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Yorkshire Group PLC (YOR)

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Thursday 25 September, 2003

Yorkshire Group PLC

Interim Results

Yorkshire Group PLC
25 September 2003

Thursday 25 September 2003


                              YORKSHIRE GROUP PLC

                         2003 INTERIM RESULTS ANNOUNCEMENT

CHAIRMAN'S STATEMENT

Overview

Trading conditions in the six month period to 30th June 2003 continued to be
very difficult with relative stabilisation in Europe more than offset by adverse
conditions in America and Asia.

In the six month period to 30th June 2003 the operating loss after exceptional
items was £7.6m, on a turnover of £45.4m against an operating loss after
exceptional items of £4.7m on a turnover of £56.3m in the six month period to
30th June 2002.   Despite these losses and the £3.2m of interest and similar
charges in the period, effective management of working capital restricted the
borrowings to £43.1m at 30th June 2003 against £40.2m at 31st December 2002.

Although the Group has made progress in its asset realization strategy through
the sale of peripheral assets, it has become clear that the best interests of
the Group and its stakeholders will be served by an operational and financial
restructuring which restores operational profitability to its core business and
ensures that the financial debt burden on this business is sustainable.  Despite
the poor operating results in the first half of 2003, I have been encouraged by
the progress made this year towards the establishment of a profitable core
business and the level of support which the Group has enjoyed from its lenders.

Trading results

Group turnover in the six month period to 30th June 2003 of £45.4m compares with
£56.3m in the first half of 2002 and £47.5m in the second half of 2002.

The operating loss of £5.3m before exceptional items compares with an operating
loss of £1.8m in the first half of 2002. The European business made some
progress in difficult conditions with an operating loss of £3.1m before
exceptional items in the first half of 2003 against a loss of £3.8m in the
second half of 2002.

Exceptional items of £3.9m include £1.4m of business rationalisation costs
relating to the restructuring of the American business and £1.6m arising from
the termination of an interest swap agreement. The interest swap was agreed at
the time of the Crompton and Knowles acquisition in 1999, and the termination
was crystallised by the banks exercising their rights under the terms of swap
and rolling the amount payable into bank debt.

The ordinary interest expense of £1.6m (first half 2002 £1.7m) reflected the
fall in interest rates.

Loss per ordinary share before exceptional items was 14.3p (2002 7.0p loss per
ordinary share), and after exceptional items, 21.7p (2002 12.5p loss per
ordinary share). The directors are not declaring an interim dividend.

Net assets of the Group before minority interests at 30th June 2003 were £15.5m,
being 30p per ordinary share.

Europe

The reorganisation of the UK manufacturing base announced in January 2002 has
recently been completed, the objective being a highly efficient dyestuff
manufacturing plant at the Hunslet Road site in Leeds.  The benefits began to
flow in the first half of 2003 but will not be fully seen until the fourth
quarter.  We are continuing to seek further improvements in manufacturing
efficiency.

Having reduced the costs of the European manufacturing operation, Steve
Meredith, our recently appointed European MD is now focusing on a restructuring
of the division's sales and marketing operations and supply chain to increase
efficiencies, reduce working capital and enhance the levels of service we
provide to our customers.  We anticipate further cost reductions will result
which will allow us to reduce the break even level of turnover for the European
business.

European turnover was £20.9m against £22.6m in the first half of 2002, a 7.6%
decline, against a decline of 20% in the first half of 2002 against 2001.

Americas

The US textile sector continues to be in severe economic decline with many high
profile companies in the manufacturing sector experiencing difficulties.
Reflecting this we saw a large decline in American turnover from £27.0m in the
first half of 2002 to £19.4m in the first half of 2003, although an element of
the sterling decline has arisen from movement in the £/$ exchange rate. This
compares with sales, at the time of the Crompton & Knowles acquisition, during
the first half of 2000 of £36.5m.

America showed an operating loss before exceptional costs of £0.3m in the first
half of 2003, against a profit of £1.5m in 2002 and a loss of £0.8m in the
second half of 2002.

There is little prospect of a short term upturn and we therefore implemented a
major restructuring in May to reduce capacity and our cost base. We have also
performed a strategic review, the first consequence of which was the recently
announced phased exit from our speciality chemicals business. Further details of
the review and its consequences will be provided in due course.

