RNS Number:3546I
Darby Group PLC
06 March 2003
DARBY GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2002
HIGHLIGHTS
* Continuing improvement in trading results following completion of the
restructuring exercise
* Return to overall profitability - profit before tax #0.8m (2001: loss
#1.9m)
* EBITDA up 32% to #2.0m (2001: #1.5m)
* Group operating profit from continuing facilities up 51% to #0.8m (2001:
#0.6m)
* Basic earnings per share 2.0p (2001: loss 5.4p)
* Proposed resumption of dividends totalling 1.0p per share (2001: nil)
* Balance sheet reconstruction complete
* Operating cashflow up 82% to #1.9m (2001: #1.0m)
* Group remains ungeared, net funds of #1.2m (2001: #0.7m)
* Net asset value per share up 5% to 21.8p per share (2001: 20.9p per share)
* Substantial investment in advanced plant and machinery for the glazing
division underway
Chairman's Statement
In my first statement as Chairman of the Company I am pleased to report the
continuing improvement in the Company's trading results and financial health,
and to announce the Company's intention to resume dividend payments subject to
shareholder approval at the forthcoming AGM. 2002 saw the completion of the
previously announced restructuring exercise, with the Capital Reconstruction of
the Balance Sheet being approved by the High Court and filed in July, this being
the final phase in the rehabilitation of the Company.
Trading
Turnover for the year was #21.2m (2001: #22.3m), on which a pre-exceptional
operating profit of #0.8m (2001: #0.1m) was achieved.
Revenues in the Glazing Products division improved strongly in 2002, assisted by
the increasing demand for more thermally efficient insulating glass units
following the changes to the Building Regulations in April 2002.
The Processed Glass division had a difficult year as demand for glass for the
outdoor advertising and street furniture markets continued to be depressed, and
much management effort went into developing alternative markets for this
division during the period.
There were no exceptional costs in 2002 (2001: #1.9m), reflecting the completion
of the restructuring exercise of the last few years. As a result, profit before
tax was #0.8m (2001: loss before tax #1.9m).
Balance Sheet
Operating cashflow was very strong this year, at #1.9m (2001: #1.0m), reflecting
the improved trading profitability and continuing tight working capital control.
Despite increased capital expenditure in the year, partially offset by new
finance leases on specific items of equipment, the Company remains ungeared,
with net funds at the year end of #1.2m (2001: #0.7m).
As highlighted in the Interim Report, the Company completed a Capital
Reconstruction early in the second half, reducing its share premium account by
#5m to offset the deficit within its profit and loss account and creating a
special reserve with the surplus.
At the year end, Net Asset Value per share was 21.8p (2001: 20.9p).
Personnel
The year's tough trading conditions in changing markets provided strong
challenges for the Company's management team, several of whom were newly
appointed during the year. The results achieved reflect well on the team, and
the Board thanks all employees for their efforts.
The year also saw the resignation from the Board of Mr. Mark Abrahams after five
years service, the last three in the role of Non-Executive Chairman. The Board
thanks Mark for his contribution during the restructuring phase, and wishes him
well for the future.
Dividend
Following the return to profitability and the completion of the Capital
Reconstruction exercise, the Company is now in a position to resume dividend
payments from distributable reserves.
The Company generated a stronger profit performance in the second half of 2002,
and subject to shareholder approval intends to pay a final dividend of 0.5p to
recognise this performance. In addition, the Company intends to pay a special
dividend of 0.5p, making a total payment for the year of 1.0p per share. The
proposed dividends will be paid on 9th May 2003 to shareholders on the register
as at 11th April 2003.
Outlook
2003 has started in line with expectations, and a trading update will be given
at the Annual General Meeting to be held on 7th May 2003. The Company continues
to operate in an extremely competitive marketplace, and at present there are
some signs of uncertainty in the economy. Nevertheless, we view the future with
confidence, and the Company is now well equipped in terms of management and
capacity to maximise the opportunities which do exist. During the current year,
we intend to concentrate hard on further improving the Company's performance and
on looking at all ways of increasing shareholder value.
