TIDMHAR
RNS Number : 4420W
Harvard International PLC
29 July 2009
Harvard International plc
Preliminary results for the year ended 31 March 2009
Harvard International plc ("Harvard", "the Company" or "the Group") is a
distributor of consumer electronic goods in the UK and Australia and of medical
electronic devices in the UK, Europe and the US
KEY POINTS
* Proposed sale of surplus property and Medical Equipment Division for a combined
GBP10m
* The purchasers are entities controlled by Daniel Harris (the Chief Executive of
Harvard) and his family. Andrew Rose (the Finance Director of Harvard) is also
an investor
* Mike Ashley to replace Daniel Harris as Chief Executive following completion of
asset sales
* The Group will now focus on specialist consumer electronic products in the UK
and Australia
* The main business drivers are opportunities arising in the UK from the
development of the HD and Digital broadcast mediums
* In December 2008 the Group sold the Alba & Bush brands for GBP15.25m and made a
30p per share return of cash in January 2009
* In line with the Group's strategic plan revenues from continuing operations fell
to GBP52.4m (2008: GBP66.1m)
* Reduced operating loss, before property write-down, of GBP3.0m (2008: loss of
GBP9.5m)
* Loss before tax of GBP8.4m (2008: GBP8.8m)
* Net cash at the balance sheet date totalled GBP24.7m (2008 GBP25.4m)
* Harvard shares to move from Full List to AIM market
Bridget Blow, Chairman, comments:
"Today, we have announced the sale of both the Group's surplus property
portfolio and the Medical Equipment Division, to a consortium led by Daniel
Harris and members of his family. Accordingly Harvard International's
repositioning is, subject to shareholder approval, now almost complete."
"Following completion of the disposal the Group will be focused on the
distribution of specialist consumer electronic products in the UK and Australia
with a new senior management team leading a business with a clear strategy,
focused on a competitively positioned product range and supported by a sound
balance sheet."
"The Board will continue to seek to return the Group to profitability and to
realise value for shareholders."
29 July 2009
ENQUIRIES:
+-------------------------------------------------+--------------------------+
| Harvard International plc | Tel: 020 8238 7650 |
+-------------------------------------------------+--------------------------+
| Bridget Blow, Chairman | |
+-------------------------------------------------+--------------------------+
| Mike Ashley, Managing Director, | |
| Consumer Electronics | |
+-------------------------------------------------+--------------------------+
| Andrew Rose, Finance Director | |
+-------------------------------------------------+--------------------------+
| | |
+-------------------------------------------------+--------------------------+
| College Hill | Tel: 020 7457 2020 |
+-------------------------------------------------+--------------------------+
| Gareth David | Mob: 07774 444 162 |
+-------------------------------------------------+--------------------------+
Chairman's Statement
Today we have announced the sale of both the Group's surplus property portfolio
and the Medical Equipment Division, to a consortium led by the Harris family and
senior group management. Accordingly Harvard International's repositioning is,
subject to shareholder approval, now almost complete.
Following completion of the disposal the Group will be focused on the
distribution of specialist consumer electronic products in the UK and Australia
with a new senior management team leading a business with a clear strategy,
focused on a competitively positioned product range and supported by a sound
balance sheet.
The main business driver will be the UK's nationwide switchover from an analogue
to a digital broadcast medium and growing demand for access to HD standard
programming.
Business Review 2008/9
The financial year ended 31st March 2009 has seen the Group continue its
programme of restructuring, in order to create a sustainable and profitable
trading platform, whilst realising and returning considerable value to
shareholders through the disposal of the Alba and Bush brands. The impact of the
restructuring on the Income Statement is not readily identifiable as, due to
accounting requirements, it is reflected in the results from Continuing
Operations (including an impairment charge in 2008/09 relating to the
revaluation of the property portfolio) and also in Discontinuing Operations. In
addition the Group has restated its prior year figures to take account of two
material errors made in previously published financial statements. The closing
balance sheet reflects the fact that over the last few years we have turned the
very large levels of net debt into cash in the bank, by realising assets,
closing down unprofitable activities, and reducing working capital.
Trading performance has continued to be impacted by the Global recession which
has severely affected the consumer electronics industry. These difficult
circumstances are forecast to continue throughout 2009 and into 2010 however,
the Company expects that the rationalisation of the Group, which is now
completed, will help the Group achieve its aim of a restoration of profitability
in the financial year ending 31 March 2011.
Revenues from continuing operations (excluding sales under the Alba & Bush
brands and sales of full service LCD TVs) during the period were GBP52.4m (2008:
GBP66.1m) with a smaller operating loss before tax and property write downs of
GBP3.0m (2008 GBP9.5m). Group inventory was reduced to GBP6.2m (2008 GBP20.0m)
and net cash at the balance sheet date totalled GBP24.7m (2008 GBP25.4m).
Throughout the last financial year the UK management team has continued the
process of restructuring through the further rationalisation and focus of
product categories, improved operational efficiency, lowered inventory levels
and reduced employee numbers.
In Australia, where the more diverse product range continues to provide a
competitive business model, trading conditions have also been weak but market
shares have held up well and the management team has retained a tight control
over costs.
The Board is continuing to actively examine options, to further refine the
business model, and realise value to shareholders.
In December 2008 the Group sold the Alba & Bush brands to Argos for GBP15.25m.
The sale proceeds were distributed to shareholders via a return of cash of 30p
per share. The Board will continue to review the Group's finances and, when
appropriate, will consider making further distributions of surplus funds to
shareholders.
After the close of the financial year, the Board agreed the sale (subject to
shareholder approval) of both the Group's surplus property portfolio and the
Medical Equipment Division, to a consortium led by Daniel Harris (the current
Chief Executive of the Group) and members of his family for a total
consideration of GBP10m. Andrew Rose (the current Finance Director of the Group)
is also an investor in the consortium.
Details of the management changes that will take place following the completion
of the disposal are set out below.
Consumer Electronics
Harvard International plc is a leading distributor of consumer electronic
products. The Group's activities are focused on the UK and Australian markets,
supported by ancillary operations in Hong Kong and China. The management's
strategy is to identify and exploit local market opportunities.
The product range is differentiated through the use of relevant technology,
design and careful market segmentation, focusing on product lines which are
complementary to, but not dominated by, those offered by major global brands.
Exploiting its flexibility, Harvard strives to ensure that it is well placed to
offer the right products, such as digital media, iPod accessories and children's
toys, to its markets at the right time and at the right price.
As part of the repositioning of the product mix, realised in the last three
years through the Group's extensive restructuring programme, the withdrawal from
global market products such as TV's, DVD players and basic audio is nearing
completion. In line with the revised strategy, direct involvement in emerging
global platforms, such as blu-ray, has been rejected.
Whilst the Group restructuring programme has done much to reduce costs and
improve efficiency, the management believe that, in keeping with the Group's
much reduced scale of activities, opportunities remain to reduce costs through
further outsourcing and reduced payroll expense.
Supplier payment terms are being moved on to a more flexible open account basis,
away from letters of credit. This will improve liquidity, reduce funding
requirements and result in a significantly improved return on capital employed.
The Group's business culture is now focussed on margins rather than sales volume
and market share. For the next two years it is expected that while, at Group
level, revenues will decline operating profitability will recover.
The Group still owns the rights to the Goodmans brand and continues to
distribute products under licenses from Grundig, which are currently due to
expire in the UK at the end of 2010 and in Australia in 2012. The Group's
operation in Australia also continues to retain the local rights to the Alba and
Bush brands. In addition, products are sourced and distributed for third parties
under OEM agreements.
