Worthington Grp Regulatory News (WRN)

18 Jul 2005 11:39

Worthington Group PLC18 July 2005 Worthington Group plc Results for the Year Ended 31 March 2005 After a year of further rationalisation, the outcomes of which are reflected inthe results, the Group now consists of three properties and investments inWorthington Manufacturing at Macclesfield and Trimmings by Design in Derby, towhich I refer later in this statement, and has thus contracted to a positionwhere there is limited downside risk and the opportunity to encash the propertyassets. The cash generation expected should now finally make the Group a moreattractive proposition for a merger or reversal. Worthington Manufacturing We vacated the newly built Macclesfield premises in October 2004, moving thebusiness to rented premises at Lyme Green whilst expanding the use of ourwarehouse facilities in Morocco to include some production using plant exportedfrom Macclesfield. This gave for a more compact and efficient operation,compatible with reduced demand for UK manufacture of the products, in the faceof aggressive and unrelenting competition from the Far East. The first fewmonths following the move were profitable, justifying the considerabledownsizing, but the early part of 2005 witnessed a further decline in theirfortunes as more goods were made offshore and a further rationalisation was thennecessary. In any event, the manufacture of textile products in the UK has little futurecurrently, with the competition now accelerating from overseas production. Wehad hoped for a longer time scale to maintain our production but, in recentmonths, it has become clear that our expectations for continued viability werenot to be realised and difficult decisions had to be taken. Accordingly we have entered into a joint venture/partnership with Jessop & Baird(Hong Kong) Ltd in Hong Kong and China, which is a complicated arrangement, andwill continue until September 2006 when the lease at Lyme Green will come to anend. We will be transferring the goodwill and the remaining plant andmachinery, at cost, to the newly formed joint venture company, of which we willhave a minority interest, with the expectation that the Far East connection andthe offshore production can yield a successful investment for us. The finaloutcome of this venture depends wholly on whether or not it is successful.. Weshall be retaining all the other assets and liabilities, which should releasesome £500,000 currently employed in the business, which will be applied toreduction of borrowings. The move to Lyme Green and the transfer of assets to the joint venture haveproduced some exceptional losses which include £215,000 of redundancies,£629,000 for asset write offs and £28,000 of moving costs, added to which thebusiness itself lost £198,000 during the year. Trimmings by Design By their standards this was a difficult year as they are witnessing morecompetition from abroad, but they have a unique product and are looking torationalise their production facilities in the UK and purchase more fromoverseas to satisfy their customer catchment area. They have a strong brand andthere is no reason why they should not be successful in this new form. Properties We have granted an option to a Builder, subject to planning permission, for thesale of the site at Eccleshill, Bradford, which should show a profit over bookvalue of some £600,000 (no tax being payable). The sales price is in the regionof £1 million with all the due diligence having now been done on the site by theBuilder. Planning permission approval should be available within the next 3-4months. The newly built premises at Fence Avenue, Macclesfield has been marketed at aprice of £3.1 million and there has been reasonable interest. There are fewsimilar sites available in South Manchester and the prospects of a sale in thenext few months do not look unreasonable. The site at Keighley is more problematical, as initial discussions with theLocal Authority have indicated that they would not permit a residentialdevelopment on that site as it is zoned in an industrial area. We are of courseconsidering our position and whether to put in planning application and appealany unfavourable response. In the meantime we are marketing this site, as is,for some £2.5 million. We have tenants producing rental income for the next twoyears, so we can take a more leisured approach whilst we explore the optionsavailable to us. Directors Following the Joint Venture arrangements, John Smith, who was Managing Directorof Worthington Manufacturing, has retired from the Group Board and subsidiariesto commit himself entirely to the future of that new venture. Roger Green, FCA, who has been a Non-Executive Director since April 1999, andwho was formerly Finance Director at Bodycote International Plc, will also beleaving the Board at the AGM and we shall seek to make an appointment of a newNon-Executive