Tomkins PLC Results Announcement for the Year Ended April 30, 2001
LONDON--June 28, 2001--Tomkins PLC today announced its results for the year ended April 30, 2001.
Financial Highlights
2001 2000 Change
(pound)m (pound)m
Sales:
- continuing businesses 3,335.1 3161.7 + 5.5%
- discontinued businesses 770.4 2478.7
Total sales 4,105.5 5,640.4
Operating profit:
- continuing businesses 308.5 341.6 - 9.7%
- discontinued businesses 11.5 184.4
Total operating profit 320.0 526.0
Profit before tax 157.5 252.3 - 37.6%
Basic earnings per share before
losses on disposal and
goodwill amortization (pence) 19.9 31.4 -36.6%
Total dividend per share (pence) 12.0 17.45 -31.2%
Net debt (pound)6.2m (pound)802.1m
Highlights:
| -- | A year of fundamental change at Tomkins achieving focus in our chosen manufacturing and engineering sectors. |
| -- | Good progress made on actions identified by the strategic review. |
| -- | Cost base reduced to respond to lower market volumes. |
| -- | Strong market positions maintained. |
| -- | Continuing progress on the development and introduction of new products. |
| -- | Satisfactory results against prevailing market conditions |
Commenting on the results, David Newlands, Chairman, said:
"We have achieved a fundamental transition of the group over the last twelve months despite the challenging market conditions and we have in place a good foundation for growth as our markets recover.
Without any clear indication as to how long the US economy will remain at lower levels of activity and given its importance to our business, it is not sensible to make early predictions about the outlook for the current financial year. Encouragingly, we have not seen a continuation of the sharp deterioration which we experienced in some of our markets in the first quarter of this calendar year and trading in our businesses is in line with expectations."
Tomkins is a world class global engineering group with market and technical leadership, manufacturing value added systems and components for the automotive, industrial and construction industries.
Tomkins shares trade in the US in ADR form (each equal to four ordinary shares) on the New York Stock Exchange under the symbol TKS; its ordinary shares are listed on the London Stock Exchange.
TOMKINS PLC PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED APRIL 30, 2001
CHAIRMAN'S STATEMENT
Our financial year to April 30, 2001 has proven to be a very busy and eventful period for Tomkins. It has been a year of fundamental change in the shape of our business portfolio and our Board. The Group is now in a position to concentrate on its continuing engineering businesses where there are prospects of solid growth and attractive financial returns.
Trading performance
With all the changes in the composition of the group during the year the headline financial information is not a meaningful reflection of the underlying performance of the continuing businesses. Also during the year the weakening demand in some of our markets, particularly the United States, has affected the results for the year.
Group turnover was(pound)4,105 million (2000:(pound)5,640 million) with turnover from continuing businesses ahead by 5 per cent to(pound)3,335 million (2000:(pound)3,162 million). Group operating profit before exceptional losses on disposals and goodwill amortization was(pound)320 million (2000:(pound)526 million) with operating profit from continuing businesses(pound)309 million (2000:(pound)342 million). Profit before tax (before exceptional losses on disposals and goodwill amortization) amounted to(pound)299 million (2000:(pound)479 million) and earnings per share was 19.9 pence (2000: 31.4 pence). After exceptional losses on disposals of(pound)132 million and goodwill amortization, profit before tax was(pound)158 million (2000:(pound)252 million) and earnings per share 3.4 pence (2000: 7.5 pence).
Losses on disposal of (pound)132 million (including goodwill previously written off against reserves now being passed through the profit and loss account) arose from businesses sold during the year (including Smith & Wesson) and are described in more detail in the Financial Review.
Operating cash flow, (defined as EBITDA, before exceptional losses on disposals, less net capital expenditure and working capital movement for the period), was (pound)250 million (2000: (pound)358 million). The reduction compared to the previous year was due to the effect of disposals and lower operating profit. The significant reduction in debt resulting from the proceeds from the disposals leaves the Group in a strong financial position.
Business portfolio
In the early part of the year we disposed of our interests in Food Manufacturing in Europe and the USA and we sold the garden products businesses, Murray and Hayter. After the year-end we also completed the exit from the Professional, Garden and Leisure segment of our business with the disposal of Smith & Wesson.
One of the Group's businesses, Totectors, identified for disposal at the time of the strategic review has been sold and a further seven businesses are at various stages in the disposal process.
Capital structure
Against the background of changes to the structure of the businesses we have continued to review the capital structure of the group. Discussions have taken place with the representatives of the trusts, which hold the Gates family preference shares but at this stage a suitable arrangement beneficial to each of our interests has not been concluded. We have both agreed to review the position regularly and as we noted in our interim statement the Gates family has been and is a most supportive shareholder.
The share buy back program continued at various times through the financial year. In total we acquired 169 million shares at an average price of 200 pence to reduce the number of Ordinary shares outstanding to 783 million. We are continuing with our commitment, announced at the time of the disposal of Ranks Hovis McDougall, to return up to (pound)700 million to shareholders, which may include preference shareholders, through the buy back program. The buy back program will be resumed shortly, purchasing shares in the market as they become available, without unduly affecting the market price. We have a remaining authority to purchase up to 20.5 million shares. Thereafter, further authority to purchase shares will be sought from shareholders as required.
Dividend
We indicated at the time of the Interim Results we expected to pay a total dividend for the year of 12.00 pence (2000: 17.45 pence). Accordingly we have decided to propose a final dividend of 7.4 pence per share (2000: 12.85 pence) in addition to the interim dividend of 4.6 pence (2000: 4.6 pence) already paid. This re-bases the total dividend for the year to a level from which it can be grown in future years on a sustainable and prudent basis taking into account the cyclical nature of some of the businesses, the continuing capital requirements and future prospects of the Group.
The Board
The composition of the Board has changed substantially during the year. In October, Greg Hutchings who led the development of Tomkins over a period of seventeen years resigned. It is sad that the issues outstanding with Greg Hutchings should have resulted in litigation. We will continue to defend the litigation to ensure the appropriate outcome is achieved for our shareholders.
Roger Holland and Ali Wambold have retired from the Board and they leave with our thanks and good wishes.
Since the last Annual General Meeting Norman Broadhurst and Ken Minton have joined Sir Brian Pitman and Marshall Wallach as non-executive directors, and have already made a significant contribution to the Group. An initial focus of the new Board has been to ensure that best practice corporate governance principles are followed and we are confident a sound framework is in place.
The process for the appointment of a new Chief Executive is progressing and we will make an announcement in due course.
