Chairman's Statement
PERFORMANCE
AT A TIME WHEN THE GLOBAL ECONOMY HAS EXPERIENCED SYSTEMIC WEAKNESS, THE STRATEGY WE HAVE BEEN PURSUING HAS YIELDED ANOTHER YEAR OF RECORD GROWTH IN REVENUE AND TRADING PROFIT.
TRADING PROFIT UP BY 112%
DELIVERING OUR STRATEGY
Over the last five years, Hampson has been executing a clearly focused strategy to build a stronger, better diversified Group, with attractive positions in certain high growth sectors within the global aerospace industry.
From relatively diverse engineering origins, Hampson has now been transformed through a series of six high quality US-based acquisitions over the last four years into an international aerospace Group of substantial scale and technical capability.
We now have operations spanning three continents, many of which are playing a critical ongoing role in some of the world’s most important and prestigious commercial and military aerospace programmes.
It is therefore pleasing for me to report that at a time when the global economy has experienced systemic weakness, the strategy we have been pursuing has yielded another year of record growth in revenue and trading profit.
Our Aerospace Composites & Transparencies division — which is the growth engine of the Group — was responsible for 59% of the Group’s revenue generation in 2008/09, up from 29% in the previous year. We anticipate this percentage will continue to rise going forward and this sector will continue to represent the focus of our investment.
Strong contributions from Odyssey and GTS, which exceeded our pre-acquisition expectations, helped us achieve total revenue growth of 62% this year. Both Odyssey and GTS have been successfully integrated into the Group, and with an additional 150,000 square feet of capacity now available, we look forward with confidence to the value our combined tooling businesses will deliver over the longer term as new generations of composite-rich aircraft are developed.
RESULTS
Underlying profit before tax (i.e. before restructuring and rationalisation charges, impairment charges, amortisation of intangible assets on acquisition and changes in the net fair value of financial instruments) was £37.6 million, an increase of £20.6 million (121%) compared to 2007/08.
The statutory results for the year ended 31 March 2009 include asset impairment charges totalling approximately £28 million as a result of the bankruptcy of Eclipse Aviation Corporation (£21 million) and lower activity levels in our automotive business (£7 million). The statutory results for the year also include charges of £14.5 million resulting from adverse movements in the fair value of financial instruments, largely due to the significant strengthening of the US dollar.
Underlying EPS increased by 5.5p (43%) to 18.50p. EPS from continuing operations on a statutory basis decreased by 14.65p (204%) to (7.47p), primarily due to the impairment charges and changes in the net fair value of financial instruments referred to above.
THE BOARD
The year has seen a further strengthening of the Board with Paul Gismondi and Peter Barlow joining us as Non-Executive Directors, both of whom we were delighted to welcome in the summer. The Board now benefits from an excellent and very well balanced blend of relevant industry and financial skills and experience.
DIVIDEND
The Board recommends that a final dividend of 1.6p per share be paid on 9 October 2009 to Shareholders on the register at 11 September 2009. This will bring the full year payout to 2.4p per share (2007/08: 2.0p), an increase of 20%.
THE FUTURE
The current global economic environment continues to impact all sectors of the commercial aerospace industry and relevant indicators signal demand will progressively soften. Hampson is not immune to these effects and we anticipate a challenging year ahead for all our businesses. However, having successfully transitioned the Group in recent years into higher than average growth markets where we now hold a number of key positions, we see ourselves well placed to deal with the fragility and inherent uncertainty of the prevailing conditions and to continue to grow when market conditions permit.
We have confidence that we have both high quality businesses and a management team capable of withstanding the shorter term industry headwinds and continuing to build long-term value for our Shareholders.
CHRIS GEOGHEGAN
CHAIRMAN
3 JUNE 2009
MEASUREMENT AND PERFORMANCE REPORTING
In addition to the “statutory” measures of profit, reference is made throughout this document to the impact on the continuing Group’s profit before tax and earnings per share of excluding the following items: restructuring and rationalisation charges, impairment charges, amortisation of intangible assets arising on acquisition, changes in the net fair value of financial instruments and the results of discontinued operations. The Directors believe that exclusion of these items allows trends in the underlying performance of the Group’s continuing business to be more easily identified and understood. Reference is made throughout to the terms “trading profit”, “underlying profit before tax” and “underlying earnings per share”, which are defined, respectively, as operating profit, profit before tax and earnings per share adjusted to exclude all of the foregoing items.