RNS Number:2701Z
Buckland Group PLC
29 June 2007
BUCKLAND GROUP PLC
Report and financial statements
for the year ended 31 December 2006
Chairman's statement for the year ended 31 December 2006
I present the financial results for the Buckland Group plc for the year ended 31
December 2006.
At the half year we reported a loss of #148,397. The second half shows a loss of
#147,494, but reflects an improvement in trading performance as this includes a
charge of #146,221 for exceptional items.
The full year therefore shows a Group loss of #295,891 (2005: loss of
#2,029,416). Sales at #2,752,230 (2005: #3,443,290) are down mainly due to
discontinued operations. The loss per share improved to 0.036p compared with a
loss of 0.51p in 2005. No dividend is proposed.
At the end of 2006 the majority of the Board became dissatisfied with the
unsatisfactory performance and direction of the Group and decided to reassess
the management of the Group and its future strategy. The result was a change in
the composition of the Board during the first half of 2007 and the
implementation of a new strategy.
The new strategic plan required the Group to raise further funds and to improve
the balance sheet by converting debt and loan notes to equity. The fund raising
of #900,000 (as detailed in the circular to shareholders on 6 June 2007) will
allow the Group to plan production more effectively and build sufficient stocks
to fill the supply chain. This will allow order shipment to the customer by sea
container, which will reduce airfreight significantly, saving in the region of
#130,000 per year based on current levels of production.
The concentration in Thailand of all production and administrative functions, in
the first half of 2007, and the closure of all UK based operations, except for a
European sales presence and a minimal head office function, has further reduced
costs and improved efficiency. It is anticipated that as a result of the changes
there will be further improvement in the Group's performance in the six months
to June 30 2007.
The new funding will also enable an increase in sales activity with a focus on
moving into new markets where we can leverage the benefits of an economic labour
force and our expertise in the manufacture of small components.
The prospects for the group are now very positive.
Philip E Palmer
Chairman
June 2007
Consolidated profit and loss account for the year ended 31 December 2006
Note Continuing Discontinued Year ended Year ended
operations operations 31 December 31 December
2006 2005
# #
Turnover 2 2,752,230 - 2,752,230 3,443,290
Cost of (2,047,723) (322) (2,048,045) (2,954,418)
sales
-------- ---------- --------- ----------
Gross
profit/(loss) 704,507 (322) 704,185 488,872
Administrative
expenses (1,170,428) (13,968) (1,184,396) (1,607,272)
Exceptional
items 6 162,467 61,418 223,885 (1,004,465)
Other
operating
Income - - - 63,838
-------- ---------- --------- ----------
Operating
(loss)/profit
on ordinary
activities
before
interest 7 (303,454) 47,128 (256,326) (2,059,027)
-------- ----------
Profit on
disposal of
fixed assets - 100,660
Interest
receivable 8 33 218
Interest
payable and
similar
charges 9 (39,598) (71,267)
--------- ----------
Loss on
ordinary
activities
before and
after
taxation
transferred to
reserves 12,24 (295,891) (2,029,416)
========= ==========
(Loss)/Profit
per ordinary
share:
Basic and
diluted 11 (0.04 p) 0.00 p (0.04p) (0.51p)
========== ========== ========= ==========
The accompanying notes form an integral part of these financial statements.
Consolidated statement of total recognised gains and losses and
consolidated reconciliation of movements in shareholders' funds
for the year ended 31 December 2006
Year ended Year ended
31 December 31 December
2006 2005
# #
Consolidated statement of total recognised gains
and losses
Loss for the year (295,891) (2,029,416)
Exchange
translation loss
on foreign
currency
net
investments in
subsidiary
undertakings (35,701) 24,366
--------- ----------
Total recognised
loss for the year (331,592) (2,005,050)
========= ==========
Consolidated reconciliation of movements in
shareholders' funds
Total recognised
loss (331,592) (2,005,050)
New ordinary share
capital subscribed
for and allotted
in the period,
including share
premium (net of
expenses) 50,000 1,414,497
--------- ----------
Net reduction in
equity
shareholders'
funds (281,592) (590,553)
Opening equity
shareholders'
funds (540,751) 49,802
--------- ----------
Closing equity
shareholders'
(deficit)/funds (822,343) (540,751)
========= ==========
The accompanying notes form an integral part of these financial statements.
Consolidated balance sheet at 31 December 2006
Note At At
31 December 2006 31 December 2005
# # # #
Fixed assets
Intangible assets 13 - 243,387
Tangible assets 14 116,405 256,791
-------- --------
116,405 500,178
Current assets
Stocks 16 259,571 425,052
Debtors 17 534,490 937,668
Cash at bank and 26b 7,245 29,717
in hand -------- --------
801,306 1,392,437
Creditors:
amounts falling
due 18 (1,624,054) (2,324,585)
within one year -------- --------
Net current (822,748) (932,148)
liabilities -------- --------
Total assets less
current (706,343) (431,970)
liabilities
Creditors:
amounts falling
due
after more than 19 (116,000) (9,371)
one
year
Provision for
liabilities 20 - (99,410)
and charges
-------- --------
Net liabilities (822,343) (540,751)
======== ========
Capital and
reserves
Called up share 23 3,533,397 3,526,492
capital
Share premium 24 1,084,627 1,041,532
account
Profit and loss 24 (5,440,367) (5,108,775)
account -------- --------
Shareholders' (822,343) (540,751)
deficit ======== ========
The accompanying notes form an integral part of these financial statements.
