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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Bagir Group Ltd. | LSE:BAGR | London | Ordinary Share | IL0011317216 | ORD ILS0.04 (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.475 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMBAGR
RNS Number : 9685J
Bagir Group Ltd
15 September 2016
This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014 (MAR).
15 September 2016
Bagir Group Ltd.
("Bagir" or the "Company")
Interim results
for the six months ended 30 June 2016
Bagir (AIM: BAGR), a designer, creator and provider of innovative tailoring, is pleased to announce its results for the six months ended 30 June 2016.
H1 trading highlights
-- Positive EBITDA* of $0.8m in the first half of 2016 - demonstrating the successful execution of the Recovery Plan with the reversal of a negative EBITDA* of $(0.4) m for H1 2015 and $(4.3)m for FY2015
-- Breakeven at the operating level for the first half of 2016 - turning around the operating loss of $(1.9)m for H1 2015 and $(8.7)m for FY2015
-- Revenue of $33.5m for H1 2016 which is in line with Directors' expectations in both the US and the UK markets. The reduction from the previous period (H1 2015 $45.5m) is mainly attributable to the reduction in sales from M&S and to shifting to sales net of fabric with a US customer
-- Gross margin has held up strongly with H1 2016 at 17.8% compared with 14.5% in H1 2015 - in spite of the reduction in revenues
-- Reduction of overhead expenses by c.30% compared with 2015
-- Cash and cash equivalents at 30 June 2016 of $4.0m (H1 2015 and 31 December 2015 $13.3m and $7.5m respectively) - the reduction in cash is as a result of prior year losses and restructuring costs
* 'EBITDA' is a non-IFRS measure that the Company uses to measure its performance. It is defined as Earnings Before Interest, Taxation, Depreciation and Amortisation.
Post period end
-- On 25 July 2016 the Company announced that as part of the Company's ongoing Recovery Plan it had reached an agreement with its lenders, Bank Leumi and Discount Bank (the "Lenders"), to clear all outstanding bank debt (approximately $21 million) subject to the satisfaction of certain conditions
-- At the same time, the Company also announced plans to undertake a private placement to raise approximately $8.5 million (net of expenses), the proceeds of which will be used to meet the cash repayment condition with the Lenders ($6.3m) with the balance being used for general working capital (the "Private Placement"). Further announcements on this will be made at the appropriate time.
Current trading and outlook
-- Current trading is in line with the Directors' expectations
-- The Recovery Plan has already borne fruit and will continue to be implemented throughout the remainder 2016, albeit that the majority of costs savings have already made
-- The Company has a clear strategy for re-establishing the business and its primary focus going forward is on the following areas:
o expanding its current customer base so as to reduce reliance on any one individual customer by securing high volume sales orders from the larger end of the US and UK retail market supported by a new pricing model
o reinvesting in product development and innovation to support the current suite of strong products;
o ensure optimum operational efficiency in line with the new shape of the Company; and
o expanding operations at the Company's chosen production sites in Egypt, Vietnam and Ethiopia maximising the potential for customs/tariff free trade routes. The Ethiopian factory is expected to become an increasingly important factor in the coming months and years.
Eran Itzhak, CEO of Bagir, said:
"We have achieved a significant turnaround in the first six months of 2016 and we can now begin to show how the various elements of our Recovery Plan are coming together to create a new base from which we can grow the business. The agreement we have reached with our Lenders is a key element and, if we are successful in satisfying the conditions, will transform our balance sheet. From this new position of strength we will then be able to implement our strategies around new customer acquisition, innovation and maintaining a highly efficient operational base. This is an exciting time to be involved with Bagir and we look forward to the future with confidence."
For further information, please contact:
Bagir Group Ltd. via Novella Communications Eran Itzhak, Chief Executive on: Officer +44 (0) 20 3151 7008 Udi Cohen, Chief Financial Officer Tessa Laws, Non-Executive Chairman N+1 Singer Nic Hellyer Alex Price +44 (0) 20 7496 3000 Novella Tim Robertson +44 (0) 20 3151 7008
Toby Andrews
Chairman's statement
Introduction
The Company has been in recovery mode since May 2014 when it announced the loss of a substantial proportion of revenue from its previous largest customer. Under the Recovery Plan the Company has sought to restructure the business to reflect the decrease in volumes and establish a new base from which to return the business to growth.
