RNS Number:7812H
Bullough PLC
21 February 2003
21 February 2003
Bullough plc
Preliminary results for the year ended 31 December 2002
Bullough plc today announces its preliminary results for the year ended 31
December 2002.
Key features of the results include:
* Net debt reduced to #0.4m (#4.9m prior year)
* Assets per share are 43.9p (49.2p prior year)
* Restructuring results in sale of Boulter Boilers which yields gain of
#6.3m before goodwill write off
* Operating loss of continuing operations #4.1m (prior year #3.7m loss)
* Pre tax loss #7.4m (#13.9m loss prior year) after goodwill write off of
#3.6m
* Exit from PPS completed at a cost of #4.9m in line with expectations
Commenting on the results, Howard Marshall, Chairman said:
"The year under review has been another difficult one, particularly as a
consequence of the declining market for Workplace Solutions. Restructuring
action has been taken to resize the business in line with current demand so that
prospects should improve. The sale of Boulter Boilers during the year has
strengthened the balance sheet and enabled significant debt reduction."
Enquiries:
Bullough plc 01372 379088
Howard Marshall, Chairman
Colin Bonsey, Finance Director
Financial Dynamics
Charlie Armitstead 0207 831 3113
Chairman's Statement
The year under review has been one of severe economic difficulty for the group.
Worldwide there has been a major downturn in the demand for office furniture.
The UK market has suffered a fall to the order of 30% and this has severely
impacted on our four businesses in Workplace Solutions that operate in this
market.
The reduction in the market place necessitated action being taken to further
reduce capacity and bring the businesses in balance with demand. The total
workforce headcount has been reduced by 32% from 1,250 to 850. At the same time
a major programme of productivity improvements has also been implemented and a
number of very encouraging projects have been completed in the year.
State of the art sheet metal processing has been installed at Flexiform and the
manufacturing footprint reduced by half. Trianco have introduced robotic welding
and computer controlled folding into the manufacture of boiler heat exchanger
shells. In addition to these projects work is progressing on a new metalwork
conversion facility for Project. All these projects are designed to lower costs,
improve product quality and expand design possibilities.
On 2 December 2002 we announced the disposal of the business of Boulter Boilers
(Boulter) to Buderus Heiztechnik GmbH. This will be very beneficial to Boulter
for their future development and it has also substantially improved the finances
of the group. Net worth has been enhanced by approximately #6 million and bank
borrowing reduced to under #1 million by the end of the year. Bullough is now
well positioned to follow through the re-engineering of its businesses and bring
the trading back into good health.
Results summary
The results summary set out below shows the turnover and operating profit of
continuing operations before charging any exceptional costs:
2002 2001 2002 2001
Turnover Turnover Operating Profit Operating Profit
#'000 #'000 #'000 #'000
Workplace Solutions 49,216 62,750 (5,377) (4,712)
Temperature Control 19,261 18,493 1,246 1,037
68,477 81,243 (4,131) (3,675)
Workplace Solutions
In the interim results shareholders were advised that sales for the division had
fallen by some 25% matching the overall fall in the market. The second half of
the year saw a significant fall in sales not only against the comparable period
of the previous year but also in comparison to the sales achievement of the
first six months of the year. During the year the trend of customers
rescheduling deliveries or simply putting projects on hold continued. As a
consequence of the fall in turnover all operating companies within the division
suffered a loss.
Significant restructuring action was taken in the second half of the year. In
addition action was taken to consolidate the Flexiform operation into half of
its former site and the resulting available space sold to a third party. The
proceeds of the sale enabled the financing of a radical restructuring of the
manufacturing capability of the company with a major investment in new plant and
equipment, which will improve competitiveness for 2003 and provide the
capability to expand the product lines.
Temperature Control
The overall result for the division was encouraging. Strong performance was
achieved by both Johnson & Starley and Boulter. Johnson & Starley are
continuing to receive market recognition for their Economair product and in
August the Dravo product line was acquired. Dravo has been a significant
supplier of industrial blown air systems and has a number of leading high street
names as customers. Both recent trading and the outlook for this business are
good.
Trianco continued to disappoint and only modest improvements were achieved in
sales and no reduction in operating losses. As a consequence further
restructuring action was taken in the second half of the year which combined
with an investment in capital to implement robotic welding should create the
opportunity for improvement in 2003. The disposal of Boulter has created no
restriction on the current or future development of Trianco.
