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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Ebtm | LSE:EBTM | London | Ordinary Share | GB00B0BHCS10 | ORD 0.5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.09 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMEBTM RNS Number : 5647M EBTM PLC 30 January 2009 EBTM Plc ("EBTM" or the "Company") Interim results for the six months ended 31 October 2008 EBTM plc, the vertically integrated online retailer of music inspired fashion, today announces half year results for the six month period to 31 October 2008. Operating review Introduction The half year to 31 October 2008 was a challenging period for the EBTM group. Trading was weak during the period and revenues were substantially down year on year. The group has suffered from substantial non-recurring costs during the period against the backdrop of a very difficult economic and credit environment. During October, the board finalised the implementation of a substantial restructuring of the cost base which is expected to lead to annualised cost benefits of approximately GBP600,000 and disposed of the Lowlife brand. In November 2008, the Company concluded a placing which significantly strengthened the balance sheet. Results for the period Group revenue for the period was GBP1,842,420 (2007: GBP3,586,578). This is a 49% decrease from the equivalent prior year period. This decrease is primarily driven by weakness in the wholesale market, predominantly in the UK and Spain, and in particular the absence of a substantial wholesale order such as the GBP800,000 special order received and delivered in October 2007. Gross margin for the group has decreased to 44% (2007: 47%). Whilst gross margin in wholesale has been put under pressure, this has been partly compensated for by the increased proportion of own brand goods sold in the online retail business and the increased proportion of the sales mix from online. Own brand sales grew to 52% of online sales in October 2008 from 37% at April 2008. Adjusted operating loss in the period (before interest, taxation, depreciation, amortisation and the IFRS 2 credit relating to share based incentives and separately disclosed items) was GBP435,352 (2007: profit of GBP237,274). Intellectual property rights are now being amortised by equal annual amounts over their expected useful life of twenty years. The expected useful life has been extended from ten years previously as the directors consider this to be more appropriate for the brands. The following items have been separately disclosed in the income statement:- * Reorganisation costs GBP270,758 The reorganisation cost for the six months to 31 October 2008 comprises charges for integration, reorganisation and restructuring following the acquisition of the Core Brands Group Limited and Twenty Four Seven Trading Limited in May 2007. These costs include expenses relating to the restructuring of these businesses to fully integrate them within EBTM. These costs include salary and compensation costs for staff who are no longer with the group because their roles became redundant as the acquired businesses were restructured to operate more efficiently utilising our economies of scale. * Loss on sale of intellectual property GBP24,718 As part of the restructuring of the businesses and with a view to focussing on core business, the rights to the Lowlife brand were sold during the period for a cash consideration of GBP200,000 and a potential further GBP100,000 based on performance. The GBP100,000 is not recognised in these accounts. The sale generated a loss once assets no longer relevant going forward were written off against the initial receipt. * Other non-recurring GBP138,068 The group's recent performance has placed pressure on working capital facilities. In order to maximise the facilities available, the group has had to pay a significant premium above normal commercial interest rates, and in addition, has incurred other incidental costs. In addition we have incurred one-off fees of GBP22,000 relating to a legal dispute. After separately disclosed items the group has posted a half year operating loss of GBP856,554 (2007: profit of GBP162,418). Net debt at 31st October 2008 was GBP1,096,973 (2007: GBP657,994). The debt within the group has significantly reduced since the period end with net debt at 31 December 2008 being GBP208,297 following a placing in November 2008. Cost Restructuring The sale of the Lowlife brand was part of a restructuring of the business to improve efficiency, enhance margins, reduce debt and focus on core activities. Following the acquisitions in 2007, the workforce was consolidated and an ongoing review of the businesses was undertaken. A substantial restructuring program then began in May 2008 and was concluded in October 2008. The reduction in overhead, partly resulting from the sale of the Lowlife brand, will result in annualised total savings of approximately GBP600,000. These savings result primarily from a reduction in headcount of approximately 23%. The restructuring of the wholesale division was designed and implemented to maintain the expected profitability of the group in anticipation of a challenging trading environment. Disposal of Lowlife brand In October 2008, the company completed the sale of the Lowlife brand to Plus Brands Ltd. The company received