MPH.L Regulatory News (MPH)

28 Jun 2007 07:04

Marchpole Holdings PLC28 June 2007 MARCHPOLE HOLDINGS PLC ("Marchpole", "the Company" or "the Group") PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2007 Sales increase by 136 per cent and Profit Before Tax by 87 per cent Marchpole Holdings plc, the rapidly growing international luxury fashion brandmanagement group which designs, produces and sells high quality clothing andaccessories for ten world class brands (Boateng, Jean-Charles de Castelbajac("JCC"), Jean-Charles de Castelbajac/Rossignol, Jean-Charles de Castelbajac/Okaidi, Jean Charles de Castelbajac/New Era, Jean Charles de Castelbajac/LeeCooper, Emanuel Ungaro, Ungaro Homme, Homebody and Homemummy) announces itspreliminary results for the year ended 31 March 2007. Financial and Operational Highlights * Turnover up to £90.5m (2006: £38.4m) * Operating profit £10.1m (2006 restated: £5.0m)* * Profit before tax £8.3m (2006 restated: £4.5m)* * EPS of 23 pence per share (2006 restated: 11 pence)* * Final dividend of 2.25 pence per share proposed payable in September 2007 (2006: 2.25 pence restated for 1 for 5 share consolidation)* * Acquisition of Greenmark Limited, an importer and wholesaler of ladies shoes, immediately earnings enhancing * Acquisition of 51 per cent of Homebody Limited, which designs, manufactures and distributes a luxury lifestyle collection of ladieswear, maternity wear and menswear * Continued growth in the number and value of JCC licences Commenting on the results, Michael Morris, Executive Deputy Chairman, said: "The last year has been one of further impressive growth for the Group and wecontinue to build for the future. Major achievements during the year were theacquisitions of Greenmark Limited and Homebody Limited, both of which have beensuccessfully integrated into the Marchpole business model. Marchpole has evolved into a diversified luxury multi-brand internationalbusiness with strong growth potential. We now operate through wholly ownedsubsidiaries in the major fashion centres of the world - the UK, mainland Europein France and Italy, Russia, Asia, the Middle East and the USA - for a widerange of internationally recognised fashion brands. The Group's growth and profitability are a reflection of the investments whichhave been made in developing its brands and we shall continue to pursue otherearnings enhancing acquisitions and licensing opportunities" For further information please contact: Marchpole Holdings plc 020 7908 7777Michael Morris, Executive Deputy ChairmanJohn Harrison, Finance Director Bell Pottinger 020 7861 3232David Rydell / Emma Kent / Amy Rajendran Shore Capital 020 7408 4090Alex Borrelli / Dru Danford An analysts' presentation will be held at Marchpole's offices at 10.00am onThursday 28 June 2007. \* The prior year figures have been restated to update certain provisional valuesrelated to the Moda acquisition and to reflect the share consolidation. CHAIRMAN'S STATEMENT I am pleased to report the preliminary results of Marchpole Holdings plc for theyear ended 31 March 2007. The business continues to grow and to expand itsglobal reach. The future potential of the business lies within the expertise of managingbrands on a worldwide platform. This platform has been developed over the lastfew years and we anticipate further growth. The acquisition of Greenmark Limited which was completed during March this yearadds a significant ladies footwear business and provides further opportunitiesfor growth and diversification. The Group's profitability provides a sound reflection of its strength. Results and Dividends Continued improvements in the business are reflected by the increase in turnoverto £90.5m (2006: £38.4m). Despite the acknowledged difficult trading conditionsin the retail industry generally and continued investment in brands, operatingprofit including the impact of the Greenmark Limited acquisition has increased to £10.1m(2006 restated: £5.0m). Profit before taxation has increased to £8.3m (2006 restated: £4.5m). The basic EPS is 23 pence per share (2006 restated: 11 pence per share). The Board is recommending the payment of a final dividend of 2.25p per sharewhich when added to the interim dividend of 1.5 pence per share gives a totaldividend for the year of 3.75p per share (2006 restated: 