Tandem Group profit rises

Tandem’s operating profit before exceptional costs totalling £738,000. In 2003 it was nil.

There was goodwill amortisation of £206,000 (2003 – £201,000) and negative goodwill released of £443,000 (2003 – nil), was £1,682,000 compared to £988,000 last year.

The acquisition of MV Sports Group plc, was completed 8th April 2003.

A statement from Tandem said Dawes maintained market share during the year and with reduced fixed costs, increased profitability before exceptional costs.

"Sales since 31 January 2004, both at Falcon and Dawes, have been encouraging with improved margins and reduced fixed costs.

Sales in the period to January 31st rose to £56.26 from £37.32m a year earlier, with £18.8m contributed by MV Sports Group PLC.

Consolidated profit and loss account

Year ended 31 January 2004

2004 2003

£’000 £’000 £’000 £’000

Turnover

Continuing operations 37,421 37,317

Acquisitions 18,835 –

——– ——–

56,256 37,317

Discontinued operations 643 –

——– ——–

56,899 37,317

Cost of sales (40,965) (26,382)

——– ——–

Gross profit 15,934 10,935

Normal operating expenses (14,252) (9,947)

Exceptional operating expenses (738) –

Net goodwill release/(amortisation) 237 (201)

Total operating expenses (14,753) (10,148)

——– ——–

——– ——–

Operating profit

Continuing operations (269) 917

Acquisitions 1,248 (134)

Discontinued operations 202 4

Profit on ordinary activities before

interest 1,181 787

——– ——–

Net interest payable (572) (553)

——– ——–

Profit on ordinary activities before

taxation 609 234

Tax on profit on ordinary activities (3) 9

——– ——–

Profit on ordinary activities after

taxation 606 243

Non equity minority interests (27) 151

——– ——–

Profit for the financial year

transferred to reserves 579 394

——– ——–

Earnings per share Pence Pence

Basic 1.64 1.57

——– ——–

Diluted 1.62 1.57

——– ——–

Adjusted 3.06 2.38

——– ——–

Consolidated balance sheet

At 31 January 2004

2004 2003

£’000 £’000

Fixed assets

Intangible assets 3,523 3,692

Negative goodwill (197) (197)

——– ——–

3,326 3,495

Tangible assets 1,396 1,153

——– ——–

4,722 4,648

——– ——–

Current assets

Stocks 7,593 7,133

Debtors 9,275 6,433

Cash at bank and in hand 1,965 –

——– ——–

18,833 13,566

——– ——–

Creditors – amounts falling due within one year

Bank overdraft – 1,374

Other creditors 15,249 9,539

——– ——–

15,249 10,913

——– ——–

Net current assets 3,584 2,653

——– ——–

Total assets less current liabilities 8,306 7,301

Creditors – amounts falling due after more than one

year 1,006 1,801

Provisions for liabilities and charges – 69

——– ——–

Net assets 7,300 5,431

——– ——–

Capital and reserves

Called up share capital 1,503 11,174

Share premium account 5,258 5,442

Merger reserve 1,036 63

Other reserves 5,363 406

Profit and loss account (6,609) (12,376)

——– ——–

Equity shareholders’ funds 6,551 4,709

Non-equity minority interests 749 722

——– ——–

7,300 5,431

——– ——–

Consolidated cash flow statement

Year ended 31 January 2004

Notes 2004 2003

£’000 £’000

Net cash inflow from operating activities A 4,436 9

——- ——-

Returns on investments and servicing of finance

Interest paid (556) (544)

Interest element of hire purchase rentals (16) (9)

——- ——-

Net cash outflow from returns on investments and

servicing of finance (572) (553)

——- ——-

Taxation (3) –

——- ——-

Capital expenditure

Purchase of tangible fixed assets (351) (214)

Sale of tangible fixed assets 35 48

——- ——-

Net cash outflow from capital expenditure (316) (166)

——- ——-

Acquisitions and disposals

Purchase of subsidiary undertakings (449) (1,170)

Net cash at bank and in hand acquired with

subsidiary 185 –

Disposal of subsidiary undertakings 1,245 –

Purchase of subsidiary company preference shares – (140)

——- ——-

Net cash inflow/(outflow) from acquisitions and

disposals 981 (1,310)

——- ——-

Net cash inflow/(outflow) before financing 4,526 (2,020)

——- ——-

Financing

Ordinary shares issued – 2,450

Expenses incurred in issue of ordinary shares (193) (88)

Repayments of amounts borrowed (880) –

New loans – 2,500

Capital element of hire purchase rentals (114) (79)

