27th Jun 2005 07:00
Multi Group PLC27 June 2005 MULTI GROUP PLC Preliminary announcement of the unaudited results for the year ended 31 December 2004 Executive Chairman's Statement In recent years Multi has experienced difficult trading conditions and reportedsubstantial losses, however 2004 has been a year of fundamental change for theGroup. Multi has now exited from all of its loss making enterprises, has ceased to be ahirer of small tools to the construction industry and in March 2005 wasrelaunched in the staffing and recruitment sector. Results for the year For the year ended 31 December 2004 Multi reported a pre-tax profit of £2million on turnover of £5.7 million. This was in marked contrast to the previoustwo years when, in 2002 the Group reported a pre-tax loss of £3 million onturnover of £15.8 million and in 2003 reported a pre-tax loss of £3.6 million onturnover of £14 million. As at 31 December 2004 the Group had net assets of £4.3 million (2003 £2.4million), and had cash resources of £5.0 million (2003 net overdraft £1million). Strategic developments In the early part of 2004 the Group's various non core businesses were sold foran aggregate cash consideration of £980k. These disposals together with the implementation of a significant cost cuttingexercise did much to stem the losses reported by the Group in previous periods. The Board then conducted a review of the tool hire sector and concluded thatother business sectors offered shareholders a better prospect for a return ontheir investment. Consequently, in August 2004 the directors announced thedisposal of the Group's tool hire businesses for a net cash consideration of £7million. The amount by which the aggregate proceeds from these disposals exceeded thebook value of the investments at the date of disposal has been reflected in theresults for the year. Having investigated a number of other business sectors in which the Group mightmore successfully operate the directors identified the staffing and recruitmentsector as being one in which there are considerable opportunities to develop theGroup. Their intention is now to pursue a buy and build programme using Multi as avehicle to consolidate both public and private operators within this sector. Companies and businesses acquired will be developed organically, however it isanticipated that the majority of the Group's growth in both turnover andprofitability will come from further acquisitions. As acquisitions are made by the Group the directors would expect to make savingsthrough the removal of duplicated costs and by streamlining back officefunctions. As a first step in this new direction, in March 2005 the directors announced theacquisition of Berry Recruitment Holdings Limited. Berry is a private companywith over 50 employees currently operating from 11 offices around the UK. The company supplies permanent and temporary staff into a wide range ofcommercial sectors and in addition provides predominantly unskilled andsemi-skilled staff into the medical and care sectors. Berry's unaudited management accounts indicate that it has been tradingprofitably in the period from October 2004 to date and the directors believethat the acquisition gives Multi a meaningful base from which to develop theGroup. As a part of the completion arrangements the majority of Berry's existing debtwas discharged through conversion into Multi shares, with the balance beingrepaid in cash. The consideration for the acquisition of the company wassatisfied entirely through the issue of Multi shares rather than cash. As aresult the Company retained some £4 million of cash resources for futuredevelopment and acquisitions. In June 2005 the directors announced that Berry had acquired the business andassets of Grays Personnel Limited. Grays is an independent recruitment agency founded in 1988 whose offices inHorsham, Epsom, Sutton, and Worthing are geographically complimentary to theeleven branches in Berry's network. The business specialises in the selectionand supply of temporary and permanent staff into a wide range of commercialsectors. The business will be fully integrated into Berry Recruitment but willcontinue to trade as Grays Personnel in the short term. Share subscription by directors The directors believe that the acquisition of Berry presents an excellentopportunity to improve the Company's trading performance and to add value forshareholders. In the light of this belief and their confidence in the Company'sprospects, on 7 March 2005 Multi's two executive directors, Andrew Brundle andmyself, subscribed for an aggregate of 3,650,000 additional new shares at aprice of 3.5 pence per share. Strengthening of the Board In November 2004 David Marks joined the Board as a non-executive director of theCompany. David is a Chartered Accountant and holds an honours degree in law. He hasconsiderable experience in the fields of private equity, corporate finance andcorporate recovery gained whilst serving with substantial organisations such asArthur Andersen, UBS, Deutsche Bank and latterly with Nikko PrincipalInvestments. David will also serve as an independent member on the Company's remuneration andaudit committees. The future The directors are actively pursuing a number of other potential acquisitionopportunities and on 23 May 2005 announced that Multi had made a strategicinvestment in Lorien Plc, an IT resourcing and specialist services companyquoted on the Official List. Multi had acquired 850,000 ordinary shares in Lorien at a price of 35 pence pershare, representing some 4.56 per cent of Lorien's issued share capital.However, Multi is deemed to be acting in concert with its largest shareholder,Southwind Limited (together "the Concert Party") in respect of Lorien andSouthwind is currently interested in 3,250,000 Lorien shares, representing 17.5per cent of Lorien's issued share capital. The Concert Party is thereforeinterested in a total of 4,100,000 Lorien shares, representing 22.1 per cent ofits issued voting capital. The directors continue to look