7th Mar 2008 07:01
Hot Tuna (International) plc07 March 2008 Hot Tuna (International) PLC ("Hot Tuna" or the "Company") Interim Report for the period ending 31 December 2007 The Company announces the interim results for the six months ended 31 December2007. For further information:Hot Tuna (International) PLCNiels Juul Tel: +44 (0) 20 7372 [email protected] www.hottunaplc.com -------------------- Seymour Pierce LimitedMark Percy /Parimal Kumar Tel: +44 (0) 20 7107 8000 www.seymourpierce.com Notes to Editors Hot Tuna International PLC (AIM: HTT) owns the rights to the Hot Tuna brand, aprogenitor of global youth fashion, born in Australia with a heritage ofauthentic surf culture. Hot Tuna is one of the world's most iconic names in surf lifestyle and can traceits roots back to 1969 when it was founded by a surfer and his fashion designerwife. Though the label had not been actively marketed over for the lastdecade, it retained an organic cult status among core action sports enthusiasts. In June 2005, Hot Tuna International PLC purchased the 'Hot Tuna' brand fromFrontier International (Holdings) Pty Ltd, listed on AIM in September 2005, andhas since started to aggressively market the brand and reinvigorate thebusiness. The Company now owns all intellectual property rights to its name andrelated iconography, and has put in place key management drawn from theexecutive ranks of Von Dutch, Quiksilver, O'Neill and Ocean Pacific, amongothers. Headquartered in the UK, Hot Tuna operates design, marketing and distributionhubs in the USA, Australia and the UK. In its core markets, Hot Tuna sellsproducts, which are directly manufactured in facilities principally in China. Interim Report for the period ending 31 December 2007 CHIEF EXECUTIVE OFFICER'S STATEMENT The Directors of Hot Tuna (International) PLC present the consolidated resultsfor the half year ending 31 December 2007. An extremely challenging trading environment coupled with restructuring of theGroup's supply chain, slow brand recognition in the USA and adverse tradingconditions have impacted trading results. An unseasonably wet summer affected Spring/Summer 2007 sales and also forcedmany of our independent retail customers to reduce volumes for subsequentorders. This and the slowdown of the economy triggered higher than budgeted baddebts for the half year ending 31 December 2007. We have also been forced todispose of inventory which accumulated under previous management who hadentered into speculative production. These circumstances have contributed to an operating loss for the half year of£1.5m. Although these difficult trading conditions were forecast we did notanticipate the full effect of the lack of brand recognition in the USA, whichhas resulted in lower than forecast sales revenue. As mentioned in our strategic review, released in August of last year, we havebeen working to restructure the company and create an effective and efficientoperating platform from which the company can springboard into the coming seasons. Whilst this process is still underway, most of the foundations are nowin place. In November we moved all of the brand's manufacturing to China, managed from ournew sourcing office in Shanghai. The aim is to generate a lower cost base andstronger relationships with suppliers which will also ensure timely production of quality garments and generate additional savings in freight and logistics. Wehave also cut our overhead cost base in the UK and the USA, which willcontribute to the profitability of our new operating model. Improvements have also been made to the designs and we are asserting the brandposition in our markets. During recent trade shows in the USA and in Europe,Hot Tuna has received excellent reviews from the press and fashion media. Hence,in addition to improved product, we are engaging with better retailers, reducingour cost of sales and repositioning the brand to create a more profitablebusiness model. Of our three core markets, Australia is performing very strongly. The launch ofour Hot Tuna girls and boys clothing ranges into Myer department stores hasexceeded expectations with a sell-through reaching 10%. This places Hot Tuna amongst the strongest performing