RNS Number:9593Q
Home Entertainment Corporation PLC
5 February 2002
News Release - Tuesday, 5 February 2002
Home Entertainment Corporation PLC - Interim Results
Highlights
• Sales increased by 26.6% to £56.2 million (2000: £ 44.4 million) with
growth coming from sales of Playstation 2 computer games consoles and
software and Digital Versatile Discs.
• Profit before taxation and exceptional costs of £3.48 million (2000: £3.46
million).
• Choices Video stores rental and total sales achieved like-for-like
increases of 12.8% and 22.8% respectively.
• Choices Direct experienced profitable sales growth, in mail order and
fulfilment, with a like-for-like increase of 33 per cent for the period.
• Strong positive cash flow.
• Interim dividend of 1.9 pence per share.
"Subject to favourable weather conditions in the crucial Easter and Whitsun
school holidays, and positive consumer spending trends, the company is well
positioned to continue its healthy long-term progress." (Iain Muspratt,
Chairman)
For further information contact:
Bankside Consultants
Simon Bloomfield: 0207 444 4177 / Michelle Doughty: 0207 444 4176
Chairman's Statement
I am pleased to report that Home Entertainment Corporation achieved satisfactory
results for the 28 weeks ended 15th December 2001, in challenging market
conditions and during a period that included the group's successful debut on the
Alternative Investment Market.
Results
Sales for the period increased by 26.6 per cent to £56.2 million compared to
£44.4 million for the previous period. Sales increased across all our product
range, with a significant part of the growth coming from sales of games consoles
and software, and a buoyant market for Digital Versatile Discs. On a
like-for-like basis, Choices Video stores rental and total sales in the period
increased by 12.8 per cent and 22.8 per cent respectively.
Profit on ordinary activities before exceptional charges and taxation was £3.48
million (2000: £3.46 million), slightly exceeding our expectations and
reflecting a lower contribution from Video Box Office and the impact on margins
of a major expansion of sell-thru activities.
Basic earnings per share was 7.8 pence, and earnings per share excluding
flotation costs of £639,000 was 12.5 pence.
Positive cash flow for the period was £2,135,000 partly reflecting the benefit
of timing differences between inflows on increased sales and payments to
suppliers.
Dividend
The Board has declared an interim dividend of 1.9 pence per share, to be paid on
16 April 2002 to shareholders on the register at 15 February 2002.
Trading
Overall growth in sales was achieved despite a relatively lacklustre video
release schedule and the adverse impact of good weather compared to the
favourable wet summer of the previous year. This satisfactory result
particularly reflects a strong trading performance in the last eight weeks of
the period when the group benefited from good title releases and an increased
emphasis on sell-thru, throughout the group, to complement rental activities.
Choices Video benefited from the growth in demand for DVD rental and sales
resulting from the transition by consumers from VHS to DVD which occurred at a
faster than anticipated rate. Sales of Sony Playstation 2 computer games
further contributed to overall growth. During the period, 10 new Choices Video
stores were opened.
As expected, the transition from VHS to DVD by their customers is taking longer
at Video Box Office outlets where video rentals on a like-for-like basis were
down for the period. We have substantially completed installation for the NAAFI
contract ahead of schedule. However, as a result of the global deployment of
British forces following the events of 11th September 2001, the return on our
investment for this contract will take longer to come through.
Choices Direct experienced profitable sales growth, in mail order and
fulfilment, as a result of strong Christmas demand. Like-for-like sales growth
for the period was 33 per cent.
Mosaic maintained its contribution compared to the same period last year.
Flotation
Dealings in Home Entertainment Corporation shares commenced on 25 October 2001
when the group was successfully floated on the Alternative Investment Market ("
AIM"). 6,976,712 existing Ordinary Shares were placed with a range of
institutional and other investors at a price of £1.70 each, representing 39.2
per cent of the issued share capital, and we are pleased to welcome these new
shareholders.
Admission to AIM has raised the profile of Home Entertainment Corporation with
customers and suppliers. Share options, amounting to approximately 21/2 per cent
of the issued share capital, were granted to 187 employees at the placing price.
Outlook
Demand for DVD and Playstation 2 sell-thru and rental remains strong, although
consumer spending currently reflects more caution than it did in the run up to
Christmas.
Key film releases for VHS and DVD in the second half of the year include
Swordfish, Moulin Rouge, Planet of the Apes, A.I., 51st State, Enigma, The
Others, American Pie 2 and Scary Movie 2.
The launch in March of Microsoft's X Box and, in May, of Nintendo's GameCube
should further stimulate the games market.
The transition to DVD is expected to benefit Video Box Office in the next
financial year.
We plan to open 8 new Choices Video stores by the end of the financial year, and
to invest in further warehouse space and other facilities to support Home
Entertainment Corporation's continued expansion particularly in relation to DVD
and computer games.
