RNS Number:1662A
Omega International Group PLC
22 March 2006
For Immediate Release 22 March 2006
OMEGA INTERNATIONAL GROUP PLC
PRELIMINARY RESULTS
Omega International Group PLC, a leading UK manufacturer of branded kitchen
furniture, today announces its preliminary results for the year ended 31
December 2005.
FINANCIAL HIGHLIGHTS
Increase 2005 2004
* Turnover 9% #23.2m #21.3m
* Operating Profit 15% #4.7m #4.1m
* Pre tax profit 21% #4.7m #3.9m
* Basic earnings per share 42% 11.8p 8.3p
* Total dividends per share 20% 1.8p 1.5p
* Net assets per share 49% 65.8p 44.2p
* Net cash/(debt) #2.3m (#1.8m)
*Final dividend of 1.3p per share proposed payable on 7 July 2006 to
shareholders recorded on the register on 9 June 2006, making a total of 1.8p
for the year (2004 : 1.5p).
Commenting on the results Chairman, Bob Murray, said:
"I am delighted to be reporting a second year of strong results since our
admission to AIM in April 2004. This has been achieved through the strength of
our senior management and the ongoing support from our ever increasing number of
dealers and their staff. Coupled with the proposed significant expansion of our
production facilities, the Directors are confident that the continued investment
in new product, new dealers and displays will lead to further growth in volumes,
margins and profit. We have already made our best ever start to a year."
For further information, please contact:
Omega International Group plc: Tel: 01405 743 333
Francis Galvin: Group Chief Executive
Martin Levitt: Finance Director
Buchanan Communications: Tel: 020 7466 5000
Mark Edwards e-mail: nicolac@buchanan.uk.com
Nicola Cronk
Notes to editors:
The Group's core business is the design, manufacture and marketing of branded
kitchen furniture through three main brands: Sheraton, Omega and Chippendale.
These three brands are sold throughout the UK, mainly to independent retailers.
The Group's manufacturing, distribution and sales facilities are located in its
205,000 square ft. purpose built factory complex in Thorne, Doncaster, adjacent
to the M18 motorway.
CHAIRMAN'S STATEMENT
At the time of our flotation on AIM almost two years ago, the Board of Directors
set themselves objectives to achieve in the year ending 31 December 2006:
*more than doubling pre tax profits by 2006
*increasing dividends in line with profit growth
*remaining debt free to enable self-funding of growth, and
*increasing net assets per share
I am delighted to report that the results for the year ended 31 December 2005
surpass those needed to meet these key objectives.
Turnover for the year to 31 December 2005 grew by 9% to #23.2m during a period
when many commentators were reporting difficult trading conditions with 'big
ticket' household goods. Operating profit grew significantly by 15% to #4.7m,
whilst gross and operating margin rates continued to improve, resulting in
record earnings. We believe that we can improve further our operating margin
rate of 20% of turnover which is already amongst the best in the industry.
Profit before tax rose by 21% to #4.7m, representing 20% of net sales.
Earnings per share rose 42% to 11.8p compared with 8.3p in 2004.
Cash flow remained strong and all bank borrowings were repaid during the year.
Cash at year end totalled over #2.3m.
The Group's freehold land and buildings were professionally valued at year end,
resulting in a #3.3m surplus over the previous carrying values with a total
current value of #12.5m. The Group now has an exceptionally strong ungeared
balance sheet.
Looking to the future, we are now reviewing strategic alternatives in accordance
with our overall objective of doubling in size over the next five years. To this
end, we have recently expanded our core team of advisors and appointed ING
Corporate Finance to assist the Board in reviewing its plans.
We have applied for detailed planning permission to build a 108,000 sq ft
extension to our freehold factory and offices, which will result in a facility
of 315,000 sq ft by the end of the year. The extension will be funded by cash
balances and operating cash flows. We are also fitting out an additional 5,500
sq ft of previously built office space in order to accommodate the staff that
will be needed to service our growth. This expansion gives the Group ample
capacity to allow us to capitalise on future growth opportunities and further
penetrate our chosen markets.