Medical Equipment
Turnover in the Medical Equipment Division reached GBP9.2m in 2008/9 (2008:
GBP14.3m) but incurred an operating loss of GBP0.9m (2008: GBP0.9m profit). The
Board continues to believe that the underlying business drivers, principally a
wealthier, older and more health aware population, create a favourable market
backdrop. Steady progress was made during the period with the development of the
product range, global distribution network, management recruitment and initial
marketing programmes.
During the current financial year there has been a recovery in the trading
performance of the Medical Equipment Division. However the Company believes that
the future growth of the business will require entry into new markets, such as
North America, and the development of new products which are not at present part
of the Company's core business. Accordingly a decision has been taken to accept
the offer made by the consortium led by Daniel Harris and members of his family
to acquire the property portfolio and the Medical Equipment Division.
Property
As a result of the much reduced scale of the Group's activities, four properties
became surplus to operational requirements. At 31st March 2009 a report by
Cushman and Wakefield LLP, a leading commercial real estate broker and
consultant, valued the portfolio at GBP8.53m. This reflects a write down of
approximately GBP11.1m compared to their carrying values prior to valuation
which we are advised is in line with movements in valuations of comparable
properties.
This portfolio consists of four properties, Cortonwood and South Shields which
are rented out to third parties, our distribution centre at Rugby which we are
partially utilising but was being marketed to let, and our previous Head Office
in Barking, which is vacant and was being marketed for let or sale.
The Board decided, after the close of the 2008/9 financial year, to dispose of
the surplus properties. This ensures the Group's exposure to property market
uncertainties will be removed.
Management changes
Following the completion of the disposals, Daniel Harris will step down from his
position as Chief Executive of Harvard International plc, and will cease to be
an employee of the Group.
I am pleased to announce that Mike Ashley, currently Managing Director of
Consumer Electronics, will be appointed as the Group's new Chief Executive.
Daniel Harris will receive no compensation on leaving his current position but
will remain on the Board as a non-executive Director. Daniel has been Chief
Executive since 1992 and has overseen the expansion of the Group and its
restructuring over the last three years, during which time the Group will have
realised approximately GBP100m from disposals (once the proceeds of the sale of
the surplus properties and Medical Equipment Division are taken into account).
Daniel will step down from an executive role at Harvard leaving it with a very
sound balance sheet and what is expected to be a profitable business model
focused on consumer electronics in the UK and Australia.
Andrew Rose, Group Finance Director, has given notice of his intention to resign
as a director and an employee of the Group. In the meantime, Andrew will remain
with the Group in his current role until the end of September and the Board are
now actively seeking a suitable replacement. Andrew has played a leading role in
the Group's activities since 1987 and has been the financial architect of
Harvard's business strategy and numerous corporate developments.
MPEG Dispute
In March 2008, certain members of the MPEG LA Consortium instigated legal
proceedings against Harvard in relation to alleged patent infringement in
respect of the prior importation of two models of MPEG2 DVD players. In July
2009, the claimants amended their claim to include all relevant Group products.
The potential liability of the Group in respect of this IP Litigation is
currently unquantifiable, but the directors are advised that an estimation of
the largest reasonably foreseeable award against the Group in the UK is
approximately US$8 million, although it is expected that a much smaller award
(if any) is likely.
The Group has a number of strong defences to this action and has been fighting
these allegations vigorously. Recently, there have been procedural hearings in
the English courts and these have found, largely, in Harvard's favour.
Substantive issues are due to come to trial in early 2010.
The Group has provided in its accounts for the year ended 31st March 2009 for
what it believes to be the most likely outcome, inclusive of costs, of this
litigation process.
Dividend
Following the sale of the Alba and Bush brands, a return of cash of 30 pence per
share was paid to shareholders in January 2009.
The Board will continue to review the Group's finances and, when appropriate,
will consider making further distributions of surplus funds to shareholders.
Listing move to AIM
In view of the Group's considerably reduced scale of operations the Board has
decided that now would be an appropriate time to move trading in the Company's
shares to the AIM market.
It is expected that the move to the AIM market will significantly reduce the
regulatory workload and expense to a level more consistent with the new Group
structure. The Board believes that the move will have negligible impact on
shareholders' ability to trade shares, receive dividends and access Company
statements.
Outlook
Through the implementation of the restructuring and disposal programmes, the
Board has made considerable progress towards realising the twin goals of
creating a more focused and sustainable, specialist consumer electronics
products business, whilst releasing and returning significant value to
shareholders.
The management team will continue to focus on identifying profitable product
lines, improving efficiency and lowering costs.
The Board remains confident of a recovery in profitability once market
conditions improve, and will continue to seek to realise value for shareholders
through whatever means possible.
BRIDGET BLOW
Chairman
29 July 2009
Consolidated Income Statement
+---------------+----------+--------------+--+--------------+
| | | Year ended |
+---------------+----------+--------------------------------+
| | | 31 March | | 31 March |
+---------------+----------+--------------+--+--------------+
| | | 2009 | | 2008 |
+---------------+----------+--------------+--+--------------+
| | | (unaudited) | | (audited) |
+---------------+----------+--------------+--+--------------+
| | | | | (restated) |
+---------------+----------+--------------+--+--------------+
| | Notes | GBP'millions | | GBP'millions |
+---------------+----------+--------------+--+--------------+
| | | | | |
+---------------+----------+--------------+--+--------------+
| Revenue | 2 | 52.4 | | 66.1 |
+---------------+----------+--------------+--+--------------+
| | | | | |
+---------------+----------+--------------+--+--------------+
| Cost of | | ( 44.8) | | ( 61.4) |
| sales | | | | |
+---------------+----------+--------------+--+--------------+
| Gross | | 7.6 | | 4.7 |
| profit | | | | |
+---------------+----------+--------------+--+--------------+
| | | | | |
+---------------+----------+--------------+--+--------------+
| Net | 3 | ( 10.6) | | ( 14.2) |
| operating | | | | |
| expenses | | | | |
+---------------+----------+--------------+--+--------------+
| | | | | |
+---------------+----------+--------------+--+--------------+
| Operating | | ( 3.0) | | ( 9.5) |
| loss | | | | |
| before | | | | |
| impairment | | | | |
| of | | | | |
| properties | | | | |
+---------------+----------+--------------+--+--------------+
| Impairment | 4 | ( 6.2) | | - |
| of | | | | |
| properties | | | | |
+---------------+----------+--------------+--+--------------+
| | | | | |
+---------------+----------+--------------+--+--------------+
| Operating | | ( 9.2) | | ( 9.5) |
| loss | | | | |
| after | | | | |
| impairment | | | | |
| of | | | | |
| properties | | | | |
+---------------+----------+--------------+--+--------------+
| Finance | 5 | ( 0.1) | | ( 0.7) |
| costs | | | | |
+---------------+----------+--------------+--+--------------+
| Finance | 5 | 0.9 | | 1.4 |
| income | | | | |
+---------------+----------+--------------+--+--------------+
| Loss | | ( 8.4) | | ( 8.8) |
| before | | | | |
| tax | | | | |
+---------------+----------+--------------+--+--------------+
| Tax | 6 | 0.7 | | ( 0.5) |
+---------------+----------+--------------+--+--------------+
| | | | | |
+---------------+----------+--------------+--+--------------+
| Loss for | | ( 7.7) | | ( 9.3) |
| the | | | | |
| period | | | | |
| from | | | | |
| continuing | | | | |
