Interim Results - Six Months To June 30, 1999
RAP GROUP PLC
29 October 1999
INTERIM REPORT FOR THE SIX MONTHS TO JUNE 30, 1999
FINANCIAL RESULTS
The results for the half year to June 30, 1999 show a further decline in sales
of 20.7% to £10.57 million (1998: £13.33m). This represents a reduction of
16.6% in sales within the old core rubber business, RAP Industrial
Distributions, Potter Cowan and Conveyors and a 51% decline at Anderson &
Firmin. It also reflects the closure of the Poplar Industries glove
manufacturing business during the period and discontinuation of much of the
lower margin business previously conducted by Planet Gloves. As a result, the
loss before tax was £450,000 (1998: loss of £187,000). This was after
charging further reorganisation costs of £158,000 (1998: £527,000). The loss
per share was 3.7p per share (1998: a loss of 1.5p per share)
The directors do not propose to pay an interim dividend (1998: nil).
OPERATIONAL REVIEW
The implementation of the new IT system for the group has progressed according
to plan with all operations handled by earlier computer systems having been
successfully transferred. Our system is fully Y2K compliant and work
continues to extend it to group sites which were not previously computerised.
This process will continue into the year 2000.
One of the major benefits of the new system is its e-commerce capability. In
trading with our major customers, we are now able to receive orders, issue
invoices and receive payments electronically. This seamless and paperless
system enables more accurate processing, greater efficiency and hence enhanced
customer service. RAP Industrial Fixings has been a major beneficiary of this
technology with nearly 50% of its sales being processed in this manner.
Within RAP Industrial Fixings, we have invested in new packaging technology in
order to meet new EU standards in advance of legislative imperatives. This
has helped us to win new business from the major retail multiples - an
important market for the group. We have also addressed environmental issues,
such as on-site waste disposal at our operations, which are of increasing
importance to our larger customers. We believe that it is as a result of
attention to such issues as these, together with the operational efficiencies
gained as a result of our focus on e-commerce that our industrial fixings
division has returned to growth. It achieved a 15.6% increase on the
corresponding period, despite the absence of large contracts lost in 1997
which contributed to sales in 1998.
The new computer system delivers the capability to monitor and analyse stock
in greater detail. As a result, we are now able to identify slow moving stock
lines more easily and quickly.
In other areas of the group, trading continued to be difficult. RAP Safety
Specialists saw prices come under pressure. While volume and margins held up
well, the result was a 4% reduction in sales.
Due to the specialist nature of the market for RAP Conveyors, the directors
consider this business to be non-core to the group. Approaches have been
received from third parties to purchase the division. These are currently
under consideration and should a sale go ahead, the proceeds would be applied
to reduce group indebtedness.
Anderson & Firmin, which supplies products to garden centres, suffered a
decline of 51% in sales in the first half. A number of major contracts were
lost by this division in 1997 the full effects of which were not evident until
mid 1998. However, steps have been taken to rectify the situation.
RAP GROUP PLC - INTERIMS 2/5
PROSPECTS
While parts of the business remain in poor shape and are experiencing
continued price pressure, there are very encouraging improvements being
achieved within other areas in the group. In particular, we are seeing
increasing sales to the major retail multiples for both RAP Industrial Fixings
products and for selected lines supplied by RAP Safety Specialists. The
introduction of e-commerce capabilities, a focus on quality of customer
service and investment in new EU compliant and environmentally friendly
packaging systems place the group in an ideal position to compete for high
volume business at attractive margins.
We anticipate further growth within RAP Industrial Fixings - particularly
through our e-commerce system, which has been well received by our higher
volume customers. We expect sales at RAP Safety Specialists to stabilise and
those of Anderson & Firmin to grow. However, sales of RAP Industrial
Distributions products continue to decline in a very competitive market.
The reorganisation of the group, which I have already indicated would be a
lengthy process, will continue throughout the remainder of this year and into
2000.
