Interim Results
July 21 2003 - 3:30AM
UK Regulatory
The Longmead Group plc ("Longmead" or "the Company")
Interim Results for the 26 weeks ended 3 May 2003
CHAIRMAN'S STATEMENT
Group Re-organisation
The nature of our business continues to change with increased market penetration by Far Eastern suppliers and little
improvement in the demand in the market place for ceramic products. As a result we have embarked on a total
re-organisation of the Company's activities and have already commenced the implementation of radical changes. These
involve:
* the complete cessation of the manufacturing in the UK of ceramic door furniture. We are now importing these items
from the Far East at prices considerably less than we are able to manufacture in the UK.
* a major reduction in the manufacture of ceramic bathroom accessories in the UK. We will import most of our
ceramic bathroom accessories requirements and will only continue to manufacture low volume or special lines which
are necessary to give a comprehensive service to our customers, but which cannot be sourced at satisfactory prices
because of volume or complexity.
* a complete re-appraisal of our product offering and the discontinuance of many product ranges because of low
volumes or obsolescence.
* the concentration of warehousing in our main factory premises thereby releasing our present warehouse building
which will be sold.
The overall effect of these changes will be:
* a significant reduction in overhead costs as a result of staff redundancies, some of which have already been
implemented.
* a substantial improvement in margins on both bathroom accessories and door furniture.
* a rapid expansion of our range of metal products as a result of the product review.
* the realisation of a substantial cash sum from the sale of our warehouse premises. Although contracts have not
been signed, a price has been agreed for the sale.
The steps listed above will give rise to exceptional costs relating to redundancies, write-off of plant, machinery and
tooling, and the write-off of stocks. Provision has been made in these interim accounts for the exceptional costs which
are likely to arise and which amount to a total of �475,000.
Trading Results
The trading results for the six months, before exceptional items, show a loss of �172,000 (�25,000 loss) on a turnover
of �1.299 million (�1.525 million). Turnover has declined as a result of a general downturn in retail sales and a
policy of de-stocking by our major customers. Margins have also been under continuing pressure due to our inability to
obtain price increases in the current market place. Sales of metal imported products have increased but have not
compensated sufficiently for the decline in ceramic sales. Door furniture sales have been particularly disappointing as
imported products take a larger share of business. The steps we are now taking should result in an improvement in both
margins and turnover in the next financial year.
Sales and Marketing
During the past nine months, the operation and staffing of our Sales & Marketing Department has been completely
reviewed by our new Sales & Marketing Director. A number of staff changes have been made and new staff recruited. We
now have a fully staffed Marketing Section which is primarily engaged in new product development and improvements in
presentation, which should yield benefits in the future. We are preparing for a major exhibition which will take place
at the National Exhibition Centre in Birmingham in January 2004, and which will form the basis of our product offering
in 2004. A great deal of work has been done in the past months, but inevitably the benefit of the changes being made
will take some time to produce results.
Balance Sheet
The trading loss and exceptional items have further depleted the shareholders' funds and our net assets per share have
been reduced to 33.4p. In order to implement our new strategy we will need additional funds, and increased borrowing
facilities are being arranged with our bank which will have the effect of increasing our borrowings in the short term.
However the profit on the agreed sale of our warehouse building will improve our shareholders' funds and reduce our
level of gearing.
Dividend
In view of the losses for the half year, an interim dividend is not proposed. In addition, the half year results have
resulted in a negative balance of our Profit and Loss Account Reserves and so a final dividend cannot be recommended.
However it still remains our intention to restore dividends as soon as the financial results permit.
Future Prospects
Your Board believes that the prospects for the Company are brighter than they have been for some time, and the
financial year 2003-4 should represent a turning point in the Company's fortunes.
In summary, the action taken will:
* reduce the Company's cost base
* increase operating margins
* improve the product offering and therefore aid growth in turnover in the future.
* release cash to reduce borrowings and for the development of the business.
Already we are seeing benefits from the changes with a significant increase in future business from one major customer,
and increased sales promotional revenue from another. Other sales and marketing initiatives are currently underway
which should provide further growth in 2004.
