TIDMMAE
RNS Number : 1749Q
Mallett PLC
28 August 2014
MALLETT PLC
("Mallett" or the "Group")
Interim report for the six months ended 30(th) June 2014
Chairman's Statement
Dear Shareholder
Our interim results for the six months ended 30(th) June 2014
show turnover reduced to GBP4.4m (2013: GBP6.6m), principally
driven by a succession of comparatively quiet trading months in the
US. The reduced turnover is reflected in a loss before tax of
GBP0.7m, compared to a profit before tax of GBP0.2m for the same
period of the previous year. The results highlight the fickle
market that we trade in: the US experienced very strong revenue
growth in 2013, which has been followed by a slower six month
period with little obvious explanation.
Despite weaker markets, we were pleased to return GBP1.75m (12.7
pence per share) to shareholders in June 2014 following the
completion of the sale of our Clapham property in February 2014 for
GBP2.65m. HJ Hatfield & Sons Ltd have relocated to new
warehouse premises in Stockwell, South London and the effect of the
relocation on trading was successfully managed.
We are delighted that our new website was launched in May. We
believe it exhibits our array of stock items to the best possible
effect with many photographs, well-written item descriptions and
provenances and links to informational pieces on eras of furniture
making, materials and key craftsmen. We plan to launch a full
online marketing campaign after the summer and expect the website
to show an increased contribution to sales towards the end of the
year.
Mallett
Mallett Antiques' turnover for the six months ended 30(th) June
2014 was lower than the first half of last year at GBP4.2m (2013:
GBP6.3m). Sales in the UK increased by 6% to GBP3.1m (2013:
GBP2.9m), which is encouraging. Unfortunately this was more than
offset by a reduction in US sales to GBP1.1m (2013 - GBP3.4m),
albeit from a high base.
A significant proportion of Mallett's business is driven by the
sale of a relatively small number of very high value pieces which
have the ability to significantly affect our results. Last year a
number of high value pieces were sold in the first half of the
year. Unfortunately this has not been matched in the first half of
2014. However, there are a number of such pieces being reviewed by
our clients which we hope will convert to sales in the second half
of the year.
We have continued a full marketing campaign in the first half of
the year attending the Palm Beach fair in February, The European
Fine Art Fair in Maastricht in March and Masterpiece in June. We
also released our Spring catalogue in May and held two exhibitions
at our Ely House gallery in London, one of equine sculpture by Ben
Panting and the other of photography by Harry Benson who is most
well known for his photography of the Beatles, but he also
photographed many world leaders and famous celebrities from the
1960s to the present day. Both exhibitions attracted a good amount
of footfall and sales and have helped to introduce Mallett to new
customers.
Other businesses
Hatfields is performing to expectations following the disruption
of moving premises at the start of the year. The refurbishment of
the new premises in Stockwell, South London, was completed on time
and to budget and third party revenue has not suffered as a result
of the move.
Masterpiece London Limited, of which Mallett owns 23.75%, put on
its fifth fair at the end of June at the Royal Hospital, London. It
was another successful fair with visitor numbers increasing on the
previous year to 35,000 over the 8 days of the fair. It was the
first year the fair had a major sponsor, RBC Wealth Management,
which proved successful and we expect the fair to be more
profitable than last year with Mallett's share of the profit for
the six months to 30th June 2014 expected to be approximately
GBP143,000 (2013: GBP85,000).
Balance sheet
Shareholders' equity as at 30 June 2014 was GBP12.1m (31
December 2013: GBP14.5m) which represents a decrease of GBP2.4m
since the start of the year. This is due primarily to the payment
of a GBP1.75m dividend and trading losses.
The value of inventory as at 30 June 2014 reduced slightly from
the start of the year to GBP11.3m (31 December 2013: GBP11.4m) as
the purchasing of new stock has broadly kept pace with the sale of
existing owned stock. Our net debt position has increased since the
start of the year to GBP1.2m (31 December 2013: GBP0.7m).
