TIDMNUT
RNS Number : 6181I
NeutraHealth Plc
16 March 2010
16 March 2010
NEUTRAHEALTH PLC ("the Company")
2009 PRELIMINARY RESULTS STATEMENT
NeutraHealth plc, one of the leading UK vitamins & supplements companies, is
pleased to announce preliminary results with profit in line with expectations
for the year ending 31 December 2009.
The Company has delivered a 20% increase in revenue in the year with adjusted
EPS growth of 22%. EBITDA before one off items has increased by 21% to GBP2.3m.
Financial Highlights
· Revenue increase of 20% to GBP34.6m (2008: GBP28.9m)
· Like for like revenue increase of 4.2%
· EBITDA increase of 21% to GBP2.3m (2008: GBP1.9m)
· Adjusted* EPS increase of 22% to 0.6p (2008: 0.5p)
· Basic and diluted EPS of 0.3p (2008: 1.2p including exceptional profit
and costs)
· Cash generated from operations before working capital changes increase of
57% to GBP1.8m (2008: GBP1.1m)
· Goodwill impairment in relation to Nutrigold Limited of GBP0.4m
* Adjusted figure excludes the non-cash effect of acquired intangible asset
amortisation, share option related charges and post tax impact of one off items.
Operational Highlights
Brunel division
· Brunel achieved 6.6% like for like revenue growth in 2009
· GBP1.4m revenue from new products launched in 2009 - exceptional customer
acceptance of new product development and innovation programme
· Strong management team established after 2008 consolidation and changes
· Progress made on input price reductions
BioCare division
· Sales sustained at 2008 level, with EBITDA increased by 6% to GBP1.6m
· Strong growth in export sales to GBP1.4m (2008: GBP1.2m), helped by new
distribution in the Middle East
· New IT systems fully operational, delivering operational efficiencies and
business intelligence
· Disposal of loss-making Nutrigold business in January 2010, allowing
focus on core BioCare business
Outlook
· Improving market conditions, with modest growth returning to the sector
· Continued focus on critical success factors of market awareness and new
product development
· Brunel targeting revenue growth with new products, new customers, and
move into Europe to improve economies of scales
· BioCare targeting further export growth and broader professional customer
base
· Revised banking facilities agreed with existing lenders to support future
growth
Ray Myers, Chief Executive, commented:
"During 2009 we made considerable operational improvements across the group,
which helped deliver our improved results for the year. More importantly, these
improvements have put us in a strong position to grow in the coming years.
Our priority across the group is to increase profits through reduction of input
prices, targeting of new customer accounts, and introduction of new products.
We operate strong businesses that are recognised market leaders in their
channels, and we are confident about the future."
For more information:
Further information for investors is available on the Company's website at
www.neutrahealthplc.com/
+-------------------------------------+-------------------------------+
| NeutraHealth plc | |
+-------------------------------------+-------------------------------+
| Ray Myers, Chief Executive | 07768 940 630 |
+-------------------------------------+-------------------------------+
| Robin Hilton, Finance Director | 07738 018 411 |
| | |
+-------------------------------------+-------------------------------+
| | |
+-------------------------------------+-------------------------------+
| Pelham Bell Pottinger | |
+-------------------------------------+-------------------------------+
| Kate Catchpole | 020 7337 1512 |
+-------------------------------------+-------------------------------+
| | |
+-------------------------------------+-------------------------------+
| Cenkos (Nominated Adviser and | |
| Broker) | |
+-------------------------------------+-------------------------------+
| Stephen Keys | 020 7397 8900 |
+-------------------------------------+-------------------------------+
CHIEF EXECUTIVE'S REVIEW
Overview
We are pleased to report that NeutraHealth performed strongly in 2009, driving
organic growth across the Group and delivering improvements in each business. We
have grown underlying EBITDA by 21% and like for like revenue by 4.2%. We have
the fundamentals in place to continue to achieve profitable growth over the
coming years.
Strategy
The Group's strategy since foundation in 2005 has been to build a group of
companies targeting the nutraceutical market, initially focused on the vitamins,
minerals and supplements (VMS) sector, delivering growth through organic
expansion and through strategic acquisitions, starting in the UK and expanding
into Europe and beyond.
There are four distinct sales channels within the UK market - practitioners,
independent retailers, multiple retailers and direct to consumers - and we
operate businesses that service each of these channels.
Through acquisition and growth, we have achieved a market leading position with
our two business units - Brunel and BioCare - in their respective channels.
After difficult trading conditions in 2008 and significant changes within the
Group, we have rebuilt the foundations for future growth, and started to deliver
growth again in 2009.
Our current emphasis is on improving the profitability of the group. We expect
this to be achieved through organic growth in revenue and in gross margin
improvement. We continue to review the market and assess potential acquisition
opportunities, and will progress those opportunities that we believe will
improve our strategic position.
Market
Vitamins and supplements are taken regularly by over 42% of the UK adult
population, with usage increasing for those over the age of 55. All products are
governed by food regulations, and there are restrictions regarding health claims
that can be made. Understanding this complex regulatory environment creates a
barrier to entry for competitors.
Consumer demand for vitamins and supplements remained static from mid 2008 until
mid 2009, and has improved steadily since then. Overall, demand for supplements
has remained remarkably healthy despite the economic conditions of 2008 and
2009. This can be attributed to two main factors. Firstly, nutritional
supplements have genuine and specific health benefits which are recognised and
valued by consumers who continue to give priority to good health. For instance,
Glucosamine eases joint pain and consumers continue to pay for those benefits
despite the recession. Secondly, the majority of consumers are aged over 45
years old and in socio-economic group ABC1. The incomes of these groups have not
been as badly affected in the recession as other demographic groups.
