RNS No 7709d
CASSIDY BROTHERS PLC
2 July 1999
Final results for the year ended 30 April 1999
CHAIRMAN'S STATEMENT
Why is it that as soon as we appear to be heading a course for the promised
land something out of our control comes along to muddy waters? We have had
Brussels toy quotas, The Cook Report on "Cot Death," raw material prices
jumping up 30%, and now that we have reliable supplies from China the cost of
shipping containers doubles. Economic depression in the Far East has resulted
in fewer shipping companies taking on the demand. This additional burden ate
into the company's margins. Another interesting scenario came about when one
of our larger customers unexpectedly selected an older product for their 1999
catalogue, and yet the tooling for this was due to be shipped to China in
February 1999 together with other equipment. We didn't have time to set up an
assembly line in China and to supply this customer in the space of two months,
so we elected to make half the contract in the UK, but making all the
components well in advance of requirements, then ship out the tools. This
would give us breathing space we needed. The effect of this on our 1998/1999
figures, however, was a tranche of unfinished stock and components carried
forward to the next financial year 1999/2000. In spite of this we are
grateful that the efforts of the last twelve months are beginning to show an
operational improvement now that we are no longer hostage to the edicts of the
comedians in Brussels who have scrapped the toy import licence and quota
system. The year started well and continued, culminating in a worthy increase
in turnover of 28%, and an operating profit of #124,000. We propose to keep
the dividend the same as last year.
When the company began to look seriously at the Far East for the supply of
some of its toy range in 1994, we did not realise the effect this would have
on the companies infrastructure. We spent the last five years trying to
strike a balance between retaining the companies skill base, providing our
customers with the flexibility that they like and the economic reality of
sourcing in China. The higher profit margins that China production can
provide a company with, can be detrimentally affected by higher inventory and
the vagaries of shipping costs. Couple this with the sad inevitability of
redundancies which get more expensive the smaller our workforce becomes. 26
more staff were laid off in November 1998 at a cost of #36,000.
FINAL DIVIDEND
The company's Balance sheet is still as strong as ever, and notwithstanding
the misfortunes, we wish to place before the AGM a recommended final dividend
payment of 2.25p per share for 1998/1999.
CURRENT TRADING
As this report is being written the company's turnover is 50% up on last year,
but before the adrenalin causes a rush of blood to the brain, I should add
that turnover this time last year was much lower than expected, we hadn't had
deliveries of our electronic Teletubby playboard the "Talking Teletubbyland"
or the toy Dyson Vacuum Cleaner. Both items are still contributing well to
the company's figures, not only from UK sales but FOB commission earnings from
other countries. Casdon own the design, patent rights and tooling to these
two products, both of which are made in China. When they are purchased by
countries other than the UK and Eire we receive a sales commission from our
Hong Kong agent who consolidates orders and handles shipping.
Our new products for 1999 were all received well at our main exhibitions in
January/February; of the successful five, four are "shopping" toys, on which
the company built its reputation in 1963 with a toy "cash register." These
latest additions replace older versions and consist of a modern Supermarket
Trolley with detachable baskets, a small lower priced electronic sound cash
till "Microcash," together with an advanced cash register Scanner Till with
calculating function, and a scanner gun that works and reads specially printed
bar codes. There isn't a good enough superlative to applaud the fourth
shopping toy, the "Supermarket Checkout." It is simply the "dog's eyeballs."
It has been most frustrating not being at liberty to reveal these last two
years the details of this development, especially within previous reports.
The idea was the brain child of Stephen Cassidy, Technical Director, who had
worked on the electronics and programming since 1997. It is the closest a
child could get to the function of a real checkout. The toy is table top
mounted and has 'footprint' a little larger than an A3 sheet of paper. A
large electronic LCD displays the purchases like the real thing. The new
Supermarket Checkout is the first ever toy to replicate the electronic cause
and effect of scanning at the cash point. The LCD readout displays the
product description in alpha format, together with the price in numeric
format. It will correctly identify 60 grocery items and add them together
giving a total price, not only in # sterling but Euros, DM's, French Francs
and Dollars, also displaying in German and French. Whatever bank notes are
offered for payment, the amount is entered through the keypad and the charge
is displayed on the screen, just like the real thing. The toy is supplied
with 12 grocery cartons, fruit and vegetables and 60 self adhesive bar code
labels. The multi-function keypad provides the means to enter the bar code
number by hand, a familiar situation we have all witnessed. Buttons activate
realistic bleeps, receipt printing and telephone ring tones, and the swipe
card activates the auto dial sound. The final button is the cash drawer
release, which flips open the lid to reveal a compartmented tray full of bank
notes and coins. it is a product just made for TV promotion, and although the
decision hasn't been made, we may do a trial ad on a local cable network
towards Christmas.
