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Supercart plc

('Supercart' or the 'Company')

Interim results for the period ended 30 June 2009

Highlights

• Turnover of £947,000 (2008 - £1,032,000)

• Operating loss of £991,000 (2008 - loss of £725,000)

• Major US investment through purchase of assets of Rehrig International

• Post period end refinancing through £1.5m equity placing

• Significant contract wins in US and Europe

Mike Wolfe, Chief Executive, commenting on the results said:

'2009 has been a year of tremendous progress at Supercart. Our underlying business has held up well in the middle of the most severe recession in living memory.  We have taken a bold step by acquiring a number of moulds and other assets from the owners of Rehrig. The Rehrig cart is found at many of the leading US retail groups and we are confident that we shall continue to supply many of these retailers. We are already seeing the benefits of this investment through significant new sales wins. The Company is now well placed to achieve significant growth which will repay our initial investment.'

Enquiries:
Supercart plc Chief Executive Mike Wolfe	01732 459898
Charles Stanley Securities Nominated Adviser and Broker Russell Cook/Ben Johnston/Carl Holmes	020 7149 6000
Tavistock Communications Jeremy Carey/Andrew Dunn	020 7920 3150

Chairman's Statement

The most significant event during the period was the successful acquisition of the moulds and other assets of Rehrig International Corp ('Rehrig'), together with the recruitment of three senior Rehrig staff members, which we announced on 20 March 2009. This has provided the Company with an excellent platform for the development of our North American business. Elsewhere we have achieved steady, if not spectacular, progress in what is always our quieter first half. Our markets have been affected by the global economic slowdown, but we remain optimistic as to the prospects for the rest of 2009 and beyond.

Financial Results

Turnover of £0.95m (2008 - £1.03m) was 8.2% lower than the comparative period in 2008 due primarily to the reduction in sales in South Africa, which had benefited from an unusually strong performance on 2008.  The operating loss for the period was £1.03m (2008 - loss £0.73m).  We experienced some pricing pressure as our competitors reduced prices in response to the general economic downturn. In addition we have also increased costs of the North American operation following the acquisition of the Rehrig business.

The Company concluded a successful placing and subscription of new ordinary shares which was announced on 13 July 2009. This raised £1.4 million net, to enable the Company to maximise the opportunity that had been created in North America. As at 31 August the Company had net cash reserves of £440,000.

Operational Review

South Africa

In the first half of the year our unit sales were satisfactory, although not at the record levels of 2008. We introduced the new 'XL' trolley into the South African marketplace, the larger capacity and more modern styling appear to be popular among our customers.

Our 30 litre hand basket has continued to perform well, increasing by nearly 10% over the record year of 2008. 

North America

The Rehrig transaction referred to above has been the most significant event of the first six months. It gives us an important opportunity to establish ourselves with many of the major retailers in North America.  

Supercart is continuing to promote and sell its all-plastic trolley. In addition, the Rehrig moulds enable us to now sell the hybrid plastic trolley that has a strong, established position in the North American market. This comprises an all-plastic basket with a metal chassis.  The production costs and profit margins of the hybrid trolley are broadly similar the all plastic trolley. And the hybrid also enjoys many of the features of the all-plastic model including, corporate branding, extended life and lower maintenance when compared to an all-metal product.

Our enlarged sales team has been working diligently to produce sales for the seasonally important second half of the year. Although these efforts have increased our costs during the period, we have already been able to announce some significant sales.

We have won new contracts with major North American retail chains including Target, Toys R US, Burlington Coat Stores and Pep Boys Stores.

The development of our North American activities has required us to expand the manufacturing facilities with our production partners. Venture Holdings, through its US subsidiary company Mayco Inc, has established a dedicated manufacturing facility for Supercart at its sight in Michigan.  

Europe

The European retail sector has been particularly hard hit by the recession and this has been reflected by many leading retailers choosing to defer major purchase decisions. We continue to market our trolleys and hand baskets to many of the leading European retail chains. We believe that the environmental advantages of our recyclable plastic products over those of the of all-metal competitors is of particular interest to our potential European customer base and we remain ready to capitalise on this interest as and when that demand translates into orders. We hope for a more receptive climate during the next twelve months.

Australia

Sales levels continue to be lower than our expectations and we continue to make every effort to make progress in this market.

Outlook

The second half of the year is historically stronger than the first, with many retailers buying the bulk of their annual purchases in this period.

North America has been, and remains, our principal area of focus for 2009 and the most crucial market for our business. We are confident that we shall achieve record unit sales in America this year.

