RNS Number:6445M
Longbridge International PLC
23 June 2003
LONGBRIDGE INTERNATIONAL plc
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2002 23 JUNE 2003
Chairman's statement
I am pleased to be able to report a substantial improvement in the Company's
performance for 2002. During the course of the year we undertook a successful
reorganisation of the Group structure and made great strides in reducing the
cost base and creating a platform from which we can build during 2003. We cut
our net debt in half and were cash positive throughout the year. I am, however,
disappointed that, although after tax losses were reduced from #4,325,358 (2001)
to #339,801 (2002), we were unable to deliver a profit. Therefore, we will not
be paying a dividend in respect of the 2002-year (2001: nil). Part of the
reorganisation was to remove or scale down non-core activities of the Group in
order to refocus on our strengths and maximize resources moving forward into
2003. This exercise included commencing the winding up of Top Pay, Peachell and
Longbridge International Asia subsequent to the year end. These subsidiaries
contributed #487,000 of the total group losses for 2002, and their closure will
remove significant debt from the Group, and result in excess of #250,000 being
returned to net funds on the balance sheet in 2003. Market conditions for
recruitment have been testing, to say the least, and the past year has provided
little or no visibility for future prospects. However, the changes we have
implemented have made the Company leaner, fitter and hungrier. In hindsight,
making a loss for the first time in the Company's history has forced us to go
back to basics. The "order book" is currently looking healthy and showing
encouraging signs for the future, although, I say that with caution, as after
all, these are still uncertain times.
Our core business, law, continues to go from strength to strength. I believe we
are the leading specialist in legal search with the significant amount of repeat
work adding credence to this assertion. Banking and financial services have had
a torrid time, but we believe they will bounce back. Our consulting division,
which specialises in coaching, mentoring, development and performance
management, is showing steady progress, as is our legal publishing and
information business which trades under the banner of "In Brief".
The operational management team has been revamped during 2002 and, as a result
of this, I am pleased to welcome Bruce Page, who joined the main Board in May
2003 as Finance and Operations Director.
During the course of 2002 we underwent a successful capital reorganisation. We
have also expanded our shareholder base with subscriptions for new shares by
Liontrust as well as a number of new private investors. More recently, we have
announced a #2m equity line of credit with Cornell Capital,
based in New York. This provides the Company with a facility to draw down up to
#2m as and when required subject to certain conditions; and should help with
future growth.
Our shareholders have been magnificent: - loyal, supportive and always
encouraging. I would like to thank you all.
Our staff have had to dig deep in the past couple of years and have had to make
the most of very difficult economic conditions. My gratitude to all of you,
together we will build a successful future for all of us.
We look forward to the rest of 2003. The first quarter was slow, as we would
have expected, but on target, although it has to be said our budgets for 2003
are conservative and revenue is incremental throughout the year. We are seeing
some increase in activity and we do have a good order book but it is still
difficult to see too far ahead. It is still a challenging environment, but one
in which we move forward with optimism in order to return to profit and real
growth for shareholders, real improvement for our clients and real job
satisfaction and career prospects for our loyal and committed employees.
Frank Varela
Chairman and Managing Director
20 June 2003
LONGBRIDGE INTERNATIONAL plc
Group profit and loss account for the year ended 31 December 2002
Note 2002 2001
#
Turnover 7,496,472 10,117,016
Cost of sales 5,211,737 7,176,283
_________ _________
Gross profit 2,284,735 2,940,733
--------- ---------
Administrative expenses
- exceptional impairmentof 2 2,074,919
goodwill
- other exceptional (72,716) 1,040,742
(income)/costs 2
- other costs 2,716,245 4,432,786
--------- ---------
Administrative expenses 2,643,529 7,548,447
_________ _________
Operating loss 2 (358,794) (4,607,714)
Interest payable and similar charges (61,274) (84,443)
Interest receivable and similar income 767 33,112
_________ _________
Loss on ordinary activities before taxation (419,301) (4,659,045)
Taxation on loss on ordinary activities 3 79,500 333,687
_________ _________
Loss for the financial year (339,801) (4,325,358)
Dividends - -
_________ _________
Transfer from reserves (339,801) (4,325,358)
_________ _________
Basic loss per share 4 (7.60)p (104.29)p
Adjustment for dilutive share options - -
_________ _________
Diluted loss per share 4 (7.60)p (104.29)p
_________ _________
All amounts relate to continuing activities.
All recognised gains and losses are included in the profit and loss account.
