6th Oct 2006 07:00
Tandem Group PLC06 October 2006 Chairman's interim statement For the six months ended 31 July 2006 the Group incurred a loss after goodwillamortisation, exceptional items and taxation of £207,000 compared to a loss lastyear of £399,000. Operating profit before goodwill amortisation and taxation was£15,000 compared to a loss of £123,000 for the same period last year. Turnoverwas £16,143,000 compared to £22,373,000 last year. The biggest factor in thereduced turnover was the loss of sales of the outdoor play and snooker and poolproducts previously sold by Pot Black. No dividend is proposed. Cycles We have the brands of Falcon, Dawes, Claud Butler, Shogun, Tourismo, BritishEagle and Optima. Production in the UK ceased in June 2006 with all bicycles nowbeing specified and designed in the UK and manufactured abroad. Exceptionalcosts of £198,000 were incurred in closing the production facilities but goingforward significant overhead and working capital savings will be made. Turnover was down in the six months compared to last year due to reduced salesto national retailers where margins are lower. Good progress has been madeelsewhere in increasing the customer base with more potential to come. Sports, leisure and toys MV Sports Group distributes a range of products featuring high profile brand andcharacter licences including Barbie, Groovy Chick, Bang on the Door Baby, Thomasthe Tank Engine, Bob the Builder and a range of football training equipmentunder the Kickmaster brand. Turnover from the UK operation was down on last year with increased competition against some of our longer established licences and cautious buying from national retailers. Following the trend of retailers buying closer to themanufacturing units, turnover from our Hong Kong operation increased over lastyear. Sales of Thomas the Tank Engine and Bob the Builder performed well,exceeding last year. Selections by national retailers for the important autumn/winter season aregreater than last year but buying commitments being made remain guarded. Snooker, pool and outdoor play products from the Pot Black range have beenredesigned by the product development team at MV. Customer reaction has beengood and it is expected that these product ranges should make a usefulcontribution in the future, particularly the outdoor play in the spring/summerof 2007. Golf equipment Turnover at Ben Sayers, our smallest business, was down on the previous yearfollowing the decision to withdraw from low margin business with a nationalretailer. Sales to independent retailers and export were up on last year and thecustomer base continues to expand. Summary We reminded shareholders in the annual report issued in May 2006 that profitsfor the Group have historically been concentrated in the second half of theyear. This year will be no exception. All businesses in the Group are working oninitiatives to improve profitability. Now that the problems encountered at our Pot Black business are behind us weexpect that the level of profitability in the second half will return to a moreacceptable level. Graham Waldron Chairman 6 October 2006 Consolidated profit and loss statement 6 months to 6 months to Year ended 31 July 31 July 31 January 2006 2005 2006 Unaudited Unaudited Audited £'000 £'000 £'000TurnoverContinuing operations 16,143 22,373 42,760 -------- -------- -------- Operating profit/(loss) beforegoodwill amortisation and impairment 15 (123) (1,156)Goodwill amortisation and impairment (92) (103) (640) -------- -------- --------Operating loss (77) (226) (1,796)Finance charges (130) (173) (361) -------- -------- --------Loss on ordinary activitiesbefore taxation (207) (399) (2,157)Tax on profit on ordinary activities - - (152) -------- -------- --------Loss for the financial yeartransferred from reserves (207) (399) (2,309) -------- -------- -------- Loss per shareBasic and diluted (0.55) (1.06) (6.14) Consolidated balance sheet 31 July 2006 31 July 2005 31 January 2006 Unaudited Unaudited Audited £'000 £'000 £'000 Fixed assetsIntangible assets 2,585 3,214 2,677Tangible assets 480 796 563 -------- -------- -------- 3,065 4,010 3,240 -------- -------- --------Current assets Stocks 5,577 7,698 5,664Debtors 7,728 9,037 5,527Cash at bank 1,421 2,397 2,426 -------- -------- -------- 14,726 19,132 13,617 -------- -------- --------Creditors - amounts falling due within one year (12,285) (15,337) (11,076) -------- -------- --------Net current assets 2,441 3,795 2,541 -------- -------- --------Net assets before pensionschemes' deficits 5,506 7,805 5,781 Pension schemes' deficits (2,742) - (2,839) -------- -------- --------Net assets 2,764 7,805 2,942 -------- -------- --------Capital and reservesCalled up share capital 1,503 1,503 1,503Share premium account 5,258 5,258 5,258Merger