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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")
HALF-YEARLY UNAUDITED RESULTS FOR THE 6 MONTHS ENDED 30 APRIL 2008
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report the Company's half-yearly results for the 6 months to 30
April 2008.
Financial Results
The period under review represents the first published results of the Group
prepared under International Financial Reporting Standards (IFRS).
Reconciliations of UK GAAP to IFRS are set out in the appendix to the
half-yearly financial information along with comparative years.
Group loss for the 6 month period to 30 April 2008 was £947,000
(2007: £1,969,000).
Loss per share, basic and diluted, was 0.04p (2007: 0.58p).
The cash outflow from operations in the 6 months to 30 April 2008 was £942,000
(2007: inflow £777,000). The issue of loan stock in January 2008 raised
£912,500 before expenses, resulting in a net decrease in cash for the period of
£118,000. As at 30 June 2008, the Company had available cash resources of
£270,000.
Total capital and reserves attributable to equity holders of the Company was
£2,208,000 (2007: £1,597,000).
Operational Review
The outcome for the 6 months to 30 April 2008 shows encouraging signs with the
operating loss being in line with management expectations. Gross profit in the
business has improved from £99,000 in the 6 months to 30 April 2007 to
£1,011,000 for the same period this year. The improvement has been generated
through the recovery plan implemented at the beginning of the financial year
based on improving the key areas of the business:
* successfully implementing price increases during the first quarter of 2008;
* improvements in the operational efficiency;
* a thorough review of operations including a reduction in headcount has
enabled the Board to reduce and better manage overheads; and
* winning of new business with certain major retail and foodservice customers
.
Furthermore, the Group has started to manufacture and sell other new food
products, a departure from frozen products, to a different group of customers.
Whilst it is early days, this is part of the strategy to reduce dependence upon
the traditional ice cream market.
Revenue for the 6 months to 30 April 2008 was £4,671,000 (2007: £5,145,000),
reflecting the Board's decision to withdraw from loss making customers.
After distribution and administration expenses, this produced an operating loss
of £742,000 (2007: loss £1,759,000). This demonstrates the positive financial
effects of the recovery plan and the determination of the new management team
who were appointed to the Board in January 2008. The pre-tax loss of £947,000
for the period compares favourably against the loss of £1,969,000 in the
comparable period last year.
Total direct and indirect costs were lower than last year, even after the
inclusion of legal costs relating to the So Real Ice court action.
The benefits of the recovery plan were seen very quickly with trading losses
reducing from £1,759,000 in the first 6 months last year to £742,000 this year.
In February 2008 and March 2008 we saw deliveries to our new customers begin,
albeit a little later than anticipated. A milestone was reached in March 2008
when the business delivered its first monthly profit (before interest and
depreciation) since the acquisition of Loseley and Granelli in 2005. In April
2008, we commenced supply of our Granelli brand into a major High Street
retailer, a major breakthrough for the business.
The Company has recently won the Grocer Magazine's award for Best Frozen Food
Manufacturer 2007 and also achieved the highest grade in an independent food
manufacturing standards audit. The Board believe that these achievements
demonstrate the Company's commitment to quality and standards whilst driving
the financial turnaround.
On 2 April 2008, the Company announced that its bankers imposed a cap on the
amount of the Company's invoice discounting facility at £1.1 million. This came
at a time when the Company's debtor book was rising and it was seeking to build
stock for the Summer season. The cap severely restricted the Company's working
capital position and had a negative effect on our customers' confidence. As a
result, our sales recovery which was gaining momentum, prior to the cap has
levelled off.
On 17 June 2008, the Company announced that an invoice discounting facility had
been agreed with Cattles Invoice Finance Ltd ("Cattles") and was in operation.
Furthermore, an additional £500,000 of new loan stock from certain shareholders
was notified to the market on the same date, for which the Board is very
grateful.
Board changes
On 22 January 2008, Cliff Carter became CEO and Robert Alstead CFO of Hill
Station plc. John Dixon also joined the Board as a Non-executive director at
the same time.
At the Annual General Meeting, Bill Mapstone stood down as Executive Chairman
to become Non-executive Chairman.
The Executive team was further enhanced with the appointment of Martin
Mallinson as operations director of Loseley Dairy Ice Cream Limited to continue
the excellent work of Gwyn Jones who retired as a Director at the Annual
General Meeting in June 2008.
Dividend
No dividend has been proposed.
Legal update
On 28 February 2008, the Board of Hill Station announced that a judgement was
given against the Company in the High Court arising from a claim made by
Staplehurst Trading Limited (formerly So Real Ice Company Limited). The
judgement related to the purchase by Hill Station in July 2007, of the business
and assets of So Real Ice Company Limited, which manufacturers, distributes and
sells ice cream products.
