TIDMFDL
RNS Number : 7845X
Findel PLC
29 November 2017
29 November 2017
Findel plc ("Findel" or "the Group")
Interim Results for the 26 weeks ended 29 September 2017
Strong first half, driven by successful customer recruitment
programme
Progress with digital transformation
Findel, the online value retail and education business, today
announces its Interim Results for the 26 week period ended 29
September 2017.
Financial Summary
26 weeks 27 weeks Change
ended 29.09.17 ended 30.09.16
------------------------ ----------------- ----------------- ----------
Revenue GBP226.0m GBP213.0m +6.1%
------------------------ ----------------- ----------------- ----------
Adjusted profit before GBP11.9m GBP1.9m +GBP10.1m
tax*
------------------------ ----------------- ----------------- ----------
Profit / (loss) before GBP8.1m (GBP0.6m) +GBP8.7m
tax
------------------------ ----------------- ----------------- ----------
Core net debt* GBP90.0m GBP94.5m -GBP4.4m
------------------------ ----------------- ----------------- ----------
* this is an Alternative Performance Measure for which a
reconciliation to the equivalent GAAP measure can be found
below
Highlights
-- Strong sales performance in the first-half with Group
like-for-like* revenue up 8.4% on prior year (reported revenue up
6.1%), driven by successful customer recruitment programme at
Express Gifts
-- Adjusted profit before tax* for H1 up by GBP10.1m to
GBP11.9m, assisted in part by intra-year timing differences.
-- Guidance for the full year remains unchanged
-- Our largest business, Express Gifts, continues to show strong
growth in customers and revenue
o Additional H1 marketing activity to support the Studio.co.uk
brand, together with improved retention rates, produced customer
growth of 230k from September 2016. Active base now at 1.7m.
o Like-for-like* product revenue growth of 15.8% in H1, assisted
by timing differences on marketing activity. This % increase is
higher than we expect to see in H2.
o Particularly strong performances from clothing sales in H1,
with a 23.9% increase in sales vs. H1 of prior year.
o Online ordering increase from 54.7% to 66.4% in 12 months to
September 2017.
o Like-for-like* financial services revenue up 12.6% in H1.
o New financial services account platform installed at the start
of October.
o Financial services income and bad debt levels performing to
plan. The new bad debt provisioning model introduced in March 2017
produces favourable variances in H1 that will reverse in H2,
particularly relating to the timing and quantum of sales of overdue
customer receivables.
-- The operational turnaround of Findel Education is proceeding in line with our plans
o H1 revenue on like-for-like* basis down 6.9% (reported revenue
down 7.8%).
o New customer websites, lower prices and online price
comparison tools rolled out in Q2.
o Online ordering has increased significantly in the last few
months from c.10% in March 2017 to over 25% in November 2017.
o Operational cost savings from warehouse consolidation of
c.GBP1.5m achieved in H1, with further cost saving initiatives in
progress to benefit FY19.
-- Core net debt* of GBP90.0m at half year reduced by GBP4.4m,
primarily due to timing differences on sales of overdue customer
receivables
o Customer refund programme at Express Gifts proceeding to plan
with total cash outflow of GBP8.4m in H1.
o Express Gifts securitisation facility recently increased to
GBP170m, up from GBP155m, to accommodate future sales and
receivables growth.
Outlook
The strong performance from Express Gifts in the first half,
with continued growth in customer numbers and sales, provides the
basis for sustainable medium-term profit growth. This is alongside
the turnaround of Findel Education.
At a time where retail markets are seeing more caution from
consumers, the Studio.co.uk proposition appears to be attractive
and relevant to value-conscious customers. Our successful customer
recruitment programme leaves us on course to achieve 2 million
active customers at Express Gifts over the next 2 to 3 years.
We remain on track to meet full year expectations, and our
earnings and net debt guidance remains unchanged.
Phil Maudsley, Group CEO, commented:
"We set out a clear set of objectives at the time of our
full-year results in June and I'm delighted to report a period of
strong delivery against those plans.
Express Gifts continues to perform strongly via its strengthened
Studio.co.uk brand. Market awareness of our exceptional value offer
continues to grow, and our online value retail proposition is
proving particularly attractive at a time of tighter household
budgets in the UK. In particular, customers are responding well to
improvements in the quality and price points across our clothing
offer encouraging customers to shop more frequently.
We are encouraged by the initial response to our operational
plan for Education in recent weeks.
The majority of the Group's revenue is generated in the second
half, and our peak trading period, including Black Friday, is
performing well against strong comparators. We are on track to
deliver against our plan for profitable growth."
Enquiries
Findel plc 0161 303 3465
Phil Maudsley, Group CEO
Stuart Caldwell, Group CFO
Tulchan Communications 020 7353 4200
Susanna Voyle
Will Smith
Notes to Editors
The Findel group contains market leading businesses in the UK
home shopping and education supplies markets. It is primarily a
retailer and distributor, handling and supplying specialist
products manufactured by third parties.
The Group's activities are focused in two main operating
segments:
-- Express Gifts - one of the largest direct mail order
businesses in the UK, primarily trading via the Studio.co.uk brand;
and
-- Findel Education - the second largest listed independent
supplier of resources and equipment (excluding information
technology and publishing) to schools in the UK.
INTERIM MANAGEMENT REPORT
Summary
This has been a strong first half performance from the Group,
with a number of key project milestones being achieved alongside
continued double-digit customer and sales growth from Express Gifts
and its Studio.co.uk brand.
The growth in profit seen in H1 is largely driven by a number of
intra-year timing differences, notably in respect of the new bad
debt provisioning model whereby the phasing of the bad debt charge
now follows the seasonality of the business' trading and is
therefore higher in H2, and the re-phasing of marketing activity
between H1 and H2. The guidance for the full year outturn for
earnings and net debt remains unchanged, confirming our
expectations for strong profit growth for the full year, which in
turn provides a strong platform for the medium term prospects for
the Group.
Express Gifts
Express Gifts is our core online value retail business,
primarily trading under the Studio.co.uk brand. The business saw
its customer base increase by 119k in the first half of the year
and now has 1.7m customers who shop from our broad range of home
and leisure items, clothing, toys and gifts via catalogue and
online, together with a leading personalisation offer.
Increased use of TV and social media advertising in the first
half of the year, highlighting particularly good-value products,
has continued to be an effective way of recruiting new customers.
The business has also made good progress in retaining established
customers and increasing ordering frequency, particularly within
clothing ranges.
The 15.8% growth in like-for-like* product sales (13.5% on a
reported basis) seen in H1 was in part the result of a conscious
decision to move some marketing activity forward from October into
September. Hence, we have planned for growth in H2 to moderate
slightly and be in the range of 10-12% for the full year as a
whole.
Product margins in H1 were 33.4%, up by 100bps from the prior
year, with the impact of weaker exchange rates on import costs
being mitigated by supply chain improvements. In particular, we
have been more selective on the level of discounting required for
our showcase promotional items to be successful, increasing the
margin rate on those products to 17.4% in H1 compared to 2.4% in H1
of the prior year when some items were priced as loss leaders,
choosing instead to invest in increased marketing activity. Our
hedging strategy continues to cover 100% of planned direct foreign
purchases for the next 12 months on a rolling basis. The gradual
recovery in Sterling seen in recent months will therefore benefit
FY19's purchases.
