RNS Number:4109G
Kleeneze PLC
15 December 2004
Immediate Release 15th December 2004
KLEENEZE plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31st OCTOBER 2004
Kleeneze plc, the leading direct to home shopping group, announces interim
results for the six months ended 31st October 2004.
Key Points
* Turnover from existing operations up 4.9% to #79.3 million (2003: #75.6m)
* Operating profit from existing operations before exceptionals up 3.6% to
#2.9m (2003 #2.8 million)
* Return to profitability before tax on ordinary activities to #4.3 million
(2003: loss #9.2 million)
* Normalised basic EPS up 7.7% to 4.2 pence per share (2003: 3.9 pence per
share)
* Interim dividend of 1.07 pence per share declared (2003: 1.0p pence per
share)
* Cash at 31st October up 58% to #17.5 million (2003: #11.1 million)
* Acquisitions of Cabouchon and I Want One of Those.com
* Joint venture television shopping channel broadcast on Sky 659
William Rollason, Chief Executive, said:
"We are very pleased with progress in the first six months. We have made
significant steps in our strategy to transform Kleeneze into the UK's leading
home shopping specialist with the acquisition of I Want One of Those.com and our
joint venture television shopping channel on Sky 659. We are excited by the
contributions these businesses will make to the Group in the future.
Growth has returned to Kleeneze Europe as sales per distributor continue to
increase. The launch of our Dutch business has been a success and we have
already recruited 1,500 distributors since September.
Overall we believe that we will meet our expectations for the full year."
Contacts:
Kleeneze plc 01793 606000
William Rollason
Chris Hulland
Buchanan Communications 020 7466 5000
Richard Oldworth
Suzanne Brocks
Kleeneze plc
Chairman's Statement
Overview
During the six months to 31st October, 2004 we completed the acquisition of I
Want One of Those.com, a leading internet retailer. We also secured a 50%
investment in a television shopping channel broadcast on Sky channel 659 which
we are re-branding eeZee tv. These investments are significant steps in our
strategy to make Kleeneze the UK's leading home shopping specialist.
Our portfolio now consists of a leading internet retailer, a television shopping
channel, Kleeneze's network of independent distributors and Farepak's agent
network, all of which provide a strong base for the distribution of an
increasing range of products, focused on our current and expanding customer
base. We are developing new products and will rotate them across the internet,
television and to our Kleeneze catalogues, which are distributed to over 1
million homes per week, thereby increasing our ability to cross-sell. This
virtuous product circle will allow us to develop, test and sell an increasing
variety of new products in a cost effective way to a wider range of customers.
Results
Turnover from existing operations for the first six months increased by 4.9% to
#79.3 million (2003: #75.6 million) and operating profit from existing
operations before exceptional items increased by 3.6% to #2.9 million
(2003: #2.8 million).
Normalised basic earnings per share based on profits excluding exceptional and
non-operating items increased by 7.5% to 4.15 pence (2003: 3.86 pence).
Profit before tax was #4.3 million compared with a loss of #9.2 million last
year. This is inclusive of non-operating exceptional profits of #1.4 million
(2003: loss #8.3 million) arising substantially from the disposal in July 2004
of Kleeneze's 5% shareholding in Premier Direct Group plc.
Cash at 31st October, 2004 has increased by #6.4 million to #17.5 million (2003:
#11.1 million) which reinforces the cash generative nature of our businesses.
Net liabilities at 31st October, 2004 were substantially reduced to #9.6 million
(2003: net liabilities #18.4 million and 30th April 2004: net liabilities #12.8
million).
Kleeneze Europe
Turnover for the first six months increased by 4.3% to #43.8 million (2003:
#42.0 million) and operating profit increased by 6.3% to #3.4 million (2003:
#3.2 million).
Average sales per retailer per period ("ASR") in the UK and Ireland continues to
grow and in the first six months increased by 20% to #720 (2003: #600). This
reflects both the success of the catalogue re-launch last year and the
increasing quality of our distributors. The total number of distributors who
order regularly fell by 9.6% to 8,500 (2003: 9,400) but the quality has improved
reflecting our increased investment in training programmes and the new training
facilities at Bristol. Recruitment in the UK and Ireland has now started to
increase.
