RNS Number:9949Q
Multi Group PLC
16 October 2003
Multi Group Plc
Interim accounts for the six months ended 30 June 2003
Explanatory Statement
For the period ended 30 June 2003
Introduction
This Explanatory Statement provides a review of the Group's activities during
the period, together with a summary of its current position and the plans
proposed by the directors to restore the Group to sustainable long-term growth
and profitability.
Review of the period, current trading and prospects
2002 was a challenging year for the Group, particularly in the South East where
there was a marked decline in the level of construction activity and an increase
in the level of competition.
Trading conditions during the first half of the current year did not improve.
The results for this period were adversely affected by lost business in the
software division as a result of the suspension of the Company's shares and by
significant additional costs arising from the refinancing process.
The Directors consider the performance of the hire division to have been largely
satisfactory given the difficulties faced by the Group with revenue growth from
the newer depots continuing to make up for flatter performance from the older
depots. However, the software division has continued to trade at a loss.
The Group's turnover for the period at #7.4million, was comparable with that of
the previous period of #7.3million. However, operating expenses rose by 21 per
cent. to #6.2million resulting in a loss before taxation for the period of
#1.2million. At 30 June 2003, the Group had net assets of #2.1million (2002 -
#5.9million) and net debt of #3.3million (2002 - #4.0million).
Proposed refinancing and restructuring plans
The Company has today announced proposals to raise up to #1.57 million before
expenses by way of a Placing and Secondary Placing and up to an additional
#465,000 by way of a non-underwritten open offer. The net proceeds of the
Placing, Secondary Placing and Open Offer, estimated to be a minimum of #1.4
million, will be used to strengthen the balance sheet of the Group and provide
working capital. In addition, having evaluated the advantages and disadvantages
of retaining a full listing on the Official List, the directors have concluded
that the interests of the Company and its Shareholders would be better served by
moving to the Alternative Investment Market ("AIM"). Accordingly, the directors
are applying for the listing of the Company's Ordinary Shares on the Official
List to be cancelled and for the New Ordinary Shares to be admitted to trading
on AIM.
Following the review undertaken last year, the directors have decided that no
additional research and development funding will be provided to the software
division from the Group's resources and the division is being actively marketed
to potential purchasers. On 13 October 2003, the Company agreed to dispose of
the assets, software and intellectual property relating to Genesys, the original
Unix based program developed by Eurogen, to Toga Sales Limited. The
consideration is #75,000 which was paid on completion and either three further
payments, comprising #125,000 on 31 October 2003 and #62,500 on each 31 January
2004 and 31 March 2004, resulting in an aggregate payment of #325,000, or two
further payments of #195,000 on 31 October 2003 and #30,000 on 31 March 2004,
resulting in an aggregate payment of #300,000.
Following completion of the above proposals, the management structure of the
Group will be changed to comprise an executive board (being the statutory board
of the Company), who will be responsible for corporate matters, and a management
board with operational control over the day-to-day running of the business.
Russell Bracegirdle will resign as director of the Company and will join the
newly formed management board. Keith Ferguson will retire by rotation at the
forthcoming Annual General Meeting but will not seek re-election and will also
join the newly formed management board. These changes, in addition to the recent
resignations of K F Payne and A D Porter, will result in an executive board
comprising Andrew Brundle, as Group Financial Director, and a proposed director,
Oliver Cooke, as Executive Chairman. In addition, two new non-executive
directors will be appointed to the board of the Company as soon as practicable
following the completion of the proposals.
Outlook
The directors feel confident that the proceeds of the Placing, Secondary Placing
and Open Offer and the management restructuring of the Group, together with the
disposal of non-core assets and businesses will enable the Group to concentrate
on and continue to build its traditionally profitable hire businesses. The
Directors feel that the prospects for the Group as refined by these proposals
are good and they are optimistic about the future.
At the time of approving the interim financial information, the above proposals
for the refinancing and restructuring of the Group remain subject to shareholder
approval. Should shareholder approval not be obtained and the proposals not
proceed, it is likely that the Group will cease to trade. Should shareholder
approval be obtained and the proposals proceed, the directors have formed a
judgement, at the time of approving the interim financial information, that the
Group has adequate resources to continue in operational existence for the
foreseeable future. The directors are confident that shareholder approval will
be obtained and for this reason they have continued to adopt the going concern
basis in preparing the interim financial information.
