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Universal Salvage (UVS)

  Print      Mail a friend       Annual reports

Tuesday 20 July, 2004

Universal Salvage

Final Results

Universal Salvage PLC
20 July 2004

                             UNIVERSAL SALVAGE PLC

                              PRELIMINARY RESULTS
                         for the 52 weeks to 1 May 2004

                                   Key Points

   •Turnover of £48.4 million

   •Operating loss of £4.0 million before exceptional items

   •Gross margin declined from 24% to 18%

   •Exceptional charges of £5.1 million

   •Loss per share of 29.1 pence

   •Trading results affected by:

     - decline in prices for salvage vehicles (impact of Vehicle Identity Check
     - weaker than anticipated salvage vehicle volumes
     - higher than necessary cost base

   •New Chief Executive appointed in March - Nigel Sandy has substantial
    experience of waste and environmental services industry

   •Turnaround strategy being implemented, following full commercial,
    strategic and financial review of the business:
     - exceptional charges made
     - new banking facilities agreed
     - cost base to be realigned

Chairman, Alexander Foster, commented,

'I recognise that the last twelve months have led to a totally unacceptable
loss. However, we have an excellent new Chief Executive who is fully committed
to turning around the business and is in the process of strengthening the
management team.

The past is now behind us and by the time my tenure is up in December 2005, I
want to report to shareholders that the business is in good shape, returning to
profit, with service levels that make us the provider of choice in the
auto-salvage and disposal market.'


Universal Salvage plc                       T: 020 7448 1000 (today)
Nigel Sandy, Chief Executive                Thereafter: 01234 762283

Biddicks                                    T: 020 7448 1000
Katie Tzouliadis/ Kathryn van der Kroft



This has been a most difficult year for the Group. Our results reflect a
challenging trading period, particularly in the second half of the year.
However, they also reflect the steps we are taking under our new Chief
Executive, Nigel Sandy, to bring the Company back into profit. Our figures
therefore include significant exceptional charges we felt it appropriate to


Excluding exceptional items, the Group's trading result for the 52 weeks to 1
May 2004, was an operating loss of £4.0 million (2003: operating profit of £1.8
million) on turnover of £48.4 million (2003: £61.3 million). In taking steps to
address our trading position, we have made a number of exceptional charges.
These total £5.1 million (2003: £0.8 million) and the major part related to the
impairment of fixed assets, the revaluation of land and buildings and the costs
of reorganising the business. The statutory operating loss was £9.1 million
(2003: profit of £1.0 million).

During the period under review gross margin declined to 18% from 24% last year,
and basic loss per share was 29.1 pence (2003: earnings per share 1.1 pence).
Net assets decreased to £15.1 million (2003: £23.3 million). Net borrowings
increased to £10.3 million compared to £6.7 million last year, representing
gearing of 68% (2003: 29%).

Whilst we started the financial year in relatively confident mood, encouraged by
the new business we had won within our core salvage marketplace and in End of
Life Vehicles ('ELVs') and fee-based vehicle disposals, our confidence was
misplaced. Critically, trading was affected by volatility in salvage auction
prices. Weakness in auction results for salvage vehicles hit us particularly
hard over the third and fourth quarters, which represent our busiest periods.
The average sale price for salvage vehicles over the fourth quarter was 7% lower
than in the first quarter, equating to a reduction in average profit per unit
sold of around 25%. We believe the most significant factor behind the sharp
deterioration in the marketplace was the impact of the DVLA's new Vehicle
Identity Check ('VIC') scheme. The DVLA now requires vehicle registration
documents for repairable 'Category C' salvage, to be clearly marked with the
vehicle's accident history. This has undermined traders' confidence in resale
values of these types of vehicles and we have felt the impact at our auctions.
In addition, our trading results were affected by weaker than anticipated
volumes and the maintenance of a higher cost base in expectation of better
volumes and market conditions.

New banking facilities

On 19 July 2004, the Group signed new banking facilities with The Royal Bank of
Scotland plc ('RBS'). These facilities comprise £8 million of term loan and £7
million of overdraft and bridging loan facilities and certain ancillary
facilities, secured by the Group's property portfolio and by a debenture over
the rest of the Group's assets. At the same time, as a part of the fee structure
for these new facilities, the Company has issued West Register (Investments)
Limited, a subsidiary of RBS, with warrants to subscribe at par for up to
1,095,469 Ordinary shares of 10 pence each in the capital of the Company, which
represents 3.73% of the Company's existing issued share capital and outstanding
share options. The option is exercisable at any time during the next ten-year
period and the total number of shares the subject of the warrants will be
adjusted pro rata, in certain circumstances, to reflect future increases in the
share capital of the Company which is issued or which becomes the subject of
options. This arrangement has the benefit of retaining cash within the business
whilst also demonstrating the confidence of RBS in the future of the Group.


