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 May, 2002
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: _____
-----
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
-----
On May 21 and May 23, 2002, Enodis plc distributed a total of four (4)
press releases. The press releases follow in chronological order. After the text
of the press releases is the text of the Enodis plc Management's Discussion and
Analysis of Financial Condition and Results of Operations regarding the 26-week
period ended March 30, 2002.
**********************************************************************
Enodis plc Announces Sale of Austral Refrigeration Pty Limited.
LONDON--(BUSINESS WIRE)--May 21, 2002--Enodis plc (NYSE: ENO - News), a world
leading food service equipment manufacturer, announces that it has sold Austral
Refrigeration Pty Limited (`Austral') for a net cash consideration of 7.5
million pounds. The consideration, less expenses, will be used to reduce debt.
Austral, a Sydney based manufacturer of refrigeration equipment, is being
purchased by a newly formed company backed by RMB Ventures.
As at 30 March 2002, Austral had a net asset value of 5.9 million pounds
(excluding goodwill and inter company balances). In the year to 30 March 2002,
the business contributed 36.3 million pounds to sales and 1.2 million pounds to
operating profit.
Commenting on the sale, Andrew Allner, Chief Executive Officer, said:
"This transaction, following the disposal of Sammic in December 2001 and Belshaw
last month, will allow us to focus on our core businesses.
Our aim is to consolidate and extend our position as a world leading
manufacturer of heavy core commercial food service equipment through product,
distribution and service excellence."
This press release contains "forward-looking statements," within the meaning of
the U.S. federal securities laws, that represent the Company's expectations or
beliefs regarding future events, based on currently available information,
including statements concerning its anticipated performance and plans. These
statements by their nature involve substantial risks and uncertainties, many of
which are beyond the Company's control. The Company's actual results could
differ materially from those expressed in the forward-looking statements due to
a variety of important factors, including the Company's substantial debt
obligations and restrictive covenants; susceptibility to regional economic
downturns, currency fluctuations, large customer order slowdowns and other risks
related to its U.S., U.K. and foreign operations; its ability to realize cost
savings from its cost reduction program; keen competition in its fragmented and
consolidating industry; and the other risk factors and more complete
descriptions of these factors found under "Risk Factors" in the Company's Form
20-F filed with the SEC.
--------------------------------------------------------------------------------
Contact:
Enodis plc
Andrew Allner, 011 44 20 7304 6006
or
Financial Dynamics
Richard Mountain, 011 44 20 7269 7291
***********************************************************
Enodis plc Interim Results for the 26 Weeks Ended 30 March 2002
LONDON--(BUSINESS WIRE)--May 23, 2002--Enodis plc (NYSE:ENO - News)
--- ----
Good Progress in Weak Markets
Group Financial Highlights
. Group profit before tax(a) 11.3m pounds sterling (18.7m pounds
sterling).
. Adjusted, diluted earnings per share 3.2p (4.8p); no interim dividend
(2.0p).
Food Equipment - Global Food Service Equipment & Food Retail Equipment
. Food Equipment sales 390m pounds sterling, down 6% on a like-for-like
basis, in weak markets.
. Global Food Service Equipment (FSE)
. Operating profit(a) down 6% on a like-for-like basis at 28.9m pounds
sterling.
. Operating profit(a) in FSE North America 7% ahead on a like-for-like
basis at 24.6m pounds sterling.
. Management changes and other actions taken to improve performance in
Europe.
. Cost savings delivered as planned, approximately 17m pounds sterling
additional savings in half year
. Food Retail Equipment
. Operating profit(a) 3m pounds sterling lower at 1.5m pounds sterling.
. Kysor Warren performed poorly.
. Management changes at Kysor Warren, formation of Kysor Group.
Non-core business disposal programme well advanced
.. Sale of Sammic, Belshaw and Austral; gross proceeds of 43.1m pounds
sterling.
Rights Issue and High Yield Bond complete. Senior debt syndication well
advanced. Appropriate capital structure in place for future.
. Period end net debt 380.5m pounds sterling (493.8m pounds sterling);
15m pounds sterling increase during the half due to exceptional items,
refinancing costs and exchange movements.
. Net debt on proforma basis reflecting Rights Issue and non-core
business disposals under 295m pounds sterling.
Board and Senior Management changes, separately announced today, establish
appropriate senior management team.
.. (a) before goodwill amortisation and exceptionals
Peter Brooks, Chairman said:
"These first half results are encouraging with a particularly strong performance
from Food Service Equipment in North America. Good progress has also been made
towards our objective of reducing debt, including the disposal of non-core
businesses.
"There are grounds for cautious optimism in respect of the market for food
service equipment in North America, while demand for food service equipment in
Europe is weak. In Food Retail Equipment, where Kysor Panel Systems is
performing ahead of plan, our major challenge is to turn round Kysor Warren.
"Overall, our expectations for full year operating profits are unchanged from
those at the time of our preliminary results announcement in November 2001,
other than in respect of the effect of disposals.
"The second half will benefit from the effects of seasonality and management
actions including market share gain initiatives and new product development.
"Our Global Food Service Equipment strategy is firmly on track. We believe
Enodis is well positioned to benefit as economies and markets recover."
For further enquiries:
Andrew Allner Chief Executive Officer 020 7304 6006
Dave Wrench Chief Financial Officer 020 7304 6006
Andrew Lorenz Financial Dynamics 020 7269 7113
A conference call will be held for bondholders at 10.45am (UK time) today. For
details please contact Financial Dynamics.
This press release contains "forward-looking statements," within the meaning of
the U.S. federal securities laws, that represent the Company's expectations or
beliefs regarding future events, based on currently available information,
including statements concerning its anticipated performance and plans. These
statements by their nature involve substantial risks and uncertainties, many of
which are beyond the Company's control. The Company's actual results could
differ materially from those expressed in the forward-looking statements due to
a variety of important factors, including the Company's substantial debt
obligations and restrictive covenants; susceptibility to regional economic
downturns, currency fluctuations, large customer order slowdowns and other risks
related to its U.S., U.K. and foreign operations; its ability to realise costs
savings from its cost reduction program; keen competition in its fragmented and
consolidating industry; and the other risk factors and more complete
descriptions of these factors found under "Risk Factors" in the Company's Form
F-4 registration statement (and any amendments to it) filed with the SEC.
INTERIM RESULTS FOR THE 26 WEEKS ENDED 30 MARCH 2002 Chairman and Chief
Executive Officer's Review
Overview
The 26 weeks ended 30 March 2002 have been a period of economic uncertainty and
slow customer investment activity. In North America and Europe, as we
anticipated, the market weakened further in the second quarter and we also saw
intensified price competition. The market for food retail equipment has remained
difficult.
In Global Food Service Equipment our strategy is to establish Enodis as the
clear world leader through excellence in product, distribution and service. In
North America, where we are most advanced in leveraging our scale, product
range, technology and relationships, we believe we are gaining share though with
some negative price impact.
In our Food Retail Equipment business, Kysor Panel Systems, which makes walk-in
coolers for supermarket customers, is performing strongly. However, Kysor
Warren, which makes display cabinets
and systems, has become loss-making. The management team has been replaced and
the Kysor Group, comprising Kysor Panel Systems and Kysor Warren, has been
formed to leverage Kysor Panel Systems' customer relationships and reputation.
Within our Food Equipment business, we have delivered the anticipated first half
benefits from the cost saving actions taken since the second half of 2001. This,
along with increased market share in Food Service Equipment North America, has
enabled us to offset in part the impact of adverse market conditions.
Net debt has, as expected, increased modestly in the first half. Importantly,
subsequent to the period end we received gross proceeds from the rights issue of
75.1 million pounds sterling, along with a further 24.2 million pounds sterling
for the disposals of businesses (see below). Adjusting for these, net debt at 30
March 2002 would have been under 295 million pounds sterling. Net debt at 31
March 2001 was 493.8 million pounds sterling.
The sales of Belshaw and Austral made in April and May continues our current
programme of non-core disposals. Whilst these disposals are earnings dilutive in
the current year they reduce debt, remove significant risk from our business and
enable us to increase our focus on our core area of competence, heavy food
service equipment.
We have continued to strengthen our senior management team. A separate
announcement today deals with important Board and Senior Management changes.
Results
Profit before tax, goodwill amortisation and exceptional items was 11.3 million
pounds sterling (First Half 2001: 18.7 million pounds sterling): foreign
exchange movements have benefited the results by 0.3 million pounds sterling.
In Food Equipment, operating profit before goodwill amortisation and exceptional
items was 30.4 million pounds sterling (36.7 million pounds sterling): operating
profit was reduced by a net 1.3 million pounds sterling by the effect of
disposals, and benefited by some 0.3 million pounds sterling from foreign
exchange movements. Operating margins in the 26 week period were 7.8% compared
to 8.7% in the prior period, principally due to a decline in Europe and Food
Retail Equipment.
Group operating profit before goodwill amortisation and exceptional items was
26.2 million pounds sterling (39.8m pounds sterling including contribution of
7.6 million pounds sterling of operating profit from our Building & Consumer
Products business which was sold in June 2001).
Financing
Operating cash flow in the period was 30.8 million pounds sterling (34.2 million
pounds sterling); after interest and tax, free cash flow was 14.0 million pounds
sterling (10.5 million pounds sterling).
After exceptional items of 16.1 million pounds sterling, net proceeds from the
disposal of non-core businesses of 16.4 million pounds sterling, bank
refinancing costs of 14.7 million pounds sterling and the adverse effect of
exchange rate movements of 14.2 million pounds sterling, net debt increased from
365.9 million pounds sterling at 29 September 2001 to 380.5 million pounds
sterling at the period end.
Subsequent to the period end, the Group completed a three for five rights issue
at 50 pence per share to raise gross proceeds of 75.1 million pounds sterling
and realised gross proceeds of 24.2 million pounds
sterling from the disposal of non-core businesses. On a proforma basis, after
adjusting for these proceeds and related costs, net debt would have been less
than 295 million pounds sterling.
During the period the Company issued 10-3/8% senior subordinated notes raising
100 million pounds sterling with a 10 year bullet maturity. Senior debt
syndication is well advanced with the co-arranging stage completed and general
syndication recently launched with an anticipated completion date of end of
June.
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. Operating companies are firmly focussed on cash conversion
days for working capital where there is some room for improvement. Contracts
have been signed for the sale of Felsted property phase III, which subject to
completion of infrastructure improvements on time, should generate cash and
profit of some 7 million pounds sterling in the second half.
