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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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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 |
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0 | 0 | N/A | 0 |
RNS Number : 6714X Hardy Amies PLC 27 June 2008 27 June 2008 Hardy Amies plc ("Hardy Amies" or the "Company") Final results for the financial year ended 31 December 2007 Hardy Amies plc and its subsidiary undertakings made some excellent progress during 2007 and achieved a number of important milestones. This includes the negotiation of increased licence income for Japan, the development and opening of two stores selling our Hardy Amies London Menswear range, the development of a Black Label Womenswear range and the opening of one retail store selling this product, the signing of a joint venture agreement to develop the menswear range in China and continued growth in couture and wholesale sales. Overall turnover increased from £1,217,996 to £1,644,544 - growth of 35%. This was attributable to the new store openings which commenced from October, further growth in couture sales and increased wholesale sales. The menswear stores in Edinburgh and Chester performed to expectation. However, the womenswear store sales were poor. This was largely self-inflicted, caused largely by poor product. As a result, the overall performance of the business was mixed. Earnings before interest, taxation, depreciation and amortisation ("EBITDA") improved significantly, reducing from a loss of £1,867,233 in 2006 to £1,118,564 for 2007. This is largely a reflection of the tighter cost controls and authorisation procedures that were put in place during 2006. However, my target was to announce an EBITDA loss below £1 million and I was disappointed that we are reporting a loss above this level. This is caused by the writing down of womenswear stocks totalling £131,629, because of the poor sales performance of the range. A loss is inevitable as the retail operations are built, because of the pre-opening expenditure that is incurred before sales are made and the cost infrastructure that is put in place before scale is built. The overall loss for the year was also lower at £1,695,596, compared with £1,999,670. In addition to the write down of womenswear stocks totalling £131,629, the loss was also impacted of a charge to accelerate the depreciation on the womenswear store totalling £96,630 and the amortisation of capitalised development costs totalling £57,532. The reasons for these charges are explained below. There are three aspects to the strategy for the business; building a thriving UK business, developing international and license revenues and carefully managing the cost base. BUILDING A THRIVING UK BUSINESS Sales of product from the House at 14 Savile Row continued to grow, up from £472,263 in 2006 to £568,846, growth of 20%. Within this category, couture sales grew by 63% from £203,293 to £331,763 as Ian Garlant, our creative director, continues to attract new customers to the House. This trend has continued into 2008. Sales plus orders up to the end of May 2008 are 59% up on the comparative period for 2007. Our menswear range is sold both wholesale and retail and is making good progress. Wholesale sales started in 2007 and totalled £244,080. This will grow further in 2008. Sales to date together with orders received for autumn and winter 2008 currently total £287,000. Our Edinburgh and Chester menswear retail stores only opened towards the end of 2007 and contributed sales of £114,280 in the year ended 31 December 2007. Retail sales of menswear product will advance markedly in 2008, due to the full year effect of these two openings and additional store openings during 2008. We opened in Belfast in April and also launched our new online retail store in the same month. We are committed to opening in Bristol in the autumn of 2008 and also looking to open a store in London later in 2008. Our range has also been expanding and now includes accessories, footwear and a wider range of more casual product. Our womenswear range has been a disappointment. The store opened just before Christmas 2007 and its sales were negligible in the 2007 financial year. We recruited a sizeable team to develop the range and were expanding this early in 2008 with a view to widening the range, opening more stores and starting to make wholesale sales. However, as sales have continued to disappoint, we took a decision in May to scale back womenswear development and re-direct our focus to just developing womenswear in the House. As a result of the poor sales the directors decided to accelerate depreciation and amortisation charges relating to womenswear and to write down the womenswear stocks as at 31 December 2007. BUILDING INTERNATIONAL AND LICENCE REVENUES Licence revenue in 2007 actually declined marginally compared to 2006, from £745,733 to £705,105. 