Ross Group PLC 27 September 2005 Ross Group plc 27 September 2005 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 Chairman's statement The result for the Group for the six months ended 30 June 2005 was an operating loss of £336,000 before tax (June 2004 profit £96,000). This result is extremely disappointing following the upturn in the group's profitability in 2003 and 2004. The substantial reduction in the level of output was due to delays in the award of some large contracts that the company, GEL Engineering Ltd (GEL) was expecting. These potential orders have only been delayed and not lost, so the main shareholder has continued to back the Group as they consider the chance for a return to profitability is substantially increased in 2006. Business review GEL, has suffered a significant downturn in orders during the period under review and this has led to the strengthening of the sales team and a change of management. One highlight of the first half of 2005 was the receipt of three test rig orders from prime contractors in the aerospace industry. These were the first orders of this type for sometime and were a direct result of the changes in the sales team. The company is committed to satisfying these orders and securing repeat business. A reduction in demand for containerised solutions for the MOD has seen this side of the business struggle for orders. The Company is looking to expand its activities in the supply of fully integrated modular solutions and physical training mock-ups. A business plan has been implemented for GEL following the change of Managing Director which should help increase the level of business by directing the company towards expanding and profitable markets. The Company now has a significant amount of bids out with its customers for decisions in late 2005 and throughout 2006. Some small orders have been secured recently which will improve the second half of the year and an export vehicle order is expected shortly. A large repeat order for a Hercules Loadmaster Training Simulator is under negotiation and is expected around the end of this year. Whilst the current trading indicates that 2005 will probably not show a profit, 2006 should see the group back in the black. Business Outlook The Directors have more than one option available to them to supplement the current business activity and thus strengthen the Group. These opportunities are being assessed and progress is being made towards potential significant changes in the structure and operation of the Group. Dividend No ordinary interim dividend is proposed after considering the result for the first half of the year, and the continuing deficiency on retained reserves (2004 - £Nil). A C C Ma Chairman 22 September 2005 GROUP INCOME STATEMENT UNAUDITED 6 Months 6 Months Year Ended Ended Ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Revenue Continuing Operations 255 1124 2362 Discontinued Operations 0 85 85 Operating (Loss)/Profit Continuing Operations (336) 96 237 Discontinued Operations 0 6 6 (Loss)/Profit Before Finance Cost (336) 102 243 Finance Cost (129) (88) (228) (Loss)/Profit Before Taxation (465) 14 15 Taxation 0 0 0 (Loss)/Profit For The Period (465) 14 15 Earnings Per Share (0.3p) 0.01p 0.01p Adjusted Earnings Per Share (0.3p) 0.01p 0.01p GROUP BALANCE SHEET UNAUDITED 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Non Current Assets 35 41 45 Current Assets Inventories 199 394 382 Trade and Other Receivables 556 396 752 Cash and Cash Equivalents 11 84 12 -------- -------- -------- 766 874 1146 -------- -------- -------- Current Liabilities Trade and Other Payables (659) (695) (834) Financial Liabilities - Short Term Borrowings (Group) (550) (1,188) (300) -------- -------- -------- (1,209) (1,883) (1,134) -------- -------- -------- Net Current Assets/(Liabilities) (443) (1009) 12 Non-Current Liabilities Financial Liabilities - Long Term Borrowings (Group) (2,374) (1,346) (2,374) -------- -------- -------- Net Liabilities (2,782) (2,314) (2,317) ======== ======== ======== Equity Share Capital 11,136 11,136 11,136 Share Premium Account 2,317 2,317 2,317 Other Reserves 15,391 15,397 15,394 Retained Earnings (31,626) (31,164) (31,164) -------- -------- -------- Total Equity (2,782) (2,314) (2,317) ======== ======== ======== GROUP CASH FLOW STATEMENT UNAUDITED 6 Months 6 Months Year Ended Ended Ended 30 June 2005 30 June 2004 31Dec. 2004 £'000 £'000 £'000 Cash Flows From Operating Activities Cash Generated From Operating Activities (120) (90) (147) Interest Paid (129) (88) (228) Taxation 0 0 0 --------- --------- --------- Net Cash From Operating Activities (249) (178) (375) Cash Flows From Investing Activities Purchase Of Plant and Machinery (2) 0 (17) --------- --------- --------- Net Cash Used In Investing Activities (2) 0 (17) Cash Flows From Financing Activities Net Increase In Borrowings 250 158 300 Repayment of Obligations Under Finance Leases 0 (2) (2) --------- --------- --------- Net Cash Flow From Financing Activities 250 156 298 --------- --------- --------- Net (Decrease) In Cash And Cash Equivalents (1) (22) (94) ========= ========= ========= Notes to the Interim Report (1) The interim financial statements have been prepared on the basis of the accounting policies set out in the audited statutory accounts for the year ended 31 December 2004. The financial information contained in these statements for the six months ended 30 June 2005 and 30 June 2004 is unaudited and does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. (2) Reconciliation of Operating Profit to Cash Generated From Operations 6 Months 6 Months Year Ended Ended Ended 30 June 2005 30 June 2004 31Dec. 2004 £'000 £'000 £'000 Operating (Loss)/Profit On Continuing Activities (336) 96 237 Operating Profit On Discontinued Activities 0 6 6 Depreciation And Amortisation 12 11 24 Decrease/(Increase) In Inventories 183 (105) (93) Decrease/(Increase) In Trade And Other Receivables 196 150 (206) (Decrease) In Trade And Other Payables (175) (248) (115) --------- --------- -------- Cash Generated From Operations (120) (90) (147) ========= ========= ======== (3) No ordinary interim dividend is proposed for 2005 (2004-£nil). Notes to the Interim Report (Continued) (4) The comparative cash flow for the year ended 31 December 2004 has been extracted from the audited accounts. The cash flows for the six months ended 30 June 2005 and 30 June 2004 are unaudited. (5) Reconciliation of Movements In Equity 6 Months 6 Months Year Ended Ended Ended 30 June 2005 30 June 2004 31 Dec 2004 £'000 £'000 £'000 Share premium Account - Brought Forward 2,317 2,317 2,317 Movement 0 0 0 Carried Forward 2,317 2,317 2,317 Other Reserves - Brought Forward 15,394 15,400 15,400 (Depreciation) (3) (3) (6) Carried Forward 15,391 15,397 15,394 Retained Earnings - Brought Forward (31,164) (31,181) (31,181) (Loss)/Profit for Period (465) 14 15 (Loss) on Translation of Subsidiary 0 0 (4) Transfer from Revaluation Reserve 3 3 6 Carried Forward (31,626) (31,164) (31,164) (6) Both the Long Term and Short Term borrowings are by way of formal agreements with the main shareholder, The Grande Group or its subsidiary companies. (7) The Group has evaluated the effect of the requirement to report in accordance with International Accounting Standards (IAS) and has concluded that the change does not materially affect any item disclosed in these statements. (8) The Interim Report will be sent by mail to all registered shareholders and copies will be available from the Company's head office at Ross Group PLC, Brunel Road, Totton, Hampshire, SO40 3YS. A copy will also be posted on the Company's website www.ross-group.co.uk Ross Group plc Contact - P. Elliott, Executive Director Registered Office Tel. - 02380 675500 Fax - 02380 675555 35 Paul Street Email - p.elliott@ross-group.co.uk London EC2A 4UQ Website - www.ross-group.co.uk This information is provided by RNS The company news service from the London Stock Exchange