Tandem Group Regulatory News (TND)

24 Aug 2005 13:55

Tandem Group PLC24 August 2005 Chairman's interim statement Profit before goodwill amortisation, exceptional items and taxation for the sixmonths ended 31 July 2005 was £304,000 compared to £280,000 for the same periodlast year. Turnover was £22,373,000 compared to £24,544,000 last year. There wasa loss after goodwill amortisation, exceptional items and taxation of £399,000compared to a profit last year of £159,000. No dividend is proposed. Falcon and Dawes Cycles We have two bicycle operations 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 there is strongdemand. Our bicycle business made a good start in the first quarter of the current yearwith increased turnover and margin and reduced overheads. Demand weakened in thesecond quarter, resulting in a lower turnover for the six months compared tolast year. The level of improved margins and reduced overheads was maintainedresulting in increased profitability for the six months over last year. MV Sports Group 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. Turnover is down on last year due to the closure of a significant catalogue shopcustomer, increased competition against some of our longer established licencesand a general malaise in the retail sector. Although the margins weremaintained, our lower overheads failed to compensate for the reduced turnover.Profitability was down on the excellent performance for the first half of lastyear. Additional turnover should be achieved in the future from new licences currentlybeing negotiated and other products that are being introduced. Pot Black The poor performance from Pot Black in the latter part of the previous financialyear continued into this year. In our statement on 22 April 2005 we said that we were undertaking a strategicreview of the Pot Black business. This has resulted in the decision to merge thePot Black operations within the MV Sports & Leisure business. The sales andadministrative functions were combined at the beginning of August. As aconsequence there should be significant cost savings. We have identified that we can source a number of the Pot Black products at alower cost than current stock values, particularly affecting components forassembly. As a result the assembly operations will significantly reduce orcease, which has incurred an exceptional one-off cost. It is currently estimatedthat the assembly changes and the restructuring cost of the Pot Black operation,including redundancy and stock write downs will be in the region of £600,000. Aprovision for this amount is included in these interim results as an exceptionalitem. Ben Sayers Turnover and profitability increased at our smallest business, golf equipmentcompany Ben Sayers, following changes to the product range and a much widerdistribution. With overheads tightly controlled and an expanding product range and customerbase, profitability should continue to increase. Summary After a series of improving results it is a major disappointment to report toyou the problems at the Pot Black business. We have taken decisive action torectify the situation. Our work on the other businesses in our Group continues to yield positivereturns. Overheads have been significantly reduced with the Group employing 30%less people than this time last year. We have reduced our cost base to ensurethat the Group is capable of producing an acceptable return. Despite a difficult half year the balance sheet remains strong and thebusinesses continue to generate cash from operating activities. With the lack of confidence in the retail sector, direct importing and thechallenge to restructure Pot Black being greater than initially envisaged, weexpect that turnover and profitability before exceptional items in the secondhalf of the year will be below last year. This is expected to result in the fullyear's result after exceptional items being approximately at the break evenlevel. Graham WaldronChairman 24 August 2005 Registered Office: 9a South Street, Crowland, Peterborough, PE6 0AH Consolidated profit and loss statement -- 6 months to 31 July 2005 unaudited -- Before After goodwill Goodwill goodwill 6 months amortisation amortisation amortisation to Year ended and and and 31 July 31 January exceptional exceptional exceptional 2004 2005 items items items unaudited audited £'000 £'000 £'000 £'000 £'000Turnover Continuing operations 22,373 - 22,373 24,544 52,683 -------- -------- -------- -------- --------Operating profit Continuing operations 477 (600) (123) 520 1,699Goodwill amortisation - (103) (103) (103) (9) -------- -------- -------- -------- --------Profit/(loss) on ordinary activities before interest 477 (703) (226) 417 1,699Net interest payable (173) - (173) (244) (490) -------- -------- -------- -------- --------Profit/(loss) on ordinary activities before taxation 304 (703) (399) 173 1,200Tax on profit on ordinary activities - - - - (74) -------- -------- -------- -------- --------Profit/(loss) on ordinary activities after taxation 304 (703) (399) 173 1,126Non-equity minority interests - - - (14) - -------- -------- -------- -------- --------Profit/(loss) for the financial year transferred to/(from) reserves 304 (703) (399) 159 1,126 -------- -------- -------- -------- -------- Earnings per share Basic (1.06) 0.42 3.00Diluted (1.04) 0.42 2.94Adjusted 0.81 0.70 3.27 Consolidated balance sheet 31 January 31 July 2005 31 July 2004 2005 Unaudited Unaudited Audited £'000 £'000 £'000 Fixed assets Intangible assets 3,214 3,423 3,317Negative goodwill - (197) -Tangible