MPH.L Regulatory News (MPH)

15 Nov 2006 07:02

Marchpole Holdings PLC15 November 2006 MARCHPOLE HOLDINGS PLC ("the Company") INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 Increasing profits, sales and expanding global reach Marchpole Holdings plc, the international fashion brand management group whichdesigns, produces and sells high quality clothing and accessories for eightworld class brands (Yves Saint Laurent, Boateng, Jean-Charles de Castelbajac("JCC"), Jean-Charles de Castelbajac/Rossignol, Jean-Charles de Castelbajac/OKAIDI, Emanuel Ungaro and Ungaro Homme, and Homebody) announces its interimresults for the six months ended 30 September 2006. Financial and Operational Highlights • Turnover up to £38.6 million (2005:£14.9 million) • Operating profit £5.0 million (2005: £1.2 million) • Profit before tax £4.0 million (2005: £1.0 million) • EPS of 10.2 pence per share (2005: restated 2.3 pence, restated for 1 for 5 share consolidation) • Acquisition of luxury clothing company Homebody • JCC licence agreement with global childrenswear brand OKAIDI • JCC flagship store opened in Kobe, and further store to open in Tokyo • Interim dividend increased to 1.5 pence (2005: restated 1.25 pence) Commenting on the results, Michael Morris, Executive Deputy Chairman, said: "During the last six months the evolution of the Company from being a singlebrand, single country business into a diversified multi-brand and internationalbusiness has continued in line with our strategy. We are delighted with theprogress made in securing additional licence and distribution agreements forboth JCC and Emanuel Ungaro, and also the acquisition of the luxury brandHomebody. "I am also delighted that the dispute with Bespoke Couture and Ozwald Boatenghas been successfully resolved, and with costs awarded in our favour. "We are confident that the Company is in a strong position to continue itsgrowth both through further licensing agreements and acquisitions." For further information please contact: Marchpole 020 7 908 7777Michael Morris, Executive Deputy ChairmanJohn Harrison, Finance Director Bell Pottinger 020 7 861 3232Emma Kent/Alex Walton Shore Capital 020 7 408 4090Alex Borrelli/Dru Danford CHAIRMAN'S STATEMENT I am pleased to report the interim results of Marchpole Holdings plc for the sixmonths ended 30 September 2006. The business continues to grow both profits andsales and to expand its global reach. As well as successfully pursuing our acquisition strategy, the Company hasincreased its licensing and distribution capabilities, reflecting our ability tomanage brands worldwide. Results Business has continued to improve. Turnover increased to £ 38.6 million (2005:£14.9 million). Operating profit has increased to £5.0 million (2005: £1.2million). Operating profit was 13% (2005: 7.9%) of turnover. Profit beforetaxation is £4 million (2005: £1.0 million). The basic EPS is 10.2 pence pershare (2005: 2.3 pence per share). Overheads Total overhead expenditure has increased by 36%. This includes a full six monthsfor Moda America (2005: £nil) and continued investment in promoting the EmanuelUngaro and Ungaro Homme brands. Stripping out these two elements overheadexpenditure fell by 2% reflecting the company's ability to leverage higherrevenues from its relatively low fixed cost base. The company continues toexercise tight cost control. Dividend The final dividend of 0.45 pence (restated 2.25 pence) per share for the yearended 31 March 2006 was approved at the Annual General Meeting on 12 September.We are maintaining our dividend policy and the board has agreed the payment ofan increased interim dividend of 1.5 pence per share (2005: restated 1.25 pence)to shareholders on the register at 1 December 2006, payable in December 2006. Moda America LLC Acquisition Moda America LLC, acquired in March 2006 (effective 1 January 2006), has nowbeen fully integrated into the Marchpole business model. This strategicacquisition has provided an opportunity to grow the business in the lucrativeUnited States market and build further on our relationship with Emanuel Ungaro. The Ungaro brands are now in 754 stores in the USA. JCC has penetrated 79 storesin its first US season. Licences Emanuel Ungaro and Ungaro Homme We continue to strengthen our relationship with the House of Ungaro. The distribution agreement with