Fayrewood Announcements

RNS Number : 4703E Fayrewood PLC 29 September 2008  
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FOR IMMEDIATE RELEASE
 29 SEPTEMBER 2008
 
INTERIM STATEMENT 
for the six months ended 30 June 2008
Fayrewood plc ("Fayrewood" or "the Group"), (AIM: FWY) announces its interim results for the six months 
ended 30 June 2008.  
 
 HEADLINES 
Disposal of remaining operating subsidiaries since 30 June 2008. 
Cash on deposit, following disposals, of £36.0m, of which £31.2m is unencumbered.
Pre-tax profit from continuing business £827,000 (2007: £441,000).
Interim dividend maintained at 1p, payable on 21 October 2008 to shareholders on the register on 10 October 2008.

On the future David Kleeman, the Chairman, stated:

"The Group holds approximately £36m in cash on deposit, £14.2m of which has to be retained for varying temporary periods in the light of contractual terms governing the sale of businesses by Fayrewood over the last 2 years or so. We are actively exploring methods of returning the maximum amount of capital to shareholders in the most effective manner and we will be circulating the Group's formal proposals to shareholders in this regard as soon as practicable"
 

David Kleeman, Chairman
020 7430 9329
Fayrewood plc

Oliver Scott/Richard Kauffer

KBC Peel Hunt
020 7418 8900
Tim Anderson / Lisa Baderoon

Buchanan Communications
020 7466 5000

 
CHAIRMAN'S STATEMENT
 

We started 2008 with two operating subsidiaries - Interface Solutions, a wholesale distributor of computer peripheral products, and where IBM and Lenovo were major suppliers, and Systems Loan Services, Interface's short term rental associate. We spent much of the first half of the year seeking a purchaser for these businesses, culminating in a sale to the SCH Group on 24 July. Details of the sale were circulated to shareholders on 4 July. A pro forma statement of net assets as at 30 June 2008, incorporating adjustments to reflect the sale of these two businesses, appears as an Appendix to this statement.

The Group holds approximately £36m in cash on deposit, £14.2m of which has to be retained for varying temporary periods in the light of contractual terms governing the sale of businesses by Fayrewood over the last 2 years or so. We are actively exploring methods of returning the maximum amount of capital to shareholders in the most effective manner and we will be circulating the Group's formal proposals to shareholders in this regard as soon as practicable.

The year started disappointingly for Interface, and indeed for the entire industry. Trading in January and February fell below budgeted levels. Whilst performance improved in March, the adverse trends experienced earlier re-emerged, and the sale negotiations with third parties were an additional distraction to be overcome. Interface suffered a loss in the six months to 30 June. After taking into account interest received on the Group's cash deposits and HQ expenses, the Group loss in the first half of the year amounted to £419,000. An interim dividend of 1p per share will be paid on 21 October 2008 to those shareholders on the register on 10 October 2008.
 

David Kleeman
Chairman
29 September 2008
 

Appendix to Chairman's statement dated 29 September 2008
Set out below is an unaudited pro forma statement of consolidated net assets as at 30 June 2008.

The unaudited pro forma statement of consolidated net assets has been prepared for illustrative purposes only to illustrate the effect on the net assets of the group at 30 June 2008 of the disposal of the remaining operating subsidiaries, Interface Solutions International Limited and Systems Loan Services Limited, which completed on 24 July 2008.

Because of the nature of pro forma financial information this pro forma statement of consolidated net assets addresses a hypothetical situation at 30 June 2008 and does not therefore represent the financial position or results of the group as at 30 June 2008.

