Press ReleaseNovember 27, 2009
CONSOLIDATED RESULTS FOR THE FIRST HALF YEAR 2009-2010
Strong development in sales for controlled network (+13%).
Major decrease in sales to Agents and Distributors (-44%).
Decrease in gross margin due to the level of activity.
Overheads are adapted to the level of activity (-12%).
Net result as at Sep, 30, 2009: - 4.6 M€ (+ 4.0 M€ as at Sep, 30, 2008).
Key indicators as at Sept, 30, 2009, are as follow:
| Quarter 2 | Half Year 1 | |||||
| Consolidated (year to date) | 30/09/2009 | 30/09/2008 | variation | 30/09/2008 | 30/092007 | variation |
| Sales | 15 422 | 16 225 | -5,0% | 28 611 | 30 634 | -6,6% |
| Gross Margin | 6 760 | 9 656 | -30,0% | 13 553 | 16 604 | -18,4% |
| % | 43,8% | 59,5% | -15,7% | 47,4% | 54,2% | -6,8% |
| Overheads | -8 034 | -9 095 | -11,7% | -15 949 | -18 212 | -12,4% |
| Other income & charges | 83 | 2 982 | -69 | 6 254 | ||
| Profit/Loss on exchange | -170 | 165 | -405 | 59 | ||
| EBIT | -1 361 | 3 709 | -5 070 | -2 871 | 4 705 | -7 576 |
| % | -8,8% | 22,9% | -31,7% | -10,0% | 15,4% | -25,4% |
| Associated companies | -82 | -199 | -310 | -224 | ||
| Interests | -219 | 102 | -1 136 | -298 | ||
| Taxation | -315 | -94 | -325 | -184 | ||
| Net results | -1 977 | 3 517 | -4 641 | 3 999 | ||
| % | -12,8% | 21,7% | -34,5% | -16,2% | 13,1% | -29,3% |
Sales
Distribution channels have a major impact on sales.
We did quite a significant sales increase on markets on which we operate through subsidiaries (France, Western Europe and Hong-Kong/China) showing a double digits sales increase (+13%).
Drop in sales is only due to sales to distributors (-44%) that drastically limited their orders because of their level of inventories. This is of major importance for Russia that accounted for 6% of product sales in 2008-2009 and 0% this year and stopped all purchase as from September 2008, Middle East because of the drop in B2B sales that are one of its major market and Eastern Europe because of financial constraints on distributors due the financial crisis
As regards sales by activity, lighters and writing instruments are increasing (+7%) while leather goods, accessories and RTW are down (-24%) because of the weight of distributors in this activity.
Royalties are strongly increasing (+26%)
Exchange rate impact on sales is very material and accounted for +4.4% in quarter 2 and +4.2% for the first half year.
Other operational indicators
- Gross margin is decreasing because of under activity and low level of sales that impacted allocation of fixed costs;
- Overheads have been adapted to the level of activity (-12%;
- There are no non recurring items this year while last year took into account the impact of fire (+6.1 M€) EBIT as at Sep, 30, 2009 is -2.9 M€ (vs. +4.7 M€ last year) and net result is -4.6 M€ (vs. +4.0 M€ last year)
Restructuring
As inventories at March, 31, 2009, were considered as too high (8 M€ over inventories) actions aiming at decreasing these inventories have been launched (part time unemployment at the factory, stop of all orders for purchased products, selling actions). As at Sep, 30, 2009, inventories are down by -5.8 M€ in line with our target. Aside from the part time unemployment we launched in October 2009 a social plan based on volunteers in order to cut cost by -4.5 M€ on a full year basis. This plan will be carried on in half year 2.
Financing
Despite the 15 M€ bond issue on March, 30, 2009, cash position is tight because of the high level of inventories. We get a moratorium on taw and social charges end September and implemented a line of factoring late October.
Negotiations regarding the implementation of a lease-back on machine at the plant are still going on with the assistance of the Credit Mediator and shall be finalized in the course of half year 2.
In the present context whereby the level of activity is uncertain, the majority shareholders has confirmed its support up to 2.0 M€ for the next 12 months. Based on our cash projection, the available cash in hands as at Sep, 30, 2009 and the support of the majority shareholder, the financing of operations for the next 12 months is secured.
