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Floors 2 Go PLC (FGO)

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Thursday 01 April, 2004

Floors 2 Go PLC

First Day of Dealings

Floors 2 Go PLC
01 April 2004

                                  1 April 2004

                                 Floors 2 Go plc



  First Day of Dealings  - Admission to Trading on the Alternative Investment

Floors 2 Go plc (AIM: FGO), one of the largest specialist multi-sale retailer of
hardwood, engineered and laminate flooring products and accessories in the UK,
is pleased to announce its flotation on the Alternative Investment Market of the
London Stock Exchange ('AIM') today via an accelerated IPO.

Floors 2 Go's success has been driven by the retail growth in the laminate and
wood flooring market with the product taking market share from carpets assisted
by the high media profiles of television 'makeover' shows where laminated wood
flooring features prominently.

  • Floors 2 Go acquired on Thursday 25th March starts trading today on Aim.

  • Market Capitalisation : £63m, 130m shares at 48p

  • Transaction process:

          -   a shell, Smart Motive was formed in December 2003
          -   Smart Motive raised £8m via two Placings in January and March 2004
          -   Floors 2 Go was acquired by Smart Motive on 25th March for cash,
              equity and debt
          -   An Accelerated IPO placed shares in Floors 2 Go with institutions 
              and high net worth individuals.
          -   805,000 raised on 1 April 2004 through a Placing of 1.7m shares to
              fund the costs relating to the Acquisition and the move to Aim
          -   Trading in the shares of Floors 2 Go starts today

  • Zeus Capital Ltd is Financial Adviser to Floors 2 Go and WH Ireland Ltd is
    Nomad and Stockbroker.

  • Floors 2 Go is one of the largest, specialist multi-site retailers of
    hardwood, engineered and laminate flooring products and related fitting and
    floor care accessories in the UK.

  • Business has increased significantly from 2001 - 2003, year end 31
          -   Number of stores increased from 19 to 96
          -   Turnover increased from £8.6 million to £44.1 million
          -   Earnings* increased from £346,000 to £4.64m
*Earnings before depreciation, interest and non-recurring costs.

  • Current trading strong at c. 30 per cent ahead of budget and 45% per cent
    like for like

  • Floors 2 Go is growing rapidly, 34 stores were opened during the second
    half of 2003 and it now has 100 stores located in regional clusters,
    predominately in the North West, Midlands and South Wales.

Simon Farnsworth, Chief Executive, of Floors 2 Go plc, commented:

'We are very pleased to be joining Aim. Floors 2 Go is a rapid growth business
with great prospects and a strong, dedicated workforce. Joining the London Stock
Market is another major step in the Company's development. I look forward to
reporting on progress and to the challenges that come with public company

For further information, please contact:

Floors 2 Go plc                                   Tel: 0161 831 1512
Keith William Salisbury

Buchanan Communications                           Tel: 020 7466 5000
Tim Anderson/Lisa Baderoon/Rebecca Dietrich



Smart Motive was formed in December 2003 as a cash shell to attract companies
and businesses which are seeking admission to trading on AIM. By a prospectus
dated 29 January 2004, the Company raised £3.5 million before expenses by way of
an offer for subscription which closed on 9 March 2004. On 24 March 2004 the
Company raised a further £4.5 million before expenses by way of a placing of
Ordinary Shares conditional upon the Acquisition. The funds were raised in order
to complete the due diligence on potential target businesses, to fund the
Acquisition and as working capital for the Company.

In assessing potential acquisition and investment opportunities, the Directors
have concentrated on companies and businesses which they consider have a good
management team and are operating in a market which has growth potential. The
main criterion that the Directors have applied in identifying potential targets
is to focus on businesses which have the capability to grow rapidly.

On 25 March 2004, Smart Motive acquired the entire issued share capital of Anglo
Baltic which in turn owns the entire issued share capital of Floors 2 Go
Limited. To fund the expenses of the Acquisition and the Proposals the Company
has raised £805,000 by way of a placing of up to 1,677,083 Placing Shares and
has admitted the entire issued share capital of the Company to trading on AIM.

