Volex Group PLC 06 June 2005 Embargoed until 07.00, 6 June 2005 VOLEX GROUP plc Preliminary Announcement of the Unaudited Group Results for the Financial Year Ended 3 April 2005 Volex Group plc, the international electrical and electronic cable assemblies group, today announces its preliminary results for the financial year ended 3 April 2005. Financial Highlights: • Sales increased by 2.6% (8% excluding foreign currency impact) to £244.6m • Operating profit of £1.5m (before goodwill amortisation and exceptional operating items) (1) • Cash generation from operating activities: - Pre exceptional cashflows £2.0m - Post exceptional cashflows £1.6m • Basic loss per ordinary share (47.2)p (2004 - (39.1)p) (1) The operating loss after charging goodwill amortisation (£0.3m) and exceptional operating items (£8.5m) was £7.3m (2004 - loss of £4.5m). The Chairman of Volex, Dom Molloy, commented: "The Group has benefited from the general improvement in the demand across most of the markets that we service but has also made significant strides in developing new business opportunities in targeted markets such as the medical sector. However, while the market demand profile supported the revenue ambitions of the Group the translation of those revenues to operating profit was disappointing and was impacted by unanticipated events, some of which were one-off in nature. The Group is well positioned in the marketplace to continue to drive for improvements in market share and revenues above market growth but it is clear that further equity investment is required to accelerate the cost reduction activity, to invest for growth, to re-structure the finances of the Group and to normalise the servicing of the debt." Ends Volex will host an analysts meeting today at 12 noon at the offices of: Allen & Overy, One New Change, London, EC4M 9QQ For further information, please contact: Volex Group plc Today: 020 7067 0700 Thereafter: 01925 830101 Dom Molloy, Chairman John Corcoran, Group Chief Executive Derek Walter, Group Finance Director Weber Shandwick Square Mile 020 7067 0700 Chris Lynch / Nick Dibden VOLEX GROUP plc Preliminary Announcement of the Unaudited Group Results for the Financial Year Ended 3 April 2005 CHAIRMAN'S STATEMENT After the downturn experienced through late 2001, Volex Group has taken significant actions to reduce debt and return to profitability. Having achieved a revenue peak of £418m in FY2001, the Group experienced a dramatic decline to £230m in FY2003 and has improved from that low point to close the last financial year (FY2005) at a revenue level of £245m. Despite the limited access to funds, a number of key actions have been undertaken over this period: • Gross borrowings have been reduced from £72m to £45m; • Gross margins have recovered from a low of 11.6% to FY'05 levels of 14.5% through reductions in material costs and labour cost reductions by moving to lower cost areas; • Facilities have been closed and manufacturing transferred to low cost locations and under-utilised assets have been disposed of; • A strong global purchasing function has been established; • The global account team was enhanced and has delivered momentum to the emerging medical and industrial business which has grown to 10% of Group revenue; and • New management and systems have been introduced to the harness businesses (Wiring Systems and Ionix). The financial year 2005 had been expected to improve further on these achievements and the Group delivered revenues in 2005 at a level of £245m which, when the effects of currency translation are removed was a growth year on year of 8%. The Group has benefited from the general improvement in the demand across most of the markets that we service but has also made significant strides in developing new business opportunities in targeted markets. The broadening of the customer base in existing and new markets remains a key focus for the Group and reduces the impact of cyclical demand patterns in any one sector. However, while the market demand profile supported the revenue ambitions of the Group the translation of those revenues to operating profit was disappointing and was impacted by unanticipated events, some of which were one-off in nature. • The escalation of commodity prices, particularly copper and petroleum, impacted the Group by circa £6m in profit. While the sales teams have been successful in passing some of these effects through to the customer base, there was a lag between the supply base increases and the successful conclusion of negotiations with those same customers. • The turnaround of North America division was adversely impacted by an unsuccessful change in management, resulting in a failure to achieve the product transfer and margin improvement targets for the business, and by a fire in one of two buildings in