29th Dec 2008 07:00
29 December 2008
Hot Tuna (International PLC
("Hot Tuna" or "the Group")
Preliminary Results for the year ended 30 June 2008
Hot Tuna (International) PLC (AIM:HTT), a leading surf wear and fashion brand, announces its Preliminary Results for the year ended 30 June 2008.
Highlights
|
• |
Revenue increased 81.8% to £1,125,493 (FY 2007: £619,131) |
|
• |
Loss from operations £5,269,751, (including £2.6m impairment of brand) (FY 2007: loss £5,333,160) |
|
• |
Cash expenditure during the period reflects the Group's commitment to investing in strong management to drive the Group to the next phase of its strategy |
|
• |
Significant cost cutting undertaken in year |
|
• |
Improvements to overall design and clear focus to re-establish Hot Tuna as a genuine heritage surf-lifestyle brand |
|
• |
Key retail partnerships established in Australia, UK, continental Europe and US |
|
• |
Orders secured including increase in Debenhams stores to 45, German catalogue and on-line retailer Sportscheck, Amazon, Littlewoods and Patricia Fields in the US |
Commenting on the results, Niels Juul, CEO, said "2008 was a difficult and challenging year for Hot Tuna but we have now completely overhauled all aspects of the apparel "machine" and streamlined the Company's sourcing program and logistics, while focusing on shifting our distribution strategy from independent retailers to a greater focus on department-stores and major on-line retailers.
We have also made great improvements to the overall design, giving the collections a more fashion forward feel. As in its original form back in 1969, Hot Tuna represents a surf-lifestyle, but has its roots solidly placed in edgy, contemporary and slightly counter-cultural fashion.
This hard work has been recognised by our customers and we have been very pleased with the response from them to our new collection with a strong order book for the Spring Summer collection providing us great confidence and hope for 2009".
|
Enquiries: |
|
|
Hot Tuna PLC Niels Juul - CEO |
Tel: +12138919409 |
|
Pelham PR Kate Catchpole |
Tel: 07803033431 |
|
Seymour Pierce Limited Mark Percy |
Tel: 07774802590 |
CHAIRMAN'S STATEMENT
The Directors of Hot Tuna (International) Plc have pleasure in presenting the Group's results for the year ended 30 June 2008.
Fundraising
In March and September 2008, the Company raised funds of £705,000 and £525,000 (before expenses) respectively. These funds, together with the available undrawn credit facility of £2.95m have helped provide the Company with the necessary working capital for the growing order book.
Results Summary
The Group loss for the year was £5.77m (2007: £5.33m), this included an impairment charge to the brand of £2.6m. The consolidated revenues grew 81% to £1.13m. All across the Group we have seen increases in sales, in spite of our aggressive efforts in cutting down the Company's overall administrative and operational costs. Our costs of sales have increased due to high one-time costs associated with a complete restructuring of the Group sourcing programs. The implementation of a new and simplified sourcing and logistics structure will enable the Company to improve order-flow, reduce delivery times, avoid excess inventory and ultimately increase gross margins.
Sales both in Europe and Australia have increased dramatically and we have reached some important milestones in establishing a stronger foothold in the US market, especially amongst "trend-setting" retailers.
Outlook
Obviously these are difficult times for the retail industry and we are facing further challenges ahead. However, as we already began our cost-cutting programs, long before the world got caught up in the current state of nervousness, we are better positioned as a smaller, but more cost-effective unit - to tackle the challenges ahead. The fact that we have been able to increase our market-share with better department-stores across the globe, especially in a shrinking market, makes me confident that we are on the right track - as a brand and as a company.
On behalf of the Board I wish to thank my fellow directors, our employees and our partners for their hard work and dedication over the last twelve months. We have worked hard to develop the brand and positioning in our markets and look forward to driving the business forward.
DAVID LENIGAS
CHAIRMAN
29 December 2008
CHIEF EXECUTIVE OFFICER'S REVIEW
The past year has seen dramatic changes and developments at Hot Tuna, as we have continued to restructure the Company and made further enhancements to the designs and general product offerings.
