RNS Number : 0369J
Alba PLC
27 November 2008
Alba plc
Interim results for the six months to 30 September 2008
Alba plc ("the Group") is a leading UK distributor of consumer electrical goods, with a portfolio of brands that includes Alba, Bush and
Goodmans
KEY POINTS
* Extremely challenging market conditions: expected to continue into new year
* Focus on added valued market sectors such as digital set-top boxes and Freesat TV receivers
* Revenue from continuing operations of £36.4m (2007: £53.9m)
* Pre-tax loss from continuing operations of £1.2m (2007: loss of £2.2m)
* Sale agreed of Alba and Bush brands to Argos Ltd for £15.25m
* Special dividend to be paid on completion of sale
* Net cash on balance sheet of £21.1m (2007: net debt of £24.1m)
Bridget Blow, Chairman, comments:
"The Group's strategy, of reducing risk and improving visibility in its consumer electronics markets, whilst further developing the
medical electronics business, is intended to re-establish a sustainable business model, capable of consistently producing positive returns.
"At this time, in view of the extremely challenging market conditions, returning the Group's continuing businesses to an acceptable
level of profitability will not be easy. It is therefore likely that the benefits to be accrued from the Group's restructuring will only
start to emerge once market conditions improve."
27 November 2008
ENQUIRIES:
Alba plc Tel: 020 8238 7650
Daniel Harris, Chief Executive
Andrew Rose, Finance Director
College Hill Tel: 020 7457 2020
Gareth David
CHAIRMAN'S STATEMENT
Trading results for the six months ended 30th September 2008 have been impacted by both the Board's strategy of seeking to restore
sustainable long term profitability, through focusing on refining the scale of the Group's activities, and the extremely challenging market
conditions which, as has been widely reported, have affected both manufacturers and retailers of consumer electronic products throughout the
world.
These difficult circumstances are forecast to continue throughout the remainder of this financial year and into at least the first half
of 2009/10.
In response to the severe market environment, the Group has escalated the rate of restructuring by withdrawing from more product lines
than previously anticipated, correspondingly reducing inventory levels, as well as staff headcount. In addition to addressing operational
issues, the Board continues to actively examine ways by which it might increase returns for Shareholders, which has resulted in the sale of
the Alba and Bush Trademarks outside of Australasia to Argos, and the proposed subsequent payment of a special dividend.
Revenues from continuing operations during the period were £36.4m (2007: £53.9m) with a loss before tax of £1.2m (2007: £2.2m). Losses
from discontinuing operations during the period were £8.4m (2007: £13.1m profit). Group inventory fell to £14.9m (2007: £41.0m) and the
number of employees was reduced to 183 (2007: 380). The Group has a net cash position in the balance sheet of £21.1m (2007: net debt of
£24.1m).
The Group's strategy, in relation to consumer electronics, is to adopt a more risk averse profile through continuing to reduce the scale
of the Group's operations and becoming wholly concentrated on 'UK centric', added-value sectors, where many of the larger consumer
electronics brands are not present.
It is intended the products will be differentiated from both global and retailer 'own-label' brands and will include digital set top
boxes, Freesat TV receivers and small-screen integrated TV solutions. The Group also remains alert to occasional opportunistic situations
such as a recently-signed contract with Disney to distribute themed products in the UK market.
The overall effect will be to continue to lower the Group's potential sales capacity whilst tightening control of inventory, debtor and
trade creditor levels. This will result in a considerably reduced exposure to any change in trading conditions and greater financial
visibility and control.
The Board considers that our continuing owned brand Goodmans, together with our license to distribute Grundig in the UK, can deliver
these strategic goals. Whilst some further short term exceptional costs will have to be incurred, the new business model should be able to
make a positive contribution to Group profitability, once market conditions stabilise and the product portfolio restructuring has been
completed.
The Group's consumer medical electronic products business, whilst in its early stages, continues to develop positively. The product
range is sold under the brand name 'Kinetik' and includes blood pressure monitors, body fat composition monitors, T.E.N.S. machines,
thermometers and stepometers.
The Group's strategy for the medical products business is to carefully extend product ranges by leveraging the existing product
development resources and manufacturing relationships in both China and the UK. In recent months the Group has started to recruit sales
managers and some initial orders and enquiries have been received from customers in North America, Europe and Asia. The global economic
downturn will have an impact on business performance and crucially the conversion of enquiries into firm purchase commitments remains a
priority.
