Final Results

Tandem Group PLC 05 April 2004 TANDEM GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JANUARY 2004 Chairman's statement Group profit before taxation was £609,000 compared to £234,000 last year. Competition from imports and a relatively high manufacturing cost in the UK has necessitated the transfer of much of the Group's production to Asia. This has resulted in exceptional costs being incurred in the year. Operating profit before exceptional costs totalling £738,000 (2003 - nil), goodwill amortisation of £206,000 (2003 - £201,000) and negative goodwill released of £443,000 (2003 - nil), was £1,682,000 compared to £988,000 last year. I am pleased to report that our balance sheet continues to strengthen with net assets increasing to £7,300,000 as at 31 January 2004 compared with £5,431,000 as at 31 January 2003. The acquisition of MV Sports Group plc, a company that distributes sports and leisure products and toys, was completed on 8 April 2003. A non-core subsidiary of MV, Water Waiter Limited, was sold on 31 October 2003. MV has an office in Hong Kong dealing with product sourcing and direct sales to major retailers. Since acquisition, this operation has been strengthened, particularly in product sourcing and development areas. The office now works closely with all the Group's businesses to ensure that our imported product is produced to the highest standards with improved delivery and competitive prices to meet our customers' requirements. Falcon and Dawes We operate two cycle businesses, Falcon and Dawes. The Falcon business has the well recognised brand names of Falcon, Claud Butler, Townsend and British Eagle and continues to maintain an excellent reputation for product quality and service. Dawes is a long established brand, with its most successful models sold in the upper end of the market. It has strong awareness with retailers and the general public and continues to be a brand of choice for those consumers wishing to purchase more specialised trekking and touring bikes. Dawes maintained market share during the year and with reduced fixed costs, increased profitability before exceptional costs. Sales since 31 January 2004, both at Falcon and Dawes, have been encouraging with improved margins and reduced fixed costs. Pot Black Pot Black experienced considerable change during the year, the most significant of which was its move from the facilities that it had occupied for more than 25 years to modern and more efficient premises. Simultaneously, much of the snooker and pool table production was transferred to Asia. An exciting new range of cues and higher value snooker tables has been introduced and we are already seeing the benefit from sales of these new products in the first months of this new financial year. Ben Sayers The relocation of Ben Sayers to operate alongside Pot Black, reported in the interim statement, has now been completed allowing better utilisation of resources and reduced fixed costs. The 2004 range of products has been well received by customers and national retailer listings have been secured. MV Sports Group MV distribute products featuring high profile brand and character licences including Barbie, Bratz, Groovy Chick and Bang on the Door and a range of football training equipment under the Kickmaster brand. Since acquisition on 8 April 2003, the MV business has been able to reduce fixed costs and focus on product development and increasing sales and margins. Sales for the current year are ahead of last year and we expect that MV will have a successful year. Current Trading Trading to date is in line with expectations although the turnover and profitability of the Group is heavily biased to the second half of the year. The benefits from the actions that incurred the exceptional costs in the year to 31 January 2004 should be received during the current financial year with savings of fixed costs and improvements in margins. We welcome to the Group the employees of MV Sports who have shown a real commitment and enthusiasm since joining us. The opportunity should also be taken to thank the employees of the other businesses in the Group for their endeavours throughout the year. Graham Waldron Chairman 5 April 2004 Consolidated profit and loss account Year ended 31 January 2004 2004 2003 £'000 £'000 £'000 £'000 Turnover Continuing operations 37,421 37,317 Acquisitions 18,835 - -------- -------- 56,256 37,317 Discontinued operations 643 - -------- -------- 56,899 37,317 Cost of sales (40,965) (26,382) -------- -------- Gross profit 15,934 10,935 Normal operating expenses (14,252) (9,947) Exceptional operating expenses (738) - Net goodwill release/(amortisation) 237 (201) Total operating expenses (14,753) (10,148) -------- -------- -------- -------- Operating profit Continuing operations (269) 917 Acquisitions 1,248 (134) Discontinued operations 202 4 Profit on ordinary activities before interest 1,181 787 -------- -------- Net interest payable (572) (553) -------- -------- Profit on ordinary activities before taxation 609 234 Tax on profit on ordinary activities (3) 9 -------- -------- Profit on ordinary activities after taxation 606 243 Non equity minority interests (27) 151 -------- -------- Profit for the financial year transferred to reserves 579 394 -------- -------- Earnings per share Pence Pence Basic 1.64 1.57 -------- -------- Diluted 1.62 1.57 -------- -------- Adjusted 3.06 2.38 -------- -------- Consolidated balance sheet At 31 January 2004 2004 2003 £'000 £'000 Fixed assets Intangible assets 3,523 3,692 Negative goodwill (197) (197) -------- -------- 3,326 3,495 Tangible assets 1,396 1,153 -------- -------- 4,722 4,648 -------- -------- Current assets Stocks 7,593 7,133 Debtors 9,275 6,433 Cash at bank and in hand 1,965 - -------- -------- 18,833 13,566 -------- -------- Creditors - amounts falling due within one year Bank overdraft - 1,374 Other creditors 15,249 9,539 -------- -------- 15,249 10,913 -------- -------- Net current assets 3,584 2,653 -------- -------- Total assets less current liabilities 8,306 7,301 Creditors - amounts falling due after more than one year 1,006 1,801 Provisions for liabilities and charges - 69 -------- -------- Net assets 7,300 5,431 -------- -------- Capital and reserves Called up share