TIDMSWL
RNS Number : 8135R
Swallowfield PLC
05 March 2019
Swallowfield plc
("Swallowfield" or the "Group")
Interim results
Swallowfield plc, a market leader in the development,
formulation, and supply of personal care and beauty products,
including its own portfolio of brands, announces its interim
results for the 28 weeks ended 12 January 2019
Financial highlights
-- Group revenue increased by 3.7% to GBP41.4m. Brands sales
grew 1.3% to GBP12.5m, against a strong comparative H1 FY18. Strong
volume recovery from Manufacturing sales with growth of 8.8%.
-- Strong margin in Brands has continued despite a challenging external environment.
-- Manufacturing margin in H1 has been significantly impacted by
the continuing high level of material cost inflation and a weaker
product mix. This will be mitigated by secured price increases in
H2 (as previously announced) and a more positive product mix.
-- Underlying operating profit reduced to GBP1.6m, with a strong
recovery anticipated in H2, driven by the above actions and cost
base optimisation in our Manufacturing business.
-- Significant reduction in net debt to GBP6.8m from year end GBP11.8m due to working capital normalisation.
-- Interim dividend increased by 7.5% to 2.15 pence.
GBPm unless otherwise stated 2019 2018
-------------------------------------- ----------------- ---------
Reported results (1)
----------------- ---------
Revenue GBP41.4m GBP39.9m
----------------- ---------
Underlying operating profit (1) GBP1.63m GBP3.40m
----------------- ---------
Adjusted basic earnings per share
(1) 7.9p 13.7p
----------------- ---------
Statutory results
----------------- ---------
Revenue GBP41.4m GBP40.0m
----------------- ---------
Operating profit before exceptional GBP1.43m GBP2.99m
items
----------------- ---------
Basic earnings per share 3.1p 13.1p
----------------- ---------
Total dividend per share 2.15p 2.0p
----------------- ---------
Net debt GBP6.8m GBP7.0m
----------------- ---------
(1) Underlying operating profit is calculated before LTIP,
amortisation of acquisition related intangibles, exceptional items
and net borrowing costs. Adjusted earnings per share is calculated
using operating profit before exceptional items and amortisation of
acquisition related intangibles.
Operational highlights
-- Strong innovation and new product development (NPD) momentum
has continued in Brands with new launches and re-stages across 3
'Drive' brands and 3 'Build' brands.
-- Focus on international and e-commerce distribution expansion
in Brands, supported by further investment in organisational
capability.
-- Manufacturing delivering significant year on year growth,
fuelled by volume performance of new contracts, with further new
business in the prestige sector secured for the second half.
-- Actions taken to streamline Manufacturing portfolio and
optimise cost base, with strategic review to be concluded in
H2.
Brendan Hynes, Non-executive Chairman, commented: "This first
half year has been impacted by significant material cost inflation,
as previously signalled in the Manufacturing segment of our
business. Our Brands business continues to perform well against
very strong comparatives. Actions have been taken to improve the
margin performance of our Manufacturing business in the second half
of the year and beyond. Swallowfield therefore remains well
positioned to regain its positive growth momentum."
Tim Perman, Chief Executive, commented: "During my first eight
months as CEO of Swallowfield plc, my focus has been working
towards a consistently profitable Manufacturing business whilst
continuing to invest in the development of our Brands business,
which has continued to underpin the Group's profit margins. The
prevailing market conditions require a clear strategic focus for
the Group and with our strategy to accelerate Brands growth and to
simplify Manufacturing we are confident in delivering further
profitable growth."
For further information please contact:
Swallowfield plc
-------------------------- ---------------
Tim Perman Chief Executive Officer 01823 662 241
-------------------------- ---------------
Matthew Gazzard Group Finance Director 01823 662 241
-------------------------- ---------------
Shaun Dobson / Jen Boorer N+1 Singer 0207 496 3000
-------------------------- ---------------
Josh Royston / Sam Modlin Alma PR 07780 901979
-------------------------- ---------------
Note: This announcement contains information that was previously
inside information for the purposes of Article 7 of regulation
596/2014 (MAR).
Business review
Group revenue growth in the period was 3.7% at GBP41.4m (2018:
GBP39.9m). This was driven by 8.8% growth in our Manufacturing
business and a modest level of growth in our Brands business.
At the start of the period the Group saw strong momentum in
Brands with positive Christmas gifting sales. However, the pace of
growth across the brand portfolio has since slowed due to lower UK
consumer confidence and pressures within the retail environment.
