Fenner is a world leader in reinforced polymer technology. Our strategy is to increase market share and target new high margin product areas. We will concentrate on growing those businesses where we already demonstrate leadership through our skills in applications, design, materials technology and dedication to customer service as well as by carefully planned acquisitions

Fenner PLC 2017 Half Year Results

Fenner PLC, a world leader in reinforced polymer technology, today announces its results for the half year ended 28 February 2017.


Half year 2017 2016 

Revenue £307.4m £276.8m
Underlying operating profit  1, 4 £24.0m £15.0m
Underlying profit before taxation  2, 4  £16.5m £8.1m
Profit/(loss) before taxation £13.8m £(23.1)m
Operating cash flow  4  £34.0m £19.1m
Underlying earnings per share  2, 3, 4  6.3p 2.9p
Dividend per share 1.4p 1.0p
·    Revenue up 11% to £307.4m, assisted by market share gains and exchange rates

·    Underlying operating profit up 60% (27% at constant currencies)

·    Underlying operating margin strongly ahead in both divisions

·    Underlying earnings per share up 117% to 6.3p

·    Dividend per share up 40% to 1.4p

·    Strong cash flow resulted in net debt reducing to £144.7m (£28.7m lower than February 2016 at constant currencies) and net debt/EBITDA of 1.9 times (at constant currencies)

·    Expected outcome for the year above previous expectations at the operating profit level with a further benefit to earnings from a lower tax rate in the current financial year


Mark Abrahams, Chief Executive Officer, commented:

"It is pleasing that the restructuring of the Group has created a platform from which we are now growing and making steady market share gains. We look forward to maintaining this momentum."


1     Underlying operating profit is before amortisation of intangible assets acquired and exceptional items
2     Underlying profit before taxation and underlying earnings per share are before amortisation of intangible assets acquired, exceptional items and notional interest
3     Underlying earnings per share is based on the basic weighted average number of shares in issue
4       Underlying and non-GAAP measures have been presented to provide a more meaningful measure of the underlying performance of the business. Reconciliations of these amounts from the most directly comparable measures recognised under International Financial Reporting Standards ("IFRS") are set out in note 1
A live audio webcast of the analyst presentation, hosted by Mark Abrahams, Chief Executive Officer, and John Pratt, Group Finance Director, can be accessed at 9.30 am today on the Group's website
For further information please contact:
Fenner PLC
Mark Abrahams, Chief Executive Officer 
John Pratt, Group Finance Director                    
Weber Shandwick Financial
Nick Oborne                            
) today: 020 7067 0700 
) thereafter: 01482 626501
020 7067 0700
Notes to editors:
Fenner PLC is a world leader in reinforced polymer technology, providing local engineered solutions for performance-critical applications. The Group operates through two divisions:
Advanced Engineered Products. The AEP division is a group of nine businesses that use advanced polymeric materials and technical expertise to provide high value-added solutions to customers' most challenging engineering problems across a variety of markets, generally classified as specialist industrial, medical and oil & gas. AEP's trading names include Hallite, Fenner Precision, Fenner Drives, Secant Group, Charter Medical, CDI Energy Products and EGC Critical Components.
Engineered Conveyor Solutions. The ECS division, trading under the Fenner Dunlop, Fenner and Dunlop brand names, is an established global leader in the supply of heavyweight conveyor belting and related services to the mining, industrial and bulk materials markets. ECS has leading presences in the Northern Hemisphere (principally North America and Europe) and the Southern Hemisphere (principally Australia).

Interim management report

In January, we reported that the Group was performing well, benefiting from both the refocusing of our businesses and from market share gains. The Group's results for the first half of the financial year reflect the improvements indicated at that time. Momentum is being maintained in the second half of the financial year as the Group continues to deliver its strategy.

Revenue for the period was £307.4m (2016: £276.8m), an increase of 11%. Underlying operating profit was £24.0m           (2016: £15.0m), an increase of 60%. Underlying profit before taxation was £16.5m (2016: £8.1m), an increase of 104%. Underlying earnings per share was 6.3p (2016: 2.9p), an increase of 117%.

