Interim Results

Ideal Shopping Direct PLC 09 September 2004 Ideal Shopping Direct Plc 7th September 2004 Ideal Shopping Direct Plc Interim Results for the Six months ended 30th June 2004 Highlights • First half results show a strong improvement against last year's equivalent period • This excellent performance reflects considerable progress over the last year in every area of the business and successful development of promising new areas of activity • Interim sales up 41%, including like-for-like growth of 16% in the core business • Sales from our Freeview launch on April 23rd 2004 have also exceeded expectations • Despite significant extra direct costs, Freeview is already producing a contribution • First half pre-tax profits at £0.684m compare with last year's £0.677m loss • Company is strongly cash generative: end June net cash up £3.0m to total £9.3m Jim Hodkinson, chairman, commented: "This excellent performance underlines the considerable improvements made in the last year in every area of the Company's business and the substantial progress made with developing promising new areas of activity, especially our April launch of additional transmissions on Freeview. We have also made a strong start to the second half and the Board remains confident of a successful and profitable year." Enquiries: Ideal Shopping Direct plc Tel: 0870 077 7002 Jim Hodkinson, Chairman ReputationInc Tel: 020 7758 2800 Tom Wyatt CHAIRMAN'S STATEMENT This is my first interim statement to shareholders and I am delighted to report a profit for the six months to 30 June 2004 of £684,000, compared with a loss of £677,000 in the corresponding period of 2003. This reflected a 41% increase in turnover to £24.1 million in the first half, against last year's £17.1 million and an earnings per share of 1.6p 2003 (1.6p). Like for like turnover increased by 16% in the first half compared to last year. The Company was cash generative in the period, increasing cash balances by £2,977,000 compared to a decrease in cash of £1,563,000 in the corresponding period of 2003. This excellent performance underlines the considerable improvements over the last year in every area of the business and the substantial progress made in developing promising new areas of activity. Review of Trading When I joined the Board as Chairman in April, a number of initiatives were well under way to allow the business to develop its full potential within the television home shopping market. Ideal Shopping Direct has a strong position in its market, an executive management team with long experience of the home shopping industry and first-rate state of the art broadcasting facilities. The company had taken a number of important steps to position itself to capitalise on these advantages: it had closed its low return traditional mail order business, completed the transfer of its call centre activities to new facilities abroad which allow round the clock, seven days a week customer service and sales support and it was in the process of reorganising its buying, warehousing and distribution facilities to be more reactive to the needs of a business preparing for a significantly higher level of turnover. Good progress has been made in all these critical areas of the business and this has been reflected in the excellent growth now reported. We started Freeview transmissions on the 23 April 2004 and the sales generated via this new route to market have exceeded our cautious expectations, producing significant additional sales and gross margin. There are of course corresponding significant additions to the fixed costs of our operations but the level of sales generated is already producing a contribution after Freeview's direct costs. We have also benefited from innovation in our niche market activities. Last August we began using the worldwide web to transmit the Create and Craft channel as an additional vehicle for customers to place orders. Sales have grown by an acceptable level through this route to market in the first half. Create and Craft has continued to make steady progress, increasing sales by 15% over the equivalent period of 2003. This reflects the beneficial comparison with the period last year before the August launch of the channel on the website, but our improving understanding of what sells well in this format should help us maintain momentum in the second half of the year. We believe that Create and