SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of December, 2001
Enodis plc
Washington House, 40-41 Conduit Street
London, W1S 2YQ, United Kingdom
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F: X Form 40-F:
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Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes: No: X
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On or about December 14, 2001, the Registrant sent to holders of the
Registrant's ordinary shares its Annual Report and Accounts 2001 and a circular
and notice of meeting describing the items to be presented for approval by its
stockholders at the Registrant's Annual General Meeting to be held January 16,
2002. Both documents are included in this Form 6-K.
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Improved second half
performance and
business refocused
Enodis annual report
and accounts 2001
The world's leading food
equipment manufacturer
================================================================================
1 Strategy and highlights
2 Chairman's statement
3 Chief Executive Officer's review
6 Global Food Service Equipment Group
12 Food Retail Equipment Group
16 Financial review
20 Key people
22 Directors' report
24 Statement of Directors' responsibilities in respect of the
financial statements
24 Independent Auditors' report to the Members of Enodis plc
25 Corporate governance
29 Group profit and loss account
29 Statement of total recognised gains and losses
30 Group and Company balance sheets
31 Group cash flow statement
32 Notes to the Group cash flow statement
33 Accounting policies
34 Notes to the accounts
56 US GAAP reconciliation
58 Five year summary
59 Holders of Company securities
60 Company information
Enodis is the leading provider of commercial food equipment solutions.The Group
has a full range of "hot" and "cold" side core heavy equipment products, a
leading technology position in the industry, and a leading portfolio of brands,
with a wide range of blue chip customers.Whilst approximately 80% of its
business is North American based, it provides products, distribution and service
to global customers in over 100 countries around the world. Its businesses are
strong cash generators with a high conversion of operating profit to operating
cash flow.
1 Enodis annual report
Strategy and highlights
The strategy of Enodis to restore shareholder value is
- To consolidate its position as the world's leading supplier of heavy core
commercial food service equipment through product, distribution and service
excellence
- To complete the turnaround of its Food Retail Equipment group and position
the business for market recovery
- To reduce debt
Highlights
Growth
2001 2000 Nominal Underlying*
(pound)m (pound)m % %
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Food Equipment sales 887 884 - (7)
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Food Equipment operating profit
before goodwill amortisation and
exceptional items 90.7 111.5 (19) (25)
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Profit before tax, goodwill
amortisation and exceptional items 63.8 102.2 (37)
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Exceptional items (149.8) 3.0
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Adjusted diluted earnings per share 22.0p 35.0p
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Dividend per share 2.0p 13.75p
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Free cash flow 61.6 89.5
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* Continuing business only at constant foreign exchange rates
2 Enodis annual report
Chairman's statement
Chairman's statement
Clear strategy to restore
shareholder value and reduce debt
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Below: Profit before tax, goodwill amortisation and exceptional items
was(pound)63.8m. Of that figure,(pound)45.1m is attributable to a revitalised
second half.
[PHOTO]
Above: Peter Brooks
Chairman
[GRAPH]
(pound)63.8m (pound)45.1m
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Overview The year ended 29 September 2001 has been extremely challenging and,
overall, the results are disappointing. We began the year with high hopes and
ambitions on the basis of our growth strategy. By March, however, it had become
clear that significant change was required to refocus the business and to
address what had rapidly become a much more difficult market. So, in late March,
we announced a number of major actions including the establishment of our
Executive Committee led by Andrew Allner, the departure of David Williams, and a
range of critical actions to improve the business.
These actions took place against a declining market backdrop. For example,
in North America the market for food service equipment fell by some 10% in
March. The market for food retail equipment, display cases and systems fell by
some 15-20% in the first half and declined further to some 25-30% below last
year by the year-end.
The prompt actions taken by management included a range of measures. In
summary, we simplified the organisation and reduced costs by headcount reduction
and discretionary cost savings amounting to over (pound)15m in the second half.
In Food Service Equipment, they have resulted in a refocused business, in which
we leverage the scale, product range, technology and relationships of Enodis;
this refocusing targets both revenue improvement and cost reduction. In North
America, this strategy is leading to market share gain.
In Food Retail Equipment, we are implementing a turnaround plan, which is
yielding results in a very challenging market. We believe that this plan,
building on our having become a low-cost producer, will position the business
for recovery when markets improve.
We completed the sale of our Building and Consumer Products business,
Magnet, in June 2001. This enabled us to reduce debt by some (pound)100m,
enabling us to focus solely on food equipment.
Whilst we have made good progress in reducing net debt, (pound)365.9m at the
year-end, this is still above a level we consider prudent. Plans are in place to
reduce debt further.
During the year, the Board undertook a detailed and rigorous review of the
strategic options for the Group. The review confirmed the strength of our
product portfolio in North America and that our strategy was appropriate.
Subsequent to the year-end, we have taken further actions to reduce costs
and target market share gain opportunities, addressing the likelihood of further
market declines following the tragic events of 11 September 2001. Our challenge
here is to turn adversity into opportunity for revenue and market share gains
and outperformance against the competition.
Results Profit before tax, goodwill, amortisation and exceptional items was
(pound)63.8m compared with (pound)102.2m in the prior year. However, the second
half profit of (pound)45.1m was significantly ahead of the (pound)18.7m in the
first half.
Dividends An interim dividend of 2.0p per share was paid on 6 July 2001. As
announced on 2 November 2001, the Board has decided that in the current
uncertain environment it is prudent to minimise cash outflow and preserve the
Group's financial flexibility. Accordingly, no final dividend will be paid.
People This has been a very demanding year for all our employees and we are very
grateful for all their hard work, commitment and loyalty through this period.
That we have succeeded in producing significantly better results in the second
half has been due to all our people and to the skills, efforts and leadership
shown by our management.
This has led naturally to the new arrangements we have now in place. Andrew
Allner, who has led the Executive Committee since March, has been appointed
Chief Executive Officer. Our group heads, Dave McCulloch, President Global Food
Service Equipment, and Dave Odum, President Food Retail Equipment, have joined
the Board and will provide highly valuable input to our discussions. The team
passionately believes in the strategy and the strength of the Enodis business.
It was announced in September that Andy Roake, Chief Operating Officer, would
leave the Board on 31 December and we thank him for his contribution.
Outlook The Group's strategy is to consolidate and extend its position as the
world's leading supplier of heavy core commercial food service equipment through
product, distribution and service excellence. We have a fully developed,
coherent Global Food Service Equipment strategy which we are confident will lead
to market share gains. We will complete the Food Retail Equipment turnaround,
positioning this business for market recovery.
The further reduction of debt remains a key priority. The Group's businesses
are highly cash generative. In addition, we have plans to realise cash by the
disposal of surplus property and non-core businesses.
We have a powerful strategy and, as we continue to implement it, Enodis will
emerge stronger, with improved market share and will be well positioned for
market recovery when it comes. I am, as are all my colleagues, acutely conscious
of the further declines in the company's share price. We believe that we are
taking the right steps to restore shareholder value and are determined that, as
we work our way through this uncertain period, we will produce results that will
lead to an improving share price performance.
/S/ Peter Brooks
Peter Brooks
3 Enodis annual report
Chief Executive Officer's review
Chief Executive Officer's review
Improved second half performance
and business refocused
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Below: Second half Food Equipment operating profit of (pound)54.0m improved on
first half of (pound)36.7m - despite worsening market conditions, reflecting the
benefits of cost reduction actions and some seasonality.
Food Equipment
Operating profit 2001(Pound)
H1 36.7
H2 54.40
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Introduction
The results for the full year are disappointing. However we have ended the
period with a significantly improved second half performance and the business
refocused for the future.
Results
Profit before tax, goodwill amortisation and exceptional items was (pound)63.8m
((pound)102.2m): foreign exchange movement benefited this result by around
(pound)2m. The second half profit of (pound)45.1m was significantly ahead of the
(pound)18.7m in the first half. Second half property profits of (pound)9.0m were
partially offset by the dilution effect of the Magnet sale (approximately
(pound)4m).
In Food Equipment, operating profit before goodwill amortisation and
exceptional items was (pound)90.7m ((pound)111.5m): operating profit for the
year benefited by around (pound)4m from foreign exchange movements compared to
the prior year and included (pound)2.0m from acquisitions. The second half
operating profit of (pound)54.0m was significantly ahead of the (pound)36.7m in
the first half despite the further underlying market decline, reflecting the
benefits of cost reduction and some seasonality. Operating margins in the second
half were 11.6% compared to 8.7% in the first half.
Financing
Net debt at 29 September 2001 was (pound)365.9m ((pound)434.2m); down from
(pound)493.8m at the half year.
The further reduction of debt remains a key priority for the Group. The
Group's businesses are highly cash generative with relatively low requirements
for capital expenditure. Very tight operating cash flow management will
accordingly play a central role in debt reduction. In addition, plans are in
place to reduce debt further, including the sale of non-core businesses and
surplus property. We have targeted profit from surplus property disposals of
some (pound)7m in the new financial year. We have also targeted proceeds of
around (pound)50m from non-core disposals, though in the current climate this
programme will take time to deliver.
Our target is to reduce net debt to (pound)250m over the next two years.
Food Service Equipment - North America
Our Food Service Equipment group in North America offers a full range of core
heavy equipment products to the industry, comprising cooking, warming,
refrigeration, ventilation, dishwashing and food preparation equipment as well
as ice machines. Customers include quick service and full service restaurants,
hotels and institutional customers. Competitive advantage is achieved through
leveraging the group's scale, product range and leading brands, technology and
relationships with end users, channel partners and suppliers.This business
represents over 50% of our Food Equipment sales.
The market for food service equipment in North America declined by some 10%
in March and remained at about that level below the prior year to the financial
year end. The market decline reflected the slowdown in the US economy with
leading restaurant chains curtailing new store openings and refurbishment
programmes and many independent restaurant and hotel operators delaying new
openings and non-essential replacement of equipment. The slowdown has been
particularly marked in the QSR chains, which represent some 30% of our North
American food service equipment business.
Whilst short-term market conditions are unfavourable there is no evidence
that long-term food service growth trends will not resume when the economic
background improves. Lifestyle changes continue to drive growth in out-of-home
food and beverage consumption. Thus in the long term we see these markets as
attractive.
We have taken tough actions to cut costs including a 271 headcount reduction,
7% of the workforce, and discretionary cost savings. These savings amounted to
over (pound)11m in the second half and are forecast to be some (pound)19m in the
new financial year. The organisation has been refocused during the period to
enable us to leverage effectively our scale, product range, technology and
relationships. Particular actions taken include the alignment of 17 out of 21
(20 out of 21 by the end of November) of our independent sales representatives
in North America so that in each aligned territory Enodis now has a single
representative covering the full range of Enodis products. We believe these
representatives constitute the strongest sales force in the industry. We have
partnered with dealers, distributors and other channel partners and have
introduced new incentive schemes, programmes and communications. We have
established a new key account management structure, which more effectively
services global, national and regional customers. These actions clearly target
revenue improvement as well as cost reduction.
Technology is a key driver and important source of competitive advantage for
Enodis. In order to support and service our customers we have maintained our
investment in new technology despite pressure to reduce costs. This investment
is co-ordinated through our technology centre in Tampa, Florida, which is unique
in the industry. Our technology focus led to an unprecedented number of new
products being on display at the North American Food Equipment Manufacturers
4 Enodis annual report
Chief Executive Officer's review
New product development
to meet customer needs
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Below: Significant reduction in debt in the second half.
[GRAPHIC]
[GRAPHIC]
[GRAPHIC]
[GRAPHIC]
Net debt (Pound)m
September 2001 365.9
March 2001 493.8
September 2000 434.2
Above: Merrychef Mealstream Series 5.5 is the market leader for electronic
combination cooking, reducing cooking times by up to five times.
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("NAFEM") show in Orlando in early September. Encouragingly, industry data and
other evidence available confirms Enodis is gaining market share. Our "like for
like" decline in sales of 8% is less than estimates of decline in the market.
Our ice businesses, where industry statistics are available, have grown market
share and our sales to the five major buying groups are up 6% in a market down
10%, with our products gaining new listings. Similarly, publicly available
competitor information confirms Enodis is performing relatively strongly with
lower sales declines and higher margins.
Operating profit was (pound)62.6m ((pound)66.3m). Importantly, operating
profit for the second half was (pound)39.6m compared to (pound)23.0m in the
first half with margins of 15.0% compared to 9.8%, reflecting the benefits of
the cost reduction actions and some seasonal volume improvement.
Since 11 September we have taken further actions to reduce costs and target
market share gain opportunities in the face of further weakening economic
circumstances. Immediate action included discretionary spend savings, cutbacks
in capital expenditure and the introduction of new programmes for buying groups
and dealers and increased customer communication.
Additional plans are being developed to accelerate market share gains,
including new product development, improving our international sales capability
and further partnering opportunities with major dealers and buying groups, thus
enhancing top line performance. Cost reduction actions include leveraging group
purchasing, group IT and manufacturing best practices. We are targeting
strategic headcount reductions and continuing our focus on ongoing manufacturing
rationalisation.
The above cost reduction actions are targeted to save some (pound)7m in the new
financial year at a cost of some (pound)2m.
Major strategic priorities include the consolidation of parts and service,
increasing focus on core heavy equipment products and brands, selling non-core
businesses and continuing to leverage the Enodis organisation.
Food Service Equipment - Europe and Rest of the World
Our Food Service Equipment business in Europe and Rest of the World ("ROW")
comprises manufacturing companies of ice machines, ovens, ventilation, beverage
and other food preparation and general food service equipment, together with the
distribution of products manufactured in North America. This business represents
approximately 20% of our Food Service Equipment group.
The market in food service equipment in Europe has been mixed, with the
market overall estimated to be flat compared to the prior year. Our businesses
in Germany and the UK beverage companies have been most impacted by the economic
slowdown.
Actions have been taken to reduce costs including headcount reduction and
discretionary cost savings. Headcount savings of some 108 employees have been
achieved, which together with discretionary cost savings, have benefited second
half performance by some (pound)1m with an annualised benefit of some (pound)4m.
Operating profit for the year was (pound)17.7m compared to (pound)22.6m in
the prior year. The second half performance was (pound)8.5m, a deterioration
compared to (pound)9.2m in the first half.
These results are disappointing and reflect losses at one of our UK beverage
businesses, which has now been sold, weakening performance in our German
businesses, increased overhead costs and margin pressure. The results include
non-recurring property profits of (pound)1.5m.
Subsequent to the year end, we have combined our North American and Europe &
ROW Food Service Equipment businesses into a single Global Food Service
Equipment group under the leadership of Dave McCulloch. This has been done in
order to improve top line performance, reduce costs, further streamline the
organisation and provide our global customers with better service. Further
actions to strengthen management have been taken.
Our strategy in Europe is to refocus the European portfolio on core heavy food
equipment, leverage the strength of our North American brands for global
customers, sell non-core activities, pool technology resources and revitalise
our owned and third party distributors.
Food Retail Equipment
Our Food Retail Equipment group, which represents just over 20% of total Food
Equipment, comprises four companies:- Kysor Warren and Austral, which
manufacture display cases and refrigeration systems, Kysor Panel Systems, which
manufactures walk-ins and systems, and Belshaw which manufactures doughnut
equipment. Austral, Kysor Panel Systems and Belshaw have leading market
positions. Kysor Warren, which accounts for over one third of this group, has a
number four market position and has suffered from under-investment and a
concentrated customer base in a very challenging market environment.
5 Enodis annual report
Chief Executive Officer's review
Strong management actions
Teamwork and realism
[PHOTO]
Above: Robert Eimers
Vice President, Global Human Resources
Right: Prompt actions to reduce headcount as a response to market conditions.
Food Equipment headcount
2001 8,075
2000 8,796
1999 8,947
The North American market for display cases and systems declined during the year
and is currently estimated to be down some 25-30% compared to the prior year.
This decline has been driven by economic slowdown and consolidation within the
US retail sector. The market for walk-ins and systems is also down and Belshaw
has been impacted by a trend towards larger equipment. Austral is showing some
recovery from a low base. The whole industry has been affected by this very
severe turndown with all major competitors in the display case and systems
business closing plants and laying off employees. We estimate that some 20% of
display case capacity has been eliminated.
We have developed and are implementing a turnaround plan for this business.
This has included the appointment of new management, led by Dave Odum, two major
plant closures and a headcount reduction of almost 500 employees, product
refreshment, the consolidation of facilities in Australia and aggressive actions
to broaden the customer base. The actions taken reduced costs by some
(pound)2.5m in the second half and over (pound)7m on an annualised basis. We
believe Kysor Warren is now positioned as the low-cost producer in what remains
a very competitive market.
Operating profit for the period was (pound)10.4m ((pound)22.6m). Operating
profit for the second half was (pound)5.9m up from (pound)4.5m in the first half
despite a further decline in the market.
Success has been achieved in broadening the customer base with important new
customers won at Kysor Warren, Kysor Panel Systems and Austral. The market,
however, is very competitive, and margins have suffered accordingly.
Additionally, actions are being taken to further reduce the cost base
including headcount reduction and other manufacturing and rationalisation
savings.
These cost savings are targeted to be (pound)2m in the new financial year at a
cost of (pound)2m. Strategic priorities include completing the turnaround plan,
broadening the customer base and positioning the business for recovery when
markets eventually improve.
People
The year has been very challenging for all our management and employees who have
responded outstandingly. We are very grateful for their continued considerable
efforts, contribution and support.
We now have a full executive team working well together, and strong and
experienced operating company presidents running our individual business units.
We have a strong team and management stability.
New values for the organisation are being encouraged including internal
teamwork, partnering with third parties, respect for people, realism and
industry leadership. Already we have seen a major change in culture and
attitudes.
Communication with employees will continue to be a key priority for us as we
build on the momentum already established and take our business forward.
Current trading and outlook
Trading in October and November to date has been at levels close to our original
plans. Nevertheless, the trading climate is likely to become more difficult
following the events of September 11 and the extent of any further market
decline remains unclear. All prudent actions are being taken to address the
situation, reducing costs further and taking advantage of market share gain
opportunities. We have based our planning on the experience at the time of the
Gulf War in 1991, when the market for food service equipment in the USA fell by
some 15%.
We are targeting further cost savings of some (pound)10m for the new financial
year relating to strategic headcount reductions, discretionary cost savings,
leveraging Group purchasing and ongoing manufacturing rationalisation. We
estimate exceptional items of some (pound)6m in the new financial year relating
to these actions.
We are also taking actions to improve top line performance and believe that
our scale, broad product range, technology, and industry relationships ideally
position us to achieve this.
/s/ Andrew Allner
Andrew Allner
Chief Executive Officer
6 Enodis annual report
Business review
Global Food Service Equipment Group
Market challenges and transformation
Below: Improved second half as benefits of restructuring become apparent.
Global Food Service Equipment
Operating profit 2001(pound)m
H1 32.2
H2 48.1
[PHOTO]
Above: Dave McCulloch
President, Global Food Service Equipment Group
Overview
Last year saw a thorough transformation of Enodis' Food Service Equipment (FSE)
business into a Global Food Service Equipment group.
Starting in North America in March, the management of FSE devised and began
implementation of a step-change in their group's structure and performance.
Within 30 days FSE returned to historical quality of earnings and enjoyed
double-digit earnings growth for several months. All of this was accomplished in
a market that was down 10%. For two companies in the group - Frymaster and
Lincoln - earnings were up 50% over the previous year. In July, Delfield enjoyed
an all-time record for both sales and profit.
In Europe, in September the organisation was delayered and simplified to
mirror the structure in North America, thereby creating one global team.
Process and potential
Clearly, the group was on the right track, but getting to that point was not
easy. It involved a highly demanding process, calling for the participation of
the entire organisation.
Given the level of performance in the first few months of 2001, the process
of simplification had to be implemented quickly. Unfortunately, this could not
be done painlessly.
The task began with North American operations and the announcement of a 15%
reduction in the salaried workforce. The remaining 85% of the workforce shared
the pain of a week off without pay, and some sacrifices on benefits.
To help map out the recovery route, the entire management team gathered in
Atlanta. Their objective was to determine how best to maximise each of 10
individual company results whilst simultaneously leveraging total FSE efforts.
They decided to return to 10 individual units with responsibility for profit
and loss; institute a flatter, more efficient management structure and create a
shared sales force supporting the channels of distribution.
Among the other outcomes of the Atlanta meeting were commitments to:
- establish new levels of partnership (in part through the establishment of
"advisory councils") with sales representatives, dealers and service agencies;
- pool efforts in advertising to make maximum use of limited budgets in an
integrated Enodis advertising campaign;
- improve communications to ensure dissemination of comprehensive information
during a period of rapid change.
7 Enodis annual report
Business review
Alignment of sales representatives
Award-winning new products
[PICTURE]
Above: The Enodis booth at the NAFEM show in Orlando featured the
introduction of over 20 new products.
[PICTURE]
Above: The Paris show, Equip Hotel, featured French TV star Vincent
Ferniot on the Enodis stand assisting with demonstrations.
The European team agreed to:
- leverage the technology centre in Tampa;
- consolidate Beverage Systems;
- continue the investment plans in new factories for Convotherm in Germany and
Viscount Catering and Vent Master in the United Kingdom.
Leveraging strengths
The new team began a drive to leverage best practices throughout the
organisation. These included Lincoln's implementation of an impressive "Lean
Manufacturing System" in its Merco Savory division and Delfield's successful
implementation of value analysis.
The group's commercial team began working more effectively with the operating
company sales and marketing teams, offering co-ordinated packages of products
and services to the distribution network.
The group aligned 80% of its US territory sales representatives, and invested
in significant training and improved communications. Three commercial presidents
developed new measurement tools focusing on market share by product and
territory.
Operating company international sales managers volunteered to perform the
dual role of Enodis regional managers to begin the process of integrating
international sales.
Forty key account teams were established to leverage existing individual brand
relationships with national and global quick service restaurants, casual dining
and contract catering accounts to other brands within the Enodis portfolio. The
new global team has the ability to leverage its factories around the world to
make global brands to local standards. When appropriate and as described later
in this review, the Enodis Technology Center provided specific equipment
solutions to these teams.
The formation of Enodis Dealer, Service and Representative Councils, along
with enhanced efforts with industry associations such as FCSI, CFESA and FEDA,
opened up stronger two-way communications and resulted in several innovative
programmes.
One was the announcement of Enodis sponsorship of the Dealer Sales
Representative of the Month in concert with FES magazine.
Other communications programmes included:
- letters were sent regularly to industry partners, and a bi-weekly newsletter
to all employees was instituted;
- new product and FSE organisation brochures were developed and distributed.
8 Enodis annual report
Business review
Innovative solutions
[PICTURE]
Above: At the Enodis Technology Center (ETC), in Tampa, Florida, expert
engineers and food technologists develop food service equipment to satisfy the
unique requirements of major customers. The facility is also used extensively
for training.
No.1 for innovation
In the financial year just ended, the energetic efforts of FSE companies
resulted in several awards:
- Delfield was named the 2001 Taco Bell Equipment Supplier STAR award winner;
- Scotsman Ice Systems was honoured as outstanding supplier for Heavy Equipment-
Refrigeration by SEFA (Supply Equipment Foodservice Alliance);
- Pride Marketing and Procurement named the Enodis ice machine companies
Scotsman and Ice-O-Matic as joint recipients of their Vendor of the Year Award.
Winning awards is edifying. However, FSE's primary objective is the profitable
production and provision of equipment that meets customers' needs for food
safety, energy efficiency, working speed, menu flexibility and greater
reliability. Consequently, despite reduced headcount and spending, the group was
determined not to slow down its new product development efforts.
The focal point of this activity is the Enodis Technology Center (ETC) in
Tampa, Florida.
There, in the industry's only facility of its kind, expert engineers and
food technologists work on food service equipment to meet the unique
requirements of individual operators. If, for example, a customer wants to
increase productivity, ETC can undertake a workstation flow analysis in
combination with innovative equipment design to reduce cooking and preparation
time. ETC can also come up with solutions to conserve space through the
development of multi-purpose equipment.
ETC's advanced technological capabilities, testing procedures and
top-of-the-line engineering teams are proving to be among the restructured FSE's
most important resources.
Success on show
ETC, in conjunction with the operating companies, targeted the industry's
largest equipment show, NAFEM in Orlando, Florida.
There, the group's aim was to position Enodis as the industry's food service
equipment technological leader. To that end, NAFEM was the launch pad for more
than 20 important new products, more than three times as many as the year
before. Among the year 2001 products featured were:
- the new Delfield reach-in line: Vantage, Supremacy and Meridian series,
featuring over 40% lower energy consumption than industry norms;
- Frymaster's FootPrint Pro Series fryer/filtration system, delivering a simpler
filtration system that accepts three forms of filtration - paper, stainless
steel screens and charcoal. A new larger capacity drawer design with coved
corners reduces the likelihood of spilling or overflows and improves safety of
operation and maintenance;
9 Enodis annual report
Business review
Exciting developments
[PICTURE]
Above: Delfield Reach-In range offers a full spectrum of solutions from the
budget to high-end market with flexible shelving systems and energy saving
designs.
[PICTURE]
Above: New ultra-violet technology and commercial kitchen ventilation
from Vent Master treat contaminated air by using ultra-violet
enhanced oxidation technology.
- Cleveland's Gemini 10 Convection Steamer with gas-fired, high-speed production
and a capacity for five 21/2" steam tablepans;
- Delfield's Blast Chiller, a new line including the DBC-10, a 100-pound unit
featuring four modes of operation and four temperature probes. With two
independent 50-pound units, the DBC-10 can run on half capacity or accommodate
menu variety;
- Garland's Master Series Xpress Grill, delivering significant productivity
increases and ensuring product quality through automated control of two-sided
cooking. A programmable controller regulating time, temperature and gap between
griddle plates enhances food safety through consistency of internal food
temperatures;
- three new models from Ice-O-Matic: the 22"ICE Series Cube Ice Maker, the EFD
300 Series Flake Ice Maker/Dispenser and the EMF 1300/3300 Low Side Series Flake
Ice Maker - plus the debut of Scotsman Ice's MAR 1400 and MAR 2000 Industrial
Flake Ice Machines;
- Vent Master's new ultra-violet technology in a broad range of ventilation
products using new technology that treats contaminated air with ultra-violet
enhanced oxidation, destroying airborne grease and thereby reducing odours, fire
hazards and duct cleaning;
- Garland's Mealstream Series 5, combining microwave and convection cooking
technology in a fully programmable format that offers increased cooking speed
and finishing flexibility for operations offering broad menus with limited
space;
- Delfield's LiquiTec Drop-in Cold Pan with a super-cooling effect that allows
pans and food to be flush with countertop displays while maintaining NSF-7 safe
food temperatures - all with energy cost savings of up to 75%;
- Aladdin Temp-Rite's Heat on Demand pellet system, an induction base and dome
heater that maintains plated food temperature for up to one hour through the use
of energy-efficient pellets that can be completely heated in 10 seconds.
The atmosphere at the group's NAFEM stand was buoyant. As far as the industry
was concerned - and the team itself - the group's turnaround was an unqualified
success. By the time NAFEM ended, we believed that Enodis' technology leadership
in food service equipment was evident.
10 Enodis annual report
Business review
Rapid reaction
[PICTURE]
Above: Jackson's Meiko Warewashing Machines offer end-users significant savings
through lower operational costs and energy consumption.
Below: NAFEM was the launch pad for more than 20 important new products, more
than three times as many as the year before.
20
new products
Project Adversity/Opportunity
The tragic events of 11 September 2001 have changed the market outlook with
expected further downturn in levels of demand in a more uncertain and difficult
environment. However, the Enodis team has rallied, confident in their ability to
work together and achieve success.
One response is Project Adversity/ Opportunity, a company-wide effort aimed
at reducing current spending while investigating every opportunity to reduce
costs. Just as important is the objective of capturing market share through
leveraging the power of Enodis.
Part of this effort was a two-month "customer blitz", which saw the
deployment of all executives and managers on an intensive round of customer
visits. This is in line with the group's overall objective of differentiation as
the supplier with the highest visibility and greatest dedication to customer
service.
In the first days following the 11 September tragedies, the group identified
the potential for $2m in reduced spending and $4m in reduced cash use in the
first quarter of the new financial year.
