RNS No 0880b
ECLIPSE BLINDS PLC
26th March 1998
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 1997
HIGHLIGHTS
Sales up 9% to #45.4m
Operating profits up 11% to #7.47m
Profit before tax and exceptionals up 14% to #7.17m
Headline earnings per share up 18% to 11.4p
Dividend up 20% to 3.60 pence (net)
Chairman, Hamish Grossart, commented
"We are delighted with the results for 1997, the fourth year
in succession we have been able to report good growth. We
expect 1998 to show a continuation of this positive trend and
the first two months trading have lent support to this view."
CHAIRMANS STATEMENT
1997 has proved another good year for Eclipse. Sales growth
was achieved in the groups two principal businesses; the last
remaining non-core business was sold; an important product
source was secured by acquisition; margins and cash flows were
maintained despite currency fluctuations; and new records were
set for turnover, profits, earnings and dividends.
Results
In the year to 31 December 1997, group sales rose 9 per cent
to #45.4m. Within this, turnover from continuing operations
grew to #43.8m primarily reflecting a full years contribution
from the groups 1996 US acquisition. Two acquisitions during
1997 contributed a further #1.3m and discontinued activities
#0.3 million. On a like for like basis, sales in the main UK
business grew by just under 2 per cent and in the US by 7 per
cent.
Operating profit, before exceptional items, rose by a healthy
11 per cent to #7.47 million. Exceptional debits totalled
#0.90 million of which #0.71 million was attributable to the
lease and leaseback of premises, and #0.19 million to the
disposal of non window blind activities. Interest charges
fell 30 per cent to #0.29 million, and the tax charge was
reduced from 27 per cent to 25 per cent.
Headline earnings per share, struck before the exceptional
items, rose by a creditable 18 per cent to 11.43p.
Disposals and acquisitions
The group is now firmly focused on developing its window blind
businesses in the UK, North America and Northern and Eastern
Europe.
During the year, Eclipse disposed of British Plywood
Manufacturing, the last remaining business in the group
engaged in non-window blind activities, for a net cash
consideration of #0.53 million.
In October 1997, Eclipse disposed of an interest in premises
in Inchinnan, Scotland, in a lease and leaseback transaction
which raised a total of #7.16 million in cash. This improved
liquidity and enhanced the groups ability to finance
expansion from internal resources.
Also in October 1997, the group acquired the business of OPM,
in Sweden. Importantly, this brought into the group a secure
source of supply of aluminium venetian blind slat.
OPM manufactures and sells to a well spread customer base in
approximately 15 countries in Northern Europe. Eclipse plans
to increase OPMs sales by providing additional product lines
through its distribution outlets.
Financial position
At 31 December 1996 net borrowings totalled #3.0m, and maximum
outstanding deferred consideration a further #3.0m. The total
of these, representing underlying net indebtedness of #6.0m,
equated to balance sheet gearing of 49 per cent.
During 1997, cash flow from operations reached a record level
of #8.25m. In addition, the disposal of premises realised #7.16m
and the disposal of British Plywood Manufacturing brought in
a further #0.53m. Interest and taxation payments totalled #2.53m,
dividends absorbed a further #2.20m and capital expenditure
totalled #0.63m. The acquisition of OPM included cash
payments of #3.77m, and deferred consideration of #1.48m was
paid in respect of the 1996 US acquisition.
At the end of 1997 the group had net cash of #1.87m. Maximum
outstanding deferred consideration payments totalled #3.05m.
Together, these represent underlying indebtedness of #1.18m, a
balance sheet gearing ratio of 10 per cent.
Dividends
1997 has shown good growth in earnings per share, cash flow
remains strong, gearing is low, dividend cover is healthy and
prospects are good. The board therefore feels it appropriate
that dividends should grow at least as fast as earnings, and
accordingly are recommending a final dividend of 2.40 pence
per share.
When taken together with the interim dividend already paid of
1.20 pence, the total dividend in respect of 1997 would be
3.60 pence per share, a 20 per cent increase over 1996.
If approved, the final dividend will be paid on 31 May 1998 to
shareholders on the register on 14 April 1998.
