RNS No 2759r
LOPEX PLC
18th March 1999
LOPEX plc
Preliminary results for the year ended 31 December 1998
Financial Highlights
* Profit before tax and exceptionals #5.91m (1997: #4.15m) up 42%
* Turnover #129m (1997: #117m) on constant currencies up 12%
* Operating margins 13.3% (1997: #11.1%) up 20%
* Basic earnings per share 6.92p (1997: 4.35p) up 59%
* Adjusted earnings per share 7.28p (1997: 4.69p) up 55%
* Gross cash flow per share 9.54p (1997: 6.85p) up 39%
* Equity shareholders' funds #9.38m (1997: #5.50m) up 71%
* Dividend 1.5p (1997: 1.0p) up 50%
Peter Thomas, Chief Executive comments:
"We have made good progress and there are opportunities to improve our
position further. In spite of the uncertainties regarding the UK economy, we
remain positive about the future and confident that the group is set for
further growth."
Enquiries:
Lopex plc
Peter Thomas, Chief Executive Telephone: 0181 254 1790
Barrie Pearson, Finance Director
Hudson Sandler Limited
Piers Hooper/Tim Robertson Telephone: 0171 796 4133
Chairman's Statement
The year saw an excellent financial performance by the group, based on
continued progress in key established operations and a very satisfactory
contribution by businesses acquired during the year. We have built further on
our strong position in many of the fastest growing areas of communications and
marketing services.
The group's pre tax profit increased by 42% to #5.91m (1997: #4.15m before
exceptional items), including a contribution from the companies acquired in
the year of #1.31m. Operating margins increased again to 13.3% compared to
the 11.1% achieved in the previous year and turnover increased by 12% on
constant currencies, to #129m.
The results reflect the implementation of the new Reporting Standard FRS10
which requires the capitalisation and amortisation of goodwill. The profit
for the year reflects an amortisation charge of #193,000 which arises from the
capitalisation of #7.67m of goodwill.
Earnings per share adjusted for the FRS10 amortisation charge this year and
the exceptional item in the previous year, increased by 55%. This reflects
not only the strong operating performance of the group, but also a lower tax
charge.
The group has had a strong operating cash flow, which has allowed the initial
consideration for the acquisitions to come predominantly from our own
resources and banking facilities. In the period since the acquisitions were
completed, a significant proportion of the net borrowing incurred has been
eliminated, leaving the group with a strong balance sheet and the capacity for
further growth.
The board is recommending a final dividend of 1p per share to be paid on 21
May 1999 to shareholders on the register at the close of business on 23 April
1999. This will make a total dividend for the year to 1.5p, representing a
50% increase over the previous year.
The 36% compound increase in earnings per share between 1995 and 1998 has been
achieved through the refocusing of the group's operations, organic growth and
rigorous development of cross divisional collaboration, and, in 1998,
acquisitions. These acquisitions have marked a new phase of growth. The most
substantial, Fotorama, is a market leader in the field of fixed fee sales
promotion and made a significant contribution both to the group's
profitability and to its range of products and services. The other smaller
acquisitions materially enhanced the product and industry expertise of our
direct marketing and marketing services businesses and in one case, added an
important piece to our selectively expanding global PR network. All
established the objectives of our strategy.
Barrie Warman retired as finance director on 31 December 1998 after over
twenty five years with the group, during which he made a vital contribution.
We will miss him as a colleague, retain him as a friend and wish him well for
an active and enjoyable retirement. We welcome Barrie Pearson as his
successor, who joined the board as finance director on 1 January 1999.
This year was one of intense overall activity in our business and the
excellent results are a testament to the commitment of our team of
professionals. We thank them all.
The market for our services remains competitive and there are, in some areas,
signs of some softening of demand. Nonetheless, the breadth of our offering,
our focus on particular client sectors and on fast growing products and our
leadership in key disciplines leave us robustly confident about our prospects.
The new year has started satisfactorily and I believe that we will see another
year of progress.