a cash consideration of GBP200,000 from the sale. Furthermore, Plus Brands will pay additional deferred consideration up to a cap of GBP100,000 dependant on meeting certain performance targets. This has not been recognised in the accounts for the six months ended 31 October 2008. The Company retained the UK wholesale distribution rights for the brand. EBTM had purchased the Lowlife brand as part of the acquisition in May 2007 of Lowlife Corporation Ltd, the wholesaler of music inspired clothing and accessories. No specific valuation had been placed on the brand previously as the revenue contribution from Lowlife branded sales was not material in group terms. Plus Brands Ltd is owned by Dale Masters, Lowlife Corporation's founder, a former director of EBTM and a significant shareholder of EBTM. As part of the agreement, Mr & Mrs Masters' shareholding of 21,898,696 shares are subject to lock-in arrangements for a year. Placings In July 2008 the company raised GBP675,000 before expenses through the placing of 19,285,715 new ordinary shares ("Placing Shares") with institutional investors at a price of 3.5p per share. Since the period end the company has raised a further GBP850,000 before expenses through the placing of 85,000,000 new ordinary shares ("Placing Shares") with institutional investors at a price of 1p per share the ("Placing"). These funds were used to improve working capital and further reduce bank debt, to make further small investments in IT and to enhance online stock and marketing spend over the Christmas period. Wholesale Division External sales in the wholesale business fell by 60% in the six month period ended 31 October 2008. This decrease is primarily driven by weakness in the high street retail market, particularly in the UK and Spain (where the group has a trading subsidiary), and the absence of a substantial wholesale order such as the GBP800,000 special order received in October 2007. Wholesale trading has continued to be very challenging beyond the period end and looks set to remain so throughout 2009. Online Retail Division The online division had continued to show sales growth with gross sales up 27% for the first 20 weeks of the financial year. As previously announced the board had believed the online division to be well placed as it entered the key Christmas trading period. KPIs for the half year ended 31 October 2008:- +--------------------+--------------------+--------------------+--------------------+ | | 6 months to | 6 months to | Growth | | | October 08 | October 07 | | +--------------------+--------------------+--------------------+--------------------+ | Unique Visitors | 1,399,507 | 1,412,400 | -1% | +--------------------+--------------------+--------------------+--------------------+ | Average Conversion | 1.85% | 1.41% | +31% | | Rate | | | | +--------------------+--------------------+--------------------+--------------------+ | Average Basket | GBP33 | GBP37 | -11% | | (inc VAT) | | | | +--------------------+--------------------+--------------------+--------------------+ Improvements in the web platform and product range have helped online conversion rates rise by 31% year on year to an average of 1.85% (2007: 1.41%). In line with our strategy, EBTM has also continued to grow the percentage of online sales of product designed and manufactured internally with sales of own brands running at 52% of online sales in October 2008 (April 2008 - 37%). By increasing own brand sales, margins are enhanced and importantly, uniqueness and exclusivity are created for the retail offering. However, online trading has been negatively impacted by the unprecedented prevailing economic conditions in the later part of the calendar year and Christmas sales were substantially behind management expectations with traffic and average basket values down 36% and 21% respectively. The reduction in average transaction value was driven primarily by price promotions online. As previously announced net sales during the key month of December 2008 were down 33% year on year. The board believes this decline is a short term problem caused by the overriding macroeconomic environment and that online retailing remains an attractive sector in the UK market. With continued focus and review of the EBTM proposition and product offering, the board believes the online business can return to positive growth. Outlook The first six months of the year and subsequent trading through the key Christmas period were very disappointing, resulting in a difficult situation for the group. The directors had believed that the online business was well positioned to deliver accelerated growth, however, the general economic environment adversely impacted on EBTM's sales and gross margins during the key Christmas trading period. Trading in the online retail division was well below management expectations with net sales in December down 33% year-on-year. The retail market in the UK and Europe to which the group is exposed through both the wholesale and online divisions has gone through a period of rapid contraction in the second half of 2008 and this will not improve in 2009. The market conditions in which EBTM operates are forcing wholesalers and retailers alike into taking drastic action - a position which could hardly have been envisaged at the beginning of the financial year. The effect of the shift