Subject to favourable weather conditions in the crucial Easter and Whitsun
school holidays, and positive consumer spending trends, Home Entertainment
Corporation is well positioned to continue its healthy long-term progress.
Iain Muspratt - Chairman
5 February 2002
Trading Divisions
Video Box Office
Provides a service throughout the United Kingdom to convenience stores and other
retailers, enabling them to add video and DVD sales and rental and computer
games software sales to the range of products offered to their customers.
Choices Video
Operated through 179 (December 2000 - 163) retail outlets in England and Wales,
offering videos, DVDs and computer games rental and sales, games consoles for
sale, and the sales of 'Pay As You Go' mobile telephones and 'Top-Ups', ice
cream and confectionery.
Choices Direct
Choices Direct offers video and DVD, as well as providing talking tapes released
in the United Kingdom on audio cassette and compact disc, for sale through mail
order. Customers can access the Choices Direct service by mail, by 'phone or via
Choices Direct's website at www.choicesdirect.co.uk
Choices Direct also manages and fulfils video and DVD sales for many of the
large mail order catalogue companies in the United Kingdom, including GUS,
Freemans, Littlewoods and Book Club Associates. The service offered is
comprehensive, ranging from title selection advice and compilation, through to
fulfilment of customers' orders.
Mosaic Entertainment
Mosaic Entertainment invests in and acquires the rights to a range of feature
films and television programmes and then releases them to the general consumer
video and DVD market in the United Kingdom and the Republic of Ireland
(including arm's length sales to other divisions of the Company).
Profit and Loss Account
for the 28 weeks ended 15 December 2001
note 28 weeks 28 weeks 52 weeks
ended 15 ended 16 ended
Dec 2001 Dec 2000 2 June 2001
(unaudited) (unaudited) (audited)
£000 £000 £000
Turnover 2 56,244 44,423 83,408
Operating Profit before Exceptional Costs 3,519 3,491 4,953
Exceptional Costs:
Costs of flotation (639) - -
Operating Profit 2,880 3,491 4,953
Net Interest Payable (37) (30) (48)
Profit on Ordinary Activities Before Tax 2,843 3,461 4,905
Taxation 3 (1,446) (1,246) (1,874)
Profit for the Period 1,397 2,215 3,031
Dividends 4 (408) (67) (922)
Profit Transferred to Reserves 989 2,148 2,109
Adjusted Earnings per Share (excluding Exceptional Costs & 5 12.5p 12.4p 17.0p
underprovision in respect of Prior Periods Taxation)
Basic Earnings Per Share 5 7.8p 12.4p 17.0p
Diluted Earnings Per Share 5 7.5p 12.3p 16.8p
Dividends per Ordinary Share 1.9p Nil 3.8p
Balance Sheet
as at 15 December 2001
28 weeks 28 weeks 52 weeks
ended 15 ended 16 ended
Dec 2001 Dec 2000 2 June 2001
(unaudited) (unaudited) (audited)
£000 £000 £000
Fixed Assets
Tangible Assets 10,711 9,624 10,254
Current Assets
Stocks 10,966 7,942 8,201
Debtors 13,248 11,304 5,069
Cash 2,659 - 524
26,873 19,246 13,794
Creditors: Amounts falling due within one year (25,382) (17,473) (12,865)
Net Current Assets 1,491 1,773 929
Total Assets Less Current Liabilities 12,202 11,397 11,183
Deferred Taxation (109) (146) (109)
Net Assets 12,093 11,251 11,074
Capital and Reserves
Called Up Share Capital 897 890 890
Share Premium Account 827 804 804
Other Reserves 1,061 1,061 1,061
Profit and Loss Account 9,308 8,496 8,319
Equity Shareholders' Funds 12,093 11,251 11,074
Cash Flow Statement
for the 28 weeks ended 15 December 2001
note 28 weeks 28 weeks 52 weeks
ended 15 ended 16 ended
Dec 2001 Dec 2000 2 June 2001
(unaudited) (unaudited) (audited)
£000 £000 £000
Net Cash Inflow from Operating Activities 6 6,103 2,916 7,329
Returns on Investments & Servicing Finance
Interest Paid (37) (30) (48)
Non-equity Dividends Paid (288) (293) (466)
Net Cash Outflow from Returns on Investments and Servicing of (325) (323) (514)
Finance
Taxation
Corporation Tax Paid (765) (645) (1,493)
Capital Expenditure
Payments to Acquire Tangible Fixed Assets (2,598) (2,578) (5,002)
Equity Dividends Paid (310) (315) (467)
Proceeds from Shares Issued 30 - -
Increase / (Decrease) in Cash 2,135 (945) (147)
Notes to the accounts for the 28 weeks ended 15 December 2001
1. Basis of preparation
The interim accounts cover the 28 weeks to 15 December 2001. They have been prepared under the
accounting policies set out in the Company's statutory accounts for the 52 weeks to 2 June
2001, except in respect of deferred tax as set out below, and are unaudited. The taxation
charge is calculated by applying the forecast annual tax rate to the profit for the period,
adjusting for the tax effect of exceptional items.
