Pressac plc
For immediate release 14th April 2005
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004
Pressac plc ("Pressac"), the international specialist manufacturer of electrical, electronic and decorative
components mainly for the automotive and telecommunications markets, announces its unaudited results for
the year ended 31 December 2004.
HIGHLIGHTS
Financial
* Turnover �135.6m (2003: �132.5m)
* Profit before interest, tax and exceptional items �3.1m (2003: �5.4m)
* Profit before interest and tax after exceptional items �3.1m (2003: �4.0m)
* Loss for the year after tax and exceptional items �3.7m (2003: loss �1.8m)
* Loss per share before exceptional items 4.29p (2003: 0.42p)
* Loss per share after exceptional items 4.29p (2003: 2.04p)
Automotive - Sales �112.0m (2003: �109.1m) Operating profit �2.5m (2003: �5.1m)
* Tough trading conditions continued with the major car brands that Pressac supplies experiencing
volume reductions in both Europe and USA.
* The Decorative Division performed well during the year, with McGavigans returning to profitability.
Kaumagraph continued to win new business with American OEM's and transplant manufacturers and despite
experiencing some start up problems during the year, is establishing a growing presence in its moulding
business.the incorrect accounting treatment of certain costs.
* The Electronics Division has performed well in 2004 with strong performances throughout the year
from both the German and Italian operations. The French operation has been turned around and returned to
profitability in the last quarter of the year.
* As reported on 8 December 2004, accounting adjustments were identified in respect of Pressac do
Brasil, largely relating to the valuation of fixed assets, stock and the incorrect accounting treatment of
certain costs.
Telecom and Industrial - Sales �23.6m (2003: �23.5m) Operating profit �0.7m (2003: �0.3m)
* The Communications Division has had some overseas successes despite continuing weak markets for
voice and data products. In addition, it has experienced competitive price pressure from imported
products, which it has partly countered by the development of its own Chinese supply source.
* The industrial products business continued to strengthen its position in electronics for fork lift
trucks and gas boiler valves.
Commenting on the results and prospects for the Group, Chairman Chris Woodwark said:
"2004 was, as expected, a challenging year across the Group. Some of our major customers have lost
ground to Japanese and Korean transplants and imports. In addition, there have been heavy cost
pressures on our main commodity purchases of copper strip and wire, steel, silver and plastics right
across the Group. This has exacerbated the cost down pressures exerted by our customers who have been
reluctant to grant us price relief for the commodity price increases. Despite this, the majority of our
businesses performed well and we achieved strong performances, particularly from our German and Italian
operations. In addition, 2004 saw the return to profitability of our Scottish operation, McGavigans.
The French operation, however, has taken longer to turn around than we had originally anticipated, but
management changes have now been made and its performance was more in line with our expectations during
quarter 4 as it returned to profitability. We have also made management changes in Pressac do Brasil
following the identification of accounting adjustments and we look forward to improved performance
during 2005 as a result.
The Group's financial position, has, however, continued to be adversely impacted by the high debt levels
and consequent high charges and costs incurred in negotiations of bank financing. As a result, the
benefits of improved operating performances have been, and will be, significantly diminished as far as
the ordinary shareholders are concerned. As a result, the Board believes that the best route to
maximising value for the Company's stakeholders, and one which secures the support of the Company's
lenders, is to undertake a value realisation strategy through asset disposals.
The Company has secured ongoing support of its lenders to enable the implementation of the asset
realisation strategy through the provision of new facilities. However, the provision of these
facilities requires the pursuit of the value realisation strategy and is conditional upon, inter alia, a
delisting of the Company's Ordinary Shares. As a result the Company has today separately announced the
securing of the new facilities and the application to delist our Ordinary Shares from the Official List
of the UK Listing Authority"
For further information, please contact:
PRESSAC www.pressac.com
Chris Woodwark, Chairman and Chief Executive Tel: 01332 821340
Jane Aikman, Group Finance Director Tel: 01332 821340
IKON ASSOCIATES
Adrian Shaw Tel: 01483 535102
Mobile: 0797 9900733
e-mail: adrian@ikonassociates.com
CHAIRMAN'S STATEMENT AND OPERATIONAL REVIEW
Summary of results
Sales for 2004 were �135.6m compared with �132.5 m for the previous year. Profit before interest and tax
and before exceptional items was �3.1m (2003: �5.4m) and after exceptional items was �3.1m (2003: �4.0m).
