Adili plc
("Adili" or "the Company")
INTERIM REPORT
SIX MONTHS ENDED 31 OCTOBER 2009
The Company is pleased to announce its unaudited Interim results for the 6
months ended 31 October 2009. They are also available on the Company's website
www.ascensiononline.com.
CHAIRMAN'S STATEMENT
Introduction
Over the six months to 31 October 2009, Adili, now trading as Ascension, posted
revenue growth of 20% in a period of substantial change and progression for the
Group. These changes include the launch of our new trading name, Ascension,
significant cost reduction in the business, a reorganisation of the Board and
operational staff as well as the launch of two stores in London and Dorchester.
This has been achieved whilst continuing the growth of Adili's own label
(Ascension) range and also focussing on fewer brands to drive improved
profitability and operational efficiencies. These developments will help to
drive future growth and, while trading conditions remain very challenging, the
opportunity to establish Ascension as `the place' to shop for ethical fashion
and other related lifestyle products remains substantial.
Financial Results
Revenue for the six months to 31 October 2009 increased to £299,000 (2008: £
250,000), a rise of approximately 20% on the comparative period last year. The
loss before tax for the six months to 31 October 2009 was £886,000 (2008: £
901,000 loss). The loss per share for the six months to 31 October 2009 was £
0.01 (2008: loss per share £0.03). The Group ended the period with net cash
resources of £307,000 (2008: £840,000).
Fundraising
In August 2009, we completed a placing which together raised additional funds
of £940,000 before expenses. The new monies raised are part of the continuing
funding required to take the Group to cash break-even. Due to a delay in
raising these funds, the business, from late July and through August, was run
on a basis to maximise cash into the business. This negatively affected gross
margins as stock was marked down significantly to encourage increased sales and
drive cash into the business. Since then the company has been acutely focussed
on margin management and eliminating sales driving activity that we believe not
to be cost effective in the longer term.
As disclosed in the Trading Update of 10 December 2010 we anticipate a need for
further working capital funding in the near future. We are exploring various
options for financing this additional requirement without recourse to existing
shareholders, but cannot rule this option out at this stage.
Business Development
Cost savings
A reorganisation of the business has been completed in the business that will
yield significant cost savings in both salaries and overhead. In total £474,000
of annual costs have been removed from the cost base. As part of these changes,
Alan Howarth and Caroline Gitsham left the business in the period and Mark
Swire stepped down from the Board and is expected to leave in due course. I
would like to thank all three for their input to the business and wish them
well in their future careers.
Product Range
Over the period, management has focused on improving the mix of goods sold to
the strongest performing areas of the business. As such, at the end of the half
year, we stocked 61 ethical brands and 1,210 lines, down from 98 and 1,731,
respectively, at 30 April 2009.
A key objective for the business was the launch of our own label products to
improve margins and expand our product range in key areas, increase Ascension's
brand awareness and allow greater control over the supply chain. The move also
helps us to progress our ethical trade goals. We have now delivered two
successful season's ranges and development continues to increase the size and
depth of the range to leverage the benefits mentioned above.
Retail Stores
The launch of our flagship store in St Christopher's Place, London and a small
clearance store in Dorchester, both opened in early November 2009, have the
aims of raising brand awareness for Ascension and adding a cash positive
channel to the business. Early trading shows encouraging prospects for the
future.
New Brand Name
In August 2009, we changed our trading name to Ascension and commenced trading
online at www.ascensiononline.com. Although there had been some short term
reduction in traffic to the website due to the url change, which is reflected
in our interim results, growth in visitor numbers has now returned to previous
levels and shows signs of further growth potential.
Market Developments
Online retailing and ethical consumerism continue to grow. The latest monthly
IMRG Cap Gemini e-Retail Sales Index, published in January 2010, shows online
retailing rising 17% year-on-year in December 2009, with sales of clothing
rising by 18% year-on-year for the same month. Research from Mintel (April
2009) assesses the market for ethical fashion at £175m, having quadrupled in
the last 5 years. The recently published (December 2009) Co-operative Bank
annual report on ethical consumerism assessed the UK ethical fashion market at
£172m in 2008, an increase of 93% year on year and an acceleration of the 71%
year-on-year growth the previous year.