in consumer habits has been exacerbated by a rapid contraction in access to credit for both consumers and businesses such as EBTM. EBTM group's sales and profits are historically biased towards the second half of its financial year due to the key trading Christmas period. Although the directors believe that the disappointing level of online sales over the Christmas period was a short term problem caused by the overriding macroeconomic environment, this, together with the ongoing challenging conditions in the wholesale division, has consequently had an impact on the limited financial resources of the company. The board is therefore evaluating strategic options to rebuild the financial resources of the group and long term shareholder value. This may include a disposal of part, or all, of the group. As such, the company considers that it is in an offer period as defined under the City Code on Takeovers and Mergers. However, there can be no assurance that an offer will be received or that any disposals will be concluded in which case the company may need to seek alternative short term funding options. Depending on the outcome of these discussions, and the way that any agreed deal is structured, there may be a future impairment to the intangible assets which in accordance with IFRS 3 would require a provision to be made in the financial statements. Any such impairment cannot at this stage be quantified. The board remains of the view that the online retail business model adopted by EBTM, and the market it targets, can deliver long term value to shareholders and is evaluating its strategic options to deliver this. Richard Breeden, Chief Executive. Enquiries: EBTM plc 020 7819 1950 Richard Breeden, Chief Executive Biddicks 020 7448 1000 Zoe Biddick/Sophie Lane Blue Oar Securities 020 7448 4400 Andrew Raca EBTM Plc Consolidated Income Statement For the six months ended 31 October 2008 +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | 6 months | | 6 | | Year to | | | | | | | | to | | months | | | | | | | | | | | | to | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | 31 | 31 October | 30 | | | | | | | | October | | April | +--------------------------+--+------------+--+--------+--+-------------+-------------------+-------------+ | | | Note | | | | 2008 | | 2007 | | 2008 | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | Unaudited | | Unaudited | | Audited | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | GBP | | GBP | | GBP | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | Revenue | | | | | | 1,842,420 | | 3,586,578 | | 6,779,775 | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | Cost of Sales | | | | | | (1,030,735) | | (1,914,875) | | (3,044,600) | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | Gross Profit | | | | | | 811,685 | | 1,671,703 | | 3,735,175 | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | Administrative expenses | | 4 | | | | (1,247,037) | | (1,434,429) | | (2,716,613) | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | (Loss) / Profit before amortisation, | | | | (435,352) | | 237,274 | | 1,018,562 | | depreciation, interest payable, IFRS2 | | | | | | | | | | and taxation | | | | | | | | | +------------------------------------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | Amortisation and | | | | | | (104,542) | | (74,586) | | (192,519) | | depreciation | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | IFRS 2 credit / (charge) | | | | | | 116,884 | | - | | 77,230 | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | Reorganisation costs | | 5 | | | | (270,758) | | - | | - | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | Loss on sale of | | 5 | | | | (24,718) | | - | | - | | intellectual property | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | Other non-recurring | | 5 | | | | (138,068) | | - | | - | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | Operating (Loss) / | | | | | | (856,554) | | 162,418 | | 903,273 | | Profit | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | Interest payable and | | | | | | (63,645) | | (13,929) | | (63,442) | | similar charges | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | Interest receivable | | | | | | 284 | | 8,506 | | 9,280 | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | (Loss) / Profit on Ordinary Activities | | | | (919,915) | | 156,995 | | 849,111 | | Before Taxation | | | | | | | | | +------------------------------------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | Taxation | | | | | | 171,547 | | (20,111) | | (292,046) | | | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | (Loss) / Profit on Ordinary Activities | | | | (748,368) | | 136,884 | | 557,065 | | After Taxation | | | | | | | | | +------------------------------------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | (Loss) / Earnings per | | | | | | | | | | | | share | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | Basic | | | | | | (0.29)p | | 0.06p | | 0.24p | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | Fully diluted | | | | | | (0.29)p | | 0.06p | | 0.23p | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | +--------------------------+--+------------+--+--------+--+-------------+--+-------------+--+-------------+ The above results reflect the IFRS standards and IFRIC interpretations issued and effective as at the time of