As a result, we expect to show a marked improvement in our overall performance during the second six months as against the same period in recent years.

Victor Segal

Chairman

  

Condensed consolidated statement of comprehensive income for the period  30 June 2009			6 months  ended  30 June   2009	6 months  ended  30 June   2008	12 months  ended  31 December  2008
	Notes		Unaudited	Unaudited	Audited
			£'000	£'000	£'000
Continuing Operations
Revenue			947	1,032	4,809
Cost of Sales			(778)	(799)	(3,948)
Gross Profit			169	233	861
Research & development tax credits					166
Administrative expenses			(1,160)	(958)	(2,098)
Operating loss			(991)	(725)	(1,071)
Investment revenue			2	17	57
Finance Costs			(94)	(16)	(189)
Loss before taxation			(1,083)	(724)	(1,203)
Tax			-	-	(4)
Loss for the period attributable to equity holders of the parent			(1,083)	(724)	(1,207)
Other comprehensive income
Issue of shares			-	-	932
Provision for share option valuation			51	30	31
Exchange differences arising on translation of foreign operations			128	(106)	59
Other comprehensive income/(loss) for the period (net of tax)			179	(76)	1022
Total comprehensive loss for the period attributable to equity holders of the parent			(904)	(800)	(185)
Loss per share (pence)
Basic and fully diluted	4		(2.23)	(1.67)	(2.76)

Condensed consolidated statement of financial position at 30 June 2009			As at  30 June  2009	As at  30 June  2008	As at  31 December  2008
	Notes		Unaudited	Unaudited	Audited
			£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment	5		4,829	2,227	3,779
Deferred tax asset			-	-	10
Total non-current assets			4,829	2,227	3,789
Current assets
Inventories			207	120	65
Trade and other receivables	6		690	449	1,500
Cash and cash equivalents			38	469	1,025
Total current assets			935	1,038	2,590
Total Assets			5,764	3,265	6,379
Equity and Liabilities
Capital and reserves
Issued share capital			194	174	194
Share premium account			6,497	5,585	6,497
Share option reserve			204	152	153
Foreign currency translation reserve			39	(254)	(89)
Retained earnings			(5,807)	(4,241)	(4,724)
Total Equity			1,127	1,416	2,031
Non-current liabilities
Finance lease obligations			1,590	974	1,125
Other financial liabilities			1,015	-	740
Deferred tax liability			22	-	32
Total non-current liabilities			2,627	974	1,897
Current liabilities
Trade and other payables	7		1,313	724	1,875
Finance lease obligations			367	150	291
Other financial liabilities			330	-	285
Total current liabilities			2,010	874	2,451
Total liabilities			4,637	1,848	4,348
Total equity and liabilities			5,764	3,265	6,379

 

Condensed consolidated statement of changes in equity  for the period ended 30 June 2009
		Issued share capital	Share  premium  Account	Share option reserve	Foreign  Currency  Translation  Reserve	Retained  earnings	Total   equity
		£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2008		174	5,585	122	(148)	(3,517)	2,216
Loss for six months to 30 June 2008		-	-	-	-	(724)	(724)
Provision for share options valuation	-		-	30	-	-	30
Exchange differences arising on translation of foreign operations.	-		-	-	(106)	-	(106)
Balance at 30 June 2008	174		5,585	152	(254)	(4,241)	1,416
Loss for six months to 31 December 2008	-		-	-	-	(483)	(483)
Issue of 5 million shares	20		980	-	-	-	1,000
Share issue costs	-		(68)	-	-	-	(68)
Provision for share options valuation	-		-	1	-	-	1
Exchange differences arising on translation of foreign operations	-		-	-	165	-	165
Balance at 31 December 2008	194		6,497	153	(89)	(4,724)	2,031
Loss for six months to 30 June 2009	-		-	-	-	(1,083)	(1,083)
Provision for share options valuation	-		-	51	-	-	51
Exchange differences arising on translation of foreign operations	-		-	-	128	-	128
Balance at 30 June 2009	194		6,497	204	39	(5,807)	1,127

