28 November 2003
Enquiries:
Russell Stevens 07860 562621
Chief Executive Russell@meriden-group.co.uk
Ewan Leggat 020 7107 8000
Seymour Pierce Limited Ewanleggat@seymourpierce.com
Meriden Group Plc (the "Company" or "the Group")
Preliminary results for the year ended 31 July 2003
Highlights
* Steady improvement in turnover and profitability
* Major improvements in efficiency
* Robust organic growth
* Evolving strategy
* Continuing caution in face of challenging market conditions
* Further strengthening of the management team
* Second Centre opened in London
* Increases in both dividend and dividend cover
* Period end cash balances to fund future organic growth and acquisitions
Financial Highlights
* Turnover of �5.8m (2002 : �5.5m)
* EBITDA of �0.79m (2002 : �0.67m)
* Pre tax profits of �0.71m (2002 : �0.61m)
* Earnings per share in the trading period of 0.18p (2002 : 0.15p)
* Year end cash balance of �0.81m (2002 : �0.54m) to fund future growth
* Total dividend of 0.023p (2002 : 0.02p)
* Dividend cover 7.6x (2002 : 7.5x)
Commenting, Russell Stevens, Chief Executive said:
"In our first two years of trading we have established a stable base from which
we are now posed to move forward from with a strategy of continued organic
growth supplemented with selective strategic acquisitions in order to build a
broad based business services group. "
Chairman's Statement
I am pleased to present this my second Chairman's report for Meriden Group Plc.
Results
Despite challenging trading conditions, the Group has built on the encouraging
results achieved in its first full year of operation. It has delivered a
pre-tax profit of �0.71m (2002: �0.61m) on a turnover of �5.8m (2002: �5.5m)
resulting in earnings per share of 0.18p (2002: 0.20p) and year end cash
balances of �0.81m (2002: �0.54m). We are particularly pleased that the Board
is recommending a final dividend, which takes the total dividend for the year
to 0.023p (2002: 0.02p) per share.
Our client base has continued to expand, with larger corporations and
government agencies joining traditional small to medium sized enterprises as
clients. Our growing experience in delivering services to a diverse client base
has enabled us to further develop our management techniques and, as a result,
our efficiency has improved significantly during the year. An increase in
turnover of 5% has driven a 17% increase in profit after taxation and the
profit per employee rose 58% from �14,023 in 2002 to �22,067 in 2003,
reflecting the fact that subcontractors have been used in many divisions rather
than increasing our directly employed head count.
One of the Board's fundamental policies is that each division must be
profitable and justify its return on capital employed. During the year the
Recruitment and Training Divisions were discontinued as their returns were
unacceptable and the Board could not be certain of improvements given the
prevailing market conditions. However, our remaining services have continued to
develop and evolve successfully and are now delivered through six divisions.
Strategy
The Board reviewed its long term business strategy during the year and has
refined this to focus more on the diversity of the services we provide rather
than our geographical presence. While we will continue to search for
organizations with whom we could build successful, fully-scoped partnerships in
commercial centres around the country, the Board now also intends to pursue
robust growth of the business by delivering a wider spectrum of business
services. The Board also intends to exploit entrepreneurial opportunities when
the Group's financial strength and business expertise can be leveraged.
This wider spectrum of services will be developed through both organic growth
and through acquisition. We have demonstrated our ability to grow organically;
and shortly after the year end the Group acquired Eltora Digital. This first
acquisition significantly strengthened the IT Systems Division and is already
delivering financial benefits. Some acquisitions will integrate with existing
divisions and others will become divisions in their own right and the Group
intends to make further announcements shortly.
The Board continues to recognize that the full potential of the Group cannot be
realized solely from its base in the West Midlands. While the Group's
geographic expansion may be less broad than originally envisaged, a second
centre in London was opened during the year and a third centre in South Wales
is under evaluation. The Board will continue to take a cautious approach to the
expansion of the business whether it be by organic growth, acquisition or
geographic expansion in order to preserve the Group's earnings stream and its
dividend flow.
The Board is delighted to report that we continue to be able to attract and
retain high calibre individuals on to the management team. We would like to
thank all of our personnel for their hard work and commitment to providing
first class services to our clients and to building this exciting business
services group.