Tijuana, Mexico that created loss of sales in the period. On a positive note the Group has already addressed many of these areas and the better performing divisions achieved operating margins of 6%+ in the year. Operationally, we recovered the Tijuana fire impact successfully and the speed and effectiveness of that recovery bears testament to the ability of the Group to manage significant events without impacting the supply line to the customer base. We have changed the leadership of North America (October 2004) and positioned one of the non-executive directors back into the regional leadership position. We have built a new team and strengthened sales, engineering and operations. We have developed a strong global purchasing function that has mitigated the full effect of rising commodity prices by materials savings secured elsewhere in the supply chain. Despite the limited access to funds the Group continued to focus on cost reduction, re-profiling the manufacturing footprint and the level of debt within which the Company had to operate. In the year three further facilities were announced for closure: Conover (US), Malaysia and Philippines. The Group strengthened its focus and resource allocation in global account management to penetrate new markets, new accounts and the existing accounts for incremental revenues, some of which were already realised in the reported year. Global markets The dynamics of the cable assembly market continue to be challenging. However, it is increasingly providing opportunity for the Group as global customers continue to consolidate their supply base in favour of global suppliers such as Volex. The Group continues to use its global presence and the breadth of its product portfolio in combination with strong account management to secure a strong position in this consolidation process. The demand environment across all our sectors remains relatively stable. However, there are some indications of weakness in some sectors through the second half of this calendar year 2005. Energy prices continue to weigh heavily on most sectors; however, the Group has assumed some level of caution in the forward forecasts of revenue that is anticipated for the full financial year. The organisation is firmly committed to achieving growth, which is anticipated to come largely from increased market share driven by the consolidation of the supply base and also from our ability to further penetrate existing or emerging markets. In addition the Group was very focused in the second half of the financial year 2005 on improving the quality of revenue and eliminating non-profitable or low margin business from its revenue stream. This is expected to continue and while it may depress revenues in some areas it will remove the dilutive effect of this low margin business from the performance of the Group overall. Regional operations As outlined sales improved over the prior year by 3%, however, the currency effect of £13m masks the growth achieved in specific areas of our global operation. In the Americas the revenue by destination increased by 3.5% but were somewhat impacted by the fire in the Tijuana facility. This event had a more pronounced effect on the cost base reduction programme which when combined with the change of leadership in the region, caused a significant under-performance to budget expectations. The Board now believe that the progress made in the last number of months has brought this programme back on track albeit 6 months behind schedule. The market environment in North America continues to be relatively stable with some suggestion of weakness in the computer electronics sector for the forthcoming calendar year. Sales in and into Asia improved by approximately 5.5% over the previous year in local currency terms. As in prior years, the strong drive for the performance was attributable to the powercord element of our business; however, the dynamic of copper price increases at the commodity level impacted the translation of this performance into growth in operating profits. At the end of the financial year the Group announced two site closures in Asia as we continue to strive for reduction in our global footprint and a rationalisation of our facilities into larger manufacturing centres, particularly in China and India. Sales in Volex Europe (Data/telco) increased by 12% over the prior year helped by an improved telecommunications market in the region and also the assembly of OEM systems for deployment in Asia meant that the sub-assembly portfolio was supported out of Europe. Additionally the team in Europe secured improved revenue streams into the medical sector. In the UK the demand environment for our specialist harness businesses remained relatively stable year on year. A recovering environment for the aerospace and defence harness industry