Interim Results

Reece PLC 28 September 2000 INTERIM STATEMENT OF THE UNAUDITED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2000 CHAIRMAN'S STATEMENT During the first half of 2000 Reece PLC generated operating losses from continuing businesses of £96,000 compared to operating losses of £306,000 for the same period last year. In add ition, the Cycles business made operating losses of £347,000 prior to disposal on 5 May 2000. Sales from the continuing operations increased by over 13 per cent. in the first half despite the dominance of exports which were held back by the weakness of the Euro. SALE OF CYCLES BUSINESS AND ASSETS The proceeds arising from the sale of the Cycles business and assets were lower than anticipated. The completion accounts showed that Reece was entitled to receive initial consideration of £338,116 together with deferred consideration of £350,000 and other small payments including those arising from the collection of long-standing debtors and the sale of discontinued stock. EXCEPTIONAL ITEMS Exceptional costs include the loss on disposal of the Cycles business and assets amounting to £136,000. HM CUSTOMS & EXCISE DUTY CLAIM HM Customs and Excise was successful in its appeal against the VAT and Duties Tribunal decision in favour of E Reece in respect of its claim for duty underpaid on the importation of bicycles. APP £'000 6 months 6 months to to 30 June 30 June 2000 1999 Sales 1,517 1,504 Operating 64 59 profit APP's sales and operating profits remained static during the first half of 2000 when compared to the same period last year. Growth was more difficult to achieve because more than half of APP's sales go to Europe so that turnover has suffered from the weakness of the Euro. This was offset by the strong underlying growth of the market and of our customers. In the UK the competitive pressure remains intense. SERVICE (ENGINEERS) £'000 6 months 6 months to to 30 June 30 June 2000 1999 Sales 1,171 859 Operating 20 (275) profit/(loss) The order book of Service (Engineers) has continued to improve in the first half during which a small operating profit was achieved. This represents a significant improvement over the large losses experienced in the first half of 1999. Considerable interest has been generated by the new range of servo-driven computer controlled decorating machines and the first orders for the direct printing and the decal application machines have already been achieved. OUTLOOK The European markets that APP serves are growing rapidly. However, APP's second half results are unlikely to match those seen in the first half. Recently, we have recruited a French speaking sales and marketing executive to develop our respected brand in an increasingly competitive European market. Both the new servo-driven computer controlled decorating machines and the new developments in clay forming and processing equipment are expected to contribute to Service (Engineers) sales in 2001. In addition, within the next few months we shall begin to build the machines that comprise one of the major projects which are expected to make a significant contribution next year. Indeed, the level of enquiries for major projects is at a level not seen for some years. However, the lower initial consideration arising from the sale of the Cycles business assets, the HM Customs and Excise claim and the additional working capital requirements from the growth in Service (Engineers) order book have put an unexpected strain on the balance sheet of Reece PLC. We are working with our bankers to ensure that we have the required short term funds at our disposal to enable us to take full advantage of the overseas business opportunities. It remains our intention to provide the longer term working capital requirements by means of the sale of business assets which will bring us closer to our objective of becoming a more focussed business. PETER KNAPTON NON-EXECUTIVE CHAIRMAN SUMMARISED PROFIT AND LOSS ACCOUNT 6 MONTHS 6 MONTHS TO 30 TO 30 Not JUNE 2000 JUNE 1999 e UNAUDITED UNAUDITED £'000 £'000 TURNOVER - continuing operations 2,688 2,363 - discontinued operations 1,178 2,354 --------- --------- 3,866 4,717 ========= ========= TOTAL OPERATING (LOSS) - continuing operations (96) (306) - discontinued operations (347) (145) --------- --------- (443) (451) Non-operating exceptional items (136) - Interest payable less interest (25) (23) receivable --------- --------- (LOSS) ON ORDINARY ACTIVITIES BEFORE (604) (474) TAXATION Tax on (loss) on ordinary activities 2 - - --------- --------- (LOSS) ON ORDINARY ACTIVITIES AFTER (604) (474) TAXATION Dividends 3 - - --------- --------- RETAINED (LOSS) FOR THE PERIOD (604) (474) ========= ========= Earnings per share 4 (0.34)p (0.27)p Basic ========= ========= Diluted (0.34)p (0.27)p ========= ========= DIVIDENDS PER SHARE - - ========= ========= SUMMARISED CONSOLIDATED CASH FLOW STATEMENT 6 MONTHS TO 6 MONTHS 30 JUNE TO 2000 30 JUNE UNAUDITED 1999 UNAUDITED £'000 £'000 Net cash (outflow) from operating (289) (246) activities Returns on investment and servicing of (25) (23) finance Taxation paid - - Capital expenditure and financial 88 - investment Acquisitions and disposals 610 - Financing (392) (62) ----------- ---------- - -- DECREASE IN CASH (8) (331) =========== ========== SUMMARISED CONSOLIDATED BALANCE SHEET AT 30 JUNE AT 30 JUNE 2000 1999 UNAUDITED UNAUDITED £'000 £'000 FIXED ASSETS Tangible assets 786 1,270 ------------- ------------- CURRENT ASSETS Stocks 1,537 2,854 Debtors due after one year 125 - Debtors due within one year 1,416 2,784 ------------- ------------- 3,078 5,638 CREDITORS: Amounts falling due (1,910) (2,942) within one year ------------- ------------- NET CURRENT ASSETS 1,168 2,696 ------------- ------------- TOTAL ASSETS LESS CURRENT 1,954 3,966 LIABILITIES CREDITORS: Amounts falling due after more than one year (20) (147) ------------- ------------- NET ASSETS 1,934 3,819 ============= ============= CAPITAL AND RESERVES - called up share capital 6,921 6,921 - share premium account 2,547 2,547 - profit and loss account (7,534) (5,649) ------------- ------------- Equity shareholders' funds (3,217) (1,332) Non-equity shareholders' funds 5,151 5,151 ------------- ------------- TOTAL SHAREHOLDERS' FUNDS 1,934 3,819 ============= ============= NOTES 1. NON-OPERATING EXCEPTIONAL ITEMS 6 MONTHS TO 6 MONTHS TO 30 JUNE 30 JUNE 2000 1999 UNAUDITED UNAUDITED £'000 £'000 The (loss) on ordinary activities before taxation is after charging the following exceptional items; Loss on disposal of discontinued 136 - operations ----------- ----------- - - 2. TAXATION No tax charge arises in the period due to trading losses (1999 - £nil) 3. DIVIDENDS The directors do not recommend the payment of a dividend (1999 - £nil) 4. LOSS PER SHARE 6 MONTHS TO 6 MONTHS 30 JUNE TO 2000 30 JUNE UNAUDITED 1999 UNAUDITED £'000 £'000 These have been calculated on losses of: (604) (474) =========== ========== 000's 000's The weighted average number of shares was: Basic 1777,054 1777,054 Adjustments - - ----------- ---------- Diluted 177,054 177,054 =========== ========== 5. CONTINGENT LIABILITY As stated in previous financial statements the group has been notified by H M Customs & Excise of a potential liability in respect of duty underpaid on the importation of cyles. Although judgement was given in favour of Reece PLC a subsequent appeal by H M Customs was decided in their favour. The amount of the potential liability is £152,000 plus costs. No specific provision has been made for the liability. 5. INTERIM REPORT This interim report was neither audited nor reviewed by the auditors. It was approved by the Board on 28 September 2000. It has been prepared using accounting policies that are consistent with those adopted in the statutory accounts for the year ended 31 December 1999.

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