As part of the general cost-cutting measures, the Company's staff numbers have been trimmed from 47 to 16.
We have now completely overhauled all aspects of the apparel "machine" and streamlined the Company's sourcing program and logistics, while focusing on shifting our distribution strategy from independent retailers to a greater focus on department-stores and major on-line retailers.
We have also made great improvements to the overall design, giving the collections a more fashion forward feel, with greater emphasis on fits, graphics and better materials. As in its original form back in 1969, Hot Tuna represents a surf-lifestyle, but has its roots solidly placed in edgy, contemporary and slightly counter-cultural fashion.
It is therefore very encouraging that the retailers have reacted positively to these developments and even though we have had to dramatically cut down our overhead, we have been able to more than double the sales this year against last year.
I am therefore very proud of the unique and talented team of employees, who through some testing times, have maintained a great level of creativity, stamina and dedication.
We have seen the following developments in these individual markets:
Australia
The Hot Tuna kids-wear business is continuing to perform very well in both David Jones and Myer department stores. The recent orders from both, shows an average increase in order quantities of 8%. For the upcoming Australian Spring season, we are launching the adult ranges and the initial reaction, from retailers such as David Jones and City Beach, has been very positive.
UK / Europe
The UK continues to show great improvements and the transition into department-stores has led to encouraging results. Following a test in 5 Debenhams stores and based on sales figures that were higher than other leading surfwear brands, Debenhams has increased the number of stores that will offer Hot Tuna for Spring 2009 from 5 to 45, resulting in a dramatic increase in orders.
Likewise, we continue to increase our business with German catalogue and on-line retailer, Sportscheck, which is the biggest of its kind in Germany. Based on sales-figures for Fall 08', Sportscheck has increased Hot Tuna's page-count from 1 to 3, resulting in a big increase in order quantities. We are particularly pleased with these results, since it not only reflects that we are getting the design and product right, but also that Hot Tuna - the name - is strong in the biggest market in Europe. As we are planning to launch into Germany for 2009, it is providing us a nice reference-point and platform from which to build from.
Amazon, Littlewoods and El Corte Ingles are other retailers that are "on board" with Hot Tuna and we are hoping to see an increase in our continental Europe business, for 2009. We have also seen an increase of about 45% of our business in UAE and we are hoping to launch the kids-wear business in Europe in 2009.
USA
The US market continues to be a challenge. Although we have made some great improvements at the distribution level, it is taking longer than we had hoped for, to build a new business with the US department stores. Unfortunately due to the current market conditions, the major chains in the US have procrastinated, in bringing in new labels and although their response to the Hot Tuna collections has been very positive - we don't expect to get into new department stores until summer 2009.
Meanwhile we have been very successful in securing business from some of the leading independent fashion retailers, such as Fred Segal in Los Angeles, Lisa Klein in Beverly Hills and Patricia Fields in New York. We have also secured orders from Victoria's Secret and feel confident that we will be able to secure a substantial business with them, going forward.
We have seen an increase in orders from Japan from high-end retailers that are reacting well to the general improvements in the Hot Tuna designs. We are hoping to negotiate a major distribution deal for the Japanese market in the early part of 2009.
We are currently negotiating distribution deals for Canada, Peru, Brazil and Chile.
Moving Forward
It has been a far from easy year at Hot Tuna and we have had to make some dramatic changes to the initial - inflated - Company set-up. Our results for the financial year also reflect some of the one-off costs we have had to incur, due to redundancies and other charges associated with the complete Company overhaul. However, today we emerge as a much more productive and effective Company, capable of delivering to the increasingly demanding department stores, with better margins and a high degree of customer satisfaction.
For people coming from outside the industry, the fashion business might look sexy, fun and glamorous and by just focusing on the "front-end" - it very well can be. However, as anyone with a bit of experience in the business will confirm, apparel is first and foremost about raw talent, hard-work, clever sourcing and a well oiled and cost effective "back-end", that can turn out great product, on time and on budget. And over the last year at Hot Tuna, that is exactly what our hard-working raw talent have done, providing us great confidence and hope for 2009.