In light of the Group's poor financial performance, the Board is not proposing a
final dividend (2003: 1.3 pence per share). The total dividend for the year is
therefore 1.2 pence per share (2003: 2.5 pence per share).

The business

We are firmly committed to turning this business around and taking whatever
action is necessary to return it to profitability.

In January 2004, we were pleased to announce the appointment of Nigel Sandy to
the Board as Chief Executive designate and he took up the position on 1 March
2004, succeeding Martin Hynes. Nigel has substantial experience of the
environmental services and waste industries, having worked in the sector for the
past 14 years. He brings new skills and experience and is leading a complete
review of the business.

Nigel has initiated a commercial, strategic and financial review with an initial
step to cut the cost base substantially. With the benefit of hindsight, it is
clear that we should have been more aggressive in taking cost out so that the
Group's overheads were better aligned to the reduced throughput of vehicles.
This action was especially overdue in the light of our slower than anticipated
progress in replacing lost salvage volumes.

The Company will remain positioned to provide a full service in our chosen
market sectors which encompass various types of problem vehicles. These are
vehicles which cannot be handled or disposed of through the conventional
channels. Our core markets remain salvage vehicles, ELVs (including abandoned
cars) and fee-based vehicle disposals (principally low value, part-exchange

We have much work to do but we believe the Company's prospects remain positive.
The actions we are taking to reduce the cost base will ensure that we are
competitive and in good shape to turn the Company around and rebuild


I recognise that the last twelve months have led to a totally unacceptable loss.
However, we have an excellent new Chief Executive who is fully committed to
turning around the business and is in the process of strengthening the
management team.

The past is now behind us and by the time my tenure is up in December 2005, I
want to report to shareholders that the business is in good shape, returning to
profit, with service levels that make us the provider of choice in the
auto-salvage and disposal market.

Alexander N Foster


Introduction and review of core business

Having joined the Board of Universal in January 2004, on 1 March I took over the
role of Chief Executive from Martin Hynes. This is therefore my first report in
my new position.

For a business that has so much potential, 2004 was a year that disappointed. At
the beginning of the financial year in May 2003, the Group viewed the continuing
challenge of rebuilding lost vehicle salvage volumes with confidence, albeit
recognising that the process of restoring volumes was taking longer than first
anticipated. Over the first half of the year, we secured a number of new vehicle
salvage contracts, both with insurers and accident management companies. We also
extended our relationship with our largest insurance client, agreeing an
exclusive contract for salvage disposal. We made good progress with our two,
newer sources of income, ELVs (which include abandoned cars) and fee-based
vehicle disposals. At the start of the second half of the financial year,
therefore, whilst trading conditions over the summer had been difficult, we were
confident that the Group would continue to make progress. In addition, the
second half of the year is traditionally our busier period, given the seasonal
deterioration in weather conditions. Critically, we continued to maintain our
cost base at a level which anticipated higher levels of activity than those
which subsequently arose.

The second half of the year, however, proved to be very disappointing. Vehicle
salvage volumes were worse than expected and trading was hit by a sharp decline
in selling prices achieved for repairable salvage vehicles. The average profit
per unit sold at our vehicle salvage auctions deteriorated to unprecedented low
levels and remained volatile from month to month. We believe that the single
most important factor behind the decline in the value of vehicle salvage was the
introduction in April 2003 of the DVLA's Vehicle Identity Check ('VIC') scheme.
It requires all vehicle registration documents for 'Category C' salvage vehicles
(i.e. 'written-off' cars which are deemed to be repairable) to show clearly that
the vehicle had been accident-damaged and substantially repaired. This
requirement undermined resale value for these vehicles, which have in the past
provided us with better returns than non-repairable salvage vehicles. In
addition, we believe that the continuing fall in the real cost of new cars and
cheap credit added to volatility in auction prices.

The difficulties we experienced within our core vehicle salvage business were
not mirrored in our two newer, emerging business areas. These are ELVs
(incorporating abandoned cars) and fee-based vehicle disposals, and we made
encouraging progress in both activities.

