RNS Number:8338S
Findel PLC
04 December 2003
4 DECEMBER 2003
FINDEL PLC
Findel p.l.c., the Yorkshire based home shopping
and educational supplies business, today announces its interim results
for the six months to 30 September 2003
FINANCIAL HIGHLIGHTS
2003 2002 % change
(restated)
Turnover #164.1m #142.8m +15%
Operating profit * #6.1m #3.0m +99%
Profit/(loss) before tax * #1.5m #(1.3m) n/a
Interim dividend 3.10p 2.80p +10.7%
* Before goodwill amortisation of #1.2m (#1.1m)
DIVISIONAL HIGHLIGHTS
Home Shopping Division
* turnover up 28%, to #84.4m (#65.8m)
* operating profit improved to #2.3m from loss of #1.5m
* turnover (35 weeks to 30 November)up 22%, to #144.3m (#118.4m)
* customer base up 5.5% to over 1.5m (1.4m)
Educational Supplies Division
* turnover up 9%, to #62.5m (#57.4m)
* turnover (35 weeks to 30 November) up 15%, to.#85.7m (#74.7m)
* strong progress in Regional Commodity market
Keith Chapman, Chairman, commented:
"I am pleased to report record half-year sales. The Group is making strong
progress in Home Shopping, although the continuing schools funding crisis has
again held back our Educational Supplies division. Overall, the Group has
nevertheless returned an excellent result for the first six months. This strong
performance has continued into our second half and I remain confident for the
future growth of the Group."
For further information please contact:
Keith Chapman, Chairman, Findel p.l.c. 01943 864686
Tony Johnson, Group Chief Executive, Findel p.l.c. 01943 864686
Richard Fallowfield, CardewChancery 020 7930 0777
CHAIRMAN'S STATEMENT
I am delighted to report record sales for the first six months of the financial
year. At #164.1m (2002: #142.8m), they are 15% higher than for the comparable
period last year. Sales of #6.2m from businesses acquired during the period
compensated for the sales reduction of #6.3m following our planned withdrawal
last year from a third party mail order contract.
Operating Profit improved by #2.9m to #4.9m from #2.0m (restated) and the
interest charge for the period amounted to #4.6m (2002: #4.3m).
The Group achieved a profit before tax in the six months of #333,000 compared to
a loss in the same period last year of #2.4m (restated).
In early July we acquired A to Z Supplies, an educational distributor based in
Essex, and in August the educational supplies business of the Wirral and North
Wales Purchasing Organisation, for a combined cash consideration of #4.4m. In
the period since acquisition to the end of September these businesses together
contributed #6.2m sales and #124,000 operating profit.
Dividend
The Directors have declared an interim dividend of 3.10p (2002: 2.80p), an
increase of 10.7% over last year. The interim dividend will be paid on 16
January 2004 to shareholders on the register on 19 December 2003.
Trading
Home Shopping
The Home Shopping division has continued to build on the sales growth achieved
over recent years, and in the first six months of this year sales increased by
28% to #84.4m from #65.8m. Operating profit improved to #2.3m from a #1.5m loss
(restated) last year. Sales have continued to grow in the important two months
trading period to 30 November, with cumulative sales for the eight months of
#144.3m (2002: #118.4m), an increase of 22%.
The division offers a wide range of consumer products via five major catalogues
and a monthly mailing programme to a predominantly female customer base
typically aged between 25 and 40 with a young family. The key features of our
offer are a high proportion of unique merchandise, the ability to personalise
many products, competitive pricing with the high street, and the availability of
a rolling credit facility.
We announced last year our intention to deliver a high quality customer service
to our existing customers, and to plan only for a modest increase in our
customer base. We have continued with that policy this year. Whilst we have
grown our customer base by 5.5% to 1.5 million customers, at the same time we
have invested substantially in systems and equipment to significantly improve
service levels. This year we are outsourcing all telephone ordering but,
importantly, retaining in-house control of all enquiries where we have developed
new systems to assist our customer service staff in first time query resolution.
We have also installed 100% quality control check via barcode scanning prior to
parcel despatch. In the first six months we increased our overall marketing
spend from #13.9m to #16.7m. Although customer recruitment expenditure was
reduced, we increased catalogue pages, mailing volumes and the number of
publications to our established base.