compensated somewhat for some weakness at the customer level in the automotive harness area. The smaller units experienced operational and execution issues that adversely affected the operating profit level. These have been largely corrected with the deployment of new management and existing Group resources diverted to securing sustainable process improvement there. Dividends The directors are not proposing to declare a dividend in respect of the reported financial year. Future The Group strategy continues to be focused on exploiting its key differentiators to position the Group as the leading global provider of cable assembly solutions in the global market. We offer breadth of the product portfolio across the entire range of power and signal products. Our independence of specific technology allows the Group to leverage the most cost effective yet technically competent solution available in the marketplace to meet our customers' requirements. Increasingly, the capabilities of the Group at the supply chain level and product development level enable us to provide a range of services around and beyond the cable assembly from design to distribution. The Group is well positioned in the marketplace to continue to drive for improvements in market share and revenues above market growth. Despite the constraints on cash much has been achieved but a lot has still to be achieved. As the funding required to correct the residual issues within the business cannot be supported by the existing lending profile, it is clear that further equity investment is required to accelerate the cost reduction activity, to invest for growth, to re-structure the finances of the Group and to normalise the servicing of the debt. Specifically, the Group needs to: • continue to reduce the manufacturing footprint and move to lower cost locations; • develop markets and products that enrich the margin potential for the Group; • strengthen the competencies in the Group by enhancing key skills (e.g. development and sourcing) and re-aligning management structure and reporting in selected areas; and • build alliances to expand the product set and technology offering. All of the above, when delivered, should return this Group back towards historically achieved levels of profitability and provide a platform for margin enhancement. To that end the Group is seeking to raise £15.8m (net of costs) and listing particulars together with a related announcement will be issued immediately following this preliminary results' announcement. D.J. Molloy Chairman FINANCIAL REVIEW Turnover for the 52 weeks ended 3 April 2005 at £244.6m was 2.6% up over the 2004 financial year, (which included an extra week), despite a £13m negative currency effect. Year on year the average exchange rate for the US dollar fell 9% against the £, the Singapore dollar and the Brazilian real both weakened by 6% and the Euro by 2%. A geographical review of sales by destination showed sales in Europe (excluding UK) in sterling terms increase by 11.7% to £63.1m and in the Americas increase by 3.5% to £77.3m. Sales in Asia were very slightly lower by £0.3m at £65.6m and sales in the UK were down by 7% to £38.5m. A comparison of Group sales by source or manufacturing location, based on gross sales including intra-group trading showed a year on year improvement in Asia of £6.7m, 7%, to £99.6m gross sales accounting for 39% of the Group's output (2004 - 37%). America's gross output declined by £1.3m, 2%, in sterling terms to £77.2m over the previous year and represented 30% of Group's total gross output (2004 - 31%). Sales sourced from Europe (excluding UK) improved by £3.1m, 6%, to £51.5m and accounted for 20% of the Group's gross output (2004 - 19%). UK sales decreased by £1.8m, 6%, to £29.8m, 11% of the Group's gross output (2004 - 13%). Intra group sales remained relatively unchanged at £13.6m. Additional analyses of sales by product category and market sector are given in note 1 to the results. Gross profit was 14.5% compared with 14.4% in the previous year. The impact of raw material prices affected the Group considerably with copper costs alone estimated to have increased by some £6m year on year but ongoing cost reduction programmes including procurement and value added engineering programmes helped mitigate those cost increases and the effect of the fire at Tijuana in September 2004. The Group recorded an operating profit (pre goodwill amortisation and exceptional operating items) for the year of £1.5m (2004 - £2.5m). The translation of foreign currency operating profits into Sterling had an adverse impact of £0.2m. The fire at Tijuana Mexico in September also impacted production and excluding the under-recovery on the insurance claim is estimated to have cost the Group in total at the operating profit line at least an