Final Results
Volex Group PLC
02 June 2004
Embargoed until 7.00am. 2 June 2004
VOLEX GROUP p.l.c.
Preliminary Announcement of Group Results for the Financial Year
Ended 4 April 2004
Volex Group p.l.c., the international electrical and electronic cable assemblies
group, today announces its preliminary results for the financial year ended 4
April 2004.
Financial Highlights:
• Sales increased by 4% (7% excluding foreign currency impact) to £238m
• H2 sales increased 11% over H1
• Operating profit of £2.5m (1) (before goodwill amortisation and
exceptional operating items)
• Cash generation from operating activities:
- pre exceptional cashflows £8.1m
- post exceptional cashflows £5.6m
• Net borrowings reduced by over £7m to £32m
• All banking covenants met and financing in place to 30 June 2005
• Basic loss per ordinary share (39.1)p (2003 - (44.3)p)
(1) The operating loss after charging goodwill amortisation and exceptional
operating items was a reported operating loss of £4.5m (2003 - loss of £9.0m).
The Chairman of Volex, Dom Molloy, commented:
'Our focus on aggressive cost alignment, cash generation and debt reduction,
while broadening the customer and market base of the business, is reflected in
the positive underlying operating results for the year. The market environment
has improved, so has our ability to capitalise on opportunities developed and
presented.
The financial structure of the Group continues as a priority for the Board.
Assuming a continuation of the current positive market environment, the steps
already taken to establish a more appropriate, cost effective and efficient
operation with improved margins throughout, will enable the Group to realise
enhanced returns for our shareholders. '
Ends
For further information, please contact:
Volex Group p.l.c. Today: 020 7067 0700 Thereafter: 01925 830101
Dom Molloy, Chairman
John Corcoran, Group Chief Executive
David Hudson, Group Finance Director
Weber Shandwick Square Mile 020 7067 0700
Chris Lynch / Josh Royston
VOLEX GROUP p.l.c.
Preliminary Announcement of Group Results for the Financial Year Ended 4 April
2004
The results for the financial year ended 4 April 2004 reflect achievement of the
year's targets of improving profitability and generating cash to further reduce
debt. We have continued our strategy to drive cost from the business by
leveraging our global profile of low cost manufacturing facilities and, after
three difficult years, the Group is starting to realise these benefits in an
improving market environment.
Despite the market uncertainty and caution that prevailed through most of the
period, the Group achieved successive quarter on quarter improvements in revenue
and profit throughout the financial year. Action continued across our high-cost
locations to migrate products to more cost-effective facilities with the result
that 85% of production is now supported from low-cost regional centres. While
this did affect the trading performance of the Group in the first half, the
benefits of these actions were realised in the second half of the financial year
and along with an 11% revenue improvement over H1, the Group exits the reported
year at much improved underlying operating profit performance.
Having generated £8.1m(2) of cash from operations before exceptional outflows in
the course of the year, £2.5m of which was in respect of the previously
announced cessation of manufacturing in Ireland, the level of debt has been
further reduced and over £18m has now been taken from the debt level over the
last two years. All banking covenants were met and financing is in place for the
new business year. The financial health of the Group was a key priority and it
remains our prime focus.
(2) Cash from operations after exceptional operating cashflows is £5.6m
(2003 - £13.1m)
Global Markets
The cable assembly business continues to reflect a challenging set of dynamics:
consolidation and outsourcing, dramatic reduction by our customers of their
supply base and the shift from regional to global supply sourcing. In response,
the Group has developed a stronger global dimension across the strategically
important functions of supply chain management, global account management and
information technology. The market is improving. Our customers' businesses are
improving reflected in a healthier order book for the Group. However, the
experiences of our customers through the most sustained downturn in the
industry's history are manifested in a short-term approach to demand creation
and fulfilment, lead-times and service requirements. Volex continues to use its
global presence, its product breadth and its account management strength to
improve its offering to existing and potential customers. Our focus on meeting
customer requirements wherever they need to be supported continues to position
the Group well within the industry.
The Group experienced a much more stable demand environment through the year and
in the second half witnessed a positive level of growth in all of its major
sectors. This was evidenced in a more robust order book, albeit the demand
needed to be satisfied in a shorter time period.
