Interim Results
01 July 2005 - 5:01PM
UK Regulatory
RNS Number:3293O
Award International Holdings PLC
30 June 2005
30 June 2005
Award International Holdings Plc ("AIH" or "the Company" or "the Group")
Interim results for the six months ended 31 March 2005
Chairman's statement
I am pleased to present my first half year report as your interim Chairman.
Financial
In the six months ended 31 March 2005, the Company incurred a loss before
taxation of #619,810 as predicted in the Annual Report for the period ended 30
September 2004. The underlying trading performance of the Company is as
expected, with a reduced turnover of #1.199 million compared to #2.237 million
for the comparative period. It is also disappointing that Flexibreaks Travel
Service ("FTS") continues to report losses at the operating level, however
management is currently restructuring FTS and has further developed its website
with a view to improving performance.
The effect of the Tsunami, with Pepsico cancelling promotions around the banner
of "Surf's Up", the long lead in times on contracts and the continued strength
of the pound relative to the US dollar have all impacted negatively on
performance, however gross margins have been improved from an average of 26% to
29% and contracts that were delayed in the first six months are now starting to
flow through.
Review of activities
It has been a challenging start to the year for AIH and despite successes in
securing new clients, the issues outlined in the Chairman's Statement in the
Annual Report continued to affect revenues and profit in the first half as
predicted. Specifically, the results have been adversely impacted by the loss of
a significant client and the cancellation of a major promotion by PepsiCo
Beverages International (PBI). Unfortunately, AIH also suffered a significant
bad debt of #97,000 during the period and a difficult general trading
environment that has meant that a number of clients have reduced their
promotional spends or diverted budgets into their trading activities.
The management has been focussing on strategically diversifying the business
away from the existing client base type in order to reduce the impact of the
promotional peaks and troughs of their business and also to reduce the impact of
the client lost in 2004. We are pleased to report that we have been developing
ideas for a number of potential new clients over the six month period including
Frito Lay (snacks division of PepsiCo), Royal Mail and BT Retail. The trading
position still continues to be difficult but the Company will keep shareholders
informed.
Current Trading
Since the end of the interim period under review trading continues to be
difficult, however contracts that were delayed are now being undertaken and the
Board is reviewing further cost cutting initiatives.
AIH continues to be preferred supplier to PBI and is currently developing a
range of merchandise for the Pepsi and Gatorade brands to coincide with
promotional activity around World Cup 2006 across Europe and Australasia. The
Group is developing a range of merchandise for World Cup 2006 and will be
actively marketing this to existing and prospective clients from July 2005. AIH
is also continuing to extend its activities within key clients including AXA,
Cantrell & Cochrane in Ireland and Scottish & Newcastle.
At the time of the announcement of results in February, the Chairman reported
that there had been a downturn in business through BVI (Buena Vista
International) due to Disney releasing fewer films in the UK. This trend has
reversed and we have been investing more resource into developing related third
party contracts and focusing on other film distribution companies. As a direct
result of this, we have been developing merchandise for the release of films
including Narnia, Sin City and Herbie.
Board Changes
On 13 June 2005, AIH announced the resignation of Geoffrey Rose as Chairman with
immediate effect and I have assumed the position of interim non-executive
Chairman until a replacement for Geoffrey is found. George Brooksbank resigned
as non executive director of AIH on 7 April 2005. The Board would like to take
this opportunity to thank them for their contribution during the formative
period of the Company.
Although the Board has put in place a number of changes and addressed the level
of overheads, as previously mentioned, they have been concerned that further
refinement could be achieved within the administrative and financial function of
the Company. Accordingly we are in the process of commissioning a senior and
experienced professional to review these processes in particular and to report
to the Board. As soon as this process is complete, which we anticipate to be
within the next 2 months, I will report to shareholders.
Outlook
Over the next six months, AIH will consolidate its events and travel business
into its Head Office in Kent. The focus for Flexibreaks going forward will be on
managing events and hospitality for key clients of the Group as well as
promoting the more profitable voucher incentives. This includes "money off"
travel vouchers and complimentarynights.com, which has been rebranded from
freehotelaccomodation.com and is currently planning a number of campaigns within
the media.
During March, the management undertook a thorough review of operations and in
particular, the administrative, supply chain and support functions of the
company and the resulting recommendations were implemented during April. Two
departments were merged into a new Customer Services Department which will
eliminate a significant overlap that existed and should streamline the processes
of the company.
In addition, the sourcing department has been restructured and is being managed
to be more innovative and focused. Relationships with key suppliers are being
strengthened and this ongoing process will contribute to the success of the
Company going forward.
