Interim Results
February 28 2003 - 4:15AM
UK Regulatory
RNS Number:0821I
Armitage Bros PLC
28 February 2003
CHAIRMAN'S INTERIM STATEMENT
2002/2003
Dear Shareholder
During the 28 weeks to 15th December 2002, sales from continuing operations were
#10,741,000 compared with #10,850,000 for the same period in 2001. Operating
profits increased from #689,000 to #771,000, which is an increase of 12%. Your
board sees this as a very solid performance in the light of changes we have been
making in the group and the current challenges in the market which I have
referred to in earlier interim and full year reports. The significant
improvement in operating profits is very much in line with the board's
expectations and has been achieved as a result of a number of key factors which
I will refer to later in my report.
Turnover
Group sales were slightly down on the same period last year. Set out below are a
number of key points which have influenced the turnover of each division during
the period.
Pet Accessories Division.
* Total sales for the division were slightly up on the same period last
year.
* During the period your board took a number of decisions to eliminate
unprofitable ranges and individual products as well as taking selective
action to withdraw from unprofitable export accounts and therefore this has
had a negative impact on overall sales volume in this division.
* The sales of our range of Rotastak small animal housing units have shown a
marked improvement compared to the same period last year.
* Our range of Christmas products has enjoyed another strong sales year and
has contributed positively to the division's overall sales performance.
* Following on from its successes in previous years, our aquatic division
continues to show progress particularly with the Algarde and Phoenix brands.
Overall, the sales performance within this division has been very encouraging
during the period.
Dog Food Division.
* Total sales for the division were down on the same period last year which
is a disappointment to your board.
* Sales of Wafcol products declined materially in the period compared to the
same period last year.
* Sales of Wilson's branded dog foods also fell but this was partially
offset by a strong performance in the production and sale of small animal
foods.
Changes in the positioning of other brands in the marketplace have led to a
short-term decline in Wafcol sales volumes. A variety of initiatives have been
instigated to reverse this position going forward.
Operating Profit
The substantial improvement in operating profits referred to earlier in my
report has been brought about by a number of factors within each of the two
operating divisions. The most significant items are highlighted below for your
information.
Pet Accessories Division
* After a number of years of considerable pressure on margins due to the
very significant changes that have been taking place in our market we have
now been able to stabilise the margin position through diligent cost
reduction and elimination of areas of less profitable trading.
* Factory efficiencies have improved through levels of reorganisation and
investment in mechanisation.
* In the period the group has taken any write down costs associated with our
withdrawal from certain ranges, products and market positions.
Dog Food Division
* There have been purchasing gains during the period but these have not
fully compensated for the loss of margin due to the sales value reduction in
the period.
* Through investment and reorganisation there have also been factory
efficiency gains during the period.
Your board continues to look for further ways of reducing its costs of
manufacture and distribution as well as seeking further reductions in the cost
of both raw materials and finished products.
Group
In the period the group generated cash of #423,000 from operating activities
leaving it with a positive bank position of #1,510,000 which compares to a bank
balance of #27,000 at the same period last year. Due to the seasonal nature of
the business, a comparison of the balance sheets between 2 June 2002 year end
and 15 December 2002 half year can be misleading. However, compared with the
same period last year, stocks have reduced by #468,000 and trade debtors by
#950,000. This liquidity within the business leaves the group in a much stronger
position than it has been for a number of years.
After a number of trading and operational setbacks in recent years, your board
now sees that it has largely been able to stabilise the group's market position
and trading performance and through this, the board is now able to concentrate
more fully on finalising its strategic objectives which have been referred to in
earlier communications and announcements.
For the second half of the year, the known challenges exist in the market place
and it is currently difficult to predict how cautious consumers will be for the
balance of 2003.
On 2 December 2002, your board announced that Armitage was in discussions
regarding a possible offer for the entire issued share capital of the company.
These discussions, whilst taking longer than anticipated, are continuing and
your board will make a further announcement in due course. However, there is no
certainty that these discussions will lead to an offer being made to
shareholders.
The directors have decided to maintain the interim dividend of 3.4p. This is to
be paid on 23 April 2003 to shareholders on the register at 28 March 2003.
David Crawley
Chairman
28 February 2003
Notes:
This letter is sent to all shareholders and copies are available from the
Registered Office of the Company at Armitage House, Colwick, Nottingham NG4 2BA.
The figures for the year to 2 June 2002 constitute abridged accounts. Full
accounts, upon which the auditor gave an unqualified opinion, have been sent to
the shareholders and filed with the Registrar of Companies.