A subsequent two-day meeting in early October devised strategic initiatives
that identified another $10m in cost saving opportunities.
Immediate actions in the aftermath of 11 September included:
- announcement of the planned closure of Booth on 26 September 2001. The closure
of Dallas-based Booth, a manufacturer of dispensing products for the soft drink
and beer industries, was aimed at further streamlining the Food Service
Equipment business in North America. Booth had struggled over the past several
years with a declining market for its products, coupled with significant changes
in the buying habits of its two major customers;
- the sale of Scotsman Response, a beverage service unit, located in Preston,
England;
- the transfer of responsibility for manufacturing and marketing Seco Systems
from Aladdin Temp-Rite to Delfield;
- the phasing out of Garland's residential business, and renewed focus on its
core commercial operation;
- a gradual exit from Delfield Walk-ins, permitting the honouring of all
outstanding customer commitment;
- the realignment of Jackson MSC as a member of the Delfield group of companies
to provide marketing, finance and IT synergies;
- the move of Dean's operations from Los Angeles to Frymaster's world-class
facilities in Shreveport, Louisiana.
11 Enodis annual report
Business review
Capturing market share
[PICTURE]
Above: E-Flow brand ovens by Lincoln come in any size from countertop models to
the highest capacity models. E-Flow offers better quality food faster, reducing
labour and energy costs substantially.
[PICTURE]
Above: US Range Cuisine Gas Ranges offer ultimate durability for the high
performance kitchens where power and simplicity are of the utmost importance.
[PICTURE]
Above: Scotsman CME456R Remote Air-cooled Ice Machine produces up to 500lbs of
ice per day. Equipped with CM3 technology with Auto IQ control system.
These developments are consistent with the group's strategy to concentrate on
core food service equipment products and brands. In particular the Dean move to
Shreveport is a signal that the group is fully committing to increased focus on
the fryer business. The consolidation will foster the development of the next
generation Frymaster and Dean fryers - both open vat and tube type technologies
- to provide customers with the best choice in high performance fryers.
Clearly, these developments, some of which were planned and initiated months
before the tragedies of 11 September, will help to give the group competitive
advantage.
But there is still more to do. A particularly promising area is in joint
US/European projects. The newly formed global group is ideally placed to
transfer knowledge and opportunities among European and North American
companies. The objective, as always, will be to improve customer service and
gain market share, reduce costs and maximise shareholder value.
Several initiatives are underway, including global expansion of Merrychef's
high-speed ovens, leveraging Garland's distribution network; developing the next
generation of ice technology for global production; introduction of Vent Master
Europe's innovative ulta-violet technology in North America; and an expanded
reach of the Enodis Technology Center to include European operations.
Expansion of its European product offering is an urgent priority. FSE will
accelerate integrated selling of North American and pan-European products
through Enodis' distribution units in UK, France, Germany, Italy and Spain. New
manufacturing plants for Convotherm, Viscount and Vent Master, in addition to
several existing plants throughout Europe, provide a foundation to build
selected US brands and/or technologies for local distribution.
Another significant area of opportunity is after-sales service. The group is
determined to move to the next level of service through greater consolidation of
its global service network, supported by a more integrated Enodis parts and
service management structure.
The past year has demonstrated that the Global Food Service Equipment team is
capable of rising to the challenges ahead.
/s/ Dave McCulloch
Dave McCulloch
President
Global Food Service Equipment Group
12 Enodis annual report
Business review
Food Retail Equipment Group
Business turnaround
Below: Operating profit in the second half up despite a further declining
market.
Food Retail Equipment
Operating profit 2001(pound)m
H1 4.5
H2 5.9
[PHOTO]
Above: Dave Odum
President, Food Retail Equipment Group
Overview
The supermarket sector in North America has witnessed significant change.
In the space of a few years, mergers and acquisitions more than halved the
number of major supermarket chains -- from 55 companies to 22. Not surprisingly,
the winners in that frenzy of acquisition are still digesting the losers.
Since North American supermarket chains have traditionally been the lead
customers for Enodis' Food Retail Equipment group ("FRE"), the group went
through a difficult period in 2001, reflecting a fall in the market of as much
as 30% by year end.
Yet the operations in this sector are fundamentally sound. Therefore, Enodis
management put a turnaround plan in place for the group. This plan, which
subsequently resolved or ameliorated the problems which FRE faced at the
beginning of 2001, consisted of four elements:
- new management;
- cost reduction;
- product refreshment;
- wider customer base.
The first priority in its implementation was a change in management. We have
attracted the talents of a number of managers with decades of sector experience
and expertise. This enthusiastic and dedicated team put the rest of the plan in
place with noteworthy success, particularly in the second half of the year.
Improvements were apparent across all of FRE's business units as performance was
re-energised.
Belshaw
Belshaw, for example, achieved a year-on-year sales increase in a declining
market.
The world's leading manufacturer of on-site doughnut making equipment,
Belshaw, experienced a significant change in customer buying patterns.
Increasingly, customers are moving from smaller volume equipment to larger units
that produce more than 2,400 doughnuts an hour.
Though Enodis margins on the smaller machines are higher, returns on the
larger machines are still healthy.
Wal-Mart, FRE's largest single customer, is an important Belshaw account as
well, with sales to 200-300 stores annually.
The year also saw a deal with Dunkin Donuts to supply Belshaw equipment to
100 outlets.
Belshaw continued to supply machine components to Krispy Kreme. Negotiations
are underway for the provision of complete machines in the near future.
Though Belshaw's international sales have dropped somewhat since 11
September, overall sales remain strong in a sector that supplies a low-cost
comfort food in uncertain and troubling times.
13 Enodis annual report
Business review
Broadening customer base
[PICTURE]
Above: Kysor refrigeration system in a custom-built enclosure.
Below: Kysor Panel Systems is a key player in the North American food equipment
business, with a leading market share and penetration into 15 out of the top 22
retail chains.
15
out of 22
Austral
Austral is the Antipodes' foremost refrigeration specialist for the retail
sector, with company operations extending to every state and major city in
Australia and New Zealand.
In Australia two names - Coles and Woolworth - serve most of the market and
Austral supplies them both. As the region's premier manufacturer, the company
enjoys a leading market share. In 2001 Austral managed to retain this leading
position throughout a challenging year that saw a slowdown in new store
development and refits following a massive building programme throughout the
supermarket sector three years ago.
In complete conformity with group strategy, Austral has embarked on a number
of ways to deal with this situation. Under guidance of a new managing director,
the company consolidated its four Sydney facilities into one.
The company also managed to increase profitability by putting spare capacity
to work with the start-up of a contract-based service and installation business.
Looking ahead, Austral management is positioning the company to benefit from
the imminent break-up of the Franklin chain of stores and their subsequent
remodelling and refitting by new owners. The arrival of the Pick n' Pay chain
from South Africa is eagerly awaited.
Austral is also gearing up for the launch of an important addition to its
product range, the Millennia line of refrigerated display cases.
More attractive and more energy-efficient than its predecessors, Millennia will
begin production by May 2002 and will be providing the cornerstone for Austral's
anticipated sales expansion.
Kysor Panel Systems
Kysor Panel Systems is a key player in the North American food equipment
business, with a leading market share and penetration into 15 out of the top 22
retail chains.
To accommodate the consolidations that the market has seen in recent years,
Kysor Panel Systems closed its Portland, Oregon plant in 2001. The company
accomplished this with no loss of customers and no diminution in customer
service. Thanks to efficient order processing/manufacturing/dispatch in the
three remaining Kysor Panel Systems plants, lead times are no more than five to
six weeks, with only a short backlog on orders.
With the contraction in the North American market, Kysor Panel Systems has
had great success by focusing on the promotion of its walk-in range in markets
in Mexico and the Caribbean. Sales in Puerto Rico have been particularly
noteworthy.
As some customer brands disappear, new opportunities arise and Kysor Panel
Systems is positioning itself to take advantage of these. New business with
Target Stores provides a prime example.
14 Enodis annual report
Business review
Increased efficiency
[PICTURE]
Above: A parallel rack system designed for maximum product protection in a new
or refurbished supermarket.
Kysor Warren
The challenges facing Kysor Warren, FRE's largest business unit, at the
beginning of the period were particularly demanding.
Though its products are usually sold in tandem with those of Kysor Panel
Systems, Kysor Warren does not enjoy the same market position: it is number
four, compared to its sister company's role as market leader. Compounding Kysor
Warren's difficulties as the year began was its narrow customer base, with only
five customers accounting for 80% of sales.
In response to these pressures, Kysor Warren closed its Conyers, Georgia
plant and merged its operations with those of the Columbus, Georgia plant at the
end of June. This move reduced excess capacity, increased efficiency and cut
costs.
A new management team expanded the company's horizons beyond the United
States to take a very aggressive stance in the Canadian market. South of the
border, Kysor Warren managed to triple sales in Mexico.
An intensive sales expansion campaign resulted in the tripling of sales to
K-Mart, and a broadening of the customer base to include, for the first time,
Kroger.
In applying the third element of the group's recovery plan - product refreshment
- Kysor Warren was particularly ambitious. In the first major overhaul of its
product line in 15 years, the company launched its new E-Line range of display
cabinets.
E-Line combines contemporary European styling with state-of-the-art energy
efficiency. Just as important, it is also easier and more cost-effective to
manufacture than the designs which it is replacing. After an investment of $3m
in new tooling, powder paints, sheet metal fabrication and coil-making
facilities, Kysor Warren managed to bring E-Line production on-stream in less
than six months.
With the backup of a dedicated advertising campaign, E-Line was soon a
success. The range was also the focal point of Kysor Warren's stand at the
influential Food Marketing Institute Show in Chicago in May. It proved to be the
exhibition's most heavily visited site. Just months after its launch, E-Line
accounted for 30% of Kysor Warren's sales. It is due to replace entirely older,
less efficient product lines by the end of 2002.
Turning a corner
Thanks to all of these developments across the Food Retail Equipment group, and
to all the people within the group who made these good things happen, the
business turned a corner in the 2001 financial year.
15 Enodis annual report
Business review
Low-cost producer
Well positioned
[PICTURE]
Above: A portion of our state-of-the-art 185,000 square-foot
assembly plant in Columbus, Georgia where we provide
Refrigeration System Solutions.
[PICTURE]
Above: The Kysor shop-around glass door reach-in cases are designed to
merchandise frozen food, ice cream, and medium temperature products.
Despite the tragedies of 11 September, optimism in, and for, the group remains.
The Food Retail Equipment group is now well positioned as a low-cost producer
of quality goods. This will stand the group in good stead as our traditional
markets in the United States gradually recover. There are some indications that
this is already happening as housing starts, traditionally a reliable indicator
for the future of the retail market, begin to stabilise as a result of lower
interest rates.
In the meantime, the Food Retail Equipment group is looking for new trade
beyond its traditional supermarket customer base. Both Kysor Panel Systems and
Kysor Warren have had considerable success in targeting major chains of
convenience stores such as 7-11, Circle K and the oil majors. Such
diversification into smaller goods for smaller facilities has also opened up new
custom business, such as a deal with the drugstore chain, Walgreens.
Widening the customer base even further is a recent promotion of the group's
range of electrical houses, prefabricated machine rooms, that were first
developed for K-Mart. Thanks to some innovative thinking, electrical houses are
now proving attractive to a number of new customers entirely outside the group's
usual remit.
Such lateral thinking, combined with cost-consciousness, new product development
and effective management, will provide a sound and adaptable basis for
continuing success.
/s/ Dave Odum
Dave Odum
President
Food Retail Equipment Group
16 Enodis annual report
Financial review
Financial review
[PHOTO]
Above: Stuart Miller
Chief Financial Officer - Group
Cash conversion %
2001 105
2000 98
1999 84
Operating cash flow as a percentage of operating profit before exceptional items
The Group's results reflect the difficult trading environment, the disposal of
the Building and Consumer Products business and the strong management actions
taken during the year. The results again demonstrate strong operating cash flow
before exceptional costs.
Turnover
Our turnover of (pound)1,081m is (pound)99m below last year, predominantly due
to the disposal of our Building and Consumer Products business, Magnet, in June
2001. Turnover of our Food Equipment business at (pound)887m was in line with
last year, although this included (pound)43m of benefit due to favourable
exchange rates in 2001 and (pound)22m due to acquisitions, offset by lower sales
at our ongoing businesses. On a like-for-like basis, Food Equipment sales were
down 7% on last year.
Profits
Profits before interest, tax, goodwill amortisation and exceptional items
decreased by (pound)39.8m to (pound)99.9m. This reflects a favourable foreign
exchange movement of some (pound)4m offset by the disposal of Building and
Consumer Products of (pound)18.0m. Total shortfalls in Food Retail Equipment and
Food Service Equipment were (pound)12.2m and (pound)8.6m respectively.
In Food Equipment, operating profit before goodwill amortisation and
exceptional items decreased by (pound)20.8m or 18.7% to (pound)90.7m. Despite
further market decline, the second half performance of (pound)54.0m was
significantly ahead of the (pound)36.7m in the first half, reflecting the
benefits of the cost reduction programme and seasonality. Operating margins in
the second half strengthened to 11.6% overall compared to 8.7% in the first
half.
Property
During the year we sold a further tranche of the Felsted, Essex, UK property,
which, along with some smaller property disposals, gave rise to turnover of
(pound)16.6m and profits of (pound)9.0m. Profits from property development are
expected to be around (pound)7m in 2002, with significantly lower levels in
future years.
Operating exceptional items
Operating exceptional items of (pound)167.5m consist of goodwill impairment of
(pound)100.0m, costs of restructuring of (pound)33.1m, settlement of the
Bomar-related litigation of (pound)12.2m, costs related to the Board's review of
options of (pound)8.5m and reassessment of accounting estimates in the light of
FRS18 of (pound)13.7m. Some of these costs represent non-cash amounts. Of the
balance (pound)27.8m has been paid in 2001 with a further (pound)17.5m expected
in 2002.
Non-cash goodwill impairment relates predominantly to the Scotsman
acquisition. We amortise this US dollar denominated asset over 20 years. As a
result of the softening of the US market, particularly in Food Retail Equipment,
and the impact of the events of 11 September, we have made a prudent decision to
book an impairment of goodwill of (pound)100m.
17 Enodis annual report
Financial review
Strong operating cash flow
[PHOTO]
Above: Dave Wrench
Chief Financial Officer - Global Operations
Below: We generated strong operating cash flow in 2001. It represented 105% of
operating profit before exceptional items.
105%
This will have no impact on future cash flow, but will reduce our annual
amortisation charge.
Business disposals
In June 2001, we completed the disposal of our non-core Building and Consumer
Products business. We received net cash in the year of (pound)98.6m together
with a vendor loan note of (pound)20m. The gain on disposal of Building and
Consumer Products of (pound)29.1m is offset by a loss on disposal of Scotsman
Response of (pound)5.6m (of which (pound)2.3m represents goodwill).
Interest
The Group's net interest cost in the period before exceptional items was
(pound)36.1m, down (pound)1.4m on the prior year reflecting lower average
principal and interest rates, offset by adverse foreign exchange effects.
Interest cover before exceptional items and goodwill amortisation was 2.8
times, a deterioration from the prior year figure of 3.7 and the effective
interest rate on the Group's net debt, which is primarily denominated in US
dollars, was 7.8%.
Profit/(loss) before tax
The pre-tax loss for the period of (pound)109.0m is disappointing, reflecting
the difficult trading conditions, associated write down of non-cash goodwill and
the cost/benefits associated with our prompt management actions to reduce
expenses and debt.
Taxation
Lower profits have led to a reduced tax charge on trading results of (pound)8.6m
compared to (pound)14.2m in the prior year. A constant underlying rate of 13.5%
reflects the continued benefits of brought forward operating losses in the UK
and US. A tax credit of (pound)2.0m was taken on exceptional items.
In the short term, we expect our tax rate to be between 13% and 17%. US tax
losses are not expected to be utilised until 2005/06 when the Group will return
to a more normal effective tax rate.
Earnings per share
Adjusted diluted earnings per share, before exceptional items and goodwill
amortisation, were 22.0p, down from 35.0p last year.
Dividend
As mentioned elsewhere in this report, there is a downturn in our markets as a
result of the tragic events of 11 September 2001. The extent and duration of
this downturn remains unclear and we are taking all actions to mitigate the
effect on our finances and reduce debt.
The Board considers it prudent, in the current uncertain environment, to
minimise cash outflow and preserve the Group's financial flexibility.
Accordingly, no final dividend payment will be made for the year ended 29
September 2001 (2000: 9.35p). An interim dividend of 2.0p (2000: 4.4p) was paid
during the year.
Operating cash flow
The Group continues to generate strong cash flow before exceptional items.
2001 2000
(pound)m (pound)m
Operating profit* 99.9 139.7
Depreciation 22.7 23.8
Profit on disposal of assets (1.7) (0.3)
Spend against provisions (6.0) (4.6)
Working capital 5.9 1.9
Net capital expenditure (16.3) (23.3)
Operating cash inflow 104.5 137.2
Interest (36.9) (37.5)
Taxation (6.0) (10.2)
Free cash inflow 61.6 89.5
* before exceptional items and goodwill amortisation
Whilst operating profits before interest, tax, goodwill amortisation and
exceptional items have fallen by (pound)39.8m, operating cash flow is only
(pound)32.7m lower at (pound)104.5m. This reflects our prompt actions to limit
capital expenditure ((pound)7.0m lower at (pound)16.3m) and improve working
capital controls ((pound)4.0m better at (pound)5.9m inflow). Cash flow is one of
our key performance indicators - monitored regularly at all levels of the Group.
18 Enodis annual report
Financial review
Building and Consumer
Products disposal
Below: We received net cash of(pound)98.6m on the disposal of Magnet.
(pound)98.6m
Net debt
Net debt at 29 September 2001 was (pound)365.9m compared to (pound)434.2m at the
beginning of the year. The movement of (pound)68.3m is analysed as follows:
(pound)m
Net debt at 30 September 2000 434.2
Free cash inflow (61.6)
Exceptional items 27.8
Acquisitions 26.5
Disposals (98.6)
Bank refinancing costs 4.0
Dividends 28.0
Foreign exchange rate movement 5.6
Net debt at 29 September 2001 365.9
The acquisition costs primarily relate to the $36.2m paid for the acquisition of
Jackson in November 2000. This is offset by the net (pound)98.6m received from
the disposal of the Building and Consumer Products business, Magnet, in June
2001.
Financing facility
The Group entered into new medium term facilities to refinance the Scotsman
acquisition debt in March. Due to uncertainties arising from the possible sale
of Enodis and the review of strategic options, and latterly due to the more
uncertain and difficult outlook, these new facilities have not been syndicated.
Syndication is planned to proceed on revised terms appropriate in today's much
more difficult banking market as soon as practicable. Subsequent to the year
end, the Company and its principal subsidiaries entered in to an agreement to
grant the underwriting banks a fixed and floating charge over the Group's
assets. Thus, whilst medium term facilities are in place, it is likely that a
significantly higher borrowing cost will be payable on outstanding balances in
the future.
The further reduction of debt remains a key priority for the Group. The
Group's businesses are highly cash generative with relatively low requirements
for capital expenditure. Very tight operating cash flow management will
accordingly play a central role in debt reduction. In addition, plans are in
place to reduce debt further, including the sale of non-core businesses and
surplus property. We have targeted profit from surplus property disposals of
some (pound)7m in the new financial year. We have also targeted proceeds of
around (pound)50m from non-core disposals, though in the current climate this
programme may take time to deliver.
Treasury management
The Group treasury function of Enodis is responsible for ensuring the
availability and flexibility of funding arrangements in order to meet the
ongoing requirements of the Group.
In addition, it is responsible for managing the interest rate risks,
liquidity risks and foreign exchange risks of the Group. Appropriate policies
that regulate the activity of the Group treasury function are in place. The
Group treasury function, in turn, has implemented policies and guidelines to
regulate the activities of subsidiary companies.
Foreign exchange risk management
Foreign exchange transaction exposures are generally managed directly by
operating subsidiaries within policies and guidelines established by Group
treasury. Group treasury also enters into foreign exchange hedging transactions
on behalf of subsidiaries where this is beneficial to the Group. It is the
Group's policy not to enter into market transactions to hedge profit and loss
account foreign exchange translation exposures. The Group's US dollar
denominated interest cost provides a partial hedge to the Group's results.
Enodis has significant capital employed in overseas operations. As a result,
the Group's balance sheet can be affected by movements in foreign exchange
rates. The Group seeks to limit the impact of these currency exposures by
borrowing in the same currencies as the capital
19 Enodis annual report
Financial review
Reducing debt
Below: Debt reduced in the second half from(pound)493.8m at 31 March 2001
to(pound)365.9m at 29 September 2001.
(pound)365.9m
employed in its main overseas operating units. Foreign exchange contracts are
also used to match the currency of the Group's borrowings to such functional
currencies.
Interest rate risk management
The Group finances its operations through a mix of retained profits and
borrowings. Borrowings are made at both fixed and floating rates of interest.
The Group uses a combination of interest rate swaps, interest rate caps and
collars and forward rate agreements to generate the desired interest profile and
to manage the Group's exposure to interest rate fluctuations. As at 29 September
2001, the Group had total net debt of (pound)365.9m. Using interest rate swaps
and forward rate agreements, (pound)136.1m (37%) was fixed for a period greater
than six months with a further (pound)68.9m (19%) fixed for a period greater
than one year. The remaining (pound)160.9m (44%) remains floating. The interest
rate profile is in line with the Group's objectives.
Investment
In the current climate we do not envisage further acquisitions. Furthermore, the
Board's review of options identified certain non-core Food Equipment businesses
that might generate more shareholder value if sold rather than retained. A
process of disposal has been commenced which, in the current economic climate,
may take some time to maximise shareholder value.
US GAAP
Enodis is listed on the New York Stock Exchange under the ticker ENO and
accordingly files accounts in the US under US GAAP. The principal differences
arise due to the treatment of goodwill, pensions costs and deferred tax.
The pre-tax loss (including discontinued operations) under US GAAP is
(pound)110.4m (2000: income of (pound)66.5m); the net loss after tax under US
GAAP is (pound)113.7m, (2000: income of (pound)25.3m).
Summary
The overall trading performance of the Group during the year reflects the
difficult economic environment. However, due to the actions taken to reduce the
cost base the second half performance was significantly ahead of the first half.
The imperative of the Group is to further reduce the level of debt.
The underlying strong cash flows of the operations together with proceeds
from the sale of non-core businesses and surplus property will in due course
bring the level of debt down to a more appropriate level.
/s/ Stuart Miller
Stuart Miller
Chief Financial Officer - Group
20 Enodis annual report Key people
Key people
The Directors
--------------------------------------------------------------------------------
Peter Brooks, Chairman (54 years), joined the Enodis Board as a non-executive
Director on 21 May 1998 and was appointed Chairman on 17 January 2000. He was
formerly General Counsel to the Board of the Global and Corporate and
Institutions Division at the Deutsche Bank Group and is currently Chairman
European corporate coverage at City solicitors Clifford Chance. He is also
Chairman of Chesterton International plc. He is a member of the Remuneration
Committee, Audit Committee and Nominations Committee.
Robert Briggs, non-executive Director (54 years), joined the Enodis Board on 15
August 2000. He is currently Senior Vice President and Chief Financial Officer
of Diageo's US subsidiary, The Pillsbury Company. He was previously President of
Arby's International and Vice President and Chief Financial Officer of Kentucky
Fried Chicken. He is a member of the Audit Committee.
--------------------------------------------------------------------------------
Andrew Allner, Chief Executive Officer (47 years), joined the Enodis Board as
Chief Financial Officer on 30 October 2000. He was appointed Chief Executive
Officer on 2 November 2001 having led the executive team since the former CEO
resigned in March. He was formerly Group Finance Director of Dalgety plc and CFO
and Senior Vice President of its successor company PIC International Group plc,
based in California. He is a non-executive director of Moss Bros Group plc. He
is a member of the Nominations Committee.
Eryl Morris, non-executive and Senior Independent Director (58 years), joined
the Enodis Board as a non-executive Director on 27 July 1998. He was formerly
Deputy Chief Executive of Courtaulds plc. He is Chairman of Airinmar Group Ltd
and HPI Group Limited and a non-executive Director of awg plc and Mill Digital
Media Limited. He is Chairman of the Audit Committee and a member of the
Remuneration Committee.
--------------------------------------------------------------------------------
Dave McCulloch, President - Global Food Service Equipment Group (54 years),
joined the Group in 1986. Progressively he held the positions of President
Garland Canada (1992), President Garland Group (1995), President Specification
Group (1999), President NA Foodservice Group (March 2001) before taking up his
current appointment (September 2001). He was appointed to the Board on 2
November 2001. Prior to joining Enodis, he spent 17 years in the residential
appliance business with Camco Inc, a subsidiary of General Electric.
Waldemar Schmidt, non-executive Director (61 years), joined the Enodis Board on
3 April 2000. He was Chief Executive of ISS Group since October 1995 and had
been employed by ISS since 1973, until he left in September 2000. He is a member
of IMD's Foundation Board, Chairman of Superfos A/S, Tholstrup Cheese Holding
A/S, Navision A/S, Thrane & Thrane A/S, and non-executive Director of Group 4
Falck A/S, Alfa Laval International AB, F Group A/S and Viterra AG. He is
Chairman of the Remuneration and Nomination Committees.
--------------------------------------------------------------------------------
Dave Odum, President - Food Retail Equipment Group (47 years), joined Enodis in
September 2000 and was appointed to the Board on 2 November 2001. He has been in
the refrigeration industry for over 23 years and held numerous manufacturing,
marketing and managerial positions within the industry. Before joining Enodis he
was the Vice President Marketing for the Hussmann Corporation. Prior to this he
was President of the Krack Corporation.
Andy Roake, Chief Operating Officer (49 years), was appointed to the Board on 29
September 1997, joining the Group as Chief Executive, Welbilt Corporation in the
US, appointed Chief Operating Officer on 1 January 2000. He was formerly Vice
President Corporate Development of Raychem Corporation in California. He will
resign on 31 December 2001.
--------------------------------------------------------------------------------
21 Enodis annual report
Key people
Executive Committee
--------------------------------------------------------------------------------
The members of the Executive Committee are Andrew Allner, Dave McCulloch and
Dave Odum, together with:
Robert Eimers, Vice President - Global Human Resources (53 years), joined Enodis
in July 2001. Prior to his employment with Enodis, he was the senior human
resources officer for three major corporations; Household International, Inc.,
Sonoco Products Company, and Service Merchandise Company, Inc.
--------------------------------------------------------------------------------
Stuart Miller, Chief Financial Officer - Group (52 years), joined Enodis in
April 2001 as Deputy Chief Financial Officer. Previously he was CFO with Dexion
Ltd which was acquired by Apax Partners in 1997. Prior to this his experience
has been in senior international finance roles with Grand Metropolitan Plc, Lex
Service Plc and Rexam Plc, including five years in the USA.
Dave Wrench, Chief Financial Officer - Global Operations (55 years), joined
Enodis in February 2000, as CFO for the Specification Group and was appointed to
his current position in November 2001. He worked for GE Canada for 23 years in
both CFO and general management positions. Prior to joining Enodis he held
executive positions with three different companies that included
responsibilities for operations in the USA, Canada and Mexico.
--------------------------------------------------------------------------------
22 Enodis annual report
Directors' report
Directors' report
1 Principal activities, business, operating and financial reviews
The principal activities of the Group consist of the manufacture and sale of
commercial food equipment through its Global Food Service Equipment and Food
Retail Equipment groups. The Group's Building and Consumer Products business was
sold on 14 June 2001. The Group's turnover, operating profit and total assets
less current liabilities are shown by business sector in note 1 to the accounts.
A review of the business and future development plans, together with operating
and financial reviews, are contained on pages 2 to 19 which constitute an
integral part of this report.
2 Results and dividends
The loss of the Group before taxation amounted to(pound)109.0m (2000
profit:(pound)83.8m). Having adjusted for goodwill amortisation and exceptional
items, profit before taxation was (pound)63.8m (2000:(pound)102.2m). The
Directors do not recommend the payment of a final dividend (2000: 9.35p net per
ordinary share). An interim dividend of 2.0p net (2000: 4.4p net) has been paid
in respect of the period.