Business development

Fee-based vehicle disposals (principally low value, part-exchange cars)
In 2002, the Company identified the auctioning of low value vehicles, especially
part-exchange cars, on a fee basis as a business opportunity. As specialists in
auctioning cars and also being equipped to dispose of problem vehicles, we felt
we offered a clear market advantage in being a 'one-stop' service. In addition,
increasing demand for new or nearly new cars was giving main franchise car
dealers difficulties in disposing of low value trade-ins.

We have had considerable success in this area and, over the year under review,
invested in indoor auction facilities at five of our sites, Chester, Sandtoft,
Sandwich, Sandy and Westbury. In January this year, we tested the format of
opening up our auctions to the public at our Sandwich branch and this has been
successful. We are now holding regular public auctions at all branches and
attracting private entries to supplement stock from trade sources. We are also
expanding our capability to dispose of vehicles through Internet auctions, which
enables us to access a wider audience. We believe there are opportunities to
continue to build our fee-based disposal business and will remain focused on the
niche market for cars over nine years old where approximately 2.5 million change
hands every year.

End of Life Vehicles (including abandoned cars)

ELVs, which include abandoned cars, represent an exciting area of growth for us.
In previous reports, we have highlighted the emerging opportunities for the
provision of ELV services. Tightening legislative obligations, aimed at reducing
landfill, promoting recycling and enforcing more environmentally acceptable
disposal methods, are driving change in the way these vehicles are handled and
disposed of.

The deadlines for the motor manufacturers to meet their new legislative
obligations under the EU End of Life Vehicle Directive are looming, which means
our ELV development team is very active. By July 2005, manufacturers will have
to publish plans for meeting their obligations to take-back cars they are
responsible for and which have reached the end of their life. From January 2006,
they will have to meet the 85% recycling requirements and, from January 2007,
comply fully with the new legislation.

Our negotiations are continuing with a number of motor manufacturers and we have
successfully reached agreement with Toyota and Daihatsu for interim ELV
arrangements. Universal has a number of competitive advantages to offer
including a network of authorised treatment sites, investment in processing
equipment, compliance procedures and administrative support.

During the year, we were approached by DEFRA to work in conjunction with the DTI
on a guidance note for depolluting ELVs. The joint work, 'Guidance on
Depolluting ELVs', has now been published and issued to all operators licensed
as an Authorised Treatment Facility ('ATF'). We are continuing to work with, and
act as a reference point, for the DTI.

In the first half, we signed seven new contracts with Local and Public
Authorities to handle the collection and disposal of abandoned cars. We have
since secured additional contracts with Local Authorities covering Bedfordshire,
Luton and Hertfordshire. The contracts are typically for a five-year term and
our contract with Luton Borough Council includes the collection of untaxed
vehicles. As tougher legislation on abandoned and untaxed vehicles comes into
force, we expect to handle increasing numbers of these cars.

The future

Stepping up into the role of Chief Executive in March has provided me with the
opportunity to take a fresh look at the Group and I initiated a complete review
of the business. The review considered the market opportunities, the processes
deployed, as well as the Group's assets and resources.

The most immediate need is to reduce the Group's cost base so that significant
reductions are achieved in the current financial year and beyond. A number of
measures have already been put into place and substantial cost will be removed
from the business as we 'mothball' certain sites. In addition, we have
identified surplus sites which we intend to dispose of. In April, following a
lengthy planning process, we secured permission for the residential
redevelopment of our site at Redbourn, Hertfordshire. This has greatly enhanced
its disposal value and we are in discussions with developers for its sale. We
also intend to dispose of excess land and buildings at Sandy in Bedfordshire in
due course.

I believe the Company is a good business, providing a unique range of services
within a market that is growing daily. At the same time, we have to recognise
the need to adapt to our changing circumstances and implement a turnaround
strategy. This strategy will focus on winning new business within each of our
business income streams in conjunction with realigning our cost base. The
actions we are taking to dispose of non-core sites and reduce the cost base will
place us on a surer footing as we go forward. Our target is to return the
business to acceptable levels of profitability and I am confident that, with the
support of our staff, we will achieve our set objectives.