Current trading is in line with expectations and the Directors are confident
that the recent product launches and improved distribution will lead to further
growth in volumes, margins and profits.
On behalf of the Group, I would again like to thank all of our customers and
suppliers, as well as our own skilled and dedicated staff, for their support,
commitment and energy throughout the year.
R S MURRAY CBE FCCA
CHAIRMAN
21 March 2006
CHIEF EXECUTIVE'S REPORT
Omega designs, manufactures and markets quality kitchen furniture in the middle
to upper market segments. Its three brands, Sheraton, Omega Kitchens and
Chippendale Kitchens are distributed and sold through a national network of
specialist kitchen outlets, the majority of which are independent retailers.
The Group continued with its investment in expanding and strengthening its
display base on all three existing brands by taking on new displaying dealers as
well as adding displays of new kitchen ranges within existing outlets.
Omega continued to increase its focus on new sales opportunities particularly in
the South where historically its distribution has not been as concentrated. This
ongoing initiative is gaining further momentum and is making an ever increasing
contribution to the business.
New product development continues to be a key area of growth for the Group.
Twelve new kitchens were launched during 2005 across all three brands, helping
to improve yields per outlet as well as refreshing the mix of kitchens on
display nationally. In addition, the Omega and Chippendale kitchen ranges were
expanded significantly during the autumn so that each now carries 42 different
door styles. This move has benefits for our dealers, consumers and our
manufacturing operations.
Omega continues to work closely with its displaying outlets, utilising its
enlarged national sales force to motivate an ever increasing number of dealers
and their staff as well as constructing tailored marketing packages including
showroom layouts, staff training, CAD planning and quotations, product
promotions and support materials. The quality of our business model combined
with our management expertise and modest existing market share will allow us to
continue with our growth plans even if overall market growth is constrained.
The operational side of the business also made significant progress. Production
volumes increased by around 9% in line with sales growth with no material change
in our headcount. An extensive lean manufacturing project was completed with the
help of Yorkshire Forward and this made a significant contribution to production
sequencing. Most of our shop floor staff received NVQ (Level 2) qualifications
as part of this project.
Service levels remained consistently high, averaging 96% of all kitchens being
despatched complete and on time to our dealers or their customers' home
addresses.
The Group continues with its successful formula into 2006, targeting additional
new display outlets and further strengthening the existing display network.
Fifteen new kitchens are being launched into Sheraton this month increasing the
number of kitchens on offer to 54. A new product development programme for Omega
Kitchens and Chippendale Kitchens is now underway with launches planned for
summer 2006.
A new Group web site (www.omegaplc.co.uk) is also being launched in March 2006
offering extensive new features for the public and the trade.
The Group's senior management team has made a significant contribution to our
growth in recent years. In recognition of their achievements to date and their
role in our future growth plans, six senior managers were promoted to the
position of director of Omega PLC, our trading subsidiary, in December 2005.
FRANCIS GALVIN
CHIEF EXECUTIVE
21 March 2006
FINANCIAL REVIEW
Trading
Turnover grew by 9% to #23.2m from #21.3m in 2004. Increased sales volumes at
stable prices together with improved cost controls allowed gross margin to reach
over 48% up from 47% in 2004. Similarly operating margin improved to over 20%
(2004: 19%) whilst significantly reduced net interest costs allowed pre tax
profit to rise to over 20% of turnover compared with 18% last year.
Over the last four years, the average annual compound growth in turnover,
operating profit and pre tax profits has been 17%, 41% and 50% respectively.
Despite significant cost increases within the industry the Group has been able
to negate much of this recent pricing pressure by improving terms through
incremental business. Since the year end we have successfully implemented a
price increase of around 4% across all three brands. It has been two years since
Omega last increased prices. These factors along with further efficiencies in
the business should improve gross margins in 2006.