3.5 pence). The finaldividend is proposed to be paid on 14 September 2007 following the completion ofthe Company's Annual General Meeting. Greenmark Limited Acquisition The acquisition of Greenmark Limited was completed in March 2007 and wasimmediately earnings enhancing. The introduction of a major shoe business to theMarchpole range provides a significant opportunity to further expand thebusiness into menswear and into designer brands. Homebody Acquisition In August 2006 we acquired 51% of the luxury clothing company Homebody Limited.Homebody designs and manufactures luxury lifestyle ladieswear, maternity wearand menswear and has wholesale, retail and internet customers. The acquisitionis in line with the Company's strategy to evolve into an international brandmanagement group and expand into the lifestyle category. Marchpole is buildingthe brand throughout Europe and the US through increased distribution outlets, leveraging the demand for the excellent designs and creativity of Homebody. Licences Emanuel Ungaro and Ungaro Homme We are working closely with the House of Ungaro on developments in design,product range and distribution. Sales of Emanuel Ungaro and Ungaro Homme in Europe and North America are bothencouraging and close to expectations. We remain confident that the Ungaro brandwill prove to be an adequate replacement for YSL. The first UK advertising campaign was well received and the brand will receive afurther boost from the Paris Fashion Show for the new first line on 29 June2007. A major event during the year has been the recruitment of Franck Boclet as Headof Design. Franck comes to Marchpole from the Francesco Smalto house where hehad built a renowned reputation. Jean-Charles de Castelbajac S.A. ("JCC") Development of the JCC brand has continued throughout the year. During the period new licence and distribution agreements have been signed with: * OKAIDI - the global childrenswear retailer * Galeries Lafayette - the iconic Parisian store * Chalhoub - the promoter of luxury lifestyle brands throughout the Middle East * Crocus - the leading Russian retailer * Boussac - commercial and domestic soft furnishings * Toulemonde Bouchart - carpets and floor coverings * Lutece - wall coverings * CFC Daum - crystal jewellery and artwork * Groupe Lampe Berger - decorative and fragrant luxury lamps * Atomic Soda- quality stationery We are in continuing negotiation with other potential licensees and distributorsas we continue to develop this segment of our strategy. Most recently we havesigned significant long term partnership agreements with two globally renownedbrands - the world famous headwear company New Era, and one of the world'soriginal denim companies, Lee Cooper. Direct sales through the JCC retail outlet in Paris, the Galeries Lafayettecorner and the boutique in Lyons are encouraging as are those from the outlet inFidenza, Italy which was opened in November 2005. Our partners in other countries are opening dedicated JCC retail outlets. LastSeptember saw the opening of a 150 square metre flagship store in Kobe, Japanand this September will see a dedicated JCC store opening in Tokyo. We continue to invest in the brand and are confident of future growth. Yves Saint Laurent Since the acquisition of Yves Saint Laurent by Gucci seven years ago the Housepolicy has been neither to renew licensing agreements nor to grant new ones.This means that the relationship between Marchpole and Yves Saint Laurent, whichhas been in existence for more than 30 years, terminated at the end of 2006. Marchpole's strategy for the last few years has been based on the expectationthat the Yves Saint Laurent licence agreement would not be extended beyond 2006and the Company is confident that it is well placed to withstand thistermination. Boateng In December 2006 the Court of Appeal ruled that Marchpole was correct in itssupposition that the licence agreement with Bespoke Couture, the Company ownedand run by Ozwald Boateng, should continue. Permission to appeal to the House ofLords was refused and costs were awarded to Marchpole. Despite the dispute with Bespoke Couture, Marchpole has continued to develop andsell the Boateng collection and our commitment to the brand remains unaltered. Outlook The business continues to progress and to invest for the future. The