RNS Number:5391K
Actif Group PLC
30 April 2003
30 April 2003
Actif Group plc
Announcement of interim results for the six months ended 1 February 2003
Summary
* Group turnover down 1.1% to #11.9 million (2002: #12.1 million)
* Gross margins have increased to 50.4% (2002: 49.8%) as a result of
the increasing proportion of retail business within the Group
* Operating profit of #160,000 (2002: #298,000)
* Profit before tax of #89,000 (2002: #174,000)
* Cash generated from operating activity in the period increased by
133% to #1.4million
* Net debt was reduced by 62% to #1.0m (2002: #2.6m)
* Earnings per share of 0.14p (2002: 0.27p)
* Two new flagship Elle retail stores opened in the Meadowhall Centre
(Sheffield) and Reading
Enquiries: ACTIF GROUP PLC HUDSON SANDLER
Mark Evans, Chief Executive Sandrine Boussard
Julian Ghinn, Finance Director
Tel: +44 (0)20 7436 3330 Tel: +44 (0)20 7796 4133
30 April 2003
Actif Group plc
Interim results for the six months ended 1 February 2003
CHAIRMAN'S STATEMENT
I am pleased to report the Group's interim results for the six-month period to 1
February 2003.
The restructuring of the business that began last year is continuing as the
Group realigns itself as a predominantly retail-led business, and reduces it's
dependence on wholesale sales. Key areas of progress include a general
improvement of the balance sheet; the design and successful execution of a new
format Elle store in the Meadowhall Centre (Sheffield); and the strengthening of
the management team in areas such as buying, merchandising and design. These
developments will provide a solid platform for further improvement to the
trading of the business in future financial years.
During the first half the Group increased it's retail sales, but, as expected,
saw a decline in wholesale activity. The combined impact of this led to a
decrease in profitability when compared to the same period last year. The Group
continues to generate strong cash flows from operating activities and this has
led to a further significant decrease in net debt.
Results
In the six months to 1 February 2003, total Group turnover was slightly down on
the previous year at #11.9 million (2002: #12.1 million). Gross margins have
increased to 50.4% (2002: 49.8%) as a result of the retail business accounting
for a higher proportion of sales than in the prior period. Operating profit was
#160,000 against #298,000. Total profit before tax was #89,000 (2002: #174,000)
and basic earnings per share were 0.14p (2002: 0.27p).
Cash generated from operating activity in the period has increased by 133% to
#1.4 million (2002: #0.6 million) and net debt has been reduced by 62% to #1.0
million (2002: #2.6 million)
ELLE Retail
Retail sales in the period increased by 16.2% to #7.9 million (2002: #6.8
million) and now account for 66% of total Group turnover (2002: 56%). The
growth in retail sales reflects the impact of the two new prime stores, which
opened during the first half of the current year and a full period of trading
from the prime concessions, which opened in the second half of last year.
Retail gross margins are slightly lower than the comparative period at 63.2%
(2002: 64.4%), which is due to further activity in clearing out slow-selling
stock.
In September we opened a new Elle store in the Oracle Centre, Reading and
followed this with a new store in the Meadowhall Centre (Sheffield) in December.
This latter store features a completely remodelled store design and is trading
in line with expectations. We have closed a net 5 unprofitable concessions,
leaving our total retail selling space unchanged at 49,300 square feet at the
end of the half year.
ELLE Wholesale
As previously reported, the re-alignment of our ELLE licence has resulted in us
relinquishing certain non-core product categories and territories. As
forecasted, this had a significant impact on the Autumn/Winter 2002 selling
season, which contributed to a decline in revenues from our wholesale activities
in the period under review of 23.1% to #4.0 million (2002: #5.2 million). The
main product category to be affected by these changes was daywear, where we no
longer sell into continental Europe. We have seen good growth in sales of
sportswear and swimwear within the UK, but sales have declined in markets such
as Germany and the Middle East. From Spring / Summer 2003 we have started to
sell nightwear direct, rather than through a distributor, and the early signals
are encouraging. On bags, where we act as UK distributor for the Italian licence
holder, there was a disappointing reaction to the Autumn/Winter 2002
collections. As a result, we are working closely with the licence holder to
ensure that future collections will be better adapted to the UK market.