| operations | | | | |
+---------------+----------+--------------+--+--------------+
| (Loss)/profit | 7 | ( 7.9) | | 21.2 |
| for the | | | | |
| period from | | | | |
| discontinuing | | | | |
| operations | | | | |
+---------------+----------+--------------+--+--------------+
| (Loss)/profit | | ( 15.6) | | 11.9 |
| for the | | | | |
| period | | | | |
+---------------+----------+--------------+--+--------------+
| | | | | |
+---------------+----------+--------------+--+--------------+
| Attributable | | | | |
| to: | | | | |
+---------------+----------+--------------+--+--------------+
| Equity | | ( 15.6) | | 11.9 |
| holders | | | | |
| of the | | | | |
| parent | | | | |
+---------------+----------+--------------+--+--------------+
| | | | | |
+---------------+----------+--------------+--+--------------+
| Earnings | 8 | | | |
| per | | | | |
| share | | | | |
| (in | | | | |
| pence) | | | | |
+---------------+----------+--------------+--+--------------+
| Basic | | | | |
+---------------+----------+--------------+--+--------------+
| - | | (15.2)p | | (18.3)p |
| continuing | | | | |
| operations | | | | |
+---------------+----------+--------------+--+--------------+
| - | | (15.6)p | | 41.8p |
| discontinuing | | | | |
| operations | | | | |
+---------------+----------+--------------+--+--------------+
| - total | | (30.8)p | | 23.5p |
+---------------+----------+--------------+--+--------------+
| Diluted: | | | | |
+---------------+----------+--------------+--+--------------+
| - | | (15.2)p | | (18.3)p |
| continuing | | | | |
| operations | | | | |
+---------------+----------+--------------+--+--------------+
| - | | (15.6)p | | 41.8p |
| discontinuing | | | | |
| operations | | | | |
+---------------+----------+--------------+--+--------------+
| - total | | (30.8)p | | 23.5p |
+---------------+----------+--------------+--+--------------+
Consolidated statement of recognised income and expense
+---------------------------------------------------------+--------------+--+--------------+
| | Year ended |
+---------------------------------------------------------+--------------------------------+
| | 31 March | | 31 March |
+---------------------------------------------------------+--------------+--+--------------+
| | 2009 | | 2008 |
+---------------------------------------------------------+--------------+--+--------------+
| | (unaudited) | | (audited) |
+---------------------------------------------------------+--------------+--+--------------+
| | | | (restated) |
+---------------------------------------------------------+--------------+--+--------------+
| | GBP'millions | | GBP'millions |
+---------------------------------------------------------+--------------+--+--------------+
| | | | |
+---------------------------------------------------------+--------------+--+--------------+
| Net income/(expense) recognised directly in equity: | | | |
+---------------------------------------------------------+--------------+--+--------------+
| | | | |
+---------------------------------------------------------+--------------+--+--------------+
| Exchange differences on translation of overseas | 0.9 | | ( 1.8) |
| operations | | | |
+---------------------------------------------------------+--------------+--+--------------+
| Losses relating to designated hedges | - | | ( 0.1) |
+---------------------------------------------------------+--------------+--+--------------+
| Reversal of prior year designated hedges | ( 1.8) | | 2.8 |
+---------------------------------------------------------+--------------+--+--------------+
| Property revaluation | ( 4.9) | | ( 3.8) |
+---------------------------------------------------------+--------------+--+--------------+
| Tax on items taken directly to reserves | 0.3 | | 1.1 |
+---------------------------------------------------------+--------------+--+--------------+
| | | | |
+---------------------------------------------------------+--------------+--+--------------+
| (Loss)/Profit for the period | ( 15.6) | | 11.9 |
+---------------------------------------------------------+--------------+--+--------------+
| | | | |
+---------------------------------------------------------+--------------+--+--------------+
| Total recognised (expenses)/income for period (all | (21.1) | | 10.1 |
| attributable to shareholders) | | | |
+---------------------------------------------------------+--------------+--+--------------+
Group Balance Sheet
+------------------------------------------------+----------+--------------+--+--------------+
| | | 31 March | | 31 March |
+------------------------------------------------+----------+--------------+--+--------------+
| | | 2009 | | 2008 |
+------------------------------------------------+----------+--------------+--+--------------+
| | | (unaudited) | | (audited) |
+------------------------------------------------+----------+--------------+--+--------------+
| | | | | (restated) |
+------------------------------------------------+----------+--------------+--+--------------+
| | Note | GBP'millions | | GBP'millions |
+------------------------------------------------+----------+--------------+--+--------------+
| Non-current assets | | | | |
+------------------------------------------------+----------+--------------+--+--------------+
| Property, plant & equipment | | 4.1 | | 21.6 |
+------------------------------------------------+----------+--------------+--+--------------+
| Investment properties | | 5.6 | | - |
+------------------------------------------------+----------+--------------+--+--------------+
| Other receivables | | 1.4 | | 5.5 |
+------------------------------------------------+----------+--------------+--+--------------+
| Deferred tax | | 0.2 | | - |
+------------------------------------------------+----------+--------------+--+--------------+
| Total non-current assets | | 11.3 | | 27.1 |
+------------------------------------------------+----------+--------------+--+--------------+
| | | | | |
+------------------------------------------------+----------+--------------+--+--------------+
| Current assets | | | | |
+------------------------------------------------+----------+--------------+--+--------------+
| Inventories | | 6.2 | | 20.0 |
+------------------------------------------------+----------+--------------+--+--------------+
| Trade receivables and other receivables | | 8.6 | | 20.0 |
+------------------------------------------------+----------+--------------+--+--------------+
| Income tax recoverable | | 0.2 | | - |
+------------------------------------------------+----------+--------------+--+--------------+
| Cash | | 24.7 | | 28.2 |
+------------------------------------------------+----------+--------------+--+--------------+
| | | | | |
+------------------------------------------------+----------+--------------+--+--------------+
| Total current assets | | 39.7 | | 68.2 |
+------------------------------------------------+----------+--------------+--+--------------+
| | | | | |
+------------------------------------------------+----------+--------------+--+--------------+
| Total assets | | 51.0 | | 95.3 |
+------------------------------------------------+----------+--------------+--+--------------+
| | | | | |
+------------------------------------------------+----------+--------------+--+--------------+
| Current liabilities | | | | |
+------------------------------------------------+----------+--------------+--+--------------+
| Bank borrowings and overdrafts | | - | | 2.8 |
+------------------------------------------------+----------+--------------+--+--------------+
| Trade and other payables | | 12.2 | | 16.9 |
+------------------------------------------------+----------+--------------+--+--------------+
| Financial liabilities - derivative financial | | - | | 0.1 |
| instruments | | | | |
+------------------------------------------------+----------+--------------+--+--------------+
| Income tax payable | | - | | 0.9 |
+------------------------------------------------+----------+--------------+--+--------------+
| Provisions | | 4.7 | | 4.1 |
+------------------------------------------------+----------+--------------+--+--------------+
| | | | | |
+------------------------------------------------+----------+--------------+--+--------------+
| Total current liabilities | | 16.9 | | 24.8 |
+------------------------------------------------+----------+--------------+--+--------------+
| | | | | |
+------------------------------------------------+----------+--------------+--+--------------+
| Total liabilities | | 16.9 | | 24.8 |
+------------------------------------------------+----------+--------------+--+--------------+
| | | | | |
