RNS Number:5771C
Gibbs & Dandy PLC
22 August 2007
22 August 2007
RESULTS FOR THE HALF YEAR TO 30 JUNE 2007
* After two challenging years we are encouraged by our performance in the
first half of 2007
* Like for like sales up 6.2% to #31.05m
* Operating profit up 11.2% to #2.40m
* Profit before tax up 13.6% to #2.44m
* Earnings per share up 17.7% to 17.3p
* Increased interim dividend to 5.75p per share (2006:5.5p per share)
* Acquisition of Carson Fletcher Timber strengthens the Company's position
in the South Midlands and the search for further branches continues
* We are optimistic that sales will continue to grow in the second half
* We believe that despite the consolidation in our industry there is a
place in the market for a growing independent merchant which is able to
offer its customers excellent service. We are firmly committed to achieving
this and thereby increasing shareholder value
Enquiries:
Gibbs and Dandy plc
Michael Dandy Managing Director ) 01582 798798
Amitabh Sharma Finance Director )
The Paddy Manning Company
Paddy Manning 020 7930 0777 (mobile 07803 183622)
Interim statement
Results
After a quiet start to the year, business gathered pace in the spring. As a
result, sales of #31.05m in the first six months of 2007 were 6.4% higher than
the #29.18m achieved in the first half of 2006. Adjusted for the slightly
different number of trading days, like for like sales growth for the period was
6.2% compared to 2006.
Operating profit improved by 11.2% to #2.40m (2006:#2.16m), although this
included a one off gain of #0.12m representing the profit on the sale of the
shareholding in AHED Limited that was sold in January of this year. Excluding
this gain, underlying operating profit increased by 5.8% to #2.28m (2006:
#2.16m). Net interest received was #45k (2006:#6k paid) giving profit before tax
of #2.44m in the first half of 2007 (2006:#2.15m), an increase of 13.6%.
The tax charge reduced to 28.3% (2006:31.0%) as a result of a one off deferred
tax credit arising from a change in the future corporation tax rate. This
reduction contributed to earnings per share (EPS) increasing by 17.7% from 14.7p
per share to 17.3p per share. Excluding the AHED gain (and its tax effect),
profit before tax was #2.33m (2006:#2.15m) and EPS increased by 11.6% to 16.4p
per share.
In view of the improvement in profits the directors have declared an increased
interim dividend of 5.75p per share (2006:5.5p per share). This dividend will be
paid on 21 September 2007 to shareholders on the register at the close of
business on 31 August 2007.
Review
After two challenging years, we are encouraged by our performance in the first
half of 2007. Trading conditions had improved at the time of the annual general
meeting and this continued throughout the spring and early summer.
Sales of heavyside products were particularly buoyant and cash sales improved
notably as customers increased their spending in the key repair, maintenance and
improvement (RMI) segment of the market. Price inflation, particularly in
respect of timber, was responsible for some of the increased turnover.
Gross margins were similar to the first half of last year at 28.8% (2006:28.9%)
as market conditions remained competitive. The increase in sales meant gross
profit was #8.95m which was #0.53m (6.2%) higher than last year. As in prior
years we have worked hard to keep overheads under control. Cost increases were
held to a minimum where possible and staffing levels were only slightly higher
over the half year despite the greater turnover. As a result the net operating
margin, excluding profit on the sale of AHED, was 7.3% (2006:7.4%).
Cash generation was strong in the first six months of 2007, with cash flow
generated from operations at #3.95m which was #0.84m up on 2006 (#3.11m).
Operating cash flow* of #3.61m compared to #2.51m last year, representing a
strong operating cash conversion ratio (excluding AHED gain) of 158% (2006:
117%).
* Cash generated by operations less purchase/disposal of plant/equipment.
This is due to better cash collections and higher capital expenditure in the
equivalent period last year on the redevelopment of the Maidenhead branch.
Working capital remained under tight control and stocks and debtors continued at
acceptable levels despite the increased turnover.
