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AIM: ADIL

14 September 2009

Adili plc

('Adili' or 'the Company')

Final Results 

for the Year ended 30 April 2009

Adili plc, the online retailer of ethical fashion and lifestyle products trading through Ascensiononline.com, announces its final results for the year ended 30 April 2009.  The Company sources its own goods sold under the Ascension Brand and also from a variety of ethical brands. Its products are intended to be fashionable and stylish, ethical and offer exceptional value for money.

Key Points

• Sales increased 56% to £552,000 (2008: £354,000) 

• Loss before tax of £1,903,000 (2008: loss of £1,585,000) after share option charge of £110,000 (2008: £147,000)

• Loss per share of £0.05 (2008: loss per share of £0.12)

• Substantial investment in the business, new website and development of own labels ranges

• Appointment of Nick Samuel as Chairman in year

• £1.4 million raised from investors during the year

• Investment in Board capability

• Since the year end, rebranded to Ascension and completed a £940,000 share placing

Adam Smith, Chief Executive, commented:

'These results are broadly in line with expectations and reflect significant activity to 'clear the decks' in readiness for further improvement in the coming year.  The recent funding constraints have temporarily restricted recent growth since the year end, but with the successful Placing in August combined with significant overhead reduction, a clean stock base, and the rebranding to Ascension, position us well for the next 12 months.

Customer and press reaction to our own labels, an improved edited 'bought in' collection, and very positive customer reaction to the rebranding, combined with new marketing developments, give us much encouragement for our prospects through accelerated sales growth.'

Enquiries:

 

Adili plc	Adam Smith, Chief Executive Officer Mark Swire, Finance Director	T: 01258 837 437
Seymour Pierce Limited	Nicola Marrin/Catherine Leftley	T: 020 7107 8000

CHAIRMAN'S STATEMENT

Introduction

I have great pleasure in presenting Adili's second full year results as an AIM quoted company. The business continues to make great progress, with the launch of the new web site in November 2008 and the introduction of the Spring Summer 2009 Adili own label capsule collection, both to positive acclaim, Adili has further laid the foundations for continued and accelerated future growth.  

Over the year to 30 April 2009 Adili showed increased revenue growth despite some of the most difficult trading conditions experienced in recent memory. Funds raised from investors have been invested in key areas which will drive future accelerated growth. The business continues to be the destination department store to shop online for ethical fashion and other related lifestyle products. With a strong platform for growth now in place we are building increasing consumer awareness of our brand as a leading name in our market. 

Since the year end we have rebranded the business as Ascension reflecting our mainstream fashion ambitions. We have also completed a further fundraising of £940,000 to provide working capital to cash breakeven.

Financial Results

Revenue for the year to 30 April 2009 increased to £552,000 (2008: £354,000). The operating loss was £1,894,000 (2008: loss of £1,591,000). 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 £1,903,000 (2008: loss of £1,585,000) and loss per share was £0.05 (2008: loss per share £0.12), including a share option charge of £110,000 (2007: £147,000). The Group ended the year with net funds of £193,000.

Fundraising

During the year, the Company raised additional funding through a placing and a loan, both of which are described below. These have resulted, before costs, in a £1.4 million increase in the Company's cash resources. Since the year end a further £0.9 million has been secured. 

Placings

In October, Adili completed a placing to raise approximately £360,000 before expenses through the issue of 6,596,350 new ordinary shares at a price of 5.5p per share. The net proceeds were used to fund the Company's growth and for working capital purposes. The new shares issued were admitted to trading on AIM on 7 October 2008.  

In April, Adili completed a further placing raising approximately £349,000 before expenses through the issue of 11,633,500 new ordinary shares at a price of 3p per share. The net proceeds were used to fund the immediate working capital requirements of the company. The new shares issued were admitted to AIM on 16 April 2009.

In August, Adili completed a placing to raise approximately £940,000 before expenses through the issue of 62,666,666 shares at a price of 1.5p per share. The proceeds will fund working capital and continuing growth, which the directors believe will take the company to cash breakeven.

Convertible Loan Facility

On 2 October, The Company entered into a secured convertible loan facility for approximately £640,000 with its largest shareholder, Hawk Investment Holdings Limited ('Hawk'). Hawk, following the placing on 2 October, was interested in 29.95% of the Company's issued share capital. The loan converted into equity, when the Panel on Takeovers and Mergers granted a waiver of any obligation on Hawk to make an offer for the Company and independent shareholders gave their approval at the AGM on 28 November. Following the conversion, Hawk was interested in approximately 48.5% of the Company's issued share capital.

  

Business Development

Own label

This year has seen the benefits of our substantial investment in own label start to flow into the business with the launch of our first own label products. Earlier in the year we delivered a capsule menswear collection, a bathrobe and towelling offering and a nightwear and lingerie offering. This was followed in March this year with the launching of the womenswear capsule collection. Sell through rates have been very encouraging. 

