RNS Number:8110R
Longmead Group PLC
08 April 2008
THE LONGMEAD GROUP PLC
Preliminary announcement for the period 53 week period to 3 November 2007
CHAIRMAN'S STATEMENT
Trading Results
The trading results for the year have been affected by significant stock
provisions. Over the last five years, we have seen a gradual decline in our
turnover to our main DIY bathroom customer from over �1 million per annum to the
present level of �100,000 per annum. As a result, it has become necessary to
make a major stock provision in respect of work in progress, packaging and
finished goods. We have also rationalised our door furniture product range and
this has resulted in further stock provisions. In addition, our changing
customer profile has necessitated further provisions.
The overall trading result is a loss of �253,000 (2006: �170,000) after allowing
for the stock write-offs. Although the outcome is most unsatisfactory, there
are some encouraging signs. Our General Trade sales are up by over 12% and our
gross profit has increased from 37.6% to 39.8% before the stock write-offs. Our
turnover fell to �2.15 million (2006: �2.29 million) but this is the result of a
fall in sales to the main DIY customer mentioned above. The operating loss
(before stock write-offs) has fallen to �86,000 (2006: �118,000), an improvement
of 27%. Overheads continue to fall in spite of increased energy and
distribution costs, and were 4% lower in 2007 than 2006. This is in spite of
the fact that we incurred one-off costs of �10,000 as a result of changing our
Nominated Adviser and Broker and re-arranging our borrowings. These items are
commented on in more detail below. Interest shows an increase of �6,000 arising
from higher borrowing costs during the year, although this is likely to improve
in the present year as a result of the new borrowing arrangements.
New Products
The new products introduced last year have continued to perform well but new
product development must be an ongoing process. In March 2008, we exhibited at
the Kitchens Bedrooms & Bathrooms Exhibition at the NEC Birmingham where we
showed a further range of new products. These included an exciting, highly
competitive range of shower curtains, new bathroom accessory ranges, extensions
to our bathroom furniture range and back-lit mirrors. These new items have been
carefully researched and we believe they will prove very successful.
The launch of our new ceramic products for the non-bathroom market has been
delayed but it is hoped that the distributor concerned will be promoting them
over the Internet in the very near future.
Change of Advisers
During 2007 we changed our Nominated Adviser and Broker. Your Board decided it
would be sensible to find a broker who had a close affiliation with a Nominated
Adviser and, after talking with several companies, we elected to appoint Ellis
Stockbrokers as our broker and City Financial Associates as our Nominated
Adviser. Accordingly, we terminated our contract with Smith & Williamson. The
cost of the changeover was approximately �6,000.
Restructuring of Borrowings
During the year we also, in discussions with our Bankers HSBC, decided to change
the structure of our borrowings. We increased the size of our Medium Term Loan
to �830,000 to be repaid over a ten year period, with the level of interest
based on the Bank's Sterling Base Rate. At the same time, we reduced our
overdraft facility to a nominal amount. The increase in our borrowings has
enabled us to invest more in new products which will lead to increased turnover
in the longer term. The cost of the change was approximately �4,000.
Balance Sheet
Following the loss for the year, our shareholders' funds have fallen to
�1.201million (2006: �1.454 million) which represents net assets per share of
21.5p. However, our freehold premises were revalued during the year at �1.6
million which represents an increase of over �460,000 against the value shown in
the balance sheet. This increase has not been included in the 2007 balance
sheet.
Stocks have been reduced at the year end but this is mainly due to the stock
provisions reported above. Debtors have been reduced partly as a result of
reduced turnover but mainly through a much stricter system of credit control.
As a result of the change in the bank arrangements our net current assets have
risen slightly.
Future Prospects
Since the year end, we have taken out further overhead costs which have lowered
the breakeven position. Many of our customers are taking a pessimistic view of
the year ahead and are reducing their level of stocks, but they are receptive to
new products and this, together with the presentation of products at the KBB
Show in Birmingham, should stand us in good stead. However, the almost total
loss of our major DIY customer's business means we have been running to stand
still.
We are budgeting for a small increase in turnover but there is no doubt 2008
will be a difficult year for all retailers, so an increase will be hard to
achieve. The strength of the pound against the dollar is helping us to maintain
reasonable margins and interest rate falls should be of some benefit.
It is impossible to predict the likely outcome for the year but we will continue
to use all our endeavours to achieve a further improvement in our results.
I would like to thank the management and staff of the Company for their hard
work and support during the year.