Property
As a result of the reduced scale of the Group's operations a number of properties are now surplus to requirements. It is intended that
these assets be sold once market conditions permit.
Dividend
The Board has announced that, conditional upon the sale of the Alba and Bush brands, a special dividend will be made to shareholders. In
view of the poor trading results and the weak outlook for consumer demand the Directors are not recommending the payment of an ordinary
dividend at this time.
Outlook
The Group's strategy, of reducing risk and improving visibility in its consumer electronics markets, whilst further developing the
medical electronics business, is intended to re-establish a sustainable business model, capable of consistently producing positive returns.
At this time, in view of the extremely challenging market conditions, returning the Group's continuing businesses to an acceptable level
of profitability will not be easy. It is therefore likely that the benefits to be accrued from the Group's restructuring will only start to
emerge once market conditions improve.
BRIDGET BLOW
Chairman
27 November 2008
Consolidated Income Statement
Six months ended Year ended
30 September 30 September 31 March
2008 2007 2008
(unaudited) (unaudited) (audited)
Notes £'millions £'millions £'millions
Revenue 3 36.4 53.9 115.9
Operating Loss 3 (1.8) (2.4) (9.9)
Finance 4 0.6 0.2 0.7
Loss before tax (1.2) (2.2) (9.2)
Tax 5 (0.1) (0.1) (0.5)
Loss for the period from (1.3) (2.3) (9.7)
continuing operations
(Loss)/profit for the period
from
discontinuing operations 6 (8.4) 13.1 26.5
(Loss)/profit for the period (9.7) 10.8 16.8
Attributable to:
Equity holders of the parent (9.7) 10.8 16.8
Earnings per share (in pence) 7
Basic
- continuing operations (2.6)p (4.5)p (19.1)p
- discontinuing operations (16.6)p 25.8p 52.2p
- total (19.2)p 21.3p 33.1p
Diluted:
- continuing operations (2.6)p (4.5)p (19.1)p
- discontinuing operations (16.6)p 25.8p 52.2p
- total (19.2)p 21.3p 33.1p
Consolidated statement of recognised income and expense
Six months ended Year ended
30 September 30 September 31 March
2008 2007 2008
(unaudited) (unaudited) (audited)
£'millions £'millions £'millions
Net income/(expense) recognised 0.5 0.5 (1.8)
directly in equity
(Loss)/profit for the period (9.7) 10.8 16.8
Total recognised (9.2) 11.3 15.0
(expense)/income for period
(all attributable to
shareholders)
Group balance sheet
30 September 30 September 31 March
2008 2007 2008
(unaudited) (unaudited) (audited)
Notes £'millions £'millions £'millions
Non-current assets
Property, plant & equipment 21.3 26.2 21.6
Other receivables 5.5 --- 5.5
Total non-current assets 26.8 26.2 27.1
Current assets
Inventories 14.9 41.0 22.7
Trade receivables and other 18.4 46.6 22.8
receivables
Financial assets - derivative 0.3 --- ---
financial instruments
Tax recoverable 0.7 0.7 ---
Cash 21.1 0.7 28.2
Total current assets 55.4 89.0 73.7
Non-current assets classified 9 --- 15.8 ---
as held for resale
Total assets 82.2 131.0 100.8
Current liabilities
Bank borrowings and overdrafts --- 24.2 2.8
Trade and other payables 13.2 25.0 17.5
Financial liabilitiess - --- --- 0.1
derivative financial
instruments
Income tax 1.4 0.8 0.9
Provisions 1.4 3.7 4.1
Total current liabilities 16.0 53.7 25.4
Non-current liabilities
Deferred tax --- 1.0 ---
Total non-current liabilities --- 1.0 ---
Liabilities directly
associated with
non-current assets classified 9 --- 4.6 ---
as held for resale
Total liabilities 16.0 59.3 25.4
Total net assets 66.2 71.7 75.4
30 September 30 September 31 March
2008 2007 2008
(unaudited) (unaudited) (audited)
Note £'millions £'millions £'millions
Equity attributable to equity
holders of the parent
Share capital 5.1 5.1 5.1
Share premium 18.6 18.6 18.6
Investment in own shares (2.3) (2.3) (2.3)
Translation reserve (6.7) (10.3) (8.1)
Hedging reserve 0.7 3.3 1.8
Revaluation reserve 5.8 8.5 5.8
Other reserves 1.7 1.7 1.7
Retained earnings 43.3 47.1 52.8
Total equity 10 66.2 71.7 75.4
Group cash flow statement
Six months ended Year ended
30 September 30 September 31 March
2008 2007 2008
(unaudited) (unaudited) (audited)
Notes £'millions £'millions £'millions
Cash flow from operating
activities
Cash generated from operations 11 (4.4) (14.7) 6.4
Tax (paid)/received (0.3) 1.0 1.4
Net cash from operating (4.7) (13.7) 7.8
activities
Cash flows from investing
activities
Interest received 0.6 0.7 1.4