Strategy
As shareholders are aware, during the year we conducted an extensive strategic review of all of our businesses with the assistance of outside consultants. We reported on the results of the review at the Interim Results' announcement but in summary the review confirmed that Tomkins has a number of excellent businesses with strong competitive positions in the markets in which they operate and form a sound platform from which to deliver value to shareholders.
We have made substantial progress completing the set of actions identified in the Interim Results statement although there remains more work to be done. We believe delivery of the actions is an important step to build market confidence and increase shareholder value. We will continually measure the success of this strategy by our ability to close the gap between the fundamental value of the Group and its market valuation. The Board recognizes that this is the ultimate measure of the delivery of value to our shareholders.
Outlook
In the early weeks of the new financial year trading generally in our businesses is in line with our expectations. Without any clear indication as to how long the US economy will remain at lower levels of activity and given its importance to our business, it is not sensible to make early predictions about the outlook for the current financial year. Whilst we anticipate that trading in our new financial year will remain challenging, we have not seen a continuation of the sharp deterioration which we experienced in some of our markets in the first quarter of this calendar year. The cost reductions and other actions we are taking in our businesses will provide a sound platform for growth as our markets recover.
OPERATING REVIEW
The operating review outlines the main features of the trading performance in the financial year to April 30, 2001.
The slow down in the US economy impacted our principal markets quite significantly as the financial year progressed, although markets outside of North America remained more encouraging. We experienced lower sales volumes to original equipment customers, particularly automotive, as well as de-stocking pressures throughout the distribution channels.
The impact on the businesses of the downturn in their markets has been mitigated in part by the strong strategic positions that they occupy and the spread of markets that they serve. Our businesses are leaders in most of their markets with approximately 75% of the sales of the group being generated in markets where we occupy either the number one or number two position.
Trading will remain challenging going forward where year on year declines in our principal markets are expected in North America of 8 per cent in the automotive build and around 3 to 5 per cent in residential, commercial and industrial construction. Our expectation is that the replacement markets will remain relatively stable and that markets outside of North America will continue to offer some growth opportunities.
Air Systems Components
2001 2000
Sales (pound)488m (pound)321m
Operating profit (pound)55m (pound)42m
Operating margin 11.3% 13.1%
Net operating assets (pound)139m (pound)131m
Return on net operating assets 39.6% 32.0%
Capital expenditure (pound)12 m (pound)10 m
Depreciation (pound)14 m (pound)9 m
Employees 7,129 7,023
Although the industrial, commercial and residential construction markets in North America passed their peak some time ago the impact on sales volumes only became apparent in the final quarter of the financial year as many of our products are supplied late in the building cycle. In each of our markets we managed to maintain or improve our market share due to our strong branding.
The margin in this business group overall showed some reduction reflecting in part some pricing pressures but also the effect of the inclusion of the lower margin Hart & Cooley business. As the markets recover and we gain the full benefit of our consolidation and rationalization activities we would expect margins to return to previous levels.
The integration of the Hart & Cooley business has involved a number of projects to rationalize our production capability and consolidate distribution arrangements to reduce our operating costs. Value analysis and value engineering of our products has allowed us to achieve further cost savings and some benefits of e-procurement have started to be realized.
Engineered & Construction Products
2001 2000
Sales 879m 919m
Operating profit 85m 120m
Operating margin 9.6% 13.0%
Net operating assets 248m 221m
Return on net operating assets 34.1% 54.1%
Capital expenditure 21 m 39 m
Depreciation 22 m 20 m
Employees 10,915 11,313
Each of our business areas in this business group has been affected by a slow down in the markets in the United States. In particular the manufactured housing and recreational vehicles markets which account for around 13% of this business group's sales was lower year on year by 33 per cent and 11 per cent respectively. The businesses were also affected by the decline in the housing and construction markets generally.
We are anticipating the rate of slow down in activity in these markets to moderate but do anticipate further modest reductions overall in the year ahead and have planned our businesses accordingly.
In our Bathware business volumes came under pressure as a result of the gradual decline in the residential housing market, which has been more pronounced in some of the key regional markets, the lower manufactured housing market and because of de-stocking by the wholesalers and retail home centers. Against this background strong brand recognition, regional competitiveness and additional volumes from the new contract with Whirlpool slightly increased market share and overcame the impact of market contraction. Gains in market share were achieved with new product introductions, expansion of business with some existing retail center customers and the new National Builder Programmes. The changing mix did reduce margins however.
The PVC pipe fittings business was affected by contraction in demand in the construction and industrial markets and also a slow down in demand for irrigation systems for the golf course market. Market shares improved slightly as sales increased to mass merchandisers in new geographic areas along with new export opportunities in Central America. There was some margin erosion as a result of competition, which to an extent was offset by aggressive cost reduction initiatives.
Our doors and windows business is most exposed to the manufactured housing and recreational vehicle markets and was affected accordingly. Volumes and margins were lower. In addition continuing disappointing performance from the wooden doors and windows business resulted in its closure at the end of the financial year with a cost of (pound)4.3 million. Acquisition of the Carefree business during the year has provided an improved competitive position in the vinyl residential market and added to market share.
Although volumes in the material handling business held up well during the financial year the overall backlog of work for the new financial year is lower compared with this time last year primarily as a result of the reduction in the capital spend of the major automotive original equipment manufacturers. The business is able to react promptly to a downturn in volume by reducing the levels of non-permanent labor and so it is expected the business will be able to preserve margins on lower volumes.
In wheels and axles, the general contraction in demand due to higher fuel costs, reduced discretionary spending activity and de-stocking reduced volumes. Action taken to preserve pricing and margin resulted in a slight reduction in market shares in the manufactured housing and recreational vehicle market whilst market share was steady in the largest market, utility and industrial, which also showed the smallest overall decline. Prompt action to further reduce costs mitigated the overall profit effect from the volume reduction.
Industrial & Automotive
2001 2000
Sales (pound)1,968m (pound)1,921m
Operating profit (pound)190m (pound)199m
Operating margin 9.7% 10.3%
Net operating assets (pound)870m (pound)725m
Return on net operating assets 21.9% 27.4%
Capital expenditure (pound)105 m (pound)88 m
Depreciation (pound)77 m (pound)80 m
Employees 25,400 25,335
The year was one of mixed fortunes for the Industrial & Automotive business. Although initially running at higher levels, sales volumes to automotive original equipment manufacturers tailed off in North America towards the end of the financial year as the major manufacturers reduced production. Automotive aftermarket sales during the year were erratic with some improvement driven by weather changes but they were negatively affected by de-stocking in the distribution channel. Industrial markets also showed declines, which were more marked in the second half of the year. Outside of North America overall performance was good particularly in Latin America and in Europe with Asia showing some recovery after the end of the labor dispute in Korea, which adversely affected the profit of the Power Transmission business by (pound)4 million overall.