Company balance sheet at 31 December 2006
Note At At
31 December 2006 31 December 2005
# # # #
Fixed assets
Investments 15 162 162
Current assets
Debtors 17 126,842 877,996
Cash at bank and in - 4,882
hand -------- --------
126,842 882,878
Creditors: amounts
falling
due 18 (644,626) (577,038)
within one year -------- --------
Net current
(liabilities)/ (517,784) 305,840
assets -------- --------
Total assets less
current (517,622) 306,002
liabilities
Creditors: amounts
falling
due
after more than one 19 (116,000) -
year
-------- --------
Net assets/ (633,622) 306,002
(liabilities) ======== ========
Capital and
reserves
Called up share 23 3,533,397 3,526,492
capital
Share premium 24 1,084,627 1,041,532
account
Profit and loss 24 (5,251,646) (4,262,022)
account -------- --------
Shareholders'
(deficit)/funds (633,622) 306,002
======== ========
Consolidated cash flow statement for the year ended 31 December 2006
Note Year ended Year ended
31 31 December
December 2005
2006
# #
Net cash
outflow from
operating
activities
(seebelow) (702,293) (657,039)
Returns on
investments
and servicing
of finance 26a (39,565) (71,049)
Taxation - -
Capital
expenditure 26a (14,509) 54,689
Acquisitions 26a - (1,254,243)
--------- ---------
Cash outflow
before
management of
liquid
resources and
financing (756,367) (1,927,642)
Financing 26a 659,217 1,874,218
--------- ---------
Decrease in
cash (97,150) (53,424)
========= =========
Reconciliation of net cash flow to movement in 26b
net debt
Decrease in
cash in the
period (97,150) (53,424)
Cash inflow
from increase
in debt (609,217) (459,721)
Non cash
movements 656,559 (30,000)
--------- ---------
Change in net
debt resulting
from cash
flows (49,808) (543,145)
Exchange
movement - 1,719
--------- ---------
Movement in
net debt in
the period (49,808) (541,426)
Opening net
debt (830,528) (289,102)
--------- ---------
Closing net
debt (880,336) (830,528)
========= =========
Reconciliation of operating loss to net
cash inflow/(outflow) from operating
activities
Operating loss (256,326) (2,059,027)
Depreciation 95,658 176,532
Amortisation
of goodwill 35,749 171,450
Impairment of
goodwill 207,639 1,004,465
(Utilisation)/
Movement on
provision for
restructuring
costs (99,410) 99,410
Closure of
subsidiaries (431,524) -
Loss on sale
of fixed
assets 9,721 -
Decrease in
stocks 122,374 317,464
Increase in
debtors (318,041) (606,425)
Increase/(decr
ease) in
creditors (31,275) 228,590
Other non cash
operating
adjustment (36,858) 10,502
--------- ---------
Net cash
outflow from
operating
activities (702,293) (657,039)
========= =========
The accompanying notes form an integral part of these financial statements.
Notes forming part of the financial statements for the year ended 31 December
2006
1 Accounting policies
The financial statements have been prepared under the historical cost convention
and are in accordance with applicable United Kingdom accounting standards. The
principal accounting policies of the Group are set out below. In accordance with
Financial Reporting Standard ('FRS') 18 "Accounting policies" the Group has
reviewed its accounting policies and estimation techniques and consider that
these policies are the most appropriate.
Turnover
Turnover represents supplies of components used in consumer electronics products
and gas ignition systems to third parties, excluding Value Added Tax or local
sales tax where appropriate. Turnover is recognised upon delivery and its
treatment is in line with FRS 5.
Basis of consolidation
The group has used the acquisition method of accounting to consolidate the
results of subsidiary undertakings. The results of subsidiary undertakings are
included in the group results from the date of acquisition. The consolidated
financial statements incorporate the financial statements of Buckland Group plc
and all of its subsidiary undertakings made up to 31 December 2006. Subsidiaries
are consolidated until they cease to be under the control of the Group.
Goodwill
Goodwill arising on an acquisition of a subsidiary undertaking is the difference
between the fair value of the consideration paid and the fair value of the
assets and liabilities acquired. It is amortised through the profit and loss
account over the directors' estimate of its useful economic life from the date
of acquisition. Any permanent diminutions in value are written off.
Valuation of investments
Investments held as fixed assets are stated at cost less any amounts written off
in respect of permanent diminution in value.
Depreciation
Depreciation is provided to write off the cost less estimated residual value, on
a straight line basis, of all fixed assets evenly over their expected useful
economic lives. Asset lives are as follows:
Leasehold improvements - 5 years
Fixtures and fittings and equipment - between 3 and 10 years
Plant, Machinery and Motor vehicles - between 3 and 5 years
Financial Instruments
The group does not use derivative financial instruments. Financial assets are
recognised in the balance sheet at the lower of cost and net realisable value.