brands in the department store and has allowedour expansion into David Jones department stores nationally. The United States office was relocated to the Cooper Design Space in downtownLos Angeles. The new office offers a studio, office and showroom facilitiesall in one location and furthermore allows us direct access to the large department store buyers. Despite the fact we have secured some lucrative ordersat recent trade shows, sales are still not meeting forecasts due to the lack ofbrand recognition, intense competition and consumer uncertainty. In the United Kingdom, the sales order book has been strong and the product hasbeen well received in independent retail stores and department stores alikehowever margins have been affected by costly logistics. Spring/Summer 2008 promises to be a great success for the European business. Finally, our online store is now fully operational across all three regions. Theonline store features both "basic collections" as well as product from recentseasons. In addition to team news and growing media coverage, the opportunityto purchase items online complements our much improved website. Subsequent to the half year end, we have appointed Mr David Lenigas as our newNon Executive Chairman. David will replace Mr Ranjit Murugason, who havingrecently taken on the full time position at an international group, believes he can no longer devote the required time to the Chairmanship role. We wish Ranjitevery success in the future and thank him for his dedication over the past twoyears. On behalf of the team I would like to welcome David to the Board, he brings a vast wealth of highly relevant experience and I am confident he willbring exceptional value to the Company as we continue to grow. I am alsopleased to announce that this week we have also successfully raised £585,000(before expenses) in an equity placing. The placing will enable the Company tocontinue and provide the necessary working capital for its growing order book. Thank you to our committed and hard working employees who have worked tirelesslythrough this very difficult period and we would also thank our investors andshareholders for their continued support. NIELS ANDERS JUULCHIEF EXECUTIVE OFFICER6 March 2008 Consolidated Income StatementFor the period from 1 July 2007 to 31st December 2007 Half Year to Half Year to 12 Months 31.12.2007 31.12.2006 Ended (Un-audited) (Un-audited) 30.6.2007 (Audited) £000 £000 £000 NotesContinuing operations Revenue 445 183 619Cost of sales (472) (119) (482) --------- --------- ---------Gross(Loss)/Profit (27) 64 137 --------- --------- --------- Otheroperatingincome - 22 5Selling andmarketingexpense (382) (153) (596)General andadministrativeexpenses (1,216) (1,475) (3,210)Depreciationandamortisation (28) (20) (40) --------- --------- --------- Loss fromoperations (1,653) (1,562) (3,704) Exceptionalshare-basedpayment charge 120 (1,237) (1,689)Investmentincome 32 19 71Loss ondisposal ofproperty,plant andequipment (2) (1) (4)Finance costs (20) (3) (7) --------- --------- --------- Loss beforetax (1,523) (2,784) (5,333) --------- --------- ---------Taxation 2 - - - --------- --------- --------- Loss for theperiod (1,523) (2,784) (5,333) --------- --------- --------- Attributable to:Equity holders (1,523) (2,755) (5,333)Minorityinterest - (29) - --------- --------- --------- (1,523) (2,784) (5,333) --------- --------- --------- LOSS PER SHAREBasic anddiluted 4 (0.02 pence) (5.14 pence) (0.08 pence) --------- --------- --------- Consolidated Balance SheetAt 31st December 2007 Half Year to Half Year to 12 Months Ended 31.12.2007 31.12.2006 30.6.2007 (Un-audited) (Un-audited) (Audited) £000 £000 £000 AssetsNon-currentassetsOtherintangibleassets 5,238 5,251 5,238Goodwill 207 187 207Property,plant &equipment 156 127 124 --------- --------- --------- 5,601 5,565 5,569 --------- --------- ---------Current AssetsInventories 436 96 399Trade andotherreceivables 497 614 524Cash and cashequivalents 464 3,524 1,892 --------- --------- --------- 1,397 4,234 2,815 --------- --------- ---------Total Assets 6,998 9,799 8,384 --------- --------- --------- LiabilitiesCurrentLiabilitiesBank loans andoverdraft - 4 -Trade andother payables 460 