Cash Flow
Conversion of profits into operating cash flows was again impressive with the
net cash inflows from operating activities exceeding the level of operating
profits at #4.9m, as in 2004. All bank loans were repaid during the year and the
Group held cash balances of over #2.3m at 31 December 2005.
Capital expenditure was modest during 2005 at less than #0.2m, however the
planned expansion of the freehold factory in 2006 will result in a significant
increase in capital expenditure during the coming year.
Property Revaluation
At the year end, the Group's freehold property, which has been developed to
Institutional standards at a high specification in a prime location, was
professionally revalued. Book values have been increased by over #3.3m to a
total value of #12.5m as a result.
Balance Sheet
The repayment of all borrowings, the recognition of the surplus in the freehold
property, retained profit levels and strong working capital control have all
contributed to what is now an exceptionally strong Group balance sheet. Ungeared
net assets per share are now 65.8p (2004: 44.2p).
Treasury
The Group currently maintains cash in deposit accounts bearing variable rates of
interest. Money market deposits are made if these generate better returns.
Following repayment of all debt, the Group's bankers have released their charge
over the freehold property. An unsecured overdraft facility of #1.5m is
available to the Group.
Approximately one third of the Group's purchases of material are made in Euros.
It is the Group's policy to purchase Euros using forward options when rates are
favourable, though this hedging policy usually covers less than the next half
years' purchases. The responsibility of hedging is delegated to both the Finance
and Operations Directors.
Investor Relations
As part of the re-launch of the Group's website, the Investor Relations section
is being upgraded. Specifically, the Group has now formally adopted a "Social
Responsibility and Environmental Policy" and has set purchasing standards to
ensure the appropriate sourcing of timber. These standards are accessible
through the new website (www.omegaplc.co.uk).
MARTIN LEVITT FCA
FINANCE DIRECTOR
21 March 2006
CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2005
Notes Audited Audited
Restated
2005 2004
#'000 #'000
Turnover 2 23,200 21,326
Cost of sales (12,039) (11,232)
Gross profit 11,161 10,094
Other operating expenses (6,481) (6,007)
Operating profit 4,680 4,087
Net interest payable (20) (230)
Profit before tax 4,660 3,857
Tax on profit on ordinary activities 3 (1,378) (266)
Profit for the financial year 3,282 3,591
Dividends 4 (555) (1,411)
Retained profit for the year 2,727 2,180
Basic and diluted earnings per share 5 11.8 8.3
(pence)
All activities of the Group are continuing.
There is no material difference between reported and historical cost profits and
losses.
STATEMENT OF CONSOLIDATED TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED
31 DECEMBER 2005
Audited Audited
2005 2004
#'000 #'000
Profit for the financial year 3,282 3,591
Unrealised surplus on revaluation of freehold land
and buildings 3,255 -
Total recognised gains for the year 6,537 3,591
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2005
Note Audited Audited
Restated
2005 2004
#'000 #'000
Fixed assets
Intangible assets 14 22
Tangible assets 14,642 11,832
14,656 11,854
Current assets
Stocks 3,020 3,125
Debtors 4,350 3,363
Cash 2,340 327
9,710 6,815
Creditors: amounts falling
due within one year (5,465) (4,052)
Net current assets 4,245 2,763
Total assets less current liabilities 18,901 14,617
Creditors: amounts falling
due after more than one year (78) (1,806)
Provisions for liabilities
and charges (558) (535)
Net assets 18,265 12,276
Capital and reserves
Called-up share capital 2,776 2,776
Share premium account 1,563 1,563
Capital redemption reserve 3,096 3,096
Revaluation reserve 7,673 4,440
Profit and loss account 3,157 401
Equity shareholders' funds 6 18,265 12,276
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005
Notes Audited Audited
2005 2004
#'000 #'000
Net cash inflow from operating activities 7 4,859 4,878
Returns on investments and
servicing of finance
Interest received 19 2
Interest paid (52) (236)
Preference dividends paid - (1,426)
Net cash outflow from returns on
