TIDMHAR
RNS Number : 8471S
Harvard International PLC
28 November 2011
28 November 2011
Harvard International plc (AIM: HAR)
Interim Results for the six months ended 30 September 2011
Harvard International plc ("Harvard", "the Company" or "the
Group") is a distributor of consumer electronic goods in the UK and
Australia
KEY POINTS
-- First half of 2011/12 performance is in line with the Board's expectations
-- Consumer confidence and spending remain depressed in both the
UK and Australia. Demand for Consumer Electronic (CE) products has
fallen by more than 20% when compared with the same period last
year
-- Operating profit for the first half of GBP0.3m (2010: loss
GBP0.6m) benefiting from increased sales of Digital Television
Recorders (DTRs) and Set Top Boxes (STBs)
-- Turnover was significantly impacted by the planned strategic
exit from high volume, low margin, product categories such as TV's
in the UK. Sales down to GBP23.1m (2010: GBP30.1m). Gross margin
rose to 23% (2010: 11%)
-- In the UK, DTR's launched successfully with more than 100,000
units sold this financial year
-- Australia's results improved when compared with the weak performance in the previous year
-- Flooding in Thailand has led to severe disruption in the
global hard disk drive supply chain. This will reduce DTR
production resulting in a shortage of units and higher prices. It
is expected that the net effect will reduce full year operating
profits by up to GBP0.5m
-- On 28 September 2011 the Board announced that it had received
an approach from Chengdu Geeya Technology Co. Ltd. ("Geeya") that
may or may not lead to a possible offer for Harvard. All necessary
shareholder approvals have now been obtained for Geeya to proceed
with the transaction, a GBP0.5m escrow deposit has been received
and the Company has been told the offer remains in line with the
anticipated timetable
Bridget Blow, Chairman, comments:
"We have delivered an improved performance in both the UK and
Australia despite difficult market conditions. Demand for consumer
electronic products is expected to remain depressed going in to
2012, however digital switch over programmes and demand for DTR
products will continue to support our business model in both the UK
and Australia. We continue to build on our strategy of targeting
the DTR, STB and Apple accessory segments through investment in
people, brands and products."
Enquiries:
Harvard International plc Tel: 020 8238 7650
Bridget Blow, Chairman
Mike Ashley, Chief Executive Officer
Investec Tel: 020 7597 4000
James Grace
CHAIRMAN'S STATEMENT
Group Performance
Against a backdrop of continued weakness in the global economy,
particularly in the consumer electronics (CE) sector, we have
improved profitability and remained on target with our strategic
plan.
The Group reported an operating profit for the first half of the
financial year of GBP0.3m (2010: loss GBP0.6m). Revenue for the
period fell to GBP23.1m (2010: GBP30.1m) and Gross Margin improved
to 23% (2010: 11%) reflecting our planned strategic exit from low
margin, high volume products which had accounted for GBP13m of
sales in the comparative period last year.
Operating profitability improved as a result of increased
consumer demand for digital set top boxes (STB's) and digital
television recorders (DTR's) and an improved business performance
in Australia.
Flooding in Thailand has led to severe disruption in the global
hard disk drive supply chain. This will reduce DTR production
resulting in a shortage of units but higher prices. It is expected
that the net effect will reduce full year operating results by up
to GBP0.5m.
The digital switch over (DSO) timetable resulted in an increased
need for working capital as short term STB inventory levels rose.
Net cash at the end of the period remained ahead of target at
GBP13.3m (2010: GBP15.0m).
Dividend
The Board is not proposing the distribution of a dividend at
this time.
Board changes
On 30 March 2011 the Board announced the resignation of the
Group's Finance Director, Colin Grimsdell, and his departure was
confirmed in August.
In September the Board announced the appointment of Robert
Thompson as Finance Director of the Company. Robert had been the
acting interim Finance Director and was previously the Group's Head
of Finance. His extensive experience and knowledge of the business
will add a strong complementary skill base to the Group's senior
leadership team.
Possible Offer for Harvard International plc
On 28 September 2011 Harvard announced that it had received an
approach from Geeya, a Chengdu based public company admitted to
trading on the Shenzhen Stock Exchange in China, that may or may
not lead a possible offer for Harvard. Geeya manufactures and
supplies digital television network equipment and its products
include a full series of digital TV products from head-end to
terminal-end, including digital television support systems and
consumer digital appliances, including digital set top boxes.
