We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Premier Direct | LSE:PDR | London | Ordinary Share | GB00B0S2Q322 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 16.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
Premium
RNS Number:6766F
Premier Direct Group PLC
15 October 2007
PDG.L
PREMIER DIRECT GROUP PLC
Final Results for the year ended 31 July 2007
Premier Direct Group Plc ("PDG" or "the Group"), the national shopping-at-work
company based in Newcastle, today announces its final results. The results for
the year have been prepared under International Financial Reporting Standards as
adopted by the EU("IFRS") and comparative figures for 2006 have been restated to
comply with these standards and adjustments to the revenue recognition
accounting policy.
KEY POINTS
Year to Year to Year to
31 July 31 July 31 July
2007 2006 2006
IFRS IFRS UK GAAP
Revenue #21.2m #25.5m #23.1m
Operating profit before charging one
off costs & goodwill amortisation #1.5m #1.9m #0.9m
Operating profit / (loss) #1.1m (#2.4m) (#3.6m)
Profit / (loss) before taxation #0.5m (#3.0m) (#4.1m)
Earnings / (loss) per share 2.9p (12.2p) (14.0p)
* Revenue reduction year on year in line with expectations
* Sales per distributor increased by 5%
* Steady growth in distributor numbers up to 540
* H2 showed a 5% increase in revenue over prior year
* Continued profit generation into H2
* Further growth in Oriflame profits
* Additional overhead reductions
* Net debt reduction of #0.5 to #6.1 million
* Final dividend proposed of 1p per share
Commenting, Eric McClenaghan, Chief Executive said:
"The Board remains committed to its strategy of controlled growth in the
distributor network whilst offering the best earning opportunity in the sector.
To this end, the Board has continued to implement measures with a view to
steadily improving the performance of the business.
Although it is relatively early in the Christmas sales season, the Board is
confident that our product offering is as strong as it has been for some time
and that our distributors are well motivated. Further, with the anticipated
sustainable growth in distributor numbers, we expect improved trading in the
first half over 2006."
Contacts
Premier Direct Group 0191 497 4100
Eric McClenaghan, Chief Executive
Christine Stobbs , Finance Director and Company
Secretary
KBC Peel Hunt (Nominated Adviser and Broker) 020 7418 8900
David Anderson
Oliver Stratton
Press Enquiries:
Biddicks 020 7448 1000
Zoe Biddick
CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT
Introduction
Premier Direct Group Plc ("PDG"), the national shopping-at-work company,
announces its results for the year ended 31 July 2007. These are the first
financial statements prepared by the Group in accordance with IFRS. Further
comment on this is included in the financial review section of this statement.
The Directors are pleased to confirm that the Group has continued to trade
profitably during the seasonally slower second half of the year. On total
revenue of #21.2 million (2006: #25.5 million), the Group achieved an operating
profit of #1.5 million (2006: #1.9 million) before one off costs. After charging
one off costs of #0.4 million (2006: #4.3 million) and interest of #0.6 million
(2006: #0.6 million), the pre tax profit of #0.5 million (2006: loss of #3.0
million) was in line with the Board's expectations.
As anticipated at the time of our trading statement in August, given the
encouraging performance of the Group, the Directors intend to propose a dividend
of 1p per share at the AGM on 11 December 2007 which, if approved, will be paid
on 24 December 2007 to shareholders on the register as at 3 December 2007.
Operating Review
The Board remains committed to its strategy of sustainable growth in the
distributor network whilst offering the best earning opportunity in the sector.
To this end, the Board has continued to implement measures with a view to
steadily improving the performance of the business. A wide ranging review of the
business in 2006 led to new recruitment structures, redefinition of the sales
territories and restructuring of internal functions. This led to significant
reduction in stock levels during the seasonally quieter second half and at the
same time enhanced the product range to the benefit of both our distributor
network and our end customers.
Sales & Marketing
As we reported last year, one of the consequences of a series of acquisitions
was significant overlap in the territories served by the distributor force,
which adversely affected the strength of our product mix. This impacted on the
sales force's earnings, subsequently leading to a net loss of distributors. A
single territory map for our distributor network was adopted in August 2006 and
has eliminated overlap, greatly improved stock utilisation and aided our ability
to undertake our recruitment activities in a more structured and effective
manner.
During the current year, we implemented changes to our field management
structure, appointing a team of 20 Business Coordinators. They have assumed
responsibility for the recruitment and training of distributors, typically
across five areas, while continuing to generate income from their personal sales
effort. These Coordinators remain part of our self-employed sales network
although they also receive a retainer for their additional services and a
performance related payment based on sales growth. The new structure is already
showing positive results with stabilisation of the distributor network and
recruitment progressing on target as we approach the most intense sales period
in the run-up to Christmas.
This year has been a year of recovery in terms of our distributor network and by
the end of the year, we had achieved a steady platform on which to grow
distributor numbers at a sustainable rate. We ended the financial year with 540
distributors, compared with approximately 500 at the end of the last financial
year, and this number is expected to continue to grow during the key Christmas
period.