After many years of banking with Coutts & Co, the Board took
the decision in April 2014 to change our banking arrangements to
HSBC. HSBC has maintained our existing overdraft facility limit at
GBP2.5m and the terms of the facility are similar to those
previously offered by Coutts. This consolidates our banking
arrangements, as our US operation also uses HSBC. HSBC has also
provided the US operation with an overdraft facility of $500,000
for its own use. This will allow us to manage our cash inflows and
outflows in the UK and the US more efficiently in the future.
Dividends
Following the return of cash to shareholders in June 2014 of
12.7 pence per share, the Board has decided not to declare an
interim dividend.
Principal Risks and Uncertainties
The Group's operating results and liquidity are significantly
influenced by a number of risk factors, many of which are not under
its control. These have not changed from those set out in the
Annual Report and Accounts for 2013. These include the strength of
the UK and US economies and financial markets, another banking
crisis/financial shock to the global system, the demand for antique
furniture and works of art, the ability to attract and retain key
personnel, competition, the value of artworks, foreign currency
exchange rate movements and retirement benefit pension obligations.
A full disclosure of these risks can be found on page 15 of
Mallett's Annual Report and Accounts for 2013, a copy of which can
be downloaded from www.mallettantiques.com.
Outlook for the second half
As stated above, the company's performance over the second half
of the year is likely to be dependent on a number of high value
transactions, which have the potential to have a material effect on
the full year outturn. Forecasting these potential sales with any
precision is challenging. These specific areas of uncertainty are
set against a generally fragile and unpredictable market backdrop.
The Board notes that an outperformance versus its budget for the
second half of the financial year would now be required to maintain
full year expectations. The Board considers it unlikely at this
stage that our full year results will represent an improvement on
our underlying results for 2013.
Lord Daresbury
Chairman
For further information please contact:
Giles Hutchinson Smith, Chief Executive 020 7499 7411
Neither the content of the Company's website nor the content of
any website accessible from hyperlinks on the Company's website (or
any other website) is incorporated into, or forms part of, this
announcement nor, unless previously published by means of a
recognised information service, should any such content be relied
upon in reaching a decision as to whether or not to acquire,
continue to hold, or dispose of, securities in the Company.
MALLETT PLC
Condensed Consolidated Income Statement (unaudited)
for the six months ended 30th June 2014
Six months Six months
ended ended
30th 30th
Notes June June
2014 2013
GBP'000 GBP'000
Revenue 4,391 6,628
Cost of sales (4,327) (5,621)
Gross profit 64 1,007
Other operating income 3 6
Distribution costs (140) (121)
Administrative expenses (803) (754)
Operating profit (876) 138
Net interest (9) (15)
Share of operating profit in associate 143 85
(Loss)/profit before income tax (742) 208
Income tax 5 (7) (2)
(Loss)/profit for the period (749) 206
------------------ -------------------
(Loss)/profit on discontinued operation,
net of tax 4 24 (92)
(725) 114
------------------ -------------------
Profit/(loss) attributable to:
Owners of the parent company (695) 148
Non controlling interest (30) (34)
(725) 114
------------------ -------------------
Earnings per share attributable to the ordinary
equity holders of the parent
Profit and loss
Basic earnings per share 6 (5.43)p 0.86p
------------------ -------------------
Diluted earnings per share 6 (5.43)p 0.82p
------------------ -------------------
Profit and loss from continuing operations
Basic earnings per share (5.61)p 1.55p
------------------ -------------------
Diluted earnings per share (5.61)p 1.46p
