Concha Regulatory News (CHA)

12 Oct 2007 16:00

Hot Tuna (International) plc12 October 2007 Press Release 12 October 2007 Hot Tuna (International) PLC ("Hot Tuna" or "the Group") Preliminary Results Hot Tuna (International) PLC (AIM:HTT), a lifestyle apparel brand with authenticsurf heritage, announces its Preliminary Results for the year ended 30 June2007. Highlights• Revenue increased 68.2% to £619,131 (FY 2006: £367,992)• Loss from operations £3,703,805 (FY 2006: loss £2,051,476)• 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• Appointment of Niels Juul as CEO in June 2007, who has implemented a strategic review to restructure the business, focusing on driving sales growth• Sourcerite International Inc. appointed as Hot Tuna's Middle Eastern distributor, with plans for Sourcerite to open a Hot Tuna store in Dubai in autumn 2008• Orders secured from Jacks' Surfboards and Diane Beachwear in the USA, as well as a number of independent retailers in the UK and Australia, including Myer and David Jones Commenting on the results, Niels Juul, Chief Executive of Hot Tuna(International) PLC, said: "This has been a period of significant change for theGroup; since I joined Hot Tuna in June 2007 I have undertaken a strategic reviewof the Group, and consequently been able to streamline many of the processeswithin the business, using the funds raised in December 2006. These changes toour processes will start to have a real impact on the business. I will beclosely overseeing the design process, and continuing to pursue theopportunities for partnerships, and we look forward to realising the potentialin the brand over the coming year." - Ends - For further information:Hot Tuna (International) PLCRanjit Murugason, Chairman Tel: +44 (0) 20 7372 9378ranjit_murugason@hottunaplc.com Seymour Pierce LimitedMark Percy / Parimal Kumar Tel: +44 (0) 20 7107 8000 www.seymourpierce.com Media enquiries:AbchurchHenry Harrison-Topham / Chris Lane Tel: +44 (0) 20 7398 7700chris.lane@abchurch-group.com www.abchurch-group.com CHAIRMAN'S STATEMENT The Directors of Hot Tuna (International) PLC have pleasure in presenting theCompany and Group's results for the year ended 30 June 2007. Over the last twelve months, we have made significant progress inre-establishing Hot Tuna as a leading global surf and youth lifestyle brand.Despite challenging market conditions and a particularly poor summer in 2007resulting in sales for the period being lower than expectations, we areencouraged nonetheless by the fact that retail sales of surf and relatedproducts have climbed by over 15% in the last 2 years and that this sector stillremains one of the fastest growing sectors within the apparel industry.Surfing, today, is no longer seen as a 'rebel' past time but another healthy funsport and lifestyle that everyone can enjoy. We believe that our strategy toposition Hot Tuna as a global surf and youth life style brand will benefit fromthis sector growth. During the past twelve months, there have been many affirmations of theCompany's growing strength and presence in the industry including the additionof Elle Macpherson to the Company's Board of Directors. We were also privilegedto be able to appoint Niels Juul as Chief Executive Officer on June 1 2007.Niels joins us from the world renowned Von Dutch apparel business where he wasManaging Director and within three months of joining the Company implementedclear leadership and direction that we believe will take Hot Tuna to the nextlevel in our quest to rank shoulder-to-shoulder with the biggest names in surffashion and youth lifestyle. Fundraising As a result of the successful fundraising in December 2006, the Company has beenable to expedite the strategic plan to improve the distribution andmanufacturing process. The capital raising exercise generated £4.2 million(before expenses) via a placing of 28,024,994 new ordinary shares of nominalvalue 1p each, at 15p per share. These shares were issued together withwarrants, in the ratio of one warrant for every two placing shares. In March 2007, the Group also agreed a maximum £2.5m equity-based creditfacility with Cornell Capital Partners LLP. Cornell Capital Partners LLP alsosubscribed to convertible loan notes worth US$450,000. Results Summary The Group operating loss for the year of £3.7m included employee costs of £1.5m(2006:£0.7m), production and manufacturing costs of £0.5m (2006:£0.1m) andmarketing costs of £0.6m (2006:£0.1m). The high cash expenditure reflects theGroup's commitment to commissioning the right management