LENNOX HOLDINGS PLC
Interim Results for the six months ended 30 June 2007
Lennox Holdings Plc (the `Company') the distributor of northern European food
and beverage produce to Spain announces interim results for the six months
ended 30 June 2007.
Highlights
* Loss after tax reduced from �1.04 million at H1 2006 to �856,000 at H1 2007
* Operational expenses cut by 22% and expected to reduce further for full
year as cost cutting continues.
* Reduction in overheads by reducing staff levels and expensive commission
based agents.
* New Operations Manager installed in Benissa to ensure rigid management of
daily operations and financial controls.
* Supplier and customer base remains strong
Nigel Terry, Chairman, commented:
"Thestringentactions taken in recent months have enabled significant cost
reductions to be made in most areas of the business,and I am pleased to report
that as a result, losses for the periodare �190,000 lower than for
thecorresponding period last year.The Company's position as the leading
distributor of northern European produce into Spain remains unaltered with a
customer base which includes most of Spain's major food stores.
"Our central strategy of providing the principal means for British food
manufacturers to get their produce onto Spanish shelves remains intact and it
is our intention in the months ahead to explore new product lines and customer
groups."
27 September 2007
Enquiries:
Nexus Financial Ltd 020 7451 7068
Nicholas Nelson/Kathy Boate nicholas.nelson@nexusgroup.co.uk
ARM Corporate Finance Ltd 020 7512 0191
Ian Fenn
CHAIRMAN'S STATEMENT
Our focus during the past six months has been to stabilise the company and
provide a sound platform from which management can shift attention to growth.
We believe that the operating inefficiencies, which had crept into the
business, have now been unearthed and considerable progress has been made in
remedying them.
As a result of this process, it became clear that overheads could be reduced
without compromising the quality of service to our suppliers and customers.
Staffing levels have been reduced from 83 to 56 and by cutting the use of
expensive commission based agents, additional full year savings should be
achieved. Both the Barcelona and Majorca warehouses have been closed and
instead arrangements have been put in place with local distributors in each
region. In Majorca, however, we have kept our sales manager to oversee the
logistics of distributing to the Balearic Islands.
During the period we took on an operations manager at our central depot in
Benissa who has worked with me during my many years in the food industry. His
principal role is to ensure that the daily operations are managed rigidly. On
the warehouse floor, controls are now in place to ensure that stock/turnover
ratios are improved to minimise wastage caused by out of date products.
Financial Overview
Revenues declined slightly to �3.4 million (H1 2006: �3.7 million) and the loss
after tax reduced to �856,000 (H1 2006: loss �1.04 million). Administrative
expenses were cut by 22% and it is expected that these will reduce further in
the second half as the full effects flow through.
The loss per share reduced from 4.2 pence to 3.2 pence per share, and on a
fully diluted basis, taking account of the convertible loan stock issued during
the period, the loss per share is 0.9 pence per share.
Working Capital
Whilst Lennox continues to make progress, it is operating under difficult
working capital constraints as a result of continuing losses and the Board is
monitoring this position closely. . The Company intends to enter into
discussions with the loan stock holders with a view to rescheduling the
interest payments due on the loan stock issued in 2006.
In March we announced that we had agreed new banking facilities with Bank
Popular, which has branches throughout mainland Spain, whereby Bank Popular
agreed initially to advance up to Euro 500,000 in respect of certain debtors.
This facility is now fully operational. Lennox currently has a debtor book in
excess of Euro1.9m and it is hoped that a wider invoice discounting facility
will made available over time.
During the year to 31 December 2006 the Company agreed a basis for settlement
of potential Spanish tax liabilities amounting to �1,476,000. I am pleased to
report that in the half year to 30 June 2007 the Company has paid off
approximately �600,000 of this liability and continues to make monthly payments
to the Spanish tax authority in accordance with the settlement agreement.
Outlook
The actions set out above have resulted in significantly reduced losses and we
are confident that this progress can be maintained particularly against a
background of expected sales growth as management focus shifts to an ever
greater degree on marketing and business development.