286 496Convertibleloan note 47 - 106 --------- --------- --------- 507 290 602 --------- --------- ---------Non-currentLiabilitiesConvertibleloan note 111 - 111 --------- --------- --------- 111 - 111 --------- --------- ---------TotalLiabilities 618 290 713 --------- --------- --------- Net Assets 6,380 9,509 7,671 --------- --------- --------- Equity and otherliabilitiesCapital andreservesShare capital 828 769 774Share-basedpaymentreserve 2,147 1,814 2,267Share premiumreserve 9,881 9,544 9,612Merger reserve 1,474 1,474 1,474Warrantreserve 800 772 800Foreignexchangereserve 82 10 53Retained loss (8,832) (4,731) (7,309) --------- --------- ---------Equityattributableto equityholders ofparent 6,380 9,652 7,671 Minorityinterest - (143) - --------- --------- ---------Total Equity 6,380 9,509 7,671 --------- --------- --------- Consolidated Cash Flow StatementFor the period from 1 July 2007 to 31st December 2007 Half Year Half Year 12 Months to to Ended 31.12.2007 31.12.2006 30.6.2007 (Un-audited) (Un-audited) (Audited) £000 £000 £000 Notes --------- --------- ---------Net Cash Flowfrom OperatingActivities 5 (1,667) (1,935) (3,921) --------- --------- --------- Investing ActivitiesInterestreceived 32 19 71Purchase ofproperty,plant andequipment (57) (77) (94) --------- --------- ---------Net Cash Flowfrom InvestingActivities (25) (58) (23) --------- --------- --------- Financing ActivitiesProceeds onissue/(repayment) ofconvertiblenotes (59) - 218Proceeds fromissue of sharecapital 323 3,993 4,094 --------- --------- ---------Net Cash Flowfrom FinancingActivities 264 3,993 4,312 --------- --------- --------- Net(decrease)/increase in cashand cashequivalents (1,428) 2,000 368 Cash and cashequivalents atthe beginningof the year 1,892 1,524 1,524Cash and cashequivalents atthe end of theyear 464 3,524 1,892 --------- --------- --------- Movement inBank & Cash (1,428) 2,000 368 --------- --------- --------- Statement of changes in equityFor the period from 1 July 2007 to 31st December 2007 Share Share Share-based Other Warrant Retained Total Minority Total capital premium payment reserves reserve profit/ equity interest Equity account reserve (loss) For the half year ended 31 December2007 ------- ------- ------- ------- -------- ------- ------- -------- -------- £ £ £ £ £ £ £ £ £Balance at 1July 2007 774 9,612 2,267 1,527 800 (7,309) 7,671 - 7,671 ------- ------- ------- ------- -------- ------- ------- -------- -------- Net loss forthe period - - - - - (1,523) (1,523) - (1,523)Exchangedifferencesarising ontranslationofoverseas operations - - - 29 - - 29 - 29 ------- ------- ------- ------- -------- ------- ------- -------- --------Totalrecognisedincome andexpense forperiod - - - 29 - (1,523) (1,494) - (1,494) ------- ------- ------- ------- -------- ------- ------- -------- --------Shareconversionand issue 54 269 - - - - 323 - 323Employeeshare option scheme - - (120) - - - (120) - (120) ------- ------- ------- ------- -------- ------- ------- -------- --------Balance at31 December 2007 828 9,881 2,147 1,556 800 (8,832) 6,380 - 6,380 ======= ======= ======= ======= ======== ======= ======= ======== ========For the yearended 30June 2007 £ £ £ £ £ £ £ £ £ -------- -------- -------- -------- -------- -------- -------- -------- --------Balance at 1July 2006 488 6,092 577 1,495 487 (1,976) 7,163 (114) 7,049 -------- -------- -------- -------- -------- -------- -------- -------- --------Net loss forthe period - - - - - (5,333) (5,333) 114 (5,219)Exchangedifferencesarising ontranslation of overseas operations - - - 58 - - 58 - 58 -------- -------- -------- -------- -------- -------- -------- -------- --------Totalrecognisedincome andexpense forthe period - - - 58 - (5,333) (5,275) 114 (5,161) -------- -------- -------- -------- -------- -------- -------- -------- --------Shareconversionand issue 286 3,520 - (26) - - 3,780 - 3,780 WarrantsSubscribed - - - - 313 - 313 - 313Employeeshare option scheme - - 1,690 - - - 1,690 - 1,690 -------- -------- -------- -------- -------- -------- -------- -------- --------Balance at30 June 2007 774 9,612 2,267 1,527 800 (7,309) 7,671 - 7,671 ======== ======== ======== ======== ======== ======== ======== ======== ======== For