------------------ -------------------
MALLETT PLC
Consolidated Statement of Comprehensive
Income
for the six months ended 30th June 2014
Six months Six months
ended ended
30th 30th
June June
2014 2013
GBP'000 GBP'000
Profit/(loss) for the period (725) 114
Other comprehensive income:
Items that may be reclassified to profit
or loss:
Exchange differences on translation of
foreign operations (103) 236
Items that will not be reclassified to
profit or loss:
Actuarial profit/(loss) on the defined
benefit pension scheme 113 (24)
Total other comprehensive loss for the
period, net of tax 10 212
------------------ -------------------
Total comprehensive profit/(loss) for
the period (715) 326
------------------ -------------------
Total comprehensive profit/(loss) attributable
to:
Owners of the parent company (685) 360
Non controlling interest (30) (34)
(715) 326
------------------ -------------------
MALLETT PLC
Condensed Consolidated Balance Sheet (unaudited)
at 30th June 2014
30th 31st
June December
2014 2013
GBP'000 GBP'000
Non-current assets
Intangible assets 170 26
Property, plant and equipment 2,486 2,464
Investment in associate 6 6
Other receivables 398 398
3,060 2,894
-------------- ---------------
Current assets
Inventories 11,289 11,406
Trade and other receivables 3,405 6,485
Cash and cash equivalents 535 1,435
15,229 19,326
-------------- ---------------
Total assets 18,289 22,220
-------------- ---------------
Equity
Share capital 690 690
Capital redemption reserve 5,168 5,168
Own shares (532) (473)
Retained profits 6,815 9,181
12,141 14,566
Non controlling interest (81) (51)
Total equity 12,060 14,515
-------------- ---------------
Current liabilities
Trade and other payables 2,975 3,842
Bank overdrafts and loans 1,819 2,189
4,794 6,031
Non current liabilities
Retirement benefit pension obligations 757 980
Other payables 678 694
1,435 1,674
-------------- ---------------
Total liabilities 6,229 7,705
-------------- ---------------
Total equity and liabilities 18,289 22,220
-------------- ---------------
MALLETT PLC
Condensed Consolidated Cash Flow Statement
(unaudited)
for the six months ended 30th June
2014
Six months Six months
ended ended
30th 30th
June June
2014 2013
GBP'000 GBP'000
(Loss)/profit before income tax (742) 208
Adjustments for:
Net interest 9 15
Share of operating profit in associate (143) (85)
Operating (loss)/profit (876) 138
Adjustments for:
Amortisation 13 -
Depreciation 101 139
Profit on the sale of fixed assets (2) -
Share-based payments 34 58
Defined benefit pension adjustment (109) (167)
Net exchange adjustments 41 (104)
Loss from discontinued operations 24 (92)
Movements in working capital:
Decrease in inventories 117 570
Decrease/(increase) in receivables 3,080 (1,778)
(Decrease)/increase in payables (776) 929
Cash generated by operations 1,647 (307)
Tax paid (7) (2)
Net Cash from Operating Activities 1,640 (309)
----------------- -----------------
Investing Activities
Purchase of shares in associate - (80)
Purchase of intangibles (157) -
Purchase of property, plant and equipment (150) (18)
Net Cash (used in)/from Investing
Activities (307) (98)
----------------- -----------------
Financing Activities
Interest paid (9) (15)
Purchases of own shares (10) (10)
Dividends paid (1,741) -
Net Cash used in Financing Activities (1,760) (25)
----------------- -----------------
Net Increase in Cash and Cash Equivalents (427) (432)
Cash and Cash Equivalents at the
beginning of the period (754) (545)
Effect of foreign exchange rate changes (103) 236
Cash and Cash Equivalents at the
end of the period (1,284) (741)
----------------- -----------------
MALLETT PLC
Condensed Consolidated Statement of Changes in Equity
(unaudited)
for the six months ended 30th
June 2014
Capital Non
Share redemption Own Retained controlling Total
capital reserve shares profits Total interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1st
January
2013 690 5,168 (438) 8,474 13,894 (89) 13,805
Profit in 6
months
to 30th June
2013 - - - 148 148 (34) 114
Total other
comprehensive
loss for the
period - - - 212 212 - 212
