Final Results
Tandem Group PLC
26 July 2000
TANDEM GROUP PLC
PRELIMINARY RESULTS 2000
Tandem Group plc, one of the leading manufacturers and distributors of
bicycles in the UK, today announced its preliminary results for the year ended
31 January 2000.
RESULTS 2000 1999
£'000 £'000
Turnover 21,226 31,256
Pre-tax profit/(loss) 71 (5,817)
Profit/(loss) per ordinary share pence 0.01 (6.25)
Diluted pence 0.01 (6.22)
KEY POINTS
* Bicycle sales ahead of last year from expanded retail customer base
* Good progress made in bank negotiations and debt management
* Turnover reduced following closure of loss making Leigh business
* Growth/Recovery strategy agreed and in progress
* Discussions continue with potential acquisition targets
Commenting on this announcement, Chairman Graham Waldron, said:
'I am pleased to report that at last the Group is reaching a level of
stability, facilitated by a continuing strong performance from our bicycle
business. With the positive co-operation of our banks, we are poised to
implement a growth strategy that we believe will rebuild value for our
shareholders and enable us to exploit fully the undoubted strength of our
quality brands.'
For further information, please contact:
Mervyn Keene, Finance Director
Tandem Group plc 01733 211399
James Fuller, Director
Haggie Financial Limited 020 7417 8989
Chairman's statement
Your board is pleased to announce that the results for the year ended 31
January 2000 show a profit before taxation of £71,000. This compares with a
loss last year of £5,817,000. Following closure of the Leigh operations,
which has previously been reported, turnover fell from £31,256,000 to
£21,226,000. No dividend is being proposed.
The revaluation of a deutschmark loan to the rate prevailing as at 31 January
2000 has resulted in a credit to distributable reserves of £373,000 compared
to a charge last year of £121,000.
The Group continues to be a leading manufacturer and distributor of bicycles
in the UK with its brand names including Falcon, Claud Butler, Townsend and
British Eagle. Bicycles are sold principally to independent bicycle dealers,
mail order companies and national sports goods retailers. Following the
elimination of the loss making businesses at Leigh your board believes that
the Group is in a position to consolidate the activities of the cycle business
and improved trading is anticipated.
On 21 January 2000 the Company announced a share placing to raise £550,000
(net of expenses) in order to repay bank loans totalling £1,387,299 and
take advantage of debt being written off amounting to £839,039. This share
placing was approved by shareholders at an EGM on 21 February 2000. Results
for the first half of the current financial year will be favourably affected
by the exceptional profit of £839,039, generated by the write off of bank
loans.
Against this, the costs associated with maintaining a high level of borrowings
will result in additional bank fees of approximately £150,000 compared to the
previous year. The net effect of these exceptional items will show a gain of
approximately £689,000 in the first half of this financial year. In the first
half of last year the Group benefited from an exceptional gain of £148,000
from the revaluation of the loan in deutschmarks
Current trading
Sales of bicycles for the first five months of the current financial year are
ahead of the same period last year, but a strong demand for lower price
products resulted in a fall in average margins. The Group has increased its
customer base of independent bicycle dealers and expects to show growth in
this sector during the second half of the year. Mail order customers are also
offering an improved range of the company's products and additional sales are
anticipated. Your board therefore expects that the results for the year will
be satisfactory and in line with expectations.
Future Prospects and Growth Strategy
In the announcement on 21 January 2000 (and subsequently in the circular to
shareholders convening the EGM for 21 February 2000) your board advised
shareholders that it would continue to seek opportunities to restore
shareholder value. Research by your board into the UK sports and leisure
equipment market, where the Group has a significant position supplying cycles,
identified a fragmented supplier base with a potential for consolidation and
expansion. Discussions are taking place with a number of companies in this
sector and your board expects to make an announcement in this regard in the
near future. Discussions with the Group's banks are also taking place which,
if successful, will add to shareholder value.
