Last checked at 26 Apr 2007 07:00
CORSIE GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006
The Board of Corsie Group plc ("Corsie" or the "Company"), the AIM listed specialist in the assembly and sale of products and services to the leisure market, today announces preliminary results for the year ended 31 December 2006.
FINANCIAL HIGHLIGHTS
* Turnover up 15% at ‚£3.62m (2005: ‚£3.16m); * Gross profit up 25% at ‚£1.38m (2005: ‚£1.11m); * Balance sheet improved by ‚£2.2m.
CORPORATE HIGHLIGHTS
* Successful acquisition and integration of Kaloss; * Extension of Henselite pty distribution agreement; * Warehouse capacity increased to 78,000 sq. ft; * Option to purchase freehold at 30% discount to NAV; and * Vikram Lall, CBE appointed Non-Executive Director.
CURRENT TRADING
* New distribution agreement secured; * ‚£500,000 raised in February to increase working capital; * 5 year exclusive agreement with Luxury Brands of Toronto; and * Good start to new financial year with the business trading in line with management expectations. Commenting on the results, David Mathewson, Chairman of Corsie, said:"Followingthe flotation of the Company in June, significant progress has been made in allareas of the business. Key objectives set out in the admission document havebeen achieved and further progress is anticipated during 2007."The business is trading in line with management expectations. The new scalablepremises provide excellent scope for expansion and the Directors are activelyseeking complementary businesses which can be easily integrated into theexisting overhead".Enquiries:Corsie Group plc Tel: 01620 828 940Richard Corsie, MBE, Chief Executivewww.corsiegroup.comCity Financial Associates Limited Tel: 020 7090 7800
James Caithie
Bishopsgate Communications Ltd Tel: 020 7562 3350Dominic BarrettoJenni HerbertCHIEF EXECUTIVE'S REPORTIntroduction
Following the flotation of the Company in June, significant progress has been made in all areas of the business. Key objectives set out in the admission document have been achieved and further progress is anticipated during 2007.
Corsie comprises three distinct divisions; Greengauge Sports, Greengauge Surfaces and Spa Solutions.
Following the move to Haddington, the business is well placed to support substantial growth and deliver increased shareholder value.
Results
The results for 2006 have been impacted by numerous exceptional items most ofwhich are positive. I have separated out those items to provide shareholderswith a better understanding of the actual performance from continuing tradeduring the period.Turnover from continuing operations increased 15% to ‚£3,626,000 (2005: ‚£3,160,000). Gross profit improved by 25% to ‚£1,387,107 (2005: ‚£1,113,000) withgross percentage margin improving by 3% to 38.2% (2005: 35.2%). The Directorsbelieve that a more useful analysis of underlying comparable year-on-yeartrading profit would be: * Continuing operating profit before Exceptional Items ‚£42,117; * Add back non-recurring Marketing and float fees of ‚£96,558; and * Add back share option FRS 20 of ‚£48,000,
giving a total of ‚£186,675.
The improvement in our underlying trading profit is primarily a result of the efficiencies now being achieved by central control of divisional overhead.
Exceptional gains within the accounts are attributable to 3 main areas. Thecancellation of preferential shares resulted in a gain of ‚£1,101,000. A furthergain of ‚£213,375 reflects the accrued dividends which were waived by theshareholders ahead of the flotation. There is also a gain of ‚£366,000 followingthe release of a historical tax provision. As a result, the balance sheet hasimproved by ‚£2,214,192 during the period.The efficiency and scalability of the new premises have already eliminated anumber of financial constraints which we anticipate will further enhance thegroup earnings going forward.
Overall the Company returned a profit after tax of ‚£1,159,034.
Trading
I am pleased to advise shareholders that all divisions made excellent progress in each of their respective markets.
All businesses contributed positively to the group with the exception of ourSpa business. The Spa division was anticipated to be loss making during theyear as we continue to invest in additional sales resources. We also increasedour marketing spend positioning the Li'tya brand here in the UK and Ireland. Weanticipate the Spa losses reducing on a monthly basis during 2007.
During the final quarter of 2006 we invested in additional sales and marketing resources to accelerate sales across the group. New channels to market are being pursued along with new geographical territories for key lines. We anticipate good benefits during 2007 from the sales strategy now being implemented.
