Slimma PLC
18 December 2007
Issued by Citigate Dewe Rogerson Ltd, Birmingham
Date: Tuesday, 18 December 2007
Embargoed: 7.00am
Slimma plc
Final Results
for the period ended 28 September 2007
STATEMENT BY THE NON-EXECUTIVE CHAIRMAN, CAROLYN SIMONS
An extremely challenging trading climate, which started with unseasonably warm
weather in Autumn/Winter 2006 and was exacerbated during the year by a
combination of poor summer weather conditions and customers' cautious approach
to buying forward owing, in our opinion, to general concerns for the economy,
had an adverse effect on trading results, particularly during the second half of
our financial year ended September 2007. This, together with a substantial loss
of contribution by our lingerie brands owing, in the main, to the exit of one of
the brands' largest customers, contributed to an operating loss for the year of
£863,000 against an operating profit of £170,000 last year.
Although the difficult trading environment was forecast in the Company's
announcement of 13 December 2006 and the position was updated in the interim
announcement of 15 May 2007, we did not expect the severity of the second half
sales loss which we believe was compounded by customers' increasing concerns
regarding the economy after a succession of interest rate rises.
With the exception of the Company's premier brand, Frank Usher, which managed to
increase its order books to UK independent customers during the year, all our
brands' sales were, in our opinion, adversely affected by the unfavourable
market conditions.
The challenge that now faces the management team is to restore the Company back
into a profitable position as soon as possible. With the progress currently
made, management are confident that this can be achieved and I look forward to
updating Shareholders during the new year.
The loss of key lingerie customer, Contessa, was a major blow (Contessa was sold
to LaSenza during the financial year). The shortfall of sales and contribution
from this customer immediately saw the lingerie brands suffer a substantial loss
for the year with little that could be performed quickly enough to recover this
position. To avoid any further substantial deficit, the lingerie brands'
expenses have now been realigned to more closely match revised sales
expectations for the new financial year 2007/2008. On a more positive note, the
brands have managed to successfully gain entry into Slimma's largest mail order
customer and in January 2008 we will be launching 'Splendour.com', our first
e-commerce site, an exciting new development for the Company, which should
reward us with growing intellectual abilities in internet trading.
continued...
-2-
The brands whose sales were most affected by the difficult trading conditions,
were 'Peter Martin' and 'Slimma'. Sales and contribution fell significantly
despite customers commenting that the Peter Martin Spring/Summer 2007 and Autumn
/Winter 2007 ranges were the best they had seen. In light of these comments, and
the lower than expected level of new customers during the year, the agency
support base for Peter Martin has been strengthened for 2008 to ensure that more
customers have the opportunity to buy the ranges.
Slimma branded sales were also hit by aggressive price moves by its main
competition during the year. Slimma operates in a fiercely competitive
mid-market arena and was unable to react quickly enough on price in certain
product areas. Although later than originally desired, we have moved all the
brand's manufacturing to Macedonia which allows us not only a much lower cost
base, but the ability to make further savings by the introduction of a simpler
sourcing support framework. Through making these moves we expect to be able to
challenge the competition in the marketplace and begin recapturing sales during
the latter part of 2008.
The brands' export sales to Europe fell by 10.8% as unseasonal weather and tax
increases took their toll in key German and Italian markets. Sales to the USA,
though, increased by 33.2%, mainly as a result of the continuing growth of the
Peter Martin and Cattiva brands. Further growth is anticipated in 2008/2009.
Export sales were 26.3% of total sales compared with last year's 24.3%. As part
of our continuing investment in export markets we have introduced new agencies
in the Middle East, Scandinavia and Holland to sell the brands Frank Usher and
Dusk.
In addition to this, Peter Martin has been successfully launched in Canada for
the Spring/Summer 2008 season by our Frank Usher Canadian agency and Cattiva has
three new agents in the UK and Eire. Owing to the initial high costs involved
with agencies and their negative effect on margins until sales contributions
cover costs, we have to regard these moves as investments which should start to
reward us during the financial year 2008/2009. Although these investments are
expensive, it is important that the Company continues to develop its customer
base internationally.
Increasing logistics costs during the year, including rising oil prices, have
played their part in having a negative effect on margin during the financial
year. To counter this, a full logistics review was undertaken during the year
and new logistics partners have been employed at lower cost to recover margin in
the current financial year.
Cash Flow
At the end of our full year trading period, net debt increased to £2.57m (2006:
£0.62m) but this was less than our 2006/2007 interim net debt of £2.88m. The
2007 figures include £600,000 used to buy back one million of the Company's
Ordinary Shares which are now held in treasury.
Barngate Street
The proposed sale of our Barngate Street building did not proceed as planned
owing to technical difficulties with the local developer. We are now in the
process of negotiating the sale of the building to a national house builder.
Dividend Payment
Taking into account the need to continue supporting our brands whilst recovery
is in progress, the Board has decided that a final dividend would be
inappropriate at this stage. When the business has returned to generating profit
we will, of course, review this position.
