RNS Number : 9980E
Adili PLC
03 October 2008
AIM: ADIL
Adili plc
("Adili" or "the Company")
Maiden Final Results
for the Year ended 30 April 2008
Adili plc, the online retailer of ethical fashion and lifestyle products trading through Adili.com, announces its maiden final results
for the year ended 30 April 2008. The Company sources its goods from a variety of ethical brands and its products are intended to be
fashionable and stylish, as well as ethical and offering value for money. Adili is advised on ethical issues by one of the UK's leading
ethical trading consultants.
Key Points
* Admission to AIM in December 2007
* Sales increased to �354,000 (13 February 2006* to 30 April 2007: �66,000)
* Loss before tax of �1,585,000 (13 February 2006* to 30 April 2007: loss of �456,000) after share option charge of �147,000 (13
February 2006* to 30 April 2007: �41,000)
* Loss per share of �0.12 (13 February 2006* to 30 April 2007: loss per share of �0.07)
* Substantial expansion in range of ethical brands and product line
* Development of Adili own label collection - launch of capsule collections post year end
* Completion of implementation of back office/order management system
* �1 million fundraising completed
* Appointment of Nick Samuel as Chairman with immediate effect
* Since the year end, trading continues to demonstrate encouraging sales growth
* The Company was incorporated on 13 February 2006 but commenced trading on 21 September 2006.
Adam Smith, Chief Executive, commented:
"These results are our first as a quoted company and I am pleased to report that Adili has made substantial progress over the year under
review. While the business is still young, having been trading for only 24 months, the group has achieved strong sales growth over the year
that has continued since the year end and has made significant investment in key areas which will drive future growth.
While traditional retailers on the high street are facing challenging market conditions, both internet retailing and ethical fashion
continue to expand significantly. This provides a substantial market opportunity for Adili."
Enquiries:
Adili plc Adam Smith, Chief Executive T: 01258 837 437
Officer
Chris Powles, Finance
Director
John East & Partners Limited David Worlidge/Bidhi Bhoma T: 020 7628 2200
Biddicks Katie Tzouliadis/Sophie Lane T: 020 7448 1000
CHAIRMAN'S STATEMENT
Introduction
The business has made tremendous progress since the inception of trading in September 2006 and the Company's admission to trading on
AIM, in December last year, marked a significant step in its development. I am now pleased to report Adili's maiden full year results as an
AIM quoted company.
Over the year to 30 April 2008 Adili achieved strong revenue growth and, with the funds raised from the placing at flotation, has
invested in key areas which will drive future growth. While the business is still young, having been trading for only 24 months, the
potential for it to establish itself as 'the place' to shop online for ethical fashion and other related lifestyle products remains
substantial. We are putting in place a strong platform for growth and are building increasing consumer awareness of the Adili brand as a
leading name in our market.
Financial Results
It should be noted that the Company's trading subsidiary was incorporated on 13 February 2006 but commenced trading on 21 September
2006.
Revenue for the year to 30 April 2008 increased to �354,000 (13 February 2006 to 30 April 2007: �66,000), with sales in the second half
of the year rising by over 250% on the comparative period last year. The operating loss was �1,591,000 (13 February 2006 to 30 April 2007:
loss of �457,000). This was higher than originally expected and reflected both a reduction in gross margin because of stock clearance and an
acceleration of investment in the business. The loss before tax was �1,585,000 (13 February 2006 to 30 April 2007: �456,000) and loss per
share was �0.12 (13 February 2006 to 30 April 2007: loss per share �0.07), including a share option charge of �147,000 (13 February 2006 to
30 April 2007: �41,000). The Company ended the year with net funds of �707,000.
Fundraising
The Placing and the Loan, both of which are described below, have resulted, before costs, in a �1 million increase in the Company's cash
resources after the year end.
Placing
Adili has completed a placing ("Placing") to raise approximately �360,000 before expenses through the issue of 6,596,350 new ordinary
shares ("Ordinary Shares") at a price of 5.5p per share. The net proceeds of the Placing will be used to fund the Company's growth and for
working capital purposes. The new Ordinary Shares will rank pari passu in all respects with the existing Ordinary Shares and their admission
to trading on AIM ("Admission") is expected to take place on 7 October 2008. Following Admission, there will be a total of 32,082,934
ordinary shares in issue.