This has resulted in softening demand and retailer reductions in
category space and promotional activity which has impacted our
business. We have made good progress in growing International sales
which underpins our belief that there is a significant opportunity
for sustained international growth in Brands, a key strategic
objective for the Group. Continued focus on supply chain efficiency
and an improved sales mix has resulted in a continued strong gross
margin, despite retail pressures.
Sales in our Manufacturing business recovered strongly during
the period, reflecting robust volume demand from existing and new
customers. The Manufacturing business continues to win new volumes
and will see a good level of revenues for the balance of the year.
The well signalled impact of continuing high input costs and lower
margin mix resulted in lower gross margins for the period,
particularly when compared to the prior year period which included
the remaining contribution from a higher margin contract. As
previously indicated, gross margins will significantly improve in
H2 due to agreed price increases, and positive mix from new
contract wins. In addition, the focus on cost base optimisation
which will equate to annualised cost savings of GBP1.0m, will also
contribute to a strong profit recovery in H2.
Overheads increased in line with sales in our Manufacturing
business and increased slightly as a percentage of sales in our
Brands business as a result of investment in organisational
capability. However, it was predominantly the effect of the lower
gross margins generated in our Manufacturing business that resulted
in the Group making an underlying operating profit of GBP1.63m,
down significantly versus the comparable period (2018: GBP3.40m).
The high margin Brands division continues to represent the majority
of operating profit.
The overall effective rate of Group taxation for the period was
19.0% (2018: 19.0%) of pre-tax profits. The current year tax charge
reflects standard UK and the Czech Republic rates of taxation.
This resulted in adjusted earnings per share of 7.9p (2018:
13.7p).
Strategic Report
The prevailing market conditions require a clear strategic focus
for the Group.
Our strategy is based on five key value drivers:
-- Portfolio of international, national and exclusive Brands
-- Distribution expansion of Brands business
-- Simplified, profitable Manufacturing business
-- Category know-how: NPD, technical, formulation & regulatory expertise
-- Performance culture: commercial acumen, speed, responsiveness, flexibility.
Our Brands business develops and markets a portfolio of personal
care and beauty brands that are distributed across major retailers
in the UK and internationally. The strategic priority for Brands is
to accelerate sales and profit growth, organically and via earnings
accretive acquisitions.
Our Manufacturing business formulates and manufactures personal
care and beauty products for a customer base that includes many of
the world's leading beauty brands. The strategic priority for
Manufacturing is to streamline and simplify the business and
actions are already underway in this regard.
The following summarises the progress made in each part of the
business in this period.
Brands
-- New product development executed at pace
-- Positive Christmas gift sales
-- 3 'Drive' brands and 3 'Build' brands restaged with new graphics
-- Ecommerce development with increased focus on e-tailers
-- Positive progress with the development of new international strategy
-- Investment in organisational capability to strengthen team
Manufacturing
-- 3 significant new contracts fully embedded with increased volumes
-- New margin accretive wins in prestige sector
-- Price increases secured to mitigate cost price inflation (H2
impact); on track to deliver a more profitable performance from
Manufacturing.
-- Utilising all 3 European sites to maximise increasing customer demand
-- Continuing to focus on R&D and innovation in areas of
core capability particularly aerosols and hot pours
-- Actions to rationalise certain areas of the cost base taken
in the period; strategic work underway with full review of
structural footprint nearing completion
Net debt and cash flow
Net debt significantly decreased from a year-end position of
GBP11.8m to GBP6.8m (2018: GBP7.0m). The key component to the
reduction in debt has been the collection of year end debtors and
the partial unwinding of material and component inventory which had
strategically been bought ahead to secure supply.
Finance costs of GBP0.22m (2018: cost GBP0.18m) comprised
interest expense of GBP0.15m (2018: GBP0.1m) plus a pension scheme
notional finance charge of GBP0.07m (2018: charge GBP0.08m).
Finance income is the receipt of GBP0.39m (2018: nil) dividend
income from our investment holding in SCCTC.
Capital expenditure was GBP0.6m, in line with depreciation. We
expect capital expenditure to remain ahead of depreciation for the
full financial year as we continue to invest in key strategic
development projects and in further line efficiency programs.
Defined benefit pension scheme
The defined benefit pension scheme underwent its last triennial
valuation as of 5 April 2017. The deficit on a statutory funding
basis was GBP2.6m and the Group has entered into a deficit recovery
plan and schedule of contributions of GBP0.2m per annum.