A particular feature of the results was the increase in underlying operating margin which increased to 7.8% (2016: 5.4%) reflecting operational improvements and efficiencies across many of the Group's operations. In addition, as the period progressed, there were increasing benefits from operational gearing as certain businesses generated revenue growth.
The Group's cash flow was again strong with higher profits and lower capital expenditure. Net borrowings ended the period at £144.7m (31 August 2016: £150.0m) despite currency movements of £5.4m. Measured at constant exchange rates, net debt at 28 February 2017 was £28.7m lower than at 29 February 2016.

During the period, the Group acquired the non-controlling interests in BBCS and LECS, each of which are conveyor service businesses located in Australia. The Group has no further deferred consideration payments outstanding. Also during the period, the Group disposed of Xeridiem Medical Devices and CDI Norway.

Advanced Engineered Products

AEP's revenue was £136.9m (2016: £139.8m at constant currencies). After adjusting for business disposals and closures, like-for-like revenue grew by 4%. Underlying operating profit was £17.9m (2016: £15.5m at constant currencies) and underlying operating margin increased to 13.1% (2016: 11.1%).

The division's results reflect improved operational performances across its businesses, driven by market share gains, new product introductions and prudent cost control. Whilst market indicators showed some softness at the start of the financial year, they gradually strengthened as the period progressed.

Advanced Sealing Technologies

Advanced Sealing Technologies generated a higher operating profit and operating margin on slightly increased revenue of £60.1m (2016: £59.9m at constant currencies). Excluding businesses which have been closed or sold (the former CDI operations in the UK and Norway), revenue increased by 7%.

During the period, there were progressive improvements in oil & gas industry lead indicators such as rig count, albeit from very low levels. Notwithstanding this, the average rig count in the period was below the average for the same period last year.

Both CDI and EGC have continued to make market share gains in their respective segments of the oil & gas industry, partly as a result of having introduced new products that reflect customer demand for higher technical specifications. As a result of both the improving market and the market share gains, order flow increased steadily throughout the period.

Hallite performed strongly, delivering revenue growth well ahead of industry indicators and even greater increases in terms of operating profit and margins. The strong performance reflects new product introductions as well as some re-stocking in the supply chain.

Precision Polymers

Precision Polymers' revenue increased to £52.2m (2016: £50.8m at constant currencies) and operating profit and margin were both well ahead of the previous period.

Precision US finished the period strongly after some softness in customer ordering in the autumn reflecting uncertainty around the outcome of the US election as well as normal seasonality patterns.

Precision UK continues to make good progress as it expands both its range of elastomeric products and its customer base.

Mandals achieved a modest improvement in revenue for the period; its order book has improved following management changes and new product introductions.

Solesis Medical Technologies

Revenue for the period was £24.7m (2016: £29.3m at constant currencies and including a contribution from Xeridiem Medical Devices sold in September 2016). Operating profit and operating margin were both well ahead of the prior period.

Secant Group is in the final validation phase of its relocation process. It achieved a strong operating result for the period, with some third party project delays offset by new developments and other efficiencies. The business' new product pipeline has been further strengthened.

Charter Medical continues to trade well following the managerial and operational changes made last year. Demand for cell therapy products has been strong.

Engineered Conveyor Solutions

ECS's revenue was £170.5m (2016: £188.6m at constant currencies). Underlying operating profit was higher at £10.4m      (2016: £7.0m at constant currencies) and underlying operating margin recovered to 6.1% (2016: 3.7%).

In the mining industry, whilst there was a general improvement in sentiment due to higher commodity prices and mineral extraction rates, this was not generally reflected in higher orders for replacement belt; the increased operating profit and margin were generated by the substantial operating improvements implemented across the business.

Northern Hemisphere

Revenue for the period was £89.8m (2016: £103.6m at constant currencies).

In ECS North America, industrial volumes continued to grow as a result of the refocusing commenced last year.  In mining, whilst below the corresponding period last year, volumes improved from recent lows which, when combined with significantly improved operating efficiencies, increased overall profitability.

In Europe, financial performance was constrained by the ongoing shortage of major project work.

Southern Hemisphere

Revenue for the period was £81.3m (2016: £86.7m at constant currencies).

In Australia, on flat volumes, ECS achieved a higher profit than in the corresponding period last year reflecting its strengthened market position and the operational improvements made across the business. Despite an improved sentiment within the mining industry, the business has not yet seen a general increase in order intake although there are now some indications that belt   de-stocking is coming to an end and that project work may resume next year.

ECS China continues to face significant pressures from the on-going re-organisation of the domestic coal industry.