Recruitment in Holland is strong and we now have over 1,500 distributors from a
standing start in September. Our new Dutch catalogue has been well received and
we are already on the second print run.
The operating profit margin for the six months has improved to 7.8% (2003: 7.6%)
reflecting the efficiencies generated from our new distribution facility which
will increase during the remainder of this year.
Kleeneze plc
Chairman's Statement
Farepak
Turnover for the first six months increased by 5.7% to #35.5 million (2003:
#33.6 million) and the operating loss increased to #0.6 million (2003: #0.5
million).
Turnover increased as we have again accelerated the despatch of vouchers for
this Christmas. As the percentage of lower margin voucher sales has increased,
and will now represent 86% of total sales (2003: 85%), the interim loss has
increased slightly.
We have launched a new range of branded vouchers for Christmas 2005 which should
help broaden the appeal. We have also signed an exclusive partnership with
Anthony Worrall Thompson and are including a range of his branded products in
our 2005 Christmas catalogue as well as managing his new on-line Club at
www.awtonline.co.uk. The AWT Club, which is known as "Private Dining", was
launched at the Good Food Show last month and the initial response has been
encouraging.
Dividend
The Board is pleased to declare a 7.0% increase in the interim dividend to 1.07
pence per share (2003: 1.0 pence per share). This will be paid on
18th February, 2005 to shareholders on the register as of 21st January, 2005.
Outlook
We are excited by the contribution that our investments in internet and
television shopping will make to the Group. The complementary nature of these
distribution channels and our networks will significantly increase our product
range as well as our market penetration and geographic coverage.
At Kleeneze Europe the increase in ASR continues to drive sales forward and we
are pleased to see an improvement in the recruitment of distributors.
Our Dutch operation is performing in line with projections and we intend to
expand elsewhere in continental Europe.
At Farepak trading for this Christmas is on target and we are starting to see
some improvement in operating efficiencies following the re-organisation carried
out in February 2004.
We will continue to transform the Group to become the UK's leading home shopping
specialist. Overall the Board believes that it will meet its expectations for
the full year.
Sir Clive Thompson
14th December, 2004
Kleeneze plc
Consolidated Profit and Loss Account
for the six months ended 31st October 2004
6 months 6 months Year
ended ended ended
Note 31/10/04 31/10/03 30/04/04
#000 #000 #000
Turnover:
Existing operations 79,331 75,625 158,924
Acquisitions 152 - -
Continuing operations 79,483 75,625 158,924
Discontinued operations - 3,313 3,313
2 79,483 78,938 162,237
Operating profit/(loss)
Existing operations before exceptional items 2,864 2,766 7,882
Exceptional items 3 - (900) (2,066)
Existing operations 2,864 1,866 5,816
Acquisitions (93) - -
Continuing operations 2,771 1,866 5,816
Discontinued operations - (2,581) (2,581)
Operating profit/(loss) 2 2,771 (715) 3,235
Share of operating (loss)/profit of associate (152) (156) 659
Non operating exceptional items
Profit on disposal of fixed assets - continuing operations 4 522 - 1,243
Profit/(loss) on disposal and closure of discontinued operations 4 884 (8,295) (6,846)
1,406 (8,295) (5,603)
Profit/(loss) before interest and tax 4,025 (9,166) (1,709)
Net interest receivable/(payable) 47 (156) (593)
Share of interest in associate 180 149 281
227 (7) (312)
Profit/(loss) on ordinary activities before tax 4,252 (9,173) (2,021)
Tax on profit/(loss) on ordinary activities 5 (909) (770) (1,570)
Exceptional tax credit 5 132 761 934
