Fayrewood PLC
24 August 2006
FOR IMMEDIATE RELEASE 24 AUGUST 2006
INTERIM STATEMENT
for the six months ended 30 June 2006
Fayrewood plc ('Fayrewood' or 'the Group'), (AIM: FWY) the pan-European computer
distributor, is pleased to announce its interim results for the six months ended
30 June 2006.
HEADLINES
•Sales in the Niche Division increased by 15% to £210m (2005: £182m).
•Pre-tax profits (adjusted) amounted to £3.4m (2005: £6.2m with
ComputerLinks AG's results consolidated for the first five months of the
period and treated as an associate for the final month).
•Pre tax profits (unadjusted) £3.0m (2005: £12.2m).
•Adjusted earnings per share were 4.4 pence (2005: 7.1.pence).
•Unadjusted earnings per share were 3.5 pence (2005: 19.2 pence).
•Overall debt dropped by £10m from £39.7m as at 31 December 2005 to £29.7m
at 30 June 2006.
•The Board proposes a 150% increase in the interim dividend to one pence
per share (2005: 0.4 pence).
•ComputerLinks AG, in which Fayrewood holds a 27.5% equity interest, has
performed strongly in the period to 30 June with pre tax profits of €5.9m
(2005: €4.4m). We continue to be optimistic about its future progress.
On outlook, David Kleeman, Non-Executive Chairman stated:
'As is usual for the Group, we expect that trading in the second half of the
year, and particularly the fourth quarter, will be significantly stronger than
levels achieved in the first half.'
David Kleeman, Non-Executive Chairman 020 7430 9329
Paul Griffiths, Chief Executive 0870 3515802
Fayrewood plc
Oliver Scott
KBC Peel Hunt 020 7418 8900
Tim Anderson / Lisa Baderoon
Buchanan Communications 020 7466 5000
Note to Editors:
Fayrewood plc
Fayrewood is a market leading, wholesaler of globally sourced computer related
products with businesses in Spain, France and the UK. Fayrewood also owns 27.5%
of ComputerLinks AG, Europe's leading value-added distributor of computer
security products.
CHAIRMAN'S STATEMENT
Fayrewood reports on the first half year, covering the period to 30 June 2006.
The performance in recent years has been difficult to repeat during the first
six months of the current year in a background of increasingly testing market
conditions Europe wide. Whilst profits fell, as forecast, improved working
capital management has enabled the Group to reduce its indebtedness
significantly during the period.
In the six months to 30 June 2006:
•Sales in the Niche Division increased by 15% to £210 million (2005: £182
million).
•Pre-tax profits (adjusted) amounted to £3.4 million (2005: £6.2 million
with ComputerLinks AG's results consolidated for the first five months of
the period and treated as an associate for the final month).
•Pre tax profits (unadjusted) £3.0 million (2005: £12.2 million).
•Adjusted earnings per share were 4.4 pence (2005: 7.1.pence).
•Unadjusted earnings per share were 3.5 pence (2005: 19.2 pence).
•Overall debt dropped by £10 million from £39.7million as at 31 December
2005 to £29.7 million at 30 June 2006.
•The Board proposes a 150% increase in the interim dividend to one pence
per share (2005: 0.4 pence).
•ComputerLinks AG, in which Fayrewood holds a 27.5% equity interest, has
performed strongly in the period to 30 June with pre tax profits of €5.9
million (2005: €4.4 million). We continue to be optimistic about its future
progress.
The decrease in the adjusted earnings per share compared to 2005 is due to the
reduced contribution from UMD, in Spain, the loss at Interface Solutions, in the
UK, and the change in accounting treatment of our investment in ComputerLinks
AG.
The divisional turnover and trading results are summarised as follows:
6 months to 6 months to Change 12 months to
------------------ ---------- ---------- ---------- ------------
£'000 30 June 2006 30 June 2005 % 31 December
2005
(unaudited) (unaudited) (audited)
------------------ ---------- ---------- ---------- ------------
Niche Distribution
Turnover 210,052 181,929 15% 430,263
Operating profit before
goodwill 3,843 5,268 -27% 12,066
Central costs (584) (549) (1,321)
Interest payable (net) (968) (875) -11% (1,675)
---------- ---------- ------------
Profit before taxation 2,291 3,844 -40% 9,070
Minority interest - (2) (2)
Taxation (760) (1,147) (2,549)
---------- ---------- ------------
Profit after taxation 1,531 2,695 -43% 6,519
ComputerLinks
Net profit attributable after
taxation and minorities 703 900 -22% 1,685
Total group profit after
taxation (adjusted)* 2,234 3,595 -38% 8,204
Adjusted EPS (undiluted)* 4.4p 7.1p 16.2p
Adjusted EPS (diluted)* 4.3p 7.0p 15.8p
* See note 3
The Niche Division experienced mixed fortunes. Banque Magnetique, in France,
performed ahead of our expectations and is confident on the outlook for its
markets as we move towards the seasonally important final four months of the
year. UMD, in Spain, has experienced tougher trading conditions, particularly in
the last four months. Whilst sales increased by 5% the sales mix has been less
favourable, to the detriment of margins. UMD believes that it can expect its
customary strong final quarter of the year, where its higher margin electronic
consumer products should have greater prominence. A disappointing feature for
the Group has been Interface Solutions in the UK where the progress that we
anticipated at the beginning of the year has not materialised, with increased
losses compared to the same period last year. The performance of the core
enterprise products division has been largely satisfactory but the outcome from
the consumer division has not been. Operational changes can be expected over the
coming months.