acquisitionof Greenmark Limited is a significant milestone in the development of theCompany. We will continue to focus on acquisitions, entering into new licenceagreements and extending existing ones. I am confident that we have themanagement team and the expertise to take the Company forward and to take fulladvantage of global opportunities. We are currently in negotiations for both newlicensing agreements and for a modest acquisition which we hope to conclude inthe current financial year. On behalf of the Board of Directors I would like to thank the employees of theCompany for their contribution towards the results for the year and inanticipation of their continued efforts towards yet further progress. Togetherwe look forward to harnessing the core strengths of the Company and todelivering enhanced shareholder value over the coming years. Christopher PhillipsChairman 28 June 2007 Dividend Declaration The Company confirms the following final dividend information: Amount of final dividend: 2.25 pence per Ordinary Share Record date: 17 August 2007 Date of AGM: 6 September 2007 Expected payment date: 14 September 2007 CONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 31 MARCH 2007 Unaudited Unaudited 31-Mar-07 31-Mar-06 Restated Note £'000 £'000 Continuing OperationsRevenue 90,534 38,370Cost of sales (63,470) (22,472) --------- ---------- Gross profit 27,064 15,898 Distribution costs (4,229) (2,230)Administration expenses (14,906) (9,092)Fair value of net assets acquiredinexcess of fair value of purchase consideration 5 2,124 418 --------- ----------Operating profit 10,053 4,994 Finance costs (1,730) (541) --------- ---------- Profit before tax 8,323 4,453 Tax 2 (2,096) (1,399) --------- ----------Profit attributable to the equityshareholders 6,227 3,054 ========= ========== Earnings per share Basic 3 23p 11p --------- ---------- Diluted 23p 11p --------- ---------- GROUP BALANCE SHEETAS AT 31 MARCH 2007 Unaudited Unaudited 31-Mar-07 31-Mar-06 Restated £'000 £'000Non-current assetsGoodwill 4,062 3,925Intangible assets 9,920 2,317Property, plant and equipment 1,088 1,125 --------- ---------- 15,070 7,367 --------- ----------Current assetsInventories 3,797 3,868Trade and other receivables 14,284 20,957Cash and cash equivalents 2,342 745 --------- ---------- 20,423 25,570 --------- ---------- --------- ----------Total assets 35,493 32,937 --------- ---------- Current liabilitiesBank overdraft and loans (2,512) (10,039)Trade and other payables (9,446) (9,928)Liabilities for current tax (2,604) (2,369)Deferred tax liabilities (353) (72)Obligations under finance lease - (16) --------- ---------- (14,915) (22,424) --------- ---------- Non-current liabilitiesLoans (3,541) (263)Deferred tax (2,498) (477) --------- ---------- (6,039) (740) --------- ---------- Total liabilities (20,954) (23,164) --------- ---------- Net current assets 5,508 3,146 --------- ---------- Net assets 14,539 9,773 ========= ========== Capital and reservesShare capital 1,373 1,360Share premium 2,800 2,798Other reserves 374 290Foreign exchange reserves (751) (212)Retained earnings 10,743 5,537 --------- ---------- Total shareholders' funds - equity interests 14,539 9,773 ========= ========== CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 MARCH 2007 Unaudited Unaudited Note 31-Mar-07 31-Mar-06 £'000 £'000 Net cash from operating activities 6 12,518 (4,225) Investing Activities Purchases of plant & equipment (282) (507)Purchase of intangible assets (63) -Acquisition of subsidiary (3,305) (837) --------- --------Net cash used in investing activities (3,650) (1,344) --------- -------- Financing ActivitiesEquity dividends paid (1,021) (934)Proceeds on issue of shares 15 119New loans 1,683 -(Decrease)/Increase in bank facilities (6,535) 6,645Capital element of finance lease rentals (16) (15)Repayment of loans (404) (52) --------- --------Net cash used in financing activities (6,278) 5,763 Movement in cash for the year 2,590 194 Cash and cash equivalents (including overdrafts) atthe beginning of the year (248) (442) --------- --------Cash and cash equivalents (including overdrafts) atthe end of the year 2,342 (248) ========= ======== CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MARCH 2007 Foreign Retained Exchange Earnings Share Capital Share Premium Other Reserve