The telecoms market recovered slowly from its dramatic decline in the recent
financial years as operators re-instituted investment for network expansion and
to offset concerns on network degradation. The return to financial health for
most of our telecom OEM (Original Equipment Manufacturers) customers bore
further testament to the modest recovery within the sector. Wireline spending
remained depressed but the Wireless spending improved through the end of the
first half of our financial year. The recovery was first evidenced in Europe,
with North America lagging some months behind. The investments required in Asia
to meet dramatically increasing demand for such services now needs to translate
from contract award by the operators to full delivery in the installation.
Demand for information technology server and networking products initially
remained at low levels, but enterprise spending has improved and these products
are increasingly being driven towards commoditisation and standardisation. The
PC market is accelerating with this increased business demand. Solid growth in
the second half of 2003 continued into 2004. Aggressive pricing and the
increasing deployment of mobility products also supported this improvement.
The consumer electronics market continued to offer strength and opportunity for
the Group. Both consumer spending and the continuing migration to digital
products were sustained throughout the year. The rate of technology churn, the
rapid product introduction cycle and the global product approvals portfolio
enabled Volex to match its technical competence from design to volume with the
demands of the sector. The consumer appliance sector was more adversely affected
by currency movements and did not demonstrate acceptable growth, although a
concentration on small harness capability allowed access to some new and
potentially significant customers.
The specialist, niche harness segment was relatively stable throughout the year.
Focusing on the market for off-highway equipment, specialist vehicles and
aerospace harness systems, the division's engineering expertise was leveraged
into existing and new customers. However, the rate of new business development
did not compensate for slight weakness in demand.
Regional Operations
Sales improved over the prior year by 4%, but more significantly the second half
was 11% up on the first and 14% improved on the same period in the prior
financial year and represents the third successive half-year of growth.
In the Americas, the first half revenue levels were weaker than expected due to
the poor rate of recovery in the market there and the translation effect into
sterling sales. However, the second half improved by 13% over the first in local
currency. This was attributable to a better economic environment particularly in
the electronics sector and some new programs secured during the first half. The
cost base for the Group in North America was also addressed as the migration of
volume manufacturing from facilities in the US and Canada to Mexico and Asia was
effected. The benefits of this were realised in the fourth quarter and will flow
through to the new financial year. The final quarter also recorded a return to
profitability for the region. This, with demonstrated quarterly growth, the
completion of the manufacturing strategy and the improved demand environment
will allow the unit to deliver profit improvement throughout the forthcoming
year.
Total sales in Asia improved by 23% over the previous year in local currency.
Much of this was attributable to our power cord sales and focus on some key
customer groupings such as the Japanese headquartered companies. The technology
content was also significant and designed-in engineered product represented 25%
of power cord sales. The success of this strategy was manifested in a
significant improvement in profitability. The migration of the multi-national
companies to the region was also a contributor and while other regions within
the Group were impacted, our presence in Asia ensured that we maintained the
business within the Group as it moved into countries such as China where we have
had a presence for over 11 years.
While total sales in Europe improved by 17% over the prior year in local
currency, the region experienced some initial difficulties in the transfer of
high-mix, high-end technologies and products to Eastern Europe. All
manufacturing has now ceased in Ireland and has been transferred to our low cost
facilities in Croatia and Poland. As a result, the region returned to
profitability in the second half of the year. The power cord organisation was
aligned into Volex Asia, where the entire portfolio of power products was being
supported from a technical and supply perspective. This enabled a focus on data,
telecommunications and medical sectors which could be best serviced from our
mainland Europe facilities. The market in these sectors is improving and the
full-year benefit of actions taken during the reported period will directly
impact the return on incremental revenues.
The specialised harness business was slightly negative year-on-year and our
focus continued on developing low-cost manufacturing support from Estonia and
China. Consolidation continues in this sector at both the customer and
competitor level and this improved sourcing capability for the business allows
it to offset the impact of such dynamics. The market sector remains relatively
stable and dramatic growth is not expected in the medium term.
