Published on 23 - September - 2011
Flying Brands could breach banking covenantsFlying Brands has warned it will breach its banking covenants next month unless further action is taken, after the business continued to perform below management expectations.
The company admitted its Gardening Direct business has performed "significantly below management expectations" as it nears the end of the Autumn selling season, while trading across other divisions has also struggled.
Flying Brands, which operates across three divisions - garden, gifts and entertainment - is now reviewing its forecasts for the rest of the year, but said it would breach its banking covenants in the second half of October unless further action is taken.
The company revealed it is in advanced talks to sell off non-core property assets.
In its half year trading statement back in July, Flying Brands said that a poor trading performance in the first quarter had meant that sales and profits for the first half were materially below expectations. The company had at that point renegotiated the covenants on its main term loan and negotiated a short-term overdraft facility until December 31, 2011.
H1 revenue for the gardening division, made up of gardening, bird food and hardware, was £9.95m, compared with £11.06m for the same period in 2010. Operating profit was £0.69m against £1.73m last year.
Commenting on the results back in July, Flying Brands chairman Tim Trotter said: "Although the first six months of 2011 have been tough we remain positive about the future of the business. We have a strong plan in place and are confident that the initiatives undertaken thus far will continue to improve performance and efficiency in the business."
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