It is very pleasing therefore to be able to report on this six-month trading period which clearly shows the benefit of the actions the Company has taken to restore the business. In the last 18 months, the Company has reduced the cost base of the business by approximately 30% and has identified further areas for potential savings. These actions have been a significant driver in the Company reversing the losses at EBITDA level last year and recording a positive EBITDA performance for the first six months of 2016. This, together with improving gross profit margins, completing the restructuring of the manufacturing base and continuing to attract new customers, represents a significant achievement.
It is no secret that the Company's current level of borrowings is disproportionate to the size of the reduced business and is preventing the Company from investing in growing the business. The agreement which we announced post-period end with the Company's Lenders, if completed, will be transformational for the business resulting in both a significantly stronger balance sheet and reduced financial expenses.
Agreement with Lenders
Under the agreement the Lenders have agreed to accept a partial repayment and then to write-off the balance of all bank loans amounting to approximately $21 million and associated obligations, subject to the Company fulfilling the following conditions to them pro rata before 31 December 2016:
- a cash payment of $6.3 million ("Cash Payment"). The Company proposes to fund this cash payment through the Private Placement; and
- the issued and allotment to the Lenders of 8.33% of the Company's total issued share capital as enlarged by the Private Placement.
On receipt of the Cash Payment and issue of new ordinary shares to the banks, each of the banks shall write-off the outstanding balance of the obligations and liabilities of the Company to the banks and any liens, mortgages, and guarantees created in favour of the banks, will also be cancelled. Additionally, if the Company generates annual EBITDA above $6.5 million between 2016 and 2024 then a contingent payment will be due of 50% of the excess of annual EBITDA generated above $6.5 million up to a maximum payment in aggregate of $8.0 million.
Proposed Private Placement
The Company intends to raise approximately $8.5 million (after expenses) through the Private Placement. Of the net proceeds from the Private Placement $6.3 million will make the Cash Payment to the Lenders with the balance being used for general working capital to support the business operations. Further announcements on this will be made at the appropriate time.
Financial review
Revenue for the six months ended 30 June 2016 has been in line with management expectations in both the US and the UK markets and amounted to $33.5m compared with $45.0m for the first half of 2015. The reduction in sales is attributed mainly to the reduction in sales to the Company's former largest customer as announced in 2014 (from approximately $7m in H1 2015 to approximately $2m in H1 2016). At the same time, some sales were made net of fabric to a large US customer; although this did not impact on the gross profit (the fabric amount that should be added to H1 2016 sales for comparison with H1 2015 is approximately $3m). The cessation of brand activity as part of the Recovery Plan also contributed to the reduction in sales. However, it is important to note that notwithstanding the overall reduction, the Company did successfully grow revenues elsewhere through additional sales to existing and new retail customers.
The gross margin for the six months ended 30 June 2016 was 17.8% compared with 14.5% for the first half of 2015. This increase is primarily attributed to the restructuring in production sites (including subcontractor costs), the reduction in overall overhead costs and the reduction in amortisation costs due to impairment of intangible assets in 2015. It also includes non-recurring government subsidy of approximately $0.5m from previous years.
Operating expenses for the first half of 2016 have been reduced substantially compared with the same period last year which includes the reduction of overhead costs by approximately 30% compared with 2015.
Selling and marketing expenses decreased to $3.6m in H1 2016 (H1 2015: $5.0m), development costs decreased to $1.0m in H1 2016 (H1 2015: $1.2m) and general and administrative expenses decreased to $1.4m in H1 2016 (H1 2015: $2.2m).
The cost reduction included significant reduction in manpower, rent and related costs, production samples cost savings, travel expenses and other overhead costs.
As a result of the above achievements and the successful execution of the Recovery Plan, the Company turned a negative EBITDA of $(0.4)m for the first half of 2015 and $(4.3)m for FY2015, into a positive EBITDA of $0.8m in the first half of 2016.
The operating income (loss) turned from $(1.9) for the first half of 2015 and $(8.7)m for FY2015, to breakeven operating income of $0.0m for the first half of 2016.