No interim dividend is proposed.
Exceptional Items
Net exceptional costs of 9.4 million pounds sterling in the first half comprise
further restructuring costs of 3.7 million pounds sterling, mostly in Food
Retail Equipment, and 8.4 million pounds sterling for the cost of refinancing,
offset by 2.7 million pounds sterling profit on the sale of Sammic.
Net cash outflow for exceptional items was 14.4 million pounds sterling,
representing costs in respect of litigation and restructuring programmes
(including those announced in the prior year) of 16.1 million pounds sterling,
costs of refinancing of 14.7 million pounds sterling offset by the net proceeds
from disposal of businesses of 16.4 million pounds sterling.
In the second half, exceptional items are estimated to be up to 3 million pounds
sterling, excluding the cost of any further actions arising from the current
review at Kysor Warren (see below). These costs comprise further costs of
simplifying the organisation. Cash outflow from exceptional items in the Second
Half is estimated to be around 7m pounds sterling.
Global Food Service Equipment
Global Food Service Equipment, under the leadership of Dave McCulloch, comprises
both our operations in North America, some 76% of Food Service Equipment first
half sales, and our operations in Europe and Asia, 24% of first half sales. Our
strategy is to achieve market share growth through excellence in product,
distribution and service.
The Group offers a full range of core heavy kitchen equipment to the industry
and competitive advantage is achieved through leveraging the Group's scale,
product range and leading brands, technology and relationships with distributors
and service partners, end-users and suppliers.
In the first half, significant progress has been made in developing this
strategy. In North America, momentum is building on new product introductions
including 12 new products launched at the recent National Restaurant Association
show, on top of the 20 introduced at NAFEM last September, along with some
exciting developments for major customers. The alignment of our U.S. sales
representatives was completed resulting in improved focus and support for our
distribution partners. We believe that this, together with dealer/buying group
incentive programmes and improved key account and segment management is
achieving increased market penetration. Cost savings have been delivered on plan
and additional management appointments made to drive Group purchasing savings
and improve global parts
and service capability. Enodis' emphasis on building partnerships with customers
and channel partners is yielding positive results.
North American operations achieved sales, including exports, of 228.3 million
pounds sterling (234.8 million pounds sterling) down 5% on a like-for-like
basis. Operating profit at 24.6 million pounds sterling (23.0 million pounds
sterling) was up 7% on a like-for-like basis. In overall terms, adverse volume,
net price and mix changes together with normal ongoing cost inflation,
principally labour, were more than offset by the benefits of last year's and
this year's cost reduction programmes which saved some 10.5 million pounds
sterling. Operating margins increased from 9.8% in the comparable period to
10.8%.
In Europe, we have made management changes to provide better focus on our
manufacturing and distribution companies and have established "tag teams"
between our European companies and their North American counterparts to leverage
product and technology globally. We have been particularly successful with our
UK Merrychef accelerated cooking technology with substantial new orders from
five global chain customers. We are also investigating how we can better utilise
our European facilities to manufacture product previously sourced from North
America. Significant further work is necessary in Europe which will take time,
but we are confident that we are now taking the right steps.
In our Europe/Asia operations, sales at 72.8 million pounds sterling (87.4
million pounds sterling) were down 4% on a like-for-like basis but profit at 4.3
million pounds sterling (9.2 million pounds sterling) was almost halved. Whilst
cost savings amounted to approximately 2 million pounds sterling, this was more
than offset by adverse price and product mix, additional infrastructure costs
for new factories at Viscount, Ventmaster and Convotherm, weak beverage
performance and the absence of last year's one-off property profits of 0.9
million pounds sterling. Operating margins declined from 10.5% in the comparable
period to 5.9%.
Overall, operating profit before amortisation and exceptional items of Global
Food Service Equipment was 28.9 million pounds sterling (32.2 million pounds
sterling) down 6% on a like-for-like basis in much weaker markets. Overall,
operating margins declined from 10.0% to 9.6% as a result of factors in Europe.
Food Retail Equipment
The results of Food Retail Equipment reflect an improved performance from Kysor
Panel Systems and Austral, now sold, offset by a much weaker performance from
Belshaw, now sold, and a very disappointing performance from Kysor Warren.
Operating profit before amortisation and exceptional items was 1.5 million
pounds sterling, down from 4.5 million pounds sterling in the comparable period,
with Kysor Warren incurring losses of some 2 million pounds sterling (profit 1.5
million pounds sterling): Kysor Warren is expected to be loss-making throughout
the second half. Our primary objective in this group is to turn round Kysor
Warren and re-establish it as a successful, leading player in the display
cabinet and systems industry. Actions taken to date include:
. Replacement of the management team. A taskforce comprising senior
executives from elsewhere within the Group is currently running the
business, reporting directly to Andrew Allner. Recruitment of an
executive team is underway. As separately announced, Dave Odum is
leaving the Group at the end of May 2002.
. The Kysor Group has been formed under the leadership of David Frase,
President of Kysor Panel Systems. This appointment will provide added
customer focus and help restore credibility, and allows us to leverage
Kysor Panel Systems' customer relationships and reputation.
. The next steps are the completion of a strategic review and
finalisation of plans for the turn round, including improved customer
service and offering.
As previously discussed in the announcement of first quarter results, we are
currently reviewing the operations of Kysor Warren, with the objective of
improving its operating performance. From its acquisition in 1999 to the end of
the 2001 financial year, Kysor Warren has operated at a profit (exclusive of
exceptional costs and goodwill amortisation). However, Kysor Warren, along with
its competitors, has been adversely impacted by difficult market conditions but
has also lost market share due to a lack of customer focus. We have completed an
independent market study and changed most of the management team. The unaudited
results of this operation for Half Year 2002 showed an operating loss and were
below expectations. If the result of our review is the conclusion that the
necessary long term improvement in performance cannot be achieved, then a
significant part of Kysor Warren's fixed assets (principally goodwill) would be
impaired, resulting in an exceptional non-cash charge. Such impairment cannot be
reasonably estimated at this time. As at 30 March 2002 the carrying value of
goodwill relating to Kysor Warren was approximately 50 million pounds sterling.
Non-core Disposals
During and subsequent to the period, the Group has completed the disposals of
Sammic, Belshaw and Austral.
Net proceeds raised amount to 43 million pounds sterling and exceptional net
losses are estimated to be some 20 million pounds sterling, including 35 million
pounds sterling in respect of goodwill written off. During the 6 months to 30
March 2002 the aggregate operating profit contribution for these businesses was
2.7 million pounds sterling.
Although the disposals are dilutive as regards earnings per share, they reduce
debt, reduce risk and enable Enodis to focus on its core heavy food service
equipment where we believe we have significant competitive advantage.
Outlook
Whilst the market for food service equipment in North America remains uncertain
and pricing pressure significant, some more positive signs are emerging from
both the industry and end users. In Europe, the market outlook for food service
equipment is weak, exacerbated by intense price competition. The market for food
retail equipment remains depressed. However, the key to our performance in this
market will be our ability to turn round Kysor Warren.
Our results for April and preliminary indications for May show better than plan
results from Food Service Equipment North America but a weaker than plan
performance in Europe and Kysor Warren.
Against this background, our expectations for full year operating profit are
unchanged from those at the time we released our preliminary results in November
2001, other than in respect of the impact of disposals. The second half will
benefit from the effects of seasonality and management actions, including cost
saving initiatives and new product development.
So far this year, we have made good progress towards our key objectives. U.S.
industry forecasts of food service sales are encouraging and confirm our view
that industry fundamentals are attractive showing increased food and beverage
sales outside the home driven by lifestyle changes. Our Global Food Service
Equipment strategy is firmly on track. We believe Enodis is well positioned to
benefit as economies and markets recover.
Management Discussion and Analysis
Under the terms of our 10-3/8% senior subordinated notes, we are required to
prepare a US style, Management Discussion and Analysis (MD&A), and to file it
with the Securities and Exchange Commission (SEC) in the US, on Form 6-K. You
will be able in due course to obtain the filing from the SEC website at
www.sec.gov.
