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Wogen PLC (WGN)

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Friday 12 January, 2007

Wogen PLC

Final Results

Wogen PLC
12 January 2007

                                    Wogen plc
                            ('Wogen' or 'the Company')
Preliminary Announcement of Audited Results for the year ended 30 September 2006

Wogen plc, the international specialty metals and minerals trader, today
announces its results for the year ended 30 September 2006.


•  Turnover of £208m (2005: £218m)
•  Profit before tax of £1.7m (2005: £23.6m)
•  EPS of 2.8p (2005: 36.7p)
•  Proposed final dividend of £2.2 million (4.9p per share), making a
   total of £3.3 million (7.35p per share) for the year, in line with
   stated intention
•  Net assets of £30.2m (2005: £30.1m)

Allan Kerr, Chief Executive of Wogen plc said:

'After 5 years of spectacularly rising prices, the past year has been a year of
correction and many of the metals we deal in ended the year down in price,
having peaked in the first half of 2005. Despite some trading still being
difficult at present, new technological developments are driving increased
interest in a number of the metals we handle and we have positive expectations
for the new year.'

12 January 2007


Wogen plc                                                    020 7222 2171
Allan Kerr, Chief Executive Officer
Peter Watkins, Chief Operating Officer and Finance Director

Merlin Communications                                        020 7653 6620
Paul Downes
Lachlan Johnston


Dear Shareholder

This 2006 Preliminary Announcement of the Audited Results covers the first year
since Wogen plc joined the Alternative Investment Market (AIM) in October 2005.

Results for 2006

While turnover totalled £208.1 million (2005: £218.2 million), the exceptional
trading conditions of the previous financial year were not repeated and a
significant fall in gross margin from 19% to 4%, together with rising interest
rates, caused a fall in profit before taxation for the year to £1.7 million
(2005: 23.6 million). Net Assets increased to £30.2 million (2005: £30.1


In the AIM Admission Document, the Directors stated that they intended to
recommend a dividend of at least £3.3 million in respect of the financial year
ended 30 September 2006, representing 7.35p per ordinary share. In line with
that statement, an interim dividend of £1.1 million (2.45p per share) was paid
in July 2006, and the Board is recommending a final dividend of £2.2 million
(4.9p per share for payment following the AGM in March 2007). While the proposed
final dividend was not covered by the profit after taxation for the year, it
will not adversely affect trading. The Company has a strong financial base and
significant distributable reserves built up from successful trading in prior

The Directors intend, subject to unforeseen circumstances, to recommend the
payment of a core dividend at a similar level for the current financial year.


In a difficult and testing year, team spirit and loyalty have remained strong.
Additional staff have been employed in China and the Group now employs 57 people
(2005: 52). The Board expresses its appreciation and gratitude to everyone for
their hard work and support.


We believe turnover is likely to continue at current levels and we are focused
on improving the gross margin. Although some of the trading is still difficult
at present, opportunities are developing and we are cautiously optimistic for
the year ahead as a whole.

Richard Nelson

12 January 2007


After 5 years of spectacularly rising prices, the past year has been a year of
correction and many of the metals we deal in ended the year down in price,
having peaked in the first half of 2005. The steel industry alloys, in
particular Molybdenum and Vanadium, were affected with the increase in supply
being greater than the increase in demand.

One of the vital aspects of our business is our ability to anticipate rises and
falls in price and during the past year volatile and unpredictable trading
conditions made this difficult, something which has been evident in other areas
of commodity trading.

Nevertheless, the wide spread of metals we handle and the international reach of
our business helped to mitigate these conditions and we have returned a modest
profit to our shareholders. For the year ahead, we see a number of interesting
situations developing, for example those associated with jet engine (super
alloy) and new technology sectors.

Physical trading

Turnover and margins achieved on individual metals can vary significantly from
one year to the next and that has certainly been the case in the past year. Our
turnover in a number of metals has been maintained at a high level, but margins
have been drastically reduced or even become negative in some cases.