Reserve Restated TOTAL £'000 £'000 £'000 £'000 £'000 £'000As at 1 April 2005 1,335 2,704 43 (133) 3,417 7,366 Shares issued in the period 25 94 - - - 119Credit in respect of share option charge - - 247 - - 247Profit for the year - - - - 3,054 3,054Foreign exchange movement - - - (79) - (79)Dividends - - - - (934) (934) ------- ------- -------- ------- ------- -------As at 31 March 2006 1,360 2,798 290 (212) 5,537 9,773 Shares issued in the period 13 2 - - - 15Credit in respect of share option charge - - 84 - - 84Profit for the year - - - - 6,227 6,227 Foreign exchange movement - - - (539) - (539)Dividends - - - - (1,021) (1,021) ------- ------- -------- ------- ------- ------- As at 31 March 2007 1,373 2,800 374 (751) 10,743 14,539 ======= ======= ======== ======= ======= ======= NOTES TO THE FINANCIAL INFORMATIONFOR THE YEAR ENDED 31 MARCH 2007 1 General information and accounting policies a. The preliminary results have been prepared in accordance with the accountingpolicies adopted under IFRS. These accounting policies are consistent with thosepublished in the IFRS financial statements for the year ended 31 March 2006. b. Whilst the financial information included in this preliminary announcementhas been prepared in accordance with IFRS as endorsed by the European Union,this announcement does not itself contain sufficient information to comply withall the disclosure requirements of IFRS. The company expects to publish a fullset of accounts that comply with IFRS in August 2007. c. The financial information set out in this announcement does not constitutethe Group's statutory accounts for the purpose of Section 240 of the CompaniesAct 1985 for the years ended 31 March 2007 or 31 March 2006, but it is derivedfrom those accounts after restating the prior year comparatives in relation tothe fair value of net assets acquired in excess of fair value of purchaseconsideration in line with IFRS 3. Statutory accounts for 2006 have beendelivered to the Registrar of Companies. The financial information for the yearended 31 March 2007 is unaudited. The statutory accounts for the year ended 31March 2007 will be finalised on the basis of the financial information presentedby the Directors in this preliminary announcement and will be delivered to theRegistrar of Companies after the company's annual general meeting. The auditorshave reported on the IFRS accounts for the year ended 31 March 2006; theirreport was unqualified and did not contain statements under s237 (2) or (3)Companies Act 1985. d. The Board of Directors approved the preliminary announcement on 27th June2007. 2 Taxation 31-Mar-07 31-Mar-06 £'000 £'000 UK corporation tax at 30% (2006 - 30%): Current tax charge on profit for the year 2,058 1,613 Prior period adjustment (121) (331) Foreign tax 127 149 Deferred tax charge / (credit) 32 (32) ---------- ---------- 2,096 1,399 ========== ========== 3 Earnings per share The calculation of the basic and diluted earnings per share is based on the following data: 31-Mar-07 31-Mar-06 Restated £'000 £'000 Net Profit attributable to equity shareholders 6,227 3,054 ========== ========== Weighted Average number of ordinary shares in issue 27,253,918 26,752,914 Effect of dilutive potential ordinary shares 3,476 389,792 ---------- ---------- 27,257,394 27,142,706 ========== ========== Earnings per Share Basic 23p 11p Diluted 23p 11p Following consolidation of ordinary shares the prior period's earnings per sharehave been restated to reflect the new number of shares. 4 Dividends 31-Mar-07 31-Mar-06 £'000 £'000 Interim dividend paid 1.5p per ordinary share (2006: 1.25p per share restated) 409 332 Final dividend for prior period 2.25p per share (2006: 2.25p per share restated) 612 602 ---------- ---------- 1,021 934 ========== ========== The Company confirms the following final dividend information which is subjectto the approval by shareholders at the Annual General Meeting and has not beenrecognised as a liability in accordance with accounting standards (IAS10). Amount of final dividend: 2.25 pence per Ordinary Share Record date: 17 August 2007 Date of AGM: 6 September 2007 Expected payment date: 14 September 2007 5 Acquisition of subsidiaries Prior year acquisition In the prior year ending 31 March 2006 the group purchased the entire equity interest of Moda