Review of Businesses
Brunel Healthcare
Brunel is the largest of our business units, generating revenue of GBP26.4m in
2009, representing 76% of Group revenue, and achieving like for like revenue
growth of 6.6%. Revenue comes from a mix of private label manufacturing,
contract manufacturing and a small element of consumer branded products. During
the year we have strengthened our position as the market leading provider of
private label vitamins in the UK, servicing the major retailers such as Boots,
Tesco, Sainsbury and Superdrug.
Brunel is in a good position to deliver the step change in growth that will lead
to increased shareholder value. The fundamentals required by our customers -
quality, service, cost and innovation - have all been addressed and improved
following the acquisition and consolidation of operations in 2008. We are
developing a culture of greater situational awareness of customer trends,
products opportunities, and material pricing. The buying strength of the major
retailers may constrain our ability to increase selling prices, but we have a
strong competitive position and many new opportunities that will increase both
our margin and our absolute level of profitability.
Brunel has considerable expertise in managing the needs of business customers,
in understanding trends within the UK healthcare market and regulatory
frameworks, and in developing and sourcing consumer healthcare products. We are
pursuing revenue growth in four main areas:
· Further penetration of the UK high street retailer market through
securing new accounts;
· Offering new products, both supplements and other healthcare goods, to
existing customers;
· Winning new contract manufacturing business;
· Entering other European markets.
We have a number of leads in European markets to work on, but do not expect to
see significant export revenue until 2011. We expect all other sources of new
business to generate revenue growth in 2010.
Two key pieces of European legislation, the Nutrition & Health Claims Regulation
and the Nutritional Labelling Directive come into effect in 2010. Our technical
expertise and ability to advise customers on these regulations is proving
absolutely crucial in securing new business. Our expertise in this area was
endorsed by Sainsbury awarding us their Best Technical Service award in 2009 for
private label suppliers (across all non-food categories).
Notwithstanding our work on securing revenue growth, our main priority in Brunel
is on improving profitability, and our material cost reduction project is of
critical importance in achieving this. In 2009 our EBITDA was GBP1.4m. This was
achieved with the help of a particularly lucrative licensing contract that
delivered GBP1.0m of income. This contract will only contribute a further
GBP0.5m before expiring in June 2010. We have already secured material cost
savings for 2010 that more than replaces the contribution that will be lost in
the coming year. We continue to pursue sourcing of quality materials at factory
gate prices for the commodity products we offer and we have the scale to be the
lowest cost provider in our market. This is helping us secure our position with
existing accounts and win new business. We have achieved this in a number of
areas, but we still have progress to make.
BioCare and other brands
BioCare offers high quality and innovative vitamins and supplements to
practitioners and to independent retailers. These premium products are typically
consumed by individuals who are very knowledgeable about nutrition, or who
require high strength supplementation for specific health needs. Education, of
practitioners and retailers, is the key means of promotion for BioCare. Our
other brands in this segment include : Patrick Holford, a range of optimum
nutrition supplements; Totally Nourish, a small business offering health
products direct to consumers over the internet; and Nutrigold.
Sales in 2009 were sustained at GBP7.6m. Behind the headline numbers, export
sales have grown from GBP1.2m to GBP1.4m. UK sales declined during the start of
the year, but returned to growth again by the autumn. Totally Nourish, which
makes up a small part of the UK figures, saw sales decline by GBP0.1m.
There are three reasons why we have confidence in BioCare's future success.
Firstly, we undertook market research at the end of 2008 and beginning of 2009
to understand customers' perception of the BioCare brand. This confirmed our
belief that there is extremely high support for the brand and for the efficacy
of our products, both in absolute terms and compared to our competitors. 96% of
practitioners who used or recommended our products said efficacy was excellent,
very good, or good. We also learned about areas for improvement. As a result we
are engaging in different ways with our existing customers and have targeted new
groups of customers.
Secondly, the installation of our new computer system at the end of 2008 proved
a distraction in the early part of the year as problems appeared and then had to
be eliminated. Now that it is fully implemented and working, we have greater
operational efficiency, such as quicker product picking routes and better stock
management systems. We also have significantly enhanced data analysis
capabilities that allow us to understand our business much better. We have the
tools to help us understand profitability by customer and by products and to see
trends arising.
Thirdly, BioCare is now focused on its core business. We have the right tools,
through our computer system. We have the right people in place with the right
knowledge and increasing situational awareness. And we have removed distractions
that have hampered growth in previous years.
As part of the focus on core business, we disposed of the trade and assets of
Nutrigold in January 2010. Nutrigold had been acquired in February 2006 for
GBP0.5m plus costs at a time when revenue was GBP1.0m, and successfully
consolidated into operations. However, the brand performed poorly, with revenue
falling to GBP0.6m by 2009. December 2009 marked the end of the original earn
out period that had been put in place on acquisition, and we took this
opportunity to dispose of the business. The buyer was the previous vendor, and
we received GBP0.3m cash on completion. The future prospects for Nutrigold
within NeutraHealth were poor. We have recovered a significant proportion of our
investment at the same time as reducing complexity and allowing focus on
BioCare's core customers.
Shareholder Value, Dividend Policy and Board Effectiveness
We recognise that we need to be more profitable, and that we would benefit from
a larger market capitalisation.
