Final Results
Ideal Shopping Direct PLC
29 May 2002
IDEAL SHOPPING DIRECT PLC
PRELIMINARY STATEMENT OF ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2001
Ideal Shopping Direct PLC, whose principal activity is the operation of the
Ideal World TV home shopping channel today announces its preliminary results for
the year ended 31 December 2001.
Chairman and Chief Executive's Statement
INTRODUCTION
I am pleased to present my report for the year ended 31 December 2001, a year of
massive disruptions to both the TV and catalogue business.
FIRE
On 6 March 2001 a catastrophic fire took place, which destroyed our offices,
warehouse, call centre, and TV and broadcasting facilities. It is difficult
for me to describe the total destruction that the Company faced on the morning
of 7 March 2001. Virtually every asset was destroyed as a result of the fire
other than essential records maintained by the Company off site to mitigate the
effects of such a catastrophe. The Company was however fully insured and the
insurers accepted liability. The process of rebuilding the business from
nothing has been a gargantuan feat and the efforts of both my co-directors and
staff cannot be ignored.
As a direct result of this sustained effort, the Company has not only rebuilt a
substantial business as detailed further below, but I am pleased to announce
that the Company has now reached agreement with its insurer to finally settle
the outstanding insurance claim. Thank you to all those involved in achieving
what is a significant result for all shareholders. The detailed receipts from
the insurance claim are described in further detail below. We currently
anticipate that the premises will be rebuilt and assets replaced by the end of
August 2002. I foresee that these replacement assets will enhance the continued
growth of our customer base, which even continued to grow through 2001, a period
of tremendous turmoil.
TRADING REVIEW
The consolidated loss for the year after taxation of £3,584,000 demonstrates an
improvement in the Company's trading when compared with the interim results to
30 June 2001, which reported consolidated losses of £3,813,000.
The market expectations for the Company was a consolidated loss for the year
after taxation of £3,200,000. The Company reported a better position of
£3,029,000 excluding £555,000 irrecoverable fire costs which were not
anticipated when the forecast was issued.
The net operating loss before insurance monies and irrecoverable fire costs
improved significantly during the financial year, to the extent that the Company
reported net operating losses of £4,255,000 in the six month period to 30 June
2001, whilst a loss of £1,867,000 was made in the latter six months to 31
December 2001, representing a significant improvement.
Turnover increased during the latter six months, with the Company reporting
sales of £10,623,000 compared to £7,028,000 in the six month period to 30 June
2001. The Company's turnover for the year of £17,651,000 exceeded market
expectations of £16,200,000. This increase was achieved in the latter six
months of the year, which re-enforces my belief in the Company's growing success
by demonstrating significant sales growth through this period of turmoil.
Television (Ideal World - Digital Channel 635)
Although the fire has delayed the Company from achieving its original growth
expectations at the time of its flotation on AIM in late 2000, the Ideal World
TV business has held its audience through providing shows to our customers
that offered them a range of products that service their needs.
As the year progressed and we became acclimatised to operating from our new
Portable Cabin environment whilst the rebuilding of the office and broadcast
studios was underway, we became more optimistic of our future.
This can be illustrated when comparing sales income in the months January/
February 2001 (before the fire in March) to January/February 2002.
January February
£000 £000 Growth £000 £000 Growth
2001 2002 % 2001 2002 %
842 1378 64% 793 1410 78%
The sales figures above in respect of 2002 are unaudited.
Any further monthly comparisons to last year will be distorted due to the
disruption caused by the fire. Trading in the following three months is healthy
and in line with expectations.
This growth rate only enhances my belief in the potential for Ideal World when
the results for the current year are taken in the context of the Company
operating in such challenging operating conditions.
CATALOGUE
Following the fire the resources of the Company were directed towards
resurrecting the Ideal World TV business and not focused on seeking to
re-establish the catalogue division. As previously announced to shareholders,
the performance of the catalogue division had suffered in what is a highly
competitive market. Attempts to dispose of our catalogue division have failed
to attract an acceptable offer. The Board has therefore reviewed the situation.
We believe that the catalogue division can become profitable and we have
decided to recommence trading this division and as such we have recruited
specialist expertise to help accomplish our objectives, and anticipate that it
will provide a positive contribution to the Group in the short term.