In the first part of this financial year both the carbon steel and the special
steel business experienced a major readjustment in both stocks and prices. A
significant part of our business is supplying the steel industry worldwide and
although our volumes and turnover maintained high levels our profitability was
severely hit.

A bright sector was Titanium where we won for the second time the Queen's Award,
on this occasion for Enterprise in International Trade. We also saw good results
in the trading of Antimony, Chromium, Tungsten and Platinum Group Metals.

Processing and transformation

Over the years Russia and China have been and continue to be important markets
for us. Developments in both markets have presented both challenges and
opportunities during the past year. In Russia, we are seeing a process of
consolidation within the economy and a drive to merge companies into single
world-class enterprises, a process which we continue to follow closely. In
China, restrictions have been placed on export conversion business in the
energy-intensive metallurgical industries and this has necessitated a
reassessment of some of the processing business which we have been handling over
the past few years.

Trading activities

We continue to look to broaden our spread of trading partners and areas,
selecting prime buyers and sellers in all parts of the world. In the course of
the past year, our traders have visited, one or more times, over 20 different
countries ranging from Bolivia to Ukraine pursuing our role in seeking out new
and emerging producers and consumers of specialty metals.

Contract values improved in Latin America, the CIS and Germany, reflecting the
improvement over the past year in those economies.


Wogen has always prized its business with, and presence in, China. During the
year our import business there almost doubled in the second half compared with
the first half and we expect growth to continue. Our export volumes from China
by contrast decreased in the second half, which represents a change from the
strong growth seen in recent years and reflects the Chinese Government's efforts
to restrict energy-intensive metallurgical industry exports.

We have upgraded our China presence and in particular, we are excited by the
expansion of the Shanghai office, moving to a new location twice the size. We
have increased our trading staff in China this year and expect to establish a
regional liaison office in South West China in 2007.

Our domestic trading subsidiary in Shanghai started trading during the year
after obtaining all the necessary regulatory approvals and booked a total of 52
contracts, making a positive contribution to overheads in its first year.
Trading volumes and profitability are expected to continue to increase in the
new year.

Russia and the CIS

Our business volume in Russia and the CIS remained steady and we appointed a
representative to open a new office in Zaporozhye, in the heart of the eastern
Ukrainian industrial belt. The process of consolidation in Russian industry in
particular has led us to focus more on new and emerging customers and a number
of new relationships have been established successfully. It has also been
noticeable that some of the business with Russia and the CIS which was handled
by offshore companies has been moving back onshore.

A success in the course of the year has been the development of the business
with the Ukraine. New businesses with the Central Asian republics, particularly
Kazakhstan, have also been built during the year and we are looking to build on
these in the course of the next year.


In April 2006, as planned and in anticipation of the growth of the Japanese
economy, we reopened our Tokyo office with the transfer there of one of our
London trading directors. We are optimistic that our business with Japan will
develop over the next year as the economy there continues its expansion.

Other markets and economies

Business with India remained steady. We developed a new agency in Romania and
saw good growth of business with Poland and Slovenia. We are making more effort
in Korea and Taiwan, coupled with the development of our Hong Kong office.

Employee development and retention

We currently employ 57 staff, of which half are in China. We are developing the
trading skills and abilities of our younger staff. This is done through a
mixture of hands-on trading experience and travel, generally together with more
experienced traders. We have also initiated a training programme whereby younger
staff from overseas offices spend 1-2 months in the London office.

Current trading and prospects

Our current strategy is to build on the areas, such as China, where we have a
competitive edge and to continue the development of our geographical reach to a
number of new countries. We continue to look at developing relationships with
the many new producers of our metals which are emerging as a result of buoyant
prices over the past few years. We will focus on the businesses with the best
returns and reduce those where turnover is not matched by profitability.

Despite some trading still being difficult at present, new technological
developments are driving increased interest in a number of the metals we handle
and we have positive expectations for the new year.