P M Brooks A J Allner
Chairman Chief Executive
22 May 2002 22 May 2002
Unaudited group profit and loss account
26 weeks to 30 March 2002 (Half year)
26 weeks to 30 March 2002 26 weeks to 31 March 2001
--------------------------- -------------------------
Before Exceptional Before Exceptional
exceptional items exceptional items
items (note 4) Total items (note 4) Total
Notes pound m pound m pound m pound m pound m pound m
(Unaud- (Unaud- (Unaud- (Unaud- (Unaud- (Unaud-
ited) ited) ited) ited)/ ited)/ ited)/
(Resta- (Resta- (Resta-
ted) ted) ted)
Turnover
Food Equipment 390.0 - 390.0 419.7 - 419.7
Property - - - 0.9 - 0.9
----------------------------------------------------------------------
Continuing
operations 390.0 - 390.0 420.6 - 420.6
Discontinued
operations - - - 132.9 - 132.9
----------------------------------------------------------------------
Total turnover 2 390.0 - 390.0 553.5 - 553.5
----------------------------------------------------------------------
Profit from
operations
Food Equipment 30.4 (3.7) 26.7 36.7 (24.8) 11.9
Property - - - - - -
Corporate costs (4.2) - (4.2) (4.5) (15.7) (20.2)
----------------------------------------------------------------------
Continuing
operations 26.2 (3.7) 22.5 32.2 (40.5) (8.3)
Discontinued
operations - - - 7.6 - 7.6
----------------------------------------------------------------------
26.2 (3.7) 22.5 39.8 (40.5) (0.7)
Goodwill
amortisation (10.1) - (10.1) (11.7) - (11.7)
----------------------------------------------------------------------
Operating profit
Continuing
operations 16.1 (3.7) 12.4 20.5 (40.5) (20.0)
Discontinued
operations - - - 7.6 - 7.6
----------------------------------------------------------------------
3 16.1 (3.7) 12.4 28.1 (40.5) (12.4)
Profit on disposal
of business - 2.7 2.7 - - -
----------------------------------------------------------------------
Profit/(loss) on
ordinary activities
before interest and
taxation 16.1 (1.0) 15.1 28.1 (40.5) (12.4)
Net interest payable
and similar
charges (14.9) (8.4) (23.3) (21.1) (5.8) (26.9)
----------------------------------------------------------------------
Profit/(loss) on
ordinary activities
before taxation 1.2 (9.4) (8.2) 7.0 (46.3) (39.3)
Tax on profit/(loss)
on ordinary
activities 5 (1.4) - (1.4) (3.9) - (3.9)
----------------------------------------------------------------------
Profit/(loss) on
ordinary activities
after taxation (0.2) (9.4) (9.6) 3.1 (46.3) (43.2)
Minority interests (0.2) - (0.2) - - -
----------------------------------------------------------------------
Profit/(loss) for
the period (0.4) (9.4) (9.8) 3.1 (46.3) (43.2)
Equity
dividends 6 - - - (5.0) - (5.0)
----------------------------------------------------------------------
Retained result (0.4) (9.4) (9.8) (1.9) (46.3) (48.2)
----------------------------------------------------------------------
Earnings/(loss)
per share(pence) 7
Basic loss per share (3.2)p (14.1)p
Adjusted basic earnings
per share 3.2p 4.8p
Diluted loss
per share (3.2)p (14.1)p
Adjusted diluted earnings
per share 3.2p 4.8p
Statement of total
recognised gains
and losses pound m pound m
Loss for the period (9.8) (43.2)
Goodwill written back
on disposals, previously
written off 10.4 -
Currency translation
differences on foreign
currency net
investments 1.6 1.5
----------------------------------------------------------------------
Total recognised gains
and losses for
the period 2.2 (41.7)
----------------------------------------------------------------------
Unaudited group profit and loss account
13 weeks to 30 March 2002 (Quarter 2)
13 weeks 13 weeks
to 30 March 2002 to 31 March 2001
---------------------- ---------------------
Except- Except-
Before ional Before ional
exceptional items exceptional items
items (note 4) Total items (note 4) Total
Notes pound pound pound pound pound pound
m m m m m m
(Unau- (Unau- (Unau- (Unau- (Unau- (Unau-
dited) dited dited) dited) dited) dited)
Turnover
Food Equipment 200.1 - 200.1 220.7 - 220.7
Property - - - 0.9 - 0.9
----------------------------------------------------------------------
Continuing operations 200.1 - 200.1 221.6 - 221.6
Discontinued operations - - - 71.6 - 71.6
----------------------------------------------------------------------
Total turnover 2 200.1 - 200.1 293.2 - 293.2
----------------------------------------------------------------------
Profit from operations
Food Equipment 16.2 (1.2) 15.0 21.0 (24.8) (3.8)
Property - - - - - -
Corporate costs (2.1) - (2.1) (2.5) (15.7) (18.2)
----------------------------------------------------------------------
Continuing operations 14.1 (1.2) 12.9 18.5 (40.5) (22.0)
Discontinued operations - - - 5.1 - 5.1
----------------------------------------------------------------------
14.1 (1.2) 12.9 23.6 (40.5) (16.9)
Goodwill amortisation (5.1) - (5.1) (6.3) - (6.3)
----------------------------------------------------------------------
Operating profit
Continuing operations 9.0 (1.2) 7.8 12.2 (40.5) (28.3)
Discontinued operations - - - 5.1 - 5.1
----------------------------------------------------------------------
3 9.0 (1.2) 7.8 17.3 (40.5) (23.2)
Profit on disposal of
business - - - - - -
----------------------------------------------------------------------
Profit/(loss) on
ordinary activities
before interest and
taxation 9.0 (1.2) 7.8 17.3 (40.5) (23.2)
Net interest payable
and similar charges (7.9) (4.4) (12.3) (11.1) (5.8) (16.9)
----------------------------------------------------------------------
Profit/(loss) on
ordinary activities
before taxation 1.1 (5.6) (4.5) 6.2 (46.3) (40.1)
Tax on profit/(loss)
on ordinary
activities (0.8) - (0.8) (2.6) - (2.6)
----------------------------------------------------------------------
Profit/(loss) on
ordinary activities
after taxation 0.3 (5.6) (5.3) 3.6 (46.3)(42.7)
Minority interests (0.1) - (0.1) - - -
----------------------------------------------------------------------
Profit/(loss) for
the period 0.2 (5.6) (5.4) 3.6 (46.3)(42.7)
Equity dividends - - - (5.0) - (5.0)
----------------------------------------------------------------------
Retained result 0.2 (5.6) (5.4) (1.4) (46.3)(47.7)
----------------------------------------------------------------------
Earnings/(loss) per
share (pence) 7
Basic loss per share (1.8)p (13.9)p
Adjusted basic earnings
per share 1.7p 3.3p
Diluted loss per share (1.8)p (13.9)p
Adjusted diluted
earnings per share 1.7p 3.3p
Statement of total
recognised gains and
losses pound m pound m
Loss for the period (5.4) (42.7)
Currency translation
differences on foreign
currency net
investments 2.7 0.3
----------------------------------------------------------------------
Total recognised gains
and losses for the
period (2.7) (42.4)
----------------------------------------------------------------------
Audited group profit and loss account
52 weeks to 29 September 2001
52 weeks to 29 September 2001
----------------------------------
Before Exceptional Total
exceptional items
items (note 4)
Notes pound m pound m pound m
(Restated) (Restated) (Restated)
Turnover
Food Equipment 887.2 - 887.2
Property 16.6 - 16.6
----------------------------------------------------------------------
Continuing operations 903.8 - 903.8
Discontinued operations 177.3 - 177.3
----------------------------------------------------------------------
Total turnover 2 1,081.1 - 1,081.1
----------------------------------------------------------------------
Profit from operations
Food Equipment 90.7 (43.4) 47.3
Property 9.0 - 9.0
Corporate costs (8.9) (24.1) (33.0)
----------------------------------------------------------------------
Continuing operations 90.8 (67.5) 23.3
Discontinued operations 9.1 - 9.1
----------------------------------------------------------------------
99.9 (67.5) 32.4
Goodwill amortisation/impairment (23.0) (100.0) (123.0)
----------------------------------------------------------------------
Operating profit
Continuing operations 67.8 (167.5) (99.7)
Discontinued operations 9.1 - 9.1
----------------------------------------------------------------------
3 76.9 (167.5) (90.6)
Profit on disposal of business - 23.5 23.5
----------------------------------------------------------------------
Profit/(loss) on ordinary
activities before interest and
taxation 76.9 (144.0) (67.1)
Net interest payable and similar
charges (36.1) (5.8) (41.9)
----------------------------------------------------------------------
Profit/(loss) on ordinary
activities before taxation 40.8 (149.8) (109.0)
Tax on profit/(loss) on ordinary
activities 5 (13.4) 2.0 (11.4)
----------------------------------------------------------------------
Profit/(loss) on ordinary
activities after taxation 27.4 (147.8) (120.4)
Minority interests (0.3) - (0.3)
----------------------------------------------------------------------
Profit/(loss) for the period 27.1 (147.8) (120.7)
Equity dividends 6 (4.8) - (4.8)
----------------------------------------------------------------------
Retained result 22.3 (147.8) (125.5)
----------------------------------------------------------------------
Earnings/(loss) per share (pence)7
Basic loss per share (39.3)p
Adjusted basic earnings per share 16.3p
Diluted loss per share (39.3)p
Adjusted diluted earnings per
share 16.3p
Statement of total recognised
gains and losses pound m
Loss for the period (120.7)
Negative goodwill written back on
disposals, previously written off (4.4)
Currency translation differences
on foreign currency net
investments (1.7)
----------------------------------------------------------------------
Total recognised gains and losses
for the period (126.8)
----------------------------------------------------------------------
Unaudited group balance sheet
30 March 31 March 29 September
2002 2001 2001
Notes pound m pound m pound m
(Unaudited) (Unaudited)/ (Restated)
(Restated)
----------------------------------------------------------------------
Fixed assets
Intangible assets: Goodwill 312.9 434.5 310.2
Tangible assets 108.8 172.6 111.4
Investments 6.2 8.0 6.2
----------------------------------------------------------------------
427.9 615.1 427.8
----------------------------------------------------------------------
Current assets
Stocks 8 103.8 160.3 105.6
Debtors 183.6 222.3 200.7
Deferred tax asset 5 27.3 30.3 26.9
Cash at bank and in hand 9 49.9 58.0 39.4
----------------------------------------------------------------------
364.6 470.9 372.6
Creditors falling due within one year
Borrowings 9 (10.1) (0.4) (2.4)
Other creditors (210.4) (281.5) (225.1)
----------------------------------------------------------------------
(220.5) (281.9) (227.5)
----------------------------------------------------------------------
Net current assets 144.1 189.0 145.1
----------------------------------------------------------------------
Total assets less current
liabilities 572.0 804.1 572.9
----------------------------------------------------------------------
Financed by:
Creditors falling due after more than one year
Borrowings 9 404.4 549.8 398.9
Provisions for liabilities and
charges 55.1 54.7 59.1
----------------------------------------------------------------------
459.5 604.5 458.0
----------------------------------------------------------------------
Capital and reserves
Called up equity share capital 125.1 125.0 125.1
Share premium account 234.2 238.9 239.0
Profit and loss account (247.8) (165.0) (250.0)
----------------------------------------------------------------------
Equity shareholders' funds 10 111.5 198.9 114.1
----------------------------------------------------------------------
Equity minority interests 1.0 0.7 0.8
----------------------------------------------------------------------
572.0 804.1 572.9
----------------------------------------------------------------------
Unaudited group cash flow statement
26 weeks 26 weeks 52 weeks
to to to