We believe that we can substantially improve shareholder value by growing the
trading profits of the constituent business units, both of which are now well
placed to advance. While the AIM market suffered through the global financial
crisis we have successfully increased our share price during the year by
delivering improved performance, resulting in increased investor confidence. We
continue to strive to grow the share price back to an acceptable level and
beyond by delivering our results targets and meeting market expectations.
We continue to review our dividend policy. We increasingly recognise the
importance of our private shareholders, and we understand their desire to
receive a dividend as a return on investment, as well as an increase in share
price. Expected improvements in profitability may put us in a position to start
paying a dividend in 2010.
We currently operate without a Chairman. Board meetings are chaired by the
Senior Independent Director, Anthony Good. The Directors believe that the Board
operates effectively with the current Board structure, and that appointing a
Chairman would be an unnecessary additional cost to the business and would not
necessarily enhance the effective running of the Group at this time.
We welcome dialogue with all our shareholders and we are happy to receive
feedback on ways to improve our shareholder communication.
Outlook
We have put considerable effort into shaping NeutraHealth to perform profitably
and generate revenue growth in the last year. We have made many changes in
response to market conditions and as a necessary prerequisite to proceeding with
strength. The endorsement of that effort has come in the strong second half of
2009 and the good start to 2010.
We are a more capable and better informed business than we have ever been. We
have a strong market position, and many opportunities to strengthen our position
further. We have increased confidence that we can deliver significant growth in
the coming years.
Ray Myers
Chief Executive
16 March 2010
FINANCE DIRECTOR'S REVIEW
EBITDA before one-off items 2009 : GBP2.3m 2008 :
GBP1.9m
We delivered a 21% increase in EBITDA in 2009, achieved through growth in
revenue and focus on input cost reduction. We have focussed on the fundamentals
necessary for business growth, having made significant alterations to the group
in 2008 as a result of market changes.
The above result includes an EBITDA loss of GBP0.1m made by Nutrigold Limited
during 2009. This business was sold after the year end.
Gross profit 2009 : GBP12.5m
2008 : GBP10.8m
The absolute level of gross profit has increased by 15.7% in the year, while the
gross profit percentage has fallen from 37.5% to 36.1%. This is due to the full
year effect of Brunel Healthcare being part of the group, following the
acquisition in June 2008. Gross profit has also been affected during the year by
increases in raw material prices.
Revenue 2009 : GBP34.6m
2008 : GBP28.9m
Revenue increased by 20% in the year, reflecting the full year effect of the
acquisition of Brunel Healthcare in the middle of 2008. Like for like sales have
increased by 3.6% excluding the Nutrigold business.
Other income2009 : GBP1.2m 2008 : GBP0.6m
The majority of the other operating income received by the Group is attributable
to one licensing contract in Brunel which is due to expire in June 2010. Our
success to date in reducing raw material prices will more than offset the impact
of this contract coming to an end.
Impairment of Goodwill2009 : GBP0.4m 2008 : GBPnil
The impairment of goodwill relates to Nutrigold Limited. This business was
acquired for GBP0.5m plus costs in February 2006, has contributed to GBP0.1m to
Group EBITDA during our ownership, and has been divested for GBP0.3m in cash.
This business was declining and lost GBP0.1m EBITDA in 2009.
Due to the necessary structure of the disposal, a significant impairment has
arisen. Our focus has been on the cash aspects of the deal, and we believe from
that perspective the deal is in the interests of shareholders.
Cash generated from operations
before changes in working capital 2009 : GBP1.8m 2008 : GBP1.1m
Changes in working capital 2009 : GBP(1.4)m 2008 :
GBP(0.3)m
Cash generation before working capital saw a significant improvement on 2008,
which was adversely affected by termination and restructuring costs. Our working
capital has increased significantly at the year end as a result of the increase
in our trading. Inventory has increased by GBP2.5m, and this has been partly
offset by improvements in receivables collection throughout the year.
The working capital profile in our manufacturing business means that continued
growth will lead to increased working capital requirements. We are investigating
ways of limiting this increase, including considering updating old IT systems in
use. However, our commitment to servicing customers and the complexity of our
business means that high stock levels will continue to be necessary.
Adjusted EPS 2009 : 0.6p
2008 : 0.5p
Basic and Diluted EPS 2009 : 0.3p
2008 : 1.2p
We have achieved a 22% increase in adjusted EPS, which adjusts earnings for one
off items, amortisation of intangible assets recognised on acquisition, and
share option charges. Details of these adjustments are included in the notes to
the financial statements.
Capital Structure
At the year end the Group had net debt of GBP5.0m (2008: GBP4.3m), including
finance leases. Debt has increased during the year through increases in
inventory and payment of the final deferred consideration for Brunel Healthcare
of GBP0.7m in March 2009.
We consider this to be an acceptable level of gearing. Our inventory levels,
while high, are necessary to maintain service levels to our customers. Our
receivables are mostly blue chip UK businesses, which gives us confidence in our
receipt of cash for sales.
We have agreement in principle with our existing bank to change to new banking
facilities, combining invoice discounting and other asset backed lending, to
ensure that NeutraHealth has continued access to finance that supports the
growth of the operations.
Principal Risks and Uncertainties
All businesses face a range of risks and uncertainties, being subject to hazards
from internal and external sources. NeutraHealth undertakes a regular risk
assessment within a framework encompassing a range of risk factors: operational,
financial, strategic, environmental, political, social, economic, and
technological. The likelihood and significance of risk factors are considered
when putting in place risk management procedures to ensure risk mitigation.