During the period the Company complied with the waiver by Mourant & Co of its
rights to receive a dividend payable then and in the future in respect of the
Company's ordinary shares.
3 Research and development
During the period the Group incurred expenditure on research and development of
(pound)13.8m (2000: (pound)13.6m).
4 Share capital
(a) Details of movements of the Company's ordinary shares during the period are
provided in note 21 to the accounts.
(b) During the period, the Company did not exercise the authority granted by
shareholders at the Annual General Meeting held on 17 January 2001 for the
Company to purchase up to 25.0 million ordinary shares.
5 Board of Directors
The current Directors of the Company, their ages and the dates of their
appointment are shown on page 20. Peter Brooks, Robert Briggs, Eryl Morris,
Andrew Roake and Waldemar Schmidt held office throughout the period. Andrew
Allner, a Director at the end of the period was appointed on 30 October 2000.
Penny Hughes and David Williams, Directors at the beginning of the period, left
the Board on 17 January 2001 and 23 March 2001 respectively.
Peter Brooks and Waldemar Schmidt will retire at the next Annual General Meeting
by rotation in accordance with Article 97 of the Articles of Association of the
Company and, being eligible, offer themselves for reappointment in accordance
with Article 98 of the Articles of Association of the Company.
Dave McCulloch and Dave Odum, having been appointed Directors since the last
Annual General Meeting, will retire at the next Annual General Meeting and,
being eligible offer themselves for reappointment in accordance with Article 95
of the Company's Articles of Association. Both US Executives, they each have a
service contract which contains provisions which were in place some time before
their appointment to the Board, whereby the contract is terminable by a Group
company without cause on payment of 24 months base salary in the event of
termination on or before 31 March 2003, or in the event of a change of control.
In the event of termination without cause after 31 March 2003, payment will be
of an amount in accordance with the Group's then severance policy for senior
executives (currently 12 months base salary).
As reported on 25 September 2001, Andrew Roake will retire from the Board on 31
December 2001. The interests of the Directors in the share capital and other
securities of the Company and its subsidiary undertakings are shown on page 28.
6 Substantial shareholdings
The following shareholdings are disclosed as having been notified in accordance
with Sections 198 to 208 of the Companies Act 1985 as at 21 November 2001.
------------------------------------------------------------------------
Percentage
Ordinary shares of issued
Shareholder of 50p each share capital
------------------------------------------------------------------------
Harris Associates L.P. 31,822,500 12.74%
------------------------------------------------------------------------
Standard Life Investments Limited 9,435,317 3.77%
------------------------------------------------------------------------
Legal & General Investment Management 7,551,726 3.02%
------------------------------------------------------------------------
7 Charitable and political donations
The Group made charitable donations of (pound)59,000 during the period (2000:
(pound)133,000), (pound)50,000 of which was donated in the USA (2000:
(pound)100,000). Neither the Company nor any of its subsidiaries made any
donation for political purposes in either 2001 or 2000.
8 Close company status
The Company is not a close company within the provisions of the Income and
Corporation Taxes Act 1988 nor was it a close company during the period.
9 Auditors
Resolutions to reappoint Deloitte & Touche as the Company's auditors and to
authorise the Directors to determine their remuneration will be proposed at the
next Annual General Meeting.
10 Disabled employees
Applications for employment from disabled persons are considered on their merits
and regard is paid only to the ability of an applicant to carry out
satisfactorily the functions required. The same policy is adopted when
considering career development and promotion, while in the field of training, a
distinction would be made only in order to meet the particular requirements of
the disabled person. If an employee became disabled while in employment, all due
consideration would be given to continue employment whether in the same or in an
alternative capacity and training would be given where necessary.
11 Employee consultation
The Group places considerable value on the involvement of its employees and has
continued its previous practice of keeping them informed on matters affecting
them as employees and on the various factors affecting the performance of the
Group. This is achieved in many Group companies through newsletters, formal and
informal meetings. UK employees are encouraged to align their interests with
those of shareholders by participating in the savings-related share option
scheme.
12 Creditor payment policy
The terms of payment to most suppliers are agreed, and abided by, on an ongoing
basis by each group company. Trade creditors at 29 September 2001 represented,
on average, 35 days' purchases (2000: 30 days) for the Company and 63 days'
purchases (2000: 66 days) for the Group.
23 Enodis annual report
Directors' report
13 Environmental policies of the Company's operating groups
Throughout Enodis' Food Equipment businesses - incorporating what are now the
Global Food Service Equipment and Food Retail Equipment groups - there are
consistent efforts to enhance employee health and safety at work and to minimise
any adverse environmental impacts. This means complying with the spirit - as
well as the letter - of environmental health and safety legislation.
The Group's efforts in these areas extend to the Enodis Technology Center
("ETC"), where safety and environmental considerations are intrinsic to the
design of new products and processes.
The following sections contain examples of progress in reducing environmental
impacts in the year ended 29 September 2001.
Recycling/consumption/dry waste Much of the wood, enamel slag, copper, steel and
brass used in the manufacture of food equipment were recycled, as were packaging
materials and the waste paper and used toners generated by office work.
Noteworthy examples include: Lincoln's wood recycling programme that uses waste
material to generate garden mulch; Viscount Catering's new waste compactor,
which halves production of landfill waste; Merrychef's initiative in recycling
office waste paper as packaging, which entirely replaces previous polystyrene
use; Convotherm's cleaning/recycling programme for aluminium dishes for frozen
foods.
Energy conservation Energy is employed in both the manufacture and end-use of
Enodis products. The Company's objective is to save as much energy as possible
in both areas of application, benefiting shareholders and customers alike. As
part of this commitment in the commercial refrigerator and freezer ranges, in
2001 Enodis continued the previous year's participation in an Arthur D. Little
project to develop technologies that further minimise energy consumption. The
programme is under the direction of the US Department of Energy and also
involves the development of energy use standards as part of the US Environmental
Protection Agency's "Energy Star" programme.
Other conservation developments in refrigeration include:
- Scotsman and Ice-O-Matic's work with Frimont and ETC on new technologies
following the success of Scotsman's revolutionary 22-inch cuber, using 23% less
energy and 34% less water than the unit it replaces -- an achievement
independently verified by the Air Conditioning and Refrigeration Institute.
- Ice-O-Matic's changes to boilers, compressors and testing facilities to reduce
energy use in total and the start of an evaluation of plant lighting -both
opportunities for energy saving in the manufacturing process.
- Kysor Warren's switch to energy efficient fluorescent bulbs in its
refrigerated display case line.
Some examples of conservation progress in the Group's cooking and warming brands
include:
- Garland's use of convection ovens with auto setback functions that put units
in idle mode when not in use. - Rescheduling of paint processes to reduce both
oven use and gas consumption - also at Garland.
Among energy saving initiatives at Enodis facilities outside the United States
was that at Castelmac in Italy where a 35% reduction in gas use was achieved
following substitution of the old central heating facility and installation of
new insulation shields in polycarbonate.
Hazardous materials In Ontario, Canada, Garland worked with the Ministry of
Environment and Energy in meeting regulations on the transportation of dangerous
goods, including paint and enamel sludge, contaminated oil from compressors and
other materials. Work is underway on the elimination of painted parts by 2002.
Other developments in dealing with hazardous materials include:
- Frimont's elimination of painted products.
- Vent Master's segregation, double bagging and allocation to special bins of
hazardous wastes including used thinner containers, two-part paint and adhesive
remnants, broken glass, fluorescent tubes and light bulbs, used silicon sealant
tubes, pressurised aerosol containers and used chemical containers.
Drainage and liquid wastes Lincoln received an industrial water users' award
from the mayor of Fort Wayne for outstanding compliance and 100% accuracy of
reporting. Frimont installed a water recovery system that reduced water
consumption by 8%. Convotherm installed a water purification facility to enable
reuse of wastewater produced during the degrading of steel parts. Water supplies
for the process need only be topped up to replace the minute amounts lost
through evaporation.
Refrigerants The Group made further progress in achieving its goal of complete
conversion to ozone-friendly HFCs by 2002 - well ahead of the mandatory deadline
of 2010. Ice-O-Matic had been a leader in the introduction of HFC refrigerants
in 1994. Looking beyond HFCs, the Ice Group launched a project with ETC to
explore alternative refrigerants as they are developed. Meanwhile, the programme
of state training for all employees who test or handle refrigerants continued in
2001.
14 Annual General Meeting
The Annual General Meeting of the Company will be held at Radisson SAS Portman
Hotel, 22 Portman Square, London W1H 7BG on 16 January 2002 at 11.30 a.m.
A separate Circular to shareholders, containing the Notice of the Annual General
Meeting and requisite information on the Resolutions to be proposed as special
business at the Meeting, accompanies this Report and Accounts.
15 Directors' and Officers' insurance
In the year, the Company continued to purchase insurance for its Directors and
certain Officers, as permitted by Section 310(3) of the Companies Act 1985,
against liability for negligence, default, breach of duty or breach of trust in
relation to the Company.
By order of the Board
D R Hooper Secretary
21 November 2001
24 Enodis annual report
Statement of Directors' responsibilities in respect of the financial
statements/Independent Auditors' report to the Members of Enodis plc
Statement of Directors' responsibilities
in respect of the financial statements
Company law requires the Directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
Company and the Group as at the end of the financial year and of the profit or
loss of the Group for that period.
In preparing those financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent; and
- state whether applicable accounting standards have been followed, subject to
any material departures disclosed and explained in the financial statements.
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for the Group's system of
internal control, for safeguarding the assets of the Group and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
D R Hooper Secretary
21 November 2001
Independent Auditors' report to the Members of Enodis plc
We have audited the financial statements of Enodis plc for the 52 weeks ended 29
September 2001 which comprise the profit and loss account, the balance sheets,
the cash flow statement, the statement of total recognised gains and losses and
the related notes 1 to 28. These financial statements have been prepared under
the accounting policies set out therein.
Respective responsibilities of directors and auditors As described in the
statement of Directors' responsibilities, the Company's directors are
responsible for the preparation of the financial statements in accordance with
applicable United Kingdom law and accounting standards. Our responsibility is to
audit the financial statements in accordance with relevant UK legal and
regulatory requirements, auditing standards, and the Listing Rules of the
Financial Services Authority.
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We also report if, in our opinion, the Directors' report is not consistent
with the financial statements, if the Company has not kept proper accounting
records, if we have not received all the information and explanations we require
for our audit, or if information specified by law or the Listing Rules regarding
Directors' remuneration and transactions with the Company and other members of
the Group is not disclosed.
We review whether the corporate governance statement reflects the Company's
compliance with the seven provisions of the Combined Code specified for our
review by the Listing Rules and we report if it does not. We are not required to
consider whether the Board's statements on internal control cover all risks and
controls, or form an opinion on the effectiveness of the group's corporate
governance procedures or its risk and control procedures.
We read the Directors' report and the other information contained in the Annual
Report for the above period as described in the contents section and consider
the implications for our report if we become aware of any apparent misstatements
or material inconsistencies with the financial statements.
Basis of audit opinion We conducted our audit in accordance with United Kingdom
auditing standards issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the Directors in the preparation of
the financial statements and of whether the accounting policies are appropriate
to the circumstances of the Company and the Group, consistently applied and
adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion, we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion In our opinion the financial statements give a true and fair view of the
state of affairs of the Company and the Group as at 29 September 2001 and of the
loss of the Group for the 52 weeks then ended and have been properly prepared in
accordance with the Companies Act 1985.
/s/ Deloitte & Touche
Deloitte & Touche Chartered Accountants and Registered Auditors Hill House, 1
Little New Street, London EC4A 3TR
21 November 2001
25 Enodis annual report
Corporate governance
Corporate governance
The Combined Code Your Board is accountable to shareholders for the running of
the Company and is committed to the principles of good corporate governance.
The Company has applied the principles set out in Section 1 of the Combined Code
- Principles of Good Governance and Code of Best Practice ("the Code") as
detailed herein.
The Board
Board balance Composition of the Board is balanced, with an independent
non-executive Chairman, three further independent non-executive Directors and
four executive Directors. Their biographies, which are set out on page 20,
demonstrate a range of business backgrounds and international experience.
Re-election Non-executive Directors are appointed for a specific term of five
years but all Directors are subject to election by shareholders at the first
opportunity after their appointment, and to re-election thereafter by rotation
and at least every three years in accordance with the Company's Articles of
Association. The names of the Directors submitted for re-election are detailed
in the Directors' report on page 22 and biographical details for each of them
appear on page 20.
Board procedures and support Your Board considers that it provides effective
leadership and control and has a formal schedule of matters reserved for its
specific approval, including Group strategy and performance, acquisitions and
disposals, major capital projects, Board appointments and dividend
recommendation. It meets regularly and maintains a close dialogue between formal
meetings. Briefing papers are circulated in advance of planned meetings and,
during the year, your Board visited several Group sites. Newly appointed
Directors receive an induction programme which includes a pack of Board papers
for recent meetings, analysts' reports on the Company, a description of the
Board's operations and the Memorandum and Articles of Association. A procedure
exists for the Directors, in the furtherance of their duties, to take
independent professional advice, if necessary, under the guidance of the Company
Secretary and at the Company's expense. All Directors have the opportunity to
undertake relevant training, have full and timely access to relevant information
and the advice and services of the Company Secretary.
Appointments Appointments to the Board are reviewed by the Board as a whole with
a Nominations Committee established to undertake the search process and
recommend candidates to the Board as necessary. That committee comprises
Waldemar Schmidt (Chairman), Peter Brooks and Andrew Allner.
Relations with shareholders There is an agreed allocation of responsibilities
for regular executive Director communication with institutional investors and
analysts in both the UK and USA. Structured presentations accompany the
announcement of both interim and final results. Furthermore, the Annual General
Meeting provides an excellent opportunity for private shareholders to question
the Board and discuss issues with executive management after the meeting.
Audit Committee The Committee's Chairman is Eryl Morris who sits together with
Peter Brooks and Robert Briggs. At all times, it shall comprise solely
non-executive Directors and consist of not less than three members. It met four
times during the period. Other Directors and executives may attend by
invitation.
The Committee monitors accounting policies and financial reporting, and reviews
the half-yearly and annual accounts before they are presented to the Board. It
also maintains a liaison with external auditors and keeps under review the scope
and results of the audit and its cost effectiveness and the independence and
objectivity of the auditors, taking into account where necessary any non-audit
services provided to the Group by the auditors.
Remuneration Committee The Remuneration Committee is chaired by Waldemar
Schmidt, an independent non-executive Director. Peter Brooks and Eryl Morris,
also independent non-executive Directors, are members of the Committee. The
Committee's terms of reference include reviewing and advising upon the
remuneration and benefits packages of the executive Directors. The fees of the
non-executive Directors are determined by the full Board. The Committee is
advised and assisted as required by independent consultants and the Vice
President - Global Human Resources. It reports to the full Board, whose
Remuneration Report is set out on pages 26 to 28.
Going concern The Directors believe that the Group has adequate resources to
continue operating for the foreseeable future. For this reason, they continue to
adopt the going concern basis in preparing the accounts.
Internal control
Introduction The Board has established procedures to implement in full the
Turnbull Guidance "Internal Control: Guidance for Directors on the Combined
Code" for the year under review and to the date of approval of the annual report
and accounts. These procedures, which are subject to regular review, provide an
ongoing process for identifying, evaluating and managing any significant risks
faced by the Group.
Responsibility The Board has overall responsibility for the system of internal
control. A sound system of internal control is designed to manage rather than
eliminate the risk of failure to achieve business objectives and can only
provide reasonable and not absolute assurance against material misstatement or
loss.
Control structure There is a defined operating structure with lines of
responsibility and delegated authority. This is managed on a day to day basis by
the Executive Committee chaired by the Chief Executive Officer.
Written policies and procedures have been issued which define the limits of
delegated authority and provide a framework for management to deal with areas of
significant business risk. These policies and procedures are reviewed and where
necessary updated. The Board reviews the operations of the Group treasury
function, which sets appropriate limits to mitigate treasury risk.
The Board reviews the most significant risks facing the Group, their potential
impact and likelihood of occurrence and the control procedures put in place to
mitigate those risks.
Control environment The Group's operating procedures include a comprehensive
system for reporting information to the Directors. This system is documented and
regularly reviewed.
Budgets are prepared by operating company management and subject to review by
both Group management and the Directors. Forecasts are revised during the year
and compared against budget. When setting budgets and forecasts management
identifies, evaluates and reports on the potential significant business risks.
Monthly reports of operating performance, with commentary on variances against
budget, forecasts and prior year, are prepared at operational and Group levels.
Key performance indicators are monitored.
The acquisition of any business requires a rigorous analysis of the financial
implications of the acquisition and key performance figures. A sensitivity
analysis takes place of the key assumptions made in the acquisition case. Post
investment appraisals of the Group's investments are conducted on a periodic and
timely basis.
A treasury report, with details of treasury borrowings and investments, is
distributed to corporate management on a weekly basis.
The Audit Committee reviews a half yearly report detailing any significant legal
actions faced by Group companies.
26 Enodis annual report
Corporate governance
Monitoring and review activities There are clear processes for monitoring the
system of internal control and reporting any significant control failings or
weaknesses together with details of corrective action.
A formal annual self assessment is provided by the presidents and controllers of
each Group company detailing the operation of their control systems and
highlighting any weaknesses. Regional management, the Audit Committee and the
Board review the results of this assessment taking action as appropriate.
Group risk management issues are reviewed by a Group Risk
Management Committee, chaired by the Chief Financial Officer - Group and
comprising cross functional representatives from across the Group. The Committee
reports to the Board, or in the case of internal financial controls, to the
Audit Committee, on all risk management matters.
Reports from the external auditors, Deloitte & Touche, on certain internal
controls and relevant financial reporting matters are presented to the Audit
Committee and management. Where, as a result of these reviews, issues are
identified in the internal control environment, prompt corrective actions are
taken.
Review of effectiveness The Directors believe that the Group's system of
internal control provides reasonable but not absolute assurance that problems
are identified on a timely basis and dealt with appropriately.
The Directors confirm that they have reviewed the effectiveness of the system of
internal control through the monitoring process set out above for the year under
review and to the date of approval of the annual report and accounts.
Compliance statement The Listing Rules require your Board to report on
compliance with the Code throughout the accounting period. The Company has
complied throughout the accounting period ended 29 September 2001 with the
provisions set out in Section 1 of the Code.
Board remuneration report
Remuneration policy The remuneration arrangements for senior executives are
designed to enable the Company to recruit and retain executives of the calibre
needed to maintain Enodis' position as the world's leading Food Service
Equipment Group. The Remuneration Committee has established an overall framework
for the remuneration of executives throughout the Group, in order to achieve
internal equity and to encourage operational synergies, whilst also taking into
account remuneration levels in the countries in which executives are based.
Particular emphasis is placed upon linking executives' remuneration to
performance. To achieve this goal, our general approach is to set basic salaries
at around median levels for analogous businesses in the relevant countries in
which executives are based, whilst enabling executives to earn significant
payments under short-term and long-term incentive schemes subject to the
achievement of specific targets relating to the performance of individual
executives, the businesses for which they are responsible, and the performance
of the Group as a whole.
The performance targets are reviewed by the Remuneration
Committee each year, in order to ensure that they remain appropriately
challenging. The incentive schemes are also designed to align executives'
interests with shareholders' interests, particularly in the case of the
long-term scheme.
In forming its remuneration policy, the Remuneration Committee has given full
consideration to the principles in Section B of the Code. The Board believes
that the total remuneration package aligns senior executives' interests with
those of the shareholders and gives these individuals keen incentives to perform
at the highest levels.
Elements of executive Directors' remuneration Certain details of Directors'
contracts, remuneration and interests in the Company's securities, including
share options, are set out on pages 26 to 28.
The remuneration arrangements for the executive Directors consist of:
- Base salary Base salaries are determined by reference to those of similar
positions in international businesses of broadly comparable size and structure,
taking account of turnover, market value, business sector and international
involvement. Independent consultants are used to provide comparative information
for the Remuneration Committee.
- Annual bonus Annual cash bonuses are based on performance targets. The
principal measure for senior executives for the period was Group profit before
tax. The Remuneration Committee approved certain other incentive arrangements
for executive directors during the year in recognition of the particular
circumstances prevailing during the period. The Remuneration Committee may add
other corporate or job-related measures as it considers appropriate.
- Long-term incentives: executive share option schemes Options are outstanding
under the Enodis 1995 Executive Share Option Scheme, which uses new shares, and
the Enodis 1993 Executive Share Option Scheme, which uses shares purchased by an
employee share trust. Additionally, there is in existence the 1984 Executive
Share Option Scheme. No further options can be granted under these schemes.
In the year ended 29 September 2001, options have been granted under the Enodis
2001 Executive Share Option Scheme. In normal circumstances, the value of shares
under options which an executive may receive in any year may not exceed twice
basic salary. Exercise of the options will be subject to meeting challenging
performance conditions. The options granted in the period will be exercisable in
full only if the Company's total shareholder return is ranked in the upper
quartile relative both to other Mid 250 companies (excluding Investment Trusts)
and to a group of about 20 other quoted companies in the UK and overseas with
analogous businesses. Options will be exercisable on a sliding-scale basis if
the Company's total shareholder return falls between the median and upper
quartile levels, as compared with the two comparator groups. The Board has
reviewed these performance conditions and concluded that, whilst continuing to
be challenging, they should be simplified to provide a clearer incentive to our
employees.
- Long-term incentives: share matching scheme Shareholder approval has also been
obtained for the Share Matching Scheme, under which executives may be awarded
matching free shares linked to the deferral of their annual cash bonuses. No
awards have been made under this scheme and the Board has decided not to operate
it for the time being.
- Other benefits Executive Directors are provided with a fully expensed company
car (or an allowance in lieu thereof), medical insurance, disability insurance
and other benefits in line with practice in other listed companies of similar
size. All UK employees, including the executive Directors, are eligible to
participate in the savings-related ("SAYE") share option scheme.
- Pension UK executive Directors are eligible to join a tax-approved defined
benefits plan that is part of the Berisford (1948) Pension Scheme. The plan is
non-contributory and provides for up to two-thirds of final salary up to the
Inland Revenue earnings cap at normal retirement age of 60 after 20 years'
service. Andrew Allner has opted not to belong to the Company's pension
arrangements and therefore instead receives a salary supplement of 27% of base
salary.
A Funded Unapproved Retirement Benefits Scheme ("FURBS") which is a money
purchase arrangement provided additional retirement and death benefits for David
Williams until his employment ended on 31 March 2001. The Company contributed
30% of pensionable salary in excess of the Inland Revenue earnings cap and paid
additional life assurance premiums and all expenses incurred in administering
the arrangements.
27 Enodis annual report
Corporate governance
Service contracts and compensation Service contracts will normally contain a
notice period to the Director of one year with consideration being given to two
years in exceptional circumstances. As part of the terms agreed with Mr Allner
in connection with his appointment as Acting Chief Executive Officer,
arrangements were established giving him and the Company the ability, at various
times (the earliest being 2 February 2002), to terminate his employment
following the appointment of a new Chief Executive Officer. In such an event, Mr
Allner would become entitled to receive a retention bonus payment equivalent to
155% of one year's salary, 95% of one year's pension contributions, 12 months'
benefits and transfer of his company car, together with, at the Board's
discretion, a minimum of 60% of salary by way of bonus pro-rated from 1 October
2001 to date of termination. Mr Allner was appointed Chief Executive Officer on
2 November 2001. Discussions are underway to finalise the terms of his
remuneration package, which will supersede those arrangements.
The service contracts with each of D S McCulloch and D W Odum (each US
executives) contain provisions, which were in place some time before their
appointment to the Board, whereby the contracts are terminable by a Group
company without cause on payment of 24 months' base salary in the event of
termination on or before 31 March 2003, or in the event of a change of control.
In the event of termination without cause after 31 March 2003, payment will be
of an amount in accordance with the Company's then severance policy for senior
executives (currently 12 months' base salary).
Directors' remuneration, period to 29 September 2001 The remuneration of the
Directors (excluding pension costs), is shown below:
------------------------------------------------------------------------------------------------------------------------------------
Compensation
for loss of
Notice period Salary Fees Bonuses+ Benefits++ office 2001 2000
Director from Company (pound) (pound) (pound) (pound) (pound) (pound) (pound)
------------------------------------------------------------------------------------------------------------------------------------
A J Allner 12 months 293,686* - 250,000 21,496 - 565,182 -
------------------------------------------------------------------------------------------------------------------------------------
R E Briggs n/a - 27,500 - - - 27,500 3,667
------------------------------------------------------------------------------------------------------------------------------------
P M Brooks (Chairman) n/a - 161,461 - - - 161,461 81,250
------------------------------------------------------------------------------------------------------------------------------------
J P Findler (prior year Director) n/a - - - - - - 368,031
------------------------------------------------------------------------------------------------------------------------------------
P L Hughes (resigned 17/1/01) n/a - 10,833 - - - 10,833 30,625
------------------------------------------------------------------------------------------------------------------------------------
G E Morris n/a - 32,500 - - - 32,500 30,625
------------------------------------------------------------------------------------------------------------------------------------
D J Mulhall (prior year Director) n/a - - - - - - 281,911
------------------------------------------------------------------------------------------------------------------------------------
A F Roake+++ 12 months 364,382 - - 8,333 - 372,715 339,202
------------------------------------------------------------------------------------------------------------------------------------
W Schmidt n/a - 31,250 - - - 31,250 13,750
------------------------------------------------------------------------------------------------------------------------------------
J R Sclater (prior year Director) n/a - - - - - - 52,290
------------------------------------------------------------------------------------------------------------------------------------
D W Williams (resigned 23/3/01) n/a 162,500 - - 55,162** 327,302*** 544,964 476,183
====================================================================================================================================
820,568 263,544 250,000 84,991 327,302 1,746,405 1,677,534
====================================================================================================================================
* Includes a salary supplement of 27% of basic salary in lieu of membership
of Company pension arrangements.
** Including payment in relation to relocation following appointment as Chief
Executive.
*** Together with compensation for 12 months' loss of benefits.
+ Bonuses paid by reference to achievement by the Group of budgeted financial
targets, or as approved by the Remuneration Committee in respect of special
circumstances.
Bonuses are not included in pensionable salary.
++ Benefits are not included in pensionable salary.
+++ In connection with the termination of the employment of A F Roake on 31
December 2001, the Company will pay US$535,000 (one year's base salary) in
26 instalments commencing 1 January 2002. The termination payment will
increase to two years' base salary and will be paid in a lump sum in the
event of a change of control prior to 31 December 2001. In the event of a
change of a control subsequently, any outstanding instalments of the
termination payment would be accelerated and paid as a lump sum. The
Company will also pay his benefits for 2002.
Directors' pension information
-------------------------------------------------------------------------------------------------------------------------
Increase
in accrued Accumulated
pension Transfer total accrued
during value pension at
Years of the period of increase period end
service (pound) p.a. (pound) (pound)p.a.
-------------------------------------------------------------------------------------------------------------------------
D W Williams (resigned 23/3/01) 5 1,200 15,700 13,800
-------------------------------------------------------------------------------------------------------------------------
The above disclosure relates to defined benefit arrangements for D W Williams.
The transfer value above does not represent a sum paid or payable to the
Director. Instead it represents a potential liability of the pension scheme. In
addition, sums of (pound)22,003 and (pound)31,410 (2000: (pound)38,053 and
(pound)70,085) have been paid during the period by the Group to unapproved money
purchase arrangements for the benefit of A F Roake and D W Williams
respectively.
Directors' interests in contracts and other transactions with Group companies.
No Director has a material interest in any contract with Group companies other
than service contracts.