Group Trading Results
28 weeks to 28 weeks to 9 53 weeks to
15-Dec-02 -Dec-01 2-Jun-02
#000 #000 #000
Turnover (note 8) 10741 10850 18953
______ ______ ______
Operating profit 771 689 627
Interest receivable / (payable) 9 (19) (9)
______ ______ ______
Profit on ordinary activities 780 670 618
before taxation
Taxation (234) (201) (206)
______ ______ ______
Profit on ordinary activities 546 469 412
after taxation
Dividend (123) (123) (307)
______ ______ ______
Retained profit 423 346 105
______ ______ ______
Basic & diluted earnings per 14.6p 12.5p 11.0p
ordinary share (net)
Dividend per ordinary share 3.4p 3.4p 8.2p
Statement of Total Consolidated Recognised
Gains and Losses
28 weeks to 28 weeks to 53 weeks to
15-Dec-02 9-Dec-01 2-Jun-02
#000 #000 #000
Profit for period and total recognised
gains and losses relating to the period 546 469 412
Prior year adjustment (note 6) (199) 0 (199)
______ ______ ______
Total gains & losses recognised 347 469 213
______ ______ ______
Summarised Group Balance Sheet
15-Dec-02 9-Dec-01 2-Jun-02
#000 #000 #000
Fixed assets 6590 7113 6788
______ ______ ______
Stocks 3644 4112 3995
Debtors 3831 4781 2828
Cash at bank and in hand 1510 27 1355
______ ______ ______
Current assets 8985 8920 8178
Creditors: amounts falling due within (3727) (4296) (3541)
one year
______ ______ ______
Net current assets 5258 4624 4637
______ ______ ______
Total assets less current liabilities 11848 11737 11425
Provision for liabilities and charges (302) (373) (302)
______ ______ ______
11546 11364 11123
______ ______ ______
Capital and reserves 11546 11364 11123
______ ______ ______
Summarised Group Cash Flow Statement
28 weeks to 28 weeks to 53 weeks to
15-Dec-02 9-Dec-01 2-Jun-02
#000 #000 #000
Net cash inflow from operating 423 81 1751
activities (note 9)
Returns on investment and servicing 26 (13) (18)
of finance
Taxation 0 0 (153)
Capital expenditure and (100) (108) (179)
financial investment
Equity dividends paid (194) (194) (307)
______ ______ ______
Net cash inflow / (outflow) before 155 (234) 1094
financing
Financing 0 0 (178)
______ ______ ______
Increase / (decrease) in cash 155 (234) 916
for the period (note 11)
______ ______ ______
Notes to the Accounts
1. The figures for the periods to 15 December 2002 and 9 December 2001 are unaudited and have been
prepared on the basis of accounting policies set out in the audited report and accounts for the year
ended 2 June 2002.
2. Taxation has been provided at a rate of 30% for the period to 15 December 2002 (period to 9 December
2001 : 30%).
3. The interim dividend of 3.4p (2001 : 3.4p) per share will be paid on 23 April 2003, to shareholders on
the register at close of business on 28 March 2003.
4. The basic and diluted earnings per share is based on profit of #546,000 (2001 : #469,000) divided by
4,050,000 (2001 : 4,050,000) being the weighted average number of shares in issue throughout the
period less the 304,290 shares held by the Employee Shares Trust (2001 : 304,290). There is no
difference between basic earnings per share and diluted earnings per share as the outstanding share
options are considered anti-dilutive.
5. The results, balance sheet and cash flow statement at 2 June 2002 are taken from the full accounts for
the year ended.
6. The interim accounts for the 28 weeks to 15 December 2002 have been adjusted for the prior year
adjustment in respect of deferred tax as disclosed in the full accounts to 2 June 2002. Profit for the
28 weeks to 15 December 2002 and 28 weeks to 9 December 2001 is not affected by this adjustment.
7. The last full actuarial valuation of the defined benefit pension scheme was carried out by a qualified
independent actuary at 31 March 2002 using the attained age method of valuation and assumed investment
returns of 6.5% per annum and salary increases of 4% per annum. The level of funding (as a percentage)
is 82%.
The valuation shows the market value of the scheme's assets as #3,852,000 and a deficit of #848,000
and therefore contribution rates have been increased from 11.65% to 40% from November 2002 which will
continue until October 2006 when it falls to 28.5%. However, there is no longer a requirement to make
additional contributions of #120,000 per annum.
8. Geographical analysis of turnover,
28 weeks to 28 weeks to 53 weeks to
15-Dec-02 9-Dec-01 2-Jun-02
#000 #000 #000
UK 9648 9665 16895
Europe excluding UK 1010 1087 1827
North America 21 34 113
Rest of World 62 64 118
______ ______ ______
10741 10850 18953
______ ______ ______
9. Reconciliation of operating profit to net cash inflow from operating activities
28 weeks to 28 weeks to 53 weeks to
15-Dec-02 9-Dec-01 2-Jun-02
#000 #000 #000
Operating Profit 771 689 627
Depreciation 298 370 766
Stock decrease / (increase) 351 (122) (5)
Debtors (increase) / decrease (1003) (1224) 647
Creditors increase / (decrease) 6 368 (284)
______ ______ ______
Net cash inflow from operating 423 81 1751
activities
______ ______ ______
10. Reconciliation of net cash flow to movement in net funds
28 weeks to 28 weeks to 53 weeks to
15-Dec-02 9-Dec-01 2-Jun-02
#000 #000 #000
Increase / (decrease) in cash in the 155 (234) 916
period
Cash outflow from decrease in debt 0 0 178
and leasing financing
______ ______ ______
Increase/(decrease) in net funds 155 (234) 1094
Net funds at beginning of period 1355 261 261
______ ______ ______
Net funds at end of period 1510 27 1355
______ ______ ______
11. Analysis of changes in net funds
At 2 June 2002 Cash Flows At 15 Dec 2002
#000 #000 #000
Bank and cash 1355 155 1510
______ ______ ______
1355 155 1510
______ ______ ______
This information is provided by RNS
The company news service from the London Stock Exchange
END
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