Current Trading and Outlook
Sales for November and December 2009 increased by 36% year on year, reflecting
the margin focus described above, rather than chasing headline sales growth. In
particular we avoided holding a mid-season Sale and the high level of discounts
and promotions offered in 2008.
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
Enquiries:
Adili plc Adam Smith, Chief Executive T: 01258 837 437
Officer
Seymour Pierce Nicola Marrin T: 020 7107 8000
Catherine Leftley
UNAUDITED CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 OCTOBER 200
9
6 months 6 months 12 months
to 30 April
to 31 October to 31 2009
2009
October 2008 (Audited)
(Unaudited)
(Unaudited)
Notes
£ £ £
Continuing operations
Revenue 298,965 249,825 552,489
Cost of sales (287,923) (230,865) (537,524)
Gross profit 11,042 18,960 14,965
Administrative expenses (898,039) (923,861) (1,908,971)
Operating loss (886,997) (904,901) (1,894,006)
Finance costs - (5,866) (21,926)
Investment revenues 555 9,933 13,339
Loss before taxation (886,442) (900,834) (1,902,593)
Taxation - - -
Loss for the period (886,442) (900,834) (1,902,593)
Loss per share
Basic and diluted 3 (0.01) (0.03) (0.05)
UNAUDITED CONSOLIDATED BALANCE SHEET AS AT 31 OCTOBER 2009
6 months 6 months 12 months
to 31 to 31 to 30
October 2009
(Unaudited) October 2008 April 2009
(Unaudited)
(Audited)
Notes
£ £
Non-current assets
Plant and equipment 111,468 110,173 95,760
Intangible assets - other 52,094 15,727 59,371
Total non-current assets 163,562 125,900 155,131
Current assets
Inventories 221,841 262,068 233,308
Trade and other receivables 102,085 128,828 98,590
Cash and cash equivalents 2 307,082 839,801 192,742
Total current assets 631,008 1,230,697 524,640
Current liabilities
Trade and other payables (238,407) (821,184) (187,550)
Total current liabilities (238,407) (821,184) (187,550)
Net current assets 392,601 409,513 337,090
Net assets 556,163 535,413 492,221
Equity
Share capital 1,181,819 320,830 555,152
Share premium account 2,876,063 1,880,954 2,572,168
Merger reserve 574,600 574,600 574,600
Share option reserve 276,471 223,618 256,649
Equity element of convertible - 66,269 -
loan stock
Retained earnings (4,352,790) (2,530,858) (3,466,348)
556,163 535,413 492,221
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 OCTOBER
2009
Six months Six months 12 months
to 31 to 31 to 30 April
October 2009 October
(Unaudited) 2009
2008 (Audited)
(Unaudited)
Notes
£ £
Net cash used in operating (771,507) (747,259) (1,662,830)
activities
Investing activities
Interest received 555 9,933 13,339
Purchases of plant and equipment (43,846) (35,935) (51,301)
Purchases of intellectual property (1,424) - (52,206)
rights
Net cash used in investing (44,715) (26,002) (90,168)
activities
Financing activities
Proceeds on issue of shares 940,000 362,800 711,804
Loan stock proceeds - 637,201 648,932
Costs relating to share issue and (9,438) (93,644) (109,970)
loan stock
Interest paid - - (11,731)
Net cash generated from financing 930,562 906,357 1,239,035
activities
Net increase / (decrease) in cash 114,340 133,096 (513,963)
and cash equivalents
Cash and cash equivalents at 192,742 706,705 706,705
beginning of period
Cash and cash equivalents at end of 2 307,082 839,801 192,742
period
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED
31 OCTOBER 2009
Share Share Share Merger Equity Retained Total
premium option reserve element of earnings equity
capital reserve convertible
loan stock
£ £ £ £ £ £ £
Balance at 30 254,866 1,677,762 146,610 574,600 - (1,630,024) 1,023,814
April 2008
Total - - - - - (900,834) (900,834)
comprehensive
loss for the
period
Shares issued in 65,964 296,836 - - - - 362,800
period for cash
Costs of share - (93,644) - - - - (93,644)
issue
Equity element - - - - 66,269 - 66,269
of convertible
loan stock
Share option - - 77,008 - - - 77,008
charge
Balance at 31 320,830 1,880,954 223,618 574,600 66,269 (2,530,858) 535,413
October 2008
Balance at 30 254,866 1,677,762 146,610 574,600 - (1,630,024) 1,023,814
