Interim Results

Interim Results

Koovs plc ("Koovs" or the "Company") 

Koovs plc (AIM:KOOV), the fashion business focused on the young e-commerce market in India, today announces its Interim Results for the 6 month period to 30 September 2014.

Key developments

· Sales (net of returns) on the Koovs.com website doubled to INR 95.4 million (£943,000) against the six months to March 2014;

· Weekly traffic increased by 129%, a compound weekly growth rate of over 3%;

· Continued progress on the five key strategic objectives:

Build the Koovs private label - added further categories of accessories and shoes. Spring 2015 ranges were presented to the fashion press in India in October and November receiving positive reviews.

Bring international brands to India- AX Paris added to the brand portfolio. New Look, Lipsy and Glamorous, which were launched in early 2014, were among the best-selling brands.

Extend fashion credentials - tie-up with local TV presenter and DJ Nikhil Chinapa, providing an exciting introduction to the music and club scenes; collaboration with UK-based jewellery designer Mawi launched in November with further high-profile designer collaborations planned for Spring 2015.

Develop delivery and price promises- 80% of orders are delivered to customers within 5 days of placing the order; 85% of Spring 2015 Koovs product priced below the key £20 level (compared with 70% of Spring 2014).

Use technology to empower customers- website home pages refreshed in the summer with an enhanced interactive customer experience, more editorial content and a blog; mobile apps for iOS and Android launched in October with traffic to the store from mobile devices representing over 50% of visits.

Unaudited results summary

* Revenue in the six months to 30 September 2014 reflects the wholesale of products for subsequent sale through Koovs.com. Revenue in the six months to 31 March 2014 mainly reflects the revenue of the business prior to the acquisition of Koovs India on 10 March 2014.

Commenting on the announcement Waheed Alli, Chairman, said:

"We have a clear and consistent objective to build Koovs into the number one fashion destination for India in the next five years and we are pleased with our progress to date. It's been a busy and strong first half but we are still at the beginning of the journey. We continue to work hard to give consumers in India more reasons to shop with us by introducing new fashion brands and product ranges, and easier ways to access and interact with our content and product as we execute on the five key steps of our strategic plan."

Notes to Editors

Koovs is focused on building Koovs.com into the leading fashion destination in India. The Company is headquartered in London, where the majority of its design and buying team is based, with all other operational functions based in India.

Since all of its revenue and most of its costs are denominated in Indian Rupees, Koovs has changed its reporting currency to Rupees ("INR"). For ease of understanding a Sterling translation is shown as a memorandum.

Chairman's Statement

Dear Shareholders,

I'm pleased to report that we continue to make good progress towards our objectives. Traffic to the website and resulting product sales have continued to grow strongly. This has been achieved through focusing on the five key steps set out in our Annual Report:

Build the Koovs private label - we continue to build the Koovs ranges and have added further categories of accessories and shoes. Sales growth continues to be strong, and Koovs-branded product accounts for 40% of sales. Our Spring 2015 ranges were presented to the fashion press in India in October and November to positive reviews.

Bring international brands to India - we constantly review and enhance our brand selection and have recently added AX Paris to the portfolio amongst others. Of the existing brands, New Look, Lipsy and Glamorous are proving to be strong performers.

Extend fashion credentials -our high profile collaboration with Henry Holland was followed up with a tie-up with local TV presenter and DJ Nikhil Chinapa, providing an exciting introduction to the music and club scenes. Nikhil helped develop a range of products which are selling well and he has helped introduce the Koovs brand to his broad range of followers. A collaboration with UK-based jewellery designer Mawi launched in November and further collaborations with high-profile fashion designers have been arranged for spring 2015.

Develop delivery and price promises - typically, 80% of orders are delivered to customers within five days of placing the order, with many delivered within three days. 85% of the Spring 2015 Koovs product is priced below the key £20 level.

Use technology to empower customers - the website home pages were refreshed in the summer introducing a more interactive customer experience, more editorial content and a blog. Our mobile apps for iOS and Android were launched in October. They provide a bespoke access point to our offering, optimised for use on smaller mobile devices. Access to the store from mobile devices either through the apps or the mobile-enhanced website has increased to over 50% of visits.

All of this has delivered continued good growth in traffic to the Koovs.com site and is generating a good level of conversion to product sales. Encouraged by this progress, we will remain focused on our strategy while working hard to maintain a strong level of growth in traffic and sales.

Waheed Alli

Chairman

24 November 2014

Interim Review

Trading performance

Sales generated on the Koovs.com website (net of returns) amounted to INR 95.4 million (equivalent to £943,000) during the six month period, representing a doubling of sales over the immediately preceding six months. Weekly traffic to the Koovs.com website grew by 129% between the beginning of the financial year and the end of September 2014, a compound weekly growth rate of over 3%. Growth has continued at a similar rate since then. Conversion and average basket size are both running slightly ahead of our expectations.

