European Home Retail Share Discussion Threads

[cheltspy] 07/12/2005 08:25

Seems so, but prefer to wait abit.

[skintvestor] 07/12/2005 08:20

Can`t believe these have been marked down so much after such neutral results. Must be an absolute bargain at these levels!!!!!! IMHO

[skintvestor] 07/12/2005 08:19

Interim Results

RNS Number:2568V
European Home Retail plc
07 December 2005


For Immediate Release 7th December 2005



European Home Retail plc



INTERIM RESULTS FOR THE SIX MONTHS ENDED 31st OCTOBER 2005



European Home Retail plc, the leading European home retail group, announces
interim results for the six months ended 31st October 2005.

Key Points



* Turnover up 28% to #101.6 million (2004: #79.4m) reflecting maiden
contribution of internet businesses



* Operating profit before exceptionals, joint venture and associate,
#1.2m (2004 #2.3 million)



* Loss before tax and exceptional items of #0.6 million (2004: profit
#2.1 million) following anticipated investment in eeZee tv



* Basic Loss Per Share of 1.58 pence per share (2004: earnings of
2.98 pence per share)



* Interim dividend of 1.12 pence per share declared (2004: 1.07p
pence per share)



* Full year pre-tax profit expected to be not less than #3.5 million,
with substantial uplift anticipated in year ending 30th April 2007



* Internet unique users in November increased by over 60% to 2.6
million (November 2004: 1.6 million)



* Kitbag awarded exclusive rights for 45 countries to World Cup shop
from FIFA.com for 2006 World Cup plus five year contract for Celtic Football
Club, complementing existing Manchester United, Chelsea and Barcelona club
contracts.



* Outsourcing of Farepak hamper business proceeding smoothly and on
line to deliver cost savings



* Change of format for eeZee tv from live to "as live" thereby
eliminating losses going forward



William Rollason, Chief Executive, said:



"The period just reported has been in line with expectations and represents the
first full six months of trading with all of our new acquisitions.



We are, however, not immune to the overall economic conditions and November
trading results for Kleeneze Europe have seen revenue fall below expectations.
As a result we now expect current year profit before taxation and amortisation
to be not less than #3.5 million.



The strategy that we have put in place to widen our product range and
distribution channels will have been successfully implemented by the year end.
The year ending 30th April 2007 will also benefit substantially from the
elimination of #2.1 million of operating losses at eeZee tv as well as improved
efficiencies within our Catalogue Home Shopping division and further growth in
our internet retailing activities."



Contacts:


European Home Retail plc 01793 606000
William Rollason, Chief Executive
Chris Hulland, Finance Director

Buchanan Communications 020 7466 5000
Richard Oldworth/Suzanne Brocks

EUROPEAN HOME RETAIL PLC



CHAIRMAN'S STATEMENT



Revenue for the first six months increased by 28% to #101.6 million (2004: #79.4
million) due to the first time contribution of our internet businesses.
Excluding the acquisitions revenue grew by 16% primarily due to the increase in
low margin voucher business in the Catalogue Home Shopping division



Due to the seasonal loss making nature of our internet businesses, which we
acquired in the second half of last year, Group operating profit before
exceptional items, joint venture and associate was reduced to #1.2 million
(2004: #2.3 million). Excluding the acquisitions made last financial year,
operating profit grew by 17% primarily due to a timing difference on the
marketing expenditure at Farepak.



The Group recorded a loss before tax and exceptional items of #0.6 million
(2004: profit #2.1 million) due to the anticipated share of our investment in
eeZee tv of #1.1 million (2004: #nil) and the increased net finance charge of
#0.6 million (2004: net finance income #0.05 million)



The share of our investment in eeZee tv led to basic losses per share, excluding
non-operating items, of 1.58 pence (2004: earnings 2.98 pence).



Net debt at 31st October 2005 was #7.6 million (2004: Net funds of #10.8
million). Net liabilities at 31st October 2005 were #10.9 million (2004: #11.8
million and 30th April 2005: #9.1 million).



IFRS



Our results for the period and comparatives have been prepared in accordance
with International Financial Accounting Standards. Details showing the
adjustments to published results for the financial year ended 30th April 2005
and the six months ended 31st October 2004 are shown in the report "Adoption of
International Financial Reporting Standards" which can be found on the Company's
investor relations website at www.europeanhomeretail.com



CATALOGUE HOME SHOPPING



Revenue for the first six months increased by 16% to #92.3 million (2004: #79.3
million). This is primarily due to the increase in low margin voucher business
at Farepak. Operating profit increased by 17% to #3.4 million (2004: #2.9
million) due to a timing difference in the marketing costs at Farepak.



At Kleeneze Europe revenue grew by 4% to #45.4 million (2004: #43.8 million).
The number of active distributors in the UK and Ireland increased to 13,504
(2004: 13,374) and we continued to work on average sales per retailer per period
("ASR"), which grew in the six months by 13% to #813 (2004: #720). We have
achieved this by enhancing the offering in our Health & Beauty catalogue, which
we have now increased to 48 pages from 32 pages, and continuing our focus groups
to ensure that the main book remains attractive to our customers. Margins in
the first six months reduced slightly due to a one off 9% increase in
distribution charges, which includes a fuel surcharge levied on us following the
recent increases in oil prices. Our Dutch operation started quickly last year
and although the number of active distributors has fallen, it is now at the same
level as Ireland where we have been trading since 1995. We remain confident that
further growth will arise in the second half.