Nigel Sandy
Chief Executive

For the 52 weeks to 1 May 2004

                        52 weeks       52 weeks      Total       53 weeks       53 weeks      Total
                        to 1 May       to 1 May       2004       to 3 May       to 3 May       2003
                            2004           2004                      2003           2003
             Note         Before    Exceptional                    Before    Exceptional
                     exceptional          items               exceptional          items
                           items       (Note 2)                     items       (Note 2)
                           £'000          £'000      £'000          £'000          £'000      £'000
                                                                 Restated       Restated
                          --------       --------    -------       --------       --------    -------

Turnover                  48,370              -     48,370         61,266              -     61,266

Cost of                  (39,467)           (69)   (39,536)       (46,202)          (188)   (46,390)
                          --------       --------    -------       --------       --------    -------

Gross profit               8,903            (69)     8,834         15,064           (188)    14,876

expenses                 (12,867)        (5,085)   (17,952)       (13,244)          (655)   (13,899)
                          --------       --------    -------       --------       --------    -------

(loss)/profit   2         (3,964)        (5,154)    (9,118)         1,820           (843)       977
                          ========       ========                  ========       ========

receivable                                              19                                        8
payable                                               (521)                                    (421)
                          --------       --------    -------       --------       --------    -------

on ordinary                                         (9,620)                                     564

Tax on
on                                                   1,493                                     (260)
                          --------       --------    -------       --------       --------    -------

on ordinary                                         (8,127)                                     304

Dividends       5                                     (336)                                    (687)
                          --------       --------    -------       --------       --------    -------

deficit                                             (8,463)                                    (383)
                          --------       --------    -------       --------       --------    -------

per             6                                    (29.1)p                                    1.1p
Ordinary share
- basic
per             6                                    (29.1)p                                    1.1p
Ordinary share
- diluted

Dividends per
Ordinary        5                                      1.2p                                     2.5p

The 2003 comparatives have been restated for exceptional items.
All operations of the Group are continuing throughout both periods and no
material operations were acquired or discontinued.

At 1 May 2004
                                            As at 1 May    As at 3 May
                                                   2004           2003
                                    Note                      Restated
                                                  £'000          £'000
                                                ---------     ----------

Tangible fixed assets                  3         26,296         31,676

Current assets
Stock                                             2,100          2,121
Debtors                                           3,552          2,831
Cash at bank and in hand                             12             11
                                                ---------     ----------
                                                  5,664          4,963

Creditors: amounts falling due
within one                                       (6,143)        (5,606)
year                                            ---------     ----------

Net current liabilities                            (479)          (643)
                                                ---------     ----------

Total assets less current                        25,817         31,033

Creditors: amounts falling due                  (10,327)        (6,694)
after more
than one year

Provisions for liabilities and         4           (379)        (1,044)
charges                                         ---------     ----------

Net assets                                       15,111         23,295
                                                ---------     ----------

Capital and reserves
Called up share capital                           2,826          2,811
Share premium account                             1,216          1,151
Capital redemption reserve                           30             30
Revaluation reserve                               4,941          4,791
Profit and loss account                           6,098         14,512
                                                ---------     ----------

Equity shareholders' funds             7         15,111         23,295
                                                ---------     ----------

For the 52 weeks to 1 May 2004
                                            52 weeks to    53 weeks to
                                                  1 May          3 May
                                                   2004           2003
                                                  £'000          £'000
                                                ---------     ----------

(Loss)/profit on ordinary activities             (8,127)           304
after taxation for the period
Unrealised surplus on revaluation of                199              -
properties                                      ---------     ----------
                                                ---------     ----------
Total recognised (losses)/gains                  (7,928)           304
since the last annual report
                                                ---------     ----------
For the 52 weeks to 1 May 2004
                                            52 weeks to    53 weeks to
                                                  1 May          3 May
                                                   2004           2003
                                    Note          £'000          £'000
                                                ---------      ---------
                                                ---------      ---------
Net cash (outflow)/inflow from         8         (1,346)         6,466
                                                ---------      ---------

Returns on investments and
servicing of finance
Interest received                                    19              8
Interest paid                                      (501)          (408)
Interest element of finance lease                     -             (2)
rentals                                         ---------      ---------
                                                ---------      ---------
Net cash outflow from returns on                   (482)          (402)
investments and servicing of
finance                                         ---------      ---------

Corporation tax paid                               (362)          (691)

Capital expenditure and
Payments to acquire tangible fixed                 (815)        (4,591)
Receipt of grants towards land                        -             20
Receipts from sales of tangible                       -             28
fixed assets                                    ---------      ---------
Purchase of own shares by the                         -           (319)
Salvage plc 2000 Employees' Share
Trust                                           ---------      ---------
                                                   (815)        (4,862)
                                                ---------      ---------