G Waldron
Chairman
26 July 2000
Consolidated profit and loss account
______________________________________________________________
Year ended 31 January 2000
2000 1999
£'000 £'000 £'000 £'000
Turnover
Continuing operations 21,181 31,256
Discontinued operations 45
------- -------
21,226 31,256
Cost of sales (16,159) (24,485)
Exceptional cost of sales - (716)
Total cost of sales -------- (16,159)-------- (25,201)
-------- --------
Gross profit 5,067 6,055
Net operating expenses (4,460) (8,371)
Exceptional net operating - (1,976)
expenses
Total net operating expenses -------- (4,460)-------- (10,347)
-------- --------
Continuing operations 365 (4,640)
Discontinued operations 66 259
Less release/utilisation of 176 89
prior year provision
Total operating -------- 607 -------- (4,292)
profit/(loss)
Exceptional profit on 59 -
disposal of fixed assets
Loss on disposal of - (235)
discontinued operations
Less utilisation of prior - 212
year provision
-------- --------
Profit/(loss) on ordinary 666 (4,315)
activities before interest
Net interest payable and (595) (1,502)
similar charges
-------- --------
Profit/(loss) on ordinary 71 (5,817)
activities before taxation
Tax on profit/(loss) on - -
ordinary activities
-------- --------
Profit/(loss) on ordinary 71 (5,817)
activities after taxation
Non equity minority (65) (65)
interests
-------- --------
Profit/(loss) for the
financial period
transferred to/(from) 6 (5,882)
reserves
-------- --------
Pence Pence
Profit/(loss) per ordinary 0.01 (6.25)
share
Diluted profit/(loss) per 0.01 (6.22)
ordinary share
-------- --------
There are no recognised gains or losses for the current and preceding
financial periods other than as stated in the profit and loss account.
Consolidated balance sheet
______________________________________________________________
At 31 January 2000
2000 1999
£'000 £'000
Fixed assets
Tangible assets 1,103 5,839
------- -------
Current assets
Stocks 3,806 6,242
Assets for resale 586 -
Debtors 3,015 4,524
------- -------
7,407 10,766
Creditors - amounts falling due within one year
Bank overdraft 9,351 15,539
Trade creditors 1,774 2,351
Bills of exchange 692 1,398
Other creditors 1,047 1,420
------- -------
12,864 20,708
------- -------
Net current liabilities (5,457) (9,942)
Total assets less current liabilities (4,354) (4,103)
------- -------
Creditors
Amounts falling due after more than one year 22 16
Provisions for liabilities and charges 446 774
------- -------
Net liabilities (4,822) (4,893)
------- -------
Capital and reserves
Called up share capital 4,703 4,703
Share premium account 4,280 4,280
Capital reserve 406 406
Profit and loss account (15,394) (15,400)
------- -------
Equity shareholders' deficit (6,005) (6,011)
Non-equity minority interests 1,183 1,118
------- -------
(4,822) (4,893)
------- -------
The financial statements were approved by the Board on 26 July 2000 and signed
on its behalf by:
G Waldron M P J Keene
Company balance sheet
______________________________________________________________
At 31 January 2000
2000 1999
£'000 £'000
Fixed assets
Tangible assets 4 91
------- -------
Current assets
Stocks - 326
Assets for resale 586 -
Debtors 82 340
------- -------
668 666
------- -------
Creditors - amounts falling due within one year
Bank overdraft 4,389 2,478
Other creditors 144 339
------- -------
4,533 2,817
------- -------
Net current liabilities (3,865) (2,151)
------- -------
Total assets less current liabilities (3,861) (2,060)
------- -------
Provisions for liabilities and charges 431 561
------- -------
Net liabilities (4,292) (2,621)
------- -------
Capital and reserves
Called up share capital 4,703 4,703
Share premium account 4,280 4,280
Capital reserve 406 406
Profit and loss account (13,681) (12,010)
------- -------
Equity shareholders' deficit (4,292) (2,621)
------- -------
The financial statements were approved by the Board on 26 July 2000 and signed
on its behalf by:
G Waldron M P J Keene
Statement of movements on reserves
______________________________________________________________
Year ended 31 January 2000
Share Profit
Premium Capital and loss
Account Reserve Account Total
£'000 £'000 £'000 £'000
The Group
Balance at 1 February 1999 4,280 406 (15,400) (10,714)
Profit retained for the period - - 6 6
------ ------ ------ ------
Balance at 31 January 2000 4,280 406 (15,394) (10,708)
------ ------ ------ ------
The Company
Balance at 1 February 1999 4,280 406 (12,010) (7,324)
Loss sustained for the period - - (1,671) (1,671)
------ ------ ------ ------
Balance at 31 January 2000 4,280 406 (13,681) (8,995)
------ ------ ------ ------
Reconciliation of movements in equity shareholders' funds
______________________________________________________________
Year ended 31 January 2000
2000 1999
£'000 £'000
The Group
Profit/(loss) for the period 71 (5,817)
Non-equity minority interests (65) (65)
------- -------
6 (5,882)
Opening equity shareholders' deficit (6,011) (129)