additional £0.6m of costs. Profits in Asia were lower in 2005 compared with 2004, as Asia experienced a lower second half in 2005 than the first half. Losses in North America in 2005 were reduced as the second half showed improvement but the fire at Tijuana held back its recovery. Europe (excluding the UK) continued its profitable recovery from the restructuring in 2004 and reported a better second half than the first half in 2005. UK harness operations as a whole had a disappointing year in 2005 with increased losses in the second half. Exceptional costs for FY05 of £8.5m relate to the provisions for three property leases of £3.3m, a write off of an automated manufacturing line and costs of closure relating to one site in Poland, the factories in Malaysia and the Philippines and the Conover North America site. The exceptional costs also include £0.9m under-recovery of the insurance claim relating to the Tijuana fire in September 2004 pending negotiations. The goodwill remaining on the investment in Brazil of £1.7m has been written off following the initial write off in 2002. The operating loss after charging goodwill amortisation and exceptional operating items was a loss of £7.3m (2004 - loss of £4.5m). During 2005 five properties were sold and realised a profit of £1.9m. These sales included the sales of the head offices of the Volex Europe and the Volex Asia divisions with the latter head office being leased back. In the case of the Volex Europe head office this was the culmination of the programme begun in the 2002 financial year to move production from Ireland to lower cost European sites in Poland and Croatia. Finance charges (net) included interest costs of £3.2m similar to last year plus amortisation costs of £0.2m (2004 - £0.7m) relating to the bank facilities obtained through to June 2004 and a further £0.7m relating to the one year facilities' extension negotiated at the end of the 2004 financial year. Taxation Despite an overall group loss before tax, there was a tax charge of £4.4m (2004 - £2.9m). This charge related to taxes paid in countries where taxable profits were made and also included a provision of £1.1m in respect of tax relating to an overseas subsidiary in respect of prior periods. Deferred tax assets totalling £0.8m have been written off. The result for the financial year after tax was a loss of £13.9m (2004 - loss of £11.2m). Earnings Per Share Basic loss per share this year of (47.2)p compares with (39.1)p in the prior year. The adjusted loss per share (arrived at after adding back exceptional operating items, profit on sale of fixed assets and goodwill amortisation) shows a deterioration from (14.7)p in 2004 to (23.8)p per share. The earnings per share figures are distorted by the higher than normal tax charge as referred to above and adding back £1.1m in respect of the overseas prior years' tax charge and the deferred tax assets written off of £0.8m in total, the adjusted loss would have been reduced to (17.2)p per share. Funds Flow During the year there was a net inflow of funds before financing of £0.6m, comprising inflows of £1.6m from operations, £7.8m from the disposal of fixed assets, in part offset by outgoings of £2.1m on capital expenditure (excluding new finance leases), £4.5m on interest/financing costs and £2.2m of taxation payments. Currency translation of £0.7m impacted favourably on the debt position during the year. Fixed asset additions in the Group totalled £2.2m (2004 - £2.5m) including new finance leases during the year, less than half the depreciation charge. Borrowings The Group's net borrowings at the end of the year were £30.5m (2004 - £31.6m). These borrowings resulted in a year-end gearing ratio of net borrowings to shareholders' funds of 162% (2004 - 97%). The Company's present bank facilities remain available until 30 June 2005 and are currently the subject of negotiation. Conditional upon new equity being raised, the Group will enter into new banking facilities for 3 years. The total costs incurred in the renegotiation of the Group's facilities for future years will have amounted to approximately £1.5m and will be amortised over the life of the facilities as a charge. Going concern As stated in the Company's trading update in February 2005, the Company has been in discussions with the Banks to replace the Company's Existing Bank Facilities with a new facility or facilities. The Company today announces that it has today entered into new longer term bank facilities on more favourable terms to the Company (the "New Bank Facilities"), conditional on completion of the issue of new shares to the market (the "Issue"). Shareholders should be aware that if the Resolutions relating to the Issue are not approved at the EGM and Admission to the London Stock Exchange does not take place on 30 June 2005, the