Looking forward we are planning for automotive manufacturers' production volumes in North America to reduce year on year by around 8 per cent and in Europe and the rest of the world volumes are expected to be broadly static. Industrial markets are likely to see some further decline in the near term. However the effect of new product initiatives and increasing market penetration should serve to offset in part the downward pressure on volumes. Cost reduction initiatives are planned to offset the operational gearing effect on the margin.
Our Power Transmission business accounts for 41 per cent of the business group's turnover. Although there was little overall growth in its principal global markets there were regional variations which together with greater market penetration and new product sales gave rise to an overall sales growth of around 5 per cent. The effect of the Korea labor dispute and the impact of the operational difficulties in the pulley and dampers facility reduced margin slightly.
Geographic expansion into China continued with increased sales of scooter belts through the recently established manufacturing facility. In Eastern Europe sales efforts continued in Poland ahead of commissioning the new production facility.
Overall the markets for the Fluid Power business in North America and Europe were flat to declining. Volumes in the principal industrial markets, agriculture, construction and mobile equipment were already at low levels. The automotive after market was also relatively flat. Market shares in these lower markets remained broadly constant. A combination of mix and price pressures resulted in lower margins on sales which were down around 3 per cent.
In Fluid Systems the overall automotive original equipment market showed no growth but increased penetration into the markets for fuel valves, air conditioning valves and remote tire pressure monitoring increased original equipment manufacturer volumes. However the aftermarket showed some decline due to the effect of de-stocking from customer consolidation. Overall sales for this business were behind by around 4 per cent.
In Wiper Systems volumes to the automotive original equipment manufacturers were lower in North America reflecting the reducing production levels and were lower in Europe due to reduced sales to Rover and General Motors. Volumes were higher in South America with the launch of new General Motors and Ford models. Aftermarket sales edged ahead due to the harsher winter weather. Overall sales in the Wiper Systems business were lower by around 15 per cent year on year but the more favorable sales mix and cost action taken partly mitigated the margin effect.
Further corrective action is planned in this business to address the high cost base in the UK where losses increased slightly in the period.
FINANCIAL REVIEW
Financial statistics(a) 2001 2000
Return on sales (continuing businesses) 9.3% 10.8%
Interest cover 15.5 times 11.1 times
Interest and preference dividend cover 5.5 times 6.4 times
Effective tax rate 29.0% 29.5%
Return on equity after tax
(continuing businesses) 12.3% 14.5%
Return on invested capital after tax
(continuing businesses) 9.6% 10.6%
Dividend cover 1.6 times 1.6 times
(a) Financial statistics exclude goodwill amortization and exceptional
losses on disposals.
Financial resultsThe breakdown of the overall group financial performance referred to in the Chairman's statement was as set out below.
In the Air Systems Components group, sales increased by nearly 52 per cent to (pound)488 million (2000: (pound)321 million). Of this increase, (pound)150 million was due to the effect of the acquisition of Hart & Cooley, Air Diffusion and Actionair and (pound)5 million due to exchange rate movements leaving an underlying increase of (pound)11 million representing over 3 per cent. Operating profit rose by nearly 31 per cent to (pound)55 million (2000: (pound)42 million).
In the Engineered & Construction Products group, sales decreased by 4 per cent to(pound)879 million (2000:(pound)919 million). Operating profit reduced by around 29 per cent to(pound)85 million (2000:(pound)120 million). -
In the Industrial & Automotive group, sales were up by just over 2 per cent to (pound)1,968 million (2000: (pound)1,921 million). Of this increase, (pound)20 million was from acquisitions and (pound)32 million due to exchange rate movements leaving an underlying decrease of (pound)5 million representing 0.3 per cent. Operating profit was 4 per cent lower at (pound)190 million (2000: (pound)199 million).
Discontinued businesses
The Group completed its exit from Food Manufacturing on August 31, 2000 with the disposal of Ranks Hovis McDougall. Sales for the period up to August 31, 2000 were (pound)562 million and operating profit amounted to (pound)26 million.
The Group exited the major component of the Professional, Garden & Leisure Products business with the disposal of Murray and Hayter with effect from the end of September. In May 2001 we announced the sale of Smith & Wesson.
Sales were (pound)208 million and the operating loss totaled (pound)14m.
Margins
Operating margins reduced in the period with Air Systems Components at 11.3 per cent (2000: 13.1 per cent), Engineered & Construction Products at 9.6 per cent (2000: 13.0 per cent) and Industrial & Automotive at 9.7 per cent (2000: 10.3 per cent). Overall operating margins for the continuing businesses were 9.3 per cent (2000: 10.8 per cent).
Goodwill
Goodwill amortization in the year amounted to (pound)10 million (2000: (pound)5 million). Goodwill is being amortized over 20 years. During the year, goodwill relating to disposals, including Smith & Wesson, amounted to (pound)958 million.
Operating exceptional items
During the period there has been a settlement of litigation, which was outstanding at the time of the acquisition of the Gates Group in 1996. The settlement has resulted in an award in favor of the Group of (pound)29.1 million including interest of the order of (pound)4.1 million. In accordance with the original acquisition agreement this will result in the issue of further preference shares with a nominal value of around (pound)6.3 million to existing preference shareholders. The balance of some (pound)22.8 million is recorded as an exceptional credit to income as (pound)18.7 million operating profit in the Industrial & Automotive group and (pound)4.1 million interest income. The cash was received shortly after the year-end.
In arriving at the operating profit for the year Industrial & Automotive group charged costs of (pound)9.4 million associated with the relocation of capacity for the Power Transmission business from Erembodegem in Belgium to Poland.
It was announced at the Interim Results that the Group has incurred costs of (pound)5.9 million relating to the comprehensive strategic review performed by external consultants. This has been charged as a cost of the Centre in arriving at the operating profit of the Group.
The net operating profit impact of these items was (pound)3.4 million.
Exceptional losses on disposals
During the year we completed the disposals of Ranks Hovis McDougall, Red Wing, Murray and Hayter. The results of those businesses have been included in discontinued businesses to the date of disposal. The loss recorded on the disposal in the year amounted to (pound)281million, which included goodwill previously written off against reserves of (pound)732 million being recognized in the profit and loss account. Taking into account the provision for loss on disposal existing at April 29, 2000 of (pound)215 million the net loss on disposal of these companies amounted to (pound)66 million in the year.
