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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Hardy Amies | LSE:HRD | London | Ordinary Share | GB0002931458 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.25 | 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:0874Z
Hardy Amies PLC
27 June 2007
27 June 2007
Hardy Amies plc ("Hardy Amies" or "the Company")
Preliminary results for the financial year ended 31 December 2006
Since my appointment as Chairman to Hardy Amies in May 2006, I have spent time
laying the foundations to build a thriving and profitable business over the
medium term. I still remain convinced of the global potential of Hardy Amies as
a luxury brand and am encouraged by our progress in the first year. It will
take time before these changes are reflected in the overall profit performance
of the business, but there are green shoots which we can report now, which we
should build on in the coming months and years. There are three aspects to the
strategy I put in place following my appointment and I set out our progress in
each of these areas.
BUILDING A THRIVING UK BUSINESS
Until 2007 retail sales were only made from the House at 14 Savile Row,
comprising mainly couture pieces. This was and will continue to be the heart of
the brand, but will never be a significant profit contributor in its own right.
With this in mind, in the second half of 2006 funds previously earmarked for
marketing and advertising expenditure for the House were directed towards the
development of sales from other sources.
Significant progress has been made to provide a platform for additional sales.
We took full control of the UK menswear licence in September 2006 for a
consideration of #160,000 by way of cash and by the issue of 2,500,000 new
shares at a price of 3 pence. We also recruited teams to develop ready-to-wear
collections for both menswear and womenswear. Ian Garlant remains in overall
charge of design direction, but we added to the design team by recruiting Vesna
Milinkovic as overall head of the ready-to-wear ranges. I am pleased with our
progress developing these ranges and we are on track to have ranges ready for
both menswear and womenswear this autumn. Menswear sales on a wholesale basis
have already commenced and total #163,000 in the first five months of 2007. The
range can be seen in stores like Harvey Nichols and our indications suggest it
is selling well. We are also at advanced stages of negotiation to open a small
number of retail outlets which should start trading from the autumn of 2007.
These will retail both ready-to-wear collections. With a view to the developing
of the retail side of the business, I am delighted to announce that we have also
appointed John Heath as a non-executive director to the business to provide
invaluable expertise in this area.
Sales in the House continue to thrive despite cost curtailment. Sales of product
from the House increased by 28.9% from #366,462 to #472,264. This has continued
into 2007, with House sales up by 15.8% from #175,605 to #203,337 in the first
five months of the year. However, within this couture sales have increased by
81.7% from #64,396 to #117,008.
Finally, a transactional website for Hardy Amies is also now up and running,
albeit with only a small range of products. We will be adding to the range in
the coming months.
BUILDING INTERNATIONAL AND LICENCE REVENUES
Hardy Amies will only be able to fully exploit international opportunities to
create an international luxury brand once it has a successful UK operation. At
this stage our main focus has therefore been ensuring that current licences are
appropriate for the business going forward. Many were agreed a long time ago
and are on terms which would not be acceptable today. As a result, we are
currently in re-negotiation with the main licence for Japan, which comes up for
renewal in October 2007 and hope to be able to announce positive news in this
area later in 2007. Tim Maltin, the former Chief Executive, has been retained
on a part-time consulting basis to assist us with these licence negotiations.
CAREFUL MANAGEMENT OF COSTS
On my appointment, we had carried out an extensive exercise to review operating
costs to ensure they are necessary and appropriate for the business. The
effects of this can start to be seen in the financial statements for 2006. The
overall operating loss for the year was #1.99 million; however the operating
loss in the first six months of the year totalled #1.24 million. The business
will still be loss-making in 2007, but I am satisfied that expenditure is now
being made in the right areas, with a view to the longer term development of the
business.
As part of this exercise we introduced stricter internal controls in the
business, such as more stringent expenditure authorisation procedures.
Unfortunately, this resulted in the uncovering of the theft of funds from the
business. The sums involved have been separately identified as an exceptional
item in the financial statements and totalled #167,656 in 2005 and #185,021 in
2006. We have looked back through the records and it is apparent that the theft
was also taking place before 2005.
The matter has been referred to the police and this makes it difficult to
comment in any detail, but an arrest warrant has been issued for the former
financial controller of the company. If there is a positive aspect to this
horrible business, it is that the underlying trading position of the business is
better than has been previously reported.
In my statement last September I mentioned that further fundraising was likely
to be necessary in 2007. This is required to fund ongoing operating losses and
the capital costs associated with the development of the ready-to-wear ranges
and a retail rollout. I am pleased to announce that Arev Brands Limited, which
owns 49.3% of the ordinary shares in Hardy Amies plc has made a loan of #2.85
million available to Hardy Amies plc. This shows the confidence of the largest
shareholder in the future of the business.