Mr Derek Hall
Non-executive Chairman
27 November 2003
Consolidated Profit and Loss Account for the year ended 31 July 2003
Note Year ended Period ended
31 July 2003 31 July 2002
� �
Turnover 5,790,628 5,511,923
Cost of sales 4,312,261 4,101,319
----------- -----------
Gross profit 1,478,367 1,410,604
Administrative expenses 785,564 809,421
----------- -----------
Operating profit 692,803 601,183
Interest receivable 12,352 8,106
----------- ------------
Profit on ordinary activities 705,155 609,289
before taxation
Taxation 197,592 174,578
----------- ------------
Profit on ordinary activities 507,563 434,711
after taxation
Dividends 66,628 58,000
----------- ------------
Retained profit for the year 440,935 376,711
----------- ------------
Basic and diluted earnings per 3 0.18 0.20
share (pence)
----------- ------------
Basic and diluted earnings per 3 0.18 0.15
share in trading period (pence)
----------- ------------
Consolidated Balance Sheet as at 31 July 2003
Note As at As at
31 July 2003 31 July 2002
� �
Fixed Assets
Tangible assets 251,298 364,731
Fixed asset investments 177,902 177,853
----------- -----------
429,200 542,584
Current assets
Work in progress 36,420 67,228
Debtors 3,407,637 1,287,120
Cash at bank and in hand 805,589 538,817
----------- ------------
4,249,646 1,893,165
Creditors: amounts falling 2,988,824 1,168,414
due
within one year
----------- ------------
Net current assets 1,260,822 724,751
----------- ------------
Total assets less current 1,690,022 1,267,335
liabilities
Provisions for liabilities 59,021 77,269
and charges
----------- ------------
Net assets 1,631,001 1,190,066
----------- ------------
Capital and reserves
Called up share capital 290,000 290,000
Share premium 523,355 523,355
Profit and loss account 817,646 376,711
----------- ------------
Equity shareholders' funds 4 1,631,001 1,190,066
----------- ------------
Consolidated Cash Flow Statement for the year ended 31 July 2003
Notes Year ended Period ended
31 July 2003 31 July 2002
� �
Net cash inflow from operating activities 5 422,683 331,171
Return on investments and servicing of
finance
Interest received 12,352 8,106
------------ ------------
Net cash inflow from returns on investments 12,352 8,106
and servicing of finance
Tax paid (97,309) -
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (24,274) (436,169)
Payments to acquire fixed asset investments (49) (177,853)
Receipts from the sale of tangible fixed 40,297 207
assets
------------ ------------
Net cash inflow/(outflow) from capital 15,974 (613,815)
expenditure and financial investment
Dividends paid (86,928) -
------------ ------------
Net cash inflow/(outflow) before financing 266,772 (274,538)
------------ ------------
Financing
Issue of ordinary share capital - 1,250,000
Share issue costs - (436,645)
------------ ------------
Net cash inflow from financing - 813,355
------------ ------------
Increase in cash 6 266,772 538,817
------------ ------------
Notes to the Preliminary Results for the year ended 31 July 2003
1 Basis of Preparation
The preliminary announcement has been prepared in accordance with
applicable accounting standards and under the historical cost
convention.
2 Comparative figures
Comparative figures are for the period from incorporation on 15
February 2001 to 31 July 2002. The Company commenced trading on 14
August 2001.
3 Earnings per share
The calculation of the basic earnings per share is based on the profit on
ordinary activities after taxation and on the weighted average number of shares
in issue during the period. The profit and weighted average number of shares
used in the calculations are set out below:
Profit Weighted Average Basic Earnings per
share in
� average number of Earnings
trading
number shares per share period
of shares in trading (pence) (pence)
period
Basic and diluted
earnings per
share:
Year ended 31 507,563 290,000,000 290,000,000 0.18 0.18
July 2003
Period ended 31 434,711 211,541,360 290,000,000 0.20 0.15
July 2002
----------- --------------- --------------- ----------- ------------
The earnings per share in the trading period is based on the number of shares
in issue in the trading period and not from the date of incorporation as with
the basic earnings per share. The directors believe this provides a more
accurate basis in the initial years on which to monitor the progress of the
Group.
4 Reconciliation of movements in
shareholders' funds
2003 2002
� �
Profit on ordinary activities after 507,563 434,711
taxation
Dividend (66,628) (58,000)
------------ ------------
Profit on ordinary activities after 440,935 376,711
taxation and dividends
Issue of ordinary share capital (net of - 813,355
expenses)
Opening shareholders' funds 1,190,066 -
------------ ------------
Closing shareholders' funds 1,631,001 1,190,066
------------ ------------
5 Reconciliation of operating profit with net cash inflow from operating
activities
Year ended Period ended
31 July 2003 31 July 2002
� �
Operating profit 692,803 601,183
Depreciation 97,410 71,231
Decrease/(increase) in work in progress 30,808 (67,228)
Increase in debtors (2,120,517) (1,287,120)
Increase in creditors 1,722,179 1,013,105
------------ ------------
Net cash inflow from operating activities 422,683 331,171
------------ ------------
6 Analysis of changes in net
funds
1 August Cash Flow 31 July 2003
2002
in Year �
�
�
Cash at bank and in hand 538,817 266,772 805,589
------------ ------------ ------------
7 Publication of non-statutory
accounts
The financial information set out in this preliminary announcement
does not constitute statutory accounts as defined in Section 240 of
the Companies Act 1985. The summarised balance sheet at 31 July 2003
and the summarised profit and loss account, summarised cashflow
statement and associated notes for the year then ended have been
extracted from the Company's 2003 statutory financial statements upon
which the auditors opinion is unqualified and does not contain any
statement under section 237 of the Companies Act 1985.Statutory
accounts for the year ended 31 July 2003 will be delivered to the
Registrar in due course. The comparative financial information is
based on the statutory accounts for the financial period ended 31
July 2002. Those accounts on which the auditors issued an unqualified
opinion have been delivered to the Registrar of Companies.
8 Dividend
The Company intends to pay the final dividend of 0.013p per ordinary
share on 21 January 2004 to shareholders on the register at the close
of business on 19 December 2003.
9 Availability of Annual Report
The Annual Report will be posted to shareholders before the end of
December 2003 and copies will be available from the registered office
of the Company or as a download from the Company's website at
www.meriden-group.co.uk at the end of December 2003.
END