The resulting revenue of Koovs plc, reflecting the wholesale supply of products to the operator of the Koovs.com website, amounted to INR 81.7 million (£0.8 million) in the period. Revenue in the previous six months reflected income relating to Koovs plc's previous operations.

Overhead costs are running broadly to plan although our investment in brand-building and traffic-driving marketing is an area where we have experimented with different levels of expenditure and different channels to market. We will continue to experiment and refine our approach to find the best way to promote Koovs.com as the first choice for fashion in India.

Reporting currency and restatement of results

The main operational currency of the Group is the Indian Rupee and therefore the reporting currency of the Group has been changed to the Indian Rupee. The results for the six months to 30 September 2014 have been presented in millions of Rupees and the results for the six months to 31 March 2014 have been restated on the same basis. Further information is provided in Notes 2 and 10.

For ease of understanding, memorandum information has been supplied in Sterling alongside the main elements of the financial information. This information reflects a translation of the Rupee results using either the average exchange rate over the period or the closing exchange rate, as appropriate. The Sterling figures do not represent a Sterling consolidation of the Group's operations and therefore differ from the previously published Sterling financial information.

Comparative information

Koovs plc was formed on 2 August 2012 and has, to date, reported financial results for the following periods:

· 2 August 2012- 30 September 2013 - First financial period

· 1 October 2013 - 31 March 2014 - Short financial period including the acquisition of Koovs India on 10 March 2014

· 1 April 2014 - 30 September 2014 - First half of the full financial year to 31 March 2015

This first interim report of the Group includes for comparison purposes the trading results for the six month period ended 31 March 2014 and the balance sheet at 31 March 2014. No previous half-year results have been published.

The comparative figures are not the Company's statutory accounts. Statutory accounts for the period ended 31 March 2014 have been delivered to the registrar and are available from the Company's website. The auditors' report included in those statutory accounts was unqualified and did not include a reference to any matter to which the auditors drew attention by way of emphasis without qualifying the audit report, nor did it contain any statement under s498(2) or s498(3) of the Companies Act 2006.

Financial results, cash flow and funds

Revenue in the period, representing the wholesale price of products sold was INR 81.7 million (£0.8 million). After cost of sales and overhead costs, the net loss before tax in the period was INR 359.5 million (£3.6 million), in line with our expectations.

At 1 April 2014, including both short- and long-term deposits, the business had access to INR 2,185.4 million (£21.9 million) for the purposes of funding the business.

During the period, INR 432.6 million (£4.3 million) was utilised in funding losses and additional working capital, and INR 1,145 million (£11.3 million) was invested in bank deposits with original maturities of over 12 months.

At 30 September 2014, including both short- and long-term deposits, the business had access to INR 1,820.7 million (£18.2 million) for the purposes of funding the business. The funds are held in term deposits or current accounts, mainly in India.

Going Concern

This interim report has been prepared on the assumption that the business is a going concern.

The Group is in the early stages of a business plan to build a new business in India. The business plan envisages a period of development and investment for which funding was secured through the Initial Public Offering of shares completed on 10 March 2014. The Company raised INR 2,281.6 million (£22.4 million) in order to fund its development plans.

Although it is early days, operations have proceeded broadly to plan including generating significant rates of growth in traffic to the site and sales.

Based on our on-going plans and the existing capital, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for at least 12 months from the date of this report.

Accordingly, the directors continue to adopt the going concern basis in preparing the interim report.

Principal risks and uncertainties

The Company's business activities, together with the factors likely to affect its future development, financial position, financial risk management objectives, details of its financial instruments and its exposures to price, credit, liquidity and cash flow risk are described in the Chairman's Statement and the Strategic Report published in the annual report for the period ended 31 March 2014.

The board considers the principal risks and uncertainties which could impact the Group over the remaining six months of the financial year to 31 March 2015 to be unchanged from those set out in the Annual Report and Accounts for the period ended 31 March 2014, summarised as follows:

· Market and economic risks, including the economic climate and competition in India;

· Financial risks, including interest rate and currency risk;

· Technological risk;

· Warehouse disruption; and

· Reliance on key personnel.

These are set out in detail in the Group's Annual Report and Accounts for the period ended 31 March 2014, a copy of which is available on the Group's website.

Events occurring after the period end

There have been no significant or important events occurring after the period end which are not reflected in this report.

Outlook

We intend to remain resolutely focused on our strategy in order to capitalise on the growing e-commerce market in India.

On behalf of the board of directors

Condensed Consolidated Income Statement

for the six month period to 30 September 2014

Unaudited

The accompanying notes are an integral part of the Condensed Consolidated Income Statement. All results relate to continuing operations.