30 March 31 March 29 September
2002 2001 2001
Notes pound m pound m pound m
(Unaudited)(Unaudited)
----------------------------------------------------------------------
Net cash flow from operations before
exceptional items 36.5 39.3 120.8
Net cash flow effect
of exceptional items (16.1) (4.3) (27.8)
----------------------------------------------------------------------
Net cash inflow from
operating activities a 20.4 35.0 93.0
----------------------------------------------------------------------
Return on investments and servicing of finance
Interest paid (16.4) (22.8) (40.9)
Financing fees paid (14.7) - -
----------------------------------------------------------------------
(31.1) (22.8) (40.9)
----------------------------------------------------------------------
Taxation
Overseas and UK tax paid (0.4) (0.9) (6.0)
----------------------------------------------------------------------
Capital expenditure and financial investment
Payments to acquire
tangible fixed assets (6.3) (8.2) (23.7)
Receipts from sale of
tangible fixed assets 0.6 3.1 7.4
----------------------------------------------------------------------
(5.7) (5.1) (16.3)
----------------------------------------------------------------------
Acquisitions and disposals
Purchase of subsidiary undertakings and minority
interests - (25.0) (25.8)
Disposal of subsidiary
undertakings 4 16.4 - 98.6
----------------------------------------------------------------------
16.4 (25.0) 72.8
----------------------------------------------------------------------
Equity dividends paid - (23.3) (28.2)
----------------------------------------------------------------------
Cash (outflow)/inflow
before financing (0.4) (42.1) 74.4
----------------------------------------------------------------------
Financing
Issue of shares - 0.1 0.2
Additional net borrowings 310.8 591.9 398.3
Term loan repayment (400.4) (521.1) (385.7)
Issue of 10 3/8% senior
subordinated notes 100.0 - -
Repayment of other loans - - (72.8)
Capital element of finance
lease payments - 0.7 (0.6)
----------------------------------------------------------------------
10.4 71.6 (60.6)
----------------------------------------------------------------------
Increase in cash in the period 10.0 29.5 13.8
Unaudited group cash flow statement
(a) Reconciliation of operating profit/(loss) to net cash
inflow/(outflow) from operating activities
26 weeks to 30 March 2002 26 weeks to 31 March 2001
------------------------- -------------------------
Effect Effect
Before of Before of
except- except- except- except-
ional ional ional ional
items items Total items items Total
(Unaud- (Unaud- (Unaud- (Unaud- (Unaud- (Unaud-
ited) ited) ited) ited) ited) ited)
pound m pound m pound m pound m pound m pound m
Operating profit/
(loss) 16.1 (3.7) 12.4 28.1 (40.5) (12.4)
Depreciation 8.7 - 8.7 12.6 - 12.6
Amortisation of
goodwill 10.1 - 10.1 11.7 - 11.7
Gain on sale of
fixed assets - - - (1.7) - (1.7)
Provisions (net) (0.7) (2.5) (3.2) (5.0) 16.5 11.5
(Increase)/decrease
in stock (0.8) 2.4 1.6 (2.8) 0.5 (2.3)
Decrease in debtors 16.3 - 16.3 1.6 - 1.6
(Decrease)/increase in
creditors (13.2) (12.3) (25.5) (5.2) 19.2 14.0
----------------------------------------------------------------------
Net cash inflow from
operating activities 36.5 (16.1) 20.4 39.3 (4.3) 35.0
----------------------------------------------------------------------
52 weeks to 29 September 2001
---------------------------------
Before Effect of
exceptional exceptional
items items Total
pound m pound m pound m
Operating profit/(loss) 76.9 (167.5) (90.6)
Depreciation 22.7 - 22.7
Amortisation of goodwill 23.0 100.0 123.0
Gain on sale of fixed assets (1.7) - (1.7)
Provisions (net) (6.0) 16.5 10.5
(Increase)/decrease in stock 12.1 0.5 12.6
Decrease in debtors 10.7 - 10.7
(Decrease)/increase in creditors (16.9) 22.7 5.8
----------------------------------------------------------------------
Net cash inflow from
operating activities 120.8 (27.8) 93.0
----------------------------------------------------------------------
(b) Reconciliation of net cash flow to movement in net debt
30 March 31 March 29 Sept-
2002 2001 ember
(Unaudited)(Unaudited) 2001
pound m pound m pound m
Net debt at the start of period (365.9) (434.2) (434.2)
Increase in net cash in the period 10.0 29.5 13.8
Issue of 10 3/8% senior
subordinated notes (100.0) - -
Net decrease /(increase)
in other loans 89.6 (71.5) 60.1
Translation differences (14.2) (17.6) (5.6)
---------------------------------
Net debt at the end of the period (380.5) (493.8) (365.9)
---------------------------------
Notes to the unaudited interim financial statements
1 Basis of Preparation
The accompanying condensed financial statements ("interim financial statements")
have been prepared in accordance with accounting principles generally accepted
in the United Kingdom ("U.K. GAAP"). The interim financial statements are
unaudited but include all adjustments (consisting of normal recurring
adjustments) which the Group's management considers necessary for a fair
presentation of the financial position of the Group as of such dates and the
operating results and cash flows for those periods. Certain information and
footnote disclosures normally included in statutory financial statements
prepared in accordance with U.K. GAAP have been condensed or omitted. The
results of operations for the 26 weeks ended 30 March 2002 may not necessarily
be indicative of the operating results that may be achieved for the entire
financial year.
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's financial statements for the year
ended 29 September 2001, with the exception that the results reflect the
adoption of FRS 19 "Deferred Tax" and the 29 September 2001 and the 31 March
2001 comparative figures have been restated accordingly.
U.K. GAAP differs in certain significant respects from accounting principles
generally accepted in the United States of America ("U.S. GAAP"). The
application of the latter would have affected the determination of profit/(loss)
to the extent summarised in Note 14 to the interim financial statements.
These interim financial statements should be read in conjunction with the
financial statements and the notes thereto included in the Company's latest
annual report.
2 Turnover 26 weeks 26 weeks 13 weeks 13 weeks 52 weeks
to to to to to
30 March 31 March 30 March 31 March 29 Sept.
2002 2001 2002 2001 2001
(Unaudited)(Unaudited) (Unaud- (Unaud-
ited) ited)
pound m pound m pound m pound m pound m
Food Service Equipment
- North America 228.3 234.8 122.0 124.2 498.7
Food Service Equipment
- Europe and Asia 72.8 87.4 35.9 46.7 185.4
Food Retail Equipment 88.9 97.5 42.2 49.8 203.1
----------------------------------------------------------------------
Food Equipment 390.0 419.7 200.1 220.7 887.2
Property - 0.9 - 0.9 16.6
----------------------------------------------------------------------
Continuing operations 390.0 420.6 200.1 221.6 903.8
Discontinued operations - 132.9 - 71.6 177.3
----------------------------------------------------------------------
390.0 553.5 200.1 293.2 1,081.1
----------------------------------------------------------------------
Turnover from discontinued operations represents the Building and Consumer
Products business sold in June 2001.
3 Operating profit/(loss)
26 weeks to 26 weeks to
30 March 2002 31 March 2001
----------------------- -----------------------
Before Except Before Except-
except- ional except- ional
ional items ional items
items Total items Total
(Unaud- (Unaud- (Unaud- (Unaud- (Unaud- (Unaud-
ited) ited) ited) ited)/ ited)/ ited)/
pound m pound m pound m pound m pound m pound m
Food Service Equipment
- North America 24.6 - 24.6 23.0 (16.9) 6.1
Food Service Equipment
- Europe and Asia 4.3 (1.7) 2.6 9.2 (0.9) 8.3
Asia
Food Retail Equipment 1.5 (2.0) (0.5) 4.5 (7.0) (2.5)
----------------------------------------------------------------------
30.4 (3.7) 26.7 36.7 (24.8) 11.9
Food Equipment goodwill
amortisation (10.1) - (10.1) (11.7) - (11.7)
----------------------------------------------------------------------
Food Equipment 20.3 (3.7) 16.6 25.0 (24.8) 0.2
Property - - - - - -
Corporate costs (4.2) - (4.2) (4.5) (15.7) (20.2)
-
----------------------------------------------------------------------
Continuing operations 16.1 (3.7) 12.4 20.5 (40.5) (20.0)
Discontinued operations - - - 7.6 - 7.6
----------------------------------------------------------------------
16.1 (3.7) 12.4 28.1 (40.5) (12.4)
----------------------------------------------------------------------
13 weeks to 13 weeks to
30 March 2002 31 March 2001
---------------------- ----------------------
Before Except Before Except-
except- ional except- ional
ional items ional items
items Total items Total
(Unaud- (Unaud- (Unaud- (Unaud- (Unaud- (Unaud-
ited) ited) ited) ited)/ ited)/ ited)/
pound m pound m pound m pound m pound m pound m
Food Service Equipment
- North America 14.8 - 14.8 12.9 (24.8) (11.9)
Food Service Equipment
- Europe and Asia 1.6 (0.4) 1.2 6.0 - 6.0
Food Retail Equipment (0.2) (0.8) (1.0) 2.1 - 2.1
----------------------------------------------------------------------
16.2 (1.2) 15.0 21.0 (24.8) (3.8)
Food Equipment goodwill
amortisation (5.1) - (5.1) (6.3) - (6.3)
----------------------------------------------------------------------
Food Equipment 11.1 (1.2) 9.9 14.7 (24.8) (10.1)
Property - - - - - -
Corporate costs (2.1) - (2.1) (2.5) (15.7) (18.2)
----------------------------------------------------------------------
3 Operating profit/(loss) (continued) -
Continuing operations 9.0 (1.2) 7.8 12.2 (40.5) (28.3)
Discontinued operations - - - 5.1 - 5.1
----------------------------------------------------------------------
9.0 (1.2) 7.8 17.3 (40.5) (23.2)
----------------------------------------------------------------------
52 weeks to 29 September 2001
-------------------------------------
Before Exceptional Total
exceptional items
items
pound m pound m pound m
Food Service Equipment
- North America 62.6 (25.6) 37.0
Food Service Equipment
- Europe and Rest of the World 17.7 (5.2) 12.5
Food Retail Equipment 10.4 (12.6) (2.2)
----------------------------------------------------------------------
90.7 (43.4) 47.3
Food Equipment goodwill
amortisation/impairment (23.0) (100.0) (123.0)
----------------------------------------------------------------------
Food Equipment 67.7 (143.4) (75.7)
Property 9.0 - 9.0
Corporate costs (8.9) (24.1) (33.0)
----------------------------------------------------------------------
Continuing operations 67.8 (167.5) (99.7)
Discontinued operations 9.1 - 9.1
----------------------------------------------------------------------
76.9 (167.5) (90.6)
----------------------------------------------------------------------
Operating profit from discontinued operations represents the Building and
Consumer Products Business sold in June 2001.
4 Exceptional items 26 weeks to 26 weeks to 52 weeks to
(a) Operating exceptional items 30 March 31 March 29 September
2002 2001 2001
(Unaudited)(Unaudited)
pound m pound m pound m
Restructuring costs 3.7 14.5 33.1
Revisions to working capital
provisions and - 13.7 13.7
other exceptional warranty costs
Litigation costs - 12.3 12.2
Costs associated with the
Board's review of strategic options - - 8.5
-----------------------------------
3.7 40.5 67.5
Goodwill impairment - - 100.0
-----------------------------------
Operating exceptional items 3.7 40.5 167.5
-----------------------------------
Restructuring costs in the 26 weeks to 30 March 2002 principally represent
costs associated with the closure of excess operating capacity in our food
retail equipment group and the further rationalising of administration functions
and simplifying management structures in the European businesses within the
global food service equipment group.
