Interim Results

Tandem Group PLC 30 September 2003 Tandem Group plc Interim results for the 6 months ended 31 July 2003 Chairman's interim statement The operating profit before exceptional items and goodwill amortisation for the six months ended 31 July 2003 on a like for like basis was £453,000 compared to £639,000 for the same period last year. MV Sports Group Plc, which was acquired on 8 April 2003, increased the Group's operating profit before exceptional items and goodwill amortisation by £205,000 to £658,000. No dividend is proposed for the interim period. During the period we have relocated the Pot Black snooker and outdoor play equipment and the Ben Sayers golf businesses to a single site at Bideford. The Dawes Cycles and the Two Wheel Trading bicycle accessory businesses have been combined and transferred to the MV Sports premises in the Midlands. Reorganisation costs of £198,000 have been incurred in the first half year and an additional provision of £150,000 has been made. Further reorganisation costs may be incurred in the second half of the year. The full benefit of savings from employee costs and other fixed overheads will be achieved during the 2004 calendar year. Falcon and Dawes Cycles Turnover in our bicycle businesses was 2% up on the previous year with similar operating profits. We now have products covering a wide range of price points and, with increased listings with major retailers, our share of the bicycle market should rise for the full year. Pot Black Sales of outdoor play equipment products introduced since we acquired the business in September 2000 have grown very successfully. Other products, outside the core activities of snooker, pool and outdoor play equipment, with low margins are being withdrawn from the range which has resulted in a reduced turnover. Increased sales and marketing costs together with the relocation and reduced turnover has resulted in a drop in profitability for Pot Black in the first half year. Product selections by national retailers for the second half year are encouraging, which should lead to the business reporting an acceptable level of profit for the full year. Ben Sayers Our golf business achieved an increase in turnover of 17% from the previous year. Despite increased sales expenses and the cost of reorganisation, profit levels were maintained. The relocation of the business to operate alongside Pot Black should allow a better utilisation of resources and with significantly reduced fixed costs an increase in profitability. MV Sports Group MV distribute products featuring high-profile children's brand and character licences including Barbie, Bratz, Groovy Chick and Bang on the Door. A range of football training equipment for children under the brand Kickmaster was successfully launched in April 2002. Since the acquisition of MV Sports on 8 April 2003, it has contributed £6,368,000 of turnover to 31July 2003 with an operating profit of £205,000. The first half year has previously been a loss-making period for MV Sports with the six months to 30 June 2002 reporting an operating loss of £88,000. Early indications at MV Sports look encouraging and the business should yield a significant return on our investment. We welcome to the Group the employees of MV Sports who have shown real commitment and enthusiasm since joining us. Summary The first half year has seen the acquisition of MV Sports and, towards the end of the period, the commencement of the rationalisation of the Group's operating facilities. The start of the second half of the year has been encouraging with the benefit of cost savings already being seen. Graham Waldron Chairman 30 September 2003 Registered office: 9 South Street, Crowland, Peterborough PE6 0AH Consolidated profit and loss statement 6 months to 6 months to Year ended 31 July 2003 31 July 2002 31 January 2003 Unaudited Unaudited Audited £'000 £'000 £'000 Turnover Continuing operations 19,022 19,087 37,317 Acquisitions 6,368 - - Discontinued operations - - - -------- -------- -------- 25,390 19,087 37,317 -------- -------- -------- Operating profit Continuing operations 453 639 984 Acquisitions 205 - - Discontinued operations - - (24) Release/utilisation of prior year provision - - 28 -------- -------- -------- 658 639 988 Exceptional items (239) - - Amortisation of goodwill (102) (92) (201) -------- -------- -------- Operating profit on ordinary activities before interest 317 547 787 Net interest payable (272) (263) (553) -------- -------- -------- Profit before taxation 45 284 234 Taxation - - 9 -------- -------- -------- Profit after