America LLC effective 31 December 2005. At the time provisional values were assigned to the assets and liabilities acquired and also the purchase consideration based on the information that was available. As all values and considerations have now been finalised we have included an updated Net assets acquired and Consideration schedule. Book Value Fair value Fair Value adjustments £'000 £'000 £'000 Net assets acquired Property, plant and equipment 621 (484) 137 Inventories 611 - 611 Trade and other receivables 2,579 (110) 2,469 Cash and cash equivalents (18) - (18) Trade and other payables (3,188) (75) (3,263) --------- --------- -------- 605 (669) (64) ========= ========= Intangible value ascribed to client 2,000 relationships Less deferred tax (600) Fair value of net assets acquired in excess of fair value of purchase consideration - recognised in the income statement (418) -------- Total consideration 918 ======== Satisfied by: Cash 471 Directly attributable costs 447 -------- 918 ======== In accordance with IFRS 3: Business Combinations the fair value of net assets acquired and consideration paid have been restated to reflect the final values with the main difference being a change in total consideration from £446,000 to £918,000.As a result the fair value of net assets acquired in excess of the fair value of purchase consideration recognised in the income statement in the prior year has been restated to £418,000, previously £889,000. Current year acquisitionsDuring the year the group purchased 51% of the equity interest of HomebodyLimited effective 1 July 2006. Book Value Fair value Fair Value adjustments £'000 £'000 £'000Net assets acquiredProperty, plant andequipment 15 - 15Inventories 67 - 67Trade and otherreceivables 133 (49) 84Cash and cashequivalents (including overdrafts) (68) - (68)Trade and other payables (221) - (221) --------- --------- -------- (74) (49) (123) ========= ========= Goodwill 236 --------Total consideration 113 ======== Satisfied by:Cash 100 Directly attributablecosts 13 -------- 113 ======== During the year the Group purchased the entire equity interest of GreenmarkLimited effective 26 January 2007. Book Value Fair value Fair Value adjustments £'000 £'000 £'000Net assets acquiredProperty, plant and equipment - - -Inventories 139 - 139Trade and otherreceivables 2,883 - 2,883Cash and cashequivalents (including Overdrafts) (1,648) - (1,648)Trade and other payables (1,156) - (1,156) --------- --------- -------- 218 - 218 ========= ========= Intangible valueascribed to clientrelationships 8,000Less deferred tax (2,400)Fair value of net assetsacquired in excess offair value of purchaseconsideration -recognised in the incomestatement (2,124) --------Total consideration 3,694 ======== Satisfied by:Cash 1,000Convertible loan note 1,000Loan notes 1,000Deferred consideration 218Directly attributablecosts 476 -------- 3,694 ======== 6 Net cash inflow/(outflow) from operating activities 31-Mar-07 31-Mar-06 Restated £'000 £'000 Operating profit 10,053 4,994 Adjustments for: Loss/( Gain) on derivatives 99 (17) Depreciation 335 295 Amortisation of intangible assets 461 71 Share option provision 84 247 Excess of net assets acquired over consideration recognised in the income statement (2,124) (418) --------- ---------- Operating cash flows before movements in working capital 8,908 5,172 Decrease / (Increase) in inventories 168 (1,599) Decrease / (Increase) in debtors 9,391 (8,786) (Decrease) / Increase in creditors (2,260) 2,590 --------- ---------- Cash generated by operations 16,207 (2,623 ) Interest paid (1,730) (541) Income taxes paid (1,959) (1,061) --------- ---------- Net Cash from operating activities 12,518 (4,225) ========= ========== Cash and cash equivalents comprise cash at bank and other short-term highlyliquid investments with a maturity of three months or less. 7 Share Capital As approved at the AGM on 12 September 2006 the Company completed a shareconsolidation whereby every 5 existing ordinary shares of 1p each wereconsolidated and redesignated as 1 new ordinary share of 5p each. Earnings pershare and dividends per share for the year ended 31 March 2006 have beenrestated in this announcement using the consolidated share number. This information is provided by RNS The company news service from the London Stock Exchange