TIDMBWNG
RNS Number : 7252A
Brown (N.) Group PLC
14 October 2009
?
14 October 2009
N Brown Group plc
INTERIM RESULTS ANNOUNCEMENT
SIX MONTHS ENDED 29 AUGUST 2009
N Brown Group plc, the internet and catalogue home shopping company, today
announces its interim results for the 26 weeks to 29th August 2009.
Highlights:
Group revenue
GBP338.7m +4.9%
Group profit before tax and fair value adjustment to financial instruments
GBP41.8m +13.0%
E-commerce sales up
GBP128m +21.0%
Adjusted earnings per share up
11.02p +13.5%
Interim dividend up
4.38p +57.6%
Net debt down by GBP15.9m
Positive outlook for the full year
Alan White, Chief Executive, said:
"We are pleased with N Brown's financial performance against what can only be
described as difficult trading conditions. We are encouraged by the loyalty of
our customers, as over the last six months we have recorded growth across all
products ranges spanning the portfolio of brands, with particularly strong
performance from our newer titles. The flexibility of our business model which
focuses on niche customers and products, together with our international
expansion plans and the recent acquisition of High & Mighty, makes us confident
we will continue to deliver growth and are on track to deliver our expectations
for the current financial year."
Lord Alliance of Manchester, CBE, Chairman, added:
"Our core strategy to continually improve our product ranges and develop our
online channel to market has delivered growth for the group in the first half of
the year, as we have seen the number of customers and their average spend
increase in the last six months. Despite the uncertainty surrounding the
economic climate, we are confident that we are targeting customer and product
groups which can deliver growth over the medium term.
-Ends-
For further information please contact:
+-------------------------------------------+----------------------------+
| N Brown Group plc | |
+-------------------------------------------+----------------------------+
| Alan White, Chief Executive | On the day: 020 7074 1800 |
+-------------------------------------------+----------------------------+
| Dean Moore, Finance Director | Thereafter: 0161 238 2202 |
+-------------------------------------------+----------------------------+
| Website : www.nbrown.co.uk | |
+-------------------------------------------+----------------------------+
| | |
+-------------------------------------------+----------------------------+
| Kreab Gavin Anderson | |
+-------------------------------------------+----------------------------+
| Fergus Wylie / Clotilde Gros | Tel: 020 7074 1800 |
+-------------------------------------------+----------------------------+
| | |
+-------------------------------------------+----------------------------+
CHAIRMAN'S STATEMENT
Financial Results
In the six months ended 29 August 2009 N Brown Group has delivered another
record set of results. Group revenues were up by 4.9% to GBP338.7m and profit
before tax, excluding the fair value adjustment for financial instruments, was
up by 13.0% to GBP41.8m. Adjusted earnings per share are 11.02p, up by 13.5%.
The interim dividend is increased by 1.6p to 4.38p, encompassing a rebalancing
of the split between the interim and final payments as well as an underlying
increase to reflect the growth in earnings and our continued confidence in the
business. Going forward we expect to pay approximately 45% of the full year
dividend at the interim stage.
Our decision earlier in the year to slow down the rate of debtor growth, and a
planned reduction in stock holdings of 4.8%, had some impact on sales growth as
anticipated but resulted in a GBP37.0m benefit to cash flow. A GBP21.1m increase
in net borrowings in the first six months of last year reversed to a GBP15.9m
reduction this year, resulting in net borrowings falling from GBP220.5m to
GBP202.4m at 29 August 2009, compared with bank facilities of GBP320m which are
committed until March 2012. Gearing has fallen from 90% to 71% on net assets
which have risen 16.1% to GBP284.6m. Net interest charges have fallen from
GBP7.6m to GBP2.4m, covered 18 times, as a result of lower borrowings and the
decline in LIBOR.
Revenue
Customer recruitment expenditure was maintained at last year's level and we
selectively implemented a number of measures to limit the availability of credit
where our scoring systems had identified a heightened risk of default. The
outcome has been a 3% growth in active established customers who, on average,
spent 2% more than in the corresponding period last year. Our customer
recruitment has worked extremely well, particularly the merchandise
advertisement and internet search engine campaigns, although the overall sales
per new customer are down on last year.
