Shalibane PLC - Final Results
May 25 2000 - 4:00AM
UK Regulatory
RNS Number:1745L
Shalibane PLC
25 May 2000
Chairman's Statement
Introduction
1999 was a very difficult year for the group. Management problems and poor
customer relations were a major factor in the poor performance. The Chairman's
report for 1998 referred to problems with customers. These problems proved
more serious than originally thought and led to a serious loss of business
from a number of major customers.
These losses started during the first half of 1999 but the full effects were
not felt until the second half. The loss of business over that anticipated
meant that even further reorganisations and redundancies were necessary and
that further asset write-offs were needed.
Reducing revenues and increasing losses led to serious cash difficulties. In
turn this caused major production difficulties, as supplies became difficult.
Results
The consequences of the lost sales, production inefficiency, reorganisation,
redundancies and asset write-off costs meant that the group reported a loss
after tax of #5,766,000 (1998: profit #419,000) on sales of #14,681,000 (1998:
#23,112,000) resulting in a negative earnings per share of 71.8p (1998:
positive 5.2p).
Dividend
The reported loss and the consequent deficit in reserves mean that the company
is unable to pay a dividend.
Gearing / Financing
The effect of the losses was to increase our gearing at the year-end from
71.8% to 660%. Due to the poor financial position, the Company undertook a
review of all operations and commenced refinancing discussions with our
bankers and certain major shareholders. These discussions culminated in the
announcement before Christmas of a placing and open offer and a restructuring
of the Company's debt.
The refinancing was completed in January 2000 with the placing and open offer
being fully subscribed raising #1.4 million before expenses.
At the same time as the refinancing we concluded negotiations with the
shareholders of Millennium Industries (USA), a company which specialised in
similar components to Shalibane, but primarily for supply in the United
States. The result of these negotiations was that major shareholders in
Millennium Industries would subscribe for shares in Shalibane and would pay
#850,000 for approximately 29% in Shalibane Plc after the placing referred to
above. Following the debt restructuring and the new capital received from the
placing and open offer and from the shareholders of Millennium, shareholders
funds improved from #1,240,000 at the year end to #5,451,000 on a pro forma
basis. This share purchase was completed in March 2000. Further negotiations
are continuing which may lead to a merger of Millennium Industries and
Shalibane Plc.
We could not have succeeded in this exercise without the support of NatWest,
our bankers, and that of our major shareholders.
Group Development
With the difficulties of late 1998 & 1999 behind it, the company is refocusing
its product strategy.
Future focus will be on products, which incorporate the company's unique
combination of process capabilities such as pressing, turning, brazing,
assembly, leak detection and tube manipulation. In addition, through its
affiliation with Millennium Industries, the company will now have a
significantly enhanced capability to design, develop and validate technical
products such as automotive fuel rails.
The company believes technical capabilities such as CAD systems, design
resources and test laboratories will be a competitive advantage in securing
business from its customers.
Profit improvement and cost reduction are the major focus for 2000. Lean
manufacturing methods are being implemented at all facilities with
improvements underway. In addition, costs and capital expenditures are being
carefully monitored. There is also ongoing activity to increase the
value-added content by vertically integrating purchased components and
maximising the utilisation of in-house processes.
While remaining focused on pursuing business that is aligned with our core
competency described above, a priority is to find business that will utilise
the excess capacity in turning and tube manipulation
Production capacity will be matched to current and future demand.
Board Changes
The composition of the board has changed totally this past year. No directors
on the board at the end of 1998 remain on the board. Full details of
appointments and resignations are given in the directors report. A tremendous
amount of time and cost was expended in clearing outstanding litigation and
contractual matters between the Company and former directors. I am pleased to
report that there is now no outstanding litigation in respect of the above.
Stephen Levitt who was appointed interim finance director at the turn of the
year will leave the group on 31 May 2000 in accordance with his contract. I
would like to thank Stephen for his valuable assistance in recent months. The
Board is pleased to announce the appointment of Peter Tyszewicz as finance
director. Peter has a strong operational background which is seen as critical
in supplementing the skills of the existing finance team.
Employees
All of our staff have seen a difficult time during the past year. It is hard
to give of your best when much uncertainty remains. On behalf of the board
thank you for your continued efforts.
Current Trading and Prospects
The group needs to establish a level of trading from which it can develop. We
have been successful in winning new contracts but are not immune from the
current uncertainties prevailing in the automotive sector which are adversely
affecting sales levels. As a result, whilst trading was profitable at the
operating level in the first quarter, the Company expects to report a small
loss for the first half at the pre-tax level.
Whilst recognising there are still challenging times ahead I am confident that
with the progress already made, the continuing cost reduction and our
collaboration with Millennium Industries, we are on the road to recovery.