and personnel to drivethe Group into the next phase of its strategy. Hot Tuna has incurred approximately £2m of non-cash expenses up to 30 June 2007,including £0.2m bad debt and inventory write-offs and £1.7m of exceptionalshare-based payment charges incurred in accordance with IFRS2 requirements and£0.1m outside equity interests were absorbed in recognition of the fact thatthese amounts would not be re-couped in the future. The share-based payments,which have been charged as an "exceptional item", were incurred in order toappoint key personnel to the Hot Tuna team during the year. This charge doesnot affect the ability of the Company to pay dividends going forward nor does itaffect the net assets of the Group. It is strictly a charge to reserves inaccordance with current accounting standards. As at the 30 June 2007, theGroup had cash reserves of £1.9m (2006:£1.5m) and a net current asset positionof £2.2m (2006:£1.5m). Colleagues and Partners On behalf of the Board I wish to thank my fellow directors, our employees andour partners for their energy and commitment and to extend our sincere thanks toall of them for their hard work and dedication. We look forward to driving thebusiness forward and taking the business of surf to new heights through themerits of Hot Tuna. RANJIT MURUGASONCHAIRMAN11 October 2007 CHIEF EXECUTIVE OFFICER'S REVIEW It gives me great pleasure to give my first Chief Executive's statement sincejoining the Company on 1 June 2007. During 2007, the Group has made significant strides and secured the delivery ofits products into important independent retailers in all of its core markets. Strategic Review Since I have taken on my new role, the Board and I have been focusing on drivingsales growth as well as creating efficiencies that will ultimately generate costsavings and improved margins for the Group. Hot Tuna have planned the globallaunch of their product for Spring/Summer 2008 and up until this season theoperations have not been cohesive and as a result of many inefficiencies themargins generated and the operating result have not been favourable. The first improvement in our process recommended during my global strategicreview was a reduction in the number of manufacturing partners (from fourteen tothree). This will enable quicker delivery times and added reliability throughstronger relationships. Most importantly we will be in a much stronger positionto negotiate better prices and therefore secure better margins. Additionally, weare in the process of establishing our own sourcing office in Shanghai. Fromhere we will co-ordinate our production, quality control and global logistics,leading to substantial improvements in delivery rates and making sure that HotTuna is not only a strong brand but also a credible and efficient supplier forour distributors and main retail partners. Secondly, our team will be moving to a new showroom in the Cooper Building indowntown Los Angeles, where Hot Tuna will feature alongside many other reputablefashion and sportswear leaders. The new showroom will give us instant access tofashion buyers whilst serving as our design, marketing and brandingheadquarters. Furthermore, I will oversee all aspects of the design processfrom this central location whereas previously our designers were based acrossour three regional offices. These changes will reduce the overall design time bysix to eight weeks, which is significant not only in terms of reducing the costof the process, but it will also allow the Company to secure more orders byoffering a quicker time to market. Operational Review United States The US launch plan was to establish an initial account base of 'A' gradeindependent surf retailers. The Company succeeded in securing orders from Jacks'Surfboards, (voted Retailer of the Year 2006 by the Surf Industry ManufactureAssociation (SIMA)). Jacks' Surfboards are based in four locations inCalifornia, namely Huntingdon Beach, Newport Beach, Corona del Mar and DanaPoint. Orders were also received from key accounts and trendsetting retailers inNew York, Miami, Dallas, San Francisco and other major cities across the USA.Additionally, the Company has fulfilled orders from Diane Beachwear, a leadingswimwear retailer with fourteen stores in southern California and the CocoaBeach Surf Company (based in Florida). Cocoa Beach houses the largest surfcomplex in the world and is the location of Hot Tuna's first concept storelaunched in Spring 2006. United Kingdom The appetite for the brand within the UK is strong and this is illustrated