Board changes
In early April we announced that Sue Tisdall, Managing Director, was leaving the
Board to pursue other business interests. Sue is the original founder of the
business and was instrumental in securing the Elle licence back in 1995. She
played a key role in taking the Group onto the AIM market in 2000 and has
supported the new management team during the restructuring of the past two
years. I would like to thank Sue for her valued contribution and to wish her
success in her future endeavours.
Outlook
The second half of the financial year started slowly, but has improved over
recent weeks. In the 12 weeks to 26th April, growth in total retail sales has
been 10.2% ahead compared to the same period last year, and we remain positive
about the opportunities for Elle retail in the UK.
We are continuing to develop our retail estate, and plan to open at least 3
further Elle stores during 2003, including one in the new Birmingham Bullring
development, which will open in September.
Recent changes implemented to strengthen management in areas of design, buying
and merchandising are delivering early positive results in improving assortment,
fashionability and styling of the Elle range.
However, Spring / Summer 2003 sales for Elle wholesale fell short of
expectations as a result of difficulties in the European markets and slower
sales to the independent sector. These factors will impact the Group's full year
results, which are now expected to be below current market expectations. In
response to this, the board is accelerating plans to implement a changed
approach to the Group's remaining wholesale activities, which will bring
benefits in the form of reduced central costs of around #300,000 (approximately
10% of total central overhead) in 2003/4.
David Brock
Chairman
30th April 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the 6 months to 1 February 2003
Unaudited Unaudited Audited
Six months to Six months to Year to
Notes 1 February 2003 31 January 2002 31 July
2002
#'000 #'000 #'000
STARTTurnover 11,923 12,052 24,877
Cost of Sales 5,917 6,046 14,304
__________ __________ __________
Gross Profit 6,006 6,006 10,573
Other Operating Expenses (5,846) (5,708) (10,046)
__________ __________ __________
Operating profit 160 298 527
Operating profit before exceptional costs 160 298 784
Exceptional costs:
Exceptional bad debt - - (257)
Interest payable and similar charges (71) (124) (212)
__________ __________ __________
Profit on ordinary activities before taxation 89 174 315
Taxation - - 168
__________ __________ __________
Retained profit for the period 89 174 483
__________ __________ __________
Earnings per share
Basic earnings per share 2 0.14p 0.27p 0.74p
__________ __________ __________
Adjusted earnings per share 0.14p 0.27p 1.14p
__________ __________ __________
Diluted earnings per share 0.14p 0.26p 0.70p
__________ __________ __________
Adjusted diluted earnings per share 0.14p 0.26p 1.08p
__________ __________ __________
CONSOLIDATED BALANCE SHEET
As at 1 February 2003
Unaudited Unaudited Audited
1 February 2003 31 January 2002 31 July
2002
#'000 #'000 #'000
Fixed assets
Intangible assets 46 49 47
Tangible assets 1,847 1,928 1,687
__________ __________ __________
1,893 1,977 1,734
Current assets
Stocks 2,655 3,892 3,426
Debtors 2,244 2,696 3,688
Cash at bank and in hand 4 7 4
__________ __________ __________
4,903 6,595 7,118
Creditors: amounts falling due within one year (2,538) (4,509) (4,854)
__________ __________ __________
Net current assets 2,365 2,086 2,264
__________ __________ __________
Total assets less current liabilities 4,258 4,063 3,998
Creditors: amounts falling due after more than one (271) (470) (100)
year
__________ __________ __________
Net assets 3,987 3,593 3,898
__________ __________ __________
Capital and reserves
Called up share capital 657 655 657
Share premium account 4,322 4,322 4,322
Other reserves 89 89 89
Profit and loss account (1,081) (1,473) (1,170)
_________ _________ __________
Shareholders' funds 3,987 3,593 3,898
__________ __________ __________
CONSOLIDATED CASH FLOW STATEMENT
For the 6 months to 1 February 2003
Notes Unaudited Unaudited Audited
1 February 2003 31 January 2002 31 July