The following are considered to be the key risks facing the Group.
Availability of Credit
Our working capital profile leads to increases in stock and debtors to support
growth. We have many opportunities to grow profit and sales, and this therefore
requires appropriate facilities. However, the debt markets have not fully
recovered yet. There is a risk that lenders are not prepared to increase
facilities when the growth comes.
NeutraHealth is mitigating this through the negotiation of new banking
facilities that support any necessary working capital growth within the
business. Our profitability and business success also make equity raising a
potential solution to any funding requirements we have as we grow.
Product Sourcing
Our ability to source materials at factory gate pricing is important for those
products that are considered commodities in the market. Having the lowest market
prices will allow us to secure existing business and win new contracts by
continuing to offer the best possible prices to our customers.
We must also constantly source new products to drive our innovations offering to
all customers.
NeutraHealth is mitigating these risks by having teams dedicated to material
price reduction and sourcing of new innovative products or materials. The
performance of these teams is important for our success.
Robin Hilton
16 March 2010
Consolidated Statement of Comprehensive Income
Year ended 31 December 2009
+------------------------------------------+------+----------+-----+----------+
| | Note | 2009 | | 2008 |
| | | | | |
| | | GBP'000 | | GBP'000 |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
| REVENUE | | 34,602 | | 28,864 |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
| Cost of sales | | (22,100) | | (18,047) |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
| Gross profit | | 12,502 | | 10,817 |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
| Other operating income | | 1,168 | | 641 |
+------------------------------------------+------+----------+-----+----------+
| Administrative expenses | | (12,225) | | (10,251) |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
| PROFIT FROM OPERATIONS | | | | |
| BEFORE ONE OFF ITEMS | | 1,445 | | 1,207 |
+------------------------------------------+------+----------+-----+----------+
| Other expenses: | | | | |
+------------------------------------------+------+----------+-----+----------+
| Impairment of goodwill | | (405) | | - |
+------------------------------------------+------+----------+-----+----------+
| Employee termination and reorganisation | | - | | (825) |
| costs | | | | |
+------------------------------------------+------+----------+-----+----------+
| Impairment of property, plant and | | - | | (675) |
| equipment | | | | |
+------------------------------------------+------+----------+-----+----------+
| Profit on disposal of / (Impairment of) | | | | |
| available-for-sale investments | | 103 | | (262) |
+------------------------------------------+------+----------+-----+----------+
| Recognition of onerous lease | | - | | (615) |
+------------------------------------------+------+----------+-----+----------+
| Profit on disposal of subsidiary | | - | | 3,380 |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
| PROFIT FROM OPERATIONS | | 1,143 | | 2,210 |
+------------------------------------------+------+----------+-----+----------+
| Investment income | | 5 | | 72 |
+------------------------------------------+------+----------+-----+----------+
| Finance costs | | (240) | | (489) |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
| PROFIT BEFORE TAX | | 908 | | 1,793 |
+------------------------------------------+------+----------+-----+----------+
| Income tax (expense) / credit | 3 | (306) | | 318 |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
| PROFIT FOR THE YEAR | | 602 | | 2,111 |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
| Other comprehensive income: | | | | |
| Decrease in value of available-for-sale | | - | | (63) |
| investments | | | | |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
| OTHER COMPREHENSIVE INCOME FOR THE YEAR, | | | | |
| NET OF TAX | | - | | (63) |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR | | 602 | | 2,048 |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
| Profit attributable to: | | | | |
+------------------------------------------+------+----------+-----+----------+
| Equity holders of parent | | 602 | | 2,111 |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
| Total comprehensive income attributable | | | | |
| to: | | | | |
+------------------------------------------+------+----------+-----+----------+
| Equity holders of parent | | 602 | | 2,048 |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
| Earnings per share | | | | |
+------------------------------------------+------+----------+-----+----------+
| Basic | 4 | 0.3p | | 1.2p |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
| Diluted | 4 | 0.3p | | 1.2p |
+------------------------------------------+------+----------+-----+----------+
| | | | | |
+------------------------------------------+------+----------+-----+----------+
Consolidated Balance Sheet
At 31 December 2009
+---------------------------------------+--------+---------+-----+---------+
| | Note | 2009 | | 2008 |
| | | GBP'000 | | GBP'000 |
+---------------------------------------+--------+---------+-----+---------+
| ASSETS | | | | |
+---------------------------------------+--------+---------+-----+---------+
| Non-current assets | | | | |
+---------------------------------------+--------+---------+-----+---------+
| Goodwill | | 18,009 | | 18,414 |
+---------------------------------------+--------+---------+-----+---------+
| Other intangible assets | | 2,211 | | 1,935 |
+---------------------------------------+--------+---------+-----+---------+
| Property, plant & equipment | | 3,526 | | 4,245 |
+---------------------------------------+--------+---------+-----+---------+
| Available-for-sale investments | | - | | - |
+---------------------------------------+--------+---------+-----+---------+
| Deferred tax assets | | 3 | | 129 |
+---------------------------------------+--------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
| | | 23,749 | | 24,723 |
+---------------------------------------+--------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
| Current assets | | | | |
+---------------------------------------+--------+---------+-----+---------+
| Inventories | | 8,238 | | 5,691 |