For accounting purposes at 12 January 2019, the Group recognised
under IAS19 'employee benefits', a deficit of GBP6.6m (June 2018:
GBP4.5m). The Accounting Standards require the discount rate to be
based on yields on high quality (usually AA-rated) corporate bonds
of appropriate currency, taking into account the term of the
relevant pension scheme's liabilities. Corporate bond indices are
used as a proxy to determine the discount rate. At the reporting
date, the yields on bonds of all types were slightly higher than
they were at 30 June 2018. This has resulted in marginally higher
discount rates being adopted for accounting purposes compared to
last year, which has been coupled with a small increase in
expectations of long term inflation, the combined effect leaving
the fair value of the scheme liabilities increased, with a weak
investment return performance decreasing the value of the schemes
assets. This has translated into an increase in liability under the
IAS19 methodology.
Dividends
The Board is pleased to announce that it has approved an interim
dividend of 2.15 pence per share (2018: 2.0 pence). This dividend
will be paid on 24 May 2019 to shareholders on the register on 3
May 2019.
The Directors' intention is to have a progressive dividend
policy that aligns future dividend payments to the underlying
earnings and cash flow of the business, taking in to account the
gearing and the operational requirements of the business.
Outlook
There is clearly a considerable level of uncertainty in the
current business environment and we expect consumer demand to
remain subdued. We are confident that the strategic focus of the
Group will enable us to deliver the best outcome for all
stakeholders.
We expect the current pace of innovation and new product
development to continue in Brands, accompanied by an enhanced focus
on distribution in both the UK and internationally, which will help
to mitigate the slowdown in retail demand in this business.
In our Manufacturing business, we expect a significant second
half recovery given the visibility of the order book and as we
benefit from the positive impact of pricing initiatives, product
mix and cost base optimisation already implemented. We will also be
finalising our strategic work, commenced in the period, to
streamline the portfolio of activities in this segment of our
business.
We are a market leader in our field with a strong and growing
portfolio of owned brands, and whilst we are seeing the impact of
the challenges faced in the wider environment, we are confident in
a materially improved performance in the second half and believe
results will be broadly in line with market expectations for the
full year demonstrating profitable growth.
Group Statement of Comprehensive Income
28 weeks 28 weeks ended 12 months
ended ended
12 Jan 2019 6 Jan 2018 30 June 2018
(unaudited) (unaudited) (audited)
Continuing operations Notes GBP'000 GBP'000 GBP'000
Revenue 2 41,441 39,962 73,945
Cost of sales (34,239) (32,012) (60,253)
--------------------------------- ------ ------------ --------------- -------------
Gross profit 7,202 7,950 13,692
Commercial and administrative
costs (5,773) (4,953) (8,716)
--------------------------------- ------ ------------ --------------- -------------
Operating profit before
exceptional items 1,429 2,997 4,976
Exceptional items 3 (869) (25) (279)
--------------------------------- ------ ------------ --------------- -------------
Operating profit 560 2,972 4,697
Finance income 386 - 191
Finance costs 4 (218) (175) (364)
Profit before taxation 728 2,797 4,524
Taxation (138) (532) (891)
--------------------------------- ------ ------------ --------------- -------------
Profit after taxation 590 2,265 3,633
Other comprehensive (loss)
/ income for the period:
Re-measurement of defined
benefit liability (1,617) 407 1,403
Items that will be reclassified
subsequently to profit
or loss
Exchange differences on
translating foreign operations (50) 54 30
Gain on available for sale
financial assets 529 158 156
Other comprehensive (loss)
/ income for the period (1,138) 619 1,589
--------------------------------- ------ ------------ --------------- -------------
Total comprehensive (loss)
/ income for the period (548) 2,884 5,222
================================= ====== ============ =============== =============
Profit attributable to:
--------------------------------- ------ ------------ --------------- -------------
Equity shareholders 537 2,205 3,542
--------------------------------- ------ ------------ --------------- -------------
Non-controlling interests 53 60 91
Total comprehensive (loss)
/ income attributable to:
--------------------------------- ------ ------------ --------------- -------------
Equity shareholders (601) 2,824 5,131
--------------------------------- ------ ------------ --------------- -------------
Non-controlling interests 53 60 91
Earnings per share
- basic 5 3.1p 13.1p 20.9p
- diluted 5 3.0p 12.7p 20.3p
Dividend
Paid in period (GBP'000) 720 590 933
Paid in period (pence per
share) 4.2p 3.5p 5.5p
Proposed (GBP'000) 368 337 720
Proposed (pence per share) 6 2.15p 2.0p 4.2p