Interest charges were �4.0m compared with �3.1m in 2003, resulting in a loss before tax and exceptional
items of �0.9m (2003: profit �2.2m) and after exceptional items of �0.9m (2003: profit �0.8m). The tax
charge increased from �2.6m to �2.8m leaving a loss after tax before exceptional items of �3.7m (2003: loss
�0.4m) and after exceptional items a loss of �3.7m (2003: loss �1.8m). There were no exceptional costs in
2004 compared with �1.4m post tax in 2003.
Strategic plan
As a result of the continuing pressures placed on the Group by the current debt levels, the Board believes
that the best route to maximising value for stakeholders, and one which secures the support of its lenders
through the new facilities, is to undertake a value realisation strategy through asset disposals. The
Board is therefore committed to undertaking a value realisation strategy whereby offers will be sought for
each of the Group's businesses or the Group as a whole, with net proceeds from asset disposals being
distributed to stakeholders.
New Facilities and delisting of Ordinary Shares
A circular is being posted today setting out the terms of the new facilities which have been agreed with
the Group's lenders which provide for an extension of the Company's existing facilities to 30 June 2006 (or
30 June 2007 with the approval of the providers of the new facilities) to enable implementation of the
strategic plan outlined above.
The new facilities require the pursuit of this strategic plan and are conditional upon, inter alia, a
delisting of the Company's Ordinary Shares from the Official List of the UK Listing Authority. The
circular that today has been posted to Ordinary Shareholders outlines that the Company is to request a
delisting of its Ordinary Shares effective on 13 May 2005. Further details are contained in an additional
announcement made to the London Stock Exchange today.
Review of operations
AUTOMOTIVE
Sales: �112.0m (2003: �109.1m) Operating profit: �2.5m (2003: �5.1m)
Electronics Division
2004 saw a continuation of the operational challenges tackled in 2003, namely; to return our French
operations to profitability following the social plan, to strengthen management and significantly to
reduce our material stocks. In addition, we have focussed our efforts on gaining a greater share of the
market for automotive electronics. I am pleased to report that during 2004 the following were achieved:
- Following a difficult start to the year, our French operations returned to profitability in the last
quarter of 2004;
- Further automation, mechanisation and upgrading of winding machines, particularly in Italy and
France, has improved productivity;
- Sales and marketing are now effectively controlled and managed on a divisional basis. This has
enabled us to maintain a stable relay production base in France and Italy as weaknesses in the French relay
market have been successfully offset with strength in Germany;
- Difficult market conditions have prevailed in Europe with volume reductions being experienced by the
major car brands that Pressac supplies. Despite this, we have achieved continuing growth in pre-heating
products in Germany and continuing development on sun roof modules and relay boxes in Italy and France
respectively.
Prospects
Following the management changes of 2004, we believe we now have a stable management team to take the
division through the challenges of 2005.
In addition to the Company's value realisation strategy, we will continue to focus on the launch of new
products into the market under previously won contracts and also on the mitigation of the continuing
pressure of commodity price increases. We are also continuing to focus on quality across the division and
expect our three main operations in Germany, Italy and France to achieve ISO TS 14000 in 2005.
Decorative Division
McGavigans has achieved significant yield rate increases and productivity gains during 2004. This has been
combined with a reduction in overhead costs which gave it a return to profitability. During 2004 we brought
in house all our painting and laser etching and these investments have cut our costs and improved our
quality. The 3D forming and moulding business has continued to develop and now represents approximately 70%
of revenue.
