RNS Number:9954Q
Multi Group PLC
16 October 2003
Preliminary announcement of the audited results for the year ended 31 December
2002
Explanatory Statement
For the year ended 31 December 2002
Introduction
In view of the current circumstances of the Group, the directors have decided to
dispense with the usual statements of the Chairman, Chief Executive and Chief
Financial Officer and, instead, provide this Explanatory Statement. The
directors believe that this will provide Shareholders with a more useful summary
of the Group's current position and the plans proposed by the directors to
restore the Group to sustainable long-term growth and profitability.
Review of the year, current trading and prospects
2002 was a challenging year for the Group, particularly in the South East where
there was a marked decline in the level of construction activity and an increase
in the level of competition. Despite this, revenues from depots opened in
Manchester, Birmingham and Liverpool, together with revenues from software sales
enabled the Group to report turnover for the year of #15.8 million, an increase
of 25 per cent. over the previous year. Gross profit also rose by 14 per cent.
to #10.3 million. However, non-exceptional operating expenses rose by 35 per
cent. to #10.4 million, (including amortisation). These increased costs, when
combined with a one-off exceptional operating charge of #2.6 million, to cover
the cost of a repudiated insurance claim and an accelerated write off of
goodwill and research & development costs led to the Group reporting a loss
before taxation for the year of #3.1 million. At 31 December 2002, the Group
had net assets of #3.0 million and net indebtedness of #4.0 million.
Trading conditions during the first half of the current year did not improve.
The results for this period were adversely affected by lost business in the
software division as a result of the suspension of the Company's shares and by
significant additional costs arising from the refinancing process.
The Directors consider the performance of the hire division to have been largely
satisfactory given the difficulties faced by the Group with revenue growth from
the newer depots continuing to make up for flatter performance from the older
depots. However, the software division has continued to trade at a loss.
Proposed refinancing and restructuring plans
The Company has today announced proposals to raise up to #1.6 million before
expenses by way of a Placing and Secondary Placing and up to an additional #0.5
million by way of a non-underwritten open offer. The net proceeds of the
Placing, Secondary Placing and Open Offer, estimated to be a minimum of #1.4
million, will be used to strengthen the balance sheet of the Group and provide
working capital. In addition, having evaluated the advantages and disadvantages
of retaining a full listing on the Official List, the directors have concluded
that the interests of the Company and its Shareholders would be better served by
moving to the Alternative Investment Market ("AIM"). Accordingly, the directors
are applying for the listing of the Company's Ordinary Shares on the Official
List to be cancelled and for the New Ordinary Shares to be admitted to trading
on AIM.
Following the review during the year, the directors have decided that no
additional research and development funding will be provided to the software
division from the Group's resources and the division is being actively marketed
to potential purchasers. On 13 October 2003, the Company agreed to dispose of
the assets, software and intellectual property relating to Genesys, the original
Unix based program developed by Eurogen, to Toga Sales Limited. The
consideration is #75,000 which was paid on completion and either three further
payments, comprising #125,000 on 31 October 2003 and #62,500 on each of 31
January 2004 and 31 March 2004, resulting in an aggregate payment of #325,000,
or two further payments of #195,000 on 31 October 2003 and #30,000 on 31 March
2004, resulting in an aggregate payment of #300,000.
Following completion of the above proposals, the management structure of the
Group will be changed to comprise an executive board (being the statutory board
of the Company), who will be responsible for corporate matters, and a management
board with operational control over the day-to-day running of the business.
Russell Bracegirdle will resign as director of the Company and will join the
newly formed management board. Keith Ferguson will retire by rotation at the
forthcoming Annual General Meeting but will not seek re-election and will also
join the newly formed management board. The executive board will therefore
comprise Andrew Brundle, as Group Financial Director, and a proposed director,
Oliver Cooke, as Executive Chairman. In addition, two new non-executive
directors will be appointed to the board of the Company as soon as practicable
following the completion of the proposals.
Outlook
The directors feel confident that the proceeds of the Placing, Secondary Placing
and Open Offer and the management restructuring of the Group, together with the
disposal of non-core assets and businesses will enable the Group to concentrate
on and continue to build its traditionally profitable hire businesses. The
Directors feel that the prospects for the Group as refined by these proposals
are good and they are optimistic about the future.
At the time of approving the financial statements, the above proposals for the
refinancing and restructuring of the Group remain subject to shareholder
approval. Should shareholder approval not be obtained and the proposals not
proceed, it is likely that the Group will cease to trade. Should shareholder
approval be obtained and the proposals proceed, the directors have formed a
judgement, at the time of approving the financial statements, that the Group has
adequate resources to continue in operational existence for the foreseeable
future. The directors are confident that shareholder approval will be obtained
and for this reason they have continued to adopt the going concern basis in
preparing the financial statements.