The Future
Our strategy is unchanged: with an improving trading environment we must
increase our profitability and generate sufficient cash to further reduce our
debt and fuel the growth opportunities presented by increased demand and
improving share. The industry has experienced an unprecedented period of
sustained downturn and as we emerge, we must not only secure the gains, but take
advantage of all opportunities that improve the value return to our
shareholders. We have extended our service offering, developed technology
coverage, invested in economies of scale and have an enhanced position within
our customer base. Our drive is not just for revenue growth but the quality of
that revenue and ensuring that Volex is appropriately rewarded for the value we
extend to our customers.
With the experience of the recent past, we remain cautious on the robustness of
the recovery, but that caution drives us to intensify our focus on cost while
not inhibiting the growth potential with existing and future new accounts.
We have a product and service offering that extends the value proposition beyond
the capability of many of our competitors'.
We continue to develop a leading supply chain capable of supporting global
customers globally and are committed to leveraging our independence of connector
and cable solutions to offer the customer opportunities for design and component
substitution cost reductions.
We also continue the drive to expand our customer base and increased market
segment penetration, reducing the impact of segment and/or customer demand
fluctuations.
Action has been taken and we emerge a stronger and leaner organisation. What has
not changed is a passion for providing value to our customers in whatever
location they choose to do business.
FINANCIAL REVIEW
Turnover for the year at £238.4m was 4% up over last year, despite a £7m
negative currency effect.
A geographical review of sales by destination showed sales in Asia increase by
14% and as a percentage of Group sales increase by 3 percentage points to 28%.
Sales to customers in the Americas fell by 14% over last year and represented
31% of Group sales (2003 - 38%). Sales in Europe as a whole increased by 4
percentage points to 41%.
A comparison of Group sales by origin or manufacturing location, based on total
sales including intra-Group trading (i.e. output at selling prices) showed a
year on year improvement in Asia of 14% accounting for 32% of the Group's output
(2003 - 28%). America's output declined by 13% in value over the previous year
and accounted for 31% of Group output (2003 - 36%), while output in Europe
improved by 3% and accounted for 37% of Group output (2003 - 36%). An analysis
of sales by product category and market sector is given in note 1 to the
results.
The Group recorded an operating profit (pre goodwill amortisation and
exceptional operating items) for the year of £2.5m(3) (2003 - £0.6m). The
translation of foreign currency operating profits into Sterling had an adverse
impact of £0.6m. Despite this the Group's gross profit margin remained at over
14%, similar to last year as the Group maintains its efforts to reduce its
overheads and resulting break-even sales level.
(3) The operating loss after charging goodwill amortisation and exceptional
operating items was a reported operating loss of £4.5m (2003 - loss
of £9.0m)
During the first half of the year, the Group initiated the cessation of all
manufacturing operations in Ireland with production being transferred to our low
cost locations in Croatia and Poland. This exercise was completed during the
second half of the year. There were closure costs associated with the cessation
of manufacturing in Ireland of £3.0m which are treated as a one-off charge
separately identified as an exceptional operating item. This restructuring
exercise will result in annualised cost savings of some £2m. Following a
year-end market valuation review there has been a write-down to the valuation of
the Irish facility producing a further exceptional asset impairment charge of
£3.4m. In addition the Group also sold its North American facility at Dartmouth,
Massachusetts which had ceased manufacturing in 2002. A loss of £0.3m was
realised on this disposal.
Finance charges (net) include interest costs of £3.1m similar to last year and
amortisation costs relating to the 2002 refinancing of £0.7m (2003 - £0.5m).
The result for the financial year after tax was a loss of £11.2m (2003 - loss of
£12.7m).
Taxation
The tax charge for the year resulted in an effective composite rate of 34.3%
(2003 tax credit - 7.0%). This charge relates to taxes paid in countries in
which we made a profit. The tax charge has been materially affected by losses
arising in certain countries for which tax credit has not been recognised this
year. To the extent that the Group generates profit in these countries in future
periods, the losses will be recoverable and there will be a consequential
positive effect on the effective tax rate in those future periods.
Different tax rates apply to the Group's world-wide operations, the highest rate
relating to the North American operations, with lower than average tax rates
currently applying in Asia and Ireland.
Earnings Per Share
Basic loss per share this year of (39.1)p compares with (44.3)p in the prior
year. Whilst the headline loss per share shows a significant deterioration from
(7.3)p to (38.0)p per share this is distorted by the higher than normal tax
charge as referred to above.