preparing these statements. The income statement has been prepared on the basis that all operations are continuing operations. Revenue contribution from the Lowlife brand which was disposed of in October 2008 was not material in group terms. There are no recognised gains and losses other than those passing through the profit and loss account. EBTM Plc Consolidated Balance Sheet at 31 October 2008 +--------------------+------+--+------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | 31 October 2008 | | 31 October 2007 | | 30 April 2008 | +--------------------+----------------+-------------------------------+--+------------------------------+--+------------------------------+ | | Note | Unaudited | | Unaudited | | Unaudited | | Unaudited | | Audited | | Audited | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | GBP | | GBP | | GBP | | GBP | | GBP | | GBP | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Non-current assets | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Intangible assets | 6 | | | 9,593,374 | | | | 8,670,818 | | | | 9,602,671 | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Tangible assets | | | | 468,782 | | | | 227,617 | | | | 410,615 | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Deferred tax asset | | | | - | | | | 85,221 | | | | 32,727 | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | 10,062,156 | | | | 8,983,656 | | | | 10,046,013 | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Current Assets | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Inventories | | 1,231,883 | | | | 1,211,694 | | | | 1,456,765 | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Trade and other | | 833,837 | | | | 2,407,524 | | | | 1,411,103 | | | | receivables | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Cash and cash | | 69,278 | | | | 45,130 | | | | 356,462 | | | | equivalents | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | 2,134,998 | | | | 3,664,348 | | | | 3,224,330 | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Total assets | | | | 12,197,154 | | | | 12,648,004 | | | | 13,270,343 | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Current | | (2,614,713) | | | | (2,970,726) | | | | (3,119,008) | | | | liabilities | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Net current | | (479,715) | | | | 693,622 | | | | 105,322 | | | | (liabilities) / | | | | | | | | | | | | | | assets | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Non-current | | (67,694) | | | | (237,905) | | | | (404,892) | | | | liabilities | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Total liabilities | | | | (2,682,407) | | | | (3,208,631) | | | | (3,523,900) | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Net assets | | | | 9,514,747 | | | | 9,439,373 | | | | 9,746,443 | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Capital and | | | | | | | | | | | | | | Reserves | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Called up share | | | | 1,345,490 | | | | 1,241,560 | | | | 1,249,061 | | capital | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Share premium | | | | 9,277,991 | | | | 8,695,864 | | | | 8,740,864 | | account | | | | | | | | | | | | | +--------------------+----------------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Deferred compensation reserve | | 0 | | | | 284,069 | | | | 116,884 | +---------------------------------------------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Profit and loss account | | | | (1,108,734) | | | | (782,120) | | | | (360,366) | +---------------------------+--+--------------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +---------------------------+--+--------------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Shareholders' Funds | | | | 9,514,747 | | | | 9,439,373 | | | | 9,746,443 | +---------------------------+--+--------------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +---------------------------+--+--------------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +---------------------------+--+--------------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +---------------------------+--+--------------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Approved by the Board on 30 January 2009 | | | | | | | | | | | +---------------------------------------------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +---------------------------+--+--------------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +---------------------------+--+--------------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +---------------------------+--+--------------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | R T Breeden | | | | | | | | | | | | | +---------------------------+--+--------------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Director | | | | | | | | | | | | | +---------------------------+--+--------------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +--------------------+------+--+------+-------------+---+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ . EBTM Plc Consolidated Cash Flow Statement For the six months ended 31 October 2008 +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | Six months ended | | Six months ended | | Year ended | +----------------------+--+----------------------------+--+------------------------------+--+------------------------------+ | | | 31 October 