Pex PLC - Preliminary Audited Results
14 Abril 1998 - 7:54AM
UK Regulatory
RNS No 8859t
PEX PLC
9th April 1998
Pex plc Preliminary Audited Results Announcement
Pex plc, the UK's largest maker of children's socks and tights and a
manufacturer of outdoor leisure socks, announces its preliminary results for
the year ending 31 December 1997.
Highlights are as follows:
- Turnover #14.5 million (#10.2 million)
- Profit before tax #263,000 (#507,000)
- Earnings per share 0.17p (0.6p)
- Dividend 0.1p (nil)
Commenting on the results, chairman Andrea Cattaneo Della Volta said: "A
Particularly mild autumn and early winter have hit sales throughout the
clothing industry and Pex was no exception. Profits were also undermined by
weaknesses in production, which have been addressed by the appointment of a
new head of production. Meanwhile, the company has broadened its range, and
strengthened its marketing, its reliability and product innovation all of
which are expected to strengthen the group during 1998. Since the year end we
have made a significant acquisition in Sockwise, taking us into adult socks,
and have raised additional capital in a one-for-four rights issue. Current
trading is above budget and, as a mark of confidence for the future, the board
is pleased to recommend a return to the dividend list".
Chairman's Statement
It is my pleasure to report my second year on the Board of Pex plc and to
present a set of results for 1997 that reflects the continuing changes in the
company.
In the Chairman's interim statement for the first half of 1997 it was stated
that the Company was making progress year on year. However, the results of
the second half of the year demonstrated that the qualities that we believed
your Company had achieved, were not yet sufficient to guarantee the desired
increase in profits.
Trading Review
Particularly due to the mild weather, (a factor that has had a major impact on
the whole clothing industry) sales in October, November and December were
lower than expected. Your Company made a pre-tax profit of #263,000 against a
profit in the 11 months period to the 31 December 1996 of #507,000. Turnover
(including for the first time the full contribution of our new subsidiary
Bridgedale 2000 Ltd.) has reached #14,497,000 up from #10,240,000.
Disappointing sales were not the only reason for declining profits.
Shortcomings on the production side created excessive costs compared to the
budget, the dye house and packaging of socks and tights.
Sales
Consolidated sales increased by 41.57% from #10.240m to #14.497m. Bridgedale
realised a turnover of #4.085m and Pex #10.412m.
Results
The consolidated profit before interest and taxes decreased 14% to #0.645m.
The consolidated profit before taxes and dividends was #0.263m or c. 0.17p per
share.
One of the major constituents of cost of sales has been the cost of dyeing.
This increased considerably in the year and the management team is taking
steps to bring this area of expenditure back into line. Conversely, as a
result of better negotiation and the strength of the pound, the cost of raw
materials has fallen by some 27%.
Bought in finished goods and such constructed work increased respectively by
18.82% and 24.28%.
The financial charges of the group amounted to #0.382m against #0.243m in 1996
and the exceptional reorganisation costs and costs incurred in the analysis of
new targets amounted to #0.3m. The net profit after taxes is #0.220m.
The strong pound had a negative effect on our results. The Company incurred
some #0.127m negative exchange difference.
In Pex the overhead costs in 1997 were more than 49% of sales. The target of
your Board is to decrease those to 25% over a period of 3 years. For the
group these amounted to, on average, 25% this demonstrates that acquisitions
such as Bridgedale have a positive impact on the spread of overhead costs and
improve our competitiveness.
The new computer system that has been installed in the finance department will
enable the Company to have a tighter financial control, and promote better
service to the customer through simplified invoices, fewer credit notes,
better picking lists, and shorter delivery periods.
The year 2000 problem has been addressed and the software has the facility to
deal with this and the Euro currency.
Capital expenditure
During the year the group spent over #1m (excluding the purchase of the assets
of Bridgedale) on the purchase of new machinery.
The Company will continue to improve productivity and quality through the
replacement of machinery where and when needed.
Markets of the Enlarged Group
Pex plc operated during 1997 in two areas of sock manufacture. The first,
children's, is the historic activity of your company. In this area we have
experienced the reduction of sales, to which I have already referred.
Your Company is now perceived by the major customers in the United Kingdom for
our products in the British Isles' market as a reliable supplier of good
products. Generally, the main reason for concern by big retailers in Britain
is reliability of delivery time and quality control and we have achieved the
recognition as one of the lowest risk suppliers in the industry.
In the branded sector your Company has finalised - within an economical budget
- the complete redesign of the Pex children socks logo.
The second area in which your Company operates is the area of making technical
outdoor and leisure socks. In January 1997 we have made an important entry
into this new activity through the acquisition of the business of Bridgedale
from The Hartstone Group Plc.
Bridgedale has progressed well and turned round from losses varying between
#300,000 - #400,000 in the last four years, to an operating profit of #91,000
for the first 6 months and a net profit of #32,000 before taxation for the
full year 1997.
The recent launch of a complete new range of ski and hiking socks shows that
Bridgedale is now emerging as a leading European producer of most innovative
sports socks.
Post Balance Sheet Events
During the month of August 1997 we started negotiations to purchase the
business of Sockwise Ltd, an 80% owned subsidiary of Towles PLC (at that time
Towles being in receivership), a textiles group.
As described in the circular mailed to shareholders on 25 February 1998, and
the subsequent EGM held on 13 March 1998, where various resolutions were
passed, the acquisition of Sockwise's assets has been completed.