Dubai based BTC Group International which wassigned in August 2006 to sell the Emanuel Ungaro brand in the United ArabEmirates represents a significant breakthrough for the Group into thefast-growing Gulf marketplace. The five year contract begins with the sale ofthe 2007 Spring/Summer collection. Jean-Charles de Castelbajac S.A. ("JCC") Marchpole's wholly owned brand, JCC, has shown significant growth in the sixmonths. In the period we signed a major licensing agreement with global childrenswearretailer OKAIDI Group, giving JCC a firm foothold in the lucrative childrenswearmarket. The agreement sees Marchpole's JCC operation in Paris designing,producing and selling children's clothes under the JCC brand name. The launch ofthe Autumn/Winter 2006 collection in November 2006 into the 450 plus OKAIDIstores worldwide was above expectations. Following the agreement with leading European eyewear retailer Codir SA.Castelbajac eyewear has now been launched in Europe through 260 outlets. The brand's presence in Europe was further strengthened with the launch of theJCC range into the flagship Galleries Lafayette store on Boulevard Haussman inParis which was well-received. Further afield, our partnership with Itochu, who under licence, manufacture,wholesale and retail the Castelbajac collections in Japan, has seen encouragingprogress, with sales continuing to grow. In addition, September saw the openingof the JCC flagship store in Kobe, Japan retailing our European manufacturedgoods. A further store will be opened in Tokyo in summer 2007. The JCC brand nowhas a firm presence in the lucrative Japanese market and we anticipate furtherexpansion. In Korea a new flagship store has been opened which brings the total to six. JCCis also strongly represented in 11 important Duty Free shopping outlets. Overall, income from the JCC licence agreements continues to increase. Homebody The acquisition of 51% of the luxury clothing company Homebody Limited in August2006 expanded Marchpole's presence in the lifestyle category and is in-line withour strategy of evolving the company into an international brand managementgroup. Homebody designs, manufactures and distributes a luxury lifestyle collection ofladieswear, maternity wear and menswear. The clothes are stocked in Selfridges,Harrods and other top boutiques in the UK, as well as Neiman Marcus and FredSegal in the USA. Yves Saint Laurent ("YSL") As previously stated, the 30 year plus relationship with Yves Saint Laurent willterminate at the end of 2006. This has been the case since the acquisition ofYSL by Gucci in 1999, where the house policy is not to renew licensingagreements or grant new ones. Boateng The Company is pleased to announce that the dispute with Bespoke Couture Limitedhas been successfully resolved. The Court of Appeal ruled on 3rd November 2006 that the licence agreementcontinues and that the damages claim against Marchpole Holdings plc should bedismissed. Furthermore, Bespoke Couture Limited/Ozwald Boateng was refusedpermission to appeal to the House of Lords and the Company has had costs awardedin its favour. Outlook The business continues to progress and is well placed to capitalise on furtherlicensing and acquisition opportunities. We are currently in negotiations for anacquisition which we hope to conclude in the very near future. Furthermore, thesuccessful integration of Moda America LLC has provided a solid foundation toexpand the business into the United States. I am confident that we have themanagement team, operating team, structure and expertise to take full advantageof the global opportunities which your board believes will present themselves inthe coming months. Christopher PhillipsChairman 15 November 2006 MARCHPOLE HOLDINGS PLCUNAUDITED CONSOLIDATED INCOME STATEMENTFor the six months ended 30 September 2006 6 months to 6 months to Year 30 1 October ended 31 September 2005 March 2006 2006 Total Total Notes £'000 £'000 £'000 ---------------------------------Revenue 3. 38,560 14,874 38,370Cost of sales (25,522) (7,794) (22,472) ---------------------------------Gross profit 13,038 7,080 15,898Distribution costs (544) (1,681) (2,230)Administrative expenses (7,471) (4,224) (9,092)Fair value of net assets acquired in excess of fair value of purchase consideration - - 889 --------------------------------Operating profit 5,023 1,175 5,465Net finance costs (1,045) (165) (541) --------------------------------Profit before tax 3. 