Product Sourcing
Our dedicated buying team has continued to source innovative new product lines
to complement our book ranges. We have expanded our relationship with a key
partner in the Far East, achieving a fresher range of products and a higher
degree of reliability regarding shipment dates. This improvement in range has
resulted in an 11% increase in sales per site visited across the year. Factory
gate prices in China have begun to increase although this has been partially
offset by the weaker US Dollar. We are investigating India as a possible new
source for competitively priced product.
Reduction in Overheads
A number of cost reduction measures have been implemented across the business.
We have been able to eliminate the night shift picking operation in our
warehouse without impacting on operational efficiencies, and various
administration and finance roles have been reduced as a result of the new IT
systems. These savings will amount to almost #0.5 million on an annualised
basis. The full impact of these cost savings is expected to benefit the current
year.
The new IT system has been implemented and is gradually settling down. The
benefits from the system are expected to become visible in the current year.
Oriflame is trading satisfactorily and continues to generate profit and cash for
the Group. The traditional Oriflame business has seen a steady improvement in
turnover and profit since its acquisition in April 2006. Oriflame at Work, our
extension of the traditional business into the shopping-at-work format, has
shown some early positive results and will be a particular focus in the next
half year.
Financial Review
International Financial Reporting Standards
The Group has historically prepared its consolidated and parent company
financial statements under UK Generally Accepted Accounting Practice (UK GAAP).
The AIM rules require the adoption of IFRS as adopted by the EU (Adopted IFRS)
for accounting periods beginning on or after 1 January 2007. During the second
half of the financial year, PDG implemented a new management information and
financial reporting system based on IFRS. The Board therefore considered it
appropriate to report results for the year ended 31 July 2007 under IFRS.
The accounting policies under Adopted IFRS are set out in the notes to this
announcement. As part of the transition to Adopted IFRS the Directors have taken
the opportunity to reassess of all the Group's accounting policies and bases.
They have concluded that it is more appropriate to recognise revenue during the
period and in future periods only on sale by the distributor to the third party
end customer. Accordingly revenue has been recognised on this basis in each of
the opening balance sheet and periods presented.
A summary of the Group results is included below. The prior year numbers have
been restated under IFRS (note 6).
As reported As restated
2007 2006
#m #m
Revenue 21.2 25.5
Gross profit 7.8 6.5
Profit/(loss) before tax 0.5 (3.0)
Details of the IFRS accounting policies are set out in note 2.
The adoption of Adopted IFRS has an impact on the presentation of the accounts
but does not change the Group's business model, strategy, risk management
processes or cash flows.
Revenue for the year was #21.2 million compared with #25.5 million for the year
ended on 31 July 2006. Revenue at the shopping-at-work business amounted to
#19.1 million in 2007 compared with #25.0 million in 2006. In common with other
retailers, PDG has found the current trading environment to be challenging,
especially during the unusually warm Easter period and recently due to the
flooding experienced in many parts of the UK. This has contributed to the
reduction in turnover. In addition, this year we have focused on stabilising the
distributor network and ensuring we have a steady platform on which to base
sustainable growth in distributor numbers.
Group gross profit rose from #6.5 million in 2006 to #7.8 million in 2007,
assisted by the full year contribution from Oriflame.
Administrative expenses, excluding one off costs, have fallen by #0.5 million to
#6.3 million. This is due to management's continued focus on the identification
and implementation of cost efficiencies, in particular staff costs which have
fallen by #0.4m.
The Group's operating profit was #1.1 million (2006: loss of #2.4 million). The
net interest charge of #0.6 million was in line with last year.
The profit before taxation was #0.5 million (2006: loss of #3.0 million). Basic
earnings per share amounted to 2.9 pence, compared with a loss of 12.2 pence in
2006.
Net debt (being bank loans plus hire purchase liabilities less cash at the bank)
has fallen to #6.1 million (2006: #6.6 million).
In August 2007, the Group agreed new banking facilities of #7 million with RBS,
providing adequate resources to finance the gradual growth of our businesses.
The RBS fee for the facility was satisfied by the grant of warrants over 600,000
ordinary shares in PDG at a price of 45p per share. The warrants are valid until
31 July 2016.
People
On 31 July 2007, Graeme Allison, Finance Director, handed over to Christine
Stobbs ACA. Christine Stobbs joined Premier Direct Group in April 2006 from
KPMG. Graeme's strategic advice was very important during a difficult time for
the Group and his hard work during this time is greatly appreciated. At the same
time Paul Southworth retired as Non-Executive Director on the Board. We were
particularly grateful to Paul for his counsel in relation to the acquisition of
the UK Oriflame business. The Board thank both Graeme and Paul for their
contributions and wish them well for the future.
Indeed, the Board is grateful to all the staff of Premier Direct and Oriflame
for their steadfast support during a year of recovery.
Outlook
Although it is relatively early in the Christmas sales season, the Board is
confident that our product offering is as strong as it has been for some time
and our distributors are well motivated. Further, the anticipated sustainable
growth in distributor numbers is expected to continue in the busy Christmas
period. Therefore we expect improved trading in the first half over 2006.