2008 | | 31 October 2007 | | 30 April 2008 | +----------------------+--+----------------------------+--+------------------------------+--+------------------------------+ | | |Unaudited | | Unaudited | | Unaudited | | Unaudited | | Audited | | Audited | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | GBP | | GBP | | GBP | | GBP | | GBP | | GBP | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Net (Outflow) / | | | | (993,562) | | | | (328,915) | | | | 825,852 | | Inflow from | | | | | | | | | | | | | | Operating Activities | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Returns on | | | | | | | | | | | | | | Investments and | | | | | | | | | | | | | | Servicing of Finance | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Interest paid | | (63,645) | | | | (13,929) | | | | (63,442) | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Interest received | | 284 | | | | 8,506 | | | | 9.280 | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Net Outflow from | | | | (63,361) | | | | (5,423) | | | | (54,162) | | Returns on | | | | | | | | | | | | | | Investments and | | | | | | | | | | | | | | Servicing of Finance | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Capital Expenditure | | | | | | | | | | | | | | and Financial | | | | | | | | | | | | | | Investment | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Purchase of tangible | | (90,440) | | | | (88,749) | | | | (284,410) | | | | assets | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | (90,440) | | | | (88,749) | | | | (284,410) | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Investing activities | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Purchase of | - | | - | | (3,721,726) | | | | (3,721,736) | | | | subsidiary undertaking | | | | | | | | | | | | +-------------------------+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Overdraft acquired on | - | | - | | (237,798) | | | | (237,798) | | | | acquisition | | | | | | | | | | | | | of subsidiary | | | | | | | | | | | | | undertaking | | | | | | | | | | | | +-------------------------+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Purchase of | | (62,972) | | | | (2,137,587) | | | | (2,955,217) | | | | intangible assets | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Net Cash Flow for | | | | (62,972) | | | | (6,097,111) | | | | (6,914,751) | | Acquisitions and | | | | | | | | | | | | | | Disposals | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Net Cash Outflow | | | | (1,210,335) | | | | (6,520,198) | | | | (6,427,471) | | before financing | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Financing | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Issue of ordinary | | 633,556 | | | | 5,267,500 | | | | 5,320,000 | | | | share capital | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Bank and other loans | | (305,002) | | | | (3,368) | | | | (120,777) | | | | repaid | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Bank and other loans | | 50,000 | | | | 450,000 | | | | 967,000 | | | | taken out | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Net Cash Inflow from | | | 378,554 | | | | 5,714,132 | | | | 6,166,223 | | financing | | | | | | | | | | | | +-------------------------+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | Decrease in Cash | | | | (831,781) | | | | (806,066) | | | | (261,248) | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ | | | | | | | | | | | | | | +----------------------+--+-----------+--+-------------+--+-------------+--+-------------+--+-------------+--+-------------+ EBTM Plc Consolidated Statement of Changes in Equity For the six months ended 31 October 2008 +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | | | | | Called | | | | Deferred | | Profit | | | | | | | | up | | | | | | and | | | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | | | | | Share | | Share | compensation | loss | | | +----------------------+--+----------+--+-----------+--+-----------+-----------------+-------------+--+-----------+ | | | | | Capital | | Premium | | reserve | | Reserve | | Total | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | | | | | GBP | | GBP | | GBP | | GBP | | GBP | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | | | | | | | | | | | | | | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | At 1 May 2007 | | | | 552,500 | | 2,617,425 | | 194,114 | | (917,431) | | 2,446,608 | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | New shares issued | | | | 689,060 | | 6,078,439 | | - | | - | | 6,767,499 | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | Share options | | | | - | | - | | 89,955 | | - | | 89,955 | | granted | | | | | | | | | | | | | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | Profit for the | | | | - | | - | | - | | 135,311 | | 135,311 | | period | | | | | | | | | | | | | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | | | | | | | | | | | | | | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | At 31 October 2007 | | | 1,241,560 | | 8,695,864 | | 284,069 | | (782,120) | | 9,439,373 | +-------------------------+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | | | | | | | | | | | | | | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | At 1 November 2007 | | | | 1,241,560 | | 8,695,864 | | 284,069 | | (782,120) | | 9,439,373 | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | New shares issued | | | | 7,501 | | 45,000 | | - | | - | | 52,501 | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | Share options | | | | - | | - | | (167,185) | | - | | (167,185) | | granted | | | | | | | | | | | | | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | Profit for the | | | | - | | - | | - | | 421,754 | | 421,754 | | period | | | | | | | | | | | | | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | | | | | | | | | | | | | | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | At 30 April 2008 | | | 1,249,061 | | 8,740,864 | | 116,884 | | (360,366) | | 9,746,443 | +-------------------------+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | | | | | | | | | | | | | | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | At 1 May 2008 | | | | 1,249,061 | | 8,740,864 | | 116,884 | | (360,366) | | 9,746,443 | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | New shares issued | | | | 96,429 | | 537,127 | | - | | - | | 633,556 | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | Release of reserve | | | | - | | - | | (116,884) | | - | | (116,884) | | relating to | | | | | | | | | | | | | | share options | | | | | | | | | | | | | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | (Loss) for the | | | | - | | - | | - | | (748,368) | | (748,368) | | period | | | | | | | | | | | | | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | | | | | | | | | | | | | | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | At 31 October 2008 | | | 1,345,490 | | 9,277,991 | | - | | (1,108,734) | | 9,514,747 | +-------------------------+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ | | | | | | | | | | | | | | +----------------------+--+----------+--+-----------+--+-----------+--+-----------+--+-------------+--+-----------+ +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | Notes to the Consolidated Cash Flow Statement | +-----------------------------------------------------------------------------------------------+ | For the six months ended 31 October 2008 | +-----------------------------------------------------------------------------------------------+ | | | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | | | | 6 months | | 6 months | | Year | | | | | | to | | to | | to | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | | | | 31 October | | 31 | | 30 | | | | | | | | October | | April | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | | | | 2008 | | 2007 | | 2008 | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | | | | Unaudited | | Unaudited | | Audited | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | | | | GBP | | GBP | | GBP | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | 1 | Reconciliation of Operating | | | | | | | | | | (Loss) / Profit to Operating | | | | | | | | | | cash flow | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | Operating (loss) / profit | | | (856,554) | | 162,418 | | 903,273 | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | Depreciation | | | 32,273 | | 12,277 | | 24,940 | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | Amortisation | | | 72,269 | | 62,579 | | 167,579 | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | Share options | | | (116,884) | | 89,955 | | (77,230) | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | Decrease / (increase) in | | | 577,266 | | (1,639,640) | | (670,058) | | | debtors | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | Decrease / (increase) in | | | 224,882 | | (321,604) | | (631,588) | | | stock | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | (Decrease) / increase in | | | (926,814) | | 1,305,100 | | 1,108,936 | | | creditors | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | Operating cash flow | | | (993,562) | | (328,915) | | 825,852 | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | 2 | Reconciliation of Net Cash | | | | | | | | | | Flow to Movement in Net Debt | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | Decrease in cash in the | | | (831,781) | | (806,066) | | (261,248) | | | period | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | Cash inflow from bank loans | | | (50,000) | | (450,000) | | (967,000) | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | Cash outflow from bank loans | | | 305,002 | | 3,368 | | 120,777 | | | repaid | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | Exchange movement | | | (7,427) | | - | | - | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | Movement in net debt in the | | | (584,206) | | (1,252,698) | | (1,107,471) | | | period | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | Net debt brought forward | | | (512,767) | | 594,704 | | 594,704 | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | Net debt carried forward | | | (1,096,973) | | (657,994) | | (512,767) | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ | | | | | | | | | | +---+-------------------------------+--+--+-------------+--+-------------+--+-------------------+ +---+----------------------+----+-----------+-----+-----+-----+--+-----+-----------+-------+-----+ |3 | Analysis of Changes in | | | | | | | | Net Debt | | | | | | +---+---------------------------+-----------+-----------+--------------+-----------+-------------+ | | | | | | | | | +---+----------------------+----+-----------+-----------+--------------+-----------+-------------+ | | | | At 1 May | Cash | Exchange | Other | At 31 | | | | | | | | | October | +---+----------------------+----+-----------+-----------+--------------+-----------+-------------+ | | | | 2008 | Flow | Movement | Movement | 2008 | | | | | | | | | | +---+----------------------+----+-----------+-----------+--------------+-----------+-------------+ | | | | GBP | GBP | GBP | GBP | GBP | +---+----------------------+----+-----------+-----------+--------------+-----------+-------------+ | | Cash at bank and in | | 356,462 | (279,757) | (7,427) | - | 69,278 | | | hand | | | | | | | +---+----------------------+----+-----------+-----------+--------------+-----------+-------------+ | | Overdraft | | (220,374) | (552,024) | - | - | (772,398) | +---+----------------------+----+-----------+-----------+--------------+-----------+-------------+ | | Debt due within one | | (243,963) | 255,002 | - | (337,198) | (326,159) | | | year | | | | | | | +---+----------------------+----+-----------+-----------+--------------+-----------+-------------+ | | Debt due after one | | (404,892) | - | - | 337,198 | (67,694) | | | year | | | | | | | +---+----------------------+----+-----------+-----------+--------------+-----------+-------------+ | | | | | | | | | +---+----------------------+----+-----------+-----------+--------------+-----------+-------------+ | | Total | | (512,767) | (576,779) | (7,427) | - | (1,096,973) | +---+----------------------+----+-----------+-----------+--------------+-----------+-------------+ | | | | | | | | | +---+----------------------+----+-----------+-----+-----+-----+--+-----+-----------+-------+-----+ Notes to the Financial Statements For the six months ended 31 October 2008 1. General information EBTM plc ('the company') and its subsidiaries (together 'EBTM plc' or 'the group') is a manufacturer and on line and wholesale seller of fashion and fashion related products.. The company is a public limited company incorporated and domiciled in the United Kingdom. The address of its registered office is Unit G10.2, Battersea Studios, 80 Silverthorne Road, London. SW8 3HE. The company has its primary listing on the Alternative Investment Market ("AIM"). These consolidated interim financial statements have been approved for issue by the board of directors on 30 January 2009. 2. Accounting policies The accounting policies adopted by the group are in accordance with the accounting policies updated at the prior year end except as amended below. (a) Accounting basis and standards The financial statements have been prepared in accordance with those IFRS standards and IFRIC interpretations issued and effective as at the time of preparing these statements (January 2009). (b) Basis of consolidation The group profit and loss account and balance sheet consist of the financial statements of the parent company and its subsidiary undertakings. The results of subsidiaries sold or acquired are included in the profit and loss account up to or from the date control passes. Intra-group sales and profits are eliminated fully on consolidation. (c) Intangible non-current assets Purchased intellectual property rights relating to clothing brands are capitalised at cost as intangible fixed assets. Intellectual property rights are amortised by equal annual amounts over their expected useful life of twenty years. The expected useful life has been extended from ten years previously as the directors consider this to be more appropriate for the brands. Goodwill arising on acquisitions is capitalised in accordance with the requirements of IFRS 3. Goodwill impairment is assessed by comparing the carrying value of goodwill to the net present value of future cash flows derived from the operating performance underpinned by each cash generating units' three-year forecast. After this period, growth rates equivalent to nominal GDP are generally assumed. In accordance with IFRS 3 the carrying value of goodwill will continue to be reviewed for impairment on the basis stipulated and adjusted should this be required. Impairment is recognised in the income statement and is not subsequently reversed. The individual circumstances of each future acquisition will be assessed to determine the appropriate treatment of any related goodwill. (d) Depreciation of other non-current assets Other non-current assets are stated at historical cost. Depreciation on other non-current assets is provided at rates estimated to write off the cost or revalued amounts, less estimated residual value, of each asset evenly over its expected useful life as follows: Plant and machinery 3 years straight line e-commerce software 3 years straight line Fixtures, fittings and equipment 3 years straight line ERP system 10 years straight line (e) Revenue Revenue represents the value of goods despatched from the warehouse less returns net of value added tax. (f) Inventories Inventories are stated at the lower of cost and net realisable value. Cost includes all direct costs incurred in bringing the stocks to their present location and condition, including where appropriate, a proportion of manufacturing overheads. (g) Investments Fixed asset investments are stated at historical cost less any provision for diminution in value (h) Deferred taxation In accordance with IAS 12, deferred tax is recognised as a liability or asset if transactions or events that give the company the obligation