Further re Final Results
4Less Group plc (The)
27 September 2005
The 4Less Group Plc
Amendment to preliminary results and trading update
Introduction
As a result of a further accounting review by the Group of its businesses, the
Directors of The 4Less Group Plc ('4Less' or 'the Company') wish to advise that
the Group had overstated its turnover and profit before tax in the preliminary
results for the year ended 31 March 2005 as announced on 14th July 2005. The
overstatement occurred in the Group's Property Finance subsidiary, Property
Finance 4Less Limited, a business that acts as a broker for overseas mortgages.
This division remains core to the on-going operations of the Group but as a
result of this overstatement, its management and processes have been
restructured and a senior member of its staff has left the Group.
Turnover and profit before tax was overstated in the preliminary results for the
year ended 31 March 2005 by £174,000. The Directors have also made an
additional provision of £89,000 for doubtful debtors in the audited financial
statements of the parent company for the year ended 31st March 2005.
In total these adjustments will increase the previously reported group loss
after tax for the financial year from £529,000 to £883,000. The Group net
assets at 31st March 2005 are reduced from £1,194,000 to £840,000. There is no
effect on the Group's cash balances at the balance sheet date.
The audited figures for the year ended 31 March 2005 of the Group have today
been agreed by the Group auditors, and will be filed with Companies House and
sent to shareholders shortly. The fully amended preliminary statement has been
set out below.
As a consequence of the adjustments made in the Property Finance division and
the marketing initiatives of the Group being delayed, the forecast recovery of
the businesses has slowed.
In accordance with the Group's previous announcement on 15th August 2005,
Richard Collier, who was appointed as a non-executive director on that date,
became full time Chief Executive on 26 September 2005.
Richard Collier, chief executive of the Group commented, 'I am disappointed to
be reporting such news so soon after my appointment. The internal systems and
controls are under permanent review and improvement but I believe that the
present internal controls of the Group are appropriate for a company the size of
4Less.
I would like to welcome David Haddon, as marketing director. Nigel Paul steps
down from the Board following my appointment as Chief Executive. I would like
to thank him, on behalf of the Board for his valuable contribution to the group,
especially through the last twelve months.'
Enquiries:
Richard Collier
The 4Less Group Plc Tel: 0207 594 0515
27 September 2005
THE 4 LESS GROUP PLC
CHAIRMAN'S STATEMENT
Introduction
The year under review has been a difficult period for the Group. Following the
poor performance of the new ventures and activities of insurance and corporate
services, the Group conducted a full and detailed review of its activities
commencing in December 2004. This review, which is now completed, resulted in
the Group refocusing its activities on the core operations of foreign currency,
the arrangement of overseas mortgages and broking insurance products for
overseas home owners.
As a result, the corporate services division was closed, and the underperforming
Car Finance 4Less was sold to Charles McLeod at the end of the year under
review.
Performance
Gross turnover for the Group for the year under review was £335.2 million
representing a 5 per cent. increase over the 2004 result. This resulted in a
gross profit of £3.0 million for the year, representing a 4.3 per cent. increase
over the previous year. Continuing operations produced gross profits of £2.9
million.
The greatest effect of the review and the measures taken to return the Group to
profitability has been on the staffing and overhead structure of the business.
Administrative expenses of £0.4 million have been eliminated by the closure of
businesses, and overhead and staff reductions in the continuing businesses have
resulted from the streamlining of operations, and improved efficiencies.
Notwithstanding the above, the Group's continuing operations recorded a loss of
£542,000 and after taking in to account losses in discontinued operations and
the costs of reorganisation, the Group's consolidated loss for the financial
year amounted to £883,000.
The directors have not recommended the payment of a dividend.
The Board
During the year there have been a number of changes to the Board of Directors.
Nigel Paul, Finance Director, was appointed Chief Executive Officer in December
2004 to effect a reorganisation of the business. At the same time Ian Collins,
Financial Controller, was appointed Finance Director. Charles McLeod the
founder of the business has become a non-executive director with effect from the
end of the financial year. Greg Begley has left the Group. On 15 August 2005
Richard Collier joined the board and on 26 September 2005 was appointed Chief
Executive Officer. On 15 August 2005 David Haddon joined the board as Marketing
Director and James Corsellis resigned as Non-Executive Director.
People
Having undertaken a period of expansion of personnel, the reorganisation and
refocusing of the business on its core activities has resulted in a number of
redundancies across the Group. This has been a difficult time for the staff,
but I remain impressed by the way they have dealt with the circumstances.
Outlook
The year under review saw the establishment of a sound operational base on which
to develop the successful activities of the business. Having taken robust steps
to reorganise the activities and operations of the Group, we continue to improve
all aspects of the Group's activities and can now look forward to the future
with confidence.
