KOOV.L Regulatory News (KOOV)

30 September 2015

Preliminary Results for the year ended 31 March 2015

Trading Statement for the 26 weeks to 27 September 2015

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

Koovs plc (AIM:KOOV), the fashion-forward business focused on the young Indian e-commerce market, today announces its preliminary results for the year to 31 March 2015 and an unaudited and unreviewed trading statement for the 26 weeks to 27 September 2015.

Preliminary results highlights for the year to 31 March 2015

· Strong sales* growth at KOOVS.COM of 272% to INR266 million/£2.7 million in the year to 31 March 2015

· Visits to the website up 177%, a compound weekly growth rate of 2.5%

· Continued progress on the five key strategic objectives set out in the Chairman's Statement

· Koovs plc revenue in the year of INR204.1 million / £2.1 million and loss before tax of INR922.6 million / £9.4 million

Current trading and operational highlights for the 26 weeks to 27 September 2015^

· KOOVS.COM sales* growth of 187% with growth in both visits and conversion rates despite a consistent marketing investment week-on-week across the period

· Boohoo to be added to the brand portfolio; expanding product offer to include denim and footwear departments

· 59% of orders now placed via mobile devices

Management and funding update

· Mary Turner joins as Chief Executive Officer on 1 October 2015

· The Group's business plan envisages a period of investment in marketing, product and the warehouse in order to grow the business to significant scale over three years. The Board is in the process of seeking significant additional funding required to support the business both in the short term and the longer term. The process is ongoing and the Directors have a reasonable expectation that the initial tranche of funding required will be secured before the end of 2015. As explained in Note 1 below, the auditors have made reference to this in their audit opinion

Waheed Alli, Chairman of Koovs, said:

"We are pleased to report another strong set of results, as we continue to deliver on our strategy. We continue to reinforce our credentials with the fashion-forward Indian consumer, expand our own label and branded proposition and introduce more easy ways to shop with us. Looking to the future, we are determined to continue growing market share and see significant further opportunity ahead as we transform Koovs into the number one western fashion destination in India."

* Sales made through the KOOVS.COM website including taxes, net of returns. This does not represent the revenue of the Koovs plc Group.

^ The information relating to the 26 weeks to 27 September 2015 is unaudited and unreviewed

Preliminary results

# Koovs plc revenue reflects the wholesale value of products supplied for sale on the KOOVS.COM website

*\* 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 year to 31 March 2015 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. For ease of understanding, memorandum information has been supplied in Sterling alongside the main elements of the financial information.

Trading statement for the 26 weeks to 27 September 2015

1. Sales made through the KOOVS.COM website including taxes, net of returns. This does not represent the revenue of the Koovs plc Group.

2. Sterling equivalent at constant exchange rates.

3. The information relating to the 26 weeks to 27 September 2015 is unaudited and unreviewed.

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.

CHAIRMAN'S STATEMENT FOR THE YEAR TO 31 MARCH 2015

During our first year of trading following listing we have achieved very strong growth with net sales generated by the site growing by 272% year-on-year based on traffic to the website which was 177% higher.

We are still at the beginning of our journey to become India's leading western fashion destination. We believe we will succeed by building fashion credibility through strong brands, carefully curated collections and our exclusive, high fashion own-label products delivered in a knowledgeable and respected environment. We are focused on the following five key objectives:

· build the Koovs private label and establish its fashion credibility;

· bring strong international brands to the new Indian consumer;

· extend KOOVS.COM fashion credentials by bringing both established and new designers to the consumer in India through exclusive design collaborations;

· develop delivery and price promises for the consumer that are reliable, affordable and price-worthy; and

· use technology to power the consumers' fashion needs.

We are making good progress in each of these areas:

Build the Koovs private label - our fashion credibility has been built on 22 fashion trends providing over 2,000 different styles across the year, all designed in our dedicated studio in London.

Bring international brands to India - our best-selling brands include New Look, Lipsy, Gas, Warehouse and AX Paris along with others, now totalling over 150 brands.