An IAS 19 valuation of the Company's defined benefit pension scheme (the Scheme)
indicates the gross deficit has reduced from #2.84m at 31 December 2006 to
#1.53m at 30 June 2007. After adjusting for deferred tax, the net deficit
represents #1.1m (2006:#2.0m). The main reason for this reduction is an increase
in the discount rate from 5.2% to 5.8% which reduced Scheme liabilities to
#15.56m (2006:#16.68m). Scheme assets increased in value from #13.84m to #14.03m
at 30 June 2007. The IAS 19 valuation does not reflect the fall in the equity
markets since the balance sheet date.
Earlier in the year the Company undertook a market research programme and the
results of this were very encouraging. We received valuable feedback from our
customers and identified some areas for improvement which are being addressed.
We have concentrated on customer service as a means to differentiate ourselves
from our competitors in the past and we will continue to focus upon this in the
future.
We acquired Carson Fletcher Timber Limited, based in Market Harborough,
Leicestershire on 29 June. This is a single branch timber merchant which will
complement the Company's existing branches in Northamptonshire and strengthen
our position in the South Midlands. Turnover for the year ended 31 January 2007
was #1.87m and the purchase price was #1.0m plus an additional amount for net
assets not exceeding #0.373m.
At our Kettering branch, acquired in 2005, we are already seeing the benefits
from an increased product offering and we have now received planning consent to
erect a new warehouse and timber racking. It is hoped that work on this will
start later in the year and enable us to complete the development of this
branch. During the second half we shall also be undertaking a refurbishment
project of the main sales area at Henley.
Future prospects
Since 30 June, sales on a like for like basis have been 6.0% above last year,
continuing the trend seen in the first half of 2007. We are optimistic that
sales will continue to grow in the second half although the extent of this will
be influenced by the impact of interest rate increases on consumer confidence.
We continue to search for suitable acquisitions which fit into our geographical
trading area and which are capable of generating good profits in the future. We
believe that despite the consolidation in our industry there is a place in the
market for a growing independent merchant which is able to offer its customers
excellent service. We are firmly committed to achieving this and thereby
increasing shareholder value.
Christopher Roshier Michael Dandy
Independent Review Report to Gibbs and Dandy plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2007 which comprises the income statement,
statement of recognised income and expense, balance sheet, cash flow statement
and the related notes set out on pages 8 to 9. We have read the other
information contained in the interim report which comprises only the interim
statement and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information. Our responsibilities do
not extend to any other information.
This report is made solely to the Company in accordance with guidance contained
in APB Bulletin 1999/4 "Review of Interim Financial Information". Our review
work has been undertaken so that we might state to the Company those matters we
are required to state to them in a review report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company for our review work, for this report, or for
the conclusion we have formed.
Directors' responsibilities
The interim report including the financial information contained therein is the
responsibility of, and has been approved by, the directors. The Listing Rules of
the Financial Services Authority require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
"Review of Interim Financial Information" issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making enquiries
of management and applying analytical procedures to the financial information
and underlying financial data and, based thereon, assessing whether the
accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with
International Standards of Auditing (UK & Ireland) and therefore provides a
lower level of assurance than an audit. Accordingly, we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2007.
