Tandem Group Regulatory News (TND)

22 Apr 2005 07:01

Tandem Group PLC22 April 2005 TANDEM GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JANUARY 2005 Chairman's statement Profit before taxation from the Group's activities was £1,200,000 compared to£609,000 last year, on turnover of £52,683,000 (2004 - £56,899,000). Falcon and Dawes We have two bicycle businesses with the brands of Falcon, Dawes, Claud Butler,Shogun, British Eagle and Optima. Manufacturing at the Group's factory in theU.K. concentrates on the higher value quality products for which demand isincreasing. Turnover in the bicycle business was lower than the previous year following thewithdrawal from low margin business and a worldwide shortage in the first halfof the year of components used to manufacture the higher value products. Profitability in 2004 was below the potential and must be improved. We have opportunities to achieve sales growth of the higher value products,improve margins and further reduce our overheads from operational efficiencies. MV Sports MV distributes a range of products featuring high profile brand and characterlicences including Barbie, Groovy Chick, Bang on the Door Baby, Thomas the TankEngine, Bob the Builder and a range of football training equipment under theKickmaster brand. The strength of the brands has enabled MV to increase sales and improve margins,resulting in a very successful year. A strong management team has developed newproducts whilst controlling overheads and working capital utilisation. Additions to the product range are continually being sought. MV has thecapability to take on more turnover and build on its existing base. Pot Black Pot Black was acquired by the Group in September 2000 when over 80% of itsturnover came from snooker and pool products, predominantly in the second halfof the year. Since acquisition a range of outdoor play products has beendeveloped to increase sales in the first half of the year. It has been a difficult year for Pot Black, particularly on snooker and poolproducts in the second half of the year, with increased competition fromunbranded imports leading to price deflation, reduced sales and margins. A trading loss was incurred in the year at an unacceptable level and this hascontinued into the current financial year. Changes have been made and astrategic review is taking place to identify the best way to profit from thiswell known brand in the future. Ben Sayers Although our smallest business, Ben Sayers has good brand awareness in the golfmarket. Turnover in Ben Sayers declined from the previous year following the cessationof a golf clothing distribution agreement. Despite reduced overheads the resultswere disappointing. We expect better results from Ben Sayers following changes to the product rangeand a much wider distribution. Summary Our balance sheet continues to strengthen with net assets increasing to£8,178,000 as at 31 January 2005, compared with £6,551,000 as at31 January 2004. During the year we were able to purchase all the issued preference share capital in the Group companies held by external shareholders,contributing an additional £749,000 to our Group net assets. A strong and improving balance sheet is necessary for us to continue to further build on our relationships with our worldwide suppliers and strengthens partnerships to our mutual interest. In addition, it is important to build confidence with our customers who need competitively priced products of consistent quality from a reliable supplier. With a strong Tandem Group presence we will do all we can tohelp our customers prosper. Notwithstanding the profit increase, I should tell you that your Board isdisappointed with the overall result. With the actions taken in the last threeyears, opportunities for substantial sales and profit performance were in place,but in certain areas we failed to take full advantage of our improved position. I am fully aware of the challenging market that we operate in and this calls fora strong performance from all managers and staff. I regret that we fell short ofwhat was possible. Of course we have exceptions and the results from certainareas of our Group exceeded budget. Inevitably we have to improve and changesare being made around our Group with the introduction of new operating standardswith clear targets that will demand better performance from all our staff. YourBoard is determined to see these changes implemented. With retailers reporting a slow start to the year, it will be a tough time aheadfor the managers and staff in our operating businesses. Despite this and thecost of the changes being made, we still expect to have a satisfactory year. Ourchallenge is to improve our performance, further enhance our balance sheet andbe in a position to reward our shareholders. Graham WaldronChairman22 April 2005 Consolidated profit and loss account Year ended 31 January 2005 Notes 2005 2004 £'000 £'000 £'000 £'000TurnoverContinuing operations 52,683 56,256Discontinued operations - 643 -------- -------- 52,683 56,899 Cost of sales 4 (35,794) (40,403) -------- -------- Gross profit 16,889 16,496 Operating expenses 4 (15,190) (15,552)Net goodwill (amortisation)/release (9) 237 -------- --------Total operating expenses (15,199) (15,315) -------- --------Operating profitContinuing operations 1,690 979Discontinued operations - 202 -------- --------Profit on ordinary activitiesbefore interest 1,690 1,181 Net interest payable (490) (572) -------- -------- Profit on ordinary activities before taxation 1,200 609 Tax charge on profit on ordinary activities (74) (3) -------- --------Profit on ordinary activities after taxation 1,126 606 Non-equity minority interests - (27) -------- --------Profit for the financial yeartransferred to reserves 1,126 579 -------- -------- Earnings per share Pence Pence Basic 3.00 1.64 -------- -------- Diluted 2.94 1.62 -------- -------- Consolidated balance sheet At 31 January 2005 Notes 2005 2004 £'000 £'000Fixed