AC Manders
Chairman and Chief Executive
Consolidated Profit and Loss Account
For the year ended 31 December 2006
Note 2006 2006 2006 2005 2005 2005
Pre- Exceptionals Total Pre- Exceptionals Total
exceptionals exceptionals
TURNOVER -
CONTINUING
OPERATIONS 3 1,217,996 - 1,217,996 1,098,379 - 1,098,379
Cost of sales (757,399) - (757,399) (461,688) - (461,688)
---------- ---------- ---------- ---------- ---------- ----------
GROSS PROFIT 460,597 - 460,597 636,691 - 636,691
Administrative
expenses (2,000,846) (280,000) (2,280,846) (1,607,951) - (1,607,951)
Misappropriation
of funds - (185,021) (185,021) - (167,656) (167,656)
Other operating
income 13,000 - 13,000 9,600 - 9,600
---------- ---------- ---------- ---------- ---------- ----------
OPERATING LOSS-
CONTINUING
OPERATIONS (1,527,249) (465,021) (1,992,270) (961,660) (167,656) (1,129,316)
Other interest
receivable 19,241 - 19,241 11,966 - 11,966
Interest payable
and similar charges (33,506) - (33,506) (18,739) - (18,739)
---------- ---------- ----------
LOSS ON ORDINARY
ACTIVITIES BEFORE
TAXATION 4 (1,541,514) (465,021) (2,006,535) (968,433) (167,656) (1,136,089)
========== ========== ========== ==========
Taxation 5 (58,024) (55,133)
LOSS FOR THE FINANCIAL YEAR (2,064,559) (1,191,222)
LOSS PER SHARE
- Basic 6 (0.53p) (1.31p)
========== ==========
- Diluted 6 (0.53p) (1.31p)
========== ==========
Further disclosure on the exceptional items is included in note 4.
No separate Statement of Total Recognised Gains and Losses has been presented as all such gains and losses have been
dealt with in the Profit and Loss Account.
Consolidated Balance Sheet
At 31 December 2006
Note 2006 2005
# # # #
FIXED ASSETS
Intangible assets 7 752,129 621,795
Tangible assets 272,099 277,023
---------- ----------
1,024,228 898,818
CURRENT ASSETS
Stocks 91,322 197,041
Debtors 150,088 381,024
Cash at bank and in hand 635,357 22,820
---------- ----------
876,767 600,885
CREDITORS: Amounts falling 8 (1,002,922) (1,252,688)
due within one year
---------- ----------
NET CURRENT LIABILITIES (126,155) (651,803)
---------- ----------
TOTAL ASSETS LESS CURRENT 898,073 (111,573)
LIABILITIES
========== ==========
CAPITAL AND RESERVES
Called up share capital 2,079,911 967,249
Share premium account 6,975,388 5,088,845
Other reserves 1,108,407 1,033,407
Profit and loss account (9,265,633) (7,201,074)
---------- ----------
EQUITY SHAREHOLDERS'
FUNDS/(DEFICIT) 898,073 (111,573)
========== ==========
Consolidated Cash Flow Statement
For the year ended 31 December 2006
Note 2006 2005
# # # #
NET CASH OUTFLOW FROM
OPERATING ACTIVITIES 9 (2,086,419) (1,468,313)
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Interest received 16,024 11,966
Interest paid (1,556) (18,739)
---------- ----------
NET CASH INFLOW/(OUTFLOW) FOR
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE 14,468 (6,773)
TAXATION (11,614) (55,133)
CAPITAL EXPENDITURE
Purchase of tangible fixed
assets (44,067) (170,405)
Purchase of intangible assets (100,000) -
---------- ----------
NET CASH OUTFLOW FOR CAPITAL
EXPENDITURE (144,067) (170,405)
ACQUISITIONS AND DISPOSALS
Net cash acquired with
subsidiary 2,794, 375 -
---------- ----------
NET CASH INFLOW FOR
ACQUISITIONS AND DISPOSALS 2,974,375 -
---------- ----------
CASH INFLOW/(OUTFLOW)BEFORE
FINANCING 566,743 (1,700,624)
FINANCING
Issue of equity share capital 74,787 71,329
Share premium on issue of 154,693 203,492
equity share
(Repayment)/receipt of
convertible loan (57,927) 57,927
Repayment of bank loans (225,759) (4,282)
New debenture loans (net of
repayments) 100,000 -
---------- ----------
NET CASH INFLOW FROM FINANCING 45,794 328,466
---------- ----------
INCREASE/(DECREASE) IN CASH 10 612,537 (1,372,158)
========== ==========
Notes
1. Basis of preparation
The financial information set out in this announcement does not constitute the
statutory accounts for the year ended 31 December 2006 or the year ended 31
December 2005.