+------------------------------------------------+----------+--------------+--+--------------+
| Net assets | | 34.1 | | 70.5 |
+------------------------------------------------+----------+--------------+--+--------------+
| | | | | |
+------------------------------------------------+----------+--------------+--+--------------+
| Equity attributable to equity holders of the | | | | |
| parent | | | | |
+------------------------------------------------+----------+--------------+--+--------------+
| Share capital | | 5.1 | | 5.1 |
+------------------------------------------------+----------+--------------+--+--------------+
| Share premium | | 3.2 | | 18.6 |
+------------------------------------------------+----------+--------------+--+--------------+
| Capital redemption reserve | | 15.4 | | - |
+------------------------------------------------+----------+--------------+--+--------------+
| Investment in own shares | | ( 2.3) | | ( 2.3) |
+------------------------------------------------+----------+--------------+--+--------------+
| Translation reserve | | ( 7.8) | | ( 8.1) |
+------------------------------------------------+----------+--------------+--+--------------+
| Hedging reserve | | - | | 1.8 |
+------------------------------------------------+----------+--------------+--+--------------+
| Revaluation reserve | | - | | 5.8 |
+------------------------------------------------+----------+--------------+--+--------------+
| Share based payments reserve | | 1.1 | | 1.7 |
+------------------------------------------------+----------+--------------+--+--------------+
| Retained earnings | | 19.4 | | 47.9 |
+------------------------------------------------+----------+--------------+--+--------------+
| | | | | |
+------------------------------------------------+----------+--------------+--+--------------+
| Total equity | 10 | 34.1 | | 70.5 |
+------------------------------------------------+----------+--------------+--+--------------+
Group cash flow statement
+----------------------------------------------------+-------+--------------+--+--------+-----+
| | | Year ended |
+----------------------------------------------------+-------+--------------------------+
| | | 31 March | | 31 March |
+----------------------------------------------------+-------+--------------+--+--------------+
| | | 2009 | | 2008 |
+----------------------------------------------------+-------+--------------+--+--------------+
| | | (unaudited) | | (audited) |
+----------------------------------------------------+-------+--------------+--+--------------+
| |Notes | GBP'millions | | GBP'millions |
+----------------------------------------------------+-------+--------------+--+--------------+
| | | | | |
+----------------------------------------------------+-------+--------------+--+--------------+
| Cash flow from operating activities | | | | |
+----------------------------------------------------+-------+--------------+--+--------------+
| | | | | |
+----------------------------------------------------+-------+--------------+--+--------------+
| Cash (used by)/generated from operations | 11 | ( 1.9) | | 6.4 |
+----------------------------------------------------+-------+--------------+--+--------------+
| Tax (paid)/received | | ( 0.2) | | 1.4 |
+----------------------------------------------------+-------+--------------+--+--------------+
| | | | | |
+----------------------------------------------------+-------+--------------+--+--------------+
| Net cash (used in)/from operating activities | | ( 2.1) | | 7.8 |
+----------------------------------------------------+-------+--------------+--+--------------+
| | | | | |
+----------------------------------------------------+-------+--------------+--+--------------+
| Cash flows from investing activities | | | | |
+----------------------------------------------------+-------+--------------+--+--------------+
| Interest received | | 0.9 | | 1.4 |
+----------------------------------------------------+-------+--------------+--+--------------+
| Purchase of property, plant and equipment | | ( 0.6) | | ( 0.2) |
+----------------------------------------------------+-------+--------------+--+--------------+
| Sale of property, plant and equipment | | 0.4 | | 0.8 |
+----------------------------------------------------+-------+--------------+--+--------------+
| Sale of discontinued activities (net) | | 17.1 | | 70.8 |
+----------------------------------------------------+-------+--------------+--+--------------+
| | | | | |
+----------------------------------------------------+-------+--------------+--+--------------+
| Net cash from investing activities | | 17.8 | | 72.8 |
+----------------------------------------------------+-------+--------------+--+--------------+
| | | | | |
+----------------------------------------------------+-------+--------------+--+--------------+
| Cash flows from financing activities | | | | |
+----------------------------------------------------+-------+--------------+--+--------------+
| Finance costs paid | | ( 0.1) | | ( 0.8) |
+----------------------------------------------------+-------+--------------+--+--------------+
| Dividends paid on ordinary shares | | - | | ( 1.1) |
+----------------------------------------------------+-------+--------------+--+--------------+
| Dividends paid to owners of redeemable shares | | ( 3.9) | | - |
+----------------------------------------------------+-------+--------------+--+--------------+
| Redemption of redeemable shares | | ( 11.5) | | - |
+----------------------------------------------------+-------+--------------+--+--------------+
| Movement in bank import advances (net) | | ( 2.8) | | ( 37.4) |
+----------------------------------------------------+-------+--------------+--+--------------+
| | | | | |
+----------------------------------------------------+-------+--------------+--+--------------+
| Net cash used in financing activities | | ( 18.3) | | ( 39.3) |
+----------------------------------------------------+-------+--------------+--+--------------+
| | | | | |
+----------------------------------------------------+-------+--------------+--+--------------+
| Net (decrease)/increase in cash and cash | | ( 2.6) | | 41.3 |
| equivalents | | | | |
+----------------------------------------------------+-------+--------------+--+--------------+
| Net foreign exchange differences | | ( 0.9) | | ( 0.9) |
+----------------------------------------------------+-------+--------------+--+--------------+
| Cash and cash equivalents at beginning of period | | 28.2 | | ( 12.2) |
+----------------------------------------------------+-------+--------------+--+--------------+
| | | | | |
+----------------------------------------------------+-------+--------------+--+--------------+
| Cash and cash equivalents at end of period | | 24.7 | | 28.2 |
+----------------------------------------------------+-------+--------------+--+--------+-----+
Notes to the interim statement
1. General information
The financial information set out above does not constitute statutory accounts
for the purposes of Section 240 of the Companies Act 1985 but is derived from
those financial statements and as such, does not contain all information
required to be disclosed in the financial statements prepared in accordance with
International Financial Reporting Standards ("IFRS"). Statutory accounts for
2009, which have been agreed with the Company's auditors, will be delivered to
the Registrar of Companies following the Company's Annual General Meeting. The
auditors' report on the full financial statements for the year ended 31 March
2009 is yet to be signed.
The financial information in respect of the year ended 31 March 2008 has been
produced using extracts from the statutory accounts prepared under International
Financial Reporting Standards. The statutory accounts for this period have been
filed with the Registrar of Companies.The auditors' report on these accounts was
unqualified and did not contain a statement under Sections 237 (2) or (3) of the
Companies Act 1985.
The financial information presented on pages 7 to 20 has been prepared using
accounting policies consistent with International Financial Reporting Standards
as endorsed by the European Union. The accounting policies are the same as those
published by the Group in the Annual Report & Accounts for the year ended 31
March 2008 which is available on the Group's website www.harvardplc.com.
These results were approved by the directors on 29th July 2009. Copies of the
2009 Report and Accounts are being sent to shareholders in due course. Further
copies will be available at the Company's registered offices at Harvard House,
The Waterfront, Elstree Road, Elstree Herts WD6 3BS.