The Board was pleased to announce on 4 July 2008 that in the Court of Appeal
Civil Division, the Company's application for permission to appeal was granted
and a stay of execution remains in force. It is not anticipated that the appeal
will be heard until the Autumn/early Winter 2008.
Following this decision, the Company has been taking further advice to clarify
its legal position. To date the legal opinion provided to the Company has been
positive. The Board remain confident of a successful outcome.
Current trading and prospects
On 17 June 2008, the Company announced that sales in April 2008 and May 2008
were significantly below expectations due to the capped invoice discounting
facility. This unpredictable sales trend has continued through to July 2008 and
represents the major risk to the business.
Management efforts were deflected during the refinancing period, but are now
clearly focused on the generation of new sales and the development of new
products, many of which are counter-cyclical.
Gross margin levels have improved since the results for the year ended 31 October
2007 and factory performance continues at efficient levels and overheads remain
under control.
Working capital will remain a concern until we are consistently achieving a
profit (before interest and depreciation), and thereby generating cash, at a
level sufficient to carry us to, and through the Winter months. The Group
currently meets its working capital needs from debtor collections so
maintaining sales and cash collections are key over coming weeks and months.
The Company's cash flow and cash resources will continue to be closely
monitored.
The Board continues to monitor it's strategy and as a part of an ongoing
review, proposals are being considered which may include, inter alia, the
conversion of outstanding loan notes into new ordinary shares, a share capital
reorganisation and a possible issue of new equity, which may require
shareholders' approval at a General Meeting. A further announcement will be
made in this regard in due course.
The Board is working hard to deliver meaningful turnover and profitability
growth going forward with the continuing support of shareholders and customers,
however, given current economic conditions, the Board will be ever vigilant re
the condition of the business and timeously take whatever action is
appropriate.
W Mapstone
Non-Executive Chairman
31 July 2008
CONSOLIDATED INCOME STATEMENT
FOR THE 6 MONTHS ENDED 30APRIL 2008 (UNAUDITED)
Note Period ended Period Ended
30 April 2008 30 April 2007
(As re-stated)
£000 £000
ALL AMOUNTS RELATE TO
CONTINUING OPERATIONS
REVENUE 4,671 5,145
Cost of sales (3,660) (5,046)
GROSS PROFIT 1,011 99
Distribution costs (845) (782)
Administration expenses (908) (1,076)
OPERATING LOSS (742) (1,759)
Finance income 12 10
Finance costs (217) (220)
LOSS BEFORE TAXATION (947) (1,969)
Income tax expense - -
LOSS FROM CONTINUING (947) (1,969)
OPERATIONS
Basic and diluted loss per (0.04)p (0.58)p
shares
CONSOLIDATED BALANCE SHEET
AS AT 30APRIL 2008 (UNAUDITED)
Note 30 April 30 April 31 October
2008 2007 2007
As re-stated) (As re-stated)
£000's £000's £000's
ASSETS
Non Current Assets
Goodwill 5,227 4,545 5,227
Property, plant and 3,605 4,291 3,825
equipment
8,832 8,836 9,052
Current Assets
Inventories 3 1,133 1,258 1,283
Trade and other receivables 1,897 2,585 2,250
Cash and cash equivalents 4 263 182 381
3,293 4,025 3,914
Total Assets 12,125 12,861 12,966
LIABILITIES Current Liabilities
Borrowings (970) (1,906) (1,240)
Trade and other payables (2,676) (2,369) (4,039)
(3,646) (4,275) (5,279)
Non current Liabilities
Borrowings 5 (6,271) (6,990) (4,532)
Total Assets Less 2,208 1,596 3,155
Liabilities
SHAREHOLDERS' EQUITY
Called up share capital 5,813 973 5,813
Share premium account 8,360 8,477 8,360
Other reserves 932 932 932
Profit and loss account (12,897) (8,786) (11,950)
EQUITY SHAREHOLDERS FUNDS 2,208 1,596 3,155
STATEMENT OF CHANGES IN EQUITY
FOR THE 6 MONTHS ENDED 30 APRIL 2008 (UNAUDITED)
Issued Share Merger Retained Total
Share Premium Reserve Earnings
Capital Account
£000's £000's £000's £000's £000's
Balance at 1 November 2006 973 8,477 932 (6,817) 3,565
Loss for the period - - - (1,969) (1,969)
Balance at 30April 2007 973 8,477 932 (8,786) 1,596
Balance at 1 November 2007 5,813 8,360 932 (11,950) 3,155
Loss for period - - - (947) (947)
Balance at 30April 2008 5,813 8,360 932 (12,897) 2,208
CASH FLOW STATEMENT
FOR THE 6 MONTHS ENDED 30 APRIL 2008 (UNAUDITIED)
6 months to 6 months to
30 April 2008 30 April 2007
(As re-stated)
£000's £000's
Cash flows from operating activities
Operating loss (947) (1,742)
Depreciation 220 236
Finance costs 217 221
Finance income (12) (10)
Changes in working capital
Decrease in inventories 150 339
Decrease/(increase) in receivables 353 (33)
(Decrease)/increase in payables (923) 1,766
Cash generated from operating activities (942) 777
Interest paid (182) (221)
Interest received 12 10
Net cash from operating activities (1,112) 566
Cash flows from investing activities
Purchase of property plant and equipment - (353)
Net cash from investing activities - (353)
Cash (outflow)/inflow before financing activities (1,112) 213
Cash flows from financing activities
New borrowings advanced 1,063 -
Repayment of obligations under finance leases (69) (69)
Net cash used by financing activities 994 -
Net (decrease)/increase in cash and cash e (118) 144
quivalents
Opening cash and cash equivalents 381 38
Cash and cash equivalents at end of period 263 182
NOTES TO THE HALF-YEARLY FINANCIAL INFORMATION
1. GENERAL INFORMATION
Hill Station PLC is a public limited company ("Company") incorporated in the
United Kingdom under the Companies Act 1985 (registration number 5188260). The
Company is domiciled in the United Kingdom and it's registered address is
Loseley Park, Llantarnam Park Way, Cwmbran, Gwent, NP44 3GA. The Company's
shares are traded on the Alternative Investment Market ("AIM").
