Hardy Amies Share Discussion Threads

[bungler] 04/10/2007 15:49

Too late Ladybird! - I have a limit order in! Let's see if it's filled.....

[ladybird1] 04/10/2007 15:24

What about it then, Researcher07?

I hope, though, you will not be tempted to come off the medication too quickly, Bungler.

[bungler] 04/10/2007 14:28

Yes has made me even more confident than I was before. Maybe that's the news that will tempt Researcher07 to join us?

[ladybird1] 04/10/2007 14:04

Excellent news! I hope they will all make large profits!!

(I wonder where they got them from?).

[ladybird1] 29/9/2007 08:54

An interesting article in today's Times. Different animals - or at any rate bigger animals at a more advanced state of development - but it demonstrates the potential that Arev see in the business and the interest of other players in the area. I am pleasantly surprised & encouraged.

'The TimesSeptember 29, 2007

Buyout firms stalk catwalk as brands struggle with their figuresSarah Butler
The fashion set moves to Paris next week for the climax to a month of cat-walk shows around the world - and this year bankers will be hot on their heels.

The world of private equity has become increasingly interested in luxury brands. Last month Permira, the British firm, took control of 97 per cent of Valentino Fashion Group, the Italian label, for €2.6 billion (£1.8 billion) in one of the largest designer buyouts.

Permira recently secured nearly 90 per cent of Hugo Boss, making its move soon after Apax's $1.6 billion (£783 million) buyout of Tommy Hilfiger, the American brand, and a whole wardrobe of smaller designer buys, including Sciens Capital's buyout of Asprey, the jeweller, and Lion Capital's purchase of Jimmy Choo.

A burgeoning market and the potential to drive huge profits by introducing business disciplines mean that designer labels are in the spotlight for investors. Future targets are thought to include Burberry Group and the Italian label Roberto Cavalli.

Related Links
Business big shot: Stephan Lobmeyr
The Jil Sander show in Milan last week typified the new era. As Anna Wintour, Editor of American Vogue, stalked through the imaginatively attired fashionistas outside the luxury German label's showrooms, a phalanx of blue and grey-suited men tried to blend in. Among them was Stephan Lobmeyr, managing director of Change Capital, which bought Jil Sander 18 months ago.

Mr Lobmeyr said that he was interested in buying further luxury brands. Jil Sander was particularly attractive because the label's luxury status had not been sullied by down-market licensing deals.The brand was also loss-making, meaning that there were plenty of opportunities to add the benefits of private equity-style operational improvements.

To this end, Change is raising a second fund, having spent all but €30 million of the first €300 million fund that was raised from the Halley family, the largest shareholder in Carrefour.

This time, however, Change is looking to a variety of sources, using the performance of the first fund to attract new investors.

Before being snapped up by Change Capital, Jil Sander was part of the Prada stable of brands. It had suffered from the departure of its namesake designer and an expensive expansion strategy based on large flagship stores.

Mr Lobmeyr said that one of the attractions of brands such as Jil Sander to private equity firms is many fashion founders have been unable to couple design and economic success. He said: "If you look at the history of fashion, many brands have been set up by a creative founder and there are a very slim sliver of those who were also good businessmen that could grow the business from £50 million to £1 billion of turnover."

Martin Clarke, at Permira, said: "Many of these labels were run as personal fiefdoms focused on haute couture. Along the way they created fabulous brands with huge value. The challenge and opportunity for private equity is to preserve the heritage of these brands while broadening their appeal and customer base."

Since taking over Jil Sander, Change has put in new IT systems, rejigged the store portfolio and reduced central costs. The brand is expected to break even next year. Mr Lobmeyr said: "We are not design experts and we shouldn't try to change the creative bit, but we can work on the company and its basic retail mechanisms, which still apply to fashion brands."

When run well, luxury brands can be incredibly profitable, with profit margins on accessories as high as 77 per cent in some cases.

Jil Sander's five-year plan is to expand sales by up to 43 per cent to between €180 million and €200 million in the next three or four years. New stores are also planned, including one in London.'

[bungler] 24/9/2007 10:31

Go on Researcher - you know you want to!

[researcher07] 21/9/2007 15:55

Bizzarre... what would a £5,000 buy do!!!

[ladybird1] 21/9/2007 15:32

I was just musing that it's slightly sad the only reaction to the interims is a single £30 sell and bingo! - up goes the price.