Condensed consolidated statement of cash flows for the period 30 June 2009			6 months  ended  30 June  2009	6 months  ended  30 June  2008	12 months  ended  31 December  2008
			Unaudited	Unaudited	Audited
			£'000	£'000	£'000
Cash flows from operating activities
Loss for period			(1,083)	(724)	(1,207)
Income tax expense			-	-	(162)
Depreciation			27	38	50
Loss on disposal of property, plant and equipment			-	-	12
Interest income			(2)	(17)	(57)
Finance expense			94	16	189
Share based payment charges			51	-	31
Net foreign exchange gain			-	-	(5)
			(913)	(687)	(1,149)
Movements in working capital
(Increase)/Decrease in inventories			(142)	(37)	20
(Increase)/Decrease in receivables			812	566	(337)
Increase/ (Decrease) in payables			(559)	(506)	406
Cash used by operations			(802)	(664)	(1,060)
Finance costs paid			(94)	(16)	(189)
Income tax received			-	-	42
Net cash used by operating activities			(896)	(680)	(1,207)
Cashflows from investing activities
Purchase of property, plant and equipment			(85)	(586)	(375)
Interest received			2	17	57
Net cash used in investing activities			(83)	(569)	(318)
Cashflows from financing activities
Proceeds from issue of share capital			-	-	1,000
Payments for share issue costs			-	-	(68)
Repayment of finance lease and instalment sale borrowings			(115)	(81)	(144)
Net cash from financing activities			(115)	(81)	788
Net (decrease)/increase in cash and cash equivalents			(1,094)	(1,330)	(737)
Cash and cash equivalents at the beginning of the period			1,025	1,748	1,748
Effects of exchange rate changes on the balance of cash held in foreign currencies			(11)	51	14
Cash and cash equivalents at the end of the period			(80)	469	1,025

Notes on the unaudited interim financial information

1.   Basis of preparation and significant accounting policies

Basis of preparation

The unaudited condensed financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards. The unaudited condensed financial statements are presented in Sterling and have been prepared under the historical cost basis.

The Directors are satisfied that the Group has and will maintain sufficient financial resources to enable it to continue in the foreseeable future and therefore they continue to adopt the going concern basis in preparing the unaudited interim financial statements. 

Significant accounting policies

The same accounting policies, presentation and methods of computation are followed in these unaudited condensed financial statements as were applied in the preparation of the Group's financial statements for the year ended 31 December 2008.

With effect from 1 January 2009 the Group adopted the following new standards and interpretations:

• IAS 1 Revised Presentation of Financial Statements

The revised standard introduces the Statement of Comprehensive Income which presents all items of recognised income and expense either in one single statement or in two linked statements. The Group has elected to present one single statement in the form of a Statement of Comprehensive Income. The adoption of IAS 1 has also resulted in a change to the name of the Balance Sheet and the Cash Flow Statement which are now referred to as the Statements of Financial Position and the Statement of Cash Flows respectively.

• IAS 23 Borrowing Costs

The amended standard requires the Group to capitalise borrowing costs directly attributable to the acquisition construction or production of a qualifying asset as part of the cost of the asset. The adoption of this amendment has not had a material impact on the financial performance on the position of the Group.

• Additionally, a number of other interpretations and other amendments to accounting standards have been adopted that do not have a significant impact on the Group's accounting policies and reporting.

2.   Cyclicality of Operations

 Operations in the six months to 30 June 2009 are following usual seasonal trends 

3.   Segment information

	South  Africa	USA	Other  Segments	Total for  reportable  segments
June 2009	£'000	£'000	£'000	£'000
External segment revenues	685	226	36	947
Internal segment revenues	-	-	-	-
Total segment revenues	685	226	36	947
Interest revenue	-	-	-	-
Interest expense	(94)	-	-	(94)
Depreciation and amortisation	(8)	(14)	(3)	(25)
Profit/(loss) before tax	(120)	(374)	(190)	(684)
Non-current assets allocated for the purposes of depreciation and amortisation charges	2,003	208	609	2,820

	South  Africa	USA	Other  Segments	Total for  reportable  segments
June 2008	£'000	£'000	£'000	£'000
External segment revenues	908	114	10	1,302
Internal segment revenues	-	-	-	-
Total segment revenues	908	114	10	1,302
Interest revenue	5	-	-	5
Interest expense	(16)	-	-	(16)
Depreciation and amortisation	(17)	(10)	(4)	(31)
Profit/(loss) before tax	(182)	(55)	(88)	(325)
Non-current assets allocated for the purposes of depreciation and amortisation charges	1,229	201	605	2,035

