1st May 2008 07:00
Tandem Group PLC01 May 2008 TANDEM GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JANUARY 2008 Chairman's statement ______________________________________________________________ Turnover for the year ended 31 January 2008 was £34,878,000 compared to£33,785,000 last year. There was a profit before taxation of £1,105,000 comparedto £649,000. Bicycles and accessories The total number of bicycles sold increased by 4.8% over the previous year. Withlower sales of higher priced models, due predominantly to the bad weather,revenue in our cycle businesses was down by 5.9%. Our UK based product development team continues to design and develop newbicycles to provide our customers with innovative and exciting productsreinforcing our commitment to independent bicycle retailers. Sports, leisure and toys Turnover in the sports, leisure and toy sector was up 16.3% over the previousyear. Sales of the brands "Hedstrom", "In the Night Garden" and "C'Mons"performed well. "Hedstrom" is a wide range of outdoor play equipment includingswings, slides and multiplay products. The "In the Night Garden" range ofwheeled toys is based on the very successful BBC children's programme. "C'Mons"are the characters used by the Vauxhall motor company in the marketing of theCorsa, which was voted "What Car" Car of the Year 2007. Sales of Ben Sayers golf equipment continue to expand with the introduction ofnew products with the latest design and technology features. Improvements to shareholder value We continue to explore ways to enhance shareholder value. The profit for the year and the elimination of the Tandem pension scheme deficithas substantially increased shareholders' funds. In the year ended 31 January 2008 we generated £1,843,000 of cash enabling us todeal with the deficit on The Tandem pension scheme and buy some of our sharesback. On the 22 February 2008 the Group purchased 1,600,000 of its own shares andtransferred them into treasury. This increases shareholder value and willimprove earnings per share going forward. At the forthcoming Annual GeneralMeeting we are asking shareholders' authority for the Company to continue topurchase its own shares. The Company would only exercise the authority if theeffect of doing so would be to increase the earnings per share of the remainingshareholders and be in the best interests of shareholders generally. Inaddition, in exercising such authority, the Company would comply with thecurrent guidelines of the ABI and the UK Listing Authority. A large number of shareholders own a small number of shares, which they finduneconomical to sell. We are therefore offering shareholders holding 1,000shares or less the opportunity, for a limited period, to sell their shareswithout any dealing costs. They will also be offered the opportunity to purchasemore shares at a reduced fixed commission rate. Decreasing the number of smallshareholders will reduce the administration costs of the Company. Furtherdetails of the offer will be sent to relevant shareholders shortly. Pensions The Group operates two pension schemes that have defined benefit liabilities. I reported in the Interim Statement issued on 17 October 2007 that work wascontinuing on ways to further reduce or eliminate the deficit on the pensionschemes. We are keen to protect the interest of the members of the Group'spension schemes and give them every possible opportunity to utilise the benefitto suit their personal circumstances. Following a significant amount of workwith the scheme's administrators and actuary, members of the Tandem GroupPension Plan were offered the opportunity, for a limited period, to accept acash sum to forego their non-statutory increases in pension. Thirty six percentof members of the scheme accepted the offer and a total payment of £352,000 wasmade in March 2008 to the members. This made a major contribution in eliminatingthe £1,547,000 deficit on the Tandem scheme at 31 January 2007 and turning itinto a surplus of £971,000. In accordance with the accounting standard IAS 19 wehave recognised £264,000 of this surplus on our balance sheet in these financialstatements. The deficit on the Casket Group Retirement and Death Benefit Scheme decreasedfrom £590,000 last year to £546,000. We are now looking at ways to reduce oreliminate this deficit. Employees We wish to thank all management and employees for their contribution inincreasing the Group's profitability. We have an established team of managementand