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Share Name | Share Symbol | Market | Type |
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Foremost Clean Energy Ltd | CSE:FAT | CSE | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.01 | 0.28% | 3.56 | 3.58 | 3.60 | 3.65 | 3.56 | 3.65 | 3,100 | 22:00:00 |
RNS Number:6218M Faupel Trading Group PLC 23 June 2003 IMMEDIATE RELEASE 23rd June 2003 PRELIMINARY RESULTS "Operating loss more than halved Balance sheet remains sound" Faupel Trading Group plc, which imports quality textile goods mainly from China for sale to leading retailers and wholesalers, has today announced preliminary results for the year ended 31st March 2003. KEY POINTS * Pre-tax loss of #875,000 (2002: loss #2,200,000), including #377,000 of one-off, non-recurring items. Operating loss #527,000 (2002: loss #1,619,000). * Bank debt, less cash, reduced by #959,000. * Stock reduced by #855,000. * Loss per share 5.6p (2002: loss per share 17.1p). * The Board is not recommending a final dividend and no interim dividend was paid in the year (2002: 0.0p). Commenting on the results David Newbigging, Chairman, said: "The general business environment remains tough, particularly for small and medium sized businesses, but our balance sheet is sound and we now have a leaner structure. Following the changes outlined in the Chairman's Statement, we are hopeful of returning to profitability in the forthcoming year." Enquiries: Faupel Trading Group plc Laurence Mead, Chief Executive Tel: 020 8339 3100 James McClean, Finance Director Buchanan Communications Ltd Tel: 020 7466 5000 Tim Thompson/Catherine Miles Chairman's Statement Results The Group's consolidated loss before tax for the year ended 31st March 2003 was #875,000 (2002: loss #2,200,000). #498,000 (2002: loss #1,870,000) of the year's loss was attributable to trading operations, with the balance being made up principally by the need to recognise dilapidations on our leased Birmingham warehouse (#250,000) and a write down of #100,000 on the value of our Thames Ditton freehold property. We also incurred a loss during the year of #27,000 on the sale of our 15% interest in Paragon Brand Management (Hong Kong) Limited. The dilapidations charge relates to nearly 15 years occupation and needs to be considered in that light. The year to 31st March 2003 in terms of the profit and loss account did not show as much progress as previously expected but, as predicted, the second half was better than the first half and we saw further significant reductions in net debt and stock, as outlined below. Finance During the year our bank debt net of cash balances reduced by #959,000, which in turn led to a reduction in net interest cost of #233,000. Stock levels were reduced by #855,000 and trade debtors remained broadly unchanged. The turnaround in the last two years has been significant, with net debt down by #3.7 million and stock reduced by #4.5 million. The active management of our balance sheet remains a key objective Dividend Given the loss for the year, the Board is not recommending the payment of a final dividend. No interim dividend was paid during the year. Operations This was another year of significant change and further progress for Faupel in its long-term re-positioning. The Company's operations are now concentrated in three Divisions: Faupel Home Furnishings, Faupel Brands and Industrial Products. Faupel Home Furnishings - the largest - was created from the merger of our three established businesses of Stapleton, Amery's and Arditti. The new division is a significant force in the UK soft furnishings sector and we have already seen financial benefits from rationalising the sales force and product lines. We have also been able to reduce our overheads as a consequence of this merger of trading activities, and we are confident that we can grow the business in the future without significantly adding to costs. Faupel Brands' largest component is our Champion branded outdoor wear, which had a solid year of progress after the dramatic restructuring of our Garments business in the previous year. We are continuing to invest in this brand's future. The other brand in this division is Blue Sea, under which our refocused nightwear business now trades. A search continues to find brands which could be added to our existing range and benefit from our sourcing strengths in the Far East. Chairman's Statement Operations Our remaining activities now comprise the Industrial Products division, including our new Faupel Safety Products (PPE) business. This business will be a major supplier to the independent wholesalers in the construction industry and we are enthusiastic about its prospects going forward. That part of this division's business which supplies textiles to the travel and tourism industries, has suffered due to the very tough environment in which these industries currently operate. Strategy Following the restructuring described above, our immediate aim is to return to profitability, whilst building further profit