The pro forma statement of consolidated net assets has been prepared on the basis described in the notes set out below and after making the adjustments described in those notes.
Actual
Proforma

30 June 2008
Adjustment
Adjustment
30 June 2008

Note 1
Note 2
Note 3
Note 4

£000's
£000's
£000's
£000's

Property, plant and equipment
-
-
Intangible assets
-
-
Investments
-
-
Deferred tax asset
-
-

Current assets
Trade and other receivables
246

890
1,136
Inventories
-
-
Cash and short-term deposits
32,212
2,301
1,093
35,606

32,458
2,301
1,983
36,742

Assets in disposal group held for resale
32,411
-
(32,411)
-

Total assets
64,869
2,301
(30,428)
36,742

Current liabilities
Trade and other payables
91
91
Financial liabilities
-
-
Income tax payable
-
-

91
91

Non current liabilities 
Financial liabilities
-
-
Provision
500
500

500
-
-
500

Liabilities in disposal group held for resale
28,646
2,730
(31,376)
-

Total liabilities
29,237
2,730
(31,376)
591

Net assets
35,632
(429)
948
36,151

Notes to pro forma statement of net assets

1.
The consolidated net assets of the group as at 30 June 2008 have been extracted, without adjustment, from the interim financial statements at 30 June 2008 which follow.
2.
This adjustment represents the trading results of Interface Solutions International Limited and Systems Loan Services Limited that were disposed of up to date of disposal 24 July 2008 and the partial repayment of the amount due to the parent company in that time.
3.
This adjustment reflects the disposal of Interface Solutions International Limited and Systems Loan Services Limited on 24 July 2008, the full repayment of the amount due to Fayrewood plc, and the group profit on disposal.
4.
No adjustment has been made for any events other than as described in Notes 2 and 3 above.
 
UNAUDITED GROUP INCOME STATEMENT
for the six months to 30 June 2008
Note
6 months to
30 June 
2008
£000's
6 months to 
30 June 
2007
£000's
12 months to 
31 December 2007
£000's

Revenue 

-
-
-
Cost of sales

-
-
-
Gross profit

-
-
-
Distribution and administrative expenses

(6)
(710)
(62)

Group operating loss from continuing operations

(6)
(710)
(62)
Profit on sale of investments

41
132
137
Finance revenue

792
1,019
1,078
Finance costs

-
-
(2)

Profit from continuing operations before taxation

827
441
1,151

Tax credit/(expense)

2
(76)
(62)

Profit for the period from continuing operations

829
365
1,089

Discontinued operations
(Loss)/profit for the period from discontinued operations  
2
(1,248)
6,208
4,852

(Loss)/profit for the period

(419)
6,573
5,941

(Loss)/earnings per share - basic and diluted 
3
(1.8)p
13.1p
16.2p

Earnings per share continuing - basic and diluted

3

3.6p

0.7p

3.1p

(Loss)/earnings per share discontinued - basic and diluted
3
(5.4)p
12.4p
13.2p

 
UNAUDITED GROUP STATEMENT OF CHANGES IN EQUITY 
from 1 January 2008 to 30 June 2008
            
    

Foreign

Capital
Share
currency

Profit &
Share
redemption
premium
translation
Merger
loss
capital
reserve
account
reserve
reserve
account
Total

£000's
£000's
£000's
£000's
£000's
£000's
£000's
At 1 January 2007
2,580
-
17,813
(1,331)
6,355
39,403
64,820
Profit for the six months
-
-
-
-
-
6,573
6,573
Dividends paid
-
-

(3,994)
(3,994)
Movement on currency
translation

-
-

(16)
-
-
(16)
Other movements:

Proceeds from issue of

shares
49
-
329
-
-
-
378
Share buy backs
(1,326)
1,326
-
-
-
(32,344)
(32,344)
Merger reserve realised on disposals
-
-

-
(6,172)
6,172
-
At 30 June 2007
1,303
1,326
18,142
(1,347)
183
15,810
35,417
Loss for the six months
-
-
-
-
-
(632)
(632)
Dividends paid
-
-
-
-
-
(233)
(233)
Movement on currency translation