Condensed Consolidated Statement of Comprehensive Income

for the six month period to 30 September 2014

Unaudited

The accompanying notes are an integral part of the Condensed Consolidated Income Statement. All results relate to continuing operations.

Condensed Consolidated Statement of Financial Position

at 30 September 2014

Unaudited

The accompanying notes are an integral part of the Condensed Consolidated Statement of Financial Position. All results relate to continuing operations.

Condensed Consolidated Statement of Changes in Equity

for the six month period to 30 September 2014

Unaudited

Condensed Consolidated Statement of Cash Flows

for the six month period to 30 September 2014

Unaudited

Notes to the Interim Statement

Unaudited

1. Authorisation of condensed interim financial statements

The condensed consolidated financial statements of Koovs plc (the "Company") and it subsidiary (together, the "Group") for the six month period to 30 September 2014 were authorised for issue by the board of directors on 24 November 2014 and the Statement of Financial Position was signed on the board's behalf by Waheed Alli and Roy Naismith.

Koovs plc is a public limited company incorporated and domiciled in England and Wales. The address of its registered office is Aldwych House, 81 Aldwych, London WC2B 4HN.

2. Basis of preparation and changes to the Group's accounting policies

2.1. Basis of preparation

The interim condensed consolidated financial statements for the six months ended 30 September 2014 have been prepared in accordance with IAS 34 Interim Financial Reporting.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's financial statements as at 31 March 2014.

2.2. Changes to accounting policies

Since all of the Group's revenue is generated in India and the majority of the costs are incurred in India the main operational currency of the Group is the Indian Rupee ("INR"). The board of directors have therefore decided to change the reporting currency of the Group to Rupees.

A change in presentation currency is a change in accounting policy which is accounted for retrospectively. The comparative figures for the period under review have been restated into Indian Rupees using the procedures outlined below:

- assets and liabilities denominated in Sterling were translated into INR at the closing rates of exchange on the relevant balance sheet date;

- Sterling income and expenditures were translated at the average rates of exchange prevailing for the relevant periods; and

- Sterling share capital, share premium and the other equity transactions were translated at the historic rates prevailing on the date of each relevant transaction.

All exchange rates were extracted from the Group's underlying financial records.

The following exchange rates to £1 (rounded to one decimal place) have been used in the relevant periods:

The rates used for the balance sheet represent the rate at the close of the period. The rates used for trading items reflect the average rates during the periods.

All Rupee amounts are millions of Rupees (INR million or INRm) except where otherwise indicated.

Further information on the restatement of earlier financial results is given in Note 10.

To assist UK-based readers of the accounts, translations into Sterling have be supplied on a memorandum basis to allow a clear understanding of the results and financial position of the business. The memorandum information does not form part of the financial reporting of the Group representing, as they do, simple translations of the Rupee information. The exchange rates used are those shown in the table above. There are differences between the Sterling memorandum figures and the Sterling statements originally published for the period to 31 March 2014 arising from the effect of consolidating in Rupees instead of Sterling and from minor differences in the exchange rates used.

Other than the change in reporting currency, the accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's consolidated financial statements for the period ended 31 March 2014.

There are no revisions to Adopted IFRS that became applicable for the period ended 30 September 2014 which have had a significant impact on the Group's financial statements.

2.3. Comparative information

This first interim report of the Group includes for comparison purposes the trading results for the six month period ended 31 March 2014 and the balance sheet at 31 March 2014. No previous half-year results have been published.

The financial information for the period ended 31 March 2014 includes the acquisition of Koovs India on 10 March 2014. Prior to the acquisition the Company's principal activity was that of providing proprietary design and merchandising services to Koovs India in connection with the development of its fashion business. Following the acquisition, the Group's principal activity is that of supplying branded fashion garments and accessories for sale by a third party through a branded website principally in the Republic of India.

The comparative figures are not the company's statutory accounts. Statutory accounts for the period ended 31 March 2014 have been delivered to the registrar and are available from the Company's website. The auditors' report included in those statutory accounts was unqualified and did not include a reference to any matter to which the auditors drew attention by way of emphasis without qualifying the audit report, nor did it contain any statement under s498(2) or s498(3) of the Companies Act 2006.

3. Revenue

Revenue recognised in the Income Statement is analysed as follows:

Revenue in the six months to 30 September 2014 relates entirely to the supply of fashion products for subsequent sale through the Koovs.com e-commerce site. During the six months to 31 March 2014 revenue was generated from two activities, being the provision of proprietary know-how and design services for the fashion industry until 10 March 2014 and, following the acquisition of Koovs India, the wholesale of fashion garments.

All of the Group's revenue is generated by Koovs India through its operations as a supplier of branded fashion products. The chief operating decision maker is the Chairman who makes resource allocation decisions based on Group management accounts and operating reports for the entire Group. The Group therefore represents a single cash generating unit and a single operating segment.

