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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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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 |
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0 | 0 | N/A | 0 |
RNS Number:2467M EBTM PLC 22 January 2008 EBTM.L EBTM Plc ("EBTM") Interim Results for the six months ended 31 October 2007 Key Points * Sales up 590% year-on-year, assisted by the acquisitions made in May and July 2007, to £3.59 million (2006: £0.52 million). * The Group has posted its maiden operating profit. Profit before amortisation, depreciation, taxation and the FRS 20 charge for share incentives was £0.33 million (2006: loss of £0.26 million). * On 31 May 2007, EBTM acquired Core Brands Limited whose main trading subsidiary was Lowlife Corporation Limited ("Lowlife"). Since the acquisition Lowlife has continued to trade well with sales up 40% year-on-year to the end of the period. However, the Board is adopting a cautious outlook for the wholesale division in 2008, given current consumer sentiment on the high street and we expect full year results to fall materially short of current market expectations. * On 9 July 2007, the intellectual property rights related to the Atticus clothing brand were acquired. A delay in the appointment of a licensee in the USA has resulted in lower than expected royalty income. Licensees were appointed in the USA and Canada post the period end. * On 15 August 2007, EBTM announced an order of some £800,000 for Atticus clothing from a major high street retailer in the UK. The effect of this transaction is recognised in the period ended 31 October 2007. * New agreements announced during the period with Kerrang Magazine, Adeline Street Clothing (associated with the band Green Day) and Clandestine Industries clothing (associated with Pete Wentz of the band Fall Out Boy). * In the four weeks leading up to the last shipment date for Christmas 2007, online sales were up 47% year-on -year. However, despite record levels of traffic on our site, sales were below expectations as a result of disappointing conversion rates associated with the transition to the new e-commerce platform. However there is a plan to improve conversion rates back to historic levels by 30 April 2008. This plan is currently on target. * The Board is pleased to announce the appointment of Simon Hargreaves, formerly a non-executive Director as interim Finance Director whilst EBTM seeks to make a permanent appointment to this role. Commenting on the results, David Howell, Chairman said: "It is pleasing to be able to report a maiden operating profit at this stage. The acquisition made last year has helped to scale the business and create a vertically integrated retailer with exciting growth prospects. While the delay in the appointment of licensees in North America for the Atticus brand and the technical difficulties we have experienced with our trading platform have temporarily held the business back and despite our cautious view of consumer sentiment on the high street, we remain confident that we operate in a growth market and that we have established a strong platform which has exciting expansion opportunities in the UK and for future periods internationally." Enquiries: EBTM plc Richard Breeden, Chief Executive 020 7819 1950 Simon Hargreaves, Finance Director 07768 637643 Nominated Adviser Nabarro Wells & Co. Limited Hugh Oram 020 7710 7400 Biddicks Zoe Biddick 020 7448 1000 Operating Review The half year to 31 October 2007 has been transformational in the development of EBTM Plc. The Group has posted its maiden operating profit of £0.16 million (compared to a loss of £0.32 million in the equivalent period last year) and is set for continued rapid expansion. Sales have grown to £3.59 million, assisted by the acquisitions of the Lowlife businesses and the Atticus brand, compared with £0.52 million in the six months to 31 October 2006, an increase of 590%. This is a position from which the directors believe we can sustain strong growth in the future. During the period, EBTM has made a key acquisition creating a fully vertically integrated retailer which owns and licenses key clothing brands under the banner of music inspired fashion, as well as having a significant and fast growing wholesale distribution network in the UK and Europe and a sophisticated sourcing network in the Far East. I am pleased to announce that Simon Hargreaves has taken up the role of interim Finance Director whilst we seek to make a full time appointment to the position. Simon was previously a non-executive Director of EBTM plc and a Director of Lowlife Corporation Limited prior to its acquisition by EBTM last year. His background is as Group Finance Director of Vanco plc and Chief Executive of its main trading division, Vanco Solutions.. Online Retail Online sales have continued to grow. In June 2007 we moved our web platform to Storefront, maintained by Maginus Software