The financial information for the year ended 31 December 2005 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 s237(2) or (3) Companies
Act 1985. The statutory accounts for the year ended 31 December 2006 will be
delivered to the Registrar of Companies following the Company's annual general
meeting.
2. Basis of consolidation
The consolidated financial statements incorporate those of Hardy Amies plc
and all of its subsidiary undertakings for the year. Subsidiaries acquired
during the year are consolidated using the acquisition accounting method. Their
results are incorporated from the date that control passes. The difference
between the cost of acquisition of shares in subsidiaries and the fair value of
the separable net assets acquired is capitalised and written off on a straight
line basis over its estimated economic life. Provision is made for impairment.
The combination with Royal Parks Enterprises Limited was recorded under the
principles of merger accounting. All financial statements are made up to 31
December 2006.
3. Segmental Report
The Group's turnover and loss before taxation were derived from its principal activities. The Group operates in the
following geographical markets:
Net assets/(liabilities) Turnover Loss before taxation
2006 2005 2006 2005 2006 2005
# # # # # #
UK (2,167,538) (2,626,759) 591,991 475,645 (2,556,960) (1,579,859)
Overseas 3,065,611 (2,515,186) 626,005 622,734 550,425 443,770
---------- ---------- ---------- ---------- ---------- ----------
898,073 (111,573) 1,217,996 1,098,379 (2,006,535) (1,136,089)
========== ========== ========== ========== ========== ==========
The group's turnover may be analysed as follows:-
2006 2005
# #
Licence income 745,732 731,917
Retail sales 472,264 366,462
---------- ----------
1,217,996 1,098,379
========== ===========
4. Loss on ordinary activities before taxation
2006 2005
# #
Loss on ordinary activities before taxation is stated after
charging:
Depreciation and amounts written off tangible fixed assets:
Charge for the year
Owned assets 48,991 42,184
Amortisation of goodwill 33,509 33,508
Amortisation of other intangibles 11,157 9,824
Operating lease rentals:
Land and buildings 150,000 150,000
Exceptional expenses 465,021 167,656
========== ==========
During the year the group incurred exceptional costs totaling #465,021 (2005: #167,656) comprising of:
2006 2005
# #
Settlement of Winterman claim 200,000 -
Underprovision of PAYE/NI in earlier years 80,000 -
Misappropriation of funds 185,021 167,656
---------- ----------
465,021 167,656
========== ==========
In late 2005, Hardy Amies entered into an agreement with a group of US investors known as Winterman for raising finance
for Hardy Amies. On severing the deal with Winterman upon the acquisition of Brand Development Capital Unlimited,
Winterman launched a legal action against Hardy Amies. This action was settled by the issue of shares to Winterman to
the value of #200,000.
An amount totalling #80,000 is included in administration expenses in respect of additional employment costs. These
additional employment costs relate to the need to change an accounting estimate as a prior year's accrual for PAYE/NI
had been understated. The need to increase accruals in 2006 in relation to 2005 and prior costs has inflated the 2006
employment cost figures.
Details surrounding the misappropriation of funds are set out in the Chairman's Statement above.
The above items are exceptional in size and incidence and necessary to show separately in order to explain the
performance of the period.
5. Taxation
Current tax: 2006 2005
# #
Foreign corporation tax on profit of the period 58,024 55,133
---------- ----------
Total current tax charge 58,024 55,133
---------- ----------
Deferred tax:
Origination and reversal of timing differences - -
---------- ----------
Total deferred tax - -
---------- ----------
Tax on loss on ordinary activities 58,024 55,133
========== ==========
Factors affecting tax charge for the period:
The tax assessed for the period is higher than the standard rate of corporation tax in the UK (30 per cent). The
differences are explained below:
2006 2005
# #
Loss on ordinary activities before taxation (2,006,535) (1,136,089)
========== ==========
Loss on ordinary activities multiplied by standard
rate of corporation tax in the UK of 30% (2005: 30%) (601,961) (340,827)
Effects of:
Expenses not deductible for tax purposes 105,928 3,030
Capital allowances in excess of depreciation for
period (1,306) 12,126
Other timing differences 19,095 -
Difference between tax and accounting profit 13,391 -
Unutilised tax losses carried forward 530,600 388,770
Marginal relief (7,723) (7,966)
---------- ----------
Current tax charge for year 58,024 55,133
========== ==========
Factors that may affect future tax charges
No deferred tax asset has been recognised in the accounts for the year ended 31
December 2006 on the grounds that there is insufficient evidence that this asset
is recoverable. This assumption is based on the financial projections and the
recent performance of the group as a whole. The group has an unrecognised
deferred tax asset of #3,271,398 (2005: GBP2,723,009) in this respect.
The deferred tax asset would become recoverable if the group started to make
sufficient taxable profits to allow the brought forward losses to be utilised.
The deferred tax asset is based upon the unrelieved trading losses of the group
and timing differences that have originated but not reversed by the balance
sheet date.
