MRD Meriden Grp

Final Results 28 January 2005 Enquiries: Russell Stevens 07860 562621 Chief Executive Russell@meriden-group.co.uk Ewan Leggat 020 7107 8000 Seymour Pierce Limited Ewanleggat@seymourpierce.com Meriden Group Plc (the "Company" or "the Group") Preliminary results for the year ended 31 July 2004 Highlights * 31% growth in turnover * Three new divisions launched during the year * Cost of opening these new divisions absorbed this year * Full revenue and earnings potential from new divisions to flow in 05/06 and beyond. * Greater focus on large corporate clients * Acquisitions being evaluated to supplement divisions * Exceptional cost of closure of publishing joint venture has impacted on this years earnings * Significant growth prospects anticipated from major key accounts currently being negotiated Financial Highlights * Turnover of �7.5m (2003 : �5.8m) * EBITDA before exceptional items of �0.67m (2003 : �0.69m) * Pre tax profits before exceptional items of �0.68m (2003 : �0.71m) * Pre tax profits after exceptional items of �0.57m (2003 : �0.71m) * Earnings per share in the trading period of 0.13p (2003 : 0.18p) * Minimal gearing * Total dividend of 0.023p (2003 : 0.023p) * Dividend cover 6.0x (2003 : 7.6x) Commenting, Russell Stevens, Chief Executive said: "This year we have laid the foundations of an exciting future with three new trading divisions now integrated, and a greater focus on larger corporate clients. We look forward to the future with confidence." Chairman's Statement I am pleased to present this my third Chairman's report for Meriden Group Plc. The Group has been profitable since its flotation on AIM in 2001. It has maintained this record and for the year ending 31 July 2004 has delivered a pre-tax profit before exceptional items of �0.68m (2003: �0.71m) on a turnover of �7.5m (2003: �5.8m) Our decision to withdraw from our publishing joint venture incurred an exceptional charge during the year of �0.11m which resulted in earnings per share being depressed to 0.13p (2003: 0.18p). We are particularly pleased that the Board is again recommending a final dividend, which takes the total dividend for the year to 0.023p (2003: 0.023p) per share. We continue to build our business through organic growth and during the year we have launched three new trading divisions. The first is our Employee Benefits Division, whose major product is delivering a consultancy lead service to large corporates aimed at setting up a tax efficient payroll based deferred computer purchase agreement under the Government's Home Computer Initiative (HCI), and then dealing with the implementation and supply. We have invested a significant amount of money in this division during the year and its related support infrastructure, and whilst revenue has started to flow the full impact will not be felt until the second half of the 2004/05 year and more significantly in the 2005/06 year and beyond. The cost of this investment has therefore impacted on our results in the 2003/04 year, but we anticipate announcing some very significant key account wins in the next few months which will have a very positive impact on our future turnover and earnings. The second division we have launched is Logistics which specialises in the delivery and storage of high value items in short lead times. There is no doubt that our combined divisional skills in the area of Employee Benefits, Management Consultancy, IT Solutions and Logistics are key factors in large corporates deciding to choose Meriden as their HCI provider. The third division is business publishing which we started as a result of our decision to withdraw from our joint venture as mentioned above, which was due to our loss of confidence in the management skills of our partner. In our 2003 year our Training and Recruitment divisions were closed, but our core divisions have shown steady growth during the year and we are confident that they will all continue to prosper, and the synergies between our divisions will continue to enhance their growth prospects. In the Interim Report I stated that as the economy emerged from its recent downturn, the Board intended to increase its emphasis on acquisitions of businesses where this could be achieved at favourable prices. The key criterion for consummating a deal is that the Group's earnings stream and dividend flow will be significantly improved over the short term and that synergies could be realised with other Divisions. The Group has aggressively followed this strategy and has held a number of discussions with potential targets and consequently we hope to make further announcements shortly. The success in building the Group's business through organic