Print   



AIM: ADIL

 

Adili plc

('Adili' or 'the Company')

Unaudited half year results 

for the six months ended 31 October 2008 

Adili plc is an online retailer of ethical fashion and lifestyle products trading through Adili.com. The Company sources its goods from a variety of ethical brands and its own supply chains. 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

• Sales increased by 78% to £250,000 (2007: £140,000)
• Loss before tax of £901,000 (2007: £631,000)
• Loss per share of £0.03 (2007: £0.06)
• Expansion in range of product lines and brands to 1,679 and 68 (2007: 735 and 42 respectively)
• Number of unique visitors in the first half of 239,715 (2007: 172,674)
• Launch of own label product, with recent launch of initial womenswear pieces
• Appointment of Nick Samuel as Chairman in October 2008
• Trading in the four weeks to 21 December 2008 showed year-on-year sales growth of 33%. In the five weeks since 21 December 2008, sales rose 102% year-on-year 

Nick Samuel, Chairman, commented:

'This is my first statement since my appointment as Chairman and I am pleased to report that the business continues to make progress despite the worst trading conditions the retail sector has seen for very many years.

Over the half year Adili delivered strong revenue growth and achieved some important operational goals including the launch of Adili's own label ranges, a significant expansion in the number of ethical brands and lines we offer and, in November, the launch of a new website.

Looking ahead, we expect market conditions to remain very challenging but anticipate satisfactory growth in revenues.'

Enquiries:

Adili plc	Adam Smith, Chief Executive Officer Chris Powles, Finance Director	T: 01258 837 437
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

This is my first statement since my appointment as Chairman in October 2008 and I am pleased to report that the business continues to make progress despite the worst trading conditions the retail sector has seen for very many years. 

Over the six months to 31 October 2008, Adili delivered strong revenue growth and achieved some important operational goals. These included the launch of Adili's own label ranges, a significant expansion in the number of ethical brands and product lines we offer and, in November, the launch of a new website. These developments will help to drive future growth and, while trading conditions remain very challenging, the opportunity to establish Adili as 'the place' to shop online for ethical fashion and other related lifestyle products remains substantial.  

Financial Results

Revenue for the six months to 31 October 2008 increased to £250,000 (2007: £140,000), a rise of approximately 78% on the comparative period last year. The loss before tax for the six months to 31 October 2008 was £901,000 (2007: £631,000 loss). The loss per share for the six months to 31 October 2008 was £0.03 (2007: loss per share £0.06). The Company ended the period with net cash resources of £840,000.  

Fundraising

In October 2008, we completed a placing and entered into a loan agreement, which together raised additional funds of £1 million before expenses. The loan converted to equity on the proposed terms after the period end. The new monies raised are part of the continuing funding required over the next few months to meet the business' working capital requirements and to take it to cash break-even. 

Business Development

Product Range

Over the period, we invested heavily in stock, significantly expanding the range of ethical brands and the product lines we sell. At the end of the half year, we stocked 68 ethical brands and 1,679 lines, up from 53 and 756, respectively, at 30 April 2008. By Christmas, our ethical brands and lines had grown to 86 and 1,806 respectively, which is ahead of management plans. This took our offering into gifts and broadened our homewares range. We also widened all our core clothing ranges and our jewellery and skincare collections. More recently, we appointed a Head of Product whose previous background in buying at GAP, Laura Ashley, The Bay Trading Company and Liberty, will help to accelerate our range development.  

A key objective for the business has been the launch of our own label products. Our move into 'own label' is expected not only to improve margins but also expand our product range in key areas, increase Adili's brand awareness and allow greater control over the supply chain. The move also helps us to progress our ethical trade goals. 

We introduced Adili own label products over the summer and the range of own label products now includes: ladies knitwear, loungewear and nightwear; a capsule menswear collection and bath linen. The Ascension brand (which we acquired in March 2008) continues to sell well on our website and we plan to expand both the Ascension and Adili ranges over coming months, focusing on Adili ranges in particular. The first Adili womanswear capsule collection is in production and expected to launch in March 2009.

New Website

In November 2008, we launched Adili's new website, having made significant improvements to its 'look and feel' and to its functionality. The new website is enabling us to merchandise our products in a much more appealing way and to enhance customers' shopping experience. It gives us a good platform for future growth and we are pleased that customer reaction to the new site has been positive.  

Operations and Logistics

Our operations and logistics are run from our base in Dorset and, after the period end, we took an additional 9,300 square feet of warehouse and office space, adjacent to our current site, which had become available at very low cost. This will provide us with sufficient additional space as we continue to grow and develop.