NIELS ANDERS JUUL
CHIEF EXECUTIVE OFFICER
29 December 2008
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2008
|
NOTES |
Year ended 30/06/08 |
Year ended 30/06/07 |
||
|
£ |
£ |
|||
|
Continuing Operations |
||||
|
Revenue |
1,125,493 |
619,131 |
||
|
Cost of sales |
(1,152,956) |
(481,725) |
||
|
Gross (loss) / profit |
(27,463) |
137,406 |
||
|
Other operating income |
- |
5,107 |
||
|
Selling and marketing expenses |
(452,307) |
(596,101) |
||
|
General and administrative expenses |
(2,641,549) |
(3,210,406) |
||
|
Depreciation |
(57,348) |
(39,811) |
||
|
Loss from operations before exceptional items |
3 |
(3,178,667) |
(3,703,805) |
|
|
Exceptional share-based payment charge |
- |
(1,689,790) |
||
|
Impairment of intangible assets |
(2,588,338) |
- |
||
|
Investment income |
40,661 |
71,250 |
||
|
Loss on disposal of property, plant and equipment |
3 |
(4,122) |
(3,906) |
|
|
Finance costs |
(39,285) |
(6,909) |
||
|
Loss before tax |
(5,769,751) |
(5,333,160) |
||
|
- |
||||
|
Tax |
- |
|||
|
Loss after tax |
(5,769,751) |
(5,333,160) |
||
|
Loss for the year |
(5,769,751) |
(5,333,160) |
||
|
Attributable to: |
||||
|
Equity holders |
(5,769,751) |
(5,333,160) |
||
|
Minority interest |
- |
- |
||
|
(5,769,751) |
(5,333,160) |
|||
|
Loss per share |
||||
|
Basic and diluted |
2 |
(0.06) pence |
(0.08) pence |
CONSOLIDATED BALANCE SHEET AS AT 30 June 2008
|
2008 |
2007 |
||
|
Group |
Group |
||
|
£ |
£ |
||
|
ASSETS |
|||
|
Non-current assets |
|||
|
Goodwill |
207,338 |
207,338 |
|
|
Other intangible assets |
2,650,000 |
5,238,338 |
|
|
Property, plant and equipment |
119,246 |
124,134 |
|
|
Investments |
- |
- |
|
|
Inter-company loan |
- |
- |
|
|
2,976,584 |
5,569,810 |
||
|
Current assets |
|||
|
Inventories |
331,191 |
398,614 |
|
|
Trade and other receivables |
425,546 |
523,843 |
|
|
Cash and cash equivalents |
- |
1,891,997 |
|
|
756,737 |
2,814,454 |
||
|
Total assets |
3,733,321 |
8,384,264 |
|
|
LIABILITIES |
|||
|
Current liabilities |
|||
|
Borrowings |
35,250 |
- |
|
|
Trade and other payables |
556,604 |
496,394 |
|
|
Convertible loan note |
184,277 |
106,042 |
|
|
776,131 |
602,436 |
||
|
Net current liabilities/assets |
(19,394) |
2,212,018 |
|
|
Non-current liabilities |
|||
|
Convertible loan note |
- |
111,056 |
|
|
- |
111,056 |
||
|
TOTAL LIABILITIES |
776,131 |
713,492 |
|
|
Net assets |
2,957,190 |
7,670,772 |
|
|
EQUITY |
|||
|
Share capital |
1,532,935 |
773,799 |
|
|
Share premium reserve |
9,618,612 |
9,611,701 |
|
|
Share-based payment reserve |
2,307,721 |
2,266,645 |
|
|
Merger reserve |
1,474,000 |
1,474,000 |
|
|
Warrant reserve |
295,700 |
799,842 |
|
|
Foreign exchange reserve |
63,505 |
53,663 |
|
|
Retained loss |
(12,335,283) |
(7,308,878) |
|
|
Equity attributable to equity holders of the parent |
2,957,190 |
7,670,772 |
|
|
Minority interest |
- |
- |
|
|
Total equity |
2,957,190 |
7,670,772 |
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2008
|
CONSOLIDATED |
Share capital |
Share premium account |
Share-based payment reserve |
Other reserves |
Warrant reserve |
Retained loss |
Total |
Minority interest |
Total equity |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
|
Balance at 1 July 2007 |
773,799 |
9,611,701 |
2,266,645 |
1,527,663 |
799,842 |
(7,308,878) |
7,670,772 |
- |
7,670,772 |
|
Loss for the year |
- |
- |
- |
- |
- |
(5,769,751) |