Profit/(loss) on ordinary activities after tax 3,475 (9,182) (2,657)
Equity minority interest 33 - -
Profit/(loss) attributable to shareholders 3,508 (9,182) (2,657)
Dividends (including non-equity dividends) 7 (525) (492) (1,452)
Retained profit/(loss) 2,983 (9,674) (4,109)
Earnings/(loss) per ordinary share - basic 6 7.43p (19.63)p (5.76)p
Earnings per ordinary share - normalised basic 6 4.15p 3.86p 12.80p
Earnings/(loss) per ordinary share - diluted 6 7.36p (19.63)p (5.71)p
Earnings per ordinary share - normalised diluted 6 4.11p 3.86p 12.69p
Dividend per ordinary share 7 1.07p 1.00p 3.00p
Kleeneze plc
Consolidated Balance Sheet
at 31st October 2004
31/10/04 31/10/03 30/04/04
#000 #000 #000
Fixed assets:
Intangible assets 13,145 442 420
Tangible assets 11,387 11,957 12,042
Investments 431 786 745
24,963 13,185 13,207
Current assets:
Stocks 30,103 29,286 6,861
Debtors 14,939 14,682 11,087
Cash at bank and in hand 17,524 11,140 1,019
62,566 55,108 18,967
Creditors: amounts falling due within one year (89,092) (85,981) (44,280)
Net current liabilities (26,526) (30,873) (25,313)
Total assets less current liabilities (1,563) (17,688) (12,106)
Creditors: amounts falling due after more than one year (7,708) (299) (209)
Provisions for liabilities and charges:
Deferred tax (326) (379) (513)
(9,597) (18,366) (12,828)
Capital and reserves:
Called up share capital 2,845 2,844 2,844
Share premium account 1,155 1,139 1,143
Revaluation reserve 411 411 411
Profit and loss account (14,225) (22,760) (17,226)
Equity minority interest 217 - -
(9,597) (18,366) (12,828)
Shareholders' funds:
Equity (10,097) (18,866) (13,328)
Non-equity 500 500 500
(9,597) (18,366) (12,828)
Kleeneze plc
Group Cash Flow Statement
for the six months ended 31st October 2004
6 months 6 months Year
ended ended ended
31/10/04 31/10/03 30/04/04
#000 #000 #000
Operating activities:
Operating profit/(loss) 2,771 (715) 3,235
Depreciation 541 567 1,063
Amortisation of goodwill 12 - 22
(Increase)/decrease in stocks (22,705) (15,973) 778
(Increase)/decrease in operating debtors and prepayments (4,661) (3,803) 570
Increase/(decrease) in operating creditors and accruals 51,768 44,306 (1,422)
(Profit) on sale of tangible assets (26) (37) (80)
Net cash inflow from operating activities 27,700 24,345 4,166
Dividends received from associated company 706 318 318
Returns on investments and servicing of finance:
Net interest received/(paid) 47 (106) (466)
Preference dividend paid (18) (23) (45)
Net cash inflow/(outflow) from returns on investment and servicing of
finance 29 (129) (511)
Taxation:
UK Corporation tax received 155 975 495
Capital expenditure and financial investment
Purchase of tangible fixed assets (846) (740) (3,799)
Proceeds of sale of tangible fixed assets 2,178 329 3,723
Net cash inflow/(outflow) from capital expenditure 1,332 (411) (76)
Acquisitions and disposals
Proceeds from sale of business 1,217 1,000 1,167
Purchase of subsidiary undertakings (1,838) - (252)
Overdraft acquired with subsidiary undertakings (201) - -
Net cash (outflow)/inflow from acquisitions and disposals (822) 1,000 915
Equity dividends paid (938) - (469)
Net cash inflow before financing 28,162 26,098 4,838
Financing:
Issue of new shares 12 - 4
Repayment of loans (51) (31) (96)
Repayment of loan notes - - (416)
Net cash outflows from financing (39) (31) (508)
Increase in cash 28,123 26,067 4,330
Kleeneze plc
Consolidated statement of total recognised gains and losses
for the six months ended 31st October 2004
6 months 6 months Year
ended ended ended
31/10/04 31/10/03 30/04/04
#000 #000 #000
Profit/(loss) for the period excluding share of
profits in associate 3,488 (9,177) (3,317)
Share of associate's profit/(loss) for the period 20 (5) 660
