RNS Number:3318Q
Airbath Group PLC
30 September 2003
Airbath Group plc
Preliminary Results Announcement
Airbath Group plc (the "Company"), a specialist designer and manufacturer of
baths and bathwares, announces preliminary results for year ended 31 March 2003.
Highlights of the results:
- Profits in line with trading statement of 9 April 2003
- Profit before exceptional items and tax #673,000 (2002: #944,000)
- Net debt reduced to #3,566,000 from #4,349,000
- Earnings per share of 0.85p (2002: loss per share 0.67p)
Commenting, Clive Gilham, Executive Chairman, said: "The Group has undergone
considerable change since our flotation in August 2001 and has overcome many
short term problems during that time. Unfortunately, order intake and trading
volumes in the period since the year end have been disappointing and the interim
results will, therefore, be well below those achieved last year. Nevertheless,
we believe that there are many opportunities for growth, especially for our
Airbath(R) and Appollo(R) product ranges, and we remain committed to the further
development of the Group."
For further information please contact:
Airbath Group plc Telephone - 01422 349401
Clive Gilham, Executive Chairman
Brown, Shipley & Co. Limited Telephone - 0161 214 6540
David Simmons
CHAIRMAN'S STATEMENT
Financial results
The challenging trading conditions referred to in the interim results of 19
December 2002 continued from the third quarter into the fourth quarter in both
Aquabeau and Brampton Housewares. These difficulties have resulted in the
profit before tax and exceptional items for the full year being about one third
below our expectations, as we announced to the Stock Exchange on 9 April 2003.
The profit before tax for the year ended 31 March 2003 was #559,000 (41 weeks
ended 31 March 2002: #56,000). The earnings per share was 0.85p (41 weeks ended
31 March 2002: loss per share of 0.67p).
Net exceptional costs before taxation for the period were #114,000 (2002:
#888,000). Of this, exceptional costs of #352,000 were incurred as a result of
reorganisation and redundancy in both of the trading companies. Since the half
year date, we have successfully negotiated a recovery from Aquarius Group plc
from claims arising under the demerger agreement, principally relating to costs
suffered by the Group in the period ended 31 March 2002. This claim was settled
on 31 October 2002 by a combination of cancelling preference shares and waiving
accrued dividends to a value of #238,000 net of expenses. This exceptional
profit has been recognised in the full year results and this leaves a total of
#2,601,000 7% net cumulative preference shares in issue.
During the year, the Group entered into an interest rate swap contract which
effectively fixes part of the Group's interest rate exposure for two years from
1 January 2004 at an interest rate of 4.46%.
Balance sheet
Net debt at 31 March 2003 was #3,566,000 (2002: #4,349,000), which was
significantly reduced by working capital initiatives, particularly involving
better inventory management. The Group balance sheet at 31 March 2003 shows net
liabilities of #1,215,000 (2002: #1,249,000), which is primarily due to a merger
reserve of #4,142,000 arising on the demerger of the trading companies from
Aquarius Group plc in 2002.
Dividend
During the year, an interim ordinary dividend of 0.10p (41 weeks to 31 March:
nil) was paid on 27 February 2003. In light of the trading outcome for the
financial year and the disappointing start to the current year, the Board has
decided that it will not be appropriate to pay a final ordinary dividend. In
any case, the deficit on profit and loss reserves prevents any distribution of
dividends. During the year, the Company accrued preference dividends of
#192,000 (41 weeks to 31 March 2002: #124,000) and paid #200,000 of preference
dividends (41 weeks to 31 March 2002: #24,000). Due to the deficit on profit
and loss reserves, the proposed preference dividend of #90,000 cannot be paid
and will not be paid in the foreseeable future. The cost of this dividend has
been recognised in the profit and loss account as a finance cost and credited
back through reserves.
Review of operations
Aquabeau - turnover #9,501,000 (2002 proforma: #9,857,000)
Aquabeau specialises in the design and manufacture of spa baths, hydraulic and
walk-in baths, quality standard baths, shower trays and bath panels.
