RNS Number:7078N
Longmead Group PLC
26 November 2001
Longmead Group plc ("the Company") - preliminary results for the financial
year ended 28 July 2001
Chairman's Statement
Company Strategy
The continuing decline in the popularity of ceramic bathroom products has
necessitated a complete re-assessment of our business and clearly pointed to
the need for the Company to re-focus its activities. Accordingly, although our
strategy provides for a continuation of the manufacture of ceramics at or just
above our present level, the growth in our turnover will come from an
expansion of imported products mainly manufactured from metal and finished in
chrome. We have a strong customer base which we propose to further develop by
supplying imported products with the emphasis on items with a higher retail
value. To this end we have recently spent some time in China and Taiwan
identifying new products for which, we believe, there is considerable market
potential in the UK.
Our plan for 2001 - 2002 involves an increase in turnover of 23% and to
achieve this we will be increasing our expenditure on marketing by some 24%.
We are confident that there are significant opportunities for expanding our
business based on our revised strategy.
Trading Results
The trading results for the year have been seriously affected by the
exceptional items reported at the half year. I explained, in detail, in my
half year statement the reasons for the stock write-off. The stock provisions
were reviewed again at the end of the financial year but it was not found
necessary to make any significant changes to the provisions already made.
Turnover for the full year amounted to #2.97 million (2000 #3.14 million) a
reduction of 5% on the previous year. As in previous years most of the
reduction occurred in the final quarter, on this occasion our major customer,
following a change in ownership, embarked on a de-stocking exercise.
The fall in turnover resulted in a loss before exceptional items of #40,000
(2000 #81,000 loss) all of this loss occurring, for the reasons stated above,
in the last two months of the year.
The overall result for the year after the exceptional items is a loss of #
593,000 before tax and a loss of #529,000 after allowing for a tax credit.
Bathroom Accessories
There has been a steady growth in sales of imported bathroom accessories
throughout the year. Following the acquisition of the River Accessories
business we had a slow start because of imbalances in stock and long lead
times but we are now making good progress. New ranges have been introduced but
we have ambitious plans to further increase the product ranges we import from
the Far East for, as reported above, we see this as a major growth area. We
are looking to bring in some items with a higher retail value to ensure that
we offer a comprehensive range of products.
Our sales of ceramic products have been maintained except for the de-stocking
referred to earlier. It is our intention to maintain our ceramic manufacturing
base in the UK so that we can provide the service and product development our
customers require. We have continued during this year to develop new products
to meet market needs.
We have made great strides on the marketing front with the introduction of new
catalogues and display units. We will be exhibiting at the Kitchens Bathrooms
and Bedrooms Exhibition at the NEC in Birmingham in January 2002.
At last we are starting to see results on the export front with one large
French DIY chain agreeing to take our products and a further two chains
agreeing to list our products. Our business in Belgium is growing steadily and
we are now starting to receive other orders from around the world. After a
number of "false starts" we believe that we are now in a position where we
will begin to see increases in the exports of our bathroom accessories and
door furniture in spite of the current strength of the pound.
Door Furniture
Although our main emphasis has been on bathroom accessories we have also
reviewed our door furniture operation.
In the past we have offered a comprehensive bespoke business which has created
production problems in meeting customer needs. We have now decided to offer an
ex-stock service with a much reduced product range, combined with guaranteed
delivery dates. Non stock items will continue to be supplied at a premium
price and for minimum quantities and with longer delivery times. New brochures
have been produced to reflect the new policy.
With the ability to give a much better service we believe this will present an
opportunity to increase sales of our door furniture products.
Balance Sheet
Following the significant provision made against stocks, as reported at the
half year, shareholders funds now stand at 74.7p (2000 89.3p) per share. In
January we restructured our borrowings from our Bank and consolidated a number
of term loans and some of the overdraft into one medium term loan repayable in
equal quarterly instalments over 10 years. We are obviously benefiting from
the reduction in interest rates as the new medium term loan is linked to
LIBOR. At the year end our bank borrowings as a percentage of shareholders
funds was only 44%.
Dividend
In view of the results for the year and the need to provide for the future
expansion of the business, your Board has decided not to recommend the payment
of a final dividend. However it is the Board's intention to restore dividend
payments as soon as our profit performance permits.
Future Prospects
In spite of the difficulties experienced during the year we have managed to
improve our margins, before exceptional costs, and we have reduced our
overheads significantly. We believe that the Company is now in a good position
to expand its business. Although the marketing spend will increase we will
exercise a very tight control over all costs.
There is a new air of confidence in the business resulting from the steps we
have taken over the past year. We believe that there will be significant
opportunities during the coming year from which we will be in a position to
take advantage. We are all looking forward to the coming year with enthusiasm
and commitment.
I would like to thank the management and staff of the Company for all their
hard work during the past year.