and cash generating capacity into each division. In the Home Furnishings sector, opportunities exist to improve margins and sales, whilst also reducing costs, based on annual sales of #20 million, several thousand active customers and a broad product range. Our Brands business is smaller, but we aim to grow this organically going forward. We also believe there are opportunities for brand acquisitions and several possibilities are under consideration. The Industrial Products division has been strengthened with the addition of new management and we see good potential for growing this business based on our ability to source products competitively in Asia. Change of Company name At the forthcoming Annual General Meeting the shareholders will be asked to approve the Company's name being changed to Faupel plc. People There have been no changes on the Board in the past year, although there have been many changes in the organisation and structure of Faupel as described above. All those who work for Faupel have had to embrace these sometimes-radical changes and I thank them for their willingness to do so, for their enthusiasm and for their loyalty. Prospects The general business environment remains tough, particularly for small and medium sized businesses, but our balance sheet is sound and we now have a leaner structure. Following the changes outlined in this Statement, we are hopeful of returning to profitability in the forthcoming year. David Newbigging Chairman 22nd June 2003 Chief Executive's Report The year ended 31st March 2003 was another difficult and challenging time for Faupel, not least because of the sense of almost constant change under which we have all been living. We have risen to the challenges and have continued to make progress however, and with the merger of our three home furnishings businesses into one new division, Faupel Home Furnishings, we are entering into a more settled phase. We have also addressed many of the strategic challenges that were facing us but the travel and tourism sector of our business remains of some concern. That part of our business was previously a solid contributor but the well publicised difficulties within the airline and tourism industries have taken their toll. We continue to work hard to overcome these problems however, particularly by looking for other customers in the transportation sector. Results Reporting a loss for the year is a disappointment, but it is important to look at these results in detail, with significant one-off costs impacting the headline loss. From a trading perspective we had some periods of real progress, interspersed with some steps backwards. There were a number of specific reasons for this but many of the smaller issues that could have been dealt with in isolation all occurred in the same 6 month period. With the Group going through so much change, these severely stretched our management resources at the time. We were unfortunate to have one of our senior, key managers laid low with unexpected health problems but he has now made a full recovery. The end result was a significant loss, albeit substantially reduced from the previous year. We had been expecting better contributions from our Amery's division and our Directs business, both of which were negatively influenced by unforeseeable events as mentioned above. However, in the last quarter of the year Group sales were 6% ahead of budget, margins were solid, and I am pleased to be able to report that both are now rapidly improving and should make a positive contribution this year. Whilst the profit and loss side of the business is disappointing, the tight control of our balance sheet - which had been a key goal for the year - was achieved. The Chairman has already outlined the continuing reduction in net debt that we have achieved. While some of this resulted from an overall reduction in the size of the business, by exiting from unprofitable activities which had been a drag on the business for a number of years, the positive effects of tighter control procedures were also a major factor. Far higher demands have been placed on our brand managers as a consequence, and I am pleased to be able to say they have risen to these challenges very effectively. Our balance sheet is now more robust and of better quality. The road to profitability The challenges facing Faupel's current trading activities are sales and margin growth. We have restructured the company and thanks to the improvements in business processes we have the ability to service a far greater level of sales with very little additional overhead. The additional gross profit from such increased sales would contribute to the net profit line quickly, significantly enhancing shareholder returns. In addition, we continue to focus on pushing margins up and we have seen successes in this regard this year with overall margins ahead of the year to 31st March 2000, the last profitable year before the clearance of the discount garments stock dramatically depressed margins. Chief Executive's Report