Interim Results

26th Sep 2008 07:00



Intimas Group plc

Interim results for the six months to 30 June 2008

Intimas Group plc ("Intimas" or "the Group") is a designer and supplier of ladies' intimate apparel, with a portfolio of brands comprising Lepel, Charnos Lingerie, Ted Baker Intimates, DM and Urban Nights, a substantial private label division and retail outlets.

Key Points

Trading remains challenging as a result of the poor retail environment

Total group sales of £8.97m (2007: £6.97m)

Loss before taxation of £1.65m (2007: £2.21m)

Outline agreement on refinancing package with major asset backed lender

Strategic Review completed

John Gibson, Chairman, comments:

"A great deal of work has been done in recent months to stabilise the business, address the problems of the past and set a new direction for the Group. We remain optimistic about the future but there is much still to be done. Our trading results are in line with expectations but the market is challenging."

26 September 2008

ENQUIRIES:

Intimas Group plc	Tel: 0115 983 6000
John Gibson, Chairman
Tim Laughton, Finance Director
KBC Peel Hunt	Tel: 020 7418 8900
Matt Goode
College Hill	Tel: 020 7457 2020
Gareth David

  Chairman's Statement

Trading conditions remain very difficult for both our retail customers and ourselves. The global economic downturn continues to impact on consumer confidence and spending, with consequent reductions in our customers' stock buying commitments. With significant cost inflation in our supply chain and strong resistance to price increases on the High Street, growing sales and maintaining gross margins has been and continues to be extremely difficult.

Against this backdrop, total Group sales grew 29% to £8.97m (2007: £6.97m) although we incurred an operating loss of £1.69m (2007: £2.45m). The sales growth was driven principally by a significant increase in our private label activities, the impact of new retail stores opened during 2007 and substantially increased stock clearance activity, which is reflected in the reduction in the reduction in inventories on the balance sheet from £5.37m at 31 December 2007 to £4.50m at 30 June 2008. Inevitably, the change in sales mix towards private label and stock clearance activities has led to margin dilution and, with fixed costs increasing as a consequence of the 2007 retail store openings, the reduction in operating loss was smaller than would otherwise have been anticipated.

In my AGM statement I indicated that I believed that both our private label and brand businesses were capable of delivering significant growth over the next three years and this remains the case. Private label is already delivering this growth against a very challenging economic backdrop, with a focus on delivering profitable growth from customer accounts which are our long term partners. Whilst we do not expect the level of growth experienced in the first half to be maintained in the second half, the prospects for 2009 and beyond appear very encouraging.

Delivering growth from our brands business is very challenging in the current economic environment. Whilst Lepel continues to gain market share in the independent retailer sector, some of our major customers have continued to move towards their own private label collections and this has made sales growth difficult. The Charnos design team has worked extremely hard to rebuild the reputation of the brand and we are beginning to see the fruits of this labour in terms of increasing sales and orders. We have renegotiated and extended our Ted Baker Intimates license arrangement for a further year to the end of 2009 and are excited by the prospects for swimwear and nightwear in particular.

In May I confirmed that the development of retail outlets as part of the Group's strategy for addressing the market was at an end. We are trading our two High Street stores in Derby and Nottingham as hard as possible but we are also looking at potential opportunities to offset the lease costs. We have worked on developing the product offers of each of our clearance outlets and, despite the difficult environment, the sales performance has improved as we have focused on increasing sales volumes rather than maintaining margins in order to clear through as much prior season stock as possible.

With what still remains a poor trading performance, the Group continues to focus on cost control and to that end we have relocated the Charnos team to the Long Eaton site, the senior management team has been trimmed and our focus on cost reduction and control intensified.

Strategic Review

An internal strategic review was undertaken in the spring and early summer of this year. This involved all members of the senior management team and looked at prospects for each trading division in the light of current market circumstances. The broad conclusions of the review are:

Retail activities, both on the high street and in outlet centres, will not be expanded further but will be focused on supporting stock clearance activity.

Significant opportunities exist to increase our presence in the Private Label sector and resources will be allocated to achieve this.

Profitable growth opportunities exist for our Brands division, particularly in export markets, with our independent customers and in new channels of distribution, currently being negotiated.

Cash

With continuing trading losses and our ongoing pension contribution commitments, the Group's financial position has further deteriorated, with cash in hand of £0.86m (2007: £4.66m). Given the Group's substantial working capital requirements, there has been sustained focus on stock clearance and on better management of current stock intake in order to reduce the amount of prior season and redundant stock in the business. Despite the difficult retail environment, I am encouraged by the progress made in reducing our stock and this will remain an area of senior management focus.