Profit/(loss) for the period attributable to shareholders 3,508 (9,182) (2,657)
Exchange difference on re-translation of net assets of
subsidiary company 18 (21) (52)
Total recognised gains and losses 3,526 (9,203) (2,709)
Reconciliation of movement in shareholders' funds
at 31st October 2004
31/10/04 31/10/03 30/04/04
#000 #000 #000
Opening shareholders' funds (12,828) (8,671) (8,671)
Total recognised gains and losses 3,526 (9,203) (2,709)
Dividends (525) (492) (1,452)
New share capital issued 1 - -
Share premium on issue of shares 12 - 4
Minority interest 217 - -
Closing shareholders' funds (9,597) (18,366) (12,828)
Reconciliation of net cash inflow to movement in net debt
for the six months ended 31st October 2004
6 months 6 months Year
ended ended ended
31/10/04 31/10/03 30/04/04
#000 #000 #000
Increase in cash 28,123 26,067 4,330
Repayment of loan notes - - 416
Repayment of loans 51 31 96
Cash movement in net debt 28,174 26,098 4,842
Issue of loan notes (5,660) - -
Net debt at start of period (11,189) (16,031) (16,031)
Net funds/(debt) at end of period 11,325 10,067 (11,189)
Kleeneze plc
Notes
1. Basis of preparation
The unaudited interim financial information for the six month period ended 31st
October 2004 has been prepared on a basis which is consistent with the
accounting policies for the year ended 30th April 2004. After making suitable
enquiries, the directors believe that the Group has adequate banking facilities
to continue in operational existence for the foreseeable future. For this
reason, they continue to adopt the going concern basis in preparing the
accounts.
The interim financial information is unaudited but has been reviewed by Ernst &
Young LLP, the Group's auditors, in accordance with the Bulletin, Review of
Interim Financial Information issued by the Auditing Practices Board and their
report to the Company is set out on page 14.
The Group's share of the results of its associated company, Home Farm Hampers
Limited has been based on the management accounts of that company for the six
months ended 30th September 2004.
The financial information contained in this statement does not constitute
statutory accounts within the definitions of section 240 of the Companies Act
1985. The financial information for the year ended 30th April 2004 is abridged
from the full accounts for that year, on which the auditors have issued an
unqualified report which made no statement under sections 237(2) or (3) of the
Companies Act 1985. A copy of the full year accounts for the year ended 30th
April 2004 has been delivered to the Registrar of Companies and further copies
are available from the Company's registered office or on its web site at
www.kleenezeplc.co.uk.
2. Segmental Analysis
6 months 6 months Year
ended ended ended
31/10/04 31/10/03 30/04/04
#000 #000 #000
Turnover:
Kleeneze Europe 43,847 42,045 82,633
Farepak 35,484 33,580 76,291
Existing operations 79,331 75,625 158,924
Acquisitions 152 - -
Continuing operations 79,483 75,625 158,924
Discontinued operations - DMG - 3,313 3,313
79,483 78,938 162,237
Operating profit/(loss) before exceptional items
Kleeneze Europe 3,418 3,223 6,639
Farepak (554) (457) 1,243
Existing operations 2,864 2,766 7,882
Acquisitions (93) - -
Continuing operations 2,771 2,766 7,882
Discontinued operations - DMG - (2,581) (2,581)
2,771 185 5,301
Operating profit/(loss)
Kleeneze Europe 3,418 3,223 5,473
Farepak (554) (457) 1,243
Group - (900) (900)
Existing operations 2,864 1,866 5,816
Acquisitions (93) - -
Continuing operations 2,771 1,866 5,816
Discontinued operations - DMG - (2,581) (2,581)
2,771 (715) 3,235
Kleeneze plc
Notes continued
2. Segmental analysis (continued)
Acquisitions include the results for Cabouchon International Limited, I Want One
of Those.com Limited and eezee tv LLP. These acquisitions are discussed in note
8.