The growth in home shopping revenues has been shared amongst all our key
customer and product groups.
The sales to younger customers, typically aged 30-45, grew by 12% to GBP105m.
Simply Be has continued to thrive and Jacamo, the equivalent brand for men, has
more than doubled its sales. The core midlife brands, targeting customers
between 45 and 65 years old, increased revenues to GBP206m, up 3%, including
excellent performances from Marisota and Premier Man. The catalogues targeted
at the post-retirement customers had sales of GBP28m, level with last year. The
performance of the Nightingales brand, which we bought out of administration in
early 2008, was very encouraging, as was the first season result from our new
brand in this category, Julipa.
Sales of ladies clothing rose by 4% to GBP190m, benefiting from the continued
development of ranges exclusively available to our customers in the larger sizes
from brands such as Together, Ben Sherman, Regatta and Joe Browns. Footwear had
a strong season with sales up by 9%, driven by a further increase in the
fittings available, including some standard fitting options to enhance our
cross-selling opportunities. Menswear remains the fastest growing category with
sales up by 12%, with the main upward momentum coming from the increasing number
of branded ranges available to our younger customers. Home and leisure sales
were up by 2% to GBP83m, although there was a noticeable slowdown in the higher
priced items due to more restrictive credit policies.
Online sales maintained their strong momentum, up by 21% to GBP128m which now
represents 38% of total sales (2008, 33%). Our catalogues remain an important
driver of our online sales but we are also seeing strong demand from some new
customers even before they have received their catalogue. The sales from
products only available online have doubled. There has been a regular programme
of enhancements to our websites to improve the presentation and ease of use for
our customers, and there are more exciting developments in the pipeline.
Gross Margin
As anticipated the gross margin fell from 54.7% to 53.1%. This is attributable
to a rise in the bad debt charge from a combination of increases in the volume
of debtors, customer mix and a deterioration in the rate of write-offs as some
customers have suffered in the economic downturn. As we stated at the start of
the year, we anticipate an improving trend in gross margin in the second half of
the year
New Business Development
A German language version of our Simply Be catalogue and website was launched in
February 2009 and has performed in line with our expectations. We have achieved
our goal of GBP1.1m sales in the first half with an associated loss of GBP0.7m,
and proved the logistics of taking orders in Germany and shipping from the UK
can work. The online penetration was much higher than expected but so were
product returns, principally due to the complexity of converting UK to European
sizes. We look forward to the Autumn/Winter catalogues building on these
foundations.
In September 2009 we acquired certain assets of High & Mighty Limited, the
premier brand for tall and large men. The acquisition, for a total consideration
of GBP1.6m, fits perfectly with our strategy of focusing on niche customers and
products. We intend to develop or relocate the 14 stores we currently occupy
under licence from the administrator. In addition we see a major opportunity to
develop High & Mighty's online business and we will be reintroducing a catalogue
in November.
Current Trading and Outlook
The last year has seen unprecedented events in the financial markets which have
had a knock-on effect on consumers' finances and confidence. Against this
backdrop we have been delighted with the resilience of our customer base and the
flexibility of our business model. However, with rising unemployment and
depressed house prices we anticipate consumer spending will remain subdued for
some time. Despite this we still expect our customers, with an average age of
57, to remain relatively resilient.
We will continue to focus on those niche customer and product groups where our
comprehensive offer of sizes and fittings, allied with our database management
expertise, gives us an advantage over the competition. Our websites will
continue to be developed, particularly with multi-media content, in order to
deliver incremental sales and operational cost savings.
Revenue in the 6 weeks ended 10 October 2009 is 1% ahead of last year, although
this period compares with a particularly buoyant trading period and the weeks
ahead provide less challenging comparatives. Online sales continue to forge
ahead, up 15% so far and we are in the process of increasing our customer
recruitment expenditure, while at the same time there are a number of signs
emerging that the trends which influence bad debts are starting to settle down.
As a result the board remains confident that we are on track to deliver on our
expectations for the 2009/10 financial year.
