RNS Number:2051O
Carbo PLC
31 July 2003
For Immediate Release 31st July, 2003
CARBO PLC
RESULTS FOR THE YEAR ENDED 31ST JANUARY, 2003
CARBO PLC, the Manchester-based industrial abrasives manufacturer and
distributor, today announces results for the year ended 31st January, 2003.
Enquiries:
Lars Nyqvist, Chief Executive Tel: 0161 872 8291
CARBO PLC
CHAIRMAN'S STATEMENT
This preliminary statement covers the financial year which ended on 31 January
2003 - a year during which, you as shareholders will be aware, the company
underwent radical changes - a process which, as will be seen below, is still
continuing.
Results for the year
* Financial performance
Turnover from continuing activities fell by 3% to #53.2 million - a creditable
performance given the company's position and the general economic environment.
The operating loss from continuing operations was substantially higher at #5.6
million (of which #4.1 million occurred in the second half of the year). At the
pre-tax level the loss was reduced to #4.5 million (#10.0 million in the
previous year) but this was achieved primarily as a result of the corporate
reorganisation and bank debt write off of #5.5 million.
* Finance
During the second half of this year, following the repayment of the UK banks,
the Group had no banking facilities - other than a #1 million term loan in
Germany and Italy which is steadily being repaid. The Group therefore had to
depend on invoice discounting facilities which are, of course, very expensive.
It is, however, good to note that, even in these dire times, the Group had a
positive operational cash flow of #1.4 million.
* Dividends
No payment of ordinary or preference share dividends can be made until the
company has sufficient distributable reserves.
* Operations
During the whole period operating efficiencies generally were badly affected by
the shortage of working capital. In addition the continuing economic slowdown
in Germany, our main market and site of our largest operating unit, further
depressed demand and results. Finally, the strong euro has reduced demand for
the Group's products in its important Far Eastern markets.
Overall, therefore it has been an exceptionally demanding and difficult period.
People
In my half yearly statement I said that the recruitment of a new Group Finance
Director was a "top priority". We were therefore pleased when Stuart Dootson
joined the Group in this role in mid November. He has already proved a valuable
addition to the management team.
Throughout the Group conditions have remained very challenging. Much has been
demanded of all members of the Carbo team and the Board is very grateful to them
for their efforts.
The way ahead
Shareholders will need no reminding of the economic difficulties of the euro
zone which is affected by the twin challenges of a strong currency which reduces
export prospects and a low level of home economic activity which reduces
domestic demand. As a major supplier to the engineering sector Carbo cannot
expect to be immune to the consequences of these issues. We therefore continue
to face very difficult operating conditions.
The Board is responding to these challenges as follows:-
* Germany
The German operations based in Dusseldorf, Stuttgart and Hann Munden are being
completely reorganised. This will result in a 15% reduction in the labour
force, the elimination of much overhead and will give a leaner profit centre
based organisation more responsive to market conditions.
* U.K.
All the operations in Manchester are being relocated to one part of the Trafford
Park site. This will enable us to hand back to our landlord considerable
surplus space by the end of the year. The Anglo distribution depot network is
also being reduced to reflect the realities of U.K. engineering industry. This,
in combination with further streamlining of the operation, will result in a 16%
reduction of the workforce.
* Italy
This operation based in Milan is also reducing its workforce with the company
being focussed on producing paper backed abrasives.
All these programmes are underway and should begin to show results by the end of
the year. Key to their efficient exploitation is arranging proper banking
facilities for the Group. Now that we have detailed practical plans for
returning the Group to profitability discussions with various banking groups are
being pursued with vigour.
In summary, there is still a lot to do and many issues to be resolved. But we
have begun to tackle the consequences of many years of under-investment and
under-management. The plans now being implemented should restore the Group to
profitability even at current depressed levels of demand. Once the world, and
particularly the euro zone, economy begins to see some 'wind in its sails' Carbo
should be well placed to benefit.