Cash and cash equivalents at 30 June 2016 were $4.0m (H1 2015 and 31 December 2015 $13.3m and $7.5m respectively) with the reduction in cash being as a result of prior year losses and restructuring costs.
Net debt at 30 June 2016 was $17.0m (H1 2015 and 31 December 2015 were $8.2m and $13.8m respectively).
Operational review
The Company has a clearly defined strategy and is successfully executing it. In the first six months of 2016, the trading performance shows the benefits of the actions the management have taken with the improvement in gross margin, the continuing reduction in costs, launch of new products and the successful acquisition of new customers.
The focus on core manufacturing sites in Vietnam, Egypt and Ethiopia has streamlined the Company's manufacturing base whilst also improving it. The changes made have created strong competitive advantages as a result of their combined duty free export status for sales to both the EU and US, highly competitive production costs and local governmental support for the textile industry. Good progress has been made in Vietnam with the agreement with a new joint venture partner and in Ethiopia production for export has already commenced.
In 2015 the Company has reduced the overall cost base by 30%, a significant achievement, reducing costs from $13.5m to an annual run rate of $9.5m at the outset of 2016. The reductions have come from across the business and the management team has identified further areas for cost reduction whilst balancing this with ensuring that investment in key areas continues and/or increases.
Innovation and quality remains at the heart of all Company activity. Bagir is intensely proud of its track record created over the last 50 years of servicing leading western retailers. In 2015 the Company launched 4 new product lines which generated 5% of the Company's annual turnover and currently there are 8 new innovations in the pipeline, 6 of which are ready to market and the Company are planning to start actively presenting them to customers in Q4 2016.
New concepts and quality tailoring are critical to new customer acquisition. It reflects well on the Company that during these times of significant change and financial constraint for the business it has continued to win new business providing further confidence that once the Recovery Plan has been completed, new customer acquisition will accelerate. The focus is on expanding the Company's current customer base so as to reduce reliance on any one individual customer by securing high volume sales orders from the larger end of the US and UK retail market supported by a new pricing model.
Enhancing IT capabilities and expanding online sales functions is a significant area of focus. In the first six months of 2016 the Company deployed product lifecycle management (PLM) and enterprise resource planning (ERP) systems across the business. As part of increasing online sales, the Company is targeting customers with leading online distribution platforms.
Outlook
The Company has achieved a significant turnaround in the first six months of 2016 and current trading since 30 June 2016 has been in line with Director's expectations. The agreement with the Lenders is a key element in the next chapter for the Company and, assuming that the various conditions are satisfied, will have a transformational effect on the business and its balance sheet, and will give us a solid foundation from which to grow the business in the years to come.
Importantly, customer responses to the changes made across the business, in particular in terms of manufacturing, new product innovation and other areas of operational efficiency, are being well received and together these factors underpin our confidence in the future of the business.
Tessa Laws
Chairman
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Hot Features
Premium
30 June 31 December
---------------- -----------
Unaudited Audited
---------------- -----------
2016 2015 2015
------- ------- -----------
U.S. dollars in thousands
-----------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 3,979 13,332 7,463
Short-term investments 475 512 464
Trade receivables 5,502 8,441 4,143
Other receivables 2,813 2,078 2,051
Inventories 5,130 8,794 8,326
------- ------- -----------
17,899 33,157 22,447
------- ------- -----------
NON-CURRENT ASSETS:
Investment in a joint venture 1,875 1,747 1,994
Property, plant and equipment 673 1,150 650
Goodwill 5,689 5,689 5,689
Other intangible assets 4,545 4,178 5,231