A key part of our offer is the flexible credit option, allowing
customers to pay for their goods over an extended period. Financial
services revenues of GBP51.2m were earned in H1, up by 12.6% on the
prior year on a like-for-like* basis (8.1% on a reported basis),
with the total number of customers with a credit account who
revolved a balance in the H1 increasing by 8.8% vs. the prior
year.
We adopted a new bad debt provisioning model with our full-year
results, which uses more granular predictions of potential default
and loss for different categories of customer. Whilst the new model
does not change the way in which we manage a customer's account or
the cash we generate from the customer, it does lead to intra-year
timing differences on the accounting recognition of bad debt
charges. The seasonality in the business means that the majority of
product revenue and financial services income is earned in H2, with
receivables balances peaking in December as a result of the
Christmas peak season. This seasonality therefore requires a lower
bad debt provision and charge at the end of September compared to
the previous model, although this will reverse by the full-year
end. Our collections process continues to sell non-performing
receivables to third-parties at certain points in the year. This
year we have skewed more of this activity into H1, which benefits
free cashflow in H1 and, due to the increased bad debt provision
under the new model, increased the gains recorded upon sales
completed in H1 by approximately GBP2.5m. Refinements to the bad
debt model will reduce the level of gains recognised in the
future.
The new financial services customer account platform, Financier,
was implemented at the start of October 2017. This will provide the
business with the capability to manage customer accounts on a more
granular basis going forward, and will also enable the launch of
new financial services products in future.
Marketing costs of GBP23.4m in H1 were up by GBP3.5m on the
prior year, in part due to a re-phasing of activities during the
year to ease the implementation of Financier in October.
Distribution costs increased by 7% to GBP17.5m, whilst
administration costs were held flat at GBP26.0m.
Overall, the business produced an adjusted operating profit* for
H1 of GBP16.1m, up GBP11.0m on the prior year.
Findel Education
Our Education business remains one of the leading suppliers of
resources/equipment to schools in the UK and overseas. It is
currently undergoing an operational turnaround of its marketing
positioning, its buying strategy and its cost base after several
years of underperformance and loss of market share.
Its performance in the first half of the year was broadly in
line with our expectations. Revenue fell by 6.9% on a
like-for-like* basis (7.8% on a reported basis), although the
adjusted operating profit* increased by GBP1.7m to GBP3.4m
primarily as a result of cost savings made from the warehouse
consolidation completed in December 2016.
The key features of the turnaround strategy under the strapline
"savings schools time and money" are:
- Digital: increasing the level of online ordering to ease
schools' administration and aid customer loyalty. New websites were
rolled out over the summer, along with new price comparison tools
that encourage customers to move more of their spend to us. Online
ordering has increased significantly in the last few months from
c.10% in March 2017 to over 25% in November 2017.
- Value: reducing prices to improve our competitiveness. We
reduced the prices on around 800 line items during September by up
to 30%.
- Product: increasing the proportion of goods sourced directly
from the Far East and reinvesting cost-savings from that improved
procurement into value.
- Profitability: simplifying the business and reducing costs to
target a 10% operating profit to sales return. Good progress has
been made in this area, with the warehouse consolidation savings
being secured and further initiatives worth GBP3-4m on an
annualised basis have been identified. Around GBP1m of those
initiatives will be realised in the current year, with the
remainder benefiting FY19.
We remain confident that this strategy will improve the
prospects for the business over the next 2-3 years.
Central costs
Central costs of GBP3.2m were recorded in H1 vs. GBP0.3m in
prior year. This increase primarily relates to unrealised foreign
exchange movements on intra-group balances. We expect central costs
for the full year will be in the region of GBP3m.
Current trading
After a strong H1, underlying trading levels during October were
noticeably weaker in line with reported wider market trends.
However, November has seen a good recovery. We are currently
approaching the end of the peak trading period for Express Gifts
and, despite seeing record trading levels at this time last year,
we are continuing to see strong product revenue growth. Product
sales for the 34 weeks to 24 November 2017 at Express Gifts were up
by just under 12% vs. prior year, with sales from the Black Friday
campaign showing new record levels. Online ordering levels through
the campaign approached 75%. Product margins continue to hold up
well, along with new customer credit account opening.
Our Education business is starting to see encouraging signs of
increased online ordering, along with improved active trader
trends.
We will provide a further update on Christmas trading at the end
of January.
Outlook
The strong performance from Express Gifts in the first half,
with continued growth in customer numbers and sales, provides the
basis for sustainable medium-term profit growth. Good progress has
been made during the first half of the year in increasing the
resilience of the business's earnings through improvements in the
financial services systems and models, as well as tackling legacy
matters.
At a time where retail markets are seeing more caution from
consumers, the Studio.co.uk proposition appears to be attractive
and relevant to a value-conscious customer. We anticipate being
able to grow the customer base to at least 2m over the next 2-3
years, and to gradually improve the average spend per customer as
newer customers become more established.
Our Education business will take time to fully recover, but we
are encouraged by the early signs of response to the series of
actions we have taken in the first half of the year.
Overall, the Group remains on track to deliver a full year
performance in line with market expectations.
FINANCIAL REVIEW
Restatement of operating segments
Following a review of the operating segments at the start of the
financial year, we made the decision to change the presentation of
the internal information presented to the Board and thus our
external segmental reporting to more accurately reflect how
segmental performance and the allocation of resources to the
segments is managed. As a result of this review it was concluded
that since the Group's overseas sourcing operation is now almost
exclusively focused on procurement on behalf of other group
companies (particularly Express Gifts), it no longer warrants
separate presentation. Consequently, the Group's operations are now
organised into a central cost centre and two operating segments as
follows:
- Express Gifts
- Education
The operating performance of each segment is now assessed by
reference to revenue and gross margin by revenue stream, and
operating profit after distribution, marketing and administration
costs.
In addition, during the current period the impairment charge in
respect of Express Gifts' trade receivables has been disclosed
within cost of sales rather than within trading costs as it was
disclosed in prior periods as we believe this presentation more
accurately presents the performance of the business. We have also
disclosed gains arising on the purchase of foreign currencies by
the Group's treasury function in cost of sales rather in trading
costs as in prior periods. Comparative figures have been restated
accordingly.
Further details of the restatement of operating segments is
available on the investor section of our website at
www.findel.co.uk/investors.
Summary income statement
26 weeks 27 weeks Change
ended 29.9.17 ended 30.9.16
GBP000 GBP000 GBP000
-------------------- --------------- --------------- --------
Express Gifts 16,135 5,118 11,017
Findel Education 3,369 1,661 1,708
Central costs (3,167) (321) (2,846)
Adjusted operating
profit* 16,337 6,458 9,879
-------------------- --------------- --------------- --------
Finance costs (4,404) (4,588) 184
Adjusted profit
before tax* 11,933 1,870 10,063
-------------------- --------------- --------------- --------
* before individually significant items and revaluation of
derivative contracts
Borrowings and finance costs
The seasonality in the Group's businesses mean that core net
debt is at its peak around the half-year point. Core net debt stood
at GBP90.0m at the end of September 2017, down by GBP4.4m from
September 2016. The Group has made good progress in the first half
of the year with its legacy customer refund programme, which has
produced an outflow of around GBP8.4m as anticipated.