Allan Kerr
Chief Executive Officer

12 January 2007

for the year ended 30 September 2006

                                 Notes          2006           2005
                                               £'000          £'000
                                                       (as restated)*

Turnover                                     208,113        218,194
Cost of sales                              (199,793)      (176,516)
                                            ________      _________
Gross profit                                   8,320         41,678
Net operating expenses                       (5,467)       (17,793)
                                            ________      _________
Operating profit                               2,853         23,885
Other interest receivable and                    191            381
similar income
Interest payable and similar                 (1,350)          (684)
charges                                     ________       ________ 

Profit on ordinary activities                  1,694         23,582
before taxation

Tax on profit for the year                     (462)        (7,115)
                                           _________      _________
Profit on ordinary activities                  1,232         16,467
after taxation                             =========      =========

Earnings per share - basic and     2            2.8p          36.7p
diluted                                    =========      ========= 

* Restated for accounting policy changes see Note 1

as at 30 September 2006

                               Notes     £'000     2006       £'000        2005
                                                  £'000                   £'000
                                                                   (as restated)
Fixed assets
Tangible assets                            620                  520
Investments                                 99                   99
                                        ______              ______
                                                    719                    619

Current assets
Stocks                                  37,530               42,742
Debtors                                 18,029               17,859
Investments                                  -                   25
Cash at bank                               791                1,168
                                       _______              _______
                                        56,350               61,794
Creditors: amounts falling
due within one year                    (26,969)             (32,454)
                                       _______              _______

Net current assets                               29,381                 29,340
                                                _______               _______

Total assets less current                        30,100                 29,959

Provisions for liabilities                        (221)                  (146)
and charges
                                                _______              _______

Net assets excluding pension                     29,879                29,813

Pension asset                                       368                   315
                                                _______              _______

Net assets including pension                     30,247                30,128
                                                =======              =======

Capital and reserves
Called up share capital                           2,245                 2,245
Share premium account                                 2                     2
Capital redemption reserve                          400                   400
Capital reserve                                      87                    87
Revaluation reserve                                 181                   181
Profit and loss account                          27,332                27,213
                                                _______               _______

Shareholders' funds             3                30,247                30,128
                                                =======               =======

for the year ended 30 September 2006

                                             2006               2005
                                    Notes   £'000     £'000    £'000     £'000

Net cash (outflow)/inflow from
operating activities                  4                (469)            17,036

Returns on investment and
servicing of finance
Interest received                              35                  2
Other finance income                          135                  -
Interest paid                              (1,350)              (684)
                                           ______             ______
                                                     (1,180)              (682)

Taxation paid                                        (4,733)            (5,704)

Capital expenditure and financial
Sale of fixed asset investments                 -                 44
Sale of tangible fixed assets                  10                 37
Purchase of tangible fixed assets            (199)               (71)
                                           ______             ______
                                                       (189)                10

Dividends paid                                       (1,100)            (2,986)

Management of liquid resources
Sale of current asset investments                        17                153
                                                     ______             ______
(Decrease)/increase in cash in the
year                                                 (7,654)             7,827
                                                     ======             ======


1. Basis of Preparation

The financial statements have been prepared under the historical cost convention
as modified by the revaluation of short leasehold properties and in accordance
with applicable accounting standards in the United Kingdom. The principal
accounting policies of the company have remained unchanged from those set out in
the company's 2005 annual report and financial statements, except that the group
has adopted for the first time:

-   FRS 17 'Retirement benefits' (in full this year - see note 3),
-   FRS 20 'Share-based payment'.
-   FRS 21 'Events after the balance sheet date',
-   FRS 22 'Earnings per share',
-   FRS 25 'Financial Instruments: Disclosure and Presentation'
    (presentation requirements only),
-   FRS 28 'Corresponding amounts'

(i) FRS 17 'Retirement benefits'

The group has adopted FRS 17 'Retirement benefits', which replaces SSAP 24
'Accounting for pensions'. Contributions to the group's defined benefit pension
scheme were charged to the profit and loss account so as to spread the cost of
pensions over employees' expected working lives with the group. FRS 17 requires
that the pension scheme surplus or deficit is recognised in full.