byorders received from some of the most respected independents, including: Fluid,Two Seasons, Cult Clothing, Shore Watersports, Free Spirit, Extreme Pie, ShredHead and Surfdome. Free Spirit is currently the largest and most prominent group on the high streetfor surf lifestyle and stocks all the main surf lifestyle brands. Free Spirithas 38 stores nationwide. Extreme Pie is the online and mail order retaildivision of the Extreme Group and is now one of Europe's largest online boardaction sports stores. The Extreme Group possesses a large customer base with theExtreme channel broadcasting non-stop through satellite. In addition to the above, we have secured orders from Otto, the mail order andonline sales group, who own titles such as Freemans and Grattan. Otto haveestablished a new mail-order catalogue and online business called "Oli", whichwill feature Hot Tuna men's apparel and women's swimwear going forward. Earlysell through results have been very positive, with the Hot Tuna ranking in thetop twenty selling men's brands. Australia In Australia, Hot Tuna has re-launched into the key independents including,amongst others, Glue, Surf Vision and Beach Street, however, our greatestachievement has been to secure orders from both Myer and David Jones, on anational level. Myer is Australia's largest department store with 60 stores nationwide. Myerplaced orders for the Hot Tuna boy's clothing range (8-16 years) and delivery ofthese products commenced during July 2007 to all Myer stores. Myer are alsoimplementing 15 Hot Tuna concept stores into their retail premises which will beused to market and sell Hot Tuna accessories (backpacks, caps, wallets andsunglasses). The first sell through reports have been very encouraging,illustrating sell through of approximately 20% weekly, which is very impressiveby industry standards. Distribution Hot Tuna is continuing to pursue strong partnerships with distributors globallyand will continue to foster new and lucrative relationships as the year goes on.Presently, we have distributors in Spain, Portugal and the Canary Islands, andmost recently in the Middle East. In addition to selling apparel throughestablished retail outlets, we have also reached an agreement with Sourcerite,our Middle Eastern distribution partner, to open a dedicated Hot Tuna store inDubai by autumn 2008, which will significantly raise the brand's profile in thisregion. Marketing and Promotion On the marketing front we have successfully re-launched our new website andestablished an online sales store in the USA, which is expected to be rolled outglobally. Hot Tuna has also been receiving a lot of encouraging fashion pressfrom the recent trade shows and promotional activities, including most recently,the Mercedes Benz fashion show and the Home Boy Industries Charity Day inCalifornia. Hot Tuna has also recently signed a sponsorship agreement with another famousAustralian brand, Carlton Cold, which is owned by Foster's Brewing Group.Carlton Cold is aimed at adventure lifestyle-seekers, male and female 18-35year-olds, as is Hot Tuna's surf apparel. Carlton Cold will support Hot Tuna'ssurf team through a number of branding initiatives, and similarly Hot Tuna willsupport promotions run by Carlton Cold with Hot Tuna merchandise. The alignmentof the two brands will raise awareness of the Hot Tuna brand and also facilitateCarlton Cold's launch of their brand in the UK. This support marketing gives HotTuna access to new platforms and is intended to further drive the Group'spenetration of the trendy young adult market. Hot Tuna also continues to support the sport of surfing through sponsoringathletes, events and grass roots surfing and surf schools. In August 2006, HotTuna signed former World No. 11 and X-Games Champion surfer Shea Lopez to itsroster as lead team rider. Under the Hot Tuna banner, Lopez shot to the top ofthe 2007 Association of Surfing Professionals (ASP) ratings and as of the dateof press, he was the No. 2 surfer on the ASP World Qualifying Series (WQS) tour.In the United Kingdom, BPSA champion Micah Lester and British ProfessionalSurfing Association (BPSA) ranked No. 7 Toby Atkins were retained by Hot Tuna,ensuring a steady stream of national media play at the core of their sport, andtop-flight representation at the highest levels of European and Australiancompetition. In March, the whole Hot Tuna surf team converged on Hot Tuna's birthplace insupport of the Company's crown-jewel event of the year, the ASP 4-star-rated HotTuna Central Coast Pro Surfing Championship, held