BOARD CHANGES
As previously announced there have been a number of board changes during the
year. Peter Ridsdale resigned on 3 July 2001 as Non-executive Chairman. Paul
Jephcott resigned as Finance Director on 26 October 2001 to be replaced by Mike
Creedon on 26 March 2002.
STAFF
On behalf of the shareholders I would like to thank my fellow directors and in
particular, Terry Donovan, our Non-executive Director for his guidance and
experience during this difficult time and Val Kaye without whose dedication, our
recovery would probably not have happened. I would also like to thank all the
Company's employees for their continued efforts in the recovery programme at
Ideal Shopping Direct, without their dedication and support, an already
seemingly impossible task would have been all the more daunting.
INSURANCE
The management and staff have found dealing with insurance claims a particularly
time consuming and stressful exercise, but of crucial importance as the Company
has, since the fire, been reliant upon payments received from its insurers
and on £3.7million (before expenses of £188,500) of new funds raised from
certain shareholders and new investors raised in a placing at 40p per share in
August 2001. I am therefore delighted to inform shareholders that the Board
has now reached agreement with the Company's insurers and has settled all of
the outstanding insurance claims. This has been agreed as follows:
(i) Stock
Claims in respect of the Company's stock have been agreed
and £2.3 million has been received in respect of the stock claim.
(ii) Buildings
The insurers have re-imbursed an agreed amount in respect of the
premises claim to allow the construction of a replacement building.
(iii) Contents
An additional £0.5 million has been received to date in respect of
contents, particularly fixtures and equipment, destroyed in the fire and this
element of the claim will continue as fixed assets are replaced. Certain
broadcast equipment was leased to the Company and the insurers have settled the
due amounts directly with the lessor.
(iv) Business Interruption
As part of the insurance policy, the insurers have reimbursed the
additional increased costs of working incurred by the Company in reinstating the
business and to date this has resulted in insurance payments of £2.7 million for
items such as temporary premises and warehouse, studio and equipment hire and
short term additional staff costs.
The biggest element of the claim, however, was in respect of the
shortfall in profits that has occurred as a result of the fire. This carried a
significant degree of subjectivity particularly in the context of assessing the
trading of a young but rapidly expanding business.
In recent weeks I have been in discussion with our insurers with a view to
agreeing a full and final settlement for the Business Interruption Claim in
order to secure the Company's future trading position and to end the significant
distraction to management's focus. I am pleased to tell you that an agreement
has been reached at a settlement figure of £5.25 million. This sum includes the
costs of moving all staff and equipment into the new building when complete.
The settlement of the Business Interruption Claim has removed the financial
uncertainty faced by the Company and will allow the Board and employees to
focus on pursuing the Company's growth plans and build on its significant
achievements to date.
Although the Company was fully insured and the insurers have accepted liability,
there are nevertheless costs relating to the fire that are irrecoverable. These
irrecoverable fire costs have been highlighted in the Consolidated Profit and
Loss Account.
CONCLUSION
The Company has received a clean audit report which demonstrates the removal of
a material uncertainty which existed when the accounts for the year ended 31
December 2000 were signed and provides a basis for the business's continued
recovery. Finally, now that the Business Interruption Claim has been settled
management resources can be totally focused on the continuing improvement and
controlled growth of Ideal Shopping Direct Plc.
I remain optimistic about the growth of Home Shopping delivered via both our
live interactive TV Shopping Channel, Ideal World Digital Satellite Channel 635
and our catalogues, and believe the company is uniquely placed to continue to
exploit this exciting and expanding market.
Paul C Wright
Chairman and Chief Executive
Consolidated Profit and Loss Account
For the year ended 31 December 2001
Note 2001 2001 2000 2000
£'000 £'000 £'000 £'000
Turnover 17,651 16,355
Cost of sales (12,030) (12,518)
Gross profit 5,621 3,837
Distribution costs (1,145) (897)
Administrative expenses (10,598) (8,720)
Business interruption claim income 3,433 -
Irrecoverable fire costs (555) -
Total net administrative expenses (7,720) (8,720)
Net operating expenses (8,865) (9,617)
Operating loss (3,244) (5,780)
Net interest (340) (190)
Loss on ordinary activities before (3,584) (5,970)
taxation
Taxation on loss on ordinary activities - 146
Loss for the financial year (3,584) (5,824)
Dividends - -
Retained loss transferred from reserves (3,584) (5,824)
Basic loss per share 2 (15.3)p (30.4)p
Diluted loss per share 2 (15.3)p (30.4)p
There were no recognised gains or losses other than the loss for the financial
year.