Indeed, trading since 1 August 2007 in both businesses has been in line with the
Board's expectations.
Graham Wilson E McClenaghan
Non-Executive Chairman Chief Executive
Consolidated Income Statement
for year ended 31 July 2007
Note 2007 2006
#000 #000
Revenue 21,157 25,524
Cost of sales (13,365) (19,015)
---------------------------
Analysed as:
Inventory net realisable value 3 - (2,096)
provision - trade disposal
Other cost of sales (13,365) (16,919)
---------------------------
(13,365) (19,015)
---------------------------
Gross profit 7,792 6,509
Other operating income - 60
Administrative expenses (6,654) (8,973)
---------------------------
Analysed as:
Bad debt provision 3 - (415)
Goodwill impairment 3 - (1,340)
Termination costs 3 (195) (293)
Aborted deal costs 3 - (136)
Lease settlement 3 (163) -
Other administrative expenses (6,296) (6,789)
---------------------------
(6,654) (8,973)
---------------------------
Operating profit/(loss) 1,138 (2,404)
Financial income 5 -
Financial expenses (606) (598)
---------------------------
Profit/(loss) before tax 537 (3,002)
Taxation 70 496
---------------------------
Profit/(loss) for the year
attributable to equity holders of the
parent 607 (2,506)
===========================
Basic earnings/(loss) per share 4 2.9p (12.2p)
===========================
Diluted earnings/(loss) per share 4 2.9p (12.2p)
===========================
All of the above comprise continuing operations.
Consolidated Statement of Changes in Equity
for year ended 31 July 2007
Share Share Retained Total
capital premium earnings
#000 #000 #000 #000
As at 1 August 2005 204 3,463 2,578 6,245
Loss for year - - (2,506) (2,506)
Equity settled share based payment
transactions - - 20 20
Issue of shares 3 133 - 136
Dividends on shares classified in
shareholders' funds - - (953) (953)
----------------------------------
As at 31 July 2006 207 3,596 (861) 2,942
==================================
As at 1 August 2006 207 3,596 (861) 2,942
Profit for the year - - 607 607
Equity settled share based payment
transactions - - 68 68
----------------------------------
As at 31 July 2007 207 3,596 (186) 3,617
==================================
Consolidated Balance Sheet
at 31 July 2007
2007 2006
#000 #000
Non-current assets
Property, plant and equipment 1,483 1,458
Intangible assets 4,807 5,955
Deferred tax assets 315 29
----------------------------------
6,605 7,442
----------------------------------
Current assets
Inventory 6,515 6,663
Tax receivable 575 808
Trade and other receivables 1,910 2,748
Other financial assets 3 -
Cash and cash equivalents 141 261
----------------------------------
9,144 10,480
----------------------------------
Total assets 15,749 17,922
==================================
Non-current liabilities
Interest-bearing loans and borrowings (1,391) (1,856)
Deferred income (1,265) (1,316)
Other payables (303) (1,372)
Deferred tax liabilities - (18)
----------------------------------
(2,959) (4,562)
----------------------------------
Current liabilities
Bank overdraft (3,490) (2,412)
Interest-bearing loans and
borrowings (1,363) (2,624)
Trade and other payables (4,269) (5,268)
Deferred income (51) (51)
Tax payable - -
Other financial liabilities - (63)
----------------------------------
(9,173) (10,418)
----------------------------------
Total liabilities (12,132) (14,980)
==================================
Net assets 3,617 2,942
==================================
Equity attributable to equity holders of
the parent
Share capital 207 207
Share premium 3,596 3,596
Retained earnings (186) (861)
----------------------------------
Total equity 3,617 2,942
==================================
Consolidated Cash Flow Statement
for year ended 31 July 2007
2007 2006
#000 #000
Cash flows from operating
activities
Profit/(loss) for the year 607 (2,506)
Adjustments for:
Depreciation, amortisation and
impairment 272 1,598
Financial income (5) -
Financial expense 606 598
Gain on sale of property, plant
and equipment (1) (13)
Equity settled share-based
payment expenses 68 20
Taxation (70) (496)
--------------------------------
Operating profit/(loss) before
changes in working capital
1,477 (799)
Decrease in trade and other 708 104
receivables
Decrease in inventory 148 2,368
Decrease in trade and other payables (751) (747)
--------------------------------
Cash generated from the operations 1,582 926
Tax received/(paid) 314 (1,484)
--------------------------------
Net cash from operating activities 1,896 (558)
--------------------------------
Cash flows from investing activities
Proceeds from sale of property,
plant and equipment 27 35
Interest received 2 -
Acquisition of subsidiary, net
of cash acquired (449) 57
Acquisition of property, plant
and equipment (177) (341)
--------------------------------
Net cash from investing activities (597) (249)
--------------------------------
Cash flows from financing activities
Proceeds from the issue of share capital - 136
Proceeds from new loan - 4,500
Interest paid (532) (393)
Repayment of borrowings (1,900) (2,288)
Payment of finance lease liabilities (65) (87)
Dividends paid - (953)
Expenses paid in connection with debt issues - (50)
--------------------------------
Net cash from financing activities (2,497) 865
--------------------------------
Net (decrease)/increase in cash
and cash equivalents (1,198) 58
Cash and cash equivalents at 1 August (2,151) (2,209)
--------------------------------
Cash and cash equivalents at 31 July (3,349) (2,151)
================================
Notes
(forming part of the preliminary announcement)
1 Basis of preparation
The financial information given does not constitute the Group's statutory
accounts for the year ended 31 July 2007 or the year ended 31 July 2006.