A further announcement was made by the Company on 10 October
2011, which was made under Rule 2.4 of the City Code, stating that
it had in principle reached agreement with Geeya valuing each
issued and to be issued Harvard share at 45 pence per share. It is
anticipated that the offer will be made in cash and is subject to a
number of pre-conditions prior to Geeya being able to announce a
firm offer for the Company; including the receipt of all necessary
approvals from regulatory authorities in China relating to the
offer.
Geeya reserves the right to waive any of the pre-conditions, but
even if all of the pre-conditions are satisfied or waived, there
can be no certainty that a firm offer will be forthcoming. Geeya
continues to seek the approvals from regulatory bodies in China
and, following the approval by Geeya's shareholders at an
extraordinary general meeting held on 24 November 2011, is now in
the process of formally lodging all regulatory documentation with
the regulatory bodies in China . Geeya has informed the Company
that approval from the principle regulatory body, the Chinese
Securities Regulatory Commission, is expected to be provided within
three months from the date of the documentation being formally
lodged. Every effort is being made by Harvard and Geeya to ensure
that the period in which regulatory consents are obtained is as
short as possible and Harvard will continue to update its
shareholders as the transaction progresses.
Outlook
Demand for CE products is expected to remain depressed going in
to 2012, however DSO programmes and demand for DTR products will
continue to support our business model in both the UK and
Australia. The flooding in Thailand is likely to impact the first
half of 2012 but at this stage it is difficult to quantify. We
continue to build on our strategy of targeting the DTR, STB and
Apple accessory segments through investment in new products and
strengthening the Group's sales and marketing capabilities. Events
such as the Olympics and the roll out of new digital internet based
services are expected to provide additional market support.
BRIDGET BLOW
Chairman
28 November 2011
CHIEF EXECUTIVE OFFICER'S REPORT
Despite CE markets having weakened further in the UK and
Australia, with year on year sales in many product categories down
by more than 20%, we have delivered an improved operational
performance. Considerable progress continues to be made in
establishing the Group's growth platform through our strategy of
targeting the DTR, STB and Apple accessory segments with investment
in people, brands and products. Externally we continue to examine
options for further partnerships which might add value to the
business.
UK Digital Media Boxes
UK STB sales have been supported by the DSO timetable and our
involvement with the government's assistance scheme. The Group's
strategic plan has been designed so that once the DSO programme has
been completed, our new higher price point, DTR products will
already have become well established supporting our future growth
and development. London is the next region timetabled to switch to
digital which will support sales through the final quarter of this
financial year and into the first quarter of 2012/13. The UK DSO
programme is expected to be completed by the end of 2012.
The DTR segment has been targeted as one with high margins and
growth potential but relatively few competitors. Our current DTR
product range, distributed under the Goodmans brand and retail
customers' own-label brands, has continued to increase sales,
helped by new products selling in excess of 100,000 units since
going on sale in May. This has resulted in our accounting for a 30%
market share during the period which helped support Group turnover
and margins.
In August we announced the creation of our new brand, View 21,
through which we will launch a market leading range of DTR's in
both the UK and Australia. These are currently being developed in
partnership with ANT plc and the first product releases are
expected to coincide with the London DSO timetable and the 2012
Olympics.
October's severe flooding in Thailand caused major disruption to
the manufacture of hard disk drives (HDD) resulting in component
shortages and higher prices. CE producers globally have been
affected and at present markets are volatile. We have responded
quickly to the situation but have had to reduce our planned DTR
output for the second half. Once the situation stabilizes, and HDD
output returns to pre disruption levels, we expect output to
recover to meet growing consumer demand for DTR functionality.
The integration of internet broadband platforms with digital
media services continues to evolve on a global scale. Next summer's
London Olympics is expected to become a catalyst for the launch of
new services which will heighten consumer awareness and demand. We
believe that our extensive knowledge and experience in the STB and
DTR segments, together with our enhanced technological capabilities
and understanding, will enable us to actively participate in this
attractive market opportunity and gain market share.
Apple Accessories
Demand for Apple accessories remains relatively strong, with
Apple's new product pipeline supporting sales, and the iLuv brand
continues to attract broad retail interest. We have recruited a new
sales and marketing team to drive performance and as a result of
this investment expect to see the number of stockists expand
further in the second half of the year.
Australia
In Australia, where the Group distributes a broader range of CE
products, sales and profitability have improved despite depressed
consumer demand. We have maintained leading market positions for
STB and DAB radio products and have started to supply retailers
with iLuv audio products. A significant contract with a large
retailer to supply TV's also contributed to a markedly improved
outcome for the period and we continue to explore opportunities to
increase turnover in a market that is less competitive than the
UK.