Extend fashion credentials - we introduced exclusive product collaborations with Henry Holland, British jewellery designer Mawi and, most recently, red-carpet designer Giles Deacon.

Develop delivery and price promises - we have worked to develop our operations and shorten lead times and 85% of our deliveries are made with five days of placing the order. Our pricing architecture has been further refined so that 80% of the private label product on the site is priced below the key £15 level.

Use technology to empower customers - we launched an app to facilitate mobile access to the site and 50% of our visitors are using mobile devices. We have introduced an on-line returns system and a customer wallet to better manage credits arising from returns.

Marketing investment

Compared to our initial expectations, our investment in marketing during the last year was higher at INR315.8 million (£3.2 million). The e-commerce market in India is growing at an unprecedented rate and the larger multi-category players have been extremely active in the media. During the year the top three players invested 5-times more in marketing than they had the previous year (source: Technopak) highlighting that our 3-times increase was relatively modest. However, in order to be heard in this very active market and to ensure we grasp the market opportunity ahead of others, we recognise that we will have to spend considerably more in promoting the brand, building our brand awareness and developing our customer base.

We have therefore developed a detailed plan to raise the awareness of the Koovs brand and to generate significantly higher revenues. To lead the executive team in this plan I am delighted that Mary Turner has agreed to join the business as CEO in October. Her input as a Non-Executive Director over the past year has been invaluable and her experience in building consumer-facing technology-led businesses in their early stages is second to none.

A detailed marketing plan has already been built with the objective of making Koovs "famous" and achieving significantly higher brand awareness in our target market of affluent youth in the major metropolitan areas of India. The campaigns have been designed to be as cost-effective as possible, but will require a significant investment. For this reason we have been speaking to investors to seek the additional funds required to accelerate our growth. This process is on-going and additional funding is expected to be secured by the end of 2015.

Current Trading and Outlook

KOOVS.COM delivered a strong performance in the first 26 weeks of the current financial year, with net sales increasing by 187% over the same period last year. During this period, website visits were 128% ahead giving us further confidence for the future. This has been achieved on a consistent marketing investment week-on-week across the period, further confirming the strength of the Koovs offering.

We continued to grow our international brand portfolio, expand our own label proposition both in menswear and womenswear and remain encouraged by the pipeline for the remainder of the year. Our investment in mobile continues to bear fruit, with 59% of all orders placed on a mobile device. We have introduced an online returns service and now offer order tracking as we continue to enhance the ease and convenience of the shopping experience.

The Indian e-commerce market continues to experience rapid growth, and we remain ideally placed to benefit from this trend by providing customers more reasons to shop with us.

Going concern

The process to secure the required further funding for the business is ongoing. This situation has created some material uncertainties for the Group affecting the Group's cash resources and its ability to function as a going concern. The Directors have a reasonable expectation that additional funding will be secured before the end of 2015. Further details are provided in the Notes below.

Waheed Alli

Chairman

29 September 2015

OPERATING REVIEW

Objectives and strategy

Our objective is to build KOOVS.COM into India's leading western fashion destination by 2020 by following the five key steps set out in the Chairman's statement.

Backed by an experienced and credible management team, the Group is well placed to benefit from the explosive growth in connectivity, retail and e-commerce across India.

Acquisition of Koovs India

Following a successful placing of shares on 10 March 2014, Koovs plc acquired a 57.5% stake in Koovs Marketing Consulting Private Limited ("Koovs India"). This created the Koovs plc Group (the "Group") allowing closer liaison between the two businesses while providing appropriate funds for the development of the fledgling operations. The results in this report reflect the first full year of operation of the Group following the acquisition of Koovs India.

Operations

The Group supplies branded fashion garments and accessories for exclusive distribution through the KOOVS.COM website including international fashion brands, iconic British high street brands and Koovs own-label product designed by a talented team based in London. The Koovs Group wholesales these products exclusively to Marble E-retail Private Limited ("Marble"), an independently owned and managed company which operates the KOOVS.COM website and the associated e-commerce retail distribution business under a licence granted by the Koovs Group.