net proceeds of the Issue will not be received by the Company and the Company will not be able to draw on the New Bank Facilities. The Existing Bank Facilities expire on 30 June 2005 and the Company would no longer have banking facilities and would not have adequate working capital to continue trading from that date. The directors consider that in the scenario outlined above, the withdrawal of the Existing Bank Facilities would not be in the best interests of either the Banks or the Company and believe that the Existing Banking Facilities would be extended for a short period beyond 30 June 2005 whilst they were renegotiated for a longer period to enable the Company to continue trading. The directors believe, however, that such renegotiated facilities would be on substantially worse terms than both the Existing Bank Facilities and the New Bank Facilities, in particular in regard to interest rate, use of free cash and repayment scheduling. Having considered the above, the directors consider that it is appropriate to adopt the going concern basis for the preparation of the preliminary financial information. As a result, the preliminary financial information does not contain any adjustments that would arise if the preliminary financial statements were not drawn up on a going concern basis. International Financial Reporting Standards In 2006 Volex Group plc will be required to produce its financial statements in accordance with IFRS. The process regarding the endorsement of IFRS by the EU commission is ongoing and there may therefore be changes prior to IFRS being adopted by the Company. The first numbers to be reported in this format will be in respect of the six month period ending 2 October 2005. This will include appropriate comparatives for FY 2005. The areas considered to have the most significant impact for Volex Group plc are in respect of defined benefit pension schemes and hedge accounting. The Group will be required to reflect the deficit of £4.1m, on its two closed UK defined benefit pension schemes in the Group's balance sheet. The impact of the new foreign exchange hedging rules is not clear. The directors believe that these are the major adjustments to the Group's financial statements which will arise on transition to IFRS. As there is still work to do to finalise a range of minor adjustments and to review the completeness of the adjustments it is therefore possible that other adjustments may come to light which will impact the Group in the preparation of the first full set of IFRS financial statements for the year ending 2 April 2006. Consolidated Profit and Loss Account For the financial year ended 3 April 2005 (4 April 2004) Unaudited Audited 52 weeks 53 weeks 2005 2004 Notes £'000 £'000 _________________________________________________________________________________ Turnover Continuing operations 1 244,551 238,353 Cost of sales (209,062) (204,108) ------------ ----------- Gross profit 35,489 34,245 Other operating expenses (net) (42,795) (38,767) ___________________________ Operating profit before goodwill amortisation and exceptional operating items 1,528 2,486 Exceptional operating items 2 (8,532) (6,680) Amortisation of goodwill (302) (328) ___________________________ ------------ ----------- Operating loss - continuing operations (7,306) (4,522) Profit on sale of properties 1,918 - ------------ ----------- Loss on ordinary activities before finance charges (5,388) (4,522) ___________________________ Finance charges - interest (net) (3,184) (3,140) - refinancing costs and amortisation of debt issue costs 4 (932) (683) ___________________________ (4,116) (3,823) ------------ ----------- Loss on ordinary activities before tax (9,504) (8,345) Tax on loss on ordinary activities 5 (4,424) (2,861) ------------ ----------- Loss for the financial year (13,928) (11,206) Other finance costs of non-equity shares (6) (6) ------------ ----------- Loss for the financial year transferred from reserves (13,934) (11,212) ------------ ----------- Adjusted loss per ordinary share 6 (23.8)p (14.7)p Basic and diluted loss per ordinary share 6 (47.2)p (39.1)p Consolidated Statement of Total Recognised Gains and Losses For the financial year ended 3 April 2005 (4 April 2004) _________________________________________________________________________________ Loss for the financial year (13,928) (11,206) Currency variations 266 (2,335) _________________________________________________________________________________ Total recognised losses relating to the financial year (13,662) (13,541) Group Balance Sheet At 3 April 2005 (4 April 2004) Unaudited Audited 2005 2004 £'000 £'000 _________________________________________________________________________________ Fixed assets Goodwill 1,760 3,798 Tangible assets 13,568 23,872 ------------ ----------- 15,328 