investments and servicing of finance (33) (1,660)
Taxation (152) (620)
Capital expenditure and financial investment
Purchase of tangible fixed assets (146) (669)
Sale of tangible fixed assets 1 30
Grants received for capital expenditure - 23
Net cash used for capital expenditure
and financial investment (145) (616)
Equity dividends paid to shareholders (416) -
Net cash inflow before use of
liquid resources and financing 4,113 1,982
Financing
Issue of shares - 2,550
Costs of share issue - (488)
Redemption of preference shares - (700)
Repayment of bank loans (2,100) (1,929)
Repayment of other loan - (50)
Net cash outflow from financing (2,100) (617)
Increase in cash in the year 8 2,013 1,365
NOTES TO THE PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2005
1. BASIS OF PREPARATION
The audited consolidated financial information for the year ended 31December
2005 has been prepared in accordance with applicable UK accounting standards and
the accounting policies disclosed in the Group's accounts for the year ended 31
December 2004 except for the adoption of new accounting standards as detailed
below. The financial information included in this announcement has been
extracted from the audited financial statements for the years ended 31 December
2005 and 2004. The content of this announcement has been agreed with the
Company's auditors.
Financial Reporting Standard (FRS) 21 'Events after the Balance Sheet Date' has
been adopted with effect from 1 January 2005. FRS 21 requires that dividends not
approved before the balance sheet date should be disclosed in the notes to the
accounts rather than being dealt with as an expense in the profit and loss
account and a liability in the balance sheet. Accordingly, the figures for the
year ended 31 December 2004 have been restated. The effect is to increase
retained profit for the period by #416,000 and to reduce creditors by a
corresponding amount, being the 2004 final ordinary dividend.
The Group has also adopted FRS 22 'Earnings per Share' with effect from 1
January 2005 which requires adjusted earnings per share figures be disclosed in
the notes to the accounts rather than on the face of the profit and loss
account.
This preliminary announcement does not constitute the Group's statutory accounts
within the meaning of Section 240 of the Companies Act 1985. The Group's 2005
Annual Report and Financial Statements, on which the Company's auditors,
PricewaterhouseCoopers LLP, have given an unqualified opinion in accordance with
Section 235 of the Companies Act 1985, are to be delivered to the Registrar of
Companies. The Group's 2004 accounts, which contain an unqualified audit report,
have been filed with the Registrar of Companies. Copies of the Group's 2005
Annual Report and Financial Statements will be posted to all shareholders during
April 2006.
2. TURNOVER
Turnover, operating profits and net assets are derived from within the United
Kingdom and are from the Group's principal activity of the manufacture and
marketing of branded consumer products.
3. TAX ON PROFIT ON ORDINARY ACTIVITIES
a) Analysis of charge in year
Audited Audited
2005 2004
#'000 #'000
Current tax
UK Corporation tax on profit for the year 1,391 188
Adjustment for prior years (36) 2
1,355 190
Deferred tax
Deferred tax at 30% 18 71
Adjustment for prior years 5 5
23 76
Tax on profit on ordinary activities 1,378 266
NOTES TO THE PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2005
3. TAX ON PROFIT ON ORDINARY ACTIVITIES (continued)
b) Factors affecting tax charge for the year
The current taxation assessed for the year is lower than the standard rate of
30% as set out below:
Audited Audited
2005 2004
#'000 #'000
Profit on ordinary activities before taxation 4,660 3,857
Profit on ordinary activities multiplied
by the standard rate of corporation tax in
the UK of 30% (2004 - 30%) 1,398 1,157
Expenses not deductible for tax purposes 26 25
Capital allowances in excess of depreciation (13) (65)
Short term timing differences (5) (6)
Statutory deduction for exercise of share options - (900)
Effect of small companies and marginal tax rates (15) (23)
Adjustment in respect of prior years (36) 2
1,355 190
c) Factors that may affect future current tax charges
Future tax charges are expected to approximate to profit multiplied by the
standard rate of corporation tax.