Group Statement of Changes in Equity
Share Share Revaluation Exchange Pension Retained Non-controlling Total
Capital Premium of Reserve re-measurement Earnings interest Equity
investment reserve
reserve
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- --------- ------------ --------- --------------- --------- ---------------- ---------
Balance as at
June 2018 857 11,987 1,247 (112) (2,491) 15,455 79 27,022
----------------- -------- --------- ------------ --------- --------------- --------- ---------------- ---------
Dividends - - - - - (720) - (720)
Non-controlling
interest - - - - - - 53 53
Share based
payments - - - - - 143 - 143
Transactions
with owners - - - - - (577) 53 (524)
----------------- -------- --------- ------------ --------- --------------- --------- ---------------- ---------
Profit for the
period - - - - - 537 - 537
Other
comprehensive
income:
Re-measurement
of defined
benefit
liability - - - - (1,617) - - (1,617)
Exchange
difference
on translating
foreign
operations - - - (50) - - - (50)
Gain on
available
for sale
financial
assets - - 529 - - - - 529
Total
comprehensive
income for the
year - - 529 (50) (1,617) 537 - (601)
----------------- -------- --------- ------------ --------- --------------- --------- ---------------- ---------
Balance as at
12 January 2019 857 11,987 1,776 (162) (4,108) 15,415 132 25,897
----------------- -------- --------- ------------ --------- --------------- --------- ---------------- ---------
Balance as at
June 2017 as
restated 844 11,744 1,091 (142) (3,894) 12,749 18 22,410
---------------------- ------ --------- -------- -------- ---------- --------- ----- ---------
Dividends - - - - - (590) - (590)
---------------------- ------ --------- -------- -------- ---------- --------- ----- ---------
Non-controlling
interest - - - - - - 60 60
Share based payments - - - - - 47 - 47
Transactions
with owners - - - - - (543) 60 (483)
---------------------- ------ --------- -------- -------- ---------- --------- ----- ---------
Profit for the
period - - - - - 2,205 - 2,205
Other comprehensive
income:
Re-measurement
of defined benefit
liability - - - - 407 - - 407
Exchange difference
on translating
foreign operations - - - 54 - - - 54
Gain on available
for sale financial
assets - - 158 - - - - 158
Total comprehensive
income for the
year - - 158 54 407 2,205 - 2,824
---------------------- ------ --------- -------- -------- ---------- --------- ----- ---------
Balance as at
6 January 2018 844 11,744 1,249 (88) (3,487) 14,411 78 24,751
---------------------- ------ --------- -------- -------- ---------- --------- ----- ---------
Balance as at June
2017 as restated 844 11,744 1,091 (142) (3,894) 12,749 18 22,410
------------------------- ------- ---------- ------ ------ -------- ------- ----- -------
Dividends - - - - - (933) (30) (963)
Issue of new shares 13 243 - - - - - 256
Non-controlling
interest - - - - - - 91 91
Share based payments - - - - - 97 - 97
Transactions with
owners 13 243 - - - (863) 61 (519)
------------------------- ------- ---------- ------ ------ -------- ------- ----- -------
Profit for the year - - - - - 3,542 - 3,542
Other comprehensive
income:
Re-measurement of
defined benefit
liability - - - - 1,403 - - 1,403
Exchange difference
on translating foreign
operations - - - 30 - - - 30
Gain on available
for sale financial
assets - - 156 - - - - 156
Total comprehensive
income for the year - - 156 30 1,403 3,542 - 5,131
------------------------- ------- ---------- ------ ------ -------- ------- ----- -------
Balance as at June
2018 857 11,987 1,247 (112) (2,491) 15,455 79 27,022
------------------------- ------- ---------- ------ ------ -------- ------- ----- -------
Group Statement of Financial Position
As at As at As at
12 Jan 2019 6 Jan 2018 30 June 2018
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
restated
ASSETS
Non-current assets
Property, plant and equipment 11,257 11,491 11,438
Intangible assets 12,575 9,387 12,707
Deferred tax assets 1,138 666 803
Investments 1,920 1,442 1,391
------------------------------- ------ ------------ ------------ -------------
Total non-current assets 26,890 22,986 26,339
------------------------------- ------ ------------ ------------ -------------
Current assets
Inventories 15,150 13,537 13,825
Trade and other receivables 14,792 17,325 19,283
Cash and cash equivalents 1,747 425 934
Current tax receivable 508 70 109
------------------------------- ------ ------------ ------------ -------------
Total current assets 32,197 31,357 34,151
------------------------------- ------ ------------ ------------ -------------
Total assets 59,087 54,343 60,490
------------------------------- ------ ------------ ------------ -------------
LIABILITIES
Current liabilities
Trade and other payables 21,409 21,521 23,709
Interest-bearing loans
and borrowings 1,140 541 1,127
Current tax payable 994 552 503
------------------------------- ------ ------------ ------------ -------------
Total current liabilities 23,543 22,614 25,339
------------------------------- ------ ------------ ------------ -------------
Non-current liabilities
Interest-bearing loans