Income and expenditure arising on financial instruments is recognised on the
accruals basis, and credited or charged to the profit and loss account in the
financial period to which it relates.
Foreign currency
Foreign currency transactions of individual companies are translated at the
rates ruling when they occurred. Foreign currency monetary assets and
liabilities are translated at the rates ruling at the balance sheet dates. Any
differences are taken to the profit and loss account.
The profit and loss accounts of foreign subsidiary undertakings are translated
into sterling at the average rate of exchange for the period. Assets and
liabilities of foreign subsidiary undertakings are translated into sterling at
the rates of exchange ruling at the balance sheet date. Differences on exchange
arising from the translation of the opening net investment in subsidiaries are
taken directly to reserves. All other exchange differences are dealt with
through the profit and loss account.
1 Accounting policies (continued)
Product research and development
Product research and development costs are charged to profit and loss account in
the period in which the expenditure is incurred.
Stocks
Stocks are valued at the lower of cost and net realisable value. Cost is
calculated as follows:
Raw materials - purchase cost on a first in, first out
basis.
Work in progress and finished - cost of raw materials and labour together
goods with attributable overheads
Net realisable value is based on estimated selling price less additional costs
to completion and disposal.
Deferred taxation
Deferred tax has been provided in accordance with FRS 19.
Deferred tax is recognised on all timing differences where the transactions or
events that give the group an obligation to pay more tax in the future, or a
right to pay less tax in the future, have occurred by the balance sheet date.
Deferred tax assets are recognised when it is more likely than not that they
will be recovered. Deferred tax is measured using rates of tax that have been
enacted or substantially enacted by the balance sheet date.
Leased assets
Assets acquired under hire purchase contracts and finance leases are capitalised
in the balance sheet. The corresponding leasing commitments are shown as amounts
payable to the lessor. Depreciation on the relevant assets is charged to the
profit and loss account.
Lease payments are analysed between capital and interest components. The
interest element of the payment is charged to the profit and loss account over
the period of the lease and is calculated so that it represents a constant
proportion of the balances of capital repayments outstanding. The capital
element reduces the amounts payable to the lessor.
Rentals paid under operating leases are charged to the profit and loss account
on a straight line basis over the lease period.
Retirement benefits
The company operates a defined contributions pension scheme. The pension costs
charged against operating profits are the contributions payable to a foreign
scheme in respect of the accounting period.
Invoice Discounting
The Group discounts a proportion of its trade debts. The accounting policy is to
include trade debt within trade debtors due within one year and record cash
advances within creditors due within one year.
Discounting fees and interest are charged to the profit and loss account when
incurred. Bad debts are borne by the Group and are charged to the profit and
loss account when incurred.
2 Turnover, profit, net assets and other operating income
Turnover is related to the manufacture of components used in gas cooking and gas
heating appliances.
An analysis by geographical market follows:
Year ended 31 December Year ended
31 December
2006 2005
Turnover by origin # #
Europe 906,894 1,984,775
Asia 1,845,336 1,458,515
--------- ---------
2,752,230 3,443,290
========= =========
Year ended Year ended
31 December 31 December
2006 2005
Turnover by destination # #
Europe 1,844,947 2,776,658
Rest of the World 907,283 666,632
--------- ---------
2,752,230 3,443,290
========= =========
Loss before tax and net assets relating to each major geographical market are
not disclosed as, in the opinion of the directors, their disclosure would be
seriously prejudicial to the interests of the group.
An analysis by segment follows:
Year ended 31 Year ended
December 31
December
2006 2005
Turnover # #
Electronic Components - 337,607
Gas Ignition Equipment 2,752,230 3,105,683
--------- ---------
2,752,230 3,443,290
========= =========
Year ended 31 Year ended
December 31
December
2006 2005
Operating loss on ordinary activities before # #
interest
Electronic Components - (540,762)
Gas Ignition Equipment (256,326) (1,518,265)
--------- ---------
(256,326) (2,059,027)
========= =========
Year ended 31 December Year ended
31 December
2006 2005
Net liabilities # #
Electronic Components - (72,888)
Gas Ignition Equipment (822,343) (467,863)
--------- ---------
(822,343) (540,751)
========= =========
3 Corresponding figures for discontinued operations
Comparative figures for the 2005 performance of the activities discontinued in
2005 and 2006 are set out below:
Year ended 31 December 2005
Continuing Discontinued in 2005 Total
# # #
Turnover 3,105,683 337,607 3,443,290
Cost of sales (2,285,742) (668,676) (2,954,418)
--------- ---------- ---------
Gross profit 819,941 (331,069) 488,872
Administrative expenses (1,441,567) (1,170,170) (2,611,737)
Other operating income 16,225 47,613 63,838
--------- ---------- ---------
Operating loss on ordinary
activities before interest (605,401) (1,453,626) (2,059,027)
========= ========== =========
4 Employees
Group Company
Year ended Year ended Year ended Year ended
31 31 December 31 31
December 2005 December December
2006 2006 2005
Staff costs excluding # # # #
directors consist of:
Wages and
salaries 550,807 1,179,937 - -
Pension costs 3,114 4,364 - -
Social
security costs 20,735 60,568 - -
--------- --------- --------- ---------
574,656 1,244,869 - -
========= ========= ========= =========
The average monthly number of employees of the group, excluding directors,
during the year was as follows:
Group Company
Number Number Number Number
2006 2005 2006 2005
Manufacturing 154 245 - -
Sales 2 4 - -
Administration 6 9 - 3
Research and
development 3 5 - -
--------- ---------- --------- ---------
165 263 - 3
========= ========== ========= =========
5 Directors' emoluments
Year ended Year ended
31 December 31 December
2006 2005
# #
Fees 136,000 119,286
========= =========
Directors fees include payments to third parties amounting to #76,218
No director receives contributions to a pension scheme.