The Australian DSO programme has commenced in some rural parts
of the country and will continue to roll-out towards 2013 when the
major cities are due to switch to the digital signal. We have
already signed agreements with some state government assistance
schemes and will be well positioned to supply the broader consumer
market with our newly developed DTR products.
MIKE ASHLEY
Chief Executive Officer
28 November 2011
Consolidated Income Statement
Six months
ended Six months ended Year ended
30 September 30 September 31 March
2011 2010 2011
(unaudited) (unaudited) (audited)
Notes GBP'millions GBP'millions GBP'millions
Revenue 2 23.1 30.1 61.2
--------------------- ----------------------------------- -------------------------
Operating
profit/(loss) 2 0.3 (0.6) 0.7
Finance income 3 0.1 0.1 0.2
--------------------- ----------------------------------- -------------------------
Profit/(loss) before
tax 0.4 (0.5) 0.9
Tax - - (0.5)
Profit/(loss) for
the period 0.4 (0.5) 0.4
--------------------- ----------------------------------- -------------------------
Attributable to:
Owners of the parent
Company 0.4 (0.5) 0.4
--------------------- ----------------------------------- -------------------------
Earnings/(losses)
per share (in pence) 4
Basic and diluted 0.7p (0.9)p 0.7p
Profit/(loss) for the period 0.4 (0.5) 0.4
Other comprehensive income:
Exchange differences on translation
of overseas
operations - - -
Other comprehensive income net
of tax - - -
---- ------ ----
Total comprehensive income (all
attributable to owners of the parent) 0.4 (0.5) 0.4
---- ------ ----
The above results arose entirely from continuing operations.
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
30 September 30 September 31 March
2011 2010 2011
(unaudited) (unaudited) (audited)
GBP'millions GBP'millions GBP'millions
Non-current
assets
Property, plant &
equipment 0.5 0.6 0.5
------------- ------------- -------------
Total non-current
assets 0.5 0.6 0.5
------------- ------------- -------------
Current assets
Inventories 7.0 6.1 7.2
Trade and other receivables 11.4 16.9 13.0
Income tax recoverable - 0.2 -
Cash and cash equivalents 13.3 25.1 13.5
Total current assets 31.7 48.3 33.7
------------- ------------- -------------
Total assets 32.2 48.9 34.2
------------- ------------- -------------
Current liabilities
Trade and other payables 11.5 19.8 13.7
Income Tax 0.4 - 0.4
Dividend payable - 10.1 -
Provisions 0.3 0.3 0.5
Total current liabilities 12.2 30.2 14.6
------------- ------------- -------------
Total liabilities 12.2 30.2 14.6
------------- ------------- -------------
Net assets 20.0 18.7 19.6
============= ============= =============
Equity attributable to equity holders of the parent
Share capital 5.1 5.1 5.1
Share premium 3.2 3.2 3.2
Capital redemption
reserve 15.4 15.4 15.4
Investment in own shares (2.3) (2.3) (2.3)
Translation reserve (7.6) (7.6) (7.6)
Share based payment
reserve 0.5 0.7 0.5
Retained earnings 5.7 4.2 5.3
-------------------------- ------------------------------------ ------------------------
Total equity 20.0 18.7 19.6
========================== ==================================== ========================
Consolidated Statement of Changes in Equity
Share
Capital Investment based
Share Share redemption in own Translation payment Retained Total
capital premium reserve shares reserve reserve earnings equity
(GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm)
Balance at 1 April
2011 5.1 3.2 15.4 (2.3) (7.6) 0.5 5.3 19.6
--------- --------- ------------ ----------- ------------ --------- ---------- ---------
Profit for the
period - - - - - - 0.4 0.4
Other comprehensive
income:
Exchange differences
on translation of
overseas operations - - - - - - - -
--------- --------- ------------ ----------- ------------ --------- ---------- ---------
Total comprehensive
income - - - - - - 0.4 0.4
--------- --------- ------------ ----------- ------------ --------- ---------- ---------
Balance at 30
September
2011 5.1 3.2 15.4 (2.3) (7.6) 0.5 5.7 20.0
========= ========= ============ =========== ============ ========= ========== =========
Share
Capital Investment based
Share Share redemption in own Translation payment Retained Total
capital premium reserve shares reserve reserve earnings equity
(GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm)
Balance at 1
April
2010 5.1 3.2 15.4 (2.3) (7.6) 0.7 14.8 29.3
--------- --------- ------------ ----------- ------------ --------- ------------ ----------
Transactions with
owners:
Dividend approved - - - - - - (10.1) (10.1)
--------- --------- ------------ ----------- ------------ --------- ------------ ----------
Total
transactions
with owners - - - - - - (10.1) (10.1)
