RNS Number:1939E
Drummond Group PLC
25 May 2001
DRUMMOND GROUP PLC (the "Company")
Preliminary results announcement for the nine months ended 31 December 2000
Chairman's Statement
Year of change
Year 2000 proved to be another very difficult trading year for the textile
industry. It was also a year of significant change for the Drummond Group.
The traditional structure of our four business units of Drummond, Crowther,
Armatex and SRI, was dismantled, bringing the control of the four product
areas under one management team.
In July, the Company transferred to the Alternative Investment Market and, as
a result of the Rights Issue made in August, became a 74 per cent. subsidiary
of the Chargeurs Group. The change of the Group's accounting period end to 31
December was made to fall in line with that of Chargeurs.
Reorganisation
The fundamental restructuring for which the proceeds of the Rights Issue were
intended is now largely complete. The key elements were the:
- closure of the Crowther woollen manufacturing business and sale of the
dyeing and finishing equipment;
- sale of both the Bradford and Huddersfield properties, which was completed
28 February 2001; and
- reduction in employee numbers from 469 at March 2000 to the current level
of 243.
In addition to the original elements of the restructuring plan, negotiations
are at an advanced stage to sell the Group's in-house weaving function to its
management at a price in line with the net book value of the assets being
sold. This sale would result in the transfer of approximately 100 employees.
Offers and de-listing
In order to generate further necessary cost savings, Chargeurs UK Limited
wishes to remove the regulatory and financial cost of maintaining the
Company's AIM listing. Consequently, and as announced separately today, the
Board has agreed the terms of recommended cash offers to be made by N M
Rothschild & Sons Limited on behalf of Chargeurs UK Limited for all of the
ordinary and 5.6% preference shares not already held by them. This will allow
shareholders the opportunity to realise their investment in the Company for
cash before the de-listing takes effect.
Management and employees
Following the completion of the Rights Issue, Stefan Simmonds stepped down as
executive chairman, although he has remained on the Board in a non-executive
role, and I became chairman.
At the same time Roland Bellande, Group Financial Director of Chargeurs
France, and Philippe Bayet, Financial Controller of Chargeurs Fabrics, were
appointed to the Board as non-executive directors.
On 11 May 2001, Brian Levi resigned as an executive director, although he
remains on the Board in a non-executive role.
The Board would once again like to thank the employees, both past and present,
for their commitment and support through what has been an extremely difficult
period.
Performance
Although we have maintained our market position with our customers by
improving both our service levels and design offer, we have seen a continued
reduction in margins in most areas of the business.
The Group made an operating loss before exceptional items of #708,000 for the
nine months ended 31 December 2000 compared to an operating profit before
exceptional items of #368,000 for the year to 31 March 2000.
The turnover for the nine month period was #23.5m compared to #39.6m for the
year to 31 March 2000, although part of the reduction results from a planned
move away from certain loss making products and markets.
The Group loss before taxation for the nine months to 31 December 2000, after
exceptional reorganisation costs of #2.2m and provisions for losses on the
sale of the two properties of #0.8m, was #4.4m (year ended 31 March 2000 -
loss of #5.7m).
Cashflow
Although there was a #2.0m injection of cash from the Rights Issue, this was
intended to be used to finance the reorganisation process. Continued trading
losses and higher than anticipated costs of reorganisation have given rise to
a net cash outflow for the period of #0.6m.
Net debt at the end of the period stood at #9.3m, although this has since been
reduced as a result of asset disposals, principally the sale of the
Huddersfield and Bradford properties for #3.1m.
Dividends
As previously announced, in view of the significant losses incurred in seeking
to ensure the long term survival of the Company, it will be some time before
the Board will be able to recommend the payment of an ordinary dividend. At
the balance sheet date, the Group also had preference share dividend arrears
of #0.7m.
Outlook
Following a period of major reorganisation, trading conditions in the textile
sector still remain difficult. However, through our increased focus on
customer service and the continued high level of commitment from our
employees, we believe that we are beginning to create a stronger market
position with our customers.
We have traditionally been a UK focussed business but are now broadening our
customer base worldwide and we are seeking to capitalise on a much more
flexible supply base as a result of our closer association with Chargeurs.
The process of recovery will be slow but the plans laid down at the time of
the refinancing through the Rights Issue are being achieved in the timescales
anticipated. We will continue to pursue further actions to reduce the Group's
cost base and so assist the recovery of margins and improve market share.
Sergio Coimbra
Chairman
24 May 2001
Group Profit and Loss Account
9 months ended 31 December 2000 Year ended 31 March 2000
Before Exceptional Total Before Exceptional Total
exceptional items exceptional items
items items
#'000 #'000 #'000 #'000 #'000 #'000
Turnover 23,461 - 23,461 39,640 - 39,640
Cost of Sales (21,635) - (21,635) (33,869) (3,133) (37,002)
--------- -------- ---------- --------- -------- --------
Gross Profit 1,826 - 1,826 5,771 (3,133) 2,638
Other (2,534) - (2,534) (5,403) - (5,403)
operating
expenses (net)
--------- -------- --------- -------- --------- -------
Operating (708) - (708) 368 (3,133) (2,765)
(loss)/profit
Exceptional
items
Reorganisation - (2,254) (2,254) - (2,033) (2,033)
costs
Provision for
loss on
disposal of (840) (840) - - -
properties
Profit on sale
of plant and
equipment - 57 57 - - -
--------- -------- --------- ------- -------- -------
(Loss)/profit (708) (3,037) (3,745) 368 (5,166) (4,798)
before
interest
Interest (651) (856)
payable
----------- ---------
Loss on
ordinary
activities (4,396) (5,654)
before
taxation
Tax on - -
ordinary
activities
---------- ---------
Loss for the (4,396) (5,654)
financial
period
Preference (152) (242)
dividends
----------- ---------
Retained loss (4,548) (5,896)
for the period
===== =====
Basic and (11.49)p (27.72)
diluted loss
per share
Attributable (7.67)p (24.29)
to exceptional
item
----------- --------
Loss per share
before
exceptional (3.82)p (3.43)
items
===== =====
The above activities all relate to
continuing operations.