LONGBRIDGE INTERNATIONAL plc
Group balance sheet at 31 December 2002
2002 2002 2001 2001
# # # #
Fixed assets
Tangible assets 364,558 570,137
Investments 29,602 71,385
_________ _______
394,160 641,522
Current assets
Debtors 1,084,098 2,346,584
Cash at bank
and in hand 51,193 86,868
_________ _________
1,135,291 2,433,452
Creditors: amounts
falling due within
one year 2,144,779 3,434,694
_________ _________
Net current liabilities (1,009,488) (1,001,242)
__________ __________
Total assets less current
liabilities (615,328) (359,720)
Creditors: amounts falling due
after more than one year 155,286 230,843
Provision for liabilities
and charges
Deferred taxation - 29,500
__________ _________
(770,614) (620,063)
__________ _________
Capital and reserves
Called up share capital 97,294 2,107,844
Share capital to be issued - 100,000
Share premium account 77,550 1,539,283
Merger reserve (1,229,900) (1,229,900)
Profit and loss account 284,442 (3,137,290)
_________ __________
Shareholders' funds - equity (770,614) (620,063)
_________ __________
LONGBRIDGE INTERNATIONAL plc
Group cash flow statement for the year ended 31 December 2002
2002 2002 2001 2001
# # # #
Net cash inflow/(outflow) from
operating activities 504,264 (628,472)
Returns on investments and
servicing of finance
Interest received 767 33,112
Interest paid (54,993) (74,515)
Interest element
of finance lease (6,281) (9,928)
_________ _________
(60,507) (51,331)
Taxation
Corporation tax
(paid)/received (1) 198,596
Capital expenditure and
financial investment
Payments to acquire
tangible fixed assets (20,286) (358,594)
Sale of tangible
fixed assets 2,924 88,411
Investment in own shares - (2,566)
_________ _________
(17,362) (272,749)
Acquisitions and disposals
Purchase of subsidiary
undertaking - (447,525)
Cash acquired with subsidiary - 6,712
Sale of associated undertaking - 1
Adjustment to purchase
consideration 20,000 -
_________ _________
20,000 (440,812)
Equity dividends paid - (173,884)
_________ _________
Cash outflow before use
of liquid resources and
financing 446,394 (1,368,652)
Financing
Capital element of
finance lease payments (28,629) (27,900)
Issue of shares,
net of expenses 289,250 47,000
New bank loan - 400,000
Repayment of loan (183,482) (63,118)
_________ _________
Net cash inflow from financing 77,139 355,982
_________ _________
Increase/(decrease) in cash 523,533 (1,012,670)
_________ __________
Notes forming part of the financial statements:
1 Accounting policies
The results for the year ended 31 December 2002 include those for the holding
company and all of its subsidiary undertakings. The results are prepared on the
basis of the accounting policies set out in the 2001 financial statements,
except that the Group has adopted FRS 19 - "Deferred Tax" for the first time.
The adoption of this standard has not had any material effect on the Group
results.
2 Exceptional items
2002 2001
# #
Exceptional impairment of goodwill - 2,074,919
-------- ---------
Exceptional costs
- abortive acquisition costs - 93,651
- bad debts (22,355) 419,457
- reduction in purchase price of (120,000) -
subsidiary
- website costs written off - 223,035
- redundancies and associated costs 34,056 179,600
-------- --------
- dilapidations, lease surrender and 11,033 124,999
integration costs
- Settlement of disputes and capital 24,550 -
reconstruction costs -------- --------
(72,716) 1,040,742
_________ _________
The reduction in purchase price of subsidiary in the year arose on the
renegotiation of the purchase price of Top Pay Research Group Limited, which was
acquired in the year ended 31 December 2001. As a result, deferred consideration
due to be paid in shares has been written back in the accounts.
3 Tax on profit on ordinary activities
2002 2002 2001 2001
# # # #
Current tax
UK corporation tax
on profits of the year
Adjustment in respect
of previous years (50,000) (311,259)
Overseas taxation - (2,378)
_________ _________
Total current tax (50,000) (313,637)
Deferred tax
Origination and reversal
of timing differences (29,500) (20,050)
_________ _________
Taxation on profit on
ordinary activities (79,500) (333,687)
_________ _________
4 Loss per share
Basic loss per ordinary share has been computed on the basis of loss after
taxation of #339,801(2001 - loss of #4,325,358) and the weighted average number
of ordinary shares in issue during the year of 4,469,025 (2001 - 4,147,478).
The diluted loss per share in 2002 and 2001 is calculated on the same basis as
basic loss per share because the share options are not dilutive.
5 The financial information contained in this announcement does not
constitute a full statutory financial statement of the Group's affairs
for the year ended 31 December 2002. The financial information for the year
ended 31 December 2001 is extracted from the Group's financial statements to
that date which received an unqualified auditor's report with an explanatory
paragraph on going concern and have been filed with the Registrar of Companies.
The financial information for the year ended 31 December 2002 is extracted from
the Group's financial statements to that date in which the audit report contains
an explanatory paragraph relating to going concern as set out below.
The Group meets its day to day working capital requirements primarily through an
overdraft facility and invoice discounting facility which is repayable on
demand. The facilities are due for review by the Group's bankers at the
commencement of 2004.
The nature of the Group's business is such that there can be considerable
unpredictable variation in the timing of cash inflows. The directors have
prepared projected cash flow information for the period ending 12 months from
the date of their approval of these financial statements. On the basis of this
cash flow information and discussions with the Group's bankers, the directors
consider that the Group will
continue to operate within the facility currently agreed and those likely to be
agreed in the future. However, the margin of facilities over requirements is not
large and, inherently, there can be no certainty in relation to these matters.
As announced on 29 April 2003 the Group has reached agreement with Cornell
Capital Partners Offshore LP to provide equity funding of up to #2million
subject to certain conditions. On this basis, the directors consider it
appropriate to prepare the financial statements on a going concern basis. The
financial statements do not include any adjustments that would result from a
withdrawal of or significant reduction in the facilities by the Group's bankers.
Enquiries:
Frank Varela - Chairman 020 7208 5858
Longbridge International
Matthew Longbottom
Lehmann Communications 020 7266 3020
END
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