Craft has demonstrated the viability of speciality channels aimed at a niche audience and we are actively seeking other similar opportunities. The Ideal Vitality channel was taken over and brought fully under our ownership and control in January 2004, after some 12 months as a turnkey operation for Goldshield. In the first half, sales have been slower than anticipated but we have introduced a strengthened team to focus on this area of the business and we anticipate stronger sales for this channel in the second half of the year. We have also created a website for our Ideal Vitality channel. Prospects We are already making good progress in the critical areas of buying and distribution, and will shortly embark on significant investment in the company's IT and management information system to ensure that the systems are capable of meeting the Company's growth opportunities and allowing us to maintain our position as one of the UK's premier independent television retailers. Current Trading Trading in the first eight weeks of the second half has continued strongly. The level of sales is in line with our expectations and significantly better than in the equivalent period of last year when very hot weather had an adverse impact. Freeview continues to make a strong contribution, but we prudently assume that the initial momentum created by the successful launch of Ideal World may slow a little later in the year. Nevertheless, with a strong start to the second half, we remain confident of a successful and profitable year. Jim Hodkinson Chairman 9th September 2004 Consolidated Profit and Loss Accounts Six months Six months Year to to to 31 December 30 June 2004 30 June 2003 2003 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Turnover Continuing operations 24,067 17,060 40,500 Discontinued operations - 1,977 2,339 24,067 19,037 42,839 Cost of sales (13,243) (11,626) (25,362) Gross profit 10,824 7,411 17,477 Administration and distribution (10,053) (7,953) (17,590) costs Operating profit/(loss) Continuing operations 771 (546) 56 Discontinued operations - 4 (169) 771 (542) (113) Exceptional item Profit on disposal of fixed assets - - 537 Net interest (87) (135) (301) Profit/(loss) on ordinary activities 684 (677) 123 Tax on profit/(loss) on ordinary (204) 203 252 activities Profit/(loss) for the financial 480 (474) 375 period Dividends - - - Retained profit/(loss) 480 (474) 375 Basic profit/(loss) per share 1.6p (1.6p) 1.3p Diluted profit/(loss) per share 1.6p (1.6p) 1.3p There were no recognised gains or losses other than the profits of the six months ended 30 June 2004 Consolidated Balance Sheets 30 June 2004 30 June 2003 31 December 2003 £'000 £'000 £'000 (Unaudited) (Unaudited) (Audited) Fixed assets Tangible assets 8,387 9,100 8,884 Current assets Stocks 4,470 5,005 4,410 Debtors: amounts falling due within one year 1,253 1,795 1,249 Debtors: amounts falling due after more than one year 1,394 1,512 1,582 Cash 9,324 4,678 6,347 16,441 12,990 13,588 Creditors: amounts falling due within one year (12,731) (11,107) (10,597) Net current assets 3,710 1,883 2,991 Total assets less current liabilities 12,097 10,983 11,875 Creditors: amounts falling due after more than one year (3,797) (4,266) (3,863) Provisions for liabilities and charges (799) (545) (991) Net assets 7,501 6,172 7,021 Capital and reserves Called up share capital 881 880 881 Share premium account 64 4,331 64 Special reserve 5,709 5,709 5,709 Profit and loss account 847 (4,748) 367 Shareholders' funds 7,501 6,172 7,021 Consolidated Cash Flow Statements Six months Six months Year to 31 to 30 June to 30 June December 2004 2003 2003 £'000 £'000 £'000 (Unaudited) (Unaudited) (Audited) Net cash inflow/(outflow) from operating activities 3,394 (811) 1,225 Returns on investments and servicing of finance Interest received 81 69 110 Interest paid (103) (105) (207) Finance lease interest paid (65) (99) (204) Net cash outflow from returns on investments and servicing of finance (87) (135) (301) Capital expenditure Purchase of tangible fixed assets (132) (449) (703) Insurance proceeds in respect of tangible fixed assets - - 537 Net cash outflow from capital expenditure (132) (449) (166) Financing New finance lease 119 - - Issue of shares - 70 70 Receipts from borrowings 212 200 200 Repayment of borrowings (66) (131) (263) Capital element of finance lease payments (463) (307) (659) Net cash outflow from