assets 796 1,148 919 -------- -------- -------- 4,010 4,374 4,236 -------- -------- --------Current assets Stocks 7,698 7,358 8,494Debtors 9,037 12,630 7,731Cash at bank 2,397 2,849 2,855 -------- -------- -------- 19,132 22,837 19,080 -------- -------- --------Creditors Amounts falling due within one year Other creditors 15,337 18,798 15,138 -------- -------- --------Net current assets 3,795 4,039 3,942 -------- -------- --------Total assets less current liabilities 7,805 8,413 8,178 Creditors Amounts falling due after more than one year - 982 -Minority interests - 763 - -------- -------- --------Net assets 7,805 6,668 8,178 -------- -------- --------Capital and reserves Called-up share capital 1,503 1,503 1,503Share premium account 5,258 5,258 5,258Merger reserve 1,036 1,036 1,036Other reserves 1,449 5,321 1,426Profit and loss account (1,441) (6,450) (1,045) -------- -------- --------Equity shareholders' funds 7,805 6,668 8,178 -------- -------- -------- Consolidated cash flow statement 6 months 6 months Year ended ended ended 31 January 31 July 2005 31 July 2004 2005 Unaudited Unaudited Audited Notes £'000 £'000 £'000 Net cash inflow fromoperating activities 4 748 1,239 2,510 -------- -------- --------Returns on investments and servicing of finance Interest paid (171) (237) (476)Interest element of hire purchase rentals (2) (7) (14) -------- -------- --------Net cash outflow from returns on investments and servicing of finance (173) (244) (490) -------- -------- --------Taxation - - (4) -------- -------- --------Capital expenditure Purchase of tangible fixed assets (83) (85) (141)Sale of tangible fixed assets 47 33 77 -------- -------- --------Net cash outflow from capital expenditure (36) (52) (64) -------- -------- --------Net cash inflow before financing 539 943 1,952 -------- -------- --------Financing Purchase of subsidiary company preference shares - - (163)Repayments of amounts borrowed (980) - (800)Capital element of hire purchase rentals (17) (59) (99) -------- -------- --------Net cash outflow from financing (997) (59) (1,062) -------- -------- --------(Decrease)/increase in cash 5 (458) 884 890 -------- -------- -------- Notes to the interim report 1 Basis of preparation The interim financial statements have been prepared using accounting policiesstated in the Group's report and accounts for the year ended 31 January 2005 andare unaudited. The summary of results for the year ended 31 January 2005 doesnot constitute full financial statements within the meaning of the Companies Act1985. The report and full financial statements for that period have been filedwith the Registrar of Companies and contain an unqualified audit report. 2 Earnings per share The calculation of earnings per share is based on the net profit and ordinaryshares in issue during the period as follows: 6 months to 6 months to Year ended 31 July 2005 31 July 2004 31 January 2005 £'000 £'000 £'000 Basic and diluted earnings per share (Loss)/profit for the period (399) 159 1,126 ---------- ---------- ----------Weighted average number of ordinary shares in issue during the period used for basic and diluted earnings per share 37,584,412 37,584,412 37,584,412Weighted average number of shares under option 1,635,000 1,740,000 1,635,000Number of shares that would have been issued at fair value (872,506) (1,085,141) (954,926) ---------- ---------- ----------Weighted average number of ordinary shares used for diluted earnings per share 38,346,906 38,239,271 38,264,486 ---------- ---------- ----------Adjusted profit used for adjusted earnings per share (Loss)/profit for the period (399) 159 1,126Exceptional costs 600 - -Goodwill amortisation 103 103 9 ---------- ---------- ----------Adjusted profit 304 262 1,135 ---------- ---------- ---------- 3 Movement in equity shareholders' funds 6 months to 6 months to Year ended 31 July 2005 31 July 2004 31 January 2005 (Loss)/profit for the period (399) 159 1,126Profit on redemption of preference shares - - 586Re-translation of overseas subsidiaries 26 (42) (85) ---------- ---------- ---------- (373) 117 1,627Opening equity shareholders' funds 8,178 6,551 6,551 ---------- ---------- ----------Closing equity shareholders' funds 7,805 6,668 8,178 ---------- ---------- ---------- 4 Reconciliation of operating loss)/profit to net cash inflow from operating activities 6 months ended 6 months ended Year ended 31 July 2005 31 July 2004 31 January 2005 £'000 £'000 £'000 Operating profit before exceptional costs 374 417 1,690Exceptional costs (600) - -Depreciation charges 166 300 570Amortisation of goodwill 103 103 206Negative goodwill released - - (197)Profit on sale of tangible fixed assets (7) - (29)Decrease/(increase) in stocks 796 235 (203)Increase/(decrease) in debtors (1,306) (3,355) 1,523Increase/(decrease) in creditors 1,222 3,539 (1,050) ---------- ---------- ----------Net cash inflow from operating activities 748 1,239 2,510 ---------- ---------- ---------- 5 Reconciliation of net cash inflow to movement in net funds 6 months ended 6 months ended Year ended 31 July 2005 31 July 2004 31 January 2005 £'000 £'000 £'000 (Decrease)/increase in cash (458) 884 890Cash to repay finance leases and hire purchase contracts 17 59 99Loan repayments 980 - 800 -------- -------- -------- Movement in net funds in the year 539 943 1,789Net funds at beginning of period 1,853 64 64 -------- -------- --------Net funds at end of period 2,392 1,007 1,853 -------- -------- -------- This information is provided by RNS The company news service from the London Stock Exchange