-

-

-

875

-

-

875
Other movements:

Proceeds from issue of
shares

-

-

1

-

-

-

1
Share buy backs
(144)
144

(283)
(283)
Currency reserve

realised on disposals
-
-
-
(781)
-
781
-
Merger reserve

realised on disposal
-
-
-
-
(183)
183
-
Realised on disposals

via income statement
-
-
-
1,253
-
-
1,253
Share based payments
-
-
-
-
-
30
30
At 31 December 2007
1,159
1,470
18,143
-
-
15,656
36,428
Loss for the six months
-
-
-
-
-
(419)
(419)
Dividends paid
-
-
-
-
-
(464)
(464)
Other movements:

Proceeds from issue of
shares
4
-
83
-
-
-
87
At 30 June 2008
1,163
1,470
18,226
-
-
14,773
35,632

 

UNAUDITED GROUP BALANCE SHEET
at 30 June 2008
Note
30 June 
2008
£000's

30 June 
2007
£000's

31 December 2007
£000's

Non-current assets
Property, plant and equipment

-

1,159

802
Intangible assets

-

271

318
Investments

-

23

-
Deferred tax asset

-

199

-
-

1,652

1,120

Current assets
Trade debtors and other receivables

246

64,954

27,854
Inventories

-

23,108

13,237
Cash and short term deposits

32,212

23,771

33,097
32,458

111,833

74,188

Assets in disposal groups held for resale
2
32,411

-

-

Total assets

64,869

113,485

75,308

Current liabilities
Trade and other payables

91

54,231

23,166
Financial liabilities

-

21,491

15,152
Income tax payable

-

5

62
91

75,727

38,380

Non current liabilities
Financial liabilities

-

1,341

-
Provision

500

1,000

500
500

2,341

500

Liabilities in disposal groups held for resale
2
28,646

-

-

Total liabilities

29,237

78,068

38,880

Net assets

35,632

35,417

36,428

Capital and reserves
Called up share capital

1,163

1,303

1,159
Capital redemption reserve

1,470

1,326

1,470
Share premium account

18,226

18,142

18,143
Foreign currency translation reserve

-

(2,382)

-
Other reserves

-

183

-
Retained earnings

14,773

16,845

15,656

35,632

35,417

36,428

  

UNAUDITED GROUP CASH FLOW STATEMENT
for the six months to 30 June 2008
6 months
 to 30 June 2008
6 months to 30 June 2007
12 months to 31 December 2007

£000's
£000's
£000's
Operating Activities

 (Loss)/profit for the period
(419)
6,573
5,941
Adjustments to reconcile profit for the year to net cash inflow from operating activities.

Effect of exchange rates on cash and cash equivalents
(355)
-
-
Tax on discontinued operations
-
-
1,164
Tax on continuing operations
(2)
407
62
Net finance costs
(250)
(109)
473
Loss/(gain) on disposal of discontinued operation
5
-
2,915
Net profit on sale of investments
(41)
(132)
(138)
Net profit on sale of associates
-
(5,472)
(6,619)
Share of post tax profits of associates accounted for using the equity method.

-

(339)

(339)
Depreciation and impairment of property, plant and equipment
96
107
315
Amortisation and impairment of intangible assets
78
64
157
Share-based payments
-
-
30
Transfer from foreign currency translation reserve
-
-
1,253
Decrease in inventories
4,255
8,275
484
Decrease in trade and other receivables
5,527
15,555
13,484
Decrease in trade and other payables
(5,087)
(21,918)
(25,068)
Movement in provisions
-
-
(500)
Cash generated from operations
3,807
3,011
(6,386)
Income taxes paid
(60)
(776)
(891)
Net cash flow from operating activities
3,747
2,235
(7,277)
Investing activities

Interest received
792
737
1,649
Disposal of subsidiary undertakings
(5)
(1,147)
8,738
Disposal of interest in associate
-
16,661
16,661
Payments to acquire property, plant and equipment
(162)
(297)
(586)
Receipts from sale of property, plant and equipment
-
-
29
Receipts from sale of investments
41
132
161
Net cash flow from investing activities
666
16,086
26,652
Financing activities