J. Grimmond
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 1999
1999 1998
#'000 #'000
TURNOVER 14,681 23,112
Cost of sales 13,305 18,019
------ ------
GROSS PROFIT 1,376 5,093
Distribution costs 447 584
Administrative expenses 1,878 2,556
Exceptional administrative expenses 1,385 -
Goodwill amortisation 24 22
------ ------
3,734 3,162
------ ------
OPERATING (LOSS)/PROFIT (2,358) 1,931
Re-organisation and restructuring costs 2,979 1,037
------ ------
(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE
INTEREST (5,337) 894
Interest payable 578 451
------ ------
(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE
TAXATION (5,915) 443
Taxation (149) 24
------ ------
(LOSS)/PROFIT ON ORDINARY ACTIVITIES AFTER
TAXATION (5,766) 419
Dividends 29 318
------ ------
RETAINED (LOSS)/PROFIT FOR THE FINANCIAL YEAR (5,795) 101
====== ======
EARNINGS PER ORDINARY SHARE (71.8)p 5.2p
====== ======
FULLY DILUTED EARNINGS PER ORDINARY SHARE (71.8)p 5.2p
====== ======
There were no recognised gains and losses other than those included in the
Profit and Loss account.
CONSOLIDATED BALANCE SHEET
as at 31 December 1999
1999 1998
#'000 #'000
FIXED ASSETS
Intangible assets 436 460
Tangible assets 9,864 11,955
------ ------
10,300 12,415
------ ------
CURRENT ASSETS
Stocks 1,249 1,706
Debtors 2,526 3,043
Cash in bank and in hand 12 1
------ ------
3,787 4,750
CREDITORS: Amounts falling due within one year (9,763) (7,171)
------ ------
NET CURRENT LIABILITIES (5,976) (2,421)
------ ------
TOTAL ASSETS LESS CURRENT LIABILITIES 4,324 9,994
CREDITORS: Amounts falling due after more than one year (3,084) (2,959)
------ ------
1,240 7,035
====== ======
CAPITAL AND RESERVES
Called up share capital 403 403
Share premium account 5,809 5,809
Capital redemption reserve 14 14
Revaluation reserve 48 63
Profit and loss account (5,034) 746
------ ------
SHAREHOLDERS' FUNDS 1,240 7,035
====== ======
GROUP CASH FLOW STATEMENT
For the year ended 31 December 1999
1999 1998
#'000 #'000
CASH FLOW STATEMENT
Net cash (outflow)/inflow from operating activities (1,209) 3,650
Returns on investments and servicing of finance (558) (451)
Taxation 26 (317)
Capital expenditure (345) (2,129)
Acquisitions and disposals - (1,934)
Equity dividends paid (234) (325)
------ ------
Net cash outflow before financing (2,320) (1,506)
Financing 1,159 644
------ ------
(Decrease) in cash (1,161) (862)
====== ======
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
(Decrease) in cash in the year (1,161) (862)
Cash flow from change in debt and lease financing (1,159) (637)
------ ------
Change in net debt resulting from cash flows (2,320) (1,499)
Loans and finance leases acquired with subsidiaries - (52)
New finance leases (833) (659)
------ ------
Movement in net debt in the year (3,153) (2,210)
Net debt at 1 January 1999 (5,054) (2,844)
------ ------
Net debt at 31 December 1999 (8,207) (5,054)
====== ======
Notes:
1. The financial information contained in this preliminary statement has been
agreed with the auditors. It does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985, but has been extracted
from the statutory accounts for the financial year ended 31 December 1999.
Comparative information is extracted from the statutory accounts for the
financial year ended 31 December 1998, which have been delivered to the
Registrar of Companies with an unqualified audit report thereon.
2. The calculation of earnings per share is based on the loss on ordinary
activities after taxation of #5,766,000 (1998: #419,000) and 8,069,842
(1998: 8,069,249) shares being the weighted average of the number of
shares in issue for the year ended 31 December 1999. Fully diluted
earnings per share allow for the exercise of all outstanding options and
are calculated on losses of #5,766,000 (1998: profit #419,000) and on
8,069,842 Ordinary Shares (1998: 8,069,249).
3. The issued share capital as at 31 December 1999 comprised 8,069,842 listed
5p Ordinary Shares.
4. Reconciliation of movements in shareholders' funds.
12 months 12 months
to 31/12/99 to 31/12/98
#'000 #'000
(Loss)/profit for the year (5,766) 419
Dividends 29 318
----- -----
(5,795) 101
Deferred shares - (2,123)
Share issue - 1,807
Goodwill - 333
----- -----
(5,795) 118
Shareholders' funds at the beginning of the period 7,035 6,917
----- -----
Shareholders' funds at the end of the period 1,240 7,035
----- -----
END
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