Active Energy Regulatory News (AEG)

2 May 2006 10:43

For immediate release: 2 May 2006 BUCKLAND GROUP PLC ("Buckland," the "Company" or the "Group") PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31st DECEMBER 2005 * Group restructuring complete * Increased sales to ‚£3,443,290 (2004: 2,957,083) * Two thirds of ‚£683,042 operating loss before goodwill amortisation relates to discontinued operations and is therefore non-recurring * Transfer of all remaining UK operations to Company's Bangkok manufacturing facility scheduled within 10 weeks * Restructured and re-located group expected to generate significant profits in the second half of current year and beyond Chairman's statement for the year ended 31 December 2005I present the financial results for Buckland Group plc for the year ended 31December 2005. During the year we undertook a fundamental restructuring of thegroup's activities, closing the loss-making connectors business, reducingsignificantly the cost base of the continuing operations in Thailand, andacquiring DK Gas Components and commencing its transfer from the UK to Bangkok.These actions have incurred a number of non-recurring costs which havematerially affected the 2005 results but following the restructuring, the groupis expected to generate significant profits in the second half of 2006 andbeyond.The group results for 2005 show an operating loss, before amortisation ofgoodwill and reorganisation costs, of ‚£ 683,042, of which ‚£ 440,102 relates todiscontinued operations ( 2004: loss ‚£ 443,061 ). Sales for the year were ‚£3,443,290 (2004: ‚£ 2,957,083). After amortisation of goodwill, reorganisationcosts and interest, the loss before tax was ‚£ 1,024,951 ( 2004: ‚£ 488,376) Theloss per share was 0.26p compared with a loss of 0.26p in 2004. No dividend isproposed.Review of Derlite, DK Gas Components and Euro Asia Connectors (`EAC')Although 2005 was a very difficult year for the Group's Thai operations, allthe necessary actions have now been taken to return the business toprofitability . Last July we stopped making connectors for the consumerelectronics industry, laid off the workforce of EAC and organised therealisation of that company's assets and liabilities. By the year end thisprocess had been largely completed, with the few remaining outstanding issuesbeing provided for in the 2005 accounts. In total the loss attributable to EACin 2005 was ‚£ 440,102.In parallel with the closure of EAC, we have reduced the overall costs ofrunning the Thai facility by cutting total employee numbers to 128 at the yearend ( 2004: 358 ) and by surrendering the lease on half the factory space. Thisresource level is sufficient to cope with the current manufacturing volumes ofDerlite and to absorb all the activities of DK Gas Components as their transferfrom the UK is completed.As already advised to shareholders, we acquired the business of DK GasComponents in February 2005. Our strategy is to transfer all its production toThailand and from that reduced cost base to seek to grow its sales and productrange in tandem with those of Derlite, the two businesses being highlycomplementary. The transfer of DK Gas has been planned in three phases: thefirst commenced last September and was completed before the year end; thesecond phase began in January and has recently been completed successfully andthe final phase will be completed by the end of June. At that time the Redditchfactory will close and the group's UK operations thereafter will comprise asmall team to service the sales, technical support and logistics requirementsfor Derlite and DK Gas in Europe.Once the transfer of manufacturing is completed, the sharp reduction in DK Gas'personnel costs and overheads will result in an annual saving of some ‚£ 600,000on its combined cost of sales and administrative expenses, which in 2005totalled ‚£ 2,143,280. A re-organisation charge of ‚£ 99,410 has been taken inthe 2005 accounts to cover redundancy and other costs associated with theclosure of the Redditch facility. The rationalisation of our Thai operationsmeans that administrative expenses from continuing operations of ‚£ 720,579 in2005 are expected to reduce to around ‚£ 600,000 pa on a like-for-like basis in2006.Derlite and DK Gas maintained their market shares in 2005 but sales volumes'were running slightly lower in the closing months of last year compared with2004, as declining consumer confidence in our major markets of the UK and theUSA led to lower sales of cooking appliances, the most important market segmentfor our products. Sales so far in 2006 have been running at the same underlyingrate as the second half of last year.Both Derlite and DK Gas have made progress in developing new products,particularly for the gas water heater market, and it is expected