Interim Results

Tandem Group PLC 17 October 2002 PRESS RELEASE 17 October 2002 TANDEM GROUP PLC Interim Results 2002 Tandem Group, the sports & leisure equipment group, and one of the largest manufacturers and distributors of bicycles in the UK, today announced its interim results for the six months ended 31 July 2002. RESULTS 6 months to 6 months to Year ended 31 July 2002 31 July 2001 31 January 2002 Unaudited Unaudited Audited £'000 £'000 £'000 Turnover 19,087 15,640 35,320 Operating profit before goodwill amortisation 639 475 1,372 KEY POINTS • Operating profit up 35% and turnover increased by 22%. • Sales of high specification bicycles exceeded expectations. • At Pot Black turnover and profits increased in line with targets and a positive contribution was made to the group results • Ben Sayers golf business achieved forecast for the period and investment was made in product development, sourcing and marketing. Commenting on these results, Chairman Graham Waldron, said: 'Despite difficult trading conditions, your Board is able to report a period of solid progress and prospects for a much improved current year. The Group's overriding priority is to maintain the improvement in shareholder value by increasing profitability and reducing debt. Your Board believes that the current financial year will mark another step forward in this objective.' For further information, please contact: Mervyn Keene, Finance Director, Tandem Group plc 01733 211399 David Haggie, Haggie Financial Limited 020 7417 8989 Interim Report for the 6 months ended 31 July 2002 Chairman's interim statement Introduction In my statement issued with the annual report in April I indicated that the results for the first quarter should show an improvement over the same period last year. I am therefore pleased to report that the results for the six months to 31 July 2002 show an increase of 35% in operating profit, before amortisation of goodwill, from £475,000 last year to £639,000. Turnover increased by 22%, rising from £15.6 million to £19.1 million. Review of interim results The Group now consists of three operating activities: Bicycles and bicycle The Group is one of the largest manufacturers of bicycles in the UK. The well accessories established brands of Falcon, Claud Butler, Townsend, British Eagle and Dawes are amongst the market leaders. A wide range of branded bicycle accessories is distributed throughout the UK. Indoor and outdoor Our Pot Black business manufactures and distributes home snooker and pool products and play equipment has a substantial market share in its sector with sales predominantly in the autumn/ winter. Since acquisition a range of outdoor play products, under the Activity Plus brand, has been introduced to supply spring and summer demand. Further indoor leisure products including table football and table tennis have also been added to the range. Golf equipment The Group widened its presence in sporting goods with the acquisition of the Ben Sayers golf business in February 2002. Ben Sayers manufactures and distributes golf clubs, bags and other accessories and is one of the oldest independent golf equipment manufacturers in the world with over 120 years of trading. Bicycle sales started the year well but the cool wet weather of May and June affected demand in what is normally a peak trading period. However, sales of high specification models in the upper price ranges exceeded budget and expectations. The opposite applied to the lower specification products where sales were affected by cheap imports and national grocery retailers taking market share from our traditional customer base. Turnover in the bicycle accessory business suffered in the early part of the year from supply chain management problems. Turnover and operating profits increased in line with our targets at the Pot Black business. Sales of the traditional snooker and pool products were encouraging, albeit in the quiet time of the year, and the growth in the sales and distribution of the outdoor play products was very encouraging. The increase in sales, together with improved margins and a tight control of costs enabled the Pot Black business to make a positive contribution to the Group's results, ahead of last year. A cautious approach was taken with our latest acquisition, the Ben Sayers golf business. Our assessment was that the business had suffered from under investment and lack of focus in recent years. In order to redress this, investment has been made in product development, sourcing and marketing. Favourable reviews in the trade and consumer press have assisted us in achieving our forecasts in the period to 31 July. Future prospects Our operations have strong management teams capable of taking the businesses forward. Firm financial controls along with prompt and detailed reporting ensure that challenges are dealt with and opportunities are taken. The increasingly competitive nature of the lower specification bicycle market and the change in UK distribution has been recognised by the Board and local management. Resources have recently been put in place, which will enable us to recover market share in this area during the next twelve months. The acquisition of Dawes in June 2001 has enabled the Group to grow a significant and profitable share of the middle and upper price end of the cycle market. Good product reviews and improved customer service gives us confidence that the Group