Convertible Loan Facility
The Company has entered into a secured convertible loan facility ("Loan") for approximately �640,000 with its largest shareholder, Hawk
Investment Holdings Limited ("Hawk"). Hawk is owned by Bob Morton and, following the Placing, will be interested in 29.95% of the Company's
issued share capital. The Loan attracts interest at a rate of 12% per annum, has a term of 364 days and will automatically convert into
equity at a conversion price of 5.5p per share, subject to the granting by the Panel on Takeovers and Mergers ("Panel") of a waiver of any
obligation on Hawk to make a general offer pursuant to Rule 9 of the Takeover Code and subject to independent shareholder approval thereof.
If these conditions are satisfied and the Loan is converted, Hawk will then be interested in approximately 48.5% of the Company's issued
share capital. The Company intends to seek a grant of the waiver from the Panel and, subject to the receipt of such waiver, a circular
seeking approval of the waiver will be sent to shareholders.
Related Party Transactions
Under the AIM Rules, the participation by Hawk in the Placing (representing an investment of �145,000) and the grant by it of the Loan
are classified as related party transactions for the purposes of Rule 13. The Directors consider, having consulted with John East & Partners
Limited, the Company's nominated adviser, that the terms of the Placing and Loan are fair and reasonable insofar as the shareholders of the
Company are concerned.
Business Development
Product range
Over the course of the year, we have invested heavily in stock, expanding the range of ethical brands we provide to 53 across 756 lines.
By Christmas, we intend to expand our offering to approximately 80 ethical brands across 1,500 lines. This will encompass our core clothing
categories for women, men and children, our jewellery and skincare collections as well as our homeware and gift offerings.
An important objective for the business is to launch our own label products. During the second half of the year, we made a substantial
investment in developing Adili's own label capability and I am pleased to advise that, after the year end, the fruits of this work have
begun to be seen with the delivery of a small capsule collection of Adili own label menswear. Also we expect to launch a small selection of
Adili womenswear shortly. Whilst this will not have a material impact on the current financial year's results, it provides an exciting
platform for growth. The launch of our own label product is a key development for the business since it helps us to advance Adili's ethical
goals and provides the following other benefits:
* further expands the product range;
* improves margins;
* increases Adili brand awareness; and
* allows greater control over the supply chain.
In March this year, we acquired at low cost the assets of 'Ascension Clothing', after its parent company became insolvent. The brand
helps us to offer customers more entry price product and is now being managed by the Adili own label team. It is selling well on the
website.
Branding
A significant development of Adili's branding is underway through improvements to our photographic and creative capabilities. This can
already been seen on the website and further improvements will be evident in coming months.
Operations and logistics
We continue to receive excellent customer feedback on the quality of our service from our logistics base in Dorset. During the year, we
completed the successful implementation of a back office/order management system, which will ensure the smooth handling of the increasing
level of transactions.
Market developments
While traditional high street retailers are experiencing difficult trading conditions, both internet retailing and ethical fashion
continue to expand significantly. This provides a strong market environment for Adili.
The available statistics indicate further considerable growth in online retailing. According to the monthly IMRG Cap Gemini e-Retail
Sales Index, online spending in August showed a rise of 15.1% year-on-year. A wide range of commentators are predicting a material increase
in online sales in the key trading period to Christmas this year.
The strong growth in ethical consumption that has been evident in recent years continued into the first half of this year with, for
example, the Fairtrade Foundation announcing in September that sales of Fairtrade products for April to June 2008 grew by 55% over the same
period as last year. Future growth is likely to be impacted to a degree by the recent 'Credit Crunch' and related consumer issues. However
the ethical fashion sub-sector is at an early stage of development and we are seeing signs of an ongoing increase in consumer and industry
interest in ethical fashion that we believe will continue to provide a positive market environment for Adili.