The underlying loss per share before tax of (4.7)p has improved from (10.6)p in
the prior year, which is consistent with the performance of the Group's trading
operations.
Funds Flow
During the year there was a net inflow of funds before financing of £1.1m,
comprising inflows of £5.6m from operations, £1.7m from the disposal of fixed
assets and asset held for resale and £0.2m from tax, in part offset by outgoings
of £2.2m on capital expenditure, and £4.1m on interest/financing costs. Currency
translation of £5.2m impacted favourably on the debt position during the year.
Capital Expenditure
Fixed asset additions in the Group totalled £2.5m (2003 - £2.4m) during the
year, a multiple of depreciation of 0.39 times compared with 0.35 times last
year. This level of spend was part of the Group's action programme to reduce
borrowings and spending was prioritised on essential replacement and
refurbishment, new business opportunities and low cost regional capacity.
Borrowings
The Group's net borrowings at the end of the year were £31.7m (2003 - £38.8m).
These borrowings resulted in a year-end gearing ratio of net borrowings to
shareholders' funds of 97.5% (2003 - 86.0%).
The Company's present bank facilities remain available until the end of June
2005 and continue to provide the Group with adequate funding for its foreseeable
requirements.
Employees
The average number of employees increased year on year, by 11% to 9,297 (2003 -
8,353). The average cost per employee reduced by 18%. This percentage reduction
reflects the Group's continuing strategy to transfer production to lower cost
environments. At the year-end 55% (2003 - 51%) of our employees were in Asia,
26% (2003 - 28%), in the Americas and 19% (2003 - 21%) in Europe.
Volex Group plc
Preliminary Announcement of Group results for the financial year to 4 April 2004
A. Consolidated Profit and Loss Account
For the financial year ended 4 April 2004 (30 March 2003)
2004 2003
Notes £'000 £'000
Turnover
Continuing operations 1 238,353 230,066
Cost of sales (204,108) (195,995)
------------ -----------
Gross profit 34,245 34,071
Other operating expenses (net) 2 (38,767) (43,083)
------------ -----------
Operating profit pre goodwill amortisation
and impairment and exceptional operating items 2,486 573
Exceptional operating items 3 (6,680) -
Amortisation of goodwill (328) (933)
Impairment of goodwill - (8,652)
---------- -----------
Operating loss - continuing operations (4,522) (9,012)
------------ -----------
Finance charges - interest (net) 5 (3,140) (3,084)
- refinancing costs 6 - (1,000)
- amortisation of debt
issue costs 7 (683) (509)
------------ -----------
(3,823) (4,593)
----------- ----------
Loss on ordinary activities before taxation (8,345) (13,605)
Tax on loss on ordinary activities 8 (2,861) 948
---------- ----------
Loss for the financial year (11,206) (12,657)
---------- ----------
Dividends paid on non-equity shares 9 - (6)
Other finance costs of non-equity shares 9 (6) -
------------ -----------
Loss for the financial year transferred
from reserves (11,212) (12,663)
------------ -----------
Underlying loss per ordinary share
(before tax) 10 (4.7)p (10.6)p
Underlying loss per ordinary share
(after tax) 10 (14.7)p (7.3)p
Headline loss per ordinary share 10 (38.0)p (7.3)p
Basic loss per ordinary share 10 (39.1)p (44.3)p
Diluted loss per ordinary share 10 (39.1)p (44.3)p
B. Consolidated Statement of Total Recognised Gains and Losses
For the financial year ended 4 April 2004 (30 March 2003)
2004 2003
£'000 £'000
--------- ---------
Loss for the financial year (11,206) (12,657)
Unrealised deficit on revalued freehold and
leasehold buildings - (1,419)
Currency variations (2,335) (100)
--------- ---------
Total recognised losses relating to the year (13,541) (14,176)
--------- ---------
C. Group Balance Sheet
At 4 April 2004 (30 March 2003)
2004 2003
£'000 £'000
Fixed assets
Goodwill 3,798 4,374
Tangible assets 23,872 33,844
--------- ---------
27,670 38,218
--------- ---------
Current assets
Stocks 29,345 29,219
Debtors 50,358 52,938
Properties held for resale - 1,482
Cash at bank and in hand 11,919 13,728