------- -------
Closing equity shareholders' deficit (6,005) (6,011)
------- -------
Consolidated cash flow statement
______________________________________________________________
Year ended 31 January 2000
Notes 2000 1999
£'000 £'000
Net cash inflow/(outflow) from operating (i) 2,365 (1,240)
activities ------- -------
Returns on investments and servicing of
finance
Interest paid (961) (1,361)
Interest element of hire purchase rentals (7) (20)
------- -------
Net cash outflow from returns on investments (968) (1,381)
and servicing of finance
------- -------
Taxation
Taxation paid - -
------- -------
Capital expenditure
Purchase of tangible fixed assets (80) (97)
Sale of tangible fixed assets 4,574 116
------- -------
Net cash inflow from capital expenditure 4,494 19
------- -------
Net cash inflow/(outflow) before financing 5,891 (2,602)
Financing
Capital element of hire purchase rentals (76) (307)
------- -------
Net cash outflow from financing (76) (307)
------- -------
Increase/(decrease) in cash (ii), 5,815 (2,909)
(iii)
------- -------
Notes to consolidated cash flow statement
(i) Reconciliation of operating profit/(loss) to
net cash inflow/(outflow) from operating
activities
2000 1999
£'000 £'000
Operating profit/(loss) 607 (4,292)
Depreciation charges 246 644
Provision for impairment of property values - 2,005
(Profit) on sale of tangible fixed assets (2) (53)
Decrease in stocks 2,436 5,218
Decrease in debtors 1,509 2,462
Increase in assets held for resale (586) -
Tangible fixed assets transferred to assets 79 -
held for resale
(Decrease) in creditors (1,596) (5,280)
Release of provisions:
- continuing activities (152) (1,944)
- discontinued activities (176) -
------- -------
Net cash inflow/(outflow) from operating 2,365 (1,240)
activities ------- -------
The operating profit/(loss) includes £242,000 (1999 - £348,000)
of profit attributable to discontinued operations. With the
exception of the release of provisions, the operating cash flows
of these activities are not significant and are included within
the net movements in stocks, debtors and creditors.
(ii) Reconciliation of net cash outflow to
movement in net debt
£'000
Increase in cash 5,815
Cash inflow from financing 76
--------
Changes in net debt resulting from cash flows 5,891
Other non-cash changes 351
--------
Movement in net debt in the period 6,242
Net debt at 1 February 1999 (15,616)
--------
Net debt at 31 January 2000 (9,374)
--------
(iii) Analysis of net debt
At Other At
1 February Cash Non-cash 31 January
1999 Flow Changes 2000
£'000 £'000 £'000 £'000
Bank overdraft (15,539) 5,815 373 (9,351)
Hire purchase (77) 76 (22) (23)
creditors
-------- ------ ------ -------
Net debt (15,616) 5,891 351 (9,374)
-------- ------ ------ -------
Notes to the preliminary results
1. This preliminary announcement is not the company's statutory accounts but
extracts therefrom. Statutory accounts dealing with the financial period
ended 31 January 1999 have been delivered to the Registrar of Companies,
however, statutory accounts dealing with the financial year ended 31 January
2000 have not yet been delivered.
2. The financial statements have been prepared on a going concern basis, the
validity of which depends on the bank facilities remaining in place. If the
facilities were to be withdrawn and not replaced adjustments would have to be
made to reduce balance sheet asset values to their recoverable amounts, to
provide for any further liabilities that might arise and to reclassify fixed
assets and long term liabilities as current assets and current liabilities.
3. In the audit report to the 31 January 2000 annual financial statements
the auditors have emphasised the fact that the Company meets its day to day
working capital requirements through certain overdraft facilities, which are
repayable on demand. The Company expects to operate within the facilities
currently agreed. In these circumstances, the Directors believe that it
continues to be appropriate for the financial statements to be prepared on a
going concern basis. However, inherently, there can be no certainty in
relation to these views.
4. Neither audit report contained statements under s237 (2) or (3) Companies
Act 1985.
5. The calculation of profit per share is based on profits of £6,000 (1999 -
loss £5,882,000) and on an average of 94,069,754 (1999 - 94,069,754) ordinary
shares in issue during the period. Diluted profit per share is after taking
into consideration share options which gives an average of 94,522,291 (1999 -
94,611,685) ordinary shares.
6. Copies of this statement can be obtained from the Company at Bridge
Street, Brigg, North Lincolnshire DN20 8PB. The Annual Report and Accounts
will be posted to shareholders in August 2000.
7. The Annual General Meeting of the Company will be held at Eversheds, 1
Royal Standard Place, Nottingham NG1 6FZ on 11 September 2000 at 11.00 a.m.
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