Enquiries:
Stephen Thwaite, Chief Executive Keith Gabriel, Senior Account Manager
Slimma plc Citigate Dewe Rogerson
Tel: 01538 399141 Tel: 0121 455 8370
www.slimma.com Mobile: 07770 788624
David Youngman
WH Ireland
Tel: 0161 832 2174
-3-
Slimma plc
PROFIT AND LOSS ACCOUNT
for the 52 week period ended 28 September 2007
52 weeks 52 weeks
ended ended
28 September 29 September
2007 2006
£000 £000
TURNOVER - CONTINUING OPERATIONS 15,702 18,546
Cost of sales (8,301) (9,394)
---------------------------
GROSS PROFIT 7,401 9,152
Distribution costs (6,444) (6,979)
Administrative expenses (1,820) (2,014)
Other operating income - 11
---------------------------
OPERATING (LOSS)/PROFIT - CONTINUING OPERATIONS (863) 170
Other interest receivable 12 28
Interest payable and similar charges (164) (27)
(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION (1,015) 171
Taxation 275 (31)
(LOSS)/PROFIT FOR THE PERIOD (740) 140
EARNINGS PER SHARE
Basic (7.89p) 1.34p
===========================
Diluted (7.89p) 1.34p
===========================
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the 52 week period ended 28 September 2007
52 weeks 52 weeks
ended ended
28 September 29 September
2007 2006
£000 £000
(LOSS)/PROFIT FOR THE FINANCIAL PERIOD (740) 140
Actuarial gain/(loss) on defined benefit pension scheme 221 (526)
Related deferred tax on actuarial gain/(loss) (81) 158
---------------------------
TOTAL RECOGNISED GAINS AND LOSSES RELATING TO THE PERIOD (600) (228)
Prior year adjustments - (181)
---------------------------
TOTAL GAINS AND LOSSES RECOGNISED SINCE LAST ANNUAL (600) (409)
REPORT
===========================
-4-
Slimma plc
Balance Sheet
at 28 September 2007
28 September 2007 29 September 2006
£000 £000 £000 £000
FIXED ASSETS
Intangible assets 261 374
Tangible assets 505 594
------- ---------
766 968
CURRENT ASSETS
Stocks 2,441 2,064
Debtors 4,347 4,805
Cash at bank and in hand 40 29
-------- --------
6,828 6,898
CREDITORS: Amounts falling due within
one year (4,162) (3,251)
-------- --------
NET CURRENT ASSETS 2,666 3,647
------- ---------
TOTAL ASSETS LESS CURRENT LIABILITIES 3,432 4,615
PROVISIONS FOR LIABILITIES AND CHARGES - -
------- ---------
NET ASSETS EXCLUDING PENSION
ASSET/(LIABILITY) 3,432 4,615
PENSION ASSET/(LIABILITY) 242 (60)
------- ---------
NET ASSETS 3,674 4,555
======= =========
CAPITAL AND RESERVES
Called up Share Capital 521 521
Share premium account 3,024 3,024
Capital reserve 62 62
Capital redemption reserve 285 285
Treasury Shares (600) (600)
Profit and loss account 382 1,263
------- ---------
EQUITY SHAREHOLDERS' FUNDS 3,674 4,555
======= =========
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
for the 52 week period ended 28 September 2007
52 weeks 52 weeks
ended ended
28 September 29 September
2007 2006
£000 £000
(LOSS)/PROFIT FOR THE FINANCIAL PERIOD (740) 140
Dividends (281) (391)
---------------------------
(1,021) (251)
Other recognised gains and losses relating to
the period 140 (368)
Investment in own Shares - (600)
---------------------------
NET REDUCTION IN SHAREHOLDERS' FUNDS (881) (1,219)
Opening Shareholders' funds 4,555 5,774
---------------------------
CLOSING SHAREHOLDERS' FUNDS 3,674 4,555
===========================
-5-
Slimma plc
CASH FLOW STATEMENT
for the 52 week period ended 28 September 2007
Note 52 weeks ended 52 weeks ended
28 September 2007 29 September 2006
£000 £000 £000 £000
CASH FLOW FROM OPERATING ACTIVITIES i (920) 801
RETURNS ON INVESTMENTS AND SERVICING
OF FINANCE
Interest received 2 4
Interest paid (164) (27)
-------- -------
NET CASH OUTFLOW FOR RETURNS ON
INVESTMENTS AND (162) (23)
SERVICING OF FINANCE
TAXATION 75 (258)
CAPITAL EXPENDITURE
Purchase of tangible fixed assets (59) (58)
Sale of tangible fixed assets - 11
------- -------
NET CASH OUTFLOW FOR CAPITAL
EXPENDITURE (59) (47)
ACQUISITIONS AND DISPOSALS
Purchase of trade and assets - (320)
------- -------
NET CASH OUTFLOW FOR ACQUISITIONS
AND DISPOSALS - (320)
EQUITY DIVIDENDS PAID (281) (391)
PURCHASE OF OWN SHARES (600) -
-------- -------
DECREASE IN CASH IN THE PERIOD ii (1,947) (238)
======== =======
-6-
Slimma plc
NOTES TO THE CASH FLOW STATEMENT
for the 52 week period ended 28 September 2007
i RECONCILIATION OF OPERATING (LOSS)/PROFIT TO NET CASH FLOW FROM OPERATING
ACTIVITIES
52 weeks 52 weeks
ended ended
28 September 29 September
2007 2006
£000 (As restated)
£000
Operating (loss)/profit (863) 170
Impact of FRS 17 (191) (674)
Depreciation 148 170
Amortisation of goodwill 113 73