GRANT THORNTON UK LLP
Chartered Accountants
Hemel Hempstead
21 August 2007
Income statement
For the six months ended 30 June 2007
Six months Six months Year
30 June 2007 30 June 2006 31 Dec 2006
Unaudited Unaudited Audited
Note #'000 #'000 #'000
Revenue 31,049 29,178 58,423
Cost of sales (22,103) (20,758) (41,728)
Gross profit 8,946 8,420 16,695
Other income 167 51 103
Distribution costs (5,202) (5,086) (10,262)
Administrative expenses (1,514) (1,229) (2,505)
Operating profit 2,397 2,156 4,031
Investment income 46 3 16
Finance costs (1) (9) (13)
Profit before tax 2,442 2,150 4,034
Tax 3 (690) (667) (1,229)
Profit for the period 1,752 1,483 2,805
Earnings per share - basic and diluted 4 17.3p 14.7p 27.7p
All operations are continuing
All of the profit for the period is attributable to the equity holders of the
parent
Statement of recognised income and expense
For the six months ended 30 June 2007
Six months Six months Year
30 June 2007 30 June 2006 31 Dec 2006
Unaudited Unaudited Audited
Note #'000 #'000 #'000
Actuarial gain on defined benefit pension scheme 1,270 - 510
Tax on actuarial gain on defined
benefit pension scheme (381) - (153)
Gains on revaluation of properties - 2,028 2,028
Deferred tax charge on revalued property 20 (608) (571)
Change in value of available for sale investments - - 116
Tax on change in value of available for sale
investments - - (35)
Deferred tax release on items
taken directly to equity 3 100 - -
Net income recognised directly in equity 1,009 1,420 1,895
Profit for the period 1,752 1,483 2,805
Total recognised income and expense for the period 2,761 2,903 4,700
All of the income for the period is attributable to the equity holders of the
parent
Balance sheet
At 30 June 2007
30 June 2007 30 June 2006 31 Dec 2006
Unaudited Unaudited Audited
Note #'000 #'000 #'000
Non-current assets
Goodwill 6 2,664 1,730 1,724
Other intangible assets 6 50 - -
Property, plant and equipment 18,301 18,522 18,331
Available for sale investments 3 16 3
21,018 20,268 20,058
Current assets
Available for sale investments - - 129
Inventories 4,999 4,955 4,659
Trade and other receivables 9,498 8,417 7,630
Cash and cash equivalents 2,493 1,519 1,461
16,990 14,891 13,879
Total assets 38,008 35,159 33,937
Current liabilities
Trade and other payables 9,224 7,897 5,912
Current tax liabilities 607 614 431
Obligations under finance leases 13 13 10
9,844 8,524 6,353
Net current assets 7,146 6,367 7,526
Non-current liabilities
Retirement benefit obligations 1,527 3,323 2,837
Deferred tax 2,580 2,207 2,406
Obligations under finance leases - 7 3
4,107 5,537 5,246
Net assets 24,057 21,098 22,338
Equity
Share capital 1,012 1,012 1,012
Revaluation reserve 5,547 5,423 5,392
Fair value reserve - - 81
Retained earnings 17,498 14,663 15,853
Total equity 7 24,057 21,098 22,338
These interim financial statements were approved by the Board on 21 August 2007
Cash flow statement
For the six months ended 30 June 2007
Six months Six months Year
30 June 2007 30 June 2006 31 Dec 2006
Unaudited Unaudited Audited
Note #'000 #'000 #'000
Operating activities
Profit before tax 2,442 2,150 4,034
Adjustments for:
Depreciation of property, plant and equipment 424 391 813
Gain on disposal of property, plant and equipment (6) (4) (9)
Gain on disposal of available for sale investments (116) - -
Interest paid 1 9 13
Interest received (46) (3) (16)
Operating cash flows before movements
in working capital 2,699 2,543 4,835
(Increase)/decrease in inventories (178) (251) 45
Increase in receivables (1,547) (928) (141)
Increase/(decrease) in payables 2,977 1,749 (212)
Cash generated by operations 3,951 3,113 4,527
Income taxes paid (600) (584) (1,281)
Interest received (net) 44 (8) 1
Net cash from operating activities 3,395 2,521 3,247
Investing activities
Purchase of property, plant and equipment (346) (610) (846)
Proceeds on disposal of property, plant and equipment 7 9 19
Proceeds on sale of available for sale investments 129 - -
Acquisitions (net of cash acquired) 6 (1,186) (85) (79)
Net cash used in investing activities (1,396) (686) (906)
Financing activities
Dividends paid (961) (961) (1,518)
Repayment of obligations under finance leases (6) (7) (14)
Net cash used in financing activities (967) (968) (1,532)
Net increase in cash and cash equivalents 1,032 867 809
Cash and cash equivalents at beginning of period 1,461 652 652
Cash and cash equivalents at end of period 2,493 1,519 1,461
1. Basis of preparation and accounting policies
The interim financial statements for the six months to 30 June 2007 have been
prepared on the basis of the accounting policies set out in the Company's
financial statements for the year ended 31 December 2006. These accounting
policies are drawn up in accordance with International Accounting Standards
(IAS) and International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
The financial information for the six months ended 30 June 2007 and 30 June 2006
is unaudited and does not constitute statutory accounts as defined in section
240 of the Companies Act 1985. These interim financial statements have been
prepared in accordance with IAS 34 "Interim financial reporting". This
information has been reviewed by Grant Thornton LLP, the Company's auditors,
and a copy of their review report appears above. The information for the year
ended 31 December 2006 does not constitute statutory accounts as defined in
section 240 of the Companies Act 1985. A copy of the statutory accounts for
that year prepared under IFRS has been delivered to the Registrar of Companies.