Tom Chandos
Chairman
Consolidated Profit and Loss Account
For the year ended 31 December 1998
Continuing Activities 1998 1997
Acquisitions Total Total
#000 #000 #000 #000
Turnover 118,947 10,239 129,186 116,514
Cost of sales (80,509) (5,929) (86,438) (79,478)
----------------------------------------
Revenue 38,438 4,310 42,748 37,036
Administrative expenses (34,260) (2,797) (37,057)(32,942)
----------------------------------------
Operating profit 4,178 1,513 5,691 4,094
Share of profits less losses
of associated undertakings 427 - 427 108
----------------------------------------
4,605 1,513 6,118 4,202
Exceptional item -
loss on disposal of group
undertakings - - - (202)
----------------------------------------
Profit on ordinary
activities before
interest 4,605 1,513 6,118 4,000
Net interest payable (1) (206) (207) (52)
----------------------------------------
Profit on ordinary
activities before
taxation 4,604 1,307 5,911 3,948
Taxation (2,138) (1,593)
----------------------------------------
Profit on ordinary activities after
taxation 3,773 2,355
Minority interests (20) (17)
----------------------------------------
Profit for the financial year 3,753 2,338
Dividends (819) (538)
----------------------------------------
Retained profit for the financial year 2,934 1,800
----------------------------------------
Earnings per share (in pence)
- Basic 6.92 4.35
- Adjustment for exceptional item and
amortisation goodwill 7.28 4.69
- Fully diluted 6.79 4.33
----------------------------------------
Statement of Total Recognised Gains and Losses
1998 1997
#000 #000
Profit for the financial year 3,753 2,338
Currency translation differences on
foreign net investments 81 (178)
--------------------
Total recognised gains and losses 3,834 2,160
--------------------
Balance Sheet
As at 31 December 1998
Group Lopex plc
1998 1997 1998 1997
#000 #000 #000 #000
Fixed assets
Intangible assets 7,474 - - -
Tangible assets 4,770 3,483 791 212
Investments 284 316 18,003 11,213
-----------------------------------------
12,528 3,799 18,794 11,425
-----------------------------------------
Current assets
Stock and work in progress 3,259 1,417 - -
Debtors due within
one year 26,231 23,173 7,468 8,161
Debtors due after more
than one year 736 1,107 725 1,146
Cash at bank and in hand 5,087 3,584 2,664 2,957
----------------------------------------
35,313 29,281 10,857 12,264
----------------------------------------
Current liabilities
Creditors falling due
within one year 35,175 24,799 7,878 4,975
----------------------------------------
Net current assets 138 4,482 2,979 7,289
----------------------------------------
Total assets less current
liabilities 12,666 8,281 21,773 18,714
Creditors falling due
after more than one year 1,848 609 1,378 35
Provisions for liabilities
and charges 1,370 2,115 1,362 2,110
----------------------------------------
Net assets 9,448 5,557 19,033 16,569
----------------------------------------
Capital and reserves
Called up share capital 2,729 2,690 2,729 2,690
Potential issue of shares 541 - 541 -
Share premium account 8,120 7,835 8,120 7,835
Goodwill reserve - (14,140) - -
Profit and loss account (2,014) 9,111 7,643 6,044
----------------------------------------
Equity shareholders' funds 9,376 5,496 19,033 16,569
Equity minority interests 72 61 - -
----------------------------------------
9,448 5,557 19,033 16,569
----------------------------------------
Group Cash Flow Statement
For the year ended 31 December 1998
1998 1997
#000 #000
Net cash flow from operating
activities 5,924 291
Dividend from associate 325 50
Returns on investments and servicing
of finance (234) (116)
Taxation (1,230) (390)
Capital expenditure and financial
investment (1,988) (1,238)
Acquisitions and disposals (5,312) (10)
Equity dividends paid (596) (457)
---------- ----------
Cash outflow before financing (3,111) (1,870)
Financing 4,603 (411)
---------- ----------
Increase/(decrease) in cash in
the year 1,492 (2,281)
---------- ----------
Reconciliation of net cash
flow to movement in net debt
Increase/(decrease) in cash
in the year 1,492 (2,281)
Cash flow from (increase)/decrease
in debt and lease financing (4,594) 411
---------- ----------
Change in net debt resulting
from cash flows (3,102) (1,870)
Loans and finance leases
disposed of with subsidiary - 55
Loans and finance leases
acquired with subsidiary (131) -
Translation differences 11 (153)
---------- ----------
Movement in net debt in the year (3,222) (1,968)
Net debt at 1 January 2,279 4,247
---------- ----------
Net (debt)/funds at 31 December (943) 2,279
---------- ----------
Notes:
1. The profit on ordinary activities before taxation and exceptional items is
as follow:
1998 1997
#000 #000
Profit on ordinary activities
before taxation as stated 5,911 3,948
Exceptional item:
- loss on disposal of group
undertakings - 202
---------- ----------
5,911 4,150
====== ======
2. Taxation
1998 1997
#000 #000
United Kingdom corporation tax
at 31% (1997: 31.5%) 1,267 903
Relief for overseas taxation - (8)
Associated undertakings taxation 130 55
Deferred taxation 257 391
Overseas taxation 502 249
Prior years taxation (18) 3
---------- ----------
2,138 1,593
---------- ----------
3. Earnings per share
The earnings per share have been calculated by reference to 54,221,961
ordinary shares being the weighted average number of shares in issue
during the year (1997: 53,801,378) and the profit for the year of
#3,753,000 (1997: #2,338,000).
Fully diluted earnings per share have been calculated by reference to
55,300,743 ordinary shares (1997: 54,035,495 - restated) in accordance
with the provisions of FRS 14, and, the profit for the financial year of
#3,753,000 (1997: #2,338,000). The number of shares used is the weighted
average number of shares taking into account the exercise of those
qualifying employee share options where these are expected to diluted
earnings. The adjustment to earnings per share in 1998 is calculated with
reference to the amortisation charge for goodwill of #193,000 resulting
in an adjustment to the earnings per share of 0.36 pence per share. The
adjustment to earnings per share in 1997 is calculated with reference to
the exceptional items of #202,000, less tax relief of #18,000. The
resulting adjustment to the earnings per share is 0.34 pence per share.
4. Year 2000 Compliance
The board has recognised that the Year 2000 is a major issue and has
established a programme to investigate its impact upon the group. Most
of the group's computer systems have already been modified or upgraded
and work will continue over the coming months to complete the remaining
upgrades. The board is also assessing the impact on the business of Year
2000 related failures by major suppliers and clients. The net cost
attributable to the Year 2000 problem is not substantial owing to the
business benefits resulting from the work undertaken.
The general expectation by those who have studied best practice in
managing the Year 2000 problem is that even the best run projects will
face some Year 2000 compliance failures. There can be no assurance that
Year 2000 projects will be successful or that the date change from 1999
to 2000 will not adversely affect the group's operations and financial
results. The group may also be adversely affected by the inability of
third parties to manage the Year 2000 problem.
5. 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.
6. The annual general meeting will be held at Wimbledon Bridge House on
Wednesday 5 May 1999.
END
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