27,670 ------------ ----------- Current assets Stocks 28,030 29,345 Debtors 50,381 50,358 Cash at bank and in hand 14,962 11,919 ------------ ----------- 93,373 91,622 Creditors: amounts falling due within one year: Borrowings and finance liabilities (45,453) (3,883) Other (40,180) (43,292) ------------ ----------- (85,633) (47,175) ------------ ----------- Net current assets 7,740 44,447 ------------ ----------- Total assets less current liabilities 23,068 72,117 Creditors: Amounts falling due after more than one year: Borrowings and finance liabilities (43) (39,586) Other (8) - ------------ ----------- (51) (39,586) Provisions for liabilities and charges (4,148) - _________________________________________________________________________________ Net assets 18,869 32,531 _________________________________________________________________________________ Capital and reserves Called-up share capital 7,465 7,465 Share premium account 20,986 20,986 Other reserves (3,766) (4,032) Profit and loss account (5,816) 8,112 _________________________________________________________________________________ 18,869 32,531 _________________________________________________________________________________ Consolidated Cash Flow Statement For the financial year ended 3 April 2005 (4 April 2004) Unaudited Audited 2005 2004 Note £'000 £'000 £'000 £'000 Net cash inflow from operating activities 8a 1,583 5,614 Return on investments and servicing of finance _______ _______ Interest received 59 218 Interest paid (3,859) (3,348) Refinancing costs (743) (1,000) _______ _______ Net cash outflow from returns on investments and servicing of finance (4,543) (4,130) Taxation _______ _______ UK corporation tax received - 240 Overseas tax paid (2,159) (36) _______ _______ Tax (paid)/recovered (2,159) 204 Capital expenditure _______ _______ Purchase of tangible fixed assets (2,061) (2,243) Sale of tangible fixed assets 7,826 470 Disposal of assets held for resale - 1,189 _______ _______ Net cash inflow/(outflow) from capital expenditure 5,765 (584) _________________________________________________________________________________ Cash inflow before financing 646 1,104 Financing _______ _______ Issue of ordinary share capital - 939 Net increase in borrowings 1,536 - Net repayment of loans - (3,136) Capital element of finance lease rentals (136) (25) _______ _______ Net cash inflow/(outflow) from financing 1,400 (2,222) _________________________________________________________________________________ Increase/(decrease) in cash in the financial year 8c 2,046 (1,118) _________________________________________________________________________________ Movement in Shareholders' Funds 2005 2004 £'000 £'000 Loss for financial year (13,928) (11,206) Dividends paid - - Other finance costs of non-equity shares (6) (6) ---------- --------- (13,934) (11,212) Currency variations 266 (2,335) New share capital subscribed - 939 Other finance costs of non-equity shares 6 6 ---------- --------- Net decrease in shareholders' funds (13,662) (12,602) Opening shareholders' funds 32,531 45,133 ---------- --------- Closing shareholders' funds 18,869 32,531 ---------- --------- 1 Segment information External sales Total sales Turnover by geographical area by destination by source restated 2005 2004 2005 2004 £'000 £'000 £'000 £'000 _________________________________________________________________________________ United Kingdom 38,542 41,343 29,810 31,590 Other Europe 63,075 56,457 51,500 48,414 -------- -------- -------- -------- Total Europe 101,617 97,800 81,310 80,004 The Americas 77,325 74,695 77,165 78,456 Asia 65,609 65,858 99,648 92,917 -------- -------- 258,123 251,377 Less: Intra-group (13,572) (13,024) _________________________________________________________________________________ 244,551 238,353 244,551 238,353 _________________________________________________________________________________ Turnover by product category 2005 2004 £'000 £'000 _________________________________________________________________________________ Data/telecommunications 104,409 109,503 Powercords 110,882 98,056 Harnesses 29,260 30,794 _________________________________________________________________________________ 244,551 238,353 _________________________________________________________________________________ Turnover by market sector 2005 2004 £'000 £'000 _________________________________________________________________________________ Data/telecommunications 94,296 101,715 Consumer appliances 47,836 44,413 Consumer electronics 47,821 40,392 Industrial and medical 25,588 21,354 Vehicle and aerospace 29,010 30,479 _________________________________________________________________________________ 244,551 238,353 _________________________________________________________________________________ Sales by source have been restated in 2004 to take account of the transfer of the business of Volex Powercords Europe to the Group's Asian operations. Operating profit, profit before tax and net assets by geographical area and by class of business are not given as such disclosure is considered by the Directors to be seriously prejudicial to the interests of the Group. All activity has arisen from continuing operations. 