Interim Results

Actif Group PLC 30 April 2003 30 April 2003 Actif Group plc Announcement of interim results for the six months ended 1 February 2003 Summary • Group turnover down 1.1% to £11.9 million (2002: £12.1 million) • Gross margins have increased to 50.4% (2002: 49.8%) as a result of the increasing proportion of retail business within the Group • Operating profit of £160,000 (2002: £298,000) • Profit before tax of £89,000 (2002: £174,000) • Cash generated from operating activity in the period increased by 133% to £1.4million • Net debt was reduced by 62% to £1.0m (2002: £2.6m) • Earnings per share of 0.14p (2002: 0.27p) • Two new flagship Elle retail stores opened in the Meadowhall Centre (Sheffield) and Reading Enquiries: ACTIF GROUP PLC HUDSON SANDLER Mark Evans, Chief Executive Sandrine Boussard Julian Ghinn, Finance Director Tel: +44 (0)20 7436 3330 Tel: +44 (0)20 7796 4133 30 April 2003 Actif Group plc Interim results for the six months ended 1 February 2003 CHAIRMAN'S STATEMENT I am pleased to report the Group's interim results for the six-month period to 1 February 2003. The restructuring of the business that began last year is continuing as the Group realigns itself as a predominantly retail-led business, and reduces it's dependence on wholesale sales. Key areas of progress include a general improvement of the balance sheet; the design and successful execution of a new format Elle store in the Meadowhall Centre (Sheffield); and the strengthening of the management team in areas such as buying, merchandising and design. These developments will provide a solid platform for further improvement to the trading of the business in future financial years. During the first half the Group increased it's retail sales, but, as expected, saw a decline in wholesale activity. The combined impact of this led to a decrease in profitability when compared to the same period last year. The Group continues to generate strong cash flows from operating activities and this has led to a further significant decrease in net debt. Results In the six months to 1 February 2003, total Group turnover was slightly down on the previous year at £11.9 million (2002: £12.1 million). Gross margins have increased to 50.4% (2002: 49.8%) as a result of the retail business accounting for a higher proportion of sales than in the prior period. Operating profit was £160,000 against £298,000. Total profit before tax was £89,000 (2002: £174,000) and basic earnings per share were 0.14p (2002: 0.27p). Cash generated from operating activity in the period has increased by 133% to £1.4 million (2002: £0.6 million) and net debt has been reduced by 62% to £1.0 million (2002: £2.6 million) ELLE Retail Retail sales in the period increased by 16.2% to £7.9 million (2002: £6.8 million) and now account for 66% of total Group turnover (2002: 56%). The growth in retail sales reflects the impact of the two new prime stores, which opened during the first half of the current year and a full period of trading from the prime concessions, which opened in the second half of last year. Retail gross margins are slightly lower than the comparative period at 63.2% (2002: 64.4%), which is due to further activity in clearing out slow-selling stock. In September we opened a new Elle store in the Oracle Centre, Reading and followed this with a new store in the Meadowhall Centre (Sheffield) in December. This latter store features a completely remodelled store design and is trading in line with expectations. We have closed a net 5 unprofitable concessions, leaving our total retail selling space unchanged at 49,300 square feet at the end of the half year. ELLE Wholesale As previously reported, the re-alignment of our ELLE licence has resulted in us relinquishing certain non-core product categories and territories. As forecasted, this had a significant impact on the Autumn/Winter 2002 selling season, which contributed to a decline in revenues from our wholesale activities in the period under review of 23.1% to £4.0 million (2002: £5.2 million). The main product category to be affected by these changes was daywear, where we no longer sell into continental Europe. We have seen good growth in sales of sportswear and swimwear within the UK, but sales have declined in markets such as Germany and the Middle East. From Spring / Summer 2003 we have started to sell nightwear direct, rather than