and borrowings 2,623 1,242 3,230
Post-retirement benefit
obligations 8 6,614 5,665 4,489
Deferred tax liabilities 410 71 410
Total non-current liabilities 9,647 6,978 8,129
------------------------------- ------ ------------ ------------ -------------
Total liabilities 33,190 29,592 33,468
------------------------------- ------ ------------ ------------ -------------
Net assets 25,897 24,751 27,022
------------------------------- ------ ------------ ------------ -------------
EQUITY
Share capital 857 844 857
Share premium 11,987 11,744 11,987
Revaluation of investment
reserve 1,777 1,249 1,247
Exchange reserve (163) (88) (112)
Re-measurement of defined
benefit liability (4,108) (3,487) (2,491)
Retained earnings 15,415 14,411 15,455
------------------------------- ------ ------------ ------------ -------------
Total equity 25,765 24,673 26,943
------------------------------- ------ ------------ ------------ -------------
Non-controlling interest 132 78 79
------------------------------- ------ ------------ ------------ -------------
Total equity 25,897 24,751 27,022
------------------------------- ------ ------------ ------------ -------------
Group Cash Flow Statement
28 weeks 28 weeks 12 months
ended ended ended
12 Jan 2019 6 Jan 2018 30 June 2018
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Profit before taxation 728 2,797 4,524
Depreciation 667 651 1,283
Amortisation 154 122 583
Finance income (386) - (191)
Finance cost 218 175 364
(Increase) in inventories (1,325) (2,107) (2,395)
Decrease / (increase) in trade
and other receivables 3,757 (540) (2,648)
Increase in trade payables 808 211 1,298
Increase / (decrease) in other
payables 1,912 (521) (354)
(Decrease) in share-based
payments provision (158) (48) (1,666)
Contributions to defined benefit
plan (175) (54) (108)
Cash generated from operations 6,200 686 690
-------------------------------------- ------------ ------------ ----------------------
Finance expense paid (153) (97) (209)
Taxation paid (202) (321) (762)
-------------------------------------- ------------ ------------ ----------------------
Net cash flow from operating
activities 5,845 268 (281)
-------------------------------------- ------------ ------------ ----------------------
Cash flow from investing activities
Dividend income received 386 - 191
Purchase of property, plant
and equipment (639) (1,067) (1,631)
Purchase of intangibles (23) (18) (3,850)
Purchase of subsidiary - (1,925) (1,850)
Sale of property, plant and 154 - -
equipment
Net cash flow from investing
activities (122) (3,010) (7,140)
-------------------------------------- ------------ ------------ ----------------------
Cash flow from financing activities
(Repayment) / proceeds of
invoice discounting facility (3,596) 10 2,741
Proceeds from new loan - - 3,000
Issue of new share capital - - 256
Repayment of loans (594) (310) (736)
Dividends paid (720) (590) (963)
-------------------------------------- ------------ ------------ ----------------------
Net cash flow from financing
activities (4,910) (890) 4,298
-------------------------------------- ------------ ------------ ----------------------
Net increase / (decrease)
in cash and cash equivalents 813 (3,632) (3,123)
Cash and cash equivalents
at beginning of period 934 4,057 4,057
-------------------------------------- ------------ ------------ ----------------------
Cash and cash equivalents
at end of period 1,747 425 934
-------------------------------------- ------------ ------------ ----------------------
Notes to the Accounts
Note 1 Basis of preparation
The Group has prepared its interim results for the 28-week
period ended 12 January 2019 in accordance with the recognition and
measurement principles of International Financial Reporting
Standards (IFRS) as adopted by the European Union and also in
accordance with the recognition and measurement principles of IFRS
issued by the International Accounting Standards Board.
The Directors have considered trading and cash flow forecasts
prepared for the Group, and based on these, and the confirmed
banking facilities, are satisfied that the Group will continue to
be able to meet its liabilities as they fall due for at least one
year from the date of approval of the Interim Report. On this
basis, they consider it appropriate to adopt the going concern
basis in the preparation of these accounts.
As permitted, this interim report has been prepared in
accordance with the AIM rules and not in accordance with IAS34
'Interim Financial Reporting'.
These interim financial statements do not constitute full
statutory accounts within the meaning of section 434 of the
Companies Act 2006 and are unaudited. The unaudited interim
financial statements were approved by the Board of Directors on 27
February 2019.
The consolidated financial statements are prepared under the
historical cost convention as modified to include the revaluation
of certain non-current assets. The accounting policies used in the
interim financial statements are consistent with IFRS and those
which will be adopted in the preparation of the Group's Annual
Report and Financial Statements for the year ended June 2019.
