Worthington Grp Regulatory News (WRN)

13 Jul 2007 14:03

Worthington Group PLC13 July 2007 Worthington Group plc ("the Company") Results for the Year Ended 31 March 2007 13 July 2007 The year ended 31 March 2007 has witnessed progress in the rationalisation ofthe Groups assets and the simplification of the historic structure of thebusinesses. The period produced a profit of £145,000, but after allowing for nonrecurring provisions and write offs explained below relating to the disposal ofthe Joint Venture, resulted in an overall loss of £331,000 (2006: £274,000profit). The net asset value of the Group now stands at £2,586,000. (2006:£2,985,000). During the year we considered several propositions for the future development ofthe Group, some of which came close to final negotiations. We are continuallydriven to seek opportunities now that we have a more defined corporate profile,notwithstanding the continuing problem of the pension deficit. Good propositionsare not easy to find and must be sustainable. During the year we completed the sale of two freehold properties at Fence Avenueand Eccleshill for £2,750,000 and £1,050,000 which eliminated all borrowings andleft us with a net cash position at the year end of £882,000. £250,000 of thesale proceeds relating to the Eccleshill site were deferred and secured on thesite via a second charge. We expect to receive this amount plus substantialinterest shortly. Shareholders will recall that we established a joint venture agreement betweenour former subsidiary Worthington Manufacturing Ltd ("WML" )and Jessop and BairdHong Kong ("JBHK") in July 2005. The plant and equipment of WML was sold at thethen book value of £400,000 to the Joint Venture ("JV") and we loaned £200,000to it taking up a 49% stake. JBHK also loaned £200,000 to the JV for their 51%interest and both parties advanced a further £100,000 each in additional loans -with an option for the JV to call on a further £100,000 each. Separately afurther £100,000 of plant owned by WML in Morocco was rented to the JV for£10,000 per annum over 10 years. The transaction allowed us to realise the stockand book debts of WML in an orderly manner and it was always our intention tosell our 49% stake in September 2006 with a simultaneous repayment of ouroutstanding loans. In September 2006 it became clear, for a variety of reasons, that the bestsolution was to renegotiate this sale option and agreement. There was a certainambiguity in the original deal that resulted in us having to meet redundancycosts, which had not been anticipated and for which we then became responsible.A charge of £52,000 has been included in the income statement for these costs.By September 2006 we had loaned £375,000 in total to the JV and to sweeten thetransaction it seemed prudent to accept a £75,000 write off in order to securethe sale and repayment of the remaining £300,000. This deal was completed inJanuary 2007 with the loan capital to be repaid in monthly instalments of£10,000 plus interest However, I have to inform shareholders that this agreement has not beenfulfilled and no repayments have been made, either of interest or capital todate. Accordingly, in light of this, it seems prudent for us to make provisionfor the £300,000 of loans and the remaining plant rented to them in Morocco witha book value of £61,000. These provisions and write offs have resulted in anoverall non-recurring loss on disposal relating to the JV of £476,000 which isincluded in the income statement. This has been an unhappy transaction, despite our high hopes that the JointVenture would really take off thus justifying our confidence in the businessacumen of our Hong Kong partners who are very heavily involved in this field ofactivity. On the plus side however the transaction has enabled us to realisenear full value of our subsidiary's stocks and debtors (in excess of £1.2m)which otherwise might not have been possible. We currently retain a 44% shareholding in Trimmings by Design Limited (a formersubsidiary) and their results have to be consolidated within our accounts. Thebusiness is trading profitably in the current year and we have included in thisperiod our share of after tax profits and goodwill impairment, which amounts to£33,000. The business is now operating on one site having sold its Leekproperty. It continues to trade profitably and is actively looking foracquisitions. A management charge of £153,000 was received in the year. Therewere no dividends declared this year. The Group's 34 non-trading or dormant subsidiaries have now been placed intoMembers Voluntary liquidation or have been struck off completing the restructureof the Group. Turning to our remaining Keighley site, I am pleased to report that we have nowre-let the vacant area at the site following the loss of a tenant who ceasedtrading in November 2006. We continue to explore the best ways to redevelop thesite and obtain planning consent. The current rental income from our Keighley site and the interest on both ourcash and the loan from Trimmings by Design are just sufficient to meet theestimated ongoing costs of the head office. This includes the annual pensionscheme administration costs which amounted to £48,000 (2006:£59,000) butexcludes the annual payments made to the scheme to reduce the deficit whichamounted