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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 |
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RNS Number : 8583W
EBTM PLC
17 June 2008
EBTM
17 June 2008
EBTM plc
Preliminary Results for the year ended 30 April 2008
EBTM plc, the online retailer of music inspired fashion, today announces full year results for the year to 30 April 2008.
Highlights
* Revenue has increased by 401% to £6.780 million (2007: £1.354 million) assisted by the acquisitions made in May and July 2007.
* The online division has continued to grow well with sales up 37% year on year and own brand sales are now running at over 30% of
total online sales
* Gross margin has increased from 48% to 55% of sales due to the acquisitions in the year and the increased proportion of own brands
in the online retail business.
* The group has posted its maiden full year operating profit of £0.903 million (2007: loss of £0.604 million), being an increase of
£1.507 million (after a one-off FRS 20 credit of £0.08 million in the year - 2007: cost of £0.123 million).
* Adjusted operating profit (before interest, taxation, depreciation, amortisation and the FRS 20 credit relating to share based
incentives) was £1.019 million (2007: loss of £0.473 million) in line with current market expectations.
* Net debt of £0.513 million (2007: £0.595 million net cash) is in line with current market expectations.
* On 31 May 2007, EBTM acquired Core Brands Group Limited whose main trading subsidiary was Lowlife Corporation Limited ("Lowlife").
Since the acquisition, Lowlife has continued to trade well with sales up 46%.
* On 9 July 2007, the intellectual property rights relating to the Atticus clothing brand were also acquired.
Chief Executive, Richard Breeden said:-
"This year has been transformational for EBTM. We have seen strong growth from both our original online business and the acquisitions
made early in the year. The acquired businesses brought ownership of two well established "own brands" as well as the ability to create and
source new exclusive lines for our online operation. Own brand sales, which enhance our margins, made up over 30% of online sales compared
with virtually none last year and we will focus on their continued growth across the group. The outlook for our business remains positive as
online retailing is predicted to continue to grow rapidly."
Enquiries:
EBTM plc 020 7819 1950
Richard Breeden, Chief
Executive
Nominated Adviser 020 7710 7400
Nabarro Wells & Co.
Limited
Hugh Oram
Biddicks 020 7448 1000
ZoBiddick/Sophie Lane
Chairman's Statement
Overview
Music is a key inspiration for lifestyle in modern youth culture. Furthermore, music is a key driver of fashion and EBTM seeks to
capitalise on the youth market's desire to embrace this trend.
EBTM is a vertically integrated, fashion retailer focusing on what we have termed "music inspired fashion". Following two key
acquisitions, we now own two brands influential in this market, and have a well established in-house design and sourcing capability and a
substantial international wholesale operation selling to the high street. Additionally, we derive royalty income from the use of the owned
brands overseas.
EBTM.com retails clothing, footwear and accessories in three categories:
* Music merchandise;
* Branded fashion linked to music; and finally
* Fashion enabling fans to "get the look".
In the second of these categories, EBTM owns the Atticus clothing brand and the Lowlife accessories brand. In the third category, EBTM
leverages its design and sourcing capabilities to create products which reflect music inspired trends. This builds both margin and
uniqueness in the retail offering and is an important part of focus for future growth plans.
Our target customer is 14 years old and upwards, predominantly male but increasingly female. The geographical focus of the online retail
business to date has been the UK market. As a result of the acquisition of Lowlife, described below, we now have a wholesale business in
Spain.
EBTM offers one of the largest selection of music inspired fashion and accessories on the internet.
The acquisitions made this year have given the business both scale and profitability, a position from which we expect to continue the
rapid revenue and profit growth demonstrated since flotation.
The Market
EBTM.com is well placed as online retail continues to grow rapidly despite the difficulties seen on the high street. Recent research by
Verdict predicts continued very rapid growth of online retail with total sales of £44.9 billion by 2012 (a 205% increase from the current
level). Verdict research also predicts that clothing & footwear will be one of the fastest growing categories within the sector. The board
sees the expansion of the online business as a key driver for future growth and profitability.
In addition, EBTM's target customer is spending more and more of their time using the internet. Music and the sense of identity and
community which it engenders is a key driver of this online activity as young people are engaging in an increasingly sophisticated way with
many different types of media. This global connectivity enhances the impact of music and ensures that such new trends enjoy ever larger
reach and quicker takeup.