Solutions. This move was necessary to provide the co-branded web stores which are part of our growth strategy.. The new platform also allows the creation of single brand stores for our own brands, all run from a central database and inventory. However, because the new e-commerce platform required extensive fine-tuning, the transition has resulted in a reduction in online conversion rates. As we address and rectify these difficulties, conversion continues to improve but is not yet fully restored to the level achieved prior to the transition. We are already beginning to see the benefits of the new platform and are confident that the new system will enable substantial growth in the product range, the customer database and most importantly sales. Online sales in the key four weeks leading to the last shipment date for Christmas were up 47% year on year but, despite record levels of traffic during this period, the lower conversion rates resulted in materially lower than expected sales growth. A plan is in place to restore conversion rates to historic levels by 30 April 2008. The company is currently on target to achieve this. Acquisition of Lowlife Corporation Limited On 31 May 2007, the Company entered into a contract to acquire the entire issued share capital of Core Brands Limited, whose main trading subsidiary at the time was Lowlife Corporation Limited ("Lowlife"). Lowlife is a wholesaler of music inspired clothing and accessories. For the year ended 31 December 2006, Lowlife reported sales of £3.5 million, and profits before tax of £646,000. At that date it had net assets of £846,000. In order to fund this acquisition the Company issued 110,526,315 new ordinary shares of 0.5 pence each in the capital of the Company at 4.75 pence per share ("the Placing"). EBTM paid a total of £4.75 million prior to costs to acquire the Lowlife business, which was settled as to £3.25 million in cash, financed by the Placing and £1.5 million by way of an issue of 26,785,714 new ordinary shares in the Company to Dale Masters, who owned 100% of the share capital in Core Brands Limited. 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. Lowlife has continued its expansion with sales growth of 40% year-on-year for the six months to 31 October 2007. However, the Board is taking a cautious view of the outlook for the remainder of this financial year and into the next given current consumer sentiment on the high street. Specifically, a view has recently been taken that several material wholesale opportunities that previously had been viewed as having a reasonable chance of being closed in the period to 30 April 2008, will not now happen prior to this date. The financial and operational management of the acquired businesses will be further consolidated in 2008, creating additional cost synergies Acquisition of Atticus clothing brand The remaining funds from the placing were used to acquire the intellectual property rights relating to the Atticus clothing brand for which EBTM paid US$4.2 million prior to costs. This transaction was completed on 9 July 2007. This is a brand which sits squarely with our proposition of music inspired fashion. The acquisition of the intellectual property in Atticus ensures that EBTM controls the design process in house and we no longer have to pay royalties for sales of the brand. The Atticus clothing brand continues to trade well through the Lowlife distribution network in the UK and Europe and the savings in royalty payments, anticipated at the point of acquisition in June 2007, have been delivered in line with management expectations. Sales of Atticus continue to grow and on 15 August 2007, EBTM announced an order of some £800,000 for Atticus clothing from a major high street retailer in the UK. The effect of this transaction is recognised in the period ended 31 October 2007. Management believes that working with the right partners is crucial to build long term value in the brand. The search for an appropriate North American licensee and the agreement of appropriate terms with the licensee has taken longer than expected. As a result royalty income from the USA will fall significantly short of previous expectations in the current financial year and is now not anticipated to reach a material level until the year ending 30 April 2009. Since the period end we are pleased to have concluded licence agreements for the Atticus brand with licencees in the USA and Canada. We will work closely with our partners and expect to begin to develop revenues from these markets in future periods. Brands Our in-house design and sourcing functions, capabilities acquired with the acquisition of Lowlife, have started to enable the further acceleration of "own brand" products which began in 2006 and the roster of brands which we own or distribute continues to grow. Alongside the Atticus clothing brand there are a number of other music inspired fashion brands which we either own or operate. Our own brand, Lowlife, has established itself