The statutory accounts for the year ended June 2018, which were
prepared under IFRS, have been filed with the Registrar of
Companies. These statutory accounts carried an unqualified Auditors
Report and did not contain a statement under Section 498(2) or
498(3) of the Companies Act 2006.
Note 2 Segmental analysis
The Group is a market leader in the development, formulation,
and supply of personal care and beauty products.
The reportable segments of the Group are aggregated as
follows:
-- Brands - we leverage our skilled resources to develop and
market a growing portfolio of Swallowfield owned and managed
brands. These include organically developed Bagsy, MR. and Tru,
plus the acquisitions of The Real Shaving Company (in 2015), the
portfolio of brands included in The Brand Architekts acquisition
(in 2016) and the latest acquisition 'Fish'.
-- Manufacturing - the development, formulation and production
of quality products for many of the world's leading personal care
and beauty brands.
-- Eliminations and Central Costs - other Group-wide activities
and expenses, including defined benefit pension costs (closed
defined benefit scheme), LTIP expenses, amortisation of
acquisition-related intangibles, interest, taxation and
eliminations of intersegment items, are presented within
'Eliminations and central costs'.
This is the basis on which the Group presents its operating
results to the Board of Directors, which is considered to be the
CODM for the purposes of IFRS 8.
a) Principal measures of profit and loss - Income Statement segmental information:
28 weeks ended 12 January 2019 28 weeks ended 6 January 2018
Brands Manufacturing Eliminations Total Brands Manufacturing Eliminations Total
and Central and Central
Costs Costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------------- ------------- -------- -------- -------------- ------------- --------
UK revenue 10,055 19,915 - 29,970 10,111 17,734 - 27,845
International
revenue 2,360 9,111 - 11,471 2,186 9,931 - 12,117
--------------------- -------- -------------- ------------- -------- -------- -------------- ------------- --------
Revenue - External 12,415 29,026 - 41,441 12,297 27,665 - 39,962
Revenue - Internal 36 2,214 (2,250) - - 1,037 (1,037) -
--------------------- -------- -------------- ------------- -------- -------- -------------- ------------- --------
Total revenue 12,451 31,240 (2,250) 41,441 12,297 28,702 (1,037) 39,962
--------------------- -------- ------------- -------- -------------
Underlying
operating
profit/(loss) 2,580 230 (1,180) 1,630 2,575 1,918 (1,089) 3,404
--------------------- -------- -------------- ------------- -------- -------- -------------- ------------- --------
Charge for
share based
payments - - (67) (67) - - (307) (307)
Amortisation
of
acquisition-related
intangibles - - (133) (133) - - (100) (100)
Exceptional
costs - - (869) (869) - - (25) (25)
Net borrowing
income / (costs) - - 168 168 - - (175) (175)
--------------------- -------- -------------- ------------- -------- -------- -------------- ------------- --------
Profit/(loss)
before taxation 2,580 230 (2,082) 728 2,575 1,918 (1,696) 2,797
--------------------- -------- -------------- ------------- -------- -------- -------------- ------------- --------
Tax charge - - (138) (138) - - (532) (532)
--------------------- -------- -------------- ------------- -------- -------- -------------- ------------- --------
Profit/(loss)
for the period 2,580 230 (2,220) 590 2,575 1,918 (2,228) 2,265
--------------------- -------- -------------- ------------- -------- -------- -------------- ------------- --------
The segmental Income Statement disclosures are measured in
accordance with the Group's accounting policies as set out in note
1.
Inter segment revenue earned by Manufacturing from sales to
Brands is determined on normal commercial trading terms as if
Brands were any other third party customer.
All defined benefit pension costs and LTIP expenses are
recognised for internal reporting to the CODM as part of Group-wide
activities and are included within 'Eliminations and central costs'
above. Other costs, such as Group insurance and auditors'
remuneration which are incurred on a Group-wide basis are recharged
by the head office to segments on a reasonable and consistent basis
for all periods presented and are included within segment results
above.
b) Other Income Statement segmental information
The following additional items are included in the measures of
profit and loss reported to the CODM and are included within (a)
above:
28 weeks ended 12 January 2019 Brands Manufacturing Eliminations Total
and Central
Costs
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- -------------- ------------- --------
Depreciation 6 661 - 667
Amortisation - 21 133 154
c) Principal measures of assets and liabilities
The Groups assets and liabilities are managed centrally by the
CODM and consequently there is no reconciliation between the
Group's assets per the statement of financial position and the
segment assets.
d) Additional entity-wide disclosures
The distribution of the Group's external revenue by destination
is shown below:
Geographical segments 28 weeks ended 28 weeks ended 12 months
ended
12 Jan 2019 6 Jan 2018 30 June 2018
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
--------------- --------------- -------------
UK 29,970 27,845 51,284
Other European Union countries 7,956 9,156 16,891
Rest of the World 3,515 2,961 5,770
--------------- --------------- -------------
41,441 39,962 73,945
--------------- --------------- -------------
In the 28 weeks ended 12 January 2019, the Group had two
customers that exceeded 10% of total revenues, being 13.3% and
10.3% respectively. In the 28 weeks ended 6 January 2018, the Group
had two customers that exceeded 10% of total revenues, being 12.7%
and 10.4% respectively.