Lord Alliance of Manchester, CBE
14 October 2009
Unaudited condensed consolidated income statement
+-------------------------------+------+------------+---+------------+--+------------+--+
| | | 26 weeks | | 26 weeks | | 52 weeks | |
| | | to | | to | | to | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| | | 29-Aug-09 | | 30-Aug-08 | | 28-Feb-09 | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| |Note | GBPm | | GBPm | | GBPm | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| | | | | Restated | | Restated | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| Revenue | 4 | 338.7 | | 322.8 | | 662.5 | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| Operating profit | 4 | 44.2 | | 44.6 | | 95.5 | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| Investment income | | 1.4 | | 2.2 | | 4.1 | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| Finance costs | | (3.8) | | (9.8) | | (16.9) | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| Profit before taxation and | | 41.8 | | 37.0 | | 82.7 | |
| fair value adjustments to | | | | | | | |
| financial instruments | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| Fair value adjustments to | | (8.5) | | 2.5 | | 9.6 | |
| financial instruments | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| Profit before taxation | | 33.3 | | 39.5 | | 92.3 | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| Taxation | 5 | (9.3) | | (15.8) | | (30.2) | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| Profit attributable to equity | | 24.0 | | 23.7 | | 62.1 | |
| holders of the parent | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| Adjusted earnings per share | 6 | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| Basic | | 11.02 | p | 9.71 |p | 21.96 |p |
| | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| Diluted | | 11.00 | p | 9.66 |p | 21.90 |p |
| | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| Earnings per share | 6 | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| Basic | | 8.79 | p | 8.75 |p | 22.88 |p |
| | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
| Diluted | | 8.77 | p | 8.70 |p | 22.82 |p |
| | | | | | | | |
+-------------------------------+------+------------+---+------------+--+------------+--+
Unaudited condensed consolidated statement of comprehensive income
+--------------------------------------------+------------+--+------------+--+------------+
| | 26 weeks | | 26 weeks | | 52 weeks |
| | to | | to | | to |
+--------------------------------------------+------------+--+------------+--+------------+
| | 29-Aug-09 | | 30-Aug-08 | | 28-Feb-09 |
+--------------------------------------------+------------+--+------------+--+------------+
| | GBPm | | GBPm | | GBPm |
+--------------------------------------------+------------+--+------------+--+------------+
| | | | Restated | | Restated |
+--------------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+--------------------------------------------+------------+--+------------+--+------------+
| Exchange differences on translation of | (0.7) | | 0.7 | | 1.7 |
| foreign operations | | | | | |
+--------------------------------------------+------------+--+------------+--+------------+
| Actuarial losses on defined benefit | (8.3) | | (8.8) | | (1.7) |
| pension schemes | | | | | |
+--------------------------------------------+------------+--+------------+--+------------+
| Tax on items recognised directly in equity | 2.3 | | 2.5 | | 0.2 |
| | | | | | |
+--------------------------------------------+------------+--+------------+--+------------+
| Net (expense)/income recognised directly | (6.7) | | (5.6) | | 0.2 |
| in equity | | | | | |
+--------------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+--------------------------------------------+------------+--+------------+--+------------+
| Profit for the period | 24.0 | | 23.7 | | 62.1 |
+--------------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+--------------------------------------------+------------+--+------------+--+------------+
| Total comprehensive income for the period | 17.3 | | 18.1 | | 62.3 |
| attributable to equity holders of the | | | | | |
| parent | | | | | |
+--------------------------------------------+------------+--+------------+--+------------+
Unaudited condensed consolidated balance sheet
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | 29-Aug-09 | | 30-Aug-08 | | 28-Feb-09 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | GBPm | | GBPm | | GBPm | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | | | Restated | | Restated | |
| | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Non-current assets | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Intangible assets | 33.6 | | 31.8 | | 32.8 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Property, plant & equipment | 72.5 | | 72.1 | | 75.0 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Deferred tax assets | 8.4 | | 10.0 | | 6.7 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | 114.5 | | 113.9 | | 114.5 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Current assets | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Inventories | 67.4 | | 70.8 | | 69.8 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Trade and other receivables | 456.6 | | 437.1 | | 451.5 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Derivative financial | 1.2 | | 2.6 | | 9.7 | |
