RNS Number:5309D
Wigmore Group (The) PLC
30 September 2004
CHAIRMAN'S STATEMENT
Review of operations for the six months ended 30 June 2004
Trading conditions for all the Group's operating subsidiaries have been
extremely difficult for the year to date for the reasons previously stated in
the Report and Financial Statements for the year ended 31 December 2003. Both
Speymill and Blanchards continue to generate an encouraging number of tenders,
which the Directors expect will translate into an upturn in the order books.
Turnover for the six months of #10.4m (2003: #6.5m) is #3.9m higher than that
achieved in the same period last year; of this #2.6m relates to Blanchard's
which was acquired on 30 June 2003. Gross profit at #1.04m has increased by
#118,000; the gross margin reported by Blanchard's for the six months was
#388,000 and for the reasons detailed below, Speymill reported a reduced gross
margin with higher revenues. The loss on ordinary activities for the six months
is #1.2m (2003: #0.5m), an increase of #0.7m; Blanchard's accounted for #120,000
of the year on year increase.
Speymill
While the Speymill recovery is slower, the Directors believe that this is to be
expected, as many of Speymill's customers, who are the main operators in the
licensed retail trade have stopped or reduced their development programmes.
Notwithstanding this, the number of tendered contracts received by Speymill has
increased significantly over the last few months and the Directors believe that
this will translate into an increased number of orders. There are also
encouraging signs that the client base is becoming more diverse with the
objective of Speymill being less dependent on either individual clients or
conditions in a specific market sector.
In previous circulars and announcements, reference has been made to a deficiency
in both process and management within Speymill, which the Directors believe to
have been a fundamental cause of the losses at Speymill. Accordingly, the
Directors have taken decisive action to remedy this situation, and have inter
alia, put in place new systems of controlling the contract process from the
initial tendering stage through to final handover of the project. Part of this
more rigorous process is to ensure that each contract contributes the required
margin, and is now monitored on a 'cost to complete' basis.
In summary, Speymill has experienced very difficult trading conditions this year
but has put in place new systems, processes and management to ensure that the
risk of this situation being repeated is minimised. This coupled with the
significant increase in the invitations to tender being received by the Group
enables the Directors to be confident about Speymill's improved performance.
Blanchards
As previously reported, Blanchards in common with other local Salisbury
contractors has suffered as a result of the change in contracting arrangements
within the MoD to 'prime contracting'. However the number of tenders being
submitted has increased significantly as well as the number of jobs being won.
On 5 August 2004, the Company announced that Blanchards had recently won
contracts worth over #1m. Blanchards continues to win contracts giving the
Directors the expectation that the second half of the year will be an
improvement upon the first half.
The Group has, historically, sub-contracted out all the mechanical and
electrical ("M&E") elements of a contract, which frequently comprise a
significant part of the total contract value. However, this year Blanchards has
established an electrical division, to which, because of the recent lack of
finance, the Group has not been able to give the support that it merits. The
Directors believe that by establishing this division internally, revenue and
profit can be retained within the Group and so intend to develop this division
actively in the future. Further, it is the opinion of the Directors that the
maintenance of M&E is a core element of many facilities management ("FM") and
maintenance contracts and the development of this division should enhance the
Group's ability to secure FM and maintenance contracts in the future.
FNPM
This year FNPM has significantly increased its turnover from an average of
#95,000 per month in 2003 to #122,000 per month in 2004. However, profitability
has not been achieved in the six months to 30 June 2004 as a result of
increasing overheads and difficulty in securing debtor payments.
Wigmore has carried out a review of FNPM and its operations and has concluded
that economies of scale and a reduction in overheads could be achieved by closer
co-operation with Blanchards. Blanchards operates in a similar market and would
benefit in turn from the more sophisticated IT system that is used by FNPM.
Board Changes
I am delighted to welcome Sir James Mellon as a director of the Group, being
Burnbrae's representative on the board.
Dividend policy
The Board is not recommending an interim dividend.
Future prospects
Despite the poor results, the Directors are pleased to have secured a
substantial investment from Burnbrae. Negotiations with Burnbrae are progressing
with a view to securing a substantially increased level of funding than that
envisaged in the Company's announcement dated 6 September 2004. Burnbrae is a
strategic investor with a stated intention of increasing the number of bed
spaces within their hotel portfolio. Consequently, the Directors believe that
this will provide an additional revenue stream for the Group. With this in mind
and having regard to the changes being planned to the Group's operations, the
Directors believe that the prospects of the Group going forward are more
encouraging.