6 Exceptional items
Year ended Year ended
31 December 31 December
2006 2005
# #
Impairment of goodwill (207,639) (1,004,465)
Gain on cessation of
subsidiaries. 431,524 -
--------- ---------
223,885 (1,004,465)
========= =========
In view of the substantial reorganisation during 2006 and subsequent to the year
end, the Directors feel it is appropriate to impair all the goodwill.
The gain on cessation of subsidiaries is in connection with the liquidation of
DK Gas Components Ltd and the decision to dissolve the non trading subsidiaries
Holdsafe Limited and Ravago Plastics Limited.
7 Operating loss
Year ended Year ended
31 31
December December
2006 2005
This has been arrived at after charging / # #
(crediting) :
Depreciation - own assets 86,848 103,440
- leased assets 8,810 11,261
Impairment provision
against tangible fixed
assets - 61,832
Amortisation of goodwill 35,749 171,450
Loss on disposal of
tangible assets 9,721 -
Exceptional items (223,885) 1,004,465
Reorganisation costs - 99,410
Operating lease rentals - other 83,950 86,205
Auditors' remuneration - audit services 25,000 38,750
- non-audit services: 5,000 6,000
taxation
- audit of subsidiaries 2,143 4,356
Research and development
expenditure 8,427 20,233
Net profit on foreign
exchange (5,309) (72,079)
========= =========
Reorganisation costs
During 2006 the Group relocated all of its UK manufacturing operations to
Thailand. The reorganisation costs of #99,410 comprised redundancy costs and the
costs of transferring plant and equipment and was provided for in 2005.
8 Interest receivable
Year ended Year ended
31 December 31 December
2006 2005
# #
Interest on bank balances 33 218
========= =========
9 Interest payable and similar charges
Year ended Year ended
31 December 31 December
2006 2005
# #
Interest on bank loans and overdrafts 33,040 37,334
Finance charges payable
under finance leases and
hire purchase contracts 3,481 4,009
Other loans 3,077 29,924
--------- ---------
39,598 71,267
========= =========
10 Taxation
Year ended Year ended
31 December 31 December
2006 2005
# #
Current tax:
UK corporation tax on loss for the period - -
Foreign corporation tax on profits for the - -
year --------- ---------
- -
========= =========
The tax assessed for the period is higher than the
standard rate of corporation tax in the UK (30%).
The differences are explained below:
Loss on ordinary activities before tax (295,891) (2,029,416)
========= =========
Loss on ordinary activities multiplied by
standard rate of corporation tax in the UK of
30% (88,767) (608,825)
Effects of:
Expenses not deductible for tax purposes 75,000 21,818
Non taxable income (129,457) (3,399)
Utilisation of tax losses - (9,599)
Current year tax losses 143,224 600,005
--------- ---------
Current tax charge for the period - -
========= =========
Current tax losses relate to #103,037 of UK losses and #40,187 of losses in
Thailand.
11 Loss per share
The calculation of basic and diluted loss per share is based on the loss for the
year attributable to ordinary shareholders of #295,891 (2005: loss #2,029,416)
and the weighted average number of shares in issue during the year of
809,862,908 (2005: 393,618,826).
The loss relating to continuing activities is #303,454 (2005: #1,488,654) and
the profit relating to discontinued activities is #47,128 (2005: loss #40,762).
Note 23 shows that share options exist at 20% of issued share capital. These
share options have an anti- dilutive effect on the earnings per share since the
exercise prices are in excess of the market price.
12 Loss for the financial period
The parent company has taken advantage of section 230 of the Companies Act 1985
and has not included its own profit and loss account in these financial
statements. The parent company's loss after tax for the year was #989,624 (2005
loss #1,149,341).
13 Intangible assets
Goodwill on:
Group Acquisition Acquisition Acquisition of Total
Purchased
Goodwill
of business of of Holdsafe Euro Asia
Kigass Limited Connectors Co.