23.11.2001
CONSOLIDATED PROFIT AND LOSS ACCOUNT
52 WEEKS ENDED 28 JULY 2001
2001 2001 2001 2000
before exceptional
exceptional costs
costs
#
# # #
Turnover - 2,970,694 - 2,970,694 3,141,845
continuing
operations
(2,005,935) (552,256) (2,558,191) (2,182,380)
Cost of sales --------------- --------------- --------------- ---------------
Gross profit 964,759 (552,256) 412,503 959,465
Distribution (574,463) - (574,463) (552,939)
costs
Administrative (324,871) - (324,871) (391,549)
expenses
--------------- --------------- --------------- ---------------
OPERATING 65,425 (552,256) (486,831) 14,977
(LOSS)/PROFIT -
continuing --------------- ---------------
operations
Interest 1,750 _
receivable and
similar income
Interest (107,715) (96,742)
payable and
similar charges
--------------- ---------------
(LOSS) ON (592,796) (81,765)
ORDINARY
ACTIVITIES
BEFORE TAXATION
Tax credit on 63,773 13,300
(loss) on
ordinary
activities
--------------- ---------------
(LOSS) ON (529,023) (68,465)
ORDINARY
ACTIVITIES
AFTER TAXATION
Dividends paid _ (18,047)
and proposed
--------------- ---------------
RETAINED (LOSS) (529,023) (86,512)
FOR THE
FINANCIAL YEAR
========== ==========
BASIC (LOSS) (14.66)p (1.90)p
PER ORDINARY
SHARE
========== ==========
CONSOLIDATED BALANCE SHEET
28 JULY 2001
2001 2000
# #
FIXED ASSETS
Tangible assets 2,351,062 2,523,218
--------------- ---------------
CURRENT ASSETS
Stocks and work in progress 1,546,765 1,921,115
Debtors 562,150 623,303
Cash at bank and in hand 1,557 2,728
--------------- ---------------
2,110,472 2,547,146
CREDITORS: amounts falling due within one year (869,514) (1,270,941)
--------------- ---------------
NET CURRENT ASSETS 1,240,958 1,276,205
--------------- ---------------
TOTAL ASSETS LESS CURRENT LIABILITIES 3,592,020 3,799,423
CREDITORS: amounts falling due after more than (897,030) (526,757)
one year
PROVISIONS FOR LIABILITIES AND CHARGES - (48,653)
--------------- ---------------
TOTAL NET ASSETS 2,694,990 3,224,013
========== ==========
CAPITAL AND RESERVES
Called up share capital 360,939 360,939
Share premium account 1,224,824 1,224,824
Revaluation reserve 281,669 286,741
Profit and loss account 827,558 1,351,509
--------------- ---------------
TOTAL EQUITY SHAREHOLDERS' FUNDS 2,694,990 3,224,013
========== ==========
CONSOLIDATED CASH FLOW STATEMENT
52 WEEKS ENDED 28 JULY 2001
2001 2000
# #
Net cash inflow/(outflow) from operating (38,276) 249,513
activities
--------------- ---------------
Returns on investments and servicing of finance
Interest received 1,750 -
Interest paid (100,626) (85,706)
Interest element of finance lease rentals (9,776) (12,024)
--------------- ---------------
(108,652) (97,730)
--------------- ---------------
Taxation
Corporation tax 45,981 -
--------------- ---------------
Capital expenditure and financial investment
Purchase of tangible fixed assets (43,541) (111,995)
Proceeds from sale of tangible fixed assets 5,965 10,189
--------------- ---------------
(37,576) (101,806)
--------------- ---------------
Equity dividends paid - (36,094)
--------------- ---------------
Net cash inflow/(outflow) before financing (138,523) 13,883
--------------- ---------------
Financing
Capital element of finance lease rentals (77,305) (81,350)
Loans received/(repaid) 380,000 (150,000)
--------------- ---------------
Net cash inflow/(outflow) from financing 302,695 (231,350)
--------------- ---------------
Increase/(decrease) in cash for the period 164,172 (217,467)
========== ==========
1. EARNINGS PER ORDINARY SHARE
The calculation of the (loss) per share is based on the weighted
average number of shares in issue during the financial year of
3,609,391 (2000 - 3,609,391) and on the loss attributable to ordinary
shareholders of #529,023 (2000 - loss of #68,465).
2. DIVIDENDS
2001 2000
# #
Interim paid Nil per ordinary share (2000 - - 18,047
0.5p)
Final proposed Nil per ordinary share (2000 - - -
Nil)
---------- --------
- 18,047
===== =====
3. EXCEPTIONAL ITEMS
2001 2000
# #
Stock write offs 541,790
-
Compensation payments for loss of office 10,466 -
--------------- ---------------
552,256 -
========== ==========
4. The financial information on the Group set out above does not
constitute statutory accounts within the meaning of section 240 of the
Companies Act 1985. The statutory accounts for the period ended 28 July 2001
will be finalised on the basis of the financial information presented by the
directors in this preliminary announcement and will be delivered to the
Registrar of Companies following the Group's Annual General Meeting.
5. Copies of the 2001 Report and Accounts will be sent to shareholders in due
course. Further copies will be available from the registered office of The
Longmead Group, Millwey Industrial Estate, Axminster, Devon, EX13 5HU and from
the Company's nominated adviser, Smith & Williamson Corporate Finance, at 1
Riding House Street, London, W1A 3AS, free of charge, for one month from the
date of this announcement.
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