---------- --------
91,622 97,367
Creditors: amounts falling due within one year
Borrowings (3,883) (3,815)
Other (43,292) (38,792)
---------- --------
Net current assets 44,447 54,760
---------- --------
Total assets less current liabilities 72,117 92,978
Creditors: amounts falling due after more
than one year
Borrowings (39,586) (47,845)
--------- ---------
Net assets 32,531 45,133
--------- ---------
Capital and reserves
Called-up share capital 7,465 7,231
Reserves 25,066 37,902
--------- ---------
Shareholders' funds* 32,531 45,133
--------- ---------
Gearing** 98% 86%
* Including non-equity interests of £80,000 (2003 - £80,000)
** Net debt excluding debt issue costs/shareholders' funds
D. Consolidated Cash Flow Statement
For the financial year ended 4 April 2004 (30 March 2003)
2004 2003
£'000 £'000 £'000 £'000
Net cash inflow from operating activities 5,614 13,059
(see note 12a)
Return on investments and servicing of finance
Interest received 218 221
Interest paid (3,358) (2,770)
Refinancing costs (1,000) (3,294)
Interest element of finance lease rentals 10 (15)
Preference dividends paid - (6)
Net cash outflow from returns on investments
and servicing of finance (4,130) (5,864)
Taxation
UK corporation tax received 240 600
Overseas tax (paid)/received (36) 1,779
Tax received 204 2,379
Capital expenditure
Purchase of tangible fixed assets (2,243) (2,255)
Sale of tangible fixed assets and current asset
investments 470 301
Disposal of assets held for resale 1,189 -
Net cash outflow from capital expenditure (584) (1,954)
Acquisitions and disposals
Purchase of subsidiary undertakings - (279)
Net cash outflow from acquisitions - (279)
------------------------------------
Cash inflow before financing 1,104 7,341
Financing
Issue of ordinary share capital 939 -
Repayment of loans (3,136) (6,039)
Capital element of finance lease rentals (25) (43)
Net cash outflow from financing ( 2,222) (6,082)
------------------------------------
(Decrease)/increase in cash in the year (1,118) 1,259
------------------------------------
Note 1 Segment information
External sales Total sales
Turnover by geographical area by destination by source
2004 2003 2004 2003
£'000 £'000 £'000 £'000
United Kingdom 41,343 42,230 31,590 31,619
Other Europe 56,457 42,689 66,604 63,547
-------- -------- ------- --------
Total Europe 97,800 84,919 98,194 95,166
The Americas 74,695 87,182 81,272 93,475
Asia 65,858 57,965 82,716 72,368
Less: Inter-divisional (23,829) (30,943)
------------------------------------
238,353 230,066 238,353 230,066
Turnover by product category
2004 2003
£'000 £'000
Data/telecommunications 109,503 96,142
Powercords 98,056 101,860
Harnesses 30,794 32,064
-----------------------
238,353 230,066
Turnover by market sector
2004 2003
£'000 £'000
Data/telecommunications 123,069 111,661
Consumer appliances 44,413 48,914
Consumer electronics 40,392 38,094
Vehicle and aerospace 30,479 31,397
-----------------------
238,353 230,066
Operating profit, profit before tax and net assets by geographical area and by
class of business are not given as such disclosure is considered by the
Directors to be seriously prejudicial to the interests of the Group.
Note 2 Other operating expenses (net)
2004 2003
Other operating expenses (net) comprise: £'000 £'000
Selling and distribution expenses 15,482 15,435
Administrative expenses - goodwill amortisation 328 933
- impairment of goodwill - 8,652
- exceptional operating items 6,680 -
- other 16,320 18,657
Other operating income (43) (594)
-----------------------
Other operating expenses (net) 38,767 43,083
Note 3 Exceptional operating items
2004 2003
£'000 £'000
Cessation of manufacturing in Ireland 2,991 -
Impairment of Irish manufacturing facility 3,396 -
Loss on disposal of current asset investment 293 -
-----------------------
6,680 -
This cost includes the restructuring of the continuing operations of the group's
European manufacturing activities, the write down to market value of the Irish
facility at Castlebar, Co. Mayo and the loss on disposal of the US facility at
Dartmouth, Massachusetts, USA, which had ceased manufacturing in 2002.