to £257,000 (2006: £250,000). The former Jerome retirement benefit scheme is the only remaining scheme thatrequires funding by the Group. The deficit has once again reduced in the year by£148,000 to £1,803,000 ( 2006: £1,951,000). The reduction in the year would havebeen far greater had it not been for the increases applied to the estimatedliabilities of the scheme to reflect current mortality rates. In accordance withstandard practice these have not been updated since the last full actuarialvaluation carried out on 5 April 2004. The scheme actuaries are presentlyperforming the tri-annual review of the scheme as at 5 April 2007 and we haveaccordingly updated the mortality rates used in the IAS 19 calculations to moreclosely reflect the rates that will be used in the review. The results of thereview will form the basis of negotiations with the Trustees as to the futurelevel of contributions that are required to the scheme. The Board continues to monitor the investment performance of the scheme togetherwith rental income and head office costs which are viewed as the key performanceindicators for the Group at this time. We are continuing to turn the remaining assets of the Group into cash and arepursuing suitable investment opportunities whilst keeping costs to a bareminimum. J C Dwek CBE Chairman 13 July 2007 Worthington Group plc Consolidated Income Statementfor the year ended 31 March 2007 2007 2006 Notes £'000 £'000Continuing OperationsRevenue 2 313 140Cost of sales - -Gross profit 313 140 Administrative expenses (277) (291)Other income 3 - 714Operating profit 36 563Investment revenues 4 107 53Finance costs 5 (48) (213)Share of post-tax profits/(losses) ofassociates 10 50 (121)Loss on disposal of interest in associates 6 (476) -(Loss)/ profit on continuing operations beforetaxation (331) 282Tax on continuing operations 7 - -(Loss)/ profit on continuing operations aftertaxation (331) 282Loss after taxation from discontinuedoperations 10 - (8)(Loss)/profit after taxation for the current (331)year 274 (Loss)/earnings per ordinary Share - basic and fully diluted 8 (2.8p) 2.3p Earnings per ordinary share from discontinued operations is not disclosedseparately as the amounts are immaterial. No note of historical cost income and expenses has been prepared as thehistorical cost income and expenses are the same as detailed in the above incomestatement. All items above from turnover to operating profit are derived from continuingoperations. Consolidated Balance Sheet At 31 March 2007 Note 2007 2006 £'000 £'000 £'000 £'000 Non-current assets Tangible assets - Property 1,800 1,800- Plant and machinery - 71 Investments: Interest in associated undertakings 724 646 2,524 2,517Current assets Current asset investments - 3,750 Trade and other receivables due within 1 321 387year Trade and other receivables due after more 800 805than 1 year Cash at bank and in hand 882 - 2,003 4,942 Total assets 4,527 7,459 Current liabilities Trade and other payables 138 493 Bank overdrafts and loans - 2,030 138 2,523 Non-current liabilities Retirement benefit obligation 1,803 1,951 1,803 1,951Total liabilities (1,941) (4,474) Net assets 2,586 2,985 Equity Called up share capital 11,807 11,807 Share premium account 9,836 9,836 Capital redemption reserve 128 128 Revaluation Reserve - 624 Profit and loss account (19,185) (19,410) Total Equity 2,586 2,985 Statement of Recognised Income and Expense Group Company Group Company 2007 2006 2007 2006 £'000 £'000 £'000 £'000 Retained (loss)/profit for the financial year (331) 274 (357) (311)Revaluation of property - 624 - -Actuarial gain/(loss)on retirement benefitobligation (82) 167 (82) 167Disposal of associate 14 - - -Total recognised (losses)/gains for the year (399) 1,065 (439) (144) ReconciliationOpening reserves at 1 April 2,985 1,920 2,700 2,844Total recognised (losses)/gains for the year (399) 1,065 (439) (144) Closing reserves at 31 March 2,586 2,985 2,261 2,700 Following a review of the 2006 financial statements an error was found in therestated balance sheet presented in respect of the 2005 comparatives re-statedto reflect the transition from UK GAAP to IFRS. A revised reconciliation of themovements in shareholders' funds and between IFRS and UK GAAP has been includedin note 9. Consolidated Cashflow Statementfor the year ended 31 March 2007 2007 2006 £'000 £'000 Operating profit 36 563Operating loss from discontinued activities - (8)Depreciation and revaluation adjustments 10 (689)Profit on disposal of investment property and plant (50) (218) Write off of associate (52) -Movement in trade and other receivables 59 1,337Movement in trade and other payables excluding pensionobligation (67) (748) Payments to Pension scheme (257) (250) Net cash outflow from operating activities (321) (13) Cash flow from financing activitiesInterest paid (21) (158)Proceeds from short term loans - 238Repayment of short term loans (288) -Repayment of Bank borrowings (1,500) (71)Repayment of hire purchase - (6)Net cash (used) /generated by financing (1,809) 3 Cashflow from investing activitiesInterest received 67 53Proceeds from sale of investments 3,550 -Proceeds on disposal of plant and equipment - 403Loans to associates (75) (300)Dividends received from associated undertakings - 44 Net cash generated by investing activities 