The review of our supply base and cost structure is ongoing and will take some
months to complete, the Board will continue to keep shareholders informed of
progress.
We are confident that the projects in development for Royal Mail, BT Retail and
Frito Lay Europe will go live by the end of the financial year.
The Board of AIH believes that its investment into the sales and logistics
teams, the restructuring of its operations and the development of new clients
will result in an improved situation in the second half year and position the
company to grow its operations.
Edward Marlow
Interim Non Executive Chairman
30th June 2005
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months period ended 31 March 2005
--------------------------------------------------------------------------------
Period ended Six months ended
31/03/2005 31/03/2004
(unaudited) (unaudited)
#'000 #'000
Turnover 1,199 2,237
Cost of sales 889 1,572
-------------------------------
Gross Profit 310 665
Distribution Costs (221) (181)
Administration expenses (686) (344)
-------------------------------
Operating profit (596) 140
Interest receivable and similar charges 0 0
Interest payable and similar charges (24) (30)
-------------------------------
Profit on ordinary activities before
taxation (620) 110
Taxation - (20)
-------------------------------
Profit and loss at 30 September 2004 (33) -
-------------------------------
Profit and loss at 31 March 2005 (652) 90
===============================
pence pence
Basic profit/(loss) per ordinary share (2.01) 0.92
===============================
Diluted profit/(loss) per ordinary share (2.00) 0.90
===============================
CONSOLIDATED BALANCE SHEET
As at 31 March 2005
--------------------------------------------------------------------------------
As at As at
31 March 2005 31 March 2004
(unaudited) (unaudited)
#'000 #'000 #'000 #'000
Fixed assets
Tangible assets 82 154
Intangible assets 21 185
------ ------
103 339
Current Assets
Stock 20 331
Associated Company Balances 312 95
Debtors 1,806 3,051
Cash at bank and in hand 19 27
------ -------
2,157 3,504
------ -------
Creditors: amounts falling due within
one year
Creditors 706 1,697
Bank overdraft 395 -
------ -------
1,101 1,697
------ -------
Net current assets 1,056 1,807
------ ------
Total assets less current liabilities 1,159 2,146
Creditors: amounts falling due after (69) (182)
one year
Deferred taxation - (15)
------ ------
1,090 1,949
======= =======
Capital and reserves
Called up share capital 325 325
Share premium reserve 1,536 1,534
Merger reserve (118) -
Profit and loss account (652) 90
------- -------
1,090 1,949
======= =======
CONSOLIDATED CASH FLOW STATEMENT
For the six months period ended 31 March 2005
--------------------------------------------------------------------------------
Period ended Six months ended
31/03/2005 31/03/2004
(unaudited) (unaudited)
#'000 #'000 #'000 #'000
Net cash outflow from operating activities
Operating profit/(loss) (596) 140
Depreciation and amortisation 42 50
Movement in debtors 244 (1,501)
Stock movements 91 (219)
Movement in creditors 6 204
------- -------
(213) (1,326)
Returns on investments and servicing of
finance
Interest paid (24) (30)
Capital expenditure and financial
investment
Purchase of tangible fixed assets - (22)
Proceeds from sale of tangible fixed - 7
assets ------- -------
Net cash flow from capital expenditure - (15)
------- -------
(237) (1,371)
FINANCING
Capital element of finance leases (9) 17
Net proceeds from the issue of share
capital - 1,713
------- -------
Net cash flow from financing (9) 1,730
------- -------
Increase/(decrease) in cash in the period (246) 359
======= =======
Award International Holdings Plc
NOTES TO THE INTERIM STATEMENT
for the 6 months ended 31 March 2005
1. The interim financial information does not constitute statutory accounts for
the purpose of the Companies Act 1985.
2. The interim financial information has been prepared using the same
accounting policies as set out in the companies' accounts for the year ended
30 September 2004.
3. The basic earnings per share has been calculated based on the profit on
ordinary activities after taxation and the weighted average number of
ordinary shares of #0.01 each in issue for the period of six months to
31 March 2005.
The diluted earnings per share has been calculated by adjusting the basic
earnings per share for the effects of all dilutive potential ordinary shares
arising from the company's share option schemes.
4. A copy of the interim statement is being sent to all shareholders and
copies are available for collection from the company's registered office
address as follows:
Viking House
Cliftonville Avenue
Cliftonville
Margate
Kent CT9 2AQ
This information is provided by RNS
The company news service from the London Stock Exchange
END
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