Deferred taxes 328 270 304
------- ------- -----------
13,110 13,034 13,868
------- ------- -----------
31,009 46,191 36,315
======= ======= ===========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Credit from banks and current
maturities of long-term loans 608 11,295 465
Trade payables 3,950 7,179 5,416
Other payables 3,983 8,086 5,831
8,541 26,560 11,712
-------- -------- --------
NON-CURRENT LIABILITIES:
Loans from banks 20,397 10,192 20,772
Employee benefit liabilities 410 427 439
Obligation relating to lease
agreement - 156 -
Payable for acquisition of
subsidiary 2,790 - 2,972
-------- -------- --------
23,597 10,775 24,183
-------- -------- --------
EQUITY ATTRIBUTABLE TO EQUITY
HOLDERS OF THE COMPANY:
Share capital 576 574 576
Share premium 78,380 78,322 78,342
Capital reserve for share-based
payment transactions 1,441 1,449 1,438
Capital reserve for transactions
with shareholders 10,165 10,165 10,165
Adjustments arising from translation
of foreign operations (8,895) (8,895) (8,895)
Accumulated deficit (84,742) (74,705) (83,152)
-------- -------- --------
(3,075) 6,910 (1,526)
Non-controlling interests 1,946 1,946 1,946
-------- -------- --------
Total equity (deficiency) (1,129) 8,856 420
-------- -------- --------
31,009 46,191 36,315
======== ======== ========
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
Six months ended Year ended
30 June 31 December
------------------ ------------
Unaudited Audited
------------------ ------------
2016 2015 2015
-------- -------- ------------
U.S. dollars in thousands
--------------------------------
Revenues from sales 33,503 45,474 75,207
Cost of sales 27,543 38,860 67,870
-------- -------- ------------
Gross profit 5,960 6,614 7,337
Selling and marketing expenses 3,570 5,045 9,464
General and administrative
expenses 1,449 2,249 4,315
Development costs 962 1,176 2,221
Other expenses, net 6 21 25
-------- -------- ------------
Operating loss (27) (1,877) (8,688)
Finance income - 167 17
Finance expenses (1,468) (1,424) (2,975)
Company's share of losses of
a joint venture (119) (18) (49)
Loss before taxes on income (1,614) (3,152) (11,695)
Tax benefit 24 21 44
-------- -------- ------------
Loss (1,590) (3,131) (11,651)
-------- -------- ------------
Other comprehensive loss:
Items not to be reclassified
to profit or loss in subsequent
periods:
Remeasurment gain on defined
benefit plans - - 73
-------- -------- ------------
Total other comprehensive income
(loss) - - 73
-------- -------- ------------
Total comprehensive loss (1,590) (3,131) (11,578)
======== ======== ============
Loss attributable to equity
holders of the Company (1,590) (3,131) (11,651)
======== ======== ============
Total comprehensive loss attributable
to equity holders of the Company (1,590) (3,131) (11,578)
======== ======== ============
Loss per share attributable
to equity holders of the Company
(in dollars)
Basic and diluted loss (0.03) (0.06) (0.23)
====== ====== ======
Weighted average number of
Ordinary shares for basic and
diluted loss per share (in
thousands) 50,428 50,223 50,377
====== ====== ======
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the Company
-------------------------------------------------------------------------------
Capital Capital Adjustments
reserve reserve arising
for for from
share-based transactions translation Total
Share Share payment with of foreign Accumulated Non-controlling equity
capital premium transactions shareholders operations deficit Total interests (deficiency)
------- ------- ------------ ------------ ----------- ----------- ------- --------------- ------------
Unaudited
--------------------------------------------------------------------------------------------------------------
U.S. dollars in thousands
--------------------------------------------------------------------------------------------------------------
Balance at 1
January 2016 576 78,342 1,438 10,165 (8,895) (83,152) (1,526) 1,946 420
------- ------- ------------ ------------ ----------- ----------- ------- --------------- ------------
Total loss and
comprehensive
loss - - (1,590) (1,590) - (1,590)
Exercise of
options -* 38 (35) 3 3
Cost of
share-based
payment - - 38 - - - 38 - 38
------- ------- ------------ ------------ ----------- ----------- ------- --------------- ------------
Balance at 30
June 2016 576 78,380 1,441 10,165 (8,895) (84,742) (3,075) 1,946 (1,129)
======= ======= ============ ============ =========== =========== ======= =============== ============
*less than 1,000 USD.