The taxation effect of these exceptional items was £nil.
Note 4 Exchange rates
The principal exchange rates used in the preparation of the accounts are:
Average % Year End %
2004 2003 Change 2004 2003 Change
United States dollar 1.68 1.54 9.09 1.83 1.57 16.56
Singapore dollar 2.91 2.72 6.98 3.07 2.78 10.43
Euro 1.44 1.54 (6.49) 1.51 1.46 3.42
Canadian dollar 2.29 2.39 (4.18) 2.41 2.30 4.78
Brazilian real 4.99 4.48 11.38 5.29 5.28 0.19
Swedish krona 13.17 14.33 (8.09) 13.92 13.43 3.65
Note 5 Finance charges - interest (net)
2004 2003
Net interest costs represent: £'000 £'000
Interest receivable on bank deposits (218) (221)
Interest payable on bank loans and overdraft 3,358 3,305
------ ------
Finance charges - interest (net) 3,140 3,084
Note 6 Finance charges - refinancing costs
The prior year refinancing costs of £1,000,000 represent the expenses incurred
in 2003 on re-negotiating the Group's bank facilities with its major lenders.
Note 7 Finance charges - amortisation of debt issue costs
Amortisation costs of £683,000 (2003 - £509,000) represents the amortisation of
the debt issue costs capitalised in the prior year on re-negotiating the Group's
bank facilities.
Note 8 Tax on loss on ordinary activities
2004 2003
The tax charge/(credit) is based on the loss for the
financial year and comprises: £'000 £'000
Current Tax
UK corporation tax - 434
Foreign tax 1,840 516
Adjustments in respect of previous years
UK corporation tax 735 -
Foreign tax (134) (759)
------ ------
Total current tax 2,441 191
Deferred taxation
Origination and reversal of timing differences (208) (1,139)
Decrease in estimate of recoverable deferred tax asset 628 -
------ ------
Total deferred tax 420 (1,139)
------ ------
Total tax on loss on ordinary activities 2,861 (948)
The differences between the total current tax shown above and the amount
calculated by applying the standard rate of UK corporation tax to the loss
before tax is as follows:
2004 2003
£'000 £'000
Group loss on ordinary activities before tax (8,345) (13,605)
Tax on loss on ordinary activities at standard UK
corporation tax rate of 30% (2003 - 30%) (2,503) (4,082)
Effects of:
Expenses not deductible for tax purposes 1,449 3,487
Capital allowances in excess of depreciation 619 277
Timing differences 52 (90)
Lower tax rates on overseas earnings (636) (287)
Non-utilisation of losses 2,859 1,645
Adjustments to tax charge in respect of previous periods 601 (759)
------ ------
Group current tax charge for the year 2,441 191
------ ------
Note 9 Dividends paid on non-equity shares and other 2004 2003
finance costs of non-equity shares £'000 £'000
Dividends paid on non-equity shares
Non-equity shares:
Cumulative preference dividends
- interim paid of nilp per share (2003 - 3.75p per share) - 3
- final paid of nilp per share (2003 - 3.75p per share) - 3
- 6
Other finance costs of non-equity shares
- interim accrued of 3.75p per share (2003 - nilp per share) 3 -
- final accrued of 3.75p per share (2003 - nilp per share) 3 -
6 -
Note 10 Loss per ordinary share
The calculations of loss per share are based on the
following losses and numbers of shares:
2004 2003
£'000 £'000
Loss for the financial year (11,206) (12,657)
Preference Dividends - (6)
Other finance costs of non-equity shares (6) -
------ ------
Basic loss (11,212) (12,663)
Goodwill amortisation and impairment 328 9,585
Finance restructuring costs - 1,000
------ ------
Headline loss (10,884) (2,078)
------ ------
Exceptional operating items 6,680 -
------ ------
Underlying loss (after tax) (4,204) (2,078)
------ ------
Tax 2,861 (948)
------ ------
Underlying loss (before tax) (1,343) (3,026)
------ ------
Weighted average number of shares:
No. of Shares No. of Shares
For basic and diluted loss per share 28,650,462 28,602,637
Underlying loss per share (before tax - full) (4.7)p (10.6)p
Underlying loss per share (after tax - full) (14.7)p (7.3)p
Headline loss per share (full) (38.0)p (7.3)p
Basic loss per share (full) (39.1)p (44.3)p
Diluted loss per share (full) (39.1)p (44.3)p
Headline loss per share has been calculated on the basis of continuing
activities before goodwill amortisation, goodwill impairment and exceptional
refinancing costs in each case net of tax. Underlying loss per share before and
after tax have been calculated on the basis of headline loss before exceptional
operating items. The directors consider that these give a better understanding
of the Group's loss per share in the year and the prior year. As the Group
recorded a loss per share, the share options are anti dilutive.
