Home audio equipment manufacturer Linn Products slumped to a £1.09m pre-tax loss in the 12 months to October 31 last year, and its chairman Ivor Tiefenbrun says operating losses have continued into 2007.
However, sometimes outspoken entrepreneur Tiefenbrun highlights his board's confidence that Linn Products will return to profitability in 2008 on the back of a recovery plan implemented in the spring of this year. This included "significant" redundancies among a workforce averaging 343 people in the 2006 period.
Linn Products, based at Eaglesham in East Renfrewshire, had made profits of only £173,000 in the year to October 31, 2005, a far cry from the surplus of £2.1m recorded in its 2000 financial year.
The slump into loss in the year to October 2006, revealed in accounts which have just become available from Companies House, reflected a jump in costs. This more than offset a modest rise in turnover from £32m to £33.8m.
In his chairman's statement in the 2006 accounts, which is dated November 1 this year, Tiefenbrun provides an up-to-date view of Linn Products' position.
He states: "In March 2007, the company created a recovery plan to return the group to profitability and address the related cashflow issues. This recovery plan was ratified by the board and our bankers, and was immediately implemented."
Tiefenbrun declares: "The board is determined to work towards a successful financial recovery and the many activities that have taken place this year give encouraging signs that our recovery plan is well on course ..."
He notes that the company, in May this year, disposed of its loss-making Loewe Distribution business.
Tiefenbrun says: "The remaining business has undergone restructuring over the last year, including a significant number of redundancies, and is now better positioned to face the challenges of an increasingly competitive and rapidly-changing market-place. We have continued to invest in research and development, both to deliver new products in quarter four this year and for delivery in 2008 and beyond."
He concludes: "The board are confident that the company and group will return to profitability in 2008 as a result of the above activities."
Linn Products' directors highlight the fact that, in spite of the loss in the 12 months to October last year, the group maintained a strong balance sheet with net assets of £6.81m at the 2006 financial year-end.
They say the cost of the redundancies announced in the spring has been expensed fully in the year to October 31, 2007.
According to the directors' report, sales arising from the manufacture and distribution of audio equipment decreased by 6% in the 12 months to October 31 last year. Sales of televisions, through Linn Products' distribution company, LinnSight, jumped by 50%. Sales of compact discs fell to £367,000 in the 12 months to October 2006, from £387,000 in the prior 12 months.
Linn Products said in April that it was realigning its core business around the manufacture of "a more focused range of even higher quality products, specifically aimed at the premium end of the consumer electronics market".
Tiefenbrun was unavailable last night for comment beyond that in the accounts.
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