(5,769,751) |
- |
(5,769,751) |
|
Exchange differences arising on translation of overseas operations |
- |
- |
- |
9,842 |
- |
- |
9,842 |
- |
9,842 |
|
Total recognised income and expense for 2008 |
- |
- |
- |
9,842 |
- |
(5,769,751) |
(5,759,909) |
- |
(5,759,909) |
|
Loan conversion and share issue |
759,136 |
305,865 |
- |
- |
- |
- |
1,065,001 |
- |
1,065,001 |
|
Costs of share issue and conversion |
- |
(59,750) |
- |
- |
- |
- |
(59,750) |
- |
(59,750) |
|
Warrants subscribed |
- |
(239,204) |
- |
- |
239,204 |
- |
- |
- |
- |
|
Warrants expired |
- |
- |
- |
- |
(743,346) |
743,346 |
- |
- |
- |
|
Employee share option scheme |
41,076 |
- |
- |
41,076 |
- |
41,076 |
|||
|
Balance at 30 June 2008 |
1,532,935 |
9,618,612 |
2,307,721 |
1,539,598 |
295,700 |
(12,335,283) |
2,957,190 |
- |
2,957,190 |
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2007
|
CONSOLIDATED |
Share capital |
Share premium account |
Share-based payment reserve |
Other reserves |
Warrant reserve |
Retained loss |
Total |
Minority interest |
Total equity |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
|
Balance at 1 July 2006 |
488,010 |
6,092,232 |
576,855 |
1,494,983 |
486,557 |
(1,975,718) |
7,162,919 |
(113,451) |
7,049,468 |
|
Net loss for the period |
- |
- |
- |
- |
- |
(5,333,160) |
(5,333,160) |
113,451 |
(5,219,709) |
|
Exchange differences arising on translation of overseas operations |
- |
- |
- |
57,680 |
- |
- |
57,860 |
- |
57,680 |
|
Total recognised income and expense for 2007 |
- |
- |
- |
57,680 |
- |
(5,333,160) |
(5,275,480) |
113,451 |
(5,162,029) |
|
Loan conversion and share issue |
285,789 |
3,729,685 |
- |
(25,000) |
- |
- |
3,990,474 |
- |
3,990,474 |
|
Costs of share issue and loan conversion |
- |
(210,216) |
- |
- |
- |
- |
(210,216) |
- |
(210,216) |
|
Warrants Subscribed |
- |
- |
- |
- |
313,285 |
- |
313,285 |
- |
313,285 |
|
Employee share option scheme |
- |
- |
1,689,790 |
- |
- |
- |
1,689,790 |
- |
1,689,790 |
|
Balance at 30 June 2007 |
773,799 |
9,611,701 |
2,266,645 |
1,527,663 |
799,842 |
(7,308,878) |
7,670,772 |
- |
7,670,772 |
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2008
|
Group |
Group |
||
|
2008 |
2007 |
||
|
NET CASH FROM OPERATING ACTIVITIES |
(2,845,406) |
(3,906,880) |
|
|
Investment income |
40,661 |
71,250 |
|
|
Finance costs |
(39,285) |
(6,909) |
|
|
Net cash flow from operating activities |
(2,844,030) |
(3,842,539) |
|
|
Cash flow from investing activities |
|||
|
Purchase of property, plant and development |
(55,647) |
(100,360) |
|
|
Net cash flow from investing activities |
(55,647) |
(100,360) |
|
|
Cash flow from financing activities |
|||
|
Net proceeds from issue of share capital |
1,005,251 |
4,093,543 |
|
|
Repayment of convertible loan notes |
(32,821) |
- |
|
|
Proceeds on issue of convertible loan notes |
- |
217,098 |
|
|
Net cash from financing activities |
972,430 |
4,310,641 |
|
|
Net cash (outflow) / inflow |
(1,927,247) |
367,742 |
|
|
Cash and cash equivalents at start of period |
1,891,997 |
1,524,255 |
|
|
Cash and cash equivalents at the end of the period |
(35,250) |
1,891,997 |
|
1. BASIS OF PREPARATION
The results for the year ended 30 June 2008 have been prepared on accounting policies which are consistent with those used in the preparation of the financial statements of the Group for the period ended 30 June 2007.