The financial information does not constitute statutory accounts as defined in Section 240 of
the Companies Act 1985. The financial information for the full preceding 52 weeks is based on
the statutory accounts for the 52 weeks ended 2 June 2001 which have been delivered to the
Registrar of Companies. These statutory accounts were audited by Ernst & Young LLP and their
report thereon was unqualified.
FRS18 (Accounting Policies) and FRS19 (Deferred Tax) have been adopted during the period, and
have had no effect on the published numbers
2. Turnover 28 weeks ended 15 28 weeks ended 16 52 weeks ended
Dec 2001 Dec 2000 2 June 2001
(unaudited) £000 (unaudited) £000 (audited) £000
Rental 27,129 24,100 46,448
Sales - Games 7,798 3,802 8,751
Sales - Other 21,317 16,521 28,209
56,244 44,423 83,408
3. Taxation 28 weeks ended 15 28 weeks ended 16 52 weeks ended
current taxation: Dec 2001 Dec 2000 2 June 2001
(unaudited) £000 (unaudited) £000 (audited) £000
Corporation tax before exceptional items 1,253 1,246 1,874
On Exceptional items - - -
Corporation tax 1,253 1,246 1,874
Under -provisions in respect of prior 193 - -
periods
1,446 1,246 1,874
4. Dividends 28 weeks ended 15 28 weeks ended 16 52 weeks ended
Dec 2001 Dec 2000 2 June 2001
(unaudited) £000 (unaudited) £000 (audited) £000
Paid prior to flotation 67 67 922
Interim dividend - Proposed 341 - -
408 67 922
5. Earnings Per Share
The earnings and number of shares in issue or to be issued used in calculating the earnings and
diluted earnings per share were as follows:
28 Weeks ended 28 Weeks ended 52 Weeks ended
15 December 2001 16 December 2000 2 June 2001
(Unaudited) (Unaudited) (Audited)
diluted earnings diluted earnings diluted earnings
earnings earnings earnings
Earnings £1,397,000 £1,397,000 £2,215,000 £2,215,000 £3,031,000 £3,031,000
Weighted 18,361,250 17,861,414 18,079,375 17,791,852 18,079,375 17,791,852
Average Number
of Shares
Earnings per 7.5p 7.8p 12.3p 12.4p 16.8p 17.0p
Share
Adjusted 12.1p 12.5p 12.3p 12.4p 16.8p 17.0p
Earnings per
Share
Calculation of
number of
shares:
at 2 June 2001 17,791,852 17,791,852 17,791,852 17,791,852 17,791,852 17,791,852
Shares Issued 139,123 139,123 - - - -
Dilutive 713,650 - 287,523 - 287,523 -
effect of
share option
schemes
18,644,625 17,930,975 18,079,375 17,791,852 18,079,375 17,791,852
Adjusted earnings per share excluded the effects of exceptional costs of £639,000 and
underprovision in respect of prior periods taxation of £193,000 and is presented in
order to show the true underlying performance of the Company.
6. Reconciliation of Operating Profits to Net Cash Flow from Operating Activities
28 weeks ended 15 28 weeks ended 16 52 weeks ended
Dec 2001 Dec 2000 2 June 2001
(unaudited) £000 (unaudited) £000 (audited) £000
Operating profit before exceptional 3,519 3,491 4,953
costs
Costs of Flotation (639) - -
Operating profit 2,880 3,491 4,953
Depreciation 2,136 1,813 3,608
(Increase) in stocks (2,765) (2,459) (2,718)
(Increase) in debtors (8,179) (8,060) (1,825)
Increase in creditors 12,031 8,131 3,311
Net cash inflow from operating 6,103 2,916 7,329
activities
The cash outflows during the period relating to the costs of flotation totalled £386,000.
Copies of the interim report are available, free of charge to the public on any
week day (excluding Saturdays), at the registered office of the Company (19 - 24
Manasty Road, Orton Southgate, Peterborough, PE2 6UP) and at the offices of the
Company's Nominated Advisers, Teather & Greenwood Limited (Beaufort House, 15 St
Botolph Street, London, EC3A 7QR) from the date of this announcement and for a
period of 1 month thereafter.
This information is provided by RNS
The company news service from the London Stock Exchange
Henderson European (LSE:HET)
Historical Stock Chart
From Jun 2024 to Jul 2024
Henderson European (LSE:HET)
Historical Stock Chart
From Jul 2023 to Jul 2024
