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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Hill Station | LSE:HLL | London | Ordinary Share | GB00B0335224 | ORD 0.25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.07 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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Hill Station Plc (the "Company" or the "Group")
Half yearly report to 30 April 2007
CHAIRMAN'S STATEMENT
This report is being written in the middle of difficult period for the Company
and comes hard on the heels of a number of recent announcements to shareholders
regarding the current state of trading, refinancing and future prospects.
Financial Results and Operational Review
The Group's financial results for the six month period to 30 April 2007 are
very disappointing but reflect the turmoil the Group had gone through during
the period, notably:
* Failure to complete the integration into Cwmbran of the Cheadle production
and close the factory there until 31 December 2006, some 4 months late,
with the consequent negative financial effects;
* Significant refinancing activity during the period from October to the end
of January 2007, which took management effort and focus away from the key
task of running an efficient production facility and building a sales
platform;
* Wholesale senior management changes with the resignation in January of the
Chairman, Group Managing Director, Group Marketing Director and one Non
Executive, followed in early February by the departure of the Operations
Director. The appointment of myself as Executive Chairman on 31 January
2007 represented a new beginning for the Group and the culmination of the
first stage refinancing of some £2.5 million of new equity, loan stock and
asset finance.
Since January 2007 much effort has been directed at increasing the efficiency
within the factory, reducing and rationalising the number of products and
weeding out those with small, and even negative, margin. However the spectre of
a worsening cash flow has been ever present, and the gap in cash flow
identified in January 2007 continued to widen as our key raw material costs
almost doubled from January through April 2007 and the negative effects of the
poor financial state of the Group started to be felt by suppliers and customers
alike.
The Group recorded a post tax loss of £2.05 million for the six months against
a loss of £1.15 million in the comparable 2006 period.
Total direct and indirect costs were greater than 2006, but lower than
anticipated sales and continuing poor margins were the main cause of the poor
result.
Net assets at 30 April were £1.5 million. Net debt increased to £3.2 million.
Trading Update
In the Notice of EGM dated 27 July I commented as follows:
`As reported in the announcement of 10 July 2007, sales in April 2007 were
above expectations due to the warm weather experienced in that month; however
since then the extremely poor, inclement weather over the months of May, June
and July 2007 has had a seriously adverse affect on ice cream sales for all
producers, and the Company is no exception with sales now running at some 25%
below target. This of course represents a serious reduction in the Company's
ability to draw from the debtor finance facility.
The Company reacted swiftly to try to recover the significant increase in the
raw material prices of key ingredients, also reported in the 10 July 2007
announcement, by passing this on in part to customers but this is a slow
process and has been met with resistance from customers and some further loss
of sales. Competitors are in the same position and the Directors believe that
there will be an across the board price increase over coming months. However
the squeeze in margins can only lead to a further cash drain.
Work continues apace on reducing the number of product lines, eliminating low/
negative margin sales and on seeking alternatives to the raw materials subject
to the price inflation, which should show benefit in the future. In addition
improvement in factory efficiency continue to be forced through and plans are
in place for the rapid integration of the So Real Ice manufacture into the
Company's Cwmbran operation.
The addition of the So Real Ice products is eagerly anticipated and, through
recent strengthening at the top of the sales team, strategies for building on
their products/brands are being advanced, as part of the overall strategy for
the group.
The board believe that the Company has a viable future and is capable of
creating shareholder value in the medium term if it can overcome its current
funding needs and grow by acquisition'
In the event that the minimum subscription pursuant to the placing announced in
the circular posted to shareholders 27 July 2007 is not raised, the EGM will be
adjourned and the board of the Company will consider its position in respect of
its current trading and working capital position.
Looking ahead
The Board still believe that the Company is capable of producing the returns
that were envisaged when the acquisitions took place in November 2005. The
problems of integration in 2006, significant raw material inflation and the
unprecedented weather during May, June and July 2007 have all been very
difficult hurdles to negotiate, but with the support of shareholders and loan
stock holders in relation to the current fundraising and thereby completion of
the acquisition of So Real Ice, the business will be on an even sounder basis
for the future.
It is intended in coming months to continue the review of all aspects of the
Group, including the sales platform/strategy, product mix, factory performance,
distribution and personnel at all levels to enhance the quality of performance
across the business.
