Results Review Of French Connection Group Plc And Springfield Properties Plc

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French Connection Group Plc

French Connection Group PLC (FCCN) is a United Kingdom based branded fashion clothing and accessories retailing company. The Company has its own retail stores and concessions within the United Kingdom, in continental Europe, in the United States of America and in Canada, it also has an e-commerce portal, through which it does online retailing in each of those territories. The company’s flagship  brand is “French Connection”, under the umbrella of which the company designs, manufactures and markets its own branded apparal as well as accessories like toiletries, shoes, watches,  fragrances, jewelry, eyewear. The company also retails furniture and homeware using its own distribution channels: retail stores, e-commerce, wholesale and franchise licensing.

The company’s other brands include, Great Plains and YMC. The Company has its operations in  about 50 countries around the world. The Company's principal subsidiaries include among others, French Connection Limited, French Connection (London) Limited, French Connection (Hong Kong) Limited, and YMC Limited.

The company was founded in 1972 and it has its headquarters in London. The shares of the company were listed for trading on the London Stock Exchange on 9 May 1983, where they trade with the ticker name FCCN.

News Update

The company on 17 September 2019, came out with the interim results for the six-month period ended 31 July 2019.

Insights from Financial Results published on 17 September 2019

• The company’s revenue of £51.0 million for the six-month period ended 31 July 2019 reduced by 12.2 per cent (reduction of 14.0 per cent on constant currency basis) over that in the six- month period ended 31 July 2018 revenues of £58.1 million. This is on account of the ongoing reduction in the store portfolio and a timing shift of wholesale shipments well into the remaining half of the year
• The company’s composite gross margin improved to 42.7 per cent for the six month period ended 31 July 2019 while for the six month period ended 31 July 2018, composite gross margin was 41.5 per cent,  aided by higher full-price sales in wholesale and partially offset by a bigger combination  of outlet retail store sales.
• The wholesale revenues of the company were down by 11.7 per cent (down by 14.4 per cent on a constant currency basis) being caused by later phasing of UK and European shipments.
• The underlying operating loss of the company for the six-month period ended 31 July 2019 on pre-IFRS 16 adjustments has come down to £5.3 million, which is an improvement of £0.2 million against an underlying operating loss of £5.5 million for the six-month period ended 31 July 2018.

Source – Company’s half-yearly report published on 17 September 2019

Price Chart as on 17 September 2019, before the market close (Source: Thomson Reuters)

On 17^th September 2019, at the time of writing the report (before the market close, GMT 9.05 AM), FCCN shares were trading on the London Stock Exchange at GBX 33.3.

The stock has a 52-week High of GBX 67.80 and a 52-week low of GBX 32.72. The total market capitalization of the company was £36.71 million.

Outlook

The wholesale business of the company again grew strongly during this six month period ended 31 July 2019 in the United States of America, although there was an impact due to a change in the ordering behavior of certain big customers in the United Kingdom  and in Europe, with some of the sales shifting into the latter half of the year.  Given the prevailing business environment, the Retail division performed well, achieving a 1.4 per cent increase in like-for-like sales. Underlying operating loss of the company, while leaving out IFRS 16 and Onerous Lease adjustments has improved by £0.2 million during the six month period ended 31 July 2019 to £5.3 million.

The company has made changes to the business a few years back, however, no progress could be made due to the the trading conditions prevalent in the United Kingdom; Notwithstanding, the company’s retail performance has been strong, the wholesale business continues to perform well, and the company also continues to see a sturdy license income. The order book of the company provides a clear outlook for the performance of the company in the second half in wholesale, however, for the retail vertical, conditions will remain challenging. On the backdrop of these results the company believes that is on track to achieve its guidance for the full year.

Springfield Properties Plc

Springfield Properties PLC (SPR) is a United Kingdom domiciled residential real estate company. The company is focused on building a combination of private and cost-effective residential properties in Scotland. The company’s business is divided into two business verticals: Private Housing and Affordable contracts. The Affordable contracts division focuses on development of land into stand-alone locations which would then consist entirely of affordable residential properties. The Private Housing division's business strategy focuses on securing land in areas with good growth prospects and, subsequently, to advance developments through the planning phase. The company also undertakes construction-only work. The company’s house types include among others Abercromby, Croy, Dallachy Alba, Aberlour, Aboyne, Dornoch Ff, Fortrose, Glamis, Edzell, Huntly-Woodilee Village and Lauder.

The company was founded in 1956 and has its headquarters in Elgin United Kingdom. The shares of the company was admitted into the London Stock Exchange on 16 October 2017 where they trade with the ticker name SPR.

News Update

The company on 17 September 2019, came out with its annual results for the period ended 31 May 2019.

Insights from Financial Results published on 17 September 2019

• The company registered a strong revenue and gross margin growth across private and affordable housing business verticals.
• The company’s new home completions this year increased by 23.6 per cent to 952 over the 2017/18 financial year when it was 770.
• The company was able to expand its 16-year land bank to 15,938 plots while for period ended 31 May 2018 the number stood at 12,476 plots. 28.4 per cent of these plots have planning permission, with the Gross Development Value ("GDV") of these combined plots on 31 May 2019 increased to £3.2 billion, whereas it stood at £2.4 billion on 31 May 2018.
• The company was also able to significantly strengthen its geographic spread in the Edinburgh commuter belt by acquiring Walker Group, a Livingston-based residential property development company with a focus on private housing, and by acquiring land for a new Village to be located at Gavieside, Livingston
• The directors of Springfield Properties Plc have proposed a final dividend of 3.2 pence per share for the 2018/19 financial year whereas for 2017/18 financial year it was 2.7 pence per share. This brings the total dividend for the year to 4.4 pence per share, representing an increase of 18.9 per cent over the previous year total dividend of 3.7 pence per share.

Source – Company’s Annual results published on 17 September 2019

Price Chart as on 17 September 2019, before the market close (Source: Thomson Reuters)

On 17 September 2019, at the time of writing the report (before the market close, GMT 12.15 PM), SPR shares were trading on the London Stock Exchange at GBX 110.0

The stock has a 52-week High of GBX 129.00 and a 52-week low of GBX 95.00. The total market capitalization of the company was £102.13 million.

Outlook

The company’s large land bank will help it to keep busy for up to the next 16 years if the current rate of sales is to continue and its objective on progressing with its active sites and development of future sites will only aid in pushing this time period further. The company continues to integrate the acquisitions of Walker Group and Dawn Homes and is harvesting benefits increasingly with the passage of time.

The company continues to witness strong growth across its verticals. Particularly, the Village development projects are advancing well, and their appeal is strengthening as their footing gets established. This adds further amenities available to residents as other businesses set shop.

The growth of both private as well as affordable housing verticals is aided by strong market conditions. The demand for residences in Scotland far outstrips supply during a period when interest rates and mortgage availability conditions are good. Residential property pricing growth in Scotland beats the rest of the United Kingdom with the Scottish Government still focused on fuelling levels of affordable housing with the intent to hit the target of raising 50,000 new homes by 2021.

Buoyed by the results, the Board of Directors is hopeful to be able to deliver sustained growth, in line with market expectations, and creating value for shareholders.