2. Business segments
Primary reporting format - business segments
The Group now operates Consumer Electronics and Medical Electronics divisions
and is organised accordingly. These divisions are the basis on which the Group
reports its primary segment information as below:
Continuing operations:
+----------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+
| | Year ended 31st March | | Year ended 31st March |
| | 2009 | | 2008 |
+----------------------------+--------------------------------------------+--+--------------------------------------------+
| | Consumer | Medical | | | Consumer | Medical | |
+----------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+
| | Electronics | Electronics | Total | | Electronics | Electronics | Total |
+----------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+
| |GBP'millions |GBP'millions |GBP'millions | |GBP'millions |GBP'millions |GBP'millions |
+----------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+
| | | | | | | | |
+----------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+
| Revenue | | | | | | | |
+----------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+
| External sales | 43.2 | 9.2 | 52.4 | | 51.8 | 14.3 | 66.1 |
+----------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+
| | | | | | | | |
+----------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+
| Operating (loss)/profit | ( 2.1) | ( 0.9) | ( 3.0) | | ( 10.4) | 0.9 | ( 9.5) |
| before impairment of | | | | | | | |
| properties | | | | | | | |
+----------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+
| Impairment of properties | ( 6.2) | - | ( 6.2) | | - | - | - |
+----------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+
| | | | | | | | |
+----------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+
| Operating (loss)/profit | ( 8.3) | ( 0.9) | ( 9.2) | | ( 10.4) | 0.9 | ( 9.5) |
| after impairment of | | | | | | | |
| properties | | | | | | | |
+----------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+
| Finance Income(net) | 0.8 | - | 0.8 | | 0.7 | - | 0.7 |
+----------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+
| | | | | | | | |
+----------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+
| (Loss)/profit before tax | ( 7.5) | ( 0.9) | ( 8.4) | | ( 9.7) | 0.9 | ( 8.8) |
+----------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+
Secondary reporting format - geographical segments
The Group operates within the UK, the Far East and Australia. These locations
are the basis on which the Group reports its secondary segment information
below:
Continuing operations:
+------------------+--------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| | Year ended 31st March 2009 | | Year ended 31st March 2008 |
+------------------+-----------------------------------------------------------+--+-----------------------------------------------------------+
| | UK | Far | Australia | Total | | UK | Far | Australia | Total |
| | | East | | | | | East | | |
+------------------+--------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| |GBP'millions |GBP'millions |GBP'millions |GBP'millions | |GBP'millions |GBP'millions |GBP'millions |GBP'millions |
+------------------+--------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+------------------+--------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| Revenue | | | | | | | | | |
+------------------+--------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| External sales | 23.3 | 16.8 | 12.3 | 52.4 | | 25.3 | 33.0 | 7.8 | 66.1 |
+------------------+--------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| Inter-segment | - | 11.2 | - | 11.2 | | - | 10.1 | - | 10.1 |
| sales | | | | | | | | | |
+------------------+--------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+------------------+--------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| Operating | ( 2.6) | ( 0.4) | - | ( 3.0) | | ( 13.4) | 3.4 | 0.5 | ( 9.5) |
| (loss)/profit | | | | | | | | | |
| before | | | | | | | | | |
| impairment of | | | | | | | | | |
| properties | | | | | | | | | |
+------------------+--------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| Impairment of | ( 6.2) | - | - | ( 6.2) | | - | - | - | - |
| properties | | | | | | | | | |
+------------------+--------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+------------------+--------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| Operating | ( 8.8) | ( 0.4) | - | ( 9.2) | | ( 13.4) | 3.4 | 0.5 | ( 9.5) |
| (loss)/profit | | | | | | | | | |
| after impairment | | | | | | | | | |
| of properties | | | | | | | | | |
+------------------+--------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| Finance Income | 0.9 | ( 0.1) | - | 0.8 | | ( 0.8) | 1.4 | 0.1 | 0.7 |
+------------------+--------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+------------------+--------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| (Loss)/profit | ( 7.9) | ( 0.5) | - | ( 8.4) | | ( 14.2) | 4.8 | 0.6 | ( 8.8) |
| before tax | | | | | | | | | |
+------------------+--------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
3. Net Operating expenses
+--+--------------------+--------------+---------------+--------------+--+--------------+---------------+--------------+
| | | Year ended 31st March 2009 | | Year ended 31st March 2008 |
+--+--------------------+---------------------------------------------+--+---------------------------------------------+
| | | Continuing |Discontinuing | | | Continuing |Discontinuing | |
+--+--------------------+--------------+---------------+--------------+--+--------------+---------------+--------------+
| | | operations | operations | Total | | operations | operations | Total |
+--+--------------------+--------------+---------------+--------------+--+--------------+---------------+--------------+
| | |GBP'millions | GBP'millions |GBP'millions | |GBP'millions | GBP'millions |GBP'millions |
+--+--------------------+--------------+---------------+--------------+--+--------------+---------------+--------------+
| | | | | | | | | |
+--+--------------------+--------------+---------------+--------------+--+--------------+---------------+--------------+
| | | | | | | | | |
+--+--------------------+--------------+---------------+--------------+--+--------------+---------------+--------------+
| Net operating | | | | | | | |
| expenses comprise: | | | | | | | |
+-----------------------+--------------+---------------+--------------+--+--------------+---------------+--------------+
| | Selling and | 4.6 | 3.1 | 7.7 | | 6.1 | 4.9 | 11.0 |
| | distribution | | | | | | | |
+--+--------------------+--------------+---------------+--------------+--+--------------+---------------+--------------+
| | Administration | 6.0 | 9.6 | 15.6 | | 8.5 | 15.8 | 24.3 |
+--+--------------------+--------------+---------------+--------------+--+--------------+---------------+--------------+
| | | | | | | | | |
+--+--------------------+--------------+---------------+--------------+--+--------------+---------------+--------------+
| | Other operating | - | - | - | | ( 0.4) | - | ( 0.4) |
| | income | | | | | | | |
+--+--------------------+--------------+---------------+--------------+--+--------------+---------------+--------------+
| | | 10.6 | 12.7 | 23.3 | | 14.2 | 20.7 | 34.9 |
+--+--------------------+--------------+---------------+--------------+--+--------------+---------------+--------------+
4. Impairment of properties
Impairment of properties comprise the loss on revaluation of the Group's
properties which may be summarised as follows:
+--------------------------------------------------+--------------+--+--------------+
| | Year ended |
+--------------------------------------------------+--------------------------------+
| | 31 March | | 31 |
| | | | March |
+--------------------------------------------------+--------------+--+--------------+
| | 2009 | | 2008 |
+--------------------------------------------------+--------------+--+--------------+
| | (unaudited) | | (audited) |
+--------------------------------------------------+--------------+--+--------------+
| | GBP'millions | | GBP'millions |
+--------------------------------------------------+--------------+--+--------------+
| | | | |
+--------------------------------------------------+--------------+--+--------------+
| Carrying value of properties prior to | 19.5 | | - |
| revaluation | | | |
+--------------------------------------------------+--------------+--+--------------+
| | | | |
+--------------------------------------------------+--------------+--+--------------+
| Valuation of properties | ( 8.9) | | - |
+--------------------------------------------------+--------------+--+--------------+
| Deficit on revaluation | 10.6 | | - |
+--------------------------------------------------+--------------+--+--------------+
| Written off against Revaluation Reserve | ( 4.9) | | - |
+--------------------------------------------------+--------------+--+--------------+
| | 5.7 | | - |
+--------------------------------------------------+--------------+--+--------------+
| Accelerated depreciation of fixed assets held at | 0.5 | | - |
| revalued properties | | | |
+--------------------------------------------------+--------------+--+--------------+
| Impairment of properties | 6.2 | | - |
+--------------------------------------------------+--------------+--+--------------+
5. Finance costs/income
+--+------------------------------------------------+--------------+--+--------------+
| | | Year ended |
+--+------------------------------------------------+--------------------------------+
| | | 31 March | | 31 |
| | | | | March |
+--+------------------------------------------------+--------------+--+--------------+
| | | 2009 | | 2008 |
+--+------------------------------------------------+--------------+--+--------------+
| | | (unaudited) | | (audited) |
+--+------------------------------------------------+--------------+--+--------------+
| | | GBP'millions | | GBP'millions |
+--+------------------------------------------------+--------------+--+--------------+
| Finance costs comprise: | | | |
+---------------------------------------------------+--------------+--+--------------+
| | Interest on bank loans and overdrafts | | | |
+--+------------------------------------------------+--------------+--+--------------+
| | repayable within 5 years | 0.1 | | 0.7 |
+--+------------------------------------------------+--------------+--+--------------+
| | | | | |
+--+------------------------------------------------+--------------+--+--------------+