Trading performance

As shown by the Key Performance Indicators discussed below, the business has demonstrated very strong growth during the period to 31 March 2015. We continue to be encouraged by progress so far and intend to remain focused on our strategy while working hard to maintain a strong level of growth. In these early days of development, revenue is at a low level despite the very strong growth. Gross margins are compromised by the low volumes and our overhead structure is considerably higher than the gross profit generated. We expect therefore to generate trading losses in the immediate future as volumes and gross margins improve with the development of the brand.

During the year the Group incurred higher marketing than initially expected. The e-commerce market in India is growing extremely quickly and is attracting huge investment from a number of major players who aim to claim leading brand recognition. These businesses are investing extremely heavily in marketing and it is estimated that in 2014 the leading multi-category players increased their investment in marketing by a factor of five over the year before (source: Technopak). With this added noise in the market and the inevitable upward pressure on marketing costs, particularly for biddable search terms, we found it necessary to increase our investment in marketing in order to secure sufficient share of voice in the market to maintain a healthy growth in revenue.

We expect that these market conditions will continue and that therefore the Group will continue to invest more heavily than anticipated in marketing to achieve our goals.

Key performance indicators

We monitor the Group's performance in a number of ways including assessing the performance of KOOVS.COM, which, although it is operated by a third party, reflects the performance of the products and marketing managed by the Group. The statistics are generated internally with the use of website monitoring tools and data supplied by the operator of the website. The Group monitors such metrics as the gross value of orders received (value of orders placed, including VAT), visits to the website (number of times the website is accessed), the rate of conversion of that traffic to sales orders (number of orders generated divided by the number of visits to the site), the average value of orders placed and the net sales (value of sales orders including VAT, net of orders cancelled, not delivered or returned by the customer). Each of these reflect the success of the KOOVS.COM website which is the Group's major customer and whose success is fundamental to the success of the Group.

Over the past year, compared with the previous year, we have achieved the following:

Recent developments

Koovs private label

We continue to expand our ranges with a constant pipeline of new ranges and we have refined our pricing architecture to match the expectations of our customers. The ranges for autumn 2015 were recently previewed to the press in Delhi and Mumbai resulting in excellent feed-back and immediate requests for product to be featured in the fashion press.

International brands

The brand mix is key to our fashion credibility and accounts for 60% of our sales, as planned. We offer a broad range of over 150 UK high-street and international brands selected and curated by our knowledgeable and experienced merchandising team in order to offer an exclusive mix of the latest trends in fashion. We are pleased to have added Boohoo to our selection of brands, launching in December.

Collaborations

We are proud to be able to partner with leading British and Indian designers to create exclusive ranges designed specifically for Koovs. We have offered ranges from Henry Holland, jewellery designer Mawi and red-carpet designer Giles Deacon as well as Nikhil Chinapa, a leading DJ and music promoter in India. We have further collaborations planned for the rest of this year.

Delivery and price promise

Our pricing reflects the quality of design and manufacture invested in our products yet is competitive in the market and attractive to the consumer. 80% of private label products are priced below the critical INR1500 (£15) level. We offer free delivery on all orders and 85% of orders received are delivered within five days of the customer placing the order.

Technology

The explosive growth of smart-phone ownership in India is proving 24/7 access to the internet for millions of people and over half of the visits to KOOVS.COM are from mobile devices. We launched both Android and iOS apps last year to provide the best user experience for our mobile customers and our focus is to develop this as the main access to our products alongside the traditional website.

Future developments

We intend to remain resolutely focused on our strategy in order to capitalise on the enormous opportunity in the Indian market. We believe that it is necessary to raise the profile of the brand significantly in the short term in order to capitalise on the enormous potential of the market. We therefore intend to increase our investment in marketing and to maintain a significant level of investment over the next two years with the aim of increasing the Group's market share and generating significant scale. The Board is therefore in the process of seeking further investment to support the on-going funding requirements of the business.

FINANCE REVIEW

The financial results of the Koovs plc Group in this report cover the year ended 31 March 2015. The comparative data covers the six-month period from 1 October 2013 to 31 March 2014 and includes the effects of a major share issue and the acquisition of Koovs India on 10 March 2014.