Statement of Total Recognised Gains and Losses
for the nine months ending 31 December 2000
9 months Year
ended ended
31 December 31 March
2000 2000
#'000 #'000
Loss for the financial period (4,396) (5,654)
Impairment on property write down taken through - (832)
revaluation reserve
------------
----------Total recognised losses relating to the period (4,396)
(6,486)
======== =======
Balance Sheets
Group Company
31 31 31 31
December March December March
2000 2000 2000 2000
#'000 #'000 #'000 #'000
Fixed assets
Tangible assets 6,208 8,146 - 22
Investments - - 9,342 9.342
--------- --------- --------- --------
6,208 8,146 9,342 9,364
====== ====== ====== ======
Current assets
Stocks 4,972 8,550 - -
Debtors 4,598 4,253 4,199 4,851
Cash at bank and in hand - - - 7,194
--------- --------- --------- -------
9,570 12,803 4,199 12,045
Creditors - due within one (13,697) (15,811) (742) (8,431)
year
--------- --------- -------- -------
Net current (liabilities)/ (4,127) (3,008) 3,457 3,614
assets
--------- --------- -------- -------
Total assets less current 2,081 5,138 12,799 12,978
liabilities
Creditors - due after more (1,026) (841) - -
than one year
Provisions for liabilities (273) (840) - -
and charges
-------- --------- -------- -------
Net assets 782 3,457 12,799 12,978
====== ====== ====== ======
Capital and reserves
Called up share capital 9,651 8,091 9,651 8,091
Share premium account 3,243 2,730 3,243 2,730
Revaluation reserve 405 405 - -
Profit and loss account (12,517) (7,769) (95) 2,157
-------- --------- -------- -------
Shareholders' funds 782 3,457 12,799 12,978
====== ====== ====== ======
Equity interests (3,137) (1,317) 8,880 8,204
Non-equity interests 3,919 4,774 3,919 4,774
-------- -------- -------- -------
Capital employed 782 3,457 12,799 12,978
====== ====== ====== ======
Approved by the Board of Directors on 24 May 2001 and signed on its behalf by:
S Coimbra
FT Finnie
Directors
Group Cash Flow Statement
9 months Year ended
ended 31 March
31 December
2000 2000
#'000 #'000
Net cash (outflow)/inflow from operating (2,424) 3,093
activities
------------ -----------
Returns on investments and servicing of finance
Interest paid (531) (663)
Interest element of payments under hire purchase (112) (211)
contracts
Preference dividends paid - (9)
------------ -----------
(643) (883)
------------ -----------
Taxation - (2)
------------ -----------
Capital expenditure
Purchase of tangible fixed assets (43) (364)
Disposal of plant and equipment 678 107
------------ -----------
635 (257)
------------ -----------
Net cash (outflow)/inflow before financing (2,432) 1,951
------------ -----------
Financing
Receipts from issue of shares 2,182 -
Capital element of payments under hire purchase (226) (1,263)
contracts
Payment of expenses on issue of shares (109) -
------------ -----------
1,847 (1,263)
------------ -----------
(Decrease)/increase in cash during the period (585) 688
======== =======
Reconciliation of net cash flow to movement in net debt
9 months ended Year ended
31 December 31 March
2000 2000
#'000 #'000
(Decrease)/increase in cash in the period (585) 688
Cash outflow from decrease in lease 226 1,263
financing
------------ -----------
Change in debt resulting from cash flows (359) 1,951
New hire purchase and finance leases - (440)
------------ -----------
Movement in net debt in the period (359) 1,511
Net debt at beginning of period (8,913) (10,424)
------------ -----------
Net debt at end of period (9,272) (8,913)
======== =======
Reconciliation of operating loss to net cash (outflow)/inflow from operations
9 months ended 31 December Year ended
2000 31 March
2000
#'000 #'000
Operating loss (708) (2,765)
Depreciation/impairment 520 4,383
Profit on sale of plant and - (10)
equipment
Decrease in stock 3,578 1,545
(Increase)/decrease in debtors (596) 2,493
Decrease in creditors (2,397) (1,591)
Reorganisation provisions utilised (2,821) (962)
----------- -----------
Net cash (outflow)/inflow from (2,424) 3,093
operations
====== ======
Notes to the preliminary results
1. The financial information set out above does not comprise the Company's
statutory accounts. Statutory accounts for the previous financial year
ended 31 March 2000 have been delivered to the Registrar of Companies.
The auditors' report on those accounts was unqualified and did not
contain any statement under section 237(2) or (3) of the Companies Act
1985
The auditors have given an unqualified opinion on the accounts for the
nine month period ended 31 December 2000 which will be delivered to the
Registrar of Companies following the Annual General Meeting.
2. It is expected that copies of the audited statutory accounts will be
available from the Company's registered office at Drummond House, Lumb
Lane Mills, Bradford, West Yorkshire BD8 7RP from 8 June 2001. Copies of
the statutory accounts are being sent to shareholders on the same date.
3. These figures have been prepared in accordance with the same accounting
policies used in the audited statutory accounts for the years ended 31
March 2000 and the nine months ended 31 December 2000.
END
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