Structure We have completed a thorough overhaul of the corporate structure and our business is now divided into three main selling divisions, all of which have a distinct rationale, joined by a common business model of buying product from third party suppliers, primarily in China and South East Asia. However, whereas Faupel was previously a trading organisation, we are moving towards being a brand ownership and product management group, where we will have a higher level of control over both revenue and margins. This process will continue over the next few years so that we will become much more than our old role as merely middlemen in a trading process. Whilst there are plenty of companies bringing product to market, no matter how low the price goes the quality and the design of the product needs to be right if it is to find a buyer. We are extremely focused on being price competitive and we will continue to squeeze our overheads structure down so that we can always compete on price, but a large element of our focus will be on improving our product management and product design skills so that we can match this price competitiveness with an excellence in design and styling. We are already seeing steps forward in this regard and I have confidence in the products that our brand managers are now developing. We have seen major improvements in the logistics side of the business and we expect more in this area over the next year. As an example, we now consolidate all the Group's buy in China through a single freight forwarder and consolidate these shipments in two warehouses, one in Shanghai, the other in Qingdao. Our Thames Ditton office is home to our accounts department and some of our sales and design staff, but all day to day operations have been consolidated in our Oldbury (West Midlands) warehouse and our Manchester office. We own the freehold to our Thames Ditton property and we will be reviewing options in this regard, which may result in the relocation of the remaining Thames Ditton staff to smaller, more economic offices in due course. SARS I am pleased to say that thanks to a very close level of cooperation between our UK and China offices, we have not been badly affected by the outbreak of the SARS virus in China. There have been some operational issues but these have by and large been overcome. In fact we feel that we have been better able to service our customers than some of our competitors. The Future Faupel is inherently a good business and our strategy has been to take a measured approach to restoring profitability. Phase 1 has now been substantially completed in that the balance sheet is no longer under strain. Phase 2 is to develop new skills which are complementary to our businesses and to find ways to service Faupel's considerable customer base so that margins and revenues can grow in the future. We are now entering Phase 2 and I am sure this will bring rewards to shareholders and give us the opportunity to build on the Group's activities by acquisition. Chief Executive's Report People As mentioned previously, it has been a year of significant change. I would like to thank everybody within the Company for their positive attitude to that change. We will find it increasingly difficult to reduce working capital further and although we will be keeping a tight rein over balance sheet management, as we grow, returning to profitability is our main challenge. Laurence Mead Group Chief Executive 22nd June 2003 Consolidated Profit and Loss Account for the year ended 31 March 2003 Notes 2003 2002 #'000 #'000 Turnover 26,937 35,377 Cost of sales (21,156) (29,816) Gross profit 5,781 5,561 Distribution costs (3,743) (4,331) Administration expenses 5 (2,565) (2,849) Operating loss 3 (527) (1,619) Interest receivable 30 30 Interest payable (378) (611) Loss on ordinary activities before taxation (875) (2,200) Tax on loss on ordinary activities - - Loss on ordinary activities after taxation and for the financial year (875) (2,200) Loss per ordinary share, basic and diluted 4 (5.6)p (17.1)p Consolidated Balance Sheet at 31 March 2003 2003 2002 Note #'000 #'000 Fixed assets Tangible assets 5 1,556 1,748 Investments - 85 1,556 1,833 Current assets Stock and goods in transit 3,407 4,262 Debtors and prepayments 4,938 4,819 Cash at bank and in hand 1,072 1,469 9,417 10,550 Creditors: amounts falling due within one year 6 (6,416) (7,201) Net current assets 3,001 3,349 Total assets less current liabilities 4,557 5,182 Provisions for liabilities and charges (250) - Net assets 4,307 5,182 Capital and reserves Called up share capital 785 785 Share premium account 2,882 2,882 Revaluation reserve 682 682 Other reserve 93 93 Profit and loss account (135) 740 Equity shareholders' funds 4,307 5,182 Consolidated Cash Flow Statement for the year ended 31 March 2003 2003 2002 Notes #'000 #'000 Cash inflow from operating activities 7 1,328 2,706 Returns on investments and servicing of finance 8 (348) (587) Taxation (6) - Capital expenditure and financial investment 8 (15) (71) Cash inflow