Nevertheless, it has been clear for some time that the restoration of profitability is not a "quick fix" and I am therefore pleased to confirm that the Group is in advanced stages of arranging new finance facilities which should support the planned turn-around in the Group's performance and meet the Group's working capital requirements. A full announcement will be made when these arrangements are formally in place.

Pension

The actuarial review carried out at the half year end, in accordance with IAS 19, indicates that the pension scheme had experienced further gains in relation to the estimated assets and liabilities of the scheme.  The scheme now has only two remaining active employees and this restricts the extent to which the Group is allowed to recognise an actuarial surplus under current international financial reporting standards. As a consequence of this restriction, the future deficit contributions to which the Group is currently committed are unlikely to generate further significant increases in the level of surplus that can be recognised as an asset, irrespective of the actuarial experience of the scheme.

As noted in the 2007 Annual report, the Board remains mindful of the accounting guidance contained in IFRIC 14, which is yet to be endorsed by the European Union. When IFRIC 14 is endorsed, it is conceivable that the Group will be required to recognise a liability in its balance sheet based on the present value of future deficit reduction contributions that the Group is committed to make.

Outlook

Consumer confidence has been affected by the current economic uncertainty and this is impacting our marketplace. However, we remain confident that the improvement in performance compared to 2007 seen in the first half will continue through the second half.

JOHN GIBSON

Chairman

26 September 2008

  

Group Income Statement (unaudited)
		Half year	Half year	Year
		ended	ended	ended
		30 June	30 June	31 December
		2008	2007	2007
		£'000	£'000	£'000
Revenue		8,966	6,971	19,457
Operating loss		(1,693)	(2,445)	(4,243)
Operating loss includes:
	Increase in provision for impairment of inventories	-	(700)	(1,217)
	Reorganisation costs	(132)	(100)	(100)
Finance income
Finance income		368	646	1,223
Finance costs		(323)	(415)	(826)
Net finance income		45	231	397
Loss before taxation		(1,648)	(2,214)	(3,846)
Income tax expense (note 3)		-	-	(246)
Loss for the period from continuing operations		(1,648)	(2,214)	(4,092)
Profit for the period from discontinued operations		-	317	349
Distribution from closure of associate		-	-	36
(Loss)/profit for the period		(1,648)	(1,897)	(3,707)
Earnings per share (note 4)
Continuing operations		(1.6)p	(2.1p)	(3.8)p
Discontinued operations		-	0.3p	0.3p
Total		(1.6)p	(1.8p)	(3.5)p

Group Statement of Recognised Income and Expense (unaudited)
	Half year	Half year	Year
	ended	ended	ended
	30 June	30 June	31 December
	2008	2007	2007
	£'000	£'000	£'000
Loss for the period	(1,648)	(1,897)	(3,707)
Actuarial (loss)/gain on pension scheme	(185)	1,100	739
Movement on deferred tax asset relating to pension scheme	52	(331)	(207)
Effect of change in tax rate on pension scheme deferred tax asset	-	-	(15)
Effective portion of changes in fair value of cash flow hedges	(9)	-	46
Movement on deferred tax relating to cash flow hedges	3	-	(13)
Total recognised income and expense	(1,787)	(1,128)	(3.157)

  

Group Balance Sheet (unaudited)
	30 June	30 June	31 December
	2008	2007*	2007
	£'000	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment	2,620	2,510	2,900
Intangible assets	1,730	1,804	1,767
Deferred tax assets	1,120	1,213	1,065
Pension Scheme surplus (note 6)	184	48	68
Total non-current assets	5,654	5,575	5,544
Current assets
Inventories	4,502	5,032	5,372
Trade and other receivables	3,613	3,254	5,267
Other financial assets	37	-	46
Cash and cash equivalents	856	4,661	1,873
Total current assets	9,008	12,947	12,558
TOTAL ASSETS	14,662	18,522	18,358
EQUITY
Issued capital	5,270	5,270	5,270
Share premium	89	89	89
Capital redemption reserve	415	415	415
Retained earnings	7,136	10,946	8,923
TOTAL EQUITY	12,910	16,720	14,697
LIABILITIES
Current liabilities
Trade and other payables	1,752	1,698	3,655
Other financial liabilities	-	104	6
TOTAL LIABILITIES	1,752	1,802	3,661
TOTAL EQUITY AND LIABILITIES	14,662	18,522	18,358

*Following the publication of further guidance on the treatment of marketing brochure costs under IAS 38, the Balance Sheet at 30 June 2007 has been restated to reflect that guidance. The impact is to reduce each of trade and other receivables and retained earnings by £264,000. This is consistent with the treatment adopted at 31 December 2007.