Also on May 11, 2001 we disposed of our interest in Smith & Wesson. The results of the business for the year have been included in the results of discontinued businesses. A provision in respect of the expected loss on disposal of (pound)66 million has been established comprising (pound)42 million in respect of goodwill previously written off against reserves and (pound)24 million loss against the book value of the assets.
Finance costs
The net interest cost in the period was(pound)21 million (2000:(pound)47 million). The reduction was due to lower borrowings as a result of the proceeds from disposals. Interest cover in the period before goodwill amortization and exceptional losses on disposals was 15.5 times (2000: 11.1 times). Interest and preference dividend cover for the year was 5.5 times (2000: 6.4 times).
Earnings per share
Earnings per share before goodwill amortization and exceptional losses on disposals was 19.9 pence (2000: 31.4 pence). The movement is set out below:
Earnings per share bridge Pence
April 29, 2000 31.4
Lower average shares in issue 3.3
Movement in operating profit:
Continuing businesses (3.8)
Discontinued businesses (20.2)
Interest, tax and preference dividends 9.0
Minority interest 0.2
April 30, 2001 19.9
After goodwill amortization and exceptional losses on disposals earnings per share was 3.4 pence (2000: 7.5 pence).
Capital expenditure
Capital expenditure in the period was (pound)157 million (2000: (pound)247 million) and represents 1.1 times depreciation. For the continuing businesses capital expenditure was (pound)138 million.
Working capital
Overall working capital declined by (pound)86 million. Currency movements led to an increase of (pound)40 million and disposals reduced working capital by (pound)217 million. Working capital in the continuing businesses was higher by (pound)91 million. This was due to the debtor arising from the settlement of the litigation of (pound)29 million, lower creditors of (pound)52 million, primarily due to the elimination of the year end cash strive and other debtor increases of (pound)10 million. Stock levels were unchanged overall.
Cash flow
Operating cash flow, (defined as EBITDA, before exceptional items, less net capital expenditure and working capital movement for the period), was (pound)250 million (2000: (pound)358 million), representing a cash conversion of operating profit before exceptional items of 78 per cent (2000: 68 per cent). This was applied to paying tax of (pound)84 million (2000: (pound)63 million) and interest and dividends of (pound)215 million (2000: (pound)225 million). Net cash outflow before disposals and share buy backs was (pound)141 million (2000: (pound)38 million inflow). Of this outflow (pound)104 million (2000: (pound)21 million) arose from the impact of the US dollar hedging arrangements.
With the net proceeds from disposals in the period amounting to (pound)1.277 billion and the share buyback of (pound)341 million, the Group had net debt of (pound)6 million at the end of the period.
Taxation
The tax charge for the year was(pound)87 million (2000:(pound)141 million) representing an effective rate of 29.0 per cent (2000: 29.5 per cent).
Financial risk management
As explained at the time of the interim announcement the previous balance sheet hedging arrangements are being unwound and will be allowed to expire naturally at their maturity dates through to February 2003 or terminated earlier if appropriate. In the period to April 30, 2001 the net cash outflow attributed to the mark to market of the US dollar hedging arrangement was (pound)104 million.
The hedged exchange rate for the year to April 30, 2001 was (pound)1=$1.593 compared to an average rate during the period of (pound)1=$1.456. As announced at the time of the Interim Results the practice of hedging the profits of the Group forward for one year was discontinued with effect from May 1, 2001. The currency translation risk on overseas profits is now only covered to the extent there is interest on foreign currency borrowings set against operating profits. To the extent that the profits are not covered in this way they are subject to the risk of currency fluctuations.
Consolidated profit and loss account
For the year ended April 30, 2001 2001
Before
goodwill
amortization
and
exceptional Goodwill Exceptional
items amortization items(b) Total
Notes (pound) (pound) (pound) (pound)
million million million million
Turnover(a)
Continuing operations 3,335.1 - - 3,335.1
770.4 - - 770.4
Discontinued operations
1 4,105.5 - - 4,105.5
Operating profit
Continuing operations 308.5 (9.7) - 298.8
Discontinued operations 11.4 (0.2) - 11.2
319.9 (9.9) - 310.0
Share of profits of 0.1 - - 0.1
associates
Operating profit
including
associates 1 & 2 320.0 (9.9) - 310.1
Loss on disposal of
operations 14 - - (280.9) (280.9)
Reversal of provision
for loss on disposal of
business 14 - - 215.0 215.0
Provision for loss on
disposal of business to
be
discontinued:14
Impairment of goodwill - - (42.2) (42.2)
Impairment of assets - - (23.8) (23.8)
Payments directly
related to
the disposal - - - -
Profit before interest 320.0 (9.9) (131.9) 178.2
Net interest (20.7) - - (20.7)
Profit on ordinary
activities before
tax 299.3 (9.9) (131.9) 157.5
Before exceptional items 299.3 (9.9) - 289.4
Exceptional items - - (131.9) (131.9)
Tax on profit
on ordinary
activities 3 (86.8) - - (86.8)
Profit on ordinary
activities after tax 212.5 (9.9) (131.9) 70.7
Equity minority
interest (3.8) - - (3.8)
Profit attributable to
shareholders 208.7 (9.9) (131.9) 66.9
Dividends on equity
and non-equity
shares 5 (132.9) - - (132.9)
Retained profit/(loss) 75.8 (9.9) (131.9) (66.0)
Earnings per share
Basic 4 19.95p 3.42p
Diluted 4 19.32p 3.42p
Dividends per ordinary
share 5 12.00p
For the year ended April 30, 2001 2000
Before
goodwill
amortization
and
exceptional Goodwill Exceptional
items amortization items(b) Total
(pound) (pound) (pound) (pound)
Notes million million million million
Turnover(a)
Continuing operations 3,161.7 - - 3,161.7
2,478.7 - - 2,478.7
Discontinued operations
1 5,640.4 - - 5,640.4
Operating profit
Continuing operations 340.7 (4.5) - 336.2
Discontinued operations 183.4 (0.5) - 182.9
524.1 (5.0) - 519.1
Share of profits of 1.9 - - 1.9
associates
Operating profit
including
associates 1 & 2 526.0 (5.0) - 521.0
Loss on disposal of
operations 14 - - (6.3) (6.3)
Reversal of provision
for loss on disposal of
business 14 - - - -
Provision for loss on
disposal of business to
be
discontinued: 14
Impairment of goodwill - - (171.4) (171.4)
Impairment of assets - - - -
Payments directly
related to
the disposal - - (43.6) (43.6)
Profit before interest 526.0 (5.0) (221.3) 299.7
Net interest (47.4) - - (47.4)
Profit on ordinary
activities before
tax 478.6 (5.0) (221.3) 252.3
Before exceptional
items 478.6 (5.0) - 473.6
Exceptional items - - (221.3) (221.3)
Tax on profit
on ordinary
activities 3 (141.0) - - (141.0)
Profit on ordinary
activities after tax 337.6 (5.0) (221.3) 111.3
Equity minority
interest (5.8) - - (5.8)
Profit attributable to
shareholders 331.8 (5.0) (221.3) 105.5
Dividends on equity
and non-equity
shares 5 (200.2) - - (200.2)
Retained profit/(loss) 131.6 (5.0) (221.3) (94.7)
Earnings per share
Basic 4 31.38p 7.50p
Diluted 4 28.30p 7.49p
Dividends per ordinary
share 5 17.45p
(a) Comparative figures have been restated. See basis of preparation
(note 16).