Kaumagraph in the USA has made good progress by winning new business with the American OEM's and the
transplant manufacturers and is now establishing a growing presence in its moulding business. We
experienced some start up problems in relation to this in 2004, but these have been addressed and 2005 is
expected to show an improved performance.
Prospects
In addition to the Company's value realisation strategy set out above, McGavigans will continue its focus
to win new business in the European market, where they have an estimated 43% of the available market, that
is open to McGavigans to bid for, for appliqu� and dial products (or an estimated 17% of the total market).
Growth will come from extending its 3D product offerings, gaining further market share and from persuading
current in-house producers of the benefits of outsourcing. In addition, we will continue to focus on cost
reduction and margin improvement.
Kaumagraph will continue to build on its reputation for quality, competitive prices and excellent service.
With an estimated 27% share of the North American market, Kaumagraph is the leading provider of printed
flat appliqu�s and three dimensional formed products. The investment in 3D inmould production capabilities
has provided Kaumagraph with an advantage as an early adopter of this technology to pursue the significant
opportunities available for inmoulded products in the USA.
TELECOM AND INDUSTRIAL
Sales �23.6m (2003: �23.5m) Operating profit �0.7m (2003: �0.3m).
The performance of the Communications Division has been impacted by slow market growth and lower sales due
to competitive price pressure associated with the growth in imported products. Initiatives undertaken to
combat margin pressure include the development of our own Chinese supply source.
Despite the markets for voice and data products remaining weak, we have experienced some successes in the
overseas markets in which we operate.
Prospects
In addition to the value realisation strategy, we are in the process of restructuring, reinforcing and
refocusing our sales force to deliver sales growth. We are planning to introduce other strategic sales
initiatives focused on niche markets and the development of our product portfolio.
Industrial products sales have continued to be dominated by gas boiler valves, valves for power steering
pumps and control equipment for Europe's leading fork lift truck manufacturer.
Employees and the Board
Harry Gordon retired at the end of the year after 13 years' service, and I would like to thank him for his
help and advice.
Derek Walter announced his intention to resign as Group Finance Director in February 2004 and we would like
to thank him for his contribution to the Company during his period of service. Jane Aikman was welcomed on
to the Board, as his replacement, in June 2004.
Most importantly, I would like to express my thanks to all our staff worldwide for their continuing efforts
and determination to grow our business in increasingly competitive times.
Prospects
The Board believes that the major operational measures undertaken during 2004 will continue to drive
improved performance.
As set out above, as a result of the continuing pressures placed on the Group by the current debt levels,
the Board believes that the best route to maximising value for stakeholders, and one which secures the
ongoing support of the Group's lenders, is to undertake a value realisation strategy through asset
disposals.
Whilst seeking to undertake this value realisation strategy, the Company intends to focus on implementing
the latest production techniques, improving manufacturing margins and taking steps to provide customers
with an even higher level of service and attention.
FINANCIAL REVIEW
This review summarises the significant financial issues which have impacted the performance of the Group
during the year ended 31 December 2004
Interest costs
Net interest costs for the year were �4.0m, an increase of 27% on 2003's charge of �3.1m. This increase
was largely as a result of the higher fees and interest costs associated with the Company's principal
banking facility.
Non recourse debt financing, whereby trade receivables are discounted for cash in Continental Europe,
averaged �3.8m against �5.9m in the previous year. The higher margins charged by the banks resulted in an
increase in the effective interest rate.
Taxation
The tax charge on the normal operating results was �2.8m. As in previous years, losses incurred in the UK,
France and South America were not available for offset against profits in other parts of the Group, which
also suffered higher rates of tax than the UK.
The Group has an unrecognised tax asset of �10.5m arising from losses not expected to be utilised in the
near future in France, Argentina, Brazil and the UK. The UK also has significant pools of writing down
allowances.