| Finance income comprises: | | | |
+---------------------------------------------------+--------------+--+--------------+
| | Bank interest receivable | 0.9 | | 0.3 |
+--+------------------------------------------------+--------------+--+--------------+
| | Interest from joint venture | - | | 1.1 |
+--+------------------------------------------------+--------------+--+--------------+
| | | 0.9 | | 1.4 |
+--+------------------------------------------------+--------------+--+--------------+
6. Tax
+---+---------------------------------------------------+--------------+--+--------------+
| | | Year ended |
+---+---------------------------------------------------+--------------------------------+
| | | 31 March | | 31 March |
+---+---------------------------------------------------+--------------+--+--------------+
| | | 2009 | | 2008 |
+---+---------------------------------------------------+--------------+--+--------------+
| | | (unaudited) | | (audited) |
+---+---------------------------------------------------+--------------+--+--------------+
| | | GBP'millions | | GBP'millions |
+---+---------------------------------------------------+--------------+--+--------------+
| The tax credit/(charge) comprises: | | | |
+-------------------------------------------------------+--------------+--+--------------+
| | | | | |
+---+---------------------------------------------------+--------------+--+--------------+
| | UK corporation tax on profits for the year at 28% | - | | - |
| | (2008:30%) | | | |
+---+---------------------------------------------------+--------------+--+--------------+
| | Adjustments for previous periods | - | | - |
+---+---------------------------------------------------+--------------+--+--------------+
| | | - | | - |
+---+---------------------------------------------------+--------------+--+--------------+
| | Non-UK taxation - current | ( 0.1) | | ( 0.5) |
+---+---------------------------------------------------+--------------+--+--------------+
| | Adjustments for previous periods | 0.9 | | - |
+---+---------------------------------------------------+--------------+--+--------------+
| | | | | |
+---+---------------------------------------------------+--------------+--+--------------+
| | Total current tax | 0.8 | | ( 0.5) |
+---+---------------------------------------------------+--------------+--+--------------+
| | Deferred tax: Origination and reversal of | - | | ( 0.2) |
| | temporary timing differences | | | |
+---+---------------------------------------------------+--------------+--+--------------+
| | Adjustments in respect of prior years | ( 0.1) | | 0.2 |
+---+---------------------------------------------------+--------------+--+--------------+
| | | | | |
+---+---------------------------------------------------+--------------+--+--------------+
| | Taxation credit/(charge) in the income statement | 0.7 | | ( 0.5) |
+---+---------------------------------------------------+--------------+--+--------------+
7. Profit/(loss) for the period from discontinuing operations
The profit/(loss) from discounting operations comprise:
+-----------------------------------------------------+--------------+--+--------------+
| | Year ended | | Year ended |
+-----------------------------------------------------+--------------+--+--------------+
| | 31 March | | 31 March |
+-----------------------------------------------------+--------------+--+--------------+
| | 2009 | | 2008 |
+-----------------------------------------------------+--------------+--+--------------+
| | GBP'millions | | (restated) |
+-----------------------------------------------------+--------------+--+--------------+
| | | | GBP'millions |
+-----------------------------------------------------+--------------+--+--------------+
| | | | |
+-----------------------------------------------------+--------------+--+--------------+
| Loss from operations | ( 18.9) | | ( 19.3) |
+-----------------------------------------------------+--------------+--+--------------+
| | | | |
+-----------------------------------------------------+--------------+--+--------------+
| Profit on disposal | 11.0 | | 40.5 |
+-----------------------------------------------------+--------------+--+--------------+
| | ( 7.9) | | 21.2 |
+-----------------------------------------------------+--------------+--+--------------+
During the year ended 31st March 2009, the Group:
1) disposed of its Alba and Bush trade marks to Argos Limited for GBP15.25
million;
2) ceased trading in its full service LCD tv operation.
During the year ended 31st March 2008, the Group:
1) disposed of its Leisure Division for GBP51.5 million;
2) disposed of its 50% interest in Grundig for an initial consideration of euro
35 million:
3) disposed of its Roadstar European operation for euro 1: and
4) ceased trading in several of its UK Consumer Electronics businesses including
Roadstar UK,
the telecoms division and the sale of "lead in" Consumer Electronics under the
Bush and Alba brand names.
i) Loss for the period from discontinuing operations may be analysed as follows:
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| | Year ended 31st March 2009 | | Year ended 31st March 2008 |
+---------------+--------------------------------------------+----------+--------------------------------------------------------------------------+
| | Full |Discontinued | Total | | Leisure | Roadstar | Full |Discontinued | Total |
| | Service | | | | | | Service | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| | LCD TV | UK CE | | | Division | | LCD TV | UK CE | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | (restated) | (restated) |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| |GBP'millions |GBP'millions |GBP'millions | |GBP'millions |GBP'millions |GBP'millions |GBP'millions |GBP'millions |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| Revenue | 20.1 | 17.7 | 37.8 | | 34.4 | 6.8 | 49.8 | 108.9 | 199.9 |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| Cost of | ( 20.5) | ( 23.5) | ( 44.0) | | ( 29.9) | ( 6.3) | ( 44.8) | ( 108.6) | ( 189.6) |
| sales | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| Prior | - | - | - | | - | - | - | ( 2.0) | ( 2.0) |
| period | | | | | | | | | |
| adjustment | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| Gross | ( 0.4) | ( 5.8) | ( 6.2) | | 4.5 | 0.5 | 5.0 | ( 1.7) | 8.3 |
| (loss)/profit | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| Net | ( 3.4) | ( 9.3) | ( 12.7) | | ( 5.6) | ( 1.8) | ( 5.4) | ( 7.9) | ( 20.7) |
| operating | | | | | | | | | |
| expenses | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| Operating | ( 3.8) | ( 15.1) | ( 18.9) | | ( 1.1) | ( 1.3) | ( 0.4) | ( 9.6) | ( 12.4) |
| loss | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| Finance | - | - | - | | - | ( 0.1) | - | - | ( 0.1) |
| costs | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| Total | ( 3.8) | ( 15.1) | ( 18.9) | | ( 1.1) | ( 1.4) | ( 0.4) | ( 9.6) | ( 12.5) |
| Operating | | | | | | | | | |
| loss | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| Share of | - | - | - | | - | - | - | ( 6.8) | ( 6.8) |
| results | | | | | | | | | |
| of joint | | | | | | | | | |
| venture | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| Loss | ( 3.8) | ( 15.1) | ( 18.9) | | ( 1.1) | ( 1.4) | ( 0.4) | ( 16.4) | ( 19.3) |
| before | | | | | | | | | |
| tax | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| Tax | - | - | - | | - | - | - | - | - |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
| Loss for | ( 3.8) | ( 15.1) | ( 18.9) | | ( 1.1) | ( 1.4) | ( 0.4) | ( 16.4) | ( 19.3) |
| the | | | | | | | | | |
| period | | | | | | | | | |
+---------------+--------------+--------------+--------------+----------+--------------+--------------+--------------+--------------+--------------+
ii) Profit/(loss) on disposal of discontinuing operations may be analysed as
follows:
+-------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| | Year ended 31st | | Year ended 31st March 2008 |
| | March 2009 | | |
+-------------------------+--------------------------------------------+--+-----------------------------------------------------------+
| | Alba/Bush | Grundig | Total | | Leisure | Roadstar | Grundig | Total |
+-------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| | trademarks | | | | Division | | | |
+-------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| | | | | | (restated) | | | (restated) |
+-------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| | GBP'millions | GBP'millions | GBP'millions | | GBP'millions | GBP'millions | GBP'millions | GBP'millions |
+-------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| | | | | | | | | |
+-------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| Net assets disposed of | - | - | - | | 26.0 | - | 8.4 | 34.4 |
| as previously stated | | | | | | | | |
+-------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| Prior period adjustment | - | - | - | | 2.9 | - | - | 2.9 |
+-------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| Attributable Goodwill | - | - | - | | 1.2 | - | - | 1.2 |
+-------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| | - | - | - | | 30.1 | - | 8.4 | 38.5 |
+-------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| Profit/(loss) on | 14.9 | ( 3.9) | 11.0 | | 17.5 | ( 0.2) | 23.2 | 40.5 |
| disposal | | | | | | | | |
+-------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| | | | | | | | | |
+-------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| Total consideration net | 14.9 | ( 3.9) | 11.0 | | 47.6 | ( 0.2) | 31.6 | 79.0 |
| of costs etc | | | | | | | | |
+-------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
| Satisfied and to be | 14.9 | ( 3.9) | 11.0 | | 47.6 | ( 0.2) | 31.6 | 79.0 |
| satisfied by cash, and | | | | | | | | |
| net cash | | | | | | | | |
| inflow/(outflow) | | | | | | | | |
| arising on disposal | | | | | | | | |
+-------------------------+--------------+--------------+--------------+--+--------------+--------------+--------------+--------------+
8. Earnings per share
Basic earnings per share are based upon earnings of GBP(15.6) million (2008 :
GBP11.9 million) and 50,578,573 (2008 : 50,715,787) Ordinary Shares being the
average number of Ordinary Shares in issue during the twelve months ended 31
March 2009 excluding the shares held by The ESOP Trust. Basic earnings per share
on continuing activities are based upon earnings of GBP(7.7) million (2008 :
GBP(9.3) million) and on discontinuing activities upon earnings of GBP(7.9)
million (2008 : GBP21.2 million).