Discontinued activities
Amounts shown under this section represent the trading results of Boulter up to
the time of sale together with the trading losses incurred by Product
Procurement Services (PPS) up to its point of sale.
Exceptional items
An exceptional charge of #2.5 million included in operating losses represents
restructuring charges together with the rationalisation of product lines and
non-recurring costs. An exceptional charge of #0.2 million arises from the
disposal of businesses during the year. This comprises a loss of #2.9 million
for the residual impact of the PPS disposal, a profit of #6.3 million achieved
on the sale of the business and assets of Boulter to Buderus Heiztechnik GmbH,
less related goodwill of #3.6 million.
Major shareholder
There has been no change in the Montpellier shareholding (29.9%) during the year
and they have given full support to the reorganisation actions taken by your
board.
Directors
The number of directors reduced during the year by the retirement of Mr Stoddart
as notified in the 2001 accounts.
Bank facilities
Following the sale of PPS and Boulter the group has renegotiated facilities with
the Royal Bank of Scotland, which will provide adequate working capital for the
foreseeable future.
Pensions
In view of the ever increasing burden both in terms of cost and regulatory
requirements it has been decided to create a new pension scheme based on defined
contributions. The new scheme commenced 1 February 2003 and no further benefits
other than those provided for in the appropriate Trust deeds will accrue under
existing plans beyond 31 January 2003. If the existing schemes were valued for
MFR regulations it is believed that a substantial deficit would exist. As a
consequence additional contributions will be required in the future to fund this
deficit. Further information will be included in the published accounts.
AIM
On 6 September 2002 Bullough announced its intention to move from the Official
List of the London Stock Exchange to the Alternative Investment Market of the
London Stock Exchange (AIM). The application was approved and dealings
commenced on AIM on 9 October 2002.
The directors believe that the AIM market is more suited to the current size of
the company than the Official List and that the move reflects this and will
enable the company to save costs because of less onerous requirements and to
take advantage of a greater degree of flexibility.
Employees
It has not been an easy period for the group and I would like to thank all our
employees for their efforts and contributions through this period.
Dividend
In view of the trading results for the year the board is not recommending the
payment of a dividend.
Outlook
The future financial health of the group remains crucially dependent on the
market for office furniture. Major changes are taking place in the economies of
the developed world which are radically changing the use of office space.
Forecasting the progress of the market is impossible and I don't intend to
attempt it.
However, the businesses are now structured for a level of demand consistent with
that experienced during the second half of 2002. If the market continues to fall
then more restructuring will be required and we are well placed technically and
financially to do this. If a measure of stability returns to the market then we
will enjoy much improved trading and a return to profitability.
The coming year will again be a challenging one for Bullough. However, with all
of the actions that have been taken in 2002 I am optimistic that the fortunes of
the group will improve.
Howard Marshall, Chairman 21 February 2003
Bullough plc
Group results for the year ended 31 December 2002
Consolidated profit and loss account
Year ended 31 December 2002 Year ended 31 December 2001
(as restated - note 2)
Before Before
exceptional exceptional
items Exceptional items Exceptional
items items
Total Total
#'000 #'000 #'000 #'000 #'000 #'000
Turnover
Continuing operations 68,477 - 68,477 81,243 - 81,243
Discontinued operations 14,227 14,227 23,666 23,666
Total turnover 82,704 - 82,704 104,909 - 104,909
Cost of sales (59,089) (2,033) (61,122) (74,992) (650) (75,642)
Gross profit 23,615 (2,033) 21,582 29,917 (650) 29,267
Net operating expenses (27,943) (422) (28,365) (40,143) (2,051) (42,194)
Operating loss
Continuing operations (4,131) (2,455) (6,586) (3,675) (2,701) (6,376)
Discontinued operations (197) - (197) (6,551) - (6,551)
Total operating loss (4,328) (2,455) (6,783) (10,226) (2,701) (12,927)
Exceptional items
Profit on disposal of
discontinued operations - 1,379 1,379 - 947 947
Impairment provision - 2,000 2,000 - (2,000) (2,000)
Goodwill previously written off - (3,625) (3,625) - - -
Loss before interest (4,328) (2,701) (7,029) (10,226) (3,754) (13,980)
Net interest (payable) receivable (339) - (339) 34 - 34
Loss on ordinary activities
before taxation (4,667) (2,701) (7,368) (10,192) (3,754) (13,946)
Taxation 825 90 915 1,100 768 1,868
Loss on ordinary activities
after taxation (3,842) (2,611) (6,453) (9,092) (2,986) (12,078)
Dividends - -
Loss absorbed (6,453) (12,078)
Loss per share
Basic loss per share (12.14)p (22.71)p
Adjusted loss per share (6.23)p (5.17)p
Diluted loss per share (12.14)p (22.71)p
Dividend per share nil nil
Notes:
2001 comparative figures have been restated to reflect the composition of
continuing and discontinued operations in 2002 This change has no effect on the
overall operating result. There were no recognised gains and losses other than
the result for the year.