Interest paid
(542)
(628)
(2,122)
Dividends paid to equity shareholders of the parent
(464)
(658)
(1,016)
Share buy backs & dividend on Special Shares
-
(35,563)
(35,845)
Proceeds from share issues
87
378
378
Repayment of borrowings
(4,641)
(13,579)
(1,062)
Net cash flow from financing activities
(5,560)
(50,050)
(39,667)
Decrease in cash and cash equivalents
(1,147)
(31,729)
(20,292)
Effect of exchange rates on cash and cash equivalents
355
-
490
Cash and cash equivalents at the beginning of the period
33,082
52,884
52,884
Cash and cash equivalents at the end of the period
32,290
21,155
33,082

 
NOTES TO THE INTERIM ACCOUNTS
 
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 2007 is taken from the audited statutory accounts. The 2007 accounts on which the auditors issued an unqualified opinion have been sent to the Registrar of Companies.
2.
Discontinued operations

On 4 July 2008 the company announced that it was disposing of its remaining operating subsidiaries Interface Solutions International limited and Systems Loan Services Limited. At 30 June 2008 the final negotiations for the sale were in progress and the two subsidiaries were classified as a disposal group held for sale.

The income statement for the comparative periods of 6 months to 30 June 2007 and 12 months to 31 December 2007 includes the results of the disposal group in discontinued operations. The results of Banque Magnetique S.A., which was disposed of in December 2007, for the 6 months to June 2007 are also included in discontinued operations for that period.
The (loss)/profit from discontinued operations is comprised of the following:
6 months to
30 June
 2008
6 months to
30 June
 2007
12 months to
31 December
 2007

£000's
£000's
£000's
Revenue
61,650
136,652 
129,585
Cost of sales 
 (57,239)
(127,051)
 (119,553)
Gross profit
4,411
9,601
10,032
Selling and distribution costs
  (1,646)
  (1,840)
(2,784)
Administrative expenses
(3,471)
(6,123)
(6,490)
Operating (loss)/profit
 (706)
1,638
758
Finance costs
 (542)
(910)
(973)
(Loss)/profit 
 (1,248)
  728
(215)
Tax expense
-  
(331)
  -
Results of the disposal group
 (1,248)
397
(215)
Share of profit of associate
  -
339

Gain on disposal of subsidiaries and deemed disposal of interest in associate
  -
5,472
5,067
(Loss)/profit from discontinued operations
(1,248)
6,208
4,852

The major classes of assets and liabilities of the disposal group at 30 June 2008 were as follows:
30 June

2008

£'000
Assets

Property, plant and equipment
772
Intangibles
335
Trade and other receivables
22,082
Inventories
8,983
Cash and short term deposits
239
Assets classified as held for resale
32,411
Liabilities

Trade and other payables
17,989
Financial liabilities
10,657
Liabilities classified as held for resale
28,646

  

3.
(Loss)/Earnings per Ordinary Share

The calculation of (loss)/earnings per ordinary share is based on a loss of £419,000 (June 2007 - profit £6,573,000) and on 23,178,929 (June 2007 - 50,131,308) ordinary shares being the weighted average number of ordinary shares in issue during the period. 
 
The diluted (loss)/earnings per ordinary share is based on 23,184,187 (June 2007 - 50,141,181) ordinary shares.
5.
Interim Results

Copies of these interim results will be sent to all shareholders. Copies will be available from 29 September 2008
at the company's head office at Dorchester House, Station Road, Letchworth, Herts SG6 3AW or from the registered office, 4th Floor, 74 Chancery Lane, London WC2A 1AD. The document will be available on our website,  www.fayrewood.co.uk , from  29 September 2008.

 
This information is provided by RNSThe company news service from the London Stock Exchange  END  IR PUUQUBUPRGAQ