RNS Number:5045U
Bullough PLC
15 April 2002
15 April 2002
Bullough plc
Preliminary results for the year ended 31 December 2001
Restructured Group looks forward to the future with confidence
Bullough plc today announces its preliminary results for the year ended 31
December 2001.
Key features of the results include:
• Pre tax and exceptional loss £10.2m, including PPS loss of £7.6m
• PPS disposal announced March, 2002
• £2.6 million pre exceptional loss on continuing operations, excluding
discontinuing PPS business
• Assets per share 49p
Commenting on the results, Howard Marshall, Chairman said:
After many months of negotiating the year under review saw a successful
resolution of the disposal of Product Procurement Services and the consequent
exit from the Trillium contract. This sale will relieve the Group of losses
sustained in 2001 of £7.6 million and enable the management to focus wholly on
the development of our two solid divisions Workplace Solutions and Temperature
Control.
Enquiries:
Bullough plc 01372 379088
Howard Marshall, Chairman
Colin Bonsey, Finance Director
Financial Dynamics 0207 831 3113
Charlie Armitstead
Chairman's Statement
The year to 31 December 2001 was a very difficult one for the Group. Trading
results for the year have been disappointing but the difficulties encountered in
the manufacturing companies have been overshadowed by the very poor performance
of our facilities management company, Product Procurement Services (PPS).
The losses incurred at PPS were at an unsustainable level and as a consequence
we reached an agreement with Land Securities Trillium enabling Bullough to exit
from the contract. Notwithstanding the trading losses for PPS and the cost of
exiting the contract the Group had net assets per share of 49p at end of
December 2001.The cost of effecting the transaction for the sale of PPS will
amount to approximately £4.65m as described in the circular to shareholders.
£2.0m has been reflected as an impairment charge in 2001, the balance will be
recorded as loss on disposal in 2002. If the full impact of this transaction
had been dealt with in these accounts, net asset per share would be
approximately 44p.
Results Summary
An analysis of turnover and operating profit of continuing operations excluding
PPS and exceptional items is set out below:
2001 2000
2001 2000 Operating Operating
Turnover Turnover (loss) profit (loss) profit
£'000 £'000 £'000 £'000
Workplace Solutions Manufacturing 62,750 71,330 (4,712) 517
Temperature Control 27,732 32,520 2,107 4,729
90,482 103,850 (2,605) 5,246
Workplace Solutions
- Manufacturing
The year under review produced a mixed performance from this division. In the
first half all companies, with the exception of Flexiform, performed
satisfactorily. However, turnover fell sharply in the second half of the year
at all three major units, namely Project, Pentos and Flexiform as a consequence
of uncertainty in the market place exacerbated by the events of 11 September.
Although little business was lost customers either rescheduled deliveries or put
them completely on hold. In the light of these circumstances action has been
taken to radically restructure all three manufacturing units to cut costs and
redundancy programmes have been implemented at each location.
Shareholders will be aware that as part of total restructuring consideration was
given to the complete closure of operations on the Bradford site with the
transfer of activity to a sister company. After careful appraisal it was
determined that a more appropriate course of action was to retain operations in
situ but to restructure the size of the facility.
- Facilities management
Throughout the year the Board have kept shareholders informed of the overall
trading position of PPS and in particular of the losses sustained by PPS under
the contract secured with Land Securities Trillium (LST) for the supply and
maintenance for furniture and related equipment for the DWP (formerly DSS)
estate.
Demand continued to exceed expectations throughout the year, against a
background of a fixed price contract. As a consequence substantial losses were
incurred. Considerable efforts were made to curtail costs and/or renegotiate
the contract but this has not proved to be possible. In the light of this,
agreement in principle was reached with LST for Bullough to exit from the
contract within the first quarter of 2002. Your Board was pleased to announce
that agreement was reached on 9 March 2002 for the sale of PPS to its
management. The transaction was explained in detail to shareholders in a
circular dated 19 March 2002 which was approved at the Extraordinary General
Meeting held on 4 April 2002. As part of the agreement Bullough will retain the
opportunity to supply product to the Newco on a commercial basis thus retaining
participation in the PFI market.
Temperature Control
Although the division had a difficult year it still achieved a return on sales
for the year of over 7%. The oil boiler companies were impacted by the effect
of a flat market, destocking by their major customers and the foot and mouth
epidemic impacting rural areas. These events are now behind us and the customer
base has been stabilised. Performance is already improving and new products
will be introduced in 2002.