3,978 1,010 4,924Tax 5. (1,217) (387) (1,399) --------------------------------Profit for period 2,761 623 3,525Minority interest 17 - - --------------------------------Profit for period attributable to equity shareholders 2,778 623 3,525 -------------------------------- Earnings per share basic 4. 10.2p 2.3p 13.2pEarnings per share diluted 4. 10.2p 2.3p 13.0p MARCHPOLE HOLDINGS PLCUNAUDITED CONSOLIDATED BALANCE SHEETAt 30 September 2006 As at As at As at 30-Sep-06 01-Oct-05 31-Mar-06 £'000 £'000 £'000 ---------------------------------------- Non-current assetsGoodwill 4,291 3,511 3,925Other intangible assets 2,245 357 2,317Property, plant and equipment 1,052 893 1,126 ---------------------------------------- 7,588 4,761 7,368Current assetsInventories 7,150 3,232 3,868Trade and other receivables 18,627 10,148 21,226Cash and cash equivalents 8,195 421 745 ---------------------------------------- 33,972 13,801 25,839Current liabilitiesTrade and other payables (10,105) (4,866) (9,727)Current tax liabilities (3,587) (1,129) (2,369)Obligations under finance leases - - (16)Bank overdrafts and loans (13,896) (4,718) (10,039)Deferred tax liabilities (72) - (72) ---------------------------------------- (27,660) (10,713) (22,223) Net current assets 6,312 3,088 3,616 Non-current liabilitiesDeferred tax liabilities (369) - (477)Loans (1,965) (298) (263) ---------------------------------------- (2,334) (298) (740) ---------------------------------------- Net assets 11,566 7,551 10,244 ======================================== Capital and reservesShare capital 1,360 1,335 1,360Share premium account 2,800 2,704 2,798Other reserves 290 - 290Hedging and translation reserves (424) 1 (212)Retained earnings 7,618 3,511 6,008 ----------------------------------------Total shareholders' equity 11,664 7,551 10,244Minority Interest (78) ----------------------------------------Total equity 11,566 7,551 10,224 ======================================== MARCHPOLE HOLDINGS PLCUNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITYFor the period to 30 September 2006 Share Share Other Hedging and Retained Total capital premium reserve translation earnings reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 ------------------------------------------------------As at 1 April 2005 1,335 2,704 43 (133) 3,337 7,286Adoption of IAS 32/39 - - - - 80 80 ------------------------------------------------------As at 31 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 period - - - - 3,525 3,525Foreign exchange movement - - - (79) - (79)Dividends - - - - (934) (934) ------------------------------------------------------As at 31 March 2006 1,360 2,798 290 (212) 6,008 10,244 Shares issued in the period - 2 - - - 2Credit in respect of share option charge - - - - - -Profit for the period - - - - 2,778 2,778Prior year adjustment - - - - (556) (556)Foreign exchange movement - - - (212) - (212)Dividends - - - - (612) (612) ------------------------------------------------------As at 30 September 2006 1,360 2,800 290 (424) 7,618 11,644 ------------------------------------------------------ MARCHPOLE HOLDINGS PLCUNAUDITED GROUP CASHFLOW STATEMENTFor the period to 30 September 2006 6 months to 6 months to Year to 30-Sep-06 01-Oct-05 31-Mar-06 £'000 £'000 £'000 Note (Unaudited) (Unaudited) (Audited) -----------------------------------------------------------Net cash from operating activities 2. 2,918 305 (4,225) Investing activitiesInterest received -Purchase of property, plant and equipment (74) (261) (507)Purchase of intangibles (48) - -Acquisition of subsidiary (292) - (837) ----------------------------------------Net cash used in investing activities (414) (261) (1,344) ---------------------------------------- Financing activitiesDividends paid (612) (601) (934)Repayments of borrowings (2,981) (34) (52)Repayments of obligations under finance leases (16) (15)Proceeds on issue of shares - - 119New bank loans raised 1,705 - -Increase in bank facilities - 6,645 ---------------------------------------Net cash from financing activities (1,888) (651) 5,763 ---------------------------------------Net increase/(decrease)in cash and cash equivalents 616 (607) 194 --------------------------------------- Cash and cash equivalents at