(b) Exceptional items exclude those relating to operating profit (see
note 2).
Consolidated cash flow statement
For the year ended April 30, 2001
2001 2000
Notes (pound) (pound)
million million
Cash flow from
operating activities 6 388.2 578.0
Dividends received from
associated undertakings 0.5 0.7
Returns on investments and
servicing of finance 7 (64.6) (77.2)
Tax paid (net) 7 (83.9) (62.9)
Capital expenditure (net) 7 (138.9) (228.9)
Financial investment 7 (0.1) (0.2)
Acquisitions and disposals 7 1,258.5 (241.1)
Equity dividends paid (152.8) (149.4)
Net cash inflow/(outflow) before
use of liquid resources
and financing 1,206.9 (181.0)
Financing
Share issues (net of costs) 2.8 4.3
Buy back of own shares (340.9) (6.3)
Mark to market
of hedging instruments (104.3) (21.0)
Cash flow (decreasing)/increasing
debt and lease financing (843.3) 277.0
Net cash (outflow)/inflow
from financing 7 (1,285.7) 254.0
Management of liquid resources
Cash flow increasing cash on
deposit and
collateralized cash 7 (27.4) (24.9)
(Decrease)/increase
in cash in the year (106.2) 48.1
Reconciliation of net cash flow to movement in net debt
For the year ended April 30, 2001
2001 2000
Notes (pound) (pound)
million million
(Decrease)/increase in
cash in the year (106.2) 48.1
Cash flow decreasing/
(increasing)
debt and lease financing 7 843.3 (277.0)
Cash flow increasing cash on
deposit and
collateralized cash 7 27.4 24.9
Change in net debt
resulting from cash flows 8 764.5 (204.0)
Loans and finance leases
disposed/(acquired)
with subsidiaries 8 18.9 (46.9)
Translation difference 8 12.5 (5.2)
Decrease/(increase) in
net debt in the year 795.9 (256.1)
Net debt at April 29, 2000 8 (802.1) (546.0)
Net debt at April 30, 2001 8 (6.2) (802.1)
Consolidated balance sheet
At April 30, 2001 2001 2000
Notes (pound) (pound)
million million
Capital employed
Fixed assets
Intangible assets 199.7 203.4
Tangible assets 903.0 1,448.1
Investments 12.2 17.0
1,114.9 1,668.5
Current assets
Stock 473.5 695.7
Debtors 9 741.1 1,061.8
Cash 400.4 466.4
1,615.0 2,223.9
Current liabilities
Creditors: amounts falling
due within one year 10 (813.3) (1,466.7)
Net current assets 801.7 757.2
Total assets less
current liabilities 1,916.6 2,425.7
Creditors: amounts falling
due after more than one year 11 (425.8) (1,245.6)
Provisions for
liabilities and charges 12 (405.4) (465.2)
Net assets 1,085.4 714.9
Capital and reserves
Called up share capital
Ordinary shares 39.1 47.5
Convertible cumulative
preference shares 337.2 337.4
Redeemable convertible
cumulative preference shares 426.7 391.8
803.0 776.7
Share premium account 89.7 106.0
Capital redemption reserve 64.8 37.0
Profit and loss account 94.5 (238.3)
Shareholders' funds 1,052.0 681.4
Equity shareholders' funds 288.1 (47.8)
Non-equity shareholders' funds 763.9 729.2
Equity minority interest 33.4 33.5
1,085.4 714.9
Statement of total recognized gains & losses
For the year ended April 30, 2001 2001 2000
(pound) (pound)
million million
Profit attributable
to shareholders 66.9 105.5
Foreign exchange translation:
- group (5.9) (2.4)
- associated undertakings (0.1) 0.1
(6.0) (2.3)
Total recognized
gains and losses 60.9 103.2
Reconciliation of movement in shareholders' fund
For the year ended April 30, 2001 2001 2000
Notes (pound) (pound)
million million
Total recognized
gains and losses 60.9 103.2
Dividends 5 (132.9) (200.2)
(72.0) (97.0)
Ordinary share
issues (net of costs) 2.8 5.1
Payments to the QUEST - (0.8)
Buy back of own shares
(including stamp duty,
commissions and other costs) (341.2) (2.6)
Adjustment to prior year
dividends in respect of
share buy backs 6.6 -
Goodwill written
back on disposals 14 732.2 2.2
Write back of impaired
goodwill on proposed disposal 14 42.2 171.4
Net addition to
shareholders' funds 370.6 78.3
Shareholders' funds
at April 29, 2000 681.4 603.1
Shareholders' funds
at April 30, 2001 1,052.0 681.4
Notes to the preliminary announcement
1. Segmental analysis Operating net
Turnover Operating assets at
Restated profit(a) year end
--------------- --------------- ---------------
2001 2000 2001 2000 2001 2000
By activity: (pound) (pound) (pound) (pound) (pound) (pound)
million million million million million million
------- ------- ------- ------- ------- -------
Air Systems Components 487.9 321.6 54.9 42.0 138.8 131.4
Engineered &
Construction Products 878.9 918.8 84.7 119.7 248.3 221.3
Industrial
& Automotive 1,968.3 1,921.3 190.3 198.7 870.2 725.2
Food Manufacturing 562.1 1,898.6 26.0 162.0 - 528.6
Professional, Garden
& Leisure Products 208.3 580.1 (14.5) 22.4 (4.9) 242.1
Central costs - - (21.4) (18.8) (62.2) (63.8)
------- ------- ------- ------- ------- -------
4,105.5 5,640.4 320.0 526.0 1,190.2 1,784.8
Goodwill amortization - - (9.9) (5.0) - -
------- ------- ------- ------- ------- -------
4,105.5 5,640.4 310.1 521.0 1,190.2 1,784.8
------- ------- ------- ------- ------- -------
By geographical origin:
United
States of America 2,498.1 2,884.3 237.1 291.8 773.8 929.5
United Kingdom 787.4 1,908.6 28.4 167.5 73.2 526.7
Rest of Europe 309.8 341.0 13.1 15.9 110.8 124.5
Rest of the World 510.2 506.5 41.4 50.8 232.4 204.1
------- ------- ------- ------- ------- -------
4,105.5 5,640.4 320.0 526.0 1,190.2 1,784.8
Goodwill
amortization - - (9.9) (5.0) - -
------- ------- ------- ------- ------- -------
4,105.5 5,640.4 310.1 521.0 1,190.2 1,784.8
------- ------- ------- ------- ------- -------
The segmental presentation has been adjusted to provide a more
meaningful analysis of operations and to identify corporate costs
separately from the business activities. Comparative figures for
turnover have been restated. See accounting policies.