growth validates the Board's view that the Group should concentrate on expanding its range of services rather than create fully scoped partnerships in more of the UK's commercial centres. We continue to operate successfully out of Birmingham, London and Edinburgh and will open additional offices only if there are specific reasons for being at other commercial centres. It is important that the Group can maintain organisational flexibility in the face of continual change, our business model is scalable - the Group's use of technology enables it to run a `virtual company' with lean overheads whilst maximising synergies between the Divisions. The Group now delivers its services through seven divisions which are: * IT Solutions * Employee Benefits * Marketing and Communications * Management Consultancy * Logistics * Business Publishing * Outsourcing As mentioned above the Group has had a successful and profitable performance since its AIM debut in 2001 and, given this record, the performance of the Group's share price has been disappointing. The Board intends to address this issue by ensuring that the market in general and the institutions in particular have a full and comprehensive understanding of the Group and its business strategy. Key to the Group's success has been its abilities to respond to market opportunities and to create challenging and rewarding careers for its employees via performance-driven remuneration packages. We have established sound reputations within the markets we serve and are building strong relationships with our clients. We have minimal debt, a strong balance sheet and a well motivated management team. The Board believes that the coming year will see a significant and profitable leveraging of the services we now have in place as well as selective acquisitions that satisfy our exacting criteria. The Board is delighted to welcome the newcomers to the Meriden family and, as always, we thank all our team for their hard work and tremendous commitment to developing this exciting business and to delivering the highest standards of customer service. Mr Derek Hall Non-executive Chairman 28 January 2005 Consolidated Profit and Loss Account for the year ended 31 July 2004 Note Year ended Year ended 31 July 2004 31 July 2003 � � Turnover - continuing 4,551,704 5,790,628 Turnover - acquisitions 2,961,809 - ----------- ----------- Total turnover 7,513,513 5,790,628 Cost of sales - continuing (3,355,974) (4,312,261) Cost of sales - acquisitions (2,299,593) - ----------- ----------- Total cost of sales (5,655,567) (4,312,261) Gross profit - continuing 1,195,730 1,478,367 Gross profit - acquisitions 662,216 - ----------- ----------- Total gross profit 1,857,946 1,478,367 Administrative expenses - continuing (561,000) (785,564) Administrative expenses - exceptional (110,535) - Administrative expenses - acquisitions (629,713) - ----------- ----------- Total administrative expenses (1,301,248) (785,564) Operating profit - continuing 524,195 692,803 Operating profit - acquisitions 32,503 - ----------- ----------- Total operating profit 556,698 692,803 Interest receivable 14,815 12,352 Interest payable (1,816) - ----------- ----------- Profit on ordinary activities before 569,697 705,155 taxation Taxation (189,754) (197,592) ----------- ----------- Profit on ordinary activities after 379,943 507,563 taxation Dividends (66,700) (66,628) ----------- ----------- Retained profit for the year 313,243 440,935 ----------- ----------- Basic and diluted earnings per share 2 0.13 0.18 (pence) ----------- ----------- Consolidated Balance Sheet as at 31 July 2004 Note As at As at 31 July 2004 31 July 2003 � � Fixed Assets Tangible assets 214,447 251,298 Fixed asset investments 177,853 177,902 ----------- ----------- 392,300 429,200 Current assets Work in progress 263,032 36,420 Debtors 4,533,946 3,407,637 Cash at bank and in hand 285,152 805,589 ----------- ----------- 5,082,130 4,249,646 Creditors: amounts falling due (3,524,209) (2,988,824) within one year ----------- ----------- Net current assets 1,557,921 1,260,822 ----------- ----------- Total assets less current liabilities 1,950,221 1,690,022 Provisions for liabilities and charges (5,977) (59,021) ----------- ----------- Net assets 1,944,244 1,631,001 ----------- ----------- Capital and reserves Called up share capital 290,000 290,000 Share premium 523,355 523,355 Profit and loss account 1,130,889 817,646 ----------- ----------- Equity shareholders' funds 3 1,944,244 1,631,001 ----------- ----------- Consolidated Cash Flow Statement for the year ended 31 July 2004 Notes Year ended Year ended 31 July 2004 31 July 2003 � � Net cash (outflow)/inflow from operating 4 (931,841) 