half year profit results

PROFIT RESULT FOR THE SIX MONTHS
ENDED 30 JUNE 2008

Funtastic Limited, today announced the reported Net Profit After Tax
(NPAT) for the six months to 30th June 2008 was $5.8m. This represents a
22.1% increase on the $4.7m achieved for the same period last year.
Reported revenue for the period was $171.7m, which is down 5.1% on
last year primarily as a result of a reduction in apparel and general
merchandise revenues.
Earnings Before Interest, Tax and Amortisation (EBITA) from continuing
operations was $11.7m compared to $15.1m in the previous
corresponding period. As previously indicated the full impact on earnings
of our turnaround strategy will be predominantly felt in the second half of
FY2008. First half EBITA compared with last year was predominantly
impacted by poor apparel performance, restructuring and additional
promotional costs. However, we were pleased to see a significant
improvement in the Toy and Sporting gross margins and EBITA.
Total inventory for the group has dropped from $67.4m for the same
period last year, to $50.5m as at June 30th 2008. This represents an
improvement of more than 25%. We have been very focused on
improving the quality of our inventory during the first half of 2008. These
measures will have a positive impact on our margins going into the second
half.
Net cash outflow from operating activities for the period was $24.0m. The
major factors include : -
- Once off prepaid royalty payment of $6.7m
- Delayed receipt of prepaid taxes of $5.9m (now received)
- Slower than expected collection of receivables at Judius of $6.0m
Net bank debt at the half year was $99.6m which was $8.2m lower than
for the same period last year.
In February 2008 the company presented a cost reduction plan which
budgeted $3m in cost savings in FY2008. We are pleased with the
progress of this plan and can report that we are well on track to deliver
these cost savings for the full year.
The directors recommend no payment of an interim dividend. The
dividend position will be reviewed at the end of the year.
On 19th August 2008 the company informed the market that discussions
with the Archer consortium in relation to the consortium’s non-binding
indicative proposal to acquire all of the issued shares in Funtastic under a
scheme of arrangement have terminated, following extended discussions
and negotiations failing to reach agreement.
Whilst we are budgeting for Judius USA to make a loss in FY2008, its
performance was better than expected for the half year. We continue to
work with ABC to transition to exclusive supply, given the recent change
of ownership of ABC’s operations in the USA. However, this process
continues to take substantially longer than anticipated.
The company re-affirms its guidance of approximately $31m EBITA for the
financial year ending 31 December 2008. The company expects that full
year trading in FY2008 will be affected by the following influences: -
- Positive gross margin initiatives, including inventory reduction, are
anticipated to have the greatest effect in the second half of FY2008
- Increased input costs from China are having a detrimental impact on
margins, especially in apparel
- Consumer sentiment in discretionary spending is of concern and it is
imperative we maintain a vigilant watch on costs and inventory in
order to protect margins
- The company remains cautious of the current retail environment and
the state of consumer demand in the lead up to the pivotal Christmas
period.
For more information on Funtastic, visit the web site at
www.funtastic.com.au and for comment contact Anna Kirby, Public
Relations for Funtastic Limited Ph: 03 9486 9357.