+---------------------------------------+--------+---------+-----+---------+
| Trade and other receivables | | 5,708 | | 6,929 |
+---------------------------------------+--------+---------+-----+---------+
| Current tax assets | | - | | 39 |
+---------------------------------------+--------+---------+-----+---------+
| Cash and cash equivalents | | 961 | | 1,283 |
+---------------------------------------+--------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
| | | 14,907 | | 13,942 |
+---------------------------------------+--------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
| Total assets | | 38,656 | | 38,665 |
+---------------------------------------+--------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
| EQUITY AND LIABILITIES | | | | |
+---------------------------------------+--------+---------+-----+---------+
| Capital and reserves | | | | |
+---------------------------------------+--------+---------+-----+---------+
| Share capital | 5 | 17,599 | | 17,599 |
+---------------------------------------+--------+---------+-----+---------+
| Other reserves | 6 | 2,042 | | 2,161 |
+---------------------------------------+--------+---------+-----+---------+
| Retained earnings | 7 | 4,764 | | 4,015 |
+---------------------------------------+--------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
| Total equity attributable to equity holders of | 24,405 | | 23,775 |
| the parent | | | |
+------------------------------------------------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
| Non-current liabilities | | | | |
+---------------------------------------+--------+---------+-----+---------+
| Deferred tax liabilities | | 819 | | 899 |
+---------------------------------------+--------+---------+-----+---------+
| Provisions | | 270 | | 640 |
+---------------------------------------+--------+---------+-----+---------+
| Bank loan | | 4,967 | | 4,544 |
+---------------------------------------+--------+---------+-----+---------+
| Obligations under finance leases | | - | | 57 |
+---------------------------------------+--------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
| | | 6,056 | | 6,140 |
+---------------------------------------+--------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
| Current liabilities | | | | |
+---------------------------------------+--------+---------+-----+---------+
| Trade and other payables | | 6,527 | | 7,292 |
+---------------------------------------+--------+---------+-----+---------+
| Current tax liabilities | | 279 | | - |
+---------------------------------------+--------+---------+-----+---------+
| Provisions | | 365 | | 425 |
+---------------------------------------+--------+---------+-----+---------+
| Bank loan | | 967 | | 972 |
+---------------------------------------+--------+---------+-----+---------+
| Obligations under finance leases | | 57 | | 61 |
+---------------------------------------+--------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
| | | 8,195 | | 8,750 |
+---------------------------------------+--------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
| Total liabilities | | 14,251 | | 14,890 |
+---------------------------------------+--------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
| Total equity and liabilities | | 38,656 | | 38,665 |
+---------------------------------------+--------+---------+-----+---------+
| | | | | |
+---------------------------------------+--------+---------+-----+---------+
Consolidated Cash Flow Statement
Year ended 31 December 2009
+----------------------------------------+-------+---------+-----+---------+
| | | 2009 | | 2008 |
| | Note | GBP'000 | | GBP'000 |
+----------------------------------------+-------+---------+-----+---------+
| OPERATING ACTIVITIES | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Profit from operations for the year | | 1,143 | | 2,210 |
+----------------------------------------+-------+---------+-----+---------+
| Adjustments for: | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Depreciation and amortisation | | 789 | | 1,353 |
+----------------------------------------+-------+---------+-----+---------+
| Share-based expense payments | | 28 | | 56 |
+----------------------------------------+-------+---------+-----+---------+
| Profit on disposal of subsidiary | | - | | (3,380) |
+----------------------------------------+-------+---------+-----+---------+
| Profit on disposal of property, plant | | (81) | | - |
| & equipment | | | | |
+----------------------------------------+-------+---------+-----+---------+
| (Profit on disposal) / Impairment of | | | | |
| available-for-sale investments | | (103) | | 262 |
+----------------------------------------+-------+---------+-----+---------+
| Impairment of goodwill | | 405 | | - |
+----------------------------------------+-------+---------+-----+---------+
| Recognition of onerous leases | | - | | 615 |
+----------------------------------------+-------+---------+-----+---------+
| Release of provisions | | (430) | | - |
+----------------------------------------+-------+---------+-----+---------+
| | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Cash generated by operations before | | | | |
| changes in working capital | | 1,751 | | 1,116 |
+----------------------------------------+-------+---------+-----+---------+
| | | | | |
+----------------------------------------+-------+---------+-----+---------+
| (Increase) / Decrease in inventories | | (2,547) | | 719 |
+----------------------------------------+-------+---------+-----+---------+
| Decrease / (Increase) in receivables | | 1,221 | | (874) |
+----------------------------------------+-------+---------+-----+---------+
| Decrease in payables | | (51) | | (130) |
+----------------------------------------+-------+---------+-----+---------+
| | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Cash generated from operations | | 374 | | 831 |
+----------------------------------------+-------+---------+-----+---------+
| | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Income taxes received / (paid) | | 58 | | (190) |
+----------------------------------------+-------+---------+-----+---------+
| Interest paid | | (201) | | (437) |
+----------------------------------------+-------+---------+-----+---------+
| | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Net cash generated by operating | | 231 | | 204 |
| activities | | | | |
+----------------------------------------+-------+---------+-----+---------+