The balance on the securitisation facility stood at GBP146.6m at
the end of September 2017, up by GBP16.3m vs. September 2016
showing the strong growth in Express Gifts' receivables. The
facility was recently increased by a further GBP15m to GBP170m to
support future growth.
Finance costs totalling GBP4.4m (2016: GBP4.6m) were incurred in
the first half of the year, with lower LIBOR rates more than
offsetting higher total borrowings.
Foreign exchange contracts
The Group's policy on hedging its foreign exchange risks is to
cover its planned exposures over the next 12 months on a rolling
basis by use of forward contracts. At the end of September 2017 the
Group was committed to contracts worth $87.5m, contracted at US
dollar exchange rates between GBP1/$1.35 and GBP1/$1.23, with
maturity dates covering the period to September 2018. The fair
value of these contracts at the period end was a net liability of
GBP3.3m. Fair value movements in the first half have resulted in a
charge of GBP3.8m, which has been recorded in the consolidated
income statement.
Taxation
The Group recognised a tax charge of GBP1.6m in the first half
(September 2016: GBP0.7m excluding the impact of individually
significant items), based on an estimated effective tax rate for
the full year of 20.2% (March 2017: 21.1% excluding the impact of
individually significant items). This reflects a reduction in the
prevailing corporation tax rate from 20% to 19%.
Balance sheet
Net assets at the end of September 2017 stood at GBP23.7m, up by
GBP7.0m from the year end. The Group's legacy defined benefit
pension scheme liability measured under IAS 19 was valued at
GBP4.3m, little changed from the year end.
Alternative Performance Measures
The directors use several Alternative Performance Measures
("APMs") that are considered to provide useful information about
the performance and underlying trends facing the Group. As these
APMs are not defined by IFRS, they may not be comparable with APMs
shown in other companies' accounts. They are not intended to be a
replacement for, or be superior to, IFRS measures.
The principal APMs used in these Interim Results are set out
below.
Adjusted EBITDA, adjusted operating profit and adjusted profit
before tax
Individually significant items are non-recurrent and therefore
not reflective of the underlying performance of the Group. We
therefore exclude them when assessing segment performance. The
Group's foreign exchange hedging policy means that there will be
unrealised fair value gains or losses at the period end relating to
contracts intended for future periods. Those fair value movements
are therefore excluded from the underlying performance of the Group
until realised.
The reconciliation of these APMs to profit/(loss) before tax is
as follows:
26 weeks 27 weeks 53 weeks
ended ended ended
29.9.17 30.9.16 31.3.17
GBP000 GBP000 GBP000
------------------------------- --------- --------- ---------
Adjusted EBITDA 21,133 11,445 40,594
Individually significant
items - (3,822) (82,152)
Depreciation and amortisation (4,796) (4,987) (9,444)
Fair value movements
on derivatives (3,817) 1,390 556
Finance costs (4,404) (4,588) (8,921)
------------------------------- --------- --------- ---------
Profit/(loss) before
tax 8,116 (562) (59,367)
------------------------------- --------- --------- ---------
26 weeks 27 weeks 53 weeks
ended ended ended
29.9.17 30.9.16 31.3.17
GBP000 GBP000 GBP000
--------------------------- --------- --------- ---------
Adjusted operating profit 16,337 6,458 31,150
Individually significant
items - (3,822) (82,152)
Fair value movements
on derivatives (3,817) 1,390 556
Finance costs (4,404) (4,588) (8,921)
--------------------------- --------- --------- ---------
Profit/(loss) before
tax 8,116 (562) (59,367)
--------------------------- --------- --------- ---------
26 weeks 27 weeks 53 weeks
ended ended ended
29.9.17 30.9.16 31.3.17
GBP000 GBP000 GBP000
-------------------------- --------- --------- ---------------
Adjusted profit before
tax 11,933 1,870 22,229
Individually significant
items - (3,822) (82,152)
Fair value movements
on derivatives (3,817) 1,390 556
-------------------------- --------- --------- ---------------
Profit/(loss) before
tax 8,116 (562) (59,367)
-------------------------- --------- --------- ---------------
Like-for-like revenue
The Group's businesses operate to a weekly reporting cycle,
rather than a calendar month cycle and so the Group normally
reports on a 52-week period. For the year ended 31 March 2017, the
Group reported on a 53-week period to ensure the year end date
remained consistent with its accounting reference date in
accordance with the Companies Act 2006. Consequently the first half
of the year ended 31 March 2017 was a 27-week period compared to a
26-week period for the current year.
A like-for-like comparison of revenue in a 26-week period has
been selected as being the 26 weeks ended on 29 September 2017
against the 26 weeks ended on 30 September 2016, as follows:
26 weeks 27 weeks 26 weeks Like-for-like Like-for-like
to to to change change
29.9.17 30.9.16 30.9.16
GBP000 GBP000 GBP000 GBP000 %
------------------- --------- --------- --------- -------------- --------------
Product revenue 125,285 110,363 108,168 17,117 +15.8%
Financial
services revenue 51,229 47,384 45,483 5,746 +12.6%
Sourcing revenue 108 1,754 1,754 (1,646) -93.8%
------------------- --------- --------- --------- -------------- --------------
Express Gifts 176,622 159,501 155,405 21,217 +13.7%
Findel Education 49,387 53,548 53,049 (3,662) -6.9%
------------------- --------- --------- --------- -------------- --------------
Group revenue 226,009 213,049 208,454 17,555 +8.4%
------------------- --------- --------- --------- -------------- --------------
Express Gifts Product Gross Margin %
This is used a measure of the gross profit made by Express Gifts
on the sale of goods only. Details of how this is derived can be
found in note 3.
Core net debt
The Group's revolving bank facility contains covenants that
monitor the borrowings under that facility net of cash held by the
Group. This is therefore our preferred measure of indebtedness.
It is calculated as follows:
29.9.17 30.9.16 31.3.17
GBP000 GBP000 GBP000
Total bank loans 256,622 243,908 252,534
Less securitisation borrowings* (146,622) (130,342) (142,534)
Less cash and cash equivalents (19,959) (19,082) (29,173)
--------------------------------- ---------- ---------- ----------
Core net debt 90,041 94,484 80,827
--------------------------------- ---------- ---------- ----------
*Disclosed within bank loans
Net debt
This measure simply takes account of total borrowings less cash
held by the Group and represents our total indebtedness.
It is calculated as follows:
29.9.17 30.9.16 31.3.17
GBP000 GBP000 GBP000
-------------------------------- --------- --------- ---------
Total bank loans 256,622 243,908 252,534
Less cash and cash equivalents (19,959) (19,082) (29,173)
-------------------------------- --------- --------- ---------
Net debt 236,663 224,826 223,361
-------------------------------- --------- --------- ---------
Debt funding consumer receivables
The majority of the credit receivables of Express Gifts are
eligible to be funded in part from the securitisation facility,
with the remainder being funded from bank loans and cash
equivalents. This measure simply indicates the value of those
eligible receivables.
