RNS Number:3667N
Wigmore Group (The) PLC
09 June 2005
The Wigmore Group Plc (The "Company")
Final Results
The Wigmore Group plc, contractors to the hotel and leisure industries, today
announces its preliminary results for the year ended 31 December 2004 along with
a business review and appointments to the board which become effective from
today.
* The Group made a pre tax loss of #6.79m (2003: loss of #0.36m) after
exceptional costs of #4.43m (2003: #nil)
* Loss per share 0.75p (2003: loss 0.26p)
* New experienced board appointed
* Andrew Latham appointed as Chief Executive.
* Keith Lees FCA, appointed as Finance Director
* Business reorganised around Speymill's core hotel and leisure markets
* Central overheads reduced
* Current order prospects at over #30m
* New property management division formed to take advantage of Real Estate
Investment Trust (REIT) legislation.
* Proposal to rename the Company "Speymill Group plc"
* Proposed share structure rationalisation with a 1-for-100 share
consolidation
Chairman Paul Doona said today: "The figures reflect an appalling year for the
Group and root and branch restructuring has been necessary since the financial
rescue by our majority shareholder Burnbrae. I am, however, confident that the
Group is now on a firm financial footing and that the long tried patience of our
shareholders will ultimately be rewarded."
For further information please contact:
Paul Doona
Executive Chairman 01624 698131
Tim Blackstone
Britton Financial PR 0207 251 2544
Jonathan Naess
Nabarro Wells & Co Ltd 0207 710 7400
Chairman's Statement
Introduction
The year to December 2004 was a very poor one for the Group resulting in a loss
after tax of #6.71m (2003: loss #0.36m) which comprised pre-exceptional losses
of #2.28m (2003: loss #0.36m) and exceptional costs of #4.43m (2003: #nil).
I was appointed as your Chairman in November 2004 and in my first statement to
you, I am pleased to have the opportunity to describe significant changes in the
financing, management, core business and, most importantly, the prospects of
your Company. Radical changes, made in the second half of 2004 and since the
year-end, have put the Company on the right track towards health and
profitability, and far removed from its parlous state last year.
Board and Management
First of all I am pleased to introduce a new board to you: Andrew Latham, your
new Chief Executive, has most recently served as interim Managing Director of
Speymill Contracts Limited during the start of the reconstruction of the Group
and has significant experience in the hotel and leisure industries. Keith Lees,
the new Finance Director, has 25 years' experience in industry, including
considerable involvement in contracting companies. I also welcome to the Company
four Non-Executive Directors, each of whom brings a wealth of relevant
experience.
These are: Sir James Mellon KCMG, who after a distinguished career as a diplomat
has valuable experience of the sector in which we operate, most notably as
former Executive Chairman of Thamesmead Urban Development Corporation and as
former Chairman of the housing agency, Scottish Homes; Denham Eke, Managing
Director of Burnbrae Group Ltd ("Burnbrae"), your Company's largest shareholder,
which has considerable property interests; Ilyas Khan, the Managing Director of
Crosby Capital Partners, the AIM-listed investment banking and asset management
company; and Anthony Baillieu, Chairman of Regent Pacific Group, the Hong
Kong-listed asset management group.
The team beneath main board level has also been re-shaped and strengthened and
the benefits of these changes are already being felt.
Overview and strategy
The Company's survival during 2004 and the early months of 2005 depended on
significant additional finances, mostly provided through Burnbrae, which is a
private investment company whose portfolio includes an expanding brand,
Sleepwell Hotels. Not only is Burnbrae the majority shareholder in your Company
but, as a major client in the hotel and leisure construction and refurbishment
sector, it intends to provide a stream of opportunities to the Group as it
pursues its own expansion plans in the UK and the Isle of Man, where it is
based.
The hotel and leisure sector has always been the specialist focus of Speymill
Contracts, and is now the core of the Group's business. Accordingly, your board
proposes to rename the Company Speymill Group plc. A resolution to that effect
will be tabled at the forthcoming AGM.
Along with Burnbrae I am delighted to also welcome a number of other new
shareholders. Your board is determined to ensure that there is a rewarding
future for all its shareholders, old and new.
We were also supported throughout the period by our bankers, Bank of Scotland.