Director in the near future. He has made an excellent contributionto our affairs. To both of these colleagues I would like to extend our grateful thanks, on yourbehalf, for their considerable efforts and commitment to the Group, during avery difficult period when we have had to cope with the vagaries and volatilityof a fast shrinking textile business, absorb the pension deficit and write offmonies which were due to us from the collapsed Independent Insurance Company.It is hard to recall a moment when all of us have not had continually to dealwith crisis management. Pensions On the FRS17 basis the net deficit is now down to £2,313,000. During the yearreduced contributions to the pension scheme were agreed between the Company andthe Trustees, following the 2004 actuarial valuation, which showed the Companywas ahead of the agreed plan to clear the deficit over a ten year period.Contributions for 2005/6 have been agreed at some £250,000 per annum, increasingby 3% per annum. Besides Head Office costs, which have been kept to a minimum, the pensioncontributions are the only other cash demand annually on the Company, aproportion of which will be funded by the rental income from Keighley. Move to AIM After careful consideration, the Board has concluded that the interests of theGroup are best served by a move from the Official List to AIM. It is felt thatthe AIM market is more appropriate given the size of the Group and the transfershould also help reduce the annual fees. The Board has today commenced the process to affect this transfer to AIM.Notice will shortly be given of our intention to cancel the listing of the Groupshares on the Official List and application will be made for the shares to beadmitted to trading on AIM. General Clearly, with the sales of our properties and the subsequent repayment ofborrowings, the Company will in the end have a net cash balance and will saveinterest charges incurred, which for the year just ended amounted to some£137,000. These results can only be viewed in the light of the expectations for the Groupgoing forward which has now, finally, been tidied up, but not without furtherunexpected costs from former subsidiaries, which emerged during the year, andwhich have had to be dealt with through the profit and loss account.Furthermore, we are now in the process of winding up our dormant subsidiariesand settling the tax affairs all of which will incur some costs. In truth, the last few years have not been easy for the Company. Some of ourproblems were undoubtedly inherited, others forced on us by changing marketconditions. However, it is no use looking back, what we have to do now is takeadvantage of our vastly improved situation. J C Dwek CBE Chairman 18 July 2005 Worthington Group plc Consolidated Profit & Loss Accountfor the year ended 31 March 2005 2005 2004 £'000 £'000 Turnover 4,812 9,197 Cost of sales (3,429) (6,928)Gross profit 1,383 2,269 Distribution costs (285) (698)Administrative expenses excluding (1,759) (2,715)exceptional itemsAdministrative expenses exceptional items (872) (938) (2,631) (3,653) ______ ______Group operating loss (1,533) (2,082) Share of operating profits of associatedundertaking 149 137 Total operating loss: Group and share ofassociated undertaking (1,384) (1,945) Profit/(loss) on disposal of fixed assets 37 (58) Loss before interest and taxation (1,347) (2,003) Interest payable and similar charges: Group (86) (80) Share of interest of associatedundertaking (32) (39) Loss on ordinary activities before taxation (1,465) (2,122) Taxation _ 42Share of taxation of associated undertaking (44) (49) Loss on ordinary activities after taxation (1,509) (2,129) Dividends payable - - Retained loss for the year (1,509) (2,129) Loss per share-basic- before exceptional items and disposals (5.4p) (9.6p)- after exceptional items and disposals (12.8p) (18.0p) Worthington Group plc Consolidated Balance SheetAt 31 March 2005 2005 2004 £'000 £'000 £'000 £'000 Fixed assetsTangible assets 1,013 5,367Investments: Interest in associated undertaking 811 803 811 803 1,824 6,170Current assetsCurrent asset investments 3,480 -Stock 283 690Debtors: amounts falling due within one year 1,172 1.775Debtors: amounts falling due after more than one 869 946yearCash at bank and in hand 1 1 5,805 3,412 Creditors: amounts falling due within one year (1,980) (2,171) Net current assets 3,825 1,241 Total assets less current liabilities 5,649 7,411 Creditors: amounts falling due after more than one (1,321) (1,574)year Net assets 4,328 5,837 Capital and reservesCalled up share capital 11,807 11,807Share premium account 9,836 9,836Capital redemption reserve 128 128Profit and loss account (17,443) (15,934) Shareholders' funds 4,328 5,837 Worthington Group plc Consolidated Cashflow Statementfor the year ended 31 March 2005 2005 2004 £'000 £'000 £'000 £'000 Net cash (outflow)/inflow from operating activities (230) 