It is calculated as follows:
29.9.17 30.9.16 31.3.17
GBP000 GBP000 GBP000
---------------------- -------- -------- --------
Securitisation loans
(71%) 146,622 130,342 142,534
Cash and bank (29%) 59,888 53,238 58,218
---------------------- -------- -------- --------
Eligible receivables
(100%) 206,510 183,580 200,752
---------------------- -------- -------- --------
Free cashflow
Free cash flow is reconciled to cash generated by operations as
follows:
26 weeks 27 weeks 53 weeks
ended ended ended
29.9.17 30.9.16 31.3.17
GBP000 GBP000 GBP000
------------------------------- --------- --------- ---------
Free cashflow (5,301) (6,743) 13,268
Securitisation loans
drawn (4,088) (1,431) (13,623)
Purchases of property
plant and equipment and
software 6,713 5,927 11,723
Tax and other (1,603) (327) (214)
------------------------------- --------- --------- ---------
Net cash (used in)/ generated
from operating activities (4,279) (2,574) 11,154
------------------------------- --------- --------- ---------
Findel plc
Group Financial Information
Condensed Consolidated Income Statement
26 week period ended 29 September 2017
Before
individually Individually
significant significant
items items Total
GBP000 GBP000 GBP000
------------------------------------ ------------- ------------ ---------
Continuing operations
Revenue 226,009 - 226,009
Cost of sales (124,854) - (124,854)
Gross profit 101,155 - 101,155
------------------------------------ ------------- ------------ ---------
Trading costs (84,818) - (84,818)
------------------------------------ ------------- ------------ ---------
Analysis of operating profit:
- EBITDA* 21,133 - 21,133
- Depreciation and amortisation (4,796) - (4,796)
------------------------------------ ------------- ------------ ---------
Operating profit 16,337 - 16,337
Finance costs (4,404) - (4,404)
------------------------------------ ------------- ------------ ---------
Profit before tax and fair value
movements on derivative financial
instruments 11,933 - 11,933
------------------------------------ ------------- ------------ ---------
Fair value movements on derivative
financial instruments (3,817) - (3,817)
------------------------------------ ------------- ------------ ---------
Profit before tax 8,116 - 8,116
Tax expense (1,641) - (1,641)
Profit for the period 6,475 - 6,475
------------------------------------ ------------- ------------ ---------
Earnings per ordinary
share
Basic 7.50p
Diluted 7.50p
*Earnings before interest, taxation, depreciation, amortisation
and fair value movements on derivative financial instruments.
Condensed Consolidated Income Statement
27 week period ended 30 September 2016 (restated - refer to note
2)
Before
individually Individually
significant significant
items items Total
GBP000 GBP000 GBP000
-------------------------------------- ------------- ------------ ---------
Continuing operations
Revenue 213,049 - 213,049
Cost of sales (127,033) - (127,033)
Gross profit 86,016 - 86,016
-------------------------------------- ------------- ------------ ---------
Trading costs (79,558) (3,822) (83,380)
-------------------------------------- ------------- ------------ ---------
Analysis of operating profit/(loss):
- EBITDA* 11,445 (3,822) 7,623
- Depreciation and amortisation (4,987) - (4,987)
-------------------------------------- ------------- ------------ ---------
Operating profit/(loss) 6,458 (3,822) 2,636
Finance costs (4,588) - (4,588)
-------------------------------------- ------------- ------------ ---------
Profit/(loss) before tax and
fair value movements on derivative
financial instruments 1,870 (3,822) (1,952)
-------------------------------------- ------------- ------------ ---------
Fair value movements on derivative
financial instruments 1,390 - 1,390
-------------------------------------- ------------- ------------ ---------
Profit/(loss) before tax 3,260 (3,822) (562)
Tax (expense)/income (686) 806 120
Profit/(loss) for the period 2,574 (3,016) (442)
-------------------------------------- ------------- ------------ ---------
Loss per ordinary share
Basic (0.51)p
Diluted (0.51)p
*Earnings before interest, taxation, depreciation, amortisation
and fair value movements on derivative financial instruments.
Condensed Consolidated Income Statement
53 week period ended 31 March 2017 (restated - refer to note
2)
Before
individually Individually
significant significant
items items Total
GBP000 GBP000 GBP000
---------------------------------- ------------ ------------ ---------
Continuing operations
Revenue 457,030 - 457,030
Cost of sales (269,385) (35,215) (304,600)
Gross profit 187,645 (35,215) 152,430
----------------------------------- ------------ ------------ ---------
Trading costs (156,495) (46,937) (203,432)
Analysis of operating
profit/(loss):
- EBITDA* 40,594 (60,276) (19,682)
- Depreciation and amortisation (9,444) - (9,444)
- Impairment - (21,876) (21,876)
Operating profit/(loss) 31,150 (82,152) (51,002)
Finance costs (8,921) - (8,921)
----------------------------------- ------------ ------------ ---------
Profit/(loss) before tax
and fair value movements
on derivative financial
instruments 22,229 (82,152) (59,923)
----------------------------------- ------------ ------------ ---------
Fair value movements on
derivative financial instruments 556 - 556
----------------------------------- ------------ ------------ ---------
Profit/(loss) before tax 22,785 (82,152) (59,367)
Tax (expense)/income (4,803) 6,462 1,659
Profit/(loss) for the
period 17,982 (75,690) (57,708)
----------------------------------- ------------ ------------ ---------
Loss per ordinary share
Basic (66.85)p
Diluted (66.85)p
The accompanying notes are an integral part of this consolidated
income statement.
*Earnings before interest, tax, depreciation, amortisation and
fair value movements on derivative financial instruments.
Condensed Consolidated Statement of Comprehensive Income
26 week period ended 29 September 2017
26 weeks 27 weeks 53 weeks
to 29.9.2017 to 30.9.2016 to 31.3.2017
GBP000 GBP000 GBP000
---------------------------------- ------------- ------------- -------------
Profit/(loss) for the period 6,475 (442) (57,708)
Other Comprehensive Income
Items that may be reclassified
to profit or loss
Cash flow hedges 19 (60) (51)
Currency translation gain/(loss)
arising on consolidation 239 (73) (149)
---------------------------------- ------------- ------------- -------------
258 (133) (200)
---------------------------------- ------------- ------------- -------------
Items that will not subsequently
be reclassified to profit
and loss
Remeasurements of defined
benefit pension scheme (101) (11,564) (5,367)
Tax relating to components
of comprehensive income 17 1,966 912
---------------------------------- ------------- ------------- -------------
(84) (9,598) (4,455)
---------------------------------- ------------- ------------- -------------
Total comprehensive income/(loss)
for period 6,649 (10,173) (62,363)
---------------------------------- ------------- ------------- -------------
The total comprehensive loss for the period is attributable to
the equity shareholders of the parent company Findel plc.