The 2007 accounts will be prepared on the basis of the recognition and adoption
requirements of IFRSs as adopted by the EU ('Adopted IFRSs') that are effective
as at 31 July 2007. Based on these Adopted IFRSs, the directors have applied the
accounting policies as set out in note 2. The statutory accounts for 2007 will
be finalised on the basis of the financial information presented by the
directors in this preliminary announcement and will be delivered to the
Registrar of Companies in due course.
The preparation of this financial information resulted in changes to the
accounting policies as compared with the most recent financial statements
prepared under UK GAAP (year ended 31 July 2006). The revised accounting
policies have been applied to all periods presented in this financial
information. Reconciliations of financial information from UK GAAP to Adopted
IFRSs at key dates are included at note 6.
Statutory accounts for 2006, prepared under UK GAAP, have been delivered to the
Registrar of Companies. The auditors report on the 2006 accounts was (i)
unqualified (ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 237(2) or (3) of the Companies
Act 1985.
This preliminary announcement was agreed by the directors on 15 October 2007.
2 Accounting policies
Premier Direct Group Plc (the "Company") is a company incorporated in the UK.
The Group financial statements consolidate those of the Company and its
subsidiaries (together referred to as the "Group").
The Group financial statements have been prepared and approved by the directors
in accordance with International Financial Reporting Standards as adopted by the
EU ("Adopted IFRSs").
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in these consolidated financial
statements and in preparing an opening IFRS balance sheet at 1 August 2005 for
the purposes of the transition to Adopted IFRSs.
Transition to Adopted IFRSs
The Group is preparing its financial statements in accordance with Adopted IFRS
for the first time and consequently both have applied IFRS 1. An explanation of
how the transition to Adopted IFRSs has affected the reported financial
position, financial performance and cash flows of the Group is provided in note
6.
IFRS 1 grants certain exemptions from the full requirements of Adopted IFRSs in
the transition period. The following exemptions have been taken in these
financial statements:
* Business combinations - business combinations that took place prior to
transition date have not been restated.
* Share based payments - IFRS 2 is being applied to equity instruments
that were granted after 7 November 2002 and that had not vested by 1 August
2005.
* Leases reassessed - the Group has adopted the transitional provisions
whereby the Group has reviewed arrangements at the date of transition on
the basis of circumstances at this date.
Measurement convention
The financial statements are prepared on the historical cost basis except that
the following assets and liabilities are stated at their fair value: financial
instruments classified as fair value through the profit or loss.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group
has the power, directly or indirectly, to govern the financial and operating
policies of an entity so as to obtain benefits from its activities. In assessing
control, potential voting rights that are currently exercisable or convertible
are taken into account. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control commences until
the date that control ceases.
Foreign currency
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at
the foreign exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the income statement.
Classification of financial instruments issued by the Group
Following the adoption of IAS 32, financial instruments issued by the Group are
treated as equity (i.e. forming part of shareholders' funds) only to the extent
that they meet the following two conditions:
(a) they include no contractual obligations upon the Company (or
Group as the case may be) to deliver cash or other financial assets or to
exchange financial assets or financial liabilities with another party under
conditions that are potentially unfavourable to the Company (or Group); and
(b) where the instrument will or may be settled in the Company's
own equity instruments, it is either a non-derivative that includes no
obligation to deliver a variable number of the Company's own equity instruments
or is a derivative that will be settled by the Company's exchanging a fixed
amount of cash or other financial assets for a fixed number of its own equity
instruments.
To the extent that this definition is not met, the proceeds of issue are
classified as a financial liability. Where the instrument so classified takes
the legal form of the Company's own shares, the amounts presented in these
financial statements for called up share capital and share premium account
exclude amounts in relation to those shares.
Finance payments associated with financial liabilities are dealt with as part of
finance expenses. Finance payments associated with financial instruments that
are classified in equity are dividends and are recorded directly in equity.
Investments in debt and equity securities
Investments in subsidiaries are carried at cost less impairment. Financial
instruments held for trading or designated upon initial recognition or at the
IAS 39 transition date if later are stated at fair value, with any resultant
gain or loss recognised in profit or loss.
Derivative financial instruments and hedging
Derivative financial instruments are recognised at fair value. The gain or loss
on remeasurement to fair value is recognised immediately in profit or loss.
The fair value of forward exchange contracts is their quoted market price at the
balance sheet date, being the present value of the quoted forward price.
Intra-group financial instruments
Where the Company enters into financial guarantee contracts to guarantee the
indebtedness of other companies within its group, the Company considers these to
be insurance arrangements and accounts for them as such. In this respect, the
Company treats the guarantee contract as a contingent liability until such time
as it becomes probable that the Company will be required to make a payment under
the guarantee.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and impairment losses.