4 Exceptional Items (continued) - -
(b) Disposal of businesses 26 weeks 26 weeks 52 weeks
to to to
30 March 31 March 29 September
2002 2001 2001
(Unaudited)(Unaudited)
pound m pound m pound m
Net cash flow from the
disposal of Sammic SA 18.5 - -
Net cash flow from the
disposal of Magnet/(Payment to (2.1) - 98.6
Nobia AB)
------------------------------------------------------------------------
Net cash flow from disposals 16.4 - 98.6
------------------------------------------------------------------------
On 13 December 2001, the Group disposed of Sammic SA and its subsidiary
undertakings for consideration of pound 20.0m realising a profit on disposal of
pound 2.7m after writing back goodwill of pound 10.4m previously written off
against reserves. The net cash proceeds of pound 18.5m have been used to repay
debt.
During the period pound 2.1m was paid to Nobia AB, the acquirers of the
Building and Consumer Products business in respect of the value of net assets
transferred following the sale of the business in June 2001.
(c) Net interest payable and similar charges
26 weeks 26 weeks 52 weeks
to to to
30 March 31 March 29 September
2002 2001 2001
(Unaudited)(Unaudited)
pound m pound m pound m
Deferred financing fees written off 4.2 5.8 5.8
Refinancing fees 4.2 - -
------------------------------------------------------------------------
8.4 5.8 5.8
------------------------------------------------------------------------
Deferred finance fees written off relate to amounts previously capitalised
in respect of the facility that was replaced by the refinancing announced on 20
February 2002. Refinancing fees represent amounts payable to banks in relation
to the termination of our previous facilities and costs associated with the
bridging facility under the Group's new arrangements announced on 20 February
2002 (see note 9).
5 Taxation
(a) Analysis of charge in period 26 weeks to 26 weeks to 52 weeks to
30 March 31 March 29 September
2002 2001 2001
(Unaudited) (Unaudited) (Restated)
(Restated)
pound m pound m pound m
The tax charge for the current period comprised:
UK taxation at 30% - - -
Foreign taxation 1.8 2.5 8.6
-------------------------------------------------------------------------
1.8 2.5 8.6
Tax relief on exceptional items - - (2.0)
-------------------------------------------------------------------------
1.8 2.5 6.6
Deferred taxation (0.4) 1.4 4.8
-------------------------------------------------------------------------
1.4 3.9 11.4
-------------------------------------------------------------------------
(b) The Group tax rate benefits from the effect of tax losses brought
forward. A current tax charge arises principally because of profits arising in
overseas countries where there are no available losses.
(c) The adoption of FRS 19 "Deferred Tax" has required changes in the
method of accounting for deferred tax assets and liabilities. As a result of
these changes, the comparative periods have been restated as follows,
principally in respect of tax losses and warranty reserves.
31 March 29 September
2001 2001
pound m pound m
(Restated) (Restated)
Deferred tax provision as
previously reported - -
Adjustment to recognise
deferred tax in respect of 30.3 26.9
timing differences
-------------------------------------------------------------------------
Deferred tax asset as restated 30.3 26.9
-------------------------------------------------------------------------
(d) Analysis of deferred tax asset 30 March 31 March 29 September
2002 2001 2001
pound m pound m pound m
(Unaudited) (Unaudited) (Restated)
(Restated)
US revenue losses 13.4 14.0 12.7
Warranties 8.2 8.2 8.2
Pension and SERP related reserves 4.3 3.4 4.0
Accrued compensation related items 3.2 1.0 3.2
Other short term timing differences 6.6 12.9 6.8
-------------------------------------------------------------------------
35.7 39.5 34.9
Accelerated capital allowances (8.4) (9.2) (8.0)
-------------------------------------------------------------------------
27.3 30.3 26.9
A deferred tax asset has only been recognised in respect of those losses
which are expected to be utilised in the immediate future.
6 Equity dividends
26 weeks 26 weeks 52 weeks
to to to
30 March 31 March 29 September
2002 2001 2001
(Unaudited)(Unaudited)
pound m pound m pound m
Interim and final dividend - 5.0 4.8
----------------------------------------------------------------------
pence pence pence
Interim and final dividend
(net per ordinary share) - 2.0 2.0
----------------------------------------------------------------------
7 Earnings /(loss) per share
26 weeks 26 weeks 13 weeks 13 weeks 52 weeks
to to to to to
30 March 31 March 30 March 31 March 29 Sept.
2002 2001 2002 2001 2001
(Unaud- (Unaud (Unaud- (Unaud (Restated)
ited) ited)/ ited) ited)/
(Restated) (Restated)
pound m pound m pound m pound m pound m
Basic and diluted loss
attributable to (9.8) (43.2) (5.4) (42.7) (120.7)
shareholders
----------------------------------------------------------------------
m m m m m
Basic weighted average
number of shares 307.5 307.3 307.5 307.1 307.3
Executive share
options - 0.6 - 0.4 0.2
Share save options - 0.4 - 0.2 0.2
----------------------------------------------------------------------
Diluted weighted average
number of shares 307.5 308.3 307.5 307.7 307.7
----------------------------------------------------------------------
26 weeks 26 weeks 13 weeks 13 weeks 52 weeks
to to to to to
30 March 31 March 30 March 31 March 29 Sept.
2002 2001 2002 2001 2001
(Unaud- (Unaud- (Unaud- (Unaud- (Rest-
ited) ited)/ ited) ited) ated)
(Restated)
pence Pence pence pence pence
Basic loss per share (3.2) (14.1) (1.8) (13.9) (39.3)
Effect per share of
exceptional items 3.1 15.1 1.8 15.1 15.5
Effect per share of
goodwill amortisation
and impairment 3.3 3.8 1.7 2.1 40.1
----------------------------------------------------------------------
Adjusted basic earnings
per share 3.2 4.8 1.7 3.3 16.3
----------------------------------------------------------------------
Diluted loss per share (3.2) (14.1) (1.8) (13.9) (39.3)
Effect per share of
exceptional items 3.1 15.1 1.8 15.1 15.5
7 Earnings /(loss) per share (continued)
Effect per share of
goodwill amortisation
and impairment 3.3 3.8 1.7 2.1 40.1
----------------------------------------------------------------------
Adjusted diluted earnings
per share 3.2 4.8 1.7 3.3 16.3
----------------------------------------------------------------------
On 20 February 2002, the Company announced a rights issue which was
subsequently approved by the shareholders at the Extraordinary General Meeting
held on 18 March 2002. On 9 April 2002, 150,174,595 new ordinary shares were
issued at 50p per share on the basis of three new ordinary shares for every five
existing ordinary shares.
The actual cum rights price on 18 March 2002, the last day of quotation cum
rights, was 101.5p per share and the theoretical ex-rights price for an ordinary
share was 82.2p per share.
In accordance with FRS 14 "Earnings per share", the earnings per share for
all reported periods have been restated to reflect the effect of the bonus
element of the rights issue.
8 Stocks 30 March 31 March 29 September
2002 2001 2001
pound m pound m pound m
(Unaudited) (Unaudited)
Raw materials and consumables 36.9 51.9 42.2
Work in progress 15.7 17.7 15.7
Finished goods 40.9 81.3 36.4
----------------------------------------------------------------------
93.5 150.9 94.3
Property 10.3 9.4 11.3
----------------------------------------------------------------------
103.8 160.3 105.6
----------------------------------------------------------------------
9 Borrowings
.. (a) On 20 February 2002 the Group announced new financing arrangements to
replace the existing multi-currency revolving credit agreement. These included a
new committed senior credit facility consisting of a five year amortising $300
million term loan, a six year $70 million term loan, a five year $85 million
revolving multi-currency facility and a 10 year pound 150 million bridge
facility.
On 26 March 2002 the Company received the proceeds of a pound 100 million senior
subordinated note issue, priced at 10 3/8%, maturing in April 2012. The net
proceeds were applied in part repayment of the bridge facility. On 9 April 2002,
the Company completed a gross pound 75.1 million three for five underwritten
rights issue. The net proceeds were applied in part to repay in full the balance
of the bridge facility and in part against the senior credit facility.
Since the period end, the $300 million term loan has been reduced to $254.8
million, by applying $23.0 million from the rights issue proceeds and $22.2
million from the net proceeds of the sale of Belshaw Bros, Inc (more fully
described in note 13) against the facility. The term loan will be reduced
further by $9.8 million following the disposal of Austral (see note 13).
9 Borrowings (continued)
The Group enters into interest rate swaps and forward rate agreements (FRAs) to
change a portion of its floating rate debt into fixed rate debt and so reduce
the impact of changes in interest rates on the Group's interest charge. At 30
March 2002, the Company had interest rate swaps and FRAs outstanding with an
aggregate value of $383.0 million of which $86.0 million have not yet commenced.
The Group has also entered into cross-currency swaps to change the underlying
currency profile of the debt. Two contracts have been entered into to exchange
an aggregate of pound 60.0 million for US dollars and Euros, such that the
currency profile of the debt more closely matches the currency profile of the
assets.
(b) Reconciliation of net debt to Balance Sheet
30 March 31 March 29 September
2002 2001 2001
pound m pound m pound m
(Unaudited)(Unaudited)
Cash at bank 49.9 58.0 39.4
Current borrowing (10.1) (0.4) (2.4)
Exclude current portion
of deferred financing (4.5) (0.8) (1.1)
costs
----------------------------------------------------------------------
Net cash 35.3 56.8 35.9
Long term lease
obligations (0.4) (0.8) (1.2)
10 3/8% senior
subordinated notes (100.0) - -
Other long term debt (304.0) (549.0) (397.7)
Exclude long term
portion of
deferred finance (11.4) (0.8) (2.9)
----------------------------------------------------------------------
Net debt at end of period (380.5) (493.8) (365.9)
----------------------------------------------------------------------
10 Equity shareholders' funds
a) Following the implementation of FRS 19 "Deferred tax" (note 5), equity
shareholders' funds at 29 September 2001 have been restated as follows.