3,542 200 Increase in cash and cash equivalents 1,412 190 Notes forming part of the preliminary announcement for the year ended 31 March2007 1. Basis of preparation The financial statements of the Group and the Company have been prepared inaccordance with International Financial Reporting Standards (IFRS) as adopted bythe European Union and as applied in accordance with the provisions of theCompanies Act 1985. The principal accounting policies adopted by the Group areset out in the Group's Annual Report and have been applied consistentlythroughout the reporting period. The financial information in this announcement, which was approved by the Boardof Directors on 13 July 2007, does not constitute the Company's statutoryaccounts for the years ended 31 March 2007 or 2006, but is derived from theseaccounts. Statutory accounts to 31 March 2006 have been delivered to the Registrar ofCompanies and those for 2007 will be delivered following the Company's annualgeneral meeting. The auditors have reported on these accounts; their reportswere unqualified and did not contain statements under S237(2) or (3) of theCompanies Act 1985. The financial information has been prepared on the historical cost basis,modified to include the revaluation of certain fixed assets. 2. Segmental Analysis The following is an analysis of the revenue and results for the period, analysedby business segment, the Group's primary basis of segmentation. Revenue Revenue Result Result Revenue Result 30/09/05 30/09/05 2007 2006 2007 2006 2005 2005 £'000 £'000 £'000 £'000 £'000 £'000 Continuing Operations Property 313 140 36 563 67 (110) Discontinued Operations Textiles - 1,456 - (8) 1,335 59 Total revenue and 313 1,596 36 555operating profitfrom continuing anddiscontinuedoperations 1,402 (51) 3.Other income 2007 2006 £'000 £'000 Write down of current asset investment - (354)Gain on revaluation of Keighley property - 1,068 Exceptional gain - 714 4.Investment Revenues 2007 2006 £'000 £'000 Loan note interest 52 53Interest on bank deposits 55 - Exceptional gain 107 53 5.Finance Costs 2007 2006 £'000 £'000 Bank loans and overdrafts repayable within 5 years 21 158 Pension scheme net finance charge 27 55 Exceptional gain 48 213 6.Loss on disposal of interests in associates 2007 2006 £'000 £'000 Loans to associate written off 75 -Provision against loans to associate 300 -Fixed asset impairment provisions 61 -Redundancy and other costs of disposal 52 -Share of net liabilities disposed (12) -Net cash outflow from operating activities 476 - 7.Taxation No corporation charge has been provided for 2007 or 2006 as a result of theavailability of various reliefs. 8.Earnings per share The earnings 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 was 11,807,013 (2006: 11,807,013) andthe loss after taxation was £331,000 ( 2006: profit £274,000). There is no difference between the basic and diluted loss per share in eitheryear. 9.Re-stated reconciliation of movements in shareholders' funds and between IFRSand UK GAAP. The tables below set out the re-stated reconciliation between the IFRSaccounting standards adopted on 1st April 2005 and the UK GAAP accountingstandards previously used in the preparation of the Group's accounts. Group Group 31 March 2006 31 March 2005 £'000 £'000 Profit/(loss) before Taxation under IFRS 274 (1,310) Retirement benefit adjustments - (199)Profit/(loss) before taxation under UK GAAP 274 (1,509) Net AssetsNet assets under IFRS 2,985 1,920Prior year adjustment - 95Retirement benefit obligation - 2,313 Net assets under UK GAAP 2,985 4,328 Capital and ReservesShareholders funds under IFRS 2,985 1,920Prior year adjustment - 95Retained earnings adjustment - 2,313 Shareholders funds under UK GAAP 2,985 4,328 Group Group 31 March 2006 31 March 2005 £'000 £'000Reconciliation of movements in shareholders' funds Opening shareholders' funds at 1 April under IFRS 1,920 3,169Prior Year adjustment - (95)Opening shareholders' funds at 1 April under IFRS as re-stated 1,920 3,074 Revaluation of Properties 624 -Movement in retirement benefit reserve 167 156Profit/ ( loss) after tax for current year 274 (1,310) Closing shareholders' funds at 31 March under IFRS 2,985 1,920 The prior year adjustments in the Group accounts relate to provisions againsthistoric balances in dormant subsidiaries which came to light when preparing toliquidate them. 10.Comparative information The comparatives to the Income Statement have been adjusted to be fullycompliant with IFRS. To be more specific, both the loss after tax fromdiscontinued operations and the share of the result of associates are shown assingle line items for £8,000 and £121,000 respectively in these financialstatements. In 2006's financial statements these were disclosed as follows:- (i)Loss after tax from discontinued operations £'000 Revenue 1,456 Cost of sales (1,019) Administrative expenses (445) Loss after tax (8) (ii)Share of result of associate £'000 Share of loss of associates (90) Share of interest of associates (31) Share of losses of associates (121) This change in presentation does not affect the reported result in 2006. 11.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 plc Joe Dwek CBE, Chairman Tel: 01625 549082 This information is provided by RNS The company news service from the London Stock Exchange