| instruments | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Cash and cash equivalents | 57.6 | | 39.7 | | 51.7 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | 582.8 | | 550.2 | | 582.7 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Total assets | 697.3 | | 664.1 | | 697.2 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Current liabilities | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Bank overdrafts | - | | (0.2) | | - | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Trade and other payables | (110.3) | | (117.9) | | (106.1) | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Current tax liability | (15.9) | | (12.0) | | (13.8) | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | (126.2) | | (130.1) | | (119.9) | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Net current assets | 456.6 | | 420.1 | | 462.8 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Non-current liabilities | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Bank loans | (260.0) | | (260.0) | | (270.0) | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Retirement benefit obligation | (8.5) | | (10.9) | | (4.0) | |
| | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Deferred tax liabilities | (18.0) | | (17.9) | | (20.3) | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | (286.5) | | (288.8) | | (294.3) | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Total liabilities | (412.7) | | (418.9) | | (414.2) | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Net assets | 284.6 | | 245.2 | | 283.0 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Equity | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Share capital | 30.5 | | 30.3 | | 30.3 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Share premium account | 11.0 | | 11.0 | | 11.0 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Own shares | (0.2) | | (0.3) | | (0.2) | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Foreign currency translation | 2.2 | | 1.9 | | 2.9 | |
| reserve | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Retained earnings | 241.1 | | 202.3 | | 239.0 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| Total equity | 284.6 | | 245.2 | | 283.0 | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
| | | | | | | |
+--------------------------------+-----------+--+-----------+--+-----------+--+
Unaudited condensed consolidated cash flow statement
+--------------------------------------+------------+--+------------+--+------------+
| | 26 weeks | | 26 weeks | | 52 weeks |
| | to | | to | | to |
+--------------------------------------+------------+--+------------+--+------------+
| | 29-Aug-09 | | 30-Aug-08 | | 28-Feb-09 |
+--------------------------------------+------------+--+------------+--+------------+
| | GBPm | | GBPm | | GBPm |
+--------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+------------+--+------------+--+------------+
| Net cash from operating activities | 40.4 | | 12.1 | | 38.7 |
+--------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+------------+--+------------+--+------------+
| Investing activities | | | | | |
+--------------------------------------+------------+--+------------+--+------------+
| Purchases of property, plant and | (1.0) | | (4.4) | | (12.9) |
| equipment | | | | | |
+--------------------------------------+------------+--+------------+--+------------+
| Purchases of intangible assets | (4.4) | | (4.1) | | (8.3) |
+--------------------------------------+------------+--+------------+--+------------+
| Interest received | 0.1 | | 0.7 | | 1.0 |
+--------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+------------+--+------------+--+------------+
| Net cash used in investing | (5.3) | | (7.8) | | (20.2) |
| activities | | | | | |
+--------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+------------+--+------------+--+------------+
| Financing activities | | | | | |
+--------------------------------------+------------+--+------------+--+------------+
| Interest paid | (2.5) | | (8.5) | | (13.1) |
+--------------------------------------+------------+--+------------+--+------------+
| Dividends paid | (17.5) | | (17.4) | | (24.9) |
+--------------------------------------+------------+--+------------+--+------------+
| (Decrease)/increase in bank loans | (10.0) | | 10.0 | | 20.0 |
+--------------------------------------+------------+--+------------+--+------------+
| Decrease in bank overdrafts | - | | - | | (0.2) |
+--------------------------------------+------------+--+------------+--+------------+
| Proceeds on issue of shares held by | 0.8 | | 0.5 | | 0.6 |
| ESOT | | | | | |
+--------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+------------+--+------------+--+------------+
| Net cash used in financing | (29.2) | | (15.4) | | (17.6) |
| activities | | | | | |
+--------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+------------+--+------------+--+------------+
| Net increase/(decrease) in cash and | 5.9 | | (11.1) | | 0.9 |
| cash equivalents | | | | | |
+--------------------------------------+------------+--+------------+--+------------+
| Opening cash and cash equivalents | 51.7 | | 50.8 | | 50.8 |
+--------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+------------+--+------------+--+------------+
| Closing cash and cash equivalents | 57.6 | | 39.7 | | 51.7 |