The effect of this accounting policy change on the comparatives is that net
assets have been increased by £315,000, profit for the year after taxation has
been increased by £266,000 and additionally within the statement of recognised
gains and losses there is a net gain of £49,000. Had this accounting policy not
changed, current year net assets would have been £368,000 lower, profit for the
year after taxation would have been £15,000 lower and gains of £38,000 within
the statement of recognised gains and losses would not have been recognised.

(ii) Other prior year reclassifications

Prepaid cost of sales amounting to £1,005,000 for the year ended 30 September
2005 which were previously included under Trade Debtors have been reclassified
as Stock. The Directors are of the opinion that this is a more appropriate
treatment. This adjustment does not affect the Net Assets or profit for any of
the two years shown.

The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 September 2006 and 2005, but is
derived from those accounts. Statutory accounts for 2005 have been delivered to
the Registrar of Companies and those for 2006 will be delivered following the
Company's Annual General Meeting. The Auditors have reported on those accounts;
their reports were unqualified and did not contain statements under the
Companies Act 1985, sections 237(2) or (3).

2. Earnings per share

Basic earnings per share for the year ended 30 September 2006 has been
calculated on the profit after taxation of £1,232,000 (2005: £16,467,000), and
on a weighted average number of 44,592,115 (2005: 44,905,000) shares in issue
during the year.

Diluted earnings per share have been calculated on a weighted average number of
44,639,090 (2005: 44,905,000) shares to account for share options in issue
during the year which would have had a dilutive effect on the earnings per
share. All share options in issue have been used in the diluted earnings per
share calculation.

3. Reconciliation of movements in shareholders' funds

                                              2006            2005
                                             £'000           £'000
                                                      (as restated)
Profit for the year after                    1,232          16,467
Dividends                                   (1,100)         (2,986)
Other recognised gains and                     (13)            177
                                            ______          ______ 
Net addition to shareholders'                  119          13,658
Opening shareholders' funds                 30,128          16,470
                                            ______          ______ 
Closing shareholders' funds                 30,247          30,128
                                            ======          ======
Opening shareholders' funds as              29,813          16,470
originally stated
Pension asset                                  315               -
                                           _______        _______
Opening shareholders' funds as              30,128         16,470
                                           =======        =======

4. Reconciliation of operating profit to net cash (outflow)/inflow from
   operating activities

                                              2006            2005
                                             £'000           £'000
                                                      (as restated)
Operating profit                             2,853          23,885
Depreciation                                    74              49
Currency translations                         (22)              18
Decrease/(increase) in stocks                5,212         (14,621)
Decrease/(increase) in debtors                 124            (755)
(Decrease)/increase in creditors            (8,779)          8,557
Net loss/(profit) on sale of                    8             (87)
current asset investments 
Net loss/(profit) on sale of                    -             (31)
fixed asset investments
Net profit on sale of fixed                   (14)            (29)
Net movement on dilapidation                   75              50
provision                                  ______          ______ 
Net cash (outflow)/inflow from               (469)         17,036
operating activities                     
                                           ======          ======

5. Analysis of changes in net debt

                               At                                           At
                     30 September    Cash Flows         Other     30 September
                             2005                   movements             2006
                            £'000        £'000          £'000            £'000
Cash at bank                1,168         (377)             -              791
Bank overdrafts           (13,515)      (7,277)             -          (20,792)
                            ______      ______         ______           ______
                          (12,347)      (7,654)             -          (20,001)
Other liquid                   25          (17)            (8)               -
resources                  _______       ______        ______           _______ 
                          (12,322)      (7,671)            (8)         (20,001)
                          ========      =======        =======          =======

6. Annual report and accounts

The annual report and accounts for the year ended 30 September 2006 will be
posted to shareholders shortly. Additional copies will be available from the
Company Secretary at the Company's registered office 4 The Sanctuary,
Westminster, London SW1P 3JS and may be viewed on the Company's website at

                      This information is provided by RNS
            The company news service from the London Stock Exchange