staff with the skills to take the business forward. Summary The year ended 31 January 2008 was a good year for your Group with turnover up3.2% and profit before tax up 70.3%. Even with the increased turnover tightcontrol of costs limited the increase in operating expenses to under 1%. The year ahead will be challenging. Most retailers expect trading conditions tobe difficult with the uncertainty in the economy. In addition, our suppliers areexperiencing exceptional increases in steel, oil and labour costs, particularlyin Asia. Additional effort and creativity will be required from our managementteams and staff to ensure that, by working closely with suppliers, our customerscan maintain and grow their sales. We do not anticipate any growth in turnover for the first half of the year compared to last year. Turnover in the first quarter of the current year wasdown on the high levels achieved last year but with improved margins and firm management of operating expenses the profit before tax in this period was ahead of the same period last year. Increased selections with national retailers and new character licences should improve sales in the second half of the year compared to last year. Graham WaldronChairman1 May 2008 For further information contact: Tandem Group plcMervyn Keene 01733 211065 KBC Peel HuntNick Maslen or Richard Newman 020 7418 8900 Consolidated income statement ______________________________________________________________ Note Year ended 31 Year ended 31 January 2008 January 2007 £'000 £'000 Revenue 3 34,878 33,785Cost of sales (23,753) (23,169) ------- -------Gross profit 11,125 10,616Operating expenses (9,773) (9,696) ------- -------Operating profit 1,352 920Finance costs (280) (271)Finance income 33 - ------- -------Profit before taxation 1,105 649Tax income - 297 ------- -------Net profit for the year 1,105 946 Earnings per share 4 Pence Pence Basic 2.94 2.52 ------- -------Diluted 2.91 2.52 ------- ------- All figures relate to continuing operations. Consolidated balance sheet ______________________________________________________________ At 31 January 2008 2008 2007 £'000 £'000Non current assetsGoodwill 2,661 2,677Property, plant and equipment 510 403Deferred taxation 970 1,354Pension scheme surplus 264 - ------- ------- 4,405 4,434 ------- -------Current assetsInventories 5,582 5,676Trade and other receivables 5,556 5,435Cash and cash equivalents 2,389 551 ------- ------- 13,527 11,662 ------- -------Total assets 17,932 16,096 ------- -------Current liabilitiesTrade and other payables (7,792) (6,076)Financial liabilities (2,300) (2,456)Current tax liabilities (326) (365) ------- ------- (10,418) (8,897) ------- -------Non current liabilitiesPension schemes' deficits (546) (2,137)Deferred taxation (74) - ------- ------- (620) (2,137) ------- -------Total liabilities (11,038) (11,034) ------- -------Net assets 6,894 5,062 ------- -------EquityShare capital 1,503 1,503Share premium 5,258 5,258Other reserves 2,426 2,431Profit and loss account (2,293) (4,130) ------- -------Total equity 6,894 5,062 ------- ------- Consolidated statement of recognised income and expense ______________________________________________________________ Year ended 31 Year ended 31 January 2008 January 2007 £'000 £'000 Foreign exchange differences on translationof overseas assets (5) (70)Actuarial gain on pension schemes 1,281 1,221Movement in pension schemes' deferred tax provision (562) - ------- -------Net income recognised directly in equity 714 1,151Net profit for the year 1,105 946 ------- ------- Total recognised income and expense 1,819 2,097 ------- ------- Statement of movements on reserves ______________________________________________________________ Capital Profit Share Merger redemption Translation and loss account reserve reserve reserve account Total £'000 £'000 £'000 £'000 £'000 £'000Balance at 1 February 2006 5,258 1,036 1,427 38 (6,324) 1,435Profit for the year - - - - 946 946Re-translation ofoverseas subsidiaries - - - (70) - (70)Net actuarial gains on pension schemes - - - - 1,221 1,221Share based payments - - - - 27 27 ------- ------- ------- ------- ------- -------Balance at 1February 2007 5,258 1,036 1,427 (32) (4,130) 3,559Profit for the year - - - - 1,105 1,105Re-translation ofoverseas subsidiaries - - - (5) - (5)Net actuarial gainson pension schemes - - - - 719 719Share based payments - - - - 13 13 ------- ------- ------- ------- ------- -------Balance at 31January 2008 5,258 1,036 