EBTM inhabits a key area in the changing landscape of value creation in the entertainment industry. The rapid increase in the
penetration of music, but its decline in value due to online file sharing, has led numerous parties to adopt an increasingly holistic
business model as rights owners. Clothing is now seen as a key revenue stream for music artists and the companies which hold their rights.
This area is undergoing a period of rapid sales growth. In addition, artists are increasingly developing their own fashion labels. This
promises to be an area of significant future opportunity and potential growth.
Operating Review
Introduction
The year to 30 April 2008 has been transformational in the development of EBTM. The original online business achieved strong growth with
sales up 37% year on year. This was accomplished whilst dealing with the complications of implementing a new web platform as part of the
programme to strengthen the group's infrastructure.
In addition, two acquisitions early in the year have extended the business base, Lowlife Corporation Limited ("Lowlife") in May 2007 and
Atticus in July 2007. Both acquisitions bring exciting opportunities for further growth as well as synergies with the existing business.
Results
Revenue for the year was £6.780 million (2007: £1.354 million) representing a significant increase of 401%. This result was assisted by
the acquisitions made in May and July 2007 as well as the pleasing growth of our online business highlighted above.
Gross margin has increased from 48% to 55% of sales due to the acquisitions in the year and the increased proportion of own brands in
the online retail business.
The group has posted its maiden full year adjusted operating profit (operating profit before interest, taxation, depreciation,
amortisation and the FRS 20 credit relating to share incentives) of £1.019 million (2007: a loss of £0.473 million as restated under IFRS).
Fully diluted earnings per share were 0.23p (2007: loss per share 0.53p).
FRS20 credit of £0.07 million in the current year is based on a charge for the year of £0.055 million less a £0.135 million non
recurring writeback due to incentive warrants lapsing (2007 charge of £0.123 million).
Net debt of £0.513 million (2007: £0.595 million net cash) is in line with market expectations.
Acquisitions in the year
As highlighted above, EBTM made two acquisitions in the early part of the financial year. Lowlife, a wholesaler and online retailer of
music inspired clothing and accessories, was acquired in May 2007 together with Twenty Four Seven Trading Ltd, followed by the Atticus
clothing brand in July 2007. These acquisitions provide scale and profitability to the group, creating a platform for continued rapid
growth. The financial and operational management of the group has been consolidated and at the time of writing, the integration of the
businesses is progressing according to plan and is nearing completion.
The total consideration paid for Lowlife and Twenty Four Seven Trading was £4.75 million excluding costs, which was satisfied partly by
a cash payment of £3.25 million, with the remainder satisfied by the issue of 26,785,714 new ordinary shares in the company. The cash
element was funded through a placing of 110,526,315 new ordinary shares of 0.5 pence each in the company ("the Placing"). The remainder of
the proceeds of the Placing was used to acquire the intellectual property rights relating to the Atticus clothing brand for US$4.725 million
excluding costs.
For the period ended 31 May 2007, Lowlife reported sales of £5.01 million and profits before tax of £0.39 million. At that date, it had
net assets of £0.39 million.
Lowlife's products are marketed under a variety of brand names, some of which are the subject of third party ownership and for which it
pays royalties for the right to use the brand name. The wholly-owned Lowlife brand is predominately an accessories brand. Atticus, the
single largest brand distributed by Lowlife, was operated under licence until the acquisition of the brand IPR in July 2007. Atticus is
predominantly a clothing brand.
In addition to increased revenues, the acquisitions brought a number of benefits including cost synergies, rights ownership and the
control of distribution. They have also added new and valuable capabilities. The in-house design team now has complete control over the
Atticus and Lowlife brands and is able to create quickly additional new and exclusive product for the online retail business. This is
supported by a strong in-house sourcing capability coordinating manufacturing in China and Turkey. In addition, the two strands of marketing
within the business are highly complementary. We continue to implement our plans to maximise the benefits to the business of the brands and
capabilities gained through the acquisitions.
Online Retail Division
Online sales have continued to grow well. Revenue in the online division, which accounted for 27% of sales in the year, grew by 37% year
on year.
EBTM has also continued to grow the percentage of online sales of product designed and manufactured internally. Sales of own brands are
now running at over 30% of online sales compared to almost nothing a year earlier. By increasing own brand sales, we enhance margins and
importantly, create uniqueness and exclusivity for the retail offering. As a continuation of the process of integrating the acquisitions
made during the year, we have now created a cross group department handling all product design, development, selection and purchasing. This
enables us to improve overall margins.
