RNS Number:7121G
Faupel PLC
22 December 2004
22 December 2004
Faupel Plc
Interim results
Faupel Plc, the UK based company involved in the design, importation and
distribution of home furnishings, branded clothing and PPE safety equipment from
China and the Far East, has today announced unaudited interim results for the
six months ended 30 September 2004.
Key Points:
* Loss before tax increased to #271,000 (2003: loss #40,000).
* Loss per share 1.73p (2003: loss per share 0.25p).
* No interim dividend payable (2003: #nil).
* Bank debt (net of cash) increased to #5.1 million (2003: #4.1 million);
cash resources of #1 million (2003: #0.9 million).
* Sales declines in early summer led to 5% fall in Group sales.
Commenting on the results, David Newbigging, Chairman, said:
"The introduction of the Faupel Safety Products business proved to be much
slower than originally anticipated and the warehouse move (now completed) was
more costly.
We expect to make a profit in the second half but this is unlikely to entirely
compensate for the loss incurred in the first half."
Enquiries:
Faupel Plc
Laurence Mead, Group Chief Executive Tel 07810 658 748
James McClean, Finance Director Tel: 01372 384 112
Tim Thompson, Buchanan Communications Tel: 020 7466 5000
Chairman's Interim Statement
Results
In the six months to 30 September 2004, the Group made a loss before tax of
#271,000 (2003: loss of #40,000). Loss per share was 1.73p (2003: loss per share
0.25p).
Turnover
Group turnover was #11,745,000; down by #640,000 (5%). #320,000 of the decline
was in the Home Furnishings division, and Industrial Products declined by
#501,000. Garments sales increased by #181,000.
The decline in Home Furnishings turnover was unexpected and occurred in the
first quarter of the financial year due to a combination of factors. Some key
staff left at the beginning of the year due to ill health and resignation, and
the move of the warehouse caused service levels to customers to fall behind our
required standards. Home Furnishings sales recovered in the last two months of
the period and were #179,000 (4.6%) ahead of last year in that period.
The decline in the Industrial Products turnover was due to the loss of a key
customer on the directs side of the business, while our new Proforce range did
not make the immediate impact we had hoped for.
Gross Profit
Despite the decline in turnover, gross profit was #148,000 up on last year
because margins increased from 25.1% to 27.8%. While this is consistent with the
Group's objective and is the result of specific actions, it may not continue at
as high a level in the second half. One-off factors relating to a switch to
buying more product in US Dollars worked to the Group's advantage in the first
half. We continue to focus on increasing margins, however, and further growth
going forward remains a key objective.
Operations
Overhead costs were significantly up on last year. Distribution costs increased
by #248,000 (13%) and Administration costs increased by #142,000 (12%).
Distribution costs had been expected to rise in the first half through
additional staff costs, together with increases in the size of the sales force
and additional spending on marketing and advertising by the Industrial Products
division. In addition the warehouse move had been expected to add #60,000 of
non-recurring additional costs relating to the move itself and the cost of
occupying two sites during the three-month moving period. However, bringing the
new warehouse service up to the required level took longer than expected, and
unplanned labour and port storage costs were incurred. Service levels have now
improved significantly but second half costs continued to be adversely affected
until the middle of November by unbudgeted costs associated with maintaining
service levels during the busy period running up to Christmas.
The most significant increase in Administration costs relates to the cost of
staff travel and subsistence, which increased by #75,000 over last year. This is
partially due to last year's costs being lower than normal because of the
restrictions imposed by the SARS virus, and partially because of additional
costs attributable to the temporary relocation of staff during the period of the
warehouse move.
Chairman's Interim Statement (continued)
The remaining part of the increase in Administration costs relates to general
pay increases together with recruitment costs for a number of senior brand
management and sales personnel taken on in the period. We have since introduced
a number of measures which will reduce costs to a more acceptable level.
Finance
The sale of Faupel House was completed during the period for #1,225,000.
#150,000 of the proceeds was used to settle dilapidation claims previously
provided for, and # 440,000 was invested in our new premises and equipment. The
balance of #635,000 was used to pay off short-term bank debt.
Stocks and goods in transit increased by #1,286,000 over the position a year ago
and, despite lower turnover in the period, debtors have increased by #406,000.
#695,000 of the increase in stocks and goods in transit is attributable to the
stocks of safety and industrial products that were purchased to support the
launch of the new Faupel Safety Products business earlier this year. The rest of
the increase is mainly in Home Furnishings.
The debtors increased in part because a major customer delayed payment of
#185,000 until after the period end and partly because Group sales in September
were #192,000 higher than in the same period last year.
These increases in the utilisation of working capital have led to bank
borrowings net of cash increasing by #1,041,000 at 30 September compared with
the position one year earlier.
Dividends
The Board is not recommending the payment of an interim dividend. No interim
dividend was paid last year.
Prospects
The introduction of the new Faupel Safety Products business proved to be much
slower than originally anticipated with a consequent negative impact on our
profitability and stock levels. Concurrently, the warehouse move was more costly
than expected but, on the brighter side, service levels have now improved
significantly and the new premises themselves are much more suitable for our
requirements.
As explained earlier in my statement, the first quarter of the current financial
year was disappointing and although we had expected an increased first half
loss, the results were worse than expected. Subsequent trading through the
pre-Christmas period has improved and we expect to make a profit in the second
half although it is doubtful that this will entirely compensate for the loss
incurred in the first half.