Asia Pacific

The Asia Pacific business began the year well but the SARS virus had a major
negative impact from April onwards. Given the ordering and manufacturing cycle
and lead times in the area the lack of travel in that period continues to have
an impact.

In response to the decline in sales we have cut overhead costs and outsourced
non core operations such as warehousing, moving the break even level of trading
significantly downwards.

Directors and employees

There have been further changes at Board level during 2003.

Jim Perrie who joined the Group as interim Finance Director on 23rd January and
was appointed the Board on 3rd March has agreed to join the Group in the
permanent position of Chief Financial Officer from 1st October 2003, and one of
his responsibilities being the implementation of the changes resulting from the
strategic review of the American Operations.

Steve Meredith, who joined the Group as European Managing Director on 1st August
from Clariant where he was responsible for a number of European and worldwide
operations, will join the Board of Yorkshire Group plc from 1st October 2003.

The Board was pleased to welcome Malcolm Shilton to the Group as Company
Secretary with effect from 17th June.

The continuing financial difficulties which have been experienced by the company
during the first half of 2003 have placed a severe burden on all our employees.
The Board would like to acknowledge their tolerance and the support they have
given during this period.

Prospects

In Europe the benefits from our ongoing manufacturing improvements, the further
benefits we expect to gain from the restructuring of our sales and marketing
operations and the slowdown in the decline of turnover leave us cautiously
optimistic that we can restore the business to profitability in the medium term.

The American business continues to be impacted by the difficult economic
conditions in the US textile sector, and we can see little prospect of an
upturn. We will announce the results of our strategic review in due course.

Trading conditions in Asia Pacific continue to be difficult, however the
re-alignment of the cost base means that our business is sustainable at current
sales levels, and positions us for any growth in demand.

Asset realization strategy

As announced we have disposed of surplus property assets in Australia and the
USA and non core business units in Indonesia and the USA. We continue to review
all of the Groups assets and business streams for opportunities to reduce debts.
We are currently exploring a number of other alternative realizations and are
making slow but steady progress with these.

Pat Barrett
Chairman

25th September 2003

Enquiries:

Andrew Dick, Chief Executive                           Nick Denton
Jim Perrie, Finance Director                           Tom Leatherbarrow
Tel: 0113 244 3111                                     The Hogarth Partnership
                                                       Tel: 020 7357 9477
                                                       Mob: 07770 272 083


GROUP PROFIT AND LOSS ACCOUNT
for the half year ended 30th June 2003

                            Before                   First half         First half         Full year
              Note     Exceptional    Exceptional          2003               2002              2002
                             items          items
                             £'000          £'000         £'000              £'000             £'000

Turnover          2         45,430              -        45,430             56,277           103,799

Cost of           4        (36,216)        (1,589)      (37,805)           (43,418)          (94,092)
sales
                         ---------      ---------      --------            -------           -------
Gross                        9,214         (1,589)        7,625             12,859             9,707
Profit

Other             4        (14,559)        (1,447)      (16,006)           (17,570)          (36,038)
operating
expenses
                         ---------      ---------      --------            -------           -------
Operating       3,4         (5,345)        (3,036)       (8,381)            (4,711)          (26,331)
loss

Exceptional       4              -            788           788                  -                 -
income
                         ---------      ---------      --------            -------           -------
Operating                   (5,345)        (2,248)       (7,593)            (4,711)          (26,331)
loss before
interest

Net               4         (1,629)        (1,604)       (3,233)            (1,651)           (3,838)
interest
                         ---------      ---------      --------            -------           -------
Loss on                     (6,974)        (3,852)      (10,826)            (6,362)          (30,169)
ordinary                 ---------      ---------
activities
before
taxation

Tax on loss       5                                        (504)              (150)              208
on ordinary
activities
                                                       --------            -------           -------
Loss on                                                 (11,330)            (6,512)          (29,961)
ordinary
activities
after
taxation

Minority                                                      -                (25)               30
interest -
equity
                                                       --------            -------           -------
Loss for the                                            (11,330)            (6,537)          (29,931)
period

Dividends -                                                   -                  -                 -
on equity
shares
                                                       --------            -------           -------
Transfer from                                           (11,330)            (6,537)          (29,931)
reserves                                               --------            -------           -------

Basic &           6
diluted loss
per ordinary
share
- before                                                  (14.3)   p          (7.0)   p        (21.1)  p
exceptional
items
- exceptional                                              (7.4)   p          (5.5)   p        (36.1)  p
items less
attributable
tax
                                                       --------            -------           -------
Basic &                                                   (21.7)   p         (12.5)   p        (57.2)  p
diluted loss                                           --------            -------           -------
per ordinary
share


The results in both years relate to continuing activities.