  

Group Cash Flow Statement (unaudited)
		Half year	Half year	Year
		ended	ended	ended
		30 June	30 June	31 December
		2008	2007	2007
		£'000	£'000	£'000
Cash flows from operating activities
Loss for the period		(1,648)	(1,897)	(3,707)
Adjustments for:
	Depreciation, amortisation and impairment	335	218	493
	Foreign exchange gains	(6)	(105)	(203)
	Equity settled share-based payment expenses	-	-	6
	Finance income	(368)	(646)	(1,223)
	Finance costs	323	415	826
	Taxation	-	-	246
	Profit for the period from discontinued operations	-	(317)	(349)
	Distribution from closure of associate	-	-	(36)
		(1,364)	(2,332)	(3,947)
Changes in working capital
Decrease/(increase) in inventories		870	(27)	(367)
Decrease in trade and other receivables		1,654	3,004	991
(Decrease)/increase in trade and other payables		(1,903)	(1,415)	540
		621	1,562	1,164
Cash used in operations		(743)	(770)	(2,783)
Return of rental deposit		-	82	114
Pension contributions in excess of operating charge		(276)	(335)	(615)
Pension settlements		-	(2,353)	(2,353)
Net cash from operating activities		(1,019)	(3,376)	(5,637)
Cash flows from investing activities
Interest received		20	138	203
Distribution from closure of associate		-	-	36
Acquisition of property, plant and equipment and intangible assets		(18)	(534)	(1,162)
Net cash from investing activities		2	(396)	(923)
Net decrease in cash and cash equivalents		(1,017)	(3,772)	(6,560)
Cash and cash equivalents at 1 January		1,873	8,433	8,433
Cash and cash equivalents at 30 June/31 December		856	4,661	1,873

  Notes to the accounts

1 Basis of preparation

This interim financial information has been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 31 December 2007.

The Comparative figures for the year ended 31 December 2007 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditors and delivered to the registrar of companies. The report of the auditors 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.

The financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£000). They are prepared on the historical cost basis except for the revaluation to fair value of certain financial instruments.

2 Abridged accounts

The results for the year ended 31 December 2007 are an abridged version of the full accounts for that year. The interim report is unaudited. The full 2007 accounts incorporating an unqualified audit report have been filed with the Registrar of Companies.

3 Tax charge

The tax charge for the six months ended 30 June 2008 has been based on the estimate of the tax charge for the full year results with the effective rate of tax applied to the half-year result before tax.

4 Earnings per share

Earnings per share has been calculated on the earnings for the period divided by the weighted average number of shares in issue:

	Half year	Half year	Year
	ended	ended	ended
	30 June	30 June	31 December
	2008	2007	2007
Earnings for basic earnings per share (£'000)	(1,648)	(1,897)	(3,707)
Weighted average number of ordinary shares (Number)	105,394,178	105,394,178	105,394,178

   5 Reconciliation of movements in shareholders' equity

	Half year ended 30 June 2008	Half year ended 30 June 2007	Year ended 31 December 2007
	£'000	£'000	£'000
Opening shareholders' equity	14,697	17,848	17,848
(Loss)/profit for the period attributable to shareholders	(1,648)	(1,897)	(3,707)
Equity-settled share based payment transactions	-	-	6
Actuarial (loss)/gain on pension scheme net of tax	(133)	769	517
Effective portion of changes in fair value of cash flow hedges net of tax	(6)	-	33
Closing shareholders' equity	12,910	16,720	14,697

6 Pension scheme surplus

	30 June 2008	30 June 2007	31 December 2007
	£'000	£'000	£'000
Surplus/(deficit) at the beginning of the period	68	(1,480)	(1,480)
Movement in the period:
Current service costs	(19)	(15)	(33)
Contributions	295	350	648
Net credit to other finance income and costs	25	93	194
Actuarial gains	368	1,100	739
Impact of asset ceiling	(553)	-	-
Surplus at the end of the period	184	48	68

For the purpose of this exercise, the value of the Scheme's liabilities as at 30 June 2008 was estimated by projecting the results of the latest formal valuation, carried out by the Scheme Actuary as at 1 January 2006, using approximate methods and including adjustments that are consistent with the requirements of IAS 19 and market conditions as at 30 June 2008.

In accordance with the guidance contained in IAS 19 paragraph 58(b), the Group is able to account for the surplus in the Scheme only to the extent that it can be recovered through a full contribution holiday for the remaining employee members' pensionable service. As the Scheme now has only two remaining active members, the estimated value of such a contribution holiday is restricted to £184K and this is recognised in the table above.

As noted in the 2007 Annual Report, the Directors are mindful of the new accounting guidance contained in IFRIC 14 which is yet to be endorsed by the European Union. Although it is not yet clear how this guidance will be applied in practice, it is possible that the Group will be required to reflect a liability in its balance sheet based on the present value of the future deficit reduction contributions that the Group is committed to make.

ENDIR FKPKKQBKDFCB

---

Related Shares:

International Airlines