28 Enodis annual report
Corporate governance
The beneficial interests of Directors in office at 29 September 2001 (or earlier
resignations) in the ordinary shares and American depositary shares ("ADSs") of
the Company were as follows:
1 Ordinary shares and ADSs
----------------------------------------------------------------------------------------------------
29 September 2001 30 September 2000
(or earlier resignation) (or subsequent appointment)
------------------------ ----------------------------
Ordinary Ordinary
Director ADSs shares ADSs shares
----------------------------------------------------------------------------------------------------
A J Allner (appointed 30 October 2000) Nil 4,500 Nil Nil
----------------------------------------------------------------------------------------------------
R E Briggs 2,000 Nil 2,000 Nil
----------------------------------------------------------------------------------------------------
P M Brooks Nil 20,000 Nil 20,000
----------------------------------------------------------------------------------------------------
P L Hughes (resigned 17 January 2001) Nil 2,000 Nil 2,000
----------------------------------------------------------------------------------------------------
G E Morris Nil 20,000 Nil 20,000
----------------------------------------------------------------------------------------------------
A F Roake 10,000 100,000 10,000 100,000
----------------------------------------------------------------------------------------------------
W Schmidt Nil 2,300 Nil 2,300
----------------------------------------------------------------------------------------------------
D W Williams (resigned 23 March 2001) 100 8,353 100 8,353
----------------------------------------------------------------------------------------------------
i The above interests are in the ordinary share capital and the ADSs of the
Company. No Director had any beneficial interest in any share capital of other
Group companies or in any debenture of any Group company. As at 21 November 2001
there were no changes to the interests of the Directors in office at the period
end as stated above and in paragraph 2 hereof.
ii Pursuant to the requirements of the Companies Act 1985, each UK executive
Director, as well as all UK employees, is deemed to be interested in the
Company's shares held by the Trustees of the Company's Employee Share Trust. As
at 29 September 2001, that interest was in 1,269,341 ordinary shares (30
September 2000: 1,337,341).
2 Share options Options to subscribe for or acquire shares of the Company were
held by the following Directors during the period:
i The Berisford 1984 Executive Share Option Scheme ("Executive Scheme (1984)"),
the Berisford 1993 Executive Share Option Scheme and the Berisford 1995
Executive Share Option Scheme ("Executive Scheme (1995)").
------------------------------------------------------------------------------------------------------------------------------------
At
29 September
At Number of options 2001 Date
30 September during the period (or earlier from which Latest
Director 2000 Granted Exercised resignation) Exercise price exercisable expiry date
------------------------------------------------------------------------------------------------------------------------------------
A F Roake 254,802 Nil Nil 254,802 187.5p 31.12.01 3.2.04
------------------------------------------------------------------------------------------------------------------------------------
137,935 Nil Nil 137,935 180.0p 31.12.01 3.2.04
------------------------------------------------------------------------------------------------------------------------------------
90,197 Nil Nil 90,197 314.0p 31.12.01 3.2.04
------------------------------------------------------------------------------------------------------------------------------------
77,640 Nil Nil 77,640 322.0p 31.12.01 3.2.04
------------------------------------------------------------------------------------------------------------------------------------
D W Williams (resigned 23 March 2001) 123,655 Nil Nil 123,655 186.0p 31.3.01 31.3.02
------------------------------------------------------------------------------------------------------------------------------------
159,722* Nil Nil 159,722* 144.0p 31.3.01 31.3.02
------------------------------------------------------------------------------------------------------------------------------------
52,173* Nil Nil 52,173 230.0p 31.3.01 31.3.02
------------------------------------------------------------------------------------------------------------------------------------
83,333* Nil Nil 83,333 301.5p 31.3.01 31.3.02
------------------------------------------------------------------------------------------------------------------------------------
93,170 Nil Nil 93,170 322.0p 31.3.01 31.3.02
------------------------------------------------------------------------------------------------------------------------------------
*Options granted by the Trustees of the Company's Employee Share Trust over
ordinary shares of the Company acquired by the Trustees for the purpose.
During the year the shares have traded in the range 206.0p to 78.0p. On 29
September 2001, the closing mid market share price was 78.0p. Gross gains on
exercise of Inland Revenue approved options are normally subject to capital
gains tax on disposal of the shares acquired. Gross gains on exercise of
unapproved options are subject to income tax.
The Company has agreed to grant to A J Allner an option under the 2001 Executive
Share Option Scheme, with a value of twice his annual base salary, based on an
exercise price of (pound)1.81 per Enodis Share. If the price of the Enodis
Shares increases above (pound)1.81 before the date of grant, options will be
granted at that higher price. Mr Allner is entitled upon exercise of the options
to the difference between the actual exercise price and (pound)1.81 per Enodis
Share. If there is a change of control of Enodis prior to the date of grant, Mr
Allner will receive a cash payment of the amount that would have been paid to
him if he had been granted and had exercised the option at an exercise price of
(pound)1.81 per Enodis Share and had sold the shares at the purchase price paid
by the acquirer.
Enodis has also agreed to grant to A F Roake an option under the 2001 Executive
Share Option Scheme, on the same terms as the option granted to Mr Allner as
referred to above. These options are exercisable by 31 December 2003.
ii The Berisford 1992 Sharesave Scheme ("Sharesave Scheme (1992)").
------------------------------------------------------------------------------------------------------------------------------
At
29 September
At Number of options 2001 Date
30 September during the period (or earlier from which Latest
Director 2000 Granted Exercised resignation) Exercise price exercisable expiry date
------------------------------------------------------------------------------------------------------------------------------
D W Williams (resigned 23 March 2001) 8,510 Nil Nil 8,510 202.7p Lapsed Lapsed
------------------------------------------------------------------------------------------------------------------------------
iii In the above tables the exercise prices have been rounded to the nearest
0.1p.
iv No benefit has been attached, in the table set out on page 27, to options
granted under the Executive Share Option Schemes.
By order of the Board
D R Hooper Secretary
21 November 2001
29 Enodis annual report
Group profit and loss account/Statement of total recognised gains and losses
Group profit and loss account
----------------------------------------------------------------------------------------------------------------------------
52 weeks to 29 September 2001
52 weeks to
Exceptional 30 September
Pre- items 2000
exceptional (see note 4) Total Total
Notes (pound)m (pound)m (pound)m (pound)m
----------------------------------------------------------------------------------------------------------------------------
Turnover 1
----------------------------------------------------------------------------------------------------------------------------
Food equipment 887.2 - 887.2 884.5
----------------------------------------------------------------------------------------------------------------------------
Property 16.6 - 16.6 19.9
----------------------------------------------------------------------------------------------------------------------------
Continuing operations 903.8 - 903.8 904.4
----------------------------------------------------------------------------------------------------------------------------
Discontinued operations 177.3 - 177.3 275.7
----------------------------------------------------------------------------------------------------------------------------
1,081.1 - 1,081.1 1,180.1
----------------------------------------------------------------------------------------------------------------------------
Profit from operations
----------------------------------------------------------------------------------------------------------------------------
Food equipment 90.7 (43.4) 47.3 111.5
----------------------------------------------------------------------------------------------------------------------------
Property 9.0 - 9.0 8.4
----------------------------------------------------------------------------------------------------------------------------
Corporate costs (8.9) (24.1) (33.0) (7.3)
----------------------------------------------------------------------------------------------------------------------------
Continuing operations 90.8 (67.5) 23.3 112.6
----------------------------------------------------------------------------------------------------------------------------
Discontinued operations 9.1 - 9.1 27.1
----------------------------------------------------------------------------------------------------------------------------
99.9 (67.5) 32.4 139.7
----------------------------------------------------------------------------------------------------------------------------
Goodwill amortisation/impairment (23.0) (100.0) (123.0) (21.4)
----------------------------------------------------------------------------------------------------------------------------
Operating profit/(loss) 1,3
----------------------------------------------------------------------------------------------------------------------------
Continuing operations 67.8 (167.5) (99.7) 91.2
----------------------------------------------------------------------------------------------------------------------------
Discontinued operations 9.1 - 9.1 27.1
----------------------------------------------------------------------------------------------------------------------------
76.9 (167.5) (90.6) 118.3
----------------------------------------------------------------------------------------------------------------------------
Profit on disposal of businesses 4 - 23.5 23.5 -
----------------------------------------------------------------------------------------------------------------------------
Profit on disposal of property fixed assets - - - 3.0
----------------------------------------------------------------------------------------------------------------------------
76.9 (144.0) (67.1) 121.3
----------------------------------------------------------------------------------------------------------------------------
Net interest payable and similar charges 7 (36.1) (5.8) (41.9) (37.5)
----------------------------------------------------------------------------------------------------------------------------
Profit/(loss) on ordinary activities before taxation 40.8 (149.8) (109.0) 83.8
----------------------------------------------------------------------------------------------------------------------------
Tax on (profit)/loss on ordinary activities 8 (8.6) 2.0 (6.6) (14.2)
----------------------------------------------------------------------------------------------------------------------------
Profit/(loss) on ordinary activities after taxation 32.2 (147.8) (115.6) 69.6
----------------------------------------------------------------------------------------------------------------------------
Equity minority interest (0.3) - (0.3) (0.3)
----------------------------------------------------------------------------------------------------------------------------
Profit/(loss) for the period 31.9 (147.8) (115.9) 69.3
----------------------------------------------------------------------------------------------------------------------------
Equity dividends 9 (4.8) - (4.8) (33.9)
----------------------------------------------------------------------------------------------------------------------------
Retained profit/(loss) 27.1 (147.8) (120.7) 35.4
----------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
Pence Pence
Notes per share per share
-------------------------------------------------------------------------------------------------
Earnings/(loss) per share 10
-------------------------------------------------------------------------------------------------
Basic earnings/(loss) per share (46.5) 29.6
-------------------------------------------------------------------------------------------------
Adjusted basic earnings per share 22.1 37.4
-------------------------------------------------------------------------------------------------
Diluted earnings/(loss) per share (46.5) 27.7
-------------------------------------------------------------------------------------------------
Adjusted diluted earnings per share 22.0 35.0
-------------------------------------------------------------------------------------------------
Statement of total recognised gains and losses
------------------------------------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
Notes (pound)m (pound)m
------------------------------------------------------------------------------------------------------------------------
Profit/(loss) for the period (115.9) 69.3
------------------------------------------------------------------------------------------------------------------------
Negative goodwill written back on disposals, previously written off (4.4) -
------------------------------------------------------------------------------------------------------------------------
Currency translation differences on foreign currency net investments (1.7) 1.3
------------------------------------------------------------------------------------------------------------------------
Total recognised gains and losses for the period 23 (122.0) 70.6
------------------------------------------------------------------------------------------------------------------------
Movements on reserves are set out in note 22.
The accompanying notes form an integral part of these accounts.
30 Enodis annual report
Group and Company balance sheets
Group and Company balance sheets
-----------------------------------------------------------------------------------------------------------------------------------
Group Group Company Company
29 September 30 September 29 September 30 September
2001 2000 2001 2000
Notes (pound)m (pound)m (pound)m (pound)m
-----------------------------------------------------------------------------------------------------------------------------------
Fixed assets
-----------------------------------------------------------------------------------------------------------------------------------
Intangible assets: goodwill 11 310.2 412.7 - -
-----------------------------------------------------------------------------------------------------------------------------------
Tangible assets 12 111.4 171.8 0.5 1.1
-----------------------------------------------------------------------------------------------------------------------------------
Investments 13 6.2 7.2 805.6 906.9
-----------------------------------------------------------------------------------------------------------------------------------
427.8 591.7 806.1 908.0
-----------------------------------------------------------------------------------------------------------------------------------
Current assets
-----------------------------------------------------------------------------------------------------------------------------------
Stocks 14 105.6 153.1 3.6 4.3
-----------------------------------------------------------------------------------------------------------------------------------
Debtors 15 200.7 221.1 948.6 583.4
-----------------------------------------------------------------------------------------------------------------------------------
Cash at bank and in hand 39.4 28.5 5.3 1.2
-----------------------------------------------------------------------------------------------------------------------------------
345.7 402.7 957.5 588.9
-----------------------------------------------------------------------------------------------------------------------------------
Creditors falling due within one year
-----------------------------------------------------------------------------------------------------------------------------------
Borrowings 16 (2.4) (90.4) - -
-----------------------------------------------------------------------------------------------------------------------------------
Other creditors 16 (225.1) (276.9) (933.4) (1,004.0)
-----------------------------------------------------------------------------------------------------------------------------------
(227.5) (367.3) (933.4) (1,004.0)
-----------------------------------------------------------------------------------------------------------------------------------
Net current assets/(liabilities) 118.2 35.4 24.1 (415.1)
-----------------------------------------------------------------------------------------------------------------------------------
Total assets less current liabilities 1 546.0 627.1 830.2 492.9
-----------------------------------------------------------------------------------------------------------------------------------
Financed by:
-----------------------------------------------------------------------------------------------------------------------------------
Creditors falling due after more than one year 17 398.9 366.6 384.6 57.8
-----------------------------------------------------------------------------------------------------------------------------------
Provisions for liabilities and charges 20 59.1 45.6 3.5 -
-----------------------------------------------------------------------------------------------------------------------------------
458.0 412.2 388.1 57.8
-----------------------------------------------------------------------------------------------------------------------------------
Capital and reserves
-----------------------------------------------------------------------------------------------------------------------------------
Called up share capital 21 125.1 125.0 125.1 125.0
-----------------------------------------------------------------------------------------------------------------------------------
Share premium account 22 239.0 238.9 239.0 238.9
-----------------------------------------------------------------------------------------------------------------------------------
Revaluation reserve 22 - - 120.0 120.0
-----------------------------------------------------------------------------------------------------------------------------------
Profit and loss account 22 (276.9) (150.1) (42.0) (48.8)
-----------------------------------------------------------------------------------------------------------------------------------
Equity shareholders' funds 23 87.2 213.8 442.1 435.1
-----------------------------------------------------------------------------------------------------------------------------------
Equity minority interests 0.8 1.1 - -
-----------------------------------------------------------------------------------------------------------------------------------
546.0 627.1 830.2 492.9
-----------------------------------------------------------------------------------------------------------------------------------
The accompanying notes form an integral part of these accounts.
Approved by the Board on 21 November 2001
/s/ A J Allner Director
31 Enodis annual report
Group cash flow statement
Group cash flow statement
-----------------------------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
Notes (pound)m (pound)m
-----------------------------------------------------------------------------------------------------------------
Net cash inflow from operating activities before exceptional items a 120.8 160.5
-----------------------------------------------------------------------------------------------------------------
Net cash outflow from operating exceptional items a (27.8) -
-----------------------------------------------------------------------------------------------------------------
Net cash flow from operating activities a 93.0 160.5
-----------------------------------------------------------------------------------------------------------------
Return on investments and servicing of finance
-----------------------------------------------------------------------------------------------------------------
Interest paid (40.9) (37.5)
-----------------------------------------------------------------------------------------------------------------
Taxation
-----------------------------------------------------------------------------------------------------------------
Overseas and UK tax paid (6.0) (10.2)
-----------------------------------------------------------------------------------------------------------------
Capital expenditure and financial investment
-----------------------------------------------------------------------------------------------------------------
Payments to acquire tangible fixed assets (23.7) (32.1)
-----------------------------------------------------------------------------------------------------------------
Receipts from sale of tangible fixed assets 7.4 8.2
-----------------------------------------------------------------------------------------------------------------
Payments to acquire fixed asset investments - 0.6
-----------------------------------------------------------------------------------------------------------------
(16.3) (23.3)
-----------------------------------------------------------------------------------------------------------------
Acquisitions and disposals
-----------------------------------------------------------------------------------------------------------------
Purchase of subsidiary undertakings and minority interests 24 (25.8) (47.8)
-----------------------------------------------------------------------------------------------------------------
Sale of subsidiary undertakings 98.6 -
-----------------------------------------------------------------------------------------------------------------
Investment in joint venture 13 - (0.4)
-----------------------------------------------------------------------------------------------------------------
72.8 (48.2)
-----------------------------------------------------------------------------------------------------------------
Equity dividends paid (28.2) (28.6)
-----------------------------------------------------------------------------------------------------------------
Cash inflow before use of liquid resources and financing 74.4 12.7
-----------------------------------------------------------------------------------------------------------------
Management of liquid resources*
-----------------------------------------------------------------------------------------------------------------
Cash transferred from term deposits - 1.0
-----------------------------------------------------------------------------------------------------------------
Financing
-----------------------------------------------------------------------------------------------------------------
Issue of shares 21 0.2 0.6
-----------------------------------------------------------------------------------------------------------------
Redemption of CULS - (1.1)
-----------------------------------------------------------------------------------------------------------------
Additional net borrowings 398.3 0.6
-----------------------------------------------------------------------------------------------------------------
Repayment of term loan (385.7) (32.4)
-----------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in other loans (72.8) 19.2
-----------------------------------------------------------------------------------------------------------------
Capital element of finance lease repayments (0.6) (0.7)
-----------------------------------------------------------------------------------------------------------------
(60.6) (13.8)
-----------------------------------------------------------------------------------------------------------------
Increase/(decrease) in cash in the period 13.8 (0.1)
-----------------------------------------------------------------------------------------------------------------
*Enodis Group includes as liquid resources term deposits with a maturity less
than 90 days.
The accompanying notes form an integral part of these accounts.
32 Enodis annual report
Notes to the Group cash flow statement
Notes to the Group cash flow statement
----------------------------------------------------------------------------------------------------------------------
52 weeks to 29 September 2001
Before 52 weeks to
exceptional Exceptional 30 September
items items Total 2000
a) Reconciliation of operating profit/(loss) to net (pound)m (pound)m (pound)m (pound)m
cash inflow from operating activities
----------------------------------------------------------------------------------------------------------------------
Operating profit 76.9 (167.5) (90.6) 118.3
----------------------------------------------------------------------------------------------------------------------
Depreciation 22.7 - 22.7 23.8
----------------------------------------------------------------------------------------------------------------------
Amortisation of goodwill 23.0 100.0 123.0 21.4
----------------------------------------------------------------------------------------------------------------------
Gain on sale of fixed assets (1.7) - (1.7) (0.3)
----------------------------------------------------------------------------------------------------------------------
Provisions (net) (6.0) 16.5 10.5 (4.6)
----------------------------------------------------------------------------------------------------------------------
Decrease/(increase) in stock 12.1 0.5 12.6 (0.5)
----------------------------------------------------------------------------------------------------------------------
Decrease in debtors 10.7 - 10.7 6.0
----------------------------------------------------------------------------------------------------------------------
(Decrease)/increase in creditors (16.9) 22.7 5.8 (3.6)
----------------------------------------------------------------------------------------------------------------------
Net cash inflow/(outflow) from operating activities 120.8 (27.8) 93.0 160.5
----------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
b) Reconciliation of net cash flow to movement in net debt (pound)m (pound)m
--------------------------------------------------------------------------------------------------------------------
Increase/(decrease) in net cash in the period 13.8 (0.1)
--------------------------------------------------------------------------------------------------------------------
Loans and finance leases acquired with subsidiary undertakings (0.7) (0.8)
--------------------------------------------------------------------------------------------------------------------
Cash outflow from capital element of finance lease payments 0.6 0.7
--------------------------------------------------------------------------------------------------------------------
Repayment of/(increase in) other loans 5.4 (19.2)
--------------------------------------------------------------------------------------------------------------------
Borrowings repaid 54.8 31.8
--------------------------------------------------------------------------------------------------------------------
Conversion of convertible unsecured loan stock ("CULS") to ordinary shares - 93.3
--------------------------------------------------------------------------------------------------------------------
Cash redemption of CULS - 1.1
--------------------------------------------------------------------------------------------------------------------
Translation difference (5.6) (42.3)
--------------------------------------------------------------------------------------------------------------------
Movement in net debt 68.3 64.5
--------------------------------------------------------------------------------------------------------------------
Net debt at start of period (434.2) (498.7)
--------------------------------------------------------------------------------------------------------------------
Net debt at end of period (365.9) (434.2)
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
2001 2000
c) Reconciliation of net debt to balance sheet (pound)m (pound)m
--------------------------------------------------------------------------------------------------------------------
Cash at bank and in hand 39.4 28.5
--------------------------------------------------------------------------------------------------------------------
Current borrowing (2.4) (90.4)
--------------------------------------------------------------------------------------------------------------------
Exclude current proportion of deferred financing costs (1.1) (1.2)
--------------------------------------------------------------------------------------------------------------------
Current net debt 35.9 (63.1)
--------------------------------------------------------------------------------------------------------------------
Long-term lease obligations (1.2) (0.5)
--------------------------------------------------------------------------------------------------------------------
Long-term debt (400.6) (370.6)
--------------------------------------------------------------------------------------------------------------------
Net debt at end of period (365.9) (434.2)
--------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Acquired
with Translation
2000 Cash flow subsidiaries adjustments 2001
d) Analysis of movement in net debt (pound)m (pound)m (pound)m (pound)m (pound)m
-----------------------------------------------------------------------------------------------------------------------------
Cash 28.5 13.8 - (2.9) 39.4
-----------------------------------------------------------------------------------------------------------------------------
Borrowings due within one year (92.1) 86.8 - 1.8 (3.5)
-----------------------------------------------------------------------------------------------------------------------------
Revolving multi-currency facilities
-----------------------------------------------------------------------------------------------------------------------------
Old (64.5) 67.4 - (2.9) -
-----------------------------------------------------------------------------------------------------------------------------
New - (398.3) - 10.8 (387.5)
-----------------------------------------------------------------------------------------------------------------------------
Term Loan (287.3) 298.9 - (11.6) -
-----------------------------------------------------------------------------------------------------------------------------
Other long-term debt (18.8) 6.0 (0.7) (0.8) (14.3)
-----------------------------------------------------------------------------------------------------------------------------
Net (debt)/funds (434.2) 74.6 (0.7) (5.6) (365.9)
-----------------------------------------------------------------------------------------------------------------------------
33 Enodis annual report
Accounting policies
Accounting policies
Basis of accounting The accounts have been prepared under the historical cost
convention modified to include the revaluation of certain assets and comply in
all respects with applicable Accounting Standards in the UK.
Continuing operations include the results of those operations that are to be
retained by the Group. Discontinued operations are those businesses whose sale
or termination has been completed prior to the period end.
The profit for the period on a historical cost basis, excluding the effect of
the revaluation of certain assets, was not materially different from the profit
reported on page 29.
Basis of consolidation These accounts consolidate the accounts of the Company
and all its subsidiary companies and undertakings ("subsidiary entities") made
up to the period end.
The results of the subsidiary entities are included in the Group profit and loss
account from the date of acquisition to the date of disposal.
Investments
(a) Subsidiary entities In the accounts of the Company, up to 2 October 1999,
investments in subsidiary entities were valued at cost plus post-acquisition
retained profits, unless there was evidence of an impairment in value in which
case the lower value is adopted. The valuations have not been updated since 2
October 1999.
(b) Other fixed asset investments These are shown at cost less amounts written
off. Income is recognised upon receipt.
Acquisitions and disposals On the acquisition of a business, including an
interest in an associated undertaking, fair values are attributed to the Group's
share of net separable assets. Where the cost of the assets exceeds the fair
values attributable to such net assets, the difference is treated as purchased
goodwill. Following the implementation of FRS10, goodwill arising on the
acquisition of subsidiaries is capitalised in the Group balance sheet in the
year of acquisition. Goodwill arising on associates is included with the
carrying value of the associate.
Goodwill and intangible fixed assets Goodwill arising on acquisitions has been
capitalised and is amortised over a period of 20 years; the Directors regard 20
years as a reasonable maximum for the estimated useful life of goodwill since it
is difficult to make projections exceeding this period. When it is apparent that
the carrying value of goodwill exceeds the estimated net present value of future
cash flows less operating assets, an impairment provision is charged against the
profit for the period. FRS10 does not require reinstatement of goodwill
previously eliminated against reserves; in accordance with FRS10 such goodwill
has been offset against the profit and loss account reserves. Goodwill
previously taken to reserves is charged in the profit and loss account when the
related business is sold.
Tangible fixed assets Tangible fixed assets are stated at cost less
depreciation. Depreciation is provided at rates calculated to write-off the cost
or valuation of each asset, predominantly on a straight line basis, over its
expected useful life as follows:
- Freehold land: nil.
- Freehold and long leasehold buildings: 1%-2%.
- Short leasehold properties: over the unexpired period of the lease.
- Plant and equipment: 10%-331/3%.
Leases Assets acquired under finance leases are capitalised and depreciated over
the shorter of the lease term and the expected useful life of the asset.
Operating lease rentals are charged to the profit and loss account as incurred.
Stocks Stocks are stated at the lower of cost and net realisable value. The cost
of work-in-progress and finished goods includes an appropriate portion of
manufacturing overheads.
Turnover Turnover is the invoiced value of sales excluding value added tax.
Research and development Research and development expenditure is written off as
it is incurred.
Taxation Corporation tax payable is provided on taxable profits at the current
rate. Credit is taken for Advance Corporation Tax written off in previous years
when it is recoverable against current corporation tax liabilities. Deferred
taxation is provided using the liability method to the extent that it is
probable a liability will crystallise.
Pension costs It is the general policy of the Group to fund pension liabilities,
on the advice of professionally qualified actuaries, by payments to independent
trusts or to insurance companies. Independent actuaries' valuations are carried
out at regular intervals, on a projected unit funding or attained age basis. In
addition, the impact of any significant related events, such as major changes in
stock market values, are assessed through a formal review process.
Charges in respect of defined benefit schemes are made to the profit and loss
account so as to spread the costs of pensions at a substantially level
percentage of payroll costs over employees' estimated service lives within the
Group. Contributions to defined contribution schemes are charged to the profit
and loss account on a payment basis.
Foreign currency translation Translation differences arising from exchange rate
variations on trading transactions are included in operating profit. Overseas
profits remitted to the United Kingdom during the period are dealt with at
actual rates of exchange.
The balance sheets of overseas subsidiary entities are translated into sterling
at rates of exchange ruling at the year end. Profit and loss accounts are
translated at the average rate for the month in which the profits were earned.
Differences arising from the restatement of opening foreign currency net
investments and net overseas profits or losses are dealt with through reserves,
as are differences on long-term foreign currency borrowings used to finance
overseas investment. Other translation differences are dealt with in the profit
and loss account.