Where parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items of property, plant and
equipment.
Leases in which the Group assumes substantially all the risks and rewards of
ownership of the leased asset are classified as finance leases. Where land and
buildings are held under finance leases the accounting treatment of the land is
considered separately from that of the buildings where reliably possible to do
so. Where it is not possible to do so, the entire lease is treated as a finance
lease unless it is clear that both elements are operating leases, in which case
the entire lease is treated as an operating lease. Leased assets acquired by way
of finance lease are stated at an amount equal to the lower of their fair value
and the present value of the minimum lease payments at inception of the lease,
less accumulated depreciation and impairment losses. Lease payments are
accounted for as described below.
Depreciation is charged to the income statement on a straight-line basis over
the estimated useful lives of each part of an item of property, plant and
equipment. Land is not depreciated. The estimated useful lives are as follows:
* leasehold improvements - straight line over period of lease
* motor vehicles - 25% straight line
* plant and equipment - 15% straight line
* fixtures and fittings - 15% straight line
* computer equipment - 25% - 33% straight line
Intangible assets and goodwill
Subject to the transitional relief in IFRS 1, all business combinations are
accounted for by applying the purchase method. Goodwill represents amounts
arising on acquisition of subsidiaries. In respect of business acquisitions that
have occurred since transition date, goodwill represents the difference between
the fair value of consideration and the fair value of the net identifiable
assets, liabilities and contingent liabilities acquired. Identifiable
intangibles are those which can be sold separately or which arise from legal
rights regardless of whether those rights are separable.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is
allocated to cash-generating units and is not amortised but is tested annually
for impairment.
In respect of acquisitions prior to transition date, goodwill is included on the
basis of its deemed cost, which represents the amount recorded under UK GAAP
which was broadly comparable save that only separable intangibles were
recognised and goodwill was amortised.
Stocks
Stocks are stated at the lower of cost and net realisable value.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank
overdrafts that are repayable on demand and form an integral part of the Group's
cash management are included as a component of cash and cash equivalents for the
purpose only of the statement of cash flows.
Impairment
The carrying amounts of the Group's assets other than, inventories and deferred
tax assets, are reviewed at each balance sheet date to determine whether there
is any indication of impairment. If any such indication exists, the asset's
recoverable amount is estimated.
For goodwill, assets that have an indefinite useful life and intangible assets
that are not yet available for use, the recoverable amount is estimated at each
balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in the income statement.
Impairment losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to cash-generating
units and then to reduce the carrying amount of the other assets in the unit on
a pro rata basis. A cash generating unit is the smallest identifiable group of
assets that generates cash inflows that are largely independent of the cash
inflows from other assets or groups of assets.
Goodwill, assets that have an indefinite useful life and intangible assets that
are not yet available for use were tested for impairment as at 1 August 2005,
the date of transition to Adopted IFRSs, even though no indication of impairment
existed.
Calculation of recoverable amount
The recoverable amount of the Group's investments in held-to-maturity securities
and receivables carried at amortised cost is calculated as the present value of
estimated future cash flows, discounted at the original effective interest rate
(i.e., the effective interest rate computed at initial recognition of these
financial assets). Receivables with a short duration are not discounted.
The recoverable amount of other assets is the greater of their net selling price
and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to
the asset. For an asset that does not generate largely independent cash inflows,
the recoverable amount is determined for the cash-generating unit to which the
asset belongs.
Reversals of impairment
An impairment loss in respect of a held-to-maturity security or receivable
carried at amortised cost is reversed if the subsequent increase in recoverable
amount can be related objectively to an event occurring after the impairment
loss was recognised.
An impairment loss in respect of an investment in an equity instrument
classified as available for sale is not reversed through profit or loss. If the
fair value of a debt instrument classified as available-for-sale increases and
the increase can be objectively related to an event occurring after the
impairment loss was recognised in profit or loss, the impairment loss is
reversed through profit or loss.
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed when there is an
indication that the impairment loss may no longer exist and there has been a
change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been recognised.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost with any difference
between cost and redemption value being recognised in the income statement over
the period of the borrowings on an effective interest basis.
Employee share schemes
The cost of awards to employees that take the form of shares or rights to shares
are recognised over the period of the employee's related performance. Where
there are no performance criteria, the cost is recognised when the employee
becomes unconditionally entitled to the shares.
Pension costs
The Group makes contributions to the personal pension schemes of two directors.
The amount charged to the profit and loss account in respect of these
contributions represents the contribution payable in respect of the accounting
period.
Revenue
Revenue is the aggregate amount derived from the sale of books, novelty goods
and cosmetics. Revenues are taken to the income statement when goods are sold on
by distributors to end third party customers, recovery of the consideration is
probable and the amount of revenue can be measured reliably.
All turnover arises in the UK and the Republic of Ireland.
Expenses
Operating lease payments
Payments made under operating leases are recognised in the income statement on a
straight-line basis over the term of the lease. Lease incentives received are
recognised in the income statement as an integral part of the total lease
expense.
