EXHIBIT 99
Texon Reports Fourth Quarter Results and First Acquisition
Leicester, England March 11, 1999 - Texon International plc today reported its
1998 year end and fourth quarter results and announced its first major
acquisition.
Texon acquired Cornwell Industries Limited on March 10, 1999 for approximately
(pound)3 million including assumed debt and finance leases. The net cash payment
was (pound)0.8 million and was met from Texon's current bank facilities.
Management believes Cornwell Industries is the UK market leader in moulded
footwear components and insole assemblies and supplies several major footwear
manufacturers including Clarks, FII and Lambert Howarth. Cornwell operates from
three facilities in the UK and has approximately 200 employees.
Cornwell had net sales of (pound)10.2 million and generated EBITDA of (pound)0.9
million in 1998.
Texon reported earnings before interest and tax for the twelve months ended
December 31, 1998 of (pound)13.6 million compared to (pound)9.6 million for the
prior year. Net sales for 1998 fell by (pound)11.5 million or 9.4% to
(pound)110.9 million from (pound)122.3 million for the twelve months ended
December 31, 1997.
"There is no doubt that we would have liked to report higher sales but in the
face of a continuing weak global footwear market we believe our solid results
are evidence of the strength of the company world wide. We have reduced costs,
improved efficiencies and created new products to strengthen our core business.
Furthermore we have now added our first major acquisition - we believe a key
element in developing Texon to be the foremost supplier of materials to the
global footwear companies," said Peter Selkirk, Chief Executive of Texon
International plc.
Texon's operating profit for the fourth quarter was (pound)3.3 million, a
decrease of (pound)0.7 million from the same period in 1997. Net sales for the
fourth quarter were (pound)26.6 million compared to (pound)30.2 million in the
same period in 1997.
For the quarter ended December 31, 1998, net sales fell by (pound)3.9 million or
12.8% from the same period in 1997 at constant exchange rates. This decline was
similar across all product lines. In geographical terms net sales declined in
Europe by 11%, North America by 5%, South America by 26%, Asia by 3% and
Australasia by 13%. Gross profit margin for the quarter was 35.4% compared to
33.6% for the same quarter in 1997 and 34.7% for the first three quarters in
1998. Selling, general and administrative expenses for the quarter were
(pound)6.1 million, (pound)0.1 million lower than the same quarter in 1997. The
principal reason for the increase in the fourth quarter as compared to the third
quarter of 1998 is the sale of the Leicester site at the beginning of October
1998. Therefore Texon must now pay rent whereas previously Texon received rental
income resulting in a net difference of (pound)0.5 million. Excluding this item
selling, general and administrative costs are approximately 15% less than in
1997.
Net cash flow from operating activities for the year ended December 31, 1998 was
(pound)10.l million and for the quarter ended December 31, 1998, (pound)7.2
million. Net cash flow for the quarter was comprised of earnings before interest
and taxation of (pound)2.9 million plus depreciation of (pound)0.4 million and a
net reduction in working capital of (pound)3.9 million. Capital expenditures in
the fourth quarter were (pound)0.7 million.
Texon is the world's largest, in terms of sales, manufacturer and marketer of
structural materials essential for the manufacture of footwear. The Company
operates a global business, with sales that are widely diversified by geographic
region and product line and operates six manufacturing facilities in the U.K.,
the United States, Germany, Italy and China.
Profit & Loss Account for the years and quarters ended
December 31, 1998 and 1997
(Unaudited)
Year ended Year ended Quarter 4 ended Quarter 4 ended
December 31, December 31, December 31, December 31,
1998 1997 1998 1997
(pound)'000 (pound)'000 (pound)'000 (pound)'000
Sales 110,880 122,343 26,569 30,193
Cost of Sales (72,193) (79,802) (17,167) (20,048)
Gross Profit 38,687 42,541 9,402 10,145
SG&A Costs (25,261) (27,230) (6,112) (6,150)
Operating Profit 13,426 15,311 3,290 3,995
Reorganisation Costs (819) (429) (319) 0
Profit on disposal of Assets 957 386 (43) 383
Exceptional Items 0 (5,659) 0 (5,659)
EBIT 13,564 9,609 2,928 (1,281)
Interest (9,829) (10,199) (2,093) (2,832)
Profit before Tax 3,735 (590) 835 (4,113)
Tax (1,303) (1,492) (553) (253)
Profit after tax 2,432 (2,082) 282 (4,366)
Minority Interest (184) (305) (101) (99)
Dividend (2,600) 0 (650) 0
Goodwill Amortisation (26) 0 (26) 0
Net Income/(Loss) (378) (2,387) (495) (4,465)
Balance Sheet as at December 31, 1998 and 1997
(Unaudited)
As at As at
December 31, 1998 December 31, 1997
(pound)'000 (pound)'000
Fixed Assets
Tangible Assets 13,116 17,098
Goodwill 672
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13,788 17,098
Current Assets
Stocks 15,781 16,716
Debtors 19,637 19,345
Cash at Bank and in Hand 721 1,156
---------- ---------
36,139 37,217
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TOTAL ASSETS 49,927 54,315
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Creditors
Amounts falling due within one year (30,949) (114,393)
Amounts falling due after more than 1 year (84,477) (698)
Provisions for Liabilities and Charges (7,642) (6,422)
Capital and Reserves
Called Up Share Capital (9,120) (13)
Share Premium (46,800)
Share Capital to be issued (55,600)
Profit and Loss Account Reserves 129,539 124,242
---------- --------
Shareholders' Funds: 73,619 68,629
Minority Equity Interests (478) (1,431)
---------- ---------
LIABILITIES & EQUITY (49,927) (54,315)
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Condensed Consolidated Cash Flow Statement for the Year and
Quarter Ended December 31, 1998
(Unaudited)
Year ended Quarter 4 ended
December 31, 1998 December 31, 1998
(pound)'000 (pound)'000
Net Cash Flow from Operating
Activities 10,144 7,215
Returns on Investment & Servicing
of Finance (14,767) 42
Taxation (1,420) (709)
Capital Expenditure & Financial Investment 2,211 3,356
Acquisitions & Disposals (545) 0
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Cash (outflow)/inflow before financing (4,377) 9,904
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