Limited
# # # #
Cost
At 1 January
2006 1,100,989 357,491 97,472 1,555,952
Addition in the - - - -
Year ---------- --------- ---------------- ---------
At 31
December 2006 1,100,989 357,491 97,472 1,555,952
---------- --------- ---------------- ---------
Amortisation
At 1 January
2006 1,100,989 114,104 97,472 1,312,565
Provision for
the period - 35,749 - 35,749
Impairment
charge - 207,638 - 207,638
---------- --------- ---------------- ---------
At 31 December
2006 1,100,989 357,491 97,472 1,555,952
---------- --------- ---------------- ---------
Net book value
At 31 December - - - -
2006 ========== ========= ================ =========
At 31 December
2005 - 243,387 - 243,387
========== ========= ================ =========
The Directors have reviewed the Group's amortisation policy on intangible assets
and in light of the significant reorganisation embarked on over the last few
years and since the year-end, have decided to impair the full value of the
goodwill acquired
14 Tangible assets
Group Leasehold Plant, and Total
improvement equipment
# # #
Cost
At 1 January
2006 88,107 1,041,886 1,129,993
Additions
during the
year - 30,139 30,139
Disposals - (266,814) (266,814)
Exchange
differences 615 4,814 5,429
--------- -------- ---------
At 31 December
2006 88,722 810,025 898,747
--------- -------- ---------
Depreciation
At 1 January
2006 85,304 787,898 873,202
Provided for
in the year 1,288 94,370 95,658
Disposals - (190,789) (190,789)
Impairment provision - - -
Exchange
differences 470 3,801 4,271
--------- -------- ---------
At 31 December
2006 87,062 695,280 782,342
--------- -------- ---------
Net book value
At 31 December
2006 1,660 114,745 116,405
========= ======== =========
At 1 January
2006 2,803 253,988 256,791
========= ======== =========
The net book value of tangible fixed assets included within plant, machinery and
motor vehicles, includes an amount of #2,555 (2005: #38,624) in respect of
assets held under finance leases and hire purchase contracts. Depreciation
charged in the year on assets held under finance lease was #8,810 (2005:
#11,261).
15 Fixed asset investments
Subsidiary undertakings
Company #
Cost
At 1 January 2006 1,022,896
Additions -
---------
At 31 December 2006 1,022,896
---------
Provisions at 1 January 2006 1,022,734
Provided during the year -
---------
Provisions at 31 December 2006 1,022,734
---------
Net book value at 31 December 2006 162
=========
Net book value at 31 December 2005 162
=========
15 Fixed asset investments (continued)
As at 31 December 2006 the Group held 100% of the share capital of the following
companies.
Subsidiary Country of Nature of business Date of
undertaking incorporation acquisition/ set
up
Euro Asia Connectors Thailand Non-trading 6 March 1998
Co Ltd *
Euro Asia Connectors Hong Kong Trading 19 March 1999
Co (Hong Kong) Ltd
Euro Asia Strip Thailand Non-trading 24 April 2000
Tinning Ltd *
Ravago Plastics Ltd United Application to strike 5 June 2002
Kingdom off 3 April 2007
Holdsafe Ltd * United Dissolved 23 January 22 October
Kingdom 2007 2002
Derlite Co. Limited Thailand Manufacturing 21 February
(Thailand) * 2003
Buckland Group (Hong Hong Kong Trading 29 October
Kong) Ltd 2003
DK Gas Components Ltd United In liquidation 14 18 February
* Kingdom July 2006 2005
Derlite Ltd * United Trading June 2006
Kingdom
All companies within the Group have co-terminous year ends.
* indicates an investment held through an intermediate holding company.
16 Stocks
Group 31 December 2006 31 December 2005
# #
Raw materials 66,616 301,996
Work in progress 31,150 17,896
Finished goods 161,805 105,160
--------- ---------
259,571 425,052
========= =========
There is no material difference between the replacement cost of stocks and the
amounts stated above.
17 Debtors: amounts falling due within one year
Group Company
31 December 31 December 31 December 31 December
2006 2005 2006 2005
# # # #
Trade debtors 501,501 797,756 - 13,128
Amounts owed by
group
undertakings - - 125,757 858,529
Other debtors 29,648 114,978 - 1,594
Prepayments and
accrued income 3,341 24,934 1,085 4,745
-------- -------- -------- --------
534,490 937,668 126,842 877,996
======== ======== ======== ========
At 31 December 2006 #537,981 (2005: #728,121 ) of the trade debtors have been
factored.
18 Creditors: amounts falling due within one year
Group Company
31 December 31 December 31 December 31 December
2006 2005 2006 2005
# # # #
Bank loans and other
borrowings 392,429 552,587 - -
Bank overdrafts 29,351 44,778 23,997 -
Other loans 345,892 231,105 210,348 231,105
Trade creditors 611,620 978,504 200,492 252,810
Amounts owed to group
undertakings - - 133,652 7,447
Corporation tax - - - -
Obligations under
finance leases and
hire purchase
contracts 3,909 22,402 - -
Other taxation and
social security 75,135 273,381 5,314 6,715
Accruals 165,718 221,828 70,823 78,961
-------- -------- -------- --------
1,624,054 2,324,585 644,626 577,038
======== ======== ======== ========
Amounts due under finance leases and hire purchase contracts are secured on the
assets to which they relate.
The bank loans and other borrowings relate to the factored trade debtors.
19 Creditors: amounts falling due after more than one year
Group Company
31 December 31 December 31 December 31 December
2006 2005 2006 2005
# # # #
Obligations
under finance
leases and hire
purchase
contracts - 9,371 - -
Corporate loan
notes 116,000 - 116,000 -
-------- -------- -------- --------
116,000 9,371 116,000 -
======== ======== ======== ========
Amounts due under finance leases and hire purchase contracts are secured on the
assets to which they relate.