422,683 activities Return on investments and servicing of finance Interest received 14,815 12,352 Interest payable (1,816) - ------------ ------------ Net cash inflow from returns on investments 12,999 12,352 and servicing of finance Tax paid (200,000) (97,309) Capital expenditure and financial investment Payments to acquire tangible fixed assets (70,940) (24,274) Payments to acquire fixed asset investments - (49) Receipt from disposal of intangible fixed 49 - assets Receipts from the sale of tangible fixed 9,214 40,297 assets ------------ ------------ Net cash outflow/inflow from capital (61,677) 15,974 expenditure and financial investment Dividends paid (66,597) (86,928) ------------ ------------ Net cash (outflow)/inflow before financing (1,247,116) 266,772 ------------ ------------ Financing Debt due within one year 713,804 - ------------ ------------ (Decrease)/increase in cash 5 (533,312) 266,772 ------------ ------------ Notes to the Preliminary Results for the year ended 31 July 2004 1 Accounting policies Basis of accounting The financial statements have been prepared in accordance with applicable accounting standards and under the historical cost convention. The principal accounting policies of the Group have remained unchanged from those set out in the Group's 2003 annual report and financial statements. Basis of consolidation The Consolidated Profit and Loss Account, Balance Sheet and Cash Flow Statement consolidates those of the Company and its subsidiary undertakings. Intra-group transactions have been eliminated in full. 2 Earnings per share The calculation of the basic earnings per share is based on the profit on ordinary activities after taxation and on the weighted average number of shares in issue during the period. The profit and weighted average number of shares used in the calculations are set out below: Profit Weighted Average Basic � average number of Earnings number shares per share of shares in trading (pence) period Basic and diluted earnings per share: Year ended 31 379,943 290,000,000 290,000,000 0.13 July 2004 Year ended 31 507,563 290,000,000 290,000,000 0.18 July 2003 ----------- --------------- --------------- ----------- 3 Reconciliation of movements in shareholders' funds 2004 2003 � � Profit on ordinary activities after 379,943 507,563 taxation Dividend (66,700) (66,628) ------------ ------------ Profit on ordinary activities after 313,243 440,935 taxation and dividends Opening shareholders' funds 1,631,001 1,190,066 ------------ ------------ Closing shareholders' funds 1,944,244 1,631,001 ------------ ------------ 4 Reconciliation of operating profit with net cash inflow from operating activities Year ended Year ended 31 July 2004 31 July 2003 � � Operating profit 556,698 692,803 Depreciation 98,577 97,410 Decrease/(increase) in work in progress (226,612) 30,808 Increase in debtors (1,126,309) (2,120,517) (Decrease)/increase in creditors (234,195) 1,722,179 ------------ ------------ Net cash (outflow)/inflow from operating (931,841) 422,683 activities ------------ ------------ 5 Analysis of changes in net funds 1 August Cash Flow 31 July 2004 2003 in Year � � � Cash at bank and in hand 805,589 (520,437) 285,152 Bank overdraft - (12,875) (12,875) Debt due within one year - (713,804) (713,804) ------------ ------------ ------------ 805,589 (1,247,116) (441,527) ------------ ------------ ------------ 6 Publication of non-statutory accounts The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The summarised balance sheet at 31 July 2004 and the summarised profit and loss account, summarised cashflow statement and associated notes for the year then ended have been extracted from the Company's 2004 statutory financial statements upon which the auditors opinion is unqualified and does not contain any statement under section 237 of the Companies Act 1985. Statutory accounts for the year ended 31 July 2004 will be delivered to the Registrar in due course. The comparative financial information is based on the statutory accounts for the financial year ended 31 July 2003. Those accounts on which the auditors issued an unqualified opinion have been delivered to the Registrar of Companies. 7 Availability of Annual Report The Annual Report will be posted to shareholders at the start of February 2005 and copies will be available from the registered office of the Company or as a download from the Company's website at www.meriden-group.co.uk by 4.00pm on 31 January 2005. 8 Dividend The Company intends to pay the final dividend of 0.013p per ordinary share on 8 April 2005 to shareholders on the register at the close of business on 11 February 2005. END

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