Prior to the acquisition of Koovs India the Company's principal activity was that of providing proprietary design and merchandising services to Koovs India in connection with the development of that company's fashion business in India.

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 Company changed its accounting period shortly following the acquisition in recognition of the significantly changed nature of the operations of the Group. The comparative period in this report is therefore the six months to the 31 March 2014.

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 year to 31 March 2015 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.

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.

The operational currency of the Company, Koovs plc, remains Sterling and therefore the reporting currency of the Company remains Sterling.

Financial results

The Group achieved revenue of INR204.1 million / £2,075k (2014: INR9.0 million) during the year from the wholesale of fashion garments and accessories to its sole customer for onward sale to consumers. (In the preceding period, a further INR55.4 million of revenue was generated from other activities. See Note 2.) In these early days of development and relatively low volumes, gross margins are low and therefore the Group generated a gross loss of INR85.6 million /£869k (2014: profit of INR53.5 million).

Overhead costs comprise the costs of the design and merchandising team in the UK, the creative, content, marketing and IT teams in India, infrastructure costs, marketing expenditure and corporate costs. Altogether this amounted to INR977.3 million / £9,932k (2014: INR265.9 million) during the year to give an operating loss of INR1,062.8million / £10,801k (2014: INR212.4 million).

Interest income arising mainly in India, net of finance expenses, amounted to INR140.2 million / £1,425k (2014: INR10.2 million) to give a loss before tax of INR922.6 million / £9,376k (2014: INR202.2 million).

The prior period results reflect the six month period to 31 March 2014 and mainly the company's operations prior to the acquisition of Koovs India.

Taxation

Due to the losses generated in the period and the likelihood that it will be some time before tax losses can be utilised no deferred tax has been accounted for and therefore there is no tax charge or credit in the period.

The charge for taxation in the prior period amounted to INR9.0 million / £88,000 and related entirely to withholding tax deducted at source in India on payments made to Koovs plc in relation to services provided to Koovs India.

Loss for the period

The loss for the period was INR922.6 million / £9,376k (2014: INR211.2 million / £2,075k). As described in this Strategic Report, the business is in the early phase of a plan to create a significant business in India and the losses reflect the low but rapidly growing sales revenue and the overhead base which has been put in place to support significantly larger volumes.

Basic earnings per share

Earnings per share amounted to a loss of 27.1 rupees / 27.6 pence per share based on the loss attributable to equity holders of INR654.2 million / £6,648k and weighted shares in issue of 24,110,719. The loss per share in the previous period was 27.6 rupees / 27.2 pence based on the weighted shares in issue of 7,400,568.

Cash flow and funds

The Group raised INR2,281.7 million/ £22,417k (net of expenses) in March 2014 to fund its operations. During the year to 31 March 2015 the Group utilised INR1,044.4 million / £10,614k (2014: INR221.7 million) in operations mainly funding the operating losses and increasing inventory in support of the growing sales.

In order to maximise interest income, excess funds are deposited with a range of banks in India earning interest of 8%-9%. During the year, INR1,224.1 million / £12,439 was deposited and in order to provide flexibility while maximising interest income, a small overdraft facility was put in place, secured on cash deposits with the same bank.

Allowing for these movements along with interest income and investments in fixed assets, the net decrease in cash and cash equivalents was INR2,226.0 million / £22,601k (2014: increase of INR2,154.9 million) to give a closing net of the overdraft of INR(54.7) million / £(591)k (2014: cash and cash equivalents of INR2,173.1 million).

Taken along with the bank deposits the Group had access to INR1,266.9 million / £13,712k (2014: INR2,185.4 million) at the end of the financial period.

Financial position

At the end of the financial period the net assets of the Group amounted to INR1,967.3 million / £21,290k (2014: INR2,891.9 million). This included INR621.2 million /£6,723k of goodwill arising from the acquisition of Koovs India.

Principal risks and uncertainties

There are a number of market and business risks that could affect the Company and the Group. We set out below the Group's view of the main risks which, should any actually materialise, could materially adversely affect the Group's business, financial condition and returns to shareholders. Further risks and uncertainties which are not presently known to the Directors at the date of this document, or that the Directors currently deem less significant, may also have an adverse effect on the business, financial condition or results of the Group.