On the 25 August 2006 the company resolved to create #125,000 of 12% 2008 loan
notes. At 31 December 2006 #116,000 had been issued in exchange for debt or
cash.
20 Provision for liabilities and charges
#
Provisions at 1 January 2006 99,410
Reorganisation costs provision utilised during the year (99,410)
---------
Provisions at 31 December 2006 -
=========
The Group completed the relocation all of its UK manufacturing operations to
Thailand in the first half of 2006. The reorganisation costs of #99,410 related
to redundancy payments and the cost of transferring plant and equipment.
21 Financial Instruments
The company's treasury policy is to avoid transactions of a speculative nature.
The main risks arising from the group's financial instruments are interest rate
risk and foreign currency risk. The directors review and agree policies for
managing each of these risks and they are summarised below.
Short term debtors and creditors
Short term debtors and creditors have been excluded from all the following
disclosures, other than the currency risk disclosures.
Interest rate risk
The group finances its operations through bank borrowings. The group exposure to
interest rate fluctuations on its borrowings is managed by the use of both fixed
and floating facilities. It is the Group's policy that approximately one third
of its borrowings should be at a fixed rate and at the year end 30% per cent of
the borrowings were on such terms.
Loans
Loans amounting to #210,348 (2005: #231,105) are unsecured, repayable on demand,
due to a shareholder, Groupe Industriel, and include interest at 10% per annum.
Of the amount due #147,174 (2005: #141,623) is related to capital and #63,174
(2005: #89,482) to interest.
Loans amounting to #115,544 (2005: #35,000), secured by a debenture over the
assets of Buckland Group (Hong Kong) Ltd, repayable on demand and are subject to
interest at 10% per annum. Of the amount due #105,140 (2005: #35,000) is related
to capital and #10,405 (2005: #nil) to interest.
A loan of #20,000 (2005: #20,000) is due to Mr Leon Sharples. The loan is
interest free, unsecured and repayable on demand.
Bank loans
Other borrowings amounting to #392,429 (2005: #552,588 ) relate to invoice
finance facilities. The borrowings bear interest of 2.50% over base rate (2005:
2.75% per annum).
Bank overdrafts
Other overdrafts amounting to #29,351 (2005: #44,778 ) are secured by a fixed
and floating charge over the Company's assets and personal guarantees from Mr
Palmer and Mr Sharples. The overdraft bears interest of 4% over base rate.
Liquidity risk
The group seeks to manage financial risk, to ensure sufficient liquidity is
available to meet foreseeable needs and to invest cash assets safely and
profitably manage the liquidity through the use of overdraft. It is the Group's
policy to factor its trade debtors wherever practicable.
21 Financial Instruments (continued)
Maturity of financial liabilities
The group financial liabilities analysis at 31 December 2006 was as follows:
Group 2006 2005
# #
Borrowings are repayable as follows:
Within one year
Bank loans and overdrafts 421,780 597,365
Other loans 345,892 231,105
Finance leases 3,909 22,404
Between two and five years
Loan notes 116,000 -
Finance leases - 9,371
After five years
Finance leases - -
---------- ----------
887,581 860,245
========== ==========
Borrowing facilities
At 31 December 2006 the Group had un-drawn committed borrowing facilities #nil
(2005: #nil ).
Currency risk
The Group does not hedge its exposure of foreign investments held in foreign
currencies. The Group considers that the prevailing financial conditions in
Thailand preclude the need to hedge against the Baht.
The Group is exposed to translation and transaction foreign exchange risk. In
relation to translation risk the proportion of assets held in the foreign
currency is matched to an appropriate level of borrowings in the same currency.
The Group has overseas subsidiaries operating in Thailand and Hong Kong whose
revenues and expenses are denominated in local currencies and sterling. The
directors protect the Group's sterling balance sheet from movements in the US
dollar/local currency exchange rates, by financing its net investments in its
subsidiaries, with the exception of Thailand, by means of local currency
borrowings.
The majority of the Group's sales are to the United Kingdom, USA/Mexico and Asia
. These sales are invoiced primarily in GB #, US dollars and Euros.
The table below shows, in sterling, the extent to which group companies have
monetary assets and liabilities in currencies other than their local currency.
Foreign exchange differences on re-translation of these assets are taken to the
profit and loss account of the Group companies and the group.
Functional currency of Net foreign currency monetary assets/
operation (liabilities)
Euro GBP US dollars
At 31 December 2006
GBP (210,348) - (56,615)
-------- -------- --------
(210,348) - (56,615)
======== ======== ========
At 31 December 2005
Euro 135 3,334
GBP (251,661) - (191,592)
-------- -------- --------
(251,661) 135 (188,258)
======== ======== ========
Credit risk
The Group is mainly exposed to credit risk from credit sales. It is group
policy, implemented locally, to assess the credit risk of new customers before
entering contracts. Such credit ratings, taking into account local business
practices are then factored into any decisions. The Group does not enter into
any derivatives to manage credit risk.
Fair values
The fair value of short term deposits, long term borrowings, loans, overdraft
and other financial assets approximates to the carrying amount because of the
short maturity of these instruments.