F R Bracegirdle
Chief Executive Officer
16 October 2003
Consolidated profit and loss account
For the period ended 30 June 2003
Year ended 31
December 2002
Period ended 30 Period ended 30
June 2003 June 2002
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
Turnover 7,362 7,299 15,848
Cost of sales 2,221 2,185 5,527
Gross profit 5,141 5,114 10,321
Other operating expenses 6,173 5,113 13,035
Operating (loss)/profit before goodwill
amortisation and exceptional charges (1,032) 478 99
Goodwill amortisation - 137 209
Exceptional charges 3 - 340 2,604
Operating (loss)/profit (1,032) 1 (2,714)
Interest payable and similar charges (120) (109) (343)
Loss on ordinary activities before taxation (1,152) (108) (3,057)
Taxation 4 100 (62) 131
Loss on ordinary activities after taxation (1,052) (170) (2,926)
Dividends 5 - (63) (63)
Retained loss for the financial period (1,052) (233) (2,989)
Loss per share:
- Basic 6 (2.34)p (0.40p) (6.56)p
- Diluted 6 (2.34)p (0.40p) (6.56)p
(Loss)/earnings per share before goodwill
amortisation and exceptional charge:
- Basic 6 (2.34)p 0.48p (0.86)p
- Diluted 6 (2.34)p 0.47p (0.86)p
Dividends per share - 0.14p 0.14p
All amounts relate to continuing activities. There were no acquisitions during
the period
Consolidated balance sheet
At 30 June 2003
As at As at As at 31
December 2002
30 June 2003 30 June 2002
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
Fixed assets
Intangible assets 7 - 2,193 -
Tangible assets 8 6,647 7,543 7,412
6,647 9,736 7,412
Current assets
Stocks 153 616 295
Debtors 4,431 4,767 5,660
Cash at bank and in hand 179 102 12
4,763 5,485 5,967
Creditors: amounts falling due within one year (8,110) (7,689) (9,384)
Net current liabilities (3,347) (2,204) (3,417)
Total assets less current liabilities 3,300 7,532 3,995
Creditors: amounts falling due after more than
one year (849) (904) (392)
Provisions for liabilities and charges
Deferred taxation (386) (684) (486)
Net assets 2,065 5,944 3,117
Capital and reserves
Called up share capital 2,244 2,244 2,244
Share premium account 1,414 1,414 1,414
Shares to be issued 329 400 329
Profit and loss account (1,922) 1,886 (870)
Shareholders' funds - equity 9 2,065 5,944 3,117
Approved on behalf of the Board on 16 October 2003.
F R Bracegirdle A E Brundle
Chief Executive Officer Chief Financial Officer
Consolidated cash flow statement
For the period ended 30 June 2003
Period ended 30 Period ended 30 Year ended
June 2003 June 2002
31 December 2002
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Reconciliation of operating (loss)/profit to net cash
inflow from operating activities
Operating (loss)/profit (1,032) 1 (2,714)
Depreciation charges 905 756 1,680
Loss on disposal of fixed assets 144 - 485
Amortisation of goodwill - 137 209
Development costs amortised - 36 93
Impairment losses - goodwill - - 1,692
Impairment losses - research and development - - 572
Decrease/(increase) in stocks 142 (308) 13
Decrease/(increase) in debtors 1,229 (615) (1,508)
(Decrease)/increase in creditors (193) 875 2,107
Net cash inflow from operating activities 1,195 882 2,629
Consolidated cash flow statement
Net cash inflow from operating activities 1,195 882 2,629
Returns on investments and servicing of finance (120) (109) (343)
Taxation paid (43) (144) (147)
Capital expenditure 462 (475) (1,777)
Acquisitions - (327) (492)
1,494 (173) (130)
Equity dividends paid - (80) (143)
Cash inflow/(outflow) before financing 1,494 (253) (273)
Financing (798) (397) (1,276)
Increase/(decrease) in cash in the period 696 (650) (1,549)
Reconciliation of net cash inflow/(outflow) to decrease/
(increase) in net debt
Increase/(decrease) in cash in the period 696 (650) (1,549)
Cash outflow from decrease in debt and lease financing 798 933 1,813
Change in net debt resulting from cash flows 1,494 283 264
New finance leases (746) (543) (605)
Decrease/(increase) in net debt in the period 748 (260) (341)
Net debt at start of the period (4,038) (3,697) (3,697)
Net debt at 30 June/31 December (3,290) (3,957) (4,038)
Notes to the interim results
For the period ended 30 June 2003
1 Accounting periods
The accounting reference date of the Group is 31 December.
