For immediate release: 2 May 2006
BUCKLAND GROUP PLC
("Buckland," the "Company" or the "Group")
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31st DECEMBER 2005
* Group restructuring complete
* Increased sales to �3,443,290 (2004: 2,957,083)
* Two thirds of �683,042 operating loss before goodwill amortisation relates
to discontinued operations and is therefore non-recurring
* Transfer of all remaining UK operations to Company's Bangkok manufacturing
facility scheduled within 10 weeks
* Restructured and re-located group expected to generate significant profits
in the second half of current year and beyond
Chairman's statement for the year ended 31 December 2005
I present the financial results for Buckland Group plc for the year ended 31
December 2005. During the year we undertook a fundamental restructuring of the
group's activities, closing the loss-making connectors business, reducing
significantly the cost base of the continuing operations in Thailand, and
acquiring DK Gas Components and commencing its transfer from the UK to Bangkok.
These actions have incurred a number of non-recurring costs which have
materially affected the 2005 results but following the restructuring, the group
is expected to generate significant profits in the second half of 2006 and
beyond.
The group results for 2005 show an operating loss, before amortisation of
goodwill and reorganisation costs, of � 683,042, of which � 440,102 relates to
discontinued operations ( 2004: loss � 443,061 ). Sales for the year were �
3,443,290 (2004: � 2,957,083). After amortisation of goodwill, reorganisation
costs and interest, the loss before tax was � 1,024,951 ( 2004: � 488,376) The
loss per share was 0.26p compared with a loss of 0.26p in 2004. No dividend is
proposed.
Review of Derlite, DK Gas Components and Euro Asia Connectors (`EAC')
Although 2005 was a very difficult year for the Group's Thai operations, all
the necessary actions have now been taken to return the business to
profitability . Last July we stopped making connectors for the consumer
electronics industry, laid off the workforce of EAC and organised the
realisation of that company's assets and liabilities. By the year end this
process had been largely completed, with the few remaining outstanding issues
being provided for in the 2005 accounts. In total the loss attributable to EAC
in 2005 was � 440,102.
In parallel with the closure of EAC, we have reduced the overall costs of
running the Thai facility by cutting total employee numbers to 128 at the year
end ( 2004: 358 ) and by surrendering the lease on half the factory space. This
resource level is sufficient to cope with the current manufacturing volumes of
Derlite and to absorb all the activities of DK Gas Components as their transfer
from the UK is completed.
As already advised to shareholders, we acquired the business of DK Gas
Components in February 2005. Our strategy is to transfer all its production to
Thailand and from that reduced cost base to seek to grow its sales and product
range in tandem with those of Derlite, the two businesses being highly
complementary. The transfer of DK Gas has been planned in three phases: the
first commenced last September and was completed before the year end; the
second phase began in January and has recently been completed successfully and
the final phase will be completed by the end of June. At that time the Redditch
factory will close and the group's UK operations thereafter will comprise a
small team to service the sales, technical support and logistics requirements
for Derlite and DK Gas in Europe.
Once the transfer of manufacturing is completed, the sharp reduction in DK Gas'
personnel costs and overheads will result in an annual saving of some � 600,000
on its combined cost of sales and administrative expenses, which in 2005
totalled � 2,143,280. A re-organisation charge of � 99,410 has been taken in
the 2005 accounts to cover redundancy and other costs associated with the
closure of the Redditch facility. The rationalisation of our Thai operations
means that administrative expenses from continuing operations of � 720,579 in
2005 are expected to reduce to around � 600,000 pa on a like-for-like basis in
2006.
Derlite and DK Gas maintained their market shares in 2005 but sales volumes'
were running slightly lower in the closing months of last year compared with
2004, as declining consumer confidence in our major markets of the UK and the
USA led to lower sales of cooking appliances, the most important market segment
for our products. Sales so far in 2006 have been running at the same underlying
rate as the second half of last year.
Both Derlite and DK Gas have made progress in developing new products,
particularly for the gas water heater market, and it is expected that these
will start to make a more significant contribution in the second half of 2006.
Balance sheet
In February 2005, 214,000,000 shares were issued to finance the acquisition of
DK Gas and a further 387,399,220 shares were issued last December to provide
additional working capital for the group and to pay off various outstanding
loans and other liabilities. As a result shareholders funds' at the year end
stood at � 463,714.