within the accessories market and there are many opportunities to expand the reach of Lowlife products. We have also begun to develop two new brands called Panic! and LIFE, which will complement our existing product portfolio as we move into the next financial year. In addition, we entered into wholesale and online retail agreements with Adeline Clothing (announced on 5 September 2007) and Clandestine Industries (announced 19 September 2007) and since the period end we have entered into a distribution agreement with Rockett clothing (an established music inspired fashion brand from California). We intend to continue to build a strong pipeline of music inspired brands to augment those already in our stable. Outlook The Group is now trading profitably. In the limited period since Christmas, trading has been encouraging with sales of our own brands continuing to grow as part of the overall sales mix, thereby enhancing gross margins. While the directors are confident that the initiatives taken in the first half year will add to future growth, we are cautious in outlook for 2008. The temporary difficulties we have experienced with the transition to our new e-commerce platform and the delay in the appointment of licensees for the Atticus brand in North America, along with this cautious view for the wholesale business as high street retail and consumer spending slows in 2008, lead us to believe that full year results will fall materially short of our previous expectations. Richard Breeden Chief Executive 21 January 2008 INDEPENDENT REVIEW REPORT TO EBTM Plc Introduction We have been instructed by the Company to review the financial information for the six month period ended 31 October 2007 which comprises the Consolidated Income Statement, Consolidated Balance Sheet, Consolidated Cash flow Statement, Consolidated Statement of Changes in Equity and the related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with Bulletin 1999/4 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the AIM market which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. International Financial Reporting Standard As disclosed in note 1, the next annual financial statements of the group will be prepared in accordance with International Financial Reporting Standards as adopted for use in the EU. Accordingly, the interim report has been prepared in accordance with the recognition and measurement criteria of IFRS and the disclosure requirements of the Listing Rules of the AIM market. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with International Standards on Auditing (UK and Ireland) and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six month period ended 31 October 2007. Kingston Smith LLP Chartered Accountants and Registered Auditors 141 Wardour Street London W1F 0UT Consolidated Income Statement For the six months ended 31 October 2007 As restated As restated Note 5.4 Note 5.3 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 Unaudited Unaudited Audited £ £ £ Turnover 3,586,578 520,454 1,354,447 Cost of Sales (1,914,875) (277,301) (704,726) -------- -------- -------- Gross Profit 1,671,703 243,153 649,721 Administrative (1,434,429) (564,890) (1,245,311) expenses -------- -------- -------- Profit/ (Loss) before amortisation, depreciation, interest payable and taxation 237,274 (321,737) (595,590) Amortisation and depreciation (74,856) (2,269) (8,644) -------- -------- -------- Operating Profit/(Loss) 162,418 (324,006) (604,234) Interest receivable 8,506 11,073 25,983 Interest pay (13,929) (2,486) (3,745) -------- -------- -------- Profit/ (Loss) on Ordinary Activities Before Taxation 156,995 (315,419) (581,996) Taxation (20,111) 18,424 36,848 -------- -------- -------- Retained Profit/ (Loss)for the financial period 136,884 (296,995) (545,148) ======== ======== ======== Profit/ (Loss) per share Basic 0.06 (0.27) (0.53) Fully diluted 0.06 (0.27) (0.53) ======== ======== ======== 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 profit and loss account 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 31 October 2007 As restated As restated - note 5.2 - note 5.1 31 October 2007 31 October 2006 30 April 2007 Unaudited Unaudited Unaudited Unaudited Audited Audited £ £ £ £ £ £ Fixed Assets Intangible assets 8,670,818 1,511,903 1,511,903 Tangible assets 227,617 8,483 124,426 Deferred tax asset 85,221 39,810 58,234 -------- -------- ------- 8,983,656 1 ,560,196 1,694,563 Current Assets Stock 1,211,694 326,350 433,643 Debtors 2,407,524 177,062 300,105 Cash at bank and in hand 45,130 394,821 617,710 -------- -------- ------- 3,664,348 898,233 1,351,458 Creditors: Amounts falling Due within one year (2,970,726) (308,943) (583,140) -------- -------- ------- Net Current Assets 693,622 589,290 768,318 -------- -------- ------- Total Assets less Current Liabilities 9,677,278 2,149,486 2,462,881 Creditors: Amounts falling Due after more than one year (237,905) (19,639) (16,273) -------- -------- ------- Net Assets / (Liabilities) 