The Lord Hodgson of Astley Abbots
Chairman
31st July, 2003
Consolidated profit and loss account Year ended 31 Year ended 31
January January
Note 2003 2002
#'000 #'000
Turnover - continuing activities 1 53,211 54,900
- discontinued activities 2,879 9,290
56,090 64,190
Costs and overheads
- continuing and discontinued activities (63,029) (67,798)
- exceptional operating items (596) (4,148)
(63,625) (71,946)
Operating loss
- continuing activities (5,641) (2,514)
- discontinued activities (1,894) (5,242)
(7,535) (7,756)
Loss on disposal of business (1,317) -
Loss on disposal of Chesterfield site (508) -
Loss before interest and taxation (9,360) (7,756)
Interest payable and similar charges (657) (2,242)
Bank debt forgiven 5,529 -
Loss on ordinary activities before taxation (4,488) (9,998)
Taxation on ordinary activities 167 1,627
Loss on ordinary activities after taxation (4,321) (8,371)
Dividends -cumulative preference shares 5 (25) (19)
Loss for the year (4,346) (8,390)
Loss per ordinary share
- basic and diluted 6 (54.9p) (106.0p)
Statement of total recognised gains and losses
Losses for the financial year (4,321) (8,371)
Currency translation difference on foreign currency net
investments 716 (562)
Total recognised losses for the year (3,605) (8,993)
Consolidated balance sheet 31st January 31st January
2003 2002
#'000 #'000
Fixed assets
Intangible assets 145 251
Tangible assets 18,073 17,245
Investments 34 31
18,252 17,527
Current assets
Stocks 11,099 15,994
Debtors 8,813 12,697
Investment properties held for disposal - 4,408
Cash 386 3,255
20,298 36,354
Creditors due within one year (16,273) (33,490)
Net current assets 4,025 2,864
Total assets less current liabilities 22,277 20,391
Creditors due after one year
Convertible loan notes (3,185) -
Bank loans and other creditors (1,743) (2,075)
Provisions for liabilities and charges (15,475) (14,791)
Net assets 1,874 3,525
Capital and reserves
Called up share capital 20,135 20,135
Share premium account 290 290
Profit and loss account (18,551) (16,900)
Shareholders' funds 1,874 3,525
Equity shareholders' funds 1,480 3,156
Non-equity shareholders' funds 394 369
1,874 3,525
Consolidated cash flow statement Year ended Year Ended
31st January 31st January
2003 2002
#'000 #'000
Net cash inflow from operating activities 1,390 6,328
Return on investments and servicing of finance
- interest received 108 29
- interest paid (1,273) (1,445)
- bank facility fees paid - (318)
(1,165) (1,734)
Taxation paid
- overseas tax (722) (226)
Capital expenditure
- purchase of tangible assets (812) (848)
- sale of tangible assets and investment properties 3,364 225
- Chesterfield site deposit repaid (2,750) -
(198) (623)
Acquisitions and disposals
- Purchase of business (145) (1,794)
- Net overdraft eliminated on disposal of business 688 -
543 (1,794)
Cash (outflow)/inflow before financing (152) 1,951
Financing
Loan repayments (3,581) (617)
Loans advanced (note 8) 420 2,051
Convertible loan notes issued 3,185 -
24 1,434
Cash (outflow)/inflow for year (128) 3,385
Consolidated cash flow statement (continued)
Note to cash flow statement
2003 2002
#'000 #'000
Operating loss (7,535) (7,756)
Impairment charges 235 3,933
Depreciation, amortisation and profit on sale of tangible
fixed assets 844 1,238
Stocks (increase)/decrease 4,871 1,161
Debtors (increase)/decrease 3,095 5,498
Creditors increase/(decrease) (120) 2,254
Total inflow from operating activities 1,390 6,328
Notes to the cash flow statement
2003 2002
#'000 #'000
Reconciliation of net cash flow to movement in net debt:
Cash flow in period (128) 3,385
Cash flow from movements in debt (24) (1,434)
(152) 1,951
Borrowing eliminated on disposal of subsidiary 28 -
Bank debt forgiven 5,529 -
Exchange differences (209) 234
Movement in net debt in year 5,196 2,185
Net debt at 1 February (12,418) (14,603)
Net debt at 31 January (7,222) (12,418)
Notes
1. This preliminary statement of results has been extracted from the full
financial statements which were approved by the Board on 31 July 2003.