Finance lease payments
Minimum lease payments are apportioned between the finance charge and the
reduction of the outstanding liability. The finance charge is allocated to each
period during the lease term so as to produce a constant periodic rate of
interest on the remaining balance of the liability.
Net financing costs
Net financing costs comprise interest payable, finance charges on finance
leases, interest receivable on funds invested, foreign exchange gains and losses
and gains and losses on financial instruments that are recognised in the income
statement.
Interest income and interest payable is recognised in profit or loss as it
accrues, using the effective interest method.
The discounting of deferred consideration produces a notional interest payable
amount and this is charged to finance costs.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax
is recognised in the income statement except to the extent that it relates to
items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. The following temporary differences are not provided for:
the initial recognition of goodwill; the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit other than in a
business combination, and differences relating to investments in subsidiaries to
the extent that they will probably not reverse in the foreseeable future. The
amount of deferred tax provided is based on the expected manner of realisation
or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised.
Dividends on shares presented within shareholders' funds
Dividends unpaid at the balance sheet date are only recognised as a liability at
that date to the extent that they are appropriately authorised and are no longer
at the discretion of the Company. Unpaid dividends that do not meet these
criteria are disclosed in the notes.
Provisions
A provision is recognised if, as a result of a past event, the Group has a
present legal or constructive obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future
cashflows at a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to that liability. Contingent deferred
consideration is originally recorded at fair value at the date of acquisition.
This is then increased to the settlement value at an effective interest rate
basis over the period of deferral with this value being charged as notional
interest within finance expenses in the income statement.
Adopted IFRS not yet applied
The following Adopted IFRSs were available for early application but have not
been applied in these financial statements:
* Amendments to IAS 1 'Presentation of financial statements' applicable
for years commencing on or after 1 January 2007
* IFRS 7 'Financial instruments: Disclosure' applicable for years
commencing on or after 1 January 2007
The application of Amendment to IAS 1 and IFRS 7 in 2007 would not have affected
the balance sheets or income statement as the standard is concerned only with
disclosure. The Group plans to adopt it in the year ending 31 July 2008.
* IFRIC 10 'Financial reporting and impairment' application for years
commencing on or after 1 November 2006
The application of IFRIC 10 prevents the reversal of an impairment loss
recognised in a previous interim period in respect of goodwill or an investment
in either an equity instrument or a financial asset carried at cost.
Application of IFRIC 10 would have had no effect on the current or prior year.
* IFRIC 11 'Group and treasury share transactions' applicable for years
commencing on or after 1 March 2007.
IFRIC 11 'Group and treasury share transactions' requires a share-based payment
arrangement in which an entity receives goods or services as consideration for
its own equity instruments to be accounted for as an equity-settled share-based
payment transaction, regardless of how the equity instruments are obtained. It
is not expected to have any impact on the consolidated financial statements.
Application of IFRIC 11 would have had no effect on the current or prior year.
3 Expenses
The following are one-off costs separately identified on the face of the
consolidated income statement
Current year
Administrative expenses
* Termination costs
Termination costs arose as a result of two actions in the second half of the
year; firstly changes were implemented to the field management structure and
secondly a reduction in staff numbers resulting from implementation of the
new IT system.
* Lease settlement
Final costs for premises following completion of the new lease negotiations
a one off charge was incurred.
Prior year
Cost of sales
* Stock NRV provision
In the latter half of the prior year, average selling prices of stock fell
which, along with other factors had an adverse impact on distributor
earnings in particular territory overlaps. The Board decided to undertake a
very thorough review of the business and identified actions required to
improve the Group's future performance. This included disposing of the older
tired stock outside the distributor network and resulted in a net realisable
value provision.
Administrative expenses
* Bad debt provision
A significant trade customer went into liquidation during the period.
* Goodwill impairment
Goodwill which arose on the acquisition of the distributor network
trading brands and certain assets and liabilities of The Laughing
Gull and Greenwich Direct businesses during the year ending 31 July
2005 was fully impaired during the prior year. The value in use of
the goodwill to the Group was determined to be #nil based on future
expected discounted cash flows and applying a discount rate of 20%.
* Termination costs
Termination costs resulted form a restructure of the Board and
management team in the latter part of 2006.
* Aborted deal costs
Costs were incurred in relation to a potential acquisition during the year,
a decision was taken to abort the transaction prior to completion.
4 Earnings/(loss) per share
Earnings/(loss) per share is calculated by dividing the profit for the year
of #607,000 (2006: loss #2,506,000) by the weighted average number of
shares, 20,730,920 (2006: 20,608,043), in issue during the year.
The diluted earnings/(loss) per share is calculated by dividing the profit for
the year of #607,000 (2006: loss #2,506,000) by the weighted average number of
shares adjusted to allow for the issue of shares on the assumed conversion of
dilutive options. The adjusted weighted average number of ordinary shares
arising from these calculations in 2007 is 20,801,945 (2006: 20,608,043). In
2006, as the impact of the dilutive options would be to reduce the loss per
share, they are not treated as dilutive. The diluted loss per share in 2006 is
therefore unchanged from the loss per share.