before management of liquid resources and financing 959 2,048 Management of liquid resources 8 (1,356) (1,346) Financing 8 - 699 (Decrease)/increase in cash in the year (397) 1,401 Reconciliation of net cash flow to movement in cash 2003 2002 #'000 #'000 (Decrease)/increase in cash in the year (397) 1,401 Cash at beginning of year 1,469 68 Cash at end of year 1,072 1,469 Consolidated Cash Flow Statement for the year ended 31 March 2003 (continued) Reconciliation of net cash flow to movement in net bank debt 2003 2002 #'000 #'000 Bills of exchange at beginning of year (5,756) (7,102) Cash at beginning of year 1,469 68 Bank debt net of cash at beginning of year (4,287) (7,034) Management of liquid resources 1,356 1,346 (Decrease)/increase in cash in the year (397) 1,401 Reduction in bank debt net of cash 959 2,747 Bills of exchange at end of year (4,400) (5,756) Cash at end of year 1,072 1,469 Bank debt net of cash at end of year (3,328) (4,287) Notes: 1. The financial information set out above does not constitute the Company's statutory financial statements for the years ended 31st March 2003 or 2002. The financial information for 2003 and 2002 is derived from the statutory financial statements for those years. The statutory financial statements for 2002 have been delivered to the Registrar of Companies. The statutory accounts for 2003 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The Group's auditors, KPMG Audit Plc, have reported on the 2003 and 2002 financial statements. Their reports were unqualified and did not contain a statement under 237(2) or (3) of the Companies Act 1985. 2. It is anticipated that the report and financial statements will be posted to shareholders on 25th July 2003. The Annual General Meeting will be held on 27th August 2003. 3. Turnover and operating profit/(loss) 2003 2002 2003 2002 Operating Operating Sales Sales Profit/(loss) Profit/(loss) (as restated) (as restated) #'000 #'000 #'000 #'000 Business sector analysis Home Furnishings 20,194 23,335 1,050 1,116 Brands - Garments 2,753 8,124 (61) (1,529) Industrial Products 3,990 3,918 125 282 Central admin costs - - (1,264) (1,158) -------- -------- -------- -------- Before one-off, non-recurring items 26,937 35,377 (150) (1,289) -------- -------- -------- -------- Charge for dilapidations on warehouse leases (250) - Loss on sale of investment (27) - Impairment of freehold property (note 5) (100) - Compensation payment and related legal costs paid to former director - (164) Cost of renewing bank facilities and creating new share option schemes - (166) -------- -------- Operating loss (527) (1,619) -------- -------- The loss on sale of investment and impairment of freehold property are attributable to central administration costs. The charge for dilapidations on the warehouse leases cannot be allocated to segments on any reasonable basis as the warehouses concerned have been used for a number of purposes over the lease period. 4. Loss per ordinary share Loss per share is based on the Group loss after taxation of #875,000 (2002: loss #2,200,000) and the weighted average number of ordinary shares in issue during the year of 15,709,447 (2002: 12,882,050). Diluted loss per share, calculated in accordance with FRS 14, is unchanged from the basic loss per share. 5. The recoverable amount of Faupel House, the Company's freehold property, has been assessed at #1.25m including fixtures and fittings. In accordance with FRS 11, the property has therefore been impaired by #100,000. This impairment has been included within administration expenses. 6. Creditors include #4,400,000 (2002: #5,756,000) of bills of exchange payable to banks. 7. Cash flow from operating activities Reconciliation of operating loss to operating cash flow 2003 2002 #'000 #'000 Operating loss (527) (1,619) Depreciation 165 150 Impairment of property 100 - Loss on sale of investment 27 - Decrease in stocks 855 3,670 (Increase)/decrease in debtors (119) 1,093 Increase/(decrease) in creditors 577 (588) Increase in provisions for liabilities and charges 250 - Net cash inflow from operating activities 1,328 2,706 8. Analysis of cash flows for headings netted in the cash flow statement 2003 2002 #'000 #'000 Returns on investments and servicing of finance Interest received 30 30 Interest paid (378) (617) Net cash outflow for returns on investments and servicing of finance (348) (587) Capital expenditure and financial investment Purchase of tangible fixed assets (73) (71) Proceeds from sale of investment 58 - Net cash outflow for capital expenditure and financial investment (15) (71) Management of liquid resources Decrease in bills of exchange payable to banks (1,356) (1,346) Net cash outflow from management of liquid resources (1,356) (1,346) Financing Issuing of ordinary share capital - 800 Expenses associated with issue - (101) Net cash inflow from financing - 699 This information is provided by RNS The company news service from the London Stock Exchange END FR SEWFUESDSEIM
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