to pay more tax in future or a right to pay less tax in future have occurred by the balance sheet date. (i) Foreign currencies Transactions denominated in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Assets and liabilities in foreign currencies are translated into sterling at rates of exchange ruling at the end of the financial year. Exchange differences arising from the translation of foreign investments, subsidiaries or associates are taken directly to reserves. All other exchange differences are dealt with in the profit and loss account. (j) Leasing commitments Rentals paid under operating leases are charged to income on a straight line basis over the lease term. (k) Share based payments Certain employees and directors of the company received equity settled remuneration in the form of company share options. The cost is charged to the profit and loss account on the straight line basis over the vesting period and a corresponding amount is reflected in the profit and loss reserves in shareholders' equity adjusted at each balance sheet date to take into account actual and expected levels of vesting. The charge is calculated as being the fair value of the shares or the right to the shares on the date of grant, reduced by any consideration payable by the employee. Fair value is measured using a modified Black- Scholes option pricing model and is based on a reasonable expectation of the extent to which performance criteria will be met. 3. Basis of preparation and statutory information The 31 October 2008 interim consolidated financial statements of EBTM plc are for the six month period ended 31 October 2008. These interim financial statements have been prepared in accordance with those IFRS standards and IFRIC interpretations issued and effective as at the time of preparing these statements (January 2009) and IAS 34 'Interim Financial Reporting'. The interim financial information for the six months ended 31 October 2008 and 31 October 2007 has not been audited and does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The information for the year ended 30 April 2008 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts, which were prepared under IAS, has been filed with the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. 4. IFRS 2 Included in administrative expenses in the prior period to 31 October 2007 was an IFRS 2 charge of GBP61,414 relating to share options which at the time was not separately disclosed 5. Operating Loss Operating Loss is stated after providing the following:- Reorganisation costs The reorganisation cost for the six months comprises charges for integration, reorganisation and restructuring following the acquisition of the Core Brands Group Limited and Twenty Four Seven Trading Limited in May 2007. These costs include expenses relating to the restructuring of these businesses to fully integrate them within EBTM PLC. These costs include salary and compensation costs for staff who are no longer with the group because their roles became redundant as the acquired businesses were restructured to operate more efficiently utilising our economies of scale. Loss on sale of intellectual property As part of the restructuring of the businesses and with a view to focussing on core business, the rights to the Lowlife brand were sold during the period for a cash consideration of GBP200,000 plus an additional GBP100,000 of performance based contingent consideration. The GBP100,000 is not recognised in these accounts. The sale generated a loss once assets no longer relevant going forward were written off against the initial receipt. Other non-recurring The group's recent performance has placed pressure on working capital facilities. In order to maximise the facilities available, the group has had to pay a significant premium above normal commercial interest rates, and in addition, has incurred other incidental costs. In addition we have incurred one-off fees of GBP22,000 relating to a legal dispute. 6. Impairment of intangible assets The board is currently evaluating strategic options to rebuild the financial resources of the group and long term shareholder value. This may include a disposal of part, or all, of the group. As such, the company considers that it is in an offer period as defined under the City Code on Takeovers and Mergers. However, there can be no assurance that an offer will be received or that any disposals will be concluded in which case the company may need to seek alternative short term funding options. Depending on the outcome of these discussions, and the way that any agreed deal is structured, there may be a future impairment to the intangible assets which in accordance with IFRS 3 would require a provision to be made in the financial statements. Any such impairment cannot at this stage be quantified. 7. Post Balance Sheet event In November EBTM plc raised GBP850,000 before expenses through the placing of 85,000,000 new ordinary shares of 1p per share. This considerably strengthened the balance sheet and provided additional working capital in addition to reducing debt with net debt lowered significantly from GBP1,096,973 at 31 October 2008 to GBP208,297 at 31 December 2008. This information is provided by RNS The company news service from the London Stock Exchange END IR BUGDBRBXGGCG
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