All of the above are in respect of continuing operations.
5 Dividend
2007 2006
#000 #000
Total dividends payable
2005 final dividends (#0.03 per share) - 611
2006 interim dividend (#0.016p per share) - 342
2006 final dividend (#nil per share) - -
--------------------
- 953
====================
Dividends proposed at year end and not included as a
liability in the accounts
2006 final dividend (#nil per share) - -
2007 final dividend (#0.01 per share) 207 -
--------------------
207 -
====================
After the balance sheet date dividends of #0.01 per qualifying ordinary share
(2006: #nil) were proposed by the directors. The dividends have not been
provided for in these financial statements as they remain at the discretion of
the Company.
6 Explanation of transition to Adopted IFRSs - Group
As stated in note 1, these are the Group's first consolidated financial
statements prepared in accordance with Adopted IFRSs.
The accounting policies set out in note 1 have been applied in preparing the
financial statements for the year ended 31 July 2007, the comparative
information presented in these financial statements for the year ended 31 July
2006 and in the preparation of an opening IFRS balance sheet at 1 August 2005
(the Group's date of transition).
In preparing its opening IFRS balance sheet, the Group has adjusted amounts
reported previously in financial statements prepared in accordance with its old
basis of accounting (UK GAAP). An explanation of how the transition from UK GAAP
to Adopted IFRSs has affected the Group's financial position, financial
performance and cash flows is set out in the following tables and the notes that
accompany the tables.
Reconciliation of equity as at 31 July 2006
UK Revenue Share Goodwill Forward Business Provisions Adopted
GAAP recognition options exchange combinations IFRSs
contract
(a) (b) (c) (d) (e) (f)
#000 #000 #000 #000 #000 #000 #000 #000
Non-current
assets
Property, plant
and equipment 1,458 - - - - - - 1,458
Intangible
assets -
goodwill 5,871 - - 294 - (681) (210) 5,274
Intangible
assets - licence - - - - - 681 - 681
Deferred tax
assets 29 - - - - - - 29
-------------------------------------------------------------------------------------
7,358 - - 294 - - (210) 7,442
-------------------------------------------------------------------------------------
Current assets
Inventory 4,443 2,220 - - - - - 6,663
Tax receivable 808 - - - - - - 808
Trade and other
receivables 6,494 (3,746) - - - - - 2,748
Cash and cash
equivalents 261 - - - - - - 261
-------------------------------------------------------------------------------------
12,006 (1,526) - - - - - 10,480
-------------------------------------------------------------------------------------
Total assets 19,364 (1,526) - 294 - - (210) 17,922
=====================================================================================
Non-current
liabilities
Interest-bearing
loans and
borrowings (1,856) - - - - - - (1,856)
Deferred income (1,316) - - - - - - (1,316)
Other payables (1,497) - - - - - 125 (1,372)
Deferred tax
liabilities (18) - - - - - - (18)
-------------------------------------------------------------------------------------
(4,687) - - - - - 125 (4,562)
-------------------------------------------------------------------------------------
UK Revenue Share Goodwill Forward Business Provisions Adopted
GAAP recognition options exchange combinations IFRSs
contract
(a) (b) (c) (d) (e) (f)
#000 #000 #000 #000 #000 #000 #000 #000
Current
liabilities
Bank overdraft (2,412) - - - - - - (2,412)
Interest-bearing
loans and
borrowings (2,624) - - - - - - (2,624)
Trade and other
payables (5,369) - - - - - 50 (5,319)
Other financial
liabilities - - - - (63) - - (63)
-------------------------------------------------------------------------------------
(10,405) - - - (63) - 50 (10,418)
-------------------------------------------------------------------------------------
Total
liabilities (15,092) - - - (63) - 175 (14,980)
-------------------------------------------------------------------------------------
Net assets 4,272 (1,526) - 294 (63) - (35) 2,942
-------------------------------------------------------------------------------------
Equity
attributable to
equity holders
of the parent
Share capital 207 - - - - - - 207
Share premium 3,596 - - - - - - 3,596
Retained
earnings 469 (1,526) - 294 (63) - (35) (861)
-------------------------------------------------------------------------------------
Total equity 4,272 (1,526) - 294 (63) - (35) 2,942
-------------------------------------------------------------------------------------
Reconciliation of equity as at 1 August 2005
UK GAAP Revenue Share Forward Adopted
recognition options Goodwill exchange IFRSs
contract
(a) (b) (c) (d)
#000 #000 #000 #000 #000 #000
Non-current assets
Property, plant and
equipment 1,396 - - - - 1,396
Intangible assets -
goodwill 5,339 - - - - 5,339
Deferred tax assets 72 - - - - 72
--------------------------------------------------------------
6,807 - - - - 6,807
--------------------------------------------------------------
Current assets
Inventory 5,343 3,660 - - - 9,003
Other financial assets - - - - 4 4
Trade and other
receivables 9,394 (6,142) - - - 3,252
Cash and cash
equivalents - - - - - -
--------------------------------------------------------------
14,737 (2,482) - - 4 12,259
--------------------------------------------------------------
Total assets 21,544 (2,482) - - 4 19,066
==============================================================
Non-current liabilities
Interest-bearing loans
and borrowings (1,052) - - - - (1,052)
Deferred tax liabilities (39) - - - - (39)
--------------------------------------------------------------