The notes at the end form part of these accounts.


GROUP BALANCE SHEET
at 30th June 2003

                                            30th June    30th June    31st Dec
                                                 2003         2002        2002
                                                £'000        £'000       £'000
Fixed assets
Tangible assets                                33,266       45,767      33,340
Investments                                        23           23          23
                                            ---------    ---------   ---------
                                               33,289       45,790      33,363
                                            ---------    ---------   ---------

Current assets
Stocks                                         30,172       37,300      35,688
Debtors                                        20,763       28,302      21,780
Cash at bank and in hand                        3,355        3,053       2,681
                                            ---------    ---------   ---------
                                               54,290       68,655      60,149
Current liabilities
Creditors - amounts falling due within one    (67,044)     (27,412)    (62,924)
year
                                            ---------    ---------   ---------
Net current (liabilities) / assets            (12,754)      41,243      (2,775)
                                            ---------    ---------   ---------

Total assets less current liabilities          20,535       87,033      30,588
Creditors-amounts falling due after more
than
one year                                            -      (31,856)          -
Provisions for liabilities and charges         (4,347)      (5,728)     (5,009)
                                            ---------    ---------   ---------
Net assets                                     16,188       49,449      25,579
                                            ---------    ---------   ---------

Capital and reserves:
Called up share capital                        13,076       13,076      13,076
Share premium account                          26,760       26,760      26,760
Revaluation reserve                               550          550         550
Capital redemption reserve                        300          300         300
Profit and loss account                       (25,142)       8,068     (15,717)
                                            ---------    ---------   ---------
Equity shareholders' funds                     15,544       48,754      24,969
Equity minority interest                          644          695         610
                                            ---------    ---------   ---------
Total capital employed                         16,188       49,449      25,579
                                            ---------    ---------   ---------

The notes at the end form part of these accounts.


CONSOLIDATED CASH FLOW STATEMENT
for the half year ended 30th June 2003

                                         First half    First half    Full year
                                               2003          2002         2002
                                 Note         £'000         £'000        £'000

Net cash (outflow) / inflow         7        (1,831)        1,638       (1,338)
from operating activities

Returns on investments and
servicing of finance
Interest received                                 -            46           58
Interest paid                                (1,714)       (1,464)      (3,160)
                                          ---------     ---------     --------
                                             (1,714)       (1,418)      (3,102)
                                          ---------     ---------     --------

Taxation
Taxation received                                65           169        1,090
Taxation paid                                  (130)         (176)        (760)
                                          ---------     ---------     --------
                                                (65)           (7)         330
                                          ---------     ---------     --------
Capital expenditure and
financial investment
Purchase of tangible fixed                   (1,418)       (1,876)      (4,571)
assets
Sale of tangible fixed assets                 1,787           103          516
                                          ---------     ---------     --------
                                                369        (1,773)      (4,055)
                                          ---------     ---------     --------

Acquisitions and disposals                        -            66            -

Financing
New bank loans                                2,171         5,219        3,715
Repayment of loans                                -        (2,793)      (2,715)
                                          ---------     ---------     --------
                                              2,171         2,426        1,000
                                          ---------     ---------     --------
                                          ---------     ---------     --------
(Decrease) / increase in cash                (1,070)          932       (7,165)
in the period                             ---------     ---------     --------


The notes at the end form part of these accounts.


OTHER FINANCIAL STATEMENTS
for the half year ended 30th June 2003

                                         First half    First half    Full year
                                               2003          2002         2002
                                              £'000         £'000        £'000

Statement of total recognised gains and
losses
Loss for the financial period               (11,330)       (6,537)     (29,931)
Currency translation differences on
foreign currency
net investments                               1,905         1,178          787
                                           --------      --------    ---------
Total gains and losses recognised in         (9,425)       (5,359)     (29,144)
the period                                 --------      --------    ---------

Historical cost profits

There is no material difference between
historical cost profits and those
reported in the profit and loss
account.