6. Loss per ordinary share
The calculations of loss per share are based on the following losses and number of shares.
Basic Diluted Basic Diluted
2006 2006 2005 2005
# # # #
Loss for the financial year (2,064,559) (2,064,559) (1,191,222) (1,191,222)
========== ========== ========== ==========
Weighted average 2006 2005
Number Number
For basic earnings per share 386,505,365 90,820,105
Dilutive potential ordinary
shares - 161,498
---------- ----------
For diluted earnings per share 386,505,365 90,981,603
======= === ==========
The company's earnings per share are as follows: 2006 2005
- Basic (0.53p) (1.31p)
======= === ==========
- Diluted (0.53p) (1.31p)
======= === ==========
Outstanding share options are excluded as they are anti-dilutive. These could become dilutive in the future.
7. Intangible fixed assets
GROUP Licences Designs and Goodwill Total
trademarks
# # # #
Cost
At beginning of year - 209,148 670,171 879,319
Acquisitions 175,000 - - 175,000
---------- ---------- ---------- ----------
At end of year 175,000 209,148 670,171 1,054,319
---------- ---------- ---------- ----------
Amounts written off
At beginning of year - 55,220 203,304 257,524
Charged in the year 1,333 9,824 33,509 44,666
---------- ---------- ---------- ----------
At end of year 1,333 65,044 235,813 302,190
---------- ---------- ---------- ----------
Net book value
At 31 December 2006 173,667 144,104 434,358 752,129
========== ========== ========== ==========
At 31 December 2005 - 153,928 467,867 621,795
========== ========== ========== ==========
Other intangible fixed assets comprise costs of #196,500 being archives, designs
and trademarks relating to Norman Hartnell Limited, #1 being the nominal value
of trademarks relating to Hardy Amies (Retail) Limited, along with costs
associated with the design and regulation of the Royal Parks logo which has been
written down to #nil in value. The goodwill arose on the acquisition of Hardy
Amies (Retail) Limited, Norman Hartnell Limited and Cardington Initiatives
Limited. Goodwill arising on the acquisition of the latter company has been
written down to #nil as this company's activities were all discontinued.
During the year, the company repurchased a licence to sell the Hardy Amies range
for a consideration of #175,000.
8. Creditors: Amounts falling due within one year
Group Company
2006 2005 2006 2005
# # # #
Convertible loan - 57,927 - 57,927
Bank loans and overdrafts - 225,759 - 225,759
Debenture 100,000 - 100,000 -
Trade creditors 220,872 213,836 - 18,469
Amounts owed to Group - - - 212,673
undertakings
Other taxation and social 137,377 58,634 - -
security costs
Other creditors 3,832 47,114 3,159 3,159
Accruals and deferred 540,841 649,418 76,500 35,341
Income ---------- ---------- ---------- ----------
1,002,922 1,252,688 179,659 553,328
========== ========== ========== ==========
The debenture comprises #50,000 due to Arev Limited, a company in which Mr AC
Manders is a shareholder, and #50,000 to Mr PJ Phillips. Both debentures are
secured by way of a fixed and floating charge over all the assets of the
company.
9. Reconciliation of operating profit to net cash flow from operating activities
2006 2005
# #
Operating loss (1,992,270) (1,129,316)
Depreciation 44,666 42,184
Amorisation 48,991 43,332
Decrease/(increase) in stocks 105,719 (138,329)
Decrease/(increase) in debtors 227,719 (17,506)
(Decrease)/increase in creditors (68,304) 195,051
Decrease in provisions (452,940) (463,729)
---------- ----------
CASH FLOW FROM OPERATING ACTIVITIES (2,086,419) (1,468,313)
========== ==========
10. Reconciliation of net cash flow to movement in net funds
2006 2005
# #
Increase/(decrease) in cash in the 612,537 (1,372,158)
year
Cash inflow/(outflow) from decrease 183,686 (53,645)
in debt and lease financing
---------- ----------
MOVEMENT IN NET FUNDS IN THE YEAR 796,223 (1,425,803)
NET(DEBT)/FUNDS AT START OF YEAR (260,866) 1,164,937
---------- ----------
NET DFUNDS/(DEBT) AT END OF YEAR 535,357 (260,866)
========== ==========
11. Distribution of the annual report and accounts to shareholders
Copies of the group's audited statutory accounts for the year ended 31 December
2006 will be despatched to shareholders and the AIM team shortly. Copies will
also be available to the public at 14 Savile Row, London, W1S 3JN.
Enquiries:
Hardy Amies Plc
Nigel Brunning, Chief Executive 020 7734 2436
Shore Capital & Corporate Limited
Guy Peters 020 7408 4090
This information is provided by RNS
The company news service from the London Stock Exchange
END
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