[ladybird1] 21/9/2007 12:17

Charlie

Sorry if I gave the impression I thought they might take 'the dodgy route'. I've said before I agree with your view they're straight enough. I merely meant that if it all goes pear-shaped, then there isn't any point in a rights issue and the remaining assets will go to Arev. That situation would mean a loss to both shareholders & Arev, with nobody benefitting.

[charlie] 21/9/2007 11:34

I can't imagine that their strategy is to pick up the company via a dodgy route, they don't seem the type. From what I understand also (I could be wrong) there are a lot of retail investors. I would think the law suites would be large if they did take the back door route.

Well today's statement refers to a possible rights issue, so not the dodgy route.

And yes there are a lot of retail shareholders. Including some larger ones, who have a track record of agitating in situations where directors have tried to take the dodgy route. Unfavourable press coverage, takeover panel appeals, etc. Not good publicity for Arev, damaging to all their brands.

I think they would be very ill-advised to take any 'dodgy route.' We are indeed all in this together.

Leaving all that aside, today's statement seems encouraging.

[ladybird1] 21/9/2007 11:27

R.

Agree with your points. Don't know about the need for a consolidation - 207 million shares not massive, unnecessary expense when funds tight - but increase in share price prerequisite. Current market cap. c. £2m., and to repay loan, additional capital, etc. would need £4-5 million to be worth the trouble. If share price not recovering, not much point anyway, as the business failing & Arev get the tattered remnants if the loan conditions not met.

As I said, I liked their mentioning the possibility - even if at present it does perhaps betray a wry sense of humour from them.

[researcher07] 21/9/2007 11:08

Hi Bungler

Haven't bought any yet. I think we will dip our toe in at some stage. I was hoping for an announcement consolidating the shares. Surely this has to be done before any rights issue. There are just too many shares in issue at the moment.

Still, I like it a lot as a luxury market sector play and I think the management are getting it right.

Ladybird is right, long term play, however, I think there is scope for 2p - 3p in the medium term, which would make this price look attractive. This is based on the fact that this announcement is positive and, dare I say, they maybe looking to get some action in the price. I would suggest that if a rights issue is going to be done, they would need to see a 2p-3p price first to create some interest.

[ladybird1] 21/9/2007 09:46

Just so. Remains highly speculative, of course, particularly dependent on the economic boom continuing for at least a couple of years, which is dubious. Still, the management are clearly very competent and will bring it off if anybody can.

Liked the bit about future rights issue - it presupposes a reasonable recovery in the share price. A touch of dry humour there?

A reasonable long term bet; tuck away the existing holding and forget the book loss, but not add to at this point. (3 buys yesterday, just before the results (?!?), presumably taking a different view).

[bungler] 21/9/2007 09:27

Yes looks promising - everything pretty much progressing according to plan it would seem. Did you decide to buy in Researcher07?

[researcher07] 21/9/2007 07:49

Nice numbers, positive outlook...

[researcher07] 21/9/2007 07:49

CHAIRMAN'S STATEMENT



I was appointed as Chairman of Hardy Amies on 18 May 2006 and the presentation
of these interim accounts provides a good benchmark of the progress that has
been made in my first year of tenure. I remain convinced of the global potential
of Hardy Amies as a luxury brand. Developing Hardy Amies into a profitable
business was always going to take time, but we have made significant improvement
in the past twelve months. This is reflected in the results for the six months
to 30 June 2007 which are on track with expectations I set last year. Overall
turnover is up by a modest 8.9% from £668,940 to £728,531 but the overall loss
before taxation for the period has declined from £1,249,551 in the first half of
2006 to £372,252 this year. More importantly, the foundations are now in place
which will ensure that we see turnover move forward more markedly in the second
half of 2007 and into 2008. I comment in more detail on this below.

I must give credit to the strong management team and experienced Board I have
put in place for helping to put the business on a more professional footing.
The improvement in the results is a credit to their hard work. As previously, I
set out the progress made on the three aspects of the strategy which we are
working to.



BUILDING A THRIVING UK BUSINESS



Over the past year there has been a re-focusing of our UK business into the core
areas that have the potential to offer sustained growth going forward and that
will position the company as a significant couture and fashion house.

The main area of growth in turnover so far has derived from wholesale sales of
our new menswear range. As a result retail and wholesale turnover in the period
grew from £263,205 in the first half of 2006 to £421,585 this year - an increase
of 60%. Sales will accelerate further in the second half as two menswear stores
are scheduled to open later in 2007, in Edinburgh and Chester. We are also
looking at further store opportunities in 2008. It is difficult to assess how
well the new stores will perform at this stage given the lack of comparative
data from existing stores. Sales will initially take a while to develop from the
retail units, especially in the challenging retail climate that currently
exists.