+--------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+------------+--+------------+--+------------+
Reconciliation of operating profit to net cash from operating activities
+-------------------------------------+------------+--+------------+--+------------+
| | 26 weeks | | 26 weeks | | 52 weeks |
| | to | | to | | to |
+-------------------------------------+------------+--+------------+--+------------+
| | 29-Aug-09 | | 30-Aug-08 | | 28-Feb-09 |
+-------------------------------------+------------+--+------------+--+------------+
| | GBPm | | GBPm | | GBPm |
+-------------------------------------+------------+--+------------+--+------------+
| | | | Restated | | Restated |
+-------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Operating profit | 44.2 | | 44.6 | | 95.5 |
+-------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Adjustments for: | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Depreciation of property, plant and | 3.5 | | 2.8 | | 5.8 |
| equipment | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Amortisation of intangible assets | 3.6 | | 3.2 | | 6.4 |
+-------------------------------------+------------+--+------------+--+------------+
| Share option charge | 1.0 | | 0.8 | | 1.8 |
+-------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Operating cash flows before | 52.3 | | 51.4 | | 109.5 |
| movements in working capital | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Decrease/(increase) in inventories | 2.4 | | (2.7) | | (1.7) |
+-------------------------------------+------------+--+------------+--+------------+
| Increase in trade and other | (5.4) | | (37.2) | | (51.1) |
| receivables | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Increase in trade and other | 4.2 | | 14.2 | | 5.0 |
| payables | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Pension obligation adjustment | (4.2) | | (3.7) | | (3.9) |
+-------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Cash generated by operations | 49.3 | | 22.0 | | 57.8 |
+-------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Taxation paid | (8.9) | | (9.9) | | (19.1) |
+-------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Net cash from operating activities | 40.4 | | 12.1 | | 38.7 |
+-------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
Unaudited condensed consolidated statement of changes in equity
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | Foreign | | |
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | currency | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | Share | Share | Own | translation | Retained | |
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | capital | premium | shares | reserve | earnings | Total |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Changes in equity for the 26 | | | | | | |
| weeks to 29 August 2009 | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Balance at 28 February 2009 as | 30.3 | 11.0 | (0.2) | 2.9 | 244.3 | 288.3 |
| previously stated | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Change in accounting policy | - | - | - | - | (5.3) | (5.3) |
| (Note 1) | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Restated balance as at 28 | 30.3 | 11.0 | (0.2) | 2.9 | 239.0 | 283.0 |
| February 2009 | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Total comprehensive income for | - | - | - | - | 17.3 | 17.3 |
| the period | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Equity dividends declared | - | - | - | - | (17.5) | (17.5) |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Issue of ordinary share capital | 0.2 | - | - | - | - | 0.2 |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Purchase of own shares by ESOT | - | - | (0.2) | - | - | (0.2) |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Issue of own shares by ESOT | - | - | 0.2 | - | - | 0.2 |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Adjustment to equity for share | - | - | - | - | 0.6 | 0.6 |
| payments | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Exchange difference on | - | - | - | (0.7) | 0.7 | - |
| translation of overseas | | | | | | |
| operations | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Share option charge | - | - | - | - | 1.0 | 1.0 |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Balance at 29 August 2009 | 30.5 | 11.0 | (0.2) | 2.2 | 241.1 | 284.6 |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Changes in equity for the 26 | | | | | | |
| weeks to 30 August 2008 | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Balance at 1 March 2008 as | 30.0 | 11.0 | (0.1) | 1.2 | 206.4 | 248.5 |
| previously stated | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Change in accounting policy | - | - | - | - | (5.3) | (5.3) |
| (Note 1) | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Restated balance as at 1 March | 30.0 | 11.0 | (0.1) | 1.2 | 201.1 | 243.2 |
| 2008 | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Total comprehensive income for | - | - | - | - | 18.1 | 18.1 |
| the period | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Equity dividends declared | - | - | - | - | (17.4) | (17.4) |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Issue of ordinary share capital | 0.3 | - | - | - | - | 0.3 |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Purchase of own shares by ESOT | - | - | (0.3) | - | - | (0.3) |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Issue of own shares by ESOT | - | - | 0.1 | - | - | 0.1 |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Adjustment to equity for share | - | - | - | - | 0.4 | 0.4 |
