RNS No 8274j
LOPEX PLC
23rd March 1998
LOPEX plc
Preliminary results for the year ended 31 December 1997
Financial Highlights
* Profit before tax and exceptionals #4.150m (1996: #3.405m) - up 22%
* Turnover #117m - up 6% (on continuing activities and constant currencies)
* Operating margin 11.1% (1996: 8.0% like for like)
* Adjusted earnings per share on continuing activities 4.69p (1996: 4.14p)
- up 13%
* Shareholders' funds increased by #1.782m to #5.496m
* Gross cash flow per share 6.85p (1996: 4.82p) - up 42%
* Dividend increased to 1.0p - up 33%
Peter Thomas, Chief Executive comments:
"The performance of Lopex since the year end continues to demonstrate the
benefits of initiatives previously introduced to focus our activities and
position the group for growth.
The Board is confident that shareholders will be rewarded with a further year
of improvement."
Enquiries:
Lopex plc
Peter Thomas, Chief Executive Telephone: 0181 254 1790
Barrie Warman, Finance Director Telephone: 01622 757241
Hudson Sandler Limited
Piers Hooper/Tim Robertson Telephone: 0171 796 4133
Chairman's Statement
At the end of my first financial year as Chairman, I am pleased to report a
year of solid improvement. Our core brands are among the market leaders in
their specialist fields and now co-ordinate their expertise in a marketing and
communications offer that few other groups can emulate.
Profit before tax and exceptionals was #4.150m and on a like-for-like basis
increased by 22%. Operating margins at 11.1% showed a significant improvement
on previous years and turnover on continuing operations increased to #117m.
After charging an exceptional loss of #202,000 on the disposal of group
undertakings, the profit was #3.948m. Excluding the exceptionals, the tax
rate at 39% was higher than anticipated owing to the lowering of Corporate Tax
rates in the 1997 budget. This had the one-off effect of reducing the value
of the substantial deferred tax benefits available to the group.
Earnings per share were 4.35p (1996: loss 2.10p) but were restricted by the
higher tax charge. Adjusting for exceptional items, they were 13% higher at
4.69p.
The balance sheet remains strong. Shareholders' funds increased by #1.782m to
#5.496m at the year end and net cash amounted to #2.279m.
The Board is recommending a final dividend of 0.6p per share to be paid on 22
May 1998 to shareholders on the register at the close of business on 24 April
1998. This will make a total dividend of 1p for the year and represents an
increase of one third.
These results are the best since 1990 and are a good indication of the
enhanced prospects for the group.
We have instituted a vigorous programme to communicate the company's strengths
and our platform for future growth to both existing and prospective investors.
Our new brokers, Granville Davies, are specialists in smaller growing
companies and are actively leading this effort.
Our existing core operations are all capable of solid organic development and
we will take every opportunity to strengthen these through the recruitment of
skilled executives and in-fill acquisitions. The Board is also alert to the
opportunities of more substantial acquisitions and has reviewed a number of
possibilities in the last year. Significant acquisitions will nevertheless
have to stand up to the most rigorous test of delivering shareholder value.
The Board is a well balanced combination of operational, corporate and non-
executive directors and with the addition of Nigel Kennedy, head of our PR
operation, we have recently added further expertise.
Every company's success is determined by its people and, in Lopex, we have
over 700 professionals. It is only through their efforts and commitment that
we are able to report another year of progress and achievement and look
forward to a future of continued growth. I would like to thank them for their
support.
The new year has started well and our development plans and budgets lead me to
believe that at this time next year I will be able to report a further year of
improvement.
Tom Chandos
Chairman
Consolidated Profit and Loss Account
For the year ended 31 December 1997
1997 1996
Continuing Continuing Discontinued
Activities Activities Activities Total
#000 #000 #000 #000
Turnover 116,514 112,698 8,617 121,315
Cost of sales (79,478) (77,100) (6,213) (83,313)
---------- ----------- --------- --------
Revenue 37,036 35,598 2,404 38,002
Administrative expenses (32,942) (32,745) (2,705) (35,450)
Exceptional items - - (3,802) (3,802)
---------- ----------- --------- ---------
Operating profit/(loss) 4,094 2,853 (4,103) (1,250)
Share of profits less
losses of associated
undertakings 108 618 - 618
---------- ----------- --------- ---------
4,202 3,471 (4,103) (632)
Exceptional item -
Loss on disposal of
group undertakings (202) - (789) (789)
---------- ------------ --------- ---------
Profit/(loss) on ordinary
activities before
interest 4,000 3,471 (4,892) (1,421)
Net interest payable (52) (66) - (66)
---------- ------------ --------- --------
Profit/(loss) on ordinary
activities before
taxation 3,948 3,405 (4,892) (1,487)
Taxation (1,593) (1,213) 1,543 330
---------- ------------ --------- --------
Profit/(loss) on ordinary
activities after
taxation 2,355 2,192 (3,349) (1,157)
Minority interests (17) 31 - 31
---------- ------------ ---------- --------
Profit/(loss) for the
financial year 2,338 2,223 (3,349) (1,126)
Dividends (538) (403) - (403)
---------- ------------ --------- ---------
Retained profit/(loss)