2 Exceptional operating items 2005 2004 £'000 £'000 _________________________________________________________________________________ Closure of manufacturing facilities 1,399 2,991 Impairment of goodwill 1,736 - Impairment of tangible fixed assets 1,223 3,396 Lease provisions 3,298 - Under-recovery of insurance claim 876 - Loss on disposal of current asset investment - 293 _________________________________________________________________________________ 8,532 6,680 _________________________________________________________________________________ In 2005, costs of closure relate to one site in Poland and facilities in Malaysia, Philippines and Conover, North America and include £0.3 million of fixed asset write-offs. The remaining goodwill relating to the Brazilian operations has been written off as have tangible fixed assets relating to an automated manufacturing line. Provisions have been recorded with respect to three property leases. The expected under-recovery of the insurance claim relating to the Tijuana fire has also been recorded. The taxation effect of these exceptional items was £nil. 3 Exchange rates The principal exchange rates used in the preparation of the accounts are: Average % Year End % 2005 2004 Change 2005 2004 Change _________________________________________________________________________________ vs £ vs £ United States dollar 1.84 1.68 (8.7) 1.89 1.83 (3.2) Singapore dollar 3.09 2.91 (5.8) 3.12 3.07 (1.6) Euro 1.47 1.44 (2.0) 1.45 1.51 4.1 Canadian dollar 2.36 2.29 (3.0) 2.29 2.41 5.2 Brazilian real 5.28 4.99 (5.5) 5.02 5.29 5.4 Swedish krona 13.35 13.17 (1.3) 13.31 13.92 4.6 _________________________________________________________________________________ 4 Finance charges Finance charges include £743,000 incurred during the year on the negotiation of the extension of the Group's bank facilities through to June 2005 and amortisation costs of £189,000 (2004 - £683,000) representing the amortisation of the debt issue costs capitalised in 2003 on renegotiating the Group's bank facilities for the period through to June 2004. 5 Tax on loss on ordinary activities 2005 2004 The tax charge is based on the loss for the financial year and comprises: £'000 £'000 _________________________________________________________________________________ Current Tax UK corporation tax - - Foreign tax 2,629 1,840 Adjustments in respect of previous years UK corporation tax - 735 Foreign tax 930 (134) _________________________________________________________________________________ Total current tax 3,559 2,441 Deferred taxation Origination and reversal of timing differences 52 (208) Decrease in estimate of recoverable deferred tax assets 813 628 _________________________________________________________________________________ Total deferred tax 865 420 _________________________________________________________________________________ Total tax on loss on ordinary activities 4,424 2,861 _________________________________________________________________________________ 6 Loss per ordinary share The calculations of loss per share are based on the following losses and numbers of shares: 2005 Per Share 2004 Per Share £'000 p £'000 p _________________________________________________________________________________ Loss for the financial year (13,928) (47.1) (11,206) (39.1) Other finance costs of non-equity shares (6) (0.1) (6) - _________________________________________________________________________________ Basic loss (13,934) (47.2) (11,212) (39.1) Goodwill amortisation 302 1.0 328 1.1 Exceptional operating items (note 2) 8,532 28.9 6,680 23.3 Exceptional item - profit on disposal of properties (1,918) (6.5) - - _________________________________________________________________________________ Adjusted loss (7,018) (23.8) (4,204) (14.7) _________________________________________________________________________________ No. of Shares No. of Shares _________________________________________________________________________________ Weighted average number of shares: 29,540,692 28,650,462 _________________________________________________________________________________ Adjusted loss per share (23.8)p (14.7)p Basic loss per share (47.2)p (39.1)p Adjusted loss per share has been calculated on the basis of continuing activities before goodwill amortisation, operating exceptional items and profit on disposal of properties, in each case net of tax. The directors consider that this loss per share calculation gives a better understanding of the Group's loss per share in the year and the prior year. As the Group recorded a loss per share, the share options are anti dilutive and therefore there is no difference between the basic and dilutive loss per share. _________________________________________________________________________________ 7 Dividend on equity shares The directors do not recommend a dividend for the year ended 3 April 2005 (2004 - £nil). 