——- ——-

Net cash (outflow)/inflow from financing (1,187) 4,783

——- ——-

Increase in cash B & C 3,339 2,763

——- ——-

Notes to consolidated cash flow statement

A. Reconciliation of operating profit to net cash

inflow from operating activities 2004 2003

£’000 £’000

Operating profit 1,181 787

Depreciation charges 637 384

Goodwill amortisation 206 201

Goodwill release (443) –

Profit on sale of tangible fixed assets (4) (13)

Decrease/(increase) in stocks 906 (457)

Increase in debtors (1,209) (800)

Increase/(decrease) in creditors 3,231 (65)

Utilisation of provisions on discontinued activities (69) (28)

——- ——-

Net cash inflow from operating activities 4,436 9

——- ——-

B. Reconciliation of net cash inflow to movement in

net funds/(debt) 2004 2003

£’000 £’000

Increase in cash 3,339 2,763

Cash to repay finance leases and hire purchase

contracts 114 79

Bank loan 800 (2,500)

——- ——-

Changes in net debt resulting from cash flows 4,253 342

New finance leases – (231)

Lease and hire purchase obligations acquired with

subsidiary (65) –

Loan acquired with subsidiary (80) –

——- ——-

Movement in net debt in the year 4,108 111

Net debt at 1 February (4,044) (4,155)

——- ——-

Net funds/(debt) at 31 January 64 (4,044)

——- ——-

C. Analysis of net debt

At

1 February Cash Non-cash 31 January

2003 Flow Acquisitions Flow 2004

£’000 £’000 £’000 £’000 £’000

Cash at bank and in hand – 1,965 – – 1,965

Bank overdraft (1,374) 1,374 – – –

——– ——– ——— ——- ——–

(1,374) 3,339 – – 1,965

Bank loan due within 1

year (800) 800 – (800) (800)

Bank loan due after 1

year (1,700) – – 800 (900)

Loans acquired with

subsidiary – – (80) – (80)

Hire purchase creditors (170) 114 (65) – (121)

——– ——– ——— ——- ——–

(4,044) 4,253 (145) – 64

——– ——– ——— ——- ——–

Notes to the preliminary results

1. This preliminary announcement is not the Group’s statutory accounts but

extracts therefrom and is prepared on the basis of the accounting policies as

used in the 2003 financial statements. Statutory accounts dealing with the

financial year ended 31 January 2003 have been delivered to the Registrar of

Companies, however, statutory accounts dealing with the financial year ended 31

January 2004 have not yet been delivered. The auditors have reported on the

accounts for the financial year ended 31 January 2003 and 31 January 2004. Their

reports were unqualified and did not contain a statement under section 237 (2)

or (3) of the Companies Act 1985.

2. The statutory accounts for the year ended 31 January 2004 will be

delivered to the Registrar of Companies following the Group’s annual general

meeting.

3. Net goodwill release/(amortisation) comprises goodwill amortisation of

£206,000 (2003 – £201,000) and negative goodwill released of £443,000 (2003 –

£nil).

4. No dividend on the ordinary shares is being proposed (2003 – £nil).

5. Non-equity minority interests comprises dividends waived amounting to

£38,000 less dividends accrued of £65,000.

6. Earnings per share

2004 2003

£’000 £’000

Profit for the year used for basic and diluted

earnings per share calculation 579 394

Net goodwill (release)/amortisation (237) 201

Exceptional operating expenses 738 –

——– ———

Profit for the year before goodwill

amortisation and exceptional operating

expenses used for adjusted earnings per share

calculation 1,080 595

——– ———

Number Number

Weighted average number of ordinary shares in

issue during the year used for basic and

adjusted earnings per share calculation 35,333,215 25,046,519

Weighted average number of shares under option 1,310,959 –

Number of ordinary shares that would have to

be issued at fair value (942,252) –

———- ———–

Weighted average number of ordinary shares in

issue during the year used for diluted

earnings per share calculation 35,701,922 25,046,519

———— ———–

pence pence

Earnings per share

Basic 1.64 1.57

Diluted 1.62 1.57

Adjusted 3.06 2.38

The adjusted earnings per share, which excludes net goodwill release of £237,000

(2003 – £201,000 amortisation) and exceptional items of £738,000 (2003 – £nil),

is calculated to allow shareholders to gain a clear understanding of the trading

performance of the Group. Earnings per share for 2004 and 2003 have been

restated to take account of the share consolidation which was approved by

shareholders on 18 March 2003.

7. The Annual Report and Accounts will be posted to shareholders shortly.

8. The Annual General Meeting will be held at 11:00 a.m. on 10 June 2004 at

Eversheds LLP, 1 Royal Standard Place, Nottingham NG1 6FZ.