will continue to grow sales and margins in this product sector. Further work is being carried out to improve the supply chain management for bicycle accessories, which together with investment in sales and marketing resources should enable this sector of the business to achieve full potential from the brands and customer base. Although the Christmas market has a concentration of sales of lower specification products, where there is intense competition, the full year performance of the bicycle business should show an increase over last year. Demand from major customers for snooker and pool tables in the second half looks strong, which should lead to the Pot Black business delivering a significant increase in profits. New products are being introduced to the Ben Sayers golf business, which together with improvements in the management of the business should increase turnover and operating profit in future years. We are looking to add further products or activities in the near future to improve the critical mass of the business. Summary Despite difficult trading conditions, your board is able to report a period of solid progress and prospects for a much improved current year. As we expand, our Corporate Social Responsibility Committee continues to monitor all Group members and suppliers to ensure that our ethical and environmental standards are achieved. The continuing encouraging performance of the Group gives the Board confidence to progress further by cautiously seeking additional businesses to acquire in the sports and leisure equipment market. Negotiations are taking place with a number of companies where we have identified opportunities for profitable growth through consolidation and operational synergies. We hope to be able to report progress on some or all of these potential acquisitions in the coming months. The Group's overriding priority is to maintain the improvement in shareholder value by increasing profitability and reducing debt. Your Board believes that the current financial year will mark another step forward in this objective. Graham Waldron Chairman 17 October 2002 Registered office: 9a South Street, Crowland, Peterborough PE6 0AH Consolidated profit and loss statement 6 months to 6 months to Year ended 31 July 2002 31 July 2001 31 January 2002 Unaudited Unaudited Audited £'000 £'000 £'000 Turnover Continuing operations 17,929 14,830 32,554 Acquisitions 1,158 788 2,734 Discontinued operations - 22 32 19,087 15,640 35,320 Operating profit Continuing operations 610 377 1,625 Acquisitions 29 76 (282) Discontinued operations - 22 (3) Release/utilisation of prior year provision - - 32 639 475 1,372 Amortisation of goodwill (92) (61) (147) Operating profit on ordinary activities before interest 547 414 1,225 Net interest payable (263) (367) (657) Profit before taxation 284 47 568 Taxation - - (4) Profit after taxation 284 47 564 Finance costs of non-equity shares (18) (33) (54) Retained profit for the period 266 14 510 Earnings per share Basic and diluted 0.081p 0.005p 0.17p Adjusted before goodwill amortisation Basic and diluted 0.109p 0.025p 0.22p Consolidated balance sheet 31 July 2002 31 July 2001 31 January 2002 Unaudited Unaudited Audited £'000 £'000 £'000 Fixed assets Intangible assets 3,509 2,762 3,056 Negative goodwill (95) - (71) Tangible assets 1,210 1,375 1,354 4,624 4,137 4,339 Current assets Stocks 7,824 6,461 6,347 Debtors 9,082 7,921 5,619 16,906 14,382 11,966 Creditors Amounts falling due within one year Bank overdrafts 5,040 5,875 4,137 Other creditors 10,667 10,399 8,946 15,707 16,274 13,083 Net current assets/(liabilities) 1,199 (1,892) (1,117) Total assets less current liabilities 5,823 2,245 3,222 Creditors Amounts falling due after more than one year 86 - 33 Provisions for liabilities and charges 92 129 97 Net assets 5,645 2,116 3,092 Capital and reserves Called-up share capital 11,174 9,214 9,214 Share premium account 5,397 5,103 5,040 Capital reserve 406 406 406 Merger reserve 63 - 63 Profit and loss account (12,472) (13,720) (12,770) Equity shareholders' funds 4,568 1,003 1,953 Non-equity minority interests 1,077 1,113 1,139 5,645 2,116 3,092 Notes to the interim report 1 Basis of preparation The interim financial statements have been prepared using accounting policies stated in the Group's report and accounts for the year ended 31 January 2002 and are unaudited. The summary of results for the year ended 31 January 2002 does not constitute full financial statements within the meaning of the Companies Act 1985. The report and full financial statements for that period have been filed with the Registrar of Companies and contain an unqualified audit report. 2 Earnings per share The calculation of basic and diluted earnings per share is based on the net profit for the period of £266,000 (2001 - £14,000) and on an average of 327,889,855 (2001 - 303,150,129) ordinary shares in issue during the period. 3 Movement in equity shareholders' funds 6 months to 6 months to Year ended 31 July 2002 31 July 2001 31 January 2002 £'000 £'000 £'000 Profit for the period 266 14 510 Re-classification of preference dividends 32 5 - Issue of share capital 2,317 231 231 2,615 250 741 Opening equity shareholders' funds 1,953 753 1,212 Closing equity shareholders' funds 4,568 1,003 1,953 This information is provided by RNS The company news service from the London Stock Exchange

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