Aquabeau's sales did not increase as anticipated, in part due to the change of
some of Appollo's suppliers in the third quarter, and this resulted in a small
drop in full year profits compared with last year. However, Aquabeau remains
profitable with good operating margins. We remain committed to our strategy of
focusing on our niche and more profitable product ranges and to the marketing of
Airbath(R) products through our now established "Centres of Excellence". We
believe that there are numerous opportunities for profitable growth in most of
the markets served by Aquabeau. The Appollo(R) range of assisted bathing
products is directed at a growing market of both institutional and private
clients. The moving water segment of the market is growing significantly and
this is served by both our Airbath(R) range of products as well as our small but
increasing range of whirlpools. Meanwhile, the Aquarius range has performed
well in the period and we expect this success to continue. Aquabeau's strategy
continues to focus upon expanding its range of high margin products and
strengthening its brands.
Brampton Housewares - turnover #5,802,000 (2002 pro forma: #6,640,000)
Brampton Housewares, the bathware collection, continues to manufacture, assemble
and distribute a range of bathroom cabinets and accessories.
Brampton Housewares has continued to suffer in an increasingly tough market and
profits for this company were considerably behind those for the same period last
year. There has been significant investment in sales and commercial staff to
strengthen the business and it is moving away from using third party sales
agencies. However, the benefits of this change were not felt during this
financial year as onerous EU law concerning third party agents forced us to pay
considerable severance costs. Following the merger of two of our major
customers, we continue to monitor developments in the bathwares marketplace.
Directors and staff
Following the considerable operational changes that took place within the
business last year, Glenn Powers relinquished his role as Operations Director
and has since resigned as a Director. Phillip Bennett also resigned as a
non-executive Director during the year. I would like to thank those directors,
our staff and all of our employees for their continued and enthusiastic support
and commitment throughout this change process.
Strategy
The Group's strategy is to focus the existing niche businesses on their
profitable brands and product ranges. An emphasis on design and quality will
continue to be supported by a culture of customer service.
Prospects and current trading
The Group has undergone considerable change since our flotation in August 2001
and has overcome many short term problems during that time. Unfortunately,
order intake and trading volumes in the period since the year end have been
disappointing and the interim results will therefore be well below those
achieved last year. Nevertheless, we believe that there are many opportunities
for growth, especially for our Airbath(R) and Appollo(R) product range, and we
remain committed to the further development of the Group.
Going concern
Subsequent to the year end, the Group is in breach of its banking covenants.
All the bank facilities are now repayable on demand, and the revolving debt
facility has been reduced from #2.5m to #1.6m. The overdraft and invoice
discounting facility have not been affected. The Directors have been in
discussion with the Group's bankers, who have indicated that they are prepared
to continue to provide adequate bank facilities, subject to a number of
conditions, including satisfactory trading performance. The Bank has not
demanded repayment of its loans. The Directors believe it is appropriate that
the financial statements, from which the contents of this announcement have been
taken, be prepared on a going concern basis. Further details are given in note
2.
Clive Gilham
Executive Chairman
30 September 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for year ended 31 March 2003
Year ended 31 March 2003 41 weeks ended 31 March 2002
Pre-exceptional Pre-exceptional
items items
Exceptional Exceptional
items items
Total Total
#'000 #'000 #'000 #'000 #'000 #'000
Turnover 15,303 - 15,303 12,885 - 12,885
Cost of sales (10,156) - (10,156) (8,547) (145) (8,692)
----------- ----------- ----------- ----------- ----------- -----------
Gross profit 5,147 - 5,147 4,338 (145) 4,193
Distribution costs (805) - (805) (647) (32) (679)
Administrative expenses (3,364) (114) (3,478) (2,513) (711) (3,224)
----------- ----------- ----------- ----------- ----------- -----------
Operating profit 978 (114) 864 1,178 (888) 290
Interest (305) - (305) (234) - (234)
----------- ----------- ----------- ----------- ----------- -----------
Profit before taxation 673 (114) 559 944 (888) 56
Taxation (184) 34 (150) (302) 235 (67)
----------- ----------- ----------- ----------- ----------- -----------
Profit/(loss) after taxation 489 (80) 409 642 (653) (11)
Dividends paid and proposed:
- preference shares (192) - (192) (124) - (124)
- ordinary shares (25) - (25) (168) - (168)
----------- ----------- ----------- ----------- ----------- -----------
Retained profit/(loss) for 272 (80) 192 350 (653) (303)
the period
======= ======= ======= ======= ======= =======
Basic and diluted earnings/ 0.85p (0.67)p
(loss) per share
======= =======
There are no recognised gains or losses in the year other than the profit for
the period reported in this profit and loss account.