In June 2007, we moved the web platform to Storefront, a market leading online solution, maintained by Maginus Software Solutions. The
move was an important step which significantly extends the scope and functionality of the online operations; in particular it enables us to
provide co-branded stores which are part of the future growth strategy and allows the future roll-out into Europe of online operations. As
the new platform required extensive fine tuning, the transition resulted in a temporary reduction in online conversion rates which adversely
affected sales during the year. Conversion rates have now returned to historical levels and there is a programme in place to continue this
improvement as we move towards the key selling period at Christmas. We have now also implemented the Maginus back-end solution for the
e-commerce platform which is both robust and scalable. It manages all purchasing, manufacturing, stock movement and warehouse management.
The board believes that there remains significant potential for organic growth in the UK by continuing to build the customer base and
enhance the breadth and exclusivity of the product range.
KPIs for the year ending 30 April 2008:-
2007/8 First Second Total
½ year ½ year Full year
Unique visitors to the site 1,200,814 1,758,369 2,959,183
Conversion rate 1.76% 2.25% 2.05%
Average basket value (inc VAT) £36 £34 £35
Wholesale Division
Sales in the wholesale business acquired in May 2007 grew 46% on a like-for-like basis and accounted for 73% of total group revenue. The
wholesale business has performed in line with management expectations for the year despite the challenging trading conditions on the UK High
Street. 66% of wholesale sales in 2007/8 were to UK retailers, with the balance primarily coming from mainland Europe. The wholesale
division sales have been underpinned by an order of some £800,000 from a major UK high street retailer which was delivered in October 2007.
The forward order book for Autumn/Winter 2008 delivery is healthy, with mainland Europe showing good growth.
We continue to exploit existing distribution channels and explore new ones, both in the UK and overseas.
Brands
Since its acquisition, Atticus clothing has continued to perform well. The acquisition of the intellectual property in Atticus, which we
now own in perpetuity, ensures that EBTM controls the design process in-house, no longer has to pay royalties for sales of the brand and
will itself be able to attract income from new international sales of the brand. EBTM has made significant royalty savings in the year by
virtue of this acquisition.
The Lowlife accessories brand also continues to grow. Lowlife operates successfully in a product niche which has great potential and the
growth of sales for this brand both in the UK and internationally is a key priority for the current financial year.
The Team
We continue to develop an executive and non-executive team of the highest quality.
We were delighted to announce the appointment of Ian Collins who joined the group as Chief Financial Officer on 27 March 2008. Prior to
joining EBTM, Ian was Director of Financial Planning and Analysis at Sanctuary Music group ("Sanctuary") from June 2006 until December 2007.
While at Sanctuary, he was part of the team that turned the Recorded Music Department's performance around to a break even position from a
£60 million loss and introduced strong internal controls and processes to prepare the label for its eventual sale to Universal Music in
2007. His previous career included eight years at Virgin Records where he became Head of Business Support. Following Virgin Records' merger
with EMI, he was appointed to the same role leading the consolidated EMI and Virgin team. Ian has held other senior management positions,
most notably as Commercial Director for the Specialist Sector of First Choice Holidays from May 2005 to May 2006.
Steve Walters joined the group as Chief Operating Officer on 16 June 2008. Steve brings a wealth of retail experience both from the high
street and online. During a retail career spanning two decades, he has worked in the footwear and clothing sector as a regional brand
manager for both Dolcis (Sears Group plc) and for Jaeger (Coats Viyella plc). In 2000, he was appointed as South West Regional Director for
the Early Learning Centre, responsible for 58 stores with an annual turnover of more than £50m. As Managing Director of TKC (Route One)
which specialises in BMX, Skateboard, Inline Skate and ATB equipment, Steve gained experience of multi-channel retailing. He was
instrumental in the development of the online store and catalogue business as well as a chain of physical stores. Steve left TKC in early
2005 to establish his own retail recruitment consultancy, Bluemonday.
Since the year end, there have been several further changes. On 2 May 2008, Hatty Fawcett, Marketing Director, left the company to
pursue other business interests. The board would like to thank Hatty for her contribution to the development of the company and wishes her
every success for the future. In addition, Grant Calton, Commercial Director, indicated his intention to reduce his day to day involvement
with the group and relinquished his executive responsibilities. Grant agreed to continue his involvement with the company as a non-executive
director.
