PEX Ubsetf Pex

RNS No 0432k
PEX PLC
28 May 1999


Pex plc, the UK's largest maker of children's socks and tights and a
manufacturer of men and ladies as well as outdoor and leisure socks and ladies
dernier tights, announces its preliminary results for the year ending 31
December 1998.

Group profit and loss account
for the 12 months ended 31 December 1998

                                              Unaudited   Audited
                                                  1998      1997
                                                  #000      #000
Turn over
                Continuing operations           15,797    10,412
                Acquisitions                     1,553     4,085

                                                17,350    14,497

Cost of sales                                  (14,226)  (11,021)

Grossprofit                                      3,124     3,476

Operating expenses - excluding
               exceptional items                (3,897)   (3,265)  
             - exceptitonal items                  563      (302)

                                                (3,334)   (3,567)

Operating (loss)/profit
  Continuing Operations                           (306)      (90)
  Acquisition                                       96        (1)

                                                  (210)      (91)

Exceptional income -
Profit on sale of tangible fixed assets          1,193       736

Profit before interest                             983        645

Net interest payable                              (636)      (382)

Profit on ordinary activities
Before taxation                                    347        263

Tax on profit on ordinary activities              (146)       (43)

Profit for the financial year                      201        220

Dividend proposed                                    0       (134)

Profit retained                                    201        86

Basic earnings per share                          0.13       0.17p
Diluted earnings per share                        0.13p      0.17p


Balance sheet
at 31 December 1998

                                   Unaudited   Audited    Unaudited   Audited 
                                       Group     Group      Company   Company   
                                        1998      1997         1998      1997 
                                        #000      #000         #000      #000 
Fixed Assets 
Intangible assets - Goodwill           1,044        75            -         - 
         - Negative goodwill            (317)                  (317) 
Tangible assets                        3,712     3,219        2,522     2,478 
Investment                               151                  2,193     1,939 

Current assets 
Stocks                                 7,155     4,581        4,571     3,896 
Debtors                                9,521     4,633        3,604     4,278 
Cash at bank and in hand                 583     1,341          105     1,338

                                      17,259    10,555        8,280     9,512

Creditors: amounts falling
due within one year                  (11,990)   (4,514)      (3,352)   (4,615)
        
Net current assets                     5,269     6,041        4,928     4,897

Total assets less 
  current liabilities                  9,859     9,335        9,326     9,314
        
Creditors: amounts falling
due after more than one year          (2,275)   (2,875)      (1,874)   (2,857)
Deferred Income 
   - Grants not yet credited             (44)

Net assets                             7,540     6,460        7,452     6,457

Capital and reserves
Called up share capital                2,837     2,670        2,837     2,670
Share prenium account                  3,852     3,164        3,852     3,164
Profit and loss account                  851       626          763       623

Equity shareholders' funds             7,540     6,460        7,452     6,457


The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 1997 or 1998. The financial
information for 1997 is derived from the statutory accounts for 1997, which have
been delivered to the registrar of companies. The auditors have reported on
the 1997 accounts; their report was unqualifed and did not contain a statement
under section 237 (2) or (3) of the Companies Act 1985. The statutory accounts
for 1998 will be finalised oil the basis of the financial information presented
by the directors in this preliminary announcement and will be delivered to the
registrar of companies following the company's annual general meeting.


CHAIRMAN'S STATEMENT ON 
THE ANNUAL REPORT AND ACCOUNTS 
FOR THE FINANCIAL PERIOD
ENDED 31 DECEMBER 1998


It is with pleasure that I report for the second time as your Chairman on the
progress already made to create an important European company, manufacturing,
designing and distributing socks. Our achievement is set against an economic
background where the odds are stacked against the UK textile manufacturing
industry. However, the greater the difficulties we face, the better our
experience becomes and the stronger our determination grows to succeed.

RESULTS 
Group turnover for the year ending 31 December 1998 was #17,349,860 (a
rise of 20% over the previous year). Whilst the profit before tax was #347,000
(an increase of 31.9% compared to 1997) it reflects significant exceptional
items. This takes into consideration that the newly acquired companies are
consolidated from their date of acquisition only.

Growth has mainly come from the acquisition of new businesses in sock
manufacturing which has proved to be the only way to increase market
penetration, product range and customer base. This strategy is also currently
being pursued by other growing clothing groups across Europe - confirming the
rationale of our actions.

ACQUISITIONS 
In March 1998, we unconditionally purchased the ongoing business and the assets
of Sockwise Ltd, through Bridgedale 2000 Ltd. Sockwise is a leading contract
supplier of own label adult socks to the British multiples. It has a capacity of
4.5 million pairs of socks.