Your board is most appreciative of the confidence demonstrated by the bank in
the Company and is also encouraged by the constructive way in which our recovery
plans have been received.
Other parts of an all-embracing recovery programme have included rationalising
costs by closing the Crawley offices and the consolidation of all of the Group's
activities at Speymill Contracts' premises in Huntingdon. To improve the focus
on core activities in the hotel and leisure sector, we also recently announced
the disposal of D.F. Blanchard (Salisbury) Ltd ("Blanchard's"), which
incorporated the business of First National Property Maintenance ("FNPM").
We also plan to amend the share structure and will propose a resolution at the
AGM to approve a 1-for-100 share consolidation. The Financial Review that
follows describes other mechanisms that have already strengthened our position.
As a means of fully aligning shareholder and employee interests, we intend to
use share incentive schemes to encourage and reward management performance.
Your Company's fortunes are therefore being revived and the outlook has
significantly improved. Speymill's order prospects currently total over #30
million. We expect that this figure will grow substantially in 2006 and 2007 as
the impact of the new management team is felt and as a result of demand from
Burnbrae's hotel and leisure operations in the UK and Isle of Man.
We also intend to capitalise on our core competencies through other initiatives
in property development and facilities management. One initiative is the
creation of a new business division, which will investigate the potential of UK-
Real Estate Investment Trusts ("REITs"), or their equivalent. These would offer
a tax advantage under expected forthcoming legislation.
Appreciation and Outlook
In closing I wish to thank all our employees for their continued support and to
offer encouragement particularly to those forming the new core of the business
at Speymill. I also wish to thank our suppliers and sub-contractors and the
professional advisers that have helped in the restructuring and new direction of
the Group. There is considerable work to be done at all levels, but I am
confident of fruitful results.
Paul Doona,
Chairman.
Chief Executive's Operational Review
I am pleased to be taking up a permanent role as Chief Executive, having
initially joined Speymill as interim Managing Director in 2004. We have been
able to lay some foundations for the future and I am confident that we can
reverse the fortunes of the Group going forward. In delivering this recovery I
am fortunate to have a very committed and competent team. This year will be one
of consolidation and refocusing which should lead to a better return and value
improvement for all stakeholders.
Last year was an extremely difficult one for the Group. After a poor start, with
a number of issues on existing contracts, there was still some optimism for the
development of sales and better trading during the course of the year. However,
in all subsidiaries, these failed to materialise for a variety of complex
reasons. This necessitated an emergency refinancing that shareholders approved
during the year. Predominantly, the crisis centred on serious cash flow problems
caused mainly by poor trading performance and too high overhead costs. This led
to a struggle for survival which has been achieved largely as a result of
refinancing from Burnbrae.
A number of factors had an adverse impact on the year:
Blanchard's was affected by a change in procurement policy by the agents for the
MoD on Salisbury Plain whereby they reduced their planned expenditure. FNPM
suffered from a high cost base and poor management of some contracts. Before
Christmas the board decided to combine FNPM with Blanchard's because of the
synergy between these divisions and to cut costs.
Speymill Contracts' year started badly, with several projects under-performing
and various legacy issues relating to a number of contracts. Weak systems, poor
management and delays in the start of some contracts led to a reduction in the
division's turnover. Some cost savings were made but the lower turnover led to a
haemorrhage in gross profits, leading to a large net loss. Because of the
financial instability and business crisis a number of key personnel left the
company, voluntarily and through redundancy, and although they have been
replaced, where appropriate, the new team has needed time to settle in.
In the light of these problems, Speymill's business encountered considerable
cash pressure. Legal actions and other demands from creditors resulted, all of
which have since been settled or dismissed. The reputation of the business has
been affected by these actions, but we are working hard to restore fully the
good reputation with suppliers and creditors that has normally been enjoyed.
As the Chairman has indicated, much of the work needed to address these problems
at their source, and to strengthen the Company, took place in the second part of
the year and since the year-end.
The Crawley office has been closed and the head office functions relocated to
Speymill's premises in Huntingdon. This has significantly reduced overhead
costs. We have also recently announced the sale of Blanchard's, which has raised
funds and helped us to define our target business areas in the hotel, leisure
and retail industries. These include three main areas of activity: new build,
refurbishment of existing properties, and special works.
We are currently reviewing all of the Group's systems and procedures to improve
efficiencies and strengthen controls.