Exceptional items
The exceptional charge of £2.7m included in operating losses represents
restructuring costs and provisions of £1.4m and the costs incurred in the
aborted disposal of the Temperature Control division during 2001 of £1.3m. An
exceptional charge of £2.0m has also been made in respect of the disposal of
PPS. As the disposal did not occur until after the year end the full impact of
the disposal cannot be reflected until 2002. The charge represents full
provision against the carrying value of fixed assets and stock, which were
disposed of at nil value. The exceptional credit of £0.947m relates primarily
to the disposal of a property surplus to Group requirements and the tax credit
of £0.768m relates primarily to the recovery of ACT on share repurchases carried
out in 1999.
Major Shareholder
During the last quarter of the year the Group witnessed a major change to its
shareholder base with the acquisition of a shareholding by Montpellier plc which
amounts to 29.9%. The Group has very much welcomed this investment as a vote of
long term confidence in the Company.
Chairman and Directors
Sir Michael Pickard retired from the Board and the Chairmanship on 4 April 2002,
following the shareholder approval of the disposal of PPS at the EGM, after 6
years of service. On behalf of the Board I would like to thank him for the
considerable contribution he has made to the Group over the years. He has in
particular played a very important role in negotiating the Group's exit from the
Trillium contract as well as rationalising the Group's portfolio and returning
funds of approximately £54m to shareholders.
Following the decision to retain the Temperature Control division I was invited
to join the Board on 23 November 2001 as Executive Deputy Chairman. I became
Chairman on 4 April 2002 immediately following the retirement of Sir Michael.
Mr Peter Gyllenhammar, Deputy Chairman of Montpellier Group also joined the
Board on the 23 November.
Mr Michael Stoddart has advised the Board of his intention to retire from the
Board at the occasion of the next AGM. At that time Mr Stoddart will have
reached the age of 70 and will have served on the Board for 34 years. On behalf
of the Board I would like to thank him for his valued support and guidance over
that period.
Employees
I would like to thank all our employees for their efforts and contributions in
what has been a most difficult trading period.
Dividend
In view of the trading results for the year the Board is not recommending the
payment of a dividend.
Outlook
The Group has experienced a number of significant events during the year, most
notably the trading losses at PPS and the change in the shareholder base with
the introduction of Montpellier. The finalisation of the transaction for the
sale of PPS and thereby the exit from the Trillium contract enables us to focus
completely on future trading opportunities. In this the advent of Montpellier
is, I believe, an encouraging change as they have supported and continue to
support the actions taken by the Board to revitalise of the Group for the
future.
Investment and some restructuring action have been required in the Workplace
Solutions companies in order to return the division to profitability. However
the Group manufactures excellent products which are well received by the market
and a programme of profit improvement is well under way.
The Temperature Control division is well placed to recover from the downturn
during 2001 and new product and production initiatives will ensure long term
improvements.
Short term prospects for both divisions will be impacted by increased cost of
insurance and pensions. However, there is already evidence of an improving
performance, which gives confidence for the future.
Howard Marshall, Chairman 15 April 2002
Bullough plc
Group results for the year ended 31 December 2001
Consolidated profit and loss account
Year ended 31 December 2001 Year ended 31 December 2000
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items Total
£'000 £'000 £'000 £'000 £'000 £'000
Turnover
Continuing operations 90,482 - 90,482 103,850 - 103,850
Discontinuing operations 14,427 - 14,427 10,174 - 10,174
Total continuing operations 104,909 104,909 114,024 114,024
Discontinued operations - - 3,665 3,665
Total turnover 104,909 - 104,909 117,689 - 117,689
Cost of sales (74,992) (650) (75,642) (75,728) - (75,728)
Gross profit 29,917 (650) 29,267 41,961 - 41,961
Net operating expenses (40,143) (2,051) (42,194) (38,199) - (38,199)
Operating (loss) profit
Continuing operations (2,605) (2,701) (5,306) 5,246 5,246
Discontinuing operations (7,621) - (7,621) (1,863) - (1,863)
Total continuing operations (10,226) (2,701) (12,927) 3,383 - 3,383
Discontinued operations - - - 379 - 379
Total operating (loss) profit (10,226) (2,701) (12,927) 3,762 - 3,762
Exceptional items
Impairment of assets in business
to be disposed of - (2,000) (2,000) - - -
Profit on disposal of
discontinued operations - 947 947 - 718 718
(Loss) profit before interest (10,226) (3,754) (13,980) 3,762 718 4,480
Net interest receivable 34 - 34 238 - 238
(Loss) profit on ordinary
activities
Before taxation (10,192) (3,754) (13,946) 4,000 718 4,718
Taxation 754 768 1,522 (1,178) (194) (1,372)
Profit on ordinary activities
after taxation (9,438) (2,986) (12,424) 2,822 524 3,346
Dividends - interim paid - (734)
- final proposed - (378)
Retained (loss) profit (12,424) 2,234
(Loss) earnings per share
Basic (loss) earnings per share (23.37)p 5.54p
Adjusted (loss) earnings per (4.37)p 6.74p
share
Diluted earnings per share (23.37)p 5.54p
Dividend per share Nil 2.00p
Weighted average number of shares used to
determine basic earnings per share (millions)
53.2 60.4
Shares in issue at 31 December (millions) 53.2 53.2
Note:
2000 comparative figures have been restated to reflect the composition of
continuing, discontinuing and discontinued operations in 2001. This change has
no effect on the overall operating result. There were no recognised gains and
losses other than the result for the year.