Attributable to equity holders of the Company
-------------------------------------------------------------------------------
Capital Capital Adjustments
reserve reserve arising
for for from
share-based transactions translation
Share Share payment with of foreign Accumulated Non-controlling Total
capital premium transactions shareholders operations deficit Total interests equity
------- ------- ------------ ------------ ----------- ----------- ------- --------------- -------
Unaudited
---------------------------------------------------------------------------------------------------------
U.S. dollars in thousands
---------------------------------------------------------------------------------------------------------
Balance at 1
January 2015 574 78,322 1,444 10,165 (8,895) (71,574) 10,036 1,946 11,982
------- ------- ------------ ------------ ----------- ----------- ------- --------------- -------
Total loss and
comprehensive
loss - - - - - (3,131) (3,131) - (3,131)
Cost of
share-based
payment - - 5 - - - 5 - 5
------- ------- ------------ ------------ ----------- ----------- ------- --------------- -------
Balance at 30
June 2015 574 78,322 1,449 10,165 (8,895) (74,705) 6,910 1,946 8,856
======= ======= ============ ============ =========== =========== ======= =============== =======
Attributable to equity holders of the Company
--------------------------------------------------------------------------------
Capital Capital Adjustments
reserve reserve arising
for for from
share-based transactions translation
Share Share payment with of foreign Accumulated Non-controlling Total
capital premium transactions shareholders operations deficit Total interests equity
------- ------- ------------ ------------ ----------- ----------- -------- --------------- --------
Audited
-----------------------------------------------------------------------------------------------------------
U.S. dollars in thousands
-----------------------------------------------------------------------------------------------------------
Balance at 1
January 2015 574 78,322 1,444 10,165 (8,895) (71,574) 10,036 1,946 11,982
------- ------- ------------ ------------ ----------- ----------- -------- --------------- --------
Loss for the year - - - - - (11,651) (11,651) - (11,651)
------- ------- ------------ ------------ ----------- ----------- -------- --------------- --------
Other
comprehensive
income:
Remeasurement
gain on
defined
benefit plans - - - - - 73 73 - 73
------- ------- ------------ ------------ ----------- ----------- -------- --------------- --------
Total
comprehensive
loss - - - - - (11,578) (11,578) - (11,578)
Exercise of
options 2 20 (16) - - - 6 - 6
Cost of
share-based
payment - - 10 - - - 10 - 10
Balance at 31
December
2015 576 78,342 1,438 10,165 (8,895) (83,152) (1,526) 1,946 420
======= ======= ============ ============ =========== =========== ======== =============== ========
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended Year ended
30 June 31 December
------------------ ------------
Unaudited Audited
------------------ ------------
2016 2015 2015
-------- -------- ------------
U.S. dollars in thousands
--------------------------------
Cash flows from operating
activities:
Loss (1,590) (3,131) (11,651)
-------- -------- ------------
Adjustments to reconcile loss
to net cash provided by (used
in) operating activities:
Company's share of losses
of a joint venture 119 18 49
Depreciation, amortization
and impairment loss 851 1,451 4,347
Deferred taxes, net (24) (14) (48)
Change in employee benefit
liabilities (29) (29) 56
Cost of share-based payment 38 5 10
Loss from sale of property,
plant and equipment 19 - 173
Finance expenses, net 776 840 1,384
Income tax expense (benefit),
net - (7) 4
1,750 2,264 5,975
-------- -------- ------------
Changes in asset and liability
items:
Decrease (increase) in trade
receivables (1,359) 1,806 6,104
Decrease (increase) in other
receivables (759) 720 829
Decrease in inventories 3,196 1,585 2,053
Decrease in trade payables (1,466) (548) (1,935)
Increase (decrease) in other
payables (1,104) 261 (300)
-------- -------- ------------
(1,492) 3,824 6,751
-------- -------- ------------
Cash paid during the period
for:
Interest paid (597) (531) (1,100)
Taxes paid - - (4)
(597) (531) (1,104)
-------- -------- ------------
Net cash provided by (used
in) operating activities (1,929) 2,426 (29)
-------- -------- ------------
Cash flows from investing activities:
Investment in joint venture - - (228)
Purchase of property, plant
and equipment (207) (52) (112)
Additions to intangible assets - (75) (617)
Purchase of short-term investments,
net (11) (115) (67)
Net cash used in investing
activities (218) (242) (1,024)
------- ------- --------
Cash flows from financing activities:
Exercise of options 3 - 6
Receipt of loans from banks - - 21,237
Payment of long-term liabilities
from banks (232) (2,418) (14,025)
Decrease in short-term credit,
net - - (9,880)
Short-term advance from (repayment
to) joint venture (708) 708 708
Factored receivables 1,938 -
Repayment of liability for
acquisition of subsidiary (400) (500) (950)
Net cash used in financing
activities (1,337) (272) (2,904)
------- ------- --------
Increase (decrease) in cash
and cash equivalents (3,484) 1,912 (3,957)
Cash and cash equivalents at
the beginning of the period 7,463 11,420 11,420
------- ------- --------
Balance of cash and cash equivalents
at the end of the period 3,979 13,332 7,463
======= ======= ========
Significant non-cash transactions:
Purchase of intangible assets
on credit -376 -
=== =====
Liability for acquisition of
subsidiary - - 3,446
=== =====
Investment in a joint venture - - 50
=== =====
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1:- GENERAL a. Company description:
Bagir Group Ltd. ("the Company") is registered in Israel. The Company and its subsidiaries ("the Group") specialize in the manufacturing and marketing of men and women's tailored fashion. The Company's Headquarters are located in Kiryat Gat, Israel. The Group's products are manufactured by a subsidiary and subcontractors. The Group's products are marketed in Europe (mainly in the U.K.), the U.S. and in other countries. As for operating segments, see Note 4.