Earnings per share and dividends
Earnings per share before exceptional items were a loss of 4.29p compared with a loss of 0.42p for 2003.
No dividend is proposed for the year ended 31 December 2004.
Cashflow
The following table shows the Group cashflow for the year:
�m 2004 2003
Operating profit before exceptional items 3.1 5.4
Depreciation 9.6 9.1
Working capital 0.8 (1.3)
Cash flow from operating activities before exceptional 13.5 13.2
items
Interest (3.4) (2.9)
Tax paid (2.7) (2.1)
Capital expenditure net of disposals (6.4) (7.0)
Cash generation before exceptional items and translation 1.0 1.2
Disposal of subsidiaries - 0.2
Other exceptional items (0.7) (4.6)
Translation gains 0.7 0.1
(Increase)/decrease in net debt in the year 1.0 (3.1)
Opening net debt (46.0) (42.9)
Closing net debt (45.0) (46.0)
Cash generation before translation gains and exceptional items was �1.0m and represented a �0.2m decrease
when compared with 2003.
The working capital inflow of funds excluding provisions totalled �1.2m and was primarily associated with a
reduction in debtors reflecting an improvement in UK debtor collections. The increase in stocks of �1.3m
was compensated for by a corresponding increase in creditors of �1.8m.
Gross capital expenditure in 2004 amounted to �6.5m and proceeds were �0.1m compared with gross capital
expenditure in 2003 of �7.1m and proceeds from the disposals of fixed assets of �0.1m.
The �0.7m cash outflow on other exceptional items comprises the social plan costs paid out in 2004 of �0.4m
and �0.3m in respect of the 2003 exceptional strategic review and debt restructuring charge. There are
further costs totalling approximately �0.2m yet to be paid out in respect of the social plan.
As a result of the cash inflow, net debt decreased by �1.0m to �45.0m. The Group also had non-recourse
debt of �3.8m compared with �5.9m at the end of 2003.
Treasury
Conditional upon the delisting, the Group's lenders will make new facilities available to the Group based
on the amendment and restatement of the existing facilities.
The new facilities will extend at the present level of �49.4m (or its equivalent in other currencies) to 30
June 2006, with a further extension to 30 June 2007 available to the Group, subject to the approval of the
lenders at the point at which the extension is requested.
From 1 January 2006 until 31 May 2006; an additional amount of up to ?4m is available to be redrawn
provided the sale of the Electronics Division has not been completed and the sale of the Decorative
Division has been completed and the proceeds from such disposal have been applied in repayment of amounts
outstanding under the new facilities.
Financial covenants in the new facilities are consistent with the financial covenants typical of this type
of facilities agreement.
As per the existing facilities, no dividends or other distribution will be allowed to be paid by the
Company whilst the new facilities are outstanding.
The following conditions need to be satisfied in relation to the new facilities being made available:
(a) the Company's Ordinary Shares being delisted from the Official List of the UK Listing Authority
and the trading facility on the London Stock Exchange's market for listed securities being
cancelled;
(b) payment of all applicable costs and fees; and
(c) management incentive arrangements being fully agreed in a form acceptable to the Group's lenders by
31 May 2005.
International Accounting Standards (IAS)
As the Company would not be required to prepare its accounts under IAS if it is no longer listed on the
Official List, the conversion exercise to IAS has been put on hold.
