LONDON (Alliance News) - Bagir Group Ltd Friday reported a drop in revenue and pretax profit in 2014, which it blamed on a reduction in revenue from its largest customer, but said it is successfully growing revenues from new and other existing customers and its two-year recovery plan is underway.
The maker of formal wear reported a pretax profit loss for the year ended December 31 of USD3.2 million, compared with a USD1.2 million loss a year earlier. Revenue dropped to USD97 million from USD99.5 million, as its gross margin shrank to 17.4% from 18.8%.
The company listed on the AIM market last April and just weeks later said it had suffered a substantial loss of revenue from its largest customer due to a change in that customer's buying strategy. Bagir has never identified the customer that changed buying strategy, but at the time of its IPO, it had said its largest UK customer was Marks & Spencer PLC.
Bagir also said Friday that a large project completed for a customer in 2013, which had relatively high margins, did not continue into 2014, and that the devaluation of the pound/dollar exchange rate and higher depreciation of amortised intangible assets also hurt the company's earnings.
Bagir Group reported adjusted earnings before interest, tax, depreciation and amortisation of USD3.8 million, compared with USD6.1 million the year before.
However, it said it successfully grew revenue from new and other existing customers by approximately 30%, excluding workwear.
Net debt decreased to approximately USD12.5 million from USD50.3 million a year earlier, resulting from the company's IPO last April, and cash and cash equivalents increased to USD11.4 million from USD2.7 million as a result of the IPO proceeds.
Bagir Group bought a 50% stake in Nazareth Garments Share Co in November, which owns and operates a garment factory in Ethiopia. It said it expects the acquisition to give the company a strong competitive advantage due to its duty free exports to the EU and US, competitive production costs, and government support for the textile industry.
"The comprehensive review into the company's business strategy and operating processes was successfully completed and a two-year recovery plan has commenced. Once fully implemented, the recovery plan is expected to reduce the company's operating costs, improve efficiency and enhance the company's sales and marketing performance," Chief Executive Danny Taragan said in a statement.
Shares in Bagir Group were trading flat at 6.00 pence Friday morning.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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