Condensed Consolidated Balance Sheet
At 29 September 2017
29.9.2017 30.9.2016 31.3.2017
GBP000 GBP000 GBP000
------------------------------ --------- --------- ---------
Non-current assets
Goodwill - 16,691 -
Other intangible assets 25,828 29,964 26,186
Property, plant and
equipment 46,490 42,993 44,416
Derivative financial
instruments 21 - 32
Deferred tax assets 7,892 8,028 8,410
80,231 97,676 79,044
------------------------------ --------- --------- ---------
Current assets
Inventories 73,564 74,088 57,108
Trade and other receivables 232,074 241,549 212,648
Derivative financial
instruments - 1,390 556
Cash and cash equivalents 19,959 19,082 29,173
Current tax assets - 1,525 1,748
325,597 337,634 301,233
------------------------------ --------- --------- ---------
Total assets 405,828 435,310 380,277
------------------------------- --------- --------- ---------
Current liabilities
Trade and other payables (85,777) (81,674) (63,474)
Current tax liabilities (1,006) - -
Derivative financial
instruments (3,262) - -
Obligations under finance
leases (558) (532) (545)
Provisions (17,775) (18,791) (27,770)
(108,378) (100,997) (91,789)
------------------------------ --------- --------- ---------
Non-current liabilities
Bank loans (256,622) (243,908) (252,534)
Obligations under finance
leases (787) (1,344) (1,069)
Provisions (12,036) (7,482) (12,767)
Retirement benefit
obligation (4,325) (12,846) (5,415)
(273,770) (265,580) (271,785)
------------------------------ --------- --------- ---------
Total liabilities (382,148) (366,577) (363,574)
------------------------------- --------- --------- ---------
Net assets 23,680 68,733 16,703
------------------------------- --------- --------- ---------
Equity
Share capital 48,644 48,644 48,644
Translation reserve 1,063 900 824
Hedging reserve (32) (60) (51)
(Accumulated losses)/retained
earnings (25,995) 19,249 (32,714)
Total equity 23,680 68,733 16,703
------------------------------- --------- --------- ---------
Condensed Consolidated Cash Flow Statement
26 week period ended 29 September 2017
26 weeks 27 weeks 53 weeks
to 29.9.2017 to 30.9.2016 to 31.3.2017
GBP000 GBP000 GBP000
-------------------------------------- ------------- ------------- -------------
Profit/(loss) for the period 6,475 (442) (57,708)
Adjustments for:
Income tax 1,641 (120) (1,659)
Finance costs 4,404 4,588 8,921
Depreciation of property, plant
and equipment 3,828 4,074 7,485
Impairment of property, plant
and equipment and software and
IT development costs - - 698
Impairment of goodwill - - 17,319
Impairment of other intangible
assets - - 3,859
Amortisation of intangible assets 968 913 1,959
Share-based payment expense 328 31 191
Loss on disposal of property,
plant and equipment 191 23 35
Fair value movements on financial
instruments plus premiums paid 3,817 (1,480) (699)
Pension contributions less income
statement charge (1,253) (1,042) (2,291)
Operating cash flows before
movements in working capital 20,399 6,545 (21,890)
Increase in inventories (16,456) (20,616) (3,636)
(Increase)/decrease in receivables (19,426) (14,019) 14,882
Increase in payables 22,023 23,018 4,951
(Decrease)/increase in provisions (10,819) 2,498 16,847
--------------------------------------- ------------- ------------- -------------
Cash (used in)/ generated from
operations (4,279) (2,574) 11,154
Income taxes refunded 1,647 269 148
Interest paid (3,672) (4,168) (9,107)
Net cash from operating activities (6,304) (6,473) 2,195
--------------------------------------- ------------- ------------- -------------
Investing activities
Interest received 27 2 3
Proceeds on disposal of property,
plant and equipment - 22 10
Purchases of property, plant
and equipment and software and
IT development costs (6,713) (5,927) (11,723)
Acquisition of subsidiary, net
of cash acquired - - (1,150)
Sale of subsidiary, net of cash
held in subsidiary - 2,318 2,318
Net cash used in investing activities (6,686) (3,585) (10,542)
--------------------------------------- ------------- ------------- -------------
Financing activities
Repayment of amounts owing under
finance lease arrangements (269) (299) (562)
Bank loans repaid - (6,434) (10,000)
Securitisation loan drawn 4,088 1,431 13,623
Net cash from financing activities 3,819 (5,302) 3,061
--------------------------------------- ------------- ------------- -------------
Net decrease in cash and cash
equivalents (9,171) (15,360) (5,286)
Cash and cash equivalents at
the beginning of the period 29,173 34,405 34,405
Effect of foreign exchange rate
changes (43) 37 54
Cash and cash equivalents at
the end of the period 19,959 19,082 29,173
--------------------------------------- ------------- ------------- -------------
Condensed Consolidated Statement of Changes in Equity
26 week period ended 29 September 2017
Retained
earnings/
Share Translation Hedging (accumulated Total
capital reserve reserve losses) equity
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- -------- ----------- -------- ------------- -------
At 31 March 2017 48,644 824 (51) (32,714) 16,703
Total comprehensive
income - 239 19 6,391 6,649
Share-based payments - - - 328 328
--------------------- -------- ----------- -------- ------------- -------
At 29 September
2017 48,644 1,063 (32) (25,995) 23,680
--------------------- -------- ----------- -------- ------------- -------
Retained
earnings/
Share Translation Hedging (accumulated Total
capital reserve reserve losses) equity
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- -------- ----------- -------- ------------- --------
At 25 March 2016 48,644 973 - 29,258 78,875
Total comprehensive
loss - (73) (60) (10,040) (10,173)
Share-based payments - - - 31 31
At 30 September
2016 48,644 900 (60) 19,249 68,733
--------------------- -------- ----------- -------- ------------- --------
Retained
earnings/
Share Translation Hedging (accumulated Total
capital reserve reserve losses) equity
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- -------- ----------- -------- ------------- --------
At 25 March 2016 48,644 973 - 29,258 78,875
Total comprehensive
loss - (149) (51) (62,163) (62,363)
Share-based payments - - - 191 191
--------------------- -------- ----------- -------- ------------- --------
At 31 March 2017 48,644 824 (51) (32,714) 16,703
--------------------- -------- ----------- -------- ------------- --------
The total equity is attributable to the equity shareholders of
the parent company Findel plc.
Notes to the Condensed Consolidated Financial Statements
1. General Information
The condensed consolidated financial statements have been
approved by the board on 28 November 2017.
Statement of compliance
These condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 Interim Financial Reporting
as adopted by the European Union ("EU") and the Disclosure Guidance
and Transparency Rules of the United Kingdom's Financial Conduct
Authority. As required by the latter, the interim financial
statements have been prepared applying the accounting policies and
presentation that were applied in the company's published
consolidated financial statements for the 53 weeks ended 31 March
2017. They do not include all the information required for full
annual financial statements, and should be read in conjunction with
the Group's consolidated financial statements as at and for the 53
weeks ended 31 March 2017.