34 Enodis annual report
Notes to the accounts
Notes to the accounts
1 Analyses of turnover, operating profit/(loss) and total assets less current
liabilities
---------------------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
(pound)m (pound)m
---------------------------------------------------------------------------------------------------------
a) Turnover
---------------------------------------------------------------------------------------------------------
Food Service Equipment - North America 476.6 487.0
---------------------------------------------------------------------------------------------------------
Food Service Equipment - North American acquisitions 22.1 -
---------------------------------------------------------------------------------------------------------
Food Service Equipment - Europe and Rest of the World 185.4 178.1
---------------------------------------------------------------------------------------------------------
Food Retail Equipment 203.1 219.4
---------------------------------------------------------------------------------------------------------
Food Equipment 887.2 884.5
---------------------------------------------------------------------------------------------------------
Property 16.6 19.9
---------------------------------------------------------------------------------------------------------
Continuing operations 903.8 904.4
---------------------------------------------------------------------------------------------------------
Discontinued operations 177.3 275.7
---------------------------------------------------------------------------------------------------------
1,081.1 1,180.1
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
(pound)m (pound)m
---------------------------------------------------------------------------------------------------------
b) Turnover by origin: geographical analysis
---------------------------------------------------------------------------------------------------------
United Kingdom 262.0 360.0
---------------------------------------------------------------------------------------------------------
North America 667.1 651.9
---------------------------------------------------------------------------------------------------------
Rest of Europe 112.3 117.7
---------------------------------------------------------------------------------------------------------
Rest of the World 39.7 50.5
---------------------------------------------------------------------------------------------------------
1,081.1 1,180.1
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
(pound)m (pound)m
---------------------------------------------------------------------------------------------------------
c) Turnover by destination: geographical analysis
---------------------------------------------------------------------------------------------------------
United Kingdom 264.0 362.2
---------------------------------------------------------------------------------------------------------
North America 622.7 611.1
---------------------------------------------------------------------------------------------------------
Rest of Europe 99.7 98.3
---------------------------------------------------------------------------------------------------------
Rest of the World 94.7 108.5
---------------------------------------------------------------------------------------------------------
1,081.1 1,180.1
---------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
52 weeks to 29 September 2001 52 weeks to
Exceptional 30 September
Pre-exceptional items 2000
items (see Note 4) Total Total
(pound)m (pound)m (pound)m (pound)m
--------------------------------------------------------------------------------------------------------------------------------
d) Operating profit/(loss)
--------------------------------------------------------------------------------------------------------------------------------
Food Service Equipment - North America 60.6 (25.6) 35.0 66.3
--------------------------------------------------------------------------------------------------------------------------------
Food Service Equipment - North American acquisitions 2.0 - 2.0 -
--------------------------------------------------------------------------------------------------------------------------------
Food Service Equipment - Europe and Rest of the World 17.7 (5.2) 12.5 22.6
--------------------------------------------------------------------------------------------------------------------------------
Food Retail Equipment 10.4 (12.6) (2.2) 22.6
--------------------------------------------------------------------------------------------------------------------------------
90.7 (43.4) 47.3 111.5
--------------------------------------------------------------------------------------------------------------------------------
Food Equipment goodwill amortisation and impairment (23.0) (100.0) (123.0) (21.4)
--------------------------------------------------------------------------------------------------------------------------------
Food Equipment 67.7 (143.4) (75.7) 90.1
--------------------------------------------------------------------------------------------------------------------------------
Property 9.0 - 9.0 8.4
--------------------------------------------------------------------------------------------------------------------------------
Corporate costs (8.9) (24.1) (33.0) (7.3)
--------------------------------------------------------------------------------------------------------------------------------
Continuing operations 67.8 (167.5) (99.7) 91.2
--------------------------------------------------------------------------------------------------------------------------------
Discontinued operations 9.1 - 9.1 27.1
--------------------------------------------------------------------------------------------------------------------------------
76.9 (167.5) (90.6) 118.3
--------------------------------------------------------------------------------------------------------------------------------
35 Enodis annual report
Notes to the accounts
1 Analyses of turnover, operating profit/(loss) and total assets less current
liabilities continued
---------------------------------------------------------------------------------------------------------------------
52 weeks to 29 September 2001 52 weeks to
Exceptional 30 September
Pre-exceptional items 2000
items (see Note 4) Total Total
(pound)m (pound)m (pound)m (pound)m
---------------------------------------------------------------------------------------------------------------------
e) Geographical analysis: operating profit
---------------------------------------------------------------------------------------------------------------------
United Kingdom 11.9 (13.7) (1.8) 37.9
---------------------------------------------------------------------------------------------------------------------
North America 72.0 (49.0) 23.0 81.9
---------------------------------------------------------------------------------------------------------------------
Rest of Europe 14.9 (2.4) 12.5 16.8
---------------------------------------------------------------------------------------------------------------------
Rest of the World 1.1 (2.4) (1.3) 3.1
---------------------------------------------------------------------------------------------------------------------
Goodwill amortisation (23.0) (100.0) (123.0) (21.4)
---------------------------------------------------------------------------------------------------------------------
76.9 (167.5) (90.6) 118.3
---------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
2001 2000
(pound)m (pound)m
--------------------------------------------------------------------------------------------------------------
f) Total assets less current liabilities
--------------------------------------------------------------------------------------------------------------
Food Service Equipment - North America 80.4 93.3
--------------------------------------------------------------------------------------------------------------
Food Service Equipment - North American acquisitions 4.3 -
--------------------------------------------------------------------------------------------------------------
Food Service Equipment - Europe and Rest of the World 50.5 50.9
--------------------------------------------------------------------------------------------------------------
Food Retail Equipment 45.9 60.7
--------------------------------------------------------------------------------------------------------------
Food Equipment goodwill 310.2 412.7
--------------------------------------------------------------------------------------------------------------
Food Equipment 491.3 617.6
--------------------------------------------------------------------------------------------------------------
Property 10.9 9.1
--------------------------------------------------------------------------------------------------------------
Investments 4.8 4.8
--------------------------------------------------------------------------------------------------------------
Discontinued operations - 81.4
--------------------------------------------------------------------------------------------------------------
507.0 712.9
--------------------------------------------------------------------------------------------------------------
Corporate 2.0 (22.7)
--------------------------------------------------------------------------------------------------------------
Net cash/(debt) 37.0 (63.1)
--------------------------------------------------------------------------------------------------------------
546.0 627.1
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
2001 2000
(pound)m (pound)m
--------------------------------------------------------------------------------------------------------------
g) Total assets less current liabilities: geographical analysis
--------------------------------------------------------------------------------------------------------------
United Kingdom 58.7 113.7
--------------------------------------------------------------------------------------------------------------
North America 389.3 518.7
--------------------------------------------------------------------------------------------------------------
Rest of Europe 44.4 40.0
--------------------------------------------------------------------------------------------------------------
Rest of the World 16.6 17.8
--------------------------------------------------------------------------------------------------------------
Net cash/(debt) 37.0 (63.1)
--------------------------------------------------------------------------------------------------------------
546.0 627.1
--------------------------------------------------------------------------------------------------------------
2 Operating costs
--------------------------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
(pound)m (pound)m
--------------------------------------------------------------------------------------------------------------
Cost of sales 888.2 943.1
--------------------------------------------------------------------------------------------------------------
Net operating expenses:
--------------------------------------------------------------------------------------------------------------
Distribution costs 23.6 28.8
--------------------------------------------------------------------------------------------------------------
Administration expenses 90.8 85.2
--------------------------------------------------------------------------------------------------------------
Other operating expenses 1.6 4.7
--------------------------------------------------------------------------------------------------------------
Operating costs before exceptional items 1,004.2 1,061.8
--------------------------------------------------------------------------------------------------------------
Operating exceptional items (see Note 4) 167.5 -
--------------------------------------------------------------------------------------------------------------
Operating costs 1,171.7 1,061.8
--------------------------------------------------------------------------------------------------------------
Gross profit for the period was(pound)192.9m (2000:(pound)237.0m).
The total figures above include the following amounts relating to discontinued
operations: cost of sales(pound)145.3m (2000:(pound)213.1m), distribution
costs(pound)13.3m (2000:(pound)19.1m), administration expenses(pound)9.5m
(2000:(pound)14.8m) and other operating expenses(pound)0.1m (2000: (pound)1.6m).
36 Enodis annual report
Notes to the accounts
3 Operating profit/(loss)
-----------------------------------------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
(pound)m (pound)m
-----------------------------------------------------------------------------------------------------------------------------
Operating profit/(loss) is stated after charging/(crediting):
-----------------------------------------------------------------------------------------------------------------------------
Depreciation of tangible fixed assets:
-----------------------------------------------------------------------------------------------------------------------------
- owned 22.6 23.7
-----------------------------------------------------------------------------------------------------------------------------
- leased 0.1 0.1
-----------------------------------------------------------------------------------------------------------------------------
Rental of plant and equipment under operating leases 2.6 5.9
-----------------------------------------------------------------------------------------------------------------------------
Rental of land and buildings 14.3 19.3
-----------------------------------------------------------------------------------------------------------------------------
Rental income (0.7) (0.4)
-----------------------------------------------------------------------------------------------------------------------------
Research and development 13.8 13.6
-----------------------------------------------------------------------------------------------------------------------------
Auditors' remuneration:
-----------------------------------------------------------------------------------------------------------------------------
- audit fees 1.0 0.9
-----------------------------------------------------------------------------------------------------------------------------
- other fees 2.2 1.1
-----------------------------------------------------------------------------------------------------------------------------
Profit on sale of tangible fixed assets (1.7) (0.3)
-----------------------------------------------------------------------------------------------------------------------------
The audit fees for the period include(pound)14,000 (2000:(pound)13,000) in
respect of the Company.
A further (pound)1.2m was paid to the auditors in relation to the disposal of
the Building and Consumer Products business. This has been charged against the
profit on disposal of (pound)29.1m (note 4b).
4 Exceptional items
--------------------------------------------------------------------------------------------------------------------------
52 weeks to 29 September 2001
Food
equipment Corporate Total
(pound)m (pound)m (pound)m
--------------------------------------------------------------------------------------------------------------------------
a) Operating exceptional items
--------------------------------------------------------------------------------------------------------------------------
Restructuring costs 29.7 3.4 33.1
--------------------------------------------------------------------------------------------------------------------------
Revisions to working capital provisions and other exceptional warranty costs 13.7 - 13.7
--------------------------------------------------------------------------------------------------------------------------
Litigation costs - 12.2 12.2
--------------------------------------------------------------------------------------------------------------------------
Costs associated with the Board's review of strategic options - 8.5 8.5
--------------------------------------------------------------------------------------------------------------------------
43.4 24.1 67.5
--------------------------------------------------------------------------------------------------------------------------
Goodwill impairment 100.0 - 100.0
--------------------------------------------------------------------------------------------------------------------------
Operating exceptional items 143.4 24.1 167.5
--------------------------------------------------------------------------------------------------------------------------
Restructuring costs of (pound)33.1m comprise the costs associated with a number
of rationalisation projects including headcount savings and manufacturing
efficiency improvements announced before 29 September 2001.
Following the publication of FRS18 "Accounting Policies", the Group has
reassessed its accounting estimates for warranty provisions and provided an
additional (pound)8.0m. Further exceptional warranty costs of (pound)4.5m have
arisen in the period and previously capitalised development costs of (pound)1.2m
have been written off.
The Group settled the long-standing Bomar cases for $17.5m ((pound)12.2m) to
extinguish all claims. A payment of $10.0m was made in the period with a further
$7.5m in October 2001. The Board undertook a review of the Group's strategic
options during the year with the objective of maximising shareholder value.
Costs of (pound)8.5m, predominantly professional fees, were incurred.
Following recent downturns in the US economy, in particular in the retail
markets, it was necessary to reassess the carrying value of goodwill in respect
of the Scotsman acquisition. In accordance with the methodology prescribed in
FRS11 "Impairment of Fixed Assets and Goodwill", which requires consideration of
the net present value of estimated future cash flows, the carrying value of
goodwill has been written down by (pound)100.0m (see note 11).
37 Enodis annual report
Notes to the accounts
4 Exceptional items continued
----------------------------------------------------------------------------------------------------------
52 weeks to 29 September 2001
Building and
Consumer Scotsman
Products Response Total
(pound)m (pound)m (pound)m
----------------------------------------------------------------------------------------------------------
b) Disposal of businesses
----------------------------------------------------------------------------------------------------------
Proceeds - cash 114.0 - 114.0
----------------------------------------------------------------------------------------------------------
- vendor loan note (note 15) 20.0 - 20.0
----------------------------------------------------------------------------------------------------------
134.0 - 134.0
----------------------------------------------------------------------------------------------------------
Less:
----------------------------------------------------------------------------------------------------------
Book value of net assets (85.7) (3.1) (88.8)
----------------------------------------------------------------------------------------------------------
Payment into pension fund (10.0) - (10.0)
----------------------------------------------------------------------------------------------------------
Costs (13.6) (0.2) (13.8)
----------------------------------------------------------------------------------------------------------
Goodwill 4.4 (2.3) 2.1
----------------------------------------------------------------------------------------------------------
Profit/(loss) on disposal 29.1 (5.6) 23.5
----------------------------------------------------------------------------------------------------------
On 14 June 2001, the Group completed the sale, announced on 23 April 2001, of
its Building and Consumer Products business to Nobia AB for a total
consideration of (pound)134.0m (subject to asset adjustments). Prior to
completion the Group paid a contribution of (pound)10.0m to Magnet in respect of
pension scheme funding. (pound)4.4m of negative goodwill previously written off
to reserves was credited to the profit and loss account on disposal.
On 14 September 2001, the Group disposed of Scotsman Response Limited for
consideration of up to (pound)45,000.
52 weeks to 29 September 2001(pound)m
----------------------------------------------------------------------------------------------------------
c) Net interest payable and similar charges
----------------------------------------------------------------------------------------------------------
Deferred finance fees written off 5.8
----------------------------------------------------------------------------------------------------------
On 12 March 2001, the Group entered into a new revolving multi-currency facility
to refinance the Scotsman acquisition debt. The capitalised, unamortised costs
of the previous financing arrangements relating primarily to arrangement and
other fees totalling (pound)5.8m have been written off.
5 Staff costs
-------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
(pound)m (pound)m
-------------------------------------------------------------------------------------------
a) Staff costs, including Directors, comprised:
-------------------------------------------------------------------------------------------
Wages and salaries 217.6 255.5
-------------------------------------------------------------------------------------------
Social security costs 26.5 29.8
-------------------------------------------------------------------------------------------
Pension costs 4.5 7.5
-------------------------------------------------------------------------------------------
248.6 292.8
-------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
---------------------------------------------------------------------------------------------
b) The average monthly number of employees was:
---------------------------------------------------------------------------------------------
Food Service Equipment - North America 3,870 4,319
---------------------------------------------------------------------------------------------
Food Service Equipment - North American acquisitions 268 -
---------------------------------------------------------------------------------------------
Food Service Equipment - Europe and Rest of the World 2,126 2,273
---------------------------------------------------------------------------------------------
Food Retail Equipment 2,043 2,386
---------------------------------------------------------------------------------------------
Corporate and Property 26 23
---------------------------------------------------------------------------------------------
8,333 9,001
---------------------------------------------------------------------------------------------
Discontinued businesses 1,557 2,413
---------------------------------------------------------------------------------------------
9,890 11,414
---------------------------------------------------------------------------------------------
38 Enodis annual report
Notes to the accounts
6 Directors' remuneration
--------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
(pound)m (pound)m
--------------------------------------------------------------------------------
Fees as Directors 0.26 0.18
--------------------------------------------------------------------------------
Salaries and benefits 0.91 0.97
--------------------------------------------------------------------------------
Bonuses 0.25 0.22
--------------------------------------------------------------------------------
1.42 1.37
--------------------------------------------------------------------------------
Pension contributions 0.05 0.17
--------------------------------------------------------------------------------
1.47 1.54
--------------------------------------------------------------------------------
Compensation for loss of office 0.33 0.31
--------------------------------------------------------------------------------
1.80 1.85
--------------------------------------------------------------------------------
Disclosure on Directors' remuneration, share options, pension contributions and
pension entitlements required by the Companies Act 1985 and those specified for
audit by the UK Listing Authority is included in the Board's remuneration report
on pages 26 to 28 and forms part of these financial statements.
7 Net interest payable and similar charges
------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
(pound)m (pound)m
------------------------------------------------------------------------------------------
Interest payable and similar charges:
------------------------------------------------------------------------------------------
Loan stock repayable in more than five years - (0.3)
------------------------------------------------------------------------------------------
Amortisation of deferred financing costs (1.2) (2.6)
------------------------------------------------------------------------------------------
Term loan and revolving multi-currency facility (36.7) (35.3)
------------------------------------------------------------------------------------------
Other loans (0.7) (0.3)
------------------------------------------------------------------------------------------
(38.6) (38.5)
------------------------------------------------------------------------------------------
Interest receivable:
------------------------------------------------------------------------------------------
Bank balances 1.8 0.9
------------------------------------------------------------------------------------------
Other 0.7 0.1
------------------------------------------------------------------------------------------
2.5 1.0
------------------------------------------------------------------------------------------
Net payable before exceptional write-offs (36.1) (37.5)
------------------------------------------------------------------------------------------
Exceptional finance costs (see note 4) (5.8) -
------------------------------------------------------------------------------------------
Net interest payable and similar charges (41.9) (37.5)
------------------------------------------------------------------------------------------
8 Tax on profit/(loss) on ordinary activities
--------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
(pound)m (pound)m
--------------------------------------------------------------------------------------------
The tax charge for the period comprised:
--------------------------------------------------------------------------------------------
UK taxation at 30% (2000: 30%)
--------------------------------------------------------------------------------------------
- current year - 0.7
--------------------------------------------------------------------------------------------
Foreign taxation:
--------------------------------------------------------------------------------------------
- current year 8.6 13.5
--------------------------------------------------------------------------------------------
8.6 14.2
--------------------------------------------------------------------------------------------
Tax relief on exceptional items (2.0) -
--------------------------------------------------------------------------------------------
6.6 14.2
--------------------------------------------------------------------------------------------
A substantial proportion of the Group's earnings are in jurisdictions where tax
losses are available to reduce current year tax payable.
Tax relief on exceptional items in the current year is limited to (pound)2.0m
due to costs being incurred in jurisdictions where there is little or no current
tax payable, principally the USA.
39 Enodis annual report
Notes to the accounts
9 Equity dividends
-----------------------------------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
(pound)m (pound)m
-----------------------------------------------------------------------------------------------------------------------
Interim paid, 2.0p net per ordinary share (2000: 4.4p net) 4.8 10.8
-----------------------------------------------------------------------------------------------------------------------
Final, nil payable (2000 payable: 9.35p net per ordinary share) - 23.1
-----------------------------------------------------------------------------------------------------------------------
4.8 33.9
-----------------------------------------------------------------------------------------------------------------------
10 Earnings/(loss) per share
-----------------------------------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
(pound)m (pound)m
-----------------------------------------------------------------------------------------------------------------------
Basic earnings/(loss) on ordinary activities after taxation and minority interests (115.9) 69.3
-----------------------------------------------------------------------------------------------------------------------
Convertible Unsecured Loan Stock finance costs - 0.1
-----------------------------------------------------------------------------------------------------------------------
(115.9) 69.4
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
m m
-----------------------------------------------------------------------------------------------------------------------
Basic weighted average number of shares 248.9 234.0
-----------------------------------------------------------------------------------------------------------------------
Dilution effect of:
-----------------------------------------------------------------------------------------------------------------------
- employee share options 0.1 1.5
-----------------------------------------------------------------------------------------------------------------------
- share save options 0.2 0.9
-----------------------------------------------------------------------------------------------------------------------
- CULS - 14.3
-----------------------------------------------------------------------------------------------------------------------
Diluted weighted average number of shares 249.2 250.7
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
52 weeks to 52 weeks to
29 September 30 September
2001 2000
pence pence
-----------------------------------------------------------------------------------------------------------------------
Basic earnings/(loss) per share (46.5) 29.6
-----------------------------------------------------------------------------------------------------------------------
Effect per share of exceptional items 19.2 (1.3)
-----------------------------------------------------------------------------------------------------------------------
Effect per share of goodwill amortisation and impairment 49.4 9.1
-----------------------------------------------------------------------------------------------------------------------
Adjusted basic earnings per share 22.1 37.4
-----------------------------------------------------------------------------------------------------------------------
Diluted earnings/(loss) per share (46.5) 27.7
-----------------------------------------------------------------------------------------------------------------------
Effect per share of exceptional items 19.2 (1.2)
-----------------------------------------------------------------------------------------------------------------------
Effect per share of goodwill amortisation and impairment 49.3 8.5
-----------------------------------------------------------------------------------------------------------------------
Adjusted diluted earnings per share 22.0 35.0
-----------------------------------------------------------------------------------------------------------------------
Adjusted earnings per share before exceptional items (note 4) and goodwill
amortisation (note 1d) are disclosed to reflect the underlying performance of
the Group.
40 Enodis annual report
Notes to the accounts
11 Intangible fixed assets - goodwill
--------------------------------------------------------------------------------
2001 2000
Group (pound)m (pound)m
--------------------------------------------------------------------------------
Cost:
--------------------------------------------------------------------------------
At the beginning of the period 439.1 373.7
--------------------------------------------------------------------------------
Additions: -
--------------------------------------------------------------------------------
- acquisitions in the period (note 24) 20.4 19.4
--------------------------------------------------------------------------------
- adjustments to prior period goodwill - 3.4
--------------------------------------------------------------------------------
Disposals of subsidiary entities (2.7) -
--------------------------------------------------------------------------------
Currency realignment 3.8 42.6
--------------------------------------------------------------------------------
At the end of the period 460.6 439.1
--------------------------------------------------------------------------------
Depreciation:
--------------------------------------------------------------------------------
At the beginning of the period 26.4 2.7
--------------------------------------------------------------------------------
Provided during the period 23.0 21.4
--------------------------------------------------------------------------------
Provision for impairment (see note 4) 100.0 -
--------------------------------------------------------------------------------
Disposals of subsidiary entities (0.4) -
--------------------------------------------------------------------------------
Currency realignment 1.4 2.3
--------------------------------------------------------------------------------
At the end of the period 150.4 26.4
--------------------------------------------------------------------------------
Net book value at end of the period 310.2 412.7
--------------------------------------------------------------------------------
12 Tangible fixed assets
-------------------------------------------------------------------------------------------------------------------------------
Plant and
Land and equipment Assets under 2001 2000
buildings leased construction Total Total
(pound)m (pound)m (pound)m (pound)m (pound)m
-------------------------------------------------------------------------------------------------------------------------------
a) Group:
-------------------------------------------------------------------------------------------------------------------------------
Cost:
-------------------------------------------------------------------------------------------------------------------------------
At the beginning of the period 113.4 221.1 11.0 345.5 306.0
-------------------------------------------------------------------------------------------------------------------------------
Additions 3.9 11.6 8.2 23.7 32.1
-------------------------------------------------------------------------------------------------------------------------------
Acquisitions 1.4 3.6 - 5.0 1.5
-------------------------------------------------------------------------------------------------------------------------------
Disposals (5.8) (5.0) (2.2) (13.0) (9.8)
-------------------------------------------------------------------------------------------------------------------------------
Disposals of subsidiary entities or businesses (31.7) (58.7) (11.5) (101.9) -
-------------------------------------------------------------------------------------------------------------------------------
Reclassifications 1.3 1.4 (2.7) - -
-------------------------------------------------------------------------------------------------------------------------------
Transfer to current assets (5.7) (2.8) - (8.5) -
-------------------------------------------------------------------------------------------------------------------------------
Currency realignment 0.3 0.4 - 0.7 15.7
-------------------------------------------------------------------------------------------------------------------------------
At the end of the period 77.1 171.6 2.8 251.5 345.5
-------------------------------------------------------------------------------------------------------------------------------
Depreciation:
-------------------------------------------------------------------------------------------------------------------------------
At the beginning of the period 26.2 147.5 - 173.7 147.3
-------------------------------------------------------------------------------------------------------------------------------
Provided during the period 4.7 18.0 - 22.7 23.8
-------------------------------------------------------------------------------------------------------------------------------
Acquisitions 0.3 2.3 - 2.6 0.4
-------------------------------------------------------------------------------------------------------------------------------
Disposals (2.6) (4.7) - (7.3) (4.9)
-------------------------------------------------------------------------------------------------------------------------------
Transfer to current assets (1.6) (0.5) - (2.1) -
-------------------------------------------------------------------------------------------------------------------------------
Disposals of subsidiary entities or businesses (4.4) (45.4) - (49.8) -
-------------------------------------------------------------------------------------------------------------------------------
Currency realignment 0.1 0.2 - 0.3 7.1
-------------------------------------------------------------------------------------------------------------------------------
At the end of the period 22.7 117.4 - 140.1 173.7
-------------------------------------------------------------------------------------------------------------------------------
Net book value at the end of the period 54.4 54.2 2.8 111.4 171.8
-------------------------------------------------------------------------------------------------------------------------------
Net book value at the beginning of the period 87.2 73.6 11.0 171.8 158.7
-------------------------------------------------------------------------------------------------------------------------------
The net book value of land and buildings comprises:
-------------------------------------------------------------------------------------------------------------------------------
Freehold 48.5 74.1
-------------------------------------------------------------------------------------------------------------------------------
Short leasehold 5.9 13.1
-------------------------------------------------------------------------------------------------------------------------------
54.4 87.2
-------------------------------------------------------------------------------------------------------------------------------
Plant and equipment net book value includes(pound)0.7m (2000:(pound)1.4m) of
leased assets.
41 Enodis annual report
Notes to the accounts
12 Tangible fixed assets continued
--------------------------------------------------------------------------------
Plant and Plant and
equipment equipment
owned owned
2001 2000
(pound)m (pound)m
--------------------------------------------------------------------------------
b) Company:
--------------------------------------------------------------------------------
Cost:
--------------------------------------------------------------------------------
At the beginning of the period 1.6 1.0
--------------------------------------------------------------------------------
Additions 0.5 0.8
--------------------------------------------------------------------------------
Disposals (0.9) (0.2)
--------------------------------------------------------------------------------
At the end of the period 1.2 1.6
--------------------------------------------------------------------------------
Depreciation:
--------------------------------------------------------------------------------
At the beginning of the period 0.5 0.4
--------------------------------------------------------------------------------
Provided during the period 0.2 0.2
--------------------------------------------------------------------------------
Currency realignment - (0.1)
--------------------------------------------------------------------------------
At the end of the period 0.7 0.5
--------------------------------------------------------------------------------
Net book value at the end of the period 0.5 1.1
--------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000
Group Group Company Company
(pound)m (pound)m (pound)m (pound)m
------------------------------------------------------------------------------------------------------------
c) Capital commitments:
------------------------------------------------------------------------------------------------------------
Contracted commitments for future capital expenditure 2.9 2.2 - -
------------------------------------------------------------------------------------------------------------
13 Fixed asset investments
-----------------------------------------------------------------------------------------------------------------------------------
Joint ventures and associated undertakings
Share of Other unlisted 2001 2000
net assets Goodwill Total investments Own shares Total Total
(pound)m (pound)m (pound)m (pound)m (pound)m (pound)m (pound)m
-----------------------------------------------------------------------------------------------------------------------------------
a) Group:
-----------------------------------------------------------------------------------------------------------------------------------
At the beginning of the period 1.8 1.2 3.0 2.1 2.4 7.5 7.7
-----------------------------------------------------------------------------------------------------------------------------------
Acquisitions and additions 0.2 - 0.2 - - 0.2 0.5
-----------------------------------------------------------------------------------------------------------------------------------
Disposals - - - (0.1) - (0.1) (0.7)
-----------------------------------------------------------------------------------------------------------------------------------
At the end of the period 2.0 1.2 3.2 2.0 2.4 7.6 7.5
-----------------------------------------------------------------------------------------------------------------------------------
Amounts written off:
-----------------------------------------------------------------------------------------------------------------------------------
At the beginning of the period - - - 0.3 - 0.3 0.1
-----------------------------------------------------------------------------------------------------------------------------------
Written off in the period - - - - 1.1 1.1 0.2
-----------------------------------------------------------------------------------------------------------------------------------
At the end of the period - - - 0.3 1.1 1.4 0.3
-----------------------------------------------------------------------------------------------------------------------------------
Net book value at the end of the period 2.0 1.2 3.2 1.7 1.3 6.2 7.2
-----------------------------------------------------------------------------------------------------------------------------------
Own shares comprise 1,269,341 ordinary shares of the Company (2000: 1,337,341),
held in an ESOP trust. At 29 September 2001 the market value of the shares was
less than cost. Accordingly, a provision has been charged to restructuring costs
in respect of a diminution in value. The market value of the shares held by the
trust at 29 September 2001 was (pound)1.0m.
42 Enodis annual report
Notes to the accounts
13 Fixed asset investments continued
-----------------------------------------------------------------------------------------------------------------------------------
Group undertakings
Shares at 2001 2000
valuation Loans Own shares Total Total
(pound)m (pound)m (pound)m (pound)m (pound)m
-----------------------------------------------------------------------------------------------------------------------------------
b) Company:
-----------------------------------------------------------------------------------------------------------------------------------
At the beginning of the period 608.9 295.6 2.4 906.9 827.6
-----------------------------------------------------------------------------------------------------------------------------------
Additions 10.0 - - 10.0 80.7
-----------------------------------------------------------------------------------------------------------------------------------
Recoveries - (8.1) - (8.1) (0.7)
-----------------------------------------------------------------------------------------------------------------------------------
Reclassifications - (1.4) - (1.4) -
-----------------------------------------------------------------------------------------------------------------------------------
Provisions - - (1.1) (1.1) -
-----------------------------------------------------------------------------------------------------------------------------------
Disposals (100.7) - - (100.7) (0.7)
-----------------------------------------------------------------------------------------------------------------------------------
At the end of the period 518.2 286.1 1.3 805.6 906.9
-----------------------------------------------------------------------------------------------------------------------------------
Details of principal subsidiaries and significant investment and their
activities are shown in note 28.
14 Stocks
--------------------------------------------------------------------------------------------
2001 2000 2001 2000
Group Group Company Company
(pound)m (pound)m (pound)m (pound)m
--------------------------------------------------------------------------------------------
Raw materials and consumables 42.2 45.9 - -
--------------------------------------------------------------------------------------------
Work in progress 15.7 17.0 - -
--------------------------------------------------------------------------------------------
Finished goods 36.4 81.5 - -
--------------------------------------------------------------------------------------------
94.3 144.4 - -
--------------------------------------------------------------------------------------------
Property 11.3 8.7 3.6 4.3
--------------------------------------------------------------------------------------------
105.6 153.1 3.6 4.3
--------------------------------------------------------------------------------------------
At the period end the Directors are not aware of any significant difference
between book value and replacement value of stocks.