April 2008
Total - - - - - (1,902,593) (1,902,593)
comprehensive
loss for the
period
Shares issued in 182,298 529,506 - - - - 711,804
period for cash
Costs of share - (109,970) - - - - (109,970)
issue
Equity element - - - - 66,269 - 66,269
of convertible
loan stock
Shares issued on 117,988 474,870 - - (66,269) 66,269 592,858
conversion of
loan stock
Share option - - 110,039 - - - 110,039
charge
Balance at 30 555,152 2,572,168 256,649 574,600 - (3,466,348) 492,221
April 2009
Total - - - - - ( 886,442) (886,442)
comprehensive
loss for the
period
Shares issued in 626,667 313,333 - - - - 940,000
period for cash
Costs of share - (9,438) - - - - (9,438)
issue
Share option - - 19,822 - - - 19,822
charge
Balance at 31 1,181,819 2,876,063 276,471 574,600 - (4,352,790) 556,163
October 2009
NOTES TO THE HALF-YEAR RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2009
1. ACCOUNTING POLICIES
Basis of preparation
The interim financial information in this report has been prepared using
accounting policies consistent with IFRS as adopted by the European Union. IFRS
is subject to amendment and interpretation by the International Accounting
Standards Board (IASB) and the International Financial Reporting
Interpretations 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 adopted by the
European Union and applicable as at 30 April 2010.
Except as described below, the accounting policies applied are consistent with
those of the annual financial statements for the year ended 30 April 2009. The
presentation of the primary financial statements has been modified in order to
comply with IAS1 (revised). However the revised standard has no impact on the
reported results or financial position of the group.
There has been an adjustment to the prior year balances in reserves to correct
accounting entries relating to the conversion of convertible loan stock in the
6 months ended 31 October 2008. The adjustment reduced the share premium
account by £1,048,725 and increased the merger reserve and retained earnings by
£678,333 and £370,392 respectively. The comparative figures in this report have
been restated accordingly.
Non-statutory accounts
The financial information for the year ended 30 April 2009 set out in this
interim report does not constitute the Group's statutory accounts for that
period. The statutory accounts for the year ended 30 April 2009 have been
delivered to the Registrar of Companies and are available on the Company's
website at www.ascensiononline.com. The auditors report on those accounts was
unqualified.
The financial information for the 6 months ended 31 October 2009 and 31 October
2008 is unaudited and does not constitute statutory accounts within the meaning
of Section 435 of the Companies Act 2006.
Going concern
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 Group is exploring
various options for financing this additional requirement without recourse to
existing shareholders, but cannot rule this option out at this stage.
2. CASH AND CASH EQUIVALENTS
As at As at As at
31 October 31 October 30 April
2009 2008
2009
(Unaudited) (Unaudited)
(Audited)
£ £
Cash at bank and in hand 106,527 39,801 192,742
Short term bank deposits 200,555 800,000 -
307,082 839,801 192,742
3. LOSS PER SHARE
6 months to 6 months to 12 months
to 30 April
31 October 31 October 2009
2009
2008 (Audited)
(Unaudited)
(Unaudited)
Earnings £ £ £
Earnings for the purposes of basic and (886,442) (900,834) (1,902,593)
diluted earnings per share being net
loss attributable to equity
shareholders
Number of shares
Weighted average number of ordinary shares 80,855,823 26,495,862 34,769,817
for the purposes of basic and diluted
earnings per share
Basic and diluted loss per share are the same as the Group was loss making and
therefore any contingently issuable shares would have been anti-dilutive.
4. DIVIDEND
No dividends are proposed for the six months ended 31 October 2009 (31 October
2008 - 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.ascensiononline.com.