that thesewill start to make a more significant contribution in the second half of 2006.Balance sheetIn February 2005, 214,000,000 shares were issued to finance the acquisition ofDK Gas and a further 387,399,220 shares were issued last December to provideadditional working capital for the group and to pay off various outstandingloans and other liabilities. As a result shareholders funds' at the year endstood at ‚£ 463,714.The Directors have decided that the goodwill arising on the acquisition of DKGas should be amortised over a ten year period and in addition have decided towrite the Derlite goodwill off over ten years. Derlite's goodwill hadpreviously been amortised over twenty years. The effect of this change has beento incur an additional charge for the year of ‚£ 39,168. The total goodwillamortisation charge for 2005 was ‚£ 171,450 ( 2004: ‚£ 17,875 ).The heavy losses incurred in 2005 together with increased working capitalrequirements to finance goods in transit between Thailand and Europe mean thatthe group's liquidity position remains under pressure. The Directors arecurrently examining the options for covering the anticipated additional fundingrequirements by a combination of additional bank borrowings, loans and theissue of new equity, in which the Directors would participate.OutlookBased on current internal forecasts, we expect that the Group should beprofitable in the second half of 2006; the first half of the year will see afurther, very much reduced loss as we incur the final costs of running parallelproduction facilities in Redditch and Bangkok.The prospects for the Group once the transfer of all manufacturing to Thailandis completed remain very positive.Patrick RogersChairman2 May 2006For further information please contact,Patrick Rogers,ChairmanTel. 07711 420 702Ben SimonsHansard CommunicationsTel. 020 7245 1100Consolidated profit and loss account for the year ended 31 December 2005 Note Continuing Acquired Discontinued Year ended Year ended operations Operations operations 31 December 31 December 2005 2004 (Unaudited) (Audited) ‚£ ‚£ Turnover 1,120,908 1,984,775 337,607 3,443,290 2,957,083 Cost of sales (771,849) (1,513,893) (668,676) (2,954,418) (2,458,683) Gross profit/ 349,059 470,882 (331,069) 488,872 498,400 (loss) Administrative (720,579) (629,387) (156,646) (1,506,612) (1,029,754)expenses Other operating 16,225 - 47,613 63,838 70,418 income Operating (280,369) 37,429 (440,102) (683,042) (443,061) (loss)/profit before amortisation of goodwill Amortisation of (74,926) (96,524) - (171,450) (17,875) Goodwill Reorganisation 2 - (99,410) - (99,410) - costs Operating loss (355,295) (158,505) (440,102) (953,902) (460,936) on ordinary activities before interest Interest 218 97 receivable Interest (71,267) (27,537) payable and similar charges Loss on (1,024,951) (488,376) ordinary activities before taxation Tax on loss on 4 - - ordinary activities Loss (1,024,951) (488,376) transferred to reserves Loss per ordinary share: Basic 3 (0.26p) (0.26p) Consolidated statement of total recognised gains and losses andconsolidated reconciliation of movements in shareholders' fundsfor the year ended 31 December 2005 Year ended Year ended 31 December 31 December 2005 2004 (Unaudited) (Audited) ‚£ ‚£ Consolidated statement of total recognised gains and losses Loss for the year (1,024,951) (488,376) Exchange translation loss on foreign currency 24,366 (53,887) net investments in subsidiary undertakings Total recognised gains and losses for the year (1,000,585) (542,263) Consolidated reconciliation of movements in shareholders' funds Total recognised gains and losses (1,000,585) (542,263) New ordinary share capital subscribed for and 1,414,497 - allotted in the period, including share premium (net of expenses) Net reduction in equity shareholders' funds 413,912 (542,263) Opening equity shareholders' funds 49,802 592,065 Closing equity shareholders' funds 463,714 49,802 Consolidated balance sheet at 31 December 2005 Note At At 31 December 2005 31 December 2004 (Unaudited) (Audited) ‚£ ‚£ ‚£ ‚£ Fixed assets Intangible assets 1,247,852 318,313 Tangible assets 256,791 173,382 1,504,643 491,695 Current assets Stocks 425,052 423,088 Debtors 937,668 331,243 Cash at bank and in hand 29,717 37,298 1,392,437 791,629 Creditors: amounts falling (2,324,585) (1,206,754) due within one year Net current liabilities (932,148) (415,125) Total assets less current 572,495 76,570 liabilities Creditors: amounts falling (9,371) (26,768) due after more than one year Provision for liabilities (99,410) - and charges 463,714 49,802 Capital and reserves Called up share capital 3,526,492 2,417,752 Share premium account 1,041,532 735,775 Profit and loss account (4,104,310) (3,103,725) Equity shareholders' funds 463,714 49,802 Consolidated