The Company's position as the leading distributor of northern European produce
into Spain remains unaltered with a customer base which includes most of
Spain's major food stores. Indeed, our central strategy of providing the
principal means for British food manufacturers to get their produce onto
Spanish shelves remains intact and it is our intention in the months ahead to
explore new product lines and customer groups.
Nigel Terry
Chairman
27 September 2007
LENNOX HOLDINGS PLC
PERIOD ENDED 30 JUNE 2007
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
Six months to Six months Year ended
to
30 June 2007 30 June 2006 31 December
2006
�000 �000 �000
Continuing operations
Revenue 3,391 3,709 7,091
Cost of sales (2,628) (2,869) (5,624)
Gross Profit 763 840 1,467
Administrative expenses (1,465) (1,883) (3,860)
Operating (Loss) (702) (1,043) (2,393)
Finance income - - 67
Finance cost (154) (3) (109)
(Loss) before taxation (856) (1,046) (2,435)
Taxation - - -
Loss Attributable to Equity (856) (1,046) (2,435)
Shareholders
Basic (loss) per ordinary shares (3.2)p (4.2)p (9.4)p
Diluted earnings per ordinary share (0.9)p (4.2)p (2.5)p
of 1p
LENNOX HOLDINGS PLC
PERIOD ENDED 30 JUNE 2007
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Share Share Retained
capital premium Earnings Total
�000 �000 �000 �000
Balance at 1 January 2007 2,665 6,815 (10,485) (1,005)
Exchange differences - - 13 13
Costs incurred on share issue - - - -
Issue of shares during the - - - -
period
Net income and expenses 2,665 6,815 (10,472) (992)
recognised directly in equity
Loss for the period - - (856) (856)
Balance at 30 June 2007 2,665 6,815 (11,328) (1,848)
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
Unaudited Unaudited Audited
Six months to Six months Year ended
to
30 June 2007 30 June 31 December
2006
2006
�000 �000 �000
Exchange differences on consolidation 13 22 47
Net income recognised directly in 13 22 47
equity
Loss for the year (856) (1,046) (2,435)
Total recognised income/(expense) for (843) (1,024) (2,388)
the year
Attributable to:
Equity holders of company (843) (1,024) (2,388)
LENNOX HOLDINGS PLC
PERIOD ENDED 30 JUNE 2007
CONSOLIDATED BALANCE SHEET AT 30 JUNE 2007
Unaudited Unaudited Audited
Six months to Six months to Year ended
30 June 2007 30 June 2006 31 December
2006
�000 �000 �000
Non-Current Assets
Property, plant and equipment 1,943 2,039 1,985
Intangible asset 1 1 1
1,944 2,040 1,986
Current Assets
Inventories 782 1,413 1,156
Trade and other receivables 1,904 2,202 1,990
Cash and cash equivalents 104 164 299
2,790 3,779 3,445
Total Assets 4,734 5,819 5,431
Capital and Reserves Attributable to
Equity Holders of the Company
Ordinary shares 2,665 2,665 2,665
Share premium 6,815 6,833 6,815
Retained earnings (11,328) (9,549) (10,485)
(1,848) (51) (1,005)
Minority interest in equity - - -
Total Equity (1,848) (51) (1,005)
Non-Current Liabilities
Tax liabilities 407 - 606
Borrowings 898 1,037 937
Convertible loan stock 2,807 1,232 2,717
4,112 2,269 4,260
Current Liabilities
Trade and other payables 2,175 3,511 1,929
Current tax liabilities 205 24 157
Borrowings 90 66 90
2,470 3,601 2,176
Total Liabilities 6,582 5,870 6,436
Total Equity and Liabilities 4,734 5,819 5,431
LENNOX HOLDINGS PLC
PERIOD ENDED 30 JUNE 2007
CONSOLIDATED CASHFLOW STATEMENT
Unaudited Unaudited Audited
Six months to Six months to Year ended
30 June 2007 30 June 2006 31 December
2006
�000 �000 �000
Net Cash from Operating Activities (246) (1,036) (2,512)
Cash Flows from Investing Activities
Proceeds on disposal of fixed - - -
assets
Purchases of property plant and - (41) (161)
equipment
Net Cash used in Investing Activities - (41) (161)
Cash Flows from Financing Activities
New borrowings 90 826 2,770
Repayment of borrowings (39) (32) (156)
Costs incurred on share issue - - (156)
Proceeds on issue of shares - 245 245
(Decrease) in bank overdrafts - (67) -
Net Cash used in Financing Activities 51 972 2,703
Net Increase/(Decrease) in Cash and (195) (105) 30
