RNS Number:8388A
Longmead Group PLC
15 November 1999
CHAIRMAN'S STATEMENT
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JULY 1999
Trading Results
The difficult trading conditions experienced in the first
half have continued throughout the remainder of the year
to 31 July 1999. The Company has traded at around break-
even, before exceptional costs, for the second half and
for the year as a whole. Turnover for the year has
fallen to #3.425 million (1998 - #4.046 million) with
profits before tax and exceptional costs falling to
#11,035 (1998 - #301,428). Exceptional costs, which are
commented on below, amounted to #180,655 and the loss
before tax for the year is #169,620 (1998 - #301,428
profit).
The decline in turnover has resulted from the fall in the
level of retail sales and business being lost as a result
of competition from the Far East. Although there are now
signs of an improvement in the economic climate, this has
come too late to have any effect on these results.
Exceptional Costs
The exceptional costs, mentioned above, arose from three
causes
. as part of our arrangements with a major customer we
agreed to purchase that customers stock of certain
door furniture which had been produced by its
previous supplier. This is normal practice and is
referred to as "stock cleanse". Attempts to dispose
of this stock at sensible prices has proven
difficult and we therefore decided to accelerate the
write-down of the stock. Most of this stock has been
sold.
. compensation for loss of office arising from the
restructuring of the Board of Directors.
. professional fees arising from an aborted
acquisition. In line with our strategy of seeking
acquisitions we made an offer for a target company,
subject to a satisfactory accountants report.
Unfortunately the accountants report highlighted a
number of problems and, as the target company was
not prepared to re-negotiate the purchase price, it
was felt prudent not to proceed with the
acquisition.
Bathroom Accessories
Substantial progress has been made during the year on
broadening our product ranges. Materials, other than
ceramics, have been incorporated into some of these and
the initial response has been encouraging. We have
developed many new free standing ranges to cater for
changing tastes in the bathroom.
We attended the International Bathroom Show at Frankfurt
which produced a large number of new opportunities and,
as a result, we have obtained some new export accounts
although there is considerable scope for securing many
more.
Our product development continues with additional ranges
being prepared for the Bathroom Show at the National
Exhibition Centre in Birmingham in January 2000.
Some new ranges have been accepted by a major D-I-Y store
which should lead to additional turnover in the current
year and we have strengthened our sales force to increase
our penetration of the general trade.
Much work has been done on improving productivity and
efficiency which should help to counteract the effect of
pressure on margins.
Door Furniture
New products have been introduced during the year
including a range of non-ceramic products and the initial
response has been good.
Exports of door furniture have improved after a slow
start and we are looking for steady growth in this area
of the business.
We have completed our programme of investment in new
plant and now all but a tiny minority of ceramic products
are manufactured in house which should also lead to an
improvement in margins.
Acquisitions
We continue to look for suitable acquisitions. It is
disappointing that we were not able to conclude the
purchase of an intended acquisition during the year as it
represented a very good fit with our existing activities.
However, we believe we made the right decision to walk
away. We are committed to broadening the Company's
activities by one or more suitable acquisition as soon as
we can.
Balance Sheet
In spite of the unsatisfactory results for the year our
balance sheet continues to be strong. Borrowings
(excluding finance leases), as a percentage of
shareholders funds, have risen slightly but are still
less than 30%. We continue to repay the fixed rate
medium term loan, which attracts a high rate of interest,
with the penultimate payment due in January 2000.
Dividend
In spite of the very disappointing results your Board
recommend the payment of a dividend of 0.5p per ordinary
share, making a total of 1.0p for the year. We have
substantial reserves and remain confident about longer
term prospects. The dividend will be paid on 1 February
to shareholders on the register on 26 November 1999.
Future Prospects
In my Chairman's statement last year, although we
forecast a sluggish first half, we anticipated a
considerable improvement in the second half.
Unfortunately this improvement did not materialise as
retail sales remained very flat. However I am pleased to
say that there are now some signs of improvement. There
is a little more confidence in the manufacturing sector
and retailers are becoming more optimistic.
In addition we are making considerable efforts to improve
our export sales although the continuing strength of the
pound is having an impact on our margins.
Product development remains a key part of our long term
strategy and we are also refining our marketing skills.
Our products will very shortly be promoted on the
Internet which we hope will lead to an increase in
overseas business.
I remain confident that the work we are doing to develop
products, broaden our customer base and improve margins
will show results in the coming year.
Finally, I would like to thank the management and staff
of the Company for all their hard work during the year.