Stephen Knight
Non-Executive Chairman
6th March 2003
Chief Executive's Review
2002 was the first full year for some time when management had not been
distracted by restructuring activities. Although trading remained difficult in
certain areas, the slimmed down and focused Group operations produced a much
better overall result for shareholders.
The year was also notable for the beginning of the planned medium term
investment strategy outlined last year, with benefits still to be fully
realised. Despite the investment programme, cash has continued to be
aggressively managed, and the Balance Sheet remains strong with the Company
still ungeared and with net funds of #1.2m.
The Glazing Products division had a very positive and exciting year, trading
well from all six sites. Overall sales grew by 14%, assisted by the changes in
the Building Regulations detailed in last year's Report and Accounts. These
changes, colloquially called "Part L" in England and Wales, and "Part J" in
Scotland, require windows in most new and replacement installations to meet
significantly better standards of insulation than previously required with the
tighter standards introduced in April 2002, and tightening again in Scotland in
March 2003. From April 2002 the Company saw a steadily increasing percentage of
its product sales to be of a specification suitable to meet the new regulations,
where the onus falls on the window installer to correctly specify and warrant
the window frames and unit installations. The Company now produces a significant
percentage of its insulating glass units to the new standards, and expects
further sales growth of this type of product as the window industry moves to
full compliance in the UK.
The division invested heavily in plant and equipment in the year, with new
automated unit production lines installed at our Glengarnock (Scotland),
Gloucester, and Scunthorpe sites in April, June, and August respectively. These
new lines provide the division with substantial extra production capacity for
units produced to a consistently high quality, and are all capable of handling
higher thermal performance glasses that future amendments to the Building
Regulations will require. I am pleased to report that despite the disruption
caused by the installation of this and other equipment, determined site and
divisional management ensured that the service levels to customers were not
severely affected during the installation and commissioning phases, and that the
improved and consistent product quality now being achieved has enhanced our
status in the markets supplied by these operations.
The division won some attractive business in the second half, and ended the year
with a strong trading performance.
Glass prices continued to rise in 2002, especially those of coated glass
necessary for inclusion in the higher specification insulating units, but the
average price of uncoated float glass was managed well by selective supplier
changes and spot purchases where appropriate.
The Processed Glass division in contrast continued to be affected by the serious
downturn in the street furniture and outdoor advertising markets, where the
division has a significant market share. This downturn started in late 2001 and
lasted throughout 2002, seriously affecting the activity levels of this division
which specialises in thicker glass in flat, curved, painted, printed, and
similar applications. The division invested heavily in market research during
2002, identifying a much greater demand for thicker glass for the architectural
market in general, and a need for a new entrant in the internal architectural
market in particular, servicing the needs for partitioning and balustrading
applications. Late in the year the management structure of the division was
changed, the product offer defined, and a new divisional package launched to
architects, specifiers, contractors, and similar industry specialists, supported
by a concentrated marketing and awareness campaign. Enquiry levels since the
launch have improved dramatically, although as the market application is
contract driven, the sales growth rates are expected initially to be modest, but
ultimately robust. The investment in market research, product development, and
marketing was supported by capital investment in a new print table and a heat
soak oven both specifically to assist sales into the targeted sector in 2003 and
beyond.
Behind the market facing trading activities, the Company continued to run
efficient and disciplined support services, resulting in continuing tight
control of cashflow, with a consequently strong ungeared Balance Sheet
throughout much of the year. In the absence of any significant long term debt,
the opportunity to part fund our capital investment in new plant by medium term
HP finance was taken.
Personnel
The progress made in 2002 was down to the enthusiasm, commitment, and effort of
the Company's employees, and I thank everyone for their contribution.
Prospects
2003 presents a number of challenges related to the progress made last year.
Further product mix changes related to the Building Regulation amendments of
last year are expected in the Glazing Products division, which after last year's
investment has more unit capacity available. In addition, the Company has
started to invest in more automated and productive glass cutting machinery to
reduce costs, with the first new machine being commissioned at Glengarnock
(Scotland) in February 2003, and with other new cutting machinery to follow
later in the year at our Gloucester operation. These cutting tables are capable
of handling innovative advanced glass types, and are part of our long term
investment strategy.