2. The accounts have been prepared using the same policies that were
adopted in the 2002 accounts.
3. Continuing activities refer primarily to the Company's core Abrasives
businesses in Germany and Italy and to the UK distribution business.
Discontinued activities refer to the UK Abrasives manufacturing business which
was put into administration on 29th July 2002. The shares in Brusati
Manifattura Abrasivi Spa and Carborundum Abrasifs France SA were re-acquired
from the administrator of the UK Abrasives manufacturing business on 13th August
2002 and the results of these subsidiaries have been treated as continuing
activities in this statement.
4. This preliminary statement for the period ended 31st January 2003 has
been prepared on a going concern basis. The Group has significant unencumbered
assets mainly in its Continental operating locations and has begun negotiations
with new lenders in the UK and on the Continent where the bulk of its operations
are now located. These negotiations are designed to ensure that the Group has
the necessary working capital not only to continue in operational existence but
also to develop the new shape of its operations as a cohesive whole. As part of
this development the Company has taken steps to reduce its cost base.
The accounts have been prepared on a going concern basis, which assumes that the
group will continue in operational existence for the foreseeable future. Whilst
the directors cannot be certain as to the outcome of negotiations with
alternative lenders they believe that it is appropriate for the accounts to be
prepared on a going concern basis. If the group were unable to continue in
operations existence for the foreseeable future, adjustment would have to be
made to reduce balance sheet values to their recoverable amounts and to provide
for further liabilities that may arise and to re-classify fixed assets and long
term liability as current assets and liabilities.
5. Dividends
2003 2002
#'000 #'000
Preference shares - appropriated 25 19
The dividend payable on the cumulative preference shares for the current
year has been charged to profit and loss account but cannot be paid until the
company has sufficient distributable reserves to cover it. The dividend has
been credited back to the profit and loss account.
6. The calculation of the loss per ordinary share is based on the weighted
average number of ordinary shares in issue of 7,913,990, which reflects the
share consolidation approved on the 27 November 2002, and the loss after
taxation and preference dividend of #4,346,000. The diluted earnings per share
is based on the weighted average number of ordinary shares adjusted to assume
the full conversion of the convertible loan stock issued on 16th May 2002.
7. The annual report and accounts are now available and will be posted to
shareholders. Copies are available from the Secretary at the registered office
at Lakeside, Trafford Park Road, Manchester, M17 1HP and are available on the
company's website: www.carboholdings.de.
8. On 31 July 2002 the company announced it had received a loan of #420,000
from a syndicate of investors including the Chairman, Lord Hodgson. As a
consequence of his interest in this transaction it was classified under AIM
Rules as a related party transaction. It was the intention of the company to
grant appropriate security to the loan syndicate upon the completion of certain
formalities. Accordingly, this formed part of the independent directors'
assessment of the transaction at the time. On 28 April 2003 Carborundum
Schleifmittelwerke GmbH, a subsidiary of the Company granted a charge over its
entire holding of shares in Dorfnerwerk, Dr Ing. Joseph Dorfner GmbH, in favour
of the loan syndicate.
9. These 2003 preliminary results do not constitute full accounts for the
purposes of Section 240 of the Companies Act 1985. The figures are prepared on
the basis of the accounting policies set out in the most recently published set
of annual financial statements. The information relating to the year ended 31
January 2002 is based on full accounts which have been delivered to the
Registrar of Companies and on which the auditors' opinion was unqualified.
This information is provided by RNS
The company news service from the London Stock Exchange
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