15 Debtors
----------------------------------------------------------------------------------------------------
2001 2000 2001 2000
Group Group Company Company
(pound)m (pound)m (pound)m (pound)m
----------------------------------------------------------------------------------------------------
Trade debtors 149.6 181.5 0.2 0.3
----------------------------------------------------------------------------------------------------
Amounts due from subsidiary entities - - 922.7 575.5
----------------------------------------------------------------------------------------------------
Other debtors 23.6 21.8 2.3 1.4
----------------------------------------------------------------------------------------------------
Prepayments and accrued income 4.3 12.5 0.2 1.0
----------------------------------------------------------------------------------------------------
Current tax 3.2 5.3 3.2 5.2
----------------------------------------------------------------------------------------------------
180.7 221.1 928.6 583.4
----------------------------------------------------------------------------------------------------
Vendor loan note 20.0 - 20.0 -
----------------------------------------------------------------------------------------------------
200.7 221.1 948.6 583.4
----------------------------------------------------------------------------------------------------
The vendor loan note (see note 4b) is repayable in 2009 or on a sale or public
offering of Nobia AB. The loan is subordinated to Nobia AB's bank and mezzanine
debt and interest is payable to Enodis at 3.5% above LIBOR.
43 Enodis annual report
Notes to the accounts
16 Creditors falling due within one year
----------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000
Group Group Company Company
(pound)m (pound)m (pound)m (pound)m
----------------------------------------------------------------------------------------------------------------------
a) Borrowings:
----------------------------------------------------------------------------------------------------------------------
Term loan - 84.6 - -
----------------------------------------------------------------------------------------------------------------------
Deferred financing costs (1.1) (1.2) - -
----------------------------------------------------------------------------------------------------------------------
Bank loans and overdrafts 2.7 6.3 - -
----------------------------------------------------------------------------------------------------------------------
Other current borrowings 0.7 - - -
----------------------------------------------------------------------------------------------------------------------
Obligations under finance leases (note 27) 0.1 0.7 - -
----------------------------------------------------------------------------------------------------------------------
Total (note 18) 2.4 90.4 - -
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000
Group Group Company Company
(pound)m (pound)m (pound)m (pound)m
----------------------------------------------------------------------------------------------------------------------
b) Other creditors:
----------------------------------------------------------------------------------------------------------------------
Trade creditors 81.8 102.2 3.2 1.2
----------------------------------------------------------------------------------------------------------------------
Other creditors 27.2 31.4 7.7 3.5
----------------------------------------------------------------------------------------------------------------------
Amounts due to subsidiary entities - - 919.7 974.2
----------------------------------------------------------------------------------------------------------------------
Current tax 21.5 20.8 - -
----------------------------------------------------------------------------------------------------------------------
Other taxes and social security 2.9 6.2 0.6 0.3
----------------------------------------------------------------------------------------------------------------------
Accruals and deferred income 91.7 93.2 2.2 1.7
----------------------------------------------------------------------------------------------------------------------
Dividend payable - 23.1 - 23.1
----------------------------------------------------------------------------------------------------------------------
225.1 276.9 933.4 1,004.0
----------------------------------------------------------------------------------------------------------------------
17 Creditors falling due after more than one year
----------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000
Group Group Company Company
(pound)m (pound)m (pound)m (pound)m
----------------------------------------------------------------------------------------------------------------------
Term loan - 287.3 - -
----------------------------------------------------------------------------------------------------------------------
Revolving multi-currency loan facility 387.5 64.5 387.5 57.8
----------------------------------------------------------------------------------------------------------------------
Deferred financing costs (2.9) (4.5) (2.9) -
----------------------------------------------------------------------------------------------------------------------
Other loans 13.1 18.8 - -
----------------------------------------------------------------------------------------------------------------------
Obligations under finance leases (note 27) 1.2 0.5 - -
----------------------------------------------------------------------------------------------------------------------
398.9 366.6 384.6 57.8
----------------------------------------------------------------------------------------------------------------------
44 Enodis annual report
Notes to the accounts
18 Total borrowings
----------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000
Group Group Company Company
(pound)m (pound)m (pound)m (pound)m
----------------------------------------------------------------------------------------------------------------------
Term loan - 371.9 - -
----------------------------------------------------------------------------------------------------------------------
Revolving multi-currency loan facility 387.5 64.5 387.5 57.8
----------------------------------------------------------------------------------------------------------------------
Deferred financing costs (4.0) (5.7) (4.0) -
----------------------------------------------------------------------------------------------------------------------
Bank loans and overdrafts 3.2 6.3 - -
----------------------------------------------------------------------------------------------------------------------
Other loans 13.3 18.8 - -
----------------------------------------------------------------------------------------------------------------------
400.0 455.8 383.5 57.8
----------------------------------------------------------------------------------------------------------------------
Obligations under finance leases 1.3 1.2 - -
----------------------------------------------------------------------------------------------------------------------
401.3 457.0 383.5 57.8
----------------------------------------------------------------------------------------------------------------------
Due within one year 2.4 90.4 - -
----------------------------------------------------------------------------------------------------------------------
Due after more than one year 398.9 366.6 383.5 57.8
----------------------------------------------------------------------------------------------------------------------
401.3 457.0 383.5 57.8
----------------------------------------------------------------------------------------------------------------------
An analysis of the maturity of debt is given in note 19.
On 12 March 2001, the Company entered into a new revolving multi-currency
facility ("The Facility") to replace the previous facility that commenced in
August 1999. The Facility, which was partly drawn down at the balance sheet
date, bears interest at 1.375% above LIBOR (increasing to 2.25% from October
2001). The loans are guaranteed by the Company and a number of the major
subsidiaries within the Group. The Facility of (pound)600m was reduced by
(pound)100m on 10 July 2001 following the disposal of the Building and Consumer
Product business; the remaining (pound)500m Facility matures in March 2006.
Included in debt due after more than one year is (pound)387.5m drawn under the
Facility, repayable in March 2006. The Facility is underwritten by two banks
pending syndication. The underwriting banks retain the right to alter the
structure of the Facility to achieve a successful syndication. The underwriting
banks have confirmed they will not exercise their right in such a way as to
cause repayment within one year.
On 20 November 2001, the Company and its principal subsidiaries entered into an
agreement to grant the underwriting banks a fixed and floating charge over the
Group's assets. Other loans consist primarily of (pound)11.3m of Industrial
Revenue Bonds (2000: (pound)15.7m). The Industrial Revenue Bonds are at
favourable rates of interest, set periodically by reference to market rates.
These bonds incurred rates of interest between 2.0% and 5.7% during the period.
19 Financial instruments
An explanation of the Group's treasury policy and controls is included in the
Financial review on pages 16 to 19. The Group does not trade in financial
instruments. Short-term debtors and creditors have been omitted from all
disclosures other than the currency profile.
a) Maturity profile of financial liabilities
----------------------------------------------------------------------------------------------------------------------------
2001 2000
Bank Bank
borrowings borrowings
and and
debentures Other Total debentures Other Total
(pound)m (pound)m (pound)m (pound)m (pound)m (pound)m
----------------------------------------------------------------------------------------------------------------------------
Within one year or less or on demand 1.6 0.8 2.4 89.7 0.7 90.4
----------------------------------------------------------------------------------------------------------------------------
More than one year but not more than two years 384.6 1.1 385.7 83.5 0.3 83.8
----------------------------------------------------------------------------------------------------------------------------
More than two years but not more than five years 0.5 2.3 2.8 263.8 6.7 270.5
----------------------------------------------------------------------------------------------------------------------------
More than five years - 10.4 10.4 - 12.3 12.3
----------------------------------------------------------------------------------------------------------------------------
Gross financial liabilities 386.7 14.6 401.3 437.0 20.0 457.0
----------------------------------------------------------------------------------------------------------------------------
In the maturity analysis of the Group's financial liabilities "Other" includes
liabilities shown as other creditors and obligations under finance leases. Debt
more than five years of (pound)10.4m (2000: (pound)12.3m) principally comprises
Industrial Revenue Bonds with maturities ranging between 2007 and 2020.
45 Enodis annual report
Notes to the accounts
19 Financial instruments continued
The Group had the following undrawn borrowing facilities at the end of the
period:
--------------------------------------------------------------------------------
2001 2000
(pound)m (pound)m
--------------------------------------------------------------------------------
Expiry date
--------------------------------------------------------------------------------
In more than two years 106.9 138.4
--------------------------------------------------------------------------------
b) Interest rate profile: financial liabilities
--------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Non-interest
bearing
Fixed Weighted weighted
weighted average average
Semi-fixed Non-interest average period at period until
Total Floating rate Fixed rate rate bearing interest rate fixed rate maturity
Financial liabilities (pound)m (pound)m (pound)m (pound)m (pound)m % Years Years
-----------------------------------------------------------------------------------------------------------------------------------
Sterling 11.2 11.2 - - - - - -
-----------------------------------------------------------------------------------------------------------------------------------
US$ 349.6 280.7 68.9 - - 6.3 1.2 -
-----------------------------------------------------------------------------------------------------------------------------------
Euro 39.4 39.4 - - - - - -
-----------------------------------------------------------------------------------------------------------------------------------
Other 1.1 0.7 0.4 - - 8.5 2.2 -
-----------------------------------------------------------------------------------------------------------------------------------
At 29 September 2001 401.3 332.0 69.3 - - 6.3 1.2 -
-----------------------------------------------------------------------------------------------------------------------------------
Sterling 16.5 15.3 1.0 - 0.2 3.8 4.1 2.0
-----------------------------------------------------------------------------------------------------------------------------------
US$ 429.7 267.8 91.3 67.6 3.0 6.5 2.1 1.0
-----------------------------------------------------------------------------------------------------------------------------------
Euro 10.0 9.0 1.0 - - 4.9 7.0 -
-----------------------------------------------------------------------------------------------------------------------------------
Other 0.8 0.6 0.2 - - 7.0 3.1 -
-----------------------------------------------------------------------------------------------------------------------------------
At 30 September 2000 457.0 292.7 93.5 67.6 3.2 6.4 2.2 1.1
-----------------------------------------------------------------------------------------------------------------------------------
The floating rate financial liabilities comprised bank loans and overdrafts
bearing interest at rates based on local money market rates. The semi-fixed
hedging principally comprised interest rate caps and interest rate collars. The
fixed rate hedging principally comprised interest rate swaps.
c) Interest rate profile: financial assets
---------------------------------------------------------------------------------------------
Non-interest
bearing
weighted
average
Non-interest period until
Total Floating rate bearing maturity
Financial assets (pound)m (pound)m (pound)m Years
---------------------------------------------------------------------------------------------
Sterling 27.0 22.7 4.3 -
---------------------------------------------------------------------------------------------
US$ 12.1 11.5 0.6 -
---------------------------------------------------------------------------------------------
Euro 14.9 10.3 4.6 -
---------------------------------------------------------------------------------------------
Other 7.4 7.3 0.1 -
---------------------------------------------------------------------------------------------
At 29 September 2001 61.4 51.8 9.6 -
---------------------------------------------------------------------------------------------
Sterling 6.1 5.7 0.4 -
---------------------------------------------------------------------------------------------
US$ 14.1 5.9 8.2 -
---------------------------------------------------------------------------------------------
Euro 8.8 1.4 7.4 -
---------------------------------------------------------------------------------------------
Other 1.6 1.2 0.4 -
---------------------------------------------------------------------------------------------
At 30 September 2000 30.6 14.2 16.4 -
---------------------------------------------------------------------------------------------
The floating rate financial assets comprise a (pound)20m vendor loan note to
Nobia AB due June 2009 bearing interest at a rate of LIBOR plus 3.5% and bank
deposits bearing interest at rates based on local money market rates.
The non-interest bearing financial assets mainly comprise equity return
investments and uncleared receipts.
46 Enodis annual report
Notes to the accounts
19 Financial instruments continued
d) Fair values of financial assets and liabilities Set out below is a comparison
by category of book values and fair values of all the Group's financial assets
and financial liabilities at the period end.
-------------------------------------------------------------------------------------------------------------------------
Book value Fair value
Primary financial instruments held or issued to finance the Group's operations (pound)m (pound)m
-------------------------------------------------------------------------------------------------------------------------
Short-term borrowings and current portion of long-term borrowings (1.6) (1.6)
-------------------------------------------------------------------------------------------------------------------------
Long-term borrowings (385.1) (385.1)
-------------------------------------------------------------------------------------------------------------------------
Cash deposits 39.4 39.4
-------------------------------------------------------------------------------------------------------------------------
Investments 2.0 1.7
-------------------------------------------------------------------------------------------------------------------------
Vendor loan note 20.0 20.0
-------------------------------------------------------------------------------------------------------------------------
Other financial liabilities (14.6) (14.6)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Book value Fair value
Derivative financial instruments held or issued to manage the interest rate and currency (pound)m (pound)m
profile
-------------------------------------------------------------------------------------------------------------------------
Interest rate swaps and similar instruments - (4.9)
-------------------------------------------------------------------------------------------------------------------------
Interest rate caps and collars - -
-------------------------------------------------------------------------------------------------------------------------
Forward foreign currency contracts 4.3 4.3
-------------------------------------------------------------------------------------------------------------------------
The fair value of the interest rate swaps, caps and collars and foreign exchange
contracts have been estimated by reference to prices available from the markets
on which the instruments are traded. All other fair values shown above have been
calculated by discounting cash flows at prevailing interest rates.
The fair value of short-term deposits and borrowings approximates to the
carrying amount because of the short-term maturity of these instruments. The
fair value of the long-term borrowings approximates to the carrying value due to
the debt being subject to floating rates or short-term fixed rates.
e) Hedging As explained in the Financial review on pages 16 to 19, the Group's
policy is to hedge the following exposures:
- Interest rate risk - using interest rate swaps, caps and collars and forward
rate agreements.
- Balance sheet translation risk - using forward foreign exchange contracts and
borrowings in functional currencies.
Gains and losses on instruments used for hedging are not recognised until the
exposure that is being hedged is likely to be recognised. Unrecognised gains and
losses on instruments used for hedging are as follows:
-------------------------------------------------------------------------------------------------------------------------
Gains Losses
2001 2000 2001 2000
(pound)m (pound)m (pound)m (pound)m
-------------------------------------------------------------------------------------------------------------------------
Unrecognised gains and losses on hedges to the period end 4.3 0.9 (4.9) (0.7)
-------------------------------------------------------------------------------------------------------------------------
f) Currency profile The main functional currencies of the Group are Sterling and
US$. The following analysis of net monetary assets and liabilities shows the
Group's currency exposures after the effects of forward contracts used to manage
currency exposure. The amounts shown represent the transactional exposures that
give rise to the net currency gains and losses recognised in the profit and loss
account. Such exposures comprise the monetary assets and liabilities of the
Group that are not denominated in the operating (or "functional") currency of
the operating units involved.
2001
-------------------------------------------------------------
Other
European
Sterling US$ currencies Other Total
(pound)m (pound)m (pound)m (pound)m (pound)m
--------------------------------------------------------------------------------
Sterling - 0.1 1.2 - 1.3
--------------------------------------------------------------------------------
US$ - - - - -
--------------------------------------------------------------------------------
Other European
currencies - 0.2 0.7 - 0.9
--------------------------------------------------------------------------------
Other - 1.6 - - 1.6
--------------------------------------------------------------------------------
- 1.9 1.9 - 3.8
--------------------------------------------------------------------------------
2000
-------------------------------------------------------------
Other
European
Sterling US$ currencies Other Total
(pound)m (pound)m (pound)m (pound)m (pound)m
-----------------------------------------------------------------------------------
Sterling - 0.2 1.6 - 1.8
-----------------------------------------------------------------------------------
US$ 0.2 - - - 0.2
-----------------------------------------------------------------------------------
Other European
currencies 0.1 2.0 - - 2.1
-----------------------------------------------------------------------------------
Other - 1.0 0.1 0.2 1.3
-----------------------------------------------------------------------------------
0.3 3.2 1.7 0.2 5.4
-----------------------------------------------------------------------------------
47 Enodis annual report
Notes to the accounts
20 Provisions for liabilities and charges
---------------------------------------------------------------------------------------------------------------------------------
Deferred
employee Total
Property Restructuring Pensions benefits Warranty Group Company
(pound)m (pound)m (pound)m (pound)m (pound)m (pound)m (pound)m
---------------------------------------------------------------------------------------------------------------------------------
a) Analysis of movement in provisions:
---------------------------------------------------------------------------------------------------------------------------------
At the beginning of the period 1.0 1.5 3.3 23.1 16.7 45.6 -
---------------------------------------------------------------------------------------------------------------------------------
Charged to profit and loss account 0.1 - 0.3 - 0.6 1.0 -
---------------------------------------------------------------------------------------------------------------------------------
Charged to profit and loss account exceptional
items 2.0 31.1 - 0.2 8.5 41.8 2.0
---------------------------------------------------------------------------------------------------------------------------------
Utilised (0.3) (14.5) (0.8) (0.1) - (15.7) (0.3)
---------------------------------------------------------------------------------------------------------------------------------
Transfer (to)/from other balance sheet categories 1.8 (10.5) - (2.7) (3.4) (14.8) 1.8
---------------------------------------------------------------------------------------------------------------------------------
Currency realignment - 0.3 0.1 0.7 0.1 1.2 -
---------------------------------------------------------------------------------------------------------------------------------
At the end of the period 4.6 7.9 2.9 21.2 22.5 59.1 3.5
---------------------------------------------------------------------------------------------------------------------------------
Property provisions relate primarily to lease payments under onerous contracts.
Restructuring costs relate mainly to costs associated with the changes described
in Note 4 "Exceptional items", and are expected to be utilised within one year.
Pension scheme details are set out in note 25.
Deferred employee benefits relate primarily to deferred compensation plans,
supplemental retirement plans and post retirement benefit plans. It is not
possible to estimate, with certainty, the timing of payments. Warranty
provisions have been recognised for estimated claims under product guarantees.
It is not possible to estimate, with certainty, the timing of payments.
b) Deferred taxation
1 Deferred taxation not provided Given the availability of losses and surplus
ACT within the Group, it is not expected that any tax would be payable if the
Group were to dispose of its land and buildings at their balance sheet values.
No provision has been made for any potential taxation liability that would arise
were the earnings of foreign subsidiary entities to be remitted to the UK.
2 Tax losses The Group has approximately (pound)284m (2000: (pound)280m) of
losses available for offset against future profits, comprising (pound)85m (2000:
(pound)85m) in the UK and (pound)190m (2000: (pound)195m) in the USA with a
further (pound)9m in other countries. In addition the Group has surplus ACT
carried forward of (pound)11.5m (2000: (pound)11.5m).
21 Called up share capital
------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000
Number Number (pound)m (pound)m
------------------------------------------------------------------------------------------------------------------------------
a) Number and value of shares:
------------------------------------------------------------------------------------------------------------------------------
Ordinary shares of 50p each
Authorised 344,200,000 344,200,000 172.1 172.1
------------------------------------------------------------------------------------------------------------------------------
Allotted, called up and fully paid 250,288,950 250,074,985 125.1 125.0
------------------------------------------------------------------------------------------------------------------------------
1,269,341 ordinary shares of the Company (2000: 1,337,341) are held in an
independently managed Executive Share Option Plan ("ESOP trust").
The ESOP trust was established in 1994 when Mourant & Co. were appointed as
trustees to purchase shares in the Company to meet some of the future
obligations under employee option schemes. Shares are distributed to employees
upon exercise of options held by them and payment by them of the exercise price.
The Company finances the ESOP trust by way of an interest free loan (note 13) of
(pound)2.4m.
The ESOP trust has waived the right to receive dividends on all shares held.
Costs are borne by the sponsoring company and written off in the period in which
they are incurred.
--------------------------------------------------------------------------------------------------
Ordinary shares
Number
--------------------------------------------------------------------------------------------------
b) Movement of ordinary shares during the period:
--------------------------------------------------------------------------------------------------
At the beginning of the period 250,074,985
--------------------------------------------------------------------------------------------------
Exercise of share options under the Sharesave Scheme (1992) 193,965
--------------------------------------------------------------------------------------------------
Exercise of share options under the Executive Scheme (1995) 20,000
--------------------------------------------------------------------------------------------------
At the end of the period 250,288,950
--------------------------------------------------------------------------------------------------
The proceeds of the exercises of share options in the period amounted to
(pound)264,816.
48 Enodis annual report
Notes to the accounts
21 Called up share capital continued
c) Option schemes During the period the Company has operated the following
employee option schemes using new shares:
-----------------------------------------------------------------------------------------------
At Number of options At
1 October 29 September
2000 Granted Exercised Lapsed 2001
-----------------------------------------------------------------------------------------------
Sharesave Scheme (1992) 2,341,648 - 193,965 911,144 1,236,539
-----------------------------------------------------------------------------------------------
Executive Scheme (1984)* 116,870 - - - 116,870
-----------------------------------------------------------------------------------------------
Executive Scheme (1995) 3,003,470 221,065 20,000 225,020 2,979,515
-----------------------------------------------------------------------------------------------
Executive Scheme (2001) - 3,753,000 - - 3,753,000
-----------------------------------------------------------------------------------------------
The Company has outstanding at 29 September 2001 the following options to
subscribe for ordinary shares:
-------------------------------------------------------------------------------------------------------------------------
Date from
Price which Last
Year pence exercisable expiry date Number
-------------------------------------------------------------------------------------------------------------------------
Sharesave Scheme (1992) 1994 150.9 01.09.01 01.03.02 133,227
-------------------------------------------------------------------------------------------------------------------------
1995 181.8 01.09.02 01.03.03 38,626
-------------------------------------------------------------------------------------------------------------------------
1996 158.8 01.09.01 01.03.02 70,121
-------------------------------------------------------------------------------------------------------------------------
1996 158.8 01.09.03 01.03.04 20,379
-------------------------------------------------------------------------------------------------------------------------
1997 112.0 01.09.02 01.03.03 150,802
-------------------------------------------------------------------------------------------------------------------------
1997 112.0 01.09.04 01.03.05 148,325
-------------------------------------------------------------------------------------------------------------------------
1998 202.7 01.09.01 01.03.02 46,581
-------------------------------------------------------------------------------------------------------------------------
1998 202.7 01.09.03 01.03.04 60,745
-------------------------------------------------------------------------------------------------------------------------
1998 202.7 01.09.05 01.03.06 27,315
-------------------------------------------------------------------------------------------------------------------------
1999 192.7 01.09.02 01.03.03 106,134
-------------------------------------------------------------------------------------------------------------------------
1999 192.7 01.09.04 01.03.05 125,436
-------------------------------------------------------------------------------------------------------------------------
1999 192.7 01.09.06 01.03.07 21,317
-------------------------------------------------------------------------------------------------------------------------
2000 258.9 01.09.03 01.03.04 107,539
-------------------------------------------------------------------------------------------------------------------------
2000 258.9 01.09.05 01.03.06 119,000
-------------------------------------------------------------------------------------------------------------------------
2000 258.9 01.09.07 01.03.08 60,992
-------------------------------------------------------------------------------------------------------------------------
1,236,539
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Date from
Price which Last
pence exercisable expiry date Number
-------------------------------------------------------------------------------------------------------------------------
Executive Share Scheme (1984)* 95.10 03.02.96 03.02.03 61,989
-------------------------------------------------------------------------------------------------------------------------
222.99 14.02.97 14.02.04 54,881
-------------------------------------------------------------------------------------------------------------------------
116,870
-------------------------------------------------------------------------------------------------------------------------
Executive Share Scheme (1995) 230.50 31.03.98 31.03.05 18,080
-------------------------------------------------------------------------------------------------------------------------
186.00 22.07.99 22.07.06 167,655
-------------------------------------------------------------------------------------------------------------------------
144.00 01.07.00 01.07.07 390,000
-------------------------------------------------------------------------------------------------------------------------
187.50 28.11.00 28.11.07 254,802
-------------------------------------------------------------------------------------------------------------------------
180.00 17.11.01 17.11.08 137,935
-------------------------------------------------------------------------------------------------------------------------
262.90 28.07.02 28.07.09 900,000
-------------------------------------------------------------------------------------------------------------------------
314.00 24.11.02 24.11.09 90,197
-------------------------------------------------------------------------------------------------------------------------
322.20 03.07.03 03.07.10 799,781
-------------------------------------------------------------------------------------------------------------------------
210.00 21.12.03 21.12.10 201,065
-------------------------------------------------------------------------------------------------------------------------
216.28 21.12.03 21.12.10 20,000
-------------------------------------------------------------------------------------------------------------------------
2,979,515
-------------------------------------------------------------------------------------------------------------------------
Executive Share Scheme (2001) 181.00 22.01.04 22.01.11 2,753,919
-------------------------------------------------------------------------------------------------------------------------
210.45 22.01.04 22.01.11 109,913
-------------------------------------------------------------------------------------------------------------------------
181.00 12.06.04 12.06.11 203,238
-------------------------------------------------------------------------------------------------------------------------
101.00 10.09.04 10.09.11 685,930
-------------------------------------------------------------------------------------------------------------------------
3,753,000
-------------------------------------------------------------------------------------------------------------------------
*No further options can be granted under this scheme.
The maximum aggregate number of shares over which options may currently be
granted under all schemes cannot exceed 10% of the nominal share capital of the
Company on the date of grant.
49 Enodis annual report
Notes to the accounts
22 Reserves
Movements on reserves during the period were as follows:
-----------------------------------------------------------------------------------------------------------
Share
premium Revaluation Profit and loss
account reserve account
(pound)m (pound)m (pound)m
-----------------------------------------------------------------------------------------------------------
Group:
-----------------------------------------------------------------------------------------------------------
At the beginning of the period 238.9 - (150.1)
-----------------------------------------------------------------------------------------------------------
Retained loss for the period - - (120.7)
-----------------------------------------------------------------------------------------------------------
Negative goodwill written back on disposal of subsidiaries - - (4.4)
-----------------------------------------------------------------------------------------------------------
Shares issued 0.1 - -
-----------------------------------------------------------------------------------------------------------
Currency realignment (note c) - - (1.7)
-----------------------------------------------------------------------------------------------------------
At the end of the period 239.0 - (276.9)
-----------------------------------------------------------------------------------------------------------
Company:
-----------------------------------------------------------------------------------------------------------
At the beginning of the period 238.9 120.0 (48.8)
-----------------------------------------------------------------------------------------------------------
Retained profit for the period - - 6.8
-----------------------------------------------------------------------------------------------------------
Shares issued 0.1 - -
-----------------------------------------------------------------------------------------------------------
At the end of the period 239.0 120.0 (42.0)
-----------------------------------------------------------------------------------------------------------
a) The Directors have revalued the Company's investments in subsidiary entities
at 2 October 1999 in the manner set out in the accounting policies note on page
33. The Directors have considered the value of all the fixed assets and are
satisfied that these are worth, in total, not less than the aggregate amount at
which they are stated in the Company's accounts. Accordingly, in accordance with
Section 275 of the Companies Act 1985 the aggregate provision does not fall to
be classified as a realised loss and therefore distributable reserves of the
Company are (pound)43.3m (2000: (pound)36.5m) as analysed below:
--------------------------------------------------------------------------------------------
2001 2000
(pound)m (pound)m
--------------------------------------------------------------------------------------------
Profit and loss account (42.0) (48.8)
--------------------------------------------------------------------------------------------
Provisions against investments in subsidiary entities 85.3 85.3
--------------------------------------------------------------------------------------------
Distributable reserves 43.3 36.5
--------------------------------------------------------------------------------------------
b) As permitted by Section 230 of the Companies Act 1985, a separate profit and
loss account for the parent company is not presented. The profit for the period
in the accounts of the parent company before dividends is (pound)11.6m (2000:
(pound)39.4m loss).
c) The currency realignment arises on the translation of interests in the
opening equity of overseas subsidiary entities and associated undertakings,
long-term foreign borrowings used to finance overseas investments, and on the
translation of the profit and loss account for the period to closing rate.
d) Goodwill written off directly against profit and loss reserve amounts to
(pound)335.9m (2000: (pound)331.5m)
23 Reconciliation of movement in equity shareholders' funds
----------------------------------------------------------------------------------------------------
2001 2000
(pound)m (pound)m
----------------------------------------------------------------------------------------------------
Profit/(loss) for the period (115.9) 69.3
----------------------------------------------------------------------------------------------------
Negative goodwill written back on disposals, previously written off (4.4) -
----------------------------------------------------------------------------------------------------
Currency translation differences on foreign currency net investments (1.7) 1.3
----------------------------------------------------------------------------------------------------
Total recognised gains and losses (122.0) 70.6
----------------------------------------------------------------------------------------------------
Dividends (4.8) (33.9)
----------------------------------------------------------------------------------------------------
Shares issued 0.2 92.2
----------------------------------------------------------------------------------------------------
Net increase/(decrease) in equity shareholders' funds in the period (126.6) 128.9
----------------------------------------------------------------------------------------------------
Opening equity shareholders' funds 213.8 84.9
----------------------------------------------------------------------------------------------------
Closing equity shareholders' funds 87.2 213.8
----------------------------------------------------------------------------------------------------
50 Enodis annual report
Notes to the accounts
24 Acquisitions
On 11 November 2000, the Group acquired the entire share capital of Jackson MSC,
Inc ("Jackson"), for consideration of $36.2m including costs. Jackson is
principally involved in the manufacturing and supply of industrial dishwashing
equipment.