8 Consolidated cash flow statement a. Reconciliation of operating loss to net cash inflow 2005 2004 from operating activities £'000 £'000 _________________________________________________________________________________ Operating loss (7,306) (4,522) Depreciation charges and impairment 5,943 9,766 Goodwill amortised and impaired 2,038 328 Government grants (19) (150) Loss on sale of tangible fixed assets and asset held for resale - 293 Decrease/(increase) in stocks 1,264 (1,376) Increase in debtors (297) (2,788) (Decrease)/increase in creditors (3,800) 4,063 Increase in provisions 3,760 - _________________________________________________________________________________ Net cash inflow from operating activities 1,583 5,614 _________________________________________________________________________________ Net cash inflow from operating activities pre cash outflows from exceptional operating items 1,975 8,067 Cash outflows from exceptional operating items (392) (2,453) _________________________________________________________________________________ Net cash inflow from operating activities 1,583 5,614 _________________________________________________________________________________ b. Analysis of net debt: 4 April Other Non-cash Exchange 3 April 2004 Cash Flow Changes Movement 2005 £'000 £'000 £'000 £'000 £'000 _________________________________________________________________________________ ________ Cash at bank and in hand 11,919 3,096 - (53) 14,962 Overdraft (2,971) (1,050) - (5) (4,026) ________ 2,046 ________ Debt due after one year (39,652) 619 39,689 (656) - Debt due within one year (819) (2,155) (39,689) 1,374 (41,289) Finance leases (216) 136 (101) - (181) ________ (1,400) Issue costs 189 (189) - - _______________________________________________________________________________________ Net debt (31,550) 646 (290) 660 (30,534) _______________________________________________________________________________________ Non-cash changes relate to new finance leases entered into during the year, amortisation of issue costs and reclassifications of banking facilities to be due within one year. 2005 2004 c. Reconciliation of net cash flow to movement in net debt: £'000 £'000 _________________________________________________________________________________ Increase/(decrease) in cash in the financial year 2,046 (1,118) Cash (inflow)/outflow from (increase)/decrease in debt & lease financing (1,400) 3,161 _________________________________________________________________________________ Change in net debt resulting from cash flows 646 2,043 New finance leases (101) (216) Amortisation of debt issue costs (189) (683) Translation difference 660 5,238 _________________________________________________________________________________ Movement in net debt in the financial year 1,016 6,382 Net debt - beginning of financial year (31,550) (37,932) _________________________________________________________________________________ Net debt - end of financial year (30,534) (31,550) _________________________________________________________________________________ 9 Miscellaneous (i) The current and prior year results set out in this announcement are non-statutory accounts within the meaning of Section 240 of the Companies Act 1985. (ii) The results for the financial year ended 3 April 2005 are unaudited. The accounts for this financial year will be filed in due course once they have been completed and audited. The auditors have not made a statement under Section 235 of the Companies Act 1985 in respect of these accounts. (iii) The results for the financial year ended 4 April 2004 are extracts from the 2004 Group statutory accounts, which have been reported upon without qualification by the auditors and did not contain a statement under Section 237 (2) and (3) of the Companies Act 1985. The accounts have been delivered to the Registrar of Companies for England and Wales. (iv) The preliminary announcement has been prepared using the accounting policies stated in the Annual Report and Accounts for the financial year ended 4 April 2004. There have been no changes to the accounting policies in the financial year ended 3 April 2005. (v) The preliminary announcement was approved by the Board of Directors on 3 June 2005. This information is provided by RNS The company news service from the London Stock Exchange