Profit on disposal of fixed assets - (11)
(Increase)/decrease in stocks (377) 431
Decrease in debtors 697 974
Decrease in creditors (447) (332)
------------------------
NET CASH (OUTFLOW)/INFLOW FROM OPERATING (920) 801
ACTIVITIES ========================
ii RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
£000
Decrease in cash in the period (1,947)
NET DEBT AT 29 September 2006 (619)
------------
NET DEBT AT 28 September 2007 (2,566)
============
iii ANALYSIS OF NET DEBT
At 29 September Cash flow At 28 September
2006 £000 2007
£000 £000
Cash at bank and in hand 29 11 40
Bank overdraft (648) (1,958) (2,606)
-------------------------------------------
(619) (1,947) (2,566)
===========================================
-7-
Slimma plc
NOTES
1 PREPARATION OF THE FINANCIAL STATEMENTS
The results for the period ended 29 September 2006 and period ended 28 September
2007 are an abridged version of the Company's full financial statements for
those periods. The full financial statements for the period ended 29 September
2006 have been filed with the Registrar of Companies. The full financial
statements for the period ended 28 September 2007 will be delivered to the
Registrar of Companies following the Company's Annual General Meeting.
2 SEGMENTAL REPORT
The Company's turnover, (loss)/profit before taxation, and net assets were all
derived from its principal activities. The Company operates in the following
geographical markets:
Net assets Turnover (Loss)/Profit before
taxation
52 weeks 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks
ended ended ended ended ended ended
28 29 28 29 28 29
September September September September September September
2007 2006 2007 2006 2007 2006
£000 £000 £000 £000 £000 £000
UK 3,674 4,555 11,568 14,039 (748) 130
Other
European - - 3,432 3,847 (222) 35
countries
Africa - - 66 12 (4) -
Asia - - 39 212 (3) 2
North - - 578 434 (37) 4
America
Australia - - 19 2 (1) -
--------------------------------------------------------------------
3,674 4,555 15,702 18,546 (1,015) 171
====================================================================
3 DIVIDENDS
52 weeks 52 weeks ended
ended 29 September
28 September 2006
2007
£000 £000
Ordinary:
Interim paid 117 182
Final - 2005 paid - 209
Final - 2006 paid 164 -
--------------------------------------
281 391
======================================
continued...
-8-
4 EARNINGS PER ORDINARY SHARE
The calculations of earnings per Share are based on the following profits and
number of Shares.
Basic Basic
Basic adjusted Diluted Basic adjusted Diluted
52 weeks 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks
ended ended ended ended ended ended
28 28 28 29 29 29
September September September September September September
2007 2007 2007 2006 2006 2006
£'000 £'000 £'000 £'000 £'000 £'000
(Loss)/ (740) (740) (740) 140 140 140
profit
for the
financial
period
Exceptional - - - - 256 -
items
Tax effect - - - - (77) -
===================================================================
Adjusted (740) (740) (740) 140 319 140
(loss)/
profit for
the
financial
period
===================================================================
Weighted average number of Shares 52 weeks 52 weeks
ended ended
28 September 29 September
2007 2006
Number Number
For basic and basic adjusted earnings per Share* 9,382,442 10,424,935
Share options - 4,686
----------------------------
For diluted earnings per Share 9,382,442 10,429,621
============================
The Company's earnings per Share are as
follows: 2007 2006
Basic (7.89p) 1.34p
==============================
Diluted (7.89p) 1.34p
==============================
Basic adjusted (7.89p) 3.06p
==============================
* Excludes Treasury Shares
5 Approval of the Financial Statements
The Financial Statements were approved by the Board of Directors on 17 December
2007.
6 Annual General Meeting
The Annual General Meeting will be held at Slimma plc, Slimma House, Barngate
Street, Leek, Staffordshire, ST13 8AR at 10.00am on Friday 1 February 2008.
7 Availability of the Financial Statements
The full Report and Financial Statements will be dispatched to all shareholders
on or before 4 January 2008 and will be available to the public free of charge
from the Company's Registered Office at: Slimma plc, Slimma House, Barngate
Street, Leek, Staffordshire, ST13 8AR. They will also appear on the Company
website, www.slimma.com in due course.
This information is provided by RNS
The company news service from the London Stock Exchange