PDR Premier Direct

RNS Number:2625B
Premier Direct Group PLC
01 August 2007


PDR.L

                            PREMIER DIRECT GROUP PLC

                                 TRADING UPDATE


Premier Direct Group Plc ("PDG" or the "Group") today makes the following
statement in respect of the year ending 31 July 2007.

The Board is pleased to announce that the Group has achieved the objectives it
set to recover from the difficult trading period experienced in the second half
of 2005/6. The progress made will result in a return to profitability for the
year ending 31 July 2007.

A major priority was the stabilisation of the distributor network which has seen
a marked improvement. During February and March 2007 the sales force management
function was restructured, with 18 business coordinators appointed to manage our
distributor network. These were typically (but not exclusively) selected from
among our most skilled self-employed distributors with successful track records
with PDG. The business co-ordinators remain part of our distributor network
selling products in the normal way but, in addition, they are incentivised to
manage distributor recruitment and field training. The cost of establishing this
new sales structure was approx #120,000. As a direct result of this action, the
number of distributors is now growing steadily and we are starting the new
financial year with 540 available (2006: 488).

The Oriflame business continues to perform in line with management's
expectations and contributes to both cash generation and profitability for the
Group.

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. PDG's business is
seasonal with the key selling period in the first half of our financial year
leading to the majority of profit for the financial year being recorded in this
period. For the financial year to 31 July 2007, PDG expects to report a profit
before amortisation and one off costs of approximately #1.0 million which is
broadly in line with management's expectations. The total of the one off costs
is approximately #350,000.

Although the Group has began to build stock for the peak selling season at a
level to support a larger distributor force, Group net debt has been reduced to
around #5.9 million at 31 July 2007 compared with #6.6 million at 31 July 2006.
On 30 July the Group agreed new committed banking facilities of #7 million with
RBS, providing adequate capacity to fuel the next phase of business development.
The RBS fee for the facility was satisfied by the granting of warrants over
600,000 ordinary shares in PDG at a price of 45p per share. The warrants are
valid until 31 July 2016.

During the second half of the current financial year PDG has implemented a new
management information and financial reporting system based on International
Financial Reporting Standards ("IFRS"). The Board therefore consider it
appropriate to report results for the year to 31 July 2007 under IFRS.

As part of the IT implementation and the transition to IFRS, the Group has
reviewed all of its accounting policies in full to ensure that the policies
adopted are the most appropriate to the Group's circumstances. The accounting
policy adopted for the financial years ending 31 July 2005 and 31 July 2006
recognised turnover at the point at which goods were despatched to distributors,
representing the amounts invoiced to distributors less an estimated level of
returns. Following the review the Board has decided it is more appropriate to
recognise revenue at the point goods are sold to end customers. This change in
policy will be reflected in the reported results for 2007 including a
restatement of the comparative results and opening reserves. The change in the
revenue recognition accounting policy has had no material effect on the trading
results of PDG for the year ending 31 July 2007, but will increase stock levels
at the year end whilst reducing debtors and retained reserves.

On the basis of the work carried out to date the main areas of IFRS which may
affect PDG are:

Business combinations (IFRS 3)
On adoption of IFRS 3 the Group will is required to reassess the identifiable
assets and liabilities acquired under each acquisition. The Group will, however,
take advantage of the exemption under IFRS 1 not to restate business
acquisitions made before 1 August 2005 (the date of transition to IFRS).

Accounting for leases (IAS 17)
The Group has a number of both finance and operating leases under UK GAAP. On
adoption of IAS 17 it is possible that some of these operating leases may fall
to be treated as finance leases or vice versa.

The accounting policies adopted under IFRS will be set out in full in the annual
accounts for the year ended 31 July 2007 together with full reconciliations from
previously published UK GAAP numbers to restated IFRS numbers.

The Board is pleased to report on the good progress made in the current year, in
particular the return to profitability, the significant reduction in net debt
and the return to increasing distributor numbers. Provided that trading in the
early months of the new financial year is in line with management's
expectations, the Board is intending to propose a final dividend of 1p per share
to be paid in December 2007. Results for the year ended 31 July 2007 will be
announced in early October 2007.


Further enquiries:

Premier Direct Group
Eric McClenaghan, Chief Executive Officer                  Tel: 0191 497 4100

Biddicks Associates
Zoe Biddick                                                Tel: 020 7448 1000

KBC Peel Hunt Ltd
David Anderson                                             Tel: 020 7418 8900
Oliver Stratton




                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
TSTDFLFXDDBLBBV

Premier Direct (LSE:PDR)
Historical Stock Chart
From May 2024 to Jun 2024

Premier Direct (LSE:PDR)
Historical Stock Chart
From Jun 2023 to Jun 2024