During the same period, we launched an increase of capital sponsored and
underwritten by the merchant bank Henry Ansbacher raising #1 million before
expenses. This capital increase was fully paid on 10 April 1998.

In June 1998 we purchased the whole share capital of Bonneterie de Dottignies
S.A. in Belgium, a small but very reputable entity in the sports and adult socks
sector, supplying mainly the French multiples. The capacity of this company is
2.5 million pairs of socks.

Later on in June 1998 we bought the businesses of Bulivan, Veclamar and La
Veneziana brand through a new company in Asolo, Italy. We adopted the name of
the most innovative brand, Bulivan, and started to pack and market ladies' sheer
dernier hosiery on a trial basis. We are currently evaluating the trial.

On 31 July 1998 we were able to successfully conclude the acquisition of the
sock making business from the receivers of the Hollas Group plc, (capacity of
3.3m pairs of socks) which we incorporated into a new subsidiary called Polisox
2000 Ltd. Polisox creates, designs and distributes sport and fashion socks for
teenagers, men and women and has developed ski and outdoor socks and specialist
socks for amputees.

As a result of these acquisitions, new and important customers were attracted to
the Group.

Our activities also include the trading of sock making machinery. Using our
expertise gained in evaluating the machine portfolio of target socks business
and our understanding of the industry, we regularly buy and sell machines to
manufacturers and traders around the world.

As a consequence, we have created a Group able to respond to the market for
babies, children, teenagers, men and women socks and tights and to satisfy their
requirements through all their activities at school, at work and during leisure.
The success of this strategy has helped to compensate for the disappointing
results of PEX's traditional activity.

CONTINUING OPERATIONS 
We want to highlight the continuing strong performance of Bridgedale 2000 Ltd
whose operating profits from outdoor technical socks has again increased.
Notwithstanding the strength of the Pound Sterling, Bridgedale has increased its
export penetration, particularly in North America.

Despite the measures we have taken in previous years, we have continued to
suffer poor productivity in the original Pex children company, which has
returned losses overshadowing the positive results produced by other divisions.
We have decided that drastic steps must be taken to eliminate the serious losses
within Pex children's division. Accordingly, we are now implementing a radical
plan to substantially rationalise and downsize our manufacturing activities in
Leicester. This will be accompanied by a similar reduction in our core overheads
in part made possible by the introduction of more sophisticated information
technology. The implementation of the plan will place many challenges on our
management and staff, but it is fundamentally necessary to enable the Group to
be competitive and profitable, and therefore viable.

Our current year budget indicates that implementing this plan will result in the
UK operations producing a significant improvement during the second half of this
financial year.

Having acquired companies to expand our customer, geographical market and
product range we now intend to transfer our focus to building shareholders
value.

GROUP CULTURE 
The Group is made up of different companies with different cultures and
traditions developed over many years, sometimes even decades. Consequently, the
Group has devoted considerable energy to create a new corporate culture aimed at
succeeding in the future, by building on the best qualities inherent in our
various companies and creating within the Group a philosophy where quality and
customer satisfaction is all important.

As a result we can say with some confidence that we look forward to a more
successful period, during which we will build on those companies which offer the
best prospect of sustainable growth.

POST BALANCE SHEET EVENTS 
During January 1999 we were offered the opportunity to purchase a stake in
Apollo S.A. by Uniwear. Apollo is a company listed on the RASDAQ market in
Bucharest and is one of the largest manufacturers of socks in Romania with a
knitting machine capacity of 17 million pairs. Together with our alliance with
Pacific Dunlop in China, we see this investment in Romania as crucially
important in helping us to respond to our customers' requirements for
competitive prices in a profitable manner.

Like most of the UK's embattled manufacturing industry, we have been forced to
consider transferring part of our production overseas. Therefore our investment
in Apollo, together with our alliance with Pacific Dunlop and our other
manufacturing location in Italy and Belgium, gives us the strength and
flexibility to provide high quality products, delivered on a timely basis and at
an appropriate price.

Intense price awareness in the High Street has caused many retailers, including
those who have previously sought to source almost entirely from the UK, to use
overseas suppliers. The multiples' mission is to provide' high quality products
at competitive prices. We support this policy and are meeting the challenge as a
major supplier.

To sum up, our task now is to consolidate the resources, skills and accumulated
goodwill we have acquired to create a lean manufacturing and distribution Group
which is able to compete successfully in a globally competitive market.

                       Andrea Cattaneo Della Volta
                          Marquess of Belforte
                      Chairman and Chief Executive

For further information telephone:

Mq Andrea Cattaneo Della Volta            0116 290 3090
Tim Blackstone                            0171 251 2527
        
        
END        

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