The Autumn Winter 2009 womenswear collection has just launched on site with a significant number of additional lines launching over the next three weeks. The initial press reaction to the collection has been very encouraging. 

The launch of our own label product is a key development for the business since it helps us to advance our ethical goals, further expand the product range, improve margins, increase brand awareness, and allow greater control over the supply chain.

Product range

Over the course of the year, we continued to invest in stock, expanding the range of ethical brands we provide to 98 across 1,731 lines (2008: 53 across 756 lines). This was above targets of 80 brands across 1,500 lines and includes our core clothing categories for women, men and children, our jewellery and skincare collections as well as our homeware and gift offerings. As the management team focuses on improving the mix of goods sold to the strongest performing areas of the business, we do not expect any significant increase in brands or number of lines offered in the coming year.  

Operations and logistics

During the year, we completed the successful introduction of our new website. This also included moving to a much more robust hosting environment which will ensure the smooth handling of an increasing level of transactions. The new website is achieving improved conversion levels and visitor duration levels which in turn should further improve as we add more content to our site. 

Board structure 

During the year we have invested in management capability. Caroline Gitsham has joined the board as Product Director with responsibility for own label development and branded buying and Mark Swire has been promoted to Finance Director. I believe both appointments will be of considerable benefit to developing and growing the business. 

Chris Powles and Sim Scavazza who were part-time Finance Director and part-time Creative Director respectively both stepped down from their executive roles to become Non-Executive Directors in February 2009 prior to their departure this April. In addition Quentin Griffiths resigned as a director February 2009. I would like to thank Chris, Sim and Quentin for their contribution to Adili's development and wish them well in their other interests.

Since the year end, Alan Howarth has resigned from his position of non-executive director. I again would like to offer my thanks for all his significant contribution to the growth of Adili through its early stages of development. 

Market developments

The markets for internet retailing and ethical fashion both continue to expand significantly. This provides a strong base and 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 July showed a rise of 16.8% 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 April that sales of Fairtrade products in 2008 grew by 43% compared to last year.  

Future growth is likely to be impacted to a degree by the '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 a continuing increase in consumer and industry interest in ethical fashion. We believe this will continue to provide a positive market environment for Adili. 

Ethical trade initiatives

Winning the Ethical Fashion Retailer of the Year award at the Re:Fashion Awards and receiving one of the top ratings for clothing retailers by Ethical Consumer magazine were two very pleasing accolades for our social and environmental work last year.

Outlook

Revenues for the first 5 months of the current financial year have grown by over 29% compared to the same period last year. This is anticipated to accelerate in the key trading period before Christmas and will be driven by greater availability of stock, increased conversion from the new website, increased brand awareness a relevant and credible product range as well as the resolution of recent funding constraints.  

Finally, I would like to thank all our staff 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.

Nick Samuel

Chairman

  CONSOLIDATED INCOME STATEMENT

for the year ended 30 APRIL 2009

	Notes	2009	2008
		£	£
Continuing operations
Revenue		552,489	354,191
Cost of sales		(537,524)	(317,885)
Gross profit		14,965	36,306
Administrative expenses		(1,908,971)	(1,627,410)
Operating loss		(1,894,006)	(1,591,104)
Finance costs		(21,926)	(16,500)
Investment revenues		13,339	22,179
Loss before taxation		(1,902,593)	(1,585,425)
Taxation	2	-	-
Loss for the year		(1,902,593)	(1,585,425)
Loss per share (£)
Basic and diluted	3	(0.05)	(0.12)

  

  CONSOLIDATED BALANCE SHEET

as at 30 April 2009

	Notes	2009	2008
		£	£
Non-current assets
Plant and equipment		95,760	102,335
Intangible assets - other		59,371	15,727
Total non-current assets		155,131	118,062
Current assets
Inventories		233,308	193,562
Trade and other receivables		98,590	143,064
Cash and cash equivalents	5	192,742	706,705
Total current assets		524,640	1,043,331
Current liabilities
Trade and other payables		(187,550)	(137,579)
Total current liabilities		(187,550)	(137,579)
Net current assets		337,090	905,752
Net assets		492,221	1,023,814
Equity
Share capital		555,152	254,866
Share premium account		2,572,168	1,677,762
Merger reserve		574,600	574,600
Share option reserve		256,649	146,610
Retained earnings		(3,466,348)	(1,630,024)
		492,221	1,023,814

  CONSOLIDATED CASH FLOW STATEMENT

for the year ended 30 April 2009

	Notes	2009	2008
		£	£
Net cash used in operating activities	5	(1,662,830)	(1,528,597)
Investing activities
Interest received		13,339	22,179
Purchases of property, plant and equipment		(51,301)	(102,109)
Purchases intellectual property rights		(52,206)	(15,727)
Net cash used in investing activities		(90,168)	(95,657)
Financing activities
Proceeds on issue of shares		711,804	1,500,030
Loan stock proceeds		648,932	1,100,000
Costs relating to share issue and loan stock		(109,970)	(402,860)
Interest paid		(11,731)	(16,500)
Net cash generated from financing activities		1,239,035	2,180,670
Net (decrease)/increase in cash and cash equivalents		(513,963)	556,416
Cash and cash equivalents at beginning of year		706,705	150,289
Cash and cash equivalents at end of year	4	192,742	706,705

  CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 30 April 2009

	Share capital	Share premium	Share option reserve	Merger reserve	Equity element of convertible loan stock	Retained earnings			Total equity
	£	£	£	£	£	£			£
Balance at 30th April 2007	2,117	678,333	40,657	-	-	(455,648)			265,459
Loss for the period	-	-	-	-	-	(1,585,425)			(1,585,425)
Total recognised income and expense for the year	-	-	-	-	-	(1,585,425)			(1,585,425)
Share option cancellation	-	-	(40,657)	-	-	40,657			-
Shares issued on acquisition	105,850	-	-	-	-	-			105,850
Corporate restructuring	(2,117)	(678,333)	-	574,600	-	-			(105,850)
Shares issued in year for cash	85,716	1,414,314	-	-	-	-			1,500,030
Costs of share issue	-	(402,860)	-	-	-	-			(402,860)
Equity element of convertible loan stock	-	-	-	-	370,392	-			370,392
Shares issued on conversion of loan stock	63,300	666,308	-	-	(370,392)	370,392			729,608
Share option charge	-	-	146,610	-	-	-			146,610
Balance at 30th April 2008	254,866	1,677,762	146,610	574,600	-	(1,630,024)			1,023,814
Loss for the period	-	-	-	-	-	(1,902,593)			(1,902,593)
Total recognised income and expense for the year	-	-	-	-	-	(1,902,593)			(1,902,593)
Shares issued in year for cash	182,298	529,506	-	-	-	-			711,804
Costs of share issue	-	(109,970)	-	-	-	-			(109,970)
Equity element of convertible loan stock	-	-	-	-	66,269	-			66,269
Shares issued on conversion of loan stock	117,988	474,870	-	-	(66,269)	66,269			592,858
Share option charge	-	-	110,039	-	-	-			110,039
Balance at 30th April 2009	555,152	2,572,168	256,649	574,600	-	(3,466,348)			492,221

  NOTES TO THE FINANCIAL STATEMENTS 

for the year ended 30 April 2009

1.    Basis of preparation

The financial information set out in these financial statements does not constitute statutory accounts as defined in the Companies Act 2006. The consolidated balance sheet as at 30 April 2009 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 2006 and under the historical cost convention.

The financial information for the year ended 30 April 2008 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies.  The auditors reported on those accounts; their report was (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain statements under either Section 237 (2) or (3) of the Companies Act 1985. 

The statutory accounts for the year ended 30 April 2009 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 £3,824,616 (2008: £1,889,909) to offset against future trading profits. There are unrecognised deferred tax assets of £7,369 (2008: £8,086) on fixed asset timing differences and £764,923 (2008: £377,981) on trading losses carried forward. Both deferred assets are based on a rate of 20% which is the rate for small companies for 2010.

The difference between the total tax credit and the expected tax credit is as follows:

	2009	2008
	£	£
Loss before taxation	(1,902,593)	(1,585,425)
Tax at 20 per cent. (2008: 20 per cent.)	380,519	317,085
Effects of:
Expenses not allowable for taxation	(90,066)	(42,329)
Losses not utilised	(290,453)	(274,756)
	-	-

3.    Earnings per share - basic and diluted

    

	2009	2008
	£	£
Earnings
Earnings for the purposes of basic and diluted earnings per share being net loss attributable to equity shareholders	(1,902,593)	(1,585,425)

Number of shares
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share	34,769,817	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 the effect of decreasing loss per share.

4.    Cash and cash equivalents

	2009	2008
	£	£
Cash at bank and in hand	192,742	55,874
Short term bank deposits	-	650,831
	192,742	706,705

Cash and cash equivalents comprise cash held by the Group accessible immediately. Rates over the period varied between 0% and 5.5%.

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.

  5.    Cash used in operations

	2009	2008
	£	£
Operating loss	(1,894,006)	(1,591,104)
Depreciation charge	49,985	19,940
Amortisation charge	8,562	-
Decrease / (Increase) in trade receivables	44,474	(67,466)
Increase in inventories	(39,746)	(111,078)
Increase in trade payables	49,971	74,501
Loss on sale of tangible fixed assets	7,891
Share option charge	110,039	146,610
Cash used in operations	(1,662,830)	(1,528,597)
Tax paid	-	-
	(1,662,830)	(1,528,597)

    6.    Dividend Note

No dividends are proposed for the year ended 30 April 2009 (year ended 30 April 2008: nil).

7.    Copies of Report and Accounts

The 2009 Report and Accounts will be posted to shareholders shortly and will be available from the Company's website www.ascensiononline.com.

ENDFR CKDKKPBKDQCD