As a consequence of these actions we have seen an improvement to 30 November in
customer retention levels to 67.6% (60.3%), with average order value increasing
by 13.2%. Both established customers' first orders and repeat orders are well
ahead of last year. Credit and Payment Protection income showed a 34% increase,
with bad debt remaining firmly under control. The growth we have seen from sales
via the internet has continued, and this channel now accounts for approximately
10% of sales.
The four small clothing catalogues we have published this year, offering high
street brands at discounted prices, have performed to budget. Results to date
support our belief that we can successfully develop a branded discount clothing
catalogue.
Education
Sales in the division grew to #62.5m from #57.4m last year in the first six
months, whilst operating profit reduced to #4.1m from #5.1m (restated). These
results include a #6.2m sales contribution from businesses acquired in the
period, and operating profit of #124,000. Lack of funding caused schools to only
order essential items, and by their very nature these attract lower margin,
hence the disproportionate reduction in operating profit.
A great deal has been achieved in the period. Whilst maintaining tight cost
control, we have continued to plan for the future. We have restructured the
divisional management and established four business units, each with clear
management accountability. The National Brand unit controls our three major
catalogues, NES, Hope and Galt, together with Step by Step, and we have
established a clear branding proposition for the 2004 catalogues. The Niche
Brand unit is responsible for Philip Harris, Davies Sports, and Percussion Plus,
together with International, Export and PFI, each requiring a high degree of
specialist expertise. Regional Supplies, our third business unit, comprises
Edco, A to Z Supplies and the Wirral & North Wales Purchasing Organisation.
These are commodity based catalogue supplies businesses. NRS, our Direct Care
brand, constitutes our fourth business unit. The significant opportunities for
this fast growing business require a totally dedicated approach to maximise its
potential. All four business units have a clearly defined strategic objective,
and will benefit from the closer focus provided by this structure.
We have continued our range rationalisation policy, reducing our supplier base
by 30%, and items stocked by 20%. These actions will help to increase
productivity rates, improve stock turns and give greater focus to higher selling
items. The introduction of a new sales monitoring tool allows us to quickly
establish sales patterns enabling more effective stock control. NRS has
completed a successful implementation of the Surrey contract, awarded in April
2003, and is now working with Surrey to achieve Beacon status. Internationally,
we successfully tendered for a #2m order from US Aid for Iraq, which was
completed on time.
UK educational sales (before acquisitions), which were 13% down at the end of
September have improved slightly and at 30 November are now 11% behind the same
period last year. Total divisional sales to the same date, with the inclusion of
businesses acquired, are 15% ahead of last year. Recent government announcements
have assured schools that education will be adequately funded for the financial
year commencing 1 April 2004.
Schools' confidence has been impacted, and it will take time for it to return.
When it does, the division can only benefit.
Findel Services
Sales in the division were 13% lower than the comparable period last year at
#17.2m (2002: #19.6m). This planned reduction was entirely due to our withdrawal
from an unprofitable third party contract. However after adjusting for this,
underlying sales rose by 11%. The operating result improved marginally, to a
loss of #1.5m from a loss of #1.6m (restated). Whilst we anticipate a reduction
in sales for the full year from the action we have taken, we expect operating
profit to show material improvement.
The division is responsible for managing the group's relationship with its
hamper joint venture partner, and its third party contracts. It manages our
buying offices in Hong Kong and India, and our fundraising catalogues. It is
also responsible for the fulfilment services that we provide to Confetti, Elle,
Card Connection and the Webb Group. The majority of the division's sales occur
in the second half of the year, due largely to the inclusion of the hamper sales
from our joint venture with Kleeneze.
Our procurement businesses in Hong Kong and India have had another successful
six months, and continue to provide a valuable service to the Group. The third
party distribution contracts have all run smoothly through the busy Autumn
period
Prospects
The Group is making strong progress in Home Shopping, although the continuing
schools funding crisis has again held back our educational supplies division.
Overall, the Group has nevertheless returned an excellent result for the first
six months. This strong performance has continued into our second half and I
remain confident for the future growth of the Group.
Keith Chapman
Chairman
4 December 2003
Findel p.l.c.