For further information, please contact:
RAP Group PLC John Savage Tel: 01282 451110
Biddick Associates Zoe Biddick / Katie Tzouliadis Tel: 020 7377 6677
RAP GROUP PLC - INTERIMS 3/5
Consolidated Profit and Loss Account
for the six months ended 30 June 1999
Unaudited Unaudited Audited
Notes Six months Six months Year
to 30 June to 30 June to 31 Dec
1999 1998 1998
£'000 £'000 £'000
Turnover - continuing operations 10,573 13,332 24,863
_____________________________________________________________________________
Operating loss - continuing
operations 3 (303) (2) (1,525)
Interest payable and similar
charges (147) (185) (357)
_____________________________________________________________________________
Loss on ordinary activities
before taxation (450) (187) (1,882)
Tax on loss on ordinary
activities 0 0 0
_____________________________________________________________________________
Loss on ordinary activities
after taxation (450) (187) (1,882)
Dividends on equity shares 0 0 0
_____________________________________________________________________________
Retained loss for the financial
period (450) (187) (1,882)
_____________________________________________________________________________
Loss per ordinary share 5 (3.7)p (1.5)p (15.3)p
_____________________________________________________________________________
Statement of Total Recognised Gains and Losses
Retained loss for the period (450) (187) (1,882)
Unrealised surplus on
revaluation of freehold and
long leasehold properties 0 0 512
Unrealised deficit on
revaluation of freehold
property (10) 0 0
_____________________________________________________________________________
Total recognised losses since
the last annual report and
accounts (460) (187) (1,370)
_____________________________________________________________________________
RAP GROUP PLC - INTERIMS 4/5
Consolidated Balance Sheet
as at 30 June 1999
Notes Unaudited Unaudited Audited
As at As at As at
30 June 30 June 31 Dec
1999 1998 1998
£'000 £'000 £'000
Fixed Assets
Intangible assets 32 36 34
Tangible assets 2,973 2,513 3,140
_____________________________________________________________________________
3,005 2,549 3,174
_____________________________________________________________________________
Current assets and liabilities
Stocks 4,449 6,271 4,923
Debtors 5,093 6,702 5,610
_____________________________________________________________________________
9,542 12,973 10,533
Creditors falling due within
one year (7,228) (8,494) (7,724)
_____________________________________________________________________________
Net current assets 2,314 4,479 2,809
_____________________________________________________________________________
Total assets less current liabilities 5,319 7,028 5,983
Creditors falling due after more
than one year (489) (633) (712)
Provisions for liabilities and
charges (319) (241) (300)
_____________________________________________________________________________
Net assets 4,511 6,154 4,971
_____________________________________________________________________________
Capital and Reserves
Called up share capital 616 616 616
Share premium account 4 5,259 5,259 5,259
Revaluation reserve 4 467 512
Profit and loss account 4 (1,831) 279 (1,416)
_____________________________________________________________________________
Equity shareholders' funds 4,511 6,154 4,971
_____________________________________________________________________________
RAP GROUP PLC - INTERIMS 5/5
Notes
1. The summarised results for the six months ended 30th June 1999, which are
unaudited, have been prepared in accordance with the accounting policies
adopted in the accounts for the year ended 31st December 1998.
2. The figures for the year ended 31st December 1998 have been extracted from
the statutory accounts which have been filed with the Registrar of
Companies. The audit report was unqualified and did not contain any
statement under section 237 (2) and (3) of the Companies Act 1985.
3. The operating loss for the six months ended 30th June 1999 included
exceptional costs as summarised below :
Unaudited Unaudited Audited
Six months Six months Year
to 30 June to 30 June to 31 Dec
1999 1998 1998
£'000 £'000 £'000
Reorganisation and closure
Systems related costs 0 23 107
Centralisation of group functions 45 0 212
Redundancy and closure costs 38 0 224
Reorganisation 32 0 93
Fixed asset write-offs 20 27 27
Write-offs of other assets 0 22 53
Pension scheme underfunding 0 178
Dilapidations provisions 28 50 (30)
Stock write-offs 0 405 850
Property realisations (5) 0 0
_____________________________________________________________________________
158 527 1,714
_____________________________________________________________________________
4. Reserves
Share Revaluation Profit and Total
premium account reserve loss account
At 1 January 1999 5259 512 (1,416) 4,355
Retained loss for the period 0 0 (450) (450)
Revaluation of property 0 (10) 0 (10)
Sale of properties 0 (30) 30 0
Depreciation of revalued
properties 0 (5) 5 0
____________________________________________________________________________
At 30 June 1999 5,259 467 (1,831) 3,895
____________________________________________________________________________
5. Earnings per share for the six months ended 30th June 1999 is calculated by
dividing the loss attributable to ordinary shareholders of £450,000 by the
weighted average of the number of ordinary shares in issue during the
period of 12,325,841. (For the six months ended 30th June 1998, loss
attributable was £187,000 and the number of ordinary shares in issue was
12,325,841. For the year ended 31st December 1998 the loss was £1,892,000
and the weighted average number of ordinary shares in issue was
12,325,841).
6. The above information is being sent to the shareholders and is available
from the Company's registered office: RAP House, Harrison Street,Burnley,
Lancashire BB10 2HP.