9,439,373 2,129,847 2,446,608 ======== ======== ======= Capital and Reserves Called up share capital 1,241,560 486,250 552,500 Share premium account 8,695,864 2,180,175 2,617,425 Deferred compensation reserve 284,069 132,700 194,114 Profit and loss account (782,120) (669,278) (917,431) -------- -------- ------- Shareholders' Funds 9,439,373 2,129,847 2,446,608 ======== ======== ======= Approved by the Board on 21 January 2008 R T Breeden Director Consolidated Cash Flow Statement For the six months ended 31 October 2007 As restated As restated - note 5.2 and 5.4 - note 5.1 and 5.3 Six months ended Six months ended Year ended 31 October 2007 31 October 2006 30 April 2007 Unaudited Unaudited Unaudited Unaudited Audited Audited £ £ £ £ £ £ Operating cash flow (328,915) (337,002) (505,580) Net finance (outflow)/ inflow (5,423) 8,587 22,238 Tax paid - - - -------- -------- ------- (5,423) 8,587 22,238 -------- -------- ------- Net cash outflow from operating activities (334,338) (328,415) (483,342) Investing activities Overdraft acquired on acquisition of subsidiary undertakings (237,798) - - Acquisition of subsidiary undertakings (5,859,313) - - Purchase of tangible fixed assets (88,749) (4,839) (127,157) -------- -------- ------- Net cash outflow from investing activities (6,185,860) (4,839) (127,157) Financing activities Issue of ordinary share capital 5,267,500 - 503,500 Loans repaid (3,368) (40,867) (44,233) Bank and other loans taken out 450,000 - - -------- -------- ------- Net Cash Inflow/(Outflow) From Financing Activities 5,714,132 (40,867) 459,267 -------- -------- ------- Decrease in Cash (806,066) (374,121) (151,232) ======== ======== ======= Consolidated Statement of Changes in Equity For the six months ended 31 October 2007 Called up Deferred Profit share Share compensation and loss capital premium reserve account Total £ £ £ £ £ At 1 May 2006 486,250 2,180,175 71,286 (372,283) 2,365,428 New shares issued - - - - - Share options granted - - 61,414 - 61,414 Loss for the period - - - (296,995) (296,995) -------- -------- -------- ------- ------- At 31 October 2006 486,250 2,180,175 132,700 (669,278) 2,129,847 ======== ======== ======== ======= ======= At 1 November 2006 486,250 2,180,175 132,700 (669,278) 2,129,847 New shares issued 66,250 437,250 - - 503,500 Share options granted - - 61,414 - 61,414 Loss for the period - - - (248,153) (248,153) -------- -------- -------- ------- ------- At 30 April 2007 552,500 2,617,425 194,114 (917,431) 2,446,608 ======== ======== ======== ======= ======= 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 granted - - 89,955 - 89,955 Profit for the period - - - 136,884 136,884 Foreign exchange difference (1,573) (1,573) -------- -------- -------- ------- ------- At 31 October 2007 1,241,560 8,695,864 284,069 (782,120) 9,439,373 ======== ======== ======== ======= ======= Notes to the Consolidated Cash Flow Statement For the six months ended 31 October 2007 As restated As restated Note 5.2 and 5.4 Note 5.1 and 5.3 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 Unaudited Unaudited Audited £ £ £ 1 Reconciliation of Operating Profit/ (Loss) to Operating cash flow Operating profit/ (loss) 162,418 (324,006) (604,234) Depreciation 12,277 2,269 8,644 Amortisation 62,579 - - Share options (note 4) 89,955 61,414 122,828 Increase in debtors (1,639,640) 29,017 (94,026) Increase in stock (321,604) (196,346) (303,639) Increase in creditors 1,305,100 90,650 364,847 --------- --------- --------- Operating cash flow (328,915) (337,002) (505,580) ========= ========= ========= 2 Reconciliation of Net Cash Flow to Movement in Net (Debt)/ Cash Decrease in cash in the period (806,066) (374,121) (151,232) Cash inflow from bank loans advanced (450,000) - - Cash outflow from bank loans repaid 3,368 40,867 44,233 --------- --------- --------- Movement in net debt in the period (1,252,698) (333,254) (106,999) Net cash brought forward 594,704 701,703 701,703 --------- --------- --------- Net (debt)/ cash carried forward (657,994) 368,449 594,704 ========= ========= ========= 3 Analysis of Changes in Net Debt At 1 May Cash Other At 31 2007 Flow Movements October 2007 £ £ £ £ Cash at bank and in hand 617,710 (572,580) - 45,130 Overdrafts - (233,486) - (233,486) Debt due within one year (6,733) (446,632) 221,632 (231,733) Debt due after one year (16,273) - (221,632) (237,905) ---------- --------- --------- --------- Total 594,704 (1,252,698) - (657,994) ========== ========= ========= ========= Notes to the Financial Statements For the six months ended 31 October 2007 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 141 Wardour Street, London, W1F 0UT. 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 21 January 2008. 2. Accounting policies The accounting policies adopted by the Group are in accordance with the accounting policies updated at the prior year end. (a) Accounting basis and standards The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. The accounting policies are unchanged from the previous year. (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 undertaking. 