| payments | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Exchange difference on | - | - | - | 0.7 | (0.7) | - |
| translation of overseas | | | | | | |
| operations | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Share option charge | - | - | - | - | 0.8 | 0.8 |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Balance at 30 August 2008 | 30.3 | 11.0 | (0.3) | 1.9 | 202.3 | 245.2 |
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
Unaudited condensed consolidated statement of changes in
equity
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | Foreign | | |
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | currency | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | Share | Share | Own | translation | Retained | |
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | capital | premium | shares | reserve | earnings | Total |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Changes in equity for the 52 | | | | | | |
| weeks to 28 February 2009 | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Balance at 1 March 2008 as | 30.0 | 11.0 | (0.1) | 1.2 | 206.4 | 248.5 |
| previously stated | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Change in accounting policy | - | - | - | - | (5.3) | (5.3) |
| (Note 1) | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Restated balance as at 1 March | 30.0 | 11.0 | (0.1) | 1.2 | 201.1 | 243.2 |
| 2008 | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Total comprehensive income for | - | - | - | - | 62.3 | 62.3 |
| the period | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Equity dividends declared | - | - | - | - | (24.9) | (24.9) |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Issue of ordinary share capital | 0.3 | - | - | - | - | 0.3 |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Purchase of own shares by ESOT | - | - | (0.3) | - | - | (0.3) |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Issue of own shares by ESOT | - | - | 0.2 | - | - | 0.2 |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Adjustment to equity for share | - | - | - | - | 0.4 | 0.4 |
| payments | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Exchange difference on | - | - | - | 1.7 | (1.7) | - |
| translation of overseas | | | | | | |
| operations | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Share option charge | - | - | - | - | 1.8 | 1.8 |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| Balance at 28 February 2009 | 30.3 | 11.0 | (0.2) | 2.9 | 239.0 | 283.0 |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | |
+----------------------------------+---------+---------+---------+-------------+----------+----------+
Notes to the condensed consolidated financial statements
1. Basis of preparation
The group's interim results for the 26 weeks ended 29 August 2009 were approved
by the board of directors on 14 October 2009, and have been prepared in
accordance with IAS 34 'Interim Financial Reporting'.
The accounting policies adopted in the preparation of the interim financial
statements are consistent with those disclosed in the annual report & accounts
for the 52 weeks ended 28 February 2009 other than that as set out below.
IAS 38 Intangible Assets. Following an amendment to IAS 38 all expenditure
relating to the production of home shopping catalogues should be charged to the
income statement as incurred, rather than recognising them as a prepayment asset
until the date of despatch. As a result of this change in accounting policy the
comparative amounts have been restated, as follows:
+---------------------------------+--+------------+--+------------+--+
| | | 26 weeks | | 52 weeks | |
| | | to | | to | |
+---------------------------------+--+------------+--+------------+--+
| | | 30-Aug-08 | | 28-Feb-09 | |
+---------------------------------+--+------------+--+------------+--+
| | | GBPm | | GBPm | |
+---------------------------------+--+------------+--+------------+--+
| Retained earnings as previously | | 208.5 | | 244.3 | |
| reported | | | | | |
+---------------------------------+--+------------+--+------------+--+
| Reduction in trade and other | | (8.6) | | (7.3) | |
| receivables | | | | | |
+---------------------------------+--+------------+--+------------+--+
| Increase in deferred tax asset | | 2.4 | | 2.0 | |
+---------------------------------+--+------------+--+------------+--+
| Retained earnings as restated | | 202.3 | | 239.0 | |
+---------------------------------+--+------------+--+------------+--+
The impact on earnings for the 26 weeks ended 29 August 2009 was to increase
sales and administration costs by GBP1.3m which has the impact of reducing total
comprehensive income by GBP0.9m (2008, GBP0.9m).
Adoption in the period of IAS 1 'Presentation of Financial Statements' (Revised
2007) and IFRS 8 'Operating Segments'.
IAS 1 (revised) requires the presentation of a statement of changes in equity as
a primary statement separate from the Income Statement and Statement of
Comprehensive Income. As a result, a Consolidated Statement of Changes in Equity
has been included in the primary statements, showing changes in equity for each
period presented.