(a) Operating profit includes the group's share of the profits of
associated undertakings. The split of the profits of associated
undertakings analyzed by class of business is Air Systems
Components (pound)nil (2000 - (pound)nil), Engineered &
Construction Products loss of (pound)(0.3) million (2000 -
(pound)0.3 million), Industrial & Automotive (pound)0.3 million
(2000 - (pound)0.6 million), Food Manufacturing (pound)0.3 million
(2000 - (pound)1.0 million) and Professional, Garden & Leisure
Products loss (pound)(0.2) million (2000 - (pound)nil). The split
of the goodwill amortization charged for the year, analyzed by
class of business is Air Systems Components (pound)7.6 million
(2000 - (pound)2.5 million), Engineered & Construction Products
(pound)0.4 million (2000 - (pound)0.4 million), Industrial &
Automotive (pound)1.7 million (2000 - (pound)1.6 million), Food
Manufacturing (pound)0.2 million (2000 - (pound)0.5 million) and
Professional, Garden & Leisure Products (pound)nil (2000 -
(pound)nil)
Details of businesses acquired and disposed of by segment are
disclosed in note 14.
2. Operating exceptional items
2001 2000
(pound) (pound)
million million
------- -------
Operating profit is after (charging)/crediting
the following operating exceptional items:
Industrial & Automotive:
Settlement of action against
Bando Chemical Industries of Japan 18.7 -
Restructuring costs (9.4) -
Central costs:
Strategic review costs (5.9) -
------- -------
Total before tax 3.4 -
Tax attributable (1.5) -
------- -------
Total after tax 1.9 -
------- -------
In January 1992, Gates filed an action, alleging copyright infringement, misappropriation of trade secrets and unfair competition against Bando Chemical Industries of Japan, as well as certain individual defendants. A settlement was agreed during the year ended April 30, 2001, resulting in an award in favor of the group of $41.8 million ((pound)29.1 million) including interest of $5.8 million ((pound)4.1 million). The funds were received in May and June 2001. Tomkins has agreed to issue further redeemable convertible cumulative preference shares to the former shareholders of Gates, equal to 80 per cent of the proceeds (net of costs of litigation since December 1995 and after tax) of the action. Provision has been made for the issue of redeemable convertible cumulative preference shares with a nominal value $9.0 million ((pound)6.3 million) to the former shareholders of Gates. Of the balance of $32.8 million ((pound)22.8 million), $27.0 million ((pound)18.7 million) has been credited to operating profit and $5.8 million ((pound)4.1 million) to interest.
The restructuring costs of (pound)9.4 million relate to the relocation of certain production from the Industrial & Automotive facility in Belgium to a new plant in Eastern Europe. Costs of (pound)5.9 million were incurred on the strategic review of the group carried out in the year.
Notes to the preliminary announcement
3. Tax on profit on ordinary activities
2001 2000
(pound) (pound)
million million
UK corporation tax at 30% (2000 - 30%) 2.9 27.0
Overseas tax 93.4 114.7
Deferred tax - UK (3.8) 7.6
- Overseas (5.7) (8.8)
Associated undertakings' tax - 0.5
86.8 141.0
The tax charge on exceptional losses on disposals in 2001 and 2000 is (pound)nil.
4. Earnings per share
Basic earnings per share are calculated on a profit of (pound)29.3 million (2000 - (pound)71.1 million), representing the loss for the year of (pound)66.0 million after adding back dividends payable to ordinary shareholders of (pound)95.3 million (2000 - loss of (pound)94.7 million and ordinary dividends of (pound)165.8 million) and on 857,685,690 ordinary shares being the weighted average in issue during the year (2000 - 947,773,953).
Diluted earnings per share are calculated on an adjusted weighted average number of ordinary shares of 857,711,519 (2000 - 949,793,392) after allowing for the exercise of 25,829 share options (2000 - 2,019,439) and are calculated on a profit, as stated above, of (pound)29.3 million (2000 - (pound)71.1 million). Based upon this profit the preference shares are anti-dilutive for both years and therefore have been excluded from the calculation.
The directors have also presented the earnings per share before exceptional items and goodwill amortization on the basis that they believe it represents a more consistent measure of underlying year on year performance.
Basic earnings per share after operating exceptional items, before exceptional items relating to the disposal of subsidiaries and goodwill amortization are calculated on profit attributable to ordinary shareholders of (pound)171.1 million (2000 - (pound)297.4 million) which is stated before exceptional items of (pound)131.9 million (2000 - (pound)221.3 million) and goodwill amortization of (pound)9.9 million (2000 - (pound)5.0 million). Diluted earnings per share before exceptional items and goodwill amortization are based on adjusted earnings of (pound)208.7 million (2000 - (pound)331.8 million) after adjusting for the preference dividend of (pound)37.6 million (2000 - (pound)34.4 million). Based upon these earnings the preference shares are dilutive. Therefore diluted earnings per share before exceptional items and goodwill amortization are calculated on an adjusted weighted average number of ordinary shares of 1,080,187,361 (2000 - 1,172,354,623) after allowing for the conversion of preference shares equating to 222,475,842 ordinary shares (2000 - 222,561,231) and the exercise of 25,829 share options (2000 - 2,019,439).