| | | | | |
+----------------------------------------+-------+---------+-----+---------+
| INVESTING ACTIVITIES | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Interest received | | 5 | | 72 |
+----------------------------------------+-------+---------+-----+---------+
| Purchase of property, plant & | | (183) | | (656) |
| equipment | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Purchase of intangible assets | | (167) | | (468) |
+----------------------------------------+-------+---------+-----+---------+
| Proceeds from sale of property, plant | | | | |
| & equipment | | 84 | | - |
+----------------------------------------+-------+---------+-----+---------+
| Acquisition of subsidiaries net of | | (720) | | (7,860) |
| cash acquired | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Disposal of subsidiary net of cash | | - | | 5,661 |
| disposed | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Proceeds from sale of | | | | |
| available-for-sale investments | | 103 | | - |
+----------------------------------------+-------+---------+-----+---------+
| | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Net cash used in investing activities | | (878) | | (3,251) |
+----------------------------------------+-------+---------+-----+---------+
| | | | | |
+----------------------------------------+-------+---------+-----+---------+
| FINANCING ACTIVITIES | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Repayment of borrowings | | (1,000) | | (1,000) |
+----------------------------------------+-------+---------+-----+---------+
| Repayment of obligations under finance | | (61) | | (159) |
| leases | | | | |
+----------------------------------------+-------+---------+-----+---------+
| New bank loans raised | | 1,400 | | 2,100 |
+----------------------------------------+-------+---------+-----+---------+
| Cost of raising bank loans | | (14) | | - |
+----------------------------------------+-------+---------+-----+---------+
| | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Net cash from financing activities | | 325 | | 941 |
+----------------------------------------+-------+---------+-----+---------+
| | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Net decrease in cash and cash | | (322) | | (2,106) |
| equivalents | | | | |
+----------------------------------------+-------+---------+-----+---------+
| | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Cash and cash equivalents at the beginning of | 1,283 | | 3,389 |
| the year | | | |
+------------------------------------------------+---------+-----+---------+
| | | | | |
+----------------------------------------+-------+---------+-----+---------+
| Cash and cash equivalents at the end | | 961 | | 1,283 |
| of the year | | | | |
+----------------------------------------+-------+---------+-----+---------+
| | | | | |
+----------------------------------------+-------+---------+-----+---------+
Consolidated Statement of Changes in Equity
Year ended 31 December 2009
+-----------------------------+---------+---------+-------------+----------+----------+
| | Share | Share | Investment | Share- | Retained |
| | capital | premium | revaluation | based | earnings |
| | | | reserve | payments | |
| | GBP'000 | GBP'000 | | GBP'000 | GBP'000 |
| | | | GBP'000 | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| At 1 January 2008 | 17,599 | 1,967 | 63 | 272 | 1,770 |
+-----------------------------+---------+---------+-------------+----------+----------+
| | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| Total comprehensive income | - | - | (63) | - | 2,111 |
| for the year | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| Recognition of share-based | - | - | - | 56 | - |
| payments | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| Lapse of share options | - | - | - | (134) | 134 |
+-----------------------------+---------+---------+-------------+----------+----------+
| | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| Transactions with owners | - | - | - | (78) | 134 |
+-----------------------------+---------+---------+-------------+----------+----------+
| | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| At 31 December 2008 | 17,599 | 1,967 | - | 194 | 4,015 |
+-----------------------------+---------+---------+-------------+----------+----------+
| | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| Total comprehensive income | - | - | - | - | 602 |
| for the year | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| Recognition of share-based | - | - | - | 28 | - |
| payments | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| Lapse of share options | - | - | - | (147) | 147 |
+-----------------------------+---------+---------+-------------+----------+----------+
| | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| Transactions with owners | - | - | - | (119) | 147 |
+-----------------------------+---------+---------+-------------+----------+----------+
| | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
| At 31 December 2009 | 17,599 | 1,967 | - | 75 | 4,764 |
+-----------------------------+---------+---------+-------------+----------+----------+
| | | | | | |
+-----------------------------+---------+---------+-------------+----------+----------+
Notes to the Consolidated Financial Statements
1. GENERAL INFORMATION
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2009 or 2008 but is derived
from those accounts. Statutory accounts for the year ended 31 December 2008 have
been delivered to the Registrar of Companies, and those for 2009 will be
delivered in due course. The auditors have reported on those accounts; their
reports were (i) unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 237 (2) or (3) of the
Companies Act 1985 in respect of the accounts for 2008 nor a statement under
section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for
2009.
The Annual Report and Accounts will be made available to the public at the
Company's registered office, 180 Lifford Lane, Kings Norton, Birmingham, B30 3NU
from the date of release.
The Annual General Meeting will be held at 11 am on 28 April 2010 in London.
2. BASIS OF PREPARATION
The consolidated financial statements for the year ended 31 December 2009 have
been prepared in accordance with International Financial Reporting Standards as
adopted by the EU.
These accounts have been prepared on the basis of the same accounting policies
as for the year ended 31 December 2008.