4. DIVIDENDS Audited Audited
Restated
2005 2004
#'000 #'000
Ordinary dividends
- Final dividend of 1.5p per share for 2004 416 -
- Interim dividend of 0.5p per share for 2005 139 -
Non-equity preference share dividends - 1,411
Total Dividends 555 1,411
The Directors have proposed a final dividend of 1.3p per share payable on 7 July
2006, making a total of 1.8p per share for 2005 (2004 : 1.5p per share).
5. EARNINGS PER SHARE
Audited Audited
2005 2004
Earnings per share
Basic and diluted 11.8p 8.3p
Adjusted earnings per share
Basic and diluted 11.8p 10.2p
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of shares in issue during
each period.
NOTES TO THE PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2005
5. EARNINGS PER SHARE (continued)
Diluted earnings per share reflect the adjustment of the weighted average number
of ordinary shares in issue to assume conversion of all dilutive potential
ordinary shares, being certain outstanding share options.
The number of shares has been adjusted to calculate earnings per share as though
the 10 for 1 share split on 13 April 2004 had been in effect throughout 2004.
Weighted average number of shares:
Audited Audited
2005 2004
For basic earnings per share 27,761,150 26,356,537
Share options dilution 148,436 48,510
For diluted earnings per share 27,909,586 26,405,047
A reconciliation of the earnings attributable to ordinary shareholders used in
the calculation of basic and diluted earnings per share is as follows:
Audited Audited
2005 2004
#'000 #'000
Profit for the period 3,282 3,591
Dividends - non equity - (1,411)
Basic earnings 3,282 2,180
Adjusted basic and diluted earnings per share have been calculated so as to
exclude certain one-off items that arose during 2004 in connection with the
Company's admission to the Alternative Investment Market. Adjusted earnings per
share are provided in order that the effect of these one-off items can be fully
appreciated.
Adjusted earnings used in the calculation of basic and diluted earnings per
share reconciles to basic earnings as follows:
Audited Audited
2005 2004
#'000 #'000
Basic earnings (as above) 3,282 2,180
Exceptional tax credit generated by the
exercise of Directors' share options
immediately prior to flotation - (900)
Deferred preference dividend payable on
flotation - 1,400
Adjusted earnings for the period 3,282 2,680
NOTES TO THE PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2005
6. RECONCILIATION OF MOVEMENTS ON EQUITY SHAREHOLDERS' FUNDS
Audited Audited
Restated
2005 2004
#'000 #'000
Profit for the financial year 3,282 3,591
Preference dividends - (1,411)
Preference share redemptions - (700)
Ordinary dividends (555) -
Share option expense 7 3
Revaluation of freehold 3,255 -
Issue of ordinary shares - 2,550
Cost of share issue - (488)
Net addition to equity shareholders' funds 5,989 3,545
As at 1 January 12,276 8,731
As at 31 December 18,265 12,276
7. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
Audited Audited
2005 2004
#'000 #'000
Operating profit 4,680 4,087
Depreciation and amortisation 581 518
Loss on disposal of fixed assets 5 14
Share option expense 7 3
Grant released from deferred income (28) (39)
Decrease in stocks 105 261
Increase in debtors (982) (210)
Increase in creditors 491 244
Net cash inflow from operating activities 4,859 4,878
8. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Audited Audited
2005 2004
#'000 #'000
Increase in cash 2,013 1,365
Net decrease in debt 2,100 1,979
4,113 3,344
Net debt at 1 January (1,773) (5,117)
Net cash (debt) at 31 December 2,340 (1,773)
This information is provided by RNS
The company news service from the London Stock Exchange
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