Floors 2 Go

Floors 2 Go is one of the largest specialist, multi-site retailers of hardwood,
engineered and laminate flooring products and related fitting and floor care
accessories in the UK. The business sells direct to the general public and trade
buyers from 100 stores located in regional clusters, predominately in the North
West, Midlands and South Wales regions of the UK. The majority of Floors 2 Go's
products are own label brands and it also stocks a limited range of branded
products, including Quick Step.


The business of Floors 2 Go commenced trading in 1999 from its head office in
Birmingham as a family owned and managed business. Rapid store openings have
contributed to its impressive growth record. Professional management has
subsequently been introduced into all areas of the business and has since driven
the business forward and contributed to its recent success. Turnover increased
from £8.6 million in 2001 to £44.1million in 2003.


Floors 2 Go offers a large range of products, the majority of which are own
label brands such as Bingo Loc, Next Step and Fast Fit. The laminate products
are all glueless/click fit targeted largely at the home DIY market. Floors 2 Go
also offers ranges of engineered hardwood and solid hardwood flooring together
with installation and aftercare accessories and trimmings.


The ongoing strategy has been to open regional clusters of stores within
targeted television areas and once critical mass has been achieved, to support
these with television advertising campaigns. Floors 2 Go has exploited market
conditions with a combination of competitive pricing, wide product range and
customer service.

Outlets are mainly located on main roads in areas with a population of at least
100,000 at the edge of towns and where in most cases there is car parking. The
Directors consider proximity to DIY outlets as being advantageous.

The Directors believe that Floors 2 Go is well established in the flooring
industry. Their strategy is to continue to open new stores in regional clusters,
particularly within the South East of England and Scotland supported by
television and press advertising.


Product is sourced primarily from three of Europe's leading manufacturers of
laminate and wooden flooring.

These manufacturers supply directly to Floors 2 Go, as opposed to supplying
through a distributor. The Directors believe that this relationship with its
suppliers offers Floors 2 Go a significant competitive advantage. To protect
profit margins, all negotiations with suppliers seek to secure the lowest price
rather than agree commissions or volume rebates. Two of the three manufacturers
hold Floors 2 Go labelled stock in warehouses in the UK.


The Directors consider that the format of each store is basically the same and
easily replicated, allowing management to achieve new openings rapidly and at
modest cost.

In the three years ended 31 December 2003 the number of stores rose from 19 to
96, of which 34 were opened in the last six months of that period. It costs on
average between £45,000 and £50,000 to open a new store, which are typically
leasehold properties of between 1,300 and 8,800 square feet. The sales growth of
an average store in its early months is rapid due to product discounting and an
aggressive advertising campaign. Like-for-like sales growth of an established
store has typically averaged 11.2 per cent per annum, which the Directors
believe can be increased significantly after a refurbishment of the store and
renewed television advertising.

The Directors believe that one of the most effective barriers to entry is the
holding of suitable levels of stock. Customers typically seek a cash and carry
service and may not wait for delivery of items but will seek alternate supply
sources. A new central warehouse based in Birmingham has been operational from
December 2003 which, combined with the increased number of stores, means that
the business now holds on average £82,000 of stock per store compared to £60,000
per store at the same time last year.

Customer Service

As a specialist retailer of wood and laminate flooring Floors 2 Go is well
placed to offer advice to customers.

This is in contrast to large DIY outlets, where the availability of in-store
staff can be poor and inevitably their knowledge of each product line can be
limited by the sheer range of products carried. One leading supplier described
the stores as being 'female friendly' with its testament to the non-threatening
approach of the sales staff, citing the willingness of staff to help load
customers cars and to help in product selection.


The market for laminate and solid wood in the UK is currently estimated by
Mintel International Group Limited and AMA Research Limited to be £360 million
per annum and is projected to grow to over £440 million per annum by 2006.
Retail growth in the laminate and wood flooring market has been strong with the
product taking market share away from carpets, assisted by the high media
profile of television 'makeover' shows where wood and laminate flooring features

Floors 2 Go has only just recently launched a range of solid wood floors which
the Directors believe would suggest that there is a significant opportunity to
expand in this sector.

There are a number of other competitors in the market including the large DIY
retail outlets, builders merchants and other independents. The Directors believe
that few if any of these competitors are able to offer the same combination of
specialist flooring products along with the expertise and advice of the sales
assistants that Floors 2 Go offers throughout its stores. respectively.