Consolidated Balance Sheet
At 31 December 2001
2001 2001 2000 2000
£'000 £'000 £'000 £'000
Fixed assets
Tangible assets 3,209 7,086
Current assets
Stock 1,766 1,981
Debtors 4,706 525
Cash 3,745 3,851
10,217 6,357
Creditors: amounts falling due within one year (7,929) (7,287)
Net current assets / (liabilities) 2,288 (930)
Total assets less current liabilities 5,497 6,156
Creditors: amounts falling due after more than one year (3,132) (3,811)
Provisions for liabilities and charges (300) (190)
2,065 2,155
Capital and reserves
Called up share capital 875 598
Share premium 9,975 6,758
Profit and loss account (8,785) (5,201)
Shareholders' funds 2,065 2,155
Consolidated Cash Flow Statement
For the year ended 31 December 2001
2001 2000
£'000 £'000
Net cash outflow from operating activities (3,296) (1,391)
Returns on investments and servicing of finance
Interest received 106 258
Interest paid (173) (227)
Finance lease interest paid (273) (221)
Net cash outflow from returns on investments and servicing of finance (340) (190)
Capital expenditure
Purchase of tangible fixed assets (1,187) (1,803)
Insurance proceeds in respect of tangible fixed assets 1,825 2
Net cash inflow/(outflow) from capital expenditure 638 (1,801)
Financing
Issue of shares 3,700 7,505
Expenses paid in connection with share issues (206) (599)
Receipts from borrowings - 171
Repayment of borrowings (264) (128)
Capital element of finance lease payments (338) (591)
Net cash inflow from financing 2,892 6,358
(Decrease)/increase in cash (106) 2,976
Notes:
1. BASIS OF PREPARATION
The financial information herein does not constitute statutory
accounts as defined in Section 240 of the Companies Act 1985. The financial
information has been extracted from the Company's 2001 statutory financial
statements.
2. LOSS PER SHARE
The calculation of the basic loss per share is based on the earnings
attributable to ordinary shareholders divided by the weighted average number of
shares in issue during the year.
The calculation of diluted loss per share is based on the basic loss per share
adjusted to allow for the issue of shares on the assumed conversion of dilutive
options.
Reconciliation of the earnings and weighted average number of shares used in the
calculations are set out below:
2001
Weighted average Per share
number of shares
Earnings amount
£ pence
Earnings attributable to ordinary (3,584,000) 23,475,570 (15.3)
shareholders
Anti-dilutive effect of securities:
Options - 65,616 -
Diluted loss per share (3,584,000) 23,541,186 (15.3)
2000
Weighted average Per share
number of shares
Earnings amount
£ pence
Earnings attributable to ordinary (5,824,000) 19,133,113 (30.4)
shareholders
Anti-dilutive effect of securities:
Options - 23,567 -
Diluted loss per share (5,824,000) 19,156,680 (30.4)
3. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2001 2000
£'000 £'000
The Group
Loss for the financial year (3,584) (5,824)
Issue of shares in the year 3,494 6,906
Net (decrease) / increase in shareholders' funds (90) 1,082
Shareholders' funds at 1 January 2001 2,155 1,073
Shareholders' funds at 31 December 2001 2,065 2,155
Attributable to:
Equity shareholders 2,065 2,155
The Company
Loss for the financial year (3,584) (5,814)
Issue of shares in the year 3,494 6,906
Net (decrease) / increase in shareholders' funds (90) 1,092
Shareholders' funds at 1 January 2001 2,163 1,071
Shareholders' funds at 31 December 2001 2,073 2,163
Attributable to:
Equity shareholders 2,073 2,163
4. NET CASH OUTFLOW FROM OPERATING ACTIVITIES
2001 2000
£'000 £'000
Operating loss (3,244) (5,780)
Depreciation 650 592
Amortisation - 5
Profit on sale of fixed assets - (1)
Decrease / (increase) in stocks 215 (1,180)
(Increase) / decrease in debtors (1,592) 770
Increase in creditors 675 4,203
Net cash outflow from operating activities (3,296) (1,391)
5. DIVIDENDS
No dividends have been declared or paid in respect of 2001 or 2000.
6. OTHER INFORMATION
Copies of the annual report and accounts will be posted to shareholders shortly.
Dated 29 May 2002
End
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