financing (198) (168) (652) Increase/(decrease) in cash 2,977 (1,563) 106 Notes to the Interim Information for the six months ended 30 June 2004 1. Basis of preparation The interim financial information has been prepared on the basis of the accounting policies set out in the company's 2003 statutory financial statements. The interim financial information has been prepared on the basis of the accounting policies set out in the 2003 financial statements, except that the accounting policy in respect of the treatment of advertiser sales has been amended to correctly reflect the role of the company as agent and not principal. Sales and cost of sales have been reduced to reflect advertiser sales as net, not gross, transactions. There is no profit effect of this amendment. The financial information set out above does not constitute the company's financial statements for the year ended 31 December 2003. The statutory financial statements for the year ended 31 December 2003 have been delivered to the Registrar of Companies and the auditors' report on those financial statements was unqualified and did not contain statements under Section 240 of the Companies Act 1985. The financial statements for the six months ended 30 June 2004 and 30 June 2003 are un-audited. 2. Earnings per ordinary share The calculation of the basic earnings/loss per share is based on the profits/ losses attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. Profits/losses Weighted average Basic earnings/ attributable to number of shares loss per share amount in ordinary shareholders pence Six months ended 30 June 2004 £480,000 29,200,570 1.6p Six months ended 30 June 2003 (£474,000) 29,158,995 (1.6p) Year ended 31 December 2003 £375,000 29,200,570 1.3p During the period ended 30 June 2004, options existed which had the anti-dilutive effect of increasing the weighted average number of shares by 428,847 to 29,629,417. The diluted profit per share for the period ended 30 June 2004 was 1.6p. During the year ended 30 June 2003, options existed which had the anti-dilutive effect of increasing the weighted average number of shares by 497,952 to 29,656,947. The diluted loss per share for the period ended 30 June 2003 was 1.6p. During the period ended 31 December 2003 options existed which had the anti-dilutive effect of increasing the weighted average number of shares by 388,068 to 29,588,638. The diluted profit per share for the year ended 31 December 2003 was 1.3p. 3. Reconciliation of movements in shareholders funds Six months to 30 Six months to 30 Year to 31 June 2004 June 2003 December 2003 £'000 £'000 £'000 Profit/(loss) in the period 480 (474) 375 Issue of shares in the period - 70 70 Net increase/(decrease) in shareholders funds 480 (404) 445 Shareholders funds at start of period 7,021 6,576 6,576 Shareholders funds at end of period 7,501 6,172 7,021 4. Net cash inflow from operating activities Six Six Year months months To to to 30 31 December 30 June 2004 June 2003 2003 £'000 £'000 £'000 Operating profit/(loss) 771 (542) (113) Depreciation 627 562 1,177 (Increase)/decrease in stocks (170) (632) (37) (Increase)/decrease in debtors (4) (1,029) (483) Increase in creditors 2,170 830 681 Net cash inflow/(outflow) from operating activities 3,394 (811) 1,225 5. Reconciliation of net cash flow to movement in net funds Six months to 30 Six months to 30 Year to 31 June 2004 June 2003 December 2003 £'000 £'000 £'000 Increase/(decrease) in cash in the period 2,977 (1,563) 106 Cash (inflow)/outflow from financing (146) (69) 63 Cash outflow from finance leases 463 307 659 Change in net funds resulting from cash flows 3,294 (1,325) 828 Inception of finance leases (119) (229) (374) Movement in net funds in the period 3,175 (1,554) 454 Net funds at start of period 1,432 978 978 Net funds at end of period 4,607 (576) 1,432 6. Analysis of changes in net funds At 1 January Cash flow Non-cash flow At 30 June 2004 2004 items £'000 £'000 £'000 £'000 Cash in hand and at bank 6,347 2,977 - 9,324 Debt (3,241) (146) - (3,387) Finance leases (1,674) 463 (119) (1,330) 1,432 3,294 (119) 4,607 7. Distribution This statement will be sent to all shareholders and can be obtained from the company's registered office: Ideal Home House, Newark Road, Peterborough PE1 5WG. This information is provided by RNS The company news service from the London Stock Exchange

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