3. Operating exceptional items
6 months 6 months Year
ended ended ended
31/10/04 31/10/03 30/04/04
#000 #000 #000
Kleeneze Europe - - (1,166)
Group - (900) (900)
Continuing operations - (900) (2,066)
Included within the segmental results of Kleeneze Europe for the year ended 30th
April 2004 is an exceptional charge of #1.16 million relating to the transfer of
Kleeneze Europe's warehouse and fulfilment operations to a new site in Bristol.
The exceptional operating expense of #0.9 million recorded within the Group
results for the year ended 30th April 2004 and the six months ended 31st October
2003 reflects the costs associated with the early termination of George
Pollock's employment contract on 17th December 2003.
4. Non operating exceptional items
6 months 6 months Year
ended ended ended
31/10/04 31/10/03 30/04/04
#000 #000 #000
Profit on disposal of fixed assets - continuing operations 522 - 1,243
Profit/(loss) on disposal of discontinued operations 884 (8,295) (6,846)
1,406 (8,295) (5,603)
Kleeneze plc
Notes continued
4. Non operating exceptional items (continued)
During the six months ended 31st October 2004, Farepak disposed of freehold
premises for cash proceeds of #2.1 million. The net book value of fixed assets
disposed of was #1.5 million and the costs of disposal were #0.1 million.
During the year ended 30th April 2004, Kleeneze Europe disposed of freehold
premises for cash proceeds of #4.0 million. The net book value of fixed assets
disposed of was #2.5 million and the costs of disposal were #0.3 million.
On 24th July 2003, the Group announced the disposal of the business and assets
of DMG to Premier Direct Group plc ("Premier"). The total cash consideration
received during the year ended 30th April 2004 was #3.7 million, the loss on
disposal of DMG was recorded as a non operating item. In addition to the cash
proceeds, the Group received 190,763 Ordinary shares in Premier. These shares
were sold during the six months ended 31st October 2004 for a total cash
consideration of #1.2 million. The non operating profit on disposal of the
shares was #0.9 million and has been recorded as profit on disposal of
discontinued operations in the period ended 31st October 2004.
5. Tax on profit on ordinary activities
The taxation charge for the period has been calculated on the basis of the
estimated effective tax rate for the full year of 31.8% of taxable profits. The
taxation charge for the period includes #8,000 share of the taxation charge of
the associated company (2003: #2,000 credit).
An exceptional tax charge of #0.1 million has been recognised in the six months
to 31st October 2004 relating to the disposal of freehold property in the
period. This charge has been offset by an exceptional tax credit of #0.2
million relating to the release of a deferred tax liability no longer required
following disposal of the property.
6. Earnings per ordinary share
Basic earnings per share
Basic earnings per share has been calculated on the weighted average number of
Ordinary shares in issue during the period of 46,892,595 (2003: 46,885,047 and
30th April 2004: 46,886,157). Earnings are defined as profit or loss after
taxation, minority interest and preference dividends.
Diluted earnings per share
Diluted earnings per share have been calculated using an average number of
shares of 47,341,263 (2003: 46,885,047 and 30th April 2004: 47,314,680). The
basic weighted average number of shares has been adjusted for the fair value of
shares under the three Kleeneze plc share option schemes.
Kleeneze plc
Notes continued
6. Earnings per ordinary share (continued)
Normalised basic earnings per share
Normalised basic earnings per share has been calculated using the profit after
taxation, minority interest and preference dividends on continuing operations of
#1.9 million excluding non operating exceptional items (see table below).
Taxation of #0.9 million has been charged against the profit arising on
continuing operations in the period.
Normalised diluted earnings per share
Normalised basic earnings per shares has been calculated using the profit after
taxation, minority interest and preference dividends on continuing operations of
#1.9m excluding non operating exceptional items (see table below). Taxation of
#0.9m has been charged against the profit arising on continuing operations in
the period. The average number of shares has been adjusted for the fair value of
shares under the three Kleeneze plc share option schemes totalling 448,668
shares.
The weighted average number of Ordinary shares in issue used in the calculation
of normalised basic earnings per share is 47,341,263 (2003: 46,885,047 and 30th
April 2004: 47,314,680).