	South  Africa	USA	Other  Segments	Total for  reportable  segments
December 2008	£'000	£'000	£'000	£'000
External segment revenues	4,253	180	376	4,809
Internal segment revenues	-	-	-	-
Total segment revenues	4,253	180	376	4,809
Interest revenue	40	-	-	40
Interest expense	(180)	(5)	-	(185)
Depreciation and amortisation	(24)	(16)	(7)	(47)
Profit/(loss) before tax	234	(566)	(207)	(539)
Non-current assets allocated for the purposes of depreciation and amortisation charges	1,926	201	605	2,732
3. Segment information (continued) Reconciliations (i)     Group revenues
		June 2009	June 2008	December 2008
		£'000	£'000	£'000
Total revenues for reportable segments		947	1,032	4,809
Group's revenues		947	1,032	4,809
(ii)    Group loss before tax
		June  2009	June  2008	December  2008
		£'000	£'000	£'000
Loss before tax for trading segments		(684)	(325)	(539)
Share-based payment charges		(51)	(30)	(31)
Head office costs		(348)	(370)	(637)
Loss before tax		(1,083)	(724)	(1,207)
(iii)   Group assets
		June 2007	June 2008	December 2008
		£'000	£'000	£'000
Total non-current assets allocated to trading segments		2,820	2,035	2,683
Head office non-current assets		2,009	2,035	1,106
Current assets not allocated for internal reporting purposes:
Group inventories		207	120	65
Group trade and other receivables		690	449	1,500
Group cash and cash equivalents		38	469	1,025
		935	1,038	2,590
Group assets		5,764	3,265	6,379

(iv)   Other material items
	Reportable trading  segment totals	Head office  adjustments	Group
June 2009	£'000	£'000	£'000
Interest revenue	-	2	2
Interest expense	(94)	-	(94)
Depreciation and amortisation	(25)	(2)	(27)
June 2008
Interest revenue	5	12	17
Interest expense	(16)	-	(16)
Depreciation and amortisation	(31)	(7)	(38)
December 2008
Interest revenue	40	17	57
Interest expense	(185)	(4)	(189)
Depreciation and amortisation	(47)	(3)	(50)

The adjustments relate to head office items.

4.   Loss per share

	6 months  ended  30 June 2009	6 months  ended  30 June 2008	12 months  ended  31 December 2008
	Unaudited	Unaudited	Audited
Loss for the period attributable to  shareholders (£'000)	(1,083)	(724)	(1,207)
Weighted average number of shares  in issue	48,500,000	43,500,000	43,691,781

The losses attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted loss per ordinary share are identical to those used for basic loss per ordinary share. This is because the exercise of share options would have the effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of IAS 33. These options could potentially be dilutive in the future.

5.   Property, plant and equipment

		Moulds	Moulds  under  construction	Motor  Vehicles	Plant,  equipment,  furniture  and fittings	Total
		£'000	£'000	£'000	£'000	£'000
Cost
At 1 January 2009		3,710	25	112	78	3,925
Additions		963	43	-	1	1,007
Translation differences		79	(4)	(11)	(6)	58
At 30 June 2009		4,752	64	101	73	4,990
Accumulated depreciation
At 1 January 2009		67	-	27	52	146
Charge for period		12	-	8	7	27
Translation differences		(2)	-	(4)	(6)	(12)
At 30 June 2009		78	-	31	53	161
Net book value at 30 June 2009		4,674	64	70	20	4,829
Net book value at 31 December 2008		3,643	25	85	26	3,779

6.   Trade and other receivables

		As at 30 June 2009	As at 30 June 2008	As at 31 December 2008
		Unaudited	Unaudited	Audited
		£'000	£'000	£'000
Trade receivables		593	341	1,387
Other receivables		81	80	97
Prepayments and accrued income		16	28	16
		690	449	1,500

7.   Trade and other payables

	As at 30 June 2009	As at 30 June 2008	As at 31 December 2008
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Trade payables	728	426	1,486
Overdraft	118	-	-
Accruals and deferred income	214	98	174
Other payables	52	13	83
Research and developmental tax reclaims	42	75	75
Employee benefits	120	95	117
Taxation and social security	39	17	15
	1,313	724	1,875

8.    Related party transactions

Since the audited accounts for the period ended 31 December 2008, there has been an increase in Non-current Assets that have been purchased under a finance lease from parties affiliated to entities with a significant influence over the Group.  The value of the increase is £468,190.

9.    Copies of this report will be sent to shareholders shortly and will be available from the Company's 

registered office, 3 The Mews, 16 Hollybush Lane, Sevenoaks, Kent TN13 3JT and available to download from the Company's website www.supercartplc.com.

ENDIR UWVARKURKUUR