cash flow statement for the year ended 31 December 2005 Note Year ended Year ended 31 December 31 December 2005 2004 (Unaudited) (Audited) ‚£ ‚£ Net cash (outflow)/inflow from operating (657,039) 47,226 activities (see below) Returns on investments and servicing of (71,049) (27,440) finance Taxation - (2,066) Acquisitions (1,254,243) Capital expenditure 24,689 (62,927) Cash outflow before management of liquid (1,957,642) (45,207) resources and financing Financing 1,904,218 8,166 Decrease in cash (53,424) (37,041) Reconciliation of net cash flow to movement in net debt Decrease in cash in the period (53,424) (37,041) Cash outflow from decrease in debt (489,721) (8,166) Change in net debt resulting from cash flows (543,145) (45,207) Exchange movement 1,719 (6,653) Movement in net debt in the period (541,426) (51,860) Opening net debt (289,102) (237,242) Closing net debt (830,528) (289,102) Reconciliation of operating loss to net cash inflow/(outflow) from operating activities Operating loss (953,902) (460,936) Depreciation and impairment 176,532 191,095 Amortisation of goodwill 171,450 17,875 Reorganisation costs 99,410 - Profit on sale of fixed assets (100,660) (560) Decrease in stocks 317,464 48,558 (Increase)/decrease in debtors (606,425) 250,627 Increase/ in creditors 228,590 30,782 Other non cash operating adjustment 10,502 (30,215) Net cash inflow/(outflow) from operating (657,039) 47,226 activities Notes to the cash flow statement(a) Gross cash flows 31 December 31 December 2005 2004 (Unaudited) (Audited) ‚£ ‚£ Returns on investments and servicing of finance Interest received 218 97 Interest paid (71,267) (27,537) (71,049) (27,440) Capital expenditure Payments to acquire tangible fixed (160,945) (63,607) assets Receipts from sale of tangible 185,634 680 fixed assets 24,689 (62,927) Financing New ordinary share capital net of 1,414,497 - expenses Increase in bank loans and 483,942 14,058 other borrowings Increase/(repayment) of finance 5,779 (5,892) leases 1,904,218 8,166 (b) Analysis of At Cash Exchange At changes in net debt movement 1 January Flow 31 December (Unaudited) 2005 2005 (Unaudited) (Unaudited) (Audited) ‚£ ‚£ ‚£ ‚£ Cash in hand and at 37,298 (9,055) 1,474 29,717 bank Bank overdrafts (409) (44,369) - (44,778) 36,889 (53,424) 1,474 (15,062) Bank loans and Other borrowings (300,918) (483,942) 1,168 (783,693) Finance leases (25,073) (5,779) (923) (31,774) Net (debt) (289,102) (543,145) 1,719 (830,528) Notes to the preliminary announcement for the year ended 31 December 20051. Going concernThe Directors have reviewed the profit and loss and cash flow projections forthe Group for the twelve months ending 30 April 2007. Based on currentforecasts and assumptions, the Directors anticipate that there will be afunding requirement, in excess of banking and loan facilities already in place,during this period.The Directors are currently examining the options for covering this anticipatedshortfall by a combination of additional bank borrowings, shareholders' loansand additional equity funding. The Directors are of the opinion that adequateadditional facilities will be forthcoming to cover this requirement andtherefore, at the time of issuing this preliminary announcement, there is areasonable expectation that the Group will continue in operational existencefor the foreseeable future. In view of this, the directors believe that itremains appropriate to prepare the financial statements on a going concernbasis.This preliminary announcement does not include any adjustments that wouldresult from the going concern basis of preparation being inappropriate.2. Reorganisation costsAs announced in December 2005, the Group is in the process of relocating all ofits UK manufacturing operations to Thailand. The reorganisation costs of ‚£99,410 comprise the costs of a redundancy programme and the costs oftransferring plant and equipment.3. Loss per shareThe calculations of basic loss per share are based on the loss for the yearattributable to ordinary shareholders of ‚£ 1,024,951 (2004: loss ‚£488,376) andthe weighted average number of shares in issue during the year of 393,618,826(2004:190,779,408).4. TaxationThere is no taxation charge for the year due to the availability of eligiblelosses.5. The financial information set out in the announcement does not constitutethe company's statutory accounts for the years ended 31 December 2005 or 2004,but is derived from those accounts. Statutory accounts for 2004 have beendelivered to the Registrar of Companies and those for 2005 will be deliveredfollowing the Company's annual general meeting. The previous auditors havereported on the 2004 accounts; their reports' were unqualified and did notcontain statements under the Companies Act 1985, s237(2) or (3).ENDBUCKLAND GROUP PLC