Note 11 Reconciliation of Movements in Consolidated
Shareholders' Funds
2004 2003
£'000 £'000
Loss for the financial year (11,206) (12,657)
Dividends paid - (6)
--------- ---------
Loss for the financial year transferred from reserves (11,206) (12,663)
Unrealised deficit on revalued freehold and leasehold
buildings - (1,419)
Currency variations (2,335) (100)
New share capital subscribed 939 -
--------- --------
Net decrease in shareholders' funds (12,602) (14,182)
Opening shareholders' funds 45,133 59,315
------ ------
Closing shareholders' funds 32,531 45,133
Note 12 Consolidated cash flow statement
a. Reconciliation of operating loss to net cash inflow 2004 2003
from operating activities £'000 £'000
Operating loss (4,522) (9,012)
Depreciation charges and impairment 9,766 6,758
Goodwill amortised and impaired 328 9,585
Government grants (150) (128)
Loss on sale of tangible fixed assets and asset held
for resale 293 5
(Increase)/decrease in stocks (1,376) 5,793
Increase in debtors (2,788) (2,664)
Increase in creditors 4,063 5,058
Cash impact of fundamental restructuring - (2,336)
------ ------
Net cash inflow from operating activities 5,614 13,059
Net cash inflow from operating activities pre cash
outflows from exceptional operating items 8,067 13,059
Cash outflows from exceptional operating items (2,453) -
------ ------
Net cash inflow from operating activities 5,614 13,059
------ ------
b.Analysis of net debt:
31 March Other Non-cash Exchange 4 April
2003 Cash Flow Changes Movement 2004
£'000 £'000 £'000 £'000 £'000
Cash at bank and
in hand 13,728 (866) - (943) 11,919
Overdraft (2,756) (252) - 37 (2,971)
------
(1,118)
------
Debt due after one
year (48,716) 3,057 - 6,007 (39,652)
Debt due within one
year (1,035) 79 - 137 (819)
Finance Leases (25) 25 (216) - (216)
------
3,161
-----------------------------------------------------------
Net debt (38,804) 2,043 (216) 5,238 (31,739)
2004 2003
c. Reconciliation of net cash flow to movement in net debt: £'000 £'000
(Decrease)/Increase in cash in the financial year (1,118) 1,259
Cash outflow from decrease in debt & lease financing 3,161 6,082
------ ------
Change in net debt resulting from cash flows 2,043 7,341
New finance leases (216) -
Translation difference 5,238 4,264
------ ------
Movement in net debt in the financial year 7,065 11,605
Net debt - beginning of financial year (38,804) (50,409)
------ ------
Net debt - end of financial year (31,739) (38,804)
------ ------
Note 13 Miscellaneous
(i) The current and prior year results set out in this announcement are
non-statutory accounts within the meaning of Section 240 of the
Companies Act 1985.
(ii) The results for the financial year ended 4 April 2004 are extracts from
the 2004 Group accounts which, if adopted by members in General Meeting
on 22 July 2004 will be filed with the Registrar of Companies.
The auditors have reported on these accounts; their report was
unqualified and did not contain statements under S237(2) or (3)
Companies Act 1985.
(iii) The results for the financial year ended 30 March 2003 are extracts from
the 2003 Group statutory accounts, which have been reported upon
without qualification by the auditors and have been delivered to the
Registrar of Companies.
(iv) The preliminary announcement has been prepared using the accounting
policies stated in the Annual Report and Accounts for the financial
year ended 30 March 2003. There have been no changes to the accounting
policies in the financial year ended 4 April 2004.
This information is provided by RNS
The company news service from the London Stock Exchange
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