Contacts:
- Contact Analyst:
Michel Suhard
01 53 91 33 11
- Contact Press:
Euro RSCG
Thierry Micheels
01 58 47 94 98
thierry.micheels@eurorscg.fr
CONSOLIDATED FINANCIAL STATEMENTS
P&L
| (Euro 000) | 30/09/2009 | 30/09/2008 |
| Sales Products | 25 566 | 28 222 |
| Royalties | 3 045 | 2 412 |
| Consolidates sales | 28 611 | 30 634 |
| Cost of sales | (15 058) | (14 030) |
| Gross Margin | 13 553 | 16 604 |
| Communication | (1 586) | (2 490) |
| Selling | (6 665) | (6 460) |
| Administrative | (7 697) | (9 262) |
| Other expenses | (1 579) | 6 313 |
| Other income | 899 | 0 |
| Impairment (IAS 36) | 206 | 0 |
| EBIT | (2 871) | 4 705 |
| Financial income | 72 | 206 |
| Financial expenses | (809) | (1 044) |
| Net financial expenses | (737) | (838) |
| Other financial income/(expenses) | (399) | 540 |
| Associated companies | (310) | (224) |
| Profit/(loss) before tax | (4 317) | 4 183 |
| Income tax | (325) | (184) |
| Net profit/(loss) | (4 641) | 3 999 |
| Net result - Group | (4 641) | 3 999 |
Balance sheet
| ASSETS | ||
| (Euros 000 | 30/09/2009 | 31/03/2009 |
| Non current assets | ||
| Goodwill | 2 775 | 3 074 |
| Intangible fixed assets (net) | 900 | 1 149 |
| Tangible fixed assets (net) | 13 258 | 13 465 |
| Financial assets | 1 522 | 1 582 |
| Associated companies | 149 | 461 |
| Deferred income tax | 254 | 299 |
| Total non current assets | 18 858 | 20 030 |
| Current assets | ||
| Inventories | 21 161 | 26 448 |
| Trade debtors | 8 959 | 8 507 |
| Other debtors | 5 331 | 6 784 |
| Tax | 549 | 634 |
| Cash & cash equivalent | 3 884 | 29 588 |
| Total current assets | 39 884 | 71 962 |
| Total Assets | 58 742 | 91 992 |
| LIABILITIES | ||
| (Euros 000) | 30/09/2009 | 31/03/2009 |
| Equity | ||
| Share capital | 21 234 | 21 231 |
| Additional paid-in capital | 968 | 967 |
| Treasury shares | (1 002) | -1 002 |
| Equity component of convertible bonds | 2 425 | 2 425 |
| Fair value of hedging instruments | (10) | -3 167 |
| Reserves | (1 043) | -213 |
| Profit/(loss) for the period | (4 641) | 3 287 |
| Equity attributable to equity holders | 17 931 | 23 528 |
| Minority interests | ||
| Non-current liabilities | ||
| Convertible bonds (long-term portion) | 13 922 | 13 896 |
| Long-term borrowings | 24 | 23 |
| Long-term finance lease liabilities | 224 | 201 |
| Deferred taxes | 67 | 27 |
| Long-term provisions for pension and other post-employment benefits | 6 120 | 6 266 |
| Total non-current liabilities | 20 357 | 20 413 |
| Current liabilities | ||
| Trade accounts payable | 7 201 | 9 611 |
| Other payables | 8 552 | 9 976 |
| Short-term tax liabilities | 417 | 261 |
| Short-term provisions for contingencies and charges | 2 482 | 2 892 |
| Convertible bonds (short-term portion) | 758 | 23 601 |
| Short-term borrowings | 914 | 1 536 |
| Short-term finance lease liabilities | 130 | 174 |
| Total current liabilities | 20 454 | 48 051 |
| Total Liabilities | 58 742 | 91 992 |
Cash flow statement
| (euros thousand) | 30/09/2009 | 31/03/2009 | 30/09/2008 |
| I - Cash flow from operating activities | |||
| Profit/(loss) for the period after tax | (4 641) | 3 287 | 3 999 |
| Depreciation, amortization and impairment | 1 087 | 1 510 | 1 029 |
| Change in provision | (541) | (4 764) | (8) |
| Insurance indemnity dedicated to captial expenditures (2) | 0 | (2 564) | (2 192) |
| Net interest expense | 665 | 2 465 | 1 036 |
| Gains and losses on disposals of assets | 62 | 406 | (302) |
| Tax expense/(income) | 287 | (244) | (104) |
| (Income)/loss from associates, net of dividends received | 310 | 241 | 224 |
| Cash flow from operations | (2 770) | 339 | 3 682 |
| Change in inventories and work in progress | 4 557 | (6 561) | (5 991) |
| Change in trade accounts receivable | (591) | 3 192 | 1 789 |
| Change in other receivables (3) | 1 357 | (1 455) | (7 866) |
| Change in trade accounts payable | (2 306) | 21 | 1 298 |
| Change in other payables | (1 328) | (1 075) | (1 379) |
| Change in operating working capital requirement | 1 690 | (5 878) | (12 148) |
| NET CASH GENERATED FROM/(USED IN) OPERATING ACTIVITIES | (1 080) | (5 538) | (8 465) |
| II - Capital expenditures | |||
| Development expenditure | (84) | (986) | (446) |
| Acquisitions of property, plant and equipment (net of insurance indemnity | (705) | (2 221) | (1 202) |
| Acquisition of other investments | (19) | (174) | (192) |
| Cash used in investing activities | (808) | (3 382) | (1 840) |
| Proceeds from disposals of intangible assets | 0 | 0 | 0 |
| Proceeds from disposals of investments | 49 | 711 | 74 |
| Cash provided by divestments | 49 | 711 | 74 |
| NET CASH USED FOR CAPITAL EXPENDITURES | (760) | (2 671) | (1 766) |
| III - Cash flows from financing activities | |||
| Increase in borrowings | 56 | 15 449 | 329 |
| Repayments of borrowings | (22 588) | (191) | (983) |
| Interest paid | (1 543) | (2 105) | (1 044) |
| NET CASH GENERATED FROM FINANCING ACTIVITIES | (24 075) | 13 153 | (1 697) |
| Effect of exchange rate fluctuations on cash and cash equivalents | 358 | 747 | 399 |
| Net change in cash and cash equivalents | (25 557) | 5 691 | (11 530) |
| Cash opening balance | 29 162 | 23 471 | 23 471 |
| Cash closing balance | 3 605 | 29 162 | 11 941 |
| Net change in cash | (25 557) | 5 691 | (11 530) |