IFRS 8 - Operating Segments. The reporting requirements of IFRS 8 has been
adopted in the current year. IFRS 8 concerns the disclosure and presentation of
information that allows users of its financial statements to evaluate the nature
and financial effects of the business activities of the group. It has not
affected the measurement of the group's profit, assets or liabilities. The group
has only one reportable business segment which is home shopping.
The condensed consolidated financial statements have not been audited or
reviewed by the auditors pursuant to the International Standard on Review
Engagements (UK & Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the UK Auditing
Practices Board.
The financial information for the 52 weeks ended 28 February 2009 does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. A copy of those accounts have been delivered to the Registrar of
Companies. The auditors' report on those accounts was unqualified and did not
contain any statement under Section 237 (2) or (3) of the Companies Act 1985.
2. Risks and uncertainties
There are a number of risks and uncertainties which could have an impact on the
group's long-term performance. These include consideration of the general
economic climate and the impact it has on the provision of credit to our
customers and their ability to maintain payment terms; the potential threat from
our competitors; our relationship with key suppliers; the loss of key personnel;
potential disruption to our key information systems, warehousing or call centre
facilities arising from events beyond our control such as fire or other issues
which could have a detrimental impact on sales and profit; changes to the
regulatory environment in which the business operates, primarily regulated by
the Financial Services Authority and the Office of Fair Trading.
The directors routinely monitor all these risks and uncertainties and
appropriate actions are taken to mitigate these risks, such as having business
continuity procedures in place, a dedicated team assessing regulatory
developments, ensuring we treat our customers fairly and hosting regular reviews
with all of our strategic partners. The board are also committed to continually
invest in updating the group's business systems and infrastructure to keep pace
with new technology.
3. Going concern
In determining whether the group's accounts can be prepared on a going concern
basis, the directors considered the group's business activities together with
factors likely to affect its future development, performance and its financial
position including cash flows, liquidity position and borrowing facilities and
the risks and uncertainties relating to its business activities.
The group has considered carefully its cash flows and banking covenants for the
next twelve months from the date of approval of the group's interim results.
These have been appraised in light of the uncertainty in the current economic
climate. As such, conservative assumptions for working capital performance have
been used to determine the level of financial resources available to the company
and to assess liquidity risk. The key risk identified by the directors for these
assumptions is the impact that a further deterioration in the economic climate
will have on the performance of the group's debtor book.
The group's forecasts and projections, after sensitivity to take account of all
reasonably foreseeable changes in trading performance, show that the group will
have sufficient headroom within its current facilities of GBP320m. As the
group's borrowing facilities are committed until 2012 there are no current plans
to open renewal negotiations in the next twelve months.
After making appropriate enquiries, the directors have a reasonable expectation
that the company and the group have adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they continue to
adopt the going concern basis in the preparation of the group's interim results.
4. Business Segments
+--------------------------------------+--+------------+--+------------+--+------------+
| | | 26 weeks | | 26 weeks | | 52 weeks |
| | | to | | to | | to |
+--------------------------------------+--+------------+--+------------+--+------------+
| | | 29-Aug-09 | | 30-Aug-08 | | 28-Feb-09 |
+--------------------------------------+--+------------+--+------------+--+------------+
| | | GBPm | | GBPm | | GBPm |
+--------------------------------------+--+------------+--+------------+--+------------+
| | | | | Restated | | Restated |
+--------------------------------------+--+------------+--+------------+--+------------+
| Analysis of revenue - Home shopping | | | | | | |
| | | | | | | |
+--------------------------------------+--+------------+--+------------+--+------------+
| Sale of goods | | 244.1 | | 233.8 | | 481.3 |
+--------------------------------------+--+------------+--+------------+--+------------+
| Rendering of services | | 94.6 | | 89.0 | | 181.2 |
+--------------------------------------+--+------------+--+------------+--+------------+
| | | | | | | |
+--------------------------------------+--+------------+--+------------+--+------------+
| | | 338.7 | | 322.8 | | 662.5 |
+--------------------------------------+--+------------+--+------------+--+------------+
| | | | | | | |
+--------------------------------------+--+------------+--+------------+--+------------+
| Analysis of operating profit | | | | | | |
+--------------------------------------+--+------------+--+------------+--+------------+
| Operating profit - Home shopping | | 44.2 | | 44.6 | | 95.5 |
+--------------------------------------+--+------------+--+------------+--+------------+
| | | | | | | |
+--------------------------------------+--+------------+--+------------+--+------------+
| Investment income | | 1.4 | | 2.2 | | 4.1 |
+--------------------------------------+--+------------+--+------------+--+------------+
| Finance costs | | (3.8) | | (9.8) | | (16.9) |
+--------------------------------------+--+------------+--+------------+--+------------+
| Fair value adjustments to financial | | (8.5) | | 2.5 | | 9.6 |
| instruments | | | | | | |
+--------------------------------------+--+------------+--+------------+--+------------+
| | | | | | | |
+--------------------------------------+--+------------+--+------------+--+------------+
| Profit before taxation | | 33.3 | | 39.5 | | 92.3 |
+--------------------------------------+--+------------+--+------------+--+------------+
| | | | | | | |
+--------------------------------------+--+------------+--+------------+--+------------+
The group has one business segment and one geographic segment that operates in
the United Kingdom and Ireland.