UNAUDITED GROUP PROFIT AND LOSS ACCOUNT
Year ended 31 December 2004 Year ended 31 December 2003
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items Total
�000 �000 �000 �000 �000 �000
Turnover 135,612 - 135,612 132,524 - 132,524
Cost of sales (116,343) - (116,343) (113,735) - (113,735)
Gross profit 19,269 - 19,269 18,789 - 18,789
Distribution costs (4,741) - (4,741) (3,960) - (3,960)
Administrative expenses (11,409) - (11,409) (9,467) (730) (10,197)
Total operating profit / (loss) 3,119 - 3,119 5,362 (730) 4,632
Loss on disposal of discontinued
operations - - - - (675) (675)
Profit / (loss) on ordinary
activities
before interest and taxation 3,119 - 3,119 5,362 (1,405) 3,957
Interest payable and similar (3,999) - (3,999) (3,141) - (3,141)
charges
Profit / (loss) on ordinary
activities before taxation (880) - (880) 2,221 (1,405) 816
Taxation on profit / (loss) on
ordinary activities (2,845) - (2,845) (2,587) - (2,587)
Loss for the year (3,725) - (3,725) (366) (1,405) (1,771)
Before Effect of Attributable Before Effect of Attributable
Loss per ordinary share exceptional exceptional to ordinary exceptional exceptional to ordinary
(pence) items items shareholders items items shareholders
Basic and diluted (4.29) - (4.29) (0.42) (1.62) (2.04)
UNAUDITED GROUP BALANCE SHEET
As at As at
31 December 31 December
2004 2003
�000 �000
Fixed assets
Tangible assets 51,288 54,166
Current assets
Stocks 16,293 15,067
Debtors 32,008 33,260
Cash at bank and short term deposits 7,893 5,141
56,194 53,468
Creditors: Amounts falling due within one year
Borrowings (46,149) (45,959)
Other creditors (33,309) (30,675)
(79,458) (76,634)
Net current liabilities (23,264) (23,166)
Total assets less current liabilities 28,024 31,000
Creditors: Amounts falling due after more than one year
Borrowings (6,741) (5,213)
Provisions for liabilities and charges (9,285) (10,009)
Net assets 11,998 15,778
Capital and reserves
Called up share capital 4,341 4,341
Share premium account 15,293 15,293
Capital redemption reserve 400 400
Revaluation reserve 464 477
Profit and loss account (8,500) (4,733)
11,998 15,778
UNAUDITED GROUP CASH FLOW STATEMENT
Year ended Year ended
31 December 31 December
2004 2003
�000 �000
Cash flow from operating activities 12,955 8,590
Returns on investments and servicing of finance (3,440) (2,859)
Taxation (2,706) (2,112)
Capital expenditure and financial investment (5,631) (6,513)
Disposals - 218
Cash inflow / (outflow) before use of liquid resources and financing 1,178 (2,676)
Financing 1,048 1,059
Increase / (decrease) in cash in the year 2,226 (1,617)
Reconciliation of net cash flow to movement in net debt
Increase / (decrease) in cash in the year 2,226 (1,617)
Cash outflow from movement in debt and lease financing (1,048) (1,059)
Change in net debt resulting from cash flows 1,178 (2,676)
New finance leases (831) (548)
Translation differences 687 92
Movement in net debt in the year 1,034 (3,132)
Net debt at the beginning of the year (46,031) (42,899)
Net debt at the end of the year (44,997) (46,031)
NOTES
1 - Segmental analysis Turnover Group operating profit
2004 2003 2004 2003
�000 �000 �000 �000
By activity:
Automotive 111,970 109,056 2,461 5,058
Telecom & Industrial 23,642 23,468 658 304
135,612 132,524 3,119 5,362
By geographical origin:
United Kingdom 19,944 20,165 637 (4)
Rest of Europe 100,037 96,323 3,141 3,261
The Americas 18,367 18,363 (659) 2,105
138,348 134,851 3,119 5,362
Inter - area eliminations (2,736) (2,327)
135,612 132,524
By geographical destination:
United Kingdom 13,875 15,656
Rest of Europe 96,104 90,942
The Americas 19,187 19,449
Far East 644 1,102
Other 5,802 5,375
135,612 132,524
2 - Exceptional items
Exceptional items for the year comprise the following:
2004 2003
�000 �000
Operating exceptional items
Strategic review, debt restructuring costs - 730
Total operating exceptional items - 730
Loss on disposal of subsidiary undertakings - 675
Total exceptional items before taxation - 1,405
Taxation - -
- 1,405
Strategic review, debt restructuring costs
During 2003 the Group incurred costs on a strategic review and a restructuring of the principal banking
facilities, which had been commenced in 2002.