2006 included revenue of £112,500 from the UK menswear licence, which was bought back in-house in September 2006. The majority of the licence revenue comes from Japan and the previous contract expired on 19th October 2007. We have now signed new license agreements directly with the ten existing sub-licensee operators in Japan. These agreements are for three years and will provide a minimum sales income of approximately £900,000 per annum at current exchange rates from 19th October 2007. This compares with £452,940 included in the profit and loss account for 2006, representing an increase of approximately 109%. The trademarks rights for Japan were not owned by Hardy Amies plc under the previous arrangements, but these also returned to the group with effect from 19 October 2007 at no cost. We have also agreed a joint venture with Aussino Group Limited to develop retail outlets for Hardy Amies in China. Aussino is an established retailer in the Asia Pacific region and has the infrastructure and expertise to help establish Hardy Amies as a luxury brand in China. The joint venture requires a capital commitment of £0.5 million from Hardy Amies plc, which is matched by Aussino Group Limited. The current plan envisages opening two stores selling the menswear range in the Spring of 2009. We are now turning our attention to developing additional licence opportunities, particularly for the menswear range. CAREFUL MANAGEMENT OF COSTS AND RELATED PARTY LOAN We continue to closely manage costs and the reduced loss for 2007 is largely due to cost savings. However, the problems encountered with the womenswear range will mean that the loss in the first half of 2008 will accelerate and losses will continue into 2009 as the infrastructure is developed in advance of sales. The Company announced on 2 April 2008 that it had secured a loan of £500,000 from Arev Brands Limited ("ABL"), a substantial shareholder which owns 49.3% of the ordinary shares in Hardy Amies plc. The Company has now secured an additional loan of £1,000,000 from ABL on the same terms. These loans will be used to fund working capital and to continue the store rollout. As last year, this demonstrates ABL's ongoing support and belief in the long term prospects for the business. The loans bear interest at 10% above the base rate for the time being of Barclays Bank Plc and are secured by a fixed and floating charge over the entire assets of the Company. The loans will be repayable six months from the date of demand by ABL. Hardy Amies may itself repay the loans by giving at least five business days notice to ABL. In the event of any default by Hardy Amies, comprising a failure to pay any sums due under the loans, a cessation or threat of cessation of its business or any of the usual insolvency conditions, the loans will become immediately repayable together with accrued interest. After having consulted with its nominated adviser, Shore Capital & Corporate Limited, the independent directors of Hardy Amies, being John Heath, Nigel Brunning and Peter Phillips, consider that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned. Finally, as a consequence of the changes I have made to womenswear, Nigel Brunning will be stepping down from the board of directors on 30 June 2008 and leaving the business. His drive and enthusiasm has been critical to the successful launch of the menswear range and will hopefully provide a long legacy. AC Manders Chairman 26 June 2008 Consolidated Profit and Loss Account For the year ended 31 December 2007 Pre exceptional Exceptional 2007 2006 £ £ £ £ REVENUE 1,644,544 - 1,644,544 1,217,996 Trading expenses (2,787,108) - (2,787,108) (3,098,229) Other operating income 24,000 - 24,000 13,000 Earnings before interest, taxation, depreciation and amortisation - EBITDA (1,118,564) - (1,118,564) (1,867,233) Depreciation (97,494) (96,630) (194,124) (48,990) Amortisation of other (159,783) (57,532) (217,315) (11,158) intangibles Finance revenue 7,211 - 7,211 19,241 Finance costs (115,166) - (115,166) (33,506) Loss before taxation (1,483,796) (154,162) (1,637,958) (1,941,646) Taxation (57,638) - (57,638) (58,024) Loss for the year (1,541,434) (154,162) (1,695,596) (1,999,670) Basic loss earnings per ordinary share (pence) (0.81) (1.20) Diluted loss earnings per ordinary share (pence) (0.81) (1.20) The earnings before interest, taxation, depreciation and amortisation for each year arise from the Group's continuing operations. No separate Statement of Recognised Income and Expense has been presented as all such gains and losses have been dealt with in the Income Statement. Consolidated Balance Sheet At 31 December 2007 2007 2006 £ £ ASSETS Non-current assets Property, plant and equipment 955,628 272,099 Intangible assets 1,051,354 817,018 TOTAL NON-CURRENT ASSETS 2,006,982 1,089,117 Current assets Inventories 372,852 91,322 Trade and other receivables 463,588 150,088 Cash and cash equivalents 91,166 635,357 TOTAL CURRENT ASSETS 927,606 876,767 TOTAL ASSETS 2,934,588 1,965,884 EQUITY AND LIABILITIES Equity attributable to equity holders Issued share capital 2,104,911 2,079,911 Share premium 7,025,388 6,975,388 Retained earnings (10,896,340 ) (9,200,744) Other reserves 1,033,407 1,108,407 TOTAL EQUITY (732,634) 962,962 Current liabilities Trade and other payables 1,491,153 902,922 Loans 1,983,521 100,000 Obligations under finance 68,008 - leases TOTAL CURRENT LIABILITIES 3,542,682 1,002,922 Non-current liabilities Obligations under finance 124,540 - lease TOTAL LIABILITIES 3,667,222 1,002,922 TOTAL EQUITY AND LIABILITIES 2,934,588 1,965,884 Consolidated Cash Flow Statement For the year ended 31 December 2007 2007 2006 CASH FLOW FROM OPERATING £ ACTIVITIES £ Loss before taxation (1,637,958) (1,941,646) Adjusted for: Depreciation of property, plant and equipment 194,124 48,990 Amortisation of intangible 217,315 11,158 assets (Increase)/decrease in (281,530) 105,719 inventories (Increase)/decrease in trade and other receivables (313,500) 227,719 Increase/(decrease) in trade and other payables 588,793 (521,244) Difference between finance expense and finance costs paid (563) 28,733 Taxation (57,638) (11,614) CASH OUTFLOW FROM OPERATING ACTIVITIES (1,290,956) (2,052,185) CASH FLOWS FROM INVESTING ACTIVITIES Expenditure on intangible (451,651) (131,380) assets Purchase of property, plant and equipment (673,629) (44,067) Net cash acquired on purchase of subsidiary undertakings - 2,794,375 CASH (OUTFLOW)/INFLOW FROM INVESTING ACTIVITIES (1,125,280) 2,618,928 CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of 229,480 ordinary shares - Repayment of convertible loans (57,927) - Repayment of bank loans (225,759) - New debenture loans (net of repayments) 1,883,521 100,000 Repayment of finance lease (11,476) - NET CASH INFLOW FROM FINANCING ACTIVITIES 1,872,045 45,794 NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (544,191) 612,537 Cash and cash equivalents at the beginning of the period 635,357 22,820 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 91,166 635,357 Notes to the Financial Statements 1. Basis of accounting The financial statements have been prepared in accordance with International Financial Reporting Standards as endorsed by the EU for the first time. This is the first year that the Group has presented its financial statements under IFRS. The last financial statements under UK GAAP were for the year ended 31 December 2006 and the date of transition to IFRS was therefore 1 January 2006. The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS are given in note 26. The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. 2. Basis of consolidation The Group's consolidated financial statements consist of Hardy Amies plc and all of its subsidiaries. The consolidated financial statements exclude intra-group transactions and balances. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of more than half of the voting rights (currently exercisable or convertible potential voting rights) or by way of contractual agreement. The cost of acquisition is measured at fair value of assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange plus costs directly attributable to the transaction. Identifiable assets acquired, and liabilities assumed, in a business combination are initially measured at their fair values at acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets is recorded as goodwill. The combination with Royal Parks Enterprises Limited, which occurred in previous accounting periods, was recorded under the principles of merger accounting. The Group has elected not to apply IFRS 3, "Business Combinations" retrospectively to business combinations that took place before 1 January 2006. As permitted by Section 230(4) of the Companies Act 1985, the company has not presented its own profit and loss account. 