Equity dividends paid                              (698)        (1,392)
                                                ---------      ---------

Net cash outflow before financing                (3,703)          (881)
                                                ---------      ---------

Issue of share capital                               80             26
Capital element of finance lease                     (9)           (18)
rental payments
Bank and other loans drawn-down                   3,633          1,302
                                                ---------      ---------

Net cash inflow from financing                    3,704          1,310
                                                ---------      ---------

Increase in cash                       9              1            429
                                                ---------      ---------


    1.Basis of preparation

Except for the Group's early adoption in the year of UITF 38, Accounting for
ESOP Trusts, the accounting policies adopted are consistent with those in the
most recently published set of financial statements dated 3 May 2003.
Prior to 2004, shares owned by the Employee Trust were included in the balance
sheet at cost less provision for impairment. With the issue of UITF 38,
Accounting for ESOP Trusts, such shares are now held at cost and are taken as a
deduction from the profit and loss account reserves in arriving at shareholders'
funds. The 2003 balance sheet has been restated accordingly. There is no impact
on the 2003 and 2004 profit and loss account. The impact on the 2003 and 2004
balance sheet is to reduce fixed asset investments and net assets by £651,000.

    2.Operating (loss)/profit

                                            52 weeks to    53 weeks to
                                                  1 May          3 May
                                                   2004           2003
                                                  £'000          £'000
                                                ---------      ---------
Operating (loss)/profit is stated after

Depreciation of owned fixed assets                2,662          2,779
Depreciation of assets held under finance
leases and hire purchase contracts                    4             71
Operating lease rentals                             223            206
- land and buildings
- plant, machinery and motor vehicles               162            209
                                                ---------      ---------
                                                  3,051          3,265
                                                =========      =========
Exceptional items:
Impairment of owned fixed assets                  3,626            188
Costs of reorganising continuing                    596            541
Costs of renegotiating banking facilities           480              -
FSA costs                                           347              -
Legal costs in obtaining outline planning
permission for Redbourn site                        105             50
Costs relating to abortive site                       -             64
acquisitions                                    ---------      ---------
                                                  5,154            843
                                                =========      =========

The Group's borrowings were renegotiated in July 2004. The revised terms are as

   •a bank loan comprising a ten-year facility of £8,000,000, bearing
    interest at 1.25% over London Inter Bank Offered Rate (LIBOR);

   •an overdraft comprising a £3,000,000 15-month facility which bears
    interest at 1.25% over the Royal Bank of Scotland's base rate; and

   •a bridging loan of £4,000,000 for the period up to and including 30 June
    2005, which bears interest at 1.25% over the Royal Bank of Scotland's base

The bank loan included in these new facilities reduces by £83,333 per month
commencing June 2006, with a final reduction in June 2014.

During the year, the Group was subject to an FSA investigation and these costs
comprise the professional fees incurred of £257,000 and a related fine of

    3.Fixed assets

All freehold and leasehold land and buildings were valued by DTZ Debenham Tie
Leung, a firm of independent Chartered Surveyors, at 1 May 2004 on the basis of
existing use value in accordance with the Appraisal and Valuation Standards of
The Royal Institution of Chartered Surveyors. In accordance with FRS15, an
interim valuation will be carried out in 2007.
These revaluations have been incorporated into the financial statements and the
resulting revaluation adjustments have been taken to the revaluation reserve or
profit and loss account as appropriate in accordance with FRS15. The
revaluations during the 52 weeks to 1 May 2004 resulted in a charge to the
profit and loss account of £810,000 and a revaluation surplus of £199,000.
Following a review by the Directors of the value in use of certain elements of
the IT systems and plant & machinery, the carrying value of these assets has
been reduced. This review has resulted in impairment charges of £2,747,000 and
£69,000 respectively. Together with the land and building revaluation, a total
exceptional impairment charge of £3,626,000 has been made during the year.

    4.Provisions for liabilities and charges

                                 Restructuring    Deferred       Total
                                         £'000       £'000       £'000
                                      ----------  ----------  ----------

At 3 May 2003                                -       1,044       1,044
Charged/(credited) in the                  596      (1,044)       (448)
Utilised in the period                    (217)          -        (217)
                                      ----------  ----------  ----------
At 1 May 2004                              379           -         379
                                      ----------  ----------  ----------

The £379,000 restructuring provision in 2004 arises in respect of a
reorganisation commenced by the Group during the year. This reorganisation
involves the closure of two branches and the provision is required to cover the
operating losses up to the date of closure together with associated staff
redundancy costs. The provision is expected to be fully utilised during the
first half of 2004/2005.