Eric Peacock CMG DL
27 September 2005
THE 4LESS GROUP PLC
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
Following a year which has been a difficult one for the Group resulting in
significant losses, the core business of foreign currency exchange continued to
grow, and generate increased gross profits for the year. Following our
successful flotation on AIM in April 2004, the Group started the development of
new business areas with the attendant increases in our cost base. These
businesses regrettably did not perform in line with expectations. Further the
Group bore significant one off costs associated with the intended expansion of
all activities. In December 2004, we reassessed the Group's core priorities and
implemented an overall restructuring to close non profitable operations, and
streamline the administrative cost base of the core businesses.
The year also saw a complete review of the Group's anti-money laundering
procedures in conjunction with our specialist advisers, and the authorisation of
both Property Finance 4Less Limited and FLG Insurance Brokers Limited under the
new FSA regulations.
Following the release of our 6 months results in December 2004, I was appointed
Chief Executive Officer in order to co-ordinate the strategic review and
implement the turnaround strategies necessary to return the Group to
profitability. The Group addressed the issues in the last quarter of the year
under review, closing non profitable businesses, making significant
redundancies, implementing new remuneration and commission structures, and
outsourcing certain administrative functions such as human resource and health
and safety management.
The Directors have not recommended the payment of a dividend.
Trading Review
Continuing operations
Continuing operations produced a turnover of £335.0 million up from £318.9
million in 2004 representing a 5 per cent increase, and generated a gross profit
of £2.9 million up from £2.7 million in 2004 representing a 6 per cent.
increase.
The core foreign exchange business has achieved modest growth over the year.
Both this activity, and the property finance business saw a marked decline in
activity in the last quarter of the year, following the slowing of the UK
property market at that time and the tragic events in the Indian Ocean on Boxing
Day. This trend is now reversing in both businesses. We continue to expand the
skills within the business and adapt the offering to suit the ever changing
market place.
The turnover of Property Finance 4Less decreased to £141,452 and a net loss of
£131,041 was generated. Measures have been put in place to improve the
performance of this division. The market continues to develop for the overseas
mortgage provider and we continue to develop relationships with a range of banks
and mortgage providers throughout Europe, America, South Africa, and Australia.
FLG Insurance Brokers has been refocused solely on the provision of retail
insurance products to meet the requirements of property ownership overseas. To
enhance the development of FLG Insurance Brokers and to provide a comprehensive
range of insurance products to customers, we have recently entered into a joint
venture with Healthcare International Limited, a company specialising in
healthcare insurance products to the ex-patriot communities around the world,
and associated insurance products such as critical illness, mortgage protection
and travel insurance.
Interest receivable, a fundamental income source for the business, increased by
60% to £213,236 from £133,496.
Administrative costs in the continuing businesses amounted to £3,628,056. The
Group had increased its support structures and was faced with a high level of
legal and consultancy fees during the year. As part of the review and
reorganisation these costs have been significantly reduced.
Discontinued businesses
The discontinued businesses of Corporate Services and Car Finance 4Less produced
operating losses of £262,335. The activities of Corporate Services have been
closed and Car Finance 4Less was sold to Charles McLeod, producing a profit on
disposal of £35,269.
During a period of reorganisation there is inevitable uncertainty amongst staff,
but the rapid execution of changes, and the undoubted skill, temerity and
diligence of all our staff, has led to the acceptance of difficult decisions.
The costs of the reorganisation of the businesses, which is now complete,
including the costs of redundancies and associated legal fees amounted to
£199,221.
The losses have resulted in a tax credit of £89,771 being received. In total
the Group made post tax losses of £883,168.
The future
Having undertaken the re-organisation, the Group is now in a position to
continue to develop the core business activities and pursue organic growth. Our
infrastructure is capable of supporting the future development plans of the
business, although we continue to enhance systems and seek opportunities to
further improve our administrative and organisational procedures. We are
looking forward to the future development of the Group with confidence.