through a distributor, and the early signals are encouraging. On bags, where we act as UK distributor for the Italian licence holder, there was a disappointing reaction to the Autumn/Winter 2002 collections. As a result, we are working closely with the licence holder to ensure that future collections will be better adapted to the UK market. Board changes In early April we announced that Sue Tisdall, Managing Director, was leaving the Board to pursue other business interests. Sue is the original founder of the business and was instrumental in securing the Elle licence back in 1995. She played a key role in taking the Group onto the AIM market in 2000 and has supported the new management team during the restructuring of the past two years. I would like to thank Sue for her valued contribution and to wish her success in her future endeavours. Outlook The second half of the financial year started slowly, but has improved over recent weeks. In the 12 weeks to 26th April, growth in total retail sales has been 10.2% ahead compared to the same period last year, and we remain positive about the opportunities for Elle retail in the UK. We are continuing to develop our retail estate, and plan to open at least 3 further Elle stores during 2003, including one in the new Birmingham Bullring development, which will open in September. Recent changes implemented to strengthen management in areas of design, buying and merchandising are delivering early positive results in improving assortment, fashionability and styling of the Elle range. However, Spring / Summer 2003 sales for Elle wholesale fell short of expectations as a result of difficulties in the European markets and slower sales to the independent sector. These factors will impact the Group's full year results, which are now expected to be below current market expectations. In response to this, the board is accelerating plans to implement a changed approach to the Group's remaining wholesale activities, which will bring benefits in the form of reduced central costs of around £300,000 (approximately 10% of total central overhead) in 2003/4. David Brock Chairman 30th April 2003 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the 6 months to 1 February 2003 Unaudited Unaudited Audited Six months to Six months to Year to Notes 1 February 2003 31 January 2002 31 July 2002 £'000 £'000 £'000 STARTTurnover 11,923 12,052 24,877 Cost of Sales 5,917 6,046 14,304 __________ __________ __________ Gross Profit 6,006 6,006 10,573 Other Operating Expenses (5,846) (5,708) (10,046) __________ __________ __________ Operating profit 160 298 527 Operating profit before exceptional costs 160 298 784 Exceptional costs: Exceptional bad debt - - (257) Interest payable and similar charges (71) (124) (212) __________ __________ __________ Profit on ordinary activities before taxation 89 174 315 Taxation - - 168 __________ __________ __________ Retained profit for the period 89 174 483 __________ __________ __________ Earnings per share Basic earnings per share 2 0.14p 0.27p 0.74p __________ __________ __________ Adjusted earnings per share 0.14p 0.27p 1.14p __________ __________ __________ Diluted earnings per share 0.14p 0.26p 0.70p __________ __________ __________ Adjusted diluted earnings per share 0.14p 0.26p 1.08p __________ __________ __________ CONSOLIDATED BALANCE SHEET As at 1 February 2003 Unaudited Unaudited Audited 1 February 2003 31 January 2002 31 July 2002 £'000 £'000 £'000 Fixed assets Intangible assets 46 49 47 Tangible assets 1,847 1,928 1,687 __________ __________ __________ 1,893 1,977 1,734 Current assets Stocks 2,655 3,892 3,426 Debtors 2,244 2,696 3,688 Cash at bank and in hand 4 7 4 __________ __________ __________ 4,903 6,595 7,118 Creditors: amounts falling due within one year (2,538) (4,509) (4,854) __________ __________ __________ Net current assets 2,365 2,086 2,264 __________ __________ __________ Total assets less current liabilities 4,258 4,063 3,998 Creditors: amounts falling due after more than one (271) (470) (100) year __________ __________ __________ Net assets 3,987 3,593 3,898 __________ __________ __________ Capital and reserves Called up share capital 657 655 657 Share premium account 4,322 4,322 4,322 Other reserves 89 89 89 Profit and loss account (1,081) (1,473) (1,170) _________ _________ __________ Shareholders' funds 3,987 3,593 3,898 __________ __________ __________ CONSOLIDATED CASH FLOW STATEMENT For the 6 months to 1 February 2003 Notes Unaudited Unaudited Audited 1 February 2003 31 January 2002 31 July 2002 £'000 £'000 £'000 Net cash inflow/(outflow) from operating activities 3(a) 1,392 611 1,677 Returns on investments and servicing of finance Interest paid (71) (124) (212) Dividends paid - - - ________ ________ ________ Net cash outflow from servicing of finance (71) (124) (212) ________ ________ ________ Taxation paid - - Capital expenditure and financial investment Purchase of tangible fixed assets (549) (38) (198) Sale of tangible fixed assets 3 14 ________ ________ ________ Net cash outflow from capital expenditure (549) (35) (184) ________ ________ ________ Net cash inflow before financing 772 452 1,281 Issue of ordinary shares - - 2 Repayment of secured loans (371) (308) (812) New secured loans 315 - - Capital element of finance lease payments (105) (86) (218) ________ ________ ________ Net cash outflow from financing (161) (394) (1,028) ________ ________ ________ Increase in cash in the period 3(b) 611 58 253 ________ ________ ________ NOTES TO THE INTERIM FINANCIAL STATEMENTS 1. Basis of preparation The consolidated interim financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. The accounting policies applied are consistent with those set out in the financial statements of Actif Group plc for the year ended 31 July 2002. The interim financial statements are unaudited and do not constitute accounts within the meaning of section 240 of the Companies Act 1985. The financial information for the year ended 31 July 2002 has been extracted from the Group's statutory accounts for the period, which have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under section 237 of the Companies Act 1985. 2. Earnings per share Earnings per share and fully diluted earnings per share for the 6 months ended 1 February 2003, the year ended 31 July 2002 and the 6 months ended 31 January 2002 have been calculated on loss or profit after tax and non-equity dividends and on the weighted average number of shares in issue and under option during the period, as set out below: 6 months ended 6 months ended Year ended 1 February 2003 31 January 2002 31 July 2002 Weighted average number of ordinary shares 65,344,571 65,144,571 65,194,434 Weighted average number of ordinary and potential ordinary shares 65,357,273 68,197,463 68,809,587 Adjusted earnings per share for the year ended 31 July 2002 has been calculated on profit on ordinary activities after tax and non-equity dividends but excluding the exceptional items of £257,000, which is due to exceptional bad debt. 3. Notes to the Consolidated Cash Flow Statement for the 6 months ended 1 February 2003 (a) Reconciliation of operating profit to operating cash flows Unaudited Unaudited Audited 1 February 2003 31 January 2002 31 July 2002 £'000 £'000 £'000 Operating profit 160 298 527 Depreciation charges 389 462 855 Amortisation of goodwill 1 1 3 Loss on sale of tangible fixed assets - - (2) Decrease in stock 771 455 921 Decrease in debtors 1,444 1,341 517 Decrease in creditors (1,373) (1,946) (1,138) Foreign exchange loss relating to non operating activities - - (6) __________ __________ __________ Net cash inflow from operating activities 1,392 611 1,677 __________ __________ __________ (b) Reconciliation of cash flow to movement in net debt Unaudited Unaudited Audited 1 February 2003 31 January 2002 31 July 2002 £'000 £'000 £'000 Increase/(decrease) in cash in the period 611 58 253 Cash outflow from decrease in debt and lease financing 476 394 1,030 __________ __________ __________ Change in net debt resulting from cash flows 1,087 452 1,283 New secured loans (315) - - __________ __________ __________ Movement in net funds/(debt) in the period 772 452 1,283 Net debt at the beginning of the period (1,814) (3,097) (3,097) __________ __________ __________ Net debt at the end of the period (1,042) (2,645) (1,814) __________ __________ __________ 4. Copies of Interim Report The Interim Report will be sent by post to all registered shareholders. Copies of the Interim Report are available from the Company Secretary at the Registered Office of Actif Group plc, 20 Little Portland Street, London W1W 8AA. This information is provided by RNS The company news service from the London Stock Exchange

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