The current interim results are for the 26 week period ended 30 June 2003.
The comparative year's results are for the year ended 31 December 2002.
The comparative interim results are for the 26 week period ended 30 June 2002.
2 Going concern
The consolidated balance sheet is set out on page 5 and shows net current
liabilities at 30 June 2003 of #3.4 million. The Company's shares were
suspended from trading on 28 March 2003 pending clarification of the Company's
financial position. On 16 October 2003, the Company announced proposals to
raise up to #1.57 million before expenses by way of a Placing and Secondary
Placing and up to an additional #465,000 by way of a non-underwritten open
offer. The net proceeds of the Placing, Secondary Placing and Open Offer,
estimated to be a minimum of #1.4 million, will be used to strengthen the
balance sheet of the Group and provide working capital.
At the time of approving the interim financial information, the above proposals
for the refinancing and restructuring of the Group remain subject to shareholder
approval. Should shareholder approval not be obtained and the proposals not
proceed, it is likely that the Group will cease to trade. Should shareholder
approval be obtained and the proposals proceed, the directors have formed a
judgement, at the time of approving the interim financial information, that the
Group has adequate resources to continue in operational existence for the
foreseeable future. The directors are confident that shareholder approval will
be obtained and for this reason they have continued to adopt the going concern
basis in preparing the interim financial information. The interim financial
information does not include any adjustments that might result from the
directors' proposals failing to obtain shareholder approval.
3 Exceptional charges
Exceptional impairment losses - having reviewed the carrying value of goodwill
and deferred research and development expenditure in light of the expected
future cashflows of the businesses concerned, the directors have concluded that
these assets are fully impaired. The impairment provision is #2,264,000 and is
fully reflected in the results for the year ended 31 December 2002.
Other exceptional charge - this arises as a result of a repudiated insurance
claim. The Group has agreed to a full and final settlement of #340,000 with its
former motor vehicle insurers. The liability is fully reflected in the results
for the year ended 31 December 2002.
4 Taxation
Year ended 31
December 2002
Period ended 30 Period ended 30
June 2003 June 2002
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
The charge for taxation is based on the loss on
ordinary activities for the period and comprises:
UK corporation tax charge on operating activities - 2 -
Adjustments in respect of prior years - - 7
Deferred tax:
Tax losses incurred during the period/year (64) - (140)
(Reversal)/origination of timing differences (36) 60 2
(100) 62 (131)
5 Dividends
Year ended 31
December 2002
Period ended 30 Period ended 30
June 2003 June 2002
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Final
Ordinary - final proposed - - -
Interim
Ordinary - interim paid - - 63
- interim proposed - 63 -
- 63 63
6 (Loss)/earnings per share
The calculation of (loss)/earnings per share for the period ended 30 June 2003
is based on a loss after taxation of #1,052,000 (2002 interim: loss of #170,000;
2002 full year: loss of #2,926,000).
The calculation of basic (loss)/earnings per share is based on the weighted
average number of shares in issue during the period of 44,886,448 (2002 interim:
42,453,431; 2002 full year: 44,599,128).
For the period under review the basic and diluted loss per share figures are the
same as the effect of share options is anti-dilutive.
Reconciliation of the denominators used for basic and diluted (loss)/earnings
per share calculations:
Effect of share
options
Basic Diluted
30 June 2003 44,886,448 - 44,886,448
30 June 2002 42,453,431 856,092 43,309,523
31 December 2002 44,599,128 - 44,599,128
Additional disclosure is given below in respect of basic (loss)/earnings per
share before goodwill amortisation and exceptional charge, as the directors
believe this gives a more accurate presentation of maintainable earnings.