3. TAXATION
+---------------------------------------------+---------+--------+---------+
| | 2009 | | 2008 |
| | GBP'000 | | GBP'000 |
+---------------------------------------------+---------+--------+---------+
| | | | |
+---------------------------------------------+---------+--------+---------+
| Corporation tax - current year | 276 | | 42 |
+---------------------------------------------+---------+--------+---------+
| Deferred tax (note 23) | 46 | | (352) |
+---------------------------------------------+---------+--------+---------+
| | | | |
+---------------------------------------------+---------+--------+---------+
| | 322 | | (310) |
+---------------------------------------------+---------+--------+---------+
| Corporation tax - prior year | (16) | | (8) |
+---------------------------------------------+---------+--------+---------+
| | | | |
+---------------------------------------------+---------+--------+---------+
| Income tax expense / (credit) for the year | 306 | | (318) |
+---------------------------------------------+---------+--------+---------+
| | | | |
+---------------------------------------------+---------+--------+---------+
Income tax is calculated at 28% (2008 : 28.5%) of the estimated assessable
profit for the year. On 1 April 2008, the rate of corporation tax applicable to
the companies in the Group fell from 30% to 28%. The total charge for the year
can be reconciled to the accounting profit as follows:
+---------------------------------------------+---------+-------+---------+--------+
| | 2009 | | 2008 | |
| | GBP'000 | % | GBP'000 | |
| | | | | % |
+---------------------------------------------+---------+-------+---------+--------+
| | | | | |
+---------------------------------------------+---------+-------+---------+--------+
| Profit before tax | 908 | | 1,793 | |
+---------------------------------------------+---------+-------+---------+--------+
| | | | | |
+---------------------------------------------+---------+-------+---------+--------+
| Tax at the income tax rate of 28% (2008: | 254 | 28.0 | 511 | 28.5 |
| 28.5%) | | | | |
+---------------------------------------------+---------+-------+---------+--------+
| Tax effect of non-deductible impairment of | 113 | 12.4 | - | - |
| goodwill | | | | |
+---------------------------------------------+---------+-------+---------+--------+
| Tax effect of non-taxable profit on | (23) | (2.5) | - | - |
| disposal of assets | | | | |
+---------------------------------------------+---------+-------+---------+--------+
| Tax effect of non-taxable (profit on | | | | |
| disposal) / non-deductible impairment of | | | | |
| available-for-sale investments | (29) | (3.2) | 75 | 4.2 |
+---------------------------------------------+---------+-------+---------+--------+
| Tax effect of non-taxable profit on | | | | |
| disposal of subsidiary | - | - | (963) | (53.7) |
+---------------------------------------------+---------+-------+---------+--------+
| Tax effect of expenses that are not | | | | |
| deductible in determining taxable profit | 14 | 1.5 | 79 | 4.4 |
+---------------------------------------------+---------+-------+---------+--------+
| Tax effect of small company rate in group | - | - | (12) | (0.7) |
| companies | | | | |
+---------------------------------------------+---------+-------+---------+--------+
| Tax effect of over provision in prior year | (16) | (1.7) | (8) | (0.4) |
+---------------------------------------------+---------+-------+---------+--------+
| Other difference | (7) | (0.8) | - | - |
+---------------------------------------------+---------+-------+---------+--------+
| | | | | |
+---------------------------------------------+---------+-------+---------+--------+
| Tax expense / (credit) expense and | | | | |
| effective tax rate for the year | 306 | 33.7 | (318) | (17.7) |
+---------------------------------------------+---------+-------+---------+--------+
| | | | | |
+---------------------------------------------+---------+-------+---------+--------+
4. EARNINGS PER SHARE
+---------------------------------------------+---------+--------+---------+
| | 2009 | | 2008 |
| | GBP'000 | | GBP'000 |
+---------------------------------------------+---------+--------+---------+
| Earnings | | | |
+---------------------------------------------+---------+--------+---------+
| Earnings for the purposes of basic and | | | |
| diluted earnings per share (profit for the | | | |
| year attributable to equity holders of the | 602 | | 2,111 |
| parent) | | | |
+---------------------------------------------+---------+--------+---------+
| Add back / (Deduct): | | | |
+---------------------------------------------+---------+--------+---------+
| Impairment of goodwill | 405 | | - |
+---------------------------------------------+---------+--------+---------+
| Amortisation of intangible assets | | | |
| recognised on acquisition, net of deferred | 136 | | 136 |
| tax credit | | | |
+---------------------------------------------+---------+--------+---------+
| Charges for share options in issue | 28 | | 56 |
+---------------------------------------------+---------+--------+---------+
| One off items, net of corporation tax | (74) | | 1,974 |
| impact | | | |
+---------------------------------------------+---------+--------+---------+
| Profit on disposal of subsidiary | - | | (3,380) |
+---------------------------------------------+---------+--------+---------+
| | | | |
+---------------------------------------------+---------+--------+---------+
| Earnings for the purpose of adjusted | | | |
| earnings per share | 1,097 | | 897 |
+---------------------------------------------+---------+--------+---------+
| | | | |
+---------------------------------------------+---------+--------+---------+
| | 2009 | | 2008 |
| | Number | | Number |
| | '000 | | '000 |
+---------------------------------------------+---------+--------+---------+
| Number of shares | | | |
+---------------------------------------------+---------+--------+---------+
| Weighted average number of ordinary shares | 175,985 | | 175,985 |
| for the purposes of basic earnings per | | | |
| share | | | |
+---------------------------------------------+---------+--------+---------+
| Effect of dilutive potential ordinary | | | |
| shares: | | | |
+---------------------------------------------+---------+--------+---------+
| Share options | - | | - |
+---------------------------------------------+---------+--------+---------+
| | | | |
+---------------------------------------------+---------+--------+---------+
| Weighted average number of ordinary shares | | | |
| for the purposes of diluted earnings per | 175,985 | | 175,985 |
| share | | | |
+---------------------------------------------+---------+--------+---------+
| | | | |
+---------------------------------------------+---------+--------+---------+
| | 2009 | | 2008 |
| | p per | | p per |
| | share | | share |
+---------------------------------------------+---------+--------+---------+
| Earnings per share | | | |
+---------------------------------------------+---------+--------+---------+
| Basic | 0.3 | | 1.2 |
+---------------------------------------------+---------+--------+---------+
| Diluted | 0.3 | | 1.2 |
+---------------------------------------------+---------+--------+---------+
| Adjusted | 0.6 | | 0.5 |
+---------------------------------------------+---------+--------+---------+
| | | | |
+---------------------------------------------+---------+--------+---------+
The performance conditions for the share options in issue at this year end and
last year end had not been met, and therefore the share options have not been
treated as dilutive.