Financial Information

The following information should be read in conjunction with the accountants'
report on Anglo Baltic contained in Part III. Investors should not rely solely
on the key summarised information.

Further financial information on Anglo Baltic and the Company is provided in
Parts III and IV of this document respectively.
Year ended 31 December

                                                  2001         2002         2003
                                                  £'000        £'000        £'000

Turnover                                          8,638        20,078       44,156

Earnings before depreciation, interest 
and non-recurring costs*                          346          1,397        4,638
Non-recurring costs*                              (100)        (360)        (769)

Earnings before depreciation and interest         246          1,037        3,869
Depreciation                                      (120)        (240)        (812)
Earnings before interest charges and 
non-recurring costs*                              226           1,157       3,826
Non-recurring costs*                              (100)         (360)       (769)
Earnings before interest charges                  126           797         3,057

* Non-recurring costs relate to the salaries and other private costs incurred by
the Vendors that will not be incurred by the business going forward.

Current Trading and Prospects

Sales have grown strongly in the two months ended 29 February 2004, being
considerably ahead of budget with like for like sales in February 2004 some 45%
ahead on last year. Four new stores have been opened since 31 December 2003 and
14 new staff employed. The Directors believe that there are strong growth
prospects for the UK flooring market and look forward to the future with


The Board of the Company as at the date of this document comprises five
Directors as follows.

Roy Anthony Gabbie (Aged 50), Executive Chairman
From 1975, Roy developed a retail chain of 33 drug stores in the North West of
England named Beautycare which he sold to Lloyds Chemist Plc in 1988. From 1988
he incorporated and developed Stationery Box Limited into a retail chain of 112
high street stationery stores throughout the UK. He sold the company to a
management buy out backed by PRICOA (a US based venture capitalist company) in
1998. He also formed USI Limited, a company which has grown significantly and
distributes goods to major store groups.

Simon Jonathon Farnsworth (Aged 32), Chief Executive Officer
Simon qualified as a chartered management accountant in 1996 and has held senior
management positions with Interlink Express Parcels Limited, Finelist Group plc
and Smiths Group plc. He joined Floors 2 Go in May 2002 as finance director and
has been a key figure in helping to achieve the rapid growth in Floors 2 Go to
date. He has been responsible for all aspects of finance, purchasing and
logistics and areas of stock loss prevention and profit protection.

Colin Ernest Davies (Aged 45), Non-executive Director
Colin has acted as a chief executive and finance director of both public and
private companies in a range of industries including food, engineering,
marketing and textiles. He is currently a non-executive director of Inter Link
Foods Plc which he co-founded. He has been responsible for co-ordinating the
acquisition strategy of Inter Link Foods Plc. Colin is also a non- executive
director of several private companies. He will oversee the finance function of
the Company and together with Simon Farnsworth be responsible for recruiting a
new finance director.

Keith William Salisbury (Aged 35), Non-executive Director
Keith qualified as a chartered accountant with Arthur Andersen and is a Member
of the Securities Institute. Keith worked at the corporate finance division of
Brewin Dolphin Securities Limited acting for many publicly quoted and private
companies on all types of corporate finance transactions across a range of
sectors including IPOs, secondary offerings, acquisitions, disposals and public
to private deals. Keith is a partner of Zeus Partners and a director of Zeus
Capital Limited which is an FSA regulated company providing corporate finance

Bryan Harvey Bodek (Aged 50), Non-executive Director
Bryan has 25 years experience as a solicitor advising public and private
companies in all aspects of their businesses and is a director of two public
companies. Bryan is also the managing director of Airline Services Ltd managing
a business operating from 16 sites with over 300 employees.

Details of the Placing and Admission

The Company has raised £805,000 before expenses, by way of the placing of up to
1,677,083 Placing Shares at 48p per share.  The Placing Shares will represent
approximately 1.28 per cent. of the Company's issued share capital. The Placing
Shares have been issued credited as fully paid and will rank pari passu in all
respects with the Existing Ordinary Shares.

                      This information is provided by RNS
            The company news service from the London Stock Exchange                                                                                                                                              

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