Dale Masters has stepped down from the board with immediate effect. Dale has helped considerably with the integration of the Lowlife and
Atticus businesses and brands. He will be relocating back to his homeland of Australia in due course and we wish him every success for the
future.
Outlook
The board views the outlook for the next financial year as extremely positive. We anticipate that the group will continue to make
further progress in the year ending 30 April 2009 as we grow revenues, increase profitability and improve cash generation. The indications
are good for the continued rapid growth of the online retail section of the business and our product offering continues to grow in breadth
and uniqueness and exclusivity. Despite difficult conditions on the UK high street the board also believe there are continuing growth
opportunities for the wholesale business as we expand into new channels and new markets. The group has invested in infrastructure and
personnel over the last year and is well positioned for the future.
David Howell
Chairman
Consolidated Income Statement
For the year ended 30 April 2008
Restated
2008 2007
£ £
Revenue 6,779,775 1,354,447
Cost of Sales (3,044,600) (704,726)
Gross Profit 3,735,175 649,721
Administrative expenses (2,716,613) (1,122,483)
Profit /(Loss) before amortisation, depreciation, interest payable, FRS 20 1,018,562 (472,762)
and taxation
Amortisation and depreciation (192,519) (8,644)
FRS 20 credit/ (charge) 77,230 (122,828)
Operating Profit / (Loss) 903,273 (604,234)
Interest payable (63,442) (3,745)
Interest receivable 9,280 25,983
Profit / (Loss) on Ordinary 849,111 (581,996)
Activities Before Taxation
Taxation (292,046) 36,848
Profit / (Loss) on Ordinary 557,065 (545,148)
Activities After Taxation
Earnings/(Loss) per share
Basic 0.24p (0.53p)
Fully diluted 0.23p (0.53p)
The above results have been restated to 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.
There are no recognised gains and losses other than those passing through the profit and loss account.
Consolidated Balance Sheet at 30 April 2008
2008 2008 2007 2007
£ £ £ £
Restated Restated
Non-current Assets
Intangible assets 9,602,671 1,511,903
Tangible assets 410,615 124,426
Deferred Tax asset 32,727 58,234
10,046,013 1,694,563
Current Assets
Inventories 1,456,765 433,643
Trade and other receivables 1,411,103 300,105
Cash and cash equivalents 356,462 617,710
3,224,330 1,351,458
Total Assets 13,270,343 3,046,021
Current Liabilities (3,119,008) (583,140)
Net current assets 105,322 768,318
Non current liabilities (404,892) (16,273)
Total Liabilities (3,523,900) (599,413)
Net Assets 9,746,443 2,446,608
Capital and Reserves
Called up share capital * 1,249,061 552,500
equity interests
Share premium account 8,740,864 2,617,425
Deferred compensation reserve 116,884 194,114
Profit and loss account (360,366) (917,431)
Shareholders* Funds 9,746,443 2,446,608
Consolidated Statement of Changes in Equity
For the year ended 30 April 2008
Called up Deferred Profit and
share Share compensation loss
capital premium reserve reserve Total
£ £ £ £ £
At 1 May 2007 552,500 2,617,425 194,114 (917,431) 2,446,608
New shares issued 696,561 6,123,439 - - 6,820,000
Share options granted - - (77,230) - (77,230)
Profit for the period - - - 557,065 557,065
At 30 April 2008 1,249,061 8,740,864 116,884 (360,366) 9,746,443
At 1 May 2006 486,250 2,180,175 71,286 (372,283) 2,365,428
New shares issued 66,250 437,250 - - 503,500
Share options granted - - 122,828 - 122,828
Loss for the period - - - (545,148) (545,148)
At 30 April 2007 552,500 2,617,425 194,114 (917,431) 2,446,608
Consolidated Cash Flow Statement
For the year ended 30 April 2008
2008 2007
£ £ £ £
Net Inflow /(Outflow) from Operating Activities 825,852 (505,580)
Returns on Investments and Servicing of Finance
Interest paid (63,442) (3,745)
Interest received 9,280 25,983
Net (Outflow) / Inflow from Returns on Investments and Servicing of (54,162) 22,238
Finance
Capital Expenditure and Financial Investment
Purchase of tangible assets (284,410) (127,157)
Net Cash Outflow from Capital Expenditure and Financial Investment (284,410) (127,157)
Acquisitions and Disposals
Purchase of subsidiary undertaking (3,721,736) -
Overdraft acquired on acquisition of subsidiary undertakings (237,798) -