Cash Equivalents
Cash and Cash Equivalents at 299 269 269
Beginning of Year
Effect of foreign exchange - - -
rate
Cash and Cash Equivalents at End of 104 164 299
Year
LENNOX HOLDINGS PLC
PERIOD ENDED 30 JUNE 2007
RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Unaudited Unaudited Audited
Six months to Six months to Year ended
30 June 2007 30 June 2006 31 December
2006
�000 �000 �000
Operating profit from continuing (856) (1,046) (2,435)
operations
Adjustments for:
Depreciation of property plant and 51 73 107
equipment
Foreign exchange adjustments 4 27 68
Interest income - - (67)
Interest expense 64 23 109
Operating cash flows before movements (737) (923) (2,218)
in working capital
Taxation paid - - (364)
(increase)/decrease in inventories 374 (133) 390
(Increase)/decrease in receivables 86 313 525
Increase/(decrease) in 95 (270) (323)
payables
Increase/(decrease) in provisions - - (480)
Cash generated by operations (182) (1,013) (2,470)
Interest net (64) (23) (42)
Net Cash From Operating Activities (246) (1,036) (2,512)
LENNOX HOLDINGS PLC
PERIOD ENDED 30 JUNE 2007
NOTES TO THE INTERIM STATEMENTS
1. Principal Accounting Policies
The accounting policies and methods of computation used in the interim
financial report are the same as those used to prepare the audited financial
statements at the 31 December 2006. These policies have been consistently
applied to all years presented, unless otherwise stated.
The financial statements have been prepared under the going concern concept.
The continuation of the group's activities is dependent upon the continued
support of the bank, its creditors and the group's improving trading
performance.
Basis of Accounting
The financial information contained in this interim report does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The consolidated profit and loss account and cash flow statements for the 6
months to 30 June 2007 and 30 June 2006 and the consolidated balance sheet at
30 June 2007 and 30 June 2006 are unaudited. The financial information for the
year ended 31 December 2006 has been extracted from the statutory accounts
filed with The Registrar of Companies which contained an audit report with an
emphasis of matter under Section 237 (3) of the Companies Act 1985.
The financial statements of Lennox Holdings plc have been prepared in
accordance with EU Endorsed International Financial Reporting Standards (IFRS),
IFRIC interpretations and the Companies Act 1985 applicable to companies
reporting under IFRS. The financial statements have been prepared under the
historical cost convention, as modified by the revaluation of certain
properties.
IFRS, as adopted by the EU, differs in certain respects from IFRS as issued by
the IASB. However, the financial statements for the periods presented would be
no different had the group applied IFRS as issued by the IASB. References to
IFRS hereafter should be construed as references to IFRS as adopted by the EU.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the group's accounting
policies.
LENNOX HOLDINGS PLC
PERIOD ENDED 30 JUNE 2007
NOTES TO THE INTERIM STATEMENTS
2. Segmental Information
Geographical segments
The groups' main business segments operate in two main geographical areas.
The home country of the company is the UK. The areas of operation are
principally the distribution of branded and own label British food and drink
products.
The groups' revenue is mainly within the UK and Spain.
Unaudited Unaudited Audited
Six months to Six months to Year ended
30 June 2007 30 June 2006 31 December
2006
�000 �000 �000
Revenue
UK 29 - 11
Europe 3,362 3,709 7,080
Other - - -
3,391 3,709 7,091
Revenue is allocated based on the country in which the customer is located
Total Assets
UK 31 - 34
Europe 1,912 2,039 1,951
Other - - -
1,943 2,039 1,985
Total assets are allocated based on where the assets are located
Capital Expenditure
UK - - 39
Europe - 41 122
Other - - -
- 41 161
Capital expenditure is allocated based on where the assets are located.