R E W Newman
Chairman
21 July 2003
THE LONGMEAD GROUP PLC
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR 26 WEEKS ENDED 3 MAY 2003
Unaudited 26 weeks Unaudited Audited
to 3 May 2003
Before Exceptional Total 27 weeks 66 weeks
to to
Exceptional Item 2 Feb 2 Nov
2002 2002
Item
�'000 �'000 �'000 �'000 �'000
TURNOVER 1,299 - 1,299 1,525 3,922
Cost of Sales (937) (475) (1,412) (1,039) (3,097)
_____ _____ _____ _____ _____
Gross Profit 362 (475) (113) 486 825
Operating Costs (494) - (494) (464) (1,272)
_____ _____ _____ _____ _____
OPERATING (LOSS)/
PROFIT (132) (475) (607) 22 (447)
Interest Receivable - - - - -
Interest Payable (40) - (40) (47) (107)
_____ _____ _____ _____ _____
(LOSS) ON
ORDINARY ACTIVITIES
BEFORE TAXATION (172) (475) (647) (25) (554)
_____ _____
Tax on profit on
ordinary
Activities - - -
_____ _____ _____
(LOSS) ON
ORDINARY ACTIVITIES
AFTER TAXATION (647) (25) (554)
Dividends - - -
_____ _____ _____
RETAINED (LOSS)
FOR THE PERIOD (647) (25) (554)
_____ _____ _____
(LOSS) PER SHARE (11.59)p (0.68)p (11.79)p
(PENCE)
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
UNAUDITED CONSOLIDATED BALANCE SHEET
AT 3 MAY 2003
Unaudited Unaudited Audited
as at as at as at
3 May 2 Feb 2 Nov
2003 2002 2002
�'000 �'000 �'000
FIXED ASSETS
Intangible Assets 26 - 28
Tangible Assets 1,999 2,299 2,199
_____ _____ _____
2,025 2,299 2,227
_____ _____ _____
CURRENT ASSETS
Stocks 1,162 1,616 1,364
Debtors 542 659 733
Cash at bank and in hand 4 1 1
_____ _____ _____
1,708 2,276 2,098
CREDITORS: amounts
falling due within one (1,150) (1,057) (1,058)
year
_____ _____ _____
NET CURRENT ASSETS 558 1,219 1,040
_____ _____ _____
TOTAL ASSETS LESS
CURRENT LIABILITIES 2,583 3,518 3,267
CREDITORS: amounts
falling due after one (718) (848) (755)
year
PROVISIONS FOR
LIABILITIES & CHARGES - - -
_____ _____ _____
1,865 2,670 2,512
_____ _____ _____
CAPITAL AND RESERVES
Called up share capital 558 361 558
Share premium account 1,398 1,225 1,398
Capital redemption 19 - 19
reserve
Revaluation reserve 273 279 275
Profit and loss account (383) 805 262
_____ _____ _____
TOTAL EQUITY
SHAREHOLDERS' FUNDS 1,865 2,670 2,512
_____ _____ _____
THE LONGMEAD GROUP PLC
UNAUDITED CASH FLOW STATEMENT
FOR 26 WEEKS ENDED 3 MAY 2003
Unaudited Unaudited Audited
26 weeks 27 weeks 66 weeks
to to to
3 May 2 Feb 2 Nov
2003 2002 2002
�'000 �'000 �'000
CASH FLOW FROM OPERATING
ACTIVITIES (Note 1) (21) 55 (126)
Returns on investment and
servicing of finance (38) (46) (106)
Taxation - - -
Capital expenditure and
financial investment (21) (13) (69)
Equity dividends paid - - -
_____ _____ _____
NET CASH (OUTFLOW)
BEFORE FINANCING (80) (4) (301)
Financing - (Decrease)/ (53) (89) 171
increase in debt
_____ _____ _____
(DECREASE) IN CASH (133) (93) (130)
_____ _____ _____
NOTES:
Note 1: Reconciliation of operating profit to net cash inflow from operating activities
Unaudited Unaudited Audited
26 weeks 27 weeks 66 weeks
to to to
3 May 2 Feb 2 Nov
2003 2002 2002
�'000 �'000 �'000
Operating (loss)/profit (607) 22 (446)
Depreciation 246 95 237
(Profit) on sale of fixed (1) (1) -
assets
(Increase)/decrease in 202 (70) 183
stock
Decrease/(increase) in 191 (97) (172)
debtors
(Decrease)/increase in (52) 106 72
creditors
_____ _____ _____
(21) 55 (126)
_____ _____ _____
Note 2: Reconciliation of net cash flow to movement in net debt
Unaudited Unaudited Audited
26 weeks 27 weeks 66 weeks
to to to
3 May 2 Feb 2 Nov
2003 2002 2002
�'000 �'000 �'000
(Decrease) in cash in
the period (133) (93) (130)
Cash inflow from increase
in debt
and lease and hire 53 89 200
purchase financing
_____ _____ _____
(80) (4) 70
New finance lease and
hire
purchase obligations (22) (28) (45)
_____ _____ _____
Movement in net debt in (102) (32) 25
period
Net debt at beginning of (1,271) (1,296) (1,296)
period
_____ _____ _____
Net debt at end of period (1,373) (1,328) (1,271)
_____ _____ _____
ANALYSIS OF NET DEBT
At Cash flow Other At
2 Nov non-cash 3 May
2002 2003
changes
�'000 �'000 �'000 �'000
Cash 1 3 - 4
Overdraft (375) (136) - (511)
_____ _____ _____ _____
(374) (133) - (507)
Debt due within one year (100) 25 (25) (100)
Debt due after one year (725) - 25 (700)
Finance leases (72) 28 (22) (66)
_____ _____ _____ _____
TOTAL (1,271) (80) (22) (1,373)
_____ _____ _____ _____
Note 3: Earnings per share
The loss per ordinary share is calculated on the loss on ordinary activities after taxation and on a weighted average
of ordinary shares in issue of 5,584,391 in the period (27 weeks to 2 February 2002: 3,609,391 and 66 weeks to 2
November 2002: 4,695,213).
Note 4: Preparation of interim financial statements
These unaudited financial statements have been prepared on the basis of the accounting policies set out in the Group's
2002 statutory financial statements.
Note 5: Copies of the Accounts
Copies of the interim accounts will be sent to shareholders. Further copies will be available from the Company's head
office at 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 at
least one month from the date of this announcement.
21 July 2003