22nd Sep 2006 07:00
Intimas Group PLC22 September 2006 Intimas Group plc Interim results for the six months to 30 June 2006 Intimas Group plc ("Intimas" or "the Group") is a designer and supplier ofladies' intimate apparel, with a portfolio of brands including Lepel, CharnosLingerie, Ted Baker Intimates and "By Caprice" Lingerie HIGHLIGHTS • Sales £8.4m (2005: £10.0m); Branded sales increased by 54% • Profit before tax £1.6m (2005: £0.9m), after non-recurring items • Acquisition of Charnos Lingerie helps take Branded Sales to 68% of total turnover (Dec 2005: 33%) • Exclusive supply agreement signed with Caprice for the "By Caprice" Lingerie range • Trial move into retailing, with factory outlet stores to open this year at Braintree and Long Eaton • Cash resources £7.2m (2005: £9.9m) - to be increased to £11.0m by proceeds of the Borrowash property sale. Michael Hobbs, Chairman, comments: "The first half of the current year has been an eventful one for the Group, withtwo major additions to our branded portfolio, through the acquisition of CharnosLingerie and the signing of an exclusive supply agreement with Caprice for her "By Caprice" Lingerie brand, and completion of the sale of our last remainingmanufacturing site at Borrowash for a better than expected price. We believethat by establishing a strong portfolio of brands, and a more balanced set ofdistribution channels, we can maximise the Group's potential." 22 September 2006 ENQUIRIES: Intimas Group plc Tel: 0115 983 6000Michael Hobbs, ChairmanCarol Duncumb, Chief ExecutiveLaurence Ford, Finance Director College Hill Tel: 020 7457 2020Gareth David CHAIRMAN'S STATEMENT Trading The first half of the current year has been an eventful one for the Group, withtwo major additions to our branded portfolio, through the acquisition of CharnosLingerie and the signing of an exclusive supply agreement with Caprice for her "By Caprice" Lingerie brand, and completion of the sale of our last remainingmanufacturing site at Borrowash for a better than expected price. At the same time, I am pleased to report that first-half trading has beenaccording to plan, with total sales for the half-year falling by 16% to £8.4m(2005: £10.0m) reflecting our gradual withdrawal from Private Label business.Private Label sales fell by 57% during the period to £2.7m (2005: £6.3m), whilesales of Branded products rose by 54% to £5.7m (2005: £3.7m). This increase in Brand sales reflects the inclusion for the first time ofCharnos Lingerie sales, which totalled £966,000 in the period, (2005: Nil) andcontinued growth in sales from the existing brands, notably Lepel and Ted BakerIntimates, which were up 27% on last year to £4.7m (2005: £3.7m). Operating losses from continuing operations were £390,000 (2005: loss of£636,000), but the one-off sale of fixed assets (the Borrowash building) and netinterest income enabled us to achieve a pre-tax profit for the half-year of£1.6m (2005: profit of £0.9m). It is pleasing to report that the improvement in our results is supported by agrowth in gross margin, due to the greater proportion of Branded sales, theaddition of Charnos Lingerie and the benefits of operational improvements, whichshould continue into the second half of the year. These results keep us on trackfor the full year, where we expect to see a further improvement in our overallperformance. Ongoing Strategy As highlighted above, we are seeing significant growth in our Branded operationswhile Private Label sales continue to reduce. This is a key strand to ourstrategic plan and will continue for the rest of the year. The table belowshows our mix of sales over the last three years compared to this half-year. 2003 2004 2005 2006 12 months 12 months 12 months 6 months ended ended ended ended 31 December 31 December 31 December 30 JuneBrand 17% 25% 33% 68%Private Label 83% 75% 67% 32% Integration of the Charnos Lingerie business has gone well, with stocktransferred to Long Eaton within six weeks of acquisition. The team has settleddown well and a new Sales Director, Andy Wrench, was appointed in June,reaffirming confidence in the future of this brand business. The brand did, however, experience some negative impact on sales through theSpring season, due to its short period in administration prior to ouracquisition, but it has been rebuilding confidence with customers over the lastfew months and had a strong performance at the August lingerie trade fair inHarrogate. It is our ambition to position Charnos as a credible alternative to some of thefinest European lingerie brands, underpinned