Purchase of Intangible assets (2,955,217) -
Net Cash Flow for Acquisitions and Disposals (6,914,751) -
Net Cash Outflow before financing (6,427,471) (610,499)
Financing
Issue of ordinary share capital 5,320,000 503,500
Bank and other loans repaid (120,777) (44,233)
Bank and other loans taken out 967,000 -
Net Cash Inflow from Financing 6,166,223 459,267
(Decrease) in Cash (261,248) (151,232)
Notes to the Results
For the year ended 30 April 2008
1 Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities
2008 2007
£ £
Operating profit / (loss) 903,273 (604,234)
Depreciation 24,940 8,644
Amortisation 167,579 -
Share options (77,230) 122,828
Increase in debtors (670,058) (94,026)
Increase in stock (631,588) (303,639)
Increase in creditors 1,108,936 364,847
Net Cash Inflow /(Outflow) from Operating Activities 825,852 (505,580)
2 Reconciliation of Net Cash Flow to Movement in Net cash/ (debt)
(Decrease) in cash in the period (261,248) (151,232)
Cash inflow from loans advanced (967,000) -
Cash outflow from loans repaid 120,777 44,233
Movement in net debt in the period (1,107,471) (106,999)
Net cash at 1 May 2007 594,704 701,703
Net debt at 30 April 2008 (512,767) 594,704
3 Analysis of Changes in Net (debt) / cash
At 1 At 30
May Cash April
2007 Flow 2008
£ £ £
Cash in hand, at 617,710 (261,248) 356,462
bank
Loans due in less (6,733) (513,854) (520,587)
than one year
Loans due after more (16,273) (132,369) (148,642)
than one year
Other loans - (200,000) (200,000)
Total 594,704 (1,107,471) (512,767)
4 Profit / (Loss) per 2008
2007
Share
Pence Pence
Basic profit /
0.24 (0.53)
(loss) per share
Adjustment for
0.01 -
options and warrants
Fully diluted profit
0.23 (0.53)
/ (loss) per share
The basic and diluted profit per share has been calculated by dividing the profit for the year of £557,065 (2007 loss £545,148) by the
weighted average number of shares of 234,314,867 (basic) and
238,610,391 (diluted) (2007 102,513,699 for both calculations) in issue during the year.
Book Fair value Fair
value adjustments value
Net assets acquired £ £ £
Non current assets 25,689 - 25,689
Inventories 449,749 (64,913) 384,836
Trade and other receivables 465,240 (26,839) 438,401
Cash and cash equivalents (259,078) - (259,078)
Trade and other payables (539,732) (127,461) (667,193)
141,868 (219,213) (77,345)
Goodwill 4,799,081
Total consideration 4,721,736
Satisfied by
Cash 2,750,000
Shares issued 1,500,000
Acquisition costs 471,736
Total 4,721,736
Twenty Four Seven Trading Limited
The fair value of the net liabilities acquired was £4,049 resulting in goodwill of £504,049 which has been capitalised as an
intangible asset.
Book Fair value Fair
value adjustments value
Net assets acquired £ £ £
Non current assets 1,030 - 1,030
Inventories 6,698 - 6,698
Trade and other receivables 2,539 - 2,539
Cash and cash equivalents 21,280 - 21,280
Trade and other payables (35,596) - (35,596)
(4,049) - (4,049)
Goodwill 504,049
Total consideration 500,000
Satisfied by
Cash 500,000
Shares issued -
Acquisition costs -
Total 500,000
6
7
Post balance sheet events
The directors consider that there are no significant post balance sheet events.
Status of the financial information
The financial information set out in the announcement does not constitute the company's statutory accounts within the meaning of
section 240 of the Companies Act 1985 for the year ended 30 April 2008 or the period ended 30 April 2007. The financial information for the
period ended 31 April 2007 is derived from the statutory accounts for that period which have been delivered to the Registrar of Companies.
The auditors reported on those accounts; their report was unqualified and did not contain a statement under section 237(2) or (3)
Companies Act 1985.
The statutory accounts for the year ended 30 April 2008 will be finalised on the basis of the financial information presented by the
directors in the preliminary announcement and will be delivered to the Registrar of Companies following the company's Annual General
Meeting.
The preliminary announcement has been prepared on the basis of the accounting policies as stated in the financial statements for the
year ending 30 April 2007, as amended for IFRS.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ZGGMVZNVGRZG
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