Interim Management Statement
Interim Management Statement - 26 July 07
Renold is pleased to present its first Interim Management Statement for the period from 1 April 2007, ahead of today’s AGM.
Trading is in line with the Board’s expectations and the Company’s PACE initiatives are progressing well. Overall orders and sales for the Company for the first quarter are ahead of the same period last year. Notwithstanding this, in the USA our chain business has experienced some slowdown and de-stocking which, coupled with the weaker US Dollar, will suppress returns from this market.
Operationally, the early indications following last month’s acquisition of a 90% interest in HangZhou ShanShui in China are encouraging. The integration of this important strategic acquisition is proceeding to plan with revised operating and management procedures being rapidly adopted. The purchase will boost margins to a run rate of greater than 10% by 2008/9 and underpins the execution of our PACE programme. It also provides a major growth opportunity in the domestic Chinese market and into other parts of South East Asia.
On 26 June 2007 the Company announced that it had received planning consent for mixed use development of its Burton upon Trent factory site. The Company anticipates the disposal of the site will complete during this calendar year, generating £6.4m of cash before expenses which will be used to pay down Group debt.
During the period, the actuarial valuation of one of the Company’s defined benefit schemes was concluded. This reported a surplus of £1.9m at 5 April 2006 compared to a deficit of £2.1m reported at 5 April 2003. As a consequence of this surplus, annual deficit reduction payments of £0.2m have now ceased. The Company’s two larger defined benefit schemes, for which actuarial valuations are ongoing, have a triennial valuation date of 5 April 2007.
There have been no other significant changes in the position of the Company over the period since the publication of its report and accounts for the year ended 31 March 2007.
Overall, the Board continues to be satisfied with the progress being made. The interim results will be announced in November at which point the Board expects to be able to outline the next stage of Renold’s strategic development.