THE LONGMEAD GROUP PLC ("Longmead" or "the Company")
PRELIMINARY RESULTS FOR 15 MONTHS TO 2 NOVEMBER 2002
CHAIRMAN'S STATEMENT
Trading results
The trading results (including finance costs) for the 15 month period under review show a loss, before exceptional
items, of �144,231. Exceptional costs amounted to �409,374 giving an overall loss for the 15 months of �553,605 (loss
before tax for 12 months to 29 July 2001: �592,796). The exceptional items arise from the closure of our Chard factory,
reorganisation costs and a further write-down of stocks. These are commented on in more detail below.
Turnover for the 15 month period was �3,922,538 showing an increase on the previous period of 5.6% on an annualised
basis. This result, although encouraging, was still very disappointing as we budgeted for a much larger increase in
sales. However, we experienced some delays in our larger customers taking new products into store and the overall level
of retail demand for these accounts was below expectation.
Sales of our imported products have shown a substantial increase and our policy of strengthening our sales and
marketing team to increase penetration in the general trade area has been largely successful, with an increase in sales
in this part of the business of over 30% on an annualised basis. Similarly although our exports were below budget
partly due to the strength of the pound, we still posted an increase of 41% compared with the previous year.
Closure of Chard factory
As a result of the decline in the ceramic side of our business, we decided in June 2002 to close our factory in Chard
and to consolidate production of ceramics at our main factory in Axminster. We had an option to break the lease of the
Chard factory at the end of 2002 and thus avoid further rental costs. The closure was completed in July 2002 and we
incurred some �115,000 of exceptional costs as a result. This amount is accounted for by redundancy payments, removal
costs, dilapidations and stock write-off. All expenditure relative to Chard will cease at the end of December 2002. We
estimate that we will achieve annual savings of about �70,000 from the closure.
Further exceptional costs of approximately �37,000 were incurred from the restructuring of our sales and marketing
function. This is commented on below.
Sales and marketing department
As a result of the departure of our Marketing Director in August 2002 we decided to restructure our sales and marketing
function. Whereas previously the two functions were separated, we decided to combine them under a new Head of Sales and
Marketing. Chris Newman resigned his position as Sales Director in October 2002; Chris had been our Sales Director for
16 years and played a significant part in the growth of the Company since its establishment in 1986. I would like to
thank him for the contribution he has made over this period. He continues to assist us as a consultant dealing with our
sales in Ireland and Scotland. The restructuring resulted in exceptional costs of �37,000.
The new Head of Sales and Marketing joined us in October 2002. Mark Toolan has an impressive record of achieving sales
growth in previous positions and we are confident that he will add a new dimension to our business.
Stock write-off during the period
During the period under review the nature of our business has continued to change, resulting in a further need to
provide for slow moving and obsolete stocks. Our two major DIY customers have required further alterations to product
ranges resulting in a significant write-off of packaging and of finished goods. In addition, continuing changes in our
door furniture business have necessitated a further write-off of raw materials and work in progress. A total of
�256,667 has been provided in the accounts to cover these items.
Bathroom accessories
As reported last year, we have continued our policy of improving our product ranges particularly with imported
products. As well as offering a comprehensive range of bathroom accessories we now import storage items for the
bathroom. We launched a new catalogue in January - "Bathroom Storage Solutions" - and this has achieved good results.
The new products were shown, together with an existing range, at the Kitchens, Bedrooms and Bathroom Exhibition at the
NEC in January 2002. We had a very successful show and, as a result, a large number of new general trade retail
accounts have been opened.
Sales to our major customers have been disappointing with some of the larger DIY groups undergoing restructuring or
changes in ownership. Traditionally sales to major outlets have been mainly ceramic but we are working hard to
introduce new metal products into this sector of our business.
As reported earlier exports have improved by some 41% although they still represent a comparatively small part of our
total turnover. We have been successful in improving our penetration into the French market and we are anticipating
improved sales from the Benelux countries.
Door furniture
This part of our business has shown a small decline in the period. Competition from Far East imports has intensified
and the demand for ceramic products has remained static.
We have maintained our export sales in the period but the strength of the pound makes it difficult to increase sales.
It is our intention to review the whole of this operation during the coming year and to place emphasis on increasing
our imports from the Far East, particularly metal products.
Balance sheet
In spite of the exceptional costs and the loss for the year, the balance sheet remains satisfactory. In February 2002
we placed 1,975,000 Ordinary shares at 20p each to raise �370,000 net of expenses. This was to provide additional
working capital to enable us to expand our imports from the Far East. However the placing at 20p per share has diluted
net assets per share. At the last year end they were 74.7p per share. Following the placing and after taking into
account the results for the period, shareholders' funds now stand at 45.0p per share.
We have continued to repay the medium term loan and at the end of October the outstanding balance was �825,000. At the
end of the period our bank borrowings as a percentage of shareholder funds was 45.9%.
Dividend
As a result of the loss for the year and the cost of the exceptional items your Board has decided not to recommend the
payment of a final dividend. However, it remains our policy to restore dividend payments as soon as our profit
performance permits.