at Soldiers Beach, NSW,Australia. More recently, Hot Tuna was the sponsor of the prestigious BPSA Tour,held at Widemouth Bay, Cornwall. From sponsorship of world-class talent and championships, to support of localand regional athletes and events, Hot Tuna retains its global stature as asurfer's surfing brand true to the sport and spirit of authentic surf culture. Moving Forward The year ahead looks very exciting and it has begun in a very positive manner.Subsequent to our recent brand "makeover" Hot Tuna have gained some highprofile publicity and fashion trend spotting authorities have recentlyrecognised Hot Tuna as one of the top ten swim brands to watch for 2008 (WGSNAugust DNR magazine). We have also strengthened the talent within our team, withthe likes of Anna Kenney, one of the leading swimwear designers in the USA(former Ocean Pacific and Ralph Lauren) who brings tremendous experience andcreativity to the team. Building on the great initial success of our kids ranges in Australia, we arealso looking forward to the global launch of the HT kids wear in the fall of2008. We remain very confident about the future of the brand and delivering results toour shareholders at same time as fostering a great, supportive workingenvironment for all of our employees. NIELS ANDERS JUULCHIEF EXECUTIVE OFFICER12 October 2007 CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2007 NOTES Year ended Period ended 30/06/07 30/06/06 £ £Continuing Operations Revenue 619,131 367,992Cost of sales (481,725) (204,658) Gross profit 137,406 163,334 Other operating income 5,107 4,642Selling and marketing expenses (596,101) (383,196)General and administrative (3,210,406) (1,833,161)expensesDepreciation (39,811) (3,095)Loss from operations (3,703,805) (2,051,476)Exceptional share-based (1,689,790) -payment chargeInvestment income 71,250 39,474Loss on disposal of property, (3,906) (949)plant and equipmentFinance costs (6,909) (4,841) Loss before tax (5,333,160) (2,017,792)Tax - - Loss after tax (5,333,160) (2,017,792)Loss for the year/period (5,333,160) (2,017,792) Attributable to:Equity holders (5,333,160) (1,975,718)Minority interest - (42,074) (5,333,160) (2,017,792) Loss per shareBasic and Diluted 2 (0.08) pence (0.06) pence CONSOLIDATED BALANCE SHEET AS AT 30 June 2007 2007 2006 Group Group £ £ASSETS Non-current assetsGoodwill 207,338 237,338Other intangible assets 5,238,338 5,251,429Property, plant and equipment 124,134 73,616 5,569,810 5,562,383Current assetsInventories 398,614 171,674Trade and other receivables 523,843 183,624Cash and cash equivalents 1,891,997 1,524,255 2,814,454 1,879,553 Total assets 8,384,264 7,441,936 LIABILITIESCurrent liabilitiesBank loans and overdraft - 110,842Trade and other payables 496,394 281,626Convertible loan note 106,042 - 602,436 392,468 Net current assets 2,212,018 1,487,085 Non-current liabilitiesConvertible loan note 111,056 - 111,056 - TOTAL LIABILITIES 713,492 392,468 Net assets 7,670,772 7,049,468 EQUITY Share capital 773,799 488,010Share premium reserve 9,611,701 6,092,232Share-based payment reserve 2,266,645 576,855Merger reserve 1,474,000 1,474,000Warrant reserve 799,842 486,557Foreign exchange reserve 53,663 (4,017)Shares to be issued - 25,000Retained loss (7,308,878) (1,975,718) Equity attributable to equity 7,670,772 7,162,919holders of the parentMinority interest - (113,451)Total equity 7,670,772 7,049,468 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2007 Share Share Share-based Other Warrant Retained Total Minority Total capital premium payment reserves reserve profit/ interest equity account reserve (loss) CONSOLIDATED £ £ £ £ £ £ £ £ £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) 7,049,468Net loss for the period - - - - - (5,333,160) (5,333,160) 113,451 (5,219,709)Exchange differences arising on translation ofoverseas 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) Share conversion and issue 285,789 3,729,685 - (25,000) - - 3,990,474 - 3,990,474Costs of share issue and conversion - (210,216) - - - - (210,216) - (210,216)Warrants Subscribed - - - - 313,285 - 313,285 - 313,285Employee 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 STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 30 JUNE 2006 Share Share Share Other Warrant Retained Total Minority Total capital premium based reserves reserve profit/ interest equity account payment (loss) reserveCONSOLIDATED £ £ £ £ £ £ £ £ £Balance at 1 April 2005 - - - - - - - - -Net loss for the period - - - - - (1,975,718) (1,975,718) (42,074) (2,017,792)Exchange