1,427 (37) (2,293) 5,391 ------- ------- ------- ------- ------- ------- Consolidated cash flow statement ______________________________________________________________ Year ended Year ended 31 January 2008 31 January 2007 £'000 £'000Cash flows from operating activitiesNet profit for the year 1,105 946Adjustments:Depreciation of property, plant and equipment 152 173Goodwill impairment 16 -(Profit)/loss on sale of property, plant and equipment (11) 48Finance cost 280 271Finance income (33) -Taxation paid (89) (85)Tax income - (297)Share based payments 13 27Fair value adjustments of forward contracts (42) 37 ------- -------Net cash inflow from operating activities before movements in working capital 1,391 1,120 Decrease/(increase) in inventories 94 (12)Increase in trade and other receivables (225) (681)Increase/(decrease) in trade and other payables 1,203 (1,166) ------- -------Cash generated/(utilised) from operations 2,463 (739) Cash flows from investing activitiesPurchases of property, plant and equipment (259) (94)Sale of property, plant and equipment 11 31 ------- -------Net cash used in investing activities (248) (63) Cash flows from financing activitiesDecrease in invoice financing (115) (726)Capital element of finance lease rentals - (1)Interest paid (257) (276) ------- -------Net cash used in financing activities (372) (1,003) Net increase/(decrease) in cash and cash equivalents 1,843 (1,805)Cash and cash equivalents at beginning of year 551 2,426Effect of foreign exchange rate changes (5) (70) ------- -------Cash and cash equivalents at end of year 2,389 551 ------- ------- Notes to the preliminary results _____________________________________________________________ 1. General information The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The consolidated income statement, the consolidated balance sheet at 31January 2008, the consolidated statement of recognised income and expense, thestatement of movements on reserves, the consolidated cash flow statement and theassociated notes for the year then ended have been extracted from the Group'sfinancial statements upon which the auditor's opinion is unqualified and doesnot include any statement under Section 237 of the Companies Act 1985. Thestatutory accounts for the year ended 31 January 2008 will be delivered to theRegistrar of Companies following the Group's Annual General Meeting. 2. Basis of preparation The consolidated financial statements of the Group have been prepared under thehistorical cost convention and in accordance with the International FinancialReporting Standards (IFRS) as adopted by the EU and the IFRS as issued by theInternational Accounting Standards Board. The transition to IFRS has been madein accordance with International Financial Reporting Standard 1, "First-timeadoption of International Financial Reporting Standards". The transition to IFRS reporting has resulted in a number of changes in the reported financial statements, notes thereto and accounting principles compared to the previous annual report. The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS are set out in the financial statements for the year ended 31 January 2008 and were summarised in the interim financial statements for the period ended 31 July 2007. The accounting policies are the same as those adopted for the interim financial statements. The key areas of estimation uncertainty and judgment in the financial statementsare as detailed below: Impairment of goodwill The annual impairment assessment in respect of goodwill requires estimates ofthe value in use of cash generating units to which goodwill has been allocatedto be calculated. As a result, estimates of future cash flows are required,together with an appropriate discount factor for the purpose of determining thepresent value of those cash flows. Pension scheme valuation The liabilities in respect of defined benefit pension schemes are calculated byqualified actuaries and reviewed by the Group, but are necessarily based onsubjective assumptions. The principal uncertainties relate to the estimation ofthe life expectancies of scheme members, future investment yields and generalmarket conditions for factors such as inflation and interest rates. Profits and losses in relation to changes in actuarial assumptions are takendirectly to reserves and therefore do not impact on the profitability of thebusiness, but the changes do impact on net assets. Useful lives of property, plant and equipment Intangible