5. Taxation
The taxation charge for the 26 weeks ended 29 August 2009 is based on the
estimated effective tax rate for the full year of 28.0% which is lower than last
year's rate of 32.7%. The high tax rate for last year was the result of an
exceptional tax charge of GBP4.4m in respect of the phasing out of industrial
building allowances.
6. Earnings per share
+-------------------------------------+------------+--+------------+--+------------+
| Earnings | 26 weeks | | 26 weeks | | 52 weeks |
| | to | | to | | to |
+-------------------------------------+------------+--+------------+--+------------+
| | 29-Aug-09 | | 30-Aug-08 | | 28-Feb-09 |
+-------------------------------------+------------+--+------------+--+------------+
| | GBPm | | GBPm | | GBPm |
+-------------------------------------+------------+--+------------+--+------------+
| Net profit attributable to equity | 24.0 | | 23.7 | | 62.1 |
| holders of the parent for the | | | | | |
| purpose of basic and diluted | | | | | |
| earnings per share | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Impact of exceptional tax charge in | - | | 4.4 | | 4.4 |
| respect of the phasing out of IBAs | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Fair value adjustment to financial | 6.1 | | (1.8) | | (6.9) |
| instruments (net of tax) | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Net profit attributable to equity | 30.1 | | 26.3 | | 59.6 |
| holders of the parent for the | | | | | |
| purpose of basic and diluted | | | | | |
| adjusted earnings per share | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Number of shares | 26 weeks | | 26 weeks | | 52 weeks |
| | to | | to | | to |
+-------------------------------------+------------+--+------------+--+------------+
| | 29-Aug-09 | | 30-Aug-08 | | 28-Feb-09 |
+-------------------------------------+------------+--+------------+--+------------+
| | No. | | No. | | No. |
| | ('000s) | | ('000s) | | ('000s) |
+-------------------------------------+------------+--+------------+--+------------+
| Weighted average number of shares | 273,043 | | 270,732 | | 271,413 |
| in issue for the purpose of basic | | | | | |
| earnings per share | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Effect of dilutive potential | | | | | |
| ordinary shares: | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Share options | 471 | | 1,597 | | 728 |
+-------------------------------------+------------+--+------------+--+------------+
| | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
| Weighted average number of shares | 273,514 | | 272,329 | | 272,141 |
| in issue for the purpose of diluted | | | | | |
| earnings per share | | | | | |
+-------------------------------------+------------+--+------------+--+------------+
7. Dividends
The directors have declared and approved an interim dividend of 4.38p per share
(2008, 2.78p). This will be paid on 8 January 2010 to shareholders on the
register at the close of business on 11 December 2009.
Responsibility statement
We confirm that to the best of our knowledge:
* the condensed set of financial statements has been prepared in accordance with
IAS 34;
* the interim management report includes a fair review of the information required
by DTR 4.2.7R (indication of important events during the first 26 weeks and
description of principal risks and uncertainties for the remaining 26 weeks of
the year); and
* the interim management report includes a fair review of the information required
by DTR 4.2.8R (disclosure of related party transactions and changes therein).
By order of the Board
Alan White Dean Moore
Chief Executive Finance Director
14 October 2009
This information is provided by RNS
The company news service from the London Stock Exchange
END
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