(MRX.L) Metalrax Group PLC Buy/Sell

RNS Number:8577L Metalrax Group PLC 16 January 2008

16 January 2008
Metalrax Group PLC
("Metalrax", "the Group" or the "Company")
Chief Executive's Review
Year End Trading Statement
Directorate Change

Metalrax today announces:

* conclusions of a strategic review undertaken by its recently appointed

Chief Executive, Andrew Richardson, including a new dividend policy;
* a year end trading statement in respect of its financial year ended 31

December 2007, in line with expectations;
* the resignation of its finance director and other management changes;

and
* notice of its preliminary results to be issued by 4 April 2008.

Conclusions of strategic review

Metalrax has concluded its Chief Executive's review, the initiation of which was announced on 29 October 2007.

Following this review, the Board has resolved to re-organise Metalrax into two divisions, Consumer Durables and Specialist Engineering, from the current three (Automotive, Engineering & Support Services and Housewares). Metalrax will focus on businesses that operate in niche markets, have significant growth potential and barriers to entry and can each be expected to contribute meaningful profits.

The Board therefore intends to exit businesses that currently do not meet these criteria. It is already progressing the following:

* fine blanking, which is currently incurring losses of £200,000 per

month;
* high volume, low margin automotive businesses that are unlikely to make

a meaningful contribution to future group profits; and,
* as soon as commitments allow, its Romanian business, which

notwithstanding management actions is incurring losses of approximately

£60,000 per month.

The Board anticipates that these exits will, in aggregate, be cash generative and earnings enhancing.

The future strategy of the Group will be to pursue organic growth in its selected businesses, in part, through focussing on innovation in products, services and distribution. It will also look to establish operations overseas where appropriate.

The Board also intends to supplement organic growth through selective acquisitions of complementary technologies and companies, consistent with the Company's new strategy.

As part of the strategic review, the Board has also reviewed Metalrax's balance sheet and financial position. This review has identified the potential for significant upward revaluation of the Company's property portfolio, but also the likelihood of write-downs of various fixed and current assets. The post-tax net effect of these changes, which will be reflected in the audited results for the year ended 31 December 2007, is not expected to be material to the Company's total net assets.

With respect to cash, the Company has significant headroom within its current banking facilities. Year end net debt stood at approximately £13 million (30 June 2007: net debt of £18.1 million). As stated above, the Board anticipates that the various intended business exits described above will generate cash and will also serve to enhance operating cash flow through removing loss-making businesses. In addition, the Board anticipates that Metalrax will generate further cash from ongoing property disposals and through a management initiative to reduce working capital.

Overall the Board believes that the Group has a very sound financial position with significant scope for improving its financial performance.

Dividend policy

In light of the implementation of the new strategy, the Board has reviewed the Company's dividend policy. It has resolved to implement a new, progressive and sustainable policy whereby dividends payable by the Company will be covered between 2.0 and 2.5 times by its earnings. Accordingly, there will be no final dividend payable in respect of the year ended 31 December 2007.

Resignation of Finance Director and other management changes

On 15 January 2008 William Kelly, the Group Finance Director, resigned from the Board of Metalrax. His departure was by mutual consent.

The process to identify a replacement is underway. However, in the meantime, the Board has already put in place robust interim arrangements to manage the Company's financial reporting and controls.

On 15 January 2008 Darren Farrimond was appointed Company Secretary.

Since the appointment of Andrew Richardson as Chief Executive, with effect from 15 October 2007, five senior managers have left, and six new senior managers have joined, the group.

Year end trading statement

The Directors anticipate that Metalrax's underlying financial performance (that is stated before exceptional items) in respect of the year ended 31 December 2007 will be within the range of current market expectations. An update on 2008 trading prospects will be provided at the time of the preliminary results.

Notice of results

Metalrax intends to issue its preliminary results for its financial year ended 31 December 2007 by 4 April 2008.

Andrew Richardson, Chief Executive of Metalrax, commented,

"Following the conclusion of my review, we intend to pursue our new strategy focussed around the many successful businesses within the Group.

"I believe that Metalrax has the potential to generate greatly improved returns to shareholders from a combination of turnaround and growth and I look forward to delivering on that potential".

Enquiries:

Metalrax Group PLC www.metalraxgroup.co.uk

Andrew Richardson, Chief Executive 0121 433 3444

Arden Partners
Chris Fielding 020 7398 1600
Steve Douglas 0121 423 8900
Smithfield 020 7360 4900

Reg Hoare/Will Swan/Will Henderson

This information is provided by RNS
The company news service from the London Stock Exchange

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