The UK“s Jarvis Porter Group announced a GBP 278,000 pretax loss for the six months ended 31 August 2005, versus a GBP 111,000 pretax profit for the same period in 2004, as conditions worsened in the…
The UK“s Jarvis Porter Group announced a GBP 278,000 pretax loss for the six months ended 31 August 2005, versus a GBP 111,000 pretax profit for the same period in 2004, as conditions worsened in the home refurbishment market. Turnover for the six months to 31 August 2005 totalled GBP 9.4 million (2004: GBP 9.8 million) and was entirely attributable to Darby Group, the company“s principal subsidiary. Darby Group supplies toughened safety glass and insulating glass units to the construction and related industries, and has traditionally relied on the domestic refurbishment market sector. This sector is feeling the effects of a slowing UK economy which has discouraged consumers from taking on financial obligations to fund home improvements. Market conditions worsened significantly in the 2H of the financial year ended 28 February 2005, and continued to be challenging through the spring and early summer months of 2005. In addition, the UK glass processing industry is under pressure from excess capacity, competitive pricing to maintain market share, and rising energy costs. As a consequence, the group recorded an operating loss of GBP 0.2 million for the 1H 2005 (2004: GBP 0.1 million before exceptional income of GBP 0.3 million). The group incurred a net cash outflow from operating activities for the six months to 31 August 2005 of GBP 1.2 million (2004: GBP 0.6 million). Working capital requirements increased by GBP 0.8 million, reflecting the growth in business activity from very low activity levels around the traditional winter low point in February 2005, while the cash outflow of GBP 0.6 million relating to the group“s Hinckley property and contributions to the company“s closed defined benefits pension scheme could not be funded by operating profits. The group continues to seek to let or secure a sub-tenant for the vacant Hinckley site and hopes for further progress during the 2H 2005. To offset the cash outflow, capital expenditure was restricted to GBP 0.1 million (2004: GBP 0.7 million), and will continue to be restricted for the rest of the financial year whilst the group assesses the need for new equipment in view of forthcoming changes to building regulations in April 2006 and market trends for soft coated glass substances. No new hire purchase contracts were entered into during the period, and cash payments under existing contracts absorbed GBP 0.2 million (2004: inflow GBP 0.4 million). Accordingly, total net funds at 31 August 2005 were GBP 2.4 million (2004: GBP 4.2 million), comprising net cash deposits of GBP 3.2 million (2004: GBP 5.3 million) offset by hire purchase contracts of GBP 0.8 million (2004: GBP 1.1 million). Group net asset value per share excluding the net pension liability was GBP 0.18.6 (2004: GBP 0.215), total group net asset value per share was GBP 0.073 (2004: GBP 0.11). In line with its strategy of becoming a leading supplier of double glazed units and toughened safety glass, Darby Group has invested in soft coated glass processing at three of its six sites in anticipation of changes to building regulations. Draft amendments to building regulations effective from April 2006 confirm that alternate efficiency measurements known as “Window Energy Ratings” will be introduced, and thermal transmittance “U value” levels will not be cut significantly, thus extending the life cycle of existing hard coated glass substances. As a result, Darby Group will seek to maximise sales of hard coated glass where demand exists as well as extracting the full potential of its soft coat processing capability. Although the domestic refurbishment market sector has slowed significantly, the commercial glazing sector has been boosted by spending on schools and hospitals as well as new commercial building projects. During the period, Darby says it has successfully pursued sales from the commercial glazing sector using its soft coat capability to offset domestic market sector weakness, and will continue to do so despite some limitations on the size and weight of product that it is able to process.