In the first half of the year, we placed strong emphasis on working capital
management, including renegotiating terms of business with some of our
suppliers. These improved terms are not fully reflected in the half year results
with further benefits to come in the second half. Whilst the usual increase in
activity that we experience in the final quarter of the year may lead to a
higher working capital requirement at the year end, we believe that these
initiatives have resulted in a step reduction in our working capital
requirements compared to last year.
Having regard to this strengthened cash flow, the Board is proposing an interim
dividend of one pence per share (2005: 0.4 pence), which will be payable on 16
October 2006 to those shareholders on the register at the close of business on 8
September 2006.
Outlook and summary
As is usual for the Group, we expect that trading in the second half of the
year, and particularly the fourth quarter, will be significantly stronger than
levels achieved in the first half. However, we do not anticipate that second
half trading will be sufficiently strong to fully recover the shortfall against
management expectations experienced in the first half. In the meantime the board
is examining a number of options for the group with the aim of maximising
shareholder value.
David Kleeman
Non-Executive Chairman
24 August 2006
UNAUDITED GROUP PROFIT AND LOSS ACCOUNT
for the six months to 30 June 2006
6 months to 6 months to 12 months to
30 June 30 June 31 December
2006 2005 2005
£000's £000's £000's
Turnover
Continuing operations 210,052 181,929 430,263
ComputerLinks group - discontinued - 56,514 56,514
--------- --------- ---------
210,052 238,443 486,777
Cost of sales (195,071) (213,401) (444,381)
--------- --------- ---------
Gross profit 14,981 25,042 42,396
Distribution and administrative
expenses (12,054) (18,727) (30,387)
--------- --------- ---------
Group operating profit 2,927 6,315 12,009
Share of operating profit in
associate 1,124 253 1,511
--------- --------- ---------
Amortisation of goodwill arising on
acquisition (112) (19) (132)
of associate
--------- --------- ---------
Total operating profit: group and
share of associate 3,939 6,549 13,388
Net exceptional (loss)/gain on
deemed disposal (14) 1,318 1,308
Net exceptional gain on disposal of
holding in subsidiary - 5,244 5,244
Interest receivable 38 68 181
Interest payable (1,006) (930) (1,843)
--------- --------- ---------
Profit on ordinary activities
before taxation 2,957 12,249 18,278
Tax on profit on ordinary
activities (1,181) (1,990) (4,222)
--------- --------- ---------
Profit on ordinary activities after
taxation 1,776 10,259 14,056
Minority interest - (560) (560)
--------- --------- ---------
Profit attributable to the members
of the parent company 1,776 9,699 13,496
========= ========= =========
Earnings per share - basic 3.5p 19.2p 27.2p
Earnings per share - diluted 3.4p 18.7p 26.0p
Earnings per share - adjusted 4.4p 7.1p 16.2p
UNAUDITED GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the six months to 30 June 2006
6 months to 6 months to 12 months to
30 June 30 June 31 December
2006 2005 2005
£000's £000's £000's
Profit for the period excluding
share of profits of associate 1,199 9,552 12,675
Share of associate's profit for the
period 577 147 821
Exchange gain on re-translation of
net assets of subsidiary
undertakings (109) (1,238) (139)
Exchange gain on foreign currency
borrowings to finance investments - 125 125
--------- --------- ---------
Total recognised gains relating to
the period 1,667 8,586 13,482
========= ========= =========
UNAUDITED GROUP BALANCE SHEET
at 30 June 2006
30 June 30 June 31 December
2006 2005 2005
£000's £000's £000's
Intangible fixed assets 10,184 10,841 10,512
Tangible fixed assets 6,075 4,626 6,050
Trade investments 23 23 23
Investment in associate 8,783 7,794 8,670
--------- --------- ---------
25,065 23,284 25,255
--------- --------- ---------
Current assets
Stocks - finished goods held for resale 42,369 36,745 50,671
Debtors 76,173 60,569 102,378
Cash at bank and in hand 12,567 7,285 9,816
--------- --------- ---------
131,109 104,599 162,865
Creditors: Amount falling due within
one year (97,064) (75,891) (131,070)
--------- --------- ---------
Net current assets 34,045 28,708 31,795
--------- --------- ---------
Total assets less current liabilities 59,110 51,992 57,050
Creditors: amounts falling due after
more than one year (4,068) (3,233) (3,417)
--------- --------- ---------
55,042 48,759 53,633
========= ========= =========
Called up share capital 2,568 2,540 2,557
Share premium account 17,741 17,523 17,667
--------- --------- ---------
20,309 20,063 20,224
Shares to be issued as contingent acquisition - - -
consideration
Other reserves 6,355 6,355 6,355
Profit and loss account 28,378 22,341 27,054