Funding

The Group's business plan envisages a period of investment in marketing, product and the warehouse in order to grow the business to significant scale over the next three years and through to profitability. In order to fund this plan the Board has been in discussions with current and potential shareholders in order to raise up to £35 million in additional funding, much of which is required in 2017 and beyond. The process continues, with completion of the first tranche expected by the end of 2015.

The Company has prepared detailed forecasts for more than 12 months from the date of signing of these accounts based on both the planned investment in advertising and a potential scaling back of the operations with limited investment in marketing. These forecasts show that there is a shortfall of cash within the 12-month period and, without further funding, cash will be fully utilised in the first quarter of the financial year to 31 March 2017.

This situation has created the following material uncertainties:

· The Group's ability to access sufficient further funding in order to support the business over the next 12 months; and

· The Group's ability to meet its forecasts, manage its expenses in order to extend the period when the Group is expected to have sufficient liquidity and to predict the impact of any change in marketing expenditure.

These circumstances represent material uncertainties that cast significant doubt upon the Company's ability to continue as a going concern.

Although the funding process has not yet concluded, discussions with a number of potential investors have been encouraging. Based on this the Directors have a reasonable expectation that the on-going efforts will be successful and that therefore the Group and Company will have adequate resources to continue in operational existence for the foreseeable future.

Market and Economic Risks

Economic outlook

The Group's revenue is dependent on the sales by Koovs India to Marble which, in turn, is dependent on the retail sales Marble achieves, so the Group is sensitive to the impacts of the general economic climate in India and on the population's propensity to spend on fashion clothing and accessories. Global economic factors may impact the costs of inputs such as cotton and fuel and the Group's ability to pass on such cost increases may be limited. The Board monitors projections for the Indian economy on a regular basis and amends plans based on the expected growth.

Market and competition

The retail fashion industry and market is subject to changing customer tastes. The Group's performance is dependent upon effectively predicting and quickly responding to changing consumer demands and translating market trends into saleable merchandise. Internet fashion retailing is global and highly competitive. Any failure by KOOVS.COM to compete effectively with bricks and mortar retailers and other internet retailers may affect the Group's revenue. The Group uses third parties to provide assessments of the developments of fashion in the global markets and designers attend international trade shows to provide direction and inspiration.

Suppliers

The Group makes arrangements with manufacturers for the supply of products designed by the Group. The ability to source products promptly at competitive prices and at appropriate quality is key to the success of the business and while there is a broad range of potential suppliers and well-developed competition in the market, the Group is dependent on being able to find appropriate manufacturing capability for its products in order to meet delivery, quality and price expectations. The Group uses a broad range of suppliers within the Indian market and also internationally and ensures that there is no concentration of supply. The employment of experienced sourcing experts ensures access to a broad range of manufacturing capability.

Foreign country and political risk

Most of the Group's personnel, operations and other assets including Koovs India's warehouse, all inventory and computer servers are located in India and, consequently, the Group is subject to changes in regulations or market conditions in that country. With the majority of operations located in India, local management maintain close monitoring of local developments and amend plans as necessary.

Financial risks

Interest rate risk

The Group's exposure to interest rate risk arises from the fluctuations in the rate of interest income or charges on cash and cash equivalent balances. In the period under review, the Group has operated in a net cash position. UK interest rates continue to be very low and therefore the potential adverse interest rate risk in the UK is very low. Interest rates in India are in the region of 9% and the majority of the Group's cash is held in Indian Rupees in India. There is therefore a potential adverse interest rate risk affecting the interest income generated in India. No interest rate hedging is in place. The bank deposits are made for a variety of tenures to balance liquidity and security of interest generation.

Currency risk

The Group operates in the United Kingdom and India. Following the acquisition of Koovs India, all revenues and the majority of costs are denominated in Indian Rupees. However, approximately half of the Group's overheads are incurred in Sterling and therefore the Group results are susceptible to fluctuations as a result of changes in exchange rates. No foreign currency hedging is in place to mitigate this risk.