Market Developments

Online retailing and ethical consumerism continue to grow. The latest monthly IMRG Cap Gemini e-Retail Sales Index, published in January 2009, shows online retailing rising 14.2% year-on-year in December 2008, with sales of clothing rising by 32% year-on-year for the same month. The latest Co-operative Bank report on ethical consumerism, published in November 2008, advised that 'despite the first tremors of the downturn being felt towards the end of last year, the overall ethical market in the UK was worth £35.5 billion in 2007, up 15% from £31 billion in the previous 12 months'. The report also stated that the ethical fashion sub-sector has grown by 71% year-on-year to £89 million.

Both these trends are positive for Adili especially over the longer term. However, in the short term, the sharp deterioration in market conditions, especially evident in the key Christmas trading period, have adversely affected Adili's gross margins. This reduction reflects the discounting action Adili took, in line with both online and high street retailers. As the margins available in our third party brands business are less than for our own label, this has had a significant impact. However, the action taken enabled us to clear stock to a comfortable level.

Ethical Initiatives

In October 2008, as part of our report and accounts, we published the Company's first Social and Environmental Review, which outlined how we are working towards our social and environmental goals. Since then, we have agreed the legal structure of the Adili Foundation and we are now in the process of constituting it. We have also begun ordering products as part of our producer group programme in Rwanda, which should become available on the website shortly. Aspects of our own label project, referred to above, are also a key ethical trade initiative and, as we order and sell more of this product, we will see increasing social impact. Finally, since the Review, we have now also begun working with charities in ways designed to increase the number of visitors to the Adili website while also generating either revenues for the charities or helping them in other ways. We look forward to developing that activity further.

 Board Appointment

I was pleased to join the board as Non-executive Chairman on 3 October 2008. Having worked in fashion retailing over the last seventeen years, at Hobbs and before that at Karen Millen, I look forward to helping the management team realise their growth plans for the business and establishing Adili as a leading name in ethical retailing. 

Current Trading and Outlook

Sales in the four weeks to 21 December 2008, the final shipping date for Christmas, increased by 33% on those for the same period in 2007. 3,594 items (2007: 2,357) were shipped, arising from 1,468 orders (2007: 1,050), during the same period. Trading from 21 December 2008 to 26 January 2009, covering our main stock clearance sale period, showed sales growth of 102%. Looking ahead, we expect market conditions to remain very challenging but anticipate satisfactory growth in revenues. 

Finally, in what is a difficult time, on behalf of the board, I would like to thank Adili's industrious staff for their commitment to the business and our ethical goals. 

Nick Samuel

Chairman

 

  UNAUDITED CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 OCTOBER 2008

		6 months  to 31 October (Unaudited)	6 months to 31 October (Unaudited)	12 months to 30 April (Audited)
	Notes	2008	2007	2008
		£	£	£
Continuing operations
Revenue		249,825	140,195	354,191
Cost of sales		(230,865)	(126,733)	(317,885)
Gross profit		18,960	13,462	36,306
Administrative expenses		(923,861)	(647,777)	(1,627,410)
Operating loss		(904,901)	(634,315)	(1,591,104)
Finance costs		(5,866)	-	(16,500)
Investment revenues		9,933	3,243	22,179
Loss before taxation		(900,834)	(631,072)	(1,585,425)
Taxation		-	-	-
Loss for the period		(900,834)	(631,072)	(1,585,425)
Loss per share
Basic and diluted	3	(0.03)	(0.06)	(0.12)

 

UNAUDITED CONSOLIDATED BALANCE SHEET AS AT 31 OCTOBER 2008

		6 months  to 31 October 2008 (Unaudited)	6 months  to 31 October 2007 (Unaudited)	12 months to 30 April 2008   (Audited)
	Notes
			£	£
Non-current assets
Plant and equipment		110,173	45,511	102,335
Intangible assets - other		15,727	-	15,727
Total non-current assets		125,900	45,511	118,062
Current assets
Inventories		262,068	146,657	193,562
Trade and other receivables		128,828	181,581	143,064
Cash and cash equivalents	2	839,801	482,505	706,705
Total current assets		1,230,697	810,743	1,043,331
Current liabilities
Trade and other payables		(821,184)	(1,221,868)	(137,579)
Total current liabilities		(823,184)	(1,221,868)	(137,579)
Net current assets / (liabilities)		409,513	(411,125)	905,752
Net assets / (liabilities)		535,413	(365,614)	1,023,814
Equity
Share capital		320,830	105,850	254,866
Share premium account		2,929,679	678,333	2,726,487
Merger reserve		(103,733)	(103,733)	(103,733)
Share option reserve		223,618	40,657	146,610
Equity element of convertible loan stock		66,269	-	-
Retained earnings		(2,901,250)	(1,086,721)	(2,000,416)
		535,413	(365,614)	1,023,814

