Annual General Meeting and Interim Management Statement
16/05/2008
Charter plc is holding its 2008 Annual General Meeting at 12 noon today. At the meeting, Lars Emilson, the Company’s Chairman, will make the following statement which incorporates the Company’s Interim Management Statement for the period from 1 January to 15 May 2008.
“I am pleased to report, at my first annual general meeting as Chairman of Charter, that 2007 was another successful year for the Company.
The results achieved in 2007 continue to show that both of Charter’s businesses, ESAB and Howden, are successfully building upon the investments previously made in restructuring the businesses and subsequently on enlarging the product range and on new and improved capacity, much of which is in low cost areas.
In 2007, Charter generated sales of £1,451.1 million, an increase of 15.4 per cent over 2006, operating profit of £173.3 million, an increase of 19.8 per cent and adjusted profit before tax of £181.1 million, an increase of 24.2 per cent.
Adjusted earnings per share, our principal measure of the Company’s performance, were 84.7 pence, an increase of 24.4 per cent.
Dividend
At today’s meeting, shareholders will be invited to approve a final dividend of 12 pence per share recommended by the Board.
The Board envisages a progressive dividend policy under which payments to shareholders will reflect future growth in earnings per share and anticipates declaring an interim dividend at the time of the interim results.
Board
As I previously mentioned, this is my first annual general meeting as Chairman of the Company. I joined the Board in September 2007 and became Chairman on
1 November.
David Gawler stood down as Chairman and retired from the Board on 31 October 2007. I am sure that Shareholders will join me and the rest of the Board in thanking David for his contribution and wishing him well in retirement.
Charter plc
Interim Management Statement for the period from 1 January to 15 May 2008
Current trading and outlook
At the time of Charter’s preliminary results announcement in March 2008, the Board said that it saw significant opportunities for both ESAB and Howden and that it viewed the outlook for 2008 with confidence.
The Board continues to expect that Charter will make further progress during 2008 and, in the light of trading to date and the positive impact of foreign exchange translation effects, now anticipates an outcome for the year ahead of its previous expectations.
ESAB
ESAB has continued to trade well in generally favourable market conditions across each of the regions in which it trades. Revenue and operating profit are well ahead of the same period last year, partly assisted by favourable foreign exchange translation effects and the impact of the acquisitions made last year. Particularly strong performances have been seen in South America, Russia and India. It is anticipated that the operating margin for the year as a whole will be in line with that achieved in 2007.
In relation to welding, it has been well documented that steel prices have risen along with the prices of other raw materials. ESAB is successfully recovering these cost increases in the market.
In Cutting and Automation, the order book has shown growth and margins are showing further improvements.
Against this background, ESAB is expected to make further progress in the remainder of the year.
Howden
Demand for Howden products remains strong and the business has continued to operate at high levels of activity. The order book has shown further growth beyond the record level reported at the end of February 2008, with a particularly strong order intake in Howden’s compressor businesses as a consequence of continued high levels of investment in the oil and gas industries. The anticipated pattern of customer deliveries means that sales will be somewhat more weighted towards the second half of the year than was the case in 2007.
The outlook for Howden’s 2008 sales, operating profit and operating margin remains in line with the Board’s previous expectations. Furthermore 2008 sales and operating profit are continuing to benefit from currency translation effects.
Financial position
Charter continues to maintain a strong balance sheet and net cash position.
Acquisition
On 25 April, ESAB completed the acquisition of Romar Positioning Equipment Pte Limited (“Romar”), a leading designer, manufacturer and distributor of handling equipment for use in automated welding applications, in particular for customers in the energy industry. Romar has its corporate headquarters and a factory in Singapore, with further factories in China.
Initial consideration for the transaction was S$65 million (equivalent to £24 million at the mid-market rate of exchange on 15 May 2008) in cash. Additional consideration is payable to the extent that average EBIT for the 3 years to 31 December 2010 exceeds S$9.0 million.
The acquisition of Romar increases ESAB’s presence in mid-market automation equipment which is expected to become an increasingly important market segment given the world-wide shortage of skilled welding operatives. Synergy opportunities are expected to arise, including through the cross-selling of product to ESAB’s and Romar’s customer lists.
Mr Jonathan Lim, Romar’s founder, chairman and its former owner, is remaining with the company following its acquisition by ESAB.
Contact
Andrew Fenwick; Pamela Small, Brunswick +44 (0) 20 7404 5959
Internet users will be able to view this announcement, together with other information about
Charter plc on the company’s web site www.charterplc.com
Forward Looking Statements
Certain sections of this statement may include forward looking statements that are subject to risk factors associated with, amongst other things, economic and business circumstances occurring from time to time in the countries in which the Company and its subsidiaries operate. It is believed that the expectations reflected in the statement are reasonable but they may be affected by a wide range of variables which are outside the control of the Company and could cause actual results to differ materially from those currently anticipated.