As shareholders are aware, we also launched an increase of capital by way of a
1 for 4 right issue of 33,478,961 ordinary shares at 3p each which received a
majority vote, at the EGM on 13 March 1998.
During February 1998 we sold our premises at 577 Aylestone Road for #750,000
but at the same time signed a lease contract with the new owner allowing Pex,
from the date of completion, to rent part of the premises for a period of up
to 3 years. This allows time to gradually transfer Pex's operations to new
premises with the aim of ultimately transferring all sites to a single
location. The only exception is Bridgedale, which will continue to operate in
Northern Ireland.
Future Strategy
Today the group has the capacity to produce 20 million pairs of socks p.a.,
including high quality outdoor and leisure socks at Bridgedale, baby and
children's socks and tights at Pex and now men's and women's socks with
Sockwise.
Your Company aims to be the socks and hosiery leader in the United Kingdom and
eventually Europe.
This is not a short term strategy; this involves broadening our range of
products and winning market share, which your board believes is now well in
hand.
The first step has been to broaden our range of products. The arrival of new
management and the existing qualities of our commercial product permit us to
consider entering new areas of the hosiery market.
The variety of management skills within the Company roof permits us to
consider broadening our activity to the production and the outsourcing of
socks from low cost overseas locations. We still produce better quality
products than Eastern European and Asian countries, but they are getting
better every day. To keep ahead of them we should pay a lot of attention to
the quality of our products, to service and to productivity. These are the
main targets for the coming year.
In addition, your Board also believes that we should have the opportunity to
exploit our technical know-how and the business opportunities offered through
the trading of sock making machines and related equipment presents.
Consequently, your Board considers extending its activities into the
manufacture of the machines for our industry, through the acquisition of a
participation in an existing machine producer.
The recent acquisition of Sockwise brings new products into the group, men's
and women's socks.
The acquisition of Sockwise was achieved with negative goodwill which will
give rise to a profit of #0.9m over a period of three years.
The year 1997 was as expected, a year where the reorganisation of the Company
was continued. The production organisation was changed towards the end of the
year, a new logo and modern packaging were launched at year-end giving rise to
additional "on-off" costs.
Board Changes
During the period under review, the Board was strengthened on 13 October 1997
by the appointment of Ian Reeves as Non-executive Director and Deputy
Chairman. Mr Reeves, aged 53, is Deputy Chairman and Chief Executive of High-
Point Rendel Group PLC and a past Chairman of the London Regional Council of
the Confederation of British Industry.
As Nigel Graham Maw retired as Chairman on 14 October 1997, I took over the
role of the Chairman combining it with that of Chief Executive.
David Paget resigned as Production Director and General Manager on 25 November
1997, and a few days later Mr Keith Warwick, a sock specialist from Coats
Viyella's sock division, joined our management team as Head of Production.
The Board intends to appoint further non-executive Directors as soon as the
appropriate candidates, who we believe can add value to your business, have
been identified.
Corporate Governance
The Board supports the principles embodied in the Cadbury Code ("the Code")
and recognises that the prime responsibility for implementing the Code lies
with the Board and that shareholders are entitled to information as to the
extent to which it has not yet complied and, to what is being done to redress
the areas where there is not yet full compliance.
During the period under review the Board of Directors included two non-
executive directors ("NEDs") (Nigel Graham Maw and Ian Reeves), and four
executive Directors (Mq Andrea Cattaneo Della Volta, Yves De Poorter, David
Paget, who resigned on 25 November 1997, and Shane Bray). However, since the
appointment of Ian Reeves coincided with the resignation of Nigel Graham Maw
(the two events being totally unrelated), there is and has been throughout the
year one NED at Pex.
We realise the need to make further NED appointments to comply with the Code
and accordingly steps have been taken. We have conducted a number of
interviews and several approaches have been made. We will continue our active
search for further NEDs and hope to be able to announce an appointment in the
near future.
Whilst the Hampel Report and the Combined Code are not applicable for the
period under review, we acknowledge the recommendations of the Hampel Report
and the proposal to implement the Combined Code. Consequently, the Company
and the Board in particular will consider a review of its corporate governance
framework and procedures in the light of the adoption of the Combined Code and
report accordingly in next year's Reports and Accounts.
Outlook
Your Company's continued success and further progress depend upon the skills
and commitment of the Directors and the management team and staff, whom I
would like to thank for their efforts.
In the current year, we will continue to focus our energy on:
a) increasing our market share which is principally dependant on reliability
and product innovation;
b) continuously improving production capacity and productivity;
c) maintaining our sound financial position pursuing our corporate development
strategy with the objective of becoming the European leader and delivering
strong growth over the medium term in profits and earnings per share.
I am particularly proud to announce the return to the dividend list, by
recommending the payment of a modest 0.08p per share (equivalent to a gross
dividend of 0.1p per share). This shows our progress and our determination to
satisfy shareholders.
Mq Andrea Cattaneo Della Volta
Chairman and Chief Executive
Enquiries:
Mq Andrea Cattaneo Della Volta
Chairman
Pex plc
Tel: 0116 283 3461
END
MSCAFLEFSVIAIAT
Ubsetf Pex (LSE:PEX)
Gráfico Histórico do Ativo
De Jun 2024 até Jul 2024
Ubsetf Pex (LSE:PEX)
Gráfico Histórico do Ativo
De Jul 2023 até Jul 2024