(Purchase)/sale of property, (0.2) (0.1) 0.6
plant and equipment
Sale of discontinued activity --- 43.5 70.8
(net)
Net cash flow from investing 0.4 44.1 72.8
activities
Financing activities
Finance costs paid --- (0.6) (0.8)
Dividends paid --- (1.1) (1.1)
Movement in bank import (2.8) (20.1) (37.4)
advances (net)
Net cash flow from financing (2.8) (21.8) (39.3)
activities
Net (decrease)/increase in (7.1) 8.6 41.3
cash and cash equivalents
Net foreign exchange --- (0.4) (0.9)
differences
Cash and cash equivalents at 28.2 (12.2) (12.2)
beginning of period
Cash and cash equivalents at 21.1 (4.0) 28.2
end of period
Notes to the Interim Statement
1. General information
The interim statement for the six months ended 30 September 2008 does not constitute statutory accounts for the purposes of Section 240
of the Companies Act 1985 and has not been audited. No statutory accounts for the period have been delivered to the Registrar of Companies.
The financial information presented has been prepared based on the adoption of IFRS, including International Accounting Standards (IAS)
and interpretations issued by the International Accounting Standards Board (IASB) and its committees, as interpreted by any regulatory
bodies relevant to the Group. These are subject to ongoing amendment by the IASB and subsequent endorsement by the European Commission and
are therefore subject to change. As a result the accounting policies used to prepare the interim financial report will need to be updated
for any subsequent amendments to IFRS required for first time adoption, or any new standards that the Group may elect to adopt early.
The interim report was approved by the directors on 26 November 2008. This announcement is being sent to shareholders and will be made
available at the company's registered offices at Bush House, The Waterfront, Elstree Road, Elstree, Herts WD6 3BS.
2. Accounting policies
Alba plc and its subsidiary undertakings have adopted the accounting policies set out below in preparation of this interim statement.All of these policies have been applied consistently throughout the period. The accounting policies and resulting balance sheet and income
statement are to be regarded as preliminary and will be determined with certainty only when the full IFRS financial statements for the year
ending 31 March 2009 are issued.
Basis of preparation
The interim statement has been prepared on a basis consistent with the Group's expected 2009 IFRS accounting policies and in accordance
with International Accounting Standard (IAS) 34: Interim Financial Report. The interim statement has been prepared on the historical cost
basis except for the revaluation of certain properties and financial assets and liabilities (including derivative instruments) which are
stated at fair value.
Basis of consolidation
The interim statement consolidates the financial information of Alba plc, its subsidiary undertakings and incorporates the results of
its joint venture. The financial information of subsidiaries is prepared for the same reporting period as the parent company using
consistent accounting policies.
(i) Subsidiaries
Subsidiaries are entities over which the Group has control, being the power to govern the financial and operating policies of the
acquired entity so as to obtain benefits from its activities. The results of subsidiaries acquired or sold in the year are consolidated from
the effective date of acquisition or to the effective date of disposal, as appropriate.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. On acquisition, the assets,
liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the fair
value of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of
the cost of acquisition below the fair values of identifiable net assets acquired is credited to the income statement in the period of
acquisition.
(ii) Joint venture entities
Joint venture entities are those entities over which the Group exercises joint control through a contractual arrangement. The results,
assets and liabilities of joint venture entities are incorporated in the financial statements using the equity method of accounting.Investments in joint venture entities are initially carried in the balance sheet at cost and adjusted by post acquisition changes in the
Group's share of net assets of the entity, less any impairment in the value of individual investments.