2002
#'000 #'000 #'000
Net cash inflow/(outflow) from operating activities 3(a) 1,392 611 1,677
Returns on investments and servicing of finance
Interest paid (71) (124) (212)
Dividends paid - - -
________ ________ ________
Net cash outflow from servicing of finance (71) (124) (212)
________ ________ ________
Taxation paid - -
Capital expenditure and financial investment
Purchase of tangible fixed assets (549) (38) (198)
Sale of tangible fixed assets 3 14
________ ________ ________
Net cash outflow from capital expenditure (549) (35) (184)
________ ________ ________
Net cash inflow before financing 772 452 1,281
Issue of ordinary shares - - 2
Repayment of secured loans (371) (308) (812)
New secured loans 315 - -
Capital element of finance lease payments (105) (86) (218)
________ ________ ________
Net cash outflow from financing (161) (394) (1,028)
________ ________ ________
Increase in cash in the period 3(b) 611 58 253
________ ________ ________
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
The consolidated interim financial statements have been prepared under the
historical cost convention and in accordance with applicable accounting
standards. The accounting policies applied are consistent with those set out in
the financial statements of Actif Group plc for the year ended 31 July 2002.
The interim financial statements are unaudited and do not constitute accounts
within the meaning of section 240 of the Companies Act 1985. The financial
information for the year ended 31 July 2002 has been extracted from the Group's
statutory accounts for the period, which 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 of the Companies Act 1985.
2. Earnings per share
Earnings per share and fully diluted earnings per share for the 6 months ended 1
February 2003, the year ended 31 July 2002 and the 6 months ended 31 January
2002 have been calculated on loss or profit after tax and non-equity dividends
and on the weighted average number of shares in issue and under option during
the period, as set out below:
6 months ended 6 months ended Year ended
1 February 2003 31 January 2002 31 July 2002
Weighted average number
of ordinary shares 65,344,571 65,144,571 65,194,434
Weighted average number
of ordinary and
potential ordinary shares 65,357,273 68,197,463 68,809,587
Adjusted earnings per share for the year ended 31 July 2002 has been calculated
on profit on ordinary activities after tax and non-equity dividends but
excluding the exceptional items of #257,000, which is due to exceptional bad
debt.
3. Notes to the Consolidated Cash Flow Statement for the 6 months ended 1
February 2003
(a) Reconciliation of operating profit to operating cash flows
Unaudited Unaudited Audited
1 February 2003 31 January 2002 31 July
2002
#'000 #'000 #'000
Operating profit 160 298 527
Depreciation charges 389 462 855
Amortisation of goodwill 1 1 3
Loss on sale of tangible fixed assets - - (2)
Decrease in stock 771 455 921
Decrease in debtors 1,444 1,341 517
Decrease in creditors (1,373) (1,946) (1,138)
Foreign exchange loss relating to non operating activities - - (6)
__________ __________ __________
Net cash inflow from operating activities 1,392 611 1,677
__________ __________ __________
(b) Reconciliation of cash flow to movement in net debt
Unaudited Unaudited Audited
1 February 2003 31 January 2002 31 July
2002
#'000 #'000 #'000
Increase/(decrease) in cash in the period 611 58 253
Cash outflow from decrease in debt and lease financing 476 394 1,030
__________ __________ __________
Change in net debt resulting from cash flows 1,087 452 1,283
New secured loans (315) - -
__________ __________ __________
Movement in net funds/(debt) in the period 772 452 1,283
Net debt at the beginning of the period (1,814) (3,097) (3,097)
__________ __________ __________
Net debt at the end of the period (1,042) (2,645) (1,814)
__________ __________ __________
4. Copies of Interim Report
The Interim Report will be sent by post to all registered shareholders. Copies
of the Interim Report are available from the Company Secretary at the Registered
Office of Actif Group plc, 20 Little Portland Street, London W1W 8AA.
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