Information  X 
Enter a valid email address

Flare Group PLC (FRG)

  Print      Mail a friend

Monday 11 October, 1999

Flare Group PLC

Interim Results

11 October 1999                              

                       FLARE GROUP PLC
Flare  Group  plc, the manufacturer and distributor  to  the
international  ceramics  markets,  announces   its   Interim
Results for the six months ended  30 June 1999.

Key Points:

*    Turnover down 8% to £15.1million.

*    Exceptional costs incurred of £0.9 million.

*    Loss before tax £3.3 million (1998: £2.1 million).

*    Lightweight products now driving market share gains.

*    Strategy  of innovation continues with new  technology


*    Benefits  of  reduced overheads being seen  in  second


Tony Brierley, Chief Executive commented:

'The Groups strategic focus continues to be the development
of  new  products that provide innovated solutions  for  our


Flare Group plc
Tony Brierley                      01782 847151

Buchanan Communications
Tim Anderson/Isabel Petre          0171 466 5000


A thorough review of the Groups businesses was initiated by
Tony  Brierley following his appointment as Chief  Executive
in  June  this year. As a result our Group focus has changed
to  those  areas where technical innovation and quality  can
deliver  solutions  and  value to our  customers.  Technical
innovation  has  enabled Flare to win market  share  in  its
biggest   division,  Industrial  Ceramics,  and   the   same
philosophy promises to improve performance in our other  two
divisions.  It  will, however, take some  time  before  this
translates  into  a  visible  improvement  in  the   Groups
financial performance.


The  loss  before tax of £3.8 million (1998: loss before  tax
£2.1 million) is stated after charging exceptional costs  of
reorganisation  and asset write downs of £922,000.  It  also
reflects  the  difficult state of the UK ceramics  industry.
Turnover for the first half of 1999 decreased by 8% to £15.1
million (1998: £16.5 million). The reduction was principally
due  to lower surface decoration and heavy brick sales.  The
directors do not expect to pay an interim dividend.

Current Trading

The  general ceramics market continues to be difficult  with
the continued strength of sterling
affecting all companies in the sector. The situation differs
by business area:

Industrial Ceramics

Consisting of:
Hewitt (kiln furniture and night storage heater bricks)
Gibbons (insulation bricks and night storage heater bricks)
Keith Ceramic Materials (mullites)
Sphinx Technical Ceramics (kiln furniture)

This division is gaining market share on the strength of its
new lightweight products, comprising
kiln  furniture and insulation bricks. Due to the  lightness
of these products energy savings of some
15%  are  being achieved, the benefits of which  are  shared
equally  with our customers. The division strives constantly
for the next innovative breakthrough and tests have now been
completed on a new material which will bring similar  energy
savings to primary as well as secondary kiln furniture.  The
development  of the Manta range of products has been  slower
than  anticipated. The products are as exciting now as  they
were  when  they were released and the Board has high  hopes
for  the  future. In heating, our conductive ceramics  carry
electricity  and  amongst other uses, can produce  low  cost
under-floor heating. As shielding, Manta is highly effective
against the
rapidly increasing problem of computer crime. Sales for  the
division  fell by £1.5m primarily due to the  slow  down  in
demand  for  heavy  bricks  from our  night  storage  heater

Surface Decoration

Comprising of:
Rathbone  International (four colour  based  and  specialist
decorative transfers)

The businesses of CMS Colours and C H Rathbone were combined
during  the  first  half  of the year  and  now  operate  as
Rathbone  International  supplying both  four  colour  based
transfers to the tableware industry and decorative transfers
to  the  top end of the market. As with the other divisions,
innovation is of the utmost importance and we hope to be  in
a  position to announce some exciting technology towards the
end  of  the current financial year. Sales for this division
fell by £485,000.

Chairmans Statement
Capital Goods

Consisting of:
Bricesco (kilns)
Thermic (dryers)
Elmeceram (pressure casting and decorating machinery)

In   1998,   the  division  embarked  upon  a  strategy   of
outsourcing  a  substantial  portion  of  the  manufacturing
process.   This   has   continued   resulting   in   further
restructuring  charges.  The  divisions  emphasis   is   on
producing  high  quality machines which, through  innovative
process  linking  and  advanced  technology,  can  solve   a
particular  production problem.  The division has maintained
sales despite difficult market conditions.  The most notable
project  which contributed to this performance  is  a  major
turnkey  project  in Oman which is underway  and  proceeding
according to plan.


The  strategic review undertaken by our new Chief  Executive
emphasised   increasing  global  competition,  demand   from
customers  to reduce stock, lead times and labour costs  and
the  interest  of ceramic producers in total  solutions.  In
view  of  these forces, the Group has embarked on a strategy
of innovation in new products and process technologies, cost
leadership through greater scale, faster response with local
production  and  supply chain initiatives and  a  series  of
alliances  and  joint  ventures  with  both  customers   and
suppliers. The Group has renewed its commitment to Stoke  on
Trent  by  moving its head office from London and  embarking
upon a programme of change encompassing:

*    More acute customer focus
*    lnnovation
*    Investment in People
*    Total quality
*    Benchmarked performance measures

The  Board  believes  that  the Group  has  a  strategy  and
management team to overcome the current difficulties.