3. Dividends
The directors do not recommend the payment of an interim dividend.
LENNOX HOLDINGS PLC
PERIOD ENDED 30 JUNE 2007
NOTES TO THE INTERIM STATEMENTS
4. Earning per share
Earnings per share have been calculated by dividing the group's profit after
tax from ordinary activities by the weighted number of ordinary shares in
issue.
Unaudited Unaudited Audited
Six months to Six months to Year ended
30 June 2007 30 June 2006 31 December
2006
(Loss) attributable to equity (855,806) (1,046,000) (2,434,736)
holders of the company
Weighted average number of 26,651,652 24,995,883 25,832,748
ordinary shares in issue
Weighted average number of 97,096,269 24,995,883 96,277,365
ordinary shares for diluted
earning per share
Basic (loss) per ordinary share (3.2)p (4.2)p (9.4)p
Diluted (loss) per ordinary share (0.9)p (4.2)p (2.5)p
of 1p
5. Comparative Figures
The 30 June 2006 figures have been restated to remove the property revaluation
as this was not reflected in the audited 31 December 2006 financial statements.
6. Convertible Loan Stock
In 2006 the company issued �2,695,000 of convertible loan stock. The loan stock
is convertible at the holder's option at any time until 31st July 2011 at the
rate of one ordinary share for every 10p nominal value of stock. In addition,
subscribers of stock received one warrant for every 10p nominal of stock
subscribed, which entitled the holder to subscribe for one ordinary share at a
price of 1p per share for each warrant held, at any time in the three years
commencing 1st August 2006. The subscribers to the new shares issued during the
year also received one warrant for every share subscribed with similar rights
to the subscribers of stock.
Interest accrued from May 2007 at a fixed rate of 8% per annum, payable
quarterly in arrears. The company will repay the loan stock to holders on the
earlier of the liquidation of the company or 31st July 2011 at 15p per 10p
nominal stock plus outstanding interest unless previously converted or repaid.
LENNOX HOLDINGS PLC
PERIOD ENDED 30 JUNE 2007
NOTES TO THE INTERIM STATEMENTS
6. Convertible Loan Stock - Continued
�21,600 of the convertible redeemable secured loan stock issued was in lieu of
�15,200 of salary sacrificed by Ray Greenwood and Rolf Silver, and �6,400 of
fees sacrificed by Nigel Terry. This management loan stock has 216,000 warrants
attached to subscribe for ordinary shares, on the same basis as the loan stock.
The values of the liability component as equity conversion component were
calculated at the issue of the stock. The fair liability of the liability
component was calculated using a market interest rate of 10%.The directors
considered the equity element to be worthless, and all the proceeds were
classes as a liability.
A charge of �90,000 has been made in the six months ended 30 June 2007 and in
future years there will be a charge for the uplift in the agreement of 15p per
10p raised, unless stock holders convert to equity.
The loan stock is secured by a debenture over the assets of the company, and a
charge over the group's freehold property in Benissa, Spain.
7. Post Balance Sheet Events
On the 23 August 2007 at the Annual General Meeting Mr. Rolf Silver, Finance
Director having retired by rotation decided not to offer himself for
re-election and resigned from the company with immediate effect.
On 17 July 2007 722,000 new ordinary shares have been issued and allotted
following an application to exercise 722,000 warrants for new ordinary shares
at an exercise price of 1p per share. 126,000 new ordinary shares have been
issued and allotted further to the company receiving notice to convert �12,600
of loan stock.
8. Approval of report
The interim financial information for the six months ended 30 June 2007 was
approved by the Board on 26 September 2007
9. Availability of Interim Report
Copies of the interim statement are available from the Company's Registered
Office at:
55 Gower Street, London, WC1 6HQ.
END
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