Year ended 31
December 2002
Period ended 30 Period ended 30
June 2003 June 2002
(Unaudited) (Unaudited) (Audited)
Pence Pence Pence
Basic loss per share (2.34) (0.40) (6.56)
Goodwill amortisation and exceptional charge - 0.88 5.70
Basic (loss)/earnings per share before goodwill
amortisation and exceptional charge (2.34) 0.48 (0.86)
7 Intangible assets
At 31 December 2002, the carrying value of goodwill and capitalised research and
development expenditure was reviewed in light of expected future cashflows from
the businesses concerned. The directors concluded that those assets were fully
impaired. Impairment provisions were therefore recognised in the year to 31
December 2002 to reflect this.
8 Tangible assets
Other tangible
assets*
Equipment for Motor
hire vehicles
Total
Cost #'000 #'000 #'000 #'000
At 1 January 2003 8,350 1,268 1,939 11,557
Additions 370 154 83 607
Disposals (658) (8) (78) (744)
At 30 June 2003 8,062 1,414 1,944 11,420
Depreciation
At 1 January 2003 2,846 581 718 4,145
Charge for the period 651 86 168 905
Eliminated on disposals (266) - (11) (277)
At 30 June 2003 3,231 667 875 4,773
Net book value
At 30 June 2003(Unaudited) 4,831 747 1,069 6,647
At 30 June 2002 (Unaudited) 5,747 729 1,067 7,543
At 31 December 2002 (Audited) 5,504 687 1,221 7,412
*Other tangible assets include leasehold improvements, fixtures and fittings,
office equipment and computer equipment.
9 Reconciliation of movement in shareholders' funds
Period ended Period ended Year ended 31
December 2002
30 June 2003 30 June 2002
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Loss on ordinary activities after taxation for the
financial period (1,052) (170) (2,926)
Dividends - (63) (63)
(1,052) (233) (2,989)
Ordinary shares issued, net of expenses - 586 586
Change in shares to be issued - 100 29
Net (decrease)/ increase in shareholders' funds (1,052) 453 (2,374)
Opening shareholders' funds 3,117 5,491 5,491
Closing shareholders' funds 2,065 5,944 3,117
10 Contingent liability
Multi Group PLC has guaranteed the services of one of its subsidiaries, Multi
Global Solutions PLC, to a customer. The guarantee is for a period of 5 years
from the date of acceptance which is estimated to be December 2003 and is in the
form of damages for losses sustained by the customer should the subsidiary not
be able to maintain the system supplied. Multi has entered into a supplementary
agreement, with RMD, conditional upon admission of the company's shares to
trading on AIM, that in the event that the Company no longer controls Multi
Global Solutions PLC, the guarantee shall be released and in the event that
Multi Global Solutions PLC becomes insolvent the liability of the Company shall
be capped at #75,000.
11 The Interim Report was approved by the Board of Directors on 16 October
2003.
The interim financial information does not comprise statutory accounts as
defined in Section 240 of the Companies Act 1985. The interim financial
information has been prepared on the basis of the accounting policies set out in
the Annual Report for the year ended 31 December 2002.
The financial information for the periods ended 30 June 2002 and 30 June 2003 is
unaudited.
The financial information for the year ended 31 December 2002 is an extract from
the latest Group accounts. Those accounts received an unqualified auditors'
report and will be filed with the Registrar of Companies following the company's
annual general meeting.
The auditors have carried out a review of the interim financial information
Copies of the Interim Report are available from the Company Secretary at
Christopher Wren Yard, 2nd Floor, 117 High Street, Croydon, Surrey, CR0 1QG.
Copies are also available through the FT Free Annual Reports Service, details of
which can be found in the London Share Service pages of the Financial Times.
Independent review report to Multi Group PLC
For the period ended 30 June 2003
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2003. We have read the other information contained
in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
Our report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the company for
our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of Group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Going concern
In forming our opinion, we have considered the adequacy of the disclosures made
in note 2 to the interim financial information, concerning the uncertainty of
shareholder approval being obtained for the restructuring and refinancing
proposals that have been made by the directors. As explained in note 2, should
shareholder approval not be obtained and the proposals not proceed it is likely
that the Group will cease to trade. In view of the significance of this
uncertainty, we consider that it should be drawn to your attention, but our
opinion is not qualified in this respect.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2003.
BDO Stoy Hayward
Chartered Accountants
Epsom
Surrey
16 October 2003
This information is provided by RNS
The company news service from the London Stock Exchange
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