5. Dividends on equity and non-equity shares
2001 2000
(pound) (pound)
million million
Ordinary shares:
Interim 4.60p (2000 - 4.60p) paid April 6, 2001 37.4 43.7
Proposed final 7.40p (2000 - 12.85p) to be paid
October 8, 2001 57.9 122.1
95.3 165.8
Redeemable
Preference shares: Convertible convertible
cumulative cumulative
(pound) (pound)
million million
Accrued at April 29, 2000 (3.8) (3.6) (7.4) (7.4)
Foreign exchange translation (0.4) (0.3) (0.7) -
Paid during year 19.8 18.0 37.8 34.4
Accrued at April 30, 2001 4.1 3.8 7.9 7.4
19.7 17.9 37.6 34.4
Total dividends 132.9 200.2
Notes to the preliminary announcement
6. Reconciliation of operating profit to operating cash flows
2001
Continuing Discontinued
operations operations Total 2000
(pound) (pound) (pound) (pound)
million million million million
Operating profit 298.8 11.2 310.0 519.1
Depreciation (net of
capital government
grants) 113.8 31.9 145.7 197.9
Loss/(profit) on sale of
tangible fixed assets 1.3 (0.2) 1.1 (1.0)
Amortization of goodwill 9.7 0.2 9.9 5.0
Amortization of long term
loyalty plan shares 0.9 0.1 1.0 1.3
Post-retirement benefits (0.7) 0.3 (0.4) (5.6)
Warranty provisions (0.1) (1.1) (1.2) (0.2)
Decrease/(increase) in
stock 0.6 28.0 28.6 (64.4)
Decrease)/(increase)
in debtors (39.3) 105.4 66.1 (73.2)
Decrease in creditors (52.4) (120.2) (172.6) (0.9)
Net cash inflow from
operating activities 332.6 55.6 388.2 578.0
Notes to the preliminary announcement
7. Analysis of cash flow for headings netted in the consolidated
cash flow statement
2001 2000
(pound) (pound)
million million
Returns on investments
and servicing of finance:
Interest received 71.6 69.8
Interest paid (94.2) (108.9)
Interest element of finance lease
rental payments (1.8) (2.1)
Preference dividends paid (37.8) (34.4)
Investment by minority shareholder 0.9 1.5
Dividends paid to subsidiary companies'
minority shareholders (3.3) (3.1)
Net cash outflow from returns on
investments and servicing of finance (64.6) (77.2)
Tax paid:
Tax paid (103.9) (129.0)
Tax received 20.0 66.1
Net cash outflow from tax paid (83.9) (62.9)
Capital expenditure:
Purchase of tangible fixed assets (157.1) (246.9)
Sale of tangible fixed assets 18.2 18.0
Net cash outflow from
capital expenditure (138.9) (228.9)
Financial investment:
Purchase of fixed asset investments (0.1) (0.2)
Acquisitions and disposals:
Purchase of subsidiary undertakings (5.5) (237.5)
Net overdrafts acquired with
subsidiary undertakings - (6.3)
Purchase of associated undertakings (0.6) (0.9)
Sale of subsidiary undertakings 1,337.8 3.6
Net cash disposed with subsidiary
undertakings (73.2) -
Net cash inflow/(outflow) from
acquisitions and disposals 1,258.5 (241.1)
Financing:
Share issues (net of costs) 2.8 4.3
Buy back of own shares (340.9) (6.3)
Mark to market of hedging
instruments (104.3) (21.0)
Debt due within one year:
Decrease in short term borrowings (60.8) (687.8)
Additional bank loans 3.9 58.1
Repayment of other loans (2.6) (37.0)
Debt due after more than one year:
Additional bank loans - 1,103.1
Repayment of bank and other loans(783.3) (153.3)
Capital element of finance lease
rental payments (0.5) (6.1)
Cash flow (decreasing)/increasing debt
and lease financing (843.3) 277.0
Net cash (outflow)/inflow from
financing (1,285.7) 254.0
Management of liquid resources:
Increase in cash deposits (29.0) (24.7)
Decrease/(increase) in collateralized
cash 1.6 (0.2)
Cash flow increasing cash on
deposit and collateralized cash (27.4) (24.9)
Notes to the preliminary announcement
8. Analysis of net debt
Disposals
At (excl. Exchange At
April 30, Cash flow cash and movement April 29,
2001 (pound) overdrafts) (pound) 2000
(pound) million (pound) million (pound)
million million million
Cash on demand 122.9 (109.3) 8.4 223.8
Overdrafts (41.2) 3.1 (3.0) (41.3)
(106.2)
Debt due after more
than one year (328.7) 783.3 10.3 2.2 (1,124.5)
Debt due within
one year (21.5) 59.5 5.4 0.6 (87.0)
Finance leases (24.0) 0.5 4.1 (1.9) (26.7)
843.3
Cash on deposit 277.5 29.0 5.9 242.6
Collateralized cash 8.8 (1.6) (0.9) 0.3 11.0
27.4
Net debt (6.2) 764.5 18.9 12.5 (802.1)
9. Debtors
2001 2000
(pound) (pound)
million million
Amounts falling due within one year:
Trade debtors 525.5 873.2
Amounts owing by associated undertakings 0.2 1.1
Amounts recoverable on long term contracts 37.6 37.7
Corporation tax 35.0 -
Other taxes and social security 3.2 14.3
Other debtors 60.8 54.2
Prepayments and accrued income 63.9 62.6
Collateralized cash 8.8 11.0
735.0 1,054.1
Amounts falling due after more
than one year:
Other debtors 6.1 7.7
741.1 1,061.8
Notes to the preliminary announcement
10. Creditors: amounts falling due within one year
2001 2000
(pound) (pound)
million million
Unsecured loan notes 3.9 4.1
Other loans 0.1 2.5
Obligations under finance leases 3.8 5.8
Bank loans and overdrafts 58.7 121.7
Amounts due on long term contracts 1.3 3.0
Trade creditors 270.8 635.8
Bills of exchange payable 1.4 2.9
Corporation tax 151.8 169.7
Other taxes and social security 17.2 28.6
Other creditors 86.5 115.1
Proposed and accrued dividends 65.8 129.8
Accruals and deferred income 152.0 247.7
813.3 1,466.7
11. Creditors: amounts falling due after more than one year
2001 2000
(pound) (pound)
million million
Other loans 11.1 14.9
Obligations under finance leases 20.2 20.9
Bank loans 317.6 1,109.6
Other creditors 72.0 94.9
Accruals and deferred income 4.9 5.3
425.8 1,245.6
12. Provisions for liabilities and charges
Post-
retirement Other Deferred
benefits provisions Tax Total
(pound) (pound) (pound) (pound)
million million million million
At April 29, 2000 217.1 59.4 188.7 465.2
Foreign exchange translation 18.1 1.0 0.1 19.2
Reclassifications - 34.1 - 34.1
Charge/ (credit) for
the year 12.7 28.8 (9.5) 32.0
Subsidiaries disposed (25.0) (5.8) (51.4) (82.2)
Utilized during the year (13.1) (49.8) - (62.9)
At April 30, 2001 209.8 67.7 127.9 405.4
Notes to the preliminary announcement13. Contingencies
The Company guarantees the bank facilities of certain subsidiaries and the group provides cash as security for letters of credit in order to reduce their cost. The maximum amount covered by these arrangements at April 30, 2001 was (pound)124.0 million and (pound)5.2 million respectively. The Company has also guaranteed certain property leases and performance bonds entered into in the ordinary course of business by certain of its subsidiaries.