All of the Group's revenue in both periods was generated in the Republic of India.

4. Taxation

Tax charged in the Income Statement

The Group is liable to pay withholding tax in India on certain payments made from India to the UK. Credits arising from such withholding tax payments may be set against UK corporation tax liabilities arising in the year in which the withholding tax is paid. With no corporation tax charge arising on the losses incurred, the overseas tax charge reflects unrecoverable withholding tax arising in the relevant periods. There is no tax charge or credit relating to items charged or credited to other comprehensive income.

5. Earnings Per Share

Basic earnings per share is calculated by dividing the earnings attributable to the owners of the Parent Company by the weighted average number of ordinary shares in issue during the period. Diluted earnings per share is calculated by amending the weighted average number of ordinary shares in issue during the period for the effect of dilutive share options in issue.

The effect of the share options in issue is anti-dilutive and therefore no adjustment has been made to the weighted average shares in issue when calculating diluted earnings per share. There is therefore no difference between basic earnings per share and diluted earnings per share.

6. Cash and bank deposits

Deposits with an original maturity of more than 12 months represent mainly fixed term cash deposits with substantial banks in India. Non-current financial assets disclosed in the Consolidated Statement of Financial Position includes, in addition to the deposits shown above, accrued interest income of INR 0.9 million (£9,000) (31 March 2014: INR 0.1 million (£1,000)).

7. Contingencies

A disputed claim of INR1.3 million (£13,000) made against Koovs India was settled in the period.

8. Fair value of financial instruments

The fair value of cash and cash equivalents, inventories, trade receivables, trade payables, and other current liabilities approximate their carrying amounts due to the short-term maturities of these instruments. There is no material difference between the carrying amount and the fair value of any other assets or liabilities in the Statement of Financial Position.

9. Related parties

During the period, the Group entered into transactions in the ordinary course of business with certain related parties as follows:

There have been no changes in the list of related parties since 31 March 2014.

10. Explanation of effect of change in presentation currency

As explained in Note 2, the Group has changed its presentation currency from Pounds Sterling to Indian Rupees. As a result, the Group's prior years income statements, statements of comprehensive income, balance sheets and cash flow statements that were presented in the annual reports for the period ended 31 March 2014 and 30 September 2013 have been restated into Rupees.

Consolidated income statement

It is Group policy to translate transactions in foreign currencies at the average rate applicable during the financial year unless by doing so would cause a material difference compared with using the rate on the date of the transaction. The consolidated income statement for the period ended 31 March 2014 presented above has been compiled by re-performing the consolidation using the original Rupee results of Koovs India and the Sterling results of Koovs UK translated at the average exchange rates for the period. The resulting Rupee amounts in the table below are presented as the prior year comparative numbers in the consolidated income statement for the period ended 30 September 2014.

Consolidated balance sheets

In accordance with IAS 1 Presentation of Financial Statements two comparative consolidated balance sheets have been presented in this report. The balance sheet at 30 September 2013, which reflects the Company prior to its acquisition of Koovs India, was compiled by translating all of the assets and liabilities of the company into Rupees at the exchange rate ruling at 30 September 2013. Equity items were exchanged at the rates ruling at the date of the transactions and the trading result for the period was translated at the average rate for the period. An exchange difference arises as a result of the different rates used for net assets and the equity items.

The balance sheet at 31 March 2014 was compiled by re-performing the consolidation using the original Rupee amounts for Koovs India and the Sterling amounts for assets and liabilities of Koovs UK translated at the exchange rate ruling on the balance sheet date. Equity transactions during the period were translated at the rates ruling on the day of the transaction and the average exchange rate was used to translate the income statement. Exchange differences have therefore arisen as a result of the difference between the opening and closing exchange rates used for the assets and liabilities of Koovs UK, on the difference between the closing and average exchange rates in relation to the income statement and on the difference between the closing rate and the rates used for the equity transactions conducted during the period.

The equity amounts in the consolidated balance sheet including share capital and share premium reserve will continue to be recorded at the rates ruling on the day of the transaction and will not therefore be affected by changes in future exchange rates. Differences arising from fluctuating exchange rates applied to the assets and liabilities of Koovs UK are taken to the exchange reserve as part of other comprehensive income.

Consolidated cash flow statement

It is Group policy to translate transactions in foreign currencies at the average rate applicable during the financial year unless by doing so would cause a material difference compared with using the rate on the date of the transaction. The consolidated cash flow statement for the period ended 31 March 2014 presented above has been compiled by re-performing the consolidation using the original Rupee results of Koovs India and the Sterling results of Koovs UK translated at the average exchange rates for the period. The resulting Rupee amounts in the table below are presented as the prior year comparative numbers in the consolidated cash flow statement for the period ended 30 September 2014.