Total
Comprehensive
loss for year - - - 360 360 (34) 326
Acquisition of
interest in
subsidiary - - - (155) (155) 75 (80)
Own shares
exercised - - 28 53 81 - 81
Own shares
purchased - - (58) - (58) - (58)
At 30th June
2013 690 5,168 (468) 8,732 14,122 (48) 14,074
Loss in 6
months
to 31st
December
2013 - - - 309 309 (18) 291
Total other
comprehensive
loss for the
period - - - 154 154 - 154
Total
Comprehensive
loss for year - - - 463 463 (18) 445
Disposal of
interest
in subsidiary - - - (13) (13) 15 2
Own shares
exercised - - 7 (1) 6 - 6
Own shares
purchased - - (12) - (12) - (12)
At 31st
December
2013 690 5,168 (473) 9,181 14,566 (51) 14,515
Loss in 6
months
to 30th June
2014 - - - (695) (695) (30) (725)
Total other
comprehensive
income for the
period - - - 10 10 - 10
Total
Comprehensive
loss for year - - - (685) (685) (30) (715)
Dividends paid
in period - - - (1,741) (1,741) - (1,741)
Own shares
exercised - - - 60 60 - 60
Own shares
purchased - - (59) - (59) - (59)
At 30th June
2014 690 5,168 (532) 6,815 12,141 (81) 12,060
---------------- ------------- ------------- ------------- ------------ -------------- ------------
MALLETT PLC
Statement of Directors' Responsibilities
for the six months ended 30th June
2014
The interim management report is the responsibility of, and has been
approved by, the Directors of Mallett plc. Accordingly, the Directors
confirm that to the best of their knowledge:
- The unaudited condensed consolidated set of financial statements has
been prepared in accordance with IAS 34
"Interim Financial Reporting" as issued by the IASB and endorsed and
adopted by the European Union; and
- The interim management report includes a fair review of the information
required by DTR 4.2.7R and
DTR 4.2.8R of the Disclosure and Transparency Rules of the UK Financial
Conduct Authority.
The Directors of Mallett plc are listed on the Mallett website: www.mallettantiques.com.
Notes to the Condensed Consolidated Financial Statements
for the six months ended 30th June
2014
1 BASIS OF PREPARATION
The annual financial statements of Mallett plc are prepared in accordance
with IFRSs as adopted by the European Union. The comparative financial
information for the year ended 31 December 2013 included within this
report does not constitute the full statutory accounts for that period.
The statutory Annual Report and Financial Statements for 2013 have
been filed with the Registrar of Companies. The Independent Auditors'
Report on that Annual Report and Financial Statement for 2013 was
unqualified, did not draw attention to any matters by way of emphasis,
and did not contain a statement under 498(2) or 498(3) of the Companies
Act 2006.
SIGNIFICANT ACCOUNTING
2 POLICIES
The condensed financial statements are presented on the basis
of the historical cost convention.
The accounting policies adopted are consistent with those followed in
the preparation of the Group's annual financial statements for the year
ended 31 December 2013.
3 SEGMENTAL REPORTING
The Group's operating segments have been determined based on the management
accounts reviewed by the Board of Directors (the Chief Operating Decision
Maker). The Group's activities are split into two business segments:
dealing in antique furniture and objets d'art through Mallett, and
providing restoration services through Hatfields. The operations of
Mallett are further split into two geographical regions, UK and US,
reflecting the location of a Mallett showroom in each of those regions.
The Board assesses the performance of the operating segments based
on turnover and operating profit. Sales are reported by location of
sales outlet. The accounting policies of the reportable segments are
the same as described in note 2 of the annual financial statements
for the year ended 31st December 2013 and no segment is reliant on
any one major external customer.
Transfer pricing between segments are set on an arm's length basis.
Segmental assets and liabilities consist of property, plant and equipment,
trade receivables, payables, cash at bank and inventories.