Nigel Paul
27 September 2005
CONSOLIDATED PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 MARCH 2005
2005 2004
Note Continuing Discontinued Continuing Discontinued
Operations Operations Total Operations Operations Total
£ £ £ £ £ £
Turnover 335,048,877 184,403 335,233,280 318,964,063 205,389 319,169,452
Cost of sales (332,166,149) (38,525) (332,204,674) (316,244,518) (19,980) (316,264,498)
Gross profit 2,882,728 145,878 3,028,606 2,719,545 185,409 2,904,954
Administrative expense (3,628,056) (412,699) (4,040,755) (2,511,618) (224,900) (2,736,518)
Operating (loss) / profit (745,328) (266,821) (1,012,149) 207,927 (39,491) 168,436
Interest receivable and 208,737 4,499 213,236 130,303 3,193 133,496
similar income
Interest payable and (5,511) (13) (5,524) (4,001) (10) (4,011)
similar charges
(542,102) (262,335) (804,437) 334,229 (36,308) 297,921
Exceptional Items
Profit on sale of 35,269 -
subsidiary
(Loss) / profit before (769,168) 297,921
Reorganisation Costs
Reorganisation costs (199,221) -
(Loss) / profit on (968,389) 297,921
ordinary activities
before taxation
Taxation 85,221 (96,152)
(Loss) / profit for the (883,168) 201,769
financial year
(Loss) / earnings per (11.23p) 3.92p
share
Diluted (Loss) / earnings (11.23p) 3.81p
per share
There were no other recognised gains and
losses in the year.
CONSOLIDATED BALANCE SHEET
31 MARCH 2005
2005 2004
£ £ £ £
FIXED ASSETS
Tangible 247,084 299,516
247,084 299,516
CURRENT ASSETS
Debtors 597,393 608,220
Cash at bank and in hand 5,594,089 7,844,363
6,191,482 8,452,583
CREDITORS: amounts falling due (5,598,128) (8,310,208)
within one year
NET CURRENT ASSETS 593,354 142,375
TOTAL ASSETS LESS CURRENT LIABILITIES 840,438 441,891
NET ASSETS 840,438 441,891
CAPITAL AND RESERVES
Called up share capital 79,762 51,429
Share premium account 1,414,187 160,805
Profit and loss account (653,511) 229,657
EQUITY SHAREHOLDERS' FUNDS 840,438 441,891
COMPANY BALANCE SHEET
31 MARCH 2005
2005 2004
£ £ £ £
FIXED ASSETS
Tangible 246,716 288,708
Investments 10 6
246,726 288,714
CURRENT ASSETS
Debtors 875,712 664,519
Cash at bank and in hand 5,488,407 7,784,558
6,364,119 8,449,077
CREDITORS: amounts falling due (5,591,742) (8,229,369)
within one year
NET CURRENT ASSETS 772,377 219,708
TOTAL ASSETS LESS CURRENT LIABILITIES 1,019,103 508,422
CAPITAL AND RESERVES
Called up share capital 79,762 51,429
Share premium account 1,414,187 160,805
Profit and loss account (474,846) 296,188
EQUITY SHAREHOLDERS' FUNDS 1,019,103 508,422
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 MARCH 2005
2005 2004
£ £
Reconciliation of operating (loss) / profit to net cash flow from
operating activities
Operating (loss) / profit (1,012,149) 168,436
Reorganisation costs (199,221) -
Disposal of assets to subsidiary 10,896 -
Depreciation of tangible fixed assets 157,333 108,113
Increase / (decrease) in debtors 49,917 (397,280)
(Decrease) / increase in creditors (2,556,248) 3,520,958
Net cash (outflow) inflow from operating activities (3,549,472) 3,400,227
CASH FLOW STATEMENT (note 22)
Net cash (outflow) / inflow from operating activities (3,549,472) 3,400,227
Returns on investments and servicing of finance 207,712 129,485
Taxation - (35,189)
Capital expenditure (121,231) (319,758)
Disposal of subsidiary (68,998) -
Cash (outflow) / inflow before financing (3,531,989) 3,174,765
Financing - net proceeds of flotation 1,281,715 -
(Decrease) / increase in cash in the period (2,250,274) 3,174,765
Reconciliation of net cash flow to movement in net funds (note 23)
(Decrease) / increase in cash in the period (2,250,274) 3,174,765
Net funds at 1 April 2004 7,844,363 4,669,598
Net funds at 31 March 2005 5,594,089 7,844,363
NOTES
EARNINGS PER SHARE
Both basic earnings per share and diluted earnings per share are based on a loss
after tax of £883,168 (2004: Profit after tax £201,769). The basic earnings per
share has been calculated on a weighted average of 7,867,507 (2004: 5,142,805)
ordinary shares in issue. Diluted loss and earnings per share is calculated on
the same basis as basic loss and earnings per share because the effect of the
potential ordinary shares (share options) reduces the net loss per share and is
therefore anti-dilutive. For 2004, the diluted earnings per share has been
calculated on a weighted average of 5,288,452 of ordinary shares in issue and
the dilutive potential ordinary shares from warrants.
NATURE OF ACCOUNTS
The financial information set out in the announcement does not constitute the
company's statutory accounts for the year ended 31 March 2005 or 2004. The
financial information for the year ended 31 March 2004 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their report was
unqualified and did not contain a statement under s237(2) or (3) Companies Act
1985. The statutory accounts are expected to be sent to shareholders shortly.
This information is provided by RNS
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