Mr  Peter Cartwright retired from the Board at the AGM on 24
August   1999.  I  would  like  to  thank  Peter   for   his
contribution during his time on the Board.


The  hard  work  is beginning to pay off  but  it  has  been
another  period of uncertainty for all employees, especially
those  in the Capital Goods Division. We would like to thank
all  our  employees for their efforts during this  difficult


The initial months of 1999 showed a degree of improvement in
order  intake  but  this rapidly fell off during  the  early
Spring.  The second half of the year is typically  the  more
favourable  period and in both the Industrial  Ceramics  and
Surface  Decoration  divisions order  intake  is  showing  a
significant  improvement.  In the  Capital  Goods  Division,
activity  levels  are high and the Group had  enquiries  for
some  major potential projects. Orders for basic  kilns  and
dryers remain depressed, although the Groups exposure to  a
fall  off  in such orders is now much reduced following  the
strategy of outsourcing.

I  look forward to the remainder of the year with a positive

D G Heynes
11 October 1999

for the six months to 30 June 1999

                                  Six months to 30    Year to
                                              June         31
                                    1999      1998       1998
                                     £000     £000      £000
Turnover                          15,112    16,508     34,624
Exceptional costs                   (422)        -     (1,783)
Other operating income and                
charges                          (17,510)  (17,973)   (35,593)
Operating income and charges     (17,932)  (17,973)   (37,376)
Operating loss                    (2,820)   (1,465)    (2,752)
Provision for loss on sale of     
fixed assets                        (500)        -          -
Share of net profit before tax         
ofassociated undertaking               -        54         54
Loss on ordinary activities      
before interest                   (3,320)   (1,411)    (2,698)                 
Net interest payable                (512)     (679)    (1,219)
Loss on ordinary activities       
before taxation                   (3,832)   (2,090)    (3,917)                 
Tax credit/(charge) on ordinary       
activities                             -       689        629
Loss on ordinary activities      
after taxation                    (3,832)   (1,401)    (3,288)                 
Non-equity preference dividends      (24)      (24)       (49)
Loss attributable to ordinary     
shareholders                      (3,856)   (1,425)    (3,337)                 
Proposed equity dividends              -         -          -
Loss retained                     (3,856)   (1,425)    (3,337)
Earnings per ordinary share         (7.5p)    (4.8p)     (6.5p)
Fully diluted earnings per          
ordinary share                      (7.5p)       -       (6.5p)

as at 30 June 1999

                                        30 June 30 June  31 December
                                         1999   1998        1998
                                          £000   £000      £000
Fixed Assets
Intangible assets                         931     508        807
Tangible assets                        13,520  13,053     13,719
Investments                                 -     813          -
Investments held for resale               874       -        874

                                       15,325  14,374     15,400
Current assets                                                
Stocks                                  9,316  10,339      9,161
Debtors: amounts falling due after        
more than one year                        805     932      1,003
Debtors: amounts falling due within     
one year                                6,582  11,035     11,954               
Cash at bank                              210     877        334
                                       16,913  23,183     22,452
Creditors: amounts falling due within                   
one year                              (14,418)(20,580)   (15,785)
Net current assets                      2,495   2,603      6,667
Total assets less current liabilities  17,820  16,977     22,067
Creditors: amounts falling due after  
more than one year                     (6,084) (7,224)    (6,590)              
Provision for liabilities and charges    (540)   (773)      (419)
Net assets                             11,196   8,980     15,058
Capital and Reserves
Called up share capital                 10,617  7,842     10,617
Share premium account                   20,327 15,555     20,327
Revaluation reserve                     1,559  1,559      1,559
Other reserves                             43 (15,33)        46
Profit and loss account               (21,350)  (143)   (17,491)
Total shareholders funds              11,196  8,980     15,058
Shareholders funds
Equity shareholders funds             10,711  8,495     14,573
Non-equity shareholders funds            485    485        485
Total shareholders funds              11,196  8,980     15,058

for the six months to 30 June 1999

                                    Six months     Year to
                                    to 30 June   31 December
                                   1999   1998        1998
                                    £000  £000       £000
Cash flow from operating          (105)  2,578       1,356
Return on investments and                                 
servicing of finance
Interest received                     2      9          50
Interest paid                     (499)  (676)      (1,227)
Finance lease interest paid        (15)   (12)         (42)
Non equity preference dividends   
paid                               (24)   (24)         (49)                    
                                  (536)  (703)      (1,268)
UK Taxation paid                   (29)  (203)        (459)
Overseas taxation paid             (31)  (159)           -
                                   (60)  (362)        (459)
Capital expenditure and                                   
financial investment
Expenditure on intangible fixed   
assets                            (128)  (131)        (434)
Purchase of tangible fixed       
assets                            (857)  (523)      (1,676)
Sale of tangible fixed assets       42    147          170
Sale of property held for resale     -      -          380
                                  (943)  (507)      (1,560)
Acquisitions - Deferred              -      -          371
consideration on acquisitions
Equity dividends paid                -      -            -