Note 3 Exceptional items
There was an exceptional items charge for the period ended 12
January 2019 of GBP0.9m. A structured redundancy program was
executed during the first half of the financial year in our
manufacturing business with related costs of GBP0.6m. A provision
of GBP0.3m has been made in respect to the GMP equalisation on the
Group's DB Pension scheme.
The prior year exceptional items charge represents the
applicable proportion of the consolidated loss for the Sterling
Shave Club Ltd. This investment was written off in the full year to
30 June 2018.
Note 4 Finance costs 28 weeks ended 28 weeks ended 12 months
ended
12 Jan 2019 6 Jan 2018 30 June 2018
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
--------------- --------------- -------------
Finance costs
Bank loans and overdrafts 153 97 212
Notional pension scheme costs 65 78 152
--------------- --------------- -------------
218 175 364
--------------- --------------- -------------
Note 5 Earnings per share 28 weeks ended 28 weeks ended 12 months
ended
12 Jan 2019 6 Jan 2018 30 June 2018
(unaudited) (unaudited) (audited)
--------------- --------------- -------------
Basic and diluted
Profit for the period (GBP'000) 537 2,205 3,542
Basic weighted average number
of
ordinary shares in issue during
the period 17,135,542 16,865,401 16,934,762
Diluted number of shares 17,659,183 17,413,330 17,454,505
Basic earnings per share 3.1p 13.1p 20.9p
--------------------------------- --------------- --------------- -------------
Diluted earnings per share 3.0p 12.7p 20.3p
--------------------------------- --------------- --------------- -------------
Basic earnings per share has been calculated by dividing the
profit for each financial period by the weighted average number of
ordinary shares in issue in the period. There is a difference at 6
January 2018 between the basic net earnings per share and the
diluted net earnings per share due to the LTIP share options
awarded to June 2017, to give a total of 547,929 share options. The
difference at 12 January 2019 includes the net LTIP share options
awarded to June 2018, to give a total of 523,641 share options that
could be issued.
Adjusted earnings per share
Profit for the period (GBP'000) 537 2,205 3,542
Add back: Exceptional items 869 25 279
Add back: Amortisation of Acquisition
Related Intangibles 133 100 197
Notional tax charge on above
items (190) (24) (90)
--------------------------------------- ----------------------- ------------------------- -----------
Adjusted profit before exceptional
items 1,349 2,306 3,928
--------------------------------------- ----------------------- ------------------------- -----------
Basic weighted average number
of
ordinary shares in issue during
the period 17,135,542 16,865,401 16,934,762
Diluted number of shares 17,659,183 17,413,330 17,454,505
--------------------------------------- ----------------------- ------------------------- -----------
Adjusted basic earnings per
share 7.9p 13.7p 23.2p
--------------------------------------- ----------------------- ------------------------- -----------
Adjusted diluted earnings per
share 7.6p 13.2p 22.2p
--------------------------------------- ----------------------- ------------------------- -----------
Adjusted earnings per share has been calculated by dividing the
adjusted profit (after allowing for the notional tax charge on
exceptional items) by the weighted average number of shares in
issue in the period. There is a difference at 6 January 2018
between the basic net earnings per share and the diluted net
earnings per share due to the LTIP share options awarded to June
2017, to give a total of 547,929 share options. The difference at
12 January 2019 includes the net LTIP share options awarded to June
2018, to give a total of 523,641 share options that could be
issued.
Note 6 Dividends
The Directors have declared an interim dividend payment of 2.15p
per share (2018: Interim: 2.0p; Final: 4.2p).