Reconciliation of movements in
shareholders' funds

Loss for the financial period               (11,330)       (6,537)     (29,931)
Currency translation differences on
foreign currency
net investments                               1,905         1,178          787
                                           --------      --------    ---------
Net decrease in shareholders' funds in       (9,425)       (5,359)     (29,144)
the period
Opening shareholders' funds                  24,969        54,113       54,113
                                           --------      --------    ---------
Closing shareholders' funds                  15,544        48,754       24,969
                                           --------      --------    ---------


The notes at the end form part of these accounts.



NOTES TO THE INTERIM FINANCIAL STATEMENTS

1. Preparation of interim financial statements

   The interim financial statements, which have not been audited or reviewed by
the auditors, have been   prepared on the basis of the accounting policies set
out in the Group's 2002 statutory accounts.The change   in accounting policiy
for deferred tax following the adoption of FRS 19, Deferred tax, had no impact
on the   Group accounts due to the availability of surplus tax losses brought
forward.  The statements were approved   by the Board of Directors on 24th
September 2003. The financial information set out above does not comprise  
statutory accounts within the meaning of the Companies Act 1985.

   The abridged financial information for 2002 is based on the statutory
accounts for that year, on which the   auditors have given an unqualified report
under S235 of the Companies Act 1985 which did not contain a   statement under
S237 (2) or (3) of the Act, and which have been filied with the Registrar of
Companies.



2. Turnover

Turnover represents sales by Group companies to third parties.

                                            First half       First half          Full year
                                                  2003             2002               2002
                                                 £'000            £'000              £'000
     Geographical destination
     analysis of Group turnover

     Continental Europe                         17,581           19,177             34,282
     Asia                                        4,640            6,727             11,948
     Australasia                                   698              640              1,381
     North and South America                    19,214           27,150             48,724
     Africa and the Middle East                  1,586              933              2,067
                                                ------          -------             ------
    
                                                43,719           54,627             98,402
     U.K.                                        1,711            1,650              5,397
                                                ------          -------             ------
     Total turnover                             45,430           56,277            103,799
                                                ------          -------             ------

     Divisional analysis of Group turnover
     Europe                                     20,916           22,642             42,626
     Asia Pacific                                5,144            6,613             12,653
     Americas                                   19,370           27,022             48,520
                                                ------           ------            -------
                                                45,430           56,277            103,799
                                                ------           ------            -------

3. Divisional analysis of Group operating loss

                           Before
                      Exceptional    Exceptional    First half    First half    Full year
                            items          items          2003          2002         2002
                            £'000          £'000         £'000         £'000        £'000
     Europe                (3,108)             -        (3,108)       (5,499)     (12,126)
     Asia Pacific          (1,048)             -        (1,048)          132       (1,381)
     Americas                (264)        (1,434)       (1,698)        1,515          706
     Group                   (925)        (1,602)       (2,527)         (859)      (2,336)
     services           ---------      ---------        ------       -------      -------
                           (5,345)        (3,036)       (8,381)       (4,711)     (15,137)
     Amortisation               -              -             -             -      (11,194)
     and impairment     ---------      ---------        ------       -------      -------
     review
     Operating             (5,345)        (3,036)       (8,381)       (4,711)     (26,331)
     loss               ---------      ---------        ------       -------      -------


 4.  Exceptional         Americas      Corporate         Total    First half    Full year
     items                                 costs    first half          2002         2002
                                                          2003
                            £'000          £'000         £'000         £'000        £'000
     Fixed asset                -              -             -          (200)           -
     write downs
     Impairment                 -          1,000         1,000             -       11,194
     review
     Stock                    589              -           589           260        2,257
     provisions
     Business                   -              -             -         1,723        1,493
     rationalisation    ---------      ---------        ------       -------      -------
     costs
     Charged as cost          589          1,000         1,589         1,783       14,944
     of sales           ---------      ---------        ------       -------      -------