Credit and customer risk

The Group's revenues arise predominately from invoices for goods to a single customer. As Marble is currently the only channel through which Koovs India's products are sold to consumers, the Group's revenue is dependent upon the relationship with Marble and upon the success of Marble in servicing its customers, delivering products as promised, recovering payment from its customers and maintaining high levels of customer service. The Group has considered the credit risk associated with the customer and has assessed the credit worthiness of the customer to be good. The Group minimises the risk through a requirement for prompt, monthly payment of invoices issued to which the customer is committed and has demonstrated consistent adherence.

Liquidity risk

Liquidity risk is managed through the assessment of short, medium and long-term cash flow forecasts to ensure the adequacy of funding in order to meet the Group's working capital requirements. The funding requirement of the Group requires further investment. The Board is currently in the process of seeking such funding.

Other risks

Technological risks

The Group is dependent on its IT infrastructure and any system performance issues (for example system or infrastructure failure, damage or denial of access) could seriously affect our ability to trade. The infrastructure has been designed specifically for robustness, flexibility and scalability and these objectives form a core part of the IT development strategy.

Warehouse disruption

Any disruption to the Group's warehousing facility due to physical property damage, breakdown in warehouse systems, capacity shortages or poor logistics management could lead to significant operational difficulties in order fulfilment, which may have a consequent adverse effect on the Group's business. The Group has recruited an experienced logistics manager to oversee these operations.

Intellectual property and content liability

The business of the Group carries with it the risk of intellectual property right infringement. The Group may need to engage in litigation to enforce its intellectual property rights, or to protect itself from third party claims. Our designers are professionally trained to ensure that intellectual property rights are appropriately handled. Competitors' products are regularly monitored and any infringement brought to managements' attention.

Key personnel

The Group depends on the services of its key technical, marketing and management personnel. The Group personnel structure is being developed as the business grows to provide appropriate quality, depth of experience and succession planning.

On behalf of the Board of Directors

Roy Naismith Robert Bready

Director Director

29 September 2015 29 September 2015

Consolidated Income Statement

for the year to 31 March 2015

All results relate to continuing operations.

Consolidated Statement of Comprehensive Income

for the year to 31 March 2015

All results relate to continuing operations.

Consolidated Statement of Financial Position

at 31 March 2015

Consolidated Statement of Changes in Equity

for the period from 30 September 2013 to 31 March 2015

Consolidated Statement of Cash Flows

for the year to 31 March 2015

Notes

1. Basis of preparation

Whilst the information included in this condensed consolidated financial information ("preliminary announcement") has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRSs") as adopted for use in the European Union, this preliminary announcement does not itself contain sufficient information to comply with IFRSs.

The financial information contained within this preliminary announcement for the period to 31 March 2015 does not comprise statutory financial statements within the meaning of section 434 of the Companies Act 2006. The Report and Financial Statements for the period to 31 March 2014 have been filed with the Registrar of Companies and those for the period to 31 March 2015 will be filed by 30 September 2015. This preliminary announcement has been prepared on a basis consistent with the financial accounting policies set out in the Accounting Policies section of the Report and Financial Statements for the period ended 31 March 2015.

The Group's annual report for the period ended 31 March 2015 is available for viewing and downloading from the Group's corporate website: www.koovs.com/corporate. The annual report will also be circulated to shareholders.

The condensed consolidated financial information contained in this report should be read in conjunction with the Group's Report and Financial Statements for the period ended 31 March 2015, which have been prepared in accordance with IFRSs as adopted by the European Union.

The auditors' report on those accounts states contains a statement under s498(3) of the Companies Act 2006 that the auditors have been unable to obtain sufficient appropriate audit evidence regarding the material uncertainties set out under the heading "Going concern" below and that they are therefore unable to determine whether it is appropriate to prepare the financial statements on a going concern basis. The auditors do not express an opinion on the financial statements.