by its strong English heritage. Wehave experienced some delays in deliveries of new Autumn/Winter season stock dueto the late placing of orders while in administration, but this is not expectedto affect ongoing trading. Ted Baker Intimates has had a good first season and we are seeing strong growthin the future order book. We are working closely with Ted Baker plc to furthergrow and develop this opportunity and are pleased at how quickly it hasestablished itself as a credible, fashion-orientated lingerie, nightwear andswimwear collection in UK department stores. Lepel has experienced strong growth during the first-half and is going fromstrength to strength. It continues to establish itself as a serious alternativeto the more long-standing, recognised mid-market brands, and the latestbrochures, together with brand imagery, strongly re-enforce this position. In anumber of our national accounts, Lepel was the fastest growing lingerie brand inthe Spring/Summer season. We are now attracting significant interest from potential overseas customers anddistributors for our brands, and have started to develop an export distributionstrategy to satisfy and grow this opportunity. Our recently signed supply agreement with the celebrity Caprice has started asplanned, and we are now in discussion with a major retailer to use Caprice asthe face of their swimwear collection. As indicated in the AGM statement, we are also developing a strategy tocapitalise on new distribution channels. As well as the internationaldistribution channel highlighted above, we are planning to open two clearanceoutlets in October 2006. One outlet is attached to our distribution centre atLong Eaton and the other is in the Factory Outlet Centre in Braintree, Essex. Wehave developed a strong retail proposition under the Intimas name and will trialthis format over the Christmas period. There is potential to extend the opportunity into further stores over the nexttwo years. To facilitate this opportunity and to manage the Group's stockclearance programme, we have recruited a new Senior Retail Executive, Sue Ault,who has over 20 years' retail and marketing experience. This opportunity shouldhave a very positive effect on product margins and create a new income stream.As part of this opportunity, a transactional website for all Group brands willbe developed in 2007. Cash Position The growth of the Branded operations, acquisition of Charnos Lingerie andseasonal factors have increased working capital levels resulting in a £2.3mreduction in the cash position to £7.2m. However, receipt of net proceeds of£3.8m from the sale of the Borrowash factory immediately following the half-yearend enhanced the cash position to £11.0m (December 2005: £9.5m). Borrowash The contract for the sale of the Borrowash property to David Wilson Homes Ltdbecame unconditional at the end of June, with completion taking place in earlyJuly. It is pleasing to note that the net cash proceeds of the sale at £3.8m arean improvement on previous expectations, following negotiation and theelimination of various planning issues and covenants. After costs, a profit of£1.7m has been generated. Birkin The process of winding up the Group's associated company, Guy Birkin Limited, isexpected to be completed by the end of the year. The Group has reported underdiscontinued activities £80,000 of proceeds, net of costs, representing themajority of the distribution it is expecting to receive as part of this process. Pension Update After a long period of discussion with the trustees of the Group Pension Scheme,the Group has now implemented a process that should reduce the ongoingliabilities the Group has to the Scheme. At the beginning of September letterswere sent to various categories of deferred members of the Scheme (members whono longer work for the Group) to offer them an incentive to transfer out of theGroup Scheme into schemes of their own choice. The trustees, at the Group's request, have provided details of the currentavailable reduced transfer values and the Group has offered to supplement thesewith a cash sum up to the maximum value of the current full transfer value. Ifmembers take up this option, it will reduce the Group's ongoing liabilities tothe Scheme and reduce the overall costs of administration. Once this exercise iscompleted, we will enter into discussions with the trustees to agree thelong-term commitments under the Scheme Specific Funding exercise. Even though this has been a lengthy exercise, we are now at the final stages andare awaiting responses from