Chairman's AGM Statement 19 Sep 2006
At today's Annual General Meeting of Renold plc, the Chairman, Roger Leverton, made the following statement:
"Although the results for 2005/06 were released only eight weeks ago, it is opportune for me to further report to you progress on a number of key issues.
As previously announced, the sale of the Automotive business to Schaeffler KG was completed on 3rd August, with the proceeds used to reduce the level of Group net debt. Under the terms of the agreement, there is an adjustment to the consideration in respect of the value of net working capital at completion; this adjustment to be agreed during October. We have recently been informed of a quality problem relating to deliveries of chains for one engine system made by the Automotive Division of Brampton Renold SA, France, in the period prior to the disposal. This issue is currently under investigation, and at this stage it is too early to quantify what costs might arise. Further information will be provided as it becomes available.
With regard to the divestment of the Machine Tool businesses, the negotiations with Venture Private Equity are continuing, although they have not been concluded as quickly as was anticipated.
When the Preliminary Results were announced in July, I indicated that the Group's continuing Industrial Power Transmission businesses were well positioned to show further progress in the current year as a result of a tighter focus and reduced cost base. I am pleased to say that the results of the first five months have shown a continuation of the substantially improved performance seen in the second half of last year. Steel prices have remained relatively stable so far, although there is some indication of upward pressure in the second half. Order intake over recent months has been encouraging, with the order book balance at the end of August up 14% from the beginning of the year, and cumulative orders for the first five months up 16% over the previous year.
Mark Smith, Senior Non-Executive Director, and myself, have extended our term of office beyond that originally planned in order to see the Company through the difficult time of restructuring and refocusing the business.
Following the successful divestment of the Automotive business and with clear financial recovery established in the Company's continuing businesses, it is appropriate for both of us to step down from the Board in the near future. Discussions in relation to this matter are taking place with major shareholders and a separate statement will be issued shortly naming successors."