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Results round-up
Thu, 12 Jan 2012, 16:33:00
Remedial action by management to stop the slump at baby and toddler products seller <b>Mothercare</b> appears to be paying off. 
 
 Total group sales were up 2% and worldwide network sales were up 4.5% in the 13 weeks to January 7th. 
 
 International retail sales were up 15.5% for the same period, while worldwide network sales were up 3% in the third quarter. 
 
 However, it wasn't all good news, with like-for-like sales over the past year down 5.4%, total UK sales down 5.3% and third quarter total group sales down 1.2%. 
 
 UK Direct in Home sales were also down 3.4% in the year-to-date and 2.2% during the third quarter. 
 
 Alan Parker, Executive Chairman said: "Worldwide network sales increased by 3.0%, as a result of continuing strong growth in our profitable and cash-generative International business. We have opened our 1,000th store outside the UK and also launched in four new countries - Chile, Colombia, Iraq and Morocco. 
 
 "In the UK, the better like-for-like sales performance was achieved in an increasingly competitive consumer environment. Additional promotional activity was successful in driving a 5% like-for-like sales increase in December and managing overall UK inventory levels, which are currently 17% lower than last year. The management actions we have already taken, which include a new web platform to launch next financial year, are expected to improve Direct and overall performance in 2012." 
 
 Singer Capital Markets said sales were better than expected, with the 3% decline in UK like-for-like (LFL) sales not as bad as expected, though it notes this partly reflects stock clearing, especially of clothing lines. 
 
 The stock clearance has come at the expense of margins, Singer notes, with full-year margins likely to be down by four-and-a-half to five percentage points; previously the company had guided to a four point cut. 
 
 "The net effect though is that they are on track to meet FY [full-year] forecasts. After several misses through 2012 this comes as a relief," Singer's retail analysts note. 
 
 The broker had previously cut its fiscal 2011/12 forecasts to a loss before tax of £6.3m, when the consensus view among those covering the stock is for Mothercare to break even. Singer is contemplating going back to its earlier, less pessimistic, forecasts. 
 
 In contrast, Panmure Gordon is above the consensus forecast, and is halving its estimate for fiscal 2011/12 ("FY2012E" in broker jargon) profit before tax to £1.1m. 
 
 Its discounted cash flow based price target is cut from 145p to 88p. 
 
 The broker was also dismissive of the new web platform the chairman was bragging about, wondering whether is is "too little, too late"? 
 
 Like Panmure Gordon, Peel Hunt rates the shares a "sell", and it is downgrading its full-year profit before tax forecast from £3m to break-even. 
 
 "The risk to future forecasts will centre on any move to more competitive pricing, which is likely to [hve an] impact [on] future year margins keeping 
 profitability some way off," Peel Hunt's John Stevenson said. 
 
 
 <b>GEONG International</b>, an Internet software solutions provider and operator for large enterprises in China, collected just over three-quarters of outstanding payments due from its customers in the final quarter of 2011, a commendable achievement in a country where paying late is a way of life for businesses. 
 
 In the three months to the end of 2011 GEONG collected £2.2m of the trade 
 receivables, some 76% of the balance outstanding as at 30 September 
 2011, though this calculation excludes a sum of £2.4m which is subject to deferred payment terms. 
 
 "We expect the remainder of £0.7m to be collected in the current quarter ending 31 March 2012," the company said. 
 
 The debtor days are currently skewed by the aforementioned deferred payment terms on £2.4m, and the board remains confident that the debtor days will begin to stabilise when the company has received the £2.4m in full and as the proportion of software-as-a-service sales increases beyond the current 24% of sales. 
 
 The takeover of Ukrainian farming group Landkom moved a step closer after the shareholders of Swedish group Alpcot Agro approved the agreed takeover of the AIM-listed tiddler. 
 
 The acquisition remains subject to the approval of Landkom's Shareholders and the sanction of the High Court of Justice of the Isle of Man on 23 January 2012 and the Anti-monopolies Commission of Ukraine. 
 
 Landkom urgently needs to arrange new bank credit facilities and finalise extended repayment of its outstanding payables, particularly with Amako Ukraine, by the end of the month, and the takeover by Alpcot will enable it to do this.
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