Group results for the year ended 31 December 2001
Summary consolidated balance sheet
Group Group
31 December 31 December 2000
2001
£'000 £'000
Tangible fixed assets 21,831 22,339
Current assets
Stocks 9,783 11,957
Debtors 24,242 33,748
Cash at bank and in hand 135 2,938
34,160 48,643
Creditors - amounts falling due within one year (22,736) (24,344)
Net current assets (liabilities) 11,424 24,299
Total assets less current liabilities 33,255 46,638
Creditors - amounts falling due after more than one year (180) (255)
Provisions for liabilities and charges (6,908) (7,792)
Total net assets 26,167 38,591
Capital and reserves
Called up share capital 10,634 10,634
Share premium account 1,964 1,964
Revaluation reserve 1,621 1,622
Capital redemption reserve 13,683 13,683
Profit and loss account (1,735) 10,688
Equity shareholders' funds 26,167 38,591
Assets per share 49.2p 72.5p
Reconciliation of movement in reserves
At 1 January 2001 27,957 30,835
(Loss) profit after taxation (12,424) 3,346
Dividends - (1,112)
Purchase of own shares - (8,660)
Increase in capital redemption reserve - 3,548
At 31 December 2001 15,533 27,957
Group results for the year ended 31 December 2001
Summary consolidated cash flow statement
Year ended Year ended
31 December 2001 31 December 2000
£000 £'000
Operating (loss) profit (12,927) 3,762
Depreciation 2,992 3,132
Loss (profit) on sale of fixed assets 57 (33)
Decrease (increase) in working capital less provisions 5,283 (1,573)
Net cash flow from operating activities (4,595) 5,288
Net interest received 12 241
Taxation received (paid) 68 (941)
Capital expenditure and financial investment
Purchase of tangible fixed assets (3,182) (3,578)
Sale of tangible fixed assets 13 100
(3,169) (3,478)
Acquisitions and disposals
Disposal of subsidiary undertakings 393 4,777
Cash of subsidiary undertakings disposed of - 156
393 4,933
Equity dividends paid (378) (734)
Net cash flow before financing activities (7,669) 5,309
Financing
Capital element of finance leases repaid (69) (71)
(69) (71)
Purchase of own shares - (8,660)
(69) (8,731)
Decrease in cash in the year (7,738) (3,422)
Notes
1. General
The comparative figures for the year ended 31 December 2000 above have been
derived from the Group's 2000 Report and Accounts which have been filed
with the Registrar of Companies. The auditors' opinion on those accounts
was unqualified and did not include a statement under Section 237(2) or (3)
of the Companies Act 1985. These preliminary financial statements do not
constitute statutory Group accounts within the meaning of Section 240 of
the Companies Act 1985.
2. Accounting policies
The accounting policies remain as set out in the Group's 2000 Report and
Accounts.
3. Earnings per share
Basic and adjusted earnings per share have been calculated based on an
average number of shares in issue during the year of 53,172,410. Adjusted
earnings reflect profit after taxation adjusted to exclude the
discontinuing business losses after taxation of £7,117,000 and net
exceptional charges of £2,986,000.
The Company has share options which are potential ordinary shares. However,
the impact on the net loss of these potential ordinary shares is
anti-dilutive and therefore diluted earnings per share is the same as the
basic earnings per share.
- ENDS -
The printed Annual Report and Accounts will be mailed to shareholders (but not
published in the newspapers) on Monday 29 April 2002. Copies will be available
on request from the Company Secretary, Bullough plc, 21 The Crescent,
Leatherhead, Surrey KT22 8DY.
This information is provided by RNS
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