Having relocated to scalable premises the plan for 2007 is to accelerate salesboth organically and by acquisition. We will also consider further distributionagreements which can offer our existing customers additional products withintheir respective markets. Maximising the operational efficiencies within ournew premises is a key objective during this financial year. Good sales momentumwill be quickly translated into profit as our new fixed overhead can facilitatesubstantial sales growth.Kaloss AcquisitionI highlighted in my interim report the opportunities management wereconsidering to expand the Company both organically and by acquisition. Asreported in September, Kaloss was acquired for ‚£439,000 which was subsequentlyreduced to ‚£389,000 following a net asset adjustment. Kaloss was successfullyrelocated and integrated by the existing management team and continues tocontribute positively.
Since acquiring Kaloss, the brand has been positioned to maximise current UK sales channels and new European markets are now under consideration.
People
I would like to take this opportunity to thank our employees for their valued contribution this year and in particular during the relocation to Haddington.
New and existing distribution agreements secured
I am pleased to advise shareholders that Kaloss has secured a further newexclusive distribution agreement with Luxury Brands of Toronto. Luxury Brandsowns the successful SkinScience range and Kaloss has signed a 5 year agreementto distribute the SkinScience range in Europe.
The Board also announced a 3 year extension to our existing agreement with Henselite on 11 December 2006.
New Premises
The Board advised shareholders of the business relocation to Haddington in November, which has eliminated current space constraints and provided capacity to support substantial business growth going forward. The new premises were secured on commercially attractive terms both in rental cost and option to purchase price.
Management secured a 15 year lease at an average rent of ‚£1.32 per sq ft. overthe period. As part of the agreement, an option to purchase the freehold duringthe next 5 years was secured at a price of ‚£1,400,000 compared to a currentvaluation of ‚£2m.
The Board's strategy to maximise shareholder value through selective acquisitions and organic growth remains unchanged. However, future consideration will now be given to leveraging the equity within the property to fund future targets.
Board Strengthened
Corsie appointed Vikram Lall, CBE, on 5 October 2006 as its second Non-Executive Director.
Vikram was previously director in charge of corporate finance at Brewin DolphinHoldings Plc ("Brewin Dolphin"), where he was responsible for group corporatefinance activities in Edinburgh. He retired from executive duties in December2003 and continues to hold a non-executive directorship at Brewin Dolphin.Vikram is a member of the Institute of Chartered Accountants of Scotland andwas awarded a CBE in 2005 for services to business. Since his appointment inOctober, Vikram has joined the remuneration committee and has been a valuedmember of the Board.
Outlook
The new premises offer excellent scope for expansion and the Directors are actively seeking complementary businesses which can be easily integrated into the existing overhead. Further distributions agreements are also under consideration.
The Directors expect the business to enjoy another year of growth and look forward to the future with confidence.
Richard Corsie MBEChief Executive Officer25 April 2007GROUP PROFIT AND LOSS ACCOUNT 2006 2006 2005 2005 Note ‚£ ‚£ ‚£ ‚£ Turnover - from continuing operations 3,500,890 3,160,196 - from acquisitions 125,097 - - from discontinued - 472,920operations ________ ________ Group turnover 3,625,987 3,633,116 Cost of sales (2,238,880) (2,404,238) ________ ________ Gross Profit
- from continuing operations 1,334,670 1,113,002
- from acquisitions 52,437 - - from discontinued - 115,876 operations ________ ________ Group gross profit 1,387,107 1,228,878 Operating charges - operating costs from 1,292,553 1,043,993 continuing operations - exceptional costs from 1 315,464 - continuing operations - operating costs from 1 108,903 - acquisitions ________ ________
Total costs from continuing 1,716,920 1,043,993
operations Operating costs from - 383,672 discontinued operations _______ ________ Group operating charges 1 (1,716,920) (1,427,665) Operating Profit/(loss)
- on continuing operations 42,117 69,009 before exceptional items - exceptional loss on (315,464) - continuing operating
- on acquisitions (56,466) - ________ ________
Total operating profit on (329,813) 69,009
continuing operations Operating loss on - (267,796) discontinued operations ________ _______ Group operating profit/(loss) (329,813) (198,787) Exceptional items: 2 Cost of discontinued (15,064) -operations Profit on disposal of fixed - 873,642assets ________ ________ (344,877) 674,855 Interest and finance costs: 3