The financial information for the period ended 31 March 2017 is
not the company's statutory accounts for that financial year. Those
accounts which were prepared under IFRS as adopted by the EU
("adopted IFRS") have been reported on by the company's auditor and
delivered to the Registrar of Companies. The report of the auditor
was (i) unqualified, (ii) did not include a reference to any
matters to which the auditor draws attention by way of emphasis
without qualifying their report, and (iii) did not contain a
statement under sections 498(2) or (3) of the Companies Act
2006.
Going concern basis
In determining whether the Group's interim financial statements
for the period ended 29 September 2017 can be prepared on a going
concern basis, the directors considered all 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 in the current economic climate. The financial position
of the Group, its cash flows, liquidity position and borrowing
facilities and details of those key risks and uncertainties are set
out in further detail in the Finance Review on pages 18 to 20 of
the Group's annual report and accounts for the 53 week period ended
31 March 2017.
The directors have reviewed the Group's trading and cash flow
forecasts as part of their going concern assessment, including
considering the potential impact of reasonably possible downside
sensitivities which take into account the uncertainties in the
current operating environment, including, amongst other matters,
demand for the Group's products, its available financing
facilities, and regulatory licensing and compliance. Although at
certain times the level of facility and/or covenant headroom
reduces to a level which requires cash flow initiatives to be
introduced to ensure that the funding requirements do not exceed
the committed facilities or result in non-compliance with
covenants, management are confident that such actions are
supportable, and that further controllable mitigating actions are
available that could be implemented if required. The Group's
current banking facilities mature in November 2019.
Taking into account the above circumstances, the directors have
formed a judgement that there is a reasonable expectation, and
there are no material uncertainties, that the Group and the Company
have adequate resources to continue in operational existence for a
period of at least 12 months.
Accordingly, they continue to adopt the going concern basis in
preparing the Group's annual consolidated financial statements
Risks and uncertainties
The principal risks and uncertainties which could impact the
Group's long-term performance remain those detailed on pages 22 to
24 of the Group's annual report and accounts for the 53 week period
ended 31 March 2017, a copy of which is available on the Group's
website, www.findel.co.uk. No new risks have been identified.
The risks detailed in the annual report and accounts remain
valid as regards their potential to impact the Group during the
second half of the current financial year.
Seasonality
The nature of the businesses within the Findel Group mean that
profits have shown, and will continue to show, a significant
seasonal bias with the majority of profit being earned in the
second half.
2. Accounting Policies
As required by the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority, this condensed
set of financial statements has been prepared applying the same
accounting policies and computation methods that were applied in
the preparation of the Company's published consolidated financial
statements for the year ended 31 March 2017.
Segmental reporting
IFRS 8 requires operating segments to be identified on the basis
of the internal financial information reported to the Chief
Operating Decision Maker (CODM) who is primarily responsible for
the allocation of resources to segments and the assessment of
performance of the segments. The CODM is the Board of Findel
plc.
Following a review of the operating segments at the start of the
financial year, management made the decision to change the
presentation of the internal information presented to the CODM to
more accurately reflect how segmental performance and the
allocation of resources to the segments is managed. Consequently
the Group's operations are now organised into a central cost centre
and two operating segments as follows:
- Express Gifts
- Education
The CODM now assess the operating performance of each segment by
reference to revenue and gross margin by revenue stream, and
operating profit after distribution, marketing and administration
costs.
Changes in classification of costs
During the current period management has disclosed the
impairment charge in respect of Express Gifts' trade receivables of
GBP9,978,000 within cost of sales, rather than within trading costs
as it was disclosed in prior periods. Management believe that this
presentation more accurately presents the performance of the
business. The comparative figures have been restated on an
equivalent basis to allow for a meaningful comparison.
Consequently, for the 27 week period ended 30 September 2016 an
impairment charge of GBP15,963,000 has been reclassified from
trading costs to cost of sales and for the 53 week period 31 March
2017 an impairment charge of GBP63,179,000 (of which GBP35,215,000
was presented as an individually significant item) has been
reclassified from trading costs to cost of sales. The net impact on
reported profit is GBPnil.
In addition, in the current period management has disclosed
gains arising on the purchase of foreign currencies by its treasury
function of GBP1,982,000 within cost of sales, rather than within
trading costs as it was disclosed in prior periods. Management
believe that this presentation more accurately presents the
performance of the business. The comparative figures have been
restated on an equivalent basis to allow for a meaningful
comparison. Consequently, for the 27 week period ended 30 September
2016 foreign exchange losses of GBP1,987,000 have been reclassified
from trading costs to cost of sales and for the 53 week period 31
March 2017 foreign exchange losses of GBP5,730,000 have been
reclassified from trading costs to cost of sales. The net impact of
this reclassification on reported profit is GBPnil.
Estimates
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing the interim financial statements, the significant
judgements made by management in applying the Group's accounting
policies and key sources of estimation uncertainty were the same as
those that applied to the consolidated financial statements for the
year ended 31 March 2017.
Provisions for Financial Services redress and refunds
At 29 September 2017 a provision of GBP17.1m (31 March 2017:
GBP25.5m, 30 September 2016: GBP18.4m) was recorded in the balance
sheet in respect of redress and refunds payable for flawed
financial services products. The provision amount represents an
estimate of premiums, interest and fees to be refunded to
customers, based on a review of affected customer accounts using an
account level calculator developed for the exercise, based on our
interpretation of the guidance notes issued by the Financial
Conduct Authority. The affected population falls into two broad
categories; those who have a live relationship with the business
and those that do not. The former group have largely been auto
refunded however the remaining population, some of whom may not
have traded with the business for a significant period, will be
contacted in the coming months. In calculating the provision
amount, an assumed response rate from this customer contact
exercise has been assumed. An increase of 5% in this assumed
response rate would increase the provision required by c. GBP0.9m.
Assumptions have also been made over the effective interest rate
applied to amounts to be refunded. A 0.7% increase in the effective
interest rate assumed would increase the provision required by c.
GBP0.1m. The guidance issued by the regulator is subject to
interpretation and revision from time to time. A different
interpretation or revised guidance could materially impact the
amount provided.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any of the future
periods affected.