BALANCE SHEETS
as at 31 March 2003
31 March 2003 31 March 2002
Group Company Group Company
#'000 #'000 #'000 #'000
Fixed assets
Intangible assets 3 - 3 -
Tangible assets 1,681 - 1,710 -
Investments - - - 180
----------- ----------- ----------- -----------
1,684 - 1,713 180
----------- ----------- ----------- -----------
Current assets
Stock 1,788 - 1,724 -
Debtors 3,392 162 3,761 2,992
Cash - - - 318
----------- ----------- ----------- -----------
5,180 162 5,485 3,310
Creditors: amounts falling due within one year (5,220) (716) (5,386) (224)
----------- ----------- ----------- -----------
Net current (liabilities)/assets (40) (554) 99 3,086
----------- ----------- ----------- -----------
Total assets less current liabilities 1,644 (554) 1,812 3,266
Creditors: amounts falling due after more than one year (2,758) - (2,891) -
Provisions for liabilities and charges (101) - (170) -
----------- ----------- ----------- -----------
Net (liabilities)/assets (1,215) (554) (1,249) 3,266
======= ======= ======= =======
Capital and reserves
Called up share capital 2,856 2,856 3,104 3,104
Share premium account 92 92 92 92
Other reserves (3,894) 248 (4,142) -
Profit and loss account (269) (3,750) (303) 70
----------- ----------- ----------- -----------
Shareholders' (deficit)/funds (1,215) (554) (1,249) 3,266
======= ======= ======= =======
Shareholders' (deficit)/funds may be analysed as:
Equity interests (3,906) (3,245) (4,099) 416
Non-equity interests 2,691 2,691 2,850 2,850
----------- ----------- ----------- -----------
(1,215) (554) (1,249) 3,266
======= ======= ======= =======
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2003
Year ended 41 weeks ended
31 March 2003 31 March 2002
#'000 #'000
Net cash inflow from operating activities 1,567 674
Returns on investments and services of finance (487) (328)
Taxation 152 (237)
Capital expenditure (321) (331)
Acquisitions and disposals
- cash outflow relating to the demerger - (2,490)
Equity dividends paid (109) (84)
----------- -----------
Net cash inflow/(outflow) before financing 802 (2,796)
Financing (380) 3,240
----------- -----------
Increase in cash in the year 422 444
======= =======
Reconciliation of net cashflow to movement in net debt
#'000 #'000
Increase in cash in the year 422 444
Cash outflow/(inflow) from decrease/(increase) in 379 (2,985)
debt and lease financing
Non cash movements (18) 12
----------- -----------
Movement in net debt 783 (2,529)
======= =======
#'000 #'000
Opening net debt (4,349) (1,820)
Closing net debt (3,566) (4,349)
----------- -----------
Movement in net debt 783 (2,529)
======= =======
NOTES
1. ACCOUNTS
The foregoing statements do not constitute the Group's statutory accounts. The
Group's statutory accounts, on which the Company's auditors, KPMG Audit Plc,
have given an unqualified opinion in accordance with Section 235 of the
Companies Act 1985, are to be delivered to the Registrar of Companies.
Additional copies of the statutory accounts and this announcement are available
from the Companies registered office: Crossley House, Belle Vue Park, Hopwood
Lane, Halifax HX1 5EB and from the office of its Nominated Adviser, Brown,
Shipley & Co. Limited, One King Street, Manchester, M2 6AW.
2. BASIS OF PREPARATION - GOING CONCERN
Subsequent to the year end, the Group is in breach of its banking covenants.
All the bank facilities are now repayable on demand, and the revolving debt
facility has been reduced from #2.5m to #1.6m. The overdraft and invoice
discounting facility have not been affected. The Directors have been in
discussion with the Group's bankers, who have indicated that they are prepared
to continue to provide adequate bank facilities, subject to a number of
conditions, including satisfactory trading performance. The Bank has not
demanded repayment of its loans.
The Directors have considered various business scenarios which include forecasts
of the future sales revenue and cash flow that the Group is expected to
generate. These scenarios and forecasts indicate that the available level of
facility will be adequate for the Group's needs and will enable the Group to
continue in operational existence for the foreseeable future by meeting its
liabilities as they fall due for payment. The forecasts have been prepared on
the basis of assumptions which are subject to an inherent degree of uncertainty
principally relating to the ability of the Group to achieve its forecast sales
revenues.