On May 11, 2001, Tomkins Corporation, whose ultimate parent company is Tomkins PLC, sold all of the shares of Smith & Wesson Corp. Together with other manufacturers of firearms, Smith & Wesson Corp. is a defendant in a number of lawsuits brought by various municipal authorities in the United States seeking to recoup their costs in dealing with violence involving firearms. All such liabilities were retained by Smith & Wesson Corp. and Tomkins Corporation has not indemnified the purchaser against them. In one case Tomkins PLC, together with other parent companies of the various defendants, had been named as a defendant, though it was never served with process nor did the pleadings make any specific allegations against it. The lawsuit has now been dismissed by the highest court of the state in which it was brought.
The group is also, from time to time, party to legal proceedings and claims, which arise in the ordinary course of the business.
The directors do not anticipate that the outcome of any of the above proceedings and claims, either individually or in aggregate, will have a material adverse effect upon the group's financial position.
14. Acquisitions and disposals
Acquisitions Air Systems Components
Additional purchase consideration of (pound)1.0 million on the acquisitions of Air Diffusion Limited and Hart & Cooley was paid during the year.
Engineered & Construction Products
On November 3, 2000, the business and net assets of Care Free Aluminium Products, Inc. were acquired for a provisional cash consideration of $11.2 million ((pound)7.8 million). The final consideration will be adjusted to equate to the fair value of the net assets acquired. The acquisition is not material to the Engineered & Construction Products business segment.
Industrial & Automotive
A (pound)3.3 million reduction in the purchase consideration of ACD Tridon Inc. was agreed and received during the year.
Disposals Engineered & Construction Products
Homer of Redditch Limited, Twiflex Limited and T. A. Knight Limited were sold on May 18, 2000, June 23, 2000 and February 16, 2001 respectively for a total cash consideration, net of costs, of (pound)3.1 million. (pound)1.0 million of goodwill previously written off to reserves was written off to the profit and loss account resulting in a loss on sale of (pound)1.8 million.
Food Manufacturing
The Red Wing Company Inc. was sold on July 14, 2000 for a cash consideration, net of costs, of $140.9 million ((pound)93.8 million). The sale of the remaining Food Manufacturing business segment was completed on August 31, 2000 for a total cash consideration of (pound)1,138.0 million. (pound)171.4 million of the (pound)828.7 million of goodwill previously written off to reserves on acquisition of the businesses was included in the write-off of the impaired goodwill in the year ended April 29, 2000 and the remaining (pound)657.3 million was charged to the profit and loss account. Costs of the sale were offset by the reversal of the (pound)43.6 million provision established at April 29, 2000 for payments directly related to the disposal, which included a provision of (pound)25.0 million for pension payments arising as a result of the transaction. The net loss on sale charged to the profit and loss account for the year ended April 30, 2001 was (pound)1.8 million.
Professional, Garden & Leisure Products
Murray Inc and Hayter Limited were sold on the October 5, 2000 for a provisional consideration of $219.3 million ((pound)148.3 million). Of the proceeds, $206.3 million ((pound)139.5 million) has been received in cash and $13.0 million ((pound)8.8 million) in a secured subordinated loan note, repayable in 2006. There was a loss on sale of (pound)62.3 million after charging (pound)73.9 million of goodwill, previously written off to reserves and (pound)2.1 million costs of disposal.
As a result of the agreement signed subsequent to the year end relating to the disposal of Smith & Wesson (see note 15), a provision of (pound)66.0 million for the loss on sale, which includes (pound)42.2 million for the impairment of goodwill, has been charged to the profit and loss account.
Deferred consideration of (pound)1.0 million relating to disposals made in prior years was received during the year.
Notes to the preliminary announcement
15. Post balance sheet events
On May 11, 2001 Tomkins sold Smith & Wesson Corp. for a consideration of $15.0 million ((pound)10.6 million), comprising $5.0 million ((pound)3.5 million) paid immediately and the balance due in May 2002. The purchaser also paid $20.0 million ((pound)14.1 million) of an outstanding loan of $73.8 million ((pound)52.0 million) due from Smith & Wesson Corp. to Tomkins Corporation. Of the remaining $53.8 million ((pound)37.9 million), $30.0 million ((pound)21.1 million) will be repaid on an amortizing basis over the seven years commencing in May 2004 and $23.8 million ((pound)16.8 million) will be included in the equity capital acquired by the purchaser. Interest on the outstanding loan balance will continue at nine per cent per annum.
On May 25, 2001 Totectors Limited was sold for a cash consideration of (pound)19.5 million including the repayment of inter-company indebtedness of (pound)7.4 million.
16. Basis of preparation
The financial information has been prepared in accordance with accounting policies used in the preparation of the financial statements for the year ended April 30, 2001 after conforming with United States accounting principles by giving effect to the adoption of Securities and Exchange Commission Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" and of Emerging Issues Task Force Consensus' No. 00-10 "Accounting for Shipping & Handling Fees and Costs". The change in accounting policy resulted in an increase in turnover of (pound)25.9 million (2000 - (pound)22.8 million). There was no impact on operating profit. Comparative figures have been restated.
17. Preliminary audit results
The preliminary audited results are an abridged version of the Group's Financial Statements for the year ended April 30, 2001 which were approved by the directors on June 28, 2001 and do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The statutory accounts on which the audit report is unqualified, and does not contain a statement under Section 237 (2) or (3) of the Companies Act 1985, will be delivered to the Registrar of Companies not later than November 30, 2001. The comparative figures, as restated, are taken from the Group accounts for the year ended April 29, 2000, a copy of which has been delivered to the Registrar of Companies and contains an unqualified audit report.