To illustrate the much-improved prospects for the Group, order prospects stand
at over #30 million, a figure representing committed and likely business and the
win rate achieved for new tenders. This amount does not take account of the full
breadth of opportunity offered by Burnbrae. It aims to develop the strengths of
its Sleepwell Hotels subsidiary, which owns 600 hotel beds in the Isle of Man
and the UK and it is Burnbrae's stated aim to construct or refurbish 5,000 beds
in the next five years. Speymill has been appointed the preferred contractor for
this business.
I look forward to reporting to you, in due course, the results of these various
changes and initiatives. With the rest of the board I am confident that we are
developing the stability for growth and opportunity for future success.
Andrew Latham
Chief Executive
Finance Review
Introduction
The Group's financial and organisational structures have been overhauled in the
past 12 months.
The 2004 financial statements reflect the full impact of the adverse trading
performance during the year, the costs of reorganisation and the additional
funding introduced to enable the business to continue.
Trading results
Turnover for the year, net of exceptional items, was #18.18m (2003: #22.23m).
This included a full year for Blanchard's, which was sold in May 2005.
Gross profit before exceptional items was 11.1% (2003: 13.7%), reflecting the
more difficult market conditions experienced in the year. Gross profits were
reduced by a further #1.40m as a result of exceptional items resulting from
legacies on various new build and refurbishment contracts.
Administrative expenses, before exceptional costs and goodwill amortisation
increased to #4.08m (2003: #3.11m), largely due to Blanchard's full-year costs
being incorporated. There were exceptional expenses of #0.59m on reorganisation
and refinancing. The disposal of Blanchard's gave rise to a goodwill carrying
value write-down of #0.77m, and a further goodwill write-down of #1.67m was made
on Speymill as a fair reflection of the board's view of the ongoing value.
Interest charges of #0.18m (2003: #0.13m) reflect the cost of bank borrowings
and additional loan funding charges.
The result of the poor trading performance and the additional costs and charges
was a net loss before tax of #6.79m (2003: #0.36m) of which #4.43m (2003: #nil)
was for exceptional items.
Cash Flow
Net cash outflow from operating activities for the year was #3.04m (2003: inflow
#0.5m), reflecting the loss incurred, though there was a net reduction of #0.7m
during the year in working capital. The operational outflow was compensated by
financing receipts of #1.7m from convertible loan notes and #1.78m, net of
costs, from additional equity, less a net outflow of #0.06m on finance leases.
After interest costs of #0.18m, capital expenditure of #0.04m and acquisition
costs of #0.07m this left a net improvement for the year in cash balances of
#0.09m (2003: #0.02m).
Financial restructuring
In June 2004 the Company's existing ordinary shares of 1 pence each were
sub-divided into one ordinary share of 0.01 pence (having the rights and being
subject to the same restrictions as the existing ordinary shares) and one
deferred share of 0.99 pence each (with very restricted rights). At the same
time, the Company's authorised share capital was increased from #5m to #8m.
During 2004, additional funding of #2.0m was provided by Burnbrae through a
combination of equity and convertible loan capital. Also, to reduce bank
overdraft borrowing, Burnbrae provided an overdraft facility of #0.65m. In
January 2005, Jim Mellon (the beneficiary of Burnbrae) provided a personal
convertible loan of #0.30m bringing their combined investment to almost #3.0m.
Other private investors provided an additional #1.08m in 2004 through a
combination of convertible loans and equity.
By April 2005 all the Burnbrae loan notes, plus #0.7m of further loan notes had
been converted into equity. An additional share placing of #0.5m was completed
in April 2005, with new investors. Further equity investment is in progress to
strengthen the Group's revived financial base. We are considering other
safeguards to ensure the Company's liquidity, and are proposing to rationalise
the share structure by a 1-for-100 share consolidation. Burnbrae has also made a
commitment to provide further investment to support the Group's continued
development.
Net assets
The year-end balance sheet shows negative net assets of #1.97m as a result of
the loss recorded for the year. However, since the start of 2005 the Group
balance sheet has benefited from the conversion of #0.85m of loan notes into
equity; the net disposal proceeds of #0.40m and cancellation of #0.14m of loan
notes in connection with the sale of Blanchard's and #0.50m of additional share
capital from new investors. The loan conversions will considerably reduce the
Group's interest burden.