Finally we have entered and tapped into an area of TV coverage that has a huge
following and no it has nothing to do with Charlie Dimmock, but that of the
BBC's "Animal Hospital" and Rolf Harris. We have made a toy "pet carrier"
with suitable sound chip animal noises. The "Carrypet" supplied with a plush
puppy and kitten carries the TV license and is endorsed by the RSPCA.
It now remains to be seen what impact these products have on the market, and I
look forward to giving you an account in the Interim Report.
FUTURE PROSPECTS
As our general labour force is reduced, reflecting the decline in our UK
manufacturing activity, our Design and Development Department is expanding.
Yes, we are becoming more a UK importer as compared to a UK manufacturer, in
the sense that the word "manufacturing" implies. This brings me to the
subject of FOB earnings, previously touched upon in this report.
When we manufactured 100% of our range in England, the UK and Eire represented
90% of our market. Our advantage for forty odd years was that we had the
ability and courage to develop and tool new products each year; we made the
products fit our market (niche areas), our quality and packaging was better
than the Far East and Eastern Europe, and we are on the doorstep of our
customers. What happened? China equalled and bettered the quality, embraced
ISO 9002, used European and Japanese technology, and gave a product at a price
to which one couldn't say no. If one adds that to our own knowledge of the
market, and our history of patient investment in potential "good earners" then
such synergy is the recipe for a lucrative future. Our previous successes
exporting UK made products lasted as long as it took some Far Eastern factory
to copy it, and undercut our price. By developing our own products and having
them manufactured in China, we now have the opportunity to tap markets
previously denied to us.
Finally, I would like to thank my fellow directors, management and staff for
their efforts during the year, and their valuable contributions in pursuit of
Casdon's future goals.
PAUL CASSIDY
Chairman
BALANCE SHEET
At 30 April 1999
1999 1998
FIXED ASSETS
Tangible assets 2,488,732 2,713,449
Investments - 24
2,488,732 2,713,473
CURRENT ASSETS
Stocks 2,309,876 2,230,712
Debtors 800,352 597,202
Cash at bank and in hand 18,409 8,014
3,128,637 2,385,928
CREDITORS 1,403,505 1,119,443
(amounts falling due within one
year)
NET CURRENT ASSETS 1,725,132 1,716,485
TOTAL ASSETS LESS CURRENT
LIABILITIES 4,213,864 4,429,958
CREDITORS
(amounts falling due after more
than one year) (19,222) (59,405)
PROVISIONS FOR LIABILITIES AND
CHARGES (37,000) (53,000)
NET ASSETS 4,157,642 4,317,553
CAPITAL AND RESERVES
Called up share capital 552,435 552,435
Share premium account 43,522 43,522
Revaluation reserve 942,723 955,223
Profit and loss account 2,618,962 2,766,373
EQUITY SHAREHOLDERS FUNDS 4,157,642 4,317,553
PROFIT AND LOSS ACCOUNT
For the year ended 30 April 1999
1999 1998
Turnover 7,258,770 5,654,361
Cost of sales (5,654,998) (4,329,234)
GROSS PROFIT 1,603,772 1,325,127
Distribution costs (990,688) (908,362)
Administrative expenses (489,081) (476,546)
Other operating income 72 20,327
OPERATING PROFIT/(LOSS) 124,075 (39,454)
Interest receivable and similar income 27 3,770
Interest payable and similar charges (118,782) (71,724)
PROFIT/(LOSS) ON ORDINARY ACTIVITIES
BEFORE TAXATION 5,320 (107,408)
Tax on profit/(loss) on ordinary activities 500 26,400
PROFIT/ (LOSS) FOR THE FINANCIAL YEAR 5,820 81,008
Dividends (165,731) (165,731)
NET DISTRIBUTION FOR THE YEAR (159,911) (246,739)
EARNINGS/LOSS PER SHARE 0.11p (1.47p)
DIVIDENDS PER SHARE 3.00p 3.00p
NOTES TO THE ACCOUNTS
1. BASIS OF PREPARATION
The financial information set out above does not comprise the Company's
statutory accounts. Statutory accounts for the previous financial year ended
30 April 1998 have been delivered to the Registrar of Companies. The
auditor's report on these accounts was unqualified, and did not contain any
statement under section 237 (2) or (3) of Companies Act 1985. The auditors
have not reported on the accounts for the year ended 30 April 1999, nor have
any such accounts been delivered to the Registrar of Companies.
2. EARNINGS/LOSS PER SHARE
Earnings per share is calculated on Profit for the financial year of #5,820
(1998:loss #81,008) and on the weighted average number if shares in issue
during the year of 5,524,350 (1998:5,524,350)
3. DIVIDENDS
The directors recommend a final dividend payment of 2.25p per Ordinary Share
to be declared on 27 August 1999 to shareholders registered at close of
business on 16 July 1999. The shares are expected to go ex dividend on 12 July
1999.
END
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