3. Segmental analysis
26 weeks to 29 September 2017
Continuing operations
Express Education Central Total
Gifts
GBP000 GBP000 GBP000 GBP000
--------------------------- --------- ---------- ---------- ----------
Product revenue 125,285 49,387 - 174,672
Financial services
revenue 51,229 - - 51,229
Sourcing revenue 108 - - 108
--------------------------- --------- ---------- ---------- ----------
Reportable segment
revenue 176,622 49,387 - 226,009
--------------------------- --------- ---------- ---------- ----------
Product cost of sales (83,444) (31,269) - (114,713)
Financial services
cost of sales (9,978) - - (9,978)
Sourcing costs of
sales (138) (25) - (163)
--------------------------- --------- ---------- ---------- ----------
Total cost of sales (93,560) (31,294) - (124,854)
--------------------------- --------- ---------- ---------- ----------
Product gross margin 33.4% 36.7% 34.3%
Gross profit 83,062 18,093 - 101,155
--------------------------- --------- ---------- ---------- ----------
Marketing costs (23,445) (2,001) - (25,446)
Distribution costs (17,493) (5,170) - (22,663)
Administrative costs (25,989) (7,553) (3,167) (36,709)
--------------------------- --------- ---------- ---------- ----------
Operating profit/(loss)
before individually
significant items 16,135 3,369 (3,167) 16,337
--------------------------- --------- ---------- ---------- ----------
Individually significant - -
items - -
--------------------------- --------- ---------- ---------- ----------
Operating profit/(loss) 16,135 3,369 (3,167) 16,337
--------------------------- --------- ---------- ---------- ----------
Finance costs (4,404)
--------------------------- --------- ---------- ---------- ----------
Profit before tax
and fair value movements
on derivative financial
instruments 11,933
--------------------------- --------- ---------- ---------- ----------
Fair value movements
on derivative financial
instruments (3,817)
--------------------------- --------- ---------- ---------- ----------
Profit before tax 8,116
--------------------------- --------- ---------- ---------- ----------
27 weeks to 30 September 2016*
Continuing operations
Express Education Central Total
Gifts
GBP000 GBP000 GBP000 GBP000
--------------------------- --------- ---------- -------- ----------
Product revenue 110,363 53,548 - 163,911
Financial services
revenue 47,384 - - 47,384
Sourcing revenue 1,754 - - 1,754
--------------------------- --------- ---------- -------- ----------
Reportable segment
revenue 159,501 53,548 - 213,049
--------------------------- --------- ---------- -------- ----------
Product cost of
sales (74,619) (34,835) - (109,454)
Financial services
cost of sales (15,963) - - (15,963)
Sourcing costs of
sales (1,563) (53) - (1,616)
--------------------------- --------- ---------- -------- ----------
Total cost of sales (92,145) (34,888) - (127,033)
--------------------------- --------- ---------- -------- ----------
Product gross margin 32.4% 34.9% 33.2%
Gross profit 67,356 18,660 - 86,016
--------------------------- --------- ---------- -------- ----------
Marketing costs (19,930) (3,090) - (23,020)
Distribution costs (16,337) (5,876) - (22,213)
Administrative costs (25,971) (8,033) (321) (34,325)
--------------------------- --------- ---------- -------- ----------
Operating profit/(loss)
before individually
significant items 5,118 1,661 (321) 6,458
--------------------------- --------- ---------- -------- ----------
Individually significant
items (3,167) - (655) (3,822)
--------------------------- --------- ---------- -------- ----------
Operating profit/(loss) 1,951 1,661 (976) 2,636
--------------------------- --------- ---------- -------- ----------
Finance costs (4,588)
--------------------------- --------- ---------- -------- ----------
Loss before tax
and fair value movements
on derivative financial
instruments (1,952)
--------------------------- --------- ---------- -------- ----------
Fair value movements
on derivative financial
instruments 1,390
--------------------------- --------- ---------- -------- ----------
Loss before tax (562)
--------------------------- --------- ---------- -------- ----------
* Restated - refer to note 2.
53 weeks ended 31 March 2017*
Continuing operations
Express Education Central Total
Gifts
GBP000 GBP000 GBP000 GBP000
--------------------------- ---------- ---------- ---------- -----------
Product revenue 262,240 91,739 - 353,979
Financial services
revenue 101,080 - - 101,080
Sourcing revenue 1,971 - - 1,971
--------------------------- ---------- ---------- ---------- -----------
Reportable segment
revenue 365,291 91,739 - 457,030
--------------------------- ---------- ---------- ---------- -----------
Product cost of
sales (181,247) (58,345) - (239,592)
Financial services
cost of sales (27,963) - - (27,963)
Sourcing costs of
sales (1,747) (83) - (1,830)
--------------------------- ---------- ---------- ---------- -----------
Total cost of sales (210,957) (58,428) - (269,385)
--------------------------- ---------- ---------- ---------- -----------
Product gross margin 30.9% 36.4% 32.3%
Gross profit 154,334 33,311 - 187,645
--------------------------- ---------- ---------- ---------- -----------
Marketing costs (37,296) (4,479) - (41,775)
Distribution costs (35,959) (10,798) - (46,757)
Administrative costs (50,900) (15,369) (1,694) (67,963)
--------------------------- ---------- ---------- ---------- -----------
Operating profit/(loss)
before individually
significant items 30,179 2,665 (1,694) 31,150
--------------------------- ---------- ---------- ---------- -----------
Individually significant
items (51,448) (650) (30,054) (82,152)
--------------------------- ---------- ---------- ---------- -----------
Operating profit/(loss) (21,269) 2,015 (31,748) (51,002)
--------------------------- ---------- ---------- ---------- -----------
Finance costs (8,921)
--------------------------- ---------- ---------- ---------- -----------
Loss before tax
and fair value movements
on derivative financial
instruments (59,923)
--------------------------- ---------- ---------- ---------- -----------
Fair value movements
on derivative financial
instruments 556
--------------------------- ---------- ---------- ---------- -----------
Loss before tax (59,367)
--------------------------- ---------- ---------- ---------- -----------
* Restated - refer to note 2.
4. Taxation
Income tax for the 26 week period ended 29 September 2017 is
based on an estimated effective tax rate for the full year of 20.2%
(27 week period ended 30 September 2016: 21.3%, 21.1% excluding the
impact of individually significant items), giving rise to a tax
charge of GBP1,641,000 in the period (27 week period ended 30
September 2016: GBP120,000 credit, GBP686,000 charge excluding the
impact of individually significant items).
5. Earnings/(loss) per share
Weighted average number
of shares
---------------------------------- -------------- ------------- -------------
26 weeks 27 weeks 53 weeks
to 29.9.2017 to 30.9.2016 to 31.3.2017
No. of No. of No. of
shares shares shares
----------------------------------- ------------- ------------- -------------
Ordinary shares in issue 86,442,534 86,442,534 86,442,534
Effect of own shares held (114,808) (114,808) (114,808)
----------------------------------- ------------- ------------- -------------
Weighted average number of shares
- basic and diluted 86,327,726 86,327,726 86,327,726
----------------------------------- ------------- ------------- -------------
Earnings/(loss) attributable
to ordinary shareholders
-------------
26 weeks 27 weeks 53 weeks
to 29.9.2017 to 30.9.2016 to 31.3.2017
GBP000 GBP000 GBP000
-------------------------------------- -------------- ------------- -------------
Net profit/(loss) attributable
to equity holders for the purposes
of basic loss per share 6,475 (442) (57,708)
-------------------------------------- -------------- ------------- -------------
Individually significant items
(net of tax) - 3,016 75,690
Fair value movements on derivative
financial instruments 3,817 (1,390) (556)
-------------------------------------- -------------- ------------- -------------
Net profit attributable to equity
holders for the purpose of adjusted
earnings per share 10,292 1,184 17,426
-------------------------------------- -------------- ------------- -------------
Earnings/(loss) per share
-------------------------------------- -------------- ------------- -------------
Earnings/(loss) per share -
basic 7.50p (0.51)p (66.85)p
-------------------------------------- -------------- ------------- -------------
Earnings per share - adjusted*
basic 11.92p 1.37p 20.19p
-------------------------------------- -------------- ------------- -------------
Earnings/(loss) per share -
diluted 7.50p (0.51)p (66.85)p
-------------------------------------- -------------- ------------- -------------
Earnings per share - adjusted*
diluted 11.92p 1.37p 20.19p
-------------------------------------- -------------- ------------- -------------
* Adjusted to remove the impact of individually significant
items and fair value movements on derivative financial
instruments.