F R Bracegirdle
Chief Executive Officer
16 October 2003
Consolidated profit and loss account
For the year ended 31 December 2002
2002 2002 2002 2001
Continuing Acquisitions Total Total
Note #'000 #'000 #'000 #'000
Turnover 15,134 714 15,848 12,685
Cost of sales 5,376 151 5,527 3,630
Gross profit 9,758 563 10,321 9,055
Other operating expenses 11,908 1,127 13,035 7,714
Operating profit/(loss) before
goodwill amortisation and
exceptional charges 1 137 (38) 99 1,546
Goodwill amortisation charges 198 11 209 205
Exceptional charges 2,089 515 2,604 -
Operating (loss)/profit 1 (2,150) (564) (2,714) 1,341
Interest payable and similar
charges (343) (206)
(Loss)/profit on ordinary
activities before taxation (3,057) 1,135
Taxation 131 (360)
(Loss)/profit on ordinary
activities after taxation (2,926) 775
Dividends (63) (136)
Retained (loss)/profit for the
financial year (2,989) 639
Pence Pence
(Loss)/earnings per share:
- Basic (6.56) 1.92
- Diluted (6.56) 1.90
(Loss)/earnings per share before
goodwill amortisation &
exceptional charges
- Basic (0.86) 2.43
- Diluted (0.86) 2.40
Consolidated balance sheet
At 31 December 2002
2002 2002 2001 2001
#'000 #'000 #'000 #'000
Fixed assets
Intangible assets - 1,805
Tangible assets 7,412 7,365
7,412 9,170
Current assets
Stock 295 308
Debtors 5,660 4,152
Cash at bank and in hand 12 21
5,967 4,481
Creditors: amounts falling due within one year (9,384) (6,721)
Net current liabilities (3,417) (2,240)
Total assets less current liabilities 3,995 6,930
Creditors: amounts falling due after more than one
year (392) (815)
Provisions for liabilities and charges
Deferred taxation (486) (624)
Net assets 3,117 5,491
Capital and reserves
Called up share capital 2,244 2,031
Share premium account 1,414 1,041
Shares to be issued 329 300
Profit and loss account (870) 2,119
Shareholders' funds - equity 3,117 5,491
Consolidated cash flow statement
For the year ended 31 December 2002
2002 2001
#'000 #'000
Reconciliation of operating (loss)/profit to net cash inflow from
operating activities
Operating (loss)/profit (2,714) 1,341
Depreciation charges 1,680 1,487
Loss on disposal of fixed assets 485 -
Amortisation of goodwill 209 205
Development costs amortised 93 23
Impairment losses - goodwill 1,692 -
Impairment losses - research and development 572 -
Decrease/(increase) in stocks 13 (60)
Increase in debtors (1,508) (1,261)
Increase in creditors 2,107 905
Net cash inflow from operating activities 2,629 2,640
Cash flow statement
Net cash inflow from operating activities 2,629 2,640
Returns on investments and servicing of finance (343) (206)
Taxation paid (147) (14)
Capital expenditure (1,777) (1,705)
Acquisitions (492) (93)
(130) 622
Equity dividends paid (143) (124)
Cash (outflow)/inflow before financing (273) 498
Financing (1,276) (1,471)
Decrease in cash in the year (1,549) (973)
Reconciliation of net cash outflow to movement in net debt
Decrease in cash in the year (1,549) (973)
Cash outflow from decrease in debt and lease financing 1,813 1,471
Change in net debt resulting from cash flows 264 498
New finance leases (605) (2,313)
Movement in net debt in the year (341) (1,815)
Net debt at start of the year (3,697) (1,882)
Net debt at 31 December 2002 (4,038) (3,697)
Notes forming part of the preliminary announcement
For the year ended 31 December 2002
1 Operating (loss)/profit
2002 2001
#'000 #'000
Operating (loss)/profit is stated after charging:
Depreciation of tangible assets: 1,680 1,487
Loss on disposal of fixed assets 485 -
Invoice discounting administration charge 7 -
Amortisation of goodwill 209 205
Development costs amortised 93 23
Exceptional impairment losses - goodwill 1,692 -
Exceptional impairment losses - research and development 572 -
Other exceptional charge 340 -
Operating lease rentals 698 423
Exceptional impairment losses - having reviewed the carrying value of goodwill
and capitalised research and development expenditure in the light of the
expected future cashflows from the businesses concerned, the directors have
concluded that these assets are fully impaired.
Other exceptional charge - this arises as a result of a repudiated insurance
claim. The Group has agreed to a full and final settlement of #340,000 with its
former motor vehicle insurer. The liability is fully reflected in the results
for the year.
2 Basis of preparation
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2002 or 2001, but is derived
from those accounts. Statutory accounts for 2001 have been delivered to the
Registrar of Companies and those for 2002 will be delivered following the
Company's annual general meeting. The auditors have reported on those accounts;
their reports were unqualified and did not contain statements under s237 (2) or
(3) Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
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