the Scheme's deferred members. The potential coststo the Group are highlighted below and are dependent upon the proportion oftake-up by the deferred members. Take-up 25% 50% 75% 100%Cost £0.75m £1.5m £2.25m £3.0m Our aim is to provide the Scheme membership with a fair offer to transfer out ofthe Scheme whilst reducing the current FRS 17 Pension deficit on the Balancesheet and the long-term liabilities of the Group. Once Scheme Specific Fundingis agreed, the Group can more fully concentrate on the business of growing theGroup and increasing shareholder value. Share Option Scheme At an Extraordinary General Meeting on 20 September 2006 an ordinary resolutionto approve a new share option scheme was passed. The Board considers theintroduction of this scheme at the present time to be in the best commercialinterests of the Group, in order to recruit and retain key staff. Dividends The directors are not declaring an interim dividend but, as I stated in the 2005Report & Accounts, the Group does propose to return to a policy of payingdividends, where appropriate, out of earnings and the matter continues to beunder review. Outlook There is a great deal going on within the business and Carol Duncumb, our ChiefExecutive, is working extremely hard with her team to put the Group in the bestpossible position to maximise shareholder value. She is continuing to invest inthe infrastructure of the business and, in particular, the calibre of her team. We do not under-estimate the challenge ahead and the volatility of our currentcustomer base. We believe that by establishing a strong portfolio of brands anda more balanced set of distribution channels we can maximise the Group'spotential. I look forward to updating you on our progress over the next fewmonths. MICHAEL HOBBS Chairman 22 September 2006 GROUP PROFIT AND LOSS ACCOUNT (UNAUDITED) Half year ended 30 June 2006 Half year ended 30 June 2005 Continuing Discontinued Total Continuing Discontinued Total £'000 £'000 £'000 £'000 £'000 £'000Turnover 8,417 - 8,417 10,011 - 10,011 Turnover includes:Continuing operations 7,451 - 7,451 10,011 - 10,011Acquisitions 966 - 966 - - -Discontinued operations - - - - - - Operating loss (390) - (390) (636) (219) (855) Operating loss includes:Continuing operations (537) - (537) (636) - (636)Acquisitions 147 - 147 - - -Discontinued operations - - - - (219) (219) Share of operating profit of - 80 80 - - -associateTotal operating (loss)/profit (390) 80 (310) (636) (219) (855)including share of associate Profit on sale of asset held - 1,738 1,738 - - -for resaleProfit on sale of fixed - - - - 1,635 1,635assetsProfit/(loss) on ordinaryactivities before interest (390) 1,818 1,428 (636) 1,416 780Net interest receivable 182 95Profit on ordinary activities 1,610 875before taxTax on profit on ordinary - (214)activitiesAmount transferred to 1,610 661reserves Earnings per share 1.5p 0.6p GROUP PROFIT AND LOSS ACCOUNT (UNAUDITED) CONTINUED Year ended 31 December 2005 Continuing Discontinued Total £'000 £'000 £'000Turnover 21,720 - 21,720 Turnover includes:Continuing operations 21,720 - 21,720Acquisitions - - -Discontinued operations - - - Operating (loss)/profit (1,006) 97 (909) Operating (loss)/profitincludes:Continuing operations (1,006) - (1,006)Acquisitions - - -Discontinued operations - 97 97 Share of operating profit of - - -associateTotal operating (loss)/ (1,006) 97 (909)profit including share ofassociate Profit on sale of asset held - - -for resaleProfit on sale of fixed - 1,635 1,635assetsProfit/(loss) on ordinaryactivities before interest (1,006) 1,732 726Net interest receivable 185Profit on ordinary 911activities before taxTax on profit on ordinary (302)activitiesAmount transferred to 609reserves Earnings per share 0.6p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (UNAUDITED) Half year Half year Year ended ended ended 30 June 2006 30 June 2005 31 December 2005 £'000 £'000 £'000 Result for the period 1,610 661 609Currency translation differences on overseas net investments 23 (48) (28)Actuarial loss on pension scheme - note 6 - - 859Movement on deferred tax asset relating to pension scheme - (62) (258)Total gains and losses recognised in the period 1,633 551 1,182 GROUP BALANCE SHEET (UNAUDITED) 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000Fixed assetsIntangible assets - note 7 1,066 917 885Tangible assets 2,005 1,879 1,942 3,071 2,796 2,827 Current assetsAsset held for resale - 1,653 1,996Stock 5,321 3,785 4,268Debtors 7,643 3,527 4,656Cash at bank and in hand 7,246 9,931 9,495 20,210 18,896 20,415 Creditors: amounts falling due (2,574) (2,194) (3,910)within one yearNet current assets 17,636 16,702 16,505 Total assets less current 20,707 19,498 19,332liabilities Net pension scheme deficit - note 6 (4,456) (5,511) (4,714) Net assets 16,251 13,987 14,618 Capital and reservesCalled up share capital 5,270 5,270 5,270Share premium account 89 89 89Capital redemption reserve 415 415 415Profit and loss account 10,477 8,213 8,844Shareholders' funds 16,251 13,987 14,618 GROUP CASH FLOW STATEMENT (UNAUDITED) Half year Half year Year ended ended ended 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000Net cash outflow from operating activities (1,635) (1,164) (1,619) Returns on investments and servicing of financeNet interest received 187 210 406 Capital expenditure and financial investmentAcquisition - note 7 (642) - -Purchase of tangible fixed assets (159) (196) (373)Sale of tangible fixed assets - 1,936 1,936 FinancingPurchase of own shares - (590) (590) (Decrease)/increase in cash resulting from cash flows (2,249) 196 (240) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS (UNAUDITED) 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000(Decrease)/increase in cash resulting from cash flows (2,249) 196 (240)Net funds at 1 January 9,495 9,735 9,735Net funds at period end 7,246 9,931 9,495 NOTES TO THE ACCOUNTS 1. Abridged accounts The results for the year ended 31 December 2005 are an abridged version of thefull accounts for that year. The interim report is unaudited. The full 2005accounts incorporating an unqualified audit report have been filed with theRegistrar of Companies. 2. Tax charge The tax charge for the six months ended 30 June 2006 has been based on theestimate of the tax charge for the full year results with the effective rate oftax applied to the half-year result before tax. 3. Earnings per share Earnings per share has been calculated on the earnings for the period divided bythe weighted average number of shares in issue: 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000Earnings for basic earnings per share 1,610 661 609 Weighted average number of ordinary shares 105,394,178 109,625,520 107,527,238 4. Reconciliation of operating loss to net cash outflow from operating activities Half year ended Half year Year ended ended 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000Operating loss (390) (855) (909)Depreciation and amortisation 154 176 322Share of operating profit of associate 80 - -Impairment reversal - - (343)Loss on disposal of fixed assets 1 8 9(Increase)/decrease in stock (583) 927 444Decrease in debtors 857 1,226 155Decrease in creditors (1,381) (2,322) (587)Pension contributions in excess of (373) (324) (710)operating charge Net cash outflow from operating (1,635) (1,164) (1,619)activities NOTES TO THE ACCOUNTS CONTINUED 5. Reconciliation of movements in shareholders' funds 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000Result for the period 1,610 661 609Other recognised gains and losses 23 (110) 573Purchase of own shares - (590) (590)Net increase/(decrease) in shareholders' funds 1,633 (39) 592 Shareholders' funds at 1 January 14,618 14,026 14,026Shareholders' funds at period end 16,251 13,987 14,618 6. Pension scheme deficit 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000Deficit at the end of the period (6,366) (7,873) (6,734) Related deferred tax asset 1,910 2,362 2,020 Net pension scheme deficit (4,456) (5,511) (4,714) In accordance with FRS 17 the movements in the period to 30 June 2006 have beencalculated using the assumptions disclosed in the annual report for the yearended 31 December 2005. No account has been taken of any actuarial gains orlosses. NOTES TO THE ACCOUNTS CONTINUED 7. Acquisition The acquisition relates to the purchase of Charnos Lingerie on 17 March 2006.The fair values of the net assets acquired are as follows: Notes Book value Adjustments Fair Value £'000 £'000 £'000 Tangible fixed assets 20 - 20Intangible fixed assets - brand name a - 220 220Stock b 530 (60) 470Current liabilities (68) - (68) Total 482 160 642 Cost of acquisition 585Costs associated with acquisition 57Total cost of acquisition 642 Goodwill - Notes a A valuation has been applied to the Charnos Lingerie brand name. Thisvaluation has been restricted so as not to create negative goodwill in order tocomply with FRS 10 'Goodwill and intangible assets'. b Additional obsolescence provisions have been applied to the value ofthe stock acquired. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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