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 fixed 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 ten years. 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. Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts at the date of transition subject to being tested for impairment at that date. Intangible fixed assets are reviewed for impairment at the end of the first full financial year following the acquisition and in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable. The intangible assets have a useful life of 10 years and are reviewed for impairment on an annual basis. (d) Depreciation of fixed assets Fixed assets are stated at historical cost. Depreciation on fixed 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 (e) Turnover Turnover represents the invoiced value of goods sold and services provided net of value added tax. (f) Stock Stocks 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 FRS 19, 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 and hire purchase 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 2007 interim consolidated financial statements of EBTM plc are for the six month period ended 31 October 2007. 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 (December 2007) and IAS 34 'Interim Financial Reporting'. The interim financial information for the six months ended 31 October 2007 and 31 October 2006 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 2007 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. Prior year adjustment During the year ended 30 April 2007, the Company adopted FRS20. This relates to accounting for share based payments. As a result of this the results for the period ended 31 October 2006 have been restated. The effect of this was that an additional post tax charge of £42,990 was added to the loss for the period. 5. Explanation of transition to IFRSs This is the first period for which the Group has presented its financial statements under IFRS. The following disclosures are required in the year of transition. The last financial statements under UK GAAP were for the year ended 30 April 2007 and the date of transition to IFRS was therefore 1 May 2006. 5.1 Reconciliation of Equity at 30 April 2007 (date of last UK GAAP financial statements) UK GAAP Effect of transition As restated Note As previously reported to IFRSs under IFRSs £ £ £ £ £ £ Fixed Assets Intangible assets a 1,432,329 79,574 1,511,903 Tangible assets 124,426 - 124,426 Deferred tax asset 58,234 - 58,234 -------- -------- ------- 1,614,989 79,574 1,694,563 Current Assets Stock 433,643 - 433,643 Debtors 300,105 - 300,105 Cash at bank and in hand 617,710 - 617,710 ------- ------- ------- 1,351,458 - 1,351,458 ------- ------- ------- Creditors: Amounts falling Due within one year (583,140) - (583,140) ------- ------- ------- Net Current Assets 768,318 - 768,318 -------- -------- ------- Total Assets less Current Liabilities 2,383,307 79,574 2,462,881 Creditors: Amounts falling Due after more than one year (16,273) - (16,273) -------- -------- ------- Net Assets / (Liabilities) 2,367,034 79,574 2,446,608 ======== ======== ======= Capital and Reserves Called up share capital 552,500 - 552,500 Share premium account 2,617,425 - 2,617,425 Deferred compensation reserve 194,114 - 194,114 Profit and loss account (997,005) 79,574 (917,431) -------- ------ ------- Shareholders' 2,367,034 79,574 2,446,608 Funds ======== ======== ======= Note £ Total equity previously reported under UK GAAP 2,367,034 Reversal of amortization of goodwill from date a 79,574 of transition ------- Total equity as restated under IFRSs 2,446,608 ======= 5.2 Reconciliation of Equity at 31 October 2006 UK GAAP Effect of transition As restated Note As previously reported to IFRSs under IFRSs £ £ £ £ £ £ Fixed Assets Intangible assets a 1,472,116 39,787 1,511,903 Tangible assets b 8,483 - 8,483 Deferred tax asset - 39,810 39,810 -------- -------- ------- 1,480,599 79,597 1,560,196 Current Assets Stock 326,350 - 326,350 Debtors 177,062 - 177,062 Cash at bank and in hand 394,821 - 394,821 ------- -------- ------- 898,233 - 898,233 Creditors: Amounts falling Due within one year (308,943) - (308,943) ------- -------- ------- Net Current Assets 589,290 - 589,290 -------- -------- ------- Total Assets less Current Liabilities 2,069,889 79,597 2,149,486 Creditors: Amounts falling Due after more than one year (19,639) - (19,639) -------- -------- ------- Net Assets / (Liabilities) 2,050,250 79,597 2,129,847 ======== ======== ======= Capital and Reserves Called up share capital 486,250 - 486,250 Share premium account 2,180,175 - 2,180,175 Deferred compensation reserve c - 132,700 132,700 Profit and loss account a, b, c (616,175) (53,103) (669,278) -------- -------- ------- Shareholders' Funds 2,050,250 79,597 2,129,847 ======== ======== ======= Note £ Total equity previously reported under UK GAAP 2,050,250 Reversal of amortization