Chairman's Statement 2004
The Group results show a pre-tax loss of £4.1 million (2003 £0.5 million) for the year on sales of £49.0 million (2003 £66.5 million) after substantial exceptional costs of £4.0 million and a profit of £1.7 million made on the disposal of Sprung Slumber and two surplus properties. The exceptional costs arise from the decision to outsource Airsprung Beds' woodmill, the closure costs of Bymacks' production facility and a write-off of the goodwill at Peter Guild. I am pleased to say that the restructuring over these past two years which was so necessary is now complete.
Cash and short term deposits at the year end were £4.2 million representing an increase of £2.8 million on the previous year. The balance sheet is free of gearing. The pressure on margins from high street retailers and the loss of a significant customer in the final quarter had an adverse effect on profitability.
Because of our strong cash position the board is recommending a final dividend of 2.0p per ordinary share (2003 2.0p). This is payable on 30 July 2004 to shareholders on the register on 9 July 2004. The ex-dividend date is 7 July 2004. This makes a total dividend for the year of 3.5p (2003 3.0p ordinary dividend and 5.0p special dividend).
A detailed review is included in the Chief Executive's report but I will refer to two significant actions that have previously been reported:
The sale of Sprung Slumber, where I consider an excellent sale price was achieved. Last year we stated that major capital expenditure would be required to expand the business; therefore, to concentrate production at our Trowbridge factory where production efficiencies have improved significantly, together with the opportunity to further strengthen our cash position, the sale was an opportunity not to be missed.
Despite stringent efforts to refocus Bymacks these were not successful, with the inevitable closure of the Brimscombe factory and the transfer of manufacturing to low cost economies, which I feel will have a positive effect.
Two other decisions not previously reported, neither of which will have a negative effect on our cash position, are the closure of the Airsprung Beds woodmill at a cost of £1.9 million due to the effect of low cost imports. However this should improve future profitability. We are in an advanced stage of negotiation to outsource to a specialist supplier to whom we will sub-let the premises.
In addition the trading performance of Peter Guild has necessitated the write-off of £0.6 million goodwill in that company.
The following changes to the board took place in the year:
On 6 November 2003 we welcomed a new non-executive director, John Newman, who was previously Chief Executive of UKS Group Ltd and has held main board directorships operating in PLC and MBO environments in a variety of industries in the UK and internationally.
On 17 December 2003 Paul Lamb, Managing Director of Airsprung Beds Ltd was appointed as Group Operations Director. Paul joined Airsprung Beds in December 2002 having held the position of Managing Director of Neill Tools Ltd.
On 31 March 2004 Andrew Alsop resigned from the board after more than 28 years' service with the company. I would thank Andrew for his exceptional loyalty and contribution to the Group, especially the fact he was due to leave in December 2003 but was persuaded to stay on to help in the restructuring process.
On 1 April 2004 Tean Dallaway was appointed as Group Financial Director. Tean is a Chartered Accountant and has been Group Company Secretary since April 1996.
On behalf of the board I thank all the employees for their loyalty and commitment during a period when we have experienced such difficult trading conditions.
We have now concluded the process of restructuring which has had such a detrimental effect on the profitability of the Group, and the Group should see a significant improvement in operating performance barring any major economic downturn.
Philip Bradshaw
Chairman