6 months 6 months Year
ended ended ended
31/10/04 31/10/03 30/04/04
#000 #000 #000
Profit/(loss) after tax 3,475 (9,182) (2,657)
Equity minority interest 33 - -
Preference dividends (23) (23) (45)
Add back: discontinued operations after tax - 2,581 1,969
Add back: exceptional & non operating items after tax (1,538) 8,434 6,735
1,947 1,810 6,002
7. Dividends
6 months 6 months Year
ended ended ended
31/10/04 31/10/03 30/04/04
#000 #000 #000
Non equity dividends
Cumulative preference shares 23 23 45
Equity dividends
Ordinary shares of 5p:
Interim (2004: 1.07 pence per share; 2003: 1.0 pence per share) 502 469 469
Final (2004: 2.0 pence per share) - - 938
525 492 1,452
Kleeneze plc
Notes continued
8. Acquisitions and Joint Ventures
(a) Cabouchon International Limited
On 6th September 2004, the Group purchased certain assets and trade marks of
Cabouchon International Limited and The Costume Jewellery Company Limited for
total cash consideration of #0.5 million including the costs of acquisition.
Goodwill of #0.4 million is included in the consolidated balance sheet as at
31st October 2004.
(b) I Want One of Those.Com Limited
On 25th October 2004, the Group acquired the entire share capital of I Want One
of Those.com Limited ("IWOOT") for initial deferred consideration of #6.0
million satisfied by non interest bearing loan notes, with further contingent
deferred consideration expected to be up to #4.65 million in cash. The related
costs of acquisition were #0.3 million.
The initial deferred and expected contingent consideration have been discounted
and accrued within the balance sheet as at 31st October 2004.
The base consideration is payable in three cash instalments of #2.25 million,
#1.875 million and #1.875 million in June 2005, June 2006 and June 2007
respectively. Further contingent deferred consideration of #4.65 million is
based on the achievement of certain profit related targets for the years ending
30th April 2006, 30th April 2007 and 30th April 2008. The maximum value of the
deferred consideration is #1.55 million in cash in respect of each of those
years.
Goodwill of #11.3 million has been included in the consolidated balance sheet as
at 31st October 2004.
(c) eeZee tv LLP
With effect from 1st October 2004, the Group acquired a 50% interest in Eezee TV
LLP ("eeZee tv") for an initial cash consideration of #1.0 million. EeZee tv is
a joint venture with John Mills Limited, operating a television shopping channel
on Sky channel 659.
Goodwill of #1.1 million relating to this investment has been included within
the consolidated balance sheet as at 31st October 2004.
Under the joint venture agreement, the Group considers that it will exercise
effective control of eeZee tv and consequently has consolidated its results from
1st October 2004. Minority interest of #0.2 million has been included in the
balance sheet as at 31st October 2004.
9. Announcement
The interim report was approved by the Board on 14th December 2004.
This announcement will be posted to shareholders on 4th January 2005 and copies
will be available from the registered office at Farepak House, Westmead Drive,
Westlea, Swindon SN5 7YZ or from the web site at www.kleenezeplc.co.uk.
Independent Review Report
to Kleeneze plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 31st October 2004 which comprises the Consolidated Profit
and Loss Account, Consolidated Balance Sheet, Group Cash Flow Statement,
Consolidated Statement of Total Recognised Gains and Losses, Reconciliation of
Movement in Shareholders' Funds and Reconciliation of Net Cash inflow to
movement in net debt and the related notes 1 to 9. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the financial
information.
This report is made solely to the company in accordance with guidance contained
in Bulletin 1999/4 'Review of interim financial information' issued by the
Auditing Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company, for our work,
for this report, or for the conclusions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
"Review of interim financial information" issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making
enquiries of Group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as test of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with United Kingdom Auditing Standards and, therefore, provides a
lower level of assurance than an audit. Accordingly we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31st October 2004.
Ernst & Young LLP
London
14th December 2004
This information is provided by RNS
The company news service from the London Stock Exchange
END
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