     Bad debt                   -              -             -             -          157
     provisions
     Business                 845            602         1,447         1,100        3,282
     rationalisation    ---------      ---------        ------       -------      -------
     costs
     Charged as               845            602         1,447         1,100        3,439
     other operating    ---------      ---------        ------       -------      -------
     expenses

     Sale of land               -           (116)         (116)            -            -
     (Supertram)
     Profit on                  -           (672)         (672)            -            -
     disposal of        ---------      ---------        ------       -------      -------
     Australian
     property
     Charged as                 -           (788)         (788)            -            -
     exceptional        ---------      ---------        ------       -------      -------
     income

     Termination of             -          1,604         1,604             -            -
     interest swap
     Unamortised                -              -             -             -          506
     issue costs on     ---------      ---------        ------       -------      -------
     1999 $40.5m
     loan
     Charged as                 -          1,604         1,604             -          506
     interest           ---------      ---------        ------       -------      -------
     payable and
     similar
     charges
                        ---------      ---------        ------       -------      -------
             Total          1,434          2,418         3,852         2,883       18,889
                        ---------      ---------        ------       -------      -------


 5.  Tax on loss on ordinary           First half     First half     Full year
     activities
                                             2003           2002          2002
                                            £'000          £'000         £'000
     UK corporation tax
     Current tax on income for the              -              -             -
     period
     Adjustments in respect of prior            -              -           (72)
     periods                         ------------  -------------  ------------
                                                -              -           (72)
     Overseas tax
     Current tax on income for the            504            150          (112)
     period
     Adjustments in respect of prior            -              -           (58)
     periods                         ------------  -------------  ------------
     Total current tax                        504            150          (242)
                                     ------------  -------------  ------------

     Deferred tax:
     Origination and reversal of                -              -            34
     timing differences              ------------  -------------  ------------
                                                -              -            34

                                     ------------  -------------  ------------
     Total tax charged                        504            150          (208)
                                     ------------  -------------  ------------

 6.  Earnings per ordinary share
     Losses used in the earnings per
     share calculation are as
     follows:

     Loss for the financial year          (11,330)        (6,537)      (29,931)
     Exceptional items (less                3,852          2,884        18,889
     attributable tax)               ------------  -------------  ------------
     Loss before exceptionals              (7,478)        (3,653)      (11,042)
                                     ------------  -------------  ------------

     Weighted average number of        52,303,337     52,303,337    52,303,337
     shares

     Diluted earnings per share have
     been calculated for 2003 and
     2002 under FRS 14 and no
     dilution arises in either
     period.


 7.  Reconciliation of operating loss   First half    First half     Full year
     to net cash (outflow)/inflow from
     operating activities
                                              2003          2002          2002
                                             £'000         £'000         £'000

     Operating loss on ordinary             (7,593)       (4,711)      (26,331)
     activities before interest
     Fundamental reorganisation costs       (3,394)       (2,452)       (3,470)
     paid
     Depreciation of tangible fixed          1,625         1,854         3,662
     assets
     Impairment review                           -             -        11,194
     Stock writedown                           589          (200)        2,257
     Profit on sale of fixed assets           (715)          (41)          (97)
     Decrease in stock                       4,843         5,507         3,758
     Decrease/ (increase) in debtors         1,753        (2,829)        2,365
     Increase in creditors                     292         2,448         2,309
     Net increase in provisions                769         2,062         3,015
                                      ------------  ------------  ------------
     Net cash (outflow)/inflow from         (1,831)        1,638        (1,338)
     operating activities             ------------  ------------  ------------

 8.  Reconcilation of net cash
     (outflow) / inflow to movement in
     net debt

     (Decrease)/ increase in cash in        (1,070)          932        (7,165)
     the period
     Cash inflow from increase in           (2,171)       (2,426)       (1,000)
     debt                             ------------  ------------  ------------
     Change in net debt resulting from      (3,241)       (1,494)       (8,165)
     cash flows
     Translation differences                   301         1,542         2,756
                                      ------------  ------------  ------------
     Movement in net debt in the            (2,940)           48        (5,409)
     period

     Opening net debt                      (40,195)      (34,786)      (34,786)
                                      ------------  ------------  ------------
     Closing net debt                      (43,135)      (34,738)      (40,195)
                                      ------------  ------------  ------------



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