b. The interim condensed consolidated financial statements for the six months ended 30 June 2016 were approved for issue in accordance with a resolution of the Board of Directors on 4 September 2016.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES a. Basis of preparation of the interim consolidated financial statements:
The interim condensed consolidated financial statements for the six months ended 30 June 2016 have been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the European Union. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual consolidated financial statements as at 31 December 2015.
The accounting policies applied in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's consolidated annual financial statements for the year ended 31 December 2015.
b. Assessment of going concern:
In 2015 the Group's financial results suffered due to a reduction of a substantial proportion of revenue from its previous largest customer, as announced in May 2014 which, among others, resulted in a loss from operations. Management has taken a number of remedial actions in 2015 and ongoing in 2016, including the implementation of a recovery plan which consists of focusing the core activities on larger sales addition to an efficiency and cost reduction scheme. In December, 2015, the Company also signed amendments to its financing agreements with banks to extend the maturities of loans and revise financial covenants. The Group is acting to increase revenues through plans to expand operations with existing and new-customers predominantly in the US, the UK and Australia.
The Board of Directors has considered the principal risks and uncertainties of the business, the trading forecasts prepared by management covering a twelve month period following the approval of the financial statements (including the projected effects of the remedial actions described above) and the resources available to meet the Group's obligations for the aforementioned period. After taking all of the above factors into consideration, the Board of Directors has concluded that it is appropriate to apply the going concern basis of accounting in preparing the financial statements.
c. fair value:
The fair value of cash and cash equivalents, short-term deposits, accounts receivable, short-term credit and loans from banks, trade and other payables approximate their carrying amount due to the short-term maturities of these items. The fair value of non-current loans from banks approximate their carrying value as these loans bear variable interest at rates that are adjusted periodically to market rates.
NOTE 3:- SUPPLEMENTARY INFORMATION
a. On 7 January 2016, the Company granted options to acquire 2,700,000 Ordinary shares to the Company's CEO and to the Company's CFO (1,350,000 Options each). The Options were granted at the exercise price of 0.035 GBP.
The Options are exercisable for a period of 10 years from the grant date.
The Options granted shall vest as follow: 1,000,000 Options will vest on 31 December 2016, another 1,000,000 Options will vest on 31 December 2017 and the balance will vest on 31 December 2018.
The fair value of the Options granted amounted to $102 thousand.
b. In January 2016, the Company issued 51,363 Ordinary shares pursuant to an exercise of Options by an employee.
Following the issue of the above shares, the Company's issued share capital consists of 50,428,660 Ordinary shares.
c. On 10 May 2016, the Company's Board of Directors resolved to reserve for employees of the Company and subsidiaries up to 1,089,750 options.
The options are to be granted at no consideration. Each option is exercisable into one Ordinary share of the Company (subject to adjustments) at an exercise price of GBP 0.0375 under a cashless exercise arrangement.
In May 2016 1,089,750 options were granted for employees of the Company and subsidiaries. The options vest in 3 equal tranches on 10 May 2017, 2018, and 2019, respectively. The Options are exercisable for a period of 10 years from the grant date.