Any excess of the cost of acquisition over the Group's share of the fair values of the identifiable net assets of the joint venture
entity is recognised as goodwill. Any deficiency of the cost of acquisition below the Group's share of the fair values of identifiable net
assets of the joint venture entity at the date of acquisition is credited to the income statement in the period of acquisition.
Disposal groups held for sale
On classification as held for sale, non-current assets are recognised at the lower of carrying amount and fair value less costs to
disposal. Profit or loss associated with these assets is classified as "Profit for the period on discontinuing operations". Impairment
losses on initial classification as held for sale are also included in this classification, as are any gains and losses on subsequent
re-measurement.
3. Segment information
Primary reporting format -geographical segments. As a result of the disposal of the Leisure Division, the Group now only operates
within Consumer and Medical Electronics. Therefore, for management purposes, the Group is now organised into the following management and
reporting divisions: UK, Mainland Europe, the Far East and Australasia. These divisions are the basis on which the Group reports its primary
segment information as below:
Continuing operations:
Revenue Group operating
profit
Six months ended Year ended Six months ended Year ended
30 September 30 September 31 March 30 September 30 September 31 March
2008 2007 2008 2008 2007 2008
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
£'millions £'millions £'millions £'millions £'millions £'millions
UK 24.6 32.0 75.1 (2.6) (4.5) (13.8)
Far East 11.5 24.7 43.1 0.4 1.8 3.4
Australasia 5.4 3.0 7.8 0.4 0.3 0.5
41.5 59.7 126.0 (1.8) (2.4) (9.9)
Less inter company turnover (5.1) (5.8) (10.1)
36.4 53.9 115.9
Discontinuing operations:
Revenue Group operating
profit
Six months ended Year ended Six months ended Year ended
30 September 30 September 31 March 30 September 30 September 31 March
2008 2007 2008 2008 2007 2008
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
£'millions £'millions £'millions £'millions £'millions £'millions
UK 11.8 92.6 143.3 (8.4) (5.4) (8.7)
Mainland Europe --- 5.6 6.8 --- (0.5) (1.3)
11.8 98.2 150.1 (8.4) (5.9) (10.0)
4. Financial costs
Six months ended Year ended
30 September 30 September 31 March
2008 2007 2008
(unaudited) (unaudited) (audited)
£'millions £'millions £'millions
Finance (income)/costs
comprise:
Interest on bank loans and
overdrafts
repayable within 5 years --- 0.5 0.7
Less: Bank interest receivable (0.6) --- (0.3)
Interest from joint venture --- (0.7) (1.1)
(0.6) (0.2) (0.7)
5. Tax
The taxation charge is based on the estimated effective tax rate for the year as a whole of (7) %
(2007 :(4)%).
6. (Loss)/Profit for the period from discontinuing activities
Six months ended Year ended
30 September 30 September 31 March
2008 2007 2008
(unaudited) (unaudited) (audited)
£'millions £'millions £'millions
(Loss)/Profit for the period
from discontinuing activities
comprise:
(Loss)/profit from operations:
Leisure Division --- (0.7) (1.1)
Roadstar --- (0.6) (1.4)
Discontinued UK CE (8.4) (4.7) (7.6)
Share of results of Grundig JV --- (2.7) (6.8)
(8.4) (8.7) (16.9)
Gain on disposal
Leisure Division --- 21.8 20.4
Roadstar --- --- (0.2)
Grundig JV --- --- 23.2
--- 21.8 43.4
(Loss)/profit for the period (8.4) 13.1 26.5
from discontinuing activities
a) Profit/(loss)from operations:
Leisure Division:
Revenue 34.4 34.4
Operating loss (0.7) (1.1)
Tax --- ---
Loss for the period (0.7) (1.1)
Roadstar:
Revenue 5.6 6.8
Operating loss (0.5) (1.3)
Finance costs (0.1) (0.1)
Loss before and after tax (0.6) (1.4)
Discontinued CE
Revenue 11.8 58.2 108.9
Operating loss (8.4) (4.7) (7.6)
Finance costs --- --- ---
Loss before and after tax (8.4) (4.7) (7.6)
b) Gain on disposal
Leisure Division:
Net assets disposed of 26.0 26.0
Attributable goodwill 1.2 1.2
27.2 27.2
Profit on disposal 21.8 20.4
Total consideration net of costs etc 49.0 47.6
Satisfied by cash, and net cash inflow arising on disposal 49.0 47.6
Roadstar:
Net assets disposed of ---
Loss on disposal (0.2)
Total consideration net of costs etc (0.2)
Satisfied by cash, and net cash inflow arising on disposal (0.2)
Grundig
Net assets disposed of 8.4
Profit on disposal 23.2
Total consideration net of costs etc 31.6
Satisfied and to be satisfied by cash, and net cash inflow 31.6
arising on disposal
7. Earnings per share
Basic earnings per share are based upon earnings of £(9.7) million (2007 : £10.8 million) and 50,578,573 (2007 : 50,682,142) Ordinary
Shares being the average number of Ordinary Shares in issue during the six months ended 30 September 2008 excluding the shares held by The
Alba plc ESOP Trust. Basic earnings per share on continuing activities are based upon earnings of £(1.3) million (2007 : £(2.3) million) and
on discontinuing activities upon earnings of £(8.4) million (2007 : £13.1 million).