Bill Mapstone
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(unaudited)
For the six months ended 30 April 2007
Six months Six months
30 April 30 April
2007 2006
£ £
TURNOVER 5,145,280 5,715,738
Cost of sales 5,046,199 4,733,701
GROSS PROFIT 99,081 982,037
Selling and distribution 782,105 994,623
costs
Administrative expenses 1,162,141 978,988
OPERATING LOSS (1,845,165) (991,574)
EXCEPTIONAL ITEMS
Costs of fundamental - (162,826)
reorganisation
LOSS ON ORDINARY ACTIVIES
BEFORE INTEREST (1,845,165) (1,154,400)
Interest receivable 10,184 609
Interest payable (220,559) (77,016)
LOSS ON ORDINARY ACTIVITIES (2,055,541) (1,230,807)
BEFORE TAXATION
Tax on loss on Ordinary - 77,775
Activities
RETAINED (LOSS)/PROFIT FOR (2,055,541) (1,153,032)
THE PERIOD
Basic and diluted losses per 0.61p 0.37p
share
GROUP BALANCE SHEET
(unaudited)
As at 30 April 2007
30 April 2007 30 April 2006
£ £ £ £
FIXED ASSETS
Intangible assets 4,487,838 5,298,359
Tangible assets 4,290,743 4,472,013
8,778,581 9,770,372
CURRENT ASSETS
Stock 1,258,743 1,765,180
Debtors 2,585,161 3,855,924
Cash at bank and in hand 182,198 139,109
4,026,102 5,760,213
CREDITORS:
Amounts falling due within 4,274,973 5,846,215
one year
NET CURRENT ASSETS/(LIABILITIES) (248,871) (86,002)
TOTAL ASSETS LESS CURRENT LIABILITIES 8,529,713 9,684,370
CREDITORS:
Amounts falling due after one 6,990,240 3,300,652
year
NET ASSETS 1,539,473 6,383,718
CAPITAL AND RESERVES
Called up share capital 972,970 789,345
Share premium account 8,477,218 7,460,168
Merger reserve 931,952 931,952
Profit and loss account (8,842,667) (2,797,747)
SHAREHOLDERS' FUNDS 1,539,473 6,383,718
GROUP CASH FLOW STATEMENT
(unaudited)
For the six months ended 30 April 2007
30 April 30 April
2007 2006
Cash flow statement £ £
Cash outflow from operating 364,275 (1,037,791)
activities
Returns on investment and servicing - (93,518)
of finance
Capital expenditure and financial (199,253) (558,793)
investment
Acquisitions and disposals - (7,666,148)
Cash outflow before financing 165,022 (9,356,250)
Financing 1,200,675 6,744,327
Decrease in cash 1,365,697 (2,611,923)
Reconciliation of net cash flow to movement in net funds/
(debt) (note 3)
30 April 30 April
2007 2006
£ £
Movement in cash in the period 1,365,697 (2,611,923)
Loans acquired with subsidiary - (483,500)
Finance leases (1,052,462) (190,979)
Cash outflow from repayment of finance 39,989
leases
Movement in net funds/(debt) in 313,235 (3,246,413)
the year
Net funds at 1 November 2006 (3,233,467) 12,946
Net funds/(debt) at 30 April 2007 (2,920,232) (3,233,467
NOTES TO THE INTERIM ACCOUNTS
1. Basis of Accounting
The financial statements have been prepared under the historical cost
convention and in accordance with applicable accounting standards and on the
basis that the company will continue as a going concern.
The Group has an excess of net current liabilities at the balance sheet date
which indicates that the Group may not be able to meet all its debts as they
fall due. Also, the group has continued to make significant losses during the
period. However, the directors are in the final stages of fundraising which
they believe will provide the cash necessary to support the immediate working
capital requirements of the group and to allow it to continuing trading.
There was an issue of £720,000 of loan stock in July 2007 which can be
converted into ordinary shares at a 100% premium. A further share placing will
be made on the 20 August for up to £3.5m with a minimum £3.0 m required at
0.25p per share.
The directors have assessed the current working capital requirements of the
group on the foregoing basis and believe that subject to successful fundraising
the group has sufficient resources to meet its debts as and when they fall due
and to continue trading as a going concern for at least the next 12 months.
The financial statements do not include any of the adjustments which would be
required if the going concern assumption should prove not to be appropriate.
Those adjustments would include possibly restating the carrying value of assets
to their recoverable amounts, providing for any further liabilities which may
arise, and to re-classify liabilities according to when they may then fall due.
These matters may have consequent effects on the profit and loss account.
2. Losses per Share
The weighted average number of shares during the period was calculated as
follows:
Date Event No. of shares Days Average
01/11/06 Opening balance 315,738,070 91 158,741,240
31/01/07 Issue of share capital 357,738,070 90 177,880,808
30/04/07 Closing balance 357,738,070 - -
181 336,622,048
The weighted average number of shares in issue during the prior period was
290,876,192 based on the number of shares issued at the beginning and end of
the period.
3. Analysis of net funds/(debt)
At the balance sheet date the company's net funds/(debt) comprised the
following:
30 April 30 April
2007 2006
£
Cash at bank and in hand 182,198 139,106
Bank loans and overdrafts (1,850,862) (3,173,467)
Amounts payable under hire purchase agreements (1,251,568) (199,106)
NET FUNDS/(DEBT) (2,920,232) (3,233,467)
Contact
Bill Mapstone, Chairman
Hill Station Plc
Tel 01633 833 000
Liam Murray, Nominated Adviser
City Financial Associates Limited
Tel 020 7090 7800
END
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