The Company's principal activity is that of ice cream manufacture.
2. BASIS OF PREPARATION
Hill Station PLC has adopted International Financial Reporting Standards (IFRS)
with effect from 1 November 2006. The group will apply IFRS in its consolidated
financial statements for the year ending 31 October 2008. Therefore these
interim statements are the group's first financial statements prepared in
accordance with IFRS.
The financial information set out in this document does not comprise the
statutory accounts of the Company within the meaning of section 240(5) of the
Companies Act 1985.
A reconciliation showing the impact of the transition from UK GAAP to IFRS is
contained in the appendix to this interim report.
3. INVENTORY
Inventory is valued at the lower of cost and net realisable value after making
due allowance for obsolete and slow-moving inventories. Cost includes all
direct costs and an appropriate proportion of fixed and variable overheads.
4. CASH AND CASH EQUIVALENTS
Cash and cash equivalents, for the purposes of the cash flow statement,
comprises cash in hand and at the bank, any deposits repayable on demand, less
any bank overdrafts.
An analysis of the figures is as follows:
30 April 2008 30 April 2007
£000's £000's
Cash in Hand and at Bank 263 182
Net Cash and Cash Equivalents 263 182
5. BORROWINGS
Borrowings include loan stock of £3,063,000 (2007 £2,000,000) and a Government
grant of £1,335,000 (2007 £1,506,000).
6. LOSS PER ORDINARY SHARE
Loss per share is calculated on the basis of loss for the year after tax,
divided by the weighted average number of shares in issue of 2,325,188,070
(2007 - 336,622,048).
Information with regard to diluted losses per share has not been presented as
the effects of conversion are considered to be anti-dilutive.
2008 2007
Earnings Weighted Per Earnings Weighted Per
Average No. share £ Average No. share
£000's Of shares pence mount of shares amount
pence
Losses attributable (947) 2,325,188,070 (0.04)p (1,969) 336,622,048 (0.58)p
to ordinary
shareholders
7. DIVIDENDS
No dividend is proposed for the six months ended 30 April 2008.
8. TAXATION
The charge for taxation is based on the results for the period and takes into
account taxation deferred because of timing differences between the treatment
of certain items for taxation and accounting purposes.
Provision is made in full for taxation deferred in respect of timing
differences that have originated but not reversed by the balance sheet date,
except for gains on disposal of fixed assets which will be rolled over into
replacement assets. No provision is made for taxation on permanent differences.
Deferred tax is not discounted.
Deferred tax assets are recognised to the extent that it is more likely than
not that they will be recovered.
9. APPENDIX
Reporting Under International Financing Reporting Standards
This half-yearly report is the first report to be prepared under IFRS. The
Group's date of transition is 1 November 2006, therefore the opening balance
sheet for IFRS purposes is that reported at 31 October 2006 as amended for
changes due to IFRS. The comparative figures have been prepared on the same
basis and have therefore been restated from those previously prepared under UK
GAAP. Notes below explain the effect of converting from UK GAAP to IFRS in
these accounts
To show the impact of adopting IFRS, reconciliation schedules have been
included in this appendix as follows: -
1. Reconciliation of Group Balance Sheet as at 31 October 2007
2. Reconciliation of Group Balance Sheet as at 30 April 2007
3. Reconciliation of Group Balance Sheet as at 30 April 2008
4. Reconciliation of Group Income Statement for six months ending 30 April
2008
5. Reconciliation of Group Income Statement for six months ending 30 April
2007
The transition of UK GAAP to IFRS does not affect the cash flows generated by
the Group. There is therefore no reconciliation statement required for its
impact on cash flows.