Note 7 Reconciliation of cash and cash equivalents to movement
in net debt
28 weeks ended 28 weeks ended 12 months
ended
12 Jan 2019 6 Jan 2018 30 June 2018
(unaudited) (unaudited) (audited)
GBP000's GBP000's GBP000's
--------------- --------------- -------------
Increase / (decrease) in cash
and cash equivalents in the
period 813 (3,632) (3,123)
Net cash outflow / (inflow)
from decrease / (increase) in
borrowings 4,190 300 (5,005)
----------------------------------- --------------- --------------- -------------
Change in net debt resulting
from cash flows 5,003 (3,332) (8,128)
Net debt at the beginning of
the period (11,769) (3,641) (3,641)
----------------------------------- --------------- --------------- -------------
Net debt at the end of the period (6,766) (6,973) (11,769)
----------------------------------- --------------- --------------- -------------
Note 8 IAS 19 'Employee Benefits'
Expected future cash flows to and from the Scheme:
The Scheme is subject to the scheme funding requirements
outlined in UK legislation. The last scheme funding valuation of
the Scheme was as at 5 April 2017 and revealed a funding deficit of
GBP2.6m. The liabilities of the Scheme are based on the current
value of expected benefit payment cash flows to members of the
Scheme over the next 60 to 80 years. The average duration of the
liabilities is approximately 20 years.
In accordance with the schedule of contributions dated 4
September 2018, the Company is expected to pay contributions to the
Scheme to make good any shortfalls in funding and has agreed to pay
GBP0.2m per annum. Contributions will subsequently increase from
FY24 to a sufficient level to eliminate the deficit over the
established 10 year recovery period. The magnitude of such payments
will be reviewed following the next scheme funding valuation as at
April 2020.
In addition, the Company has agreed to meet the cost of
administrative expenses and Pension Protection Fund insurance
premiums for the Scheme.
Payments made by the Company to the Scheme and in respect of
Scheme liabilities were:
28 weeks ended 28 weeks ended 12 months ended
12 January 2019 6 January 2018 30 June 2018
GBP000's GBP000's GBP000's
----------------- ---------------- ----------------
Company pension contributions - - -
Deficit recovery payments 175 54 108
Scheme administrative
expenses 92 51 171
Pension Protection Fund
premium 108 222 222
------------------------------- ----------------- ---------------- ----------------
Total 375 327 501
------------------------------- ----------------- ---------------- ----------------
The amounts expensed in the Group Statement of Comprehensive
Income were:
28 weeks ended 28 weeks ended 12 months ended
12 January 2019 6 January 2018 30 June 2018
GBP000's GBP000's GBP000's
----------------- ---------------- ----------------
In Operating profit:
Company pension contributions - - -
Scheme administrative
expenses 96 88 171
Pension Protection Fund
premium 58 119 222
GMP Equalisation 288 - -
----------------- ---------------- ----------------
442 207 393
In Finance costs:
Unwinding of notional
discount factor 65 78 155
------------------------------- ----------------- ---------------- ----------------
Total 507 285 548
------------------------------- ----------------- ---------------- ----------------
IAS 19 requires a separate valuation of the Scheme on a
different basis to the funding valuation referred to above.
The effects of the application of IAS19 on the statement of
financial position at 12 January 2019 are:
12 January
2019
GBP000's
-----------
Increase in net pension and other benefit
obligations (2,125)
Reduction in deferred tax 361
Reduction in equity 1,764
--------------------------------------------- -----------
The Accounting Standards require the discount rate to be based
on yields on high quality (usually AA-rated) corporate bonds of
appropriate currency, taking into account the term of the relevant
pension scheme's liabilities. Corporate bond indices are often used
as a proxy to determine the discount rate. At the reporting date,
the yields on bonds of all types were higher than they were at June
2018. This has resulted in marginally higher discount rates being
adopted for accounting purposes compared to last year, which has
been coupled with a small increase in expectations of long term
inflation, the combined effect leaving the fair value of the scheme
liabilities increased, with a weak investment return performance
decreasing the value of the schemes assets. This has translated
into an increase in liability under the IAS19 methodology.
The key assumptions used were:
As at 12 January As at 6 January As at 30 June
2019 2018 2018
----------------- ---------------- --------------
Discount Rate 3.05% 2.60% 2.80%
Rate of inflation (RPI) 3.20% 3.10% 3.00%
Rate of inflation (CPI) 2.10% 2.10% 2.00%
The amounts recognised in the Group statement of financial
position were:
As at 12 January As at 6 January As at 30 June
2019 2018 2018
GBP000's GBP000's GBP000's
----------------- ---------------- --------------
Present value of funded
obligations (29,065) (29,471) (27,502)
Fair value of scheme assets 22,451 23,806 23,013
----------------------------- ----------------- ---------------- --------------
(Deficit) (6,614) (5,665) (4,489)
----------------------------- ----------------- ---------------- --------------
Note 9 Announcement of results
The Interim Report will be sent to shareholders and is available
to members of the public at the Company's Registered Office at
Swallowfield House, Station Road, Wellington, Somerset, TA21 8NL
and on the Company's website.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR CKQDPDBKBONK
(END) Dow Jones Newswires
March 05, 2019 02:01 ET (07:01 GMT)
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