The consolidated financial information for the year ended 30 June 2008 has been prepared on a basis consistent with the previous period and in accordance with applicable International Financial Reporting Standards (IFRS) as adopted by the European Union. The preliminary announcement does not constitute the Group statutory financial statements within the meaning of s.240 of the Companies Act 1985.
The financial information included in this announcement has been extracted from the un-audited financial statements for the year ended 30 June 2008 and the audited financial statements for the year ended 30 June 2007.
GOING CONCERN
The directors have considered whether or not it is appropriate to adopt the going concern basis in preparing the 2008 financial statements in view of the substantial operating losses in 2007 and 2008. As at the date of this report, the Company has available undrawn credit facilities totalling £2.95m. Accordingly, the directors believe the going concern basis to be appropriate.
2. LOSS PER SHARE
|
The calculation of the basic and diluted earnings per share is based on the following data: |
||
|
Earnings |
Year ended 30/06/08 £ |
Year ended 30/06/07 £ |
|
Earnings for the purposes of basic earnings per share net loss for the period attributable to equity holders of the parent |
(5,769,751) |
(5,333,160) |
|
Number of shares |
||
|
Weighted average number of ordinary shares for the purposes of basic earnings per share |
89,221,198 |
65,230,931 |
|
The denominator for the purpose of calculating the basic earnings per share has been adjusted to reflect all capital raisings. Due to the loss incurred in the period, there is no dilutive effect resulting from the issue of share options, warrants and shares to be issued. |
||
3. RECONCILIATION OF LOSS AFTER TAX TO NET CASH USED IN OPERATING ACTIVITIES (NOTES TO THE CASH FLOW STATEMENT)
|
Group Year Ended 30/06/08 |
Group Year Ended 30/06/07 |
|
|
£ |
£ |
|
Loss after tax |
(5,769,751) |
(5,333,160) |
|
Investment income |
(40,661) |
(71,250) |
|
Finance costs |
39,285 |
6,909 |
|
Depreciation |
57,348 |
39,811 |
|
Impairment |
2,588,338 |
- |
|
Share based payment |
41,076 |
1,689,790 |
|
Foreign exchange loss |
8,907 |
68,326 |
|
Loss on disposal |
4,122 |
3,906 |
|
Operating cash flows before movements in working capital |
(3,071,336) |
(3,595,668) |
|
Decrease/(increase) in inventories |
67,423 |
(226,940) |
|
Decrease/(increase) in receivables |
98,297 |
(230,674) |
|
Increase in payables |
60,210 |
146,402 |
|
Cash from/(used) in operations |
225,930 |
(311,212) |
|
NET CASH FROM OPERATING ACTIVITIES |
(2,845,406) |
(3,906,880) |
|
Group Year Ended 30/06/08 (£) |
Group Year Ended 30/06/07 (£) |
|||
|
Cash and cash equivalents |
(35,250) |
1,891,997 |
||
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