Diluted earnings per share are based upon earnings of GBP(15.6) million (2008 :
GBP11.9 million) and 50,578,573 (2008 : 50,715,787) Ordinary Shares allowing for
the exercise of outstanding share purchase options exercisable at a price below
the average fair value during the period and the shares held by The ESOP Trust.
Diluted earnings per share on continuing activities are based upon earnings of
GBP(7.7) million (2008 : GBP(9.3) million) and on discontinuing activities upon
earnings of GBP(7.9) million (2008 : GBP21.2 million).
Potential Ordinary shares of 682,472 (2008: 674,632) have been excluded from the
computation of diluted EPS as the shares are anti-dilutive.
9. Dividends
+-----------------------------------------------------------+--------------+--+--------------+
| | Year ended |
+-----------------------------------------------------------+--------------------------------+
| | 31 March | | 31 |
| | | | March |
+-----------------------------------------------------------+--------------+--+--------------+
| | 2009 | | 2008 |
+-----------------------------------------------------------+--------------+--+--------------+
| | (unaudited) | | (audited) |
+-----------------------------------------------------------+--------------+--+--------------+
| | GBP'millions | | GBP'millions |
+-----------------------------------------------------------+--------------+--+--------------+
| | | | |
+-----------------------------------------------------------+--------------+--+--------------+
| Interim paid in respect of prior year - nil (2008: 2.25p) | - | | 1.1 |
+-----------------------------------------------------------+--------------+--+--------------+
| | | | |
+-----------------------------------------------------------+--------------+--+--------------+
| Special Dividend of 30p per share - (2008: nil) (see note | 3.9 | | - |
| 10) | | | |
+-----------------------------------------------------------+--------------+--+--------------+
| | 3.9 | | 1.1 |
+-----------------------------------------------------------+--------------+--+--------------+
10. Statement of changes in equity and prior period adjustments
i) Changes in equity
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| | Ordinary | "B" | Deferred | Share | Capital | Investment | Translation | Hedging | Revaluation | Share | Retained | Total |
| | | | | Premium | Redemption | in own | | | | based | | |
| | | | | | | | | | | payment | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| | shares | shares | shares | account | reserve | shares | reserve | reserve | reserve | reserve | earnings | equity |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| | GBP'm | GBP'm | GBP'm | GBP'm | GBP'm | GBP'm | GBP'm | GBP'm | GBP'm | GBP'm | GBP'm | GBP'm |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| Group: | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| At 1 | 5.1 | --- | --- | 18.6 | --- | (2.3) | (8.1) | 1.8 | 5.8 | 1.7 | 52.8 | 75.4 |
| April | | | | | | | | | | | | |
| 2008 (as | | | | | | | | | | | | |
| previously | | | | | | | | | | | | |
| reported) | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| Prior | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | (4.9) | (4.9) |
| period | | | | | | | | | | | | |
| adjustments | | | | | | | | | | | | |
| (see below) | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| At 1 | 5.1 | --- | --- | 18.6 | --- | (2.3) | (8.1) | 1.8 | 5.8 | 1.7 | 47.9 | 70.5 |
| April | | | | | | | | | | | | |
| 2008 | | | | | | | | | | | | |
| (restated) | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| Retained | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | (15.6) | (15.6) |
| loss for | | | | | | | | | | | | |
| year | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| Issue of | --- | 15.4 | --- | (15.4) | --- | --- | --- | --- | --- | --- | --- | --- |
| "B" | | | | | | | | | | | | |
| shares | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| "B" | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | (3.9) | (3.9) |
| share | | | | | | | | | | | | |
| dividend | | | | | | | | | | | | |
| paid | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| Redemption | --- | (11.5) | --- | --- | 11.5 | --- | --- | --- | --- | --- | (11.5) | (11.5) |
| of "B" | | | | | | | | | | | | |
| shares | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| Reclassification | --- | (3.9) | 3.9 | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| of "B" shares to | | | | | | | | | | | | |
| deferred shares | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| Cancellation | --- | --- | (3.9) | --- | 3.9 | --- | --- | --- | --- | --- | --- | --- |
| of deferred | | | | | | | | | | | | |
| shares | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| Reversal | --- | --- | --- | --- | --- | --- | --- | (1.8) | --- | --- | --- | (1.8) |
| of prior | | | | | | | | | | | | |
| year | | | | | | | | | | | | |
| designated | | | | | | | | | | | | |
| hedge | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| Exchange | --- | --- | --- | --- | --- | --- | 0.9 | --- | --- | --- | --- | 0.9 |
| differences | | | | | | | | | | | | |
| on | | | | | | | | | | | | |
| translation | | | | | | | | | | | | |
| of overseas | | | | | | | | | | | | |
| operations | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| Transfer | --- | --- | --- | --- | --- | --- | --- | --- | (1.2) | --- | 1.2 | --- |
| on | | | | | | | | | | | | |
| reclassification | | | | | | | | | | | | |
| of properties to | | | | | | | | | | | | |
| Investment | | | | | | | | | | | | |
| properties | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| Transfer | --- | --- | --- | --- | --- | --- | (0.6) | --- | --- | --- | 0.6 | --- |
| of | | | | | | | | | | | | |
| accumulated | | | | | | | | | | | | |
| exchange | | | | | | | | | | | | |
| difference | | | | | | | | | | | | |
| on | | | | | | | | | | | | |
| disposals | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| Transfer | --- | --- | --- | --- | --- | --- | --- | --- | --- | (0.7) | 0.7 | --- |
| relating | | | | | | | | | | | | |
| to | | | | | | | | | | | | |
| lapsed | | | | | | | | | | | | |
| options | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| Property | --- | --- | --- | --- | --- | --- | --- | --- | (4.9) | --- | --- | (4.9) |
| revaluation | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| Share | --- | --- | --- | --- | --- | --- | --- | --- | --- | 0.1 | --- | 0.1 |
| based | | | | | | | | | | | | |
| payments | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| Taxation | --- | --- | --- | --- | --- | --- | --- | --- | 0.3 | --- | --- | 0.3 |
| on items | | | | | | | | | | | | |
| taken | | | | | | | | | | | | |
| directly | | | | | | | | | | | | |
| to | | | | | | | | | | | | |
| reserves | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
| At 31 | 5.1 | --- | --- | 3.2 | 15.4 | (2.3) | (7.8) | --- | --- | 1.1 | 19.4 | 34.1 |
| March | | | | | | | | | | | | |
| 2009 | | | | | | | | | | | | |
+------------------+----------+--------+----------+---------+------------+------------+-------------+---------+-------------+---------+----------+--------+
As set out in the Company's circular to shareholders dated 27 November 2008,
following the disposal of the Alba and Bush trademarks, a return of cash to
shareholders of the Company was effected by means of a "B" share scheme.