beginning of year (248) (442) (442) ---------------------------------------Cash and cash equivalents at end of year 368 (1,049) (248) ======================================= MARCHPOLE HOLDINGS PLCNOTES TO THE INTERIM STATEMENT 1. Basis of preparation These condensed consolidated interim financial statements have been prepared onthe basis of the recognition and measurement requirements of InternationalFinancial Reporting Standards and have been prepared using the same accountingpolicies as set out in the Group's Annual Report for the year ended 31 March2006. The financial information presented in this interim statement does notconstitute full financial information within the meaning of Section 240 of theCompanies Act 1985. The Group income statement for the year ended 31 March 2006and the Group balance sheet at that date have been extracted from the statutoryaccounts for the period, which have been delivered to the Registrar ofCompanies. The auditor's opinion on these accounts was unqualified and does notcontain a statement made under section 273(2) and section 237(3) of theCompanies Act 1985. 2. Notes to the cash flow statement 6 months to 6 months to Year to 30-Sep-06 01-Oct-05 31-Mar-06 £'000 £'000 £'000 ----------------------------------- Operating profit from continuing operations 5,023 1,175 5,465 Net gain on derivatives - - (17) Depreciation of property, plant and equipment 163 150 295 Amortisation of intangible assets 120 17 71 Share option charge - 124 247 Excess of fair value net assets acquired over fair value consideration released to income statement - - (889) Foreign exchange - 39 - ----------------------------------- Operating cash flows before movements in working capital 5,306 1,505 5,172 (Increase)/decrease in inventories (3,215) (1,574) (1,599) (Increase)/decrease in receivables 2,126 (762) (8,786) Increase/(decrease) in payables (208) 1,818 2,590 ----------------------------------- Cash generated by operations 4,009 987 (2,623) Income taxes paid (46) (513) (1,061) Overdrafts (1,045) (169) (541) ----------------------------------- Net cash inflow/(outflow) from operating activities 2,918 305 (4,225) ----------------------------------- MARCHPOLE HOLDINGS PLCNOTES TO THE INTERIM STATEMENT 3. Geographical segments The group operates in the single business segment of high fashion appareldesign, marketing and distribution. The Group has sales operations located inthe UK, Europe and America, and a procurement office in Hong Kong. The followingtable provides an analysis of the Group's sales, operating profit and net assetsby geographical market, irrespective of the origin of the goods/services: Turnover analysis by geographical origin of sales: 6 months to 6 months to Year to 30-Sep-06 01-Oct-05 31-Mar-06 £'000 £'000 £'000 ------------------------------------United Kingdom 29,967 12,188 28,538Europe & rest of world 3,366 2,686 7,197North America 5,227 - 2,635 ------------------------------------ 38,560 14,874 38,370 ------------------------------------ Geographical analysis of profit on ordinary activitiesbefore taxation: 6 months to 6 months to Year to 30-Sep-06 01-Oct-05 31-Mar-06 £'000 £'000 £'000 ------------------------------------United Kingdom 4,024 1,614 4,580Europe & rest of world 63 (604) (801)North America (110) - 1,145 ------------------------------------ 3,978 1,010 4,924 ------------------------------------ 4.Earnings per share The calculation of the basic and diluted earnings per share is based on thefollowing data: 6 months to 6 months to Year to 30-Sep-06 01-Oct-05 31-Mar-06 £'000 £'000 £'000 ------------------------------------- Net profit attributable to equity holders of the parent 2,778 623 3,525 ------------------------------------- Weighted average number of ordinary shares in issue 27,209,247 26,615,247 26,752,914 Effect of dilutive potential ordinary shares 141,000 765,226 389,793 ------------------------------------- 27,350,247 27,380,473 27,142,706 ------------------------------------- Earnings per share (pence) Basic 10.2 2.3 13.2 Diluted 10.2 2.3 13.0 Following the consolidation of ordinary shares the prior period's results havebeen restated. 5. Taxation A provision for corporation tax has been made using the rate of 30% on profitbefore taxation. This information is provided by RNS The company news service from the London Stock Exchange