Focusing on performance
The Eclipse group has been transformed in the past four years
and now boasts operating performance of a very high level.
Given the series of disposals and acquisitions that have been
undertaken during that period, it is perhaps worth reflecting
on a selection of underlying performance statistics which may
have been lost in the inevitable noise that has surrounded
restructuring. These statistics, which are for continuing
businesses and exclude exceptional credits and debits, give a
much better description of what Eclipse has become than can be
done prosaically:-
1994 1995 1996 1997
#m #m #m #m
Sales 33.30 33.80 40.32 45.07
Operating profit 4.55 5.07 6.72 7.47
Operating margin 13.7% 15.0% 16.6% 16.6%
Headline earnings per share 5.65p 7.62p 9.70p 11.43p
Dividends per share - 1.00p 3.00p 3.60p
Underlying balance sheet
gearing 197% 55% 49% 10%
Over this period, the compound average growth rate in
operating profit has been 18 per cent per annum, the compound
average growth rate in headline earnings per share has been 26
per cent per annum and net indebtedness has been all but
eradicated. The quality of the groups main businesses, the
strength in their markets and the exceptionally robust margins
and cash flow all combine to make continuing growth possible.
Setting out a statistical account may give the impression that
a record of growth is easily won. It is not. The growing
group that Eclipse has become has been as a result of
concentrating on a clear and consistent set of objectives, a
constant reappraisal of performance, a commitment to the
business by management and staff, a clear focus on where the
market opportunities lie, and product improvement and
innovation. The group is fortunate to have a strong and loyal
staff and management team, under the leadership of Bill
Macdonald, and our thanks are due to all of them for their
continuing contribution.
Board of Directors
It is with regret that I have had to advise the board of an
intention to stand down as chairman and as a director as a
result of increasing commitments elsewhere. It has been a
privilege to be involved with my colleagues and the group at a
time of fundamental change. I will, of course, continue to
fulfil my duties until such time as the board have decided
upon a successor.
Outlook
We have had a good start to 1998, with sales satisfactorily
ahead of the corresponding period last year, and operating
performance remaining strong.
At this early point in the year, it is difficult to see a
reason why the growth trend of the last four years should not
be continued. We have successfully weathered a sea change in
sterlings relative value and see little danger to Eclipse in
the recent further rises in the pound. Higher interest rates
would have an immaterial effect on profits given our low
gearing, and all the signs are that spending on our products
is robust.
The current year will include OPM for a full year, and we
expect no exceptional items. Strong margins and operating
cash flow will continue and we therefore look forward to
the remainder of 1998 with confidence.
Hamish Grossart
Chairman
GROUP PROFIT AND LOSS ACCOUNT
For the year ended 31 December 1997 (audited)
1997 1996
Total Continu- Discon- Total Continu- Discon-
ing tinued ing tinued
#000 #000 #000 #000 #0000 #000
Turnover
Continuing
operations 43,813 43,813 40,322 40,322
Acquisition 1,261 1,261 - -
------- ------ ------ ------
45,074 45,074 40,322 40,322
Discontinued
operations 326 - 326 1,255 - 1,255
------- ------- ----- ------ ------ -----
45,400 45,074 326 41,577 40,322 1,255
Cost of
sales (28,877)(28,626) (251)(26,685) (25,755) (930)
------- ------- ----- ------- -------- ------
Gross profit 16,523 16,448 75 14,892 14,567 325
Overheads (9,057) (9,012) (45) (8,169) (7,849) (320)
Operating
profit 7,466 7,436 30 6,723 6,718 5
-continuing
operations 7,312 7,312 - 6,718 6,718 -
-acquisitions 124 124 - - - -
-discontinued
operations 30 - 30 5 - 5
Operating profit
before
exceptional
items 7,466 7,436 30 6,723 6,718 5