R E W Newman
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
53 weeks to 3 November 2007
Before Exceptional 53 weeks ended 52 weeks ended
exceptional item (note 1) 3 November 2007 28 October 2006
items
2007 2007 2007 2007
� � � �
Turnover - continuing operations 2,146,841 - 2,146,841 2,288,354
Cost of sales (1,293,362) (108,988) (1,402,350) (1,427,398)
Gross profit 853,479 (108,988) 744,491 860,956
Distribution costs (597,260) (656,553)
Administration expenses (342,585) (322,897)
Operating loss
- continuing operations (195,354) (118,494)
Interest receivable and similar income 50 3
Interest payable and similar charges (57,562) (51,611)
Loss on ordinary activities before (252,866) (170,102)
taxation
Tax on loss on ordinary activities - -
Loss on ordinary activities after (252,866) (170,102)
taxation
Loss for the financial year (252,866) (170,102)
Loss per ordinary share (Note 2)
- Basic (4.53)p (3.05)p
- Diluted (4.53)p (3.05)p
There are no recognised gains and losses for the current or preceding financial
period other than as stated in the profit and loss account. Accordingly, no
statement of total recognised gains and losses is given.
CONSOLIDATED BALANCE SHEET
As at 3 November 2007
2007 2006
� � � �
Fixed assets
Intangible assets 12,981 15,981
Tangible assets 1,215,043 1,306,049
1,228,024 1,322,030
Current assets
Stocks and work in progress 1,149,148 1,293,350
Debtors 440,197 540,685
Cash at bank and in hand 1,700 2,191
1,591,045 1,836,226
Creditors: Amounts falling due within (725,291) (972,091)
one year
Net current assets 865,754 864,135
Total assets less current liabilities 2,093,778 2,186,165
Creditors: Amounts falling due after (892,400) (731,921)
more than one year
Total net assets 1,201,378 1,454,244
Capital and reserves
Called up share capital 558,439 558,439
Share premium account 1,397,747 1,397,747
Capital redemption reserve 19,000 19,000
Revaluation reserve 249,969 255,041
Profit and loss account (1,023,777) (755,983)
Total equity shareholders' funds 1,201,378 1,454,244
CONSOLIDATED CASH FLOW STATEMENT
53 weeks ended 3 November 2007
2007 2006
� � � �
Net cash inflow/(outflow) from operating 77,559 (41,858)
activities
Returns on investments and servicing of
finance
Interest received 50 3
Interest paid (55,905) (50,641)
Interest element of financial lease (370) (914)
rentals
(56,225) (51,552)
Capital expenditure and financial
investment
Purchase of tangible fixed assets - (6,600)
Proceeds from sale of tangible assets - 4,650
- (1,950)
Net cash inflow/(outflow) before 21,334 (95,360)
financing
Financing
Capital element of finance lease rentals (10,061) (20,432)
Loan advanced 830,000 -
Loans repaid (684,780) (56,331)
Net cash inflow/(outflow) from financing 135,159 (76,763)
Increase/(decrease) in cash in the period 156,493 (172,123)
NOTES TO THE ACCOUNTS
1. EXCEPTIONAL ITEMS
2007 2006
� �
Stock provisions 108,988 -
2. LOSS PER ORDINARY SHARE
The calculation of the basic loss per share is based on the weighted
average number of shares in issue during the financial year of
5,584,391 (2006: 5,584,391) and on the loss attributable to ordinary
shareholders of �252,866 (2006: �170,102 loss).
3. The financial information on the Group set out above does not constitute
statutory information financial year within the meaning of section 240
of the Companies Act 1985. The statutory accounts for the 53 weeks
ended 3 November 2007 will be finalised on the basis of the financial
information presented by the directors in this preliminary announcement
and will be delivered to the Registrar of Companies following the Group's
Annual General Meeting.
4. Copies of the 2007 Report and Accounts will be sent to shareholders in
due course. Further copies will be available from the registered office
of The Longmead Group plc, Millwey Industrial Estate, Axminster, Devon,
EX13 5HU and from the Company's nominated adviser, City Financial
Associates Limited, 46 Worship Street, London, EC2A 2EA for one month
from the date of this announcement.
END
Contact:-
RE Newman, Chairman
Longmead Group Plc
Tel: 01297 32578
Liam Murray, Nominated Adviser
City Financial Associates Limited
Tel: 020 7492 4777
This information is provided by RNS
The company news service from the London Stock Exchange
END
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