--------- --------- ------------ ----------- ------------ --------- ------------ ----------
Loss for the
period - - - - - - (0.5) (0.5)
Total
comprehensive
income - - - - - - (0.5) (0.5)
Balance at 30
September
2010 5.1 3.2 15.4 (2.3) (7.6) 0.7 4.2 18.7
========= ========= ============ =========== ============ ========= ============ ==========
Share
Capital Investment based
Share Share redemption in own Translation payment Retained Total
capital premium reserve shares reserve reserve earnings equity
(GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm)
Balance at 1
April
2010 5.1 3.2 15.4 (2.3) (7.6) 0.7 14.8 29.3
--------- --------- ------------ ----------- ------------ --------- ------------ ----------
Transactions with
owners:
Dividends Paid - - - - - - (10.1) (10.1)
Transfer relating
to lapsed
options - - - - - (0.2) 0.2 -
--------- --------- ------------ ----------- ------------ --------- ------------ ----------
Total
transactions
with owners - - - - - (0.2) (9.9) (10.1)
Profit for the
period - - - - - - 0.4 0.4
Other
comprehensive
income:
Exchange
differences
on translation of
overseas
operations - - - - - - - -
--------- --------- ------------ ----------- ------------ --------- ------------ ----------
Total
comprehensive
income - - - - - - 0.4 0.4
--------- --------- ------------ ----------- ------------ --------- ------------ ----------
Balance at 31
March
2011 5.1 3.2 15.4 (2.3) (7.6) 0.5 5.3 19.6
========= ========= ============ =========== ============ ========= ============ ==========
Consolidated Statement of Cash Flows
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2011 2010 2011
(unaudited) (unaudited) (audited)
Notes GBP'millions GBP'millions GBP'millions
Cashflow from operating
activities
Cash used in operations 6 (0.3) (3.8) (6.0)
Tax paid - (0.1) -
-------------------------- ------------------------- ------------------------
Net cash used in operating
activities (0.3) (3.9) (6.0)
-------------------------- ------------------------- ------------------------
Cashflows from investing
activities
Interest received 0.1 0.1 0.2
Sale of discontinued
activity
(net) - - 0.5
-------------------------- ------------------------- ------------------------
Net cash from investing
activities 0.1 0.1 0.7
-------------------------- ------------------------- ------------------------
Cash flows from financing
activities
Dividends paid - - (10.1)
Net cash used in financing
activities - - (10.1)
Net decrease in cash and
cash
equivalents (0.2) (3.8) (15.4)
Cash and cash equivalents at
begining of period 13.5 28.9 28.9
-------------------------- ------------------------- ------------------------
Cash and cash equivalents at
end of period 13.3 25.1 13.5
-------------------------- ------------------------- ------------------------
Notes to the interim statement
1. Basis of preparation
The condensed consolidated interim financial information for the
six months ended 30 September 2011 comprise the Company and its
subsidiaries, together referred to as the Group.
The condensed consolidated interim financial information has
been prepared in accordance with IAS 34 'Interim Financial
Reporting', as adopted by the EU. It does not include all of the
information required for full annual financial statements, and
should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 March 2011.
The information relating to the six months ended 30 September
2011 and 30 September 2010 is unaudited and does not constitute
statutory accounts for the purposes of Section 434 of the Companies
Act 2006. The comparative figures for the financial year ended 31
March 2011 are not the Company's statutory accounts for that
financial year. Statutory accounts for the year ended 31 March 2011
were approved by the Board of Directors on 27 July 2011 and
delivered to the Registrar of Companies. The report of the auditors
on those accounts was unqualified, did not include a reference to
any matters to which the auditors drew attention by way of emphasis
without qualifying their report and did not contain a statement
under Section 498 (2) or (3) of the Companies Act 2006.
The Group's financial risk management objectives and policies
are consistent with that disclosed in the consolidated financial
statements as at and for the year ended 31 March 2011.
Accounting policies
The accounting policies applied by the Group in these condensed
consolidated interim financial information are based on
International Financial Reporting Standards as adopted by the
European Union and in accordance with the accounting policies which
the Group expects to adopt in its next annual accounts for the year
ending 31 March 2012 and are the same as those applied by the Group
in its consolidated financial statements for the year ended 31
March 2011.