Reconciliation of Group Balance Sheet at 31 October 2007
from UK GAAP to IFRS (Unaudited)
ASSETS UK GAAP Goodwill Impairment of IFRS as at 31
Amortisation intangibles October 2007
£000's £000's £000's £000's
Non Current Assets
Goodwill 4,954 273 - 5,227
Intangibles 25 - (25) -
Property, plant and 3,825 - 3,825
equipment
8,804 273 (25) 9,052
Current Assets
Inventories 1,283 - - 1,283
Trade and other receivables 2,250 - - 2,250
Cash and cash equivalents 381 - - 381
3,914 - - 3,914
Total Assets 12,718 273 (25) 12,966
LIABILITIES
Current Liabilities
Borrowings (1,240) - - (1,240)
Trade and other payables (4,039) - - (4,039)
(5,279) - - (5,279)
Non Current Liabilities
Borrowings (4,532) - - (4,532)
TOTAL ASSETS LESS 2,907 273 (25) 3,155
LIABILITIES
Shareholder's Equity
Called up share capital 5,813 - - 5,813
Share premium account 8,360 - - 8,360
Other reserves 932 - - 932
Profit and loss account (12,198) 273 (25) (11,950)
EQUITY SHAREHOLDERS FUNDS 2,907 273 (25) 3,155
Reconciliation of Group Balance Sheet at 30 April 2007
from UK GAAP to IFRS (Unaudited)
ASSETS UK GAAP Goodwill Impairment IFRS as at
Amortisation of 30 April
intangibles 2007
£000's £000's £000's £000's
Non Current Assets
Goodwill 4,458 87 - 4,545
Intangibles 30 - (30) -
Property, plant and 4,291 4,291
equipment
8,779 87 (30) 8,836
Current Assets
Inventories 1,258 - - 1,258
Trade and other 2,585 - - 2,585
receivables
Cash and cash equivalents 182 - - 182
4,025 - - 4,025
Total Assets 12,804 87 (30) 12,861
LIABILITIES
Current Liabilities
Borrowings (1,906) - - (1,906)
Trade and other payables (2,369) - - (2,369)
(4,275) - - (4,275)
Non Current Liabilities
Borrowings (6,990) - - (6,990)
TOTAL ASSETS LESS 1,539 87 (30) 1,596
LIABILITIES
Share Holder's Equity
Called up share capital 973 - - 973
Share premium account 8,477 - - 8,477
Other reserves 932 - - 932
Profit and loss account (8,843) 87 (30) (8,786)
Equity Shareholders Funds 1,539 87 (30) 1,596
Reconciliation of Group Income Statement for the six months ended 30 April 2008
from UK GAAP to IFRS (Unaudited)
UK GAAP Goodwill Impairment Restated IFRS
Amortisation of 30 April 2008
intangibles
£000's £000's £000's £000's
TURNOVER 4,671 - - 4,671
Cost of sales (3,660) - - (3,660)
1,011 - - 1,011
Distribution expenses (845) - - (845)
Administration (914) - 6 (908)
Operating profit (748) - 6 (742)
Finance income 12 - - 12
Finance costs (217) - - (217)
Profit before tax (953) - 6 (947)
Amortisation (147) 147 - -
Income tax charge - - - -
(1,100) 147 6 (947)
Reconciliation of Group Income Statement for the six months ended 30 April 2007
from UK GAAP to IFRS (Unaudited)
UK GAAP Goodwill Restated IFRS
Amortisation 30 April 2008
£000's £000's £000's
TURNOVER 5,145 - 5,145
Cost of sales (5,046) - (5,046)
99 - 99
Distribution expenses (782) - (782)
Administration (1,076) - (1,076)
Operating profit (1,759) - (1,759)
Finance income 10 - 10
Finance costs (220) - (220)
Profit before tax (1,969) - (1,969)
Amortisation (87) 87 -
Income tax charge - - -
(2,056) 87 (1,969)
10. DISTRIBUTION OF THE HALF-YEARLY REPORT
Copies of the Half-yearly Report will be available to the public from the
Company Secretary at the Company's registered address at Loseley Park,
Llantarnam Park Way, Cwmbran, Gwent, NP44 3GA and the Company's website,
www.hillstationplc.co.uk.
11. ENQUIRIES
Hill Station plc
Cliff Carter, Chief Executive Officer
Tel: 01633 833000
Nominated Advisor
Dowgate Capital Advisors Ltd
Liam Murray
Tel: 020 74924777
Broker
Finncap
Charles Cunningham
Tel: 020 76001658
END
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