The fair value of the Options granted amounted to $29 thousand.
d. In January 2016, the Israeli Parliament's Plenum approved the Bill for Amending the Income Tax Ordinance (No. 217) (Reducing of Corporate Tax Rate), 2016, which includes a reduction of the corporate tax rate from 26.5% to 25%. The amendment is effective starting 1 January 2016.
The change in tax rate did not have a material effect on the balance of deferred taxes in the financial statements.
NOTE 4:- OPERATING SEGMENTS
a. General:
The Group's activity is the manufacturing and marketing of men and women's tailored fashion (mainly men's).
The operating segments are identified on the basis of information that is reviewed by the chief operating decision maker ("CODM") to make decisions about resources to be allocated and assess its performance. The Group's products are primarily marketed to two geographical areas: Europe and the U.S. and, accordingly, the Company has two geographical segments. The Company's activities in Europe are concentrated primarily in the U.K.
b. Financial information on operating segments:
Europe
(mainly
the
U.K.) U.S. Other Total
-------- ------ ----- -------
Unaudited
--------------------------------
U.S. dollars in thousands
Six months ended 30
June 2016 :
Total revenues from
external customers 10,119 22,095 1,289 33,503
Segment profit (loss) (1,878) 1,578 273 (27)
======== ====== ===== =======
Unallocated expenses,
net (119)
Finance expenses, net (1,468)
-------
Loss before tax benefit (1,614)
=======
Europe
(mainly
the
U.K.) U.S. Other Total
-------- ------ ----- -------
Unaudited
--------------------------------
U.S. dollars in thousands
Six months ended 30
June 2015 :
Total revenues from
external customers 22,858 20,821 1,795 45,474
Segment profit (loss) (2,858) 654 327 (1,877)
======== ====== ===== =======
Unallocated expenses,
net (18)
Finance expenses, net (1,257)
-------
Loss before tax benefit (3,152)
=======
Europe
(mainly
the
U.K.) U.S. Other Total
-------- ------ ----- --------
Audited
---------------------------------
U.S. dollars in thousands
---------------------------------
Year ended 31 December
2015:
Total revenues from
external customers 35,835 36,444 2,928 75,207
======== ====== ===== ========
Segment profit (loss) (8,773) (604) 689 (8,688)
======== ====== ===== ========
Unallocated expenses,
net (49)
Finance expense, net (2,958)
--------
Loss before income
taxes (11,695)
========
NOTE 5:- SUBSEQUENT EVENTS
During July 2016 the Company signed an agreement with its lenders, Bank Leumi and Discount Bank to clear all outstanding bank debt (approximately $21 million) Subject to the fulfillment of some conditions before 31 December, 2016. Additionally, the Company intends to undertake a private placement to raise approximately $8.5 million ("Private Placement").
Agreement with Lenders
Under the agreement the Company's two principal lenders have agreed to accept a partial repayment and then to write-off the balance of all bank loans amounting to approximately $21 million and associated obligations, subject to the Company fulfilling the following conditions to them pro rata before 31 December, 2016:
-- Cash payment of $6.3 million to be funded from the proposed Private Placement ("Cash Payment").
-- Allocation to the lenders of 8.33% of the Company's total issued share capital post the completion of the Private Placement.
On receipt of the Cash Payment and issue of new ordinary shares to the banks, each of the banks shall write-off the outstanding balance of the obligations and liabilities of the Company to the banks and any liens, mortgages, and guarantees created in favor of the banks, will also be cancelled.
Additionally, if the Company generates annual EBITDA above $6.5 million between 2016 and 2024 then a contingent payment will be due of 50% of the excess of annual EBITDA generated above $6.5 million up to a maximum payment in aggregate of $8.0 million.
In addition, the Company is required to repay approximately $0.3m to Discount Bank out of secured short-term deposit.
Proposed Private Placement
The Company intends to raise approximately $8.5 million (before expenses) by way of a Private Placement from both existing and new shareholders.
Of the net proceeds from the Private Placement $6.3 million will be used to repay the lenders and the balance will be used as working capital to support the business operations.
The Private Placement is interdependent on the completion of the Bank Refinancing.
Completion of the Private Placement is subject inter alia to shareholder approval, which will be sought at a General Meeting of the Company. Further announcements will be made at the appropriate time.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
September 15, 2016 08:20 ET (12:20 GMT)
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