The Group's business activities together with the factors that are likely to affect its future developments, performance and position are set out in the Operating Report. This describes the Group's financial position and cash flows and also highlights the principal risks and uncertainties facing the Group. The Report and Financial Statements for the period ended 31 March 2015 includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposures to credit risk and liquidity risk.

Going concern

These condensed financial statements have been prepared on the assumption that the business is a going concern.

The Group is in the early stages of its aim to build a significant business in India. The business plan envisages a period of development and investment for which funding was initially secured through the public offering of shares completed on 10 March 2014.

During the period since March 2014 revenue has grown dramatically as demonstrated in the Consolidated Income Statement and Koovs has built a strong initial market position from which to develop further. In building to this point the investment required in advertising and marketing has been higher than originally anticipated. The e-commerce market in India is growing extremely quickly and is attracting significant investment from a number of major players who aim to claim leading brand recognition. These businesses are investing extremely heavily in marketing and it is estimated that in 2014 the leading multi-category players increased their investment in marketing by a factor of five over the prior year. With this added noise in the market and the inevitable upward pressure on marketing costs, particularly for biddable search terms, we have found it necessary to increase our investment in marketing in order to secure sufficient share of voice in the market to maintain a healthy growth in revenue.

Further, we recognise that in order to achieve our goals, the brand requires to achieve significantly higher brand awareness in the short term. We have therefore developed a detailed plan to raise the awareness of the Koovs brand and to generate significantly higher revenues. A detailed marketing plan has been built with the objective of making Koovs "famous" and achieving significantly higher brand awareness in our target market of affluent fashion focused youth in the major metropolitan areas of India. The campaigns have been designed to be as cost-effective as possible, but will represent a major investment.

For these reasons the Board, in conjunction with its advisors, has been in discussion with current and potential shareholders in order to raise up to £35 million in additional funding for the business. At the date of publication of these accounts these discussions are on-going.

The Company has prepared detailed forecasts for more than 12 months from the date of signing of these accounts based on both the planned investment in advertising and a potential scaling back of the operations with limited investment in marketing. These forecasts show that there is a shortfall of cash within the 12-month period and, without further funding, cash will be fully utilised in the first quarter of the financial year to 31 March 2017.

This situation has created the following material uncertainties:

· The Group's ability to access sufficient further funding in order to support the business over the next 12 months; and

· The Group's ability to meet its forecasts, manage its expenses in order to extend the period when the Group is expected to have sufficient liquidity and to predict the impact of any change in marketing expenditure.

These circumstances represent material uncertainties that cast significant doubt upon the Company's ability to continue as a going concern.

Although the funding process has not yet concluded, discussions with a number of potential investors have been encouraging and further discussions are scheduled in the short term. Based on this the Directors have a reasonable expectation that the on-going efforts will be successful and that therefore the Group and Company will have adequate resources to continue in operational existence for the foreseeable future.

The Directors therefore consider it appropriate for the financial statements to be prepared on a going concern basis. The financial statements do not include any potential impairment to intangible assets based on the above material uncertainties nor include the adjustments that would result if the Group was unable to continue as a going concern and the accounts were prepared on a break-up basis.

2. Revenue

Revenue recognised in the Income Statement is analysed as follows:

During the year the Group's sole operation was that of supplying fashion garments at wholesale to third parties. During the prior period the Group operated in two principal areas of activity, being those of providing proprietary know-how and design services for the fashion industry and, following the acquisition of Koovs India, the wholesale of fashion garments. Both revenue streams made up more than 10% of the total revenue.

Geographical information

The revenue information above is based on the location of the customers.

Operating segment

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.

Information about major customers

All of the revenue arising from the sale of fashion garments arises from one customer.

3. Operating profit

Operating profit is stated after charging:

All operating expenses are administrative by nature.

4. 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 dividing the earnings attributable to the owners of the Parent Company by the weighted average number of ordinary shares in issue during the period, adjusted for the effects of potentially dilutive share options. 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 for diluted earnings per share.

5. Cash and bank deposits

6. Change in presentation currency

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.

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

To assist UK-based readers of the financial statements, translations into Sterling have be supplied on a memorandum basis to allow a clear understanding of the results and financial position of the business.