Interim Management Statement
16th May 2011
Manganese Bronze Holdings PLC (“Manganese Bronze” or “the Group”), the leading manufacturer of the distinctive London taxi, announces the following Interim Management Statement for the period from 1 January to 16 May 2011 ahead of its Annual General Meeting to be held later today.
Trading in the UK continues to be impacted by the uncertain macro economic conditions, which makes forecasting the level of demand for new vehicles challenging. UK sales at the end of April were down 5.2% at 524 vehicles (2010: 553 vehicles). Trading in March and April was impacted in a similar way to many retail sectors of the economy, with taxi driver earnings and confidence negatively affected by generally lower disposable income, higher fuel costs, concerns about job security and the potential impact of public sector spending cuts. Overall vehicles sales (including international sales) for the four months to the end of April were up 10.1%, to 686 vehicles (2010: 623 vehicles). This is broadly in line with our expectations, with a good International performance more than offsetting a below-forecast UK performance.
International sales orders for 2011 are now over 1,300 and well ahead of the expectation of 1,000 units set at the start of the year. International customer deliveries in the four months to the end of April were 162 vehicles (2010: 70 vehicles). The Azerbaijan order of 1,000 vehicles is scheduled to be built and delivered in a number of batches through to the end of the year. The first batch of 100 vehicles has been shipped from China and the second batch of 200 vehicles is currently in build in Shanghai. The third batch is scheduled for build in June. Sales in other International markets already exceed last year’s total. Demand from customers in the Middle East currently remains strong, but recent unrest in the region may negatively impact sales prospects in the coming months.
Earnings have benefited from the initiatives to return the Group to profitability completed during 2009 and 2010, namely the restructuring of UK manufacturing operations and UK dealer network, the Chinese supply of parts, TX4 international growth, and the closure of the US based advertising business. The savings from these measures have been broadly in line with expectations.
However, earnings continue to be adversely affected by the lower level of UK sales and the weakness of Sterling, particularly against the Euro, which has increased the cost of engines from Italy. In addition, UK sales in the four months ended 30 April 2011 included the remaining 108 vehicles built prior to the restructuring of the Coventry operation in July 2010, which generated margins significantly lower than the current TX4, launched in November 2010. In the four months ended 30 April 2011, on a management accounts basis, the Group broke even at the earnings before interest, tax, depreciation and amortisation (“EBITDA”) level, compared with an equivalent loss of £0.3m in 2010.
With these improvements in EBITDA, and a reduction in working capital, the Group returned to cash generation during the four months ended 30 April 2011, with a £0.3m reduction in net debt (2010: £7.9m increase) to £14.1m, with total unutilised facilities of £1.3m as at 30 April 2011 (2010: £2.7m). The Group's relationship with its bankers remains good.
Geely and SLTI
Relationships between the Group and both Geely Automobile Holdings Limited ("Geely") and Shanghai LTI Automobile Components Company Limited ("SLTI"), the Group's joint venture with Geely, continue to be very positive. The Group is assigning expert staff to support the SLTI management team on a series of planned projects to improve quality and supply chain performance and deal with the challenges posed by increasing build volumes in the Shanghai facility. In addition, the Group continues to collaborate with Geely senior management to develop the launch plans for the TXN, the saloon car based-taxi scheduled for introduction in 2013, and other business development opportunities.
Tony Pearman has informed the Board of his intention to take a career break and step down as Group Finance Director. Tony has agreed to stay with the Group through to the end of October 2011, if required, to ensure an orderly transfer of responsibilities to his successor.
Tony, aged 55, was appointed Group Finance Director in November 2010, having joined the Group in February 1996 as Finance Director of the Coventry manufacturing facility, progressing to Group Financial Controller in November 2003.
The Board would like to thank Tony for his contribution to the Group in his 15 years service and wishes him well for the future.
The search for a suitable candidate to succeed Tony will now commence.
The underlying improvements in profitability resulting from the major restructuring initiatives in 2009 and 2010, coupled with the improvement in international sales performance, gives the Board confidence that, despite the continuing difficult UK market conditions, the Group can return to profitability in 2011. The longer term business opportunities with Geely, including the new saloon car taxi, the TXN, and the potential appointment of the Group to be Geely’s distributor in Europe, could significantly improve the prospects for the Group, and the continuing positive relationship with Geely is the foundation for joint exploitation of those opportunities.
This Interim Management Statement ("IMS") has been prepared solely to provide additional information to shareholders to access the Group's strategies and the potential for those strategies to succeed. The IMS should not be relied on by any other party for any other purpose.
The IMS contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.
Further updates will be made in due course.
| ||For further information, please contact:|
|Manganese Bronze Holdings plc|| |
|John Russell, Group Chief Executive||02476 572108|
|Tony Pearman, Group Financial Controller||02476 572214|
|Financial Dynamics|| |
|Nick Hasell / Sophie Moate||020 7269 7291|
|Matrix Corporate Capital|| |
|Malcolm Strang / Stephen Mischler||020 3206 7000|
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