 

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 OCTOBER 2008

		Six months to 31 October 2008 (Unaudited)	Six months to 31 October 2007 (Unaudited)	12 months to 30 April 2008 (Audited)
	Notes
			£	£
Net cash used in operating activities		(747,259)	(701,104)	(1,528,597)
Investing activities
Interest received		9,933	3,243	22,179
Purchases of plant and equipment		(35,935)	(31,468)	(102,109)
Purchases intellectual property rights		-	-	(15,727)
Net cash used in investing activities		(26,002)	(28,255)	(95,657)
Financing activities
Proceeds on issue of shares		362,800	-	1,500,030
Loan stock proceeds		637,201	1,100,000	1,100,000
Costs relating to share issue and loan stock		(93,644)	(38,965)	(402,860)
Interest paid		-	-	(16,500)
Net cash generated from financing activities		906,357	1,061,035	2,180,670
Net increase in cash and cash equivalents		133,096	331,676	556,416
Cash and cash equivalents at beginning of period		706,705	150,829	150,289
Cash and cash equivalents at end of period	2	839,801	482,505	706,705

 

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 OCTOBER 2008

	Share capital	Share premium	Share option reserve	Merger reserve	Equity element of convertible loan stock	Retained earnings	Total equity
	£	£	£	£	£	£	£
Balance at 30 April 2008	254,866	2,726,487	146,610	(103,733)	-	(2,000,416)	1,023,814
Shares issued in period for cash	65,964	296,836	-	-	-	-	362,800
Costs of share issue	-	(93,644)	-	-	-	-	(93,644)
Equity element of convertible loan stock	-	-	-	-	66,269	-	66,269
Share option charge	-	-	77,008	-	-	-	77,008
Loss for the period	-	-	-	-	-	(900,834)	(900,834)
Balance at 31 October 2008	320,830	2,929,679	223,618	(103,733)	66,269	(2,901,250)	535,413

NOTES TO THE HALF-YEAR RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2008

1.    BASIS OF PREPARATION

The interim report is unaudited and does not constitute statutory accounts within the meaning of s240 of the Companies Act 1985. The statutory accounts for 2008, which were prepared under IFRS, have been delivered to the Registrar of Companies. The auditors' opinion on these accounts was unmodified and did not contain a statement under s237 (2) or s237 (3) of the Companies Act 1985.

The next annual financial statements of Adili plc will be prepared in accordance with IFRS as adopted for use in the EU, applied in accordance with the provisions of the Companies Act 1985. Accordingly, the interim financial information in this report has been prepared using accounting policies consistent with IFRS. IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretation Committee (IFRIC) and there is an ongoing process of review and endorsement by the European Commission. The financial information has been prepared on the basis of IFRS that the Directors expect to be applicable as at 30 April 2009.  Comparative figures are given for the six months ended 31 October 2007 and the year ended 30 April 2008.

The consolidated financial statements have been prepared under the historical cost convention and on a going concern basis. It is expected that the Group's funds will last less than 12 months from the preparation of this report based on management's investment plans for the business. The directors believe it appropriate to prepare the interim report on a going concern basis as they believe a planned fund raising should be successful.

2.    CASH AND CASH EQUIVALENTS

	As at  31 October 2008 (Unaudited)	As at 31 October 2007 (Unaudited)	As at  30 April 2008 (Audited)
		£	£
Cash at bank and in hand	39,801	482,505	55,874
Short term bank deposits	800,000	-	650,831
	839,801	482,505	706,705

3.    LOSS PER SHARE

    

	Six months to  31 October 2008 (Unaudited)	Six months to  31 October 2007 (Unaudited)	Year  to 30 April 2008 (Audited)
	£	£	£
Earnings
Earnings for the purposes of basic and diluted earnings per share being net loss attributable to equity shareholders	(900,834)	(631,072)	(1,585,425)

Number of shares
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share	26,495,862	10,585,000	13,277,531

Basic and diluted loss per share are the same as the Group was loss making and therefore any contingently issuable shares would have be anti-dilutive.

4.    DIVIDEND

No dividends are proposed for the six months ended 31 October 2008 (31 October 2007 - Nil).

5.    COPIES OF THE REPORT & ACCOUNTS

Copies of the Interim Report will be posted to shareholders shortly and will be available from the Company's website www.adili.com.

ENDIR VVLFLKFBZBBF