Sales from the house at 14 Savile Row ('the House') continue to flourish.
Although sales from the House are broadly similar to those in the first half of
last year, there has been a change in product mix. The main thrust of the sales
going forward from 14 Savile Row is intended to be the women's couture and the
intention is to re-establish the prominence of Hardy Amies as the only British
couture house, as will be highlighted in an exhibition entitled 'The Golden Age
of Couture' which runs at the Victoria and Albert museum from 22 September 2007
to 6 January 2008. I am therefore pleased to see that women's couture sales
rose by 35% compared to the six months last year and our creative director, Ian
Garlant, is gathering an increasing following and reputation. Balancing the
strong growth in women's couture, there has also been an expected corresponding
decrease in sales of our legacy boutique range. We are likely to see this area
decline further going forward.

Our first ready to wear womenswear collection is close to seeing the light of
day. This has been worked on for the past twelve months and we are planning to
sell this product from the House and a new womenswear store in London.

Going forward we are looking to open three or four retail units a year in the UK
and are already in discussions with a number of property groups concerning
future sites. We are also investing in additional design resource to increase
the size and scope of our womenswear and accessory ranges, although the lead
time before this generates revenue will be at least twelve months.





BUILDING INTERNATIONAL AND LICENSE REVENUES

Hardy Amies will only be able to fully exploit international opportunities to
create a global luxury brand once it has a successful UK operation so our main
focus in this area continues to be ensuring that current licenses are
appropriate for the business in the future. The most significant international
license derives from Japan and is due for renewal on 19 October 2007. We are in
the final stages of long negotiations, but are confident that new arrangements
beyond 19 October 2007 will generate significantly more revenue than the
£452,952 booked in the income statement in the year ended 31 December 2006.
The new arrangements will also have a substantial cash benefit, as all the cash
from the previous license was paid up front in one lump sum in 2002 and the
income in the income statement in the current year so far is merely the release
of this deferred income to revenue. From 19 October 2007 we plan to receive
payment for the license income as it accrues.

The overall decline in license income in the first half of 2007 from £405,735
last year to £306,948 was expected. The figures for 2006 include income from a
menswear license with BMB which was bought in-house in September 2006.

We are now turning our attention to other significant overseas markets and will
update shareholders with more detailed plans in due course.



CAREFUL MANAGEMENT OF COSTS



The most pleasing aspect of the results for the first half of 2007 is the
reduction in the overall loss and this has been driven by more careful
management of costs. The income statement for the half year ended 30 June 2007
shows a reduction of £794,163 in trading expenses against the corresponding
period last year, a decline of 70% on the overall charge in the first half of
2006. Firstly there were £425,534 of exceptional expenses in the first half of
2006 and the control environment that allowed some of these items to occur has
now been significantly improved. The balance of the decline is due to a cost
reduction exercise, but this has been partly offset by the upfront costs in
developing the new menswear and womenswear ranges; from the investment in
design, buying and retail operational expertise. A total of £175,600 is
required to be capitalised as development expenditure under International
Financial Reporting Standards in the first half of 2007 although much of this
additional payroll expense has been charged in the income statement in the first
half of 2007. The corresponding period did not include any such adjustment as
the expenditure on research and development did not meet the criteria for
capitalisation under IAS 38.

Trading expenses in the second half of 2007 will increase as the new stores come
on stream and we incur pre-opening costs, however my policy of careful cost
control will continue.



FUTURE PLANS



Overall, I feel very pleased with progress to date and the funding position of
the business is currently stable. This is due to the loan facility of £2.85
million that was made available to Hardy Amies plc by the largest shareholder,
Arev Brands Limited. This is funding the ongoing trading losses incurred in
developing the new ranges and the initial investment in new stores. Going
forward, the level of cash burn should also reduce once new Japanese licensing
arrangements start from 19 October 2007. Looking into 2008, the Board is
currently considering the longer term funding options for the business with a
mind towards an acceleration of growth beyond 2008. This could include a rights
issue next year, although no final decisions have been made in this area.



AC Manders

Chairman and Chief Executive


20 September 2007

[ladybird1] 06/9/2007 16:40

R07

Thanks. I agree entirely that Arev are playing this straight & we shall all sink or swim together.