Exceptional release of FRS 25 1,101,000 -
liability Exceptional release of 213,375 - finance charge Interest receivable 121 268
Interest payable and similar (176,585) (335,376)
charges ________ ________ 1,137,911 (335,108) Profit on ordinary activities 793,034 339,747before taxation Tax on ordinary activities 4 (366,000) 159,036 ________ _______ Profit for the financial year 1,159,034 180,711 ________ _______ Earnings per Share Earnings per ordinary share Basic earnings per share 5 0.01 0.00 ________ _______ GROUP BALANCE SHEET 2006 2005 Note ‚£ ‚£ Fixed assets Intangible assets 466,991 357,785 Tangible assets 222,904 118,652 ________ ________ 689,895 476,437 Stocks 1,483,382 560,917 Debtors 572,553 243,491 Cash at bank and in hand 303,973 1,152,630 ________ ________ Current assets 2,359,908 1,957,038 ________ ________ Creditors: amounts falling due within one year 2,961,127 2,640,776 ________ ________ Net current liabilities (601,219) (683,738) ________ ________ Total assets less current liabilities 88,676
(207,301)
Creditors: amounts falling due after more than one year 1,227,834 2,780,049 ________ ________ (1,139,158) (2,987,350) Provisions for liabilities Deferred taxation - 366,000 ________ ________ (1,139,158) (3,353,350) ________ ________ Capital and reserves Called-up equity share capital 167,417 116,667 Share premium account 6 956,408 - Other reserves 482,678 434,678 Profit and loss account (2,745,661) (3,904,695) ________ ________ Deficit (1,139,158) (3,353,350) ________ ________ CASH FLOW STATEMENTS 2006 2005 ‚£ ‚£ Net cash (outflow) from operating activities (220,905)
(62,871)
Returns on investments and servicing of finance
Interest received 121 268 Interest paid (176,585) (168,936) Dividends on shares classed as liabilities - (90,000) ________ _______ Net cash (outflow) from returns on investments and (176,464) (258,668)servicing of finance ________ _______ Taxation (99,036) (60,000)
Capital expenditure and financial investment Payments to acquire intangible fixed assets (84,140)
-
Payments to acquire tangible fixed assets (114,499)
(9,281)
Receipts from sale of fixed assets 1,500 874,670 ________ _______ Net cash (outflow)/inflow for capital expenditure and (197,139) 865,389financial investment Acquisitions and disposals
Purchase of trade and assets of Kaloss (389,020)
- ________ _________ Cash (outflow)/inflow before financing (1,082,564) 483,850 Financing
Cash received from issue of shares (net of expenses) 1,021,619
- Repayment of bank loan (175,405) - ________ _________
Net cash inflow/(outflow) from financing 846,214
- ________ _________ (Decrease)/increase in cash (236,350) 483,850NOTES1 Other operating charges 2006 2005 ‚£ ‚£ Distribution costs 95,072 100,867 Administrative expenses 1,650,555 1,392,092 1,745,627 1,492,959 ________ _______
The above operating charges include exceptional continuing costs amounting to ‚£315,464 which relates to one-off costs. The bulk of this can be classified asone-off costs incurred by the flotation of Corsie Group plc on the AIM stockmarket, plus an onerous lease provision. The operating charges also includescosts incurred after the acquisition of Kaloss International Limited on 18September 2006, amounting to ‚£108,903.One-off costs totalling ‚£96,588 included within continuing costs, relate toone-off costs that arose due to the flotation and it is anticipated that thesetype of costs will not arise again in future.2 Exceptional items 2006 2005 ‚£ ‚£ Costs of discontinued operations (15,064) 873,642 ________ _______ (15,064) 873,642 ________ _______
The above cost of discontinued operations relates to closure costs incurred with Company 90 Limited (which ceased trading in 2005).
3 Interest and finance costs 2006 2005 ‚£ ‚£
Exceptional release of finance liability 1,101,000
-
Exceptional release of finance charge 213,375
-
Interest payable on bank borrowings (176,585) (335,376) Interest receivable 121 268 ________ _______ 1,137,911 (335,108) ________ _______
Other than interest payable on bank borrowings and interest receivable, the finance charges above have been calculated in accordance with FRS 25.
Finance charges payable in 2005 represent the accrued dividends on A ordinaryshares and a reclassification of directors remuneration in accordance with FRS25. Following the share for share exchange of the A ordinary shares during 2006the accrued dividend has been reversed resulting in a credit to the profit andloss account of ‚£213,375.The exceptional release of the finance liability relates to the reversal of thedebt recognised in 2005 under FRS 25. Following the share for share exchange ofthe A ordinary shares during 2006 this debt has been reversed.