5. share capital
+---------------------------------------------+---------+-------+---------+
| | 2009 | | 2008 |
| | GBP'000 | | GBP'000 |
+---------------------------------------------+---------+-------+---------+
| Authorised: | | | |
+---------------------------------------------+---------+-------+---------+
| 300,000,000 ordinary shares of 10p each | - | | 30,000 |
+---------------------------------------------+---------+-------+---------+
| 300,000,000 new ordinary shares of 1p each | 3,000 | | - |
+---------------------------------------------+---------+-------+---------+
| 300,000,000 deferred shares of 9p each | 27,000 | | - |
+---------------------------------------------+---------+-------+---------+
| | | | |
+---------------------------------------------+---------+-------+---------+
| | 30,000 | | 30,000 |
+---------------------------------------------+---------+-------+---------+
| | | | |
+---------------------------------------------+---------+-------+---------+
| | | | |
+---------------------------------------------+---------+-------+---------+
| Issued and fully paid: | | | |
+---------------------------------------------+---------+-------+---------+
| 175,985,137 ordinary shares of 10p each | - | | 17,599 |
+---------------------------------------------+---------+-------+---------+
| 175,985,137 new ordinary shares of 1p each | 1,760 | | - |
+---------------------------------------------+---------+-------+---------+
| 175,985,137 deferred shares of 9p each | 15,839 | | - |
+---------------------------------------------+---------+-------+---------+
| | | | |
+---------------------------------------------+---------+-------+---------+
| At 31 December | 17,599 | | 17,599 |
+---------------------------------------------+---------+-------+---------+
| | | | |
+---------------------------------------------+---------+-------+---------+
On 29 April 2009 each ordinary share of 10p was divided into one new ordinary
share of 1p each and one deferred share of 9p each. At 31 December 2009 the
Company has 175,985,137 new ordinary shares and 175,985,137 deferred shares
(2008: 175,985,137 ordinary shares of 10p each) in issue.
The new ordinary shares entitle holders to vote and receive dividends, and on
liquidation would be repaid the nominal amount paid up before other classes of
shares.
The deferred shares do not entitle the holders to vote or receive dividends, and
on liquidation would be repaid the nominal amount paid up after the new ordinary
shares had been repaid.
6. OTHER RESERVES
+--------------------------------+---------+----------+-------------+---------+
| | | Share- | | |
| | | based | Investment | |
| | Share | payments | revaluation | |
| | premium | reserve | reserve | Total |
| | GBP'000 | GBP'000 | | GBP'000 |
| | | | GBP'000 | |
+--------------------------------+---------+----------+-------------+---------+
| | | | | |
+--------------------------------+---------+----------+-------------+---------+
| | | | | |
+--------------------------------+---------+----------+-------------+---------+
| At 1 January 2008 | 1,967 | 272 | 63 | 2,302 |
+--------------------------------+---------+----------+-------------+---------+
| Recognition of share-based | - | 56 | - | 56 |
| payments | | | | |
+--------------------------------+---------+----------+-------------+---------+
| Transfer of lapsed share | - | (134) | - | (134) |
| options value to Retained | | | | |
| Earnings | | | | |
+--------------------------------+---------+----------+-------------+---------+
| Decrease in fair value of | - | - | (63) | (63) |
| financial asset investments, | | | | |
| net of deferred tax | | | | |
+--------------------------------+---------+----------+-------------+---------+
| | | | | |
+--------------------------------+---------+----------+-------------+---------+
| At 31 December 2008 | 1,967 | 194 | - | 2,161 |
+--------------------------------+---------+----------+-------------+---------+
| | | | | |
+--------------------------------+---------+----------+-------------+---------+
| | | | | |
+--------------------------------+---------+----------+-------------+---------+
| Recognition of share-based | - | 28 | - | 28 |
| payments | | | | |
+--------------------------------+---------+----------+-------------+---------+
| Transfer of lapsed share | - | (147) | - | (147) |
| options value to Retained | | | | |
| Earnings | | | | |
+--------------------------------+---------+----------+-------------+---------+
| | | | | |
+--------------------------------+---------+----------+-------------+---------+
| At 31 December 2009 | 1,967 | 75 | - | 2,042 |
+--------------------------------+---------+----------+-------------+---------+
| | | | | |
+--------------------------------+---------+----------+-------------+---------+
7. RETAINED EARNINGS
+----------------------------------------------+---------+---+---------+
| | 2009 | | 2008 |
+----------------------------------------------+---------+---+---------+
| | GBP'000 | | GBP'000 |
+----------------------------------------------+---------+---+---------+
| At 1 January | 4,015 | | 1,770 |
+----------------------------------------------+---------+---+---------+
| Profit for the year attributable to equity | | | |
| holders of the parent | 602 | | 2,111 |
+----------------------------------------------+---------+---+---------+
| Transfer of lapsed share options value from | | | |
| Other Reserves | 147 | | 134 |
+----------------------------------------------+---------+---+---------+
| | | | |
+----------------------------------------------+---------+---+---------+
| At 31 December | 4,764 | | 4,015 |
+----------------------------------------------+---------+---+---------+
| | | | |
+----------------------------------------------+---------+---+---------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAXDSFSKEEFF
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