To clarify one point. Mr.Philips bought out Tim Matlin's share options, which are exeercisable at 2.89p, if I recall correctly. The shares are not currently in issue.

Good luck

[researcher07] 06/9/2007 15:55

Thanks for that, although Arev having a lien over the company on their loan would seem to be against the PTM rules (although not law, they are all reaching), affectively a lien would give them control of the company without having to have had vote in another whitewash. This is also a concern, becuase it would be awonderful way of taking over the entire company for only (circa) £6mn and an average share price of 3p..

It is also a little 'naughty' that directors bought shares. They will obvioulsy be working alongside Arev and could be seen as a 'concert party'. I am confident, however, that Arev have passed this by their lawyers.

I don't agree ref the consolidation (my numbers 10:1 reffered to a consolidation at 10 for 1). It would give the opportunity to have a reasonable spread and, if they did consolidate and the price drifted to nothing, it would be a perfect excuse for Arev to take it private. I can't imagine that their strategy is to pick up the company via a dodgy route, they don't seem the type. From what I understand also (I could be wrong) there are a lot of retail investors. I would think the law suites would be large if they did take the back door route.

I agree, not a fast buck. We are looking at a long term horizon on some smaller plays, don't know whether there is enough shares available to make it worthwhile at this price, but will watch the numbers and see where we go from there.

[ladybird1] 06/9/2007 14:13

R07

The following may be relevant.

- Arev own just under 50% of the equity and with Mr.Philips' options at 3p potentially they & he would control approaching 60%.
- HRD is, I think, the only listed part of their empire (see Telegraph summary above). Effective control, anyway, no doubt bought with a view to taking full control in due course.
- Arev altered the previous strategy based on The House plus franchise income & are going for a retail approach, which fits with the rest of their group (the new non-exec. is CEO of one of their companies). As you note, given the collapse of the share price, the necessary finance could only be raised by their making a loan themselves.
- There are really only 2 possible outcomes. The company goes bust or the strategy works & Arev buy out the minority shareholders. (Arev do have a lien over the whole company if it fails to meet the loan terms, but that would only given them a hulk for their c£5m investment).
- We shall know within 2 years, I think, whether it's going to run or our cash is gone.

In consequence, this really isn't a share where 'tradeability' is currently an issue. The only likely purchasers are long-odds speculators (on your figures looking at odds of up to 5:1) and as there will always be the odd seller, the price would simply drift down even further. As to the Aim listing, it's there and to delist would be more expensive & bothersome than a couple of years routine costs.

I say a couple of years, as we shall know within 2 years, I imagine, whether it's going to run or our cash is gone. I doubt the updates in the next year will tell us all that much, beyond at best hopeful noises.

The new management have plainly injected basic management controls previously lacking (see last report), and Arev are hardheaded specialists in this field.
I for one thought they would cut and run and their refinancing I find very encouraging. Whether it works out, only time will tell of course.

In summary, not one for a fast buck, but perhaps worth a bet at antepost odds.

[researcher07] 06/9/2007 12:22

I would imagine Arev need to keep shareholders happy. Having looked at the company it is obviuos why they were unable to buy shares in the recent cash injection. They had a 'whitewash' in the purchase and would have to go to shareholders again to buy any more shares, hence the loan, albeit it at a punative interst rate.

It looks to be a reasonable buy at this level, although the company should be considering a consolidation (10:1). I think when they do this (and they almost certainly have to, to get any real trading) then this is when we will see a lot more information coming out to move the price.

If they don't consolidate, then there is very little point paying the NOMAD and AIM fees each year, because there will be no real trading with 200mn shares in issue. With all the good news in the world a 5p price, making a £10mn valuation would be the best to be hoped for here... A consolidation would open the doors to much better trading...

We are looking at the tiddlers on AIM, anything we shouold be looking at?

[ladybird1] 01/9/2007 09:42

No date. Given Arev's effective control of the stock & the funding position, I should imagine that updating the market is not a current priority, beyond formal requirements.

I rather hope we shall see something about renegotiated Japanese, etc. franchises this month with a few words tacked on.

Your post made me glance at the website. Still no movement on the online sales, which would lift the spirits yearning for action, but not otherwise significant I suppose.

[researcher07] 31/8/2007 17:16

When are the numbers out on this one?

[ladybird1] 17/8/2007 17:12

Thanks, M.

And to you.

[marshalltronics] 17/8/2007 16:32

Ok Ladybird1.

I shall drop them a note.

Have a good weekend.

Regards

M.