The Directors have decided that the goodwill arising on the acquisition of DK
Gas should be amortised over a ten year period and in addition have decided to
write the Derlite goodwill off over ten years. Derlite's goodwill had
previously been amortised over twenty years. The effect of this change has been
to incur an additional charge for the year of � 39,168. The total goodwill
amortisation charge for 2005 was � 171,450 ( 2004: � 17,875 ).
The heavy losses incurred in 2005 together with increased working capital
requirements to finance goods in transit between Thailand and Europe mean that
the group's liquidity position remains under pressure. The Directors are
currently examining the options for covering the anticipated additional funding
requirements by a combination of additional bank borrowings, loans and the
issue of new equity, in which the Directors would participate.
Outlook
Based on current internal forecasts, we expect that the Group should be
profitable in the second half of 2006; the first half of the year will see a
further, very much reduced loss as we incur the final costs of running parallel
production facilities in Redditch and Bangkok.
The prospects for the Group once the transfer of all manufacturing to Thailand
is completed remain very positive.
Patrick Rogers
Chairman
2 May 2006
For further information please contact,
Patrick Rogers,
Chairman
Tel. 07711 420 702
Ben Simons
Hansard Communications
Tel. 020 7245 1100
Consolidated profit and loss account for the year ended 31 December 2005
Note Continuing Acquired Discontinued Year ended Year ended
operations Operations operations 31 December 31 December
2005 2004
(Unaudited) (Audited)
� �
Turnover 1,120,908 1,984,775 337,607 3,443,290 2,957,083
Cost of sales (771,849) (1,513,893) (668,676) (2,954,418) (2,458,683)
Gross profit/ 349,059 470,882 (331,069) 488,872 498,400
(loss)
Administrative (720,579) (629,387) (156,646) (1,506,612) (1,029,754)
expenses
Other operating 16,225 - 47,613 63,838 70,418
income
Operating (280,369) 37,429 (440,102) (683,042) (443,061)
(loss)/profit
before
amortisation of
goodwill
Amortisation of (74,926) (96,524) - (171,450) (17,875)
Goodwill
Reorganisation 2 - (99,410) - (99,410) -
costs
Operating loss (355,295) (158,505) (440,102) (953,902) (460,936)
on ordinary
activities
before interest
Interest 218 97
receivable
Interest (71,267) (27,537)
payable and
similar charges
Loss on (1,024,951) (488,376)
ordinary
activities
before taxation
Tax on loss on 4 - -
ordinary
activities
Loss (1,024,951) (488,376)
transferred to
reserves
Loss per
ordinary share:
Basic 3 (0.26p) (0.26p)
Consolidated statement of total recognised gains and losses and
consolidated reconciliation of movements in shareholders' funds
for the year ended 31 December 2005
Year ended Year ended
31 December 31 December
2005 2004
(Unaudited) (Audited)
� �
Consolidated statement of total recognised gains and
losses
Loss for the year (1,024,951) (488,376)
Exchange translation loss on foreign currency 24,366 (53,887)
net investments in subsidiary undertakings
Total recognised gains and losses for the year (1,000,585) (542,263)
Consolidated reconciliation of movements in
shareholders' funds
Total recognised gains and losses (1,000,585) (542,263)
New ordinary share capital subscribed for and 1,414,497 -
allotted in the period,
including share premium (net of expenses)
Net reduction in equity shareholders' funds 413,912 (542,263)
Opening equity shareholders' funds 49,802 592,065
Closing equity shareholders' funds 463,714 49,802
Consolidated balance sheet at 31 December 2005
Note At At
31 December 2005 31 December 2004
(Unaudited) (Audited)
� � � �
Fixed assets
Intangible assets 1,247,852 318,313
Tangible assets 256,791 173,382
1,504,643 491,695
Current assets
Stocks 425,052 423,088
Debtors 937,668 331,243
Cash at bank and in hand 29,717 37,298
1,392,437 791,629
Creditors: amounts falling (2,324,585) (1,206,754)
due
within one year
Net current liabilities (932,148) (415,125)
Total assets less current 572,495 76,570
liabilities
Creditors: amounts falling (9,371) (26,768)
due
after more than one year
Provision for liabilities (99,410) -
and charges
463,714 49,802
Capital and reserves
Called up share capital 3,526,492 2,417,752
Share premium account 1,041,532 735,775
Profit and loss account (4,104,310) (3,103,725)
Equity shareholders' funds 463,714 49,802
Consolidated cash flow statement for the year ended 31 December 2005
Note Year ended Year ended
31 December 31 December
2005 2004
(Unaudited) (Audited)
� �
Net cash (outflow)/inflow from operating (657,039) 47,226
activities (see below)