R E W Newman
Chairman
15 November 1999
CONSOLIDATED PROFIT AND LOSS ACCOUNT
52 WEEKS ENDED 31 JULY 1999
1999 1999 1999 1998
Before
Exceptional Exceptional
Items Items Total Total
# # # #
Turnover - continuing 3,425,114 - 3,425,114 4,045,897
operations
Cost of sales (2,377,262) (151,155) (2,528,417)(2,715,977)
--------- ---------- --------- ---------
Gross profit 1,047,852 (151,155) 896,697 1,329,920
Distribution costs (515,047) - (515,047) (481,411)
Administrative (416,084) (29,500) (445,584) (403,609)
expenses
-------- -------- -------- --------
OPERATING
(LOSS)/PROFIT
- continuing 116,721 (180,655) (63,934) 444,900
operations
Interest receivable 1,589 - 1,589 9,089
and similar income
Interest payable and (107,275) - (107,275) (152,561)
similar charges
-------- -------- -------- --------
(LOSS)/PROFIT ON 11,035 (180,655) (169,620) 301,428
ORDINARY BEFORE
TAXATION
====== =======
Tax on (loss)/profit 36,800 (60,910)
on ordinary activities
-------- --------
(LOSS)/PROFIT ON
ORDINARY ACTIVITIES
ACTIVITIES AFTER (132,820) 240,518
TAXATION
Dividends paid and (36,094) (81,211)
proposed
-------- --------
RETAINED (LOSS)/PROFIT (168,914) 159,307
FOR THE FINANCIAL YEAR
====== ======
(LOSS)/EARNINGS PER (3.68p) 7.65p
ORDINARY SHARE
====== ======
CONSOLIDATED BALANCE SHEET
31 JULY 1999
1999 1998
# #
FIXED ASSETS
Tangible assets 2,582,515 2,602,859
---------- ----------
CURRENT ASSETS
Stocks and work in progress 1,807,074 1,844,290
Debtors 816,537 897,143
Cash at bank and in hand 450 29,922
---------- ---------
2,624,061 2,771,355
CREDITORS: amounts falling due (1,122,208) (1,016,098)
within one year
---------- ----------
NET CURRENT ASSETS 1,501,853 1,755,257
---------- -----------
TOTAL ASSETS LESS CURRENT 4,084,368 4,358,116
LIABILITIES
CREDITORS: amounts falling due (693,843) (810,777)
after more than one year
PROVISIONS FOR LIABILITIES AND (80,000) (67,900)
CHARGES
---------- -----------
TOTAL NET ASSETS 3,310,525 3,479,439
======== =========
CAPITAL AND RESERVES
Called up share capital 360,939 360,939
Share premium account 1,224,824 1,224,824
Revaluation reserve 291,813 296,885
Profit and loss account 1,432,949 1,596,791
---------- ----------
TOTAL EQUITY SHAREHOLDERS' FUNDS 3,310,525 3,479,439
========= =========
CONSOLIDATED CASH FLOW STATEMENT
52 WEEKS ENDED 31 JULY 1999
1999 1998
# #
Net cash inflow from operating 287,019 270,889
activities
---------- --------
Returns on investments and
servicing of finance
Interest received 1,713 8,965
Interest paid (97,501) (150,617)
Interest element of finance lease (11,901) (11,037)
rentals
---------- --------
(107,689) (152,689)
--------- --------
Taxation
Corporation tax paid (30,093) (277,520)
---------- --------
Capital expenditure and financial
investment
Purchase of tangible fixed assets (164,736) (121,556)
Proceeds from sale of tangible 109,811 25,145
fixed assets
---------- --------
(54,925) (96,411)
---------- --------
Equity dividends paid (90,235) (101,103)
---------- --------
Net cash inflow/(outflow) before 4,077 (356,834)
financing
--------- --------
Financing
Issue of ordinary share capital - 1,504,350
Expenses of issue of ordinary share - (217,594)
capital
Capital element of finance lease (75,081) (68,919)
rentals
Loans repaid (150,000) (650,000)
---------- --------
Net cash (outflow)/inflow from (225,081) 567,837
financing
---------- --------
(Decrease)/increase in cash in the (221,004) 211,003
period
======== =======
NOTES:
1. EARNINGS PER ORDINARY SHARE
The calculation of the (loss)/earnings per share is
based on the weighted average number of shares in
issue during the financial year of 3,609,391 (1998 -
3,144,016) and on the loss attributable to ordinary
shareholders of #132,820 (1998 - profit of #240,518).
2. DIVIDENDS
1999 1998
# #
Interim paid 0.5p per ordinary share 18,047 9,023
(1998 - 0.25p)
Final proposed 0.5p per ordinary 18,047 72,188
share (1998 - 2p)
------- ------
36,094 81,211
====== =======
3. EXCEPTIONAL ITEMS 1999 1998
# #
"Stock Cleanse" write offs 151,155 -
Compensation payments for loss office 15,000 -
Professional fees (aborted 14,500 -
acquisition)
------- -----
180,655 -
====== =====
4. The financial information on the Group set out above
does not constitute statutory accounts within the
meaning of section 240 of the Companies Act 1985. The
results for the year to 31 July 1999 are based on the
audited consolidated financial statement of The
Longmead Group plc which have been reported on by the
auditors. The report of the auditors was unqualified
and did not contain a statement under Section 237,
Companies Act 1985.
5. Copies of the 1999 Report and Accounts will be sent to
shareholders in due course. Further copies will be
available from the registered office of The Longmead
Group, Millwey Industrial Estate, Axminster, Devon,
EX13 5HU and from the Company's nominated adviser,
Smith & Williamson, at 1 Riding House Street, London,
W1A 3AS.
END
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