29 September
2001
pound m
(Restated)
Equity shareholders' funds as previously reported 87.2
Cumulative effect on profit and loss account reserve of 26.9
implementing FRS 19 "Deferred tax"
----------------------------------------------------------------------
Equity shareholders' funds as restated 114.1
----------------------------------------------------------------------
b) Reconciliation of equity shareholders'
funds Share Share Profit
capital premium & loss Total
pound m pound m pound m pound m
At 29 September 2001
(restated) 125.1 239.0 (250.0) 114.1
Loss for the period - - (9.8) (9.8)
Share issue costs - (4.8) - (4.8)
10 Equity shareholders' funds (continued)
Goodwill written back
on disposals previously - - 10.4 10.4
written off
Currency realignment - - 1.6 1.6
----------------------------------------------------------------------
At 30 March 2002 125.1 234.2 (247.8) 111.5
----------------------------------------------------------------------
The costs associated with the rights issue (see note 7) have been charged to the
share premium account. The shares were issued and the proceeds of pound 75.1
million were received on 9 April 2002.
11 Foreign currency translation
The results of subsidiary companies reporting in currencies other than Pounds
Sterling have been translated at the average rate prevailing for each month for
the 26 weeks to 30 March 2002, the weighted average exchange rate for sales and
profit being
pound 1=$1.44. Results to 31 March 2001 were translated at the rate
of pound 1=$1.46 and full year results to 29 September 2001 at pound 1=$1.44.
Results for the 13 week period to 30 March 2002 were
translated at the rate of pound 1 =$1.42 and for the 13 weeks to 31 March 2001
at pound 1=$1.47. The closing rate for the US Dollar at 30 March 2002 and 31
March 2001 was pound 1=$1.42 and at 29 September 2001was pound 1=$1.47.
12 Results for 2001
The accounts in this statement do not comprise full accounts within the meaning
of section 240 of the Companies Act 1985. The figures for the 52 weeks to 29
September 2001 have been extracted from the 2001 Annual Report but do not
comprise statutory accounts for that period. The audited financial statements
have been delivered to the Registrar of Companies. The Auditors made an
unqualified report on those accounts and their report did not contain any
statement under section 237 (2) or (3) of the Companies Act 1985. The figures
for the 52 weeks to 29 September 2001 have been restated to reflect the
introduction of FRS 19 "Deferred tax". The figures for the 26 week periods to 30
March 2002 and 31 March 2001 have been extracted from underlying accounting
records and have been reviewed but not audited.
13 Events occurring after the end of the financial period
On 20 February 2002, the Company announced a rights issue which was subsequently
approved by the shareholders at the Extraordinary General Meeting held on 18
March 2002. On 9 April 2002, 150,174,595 new ordinary shares were issued at 50p
per share on the basis of three new ordinary shares for every five existing
ordinary shares.
On 24 April 2002 the Group sold Belshaw Bros, Inc (`Belshaw') for a cash
consideration of pound 16.7 million ($24.2 million) payable in full upon
completion. The cash consideration, net of expenses, has been used to reduce
debt.
On 21 May 2002 the Group sold Austral Refrigeration Pty Limited (`Austral') for
a net cash consideration of pound 7.5 million payable in full on completion. The
consideration, net of expenses, will be used to reduce debt.
14 US GAAP reconciliation
26 weeks to 26 weeks to 52 weeks to
30 March 31 March 29 September
2002 2001 2001
pound m pound m pound m
(Unaudited) (Unaudited) (Restated)
Net profit/(loss)
Net loss under UK GAAP (9.8) (43.2) (120.7)
Items increasing/(decreasing)
UK GAAP operating profit
- Goodwill amortisation (7.4) (8.4) (16.6)
- Goodwill impairment - - 9.8
- Pension costs 0.6 3.0 5.9
- Sale/leaseback transactions - (0.7) (1.3)
- Restructuring charges (0.4) - 0.4
- Other 0.6 (0.7) (0.1)
Items increasing/(decreasing)
UK GAAP non-operating profit
- Deferred taxation (3.4) 3.7 8.1
- Gain on sale of businesses 3.5 - 0.8
----------------------------------------------------------------------
Net income in accordance with
US GAAP (16.3) (46.3) (113.7)
----------------------------------------------------------------------
Independent review report to Enodis plc Introduction
We have been instructed by the Company to review the financial information for
the 26 weeks ended 30 March 2002 which comprises the profit and loss account,
the balance sheet, the cash flow statement and related notes 1 to 13. We have
read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of Group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly, we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the 26 weeks ended
30 March 2002.
Deloitte & Touche
Chartered Accountants 1 Little New Street London EC4A 3TR
22 May 2002
Contact:
For Enodis plc
Andrew Allner, 020 7304 6006
Dave Wrench, 020 7304 6006
Andrew Lorenz, 020 7269 7113
***********************************************************
Enodis plc Announcement of Board and Senior Management Changes
LONDON--(BUSINESS WIRE)--May 23, 2002--Enodis plc (NYSE: ENO - News)
Enodis announces the following Board and senior management changes:-
. Dave McCulloch, currently President - Global Food Service Equipment
and a Board Director, based in Tampa, Florida, USA, is appointed Chief
Operating Officer - Enodis, effective immediately.
. Dave Wrench, currently Chief Financial Officer - Global Operations,
based in Tampa, is appointed Chief Financial Officer - Enodis and will
join the Board, effective immediately.
. Bob Eimers, currently Vice President - Human Resources, based in
Tampa, is appointed Executive Vice President - Global Human Resources
and will join the Board, effective immediately.
Also, Dave Odum, currently President - Food Retail Equipment will resign from
the Board and leave the Group at the end of May 2002 and Stuart Miller,
currently Chief Financial Officer - Group, will leave the Group at the end of
May 2002.
Following these changes, the Board of Enodis will comprise four Executive
Directors: Andrew Allner, who remains Chief Executive Officer, Dave McCulloch,
Dave Wrench and Bob Eimers; and four non-Executive Directors: Peter Brooks,
Chairman, Robert Briggs, Eryl Morris and Waldemar Schmidt. Andrew Allner, based
in London, will continue to spend a significant amount of his time in the USA
and will, for the time being, assume direct responsibility for the remaining
Food Retail Equipment businesses. The Board will take steps to appoint in due
course an additional non-Executive Director to provide a majority of
non-Executive Directors on the Board.
Dave McCulloch, aged 55, joined Garland Canada in 1986 as Vice President
Operations and went on to become President of the Garland Group in 1995. In
1998, he was appointed President, Global Specifications Group. In March 2001 he
became President Food Service Equipment - North America, and he was appointed
President - Global Food Service Equipment in September 2001. Prior to joining
Garland Canada in 1986, Dave was employed by the General Electric group.
Dave Wrench, aged 56, joined Enodis as CFO for the Specification Group in 2000.
He was appointed CFO Foodservice Equipment Group - North America in March 2001,
and became CFO - Global Operations in November 2001. Prior to joining Enodis,
Dave spent 23 years with General Electric in various financial and general
management assignments.
Bob Eimers, aged 54, has almost 25 years of experience in human resources and is
an expert in the assessment and development of both leaders and organisations.
Bob came to Enodis in July 2001, having previously worked in the acquired
Scotsman Industries company. Prior to joining Scotsman, Bob was the senior human
resources officer for three large corporations, Household International Inc.,
Sonoco Products Company and Service Merchandise Company Inc. In each case, he
had global HR accountability.
Following the recapitalisation and the recent non-core business disposals, the
changes announced today represent the final step in delayering and streamlining
the senior executive team to a structure appropriate to the Group's needs for
the foreseeable future.
Peter Brooks, Chairman of Enodis, said
"We have in place the right senior management team to take Enodis forward. This
team, under the leadership of Andrew Allner, has proved itself over the last
year in difficult circumstances. It has the right balance of skills and
experience to lead Enodis forward as we implement and benefit from our strategy
to establish Enodis as the clear world leader in Food Service Equipment".
This press release contains "forward-looking statements," within the meaning of
the U.S. federal securities laws, that represent the Company's expectations or
beliefs regarding future events, based on currently available information,
including statements concerning its anticipated performance and plans. These
statements by their nature involve substantial risks and uncertainties, many of
which are beyond the Company's control. The Company's actual results could
differ materially from those expressed in the forward-looking statements due to
a variety of important factors, including the Company's substantial debt
obligations and restrictive covenants; susceptibility to regional economic
downturns, currency fluctuations, large customer order slowdowns and other risks
related to its U.S., U.K. and foreign operations; its ability to realise costs
savings from its cost reduction program; keen competition in its fragmented and
consolidating industry; and the other risk factors and more complete
descriptions of these factors found under "Risk Factors" in the Company's Form
F-4 registration statement (and any amendments to it) filed with the SEC.
--------------------------------------------------------------------------------
Contact:
Enodis plc
Andrew Allner, 020 7304 6006
Peter Brooks, 020 7304 6006
Enodis plc Sells Aladdin for 27 Million Pounds
LONDON--(BUSINESS WIRE)--May 23, 2002--Enodis plc (NYSE: ENO - News), a world
leading food service equipment manufacturer, announces that it has agreed to
sell Aladdin Temp-Rite LLC, Temp-Rite International and a number of other
Aladdin / Temp-Rite companies ("Aladdin / Temp-Rite") to Ali SpA of Milan for a
net cash consideration, all payable on completion, of US$39.2m (27.0m pounds).
Completion is expected later today. The consideration, less expenses, will be
used to reduce debt.
Aladdin / Temp-Rite whose principal place of business is Nashville Tennessee
manufactures and distributes meal delivery systems, mainly for the healthcare
sector. It also has operations outside the US, principally in Canada and
Germany.
As at 29 September 2001, Aladdin / Temp-Rite had a net asset value of 12.3m
pounds (excluding goodwill and inter company balances). In the year to 29
September 2001, the business contributed 59.3m pounds to sales and 4.1m pounds
to operating profit.
Commenting on the sale, Andrew Allner, Chief Executive Officer, said:
"This transaction brings to a close our current phase of non-core disposals from
which, over the course of the past seven months, we have realised net proceeds
of around 70m pounds."
"Importantly, these disposals enable us to improve our focus on our core
activities. Our aim is to consolidate and extend our position as a world leading
manufacturer of heavy core commercial food service equipment through product,
distribution and service excellence."