Pursuant to this scheme, 51,256,685 "B" Shares of 30p each were allotted to
shareholders. 38,239,650 of the "B" Shares were subject to the "B" Share Scheme
redemption and were redeemed at a price of 30p each and were then subsequently
cancelled. 13,017,035 of the "B" Shares were subject to the "B" Share Scheme
dividend of 30p per share which was paid on 9 January 2009. Such shares were
then converted to Deferred Shares, redeemed for a total aggregate price of 1p
and subsequently cancelled.
ii) prior period adjustment
The Group has identified corrections required to certain balances in the
financial statements of the prior year. The Group has therefore chosen to
restate the Balance Sheet and Income Statement as at, and for the year ended, 31
March 2008.
(a) The VAT debtor at 31st March 2008 was overstated by GBP2.9 million. This sum
should have been debited against the profit on sale of the Leisure Division
within discontinued operations as under the Purchase and Sale Agreement, such
sums were payable by the Group rather than being rechargeable to the Leisure
Division.
(b) Goods in transit at 31st March 2008 included GBP2.7 million of stock that
had already been received in the company's warehouses and hence included in
stock. Related sums due to the suppliers of these goods of GBP0.7 million were
also overstated. The net impact on cost of sales of GBP2.0 million is included
in Discontinued UK CE operations in the prior period.
11. Note to the consolidated cash flow statement
+-------------------------------------------------------+--------------+--+--------------+
| | Year ended |
+-------------------------------------------------------+--------------------------------+
| | 31 March | | 31 March |
+-------------------------------------------------------+--------------+--+--------------+
| | 2009 | | 2008 |
+-------------------------------------------------------+--------------+--+--------------+
| | (unaudited) | | (audited) |
+-------------------------------------------------------+--------------+--+--------------+
| | | | (restated) |
+-------------------------------------------------------+--------------+--+--------------+
| | GBP'millions | | GBP'millions |
+-------------------------------------------------------+--------------+--+--------------+
| | | | |
+-------------------------------------------------------+--------------+--+--------------+
| Cash flow from operating activities: | | | |
+-------------------------------------------------------+--------------+--+--------------+
| | | | |
+-------------------------------------------------------+--------------+--+--------------+
| Operating loss from continuing activities | ( 3.0) | | ( 9.5) |
+-------------------------------------------------------+--------------+--+--------------+
| Operating loss from discontinuing activities | ( 18.9) | | ( 12.4) |
+-------------------------------------------------------+--------------+--+--------------+
| | ( 21.9) | | ( 21.9) |
+-------------------------------------------------------+--------------+--+--------------+
| Adjustment for: | | | |
+-------------------------------------------------------+--------------+--+--------------+
| Depreciation of property, plant & equipment | 1.0 | | 1.2 |
+-------------------------------------------------------+--------------+--+--------------+
| Share based payments | 0.1 | | - |
+-------------------------------------------------------+--------------+--+--------------+
| Decrease in receivables | 10.2 | | 18.8 |
+-------------------------------------------------------+--------------+--+--------------+
| Decrease in inventories | 13.9 | | 23.1 |
+-------------------------------------------------------+--------------+--+--------------+
| Decrease in payables | ( 5.8) | | ( 14.5) |
+-------------------------------------------------------+--------------+--+--------------+
| Increase/(decrease) in provisions | 0.6 | | ( 0.3) |
+-------------------------------------------------------+--------------+--+--------------+
| | | | |
+-------------------------------------------------------+--------------+--+--------------+
| Cash flow (used by)/from operating activities | ( 1.9) | | 6.4 |
+-------------------------------------------------------+--------------+--+--------------+
| | | | |
+-------------------------------------------------------+--------------+--+--------------+
| Net Cash | | | |
+-------------------------------------------------------+--------------+--+--------------+
| | | | |
+-------------------------------------------------------+--------------+--+--------------+
| Cash and cash equivalents | 24.7 | | 28.2 |
+-------------------------------------------------------+--------------+--+--------------+
| Bank import advances | - | | ( 2.8) |
+-------------------------------------------------------+--------------+--+--------------+
| | 24.7 | | 25.4 |
+-------------------------------------------------------+--------------+--+--------------+
12. Financial risks
The main risks arising from the Group's financial instruments are interest rate
risk, liquidity risk, foreign currency risk and credit risk. The Board reviews
and agrees policies for managing each of these risks and they are summarised
below. These policies have remained unchanged since 1 April 2008.
Interest rate risk
The Group finances its operations through a mixture of retained profits, bank
borrowings and net funds. Where necessary the Group borrows in the desired
currencies at floating rates of interest. It is the view of the Group that banks
are service providers in the same way as shipping companies, insurance companies
etc. Having several banks, the Group can utilise this competitive situation to
ensure that all banks lend on the best borrowing terms. This is further enhanced
by the fact that banks have traditionally provided facilities at lower rates of
interest on trade finance than for other types of borrowing because of the
short-term nature of the liability. Added to this the Group has enjoyed an
unblemished reputation with its banks for many years, having always been
extremely prompt in meeting its obligations and handling all matters
appertaining to its business with banks efficiently.
Liquidity risk
As regards liquidity, the Group's policy has sought, since the current structure
was first established in the 1970's, to ensure continuity of funding through the
maintenance of excellent relationships with its banks. Through the use of
extensive Trade Finance facilities, the Group is able to ensure the availability
of required funding. Furthermore, as the proportion of the Group's purchases on
open credit increases, the Group's reliance on external funding will reduce.
Foreign currency risk
Most of the Group's purchases are in currencies different from the selling
currency. It is the Group's policy to eliminate a part of this exposure when
purchase programmes are planned through a combination of forward currency
contracts and options. All remaining exposure is eliminated at the time of
shipment. Gains and losses on instruments used for hedging are not realised
until the exposure that is being hedged is itself recognised. The fair value of
gains and losses on instruments used for hedging at 31 March 2009 amount to a
loss of GBPnil (2008 : GBP0.1 million).
The Group's policy does not give rise to instruments used for hedging having
more than one year to their maturity. As a result any unrealised gain or loss on
instruments used for hedging at the balance sheet date will be recognised in the
income statement of the next accounting period.
The Group has overseas subsidiary companies operating in Hong Kong and
Australia. The Group's Sterling balance sheet is partly protected from movements
in exchange rates by financing a proportion of its net investment in foreign
currencies.
Credit risk
The Group's principal financial assets are bank balances and cash, trade and
other receivables, investments and derivative financial instruments.
The credit risk on liquid funds and derivative financial instruments is limited
because the counterparties are banks with high credit ratings assigned by
international credit rating agencies.
The Group is exposed to credit risk via its trade receivables. Concentrations of
credit risk will also exist due to material amounts receivable from individual
customers. Major customers are all blue chip institutions and procedures are in
place to ensure customers have appropriate credit histories. The maximum credit
risk exposure at the balance sheet date is in total represented by the trade
receivables figure, which is net of appropriate provisions.
13. Directors Responsibility Statement
The Group's annual report will contain the following statement:
"Directors are required by the Companies Act 1985 to prepare financial
statements for each financial year which give a true and fair view of the state
of affairs of the Company and the Group as at the end of the financial year and
of the profit or loss for that period. It is also the Directors' responsibility
to maintain adequate accounting records, safeguard the assets of the Company and
the Group and take reasonable steps in preventing and detecting fraud and other
irregularities.
The Directors confirm that suitable accounting policies, consistently applied
and supported by reasonable and prudent judgements and estimates, have been used
in the preparation of the financial statements on a going concern basis and that
applicable accounting standards have been followed."
This information is provided by RNS
The company news service from the London Stock Exchange
END
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