3. Segmental report The group's revenue from continuing operations may be further analysed as follows:- 2007 2006 £ £ Licence income 713,315 745,732 Retail and wholesale 931,229 472,264 1,644,544 1,217,996 BUSINESS SEGMENTS For management purposes, the group is currently organised into two divisions, retail and wholesale, and licence income. Segmental information 2007 Retail and wholesale Licence Unallocated Consolidation income £ £ £ £ Revenue 931,229 713,315 - 1,644,544 RESULT Segmental result (1,759,683) 377,273 - (1,382,410) Unallocated corporation - - (147,593) (147,593) expenses Investment income - - 7,211 7,211 Finance costs (5,047) - (110,119) (115,166) (Loss)/profit before tax (1,764,730) 377,273 (250,501) (1,637,958) Income tax expenses - (57,638) - (57,638) (Loss)/profit after tax (1,764,730) 319,635 (250,501) (1,695,596) Capital additions 1,329,304 - - 1,329,304 Depreciation 194,124 - - 194,124 Amortisation 217,315 - - 217,315 Assets 2,067,340 50,219 817,029 2,934,588 Liabilities (1,277,511) (204,336) (2,185,375) (3,667,222) 2006 Retail and wholesale Licence Unallocated Consolidation income £ £ £ £ Revenue 472,263 745,733 - 1,217,996 RESULT Segmental result (2,059,692) 653,177 - (1,406,515) Unallocated corporation - - (520,866) (520,866) expenses Investment income - - 19,241 19,241 Finance costs - - (33,506) (33,506) (Loss)/profit before tax (2,059,692) 653,177 (535,131) (1,941,646) Income tax expenses - (58,024) - (58,024) (Loss)/profit after tax (2,059,692) 595,153 (535,131) (1,999,670) Capital additions 75,447 175,000 - 250,447 Depreciation 48,991 - - 48,991 Amortisation - 1,333 9,824 11,157 Assets 1,142,465 211,448 611,971 1,965,884 Liabilities (496,972) (405,950) (100,000) (1,002,922) Revenue 2007 2006 £ £ Secondary reporting format: Geographical UK 931,230 472,264 Japan 530,632 452,940 Other 182,682 292,792 1,644,544 1,217,996 The assets of Group are held in the UK. 4. Loss from operations 2007 2006 £ £ Loss from operations has been arrived at after charging/(crediting): Depreciation and amounts written off property, plant and equipment: Charge for the year Owned assets* 189,740 48,991 Leased assets 4,384 - Amortisation of licences 9,383 1,333 Amortisation of designs and trademarks - 9,824 Amortisation of development costs* 207,932 - Operating lease rentals : Plant and equipment 11,615 - Land and buildings 243,579 150,000 Exceptional expenses - 465,021 Net foreign exchange losses/(gains) 3,930 (870) Inventories recognised as an expense during 632,828 513,379 the year Write down of inventories during the year 131,629 110,000 * Includes exceptional items During the year the company has decided to accelerate the depreciation and amortisation on the leasehold improvements for its Womenswear store and the Womenswear development costs that had been incurred and capitalised. In 2006 exceptional costs comprised a charge for understated PAYE/NI from the previous year, misappropriation of funds and settlement of legal action. 5. Loss per ordinary shares The calculations of loss per share are based on the following losses and number of shares. Basic Diluted Basic Diluted 2007 2007 2006 2006 £ £ £ £ Loss for the financial year (1,695,596) (1,695,596) (1,999,670) (1,999,670) Weighted average number of shares 2007 2006 Number Number For basic earnings per share 210,491,085 166,215,901 Dilutive potential ordinary shares - - For diluted earnings per share 210,491,085 166,215,901 The company's earnings per share are as follows: 2007 2006 - Basic (0.81p) (1.20p) - Diluted (0.81p) (1.20p) Outstanding share options are excluded as they are anti-dilutive. These could become dilutive in the future. 6. Related party transactions The group received a loan of £1,983,521 from a significant shareholder, a company in which a director is a shareholder. At the year end there was a balance of £1,983,521 outstanding in respect of this loan. The loan bears interest at the rate of 10% above Bank of England base rate per annum. 7. Distribution of the annual report and accounts to shareholders Copies of the group's audited statutory accounts for the year ended 31 December 2007 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 Andrew Manders, Chairman 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 FR PUUWWQUPRGMQ
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