assetsIntangible assets 3,317 3,523Negative goodwill - (197) -------- -------- 3,317 3,326Tangible assets 919 1,396 -------- -------- 4,236 4,722 -------- --------Current assetsStocks 3 8,494 8,291Debtors 7,731 9,275Cash at bank and in hand 2,855 1,965 -------- -------- 19,080 19,531 -------- -------- Creditors - amounts falling due within one year 3 15,138 15,947 -------- --------Net current assets 3,942 3,584 -------- -------- Total assets less current liabilities 8,178 8,306Creditors - amounts falling due after more than one year - 1,006Non-equity minority interests - 749 -------- --------Net assets 8,178 6,551 -------- --------Capital and reservesCalled up share capital 1,503 1,503Share premium account 5,258 5,258Merger reserve 1,036 1,036Other reserves 1,426 5,363Profit and loss account (1,045) (6,609) -------- --------Equity shareholders' funds 8,178 6,551 -------- -------- Consolidated cash flow statement Year ended 31 January 2005 Cash flow 2005 2004 Notes £'000 £'000 Net cash inflow from operating activities 1 2,510 4,436 ------- -------Returns on investments and servicing of financeInterest paid (476) (556)Interest element of hire purchase rentals (14) (16) ------- -------Net cash outflow from returns on investments andservicing of finance (490) (572) ------- -------Taxation (4) (3) ------- -------Capital expenditurePurchase of tangible fixed assets (141) (351)Sale of tangible fixed assets 77 35 ------- -------Net cash outflow from capital expenditure (64) (316) ------- -------Acquisitions and disposalsPurchase of subsidiary undertakings - (449)Net cash at bank and in hand acquired with subsidiary - 185Disposal of subsidiary undertakings - 1,245 ------- -------Net cash inflow from acquisitions and disposals - 981 ------- -------Net cash inflow before financing 1,952 4,526 ------- -------FinancingExpenses incurred in issue of ordinary shares - (193)Purchase of subsidiary companies preference shares (163) -Repayments of amounts borrowed (800) (880)Capital element of hire purchase rentals (99) (114) ------- -------Net cash outflow from financing (1,062) (1,187) ------- -------Increase in cash 2 & 3 890 3,339 ------- ------- Notes to consolidated cash flow statement 1. Reconciliation of operating profit to net cash inflow from operating activities 2005 2004 £'000 £'000 Operating profit 1,690 1,181Depreciation charges 570 637Amortisation of goodwill 206 206Negative goodwill released (197) (443)Profit on sale of tangible fixed assets (29) (4)(Increase)/decrease in stocks (203) 906Decrease/(increase) in debtors 1,523 (1,209)(Decrease)/increase in creditors (1,050) 3,231Utilisation of provisions on discontinued activities - (69) ------- -------Net cash inflow from operating activities 2,510 4,436 ------- ------- 2. Reconciliation of net cash inflow to movement in net funds 2005 2004 £'000 £'000 Increase in cash 890 3,339Cash to repay finance leases and hire purchase contracts 99 114Bank loan 800 800 ------- -------Changes in net funds resulting from cash flows 1,789 4,253Lease and hire purchase obligations acquired with subsidiary - (65)Loan acquired with subsidiary - (80) ------- -------Movement in net funds in the year 1,789 4,108Net funds/(debt) at 1 February 64 (4,044) ------- -------Net funds at 31 January 1,853 64 ------- ------- 3. Analysis of net funds At At 1 February Cash Non-cash 31 January 2004 flow flow 2005 £'000 £'000 £'000 £'000 Cash at bank and in hand 1,965 890 - 2,855Bank loan due within 1 year (800) 800 (900) (900)Bank loan due after 1 year (900) - 900 -Other loans (80) - - (80)Hire purchase creditors (121) 99 - (22) -------- -------- -------- -------- 64 1,789 - 1,853 -------- -------- -------- -------- Notes to the preliminary results 1. The financial information in this preliminary announcement does notconstitute the Group's statutory accounts for the years ended 31 January 2005 or2004. The financial information for 2004 is derived from the statutory accountsfor the year ended 31 January 2004 which have been delivered to the Registrar ofCompanies. The auditors have reported on the accounts for the financial yearsended 31 January 2004 and 31 January 2005. Their reports were unqualified anddid not contain a statement under section 237 (2) or (3) of the Companies Act1985. 2. The statutory accounts for the year ended 31 January 2005 will bedelivered to the Registrar of Companies following the Group's Annual GeneralMeeting. 3. The balance sheet at 31 January 2004 has been restated to recognisegoods in transit. Stock and creditors have been increased by £698,000 to£8,291,000 and £15,947,000 respectively. 4. In the profit and loss account for the year ended 31 January 2004,£562,000 has been reallocated to operating expenses from cost of sales. 5. Net goodwill (amortisation)/release comprises goodwill amortisation of£206,000 (2004 - £206,000) and negative goodwill released of £197,000 (2004 -£443,000). 6. No dividend on the ordinary shares is being proposed (2004 - £nil). 7. Earnings per share 2005 2004 £'000 £'000 Profit for the year used for basic and dilutedearnings per share calculation 1,126 579 ------- -------- Number NumberWeighted average number of ordinary shares inissue during the year used for basic earningsper share calculation 37,584,412 35,333,215Weighted average number of shares under option 1,740,000 1,310,959Number of ordinary shares that would have tobe issued at fair value (1,016,252) (942,252) --------- ---------Weighted average number of ordinary shares inissue during the year used for dilutedearnings per share calculation 38,308,160 35,701,922 --------- --------- Earnings per share Pence PenceBasic 3.00 1.64Diluted 2.94 1.62 8. The Annual Report and Accounts will be posted to shareholders shortly. 9. The Annual General Meeting will be held at 11:00 a.m. on 9 June 2005at Eversheds LLP, 1 Royal Standard Place, Nottingham NG1 6FZ. 22 April 2005 This information is provided by RNS The company news service from the London Stock Exchange