forward to the future with confidence. Oliver C CookeExecutive Chairman Contact: Oliver Cooke - Executive Chairman08701 602 901 Andrew Brundle - Chief Financial Officer08701 602 969 William Vandyk - Corporate Synergy020 7626 2244 Consolidated profit and loss account For the year ended 31 December 2004 2004 2004 2004 2003 Continuing Discontinued Total Total Note £'000 £'000 £'000 £'000 (unaudited) (unaudited) (unaudited) (audited) Turnover - 5,744 5,744 13,995Cost of sales - 926 926 5,106 Gross profit - 4,818 4,818 8,889Other operating expenses 783 5,375 6,158 12,234 Operating loss 2 (783) (557) (1,340) (3,345)Earnings before interest, tax anddepreciation Operating loss (783) (557) (1,340) (3,345) Add back: Depreciation 55 835 890 2,983 EBITDA (728) 278 (450) (362) Profit on disposal of businesses 3,305 - Profit/(loss) on ordinaryactivities before interest 1,965 (3,345)Interest receivable 109 -Interest payable and similarcharges (38) (270) Profit/(loss) on ordinaryactivities before taxation 2,036 (3,615)Taxation (239) 642 Profit/(loss) for the financialyear 1,797 (2,973) Pence PenceEarnings/(loss) per share:- Basic 3 0.69 (4.22)- Diluted 3 0.67 (4.22) Earnings per share beforedepreciation - Basic 3 1.03 0.01 - Diluted 3 1.01 0.01 Consolidated balance sheet At 31 December 2004 2004 2004 2003 2003 £'000 £'000 £'000 £'000 (unaudited) (unaudited) (audited) (audited) Fixed assetsTangible assets 119 4,879 119 4,879Current assetsStock - 112Debtors 418 3,409Cash at bank and in hand 5,120 8 5,538 3,529 Creditors: amounts falling due within one year (1,300) (5,459) Net current assets/(liabilities) 4,238 (1,930) Total assets less current liabilities 4,357 2,949 Creditors: amounts falling due after more than oneyear (20) (516)Provisions for liabilities and charges (35) (78) Net assets 4,302 2,355 Capital and reservesCalled up share capital 2,541 2,526Share premium account 3,095 2,960Other reserves - 250Profit and loss account (1,334) (3,381) Shareholders' funds - equity 4,302 2,355 Consolidated cash flow statement For the year ended 31 December 2004 2004 2003 £'000 £'000 (unaudited) (audited)Reconciliation of operating profit/(loss) to net cash inflow fromoperating activitiesOperating loss (1,340) (3,345)Depreciation charges 890 2,983Loss on disposal of fixed assets 93 103Share option charge - 462(Increase)/decrease in stocks (30) 183Decrease in debtors 2,512 2,251Decrease in creditors (3,064) (1,285) Net cash (outflow)/inflow from operating activities (939) 1,352 Cash flow statementNet cash (outflow)/inflow from operating activities (939) 1,352Returns on investments and servicing of finance 71 (270)Taxation recovered/(paid) 46 (42)Proceeds from sale of businesses 7,980 -Capital expenditure (net of disposal proceeds) (977) 256 Cash inflow before financing 6,181 1,296Financing (155) 623 Increase in cash in the year 6,026 1,919 Reconciliation of net cash inflow to movement in net debtIncrease in cash in the year 6,026 1,919Cash outflow from decrease in debt and lease financing 929 1,127 Change in net debt resulting from cash flows 6,955 3,046New finance leases (144) (811) Movement in net debt in the year 6,811 2,235Net debt at start of the year (1,803) (4,038) Net funds/(debt) at 31 December 2004 5,008 (1,803) Notes forming part of the financial statements 1 Basis of preparation The preliminary financial information set out above incorporates the unauditedresults of Multi Group PLC and all its subsidiary undertakings for the yearended 31 December 2004. The financial information set out in the announcement does not constitute thecompany's statutory accounts for the year ended 31 December 2004 or 2003. Thefinancial information for the year ended 31 December 2003 is derived from thestatutory accounts for that year which have been delivered to the Registrar ofCompanies. The auditors reported on those accounts; their report was unqualifiedand did not contain a statement under s237(2) or (3) Companies Act 1985. Thestatutory accounts for the year ended 31 December 2004 will be finalised on thebasis of the financial information presented by the directors in thispreliminary announcement and will be delivered to the Registrar of Companiesfollowing the Company's annual general meeting. Furthermore, the preliminary financial information has been prepared on a basisconsistent with the audited financial statements for the year ended 31 December2003. 2 Operating loss 2004 2003 £'000 £'000 (unaudited) (audited) Operating loss is stated after charging/(crediting):Depreciation and impairment of tangible assets: 890 2,983Profit on disposal of software division - (218)Loss on disposal of fixed assets 93 103Invoice discounting administration charge 44 17Abortive acquisition/fundraising costs 215 257Operating lease rentals 378 871Auditors' remuneration: - audit services (Group) 28 55- audit services (Company only) 10 15- other services/fees (Group) 147 207 In addition, the auditors were paid £56,400 in 2003 in respect of non-auditservices which has been charged to the share premium account. 3 Earnings/(loss) per share The calculation of earnings per share for the year ended 31 December 2004 isbased on the profit after taxation of £1,797,000 (2003: loss £2,973,000) and aweighted average number of shares in issue during the year of 260,192,656 (2003:70,382,518). Effect of Basic share options Diluted 31 December 2004 260,192,656 9,300,018 269,492,67431 December 2003 70,382,518 755,228 71,137,746 Additional disclosure is given below in respect of earnings/(loss) per sharebefore depreciation, as the directors believe this gives a more accuratepresentation of maintainable earnings. 2004 2003 Pence Pence (unaudited) (audited) Basic earnings/(loss) per share 0.69 (4.22)Depreciation 0.34 4.23 Basic earnings per share before depreciation 1.03 0.01 Diluted earnings/(loss) per share 0.67 (4.22)Depreciation 0.34 4.23 Diluted earnings per share before depreciation 1.01 0.01 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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