Ethical trade initiatives
We will shortly publish the Company's first full Social and Environmental Review, which will discuss how we are working towards
achieving our social and environmental goals. The Review will examine our performance against a range of social and environmental indicators
we have set covering our suppliers, staff, customers, shareholders and the environment. It will also cover certain important social and
environmental initiatives such as the Adili Foundation, the start of our producer group programme in Rwanda and key aspects of our own label
project.
Outlook
Revenues for the first four months of the current financial year have grown by over 100% compared to the same period last year. This is
anticipated to accelerate in the key trading period before Christmas and will be driven by the increase in the product range.
In a separate statement issued today, we are delighted to announce the appointment of Nick Samuel as chairman of the board. He brings
significant additional retail and business expertise to our team. Until recently, Nick was the chief executive of Hobbs, the women's fashion
retailer and, before that, he played a major part in the transformation of Karen Millen, another successful women's fashion business. I am
delighted to welcome him and I am also pleased to be remaining on the board as senior non-executive director.
Finally, Adili has been able to attract particularly capable and industrious staff. I give them my thanks for their hard work and
loyalty - as I do to our brands, sub-contractors and other suppliers. They have shown great commitment to help us achieve all that we have
in the year.
Alan Howarth
Chairman
CONSOLIDATED INCOME STATEMENT
for the year ended 30 APRIL 2008
13 February 2006 to 30 April
Notes 2008 2007
� �
Continuing operations
Revenue 354,191 65,519
Cost of sales (317,885) (51,530)
Gross profit 36,306 13,989
Administrative expenses (1,627,410) (471,479)
Operating loss (1,591,104) (457,490)
Finance costs (16,500) -
Investment revenues 22,179 1,842
Loss before taxation (1,585,425) (455,648)
Taxation 2 - -
Loss for the year (1,585,425) (455,648)
Loss per share (�)
Basic and diluted 3 (0.12) (0.07)
CONSOLIDATED BALANCE SHEET
as at 30 April 2008
Notes 2008 2007
� �
Non-current assets
Plant and equipment 4 102,335 20,166
Intangible assets - other 15,727 -
Total non-current assets 118,062 20,166
Current assets
Inventories 193,562 82,484
Trade and other receivables 143,064 75,598
Cash and cash equivalents 5 706,705 150,289
Total current assets 1,043,331 308,371
Current liabilities
Trade and other payables (137,579) (63,078)
Total current liabilities (137,579) (63,078)
Net current assets 905,752 245,293
Net assets 1,023,814 265,459
Equity
Share capital 254,866 2,117
Share premium account 2,726,487 678,333
Merger reserve (103,733) -
Share option reserve 146,610 40,657
Retained earnings (2,000,416) (455,648)
1,023,814 265,459
CONSOLIDATED CASH FLOW STATEMENT
for the period ended 30 April 2008
13 February 2006 to 30 April
Notes 2008 2007
� �
Net cash used in operating 6 (1,528,597) (508,083)
activities
Investing activities
Interest received 22,179 1,842
Purchases of property, plant (102,109) (23,920)
and equipment
Purchases intellectual (15,727) -
property rights
(22,078)
Net cash used in investing (95,657)
activities
Financing activities
Proceeds on issue of shares 1,500,030 680,450
Loan stock proceeds 1,100,000 -
Costs relating to share issue (402,860) -
and loan stock
Interest paid (16,500) -
Net cash generated from 2,180,670 680,450
financing activities
Net increase/(decrease) in
cash and cash equivalents 556,416 150,289
Cash and cash equivalents at 150,289 -
beginning of year
5 150,289
Cash and cash equivalents at 706,705
end of year
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 April 2008
Share option reserve
Share Share premium Merger reserve Retained earnings Total equity
capital
� � � � � �
Balance at 13 February 2006 - - - - - -
Shares issued in year for cash 2,117 678,333 - - - 680,450
Share option charge - - 40,657 - - 40,657
Loss for the period - - - - (455,648) (455,648)
Balance at 30 April 2007 2,117 678,333 40,657 - (455,648) 265,459
Share option cancellation - - (40,657) - 40,657 -
Shares issued on acquisition 105,850 - 105,850
Corporate restructuring (2,117) (103,733) (105,850)
Shares issued in year for cash 85,716 1,414,314 - - - 1,500,030
Costs of share issue - (402,860) - - - (402,860)
Shares issued on conversion of
loan stock 63,300 1,036,700 - - - 1,100,000
Share option charge - - 146,610 - - 146,610
Loss for the period - - - - (1,585,425) (1,585,425)
Balance at 30 April 2008 254,866 2,726,487 146,610 (103,733) (2,000,416) 1,023,814
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 April 2008
1. Basis of preparation
The financial information set out in these financial statements does not constitute statutory accounts as defined in Section 240 of the
Companies Act 1985. The consolidated balance sheet as at 30 April 2008 and the consolidated income statement, consolidated cash flow
statement and associated notes for the year then ended have been extracted from the Group's financial statements.