Details of the acquisition are shown in the table below. Provisional fair value
adjustments reflect the circumstances and conditions at the date of acquisition
and principally relate to the write-off of obsolete stock, additional cost
accruals and the write-off of goodwill carried on the balance sheet.
------------------------------------------------------------------------------------
Fair value
Book value Adjustment Total
(pound)m (pound)m (pound)m
------------------------------------------------------------------------------------
Goodwill 0.6 (0.6) -
------------------------------------------------------------------------------------
Fixed assets 2.4 - 2.4
------------------------------------------------------------------------------------
Stock 5.0 (0.6) 4.4
------------------------------------------------------------------------------------
Other current assets 1.4 (0.3) 1.1
------------------------------------------------------------------------------------
Current liabilities (2.0) (0.3) (2.3)
------------------------------------------------------------------------------------
Loans (0.7) - (0.7)
------------------------------------------------------------------------------------
Net assets/(liabilities) acquired 6.7 (1.8) 4.9
------------------------------------------------------------------------------------
Consideration:
------------------------------------------------------------------------------------
Paid in cash 24.4
------------------------------------------------------------------------------------
Costs 0.9
------------------------------------------------------------------------------------
Total 25.3
------------------------------------------------------------------------------------
Goodwill arising 20.4
------------------------------------------------------------------------------------
The subsidiary acquired during the year contributed (pound)2.9m to the Group's
net operating cash flows, paid no interest nor taxation and utilised (pound)0.4m
net for capital expenditure.
The Group made other acquisitions totalling (pound)0.5m in the period.
51 Enodis annual report
Notes to the accounts
25 Group pension schemes
The Group operates a number of pension schemes of both the defined benefit and
defined contribution type. The total pension cost for the period was (pound)4.5m
(2000: (pound)4.7m). There is a provision for pension costs of (pound)2.9m
(2000: (pound)3.3m) in the balance sheet as at 29 September 2001 arising from
the accumulated difference between the contributions paid and the corresponding
pension costs.
The total employer contributions payable to the Group's defined contribution
schemes over the period was (pound)3.1m (2000: (pound)2.7m). At 29 September
2001, there were no outstanding or prepaid contributions (2000: nil).
The Group currently accounts for pensions under SSAP24. Under the transitional
arrangements for FRS17, the Group is required to provide additional disclosures
relating to its pension schemes. These are provided below.
SSAP24
a) A number of the Group's full time UK employees as at 29 September 2001 are
members of defined benefit arrangements with assets held in separate trustee
administered funds. The principal defined benefit scheme in the UK is the
Berisford (1948) Pension Scheme ("the Berisford Scheme"). A valuation was
carried out by a qualified independent actuary at 31 March 2001 using the
attained age method. Following the valuation it was agreed that the employer
would pay contributions at the rate of 0% of pensionable salaries.
The assumptions which have the most significant effect on the results of the
valuation are those relating to the rate of return on investments and the rates
of increase in salaries and pensions. The assumptions used in the valuation
were:
--------------------------------------------------------------
Investment returns 5.5% p.a.
--------------------------------------------------------------
Increase in:
--------------------------------------------------------------
Salaries 4.5% p.a.
--------------------------------------------------------------
Present and future pensions 5.0% p.a.
--------------------------------------------------------------
The total market value of the Berisford Scheme's assets at the last valuation
date, together with their funding level as a percentage of accrued benefits
after allowing for future increases in earnings, was (pound)86.4m (117.9%).
b) Enodis Corporation maintains a 401(k) plan which covers most of its
employees. It had formerly maintained several frozen defined benefit pension
plans. These plans have been terminated with the approval of the appropriate
regulatory authorities, and all of the liabilities to participants and
beneficiaries have been settled.
c) Scotsman Industries maintained a number of pension and 401(k) plans which
cover substantially all of its employees. Benefits under defined benefit plans
for hourly paid employees are based on a fixed multiple of the length of service
and for salaried employees are based on a percentage of earnings during the
period of their employment. All pension plans have been funded in accordance
with the Employee Retirement Income Security Act of 1974.
Following the last valuations of the plans at 1 January 2001, it was agreed that
the employer would pay contributions at the rate of 0% of pensionable salaries.
The following assumptions were used to develop net pension costs for pension
plans in the USA in the 52 weeks ended 29 September 2001:-
--------------------------------------------------------------
Discount rate 8.5% p.a.
--------------------------------------------------------------
Future salary increases not applicable
--------------------------------------------------------------
Future pension increases nil
--------------------------------------------------------------
Actuarial gains and losses are amortised over the estimated future working
lifetime of employees.
The total market value of the US plans' assets as at 29 September 2001 was
(pound)40.4m. The funding level of the US plans as a percentage of accrued
benefits, after allowing for future increases in earnings, was 136%.
FRS17
The figures below for the Berisford Scheme have been based on a full actuarial
valuation as at 31 March 2001, updated to the current year end. For the pension
plans in the USA, the figures have been based on full actuarial valuations as at
1 January 2001, updated to the current year end.
The assets in the Group's defined benefit schemes and the expected rate of
return were:
------------------------------------------------------------------------------------------------------------------
Berisford Scheme Pension Plans in the USA
Long term Long term
rate of return Value at rate of return Value at
expected at 29 September expected at 29 September
29 September 2001 29 September 2001
2001 (pound)m 2001 (pound)m
------------------------------------------------------------------------------------------------------------------
Asset:
------------------------------------------------------------------------------------------------------------------
Equities 6.49% 43.6 10.175% 17.2
------------------------------------------------------------------------------------------------------------------
Corporate Bonds 6.09% 12.8 6.5% 7.6
------------------------------------------------------------------------------------------------------------------
Government Bonds 4.49% 9.8 5.6% 5.0
------------------------------------------------------------------------------------------------------------------
Property 6.49% 7.5 6.5% 2.3
------------------------------------------------------------------------------------------------------------------
Other 4.49% 1.7 6.5% 3.0
------------------------------------------------------------------------------------------------------------------
52 Enodis annual report
Notes to the accounts
25 Group pension schemes continued
The liabilities of the Group's schemes at 29 September 2001 were calculated on
the following bases as required under FRS17:
------------------------------------------------------------------------------------------------------------
Post retirement plans in the USA
Berisford Scheme Pension Other
------------------------------------------------------------------------------------------------------------
Assumptions at 29 September 2001
------------------------------------------------------------------------------------------------------------
Discount rate 6.09% 6.75% 7.5%
------------------------------------------------------------------------------------------------------------
Not Not
Rate of increase in salaries 4.5% applicable applicable
------------------------------------------------------------------------------------------------------------
Not
Rate of increase in pensions in payment 5.0% 0% applicable
------------------------------------------------------------------------------------------------------------
Not
Rate of increase in pensions in deferment 3.0% 0% applicable
------------------------------------------------------------------------------------------------------------
Not Not
Medical cost inflation applicable applicable 6.5% - 5.0%
------------------------------------------------------------------------------------------------------------
Not
Price inflation 3.0% 2.75% applicable
------------------------------------------------------------------------------------------------------------
The balance sheet position for the Group's schemes as calculated under FRS17 at
29 September 2001 was as follows:
---------------------------------------------------------------------------------------------------------------------------
Post retirement benefit plans in the USA
Pension plans Pension plans
with assets with liabilities Post
Berisford in excess in excess retirement
Scheme of liabilities of assets medical plans
(pound)m (pound)m (pound)m (pound)m
---------------------------------------------------------------------------------------------------------------------------
Fair value of assets 75.4 35.1 Nil Nil
---------------------------------------------------------------------------------------------------------------------------
Present value of scheme liabilities (69.5) (33.7) (3.9) (2.9)
---------------------------------------------------------------------------------------------------------------------------
Surplus or deficit in the scheme 5.9 1.4 (3.9) (2.9)
---------------------------------------------------------------------------------------------------------------------------
Unrecognisable surplus in the scheme - (0.7) - -
---------------------------------------------------------------------------------------------------------------------------
Net pension asset 5.9 0.7 (3.9) (2.9)
---------------------------------------------------------------------------------------------------------------------------
26 Contingencies
(i) Enodis Corporation has been named in a number of lawsuits throughout the
United States in which the plaintiffs seek to hold it liable for the alleged
obligations of its former subsidiary, Consolidated Industries Corp. of
Lafayette, Indiana ("Consolidated") by reason of Consolidated's design and
manufacture of some 870,000 defective home furnaces. Consolidated's alleged
liability in respect of these furnaces is potentially in the range of nil to
$600m. Enodis Corporation sold Consolidated to an unrelated party in 1998. The
plaintiffs all contend that Enodis Corporation is the alter ego of Consolidated
and therefore liable for its debts. The plaintiffs are also seeking to recover
approximately $30m of Consolidated's revenues that were transferred to Enodis
Corporation for various reasons. The issue of whether Consolidated and/or Enodis
Corporation has insurance coverage for some or all of these contingent
liabilities is also the subject of litigation. The plaintiffs in these actions
who are seeking to hold Enodis Corporation accountable for the liabilities of
Consolidated include Daniel L. Freeland, in his capacity as trustee of the
Chapter 7 Estate of Consolidated, the Trane Company, a division of America
Standard, Amana, LLC, Bard Manufacturing Company and Janet Pearce, on behalf of
a class of homeowners claiming to be entitled to have their furnaces replaced
free of charge. Enodis Corporation has thoroughly investigated these claims and
has been advised that they are without merit and is defending them vigorously.
In the event of an outcome adverse to Enodis Corporation, it is currently
unclear to what extent, if any, the liability of Enodis Corporation would be
covered by insurance.
(ii) During the year the Company settled the IMR federal and state court actions
which were disclosed in the 2000 Annual Report and Accounts (see note 4).
(iii) There are customary tax and other warranties and indemnities in respect of
companies and businesses sold in previous years.
53 Enodis annual report
Notes to the accounts
27 Lease obligations
---------------------------------------------------------------------------------------------------------------
2001 2000
Group Group
(pound)m (pound)m
---------------------------------------------------------------------------------------------------------------
a) The future minimum payments to which the Group is committed under finance
leases are as follows:
---------------------------------------------------------------------------------------------------------------
Within one year 0.1 0.7
---------------------------------------------------------------------------------------------------------------
Between one and two years 1.2 0.5
---------------------------------------------------------------------------------------------------------------
Between two and five years 0.2 0.2
---------------------------------------------------------------------------------------------------------------
1.5 1.4
---------------------------------------------------------------------------------------------------------------
Finance charges allocated to future periods (0.2) (0.2)
---------------------------------------------------------------------------------------------------------------
1.3 1.2
---------------------------------------------------------------------------------------------------------------
Disclosed in the accounts as:
---------------------------------------------------------------------------------------------------------------
Creditors due within one year (note 16) 0.1 0.7
---------------------------------------------------------------------------------------------------------------
Creditors due after more than one year (note 17) 1.2 0.5
---------------------------------------------------------------------------------------------------------------
1.3 1.2
---------------------------------------------------------------------------------------------------------------
The Company had no commitments under finance leases (2000:(pound)nil).
---------------------------------------------------------------------------------------------------------------
2001 2000
Group Group
(pound)m (pound)m
---------------------------------------------------------------------------------------------------------------
b) Operating lease payments which the Group is committed to make during the next
financial year are analysed as follows: Leases expiring:
---------------------------------------------------------------------------------------------------------------
Within one year 3.1 2.9
---------------------------------------------------------------------------------------------------------------
Between one and two years 3.9 2.7
---------------------------------------------------------------------------------------------------------------
Between two and five years 3.8 7.3
---------------------------------------------------------------------------------------------------------------
Thereafter 9.5 17.1
---------------------------------------------------------------------------------------------------------------
20.3 30.0
---------------------------------------------------------------------------------------------------------------
The Company had annual commitments under operating leases expiring after more
than five years of (pound)2.7m (2000: (pound)0.8m).
54 Enodis annual report
Notes to the accounts
28 Principal subsidiaries and significant investment
-----------------------------------------------------------------------------------------------------------------------------------
Percentage
held and
Country of voting rights at
incorporation 29 September
and operation 2001 Details of holding of share capital
-----------------------------------------------------------------------------------------------------------------------------------
Food Equipment
Aladdin Temp-Rite Canada, Inc. Canada 100 700,100 no par value common stock
Aladdin Temp-Rite LLC USA 100 n/a
Aladdin Temp-Rite Pty. Ltd Australia 100 1,184,115 AU$1 ordinary shares
Aladdin Temp-Rite Puerto Rico Inc. Puerto Rico 100 1,000 no par value common stock
Austral Refrigeration Pty. Ltd Australia 100 40,993 AU$1 ordinary shares
Belshaw Bros, Inc USA 100 200 no par value common stock
Booth, Inc. USA 100 1,000 no par value common stock
Castel MAC S.p.A Italy 100 8,300,000 0.52 Euro shares
Cleveland Range, Inc. USA 100 3,000 no par value common stock
Cleveland Range Ltd Canada 100 32,449 Class A no par value shares
Convotherm Elektrogerate GmbH Germany 91 2,730,000 DM1 shares
Convotherm Limited England 91 6,000(pound)1 ordinary shares
Convotherm Singapore Pte Ltd Singapore 100 100,000 $1 shares
Cowley Refrigeration Ltd New Zealand 60 210,000 NZ$1 shares
Enodis Corporation USA 100 100 US$.01 par value common stock
Enodis Deutschland GmbH Germany 100 50,000 DM shares
Enodis France SA France 100 7,500 FFr 100 shares
Enodis Iberia SA Spain 100 200 Pta 50,000 shares
Enodis UK Limited England 100 5,000(pound)1 ordinary shares
Frimont S.p.A Italy 100 16,000 516.46 Euro shares
Frymaster L.L.C USA 100 n/a
Garland Commercial Industries, Inc. USA 100 10 no par value common stock
Garland Commercial Ranges, Limited Canada 100 2,000 no par value common stock
Guyon Productions SA France 100 50,000 FFr 100 shares
Hartek Awagem Vertriebsges m.b.H Austria 100 1 share of 1,500,000 ATS
Hartek Beverage Handling GmbH Germany 100 1 share of 1,150,000 DM
Jackson MSC Inc. USA 100 100 shares no par value common stock
Kysor Industrial Corporation USA 100 100 US$1 common stock
Kysor//Warren Australia Pty. Limited Australia 100 275,003 AU$1 ordinary share
Lincoln Foodservice Products, Inc. USA 100 1,000 no par value common stock
Merco/Savory, Inc. USA 100 3,000 no par value common stock
Merrychef Holdings Limited England 100 295,000 Class A ordinary shares
100 205,000(pound)1 ordinary shares
Mile High Equipment Company USA 100 200 no par value common stock
New Ton Food Equipment Co Ltd. Thailand 97.2 1,905,120 10 Thai Baht Class A ordinary shares
Sammic SA Spain 100 1.000 Pta 1,000,000 shares
Sammic SARL France 100 3,000 FFr 1,000 shares
Sammic-Equipamientos de Hotelaria, L.d Portugal 99.5 1 participation of Escudos 3,980,000
Scotsman Beverage Systems Limited England 100 8,397,517(pound)1 preference shares
Scotsman Group Inc. USA 100 1,000 US$1 common stock
Scotsman Ice Systems (Shanghai) Company Ltd China 100 1 share of 2,150,000 US$ Shares
Technyform Production SA France 100 2,500 FFr 100 shares
Temp-Rite International GmbH Germany 100 500,000 DM 1 shares
Temp-Rite International Holding B.V Netherlands 100 40 NLG 1,000 shares
Temp-Rite International SA France 100 4,300,000 FF 100 shares
Temp-Rite Kft Hungary 100 3,000,000 HUF 1 shares
The Delfield Company USA 100 100 US$0.01 par value common stock
Vent Master (Europe) Limited England 100 49,000(pound)1 ordinary shares
Viscount Catering Limited England 100 1,500,000(pound)1 ordinary shares
Welbilt Manufacturing (Thailand) Ltd* Thailand 50 9,333,333 10 Thai Baht Class A ordinary shares
Welbilt Walk-Ins, LP USA 100 n/a
Whitlenge Drink Equipment Limited England 100 406,500,000 1p ordinary shares
100 500,000(pound)1 deferred shares
-----------------------------------------------------------------------------------------------------------------------------------
55 Enodis annual report
Notes to the accounts
28 Principal subsidiaries and significant investment
---------------------------------------------------------------------------------------------------------------------------------
Percentage
held and
Country of voting rights at
incorporation 29 September
and operation 2001 Details of holding of share capital
---------------------------------------------------------------------------------------------------------------------------------
Property
Enodis Property Developments Limited England 100 38,343,713(pound)1 ordinary shares
Enodis Investments Limited* England 100 65,775,400 50p ordinary shares
100 145,805,094 50p preferred ordinary shares
---------------------------------------------------------------------------------------------------------------------------------
Investment
C. Czarnikow Limited England 15 150,000(pound)1 ordinary shares
---------------------------------------------------------------------------------------------------------------------------------
The subsidiaries marked with an asterisk and the investment are held by the
Company. All other trading subsidiaries are held through subsidiaries.
Consolidated subsidiaries not listed above are either dormant or used only as
vehicles to hold the shares of certain non-operating companies. Certain
subsidiaries of the Group have been excluded from the consolidation since, in
aggregate, their inclusion is not material for the purpose of giving a true and
fair view.
56 Enodis annual report
US GAAP Reconciliation
US GAAP Reconciliation
Summary of differences between Generally Accepted Accounting Principles in the
United Kingdom and the United States The consolidated financial statements are
prepared in accordance with accounting principles generally accepted in the
United Kingdom ("UK GAAP"), which differ in certain material respects from those
generally accepted in the United States ("US GAAP"). The differences that are
material to Enodis plc (the "Company") relate to the following items and the
necessary adjustments are shown in the tables that follow.
Goodwill Prior to fiscal 1999 the Company has written off goodwill against
shareholders' equity in the fiscal year of acquisition. During fiscal 1999 UK
GAAP was amended to prohibit the write-off of goodwill against shareholders'
equity and requires capitalisation and amortisation of goodwill over the
estimated period of benefit. Under US GAAP, acquisitions prior to 30 June 2001
giving rise to goodwill must be capitalised and amortised against income over
the estimated period of benefit, but not in excess of 40 years. The Company has
adopted a 20 year life with respect to goodwill established under both US GAAP
and UK GAAP.
Deferred Taxation Under UK GAAP, deferred taxation is only accounted for to the
extent that it is probable that taxation liabilities or benefits will
crystallise. In addition, deferred taxation assets are recognised for future
deductions and utilization of tax credit carry-forward where recovery is assured
beyond a reasonable doubt. Under US GAAP, deferred taxation is accounted for on
all temporary differences and a valuation adjustment is established in respect
of those deferred taxation assets where it is more likely than not that some
portion will not be realised. In addition, deferred taxation assets are
recognised for future deductions and utilisation of tax credit carry-forwards,
subject to a valuation allowance.
Accounting for Derivative Instruments and Hedging Activities US GAAP requires
the fair values of hedging instruments to be recorded on the balance sheet, and
any changes in such fair values which do not meet certain documentation
requirements, as well as the US definition of an effective hedge, to be booked
through the profit and loss account.
Pension Costs Accounting for defined contribution schemes is similar under both
US and UK GAAP. With respect to defined contribution schemes a charge against
income should be made for the amount of the contributions payable to the pension
scheme in respect of the accounting period. Under a defined benefit scheme both
UK GAAP and US GAAP pension costs are recorded so as to provide for future
pension liabilities. However, with respect to the defined benefit schemes, there
are differences in the prescribed methods of valuation which give rise to GAAP
adjustments.
Sale/Leaseback Transactions Under UK GAAP, a gain or loss on the sale of an
asset that is leased back is deferred if the leaseback is a finance lease and is
recognised immediately when the leaseback is an operating lease. Under US GAAP,
a gain or loss on the sale of property which is leased back and does not meet
certain criteria, is deferred and amortised over future periods.
Goodwill impairment Differences in the carrying value of net assets and goodwill
of impaired entities under US GAAP give rise to differences in the calculations
for impairment charges.
Share Option Plans Under UK GAAP, options issued under the Company's 1995
Executive share option plan only give rise to an accounting entry when the
option is exercised. Shareholders' funds are increased by the product of the
number of options multiplied by the original option price.
The 1995 Executive share option plan includes certain performance criteria.
Under US GAAP, a measurement date occurs when such performance criteria are met,
which is effectively the date such options first become exercisable. At the
measurement date any excess of market price over the exercise price is recorded
as compensation expense in the profit and loss account.
Once the option is exercised, shareholders' funds are increased by the product
of the number of options multiplied by the original option price plus the charge
to profit and loss account already calculated.
Gain on sale of Building and Consumer Products business Differences in the
carrying value of the net assets of the Building and Consumer Products business
under US GAAP give rise to a different calculation of the gain on sale.
Dividends UK GAAP requires dividends to be accrued when declared, with a charge
to profit and loss account. Under US GAAP dividends are charged to shareholders'
funds only when approved.
57 Enodis annual report
US GAAP Reconciliation
US GAAP reconciliation continued
Reconciliation of net income/(loss) and shareholders' equity The effects of the
differences between UK GAAP and US GAAP on net income/(loss) and shareholders'
equity are as follows:
-------------------------------------------------------------------------------------------------------
2001 2000
(pound)m (pound)m
-------------------------------------------------------------------------------------------------------
Net income
-------------------------------------------------------------------------------------------------------
Net income/(loss) under UK GAAP (115.9) 69.3
-------------------------------------------------------------------------------------------------------
Items (decreasing)/increasing net income
-------------------------------------------------------------------------------------------------------
Goodwill amortisation (16.6) (16.5)
-------------------------------------------------------------------------------------------------------
Depreciation - 1.6
-------------------------------------------------------------------------------------------------------
Goodwill impairment 9.8 -
-------------------------------------------------------------------------------------------------------
Deferred taxation 3.3 (27.0)
-------------------------------------------------------------------------------------------------------
Pension cost 5.9 3.6
-------------------------------------------------------------------------------------------------------
Sale/leaseback transactions (1.3) (2.7)
-------------------------------------------------------------------------------------------------------
Gain on sale of Building and Consumer Products business 0.8 -
-------------------------------------------------------------------------------------------------------
Stock option plans - (3.0)
-------------------------------------------------------------------------------------------------------
Restructuring 0.4 -
-------------------------------------------------------------------------------------------------------
Other (0.1) -
-------------------------------------------------------------------------------------------------------
Net income/(loss) in accordance with US GAAP (113.7) 25.3
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
2001 2000
(pound)m (pound)m
-------------------------------------------------------------------------------------------------------
Shareholders' equity
-------------------------------------------------------------------------------------------------------
Shareholders' equity under UK GAAP 87.2 213.8
-------------------------------------------------------------------------------------------------------
Items (decreasing)/increasing shareholders' equity
-------------------------------------------------------------------------------------------------------
Goodwill 310.8 325.1
-------------------------------------------------------------------------------------------------------
Cumulative amortisation on goodwill (101.8) (85.3)
-------------------------------------------------------------------------------------------------------
Cumulative goodwill impairment 9.8 -
-------------------------------------------------------------------------------------------------------
Cumulative depreciation on adjustments to fixed assets 4.7 4.7
-------------------------------------------------------------------------------------------------------
Cumulative deferred income taxes 96.1 68.7
-------------------------------------------------------------------------------------------------------
Gain on sale/leaseback (1.2) (5.3)
-------------------------------------------------------------------------------------------------------
Cumulative pension adjustments 31.1 26.2
-------------------------------------------------------------------------------------------------------
Gain on sale of Building and Consumer Products business 0.8 -
-------------------------------------------------------------------------------------------------------
Cumulative purchase accounting adjustments 4.0 4.0
-------------------------------------------------------------------------------------------------------
Stock option provision (2.2) (2.3)
-------------------------------------------------------------------------------------------------------
Dividend timing - 23.0
-------------------------------------------------------------------------------------------------------
Effect of foreign exchange 3.6 4.3
-------------------------------------------------------------------------------------------------------
Other 0.1 -
-------------------------------------------------------------------------------------------------------
Shareholders' equity in accordance with US GAAP 443.0 576.9
-------------------------------------------------------------------------------------------------------
58 Enodis annual report
Five year summary
Five year summary
-----------------------------------------------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001
(pound)m (pound)m (pound)m (pound)m (pound)m
(restated) (restated)
-----------------------------------------------------------------------------------------------------------------------------------
Group turnover 549.7 591.2 756.3 1,180.1 1,081.1
-----------------------------------------------------------------------------------------------------------------------------------
Earnings and dividends:
-----------------------------------------------------------------------------------------------------------------------------------
Profit before interest, tax, depreciation, amortisation and
exceptionals 59.2 73.1 103.4 163.5 122.6
-----------------------------------------------------------------------------------------------------------------------------------
Profit/(loss) before interest and tax 45.1 59.8 80.0 121.3 (67.1)
-----------------------------------------------------------------------------------------------------------------------------------
Profit before tax, amortisation and exceptionals 37.0 50.2 75.4 102.2 63.8
-----------------------------------------------------------------------------------------------------------------------------------
Profit/(loss) before taxation 60.4 50.2 66.7 83.8 (109.0)
-----------------------------------------------------------------------------------------------------------------------------------
Profit/(loss) after tax 56.8 46.7 60.8 69.6 (115.6)
-----------------------------------------------------------------------------------------------------------------------------------
Adjusted diluted earnings per share (note i) 18.0p 23.5p 29.6p 35.0p 22.0p
-----------------------------------------------------------------------------------------------------------------------------------
Dividends per share (net) 6.5p 9.5p 12.5p 13.75p 2.0p
-----------------------------------------------------------------------------------------------------------------------------------
Ratios:
-----------------------------------------------------------------------------------------------------------------------------------
Operating margin (excluding amortisation and exceptionals) 8.5% 10.1% 11.2% 11.8% 9.2%
-----------------------------------------------------------------------------------------------------------------------------------
Return on sales (excluding amortisation and exceptionals) 6.7% 8.5% 9.4% 8.7% 5.9%
-----------------------------------------------------------------------------------------------------------------------------------
Dividend cover (adjusted diluted) 2.8x 2.5x 2.4x 2.5x 11.0x
-----------------------------------------------------------------------------------------------------------------------------------
Interest cover (excluding amortisation and exceptionals) 4.7x 6.2x 6.4x 3.7x 2.8x
-----------------------------------------------------------------------------------------------------------------------------------
Assets employed:
-----------------------------------------------------------------------------------------------------------------------------------
Intangible fixed assets
-----------------------------------------------------------------------------------------------------------------------------------
- goodwill - - 371.0 412.7 310.2
-----------------------------------------------------------------------------------------------------------------------------------
Tangible fixed assets 90.9 89.3 158.7 171.8 111.4
-----------------------------------------------------------------------------------------------------------------------------------
Investments 10.9 4.9 7.6 7.2 6.2
-----------------------------------------------------------------------------------------------------------------------------------
Net current assets 83.8 61.5 25.6 35.4 118.2
-----------------------------------------------------------------------------------------------------------------------------------
185.6 155.7 562.9 627.1 546.0
-----------------------------------------------------------------------------------------------------------------------------------
Financed by:
-----------------------------------------------------------------------------------------------------------------------------------
Share capital 76.3 76.6 105.8 125.0 125.1
-----------------------------------------------------------------------------------------------------------------------------------
Reserves (note i) (142.4) (165.4) (20.9) 88.8 (37.9)
-----------------------------------------------------------------------------------------------------------------------------------
Shareholders' funds (66.1) (88.8) 84.9 213.8 87.2
-----------------------------------------------------------------------------------------------------------------------------------
5% convertible unsecured loan stock 2015 230.7 230.4 94.4 - -
-----------------------------------------------------------------------------------------------------------------------------------
Other 21.0 14.1 383.6 413.3 458.0
-----------------------------------------------------------------------------------------------------------------------------------
185.6 155.7 562.9 627.1 546.0
-----------------------------------------------------------------------------------------------------------------------------------
US Dollar rate
-----------------------------------------------------------------------------------------------------------------------------------
- Average 1.63 1.66 1.62 1.55 1.44
-----------------------------------------------------------------------------------------------------------------------------------
- Year end 1.61 1.70 1.66 1.48 1.47
-----------------------------------------------------------------------------------------------------------------------------------
i Adjusted diluted earnings per share have been restated for the implementation
of FRS14. Reserves have been restated for the implementation of FRS10.