22 Deferred tax
Group Company
Unprovided deferred 31 31 31 31
tax December December December December
2006 2005 2006 2005
# # # #
Accelerated
capital
allowances (598) (598) (598) (598)
Losses (1,642,743) (1,499,519) (1,162,210) (1,059,173)
-------- -------- -------- --------
Unrecognised
deferred tax
asset (1,643,341) (1,500,117) (1,162,808) (1,059,771)
======== ======== ======== ========
No provision for the deferred tax asset has been made in the group or company
due to the uncertainty of the group or company being able to generate sufficient
future taxable profits from which the future reversal of the timing differences
can be deducted.
23 Called up share capital
2006 2006 2005 2005
Number # Number #
Authorised
New Ordinary shares
0.01p each 30,165,809,008 3,016,581 30,165,809,008 3,016,581
---------- -------- ---------- --------
Deferred shares 9.5p
each 15,409,000 1,463,855 15,409,000 1,463,855
New Deferred shares of
0.49p each 404,779,408 1,983,419 404,779,408 1,983,419
---------- -------- ---------- --------
30,585,997,416 6,463,855 30,585,997,416 6,463,855
========== ======== ========== ========
Allotted, called up
and fully paid
New Ordinary shares of
0.01p each 861,226,247 86,123 792,178,629 79,218
---------- -------- ---------- --------
Deferred shares 9.5p
each 15,409,000 1,463,855 15,409,000 1,463,855
New Deferred shares of
0.49p each 404,779,408 1,983,419 404,779,408 1,983,419
---------- -------- ---------- --------
1,281,414,655 3,533,397 1,212,367,037 3,526,492
========== ======== ========== ========
The deferred shares, which are not listed, have no voting rights, no rights to
dividends and are not entitled to any payment on winding up.
On 21st July 2006 the Company issued 35,714,285 new ordinary shares of 0.01p
each at a premium of 0.06p per shares.
On 13th December 2006 there was an issue of 33,333,333 new ordinary shares of
0.01p each at a premium 0.065p each. At the same time it was announced that a
further 73,333,333 ordinary shares were to be issued but these were not issued
until after the year end.
Options
The company has entered into the following option arrangements under which the
holders are entitled to subscribe for a percentage of the company's ordinary
share capital from time to time.
Holder Options outstanding Percentage
at 31 December 2005 and 31 December
2006
Wharton Holdings 2,075,405 at 15p 13.38
Corporation
501,750 at 10p
20,633,700 at 0.75p
44,488,500 at 0.50p
64,792,520 at 0.10p
Consortia Trustees Limited 1,026,845 at 15p 6.62
248,250 at 10p
10,208,902 at 0.75p
22,011,500 at 0.50p
32,057,285 at 0.10p
The options held by Wharton Holdings Corporation are held on behalf of
discretionary trusts, the beneficiaries of which include the families of Mr
Rogers and Mr Sharples. Those held by Consortia Trustees Limited are held on
behalf of a discretionary trust, beneficiaries of which include the family of Mr
Palmer.
23 Called up share capital (continued)
The following is a summary of the principal terms of the options.
(a) The price at which the option holders are entitled to subscribe for
ordinary shares is 15p in respect of the rights which accrued to the option
holders on 19 September 1997 and on 6 March 1998. The exercise price in respect
of rights which accrued to option holders in December 1999 is 10p per share and
in respect of rights which accrued on 6 March and 17 April 2003 is 0.75p per
share. For rights which accrued on 30 October 2003 and on 18 February 2005 the
option price is 0.50p per share and for rights accruing on 15 December 2005 is
0.1p per share.
(b) In respect of any ordinary shares for which the holder is entitled to
subscribe as a result of a rights issue, placing, open offer or similar the
exercise price shall be the price at which such ordinary shares are issued.
(c) In respect of any ordinary shares for which the holder is entitled to
subscribe as a result of any capitalisation of reserves or profits, or a capital
reduction or otherwise or on the making of an exempt distribution by virtue of
Chapter II Part VI of the Income and Corporation Taxes Act 1998, the exercise
price may be varied.
(d) In respect of any ordinary shares for which the option holder is entitled
to subscribe as a result of the exercise by any other person, firm or
corporation of any rights granted to subscribe for ordinary shares (whether by
way of option, warrant or otherwise), the exercise price per ordinary share
shall be equal to the average market price of the ordinary shares on each of the
five business days preceding the date of the exercise of the said rights, as
derived from the Stock Exchange Daily Official List.
(e) The options may be exercised in whole or in part on any one or more
occasions at any time between 1 October 1998 and 30 September 2009.
(f) The ordinary shares allotted to the option holder shall rank pari passu
in all respects with the ordinary shares of the company then in issue and shall
carry the right to receive all dividends and other distributions declared, made
or paid by the company in respect of the ordinary shares on and after the date
of the exercise of any of the options.