                                              52 weeks       53 weeks
                                              to 1 May       to 3 May
                                                  2004           2003
                                                 £'000          £'000
                                             -----------    -----------
Equity dividends on Ordinary shares:
Interim paid 1.2p (2003: 1.2p)                     336            325
Final proposed nil (2003: 1.3p)                      -            362
                                             -----------    -----------
                                                   336            687
                                             -----------    -----------

In view of the loss for the period, the Directors are unable to recommend the
payment of a final dividend.

    6.(Loss)/earnings per share

(Loss)/earnings per share has been calculated on the loss on ordinary activities
after taxation for the period of £8,127,000 (2003: profit of £304,000) divided
by the weighted average number of Ordinary shares, excluding shares held by the
Universal Salvage plc 2000 Employees' Share Trust of 27,931,000 (2003:
The diluted earnings per share has been calculated on the loss on ordinary
activities after taxation for the period of £8,127,000 (2003: profit of
£304,000) divided by the weighted average number of Ordinary shares taking into
account all dilutive potential Ordinary shares of 27,931,000 (2003: 28,224,000).

 7. •Reconciliation of movement in equity shareholders' funds

                                            52 weeks to    53 weeks to
                                                  1 May          3 May
                                                   2004           2003
                                                ---------      ---------
                                                  £'000          £'000

Opening equity shareholders' funds as
previously reported                              23,946         24,303
Change in accounting policy: Investment in
own shares                                         (651)          (651)
                                               ---------      ---------
Opening equity shareholders' funds as            23,295         23,652
Issue of Ordinary share capital                      80             26
Revaluation of properties                           199              -
Retained deficit for the period                  (8,463)          (383)
                                                ---------      ---------
Closing equity shareholders' funds               15,111         23,295
                                                ---------      ---------

8. Reconciliation of operating loss to net cash outflow from operating
                                            52 weeks to    53 weeks to
                                                  1 May          3 May
                                                   2004           2003
                                                  £'000          £'000
                                                 --------       --------

Operating (loss)/profit                          (9,118)           977
Depreciation of tangible fixed assets             2,666          2,850
Impairment of tangible fixed assets               3,626            188
Loss/(profit) on disposal of tangible                 6             (1)
fixed assets
Decrease in stock (excluding transfers
between fixed assets and stock)                     118          2,107
(Increase)/decrease in debtors                     (421)         1,521
Increase/(decrease) in creditors due
within one year                                   1,777         (1,176)
                                                 --------       --------

Net cash (outflow)/inflow from operating
activities                                       (1,346)         6,466
                                                 --------       --------

    9.Reconciliation of net cash flow to movement in net debt

                                            52 weeks to    53 weeks to
                                                  1 May          3 May
                                                   2004           2003
                                                  £'000          £'000
                                                 --------       --------

Increase in cash in period                            1            429
Cash outflow from repayment of leases                 9             18
                                                 --------       --------
Cash inflow from increase in bank loans
and committed overdraft                          (3,633)        (1,302)
                                                 --------       --------

Movement in net debt in period                   (3,623)          (855)

Net debt at 3 May 2003                           (6,692)        (5,837)
                                                 --------       --------

Net debt at 1 May 2004                          (10,315)        (6,692)
                                                 --------       --------

    10. Analysis of changes in net debt

                                                   As at         As at
                                                   1 May         3 May
                                                    2004          2003
                                                   £'000         £'000
                                                  --------      --------

Cash at bank and in hand                              12            11
Finance leases                                         -            (9)
Bank loans and committed overdraft               (10,327)       (6,694)
                                                  --------      --------
                                                 (10,315)       (6,692)
                                                  --------      --------

    11. Report and accounts preliminary announcement

The Board of Directors approved the report and accounts and this preliminary
announcement on 19 July 2004. The auditors have completed their audit for the 52
weeks to 1 May 2004 and the preliminary announcement represents an extract from
these audited accounts, upon which the auditors have issued an unqualified
opinion. The report and accounts will be posted to shareholders in August 2004.
Further copies can be obtained from the Company's registered office at Acrey
Fields, Woburn Road, Wootton, Bedfordshire MK43 9EJ.

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

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