714 Dividends from associates 66 66 Returns on investments and servicing of finance:Interest paid (84) (73)Interest element of finance lease rental (payments) (2) (7) (86) (80) Capital expenditure and financial investment:Purchase of tangible fixed assets (net of finance (38) (220)leases)Sale of tangible fixed assets 121 521Investment in associated undertaking - (35) 83 266 Net cash (outflow)/ inflow before financing (167) 966 Financing:Capital element of finance lease rental payments (28) (72)Debt due within one year:Repayments of long term borrowings (250) (246) (278) (318) (Decrease)/increase in cash in the year (445) 648 Worthington Group plc Notes forming part of the preliminary announcement for the year ended 31 March2005 1. Accounts The financial information included within the preliminary announcement has been prepared on the basis of accounting policies consistent with those set out in the annual report to shareholders for the year ended 31 March 2004. The financial information included within the preliminary announcement does not constitute the group's audited statutory accounts for the financial year ended 31 March 2005. The financial information for 2004 is derived from the statutory accounts for that period. Full audited accounts of Worthington Group plc in respect of that period (which received an unqualified audit opinion and did not contain a statement under either section 237 (2) or (3) of the Companies Act 1985) have been delivered to the Registrar of Companies. The statutory accounts for 2005 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's annual general meeting. The board of directors approved this preliminary announcement on 18 July 2005. The Group currently meets its day to day working capital requirements through the support of its bankers. The Bank has indicated that it is not committed to renewing the Group's facilities when they are reviewed on 2 January 2006. The Chairman has indicated that in the event that these facilities are not renewed he will introduce the necessary funds to support the Group. On this basis the Directors consider it appropriate to prepare the financial statements on a going concern basis. 2. Turnover, Profits and Net Assets Turnover and profit before taxation is attributable to the Group's principal activity. Turnover is derived from the following markets: 2004 2004 £'000 £'000 United Kingdom 2,150 4,770Eire and the rest of Europe 365 326Rest of the World 2,297 4,101 4,812 9,197 A further analysis of turnover and pre-tax profits originating overseas has not been given since, in the opinion of the directors, the amounts involved are not material. The principal activities of the Group are the manufacture, importation and distribution of textile components. These are regarded as a single activity for segmental reporting purposes. The net assets of the Group over this activity are as follows: 2005 2004 £'000 £'000 Manufacture, importation and distribution of textile components 4,328 5,837 Worthington Group plc Notes forming part of the preliminary announcement for the year ended 31 March2005 (Cont.) 3. Exceptional items 2005 2004 £'000 £'000Redundancy costs 215 258Impairment of fixed assets 629 542Other closure costs 28 138 872 938 4. Taxation 2005 2004 £'000 £'000 Adjustments in respect of prior periods - 42Share of tax in associated undertaking (44) (49) (44) (7) 5. Loss per share The loss per share has been calculated using the weighted average number ofshares in issue during the relevant financial periods. The weighted averagenumber of shares in issue during the year after adjusting for the share capitalre-organisation was 11,807,013 (2004: 11,807,013) and the loss after exceptionalitems and taxation was £1,509,000 (2004: £2,129,000). The loss per share beforeexceptional items has been disclosed in the accounts for the year ended 31 March2005. There is no difference between the basic and diluted loss per share in eitheryear. 6. Reconciliation of operating loss to net cash inflow from operating activities 2005 2004 £'000 £'000 Operating loss before exceptional costs (661) (1,144)Exceptional costs (872) (938) Operating loss (1,533) (2,082)Depreciation/impairment and amortisation of goodwill 819 980Provision against investment - 35Decrease in stocks 407 193Decrease in debtors 680 5,024Decrease in creditors (603) (3,436) Net cash (outflow)/ inflow from operating activities (230) 714 Worthington Group plc Notes forming part of the preliminary announcement for the year ended 31 March2005 (Cont.) 7. Copies of the Annual Report Copies of the Annual Report are available from the Company Secretary at theregistered office which is situated at Suite 1, Courthill House, 66 Water Lane,Wilmslow, Cheshire, SK9 5AP. Enquiries: Worthington Group plcJoe Dwek CBE, Chairman Tel: 01625 549082 This information is provided by RNS The company news service from the London Stock Exchange