taxation 45 284 243 Finance costs of non-equity shares (14) (18) 151 -------- -------- -------- Retained profit for the period 31 266 394 -------- -------- -------- Earnings per share Basic 0.10 0.76 1.57 Diluted 0.10 0.76 1.57 Adjusted 1.13 1.03 2.38 Consolidated balance sheet 31 July 2003 31 July 2002 31 January 2003 Unaudited Unaudited Audited £'000 £'000 £'000 Fixed assets Intangible assets 6,034 3,509 3,692 Negative goodwill (1,637) (95) (197) Tangible assets 1,774 1,210 1,153 -------- -------- -------- 6,171 4,624 4,648 -------- -------- -------- Current assets Stocks 8,786 7,824 7,133 Debtors 12,657 9,082 6,433 Cash at bank 1,285 - - -------- -------- -------- 22,728 16,906 13,566 -------- -------- -------- Creditors Amounts falling due within one year Bank overdrafts - 5,040 1,374 Other creditors 20,356 10,667 9,539 -------- -------- -------- 20,356 15,707 10,913 -------- -------- -------- Net current assets/(liabilities) 2,372 1,199 2,653 -------- -------- -------- Total assets less current liabilities 8,543 5,823 7,301 Creditors Amounts falling due after more than one year 1,754 86 1,801 Provisions for liabilities and charges 77 92 69 -------- -------- -------- Net assets 6,712 5,645 5,431 -------- -------- -------- Capital and reserves Called-up share capital 1,502 11,174 11,174 Share premium account 6,193 5,397 5,442 Capital reserve 5,356 406 406 Merger reserve 63 63 63 Profit and loss account (7,138) (12,472) (12,376) -------- -------- -------- Equity shareholders' funds 5,976 4,568 4,709 Non-equity minority interests 736 1,077 722 -------- -------- -------- 6,712 5,645 5,431 -------- -------- -------- Notes to the interim report 1 Basis of preparation The interim financial statements have been prepared using accounting policies stated in the Group's report and accounts for the year ended 31 January 2003 and are unaudited. The summary of results for the year ended 31 January 2003 does not constitute full financial statements within the meaning of the Companies Act 1985. The report and full financial statements for that period have been filed with the Registrar of Companies and contain an unqualified audit report. 2 Earnings per share The calculation of earnings per share is based on the net profit and ordinary shares in issue during the period as follows: 6 months to 6 months to Year ended 31 July 2003 31 July 2002 31 January 2003 £'000 £'000 £'000 Basic and diluted earnings per share Profit for the period after finance cost of non-equity shares 31 266 394 ---------- --------- --------- Weighted average number of ordinary shares in issue during the period used for basic and diluted earnings per share 33,043,506 34,883,232 25,046,592 Weighted average number of shares under option 438,575 - - Number of shares that would have been issued at fair value (295,640) - - ---------- --------- --------- Weighted average number of ordinary shares used for diluted earnings per share 33,186,441 34,883,232 25,046,592 ---------- --------- --------- Adjusted profit used for adjusted earnings per share Profit for the period after finance cost of non-equity shares 31 266 394 Goodwill amortisation 102 92 201 Exceptional items 239 - - ---------- --------- --------- Adjusted profit 372 358 595 ---------- --------- --------- The earnings per share figures for the period ended 31 July 2002 and the year ended 31 January 2003 have been adjusted to take account of the reorganisation of the ordinary share capital of the Company, which took effect on 19 March 2003. 3 Exceptional items Exceptional items, analysed below, are reorganisation costs following the acquisition of MV Sports Group Plc and restructuring of the Group, the release of negative goodwill on preference shares owned by the company and special pension contributions made by the company to meet the minimum funding requirement of its pension schemes. £'000 Reorganisation costs and 348 provisions Special pension payments 88 Release of negative goodwill (197) ------- 239 ------- 4 Movement in equity shareholders' funds 6 months to 6 months to Year ended 31 July 2003 31 July 2002 31 January 2003 £'000 £'000 £'000 Profit for the period 31 266 394 Re-classification of preference dividends - 32 - Issue of share capital 1,236 2,317 2,362 -------- -------- -------- 1,267 2,615 2,756 Opening equity shareholders' funds 4,709 1,953 1,953 -------- -------- -------- Closing equity shareholders' funds 5,976 4,568 4,709 -------- -------- -------- This information is provided by RNS The company news service from the London Stock Exchange

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