Mallett
Dis-countinued
UK USA Hatfields Other Total operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income & expenses information for six months
ended 30th June 2014
Total Revenue 3,168 1,099 339 - 4,606 -
Inter segment revenue (84) - (131) - (215) -
External revenue
by sales outlet 3,084 1,099 208 - 4,391 -
EBITDA (484) (226) (63) 11 (762) -
Depreciation and
amortisation (53) (54) (7) - (114) -
Operating profit/(loss) (537) (280) (70) 11 (876) -
Share of operating profit
in associate - - - 143 143 -
Interest revenue (9) - - - (9) -
Interest expense 64 (64) - - - -
Profit/(loss) before
tax (482) (344) (70) 154 (742) -
Income tax - (7) - - (7) 24
Profit/(loss) for
the year (482) (351) (70) 154 (749) 24
----------------------------------------- ------------------- ----------------- -------------------- --------------- --------------- -----------------
Balance Sheet information at 30th
June 2014
Non current
assets 1,160 1,356 140 - 2,656
Capital expenditure 158 10 139 - 307
Total assets 1,639 6,111 539 - 18,289
Total liabilities, excluding
tax liabilities 5,115 918 196 - 6,229
Investment in associate 6 - - - 6
----------------------------------------- ------------------- ----------------- -------------------- --------------- ---------------
Mallett
Dis-countinued
UK USA Hatfields Other Total operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income & expenses information for six months
ended 30th June 2013
Total Revenue 3,973 3,408 408 - 7,789 140
Inter segment
revenue (1,091) - (70) - (1,161) -
External revenue
by sales outlet 2,882 3,408 338 - 6,628 140
EBITDA 101 204 30 (59) 276 (68)
Depreciation and
amortisation (47) (75) - (16) (138) -
Operating profit/(loss) 54 129 30 (75) 138 (68)
Share of operating profit
in associate - - - 85 85 -
Interest revenue (15) - - - (15) -
Interest expense 46 (46) - - - -
Profit/(loss) before
tax 85 83 30 10 208 (68)
Income tax - (2) - - (2) (24)
Profit/(loss) for
the year 85 81 30 10 206 (92)
----------------------------------------- ------------------- ----------------- -------------------- --------------- --------------- -----------------
Balance Sheet information at 30th
June 2013
Non current
assets 3,102 1,623 - - 4,725
Capital expenditure 18 - - - 18
Total assets 12,107 7,815 435 1,991 22,348
Total liabilities, excluding
tax liabilities 6,927 514 93 - 7,534
Investment in associate 6 - - - 6
----------------------------------------- ------------------- ----------------- -------------------- --------------- ---------------
4 DISCONTINUED OPERATIONS
On 28 May 2013 the sale of the business of James Harvey British Art
Limited ("JHBA") and JHBA inventory with a book value of GBP80,000
was completed to James Harvey in exchange for James Harvey's 50% equity
in JHBA. The company will no longer trade through JHBA, which will
become a dormant company, and therefore the results of JHBA for 2014
and 2013 and costs associated with the sale have been separated out
from the rest of the Group and included in discontinued operations
as follows:
2014 2013
GBP'000 GBP'000
Result of discontinued
operations
Revenue - 140
Expenses other than
finance costs - (208)
Tax 24 (24)
Profit/(loss) for
the year 24 (92)
------------------ ---------------------
Basic loss
per share 0.18p (0.69)p
------------------ ---------------------
Diluted loss
per share 0.18p (0.66)p
------------------ ---------------------
5 TAX
Taxation has been provided for at an estimated
rate of 20% (2013 - 20%).
BASIC AND DILUTED EARNINGS PER
6 SHARE
Basic and diluted earnings per share have been calculated on the
profit attributable to the owners of the parent company for the period
after taxation and divided by the weighted average number of shares
in issue during the period of 13,334,018 (2013 - 13,334,018).
Dilutive earnings per share is calculated by adjusting the weighted
average number of ordinary shares outstanding assuming conversion
of all potentially dilutive ordinary shares. The company has potentially
dilutive ordinary shares in the form of share awards under the Group's
SIP and LTIP. For these share awards the number of shares that could
have been acquired at fair value based on the monetary value of the
subscription rights attached to outstanding share awards is 737,249
(2013 - 642,352). Therefore, the weighted average number of shares
for the diluted earning per share is 14,071,267 (2013 - 13,976,370).
As a result of the loss in the current period all potential ordinary
shares are anti-dilutive and therefore diluted EPS is the same as
the basic earnings per share.
7 DIVIDENDS
The directors have not declared an interim
dividend (2013 - nil).
Company Information
DIRECTORS Lord Daresbury (Chairman)*
Giles H. Hutchinson Smith
*Non-executive (Chief Executive)
James Heneage*
M. Henry G.
Neville
Michael Smyth-Osbourne (Secretary)
REGISTERED OFFICE Ely House
37 Dover Street
London W1S
4NJ
COMPANY NUMBER 1838233
WEBSITE www.mallettantiques.com
This information is provided by RNS
The company news service from the London Stock Exchange
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