The impact of the funding changes on net assets in 2005 to date are shown in the
following proforma statement:
#000
Net assets at 31 December 2004 (1,974)
2005 movements:
Loan note conversions 850
Additional shares issued 508
_______
(616)
Further placing anticipated June 2005 500
_______
(116)
Add: Existing funding considered as long term:
J Mellon convertible loan 300
Burnbrae Overdraft 621
_______
Proforma net assets 805
Outlook
The board believes that the financial restructuring has placed the Group in a
stronger position to take advantage of distinct opportunities in the hotel and
leisure field and in property investment and management. The board will continue
to seek additional equity funding to enable further expansion of the Group's
activities in these target markets.
Keith Lees
Finance Director.
The Wigmore Group plc
Preliminary Results for the Year Ended 31 December 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
2004 2003
Before Exceptional Total
Exceptional Items
Items (see note 5)
Notes #'000 #'000 #'000 #'000
Turnover 18,769 (591) 18,178 22,229
Cost of Sales (16,680) (809) (17,489) 19,173
____________________________________________ _______
Gross Profit 2,089 (1,400) 689 3,056
Administrative Expenses
Before goodwill amortisation and
Impairment (4,079) (586) (4,665) (3,105)
Amortisation of goodwill (196) - (196) (177)
Impairment of goodwill - (2,440) (2,440) -
____________________________________________ _______
Operating Loss (2,186) (4,426) (6,612) (226)
Interest payable and similar
charges (181) - (181) (131)
____________________________________________ _______
Loss on ordinary activities
before taxation (2,367) (4,426) (6,793) (357)
Taxation 2 88 - 88 -
____________________________________________ _______
Loss on ordinary activities
after taxation 9 (2,279) (4,426) (6,705) (357)
____________________________________________ _______
Loss per share (pence)
Basic and fully diluted 4 (0.26) (0.75) (0.26)
____________________________________________ _______
In both 2003 and 2004 the group had no recognised gains or losses other than the
result for each financial year shown above.
The Wigmore Group plc
Preliminary Results for the year ended 31 December 2004
CONSOLIDATED BALANCE SHEET
2004 2003
Notes #'000 #'000
FIXED ASSETS
Intangible - goodwill 1,000 3,716
Tangible 756 728
_________ _________
1,756 4,444
_________ _________
CURRENT ASSETS
Stocks 59 48
Debtors 3,059 4,747
Cash at bank - 413
_________ _________
3,118 5,208
CURRENT LIABILITIES
Creditors: amounts falling due within one year (5,422) (7,006)
_________ _________
NET CURRENT LIABILITIES (2,304) (1,798)
_________ _________
TOTAL ASSETS LESS CURRENT LIABILITIES (548) 2,646
Creditors: amounts falling due after more than one year (1,426) (593)
_________ _________
(1,974) 2,053
_________ _________
CAPITAL AND RESERVES
Called up share capital 237 2,097
Called up deferred share capital 2,294 -
Share premium account 3,057 813
Profit and loss account - deficit (7,562) (857)
_________ _________
9 (1,974) 2,053
_________ _________
The Wigmore Group plc
Preliminary Results for the year ended 31 December 2004
2004 2003
CONSOLIDATED CASH FLOW STATEMENT Notes #'000 #'000
Net Cash (Outflow)/Inflow from operating activities 6 (3,037) 499
Returns on investment and servicing of finance (181) (131)
Tax paid (6) (222)
Capital expenditure and financial investment (38) (59)
Acquisitions (70) (821)
_________ _________
Cash Outflow before financing (3,332) (734)
Financing 7 3,425 749
_________ _________
Increase in cash in the year 93 15
_________ _________
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Increase in cash in the period 93 15
Cash (inflow)/outflow from decrease in debt (1,642) 523
_________ _________
Change in net debt resulting from cash flows (1,549) 538
Finance lease creditors of acquired subsidiary - (16)
Bank loans of acquired subsidiary - (73)
Issue of redeemable loan notes - (309)
New finance leases (158) (103)
Conversion of loan notes 850 600
Issue of convertible loan notes - (150)
_________ _________
(857) 487
Opening net debt (1,639) (2,126)
Closing net debt 8 (2,496) (1,639)
_________ _________
NOTES TO THE ACCOUNTS
1. The financial information set out in this announcement does not constitute
statutory accounts within the meaning of s240 of the Companies Act 1998. The
results incorporated in the preliminary announcement have been prepared on
the basis of accounting policies consistent with the previous year. The
comparative figures have been extracted from statutory accounts for the year
ended 31 December 2003, which have been delivered to the Registrar of
Companies. The auditors have reported on those accounts; their report was
unqualified and did not contain statements under Section 237 (2) of the
Companies Act 1985. The statutory accounts for the year to 31 December 2004
will be delivered to the Registrar of Companies on or about 15 July 2005.