4 Taxation on ordinary activities
(a) Analysis of charge in the year
2006 2005 ‚£ ‚£ Current tax
UK Corporation tax based on the results for the year at -
-30% (2005 - 30%) (Over)/under provision in prior year - (55,585) ________ _______ Total current tax - (55,585) Deferred tax: Origination and reversal of timing differences (366,000)
214,621
Tax on profit on ordinary activities (366,000) 159,036 ________ _______
(b) Factors affecting current tax charge
The tax assessed on the profit/(loss) on ordinary activities for the year islower than the standard rate of corporation tax in the UK of 30% (2005 30%). 2006 2005 ‚£ ‚£ Profit on ordinary activities before taxation 793,034 339,747 ________ _______ Profit on ordinary activities by rate of tax 237,910
101,925
Expenses not deductible for tax purposes 76,347
32,765
Capital allowances in excess of depreciation/ (10,510)
132,208
Depreciation in excess of capital allowances Amounts written off not deductible for tax purposes 6,176 (6,146) Unrelieved tax losses 73,411 - Additional consideration - (260,670) Adjustments in respect of previous periods - (55,585) Rate differences - (82) FRS 25 adjustment (383,334) - ________ _______ Total current tax - (55,585) ________ _______
Factors that may affect future tax charges
Deferred tax assets of ‚£207,808 consisting mainly of trade losses carriedforward have not been recognised as there is insufficient evidence as to theirrecoverability in the foreseeable future. The losses are recoverable againstfuture trading profits.5 Earnings per shareBasic and diluted earnings per ordinary share are calculated by dividing theearnings attributable to ordinary shareholders by the weighted average numberof ordinary shares in issue during the period.For the first reporting period to 31 December 2006, the shares on issue atflotation were treated as if they had been in issue for the whole financialyear. Profit for Weighted Earnings the period Average per share number of Shares ‚£ ‚£
Year to 31 December 2005 180,711 116,666,667
0.00
Year to 31 December 2006 1,159,034 145,599,544
0.01
There is no dilutive effect on the earnings per share as the average marketprice of the ordinary shares during the period was less than the exercise priceof the options and warrants.6 ReservesGroup Share Other Profit and Premium Reserves Loss account Account ‚£ ‚£ ‚£ At 1 January 2006 - 434,678 (3,904,695) Share option adjustment - 48,000 - Issue of shares 956,408 - - _________ _________ _________ 956,408 482,678 (3,904,695) Profit for the year - - 1,159,034 _________ _________ _________ At 31 December 2006 956,408 482,678 (2,745,661) _________ _________ _________
During the year the company issued 167,416,664 ordinary shares of 0.1p each at3p per share. The share premium is stated net of transaction costs totalling ‚£515,342.
Other reserves arise on consolidation of the group using merger accounting and the adjustment required for FRS 20 share options.
7. Reconciliation of operating profit/(loss) to net cash inflow/(outflow) fromoperating activities 2006 2005 ‚£ ‚£ Operating (loss) (343,461) (198,787) Depreciation 31,213 33,903 Amortisation 30,484 31,466 Share option charge 48,000 - (Increase)/decrease in stocks (659,686)
254,523
(Increase)/decrease in debtors (241,104)
260,912
Increase/(decrease) in creditors 913,649 (444,888) ________ _______ Net cash (outflow) from operating activities (220,905) (62,871) ________ _______
8 Reconciliation of movements in net debt
2006 2005 ‚£ ‚£ (Decrease)/increase in cash in the period (236,350)
483,850
Net cash outflow from bank loans 175,405
- ________ _______ Change in net debt resulting from cash flows (60,945) 483,850 ________ _______ Non cash movement 1,101,000 --- Net debt at 1 January 2006 (3,235,017) (3,718,868) ________ _______ Net debt at 31 December 2006 (2,194,962) (3,235,017) ________ _______
9. Availability of accounts
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985.
The summarised balance sheet at 31 December 2006 and the summarised profit andloss account, summarised cash flow statement and associated notes for the yearthen ended have been extracted from the Group's 2006 statutory financialstatements upon which the auditors opinion is unqualified and does not includeany statement under Section 237 of the Companies Act 1985.Copies of the Report and Accounts for the year ended 31 December 2006 will besent to shareholders in due course. Further copies will be available from theCompany's registered office: 5 Gateside Commerce Park, Haddington EH41 3ST.
CORSIE GROUP PLC