Future prospects
Although we achieved some sales growth in the last period, we must do a great deal better in the coming year to return
the Company to profitability. We are concentrating our efforts on selling and marketing where we are investing
additional costs. The market is likely to remain static at best so we must strive to increase market share. However,
the economic climate is worrying with the prospect of war in the Middle East, increased taxes in April and a decline in
consumer confidence all likely to make trading difficult. The year ahead will therefore represent a major challenge
although it will also present new opportunities of which I believe we are in a position to take advantage.
In conclusion, I would like to thank the management and staff of the Company for all their hard work and commitment
during the period.
R E W Newman
Chairman
THE LONGMEAD GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
66 weeks ended 2 November
2002
Before Exceptional 66 weeks 52 weeks
exceptional costs ended ended
costs (Note 1) 2 November 29 July
2002 2002 2002 2001
� � � �
TURNOVER 3,922,538 - 3,922,538 2,970,694
Cost of sales (2,725,161) (372,099) (3,097,260) (2,558,191)
________ _______ ________ ________
GROSS PROFIT 1,197,377 (372,099) 825,278 412,503
Distribution costs (873,082) - (873,082) (574,463)
Administrative expenses (361,152) (37,275) (398,427) (324,871)
________ _______ _______ _______
OPERATING (LOSS) (36,857) (409,374) (446,231) (486,831)
________ _______
Interest receivable and 3 1,750
similar income
Interest payable and (107,377) (107,715)
similar charges
_______ _______
(LOSS) ON ORDINARY
ACTIVITIES
BEFORE TAXATION (553,605) (592,796)
Tax credit on loss on - 63,773
ordinary activities
_______ _______
(LOSS) ON ORDINARY
ACTIVITIES
AFTER TAXATION (553,605) (529,023)
_______ _______
RETAINED (LOSS)
FOR THE PERIOD (553,605) (529,023)
======= =======
(LOSS) PER SHARE (11.79)p (14.66)p
There are no recognised gains and losses other than the gains and losses
set out in the profit and loss account.
THE LONGMEAD GROUP PLC
CONSOLIDATED BALANCE SHEET
At 2 November 2002
2 November 29 July
2002 2001
� �
FIXED ASSETS
Intangible Assets 27,981 -
Tangible Assets 2,199,399 2,351,062
_______ _______
2,227,380 2,351,062
_______ _______
CURRENT ASSETS
Stocks 1,363,643 1,546,765
Debtors 733,457 562,150
Cash at bank and in hand 1,219 1,557
_______ _______
2,098,319 2,110,472
CREDITORS: AMOUNTS FALLING
DUE WITHIN ONE YEAR (1,058,350) (869,514)
_______ _______
NET CURRENT ASSETS 1,039,969 1,240,958
_______ _______
TOTAL ASSETS LESS
CURRENT LIABILITIES 3,267,349 3,592,020
CREDITORS: AMOUNTS FALLING
DUE AFTER MORE THAN ONE YEAR (755,541) (897,030)
_______ _______
2,511,808 2,694,990
======= =======
CAPITAL AND RESERVES
Called up share capital 558,439 360,939
Share premium account 1,397,747 1,224,824
Capital redemption reserve 19,000 -
Revaluation reserve 275,329 281,669
Profit and loss account 261,293 827,558
_______ _______
TOTAL EQUITY SHAREHOLDERS' FUNDS 2,511,808 2,694,990
======= =======
THE LONGMEAD GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
66 weeks ended 2 November
2002
2002 2001
� �
CASH FLOW FROM OPERATING
ACTIVITIES (125,707) (38,276)
Returns on investment and
servicing of finance (105,907) (108,652)
Taxation - 45,981
Capital expenditure and
financial investment (69,006) (37,576)
_______ _______
NET CASH (OUTFLOW)
BEFORE FINANCING (300,620) (138,523)
Financing - Increase in 170,631 302,695
debt
_______ _______
(DECREASE)/INCREASE IN (129,989) 164,172
CASH
======= =======
NOTES TO THE ACCOUNTS
1. EXCEPTIONAL COSTS
2002 2001
� �
Stock write-offs 256,667 541,790
Factory closure costs 115,432 -
Reorganisation of Board and compensation for redundancy 37,275 10,466
___________ __________
409,374 552,256
====== ======
2. EARNINGS PER ORDINARY SHARE
The calculation of the basic loss per share is based on the weighted average number of shares in issue during
the financial year of 4,695,213 (2001: 3,609,391) and on the loss attributable to ordinary shareholders of
�553,605 (2001: �529,023).
3. The financial information on the Group set out above does not constitute statutory information within the meaning of
section 240 of the Companies Act 1985. The statutory accounts for the ended 2 November 2002 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.
4. Copies of the 2002 Report and Accounts will be sent to shareholders in due course. Further copies will be available
from the registered office of The Longmead Group plc, Millwey Industrial Estate, Axminster, Devon, EX13 5HU and
from the Company's nominated adviser, Smith & Williamson Corporate Finance Limited at No 1 Riding House Street,
London, W1A 3AS for two months from the date of this announcement.
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