Group Financial Statements (Unaudited)
Consolidated Profit and Loss Accounts
Note 6 months to 6 months to Year to
30.9.2003 30.9.2002 31.3.2003
(restated)
#000 #000 #000
Turnover
Continuing operations 157,890 142,825 368,236
Acquisitions 6,165 - -
_______ _______ _______
2 164,055 142,825 368,236
_______ _______ _______
Operating profit
Continuing operations
before goodwill
amortisation 5,919 3,056 41,238
Amortisation of goodwill (1,114) (1,091) (2,183)
_______ _______ _______
4,805 1,965 39,055
Acquisitions (net of
#45,000 goodwill amortisation) 124 - -
Total operating profit 2 4,929 1,965 39,055
Exceptional items
Reorganisation costs - - (4,304)
_______ _______ _______
Profit before interest 4,929 1,965 34,751
Interest (4,596) (4,333) (8,816)
_______ _______ _______
Profit/(loss)
before taxation 333 (2,368) 25,935
Taxation (408) 663 (7,365)
_______ _______ _______
(Loss)/profit
after taxation (75) (1,705) 18,570
Equity minority interests 163 85 (713)
_______ _______ _______
Profit/(loss) for the period 88 (1,620) 17,857
Dividends
Interim 3.10p (2.80p) per share (2,600) (2,342) (2,342)
Final 9.80p per share - - (8,204)
Less attributable to own shares
held in employee benefit trust 47 - 147
_______ _______ _______
Retained (loss)/ profit for the period (2,465) (3,962) 7,458
_______ _______ _______
Earnings/(loss) per share
Basic 3 0.11p (1.94)p 21.38p
_______ _______ _______
Excluding exceptional
items 3 0.11p (1.94)p 25.30p
_______ _______ _______
Findel p.l.c.
Group Financial Statements (Unaudited)
Consolidated Balance Sheets
At At At
30.9.2003 30.9.2002 31.3.2003
(restated)
#000 #000 #000
Fixed assets
Intangible assets 42,842 39,557 40,426
Tangible assets 53,594 52,010 51,708
Investments 18,391 14,710 18,150
_______ _______ _______
114,827 106,277 110,284
_______ _______ _______
Current assets
Stocks 100,133 78,395 69,761
Debtors - Trade debtors subject to
non-recourse finance 113,048 90,078 100,951
- Non-recourse finance (66,342) (51,463) (58,534)
46,706 38,615 42,417
- Debtors not subject to
non-recourse finance 61,049 75,261 49,830
Cash at bank and in hand 7,261 4,269 9,712
_______ _______ _______
215,149 196,540 171,720
_______ _______ _______
Creditors
Bank and other borrowings (126,716) (122,357) (115,636)
Other creditors and provisions (113,481) (100,425) (74,053)
_______ _______ _______
(240,197) (222,782) (189,689)
_______ _______ _______
Net assets 89,779 80,035 92,315
_______ _______ _______
Capital and reserves
Called up share capital 4,193 4,183 4,185
Reserves 85,669 76,253 88,049
_______ _______ _______
Equity shareholders' funds 89,862 80,436 92,234
Equity minority interests (83) (401) 81
_______ _______ _______
89,779 80,035 92,315
_______ _______ _______
Combined statement of total 6 months to 6 months to Year to
recognised gains and losses 30.9.2003 30.9.2002 31.3.2003
and movements in equity (restated)
shareholders' funds #000 #000 #000
Profit/(loss) for the financial period 88 (1,620) 17,857
Translation differences on foreign
currency net investments (167) (233) 81
_______ _______ _______
Total recognised gains and losses
for the period (79) (1,853) 17,938
Dividends (2,553) (2,342) (10,399)
Issue of equity shares 260 143 207
_______ _______ _______
Movements in shareholders' funds
for the period (2,372) (4,052) 7,746
Opening equity shareholders' funds 92,234 84,488 84,488
_______ _______ _______
Closing equity shareholders' funds 89,862 80,436 92,234
_______ _______ _______
Findel p.l.c.