Copies of those statutory accounts will be posted to shareholders on or
about 29 June 2005 and they will be laid before the shareholders at the
Annual General Meeting.
2. The tax credit for the year arises from the carry back of current year losses
against pre-acquisition trading profits of a subsidiary. In the foreseeable
future, no charge to taxation arises as the Group has incurred losses to
date. Consequential deferred tax assets are not recognised as their recovery
is uncertain.
3. No final dividend is proposed.
4. Loss per share
The basic and diluted loss per share calculations are based on the
following:
2004 2003
#'000 #'000
Net loss before exceptional items 2,279 357
____________ ____________
Net loss after exceptional items 6,705 357
____________ ____________
Weighted average number of No. No.
ordinary shares in issue 892,728,606 135,548,000
____________ ____________
The share options and warrants do not give rise to any dilution and
therefore the fully diluted loss per share is equal to the basic loss per
share.
5. Exceptional items comprise:
2004 2003
#'000 #'000
Cost over-runs and loss provisions on new build
and refurbishment contracts 1,400 -
____________ ____________
Costs of refinancing 428 -
Reorganisation costs 158 -
____________ ____________
586 -
____________ ____________
Impairment of goodwill: Provision re Blanchard
disposal 771 -
Speymill write down 1,669 -
____________ ____________
2440 -
____________ ____________
4,426 -
____________ ____________
6. Reconciliation of Operating Loss to Operating Cash Flow
2004 2003
#'000 #'000
Operating loss (6,612) (226)
Depreciation of tangible assets 169 155
Amortisation of goodwill 196 178
Impairment of goodwill 2,440 -
Operating costs paid by way of share issue 45 -
Decrease/(increase) in stocks and work in progress 249 (5)
Decrease/(increase) in debtors 1,429 (1,625)
(Decrease)/increase in creditors (953) 2,022
____________ ____________
Net cash (outflow)/inflow from operating activities (3,037) 499
7. Analysis of cash flows from financing
2004 2003
#'000 #'000
Issue of equity shares 1,917 1,508
Expenses of issue (134) (235)
____________ ____________
1,783 1,273
Issue of convertible loan notes 1,700 -
Repayment of loan - (73)
Repayment of loan notes - (400)
Capital element of finance leases repaid (58) (51)
____________ ____________
3,425 749
____________ ____________
8. Analysis of net debt
At 1 Jan Cash Flow Other At 31 Dec
2004 non-cash 2004
changes
#'000 #'000 #'000 #'000
Cash at bank and in hand 413 (413) -
Overdrafts Bank of Scotland (1,471) 1,127 - (344)
Burnbrae - (621) - (621)
______________________________________________
(1,058) 93 - (965)
______________________________________________
Debt due within one year:
finance leases (57) 58 (105) (104)
Debt due after more than one year:
finance leases (65) - (53) (118)
convertible loan notes (150) (1,700) 850 (1,000)
redeemable loan notes (309) - - (309)
______________________________________________
(581) (1,642) 692 (1,531)
______________________________________________
Movement in net debt (1,639) (1,549) 692 (2,496)
______________________________________________
9. Reconciliation of movement in equity shareholders funds
2004 2003
#'000 #'000
Loss for the year (6,705) (357)
New share capital subscribed 2,812 2,307
Costs written off to share premium (134) (235)
_________ _________
Net (reduction)/addition to shareholders' funds (4,027) 1,715
Opening equity shareholders' funds 2,053 338
_________ _________
Closing equity shareholders' funds (1,974) 2,053
_________ _________
10. Copies of the report and accounts will be available from the Company's
registered office once they have been dispatched to shareholders.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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