the half Share Share Share-based Other Warrant Retained Total Minority Totalyear ended capital premium payment reserves reserve profit/ equity interest Equity31 December account reserve (loss)2006 £ £ £ £ £ £ £ £ £Balance at 1July 2006 488 6,092 577 1,495 487 (1,976) 7,163 (114) 7,049 ------- ------- ------- -------- -------- ------- ------- -------- --------Net loss forthe period - - - - - (2,755) (2,755) (29) (2,784)Exchangedifferencesarising ontranslation of overseas operations - - - (11) - - (11) - (11) ------- ------- ------- -------- -------- ------- ------- -------- --------Totalrecognisedincome andexpense forthe period - - - (11) - (2,755) (2,766) (29) (2,795) ------- ------- ------- -------- -------- ------- ------- -------- --------Shareconversionand issue 281 3,452 - - 285 - 4,018 - 4,018 Employeeshare option scheme - - 1,237 - - - 1,237 - 1,237 ------- ------- ------- -------- -------- ------- ------- -------- --------Balance at31 December 2006 769 9,544 1,814 1,484 772 (4,731) 9,652 (143) 9,509 ======= ======= ======= ======== ======== ======= ======= ======== ======== Notes to the unaudited Interim ReportFor the period ending 31st December 2007 1. PRESENTATION OF INTERIM RESULTS This interim report has been prepared in accordance with theaccounting policies set out in the Company's Annual Report for the year ended 30June 2007 and are expected to be used in the Annual Report for the year ended 30June 2008. The results for the six months ended 31 December 2007 have not been audited. Thefinancial information contained in this report does not constitute statutoryaccounts within the meaning of Section 240 of the Companies Act 1985. Theresults for the year ended 30 June 2007 are based on the audited accounts (whichreceived an unqualified audit report). Full accounts have been delivered to theRegistrar of Companies and are available on request. 2. TAXATIONNo taxation has been provided due to losses in the period. 3. DIVIDENDSThe Directors have not declared a dividend for the period. 4. LOSS PER SHARE The calculation of the basic and diluted earnings per share isbased on the following data: EarningsEarnings for the purposes of basic earnings per share net loss for the period attributable to equity holders of the parent (1,523,334) Number of sharesWeighted average number of ordinary shares for the purposes of basic earnings per share 77,997,734 The denominator for the purpose of calculating the basic earnings per share hasbeen adjusted to reflect all capital raisings. Due to the loss incurred in theperiod, there is no dilutive effect resulting from the issue of share options,warrants and shares to be issued. 5. RECONCILIATION OF NET OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES Half Year to Half Year to 12 Months Ended 31.12.2007 31.12.2006 30.6.2007 (Un-audited) (Un-audited) (Audited)Cash outflow fromOperating Activities £000 £000 £000 Loss fromoperations (1,653) (1,562) (3,704) Adjustedfor:Depreciationof property,plant andequipment 28 20 44 ---------- ---------- -----------Operatingcashflows beforemovements inworking capital (1,625) (1,522) (3,660) ---------- ---------- -----------Increase ininventories (37) (76) (227) Decrease/(Increase) in receivables 27 (430) (231) (Decrease)/Increase in payables (12) 97 204 ---------- ---------- -----------Cash used inoperations (1,647) (1,931) (254) ---------- ---------- -----------Interest (20) (4) (7)paid ---------- ---------- ----------- Net Cashoutflow fromOperatingActivities (1,667) (1,935) (3,921) ---------- ---------- ----------- 6. POST BALANCE SHEET DATE EVENTS The Company has raised £585,000 gross (£555,000 net of expenses)by way of a placing of 58,500,000 new ordinary shares of 1 pence each in theshare capital of the Company at 1 pence per share. Participants haveadditionally been granted one warrant to subscribe for an additional ordinaryshare in Hot Tuna for each two new ordinary shares subscribed for by thatparticipant in the placing. These warrants are exercisable at 1.5p per share fora period of five years from the date of admission of the shares to trading onAIM. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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