------ ----- ---- ----- ----- -----
Exceptional
loss on
disposal of
interest
in property
in continuing
operations (713) -
Exceptional
loss arising
on disposal
of discontinued
subsidiary (193) -
-------- --------
Profit on
ordinary
activities
before
interest 6,560 6,723
Net interest (294) (422)
--------- ---------
Profit on
ordinary
activities
before
taxation 6,266 6,301
Tax on profit
on ordinary
activities (1,541) (1,679)
--------- ---------
Profit on
ordinary
activities
after
taxation 4,725 4,622
Equity
minority
interests (17) (42)
--------- ---------
Profit for
the financial
year
attributable
to
shareholders 4,708 4,580
Preference
dividend (870) (936)
Ordinary
dividend (1,542) (1,210)
--------- ---------
Retained
profit for
the year 2,296 2,434
--------- ---------
IIMR heading
earnings per
ordinary
share 11.43p 9.70p
========= ========
Earnings
per
ordinary
share 9.25p 9.70p
========= =========
BALANCE SHEET
At 31 December 1997
(audited)
Group Company
1997 1996 1997 1996
#000 #000 #000 #000
Fixed assets
Tangible assets 4,996 12,419 27 -
Investments - - 59,124 59,876
------ ------ ------ -------
4,996 12,419 59,151 59,876
Current assets
Stocks 9,745 8,261 - -
Debtors 8,859 7,797 16,308 13,121
Cash at bank
and in hand 2,766 4,245 375 -
------ ----- ----- ------
21,370 20,303 16,683 13,121
Creditors due
within one year (12,462) (17,601) (4,686) (7,010)
------- ------ ------- -------
Net current assets 8,908 2,702 11,997 6,111
------ ------ ------ -------
Total assets less
current
liabilities 13,904 15,121 71,148 65,987
Creditors due after
more than one year (1,941) (2,195) - -
Provisions for
liabilities & charges (166) (480) (140) (166)
-------- ------- ------- -------
11,797 12,446 71,008 65,821
-------- ------- ------ ------
Capital and reserves
Called up share
capital 11,477 10,777 11,477 10,777
Share premium account 27,419 24,932 27,419 24,932
Other reserves (39,071) (34,428) 23,330 23,330
Capital redemption
reserve 71 11 71 11
Profit and loss
account 11,605 10,868 8,711 6,771
--------- ------ ------ -------
Total shareholders
funds 11,501 12,160 71,008 65,821
--------- ------ ------ ------
Equity shareholders
funds (2,161) (2,851) 57,346 50,810
Non Equity
shareholders
funds 13,662 15,011 13,662 15,011
Equity minority
interests 296 286 - -
-------- ------ ------ -------
11,797 12,446 71,008 65,821
-------- ------ ------- -------
Approved by the Board on 26 March 1998 and signed on its
behalf by
Hamish Grossart, Chairman
Ken Brown, Finance Director
GROUP CASH FLOW STATEMENT
For year ended 31 December 1997 (audited)
1997 1996
#000 #000 #000 #000
Cash flow from operating
activities
Continuing 8,253 8,132
Return on investments
and servicing of finance
Interest received 80 90
Interest paid (444) (522)
Dividends paid on non
equity capital (891) (1,255) (939) (1,371)
-------- -------
Taxation
Taxation paid (2,208) (978)
Taxation recovered 41 (2,167) 249 (729)
--------- --------
Capital Expenditure
Payments to acquire
tangible fixed assets (632) (997)
Receipts from sales of
tangible fixed assets
(net of disposal costs) 7,156 6,524 100 (897)
---------- --------
Acquisitions and disposals
Net cash outflow on
acquisition of
subsidiaries (3,774) (5,702)
Net cash inflow on
disposal of subsidiary 534 -
Deferred consideration (1,478) (4,718) - (5,702)
----------- ---------
Dividends paid
On equity capital (1,308) (738)
--------- --------
Net cash outflow before
financing 5,329 (1,305)
Financing
Proceeds from placing
and open offer - 5,257
Less: Costs (204)
-------
5,053
Proceeds from exercise
of share options 10 48
New loans - 433
Repayment of loans (2,797) (2,787) (177) 5,357
--------- --------
------- ------
Increase in cash 2,542 4,052
------- ------
Enquiries: Hamish Grossart, Chairman Tel: 0141 812 3322
or 0468 025209
Bill Macdonald, Managing Director 0141 812 3322
Ken Brown, Finance Director 0141 812 3322
Eclipse Blinds PLC
Zena Bates, Buchanan Communications 0171 466 5000
END
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