differencesarising on translation ofoverseas operations - - - (4,017) - - (4,017) - (4,017) Total recognised income and expense for 2006 - - - (4,017) - (1,975,718) (1,979,735) (42,074) (2,021,809) Share conversion and issue 488,010 7,390,490 - 1,474,000 - - 9,352,500 - 9,352,500Costs of share issue and conversion - (1,298,258) - - - - (1,298,258) (71,377) (1,369,635)Warrants Subscribed - - - - 486,557 - 486,557 - 486,557Shares to be issued - - - 25,000 - - 25,000 - 25,000Employee share option scheme - - 90,695 - - - 90,695 - 90,695Share based payments to advisors - - 312,172 - - - 312,172 - 312,172Share based payment on acquisition - - 173,988 - - - 173,988 - 173,988 Balance at 30 June 2006 488,010 6,092,232 576,855 1,494,983 486,557 (1,975,718) 7,162,919 113,451 7,049,468 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2007 NOTES Group Group Year Ending Period Ending 30/06/07 30/06/06 £ £ NET CASH USED IN OPERATING ACTIVITIES 3 (3,920,529) (1,925,622) INVESTING ACTIVITIESCurrency revaluation reserve - (4,017)Payments for purchase of controlled entity - (606,770)Cash funding on purchase of controlled - (178,333)entitiesPayments for intangible assets - (283,000)Interest received 71,250 39,474Purchases of property, plant and equipment (93,620) (38,446) NET CASH USED IN INVESTING ACTIVITIES (22,370) (1,071,092) FINANCING ACTIVITIESProceeds on issue of convertible notes 217,098 -Proceeds from issue of share capital 4,093,543 4,520,969 NET CASH INFLOW FROM FINANCING ACTIVITIES 4,310,641 4,520,969 Net increase in cash and cash equivalents 367,742 1,524,255 CASH AND CASH EQUIVALENTS AT BEGINNING OFYEAR/PERIOD 1,524,255 - CASH AND CASH EQUIVALENTS AT END OF YEAR/PERIOD 3 1,891,997 1,524,255 NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2007 1. BASIS OF PREPARATION The results for the year ended 30 June 2007 have been prepared on accountingpolicies which are consistent with those used in the preparation of thefinancial statements of the Group for the period ended 30 June 2006. The consolidated financial information for the year ended 30 June 2007 has beenprepared on a basis consistent with the previous period and in accordance withapplicable International Financial Reporting Standards (IFRS) as adopted by theEuropean Union. The preliminary announcement does not constitute the Groupstatutory financial statements within the meaning of s.240 of the Companies Act1985. The financial information included in this announcement has been extracted fromthe un-audited financial statements for the year ended 30 June 2007 and theaudited financial statements for the year ended 30 June 2006. The Group's 2007 Annual Report and Financial statements are to be delivered tothe Registrar of Companies following the Company's Annual General Meeting on 19November 2007. The Group's 2006 accounts, which contain an unqualified auditreport, have been filed with the Registrar of Companies. 2. LOSS PER SHARE The calculation of the basic and diluted earnings per share is based on the following data: Year ended 30/06/07 Period ended 30/06/06 £ £ Earnings Earnings for the purposes of basic earnings per share net loss (5,333,160) (1,975,718)for the period attributable to equity holders of the parent Number of sharesWeighted average number of ordinary shares for the purposes of 65,230,931 32,471,760basic earnings per shareThe denominator for the purpose of calculating the basic earnings per share has been adjusted to reflectall capital raisings. Due to the loss incurred in the period, there is no dilution effect resulting fromthe issue of share options, warrants and shares to be issued. 3. RECONCILIATION OF PROFIT FROM OPERATIONS TO NET CASH USED IN OPERATING ACTIVITIES (NOTES TO THE CASHFLOW STATEMENT) Group Group Year Period Ending Ending 30/06/07 30/06/06 £ £ Loss from operations (3,703,805) (2,051,476) Adjusted for: Depreciation of property, plant and 39,811 3,095equipment Loss on disposal of property, plant and 3,906 949equipment Share-based payment expense - 90,695 Operating cash flows before movements inworking capital (3,660,088) (1,956,736) Increase in inventories (226,940) (27,109) Increase in receivables (230,674) (102,162) Increase in payables 204,082 165,227 Cash used in operations (253,532)) 35,956 Interest (Paid) (6,909) (4,841) NET CASH FROM OPERATING ACTIVITIES (3,920,529) (1,925,622) Group Group Period Year Ending Ending 30/06/07 30/06/06 (£) (£) Cash and cash equivalents 1,891,997 1,524,255 This information is provided by RNS The company news service from the London Stock Exchange