Bullough plc
Group results for the year ended 31 December 2002
Consolidated balance sheet
Group Group
31 December 31 December
2002 2001
#'000 #'000
Tangible fixed assets 19,222 21,831
Current assets
Stocks 7,382 9,783
Debtors - due within one year 15,985 24,094
Debtors - due after more than one year 251 148
Cash at bank and in hand 208 135
23,826 34,160
Creditors - amounts falling due within one year (13,546) (22,736)
Net current assets 10,280 11,424
Total assets less current liabilities 29,502 33,255
Creditors - amounts falling due after more than one year (124) (180)
Provisions for liabilities and charges (6,039) (6,908)
Total net assets 23,339 26,167
Capital and reserves
Called up share capital 10,634 10,634
Share premium account 1,964 1,964
Revaluation reserve 856 1,621
Capital redemption reserve 13,683 13,683
Profit and loss account (3,798) (1,735)
Equity shareholders' funds 23,339 26,167
Assets per share 43.9p 49.2p
Bullough plc
Group results for the year ended 31 December 2002
Consolidated cash flow statement
Year ended Year ended
31 December 2002 31 December 2001
#000 #'000
Operating loss (6,783) (12,927)
Depreciation 2,906 2,992
(Profit) loss on sale of fixed assets (170) 57
Decrease in stocks 2,342 798
Decrease in debtors 4,871 9,596
Decrease in creditors (2,459) (5,762)
(Decrease) increase in provisions (446) 651
Net cash flow from operating activities 261 (4,595)
Net interest (paid) received (318) 12
Taxation received 1,466 68
Capital expenditure and financial investment
Purchase of tangible fixed assets (3,071) (3,182)
Acquisition of Dravo assets (88) -
Sale of tangible fixed assets 1,205 13
(1,954) (3,169)
Acquisitions and disposals
Disposal of subsidiary undertakings 5,035 393
Borrowings of subsidiary undertakings disposed of 36 -
5,071 393
Equity dividends paid - (378)
Net cash flow before financing activities 4,526 (7,669)
Financing
Inception of new finance leases 44 -
Capital element of finance leases repaid (53) (69)
(9) (69)
Increase (decrease) in cash in the year 4,517 (7,738)
Reconciliation of net cash flow to movement in net debt
Increase (decrease) in cash in the year 4,517 (7,738)
Decrease in amounts due under finance leases 9 69
Decrease (increase) in net debt in the year 4,526 (7,669)
Net debt at 1 January 2002 (4,902) 2,767
Net debt at 31 December 2002 (376) (4,902)
Notes
1. General
Comparative figures for the year ended 31 December 2001 have been derived from
the group's 2001 Report and Accounts which have been filed with the Registrar of
Companies as adjusted for the change in accounting policy described in note 2.
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 2001 Report and
Accounts except for the change noted below.
The requirements of Financial Reporting Standard 19, 'Deferred Taxation', have
been adopted during the year. The previous accounting policy of making partial
provision for deferred taxation which is expected to become payable in the
foreseeable future has been replaced by a full provision policy for all deferred
tax assets and liabilities. The change in policy does not have any impact on the
balance sheet at 31 December 2001. As a consequence of the impact on the balance
sheet at 31 December 2000, the taxation credit for 2001 has been increased by
#346,000.
3. Loss per share
Basic and adjusted losses per share have been calculated based on an average
number of shares in issue during the year of 53,172,410. Adjusted loss per
share reflects the loss after taxation adjusted to exclude the impact of
discontinued businesses amounting to operating losses of #197,000, interest
receivable of #24,000 and a net taxation charge of #356,000 and net exceptional
charges of #2,611,000.
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 13 March 2003. 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
The company news service from the London Stock Exchange
END
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