(1,091) - - - - (1,091)
--------------------------------------------------------------
Current liabilities
Bank overdraft (2,209) - - - - (2,209)
Interest-bearing loans
and borrowings (1,278) - - - - (1,278)
Trade and other payables (7,094) - - - - (7,094)
Tax payable (1,894) 745 - - - (1,149)
--------------------------------------------------------------
(12,475) 745 - - - (11,730)
--------------------------------------------------------------
Total liabilities (13,566) 745 - - - (12,821)
--------------------------------------------------------------
Net assets 7,978 (1,737) - - 4 6,245
==============================================================
Reconciliation of equity as at 1 August 2005 (continued)
UK GAAP Revenue Share Forward Adopted
recognition options Goodwill exchange IFRSs
contract
(a) (b) (c) (d)
#000 #000 #000 #000 #000 #000
Equity attributable to
equity holders of the
parent
Share capital 204 - - - - 204
Share premium 3,463 - - - - 3,463
Retained earnings 4,311 (1,737) - - 4 2,578
--------------------------------------------------------------
Total equity 7,978 (1,737) - - 4 6,245
==============================================================
Reconciliation of consolidated income statement for the year ended 31 July 2006
UK Revenue Share Goodwill Forward Provisions Adopted
GAAP recognition options exchange IFRSs
contract
(a) (b) (c) (d) (f)
#000 #000 #000 #000 #000 #000 #000
Revenue 23,128 2,396 - - - - 25,524
Cost of sales (17,575) (1,440) - - - - (19,015)
------------------------------------------------------------------------
Gross profit 5,553 956 - - - - 6,509
Other operating
income 60 - - - - - 60
Administrative
expenses (9,247) - (20) 294 - - (8,973)
------------------------------------------------------------------------
Operating loss
(3,634) 956 (20) 294 - - (2,404)
Financial income - - - - - - -
Financial expenses (496) - - - (67) (35) (598)
------------------------------------------------------------------------
Loss before tax (4,130) 956 (20) 294 (67) (35) (3,002)
Taxation 1,241 (745) - - - - 496
------------------------------------------------------------------------
Loss for the year
attributable to
equity holders of
the parent (2,889) 211 (20) 294 (67) (35) (2,506)
------------------------------------------------------------------------
Notes to the reconciliation of equity as at 1 August 2005 and 31 July 206 and
reconciliation of consolidated income statement for year ended 31 July 2006
a) Revenue recognition
As a result of the group's business model, the point at which the group
transfers significant risks and rewards of ownership of goods (and hence revenue
is recognised) is judgemental. The arrangements under which certain goods are
transferred to distributors for sale to customers include limited rights to
return those goods. Previously, since July 2005 (in the financial statements
for the years ended 31 July 2005 and 2006 prepared under UK GAAP), revenue was
recognised on transfer of those goods to distributors (less a level of estimated
returns), since the remaining criteria set out in standards for recognition of
sale were met and assuming the ability to reliably measure the level of
returns. This approach required a finely balanced judgement taking into account
available information on historic levels of returns. The directors have
monitored the subsequent level of returns and have reconsidered that judgement
as part of the transition to Adopted IFRS. In applying Adopted IFRS they have
concluded that it is more appropriate to recognise revenue only on sale by the
distributor to the third party end customer. This approach has been applied
consistently in preparing an opening balance sheet at the date of transition to
Adopted IFRSs and throughout the two years presented in these financial
statements. This also has a tax effect.
b) Share options
In accordance with IFRS 2 'Share based payments' the fair value of share options
granted after 7 November 2007 is recognised as an employee expense with a
corresponding increase in equity.
The charge for the year ended 31 July 2006 is #20,000.
c) Goodwill
In accordance with IFRS 3 'Business combinations' goodwill is not amortised from
the date of transition, but is tested annually for impairment. Under UK GAAP,
goodwill was amortised over a period between 17 and 20 years.
d) Forward exchange contracts
In accordance with IAS 32 'Financial instruments: presentation' forward exchange
contracts are valued at fair value with gains and losses recognised through the
income statement.
Previously under UK GAAP gains and losses were disclosed but not recognised in
the income statement.
e) Business combinations
In accordance with IFRS 3 'Business combinations' intangible assets are recorded
at fair value. An intangible asset of #681,000 relating to the licence to use
the Oriflame brand name is recognised under IFRS which was not previously
recognised under UK GAAP.
f) Provisions
A provision is recognised if, as a result of a past event, the Group has a
present legal or constructive obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to that liability. Contingent deferred
consideration arising on the acquisition of Oriflame (UK) Limited is originally
recorded at fair value at the date of acquisition. This is then increased to the
settlement value on an effective interest rate basis over the period of deferral
with this value being charged as notional interest within finance expenses in
the income statement
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UUSWRBNRRAAA
1 Year Premier Direct Chart |
1 Month Premier Direct Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