assets and property, plant and equipment are amortised or depreciatedover their useful lives. Useful lives are based on the estimated period that theassets will generate revenue, which are periodically reviewed for continuedappropriateness. Due to the long life of the assets, changes to the estimatesused can result in significant variations in the carrying value. Inventory The Group reviews the net realisable value of and demand for its inventory on anongoing basis to ensure recorded inventory is stated at the lower of cost or netrealisable value. Factors that could impact estimated demand and selling pricesare the timing and success of future technological innovations, competitoractions, suppliers prices and economic trends. If total inventory losses differ,the Group's consolidated net income in the year would have improved or declined,depending upon whether the actual results were better or worse than expected. 3. Segmental reporting For management purposes the Group is organised into two operating segments. Therevenues, results and net assets for these segments are shown below: (a) By business segment Sports, Bicycles and leisure accessories and toys Total £'000 £'000 £'000Year ended 31 January 2008 Revenue 18,675 16,203 34,878 ------- ------- ------- Segment result 1,176 800 1,976 ------- ------- ------- Unallocated corporate expenses (624) -------Operating profit 1,352Finance costs (280)Finance income 33 -------Profit before taxation 1,105Tax income - -------Net profit for the year 1,105 ------- Segment assets 8,923 4,818 13,741Unallocated assets 5,346 ------- 19,087Segment liabilities (6,506) (4,294) (10,800)Unallocatedliabilities (1,393) ------- (12,193) -------Consolidated net assets 6,894 ------- Capital additions 157 102 259 ------- ------- ------- Depreciation and goodwill impairment 84 84 168 ------- ------- ------- Year ended 31 January 2007 Revenue 19,852 13,933 33,785 ------- ------- ------- Segment result 1,260 147 1,407 ------- ------- ------- Unallocated corporate expenses (487) -------Operating profit 920Finance costs (271) -------Profit before taxation 649Tax income 297 -------Net profit for the year 946 ------- Segment assets 8,750 4,533 13,283Unallocated assets 13,277 ------- 26,560Segment liabilities (7,113) (4,718) (11,831)Unallocated liabilities (9,667) ------- (21,498) -------Consolidated net assets 5,062 ------- Capital additions 18 76 94 ------- ------- ------- Depreciation and goodwill impairment 61 112 173 ------- ------- ------- (b) By geographical segment United Rest of Kingdom Europe the World Total £'000 £'000 £'000 £'000Year ended 31 January 2008 Revenue 32,425 1,748 705 34,878 ------- ------- ------- ------- Assets 16,902 - 2,185 19,087Liabilities (11,028) - (1,165) (12,193) ------- ------- ------- -------Net assets 5,874 - 1,020 6,894 ------- ------- ------- ------- Capital additions 259 - - 259 ------- ------- ------- ------- Year ended 31 January 2007 Revenue 31,108 1,857 820 33,785 ------- ------- ------- ------- Assets 25,100 - 1,460 26,560Liabilities (20,754) - (744) (21,498) ------- ------- ------- -------Net assets 4,346 - 716 5,062 ------- ------- ------- ------- Capital additions 94 - - 94 ------- ------- ------- ------- 4. Earnings per share The calculation of earnings per share is based on the net profit and ordinaryshares in issue during the year as follows: Year ended Year ended 31 January 31 January 2008 2007 £'000 £'000 Net profit for the year 1,105 946 --------- ---------Weighted average shares in issue used for basicearnings per share 37,584,412 37,584,412Weighted average dilutive shares under option 2,834,726 -Number of shares that would have been issued at fairvalue (2,415,422) - --------- --------- Average number of shares used for diluted earningsper share 38,003,716 37,584,412 --------- --------- Pence PenceBasic earnings per share 2.94 2.52 ------- -------Diluted earnings per share 2.91 2.52 ------- ------- 5. Dividend No dividend on the ordinary shares is being proposed (2007 - £nil). 6. Annual report and accounts The annual report and accounts will be posted to shareholders shortly and willbe available on the Company's website, www.tandemgroup.co.uk. 7. Annual General Meeting The Annual General Meeting will be held at 11:00 a.m. on 19 June 2008 at MVSports & Leisure Ltd, 35 Tameside Drive, Castle Bromwich, Birmingham, B35 7AG. 1 May 2008 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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