24 Reserves
Group Share Profit
premium account and loss account
# #
At 1 January 2006 1,041,532 (5,108,775)
Loss for the year (295,891)
Premium on issue of new ordinary share
capital net of expenses 43,095
Exchange differences (35,701)
--------- ---------
At 31 December 2006 1,084,627 (5,440,367)
========= =========
Company
At 1 January 2006 1,041,532 (4,262,022)
Loss for the year (989,624)
Premium on issue of new ordinary share
capital net of expenses 43,095
--------- ---------
At 31 December 2006 1,084,627 (5,251,646)
========= =========
25 Commitments under operating leases
As at 31 December 2006, the group had annual commitments under non-cancellable
operating leases as set out below.
Group Company
31 December 31 December 31 December 31 December
2006 2005 2006 2005
Operating leases # # # #
which expire:
Within one
year - 25,938 - -
In two to five
years 41,142 41,142 - -
--------- --------- --------- ---------
41,142 67,080 - -
========= ========= ========= =========
26 Notes to the cash flow statement
(a) Gross cash flows 31 December 31 December
2006 2005
# #
Returns on investments and servicing of
finance
Interest received 33 218
Interest paid (39,598) (71,267)
--------- ---------
(39,565) (71,049)
========= =========
Acquistions
Cash consideration - 1,166,000
Acquisition expenses - 88,243
--------- ---------
- 1,254,243
========= =========
Capital expenditure
Payments to acquire tangible fixed
assets (30,139) (130,945)
Receipts from sale of tangible fixed
assets 15,630 185,634
--------- ---------
(14,509) 54,689
========= =========
Financing
New ordinary share capital net of
expenses 50,000 1,414,497
Issue of loan notes 116,000 -
Increase in bank loans and
other
borrowings 499,833 483,942
Repayment of finance leases (6,616) (24,221)
--------- ---------
659,217 1,874,218
========= =========
(b) Analysis of At Cash Exchange Non cash At
changes in net debt movement movements
1 Flow 31
January December
2006
2006
# # # # #
Cash in hand and at
bank 29,717 6,376 - (28,848) 7,245
Bank overdrafts (44,778) (103,526) - 118,953 (29,351)
--------- --------- --------- --------- --------
(15,061) (97,150) - 90,105 (22,106)
Bank loans and
Other borrowings (783,692) (615,833) - 545,204 (854,321)
Finance leases (31,775) 6,616 - 21,250 (3,909)
--------- --------- --------- --------- --------
Net (debt) (830,528) (706,367) - 656,559 (880,336)
========= ========= ========= ========= ========
The non cash movements relate to subsidiary bank and loan balances falling
outside of the control of the group due to the liquidation or dissolution of the
subsidiary.
27 Post balance sheet events
The reorganisation of the group has continued after the end of the year with the
transfer of the activities of Derlite Ltd in the United Kingdom to Derlite Co
Ltd in Thailand. This company ceased to trade on 30 April 2007 and will be
dissolved once all liabilities have been met.
The dormant subsidiary, Holdsafe Limited, was dissolved on the 23 January 2007
and the Directors are allowing Ravago Plastics Limited to be struck off the
register in July 2007.
On the 6 June 2007 the Directors announced their plans to restructure the share
capital by the consolidation of every 100 0.01p ordinary share into one new
ordinary share of 1p.
The Directors also announced their proposal to place 12,857,142 new ordinary
shares to raise #900,000 to replay high cost borrowings and finance extra
working capital to remove the need for expensive worldwide air-freight costs.
At the same time the Directors have negotiated a debt for equity swap amounting
to about #510,000. This has been accepted with the convertible corporate loan
note holders and providers of outstanding loan capital.
On the 6 June 2007 the group agreed to acquire all the share capital of Gas
Ignition Limited, a company incorporated by Mr Palmer and Mr Sharples to supply
gas boiler and industrial ignitors. The business was valued at #150,000 and Mr
Palmer and Mr Sharples have accepted the issue of 2,142,857 new shares in
Buckland plc as consideration.
Changes to the board of Directors were effected on the 6 June 2007 with the
resignation of Mr Rogers. There will be a termination payment of #60,000 in
respect of his notice period.
28 Related party transactions
During the year, Gas Ignition Limited, a company owned by Mr Palmer and Mr
Sharples, bought gas igniters from Derlite Limited totalling #22,043 (2005
#nil). Derlite Limited also provided sales and administration services for a sum
of #12,059 (2005 #nil). At the end of the year Gas Ignition owed Derlite Limited
#17,913 (2005 #nil).
Mr Palmer and Mr Sharples have provided personal guarantees in respect of the
overdraft facility of Buckland plc in the sum of #20,000.
A loan from Mr Sharples was outstanding at the year-end of #20,000 (2005:
#20,000).
29 Pension
During the year one of the subsidiaries, DK Gas Limited, operated a defined
contribution scheme in which that assets of the scheme where held separately to
the assets of the Group. During the year contributions were made totalling
#3,114 (2005 #4,364) of which total contributions outstanding at the year-end
were #nil (2005 #4,277). On the 14 July 2006 DK Gas Limited was placed into
Creditors Voluntary Liquidation and the pension scheme proceeded to be wound up.
Copies of the report and accounts have been sent to shareholders today and are
available free of charge from:
Seymour Pierce Limited
20 Old Bailey
London
EC4M 7EN
This information is provided by RNS
The company news service from the London Stock Exchange
END
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