Not withstanding these uncertainties, having considered the assumptions,
appropriate sensitivities, and the actions available to them, the Directors
believe it is appropriate that the financial statements, from which the contents
of this announcement have been taken, be prepared on a going concern basis.
3. EXCEPTIONAL ITEMS
Exceptional (costs)/income recognised in arriving at the operating profit
comprise:
41 weeks ended
Year ended 31 31 March 2002
March 2003
#'000
#'000
In respect of stock, rebates, customer returns and other customer trading issues - (177)
In respect of management changes and restructuring, strengthening of management
teams and closure of one production site (352) (405)
In respect of demerger 238 (306)
----------- -----------
Exceptional costs before tax (114) (888)
Tax effect of exceptional items 34 235
----------- -----------
Exceptional costs after tax (80) (653)
======= =======
During the year, Airbath successfully negotiated a claim of #250,000 with
Aquarius Group plc in respect of certain costs borne by the Airbath Group at the
time of the demerger. This claim was settled by way of the waiver of preference
shares and accrued preference dividends. #12,000 costs which have arisen during
the year relating to the demerger have been set against this income.
4. DIVIDENDS
Dividends paid and proposed on equity and non-equity shares:
41 weeks ended
Year ended 31 31 March 2002
March 2003
#'000 #'000
Preference shares:
7% preference dividend paid 101 25
7% preference dividend waived 1 -
7% preference dividend proposed 90 99
----------- -----------
192 124
======= =======
Equity shares:
Interim paid 0.1p (2002: 0.33p) per ordinary share 25 84
Final proposed of nil (2002: 0.33p) per ordinary share - 84
----------- -----------
25 168
======= =======
There are insufficient distributable reserves to pay the proposed preference
dividend on the 7% cumulative preference shares. The finance cost has been
recognised in the profit and loss account and credited back through the profit
and loss reserve.
5. EARNINGS/(LOSS) PER SHARE
The calculation of the basic and diluted earnings per share of 0.85p (41 weeks
ended 31 March 2002: loss per share of 0.67p) is based on a profit of #217,000
(2002: loss of #135,000) divided by the weighted average number of ordinary
shares in issue during the period of 25,408,461 (2002: 20,117,283). There are
no dilutive potential ordinary shares in issue.
6. AGM
The Annual General Meeting will be held at 10.00am on Wednesday 10 December 2003
at Crossley House, Belle Vue Park, Hopwood Lane, Halifax HX1 5EB.
END
Editor's Notes:
Airbath Group has four well-established brands:
- Airbath(R), which is the UK market leading brand of spa baths, which is also applied to quality standard baths.
- Aquarius Bathrooms, which is applied to standard baths and shower trays for the mid-priced sector of the market.
- Appollo(R), which is the assisted bathing brand applicable to a range of products designed specifically for
elderly, infirm and physically less able users. These include baths with powered seats, walk-in baths and
wheelchair accessible shower trays.
- Brampton Housewares, which manufactures, assembles and distributes ranges of bathroom products that are sold by
DIY chains, supermarkets, catalogue stores and other retail outlets throughout the UK and Europe.
Website: www.airbathgroup.co.uk
About the Airbath(R) system:
The Airbath(R) system is a patented system invented by the founder of Airbath
International which involves warm air being pumped through hundreds of tiny
holes in the base of the bath. The Airbath(R) offers a very different bathing
experience from those offered by other moving water systems, in particular
whirlpool baths. There are a number of features that set the Airbath(R) apart
from competing products:
- Unlike whirlpool baths, which typically have a small number of nozzles through which water is pumped into the
bath, each Airbath(R) has between 185 and 385 air jets to provide an "all over" massage effect.
- The Airbath(R) pumps warm humid air through the water (using its patented warm air injection system), unlike
some rival products which pump cold air causing bath water to cool faster.
- The Airbath(R) is inherently more hygienic than whirlpool baths as there is no danger of water from the last
bath standing in the pipes between baths. Airbath(R) are therefore particularly suited for hotels or other
locations where usage may be infrequent; and unlike whirlpool baths, which will only work if the water is deep
enough to cover the nozzles (which are often fitted to the sides of the bath), an Airbath(R) will work with only
a very small amount of water covering the bottom of the bath. This makes Airbaths(R) well suited for bathing
young children.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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