of goodwill a 39,787 Tax effect of FRS 20 b 39,810 Creation of Deferred Compensation Reserve following adoption of FRS 20 regarding share based payments c 132,700 Movement from profit and loss account to create Deferred Compensation Reserve d (132,700) ------- Total equity as restated under IFRSs 2,129,847 ======= 5.3 Reconciliation of profit or loss for the year ended 30 April 2007 UK GAAP Effect of As restated As previously transition under Note reported to IFRSs IFRSs £ £ £ Turnover 1,354,447 - 1,354,447 Cost of Sales (704,726) - (704,726) -------- -------- -------- Gross Profit 649,721 - 649,721 Administrative (1,245,311) - (1,245,311) expenses -------- -------- -------- Loss before amortisation, depreciation, interest payable and taxation a (595,590) - (595,590) Amortisation (88,218) 79,574 (8,644) and depreciation -------- -------- -------- Operating Loss (683,808) 79,574 (604,234) Interest receivable 25,983 - 25,983 Interest payable (3,745) - (3,745) -------- -------- -------- Loss on Ordinary Activities Before Taxation (661,570) 79,574 (581,996) Taxation 36,848 - 36,848 -------- -------- -------- Retained loss for the financial period (624,722) 79,574 (545,148) ======== ======== ======== Loss on Retained ordinary loss for Note Operating activities the financial loss before tax period £ £ £ Loss as previously reported under UK GAAP (683,808) (661,570) (624,722) Reversal of amortization goodwill a 79,574 79,574 79,574 Adoption of FRS 20 regarding share based payments - - - Tax effect of FRS 20 - - - -------- -------- -------- Loss as restated under IFRSs (604,234) (581,996) (545,148) ======== ======== ======== 5.4 Reconciliation of profit or loss for the six months ended 31 October 2006 UK GAAP Effect of As restated As previously Transition under Note reported to IFRSs IFRSs £ £ £ Turnover 520,454 - 520,454 Cost of Sales (277,301) - (277,301) -------- -------- -------- Gross Profit 243,153 - 243,153 Administrative a (503,476) (61,414) (564,890) expenses -------- -------- -------- Loss before amortisation, depreciation, interest payable and taxation (260,323) (61,414) (321,737) Amortisation b (42,056) 39,787 (2,269) and depreciation -------- -------- -------- Operating Loss (302,379) (21,627) (324,006) Interest receivable 11,073 - 11,073 Interest payable (2,486) - (2,486) -------- -------- -------- Loss on Ordinary (293,792) (21,627) (315,419) Activities Before Taxation Taxation c - 18,424 18,424 -------- -------- -------- Retained loss for the financial period (293,792) (3,203) (296,995) ======== ======== ======== Loss on Retained Ordinary loss for Note Operating Activities the financial loss before tax period £ £ £ Loss as previously reported under UK GAAP (302,379) (293,792) (293,792) Adoption of FRS 20 regarding share based payments a (61,414) (61,414) (61,414) Reversal of amortization of goodwill b 39,787 39,787 39,787 Tax effect of FRS 20 c - - 18,424 -------- -------- -------- Loss as restated under IFRSs (324,006) (315,419) (296,995) ======== ======== ======== 6. Acquistion of Core Brands Limited and Twenty Four Seven Trading Limited On 31 May 2007, the Company issued 110,526,315 new ordinary shares of 0.5 pence each in the capital of the Company at 4.75 pence per share ("the Placing"). On 31 May 2007, the Company entered into a contract to acquire the entire issued share capital of Core Brands Limited and Twenty Four Seven Trading Limited. The main trading subsidiary of Core Brands Limited at the time was Lowlife Corporation Limited ("Lowlife"). Lowlife is a wholesaler and on-line retailer of clothing and accessories in the area of music inspired fashion. For the year ended 31 December 2006, Lowlife reported sales of £6.7 million, and profits before tax of £646,000. At that date it had net assets of £846,000. EBTM paid £4.25 million to acquire Core Brands Limited, settled as follows: * £1.5 million by way of an issue of 26,785,714 new ordinary shares in the company to Dale Masters, who owned 100% of the share capital in Core Brands Limited; and * £2.75 million in cash, to be financed by the Placing. EBTM paid £500,000 in cash to acquire Twenty Four Seven Trading Limited. Core Brands Limited The fair value of the net assets acquired was £141,868, resulting in goodwill of £4,579,868 which has been capitalised as an intangible asset. Book Fair value Fair value adjustments value Net assets acquired £ £ £ Tangible fixed assets 25,689 - 25,689 Stock 449,749 - 449,749 Trade and other receivables 465,240 - 465,240 Cash and cash equivalents (259,078) - (259,078) Trade and other payables (539,732) - (539,732) --------- -------- -------- 141,868 - 141,868 ========= ======== Goodwill 4,579,868 -------- 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 £ £ £ Fixed assets 1,030 - 1,030 Stock 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 ======== This information is provided by RNS The company news service from the London Stock Exchange END IR SEAEFFSASEIF
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