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Share Name | Share Symbol | Market | Type |
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Lisi Group | EU:FII | Euronext | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.75 | 3.11% | 24.85 | 24.80 | 25.00 | 25.05 | 24.35 | 24.40 | 9,738 | 09:51:15 |
RNS Number:2627Q FII Group PLC 29 September 2003 26 September 2003 Fii Group plc PRELIMINARY ANNOUNCEMENT OF THE UNAUDITED RESULTS FOR THE YEAR ENDED 31 MAY 2003 Fii Group plc (the "Company" or "the Group") announces its unaudited preliminary results for the year ended 31 May 2003. Fundamental Uncertainty - Going concern Although the financial statements, and therefore the financial information contained within this Preliminary Announcement are as yet unaudited, the Auditors have informed us that they intend to modify their audit report to highlight and refer to the disclosures relating to a fundamental uncertainty in respect of the going concern basis used in the preparation of the financial statements. We have prepared the unaudited financial statements on the going concern basis which assumes that the company and its subsidiaries will continue in operational existence for the foreseeable future. The validity of this assumption depends on the successful conclusion of both the directors' efforts to negotiate a compromise agreement with the trustees of the Fii defined benefit occupational benefit scheme (as outlined in the Chairman's statement below), which may reduce the ongoing cash cost to the Group, and the securing of additional funding through an issue of shares in the company to fund the settlement of the proposed compromise agreement with the pension trustees. Whilst we as directors are presently uncertain as to the outcome of the matters mentioned above, we believe that it is appropriate for the financial statements accounts to be prepared on the going concern basis. For further information please contact: Douglas Ware, Chairman and CEO Telephone: 01604 593600 Fii Group plc Roland Cornish, Chairman Telephone: 0207 628 3396 Beaumont Cornish Limited Chairman's Statement The year ending 31st May 2003 has marked a significant change of direction for the Group. As has already been announced, we withdrew from UK manufacturing, closing our facility in Banbridge, Northern Ireland on 21st March 2003. Our remaining retail outlet, also in Banbridge, was sold at the same time. This final withdrawal from manufacturing meant that I was able to develop and focus our strategy on Brand Management and Distribution of our core footwear brands - Lotus, Frank Wright and PerTu. I have had to make some difficult and costly decisions to enable me to transform the business from one steeped in a history of manufacturing into the brand-aware business we are today. It is my ongoing strategy to seek new geographical markets, to maximise the potential of existing brands, to grow other brands within our portfolio, to expand our brands into other product lines and seek to acquire previously unprofitable or under-utilised brands for development. As has been reported, the critical issue facing your Group, of course, remains the substantial deficit within our final salary pension scheme. The final payment to the Pension Fund of #475,000 due under the 1999 agreement was made, as required, in June of this year. The triennial actuarial valuation of the fund to 31st May 2002 resulted in a deficit being reported of some #27 million. The pension fund actuary has served notice on the Group for future contributions starting in June 2004. The level of these contributions, if paid, would render the Group insolvent as disclosed in the circular to shareholders in February 2003. However, I can report that we are in negotiations with the Pension Fund Trustee Board in an attempt to reach a compromise of the debt (under section 75 of the Pensions Act 1995) which would fall on the Group in the event of insolvency. This course of action is strengthened following the "Bradstock" ruling by the courts in 2002 which created a precedent for employers and trustees in this situation. As expected, turnover for the year fell from #17.4 million to #13.9 million. This was mainly due to the rundown and closure of the Banbridge site and the resultant withdrawal from the unprofitable private label business. Historically, as a manufacturer, our historic stock levels were not commensurate with the current profile of the Group. Accordingly, we have pursued an aggressive policy of clearance of dated stock, with a consequential adverse impact on margins for this year only. As part of our rationalisation programme, our Stafford-based accounts department is being reduced in size and moved to our head office in Northampton, reducing costs by an estimated #160,000 per annum thus centralising our operation into one location. This coincides with the implementation of a software solution designed to address the needs of a modern distribution business. This will streamline our accounting function, allow us to communicate more effectively with our customers and suppliers and provide e-commerce business opportunities. Provided that we can agree and bring into effect a compromise with the Pension Fund, I believe that the Group is well-positioned to deliver value to shareholders. I firmly believe that under the focused and motivated management now in place, your Company has a bright future. I hope to make a further announcement regarding the pension fund settlement in due course. Douglas Ware Chairman and CEO 26th September 2003 OPERATING AND FINANCIAL REVIEW Sales Lotus maintained its volume with sales of #10.9 million compared with #11.1 million last year. The cost base of Frank Wright was addressed and the range rationalised . This necessary reorganisation caused an expected drop in sales from #2.5 million to #1.9 million but returned the brand to a profit of #0.138 million after a loss of #0.105 million the previous year. Private label sales fell from #3.8 million to #1.1 million. As had been reported, Private Label business had become increasingly unprofitable. Falling volumes combined with costly UK manufacture necessitated complete withdrawal from this sector. By the end of the year under review, that process was complete. Margins The overall Group gross profit margin was down to 16% from 23.2 % last year. This fall is the result mainly of our private label business producing a negative margin of 17.7% compared to a 4.4% positive margin last year. This confirms the rationale behind our withdrawal from the private label manufacturing business and the consequent closure of the Banbridge facility. The overall gross profit margin excluding private label business, would have been 21.4%. This compares favourably with last year bearing in mind the sustained strength of the Euro; this reduced our gross margin across Lotus and Frank Wright by #0.436 million against a foreign exchange gain the previous year. Without the Euro and private label effects the overall margin would have been 24.8%. Whilst we have always hedged against currency exposure using the various financial instruments available to us, we are also now expanding sales into Europe generating Euro income that will help offset this exposure in future. The closure of Banbridge allowed a reduction in overall stock levels and more efficient utilisation of our centralised warehouse at Northampton. However, this exercise cost a further #0.148 million in stock write downs. If all three factors are removed, the overall gross profit would have been 26%. Operating Expenses Operating expenses in 2000/2001 including exceptional items on continuing and discontinued operations were #6.931 million. In 2001/2002 when I had executive responsibility for the full year, these operating expenses fell by some #2.323million to #4.608 million. In the year under review, operating expenses fell a further #0.251million to #4.357 million. I am confident that further significant savings will be apparent at the interim stage and more so at the year-end in 2004. These savings have been achieved despite increases in pension fund legal and professional fees of #0.096 million. Non operating Exceptional Items After the profits on the disposal of the Banbridge site and its associated plant and machinery are offset against the costs of closure, there was a loss of #0.725 million. Pension fund costs The additional pension fund costs totalled #0.695 million during the year, being the additional annual contribution of #0.475million, together with #0.220 million in respect of legal and other professional fees paid on behalf of the scheme. Balance sheet and cash flow As was to be expected with the disposal of our freehold site in Banbridge, fixed assets have reduced by #0.995 million. Current assets reduced from #5.666 million to #4.401 million largely due to the planned reduction in stock levels. Net cash outflow for the year on operating activities was #2.9 million. This was mainly attributable to exceptional items of #2.211 million. The future Managing our way out of manufacturing in Banbridge was always going to be a difficult, costly and thankless task. I would like to extend my personal thanks to the workforce in Northern Ireland for the mature and professional way in which this painful exercise was handled. Expected improvements in the margin on product previously sourced from Banbridge will benefit Lotus in the year ending in 2004. Along with the reduced layers of management that I have implemented we can now move forward into 2004 on a vastly reduced cost base from which the business can be grown. We have now obtained firm orders for new business in Canada, the USA and Bermuda. A licence agreement has been entered into with a Spanish manufacturer and we are also now dealing directly with Spain's leading department store chain. After a successful ten store trial, we now have a major new multiple outlet client in the UK with over 100 sites. We will have a presence in all of these stores starting in Spring / Summer 2004. We will continue to nurture our mainstream Lotus business in the UK and Eire while further developing our other brands, Lotus of England, Frank Wright, PerTu and Thomas Bostock both in the UK and in specific markets overseas. Douglas Ware Chairman and CEO 26th September 2003 UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MAY 2003 Unaudited Audited 2003 2002 -------------------------------- ----------------------------------- Before Before exceptional Exceptional exceptional Exceptional items items Total items items Total #'000 #'000 #'000 #'000 #'000 #'000 Turnover 12,868 - 12,868 13,646 - 13,646 - continuing - discontinued 1,061 - 1,061 3,836 - 3,836 ------- -------- ------- ------- ------- ------- 13,929 - 13,929 17,482 - 17,482 Cost of sales (10,110) - (10,110) (9,861) - (9,861) - continuing - discontinued (1,583) - (1,583) (3,573) - (3,573) ------- -------- ------- ------- ------- ------- (11,693) - (11,693) (13,434) - (13,434) Gross profit 2,758 - 2,758 3,785 - 3,785 - continuing - discontinued (522) - (522) 263 - 263 ------- -------- ------- ------- ------- ------- 2,236 - 2,236 4,048 - 4,048 Operating Expenses-continuing (3,927) - (3,927) (4,152) - (4,152) - discontinued (430) - (430) (301) (155) (456) ------- -------- ------- ------- ------- ------- (4,357) - (4,357) (4,453) (155) (4,608) Operating loss -continuing (1,169) - (1,169) (367) - (367) -discontinued (952) - (952) (38) (155) (193) ------- -------- ------- ------- ------- ------- (2,121) - (2,121) (405) (155) (560) Non-operating exceptional items Loss on termination of an operation - discontinued - (1,769) (1,769) - - - Fundamental restructuring - discontinued - (254) (254) - - - ------- -------- ------- ------- ------- ------- Profit on disposal of fixed assets - discontinued - 1,298 1,298 - - - ------- -------- ------- ------- ------- ------- - (725) (725) - - - Net interest & (171) - (171) (130) - (130) similar charges ------- -------- ------- ------- ------- ------- payable Loss on ordinary activities before taxation (2,292) (725) (3,017) (535) (155) (690) Taxation on loss on - - - 21 - 21 ordinary activities ------- -------- ------- ------- ------- ------- Loss on ordinary activities after taxation (2,292) (725) (3,017) (514) (155) (669) Dividends - - - - - - ------- -------- ------- ------- ------- ------- Loss for thefinancial(2,292) (725) (3,017) (514) (155) (669) year ------- -------- ------- ------- ------- ------- Loss per share (9.9)p (3.1)p (13.0)p (2.2)p (0.7)p (2.9)p - basic ------- -------- ------- ------- ------- ------- Loss per share - - (13.0)p - - (2.9)p - diluted ------- -------- ------- ------- ------- ------- UNAUDITED CONSOLIDATED BALANCE SHEET AS AT 31 MAY 2003 Group Company Unaudited Audited Unaudited Audited 2003 2002 2003 2002 #'000 #'000 #'000 #'000 Fixed assets Intangible fixed assets - - - - Tangible fixed assets 393 1,388 - - Investments - - 5,360 5,863 --------- -------- --------- -------- 393 1,388 5,360 5,863 --------- -------- --------- -------- Current assets Stocks 1,268 2,545 - - Assets held for resale 64 - - - Debtors 3,069 2,910 468 470 Cash at bank and in hand - 211 2,038 2,035 --------- -------- --------- -------- 4,401 5,666 2,506 2,505 --------- -------- --------- -------- Creditors - amounts falling due (4,059) (3,318) (7,651) (5,401) within one year Net current assets/(liabilities) 342 2,348 (5,145) (2,896) --------- -------- --------- -------- Total assets less current 735 3,736 215 2,967 liabilities Creditors falling due after more (14) (28) - - than one year Provisions for liabilities and (39) (9) - - charges --------- -------- --------- -------- Net assets 682 3,699 215 2,967 --------- -------- --------- -------- Capital and reserves Called up share capital 5,798 5,798 5,798 5,798 Share premium account 10,238 10,238 10,238 10,238 Capital redemption reserve 331 331 331 331 Profit and loss account (15,685) (12,668) (16,152) (13,400) --------- -------- --------- -------- Equity shareholders' funds 682 3,699 215 2,967 --------- -------- --------- -------- UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MAY 2003 Unaudited Audited 2003 2002 #'000 #'000 #'000 #'000 Net cash outflow from operating (2,907) (747) activities Returns on investments and servicing of finance Interest received 16 2 Interest paid (169) (135) Interest element of finance lease (2) (1) payments -------- ------- -------- ------- Net cash outflow for returns on investments and servicing of finance (155) (134) Taxation - 21 Capital expenditure Payments to acquire tangible fixed (58) (65) assets Sales of tangible fixed assets 2,484 94 -------- ------- -------- ------- Net cash inflow for capital 2,426 29 expenditure Acquisitions and disposals Sale of businesses 33 253 -------- ------- -------- ------- Net cash inflow from acquisitions and 33 253 disposals Financing Invoice discounting 239 726 Capital element of finance leases (82) (134) -------- ------- -------- ------- Net cash inflow from financing 157 592 ------- ------- (Decrease)/increase in cash (446) 14 ======= ======= UNAUDITED RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT AS AT 31 MAY 2003 Unaudited Audited 2003 2002 #'000 #'000 (Decrease)/increase in cash for the year (446) 14 Additional finance leases - (28) Cash from increase in financing (157) (592) --------- -------- Change in net debt (603) (606) Net debt at 1 June (625) (19) --------- -------- Net debt at 31 May (1,228) (625) ========= ======== UNAUDITED EARNINGS PER SHARE CALCULATION FOR THE YEAR ENDED 31 MAY 2003 The calculation of earnings per share, in accordance with FRS 14, is based on the loss on ordinary activities after taxation. Unaudited Audited 2003 2002 #'000 pence per #'000 pence per share share Loss for the financial (3,017) (13.0) (669) (2.9) year: -------- ------- -------- -------- Exceptional items: 725 (3.1) 155 (0.7) Loss before exceptional (2,292) (9.9) (514) (2.2) items -------- ------- -------- -------- Loss per ordinary share (13.0) (2.9) fully diluted ======== ======= ======== ======== The weighted average number of shares used in the earnings per share calculation is as follows: Unaudited Audited 2003 2002 number number Weighted average Ordinary Shares in issue during 23,191,679 23,191,679 the year Potentially dilutive share options under the - - Group's share option scheme ---------- ---------- Weighted average Ordinary Shares for fully 23,191,679 23,191,679 diluted earnings per share ========== ========== The earnings per share before exception items, and the effect of the exceptional items, are presented to show the earnings per share attributable to the underlying business of the Group. Notes to the preliminary Announcement: 1. The financial information set out in this announcement does not constitute statutory accounts for the purposes of Section 240 Companies Act 1985. 2. The financial information contained within this announcement has been extracted from the unaudited draft financial statements in respect of the year ended 31 May 2003. 3. The Preliminary Announcement is prepared on the same basis as set out in the audited accounts in respect of the year ended 31 May 2002. 4. Copies of this announcement, which will be sent to shareholders, are available for the next 14 days from the company's registered office, 19 Gambrel Road, Northampton, NN5 5DJ. END This information is provided by RNS The company news service from the London Stock Exchange END FR BRGDCXDDGGXL
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