D K Newbigging
Chairman
21 December 2004
Consolidated Profit and Loss Account
for the six months ended 30 September 2004
6 months 6 months Year ended
30 September 30 September 31 March
2004 2003 2004
as restated
(see note)
(unaudited) (unaudited) (audited)
Notes #'000 #'000 #'000
Turnover 2 11,745 12,385 24,892
Cost of sales (8,482) (9,270) (18,435)
--------- -------- --------
Gross profit 3,263 3,115 6,457
Distribution costs (2,089) (1,841) (3,815)
Administration expenses (1,301) (1,159) (2,410)
--------- --------- ---------
Operating (loss)/profit 2 (127) 115 (232)
Interest (144) (155) (250)
-------- -------- --------
Loss on ordinary activities
before taxation (271) (40) (18)
Taxation - - -
-------- -------- --------
Retained loss (271) (40) (18)
-------- -------- --------
Loss per share, basic and diluted 3 (1.73)p (0.25)p (0.11)p
-------- -------- --------
Consolidated Balance Sheet
at 30 September 2004
6 months 6 months Year ended
30 September 30 September 31 March
2004 2003 2004
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Fixed assets
Tangible assets 716 1,496 334
-------- -------- --------
Current assets
Stocks and goods in transit 5,338 4,052 3,428
Trade debtors 4,876 4,470 3,334
Proceeds due on sale of Faupel House - - 1,225
Other debtors 408 371 279
Cash at bank and in hand 977 894 1,384
-------- -------- --------
11,599 9,787 9,650
-------- -------- --------
Creditors: amounts falling due within
one year
Bills of exchange payable 6,106 4,982 3,654
Other creditors 2,116 1,784 1,791
-------- -------- --------
8,222 6,766 5,445
-------- -------- --------
Net current assets 3,377 3,021 4,205
-------- -------- --------
Total assets less current liabilities 4,093 4,517 4,539
Provisions for liabilities and charges (75) (250) (250)
-------- -------- --------
Net assets 4,018 4,267 4,289
-------- -------- --------
Capital and reserves
Called up share capital 785 785 785
Share premium account 2,882 2,882 2,882
Other reserve 93 93 93
Revaluation reserve - 674 -
Profit and loss account 258 (167) 529
--------- ------- --------
Equity shareholders' funds 4,018 4,267 4,289
--------- ------- --------
Consolidated Cash Flow Statement
for the six months ended 30 September 2004
6 months 6 months Year
Ended ended ended
30 September 30 September 31 March
2004 2003 2004
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Operating (loss)/profit (127) 115 232
Depreciation 58 66 126
Net (increase)/decrease in working capital (3,292) (784) 1,022
Impairment of fixed assets - - 19
Profit on disposal of freehold property - - (19)
Proceeds from disposal of freehold property 1,225 - -
(Decrease)/increase in provisions
for liabilities and charges (175) - -
-------- -------- --------
Cash (outflow)/inflow from operating activities (2,311) (603) 1,380
Returns on investments and servicing of finance (108) (155) (197)
Taxation - 4 4
Capital expenditure and financial investment (440) (6) (129)
-------- -------- --------
Cash (outflow)/inflow before use
of liquid resources (2,859) (760) 1,058
Management of liquid resources 2,452 582 (746)
-------- -------- --------
(Decrease)/increase in cash in the period (407) (178) 312
-------- -------- --------
Reconciliation of net cash flow to movement in cash balances
(Decrease)/increase in cash in the period
and movement in net debt in the year (407) (178) 312
Cash at beginning of period 1,384 1,072 1,072
-------- -------- --------
Cash at end of period 977 894 1,384
-------- -------- --------
Summary of net bank debt
Bills of exchange at end of period
(6,106) (4,982) (3,654)
Cash at end of period
977 894 1,384
-------- -------- --------
Bank debt net of cash at end of period (5,129) (4,088) (2,270)
-------- -------- --------
Notes
1. Results for the six months ended 30 September 2003 and 2004 are unaudited
and have been prepared on the basis of the accounting policies set out in
the Company's statutory accounts for the year ended 31 March 2004.
The comparative figures for the financial year ended 31 March 2004 are not
the Company's statutory accounts for that financial year. These accounts
have been reported on by the Company's auditors and delivered to the
Registrar of Companies. The report of the auditors was unqualified and
did not contain a statement under Section 237(2) or (3) of the Companies Act
1985.
2. Analysis of turnover and operating profit
6 months ended 6 months ended Year ended
30 September 2004 30 September 2003 31 March 2004
Operating Sales Operating Operating
Sales (loss)/profit as restated profit/(loss) Sales profit/(loss)
#'000 #'000 #'000 #'000 #'000 #'000
Home Furnishings 8,961 495 9,281 601 18,698 1,210
Brands - Garments 1,302 (70) 1,121 10 2,693 153
Industrial Products 1,482 (9) 1,983 89 3,501 2
Central admin costs - (543) - (585) - (1,074)
-------- -------- --------- -------- -------- --------
11,745 (127) 12,385 115 24,892 291
Costs incurred on
aborted acquisitions - - - - - (59)
-------- --------- -------- -------- -------- --------
11,745 (127) 12,385 115 24,892 232
-------- --------- -------- -------- -------- --------
3. Losses per share for the six months ended 30 September 2004 are based on
the Group loss after taxation of #271,000 (2003: loss after tax #40,000) and
ordinary shares in issue during the period of 15,709,447 (2003: 15,709,447).
Diluted losses per share calculated in accordance with FRS14, is unchanged from
the basic losses per share.
4. Restatement of comparative figures:
(i) In accordance with FRS 5, discounts are now classified as a
deduction from turnover, having been previously classified
as cost of sales.
(ii) Certain distribution costs of #61,000 have been reclassified as
administration expenses in the 6 months to 30 September 2003 in
line with current treatment.
5. Copies of this statement of interim results will be sent to shareholders
and copies will also be available on application to the Group's headquarters and
registered office at Unit 4, First Floor, Bradmere House, Kingston Road,
Leatherhead, Surrey KT22 7NA.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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