The Processed Glass division's new direction will see our first large sales into
the internal architectural market following last year's launch, and by the end
of the year we expect to be significantly less reliant on the street furniture
market.
The Company retains scope to further improve its results from better material
utilisation and productivity, and will be concentrating on these key internal
factors throughout 2003, at the same time pushing for further sales growth.
The Company's operational strategy remains essentially unchanged from that
outlined last year. In the Glazing Products division we are concentrating on
becoming a top quality manufacturer and supplier of glazing units, able to
handle high thermal performance glasses and to take advantage of market
developments driven by changes in legislation. The Processed Glass division's
strategy is based on developing a position within the architectural market, and
reducing our dependency on the street furniture sector. The Company is able to
fund its organic development from internal cash generation capabilities, and
also has unencumbered properties should the need to raise additional funding be
required. The Company also has bank borrowing facilities in place, which are
currently unutilised.
To complement the organic growth operating strategy the Company continues to
review acquisition opportunities as and when they arise, and believes that there
will be some opportunity for complementary acquisitions in the future despite
present price expectations being unrealistic.
Hugh Hayes
Chief Executive
6th March 2003
Enquiries:
Darby Group Plc
Hugh Hayes - Chief Executive Tel. No. 0207 522 3278 after 3.00pm Mobile No.: 07966 555583
Stephen Bannister - Group Finance Director Mobile No: 07966 555585
Arbuthnot Securities
Susan Brice Tel. No. 0121 710 4500
Group Profit and Loss Account
Year ended 31st December 2002
2002 Continuing Discontinued 2001
Total Facilities Facilities Total
#'000 #'000 #'000 #'000
Turnover 21,220 19,828 2,500 22,328
Operating costs (20,373) (19,117) (3,112) (22,229)
Operating profit/(loss) before exceptional items 847 711 (612) 99
Exceptional items - (149) (1,091) (1,240)
Group operating profit/(loss) 847 562 (1,703) (1,141)
Non-operating exceptional items:
Goodwill previously written off to reserves - - (669) (669)
Loss on disposal of fixed asset investments (7) - - -
Profit/(loss) on ordinary activities before interest 840 562 (2,372) (1,810)
Interest receivable 38 45
Interest payable and similar charges (68) (91)
Profit/(loss) before taxation 810 (1,856)
Taxation (247) 357
Profit/(loss) for the year 563 (1,499)
Ordinary dividends (276) -
Retained profit/(transfer from reserves) for the 287 (1,499)
year
Earnings/(loss) per share
- basic and diluted 2.0p (5.4p)
Group Balance Sheet
At 31st December 2002
2002 2001
#'000 #'000
Fixed assets
Tangible assets 6,030 5,858
Investments - 19
6,030 5,877
Current assets
Stocks 554 667
Debtors 3,687 3,442
Cash at bank and in hand 2,477 2,080
6,718 6,189
Creditors: amounts falling due within one year (4,986) (5,058)
Net current assets 1,732 1,131
Total assets less current liabilities 7,762 7,008
Creditors: amounts falling due after one year (605) (77)
Provisions for liabilities and charges (1,126) (1,165)
Net assets 6,031 5,766
Capital and reserves
Called up share capital 1,382 1,382
Share premium account 3,153 8,153
Profit and loss account 1,496 (3,769)
Equity shareholders' funds 6,031 5,766
Group Cash Flow Statement
Year ended 31st December 2002
2002 2002 2001 2001
#'000 #'000 #'000 #'000
Cash flow from operating activities 1,880 1,032
Returns on investments and servicing of finance
Interest received 32 47
Interest paid on bank loans (25) (49)
Interest paid on finance leases (43) (43)
(36) (45)
Taxation
Corporation tax received - 265
Capital expenditure
Sale of tangible fixed assets 31 702
Sale of fixed asset investments 12 -
Purchase of tangible fixed assets (1,308) (353)
(1,265) 349
Management of liquid resources
Increase in short term deposits (1,462) -
Net cash (outflow)/inflow before financing (883) 1,601
Financing
New finance leases 851 -
Capital repayments of finance leases (331) (304)
Capital reorganisation costs (22) -
498 (304)
(Decrease)/increase in cash (385) 1,297
Reconciliation of net cash flow to movement in net funds/
(debt)