for the financial year 1,800 1,820 (3,349) (1,529)
---------- ------------ --------- ---------
Earnings/(loss) per
share (in pence) 4.35 4.14 (6.24) (2.10)
Adjustment for exceptionals 0.34 - 5.83 5.83
---------- ------------ --------- ---------
4.69 4.14 (0.41) 3.73
---------- ------------ --------- ---------
Statement of Total Recognised Gains and Losses
1997 1996
#000 #000
Profit/(loss) for the financial year 2,338 (1,126)
Currency translation differences on foreign
net investments (178) (72)
--------- -----------
Total recognised gains and losses 2,160 (1,198)
--------- -----------
Balance Sheet
As at 31 December 1997
Group Lopex plc
1997 1996 1997 1996
#000 #000 #000 #000
Fixed assets
Tangible assets 3,483 3,398 212 201
Investments 316 368 11,213 11,895
----- ----- ------ ------
3,799 3,766 11,425 12,096
----- ----- ------ ------
Current assets
Stock and work in progress 1,417 1,836 - -
Debtors due within one
year 23,173 22,639 8,161 5,950
Debtors due after more
than one year 1,107 1,823 1,146 1,835
Cash at bank and in hand 3,584 5,963 2,957 4,237
------ ------ ----- -----
29,281 32,261 12,264 12,022
------ ------ ----- -----
Current liabilities
Creditors falling due
within one year 24,799 28,061 4,975 5,371
------ ------ ----- -----
Net current assets 4,482 4,200 7,289 6,651
------ ------ ----- -----
Total assets less current
liabilities 8,281 7,966 18,714 18,747
Creditors falling due
after more than one year 609 994 35 19
Provisions for liabilities
and charges 2,115 3,130 2,110 3,119
----- ----- ----- -----
Net assets 5,557 3,842 16,569 15,609
----- ----- ----- -----
Capital and reserves
Called up share capital 2,690 2,690 2,690 2,690
Share premium account 7,835 7,835 7,835 7,835
Goodwill reserve (14,140)(14,300) - -
Profit and loss account 9,111 7,489 6,044 5,084
------- ------ ----- -----
Shareholders' funds 5,496 3,714 16,569 15,609
Minority interests 61 128 - -
------- ------ ----- -----
5,557 3,842 16,569 15,609
------- ------ ----- -----
Group Cash Flow Statement
For the year ended 31 December 1997
1997 1996
#000 #000
Net cash flow from operating activities 341 6,952
Returns on investments and servicing
of finance (116) (132)
Taxation (390) (522)
Capital expenditure and financial
investment (1,238) (1,823)
Acquisitions and disposals (10) 1,661
Equity dividends paid (457) (294)
---------- ----------
Cash (outflow)/inflow before
financing (1,870) 5,842
Financing (411) (2,002)
---------- ----------
(Decrease)/increase in cash in
the year (2,281) 3,840
---------- ----------
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash
in the year (2,281) 3,840
Cash flow from increase in debt
and lease financing 411 2,155
---------- ----------
Change in net debt resulting
from cash flow (1,870) 5,995
Loans and finance leases
disposed of with subsidiary 55 -
Translation differences (153) (93)
---------- ----------
Movement in net debt in the year (1,968) 5,902
Net debt at 1 January 1997 4,247 (1,655)
---------- ----------
Net debt at 31 December 1997 2,279 4,247
---------- ----------
Reconciliation of operating
profit to operating cash flow
Operating profit/(loss) 4,094 (1,250)
Depreciation 950 918
Dividend from associate 50 450
Provision for future property
loss rentals - 3,802
Costs charged against loss rental
provision (902) (683)
Loss on sale of assets 42 8
Decrease in stocks 390 45
Increase in debtors (1,751) (560)
(Decrease)/increase in creditors (2,532) 4,222
---------- ----------
Net cash inflow from operating
activities 341 6,952
---------- ----------
Notes:
1. Profit on continuing activities before taxation and exceptional items is
as follows:
1997 1996
#000 #000
Profit before tax on continuing
activities as stated 3,948 3,405
Exceptional items:
- Loss on disposal of group
undertakings 202 -
---------- ----------
Profit before tax and
exceptionals 4,150 3,405
====== ======
2. Taxation
1997 1996
#000 #000
United Kingdom corporation tax
at 31.5% (1996: 33%) (903) (517)
Relief for overseas taxation 8 252
Advance corporation tax - 222
Associated undertakings taxation (55) (226)
Deferred taxation (391) 830
Overseas taxation (249) (233)
Prior years taxation (3) 2
---------- ----------
(1,593) 330
---------- ----------
3. Earnings per share
The earnings per share have been calculated by reference to 53,801,378
ordinary shares in issue during the year (1996: 53,639,463) and the
profit for the year of #2,338,000 (1996: loss #1,126,000). The
adjustment to earnings per share is calculated as follows:
1997 1996
#000 #000
Exceptional items (202) (4,591)
Tax relief 18 1,462
---------- ----------
(184) (3,129)
---------- ----------
Pence per share adjustment 0.34 5.83
---------- ----------
The fully diluted earnings per share assuming all outstanding options at
31 December 1997 were exercised are 4.04 pence.
4. This announcement does not constitute full group accounts for the year.
Copies of the full accounts, on which the auditors have made an
unqualified report, will be circulated to shareholders and after approval
at the annual general meeting will be delivered to the Registrar of
Companies and will be available from the Company's registered office:
Wimbledon Bridge House, Hartfield Road, Wimbledon, London SW19 3RU.
5. The information relating to the year ended 31 December 1996 is an extract
from the published accounts which have been delivered to the Registrar of
Companies and on which the report of the auditors was unqualified.
6. The annual general meeting will be held on 18 May 1998.
END
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