capital 1,503 11,174 Share premium account 5,258 5,442 Merger reserve 1,036 63 Other reserves 5,363 406 Profit and loss account (6,609) (12,376) -------- -------- Equity shareholders' funds 6,551 4,709 Non-equity minority interests 749 722 -------- -------- 7,300 5,431 -------- -------- Consolidated cash flow statement Year ended 31 January 2004 Notes 2004 2003 £'000 £'000 Net cash inflow from operating activities A 4,436 9 ------- ------- Returns on investments and servicing of finance Interest paid (556) (544) Interest element of hire purchase rentals (16) (9) ------- ------- Net cash outflow from returns on investments and servicing of finance (572) (553) ------- ------- Taxation (3) - ------- ------- Capital expenditure Purchase of tangible fixed assets (351) (214) Sale of tangible fixed assets 35 48 ------- ------- Net cash outflow from capital expenditure (316) (166) ------- ------- Acquisitions and disposals Purchase of subsidiary undertakings (449) (1,170) Net cash at bank and in hand acquired with subsidiary 185 - Disposal of subsidiary undertakings 1,245 - Purchase of subsidiary company preference shares - (140) ------- ------- Net cash inflow/(outflow) from acquisitions and disposals 981 (1,310) ------- ------- Net cash inflow/(outflow) before financing 4,526 (2,020) ------- ------- Financing Ordinary shares issued - 2,450 Expenses incurred in issue of ordinary shares (193) (88) Repayments of amounts borrowed (880) - New loans - 2,500 Capital element of hire purchase rentals (114) (79) ------- ------- Net cash (outflow)/inflow from financing (1,187) 4,783 ------- ------- Increase in cash B & C 3,339 2,763 ------- ------- Notes to consolidated cash flow statement A. Reconciliation of operating profit to net cash inflow from operating activities 2004 2003 £'000 £'000 Operating profit 1,181 787 Depreciation charges 637 384 Goodwill amortisation 206 201 Goodwill release (443) - Profit on sale of tangible fixed assets (4) (13) Decrease/(increase) in stocks 906 (457) Increase in debtors (1,209) (800) Increase/(decrease) in creditors 3,231 (65) Utilisation of provisions on discontinued activities (69) (28) ------- ------- Net cash inflow from operating activities 4,436 9 ------- ------- B. Reconciliation of net cash inflow to movement in net funds/(debt) 2004 2003 £'000 £'000 Increase in cash 3,339 2,763 Cash to repay finance leases and hire purchase contracts 114 79 Bank loan 800 (2,500) ------- ------- Changes in net debt resulting from cash flows 4,253 342 New finance leases - (231) Lease and hire purchase obligations acquired with subsidiary (65) - Loan acquired with subsidiary (80) - ------- ------- Movement in net debt in the year 4,108 111 Net debt at 1 February (4,044) (4,155) ------- ------- Net funds/(debt) at 31 January 64 (4,044) ------- ------- C. Analysis of net debt At 1 February Cash Non-cash 31 January 2003 Flow Acquisitions Flow 2004 £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand - 1,965 - - 1,965 Bank overdraft (1,374) 1,374 - - - -------- -------- --------- ------- -------- (1,374) 3,339 - - 1,965 Bank loan due within 1 year (800) 800 - (800) (800) Bank loan due after 1 year (1,700) - - 800 (900) Loans acquired with subsidiary - - (80) - (80) Hire purchase creditors (170) 114 (65) - (121) -------- -------- --------- ------- -------- (4,044) 4,253 (145) - 64 -------- -------- --------- ------- -------- Notes to the preliminary results 1. This preliminary announcement is not the Group's statutory accounts but extracts therefrom and is prepared on the basis of the accounting policies as used in the 2003 financial statements. Statutory accounts dealing with the financial year ended 31 January 2003 have been delivered to the Registrar of Companies, however, statutory accounts dealing with the financial year ended 31 January 2004 have not yet been delivered. The auditors have reported on the accounts for the financial year ended 31 January 2003 and 31 January 2004. Their reports were unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. 2. The statutory accounts for the year ended 31 January 2004 will be delivered to the Registrar of Companies following the Group's annual general meeting. 3. Net goodwill release/(amortisation) comprises goodwill amortisation of £206,000 (2003 - £201,000) and negative goodwill released of £443,000 (2003 - £nil). 4. No dividend on the ordinary shares is being proposed (2003 - £nil). 5. Non-equity minority interests comprises dividends waived amounting to £38,000 less dividends accrued of £65,000. 6. Earnings per share 2004 2003 £'000 £'000 Profit for the year used for basic and diluted earnings per share calculation 579 394 Net goodwill (release)/amortisation (237) 201 Exceptional operating expenses 738 - -------- --------- Profit for the year before goodwill amortisation and exceptional operating expenses used for adjusted earnings per share calculation 1,080 595 -------- --------- Number Number Weighted average number of ordinary shares in issue during the year used for basic and adjusted earnings per share calculation 35,333,215 25,046,519 Weighted average number of shares under option 1,310,959 - Number of ordinary shares that would have to be issued at fair value (942,252) - ---------- ----------- Weighted average number of ordinary shares in issue during the year used for diluted earnings per share calculation 35,701,922 25,046,519 ------------ ----------- pence pence Earnings per share Basic 1.64 1.57 Diluted 1.62 1.57 Adjusted 3.06 2.38 The adjusted earnings per share, which excludes net goodwill release of £237,000 (2003 - £201,000 amortisation) and exceptional items of £738,000 (2003 - £nil), is calculated to allow shareholders to gain a clear understanding of the trading performance of the Group. Earnings per share for 2004 and 2003 have been restated to take account of the share consolidation which was approved by shareholders on 18 March 2003. 7. The Annual Report and Accounts will be posted to shareholders shortly. 8. The Annual General Meeting will be held at 11:00 a.m. on 10 June 2004 at Eversheds LLP, 1 Royal Standard Place, Nottingham NG1 6FZ. 5 April 2004 This information is provided by RNS The company news service from the London Stock Exchange

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