Returns on investments and servicing of (71,049) (27,440)
finance
Taxation - (2,066)
Acquisitions (1,254,243)
Capital expenditure 24,689 (62,927)
Cash outflow before management of liquid (1,957,642) (45,207)
resources and financing
Financing 1,904,218 8,166
Decrease in cash (53,424) (37,041)
Reconciliation of net cash flow to movement in
net debt
Decrease in cash in the period (53,424) (37,041)
Cash outflow from decrease in debt (489,721) (8,166)
Change in net debt resulting from cash flows (543,145) (45,207)
Exchange movement 1,719 (6,653)
Movement in net debt in the period (541,426) (51,860)
Opening net debt (289,102) (237,242)
Closing net debt (830,528) (289,102)
Reconciliation of operating loss to net
cash inflow/(outflow) from operating
activities
Operating loss (953,902) (460,936)
Depreciation and impairment 176,532 191,095
Amortisation of goodwill 171,450 17,875
Reorganisation costs 99,410 -
Profit on sale of fixed assets (100,660) (560)
Decrease in stocks 317,464 48,558
(Increase)/decrease in debtors (606,425) 250,627
Increase/ in creditors 228,590 30,782
Other non cash operating adjustment 10,502 (30,215)
Net cash inflow/(outflow) from operating (657,039) 47,226
activities
Notes to the cash flow statement
(a) Gross cash flows 31 December 31 December
2005 2004
(Unaudited) (Audited)
� �
Returns on investments and
servicing of finance
Interest received 218 97
Interest paid (71,267) (27,537)
(71,049) (27,440)
Capital expenditure
Payments to acquire tangible fixed (160,945) (63,607)
assets
Receipts from sale of tangible 185,634 680
fixed assets
24,689 (62,927)
Financing
New ordinary share capital net of 1,414,497 -
expenses
Increase in bank loans and 483,942 14,058
other borrowings
Increase/(repayment) of finance 5,779 (5,892)
leases
1,904,218 8,166
(b) Analysis of At Cash Exchange At
changes in net debt movement
1 January Flow 31 December
(Unaudited) 2005
2005 (Unaudited)
(Unaudited)
(Audited)
� � � �
Cash in hand and at 37,298 (9,055) 1,474 29,717
bank
Bank overdrafts (409) (44,369) - (44,778)
36,889 (53,424) 1,474 (15,062)
Bank loans and
Other borrowings (300,918) (483,942) 1,168 (783,693)
Finance leases (25,073) (5,779) (923) (31,774)
Net (debt) (289,102) (543,145) 1,719 (830,528)
Notes to the preliminary announcement for the year ended 31 December 2005
1. Going concern
The Directors have reviewed the profit and loss and cash flow projections for
the Group for the twelve months ending 30 April 2007. Based on current
forecasts and assumptions, the Directors anticipate that there will be a
funding requirement, in excess of banking and loan facilities already in place,
during this period.
The Directors are currently examining the options for covering this anticipated
shortfall by a combination of additional bank borrowings, shareholders' loans
and additional equity funding. The Directors are of the opinion that adequate
additional facilities will be forthcoming to cover this requirement and
therefore, at the time of issuing this preliminary announcement, there is a
reasonable expectation that the Group will continue in operational existence
for the foreseeable future. In view of this, the directors believe that it
remains appropriate to prepare the financial statements on a going concern
basis.
This preliminary announcement does not include any adjustments that would
result from the going concern basis of preparation being inappropriate.
2. Reorganisation costs
As announced in December 2005, the Group is in the process of relocating all of
its UK manufacturing operations to Thailand. The reorganisation costs of �
99,410 comprise the costs of a redundancy programme and the costs of
transferring plant and equipment.
3. Loss per share
The calculations of basic loss per share are based on the loss for the year
attributable to ordinary shareholders of � 1,024,951 (2004: loss �488,376) and
the weighted average number of shares in issue during the year of 393,618,826
(2004:190,779,408).
4. Taxation
There is no taxation charge for the year due to the availability of eligible
losses.
5. The financial information set out in the announcement does not constitute
the company's statutory accounts for the years ended 31 December 2005 or 2004,
but is derived from those accounts. Statutory accounts for 2004 have been
delivered to the Registrar of Companies and those for 2005 will be delivered
following the Company's annual general meeting. The previous auditors have
reported on the 2004 accounts; their reports' were unqualified and did not
contain statements under the Companies Act 1985, s237(2) or (3).
END
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