The earnings/(loss) per share attributable to convertible
ordinary shareholders is GBPnil.
6. Derivative financial instruments
At 29 September 2017 the Group has outstanding derivative
financial instruments as follows:
Non-current assets
29.9.2017 30.9.2016 31.3.2017
GBP000 GBP000 GBP000
------------------ --------- --------- ---------
Interest rate cap 21 - 32
------------------ --------- --------- ---------
Current (liabilities)/assets
29.9.2017 30.9.2016 31.3.2017
GBP000 GBP000 GBP000
----------------------------------- --------- --------- ---------
Forward foreign exchange contracts (3,262) 1,390 556
----------------------------------- --------- --------- ---------
Forward foreign exchange contracts
Exchange rate exposures are managed utilising forward foreign
exchange contracts. At the balance sheet date, details of the
notional value of outstanding US dollar forward foreign exchange
contracts that the Group has committed to are as follows:
29.9.2017 30.9.2016 31.3.2017
GBP000 GBP000 GBP000
------------------------------------ --------- --------- ---------
Notional amount - Sterling contract
value 68,154 14,452 41,037
Fair value of asset recognised - 1,390 556
Fair value of liability recognised (3,262) - -
------------------------------------ --------- --------- ---------
Forward contracts outstanding at the period end are contracted
at US dollar exchange rates between GBP1/$1.35 and GBP1/$1.23.
Changes in fair value of forward foreign exchange contracts for
the 26 week period ended 29 September 2017 amounted to a charge of
GBP3,817,000 (27 week period ended 30 September 2016: credit of
GBP1,390,000, 53 week period to 31 March 2017: credit of
GBP556,000) and have been recorded in the consolidated income
statement.
Interest rate cap contract
Under interest rate cap contracts, the Group agrees to cap the
LIBOR element of its interest cost at an agreed level calculated on
agreed notional principal amounts. Such contracts enable the Group
to mitigate the risk of rising interest rates on its variable rate
debt.
The following caps were in place at 29 September 2017:
At 29 September 2017
Notional
borrowing Fair
amount Cap rate value
Maturity GBP000 GBP000
-------------------- ---------- -------- ------
Less than 12 months 100,000 1.060% -
1 to 2 years 100,000 1.075% 21
-------------------- ---------- -------- ------
The Group has two caps in place. The first was purchased on 4
May 2016 and matures in October 2017. The second cap was purchased
on 17 February 2017 and matures in November 2018. Both caps were
designated as cash flow hedges from inception in accordance with
IAS 39. The movement in the fair value of interest rate caps during
the current and prior period was as follows:
29.9.2017 30.9.2016 31.3.2017
GBP000 GBP000 GBP000
-------------------------- --------- --------- ---------
At the beginning of the
period 32 - -
Purchase of interest rate
caps - 90 143
Movement in fair value
charged to the hedging
reserve 19 (60) (51)
Movement in fair value
of ineffective element
charged to finance costs (30) (30) (60)
-------------------------- --------- --------- ---------
At the end of the period 21 - 32
-------------------------- --------- --------- ---------
Basis for determining fair values
The fair value of both interest rate caps and forward foreign
exchange contracts is their market value at the balance sheet date.
Market values are based on the duration of the derivative
instrument together with the quoted market data including interest
rates, foreign exchange rates and market volatility at the balance
sheet date.
The financial instruments held by the Group at the balance sheet
date are valued under the Level 2 measurement basis of the fair
value hierarchy: (i.e. based on inputs other than quoted prices
included within Level 1 that are observable for the asset or
liability, either directly (i.e., as prices) or indirectly (i.e.,
derived from prices)). There were no transfers between Level 1 and
Level 2 during the period.
7. Related parties
During the current and prior periods, the Group made purchases
in the ordinary course of business from Brands Inc. Limited and
Firetrap Limited, subsidiaries of Sports Direct International plc,
which is a significant shareholder in the ultimate parent company,
Findel plc. Purchases for the periods and amounts owed at the
period end dates were as follows:
Brands Inc. Limited
29.9.2017 30.9.2016 31.3.2017
GBP000 GBP000 GBP000
------------- --------- --------- ---------
Purchases 72 49 111
Amounts owed 94 32 2
------------- --------- --------- ---------
Firetrap Limited
29.9.2017 30.9.2016 31.3.2017
GBP000 GBP000 GBP000
------------- --------- --------- ---------
Purchases 367 169 732
Amounts owed 42 - -
------------- --------- --------- ---------
Transactions between the Findel plc and its subsidiaries, which
are related parties of Findel plc, have been eliminated on
consolidation and are not discussed in this note. All transactions
and outstanding balances between group companies are priced on an
arms-length basis and are to be settled in the ordinary course of
business.
Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed consolidated financial statements have been
prepared in accordance with IAS 34
Interim Financial Reporting as adopted by the European
Union;
(b) the interim management report and condensed consolidated
financial statements include a fair review of the information
required by:
(i) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the condensed set of financial statements; and a description of
the principal risks and uncertainties for the remaining six months
of the year; and
(ii) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the current financial year and that have
materially affected the financial position or performance of the
entity during that period; and any changes in the related party
transactions described in the last annual report that could do
so.
By order of the Board
S M Caldwell P B Maudsley
Chief Financial Officer Chief Executive Officer
28 November 2017 28 November 2017
This document may contain forward looking statements. In
particular, but without limitation, nothing contained in this
document should be relied upon or construed as a promise or a
forecast, including any projection or management estimate, any
statements which contain the words "anticipate", "believe",
"intend", "estimate", "expect", "forecast" and words of a similar
meaning, reflect the management of the company's current beliefs
and expectations and are subject to risks and uncertainties that
may cause actual results to differ materially. Given these risks
and uncertainties, prospective investors are cautioned not to place
undue reliance on such statements. Any forward looking statements
speak only as at the date of this document, and except as required
by applicable law, Findel plc undertakes no obligation to update or
revise publicly any forward looking statements, whether as a result
of new information or otherwise.
INDEPENDENT REVIEW REPORT TO FINDEL PLC
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
26 week period ended 29 September 2017 which comprises the
condensed consolidated income statement, the condensed consolidated
statement of comprehensive income, the condensed consolidated
balance sheet, the condensed consolidated cash flow statement, the
condensed consolidated statement of changes in equity and the
related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 26 week period ended 29
September 2017 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU and the Disclosure Guidance and Transparency Rules ("the
DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Nicola Quayle
for and on behalf of KPMG LLP
Chartered Accountants
1 St Peter's Square, Manchester, M2 3AE
28 November 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DBBDBISDBGRI
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