The financial information has been extracted from the Group's financial statements that are prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union applied in accordance with the provisions of the Companies Act 1985
and under the historical cost convention.
The financial information for the period ended 30 April 2007 is derived from the statutory accounts for that period which have been
delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a
statement under either Section 237 (2) or Section 237 (3) of the Companies Act 1985.
The statutory accounts for the year ended 30 April 2008 will be finalised on the basis of the financial information presented by the
Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General
Meeting.
2. Taxation
The Group has tax losses available to carry forward of �1,889,909 (2007: �447,954) to offset against future trading profits. There are
unrecognised deferred tax assets of �8,086 (2007: �751) on fixed asset timing differences and �377,981 (2007: �85,591) on trading losses
carried forward. Both deferred assets are based on a rate of 20% which is the rate for small companies for 2009.
The difference between the total tax credit and the expected tax credit is as follows:
2008 2007
� �
Loss before taxation (1,585,425) (455,648)
Tax at 20 per cent. (2007: 19 per cent.) 317,085 86,573
Effects of:
Expenses not allowable for taxation (42,329) (748)
Losses not utilised (274,756) (85,825)
- -
3. Earnings per share - basic and diluted
2008 2007
� �
Earnings
Earnings for the purposes of basic and diluted
earnings per share being net loss attributable to (1,585,425) (455,648)
equity shareholders
Number of shares
Weighted average number of ordinary shares for the
purposes of basic and diluted earnings per share 13,277,531 6,410,000
Basic and diluted loss per share are the same as the Group was loss making and therefore any contingently issuable shares would have the
effect of decreasing loss per share.
4. Plant and equipment
Fixtures and
fittings Office
equipm
ent Software Total
� � � �
Cost
At 1 May 2007 7,681 15,580 659 23,920
Additions 18,771 33,963 49,375 102,109
At 30 Apr 2008 26,452 49,543 50,034 126,029
Depreciation
At 1 May 2007 972 2,709 73 3,754
Charge for the year 6,217 10,433 3,290 19,940
At 30 April 2008 7,189 13,142 3,363 23,694
Net book amount
At 30 April 2008 19,263 36,401 46,671 102,335
At 30 April 2007 6,709 12,871 586 20,166
5. Cash and cash equivalents
2008 2007
� �
Cash at bank and in hand 55,874 99,408
Short term bank deposits 650,831 50,881
706,705 150,289
Cash and cash equivalents comprise cash held by the Group accessible immediately. Rates over the period varied between 0 per cent. and
5.5 per cent.
The Directors consider that the carrying amount of these assets approximates to their fair value. The credit risk on liquid funds is
limited because the counter-party is a bank with a high credit rating.
6. Cash used in operations
2008 2007
� �
Operating loss (1,591,104) (457,490)
Depreciation charge 19,940 3,754
Increase in trade receivables (67,466) (75,598)
Increase in inventories (111,078) (82,484)
Increase in trade payables 74,501 63,078
Share option charge 146,610 40,657
Cash used in operations (1,528,597) (508,083)
Tax paid - -
(1,528,597) (508,083)
7. Dividend Note
No dividends are proposed for the year ended 30 April 2008 (period ended 30 April 2007: nil).
8. Copies of Report and Accounts
The 2008 Report and Accounts will be posted to shareholders shortly and will be available from the Company's website www.adili.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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