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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