59 Enodis annual report
Holders of Company securities
Holders of Company securities
Shareholders'analysis The issued ordinary share capital of Enodis plc at 29
September 2001 was (pound)125,144,475 in 250,288,950 ordinary shares of 50p
each, held by 7,895 members.
-------------------------------------------------------------------------------------------------
Holders Holders Number Percentage
Number % of shares of capital
-------------------------------------------------------------------------------------------------
Banks/Nominees 928 11.75 217,379,740 86.85
-------------------------------------------------------------------------------------------------
Insurance companies 17 0.22 2,020,093 0.81
-------------------------------------------------------------------------------------------------
Investment trusts 17 0.22 263,111 0.11
-------------------------------------------------------------------------------------------------
Pension trusts 4 0.05 858,816 0.34
-------------------------------------------------------------------------------------------------
Other corporate bodies 9 0.11 231,290 0.09
-------------------------------------------------------------------------------------------------
Other companies 346 4.38 18,014,213 7.20
-------------------------------------------------------------------------------------------------
Individuals 6,574 83.27 11,521,687 4.60
-------------------------------------------------------------------------------------------------
Total 7,895 100 250,288,950 100
-------------------------------------------------------------------------------------------------
60 Enodis annual report
Company information
Company information
Capital gains tax For the purpose of United Kingdom capital gains tax, the
market value of the Company's ordinary shares on 31 March 1982 was 258p (after
adjustment for the consolidation and sub-division of shares in 1989 and the
consolidation of shares in 1993).
The value does not take account of any adjustment required by the Company's
rights issues, as such adjustment is wholly dependent upon action taken by the
shareholders in respect of such rights issues.
Financial calendar 2001/2002
--------------------------------------------------------------------------------
Year's results - 2001 Announced 21 November 2001
--------------------------------------------------------------------------------
Annual General Meeting To be held on 16 January 2002
--------------------------------------------------------------------------------
Half year's results - 2002 To be announced May 2002
--------------------------------------------------------------------------------
Corporate information Registrar American Depositary Receipt facility
Company Secretary D R Hooper Computershare Investor Services PLC Enodis plc ordinary shares are traded on The New York Stock
PO Box 82 Exchange in the form of American Depositary Shares (ADSs)
Registered Office The Pavilions using the symbol ENO. Each ADS represents four Enodis plc
Washington House Bridgwater Road ordinary shares. The ADS programme is administered by the
40-41 Conduit Street Bristol BS99 7NH Bank of New York and enquiries should be directed to them at
London W1S 2YQ 0870 7020000 the address shown. An annual report on Form 20-F is filed
Website: www.computershare.com with the US Securities and Exchange Commission.
Registration details
Registered in England and Wales ADR Depositary Internet
No. 109849 The Bank of New York Information on Enodis plc is available on our website:
620 Avenue of the Americas www.enodis.com
New York, NY 10011
1-888-BNY-ADRS (toll free)
Email via website at www.adrbny.com
Enodis plc
Washington House
40-41 Conduit Street
London
W1S 2YQ
T +44 (0)20 7304 6000
F +44 (0)20 7304 6001
www.enodis.com
e-mail to:
contact@enodis.com
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in
any doubt about its contents or the action you should take, you are recommended
to seek your own personal financial advice from your stockbroker, bank manager,
solicitor, accountant or other independent financial adviser duly authorised
under the Financial Services and Markets Act 2000 immediately. If you have sold
or otherwise transferred all of your ordinary shares in Enodis plc you should
pass this document and the other enclosures at once to the purchaser or
transferee or to the person through whom the sale or transfer was effected for
transmission to the purchaser or transferee.
Enodis
14 December 2001
To shareholders
Dear Shareholder
Annual General Meeting
The 92nd Annual General Meeting of the Company is to be held at the Radisson SAS
Portman Hotel, 22 Portman Square, London W1H 7BG on Wednesday, 16 January 2002
at 11.30 a.m. You will find the Notice of Meeting set out on pages 6 to 8 of
this Circular. In addition to the regular items of ordinary business to be
conducted at the Annual General Meeting, there are the following items of
special business, which I would like to take this opportunity to explain to you:
a. Directors' power to allot shares.
b. Disapplication of pre-emption rights.
c. Authority to purchase own shares.
d. Renewal of Sharesave Scheme.
e. Amendment of rules of Executive Share Option Scheme.
f. Adoption of new Articles of Association.
Items a-c are matters commonly dealt with at Annual General Meetings of public
companies and I refer you to Appendix 1 for an explanation of them. Accordingly,
in the remainder of this Circular, I will concentrate on items d, renewal of our
Sharesave Scheme, e, amendment of the rules of the Executive Share Option Scheme
and f, adoption of new Articles of Association.
Resolution 9 - Renewal of Sharesave Scheme
Since 1992, Enodis has operated a Sharesave Scheme for UK employees. The ability
to grant options under this scheme expires on 22 January 2002 and your Board
therefore proposes to introduce a replacement scheme - the Enodis plc Sharesave
Scheme 2002 - at the forthcoming Annual General Meeting.
The main features of the new scheme will be the same as the existing scheme.
Eligible employees will be able to save with a bank or building society over a
three or five year period, currently up to a maximum of (pound)250 each month.
At the end of three, five or seven years, employees will have an option to use
their savings, plus a tax-free bonus, to buy shares in the Company at a discount
of approximately 20% to the share price shortly before they start saving.
The new scheme will be submitted for approval by the Inland Revenue and will
contain a limit of 10% on the number of ordinary shares which may be issued
pursuant to options granted under it and any other share option scheme adopted
by Enodis over a 10 year period.
The Directors have no current plans to operate the new Sharesave Scheme, but are
seeking shareholder approval in order to preserve flexibility to do so. Amongst
factors affecting a decision to operate the scheme is a review of the
feasibility of launching a similar scheme in the US where the majority of the
Group's employees are located. A summary of the new scheme is set out in
Appendix 2.
A copy of the draft rules of the new scheme will be available at the registered
office of the Company during normal working hours on any business day (Saturdays
and public holidays excepted) from the date of this Circular up to and including
the date of the Annual General Meeting (or any adjournment thereof) from
15 minutes beforehand.
Resolution 10 - Amendment of rules of Executive Share Option Scheme
The rules of the 2001 Executive Share Option Scheme ("the Scheme") contain two
specific anti-dilution limits. Firstly, no more than 10% of new issue ordinary
shares may be allocated for the grant of options under all the Company's share
schemes over a 10 year period. Secondly, no more than 5% of new issue ordinary
shares may be allocated for the grant of options under the Scheme over a 10 year
period. The Scheme is regarded by the Board of Directors as a very important
mechanism for providing long-term incentives for senior executives, as well as
helping to recruit and retain them. Share option grants form a particularly
significant part of the remuneration packages of executives in the US, where
most of our executives are now based. However, the Company's ability to grant
options under the Scheme is becoming increasingly constrained by the 5% limit.
In order to ensure that the Board can grant additional options under the Scheme,
and to give the Board greater discretion to decide how shares will be allocated
amongst the Company's various employee share schemes, shareholders' approval is
sought in Resolution 10 for the removal of this 5% limit from the Scheme rules.
The overall 10% limit on the allocation of new issue shares under all of the
Company's share schemes over a 10 year period will, however, remain in place.
A copy of the rules of the Scheme, incorporating the proposed amendment, will be
available for inspection at the Company's registered office during normal
working hours on any business day (Saturdays and public holidays excepted) from
the date of this Circular up to and including the date of the Annual General
Meeting (or any adjournment thereof) and at the Annual General Meeting itself
(or any adjournment thereof) from 15 minutes beforehand.
Resolution 11 - Adoption of new Articles of Association
As a result of recent legalisation, it is now possible to offer a greater choice
of methods of communication between the Company and its shareholders. In
accordance with current recommended practice, it is proposed that the Company
adopt new Articles of Association which reflect the provisions of such
legislation and provide shareholders with the opportunity to receive certain
shareholder communications, including the annual report and accounts, financial
statements, notices of meetings and appointments of proxies electronically or
via publication on the Company's website. The new Articles will be the same as
the Company's current Articles of Association save for the changes necessary to
achieve the electronic communication described above. A copy of the Company's
current Articles of Association marked to show the proposed changes will be
available for inspection at the Company's registered office during normal
working hours on any business day (Saturdays and public holidays excepted) from
the date of this Circular up to and including the date of the Annual General
Meeting (or any adjournment thereof) and at the Annual General Meeting itself
(or any adjournment thereof) from 15 minutes beforehand.
General Your Board considers that all the resolutions set out in the Notice of
Meeting are in the best interests of shareholders as a whole and urges you to
vote in favour of them as the Directors intend to do in respect of their own
shareholdings.
Whether or not you expect to come to the Meeting, please complete the
accompanying Form of Proxy and return it to the Company's Registrar at the
address shown on the Form. Guidance as to how to fill in the Form is given on
the Form itself. To be valid at the Annual General Meeting, the Form of Proxy
must be received by the Company's Registrar no later than 11.30 a.m. on Monday,
14 January 2002. Even if you return the Form of Proxy, you may still attend and
vote in person at the Annual General Meeting as I encourage you to do.
Yours sincerely
/s/ Peter Brooks
Peter Brooks
Chairman
Appendix 1
1. Resolution 6 - Directors' power to allot shares Under the Companies Act 1985
(the "Act") the Board is not able to allot shares except with the general or
specific authority of the shareholders. Resolution 6 is a renewal of an existing
authority given on 17 January 2001. This resolution seeks general and
unconditional authority for the Board to allot up to (pound)41.6 million in
nominal value of relevant securities for the period of five years from the date
of passing Resolution 6. This figure, which complies with institutional
shareholder guidelines, represents 33.24% of the Company's issued ordinary share
capital as at 21 November 2001. Furthermore, additional securities may be
allotted pursuant to the Company's share option schemes (including the proposed
renewed sharesave scheme if approved) without them counting towards the limit of
the nominal value of (pound)41.6 million. Such an authority enables the Board to
take advantage without delay of any opportunity that occurs to issue shares
either for cash (subject as mentioned in paragraph 2. below) or as consideration
for an acquisition. The Directors have no current intention to allot such
relevant securities, but will keep the matter under review. The authority will
be exercised only if the Directors believe that to do so would be in the best
interests of shareholders generally.
2. Resolution 7 - Disapplication of pre-emption rights The Act provides that
when equity securities are being issued for cash, such securities must first be
offered pro-rata to existing ordinary shareholders, unless the Board is given
the power to allot them without regard to this requirement. Resolution 7
therefore empowers the Board to allot for cash equity securities of a nominal
amount not exceeding (pound)6.25 million, representing less than 5% of the
Company's issued share capital as at 21 November 2001, without first offering
such securities to existing ordinary shareholders. It also modifies the
situation with regard to rights issues or other offers to ordinary shareholders
with the result that the Company may sell for the benefit of shareholders
resident in certain overseas countries the equity securities to which such
shareholders would otherwise be entitled. The authority extends until the
earlier of the conclusion of the Annual General Meeting to be held in 2003 and
the date 15 months from the date of passing Resolution 7.
3. Resolution 8 - Authority to purchase own shares Subject to the approval of
its shareholders, the Company is empowered by its Articles of Association to
purchase its own ordinary shares. It has become customary for public companies
to seek such shareholder approval at each Annual General Meeting. Approval was
duly obtained by the Company on 17 January 2001 in respect of up to 25 million
ordinary shares and remains valid until 16 January 2002, although no purchases
of shares have been made during the period. The Directors have no current plans
for the Company to purchase its own ordinary shares; however they consider it
prudent once more to seek the approval of shareholders for authority to purchase
up to 25 million ordinary shares, representing less than 10% of the issued
ordinary share capital of the Company, by way of market purchase.
In accordance with the Company's Articles of Association, a Special Resolution
(Resolution 8 set out in the Notice of Annual General Meeting) will be proposed
to seek this authority.
The price at which ordinary shares may be purchased will be not less than their
nominal value and not more than 5% above the average of the middle market
quotations (as derived from the London Stock Exchange Daily Official List) for
an ordinary share of the Company for the five business days immediately
preceding the day of purchase. The authority will expire at the conclusion of
the Annual General Meeting to be held in 2003 or 12 months after the date of the
passing of Resolution 8, whichever is the earlier. As at 21 November 2001, there
were options outstanding over 8,085,924 ordinary shares in the Company which
represent 3.23% of the Company's issued share capital. If the authority to
purchase the Company's ordinary shares was exercised in full, these options
would then represent 3.5%.
As stated above, the Board has no immediate intention of exercising the
authority to purchase the Company's ordinary shares but will keep the matter
under review, taking into account other investment opportunities. The authority
will be exercised only if the Directors believe that to do so would result in an
increase in earnings per share and would be in the best interests of
shareholders generally.
Appendix 2
Summary of the Enodis plc Sharesave Scheme 2002 (the "Sharesave Scheme")
General
The Company intends to obtain Inland Revenue approval of the Sharesave Scheme
under the Income and Corporation Taxes Act 1988. The operation of the Sharesave
Scheme will be supervised by the Board of Directors (the "Board") or a Committee
of the Board.
Eligibility
UK resident employees of the Company, participating subsidiaries and specified
joint venture companies with at least one year's service (including Directors
who are required to work at least 25 hours a week) will be eligible to
participate. The Board may amend the eligibility conditions (within the limits
set by the relevant legislation) and have a discretion to allow other employees
to participate.
Grant of options
Invitations to apply for options to acquire ordinary shares may be issued within
six weeks following Inland Revenue approval of the Sharesave Scheme and,
thereafter, in the six weeks following the announcement by the Company of its
results for any period, as well as at any other time if the Board considers that
there are exceptional circumstances. No invitations may be issued later than ten
years after the adoption of the Sharesave Scheme. Options may only be granted to
employees who enter into Inland Revenue approved savings contracts, under which
monthly savings are made over a period of three or five years.
The number of ordinary shares over which an option is granted will be such that
the total amount payable on its exercise will correspond to the proceeds on
maturity of the related savings contract. An option will be personal to the
optionholder and may not be transferred by him/her.
Individual participation
Monthly savings by an employee under all savings contracts linked to options
granted under any savings related share option scheme may not exceed the
statutory maximum (currently (pound)250).
Acquisition price
The price per ordinary share payable upon the exercise of options will not be
less than the higher of:
a. 80% of the average of the middle market quotations of an ordinary share of
the Company on the London Stock Exchange on four dealing days within the period
of 30 days (or 42 days, if applications are scaled down) ending with the date of
grant of options (or such other day or days as may be agreed with the Inland
Revenue), provided that no such days may fall before the Company last announced
its results for any period; and
b. the nominal value of an ordinary share (except to the extent the Board is
authorised to capitalise reserves or the option relates solely to existing
ordinary shares).
Limit on subscription
Not more than 10% of the issued ordinary share capital of the Company may be
subscribed on the exercise of options granted over a 10 year period under the
Sharesave Scheme or any other share option scheme adopted by the Company or
issued over that period under any other type of employees' share scheme adopted
by the Company.
Exercise of options
Options will normally be exercisable only for six months from the third, fifth
or seventh anniversary of the commencement of the related savings contracts.
Earlier exercise is permitted following cessation of employment in specified
compassionate circumstances, or if an employee reaches age 65. Options will
otherwise lapse on cessation of employment. Early exercise is also permitted in
the event of a takeover, amalgamation, reconstruction or winding-up of the
Company.
Pensionability
Benefits received under the Sharesave Scheme will not be pensionable.
Rights attaching to ordinary shares
All ordinary shares allotted under the Sharesave Scheme will rank equally with
all other ordinary shares of the Company for the time being in issue (except as
regards any rights attaching to such shares by reference to a record date prior
to the date of allotment) and application will be made to the London Stock
Exchange for such shares to be admitted to the Official List.
Variation of capital
In the event of any variation of the Company's share capital, the Board may make
such adjustments as it considers appropriate to the number of ordinary shares
subject to options and the price payable on the exercise of options.
Alterations
The Board may at any time alter the Sharesave Scheme in any respect, subject to
the prior approval of shareholders for alterations to the advantage of
participants to the rules governing eligibility, the individual limit on
participation, the overall limit on the issue of ordinary shares, the terms of
options, the rights attaching to ordinary shares acquired on the exercise of
options, the adjustment of options in the event of a variation of capital and
the amendment of the Sharesave Scheme. The requirement to obtain prior
shareholder approval will not, however, apply to any minor alteration to benefit
the administration of the Sharesave Scheme, or to take account of a change in
legislation, or to obtain or maintain favourable tax, exchange control, or
regulatory treatment for participants or an Enodis Group company.
Enodis plc
Notice of the Annual General Meeting
To holders of ordinary shares
Notice is hereby given that the ninety-second Annual General Meeting of the
Company will be held at the Radisson SAS Portman Hotel, 22 Portman Square,
London W1H 7BG on Wednesday, 16 January 2002 at 11.30 a.m. for the following
purposes:
1.To receive and adopt the Financial Statements for the period ended 29
September 2001 together with the Directors' Report and the Auditors' Report
thereon.
2.To reappoint each of the following Directors who, having been appointed since
the last Annual General Meeting, each retire and offer themselves for
reappointment in accordance with Article 95 of the Articles of Association of
the Company:
a. D S McCulloch
b. D W Odum
3.To reappoint each of the following Directors who, retiring as Directors in
accordance with Article 97 of the Articles of Association of the Company, offer
themselves for reappointment in accordance with Article 98 of the Articles of
Association of the Company:
a. P M Brooks
b. W Schmidt
4.To reappoint Deloitte & Touche as Auditors of the Company to hold office from
the conclusion of the Annual General Meeting until the conclusion of the next
General Meeting of the Company at which accounts are laid.
5.To authorise the Directors to determine the remuneration of the Auditors.
Special Business
6.To propose the following resolution as an Ordinary Resolution: THAT, in
substitution for the authority given to them pursuant to the Ordinary Resolution
(numbered 7) passed at the Annual General Meeting on 17 January 2001 (but
without prejudice to any previous allotments under such substituted authority),
the Directors be generally and unconditionally authorised in accordance with
Section 80 of the Companies Act 1985 (the "Act") to exercise all powers of the
Company to allot relevant securities within the meaning of that section provided
that:
a. the aggregate of the nominal amount of such securities, where they are
shares, and, where such securities are not shares, the nominal amount of the
shares in respect of which such securities confer the right to subscribe or
convert shall not exceed (pound)41.6 million, but for this purpose no account
shall be taken of any relevant securities allotted pursuant to any share option
scheme adopted or to be adopted by the Company; and
b. this authority shall expire on the date five years after the passing of this
Resolution save that the Company may before such expiry make an offer or
agreement which would or might require relevant securities to be allotted after
such expiry and the Directors may allot relevant securities in pursuance of such
offer or agreement as if the authority conferred hereby had not expired.
7. To propose the following resolution as a Special Resolution:
Subject to the passing of Resolution 6, THAT the Directors be generally
empowered pursuant to Section 95 of the Act to allot equity securities (within
the meaning of Section 94(2) of the Act) of the Company for cash pursuant to the
general authority conferred by Resolution 6 as if Section 89(1) of the Act did
not apply to such allotment, provided that the power conferred by this
Resolution shall be limited:
a. to allotments of equity securities where such securities have been offered
(whether by way of a rights issue, open offer or otherwise) to holders of
ordinary shares of 50p nominal value in the capital of the Company ("ordinary
shares") and, if in accordance with their rights as the Directors so determine,
holders of other equity securities of any class in proportion (as nearly as may
be) to their existing holdings of ordinary shares or (as the case may be) other
equity securities of the class concerned (so that any offer to holders of other
equity securities of any class shall be on the basis of their rights to receive
such offer and, failing which, shall be on the basis that their holdings have
been converted into or that they have subscribed for ordinary shares on the
basis then applicable) but subject to the Directors having a right to make such
exclusions or other arrangements in connection with such offering as they deem
necessary or expedient, including:
i. to sell, for the benefit of those shareholders who are citizens of or
resident in any overseas territory where in the opinion of the Directors it
would at the time of the offer be illegal (by relevant law) or unduly costly or
burdensome for the Company to make or for those shareholders to accept an offer
of equity securities of the Company, the equity securities to which they would
otherwise be entitled, save that the proceeds (net of expenses) of (pound)3 or
less due to any such shareholder may be retained for the benefit of the Company;
and
ii. to aggregate and sell for the benefit of the Company all fractions of a
share which may arise in apportioning the equity securities among the original
shareholders;
b. to allotments of equity securities pursuant to the Company's employee share
schemes; and
c. to allotments (otherwise than pursuant to sub-paragraphs a. or b. above) of
equity securities having in the case of relevant shares (as defined in Section
94 of the Act) a nominal amount or, in the case of other equity securities,
giving the right to subscribe for or convert into relevant shares having a
nominal amount, not exceeding in aggregate (pound)6.25 million;
and this power shall expire on the earlier of the conclusion of the next Annual
General Meeting of the Company to be held in 2003 and the date 15 months after
the passing of this Resolution, save that the Company may before such expiry
make an offer or agreement which would or might require equity securities to be
allotted after such expiry and the Directors may allot equity securities
pursuant to any such offer or agreement as if the power conferred hereby had not
expired.
8.To propose the following resolution as a Special Resolution: THAT the Company
be generally and unconditionally authorised to make one or more market purchases
(within the meaning of Section 163(3) of the Act) of ordinary shares provided
that:
a. the maximum aggregate number of ordinary shares authorised to be purchased is
25.00 million (representing less than 10% of the issued ordinary share capital);
b. the minimum price which may be paid for an ordinary share is an amount equal
to its nominal value;
c. the maximum price which may be paid for an ordinary share is an amount equal
to 105% of the average of the middle market quotations for an ordinary share as
derived from the London Stock Exchange Daily Official List for the five business
days immediately preceding the day on which that ordinary share is purchased;
d. this authority expires at the conclusion of the next Annual General Meeting
of the Company to be held in 2003 or within 12 months from the date of the
passing of this Resolution, whichever is earlier; and
e. the Company may make a contract to purchase ordinary shares under this
authority before the expiry of the authority which will or may be executed
wholly or partly after the expiry of the authority, and may make purchases of
ordinary shares in pursuance of any such contract.
9.To propose the following resolution as an Ordinary Resolution:
THAT:
a. the Enodis plc Sharesave Scheme 2002 (the "Sharesave Scheme"), the main
features of which are summarised in Appendix 2 to the Circular to shareholders
dated 14 December 2001, and a copy of which is produced to the Meeting and
initialled by the Chairman for the purpose of identification, be and it is
hereby approved and the Directors be and are hereby authorised to do all such
acts and things as they may consider necessary or expedient to carry the
Sharesave Scheme into effect;
b. the Directors be and are hereby authorised to establish such schedules to the
Sharesave Scheme or establish such other employee share schemes based on the
Sharesave Scheme, to take account of local tax, exchange controls or securities
laws outside the UK, provided that any shares issued under the schedules or
other schemes must be treated as counting against the individual and overall
limits on participation contained in the Sharesave Scheme;
c. the Directors be and are hereby authorised to vote, and be counted in the
quorum, on any matter connected with the Sharesave Scheme and any similar
schemes established for overseas employees, notwithstanding that they may be
interested in the same (except that no Director may be counted in a quorum or
vote in respect of his own participation) and any prohibition on voting by
interested Directors contained in the Articles of Association of the Company be
and is hereby disregarded accordingly.
10.To propose the following resolution as an Ordinary Resolution:
THAT the amendment to the Enodis 2001 Executive Share Option Scheme (the
"Scheme") described on page 2 of the Circular to shareholders dated 14 December
2001 and marked on the copy of the rules of the Scheme which are produced to the
Meeting and signed by the Chairman for the purpose of identification be and is
hereby approved and the Directors be and are hereby authorised to do all things
necessary to carry the same into effect.
11.To propose the following resolution as a Special Resolution:
THAT the existing Articles of Association of the Company be and are hereby
amended by adopting the regulations set forth in the marked up Articles of
Association produced to the Meeting and signed by the Chairman for the purpose
of identification, in substitution for and to the exclusion of the existing
Articles of Association.
By order of the Board
D R Hooper
Secretary
Enodis plc
Washington House
40-41 Conduit Street
London W1S 2YQ
14 December 2001
Notes to Notice of the Annual General Meeting
Note 1 Only holders of ordinary shares are entitled to attend and vote at the
Annual General Meeting. Shareholders so entitled may appoint one or more proxies
to attend and, on a poll, vote instead of him/her. A proxy need not be a member.
A Form of Proxy is enclosed.
Note 2 The Company, pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, specifies that only those shareholders registered in the
register of members of the Company as at 6.00 p.m. on Monday, 14 January 2002
shall be entitled to attend or vote at this Annual General Meeting in respect of
the number of shares registered in their name at that time. Changes to entries
on the register of members after 6.00 p.m. on Monday, 14 January 2002 shall be
disregarded in determining the rights of any person to attend or vote at the
Annual General Meeting.
Note 3 The instrument appointing a proxy, and (in the case of an instrument
signed by an agent of a member or on behalf of a corporation) the authority
under which such instrument is signed or an office copy or duly certified copy
thereof, must be deposited at the office of the Company's Registrar,
Computershare Services PLC, PO Box 1075, Bristol BS99 3FA by not later than
11.30 a.m. on Monday, 14 January 2002, being not less than 48 hours before the
time appointed for the above Meeting or any adjournment thereof.
Note 4 The Register of Directors' interests required to be kept pursuant to
Section 325 of the Act and copies of contracts of service (unless expiring or
determinable by the Company within one year without payment of compensation) of
Directors with the Company or with any of its subsidiary companies, will be
available for inspection at the registered office of the Company during usual
working hours on any business day (Saturdays and public holidays excepted) from
the date of this Notice up to and including the date of the Annual General
Meeting (or any adjournment thereof) and at the Annual General Meeting itself
(or any adjournment thereof) and for a period of 15 minutes beforehand.
Note 5 The rules of the Sharesave Scheme summarised in Appendix 2 to the
Circular, together with a copy of the rules of the 2001 Executive Share Option
Scheme marked to show the amendment proposed pursuant to Resolution 10, and a
copy of the current Articles of Association marked to show the amendments
proposed pursuant to Resolution 11 will be available for inspection at the
registered office of the Company during usual working hours on any business day
(Saturdays and public holidays excepted) from the date of this Notice and up to
and including the date of the Annual General Meeting (or any adjournment
thereof), and at the Annual General Meeting itself (or any adjournment thereof),
and for a period of 15 minutes beforehand.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ENODIS PLC
December 20, 2001 By: /s/ Stuart Miller
--------------------------
Name: Stuart Miller
Title: Chief Financial Officer