This condensed consolidated interim financial information was
approved by the Board of Directors on XX November 2011 and are
available on Harvard's website, www.harvardplc.com, and are being
sent to shareholders. Further copies are available from Harvard's
registered office, Harvard House, The Waterfront, Elstree Road,
Elstree, Hertfordshire WD6 3BS.
2. Segmental reporting
Revenue and segmental profit has been disclosed by the three
operating segments of UK Digital, UK other CE and Rest of the World
CE in the manner that the information is presented to the Board of
Directors.
The revenues and profit generated by each of the Group's
segments are as follows:
Rest of the
UK Digital UK Other CE World CE Total
GBP'millions GBP'millions GBP'millions GBP'millions
6 months to 30 September
2011
Revenue from external
customers 12.3 1.8 9.0 23.1
Segmental profit 2.3 - 1.6 3.9
------------- ------------- ------------- -------------
6 months to 30 September
2010
Revenue from external
customers 9.0 16.3 4.8 30.1
Segmental profit 1.2 0.7 1.0 2.9
------------- ------------- ------------- -------------
Year ended 31 March
2011
Revenue from external
customers 25.6 22.4 13.2 61.2
Segmental profit 3.7 1.8 3.0 8.5
------------- ------------- ------------- -------------
Segment operating profit can be reconciled to Group
profit/(loss) as follows:
Six months
ended Six months ended Year ended
30 September 30 September 31 March
2011 2010 2011
(unaudited) (unaudited) (audited)
GBP'millions GBP'millions GBP'millions
Segmental profit 3.9 2.9 8.5
Reconciling
items:
Overheads not
allocated
to segments (3.6) (3.5) (7.8)
----------------------------- ----------------------------------- -------------------------------
Group operating
profit/(loss) 0.3 (0.6) 0.7
Finance income 0.1 0.1 0.2
Tax - - (0.5)
Profit/(loss)
for the
period 0.4 (0.5) 0.4
----------------------------- ----------------------------------- -------------------------------
3. Finance income
Six months
ended Six months ended Year ended
30 September 30 September 31 March
2011 2010 2011
(unaudited) (unaudited) (audited)
GBP'millions GBP'millions GBP'millions
Finance income comprises:
Bank interest receivable 0.1 0.1 0.2
------------- ----------------- -------------
0.1 0.1 0.2
------------- ----------------- -------------
4. Earnings per share
Basic and diluted earnings per share are based upon profits of
GBP0.4 million (six months ended 30 September 2010: losses of
GBP0.5 million, and year ended 31 March 2011: profits of GBP0.4
million). Basic earnings per share is based on 50,597,573 (2010:
50,597,573) Ordinary Shares being the weighted average number of
Ordinary Shares in issue during the six months ended 30 September
2011 excluding the shares held by The Alba plc ESOP Trust.
Diluted earnings per share are based upon 51,275,685 (2010:
50,597,573) Ordinary Shares allowing for the exercise of
outstanding share purchase options exercisable at a price below the
average fair value during the period and the shares held by The
Alba plc ESOP Trust.
No (2010: 1,213,386) Potential Ordinary Shares have been
excluded from the computation of diluted earnings per share for
shares which would be anti-dilutive.
5. Dividends
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2011 2010 2011
(unaudited) (unaudited) (audited)
GBP'millions GBP'millions GBP'millions
Special dividend - 10.1 10.1
-------------- ------------- -------------
A special dividend of 20p per ordinary share was approved at the
AGM on 23 September 2010. This dividend was paid on 15 October 2010
to shareholders on the register at 1 October 2010.
6. Note to the consolidated cash flow statement
Six months Six months
ended ended Year ended
30 September 30 September
2011 2010
31 March
(unaudited) (unaudited) 2011 (audited)
GBP'millions GBP'millions GBP'millions
Cashflow from operating
activities:
Operating profit/(loss)
from
continuing operations 0.3 (0.6) 0.7
Adjustment for:
Depreciation of
property,
plant & equipment - 0.1 0.2
Decrease/(increase) in
receivables 1.6 (11.3) (7.9)
Decrease/(increase) in
inventories 0.2 (1.7) (2.8)
(Decrease)/increase in
payables
and provisions (2.4) 9.7 3.8
------------------------------- ------------------------------ -------------------
Cash used in operations (0.3) (3.8) (6.0)
------------------------------- ------------------------------ -------------------
Net Cash
Cash and cash equivalents 13.3 25.1 13.5
----- ----- -----
13.3 25.1 13.5
----- ----- -----
Cash and cash equivalents comprise cash at bank all with a
maturity of three months or less.
This information is provided by RNS
The company news service from the London Stock Exchange
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