reserve 1,036 1,036 1,036Other reserves 1,426 1,449 1,426Profit and loss account (6,459) (1,441) (6,281) -------- -------- --------Equity shareholders' funds 2,764 7,805 2,942 -------- -------- -------- Consolidated cash flow statement 6 months to 6 months to Year ended 31 July 31 July 1 January 2006 2005 2006 Unaudited Unaudited Audited £'000 £'000 £'000 Notes Net cash (outflow)/inflow fromoperating activities 5 (871) 748 1,046 -------- -------- --------Returns on investments and servicing offinanceFinance charges paid (130) (171) (358)Interest element of hire purchase rentals - (2) (3) -------- -------- --------Net cash outflow from returns on investments and servicing of finance (130) (173) (361) -------- -------- --------Taxation - - (43) -------- -------- --------Capital expenditurePurchase of tangible fixed assets (34) (83) (119)Sale of tangible fixed assets 30 47 49 -------- -------- -------Net cash outflow from capitalexpenditure (4) (36) (70) -------- -------- --------Net cash (outflow)/inflow beforefinancing (1,005) 539 572 -------- -------- --------FinancingRepayments of amounts borrowed - (980) (980)Capital element of hire purchase rentals - (17) (21) -------- -------- --------Net cash outflow from financing - (997) (1,001) -------- -------- --------Decrease in cash 6 (1,005) (458) (429) -------- -------- -------- Notes to the interim report 1 Basis of preparation The interim financial statements have been prepared using accounting policiesstated in the Group's report and accounts for the year ended 31 January 2006 andare unaudited. The summary of results for the year ended 31 January 2006 doesnot constitute full financial statements within the meaning of the Companies Act1985. The report and full financial statements for that period have been filedwith the Registrar of Companies and contain an unqualified audit report. 2 Exceptional items Operating profit is after charging exceptional items totalling £198,000 for the6 months to 31 July 2006, £600,000 for the 6 months to 31 July 2005 and£1,382,000 for the year ended 31 January 2006. 3 Earnings per share The calculation of earnings per share is based on the net profit and ordinaryshares in issue during the period as follows: 6 months to 6 months to Year ended 31 July 31 July 1 January 2006 2005 2006 £'000 £'000 £'000 Basic and diluted earnings per shareLoss for the period (207) (399) (2,309) --------- --------- ---------Weighted average number of ordinary sharesin issue during the period 37,584,412 37,584,412 37,584,412 --------- --------- --------- FRS 14 requires presentation of diluted earnings per share ("EPS") when acompany could be called upon to issue shares that would decrease net profit orincrease net loss per share. For a loss making company with outstanding shareoptions, net loss per share would only be increased by the exercise ofout-of-the-money options. Since it seems inappropriate to assume that optionholders would act irrationally and there are no other diluting future shareissues, diluted EPS equals basic EPS. 4 Movement in equity shareholders' funds 6 months to 6 months to Year ended 31 July 31 July 1 January 2006 2005 2006 £'000 £'000 £'000 Loss for the period (207) (399) (2,309)Re-translation of overseas subsidiaries 29 26 38Net actuarial loss on pension schemes including related tax asset - - (910) -------- -------- -------- (178) (373) (3,181)Opening equity shareholders' funds 2,942 8,178 6,123 -------- -------- --------Closing equity shareholders' funds 2,764 7,805 2,942 -------- -------- -------- 5 Reconciliation of operating loss to net cash (outflow)/inflow from operating activities 6 months ended 6 months ended Year ended 31 July 2006 31 July 2005 31 January 2006 £'000 £'000 £'000 Operating loss (77) (226) (1,796)Depreciation charges 83 166 307Provision for amortisation/impairment of goodwill 92 103 640Loss/(profit) on sale oftangible fixed assets 4 (7) 119Decrease in stocks 87 796 2,830(Increase)/decrease in debtors (2,201) (1,306) 2,095Increase/(decrease) in creditors 1,141 1,222 (3,024)Adjustment for pension funding - - (125) -------- -------- --------Net cash (outflow)/inflow fromoperating activities (871) 748 1,046 -------- -------- -------- 6 Reconciliation of net cash outflow to movement in net funds 6 months ended 6 months ended Year ended 31 July 2006 31 July 2005 31 January 2006 £'000 £'000 £'000 Decrease in cash (1,005) (458) (429)Cash to repay finance leasesand hire purchase contracts - 17 21Loan repayments - 980 980 -------- -------- --------Changes in net funds resultingfrom cash flows (1,005) 539 572Net funds at beginning of period 2,425 1,853 1,853 -------- -------- --------Net funds at end of period 1,420 2,392 2,425 -------- -------- -------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Tandem Group