Diluted earnings per share are based upon earnings of £(9.7) million (2007 : £10.8 million) and 50,578,573 (2007 : 50,682,142) 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. Diluted earnings per share on continuing activities are based upon earnings of £(1.3)
million (2007 : £(2.3) million) and on discontinuing activities upon earnings of £(8.4) million (2007 : £13.1 million). Potential Ordinary
shares have been excluded from the computation of diluted EPS where these shares would be anti-dilutive.
8. Dividends
Six months ended Year ended
30 September 30 September 31 March
2008 2007 2008
(unaudited) (unaudited) (audited)
£'millions £'millions £'millions
Dividend paid/approved per --- 1.1 1.1
share in the period of nil
(2007/8: interim nil, full year
nil)
The amount paid during the six months ended 30th September 2007 is in respect of the interim dividend for the year ended 31 March 2007.The amount paid and/or approved during the year ended 31 March 2008 is in respect of the interim and final dividend for the year ended 31st
March 2007.
9. Non - current assets classified as held for resale
Non-current assets classified as held for resale as at 30th September 2007 related to the Group's investment in Grundig and it's
Roadstar division. These assets may be analysed as follows:
Roadstar Grundig Total
(unaudited) (unaudited) (unaudited)
£'millions £'millions £'millions
Non-current assets
Investment in joint venture --- 9.3 9.3
Total non-current assets --- 9.3 9.3
Current assets
Inventories 0.9 --- 0.9
Trade receivables and other 2.2 2.8 5.0
receivables
Cash 0.6 --- 0.6
Total current assets 3.7 2.8 6.5
Non-current assets classified as 3.7 12.1 15.8
held for resale
Current liabilities
Bank borrowings and overdrafts 1.2 --- 1.2
Trade and other payables 3.2 --- 3.2
Provisions 0.2 --- 0.2
Total current liabilities 4.6 --- 4.6
Liabilities directly associated 4.6 --- 4.6
with non-current assets classified
as held for resale
Total net assets (0.9) 12.1 11.2
10. Reconciliation of Movement in Consolidated Equity
Six months ended Year ended
30 September 30 September 31 March
2008 2007 2008
(unaudited) (unaudited) (audited)
£'millions £'millions £'millions
Net (expense)/income recognised (9.2) 11.3 15.0
directly in equity
Dividends on equity shares --- (1.1) (1.1)
Net (decrease)/increase in (9.2) 10.2 13.9
equity
Opening equity 75.4 61.5 61.5
Closing equity 66.2 71.7 75.4
11. Note to the consolidated cash flow statement
Six months ended Year ended
30 September 30 September 31 March
2008 2007 2008
(unaudited) (unaudited) (audited)
£'millions £'millions £'millions
Cash flow from operating
activities:
Operating loss (1.8) (2.4) (9.9)
Adjustment for:
Depreciation of property, plant 0.5 0.7 1.2
& equipment
Operating loss from (8.4) (5.9) (10.0)
discontinuing operations
Decrease/(increase) in 4.4 (5.0) 18.8
receivables
Decrease in inventories 7.8 1.0 20.4
Decrease in payables (6.9) (3.1) (14.1)
Cash flow from operating (4.4) (14.7) 6.4
activities
Net Debt
Cash and cash equivalents 21.1 (4.0) 28.2
Bank import advances --- (20.1) (2.8)
21.1 (24.1) 25.4
Cash and cash equivalents comprise cash at bank and bank overdrafts all with a maturity of three months or less.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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