The auditors' report on those accounts was unqualified and did not contain
statements under section 237 (2) or (3) of the Companies Act 1985.
2. Segmental information
The Company's business relates to one activity being that of builders merchants
wholly within the United Kingdom.
3. Taxation
The tax charge for the six months to 30 June 2007 has been based on the
effective rate for the year to 31 December 2007 of 28.3% (2006: 31%). On 26
June the Finance bill, which reduces the UK standard rate of corporation tax
from 30% to 28% with effect from 1 April 2008 was passed by the House of
Commons. The reduction in rate results in a deferred tax credit of #58,000 in
the current year tax charge and a deferred tax credit of #100,000 on items taken
directly to equity.
4. Earnings per share
Earnings per share is calculated by dividing the profit attributable to equity
shareholders of #1,752,000 (2006: #1,483,000) by the weighted average number of
shares in issue during the period of 10,119,820 (2006: 10,119,820).
5. Dividends
Amounts recognised as distributions to equity holders in the period:
Six months Six months
30 June 30 June
2007 2006
#'000 #'000
Final dividend for the year ended 31 December 2006 of 9.5p
(2005: 9.5p) per share 961 961
The proposed interim dividend for the year ended 31 December 2007 of 5.75p per
share (2006: 5.5p) was approved by the Board on 21 August 2007 and has not been
included as a liability as at 30 June 2007. The total cost of this dividend is
#582,000 (2006: #557,000). The proposed interim dividend is payable on 21
September 2007 to shareholders on the register on 31 August 2007. The shares
will be quoted ex-dividend on 29 August 2007.
6. Intangible assets
On 29 June 2007, the Company acquired 100 per cent of the issued share capital
of Carson Fletcher Timber Limited, based in Market Harborough, Leicestershire
for a cash consideration of #1.0m plus an additional amount for net assets not
exceeding #0.373m. The transaction has been accounted for using the purchase
method of accounting. The adjustments to fair value represent alignment of
depreciation policy.
The goodwill on the acquisition of Carson Fletcher Timber Limited is
attributable to the anticipated future profitability and operating synergies
from the combination. If the acquisition had been completed on the first day of
the financial year, Group revenues for the period would have been #32.0m and
profit attributable to equity holders of the parent would have been #1.76m.
Carson Fletcher Timber Limited
Book value Fair value Fair value
adjustments
#'000 #'000 #'000
Property, plant and equipment 41 8 49
Inventories 162 162
Trade and other receivables 320 320
Cash and cash equivalents 111 111
Trade and other payables (295) (295)
Current tax liabilities (34) (34)
Obligations under HP (6) (6)
299 8 307
Other intangible assets 50
Goodwill 940
Total consideration 1,297
Satisfied by:
Cash 1,280
Directly attributable costs 17
1,297
Net cash outflow on acquisition:
Cash consideration 1,297
Cash and cash equivalents acquired (111)
1,186
7. Statement of changes in shareholders' equity
Six months Six months Year
30 June 2007 30 June 2006 31 Dec 2006
Unaudited Unaudited Audited
#'000 #'000 #'000
Profit for the period 1,752 1,483 2,805
Actuarial gain (net of tax) 889 - 357
Unrealised gain on property revaluation
(net of tax) - 1,420 1,457
Gain on change in value of available for sale
investments (net of tax) - - 81
Transfer of gain realised on sale
of available for sale investments (81) - -
Deferred tax release on items taken
directly to equity 120 - -
Dividend paid (961) (961) (1,518)
Net addition to shareholders' funds 1,719 1,942 3,182
Opening shareholders' equity 22,338 19,156 19,156
Closing shareholders' equity 24,057 21,098 22,338
This information is provided by RNS
The company news service from the London Stock Exchange
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