--------- --------- ---------
Shareholders' funds : equity 55,042 48,759 53,633
========= ========= =========
UNAUDITED GROUP STATEMENT OF CASH FLOWS
for the six months to 30 June 2006
months to 6 months to 12 months to
30 June 30 June 31 December
2006 2005 2005
£000's £000's £000's
Total operating profit : Group and
share of associate 3,939 6,549 13,388
Share of profits of associate (1,012) (234) (1,379)
Depreciation of tangible fixed
assets 414 588 992
Amortisation of goodwill 332 497 825
Decrease/(increase) in stocks 8,489 (2,851) (15,636)
Decrease/(increase) in operating
debtors and prepayments 26,395 27,885 (15,094)
Decrease in operating creditors and
accruals (26,689) (44,633) (2,373)
--------- --------- ---------
Net cash inflow from operating
activities 11,868 (12,199) (19,277)
--------- --------- ---------
Returns on investment and servicing of
finance
Interest paid (1,006) (924) (1,837)
Interest received 38 68 181
Dividends paid to Minority
Interests - (725) (726)
Dividends received from associate 443 - -
--------- --------- ---------
(525) (1,581) (2,382)
--------- --------- ---------
Taxation
Net corporation tax and overseas
tax paid (275) (679) (3,665)
--------- --------- ---------
Capital Expenditure
Payments to acquire tangible fixed
assets (438) (230) (2,204)
Sale of tangible fixed assets - - 4
--------- --------- ---------
(438) (230) (2,200)
--------- --------- ---------
Acquisitions and disposals
Deferred consideration for UMD SA - (1,050) (1,050)
Additional shares in Banque
Magnetique SAS - (646) (646)
Issue of share capital by
ComputerLinks AG - 5,363 5,363
Cash held by ComputerLinks AG upon
change to associate - (11,360) (11,360)
Sales of shares in ComputerLinks AG - 10,664 10,664
--------- --------- ---------
- 2,971 2,971
--------- --------- ---------
Equity dividends paid (553) (130) (420)
--------- --------- ---------
Net cash inflow/(outflow) before
financing 10,077 (11,848) (24,973)
========= ========= =========
Financing
Issue of share capital by Fayrewood
plc 85 63 239
Increase/(decrease) in bank loans 407 (549) 1,322
Decrease in other loans - - (1,474)
Net decrease in Trade Receivables
Financing debt (6,038) (17,693) (10,605)
--------- --------- ---------
Net cash outflow from financing (5,546) (18,179) (10,518)
--------- --------- ---------
Increase /(decrease) in cash in the
period 4,531 (30,027) (35,491)
--------- --------- ---------
Cash (outflow)/inflow from movement
in loans (407) 549 152
Cash inflow from movement in Trade
Receivables Financing 6,038 17,693 10,605
--------- --------- ---------
Change in net debt resulting from
cash flows 10,162 (11,785) (24,734)
========= ========= =========
Exchange differences (171) 1,195 (73)
--------- --------- ---------
Change in net debt in the period 9,991 (10,590) (24,807)
--------- --------- ---------
Net debt at beginning of period (39,702) (14,895) (14,895)
Net debt at end of period (29,711) (25,485) (39,702)
========= ========= =========
1. Financial Information
The financial information contained in this Interim Statement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. The financial information for the 12 months to 31 December 2005 is taken
from the audited statutory accounts that have been sent to the Registrar of
Companies and on which the auditors issued an unqualified opinion.
2. Earnings Per Ordinary Share
The calculation of earnings per ordinary share is based on a profit of
£1,776,000 (2005 - £9,699,000) and on 51,284,961 (2005 - 50,452,324) ordinary
shares being the weighted average number of ordinary shares in issue during the
period. The profit for the period includes a charge for goodwill amortisation of
£444,000 (2005 - £516,000)
The diluted earnings per ordinary share is based on 52,110,662 (2005 -
51,735,754) ordinary shares.
3. Adjusted Results
Profit before taxation (adjusted), taxation (adjusted), profit after taxation
(adjusted), minority interests (adjusted), attributable profit (adjusted) and
adjusted earnings per share have been calculated by :
•Removing goodwill amortisation of £444,000 (2005 - £516,000), or the
Group's share of goodwill amortisation of £444,000 (2005 - £458,000) where
appropriate
•Removing the loss on deemed disposals of £14,000 (2005 - gain of
£1,318,000)
•Removing the gain on disposal of investment of nil (2005 - £5,244,000)
The December 2005 adjusted results also reflect a decrease in the taxation
charge by removing the effect of deferred tax asset de-recognition.
4. Interim Results
Copies of these interim results will be sent to all shareholders. Copies will be
available from 24 August 2005 at Fayrewood's registered office, Unit 4,
Birmingham International Park, Starley Way, Marston Green, Solihull, B37 7GN.
This information is provided by RNS
The company news service from the London Stock Exchange