(Decrease)/increase in cash in the year (385) 1,297
Cash inflow from short term deposits 1,462 -
New finance leases (851) -
Capital repayments of finance leases 331 304
Movement in net funds resulting from cash flows 557 1,601
Net funds/(debt) at beginning of year 662 (939)
Net funds at end of year 1,219 662
Group Statement of Total Recognised Gains and Losses
Year ended 31st December 2002
2002 2001
#'000 #'000
Profit/(loss) for the year 563 (1,499)
Prior year adjustment - (727)
Capital reorganisation costs (22) -
Total recognised gains and losses relating to the year 541 (2,226)
Reconciliation of Movements in Group Shareholders' Funds
Year ended 31st December 2002
2002 2001
#'000 #'000
Shareholders' funds brought forward - as previously stated 5,766 7,323
Prior year adjustment - (727)
Shareholders' funds brought forward - restated 5,766 6,596
Profit/(loss) for the year 563 (1,499)
Capital reorganisation costs (22) -
Goodwill adjustment - 669
Dividend (276) -
Shareholders' funds carried forward 6,031 5,766
Notes
1. Basis of preparation
The preliminary announcement was approved by the Board on 6th March 2003. The profit and loss account, balance
sheet, cash flow statement and other financial information provided are derived from the Group's statutory
accounts for the years ended 31st December 2002 and 31st December 2001 on which the auditors, Ernst & Young
LLP, have given an unqualified opinion which did not include a statement under section 237(2) or 237(3) of the
Companies Act 1985. Statutory accounts for 2001 have been filed with the Registrar of Companies, and those for
2002 will be filed following the Company's Annual General Meeting.
2. Exceptional items
There are no exceptional items to report for the year ended 31st December 2002.
The accounts for the year ended 31st December 2001 included an exceptional operating charge of #1,240,000,
relating to the restructuring of the Group in order to restore profitability. It comprised a provision against
the remaining costs of equipment where technology had become outdated (#804,000), redundancy and closure costs
(#362,000) and the write-off of premiums paid to Independent Insurance (#74,000).
3. Goodwill
The accounts for the year ended 31st December 2001 included a goodwill adjustment of #669,000. This related to
the closure of Glazing Products sites acquired in 1997, at which time any goodwill arising on acquisition was
written off direct to reserves. In line with FRS10 "Goodwill", goodwill arising on these acquisitions of
#669,000 was written back through the profit and loss account during 2001.
4. Taxation
The tax charge, based on profit/(loss) for the year, comprises;
2002 2001
#'000 #'000
Current tax
UK corporation tax on profits for the period 55 -
Adjustment in respect of prior periods - (2)
Total current tax 55 (2)
Deferred Tax 192 (355)
Tax on profit/(loss) on ordinary activities 247 (357)
5. Dividends 2002 2001
#'000 #'000
Ordinary shares:
Dividend proposed - final 0.5p 138 -
Dividend proposed - special 0.5p 138 -
276 -
If approved, the final and special dividends totalling 1.0p per share (2001: nil) will be paid on 9th May 2003
to shareholders on the register on 11th April 2003.
6. Earnings per share
The earnings per share, basic and diluted, is calculated by dividing profit after taxation of #563,000 by the
weighted average of 27,634,594 shares in issue during the year.
7. Capital Reorganisation
The Company reduced its share premium account by #5,000,000 on 4th July 2002 following approval by
shareholders and the High Court. The reduction in the share premium account was credited against the deficit
on the profit and loss reserve of the Company, eliminating the deficit brought forward and creating a special
reserve within the profit and loss reserve of the Company, protecting the interests of creditors. The special
reserve totals #1,311,000, and is treated as a non-distributable reserve for the purposes of section 264 of
the Companies Act 1985 until all creditors of the Company as at 4th July 2002 have either been paid in full or
given their assent otherwise. Long term creditors of the Company have been approached for their assent in
treating the special reserve as distributable, all short term creditors have been paid in full.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UUUGGWUPWGMA