Loss on disposal of subsidiary undertakings
The charge for 2003 represents a provision against deferred consideration from previous disposals of
subsidiary undertakings.
3 - Dividend on equity shares
The directors do not recommend a dividend for the year ended 31 December 2004. In the year to 31 December
2003 total dividends were �nil.
4 - Loss per ordinary share
The calculations of the loss and diluted loss per ordinary share for the year ended 31 December 2004 are
based on a loss attributable to ordinary shareholders after exceptional items and taxation of �3,725,000
(2003: �1,771,000) and the weighted average of 86,810,475 (2003: 86,810,475) ordinary shares of 5p each in
issue.
The calculation of the adjusted loss per ordinary share is based on the loss attributable to ordinary
shareholders before exceptional items as follows:
2004 2003
�000 �000
Loss attributable to ordinary shareholders (3,725) (1,771)
Add back:
Exceptional items (note 2) - 1,405
Adjusted loss (3,725) (366)
5 - Reserves
Share Capital Profit
premium redemption Revaluation and loss
account reserve reserve account
�000 �000 �000 �000
At 1 January 2004 15,293 400 477 (4,733)
Transfer - - (13) 13
Loss for the financial year - - - (3,725)
Exchange movements - - - (55)
At 31 December 2004 15,293 400 464 (8,500)
6 - Reconciliation of operating profit to operating cash flow 2004 2003
�000 �000
Group operating loss 3,119 4,632
Operating exceptional items - 730
Depreciation charge 9,553 9,045
Loss on sale of tangible fixed assets 126 92
(Increase)/decrease in stocks (1,305) 5,132
Decrease/(increase) in debtors 729 (3,205)
Increase/(decrease) in creditors 1,757 (3,926)
(Decrease)/increase in provisions (355) 749
13,624 13,249
Cash flow effect of exceptional items (669) (4,659)
Cash flow from operating activities 12,955 8,590
7 - Basis of derivation
The financial information contained in these preliminary unaudited results is abridged and does not
constitute the Group's statutory financial statements for the year ended 31 December 2004 or the year ended
31 December 2003. Statutory financial statements for the year ended 31 December 2003 have been reported on
by the Company's auditors and delivered to the Registrar of Companies.
The statutory financial statements for the year ended 31 December 2004 have not yet been completed.
Consequently, the auditors have not yet reported for the year ended 31 December 2004 and the statutory
financial statements have not yet been delivered to the Registrar of Companies.
The report of the auditors for the year ended 31 December 2003 was unqualified and did not contain a
statement under section 237(2) or (3) of the Companies Act 1985.
Copies of the Report and Accounts for the year ended 31 December 2003 are available from the Registered
Office of the Company, Kedleston House, Aspen Drive, Spondon, Derby DE21 7SS (telephone number 01332
821340)
Going concern
The 2004 financial information has been prepared on a going concern basis which the Directors believe to be
appropriate for the following reason:
* The Company operates with existing facilities which mature on 30 June 2005. The Directors recognise
that the Company would not be able to repay the existing facilities and accordingly have agreed new
facilities which mature on 30 June 2006, subject to a further extension to 30 June 2007 available to
the Company, subject to the approval of the Group's lenders;
* The availability of the new facilities is conditional upon, inter alia, a delisting of the Company's
Ordinary Shares, and consequently the Company has today requested the delisting of its Ordinary
Shares.
The financial information does not include any adjustments that would result from this delisting not being
undertaken. If the basis of preparation was inappropriate, substantial adjustments would be necessary to
the amounts included in this financial information.
The registered number of Pressac plc is 871399.
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