At Farepak we are focusing on Christmas 2005 deliveries to our customers. The
outsourcing of our hamper production has proceeded smoothly and is on track to
produce the anticipated savings. Our voucher business has seen considerable
growth albeit at low margins. The recruitment season for 2006 has commenced and
the initial enquiries are ahead of the same time last year. Our Christmas 2006
product range has been extended and our voucher offering has been further
improved to provide competitive differentiation in this growing area.



INTERNET RETAILING



Revenue for the first six months was #9.4 million (2004: #0.1 million) and there
was an operating loss of #1.7 million (2004: #0.1 million). We acquired I Want
One of Those.com Limited ("IWOOT") in October 2004 and Kitbag.com Limited ("
Kitbag") in April this year. Both businesses are traditionally loss making in
the first six months of the financial year.



We re-launched IWOOT's website on 2nd September 2005 to increase its capacity
and speed to reflect the increased number of items and categories as we now
carry over 750 items on the site across nine categories. IWOOT's website
received 1.2 million unique visitors in November, a 47% increase over last year.
We continue to add new customers to our database, which has increased by 25%
since acquisition. We have re-located IWOOT's distribution to a dedicated
warehouse in South London to handle the increased turnover.



Kitbag has recently signed a five year contract for the exclusive internet and
catalogue retailing rights for Celtic Football Club. This continues our
strategy of representing major football club brands and will complement
Manchester United, Chelsea and Barcelona. We also won the exclusive rights to
run the World Cup shop for FIFA.com for the duration of the 2006 World Cup,
covering 45 countries. Kitbag received 1.4 million unique visitors to its
website in November - a 74% increase over November last year.



TELEVISION SHOPPING



eeZee tv, broadcasting on Sky 659, grew its audience as it established itself in
the television shopping spectrum. Our Retailer Hours, currently comprising
Carphone Warehouse and Robert Dyas, have been well received and we are
negotiating with other well known High Street retailers to increase these. We
continue to work on flowing product through eeZee tv into our catalogues and the
first items will be in our catalogues to be released in December. We believe
that there is much more that can be done to improve the flow of product across
our platforms. The popularity of our Kleeneze Show continues to increase and we
are now broadcasting this show four times a week.



DIVIDEND



The Board is declaring an interim dividend of 1.12 pence per share, a 5%
increase over last year (2004: 1.07 pence per share) reflecting the Board's
confidence in the Group's ongoing growth prospects. This will be paid on 21st
March 2006 to shareholders on the register on 16th December 2005.



OUTLOOK



The period just reported has been in line with expectations and represents the
first full six months of trading with all of our new acquisitions. We have
already seen some benefits from widening the product range and the distribution
channels, which will continue to increase.



In our Catalogue Home Shopping division we grew revenue in spite of an
increasingly difficult retail environment. We are, however, not immune to the
overall economic conditions and, in November, we have seen revenue at Kleeneze
Europe fall below expectations. Our Kleeneze Christmas catalogue is trading
well year on year but we are seeing sales of the main book, which represents
some 60% of total revenue, slowing down. We will launch a new main book later
this month and based on our customer research we expect this to trade well. The
slow down in revenue growth has reduced our ability to offset the significant
increases in distribution charges that we have had to absorb during this year,
which we have capped at RPI going forward. Recognising this we have taken steps
to reduce the cost base and improve efficiencies in the Catalogue Home Shopping
division so that our margin going forward should not be affected. We remain on
track to launch in Germany during the early part of 2006. Farepak's 2005
Christmas season is trading in line with our expectations.



In our Internet Retailing division the Christmas period represents a significant
part of the year's trading and the early indications are that we will meet our
expectations. We are encouraged by the increase in traffic at both IWOOT and
Kitbag.



Television Shopping remains a good opportunity for us. We have recently changed
the format of eeZee tv by moving from a live to a pre recorded format. This will
enable us to reduce the cost base substantially over the next two months so that
our investment will be lower in the second half of this year and we expect the
business to be in a breakeven position next financial year. We are accelerating
the flow through of successful product from eeZee tv into our catalogues. In
November we released a catalogue across the Kleeneze network dedicated to the
most successful products from IWOOT, eeZee tv and Kitbag. Early indications are
that this has been well received.



With a continuation of the recent slow down in revenue growth at Kleeneze
Europe, profit before tax and amortisation for the year ending 30th April 2006
will be lower than the current expectations but should not be less than #3.5
million.



The strategy that we have put in place to widen our product range and
distribution channels will have been successfully implemented by the year end.
The year ending 30th April 2007 will also benefit substantially from the
elimination of #2.1 million of operating losses at eeZee tv as well as improved
efficiencies within our Catalogue Home Shopping division and further growth in
our internet retailing activities.



Sir Clive Thompson

7th December 2005