Group Financial Statements (Unaudited)
Consolidated Cashflow Statements
6 months to 6 months to Year to
30.9.2003 30.9.2002 31.3.2003
(restated)
#000 #000 #000
Operating profit 4,929 1,965 39,055
Depreciation and amortisation 4,443 4,101 8,332
Loss on disposal of fixed assets 9 428 135
Movements in working capital 47 (3,001) (14,942)
Reorganisation costs incurred (903) (1,034) (3,401)
_______ _______ _______
Net cash inflow 8,525 2,459 29,179
_______ _______ _______
Returns on investments and
servicing of finance
Interest received 108 59 163
Interest paid (4,439) (4,643) (9,289)
Interest element of finance leases (33) (8) (44)
Dividends paid to minorities (317) (700) (700)
_______ _______ _______
Net cash outflow (4,681) (5,292) (9,870)
_______ _______ _______
Taxation: Corporation tax paid (66) (1,467) (241)
_______ _______ _______
Capital expenditure and
financial investment
Purchase of tangible fixed assets (5,439) (5,257) (7,437)
Sale of tangible fixed assets 605 924 2,836
Purchase of investments (242) (510) (3,950)
_______ _______ _______
Net cash outflow (5,076) (4,843) (8,551)
_______ _______ _______
Acquisitions and Disposals
Purchase of businesses (4,437) - -
Net costs in businesses
held for resale - - (3,200)
_______ _______ _______
Net cash outflow (4,437) - (3,200)
_______ _______ _______
Dividends: Equity dividends paid (8,056) (7,730) (10,073)
_______ _______ _______
Net cash outflow before financing (13,791) (16,873) (2,756)
Financing
Issue of ordinary share capital 260 143 207
Increase in borrowings 10,000 10,000 10,000
Capital element of finance
lease payments (538) (316) (781)
_______ _______ _______
Net cash inflow 9,722 9,827 9,426
_______ _______ _______
(Decrease)/increase in cash (4,069) (7,046) 6,670
_______ _______ _______
Findel p.l.c.
Notes to the Group Financial Statements
1. Basis of preparation of consolidated financial statements
The consolidated interim financial statements have been approved by the board,
but have not been reviewed or audited by the auditors. They have been prepared
under the accounting policies set out in the group's accounts for the year ended
31 March 2003. In those accounts the group adopted a new accounting policy
whereby catalogue costs and recruitment expenditure previously deferred are now
written off as incurred. The comparative figures for the 6 months to 30
September 2002 have been restated accordingly
The financial information relating to the year ended 31 March 2003 comprises
non-statutory accounts. The full financial statements for that year have been
reported on by the company's auditors and have been filed with the Registrar of
Companies. The audit report was unqualified and did not contain a statement
under either S237 (2) or S237 (3) of the Companies Act 1985
2. Segmental analysis
6 months to 6 months to Year to
30.9.2003 30.9.2002 31.3.2003
(restated)
#000 #000 #000
Turnover
Home Shopping 84,410 65,821 171,364
Services 17,171 19,642 82,462
Educational Supplies 62,474 57,362 114,410
_______ _______ _______
164,055 142,825 368,236
_______ _______ _______
Operating profit/(loss)
Home Shopping 2,317 (1,543) 24,992
Services (1,502) (1,618) 1,575
Educational Supplies 5,273 6,217 14,671
Goodwill amortisation (1,159) (1,091) (2,183)
_______ _______ _______
4,929 1,965 39,055
_______ _______ _______
In the 6 months to 30 September 2003, acquired businesses accounted for turnover
of #6,165,000, operating profit before goodwill amortisation of #169,000, and
goodwill amortisation of #45,000.
The acquired businesses were in the Educational Supplies business segment.
3. Earnings/(loss) per share
Basic earnings/(loss) 88 (1,620) 17,857
Exceptional items - - 4,304
Tax attributable to exceptional items - - (1,036)
_________ _________ _________
Earnings excluding
exceptional items 88 (1,620) 21,125
_________ _________ _________
Weighted average number of shares 82,278,076 83,620,324 83,508,615
_________ _________ _________
Earnings/(loss) per share - basic 0.11p (1.94)p 21.38p
_________ _________ _________
Earnings/(loss) per share
- excluding exceptional items 0.11p (1.94)p 25.30p
_________ _________ _________
This information is provided by RNS
The company news service from the London Stock Exchange
END
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