Peter L R Hewitt
30 September 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months ended 30 June 2004 6 months to 6 months to Year to
30 June 30 June 31 December
2004 2003 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Turnover - continuing activities 10,438 6,527 22,229
Cost of Sales (9,402) (5,610) (19,173)
Gross profit 1,035 917 3,056
Administrative expenses (1,930) (1,224) (3,105)
Administrative expenses - exceptional (100) - -
items
Amortisation of goodwill (102) (77) (177)
Operating loss (1,097) (384) (226)
Interest payable and similar charges (58) (72) (131)
Loss on ordinary activities before (1,155) (456) (357)
taxation
Taxation on loss on ordinary activities - - -
Loss on ordinary activities after (1,155) (456) (357)
taxation
Loss per share (pence) (0.53) (0.48) (0.26)
Statement of total recognised gains and
losses
Loss for the period (1,155) (456) (357)
Total losses recognised in period (1,155) (456) (357)
CONSOLIDATED BALANCE SHEET 30 June 30 June 31 December
As at 30 June 2004 2004 2003 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Fixed Assets
Intangible fixed assets - goodwill 3,614 3,842 3,716
Tangible fixed assets 843 677 728
4,457 4,519 4,444
Current Assets
Stock and work in progress 84 50 48
Debtors 4,242 4,660 4,747
Cash at bank and in hand 2 412 413
4,329 5,122 5,208
Current Liabilities
Creditors: amounts falling due within one (6,428) (7,453) (7,006)
year
Net Current Liabilities (2,099) (2,331) (1,798)
Total Assets less Current Liabilities 2,358 2,188 2,646
Creditors: amounts falling due after more
than one year (1,139) (1,665) (593)
Net Assets 1,219 523 2,053
Capital and Reserves
Called up Share Capital 23 1,068 2,097
Called up Deferred Share Capital 2,294 - -
Share Premium Account 915 210 813
Revaluation Reserve
Share Capital to be issued - 200 -
Profit and Loss Account (2,012) (955) (857)
Shareholders Funds 1,219 523 2,053
Attributable to
Equity shareholders (1,075) 523 2,053
Non-equity shareholders 2,294 - -
1,219 523 2,053
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2004
6 months to 6 months to Year to
30 June 30 June 31 December
2004 2003 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Net cash (outflow)/inflow from operating activities (1,627) (44) 499
Returns on investments and servicing of finance (58) (71) (131)
Tax paid - - (222)
Capital expenditure and financial investment (62) 4 (59)
Acquisitions and disposals - (821) (821)
Cash outflow before financing (1,747) (932) (734)
Financing 812 421 749
Decrease/(increase) in cash in the period (936) (511) 15
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Decrease/(increase) in cash in the period (936) (511) 15
Cash (inflow)/outflow from increase/decrease in debt (530) 19 523
Change in Net Debt Resulting from Cash Flows (1,466) (492) 538
Finance lease creditors of acquired subsidiary - (16) (16)
Bank loans of acquired subsidiary - (73) (73)
Issue of redeemable loan notes - (309) (309)
New Finance Leases (163) - (103)
Conversion of loan notes - - 600
Issue of Convertible Loan Notes - (150) (150)
(1,628) (1,040) 487
Opening Net Debt (1,639) (2,126) (2,126)
CLOSING NET DEBT (3,267) (3,166) (1,639)
Notes
1. Exceptional administrative expenses relate to compensation for directors'
loss of office.
2. In April 2004, the Company issued for cash 22,000,000 ordinary shares of 1p
each at a premium of 1.25p to raise #495,000 before expenses.
3. On 29 June 2004, the members approved the sub-division of the ordinary shares
of 1p each into ordinary shares of 0.01p each and deferred ordinary shares
of #0.99p each.
4. Post Balance Sheet Events:
a. On various dates during 2004 the Company issued #200,000 of convertible
loan stock for cash. The loan stock bears interest at 4 per cent.
b. On various dates during July 2004, #430,000 of the loan notes issued during
June and July 2004 (including #30,000 issued to directors of the Company)
were converted into 430,000,000 ordinary shares of 0.01p each in the
Company.
c. In July 2004 the Company entered into new financing proposals, which
resulted in the issue of 200 million warrants to subscribe for ordinary
shares of 0.01p each and a further 100 million warrants to subscribe for
ordinary shares of 0.11p each. Additionally 45,000,000 new ordinary shares
were issued.
d. In connection with the new financing proposals referred to above, #300,000
loan notes convertible at 0.11p each were issued. These loan notes have
been converted into 177,000,000 new ordinary shares of 0.01p each in July
2004 and a further 95,727,273 new ordinary shares of 0.01p each in August
2004.
e. On various dates during August and September 2004, the Company issued
#500,000 of convertible loan stock for cash. The loan stock bears interest
of 7.2 per cent. The loan notes are convertible at the rate of 100 Ordinary
Shares for every 11p nominal of loan converted.
5. The interim results are unaudited and do not constitute statutory accounts
within the meaning of section 240 of the Companies Act 1985. The figures for
the year ended 31st December 2003 have been extracted from the statutory
accounts, which have been reported on by the Company's auditors and have
been delivered to the Registrar of Companies. The auditors report did not
contain any statement under Section 237(2), (3) or (4) of the Companies Act
1985.
6. The interim financial statements have been prepared using the accounting
policies set out in the 2003 accounts.
7. Earnings per ordinary share have been calculated using the weighted average
number of shares in issue during the relevant financial periods.
8. The Directors do not propose to pay a dividend for the period.
9. Copies of this statement will be posted to shareholders and will also be
available on written application to the Company Secretary, The Wigmore Group
Plc, Bodiam House, Amberley Court, County Oak Way, Crawley, Sussex RH11 7XL
This information is provided by RNS
The company news service from the London Stock Exchange
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