This press release contains "forward-looking statements," within the meaning of
the U.S. federal securities laws, that represent the Company's expectations or
beliefs regarding future events, based on currently available information,
including statements concerning its anticipated performance and plans. These
statements by their nature involve substantial risks and uncertainties, many of
which are beyond the Company's control. The Company's actual results could
differ materially from those expressed in the forward-looking statements due to
a variety of important factors, including the Company's substantial debt
obligations and restrictive covenants; susceptibility to regional economic
downturns, currency fluctuations, large customer order slowdowns and other risks
related to its U.S., U.K. and foreign operations; its ability to realize cost
savings from its cost reduction program; keen competition in its fragmented and
consolidating industry; and the other risk factors and more complete
descriptions of these factors found under "Risk Factors" in the Company's Form
F-4 registration statement (and any amendments to it) filed with the SEC.
-----------------------------------------------
Contact:
Enodis plc
Andrew Allner, Chief Executive Officer
Dave Wrench, Chief Financial Officer
011 44 20 7304 6006
or
Financial Dynamics
Richard Mountain
011 44 20 7269 7291
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Throughout this document, the 26 weeks ended March 30, 2002 and March 31, 2001
are called, respectively, First Half 2002 and First Half 2001. The 13 weeks
ended December 29, 2001 are called First Quarter 2002. The 13 weeks ended March
30, 2002 and March 31, 2001 are called, respectively, Second Quarter 2002 and
Second Quarter 2001. The 52 weeks ended September 29, 2001 are called fiscal
2001. "We", "us", "our" "the Group" and "Enodis" refer to Enodis plc and its
consolidated subsidiaries, except where the context requires otherwise.
In our discussion of performance, we use "comparable" sales or profits which
reflect adjustments to actual results because of sales of businesses and to
eliminate the effect of foreign exchange.
Results of Operations
First Half 2002 Compared to First Half 2001
Turnover from Continuing Operations
First Half First Half %
2002 2001 change Q2 2002 Q2 2001 % change
----------------------------------------------------------------------
((Pounds) in millions, except percentages)
Global Food Service Equipment 301.1 322.2 (6.5%) 157.9 170.9 (7.6%)
Food Retail Equipment 88.9 97.5 (8.8%) 42.2 49.8 (15.3%)
Property - 0.9 (100%) - 0.9 (100%)
----------------------------------------------------------------------
390.0 420.6 (7.3%) 200.1 221.6 (9.7%)
======================================================================
Turnover in First Half 2002 benefited from approximately (Pounds)3.8 million of
foreign exchange movements compared to First Half 2001.
Global Food Service Equipment. The following table provides a summary of
turnover from our global food service equipment segment.
First Half First Half Q2 Q2
2002 2001 % Change 2002 2001 % Change
------------------------------------------------------------------
((Pounds) in millions, except percentages)
North America .................................. 228.3 234.8 (2.8%) 122.0 124.2 (1.8%)
Europe & Asia .................................. 72.8 87.4 (16.7%) 35.9 46.7 (23.1%)
--------- --------- ------ ------- ------ ----------
Total Global Food Service Equipment ............ 301.1 322.2 (6.5%) 157.9 170.9 (7.6%)
========= ========= ====== ======= ====== ==========
Turnover from our North American operations for First Half 2002 decreased by
(Pounds)6.5 million, or 2.8%, to (Pounds)228.3 million from (Pounds)234.8
million in First Half 2001, reflecting the continuing weakness in the food
service equipment market in North America, which we believe has declined
compared to the same period last year. Comparable sales decreased by 5% due to
the declining market and intense price competition, although we believe that we
are gaining market share. Turnover decreased in Second Quarter 2002 by
(Pounds)2.2 million, or 1.8%, to (Pounds)122.0 million from (Pounds)124.2
million in Second Quarter 2001 reflecting the decline in the market mentioned
above.
In First Half 2002, turnover for Europe and Asia declined by (Pounds)14.6
million, or 16.7%, to (Pounds)72.8 million from (Pounds)87.4 million in First
Half 2001. Excluding the effects of the sale of Sammic and, in the prior year,
Scotsman Response, comparable sales decreased 4%, which was due to a decrease in
sales volume in a market that we believe has
declined. Turnover in Second Quarter 2002 decreased by (Pounds)10.8 million or
23.1% to (Pounds)35.9 million from (Pounds)46.7 million in Second Quarter 2001.
Food Retail Equipment. First Half 2002 turnover declined by (Pounds)8.6 million,
or 8.8% to (Pounds)88.9 million from (Pounds)97.5 million in First Half 2001.
These results reflect improved performance at Kysor Panel Systems and at
Austral, now sold, offset by much weaker performance at Belshaw, now sold, and
very disappointing performance at Kysor Warren. We have completed an independent
market study and changed most of the Kysor Warren management team with the goal
of improving the performance of Kysor Warren. Turnover in First Half 2002
benefited by (Pounds)0.6 million from foreign exchange movements compared to
First Half 2001. Turnover in Second Quarter 2002 decreased by (Pounds)7.6
million, or 15.3%, to (Pounds)42.2 million from (Pounds)49.8 million in Second
Quarter 2001 for the reasons previously mentioned in the First Half analysis.
Property. There were no sales of property assets in First Half 2002. Property
generated turnover of (Pounds)0.9 million in First Half 2001.
Operating Profit from Continuing Operations before Goodwill Amortization and
Exceptional Items
The following table provides a summary of the total operating profit from
continuing operations before goodwill amortization and exceptional items.
First Half First Half
2002 2001 % change Q2 2002 Q2 2001 % change
------------------------------------------------------------------------
((Pounds) in millions, except percentages)
Global Food Service Equipment 28.9 32.2 (10.2%) 16.4 18.9 (13.2%)
Food Retail Equipment 1.5 4.5 (66.7%) (0.2) 2.1 (109.5%)
Property - - - -
Corporate Costs (4.2) (4.5) 6.7% (2.1) (2.5) 16.0%
-----------------------------------------------------------------------
26.2 32.2 (18.6%) 14.1 18.5 (23.8%)
=======================================================================
Operating profit from continuing operations before goodwill amortization and
exceptional items in First Half 2002 has benefited by approximately (Pounds)0.3
million as a result of foreign exchange translation movements compared to First
Half 2001.
Global Food Service Equipment. The following table sets forth a summary of our
operating profit from continuing operations before goodwill amortization and
exceptional items in our global food service equipment segment.
First Half First Half Q2 Q2
2002 2001 % change 2002 2001 % change
-------------------------------------- ------------------------------
((Pounds) in millions, except percentages)
North America ..................................... 24.6 23.0 7.0% 14.8 12.9 14.7%
Europe & Asia ..................................... 4.3 9.2 (53.3%) 1.6 6.0 (73.3%)
------------ --------- -------- --------- ------- ----------
Total Global Food Service Equipment ............... 28.9 32.2 (10.2%) 16.4 18.9 (13.2%)
============ ========= ======== ========= ======= ==========
Operating profit from continuing operations before goodwill amortization and
exceptional items in First Half 2002 benefited by (Pounds)0.4 million from
foreign exchange movements compared to First Half 2001.
Operating profit from continuing operations before goodwill amortization and
exceptional items in North America increased by (Pounds)1.6 million, or 7.0%, to
(Pounds)24.6 million in First Half 2002 from (Pounds)23.0 million in First Half
2001. Operating profit from continuing operations before goodwill amortization
and exceptional items as a percentage of turnover from North
America increased by 1.0 percentage point to 10.8% in First Half 2002 from 9.8%
in First Half 2001. Operating profit has increased on a comparable basis by 7%
to (Pounds)24.6 million, because adverse volume, net price and product mix
changes together with normal ongoing cost inflation, principally labor, were
more than offset by the benefits of our cost reduction programs that saved
(Pounds)10.5 million. Operating profit from continuing operations before
goodwill amortization and exceptional items increased in Second Quarter 2002 by
(Pounds)1.9 million, or 14.7%, to (Pounds)14.8 million from (Pounds)12.9 million
in Second Quarter 2001. Operating profit from continuing operations before
goodwill amortization and exceptional items as a percentage of turnover from
North America increased by 1.7 percentage points to 12.1% in Second Quarter 2002
from 10.4% in Second Quarter 2001.
Operating profit from continuing operations before goodwill amortization and
exceptional items in Europe and Asia decreased by (Pounds)4.9 million, or 53.3%,
to (Pounds)4.3 million in First Half 2002 from (Pounds)9.2 million in First Half
2001. On a comparable basis, the decrease was 48.0%. Operating profit from
continuing operations before goodwill amortization and exceptional items as a
percentage of net sales from Europe and Asia decreased by 4.6 percentage points
to 5.9% in First Half 2002 from 10.5% in First Half 2001. While cost savings
amounted to approximately (Pounds)2m, this was more than offset by adverse price
and product mix, additional infrastructure costs for new factories at Viscount,
Ventmaster and Convotherm, weak beverage dispensing equipment performance and
the absence of last year's property profits of (Pounds)0.9 million. Operating
profit from continuing operations before goodwill amortization and exceptional
items decreased by (Pounds)4.4 million, or 73.3%, in Second Quarter 2002 to
(Pounds)1.6 million from (Pounds)6.0 million in Second Quarter 2001, primarily
due to reduced sales in 2002.
Food Retail Equipment. Operating profit from continuing operations before
goodwill amortization and exceptional items decreased by (Pounds)3.0 million, or
66.7%, to (Pounds)1.5 million in First Half 2002 from (Pounds)4.5 million in
First Half 2001. The net effect on operating profit from continuing operations
before goodwill amortization and exceptional items of foreign exchange movements
in First Half 2002 compared with First Half 2001 was negligible. Operating
profit from continuing operations before goodwill amortization and exceptional
items as a percentage of net sales decreased by 2.9 percentage points to 1.7% in
First Half 2002 from 4.6% in First Half 2001. The decrease in operating profit
from continuing operations before goodwill amortization and exceptional items
principally reflects reduced sales of refrigeration systems and display cases by
Kysor Warren and weakening performance at Belshaw, now sold. This was offset in
part by stronger performance in refrigerated panels and walk-in freezers and
coolers sold by Kysor Panel Systems, along with improvements at Austral, now
sold. The decline in operating margin was partially offset by the effect of the
cost savings program enacted in the second half of fiscal 2001 and in First
Quarter 2002. Operating profit from continuing operations before goodwill
amortization and exceptional items decreased by (Pounds)2.3 million in Second
Quarter 2002 to an operating loss of (Pounds)0.2 million from a profit
(Pounds)2.1 million in Second Quarter 2001.
Property. Future profits from sales of property will depend on the nature and
size of the properties sold, as well as the timing of sales, which are
determined by management based on market and other considerations. We have
signed a contract for the sale of Felsted Phase 3, which is targeted for
practical completion and profit recognition at the end of September 2002.