Cash inflow/(outflow) before      
financing                       (1,644) 1,006       (1,560)                    

Financing                         (312)  (750)       5,312
(Decrease)/increase in cash in    
the period                      (1,956)   256        3,752                     


Basis of preparation

The  financial information does not constitute full accounts
within the meaning of Section 240 of the Companies Act 1985.
The  information  in respect of the year ended  31  December
1998  has been extracted from the statutory accounts of  the
financial year then ended. The auditors have made  a  report
under  Section  235  of  the Companies  Act  1985  on  those
accounts and such report was unqualified and did not contain
a statement under Section 237(2) or Section 237(3) of the
Companies  Act  1985.  Statutory accounts  relating  to  the
financial year ended 31 December 1998 have been delivered to
the Registrar of Companies.


Taxation  has been estimated in the UK at the effective  tax
rate of 30%. (1998: 33%).

Accounting policies

The  accounting  policies remain as  stated  in  the  Annual
Report for the year ended 31 December 1998.

Earnings per ordinary share

The  earnings per share calculation is based on the loss  of
£3,856,000  (1998: loss of £1,425,000) for the period  after
deducting  preference dividends of £24,000 and  attributable
to  the  weighted  average of 51,320,692 (1998:  29,429,004)
ordinary shares in issue during the period.

Year 2000 compliance

Businesses  worldwide  are dealing with  potential  problems
posed  by  the use of computer equipment and software  which
record  and  use dates using only two digits for  the  year.
This may cause problems in both February next year and, most
possibly,  on the first of January 2000. Dedicated resources
were applied to quantify and eliminate the Groups Year 2000
exposure  beginning in January 1998. All  internal  hardware
and  software has been tested and replaced as necessary with
the  exception of one software module for customising report
writing. This is not critical to the business but is in  the
process  of being replaced this year. The Group has  written
to  all of its suppliers to determine if their systems  pose
any  problem.  This  process is  now  largely  complete  and
suppliers are being chased to obtain outstanding replies. No
significant  expenditure is envisaged over  and  above  that
already  spent  or  committed  in  terms  of  a  replacement
programme. All expenditure to date has been written off. The
directors believe, therefore, that they are taking  all  the
steps  possible to deal with the situation successfully  and
control  the  inherent uncertainties. However,  they  accept
that  the  year 2000 problem is simply too complex  for  any
single  entity  to guarantee year 2000 compliance  and  that
there remains a risk that unforeseen problems could occur.

Other information

Copies   of   this   statement  are  being   despatched   to
shareholders  and are available for members  of  the  public
from  the Groups registered office, Victoria Road,  Fenton,
Stoke on Trent, ST4 2HR.



We  have  been  instructed  by the  company  to  review  the
financial  information set out on pages 4 to 7 and  we  have
read  the other information contained in the interim  report
and    considered   whether   it   contains   any   apparent
misstatements or material inconsistencies with the financial

Directors Responsibilities

The  interim  report,  including the  financial  information
contained  therein, is the responsibility of, and  has  been
approved  by the directors. The Listing Rules of the  London
Stock  Exchange  require  that the accounting  policies  and
presentation  applied  to  the  interim  figures  should  be
consistent  with  those applied in preparing  the  preceding
annual  accounts except where any changes, and  the  reasons
for them, are disclosed.

Review Work Performed

We   conducted  our  review  in  accordance  with   guidance
contained  in  Bulletin 1999/4 'Review of Interim  Financial
Information'  issued  by  the Auditing  Practices  Board.  A
review   consists   principally  of  making   enquiries   of
management  and  applying  analytical  procedures   to   the
financial  information and underlying  financial  data  and,
based thereon, assessing
whether  the accounting policies and presentation have  been
consistently  applied unless otherwise disclosed.  A  review
excludes  audit  procedures such as tests  of  controls  and
verification of assets, liabilities and transactions. It  is
substantially  less  in  scope than an  audit  performed  in
accordance with Auditing Standards and therefore provides  a
lower  level of assurance than an audit. Accordingly, we  do
not express an audit opinion of the financial information.

Review Conclusion

On  the basis of our review we are not aware of any material
modifications   that  should  be  made  to   the   financial
information  as presented for the six months ended  30  June

Grant Thornton
Registered Auditors
Chartered Accountants
11 October 1999


a d v e r t i s e m e n t