Profits of (Pounds)7.0 million will be recognized on practical completion.
Goodwill Amortization
Amortization and impairment of goodwill from continuing operations decreased by
(Pounds)1.6 million to (Pounds)10.1 million in First Half 2002 from (Pounds)11.7
million in First Half 2001 due to the effect of the (Pounds)100 million
impairment in the value of our goodwill booked in
September 2001. This has been offset in part by the full half-year effect of the
amortization of goodwill arising from the Jackson acquisition in November 2000.
As previously discussed in the announcement of first quarter results, we are
currently reviewing the operations of Kysor Warren with the objective of
improving its operating performance. From its acquisition in 1999 to the end of
fiscal 2001, Kysor Warren operated at a profit (exclusive of exceptional costs
and goodwill amortization). However, Kysor Warren, along with its competitors,
has been adversely impacted by difficult market conditions but has also lost
market share due to a lack of customer focus. We have completed an independent
market study and changed most of the management team. The unaudited results of
this operation for Half Year 2002 showed an operating loss and were below
expectations. If the result of our review is the conclusion that the necessary
long-term improvement in performance cannot be achieved, then a significant part
of Kysor Warren's fixed assets (principally goodwill) would be impaired,
resulting in an exceptional non-cash charge. Such impairment cannot be
reasonably estimated at this time. As at March 30, 2002, the carrying value of
goodwill relating to Kysor Warren was approximately (Pounds)50 million.
Operating Exceptional Items
Exceptional operating charges from continuing operations totalled (Pounds)3.7
million for First Half 2002. These costs relate principally to the reduction of
excess capacity in our Food Retail Equipment group and the continuing
rationalization of administration functions within the European business.
Profit on Sale of Businesses and Other Assets
There were no sales of businesses or other assets in First Half 2001. However we
sold the Building and Consumer Products business in June 2001, and the results
from this business have been shown as discontinued operations. The profit from
the sale of businesses in First Half 2002 amounted to (Pounds)2.7 million, due
to the sale of Sammic for consideration of (Pounds)20 million.
Net Interest Payable and Similar Charges
Net interest payable and similar charges were (Pounds)23.3 million in First Half
2002 ((Pounds)26.9 million in fiscal 2001). Charges for First Half 2002 include
a write off of (Pounds)4.2 million in unamortized financing costs (First Half
was: (Pounds)5.8 million), and exceptional costs relating to the refinancing of
(Pounds)4.2 million. Excluding these charges, net interest expense decreased by
(Pounds)6.2 million or 29.4% to (Pounds)14.9 million in First Half 2002,
reflecting lower average principal outstanding and lower interest rates. Net
interest payable and similar charges, excluding the charges mentioned above,
decreased in Second Quarter 2002 by (Pounds)3.2 million to (Pounds)7.9 million
from (Pounds)11.1 million in Second Quarter 2001 principally reflecting the
decreased costs of borrowing and lower principal amount outstanding. Our current
debt position is discussed below under "Debt and Liquidity" and "Recent
Developments."
Tax on Profit/(Loss) on Ordinary Activities
Tax on profit/(loss) on ordinary activities decreased by (Pounds)2.5 million, or
64.1%, to (Pounds)1.4 million in First Half 2002 from (Pounds)3.9 million in
First Half 2001. Tax on profit/(loss) on ordinary activities decreased in Second
Quarter 2002 by (Pounds)1.8 million to (Pounds)0.8 million from (Pounds)2.6
million in First Quarter 2002. The effective underlying rate of current tax in
First Half 2002 was 15.9% versus 13.5% in First Half 2001 reflecting the
different geographical mix of profit in each year.
In December 2000, the Accounting Standards Board issued Financial Reporting
Standard 19 ("FRS 19"), "Deferred Tax," which replaced Statement of Standard
Accounting Practice
15 "Accounting for Deferred Tax" and prescribes significant changes to the
accounting disclosures for deferred tax. FRS 19 requires full provision to be
made for deferred tax assets (to the extent that they are estimated to be
recoverable in the immediate future) and liabilities arising from timing
differences between the recognition of gains and losses in the financial
statements and their recognition in a tax computation. Upon implementation of
FRS 19, all prior period results currently presented should be restated as
though FRS 19 had been applied throughout the relevant period. Accordingly,
results for fiscal 2001 have been restated, recognizing a deferred tax asset of
(Pounds)26.9 million at September 29, 2001, principally relating to timing
differences on tax losses and warranty reserves.
US GAAP Reconciliation
The nature of the US GAAP adjustments to net income for First Half 2002 did not
vary significantly from those in our fiscal 2001 annual report. The exceptional
items noted in the UK GAAP presentation would be not be presented as
extraordinary items under US GAAP.
Debt and Liquidity
Net debt at March 30, 2002, which did not reflect the benefit of the rights
offering proceeds, described below, was (Pounds)380.5 million, compared to
(Pounds)493.8 million at March 31, 2001, (Pounds)365.9 million at September 30,
2001 and (Pounds)376.1 million at December 29, 2001. The overall decrease from
March 31, 2001 reflects the efforts made over the last year in reducing debt,
including the sale of the Building and Consumer Products business in June 2001.
First Half 2002 pre-exceptional operating cashflow of (Pounds)30.8 million
(First Half 2001 (Pounds)34.2 million) was achieved in spite of (Pounds)12.0
million lower operating profits, principally due to improved collection of
accounts receivable. There was also additional net cash inflow from disposals of
(Pounds)16.4 million. These inflows have been offset by interest expense of
(Pounds)16.4 million, adverse foreign exchange movement due to the retranslation
of US dollar denominated debt of (Pounds)14.2 million, tax of (Pounds)0.4
million and the final payment of the Bomar litigation settlement of (Pounds)5.1
million, as well as financing fees of (Pounds)14.7 million and reorganization
and restructuring outflows of (Pounds)11.0 million.
The increase in debt in Second Quarter 2002 of (Pounds)4.4 million arose as
normal cashflows were insufficient to cover the payment of fees incurred in the
recapitalization described in the following paragraph.
Recapitalization
On February 20, 2002, we announced a recapitalization of the Group that
included:
- a three for five fully underwritten rights offering generating gross
proceeds of(Pounds)75.1 million, approximately(Pounds)69 million of which
was used to repay debt, with the balance available for general corporate
purposes;
- (Pounds)100 million of 10-3/8% senior subordinated notes sold into the
institutional market; and
- a new committed $455 million senior secured credit facility.
The rights offering and the note offering have been successfully completed, and
the syndication of the senior credit facility is progressing well and is
expected to be completed before the end of June 2002.
Dividend Policy
As previously announced in the first quarter results, our board of directors has
decided that it will only resume payment of a dividend when it is financially
prudent so to do. Furthermore, as an indirect result of the recent refinancing
we do not have distributable reserves and will require approval by shareholders
and an application to the High Court to take appropriate actions to resume
dividend payments. No such application has been made to date.
Recent Developments
After March 30, 2002, the following material events have occurred:
We completed a rights offering on April 9, 2002, in which qualifying existing
shareholders subscribed for 139,551,567 of our ordinary shares at a price of
(Pounds)0.50 per share. In addition, institutional and other investors
subscribed for 10,623,028 ordinary shares not purchased by shareholders in the
rights offering at a price of (Pounds)0.92 per share. In accordance with the
terms of the rights offering, the premium over the rights offering price (after
deducting the expenses of the procuring subscribers) has been distributed pro
rata to the shareholders entitled thereto. The gross proceeds of the rights
offering were (Pounds)75.1 million, approximately (Pounds)69 million of which
was used to repay debt, with the balance available for general corporate
purposes.
On April 24, 2002, we announced the sale of Belshaw, a subsidiary that
manufactures automated doughnut cooking systems, for a cash consideration of
(Pounds)16.7 million. The expected loss from the sale of Belshaw, after write
back of non-cash goodwill of (Pounds)25.0 million and costs will be (Pounds)15.9
million.
On May 21, 2002, we announced the sale of Austral, a subsidiary that
manufactures refrigeration equipment for a net cash consideration of (Pounds)7.5
million. The expected loss on the sale of Austral, after costs, will be
(Pounds)6.8 million.
On May 23, 2002, we announced the sale of our Aladdin and Temp Rite companies,
which manufacture and distribute meal delivery systems, for (Pounds)27.0
million. The expected loss on the sale, after costs, will be (Pounds)15.7
million.
In total, gross proceeds raised by these divestitures amount to some
(Pounds)51.2 million, and exceptional net losses, after writing off (Pounds)54.7
million of goodwill, are estimated to be (Pounds)38.4 million. The aggregate
operating profits for these companies for the last financial year were
(Pounds)9.2 million. During the First Half 2002, the aggregate operating profit
contribution for these businesses was (Pounds)4.0 million.
Although the sales are dilutive as regards earnings per share, they reduce debt
and enable us to focus on our core heavy food service equipment where we believe
we have significant competitive advantage.
Had we received the gross proceeds from the rights offering of (Pounds)75.1
million and the gross consideration of (Pounds)51.2 million from the sale of
businesses prior to March 30, 2002, then net debt at March 30, 2002, after
adjusting for related costs, would have been approximately (Pounds)270 million.
Outlook
While the market for food service equipment in North America remains uncertain
and pricing pressure significant, some more positive signs are emerging from
both the industry and end users. In Europe, the market outlook for food service
equipment is
weak, exacerbated by intense price competition. The market for food retail
equipment remains depressed. However, the key to our performance in this market
will be our ability to turn around Kysor Warren.
Our results for April 2002 and preliminary indications for May 2002 show better
than plan results from Food Service Equipment North America but weaker than plan
performance in Europe and at Kysor Warren.
Against this background, our expectations for full year operating profit are
unchanged from those at the time we released our preliminary results in November
2001, other than in respect of the impact of disposals. We expect the second
half to benefit from the effects of seasonality and management actions,
including cost saving initiatives and new product development.
So far this year, we have made good progress towards our key objectives. US
industry forecasts of food service sales are encouraging and confirm our view
that industry fundamentals are attractive, showing increased food and beverage
sales outside the home driven by lifestyle changes. Our Global Food Service
Equipment strategy is firmly on track. We believe Enodis is well positioned to
benefit as economies and markets recover.
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
May 24, 2002 By: /s/ W. David Wrench
----------------------------------------
Name: W. David Wrench
Title: Chief Financial Officer