RNS Number:2467M
EBTM PLC
22 January 2008
EBTM.L
EBTM Plc ("EBTM")
Interim Results for the six months ended 31 October 2007
Key Points
* Sales up 590% year-on-year, assisted by the acquisitions made in May and
July 2007, to �3.59 million (2006: �0.52 million).
* The Group has posted its maiden operating profit. Profit before
amortisation, depreciation, taxation and the FRS 20 charge for share
incentives was �0.33 million (2006: loss of �0.26 million).
* On 31 May 2007, EBTM acquired Core Brands Limited whose main trading
subsidiary was Lowlife Corporation Limited ("Lowlife"). Since the
acquisition Lowlife has continued to trade well with sales up 40%
year-on-year to the end of the period. However, the Board is adopting a
cautious outlook for the wholesale division in 2008, given current consumer
sentiment on the high street and we expect full year results to fall
materially short of current market expectations.
* On 9 July 2007, the intellectual property rights related to the Atticus
clothing brand were acquired. A delay in the appointment of a licensee in
the USA has resulted in lower than expected royalty income. Licensees were
appointed in the USA and Canada post the period end.
* On 15 August 2007, EBTM announced an order of some �800,000 for Atticus
clothing from a major high street retailer in the UK. The effect of this
transaction is recognised in the period ended 31 October 2007.
* New agreements announced during the period with Kerrang Magazine,
Adeline Street Clothing (associated with the band Green Day) and Clandestine
Industries clothing (associated with Pete Wentz of the band Fall Out Boy).
* In the four weeks leading up to the last shipment date for Christmas
2007, online sales were up 47% year-on -year. However, despite record levels
of traffic on our site, sales were below expectations as a result of
disappointing conversion rates associated with the transition to the new
e-commerce platform. However there is a plan to improve conversion rates
back to historic levels by 30 April 2008. This plan is currently on target.
* The Board is pleased to announce the appointment of Simon Hargreaves,
formerly a non-executive Director as interim Finance Director whilst EBTM
seeks to make a permanent appointment to this role.
Commenting on the results, David Howell, Chairman said:
"It is pleasing to be able to report a maiden operating profit at this stage.
The acquisition made last year has helped to scale the business and create a
vertically integrated retailer with exciting growth prospects. While the delay
in the appointment of licensees in North America for the Atticus brand and the
technical difficulties we have experienced with our trading platform have
temporarily held the business back and despite our cautious view of consumer
sentiment on the high street, we remain confident that we operate in a growth
market and that we have established a strong platform which has exciting
expansion opportunities in the UK and for future periods internationally."
Enquiries:
EBTM plc
Richard Breeden, Chief Executive 020 7819 1950
Simon Hargreaves, Finance Director 07768 637643
Nominated Adviser
Nabarro Wells & Co. Limited
Hugh Oram 020 7710 7400
Biddicks
Zoe Biddick 020 7448 1000
Operating Review
The half year to 31 October 2007 has been transformational in the development of
EBTM Plc.
The Group has posted its maiden operating profit of �0.16 million (compared to a
loss of �0.32 million in the equivalent period last year) and is set for
continued rapid expansion. Sales have grown to �3.59 million, assisted by the
acquisitions of the Lowlife businesses and the Atticus brand, compared with
�0.52 million in the six months to 31 October 2006, an increase of 590%.
This is a position from which the directors believe we can sustain strong growth
in the future.
During the period, EBTM has made a key acquisition creating a fully vertically
integrated retailer which owns and licenses key clothing brands under the banner
of music inspired fashion, as well as having a significant and fast growing
wholesale distribution network in the UK and Europe and a sophisticated sourcing
network in the Far East.
I am pleased to announce that Simon Hargreaves has taken up the role of interim
Finance Director whilst we seek to make a full time appointment to the position.
Simon was previously a non-executive Director of EBTM plc and a Director of
Lowlife Corporation Limited prior to its acquisition by EBTM last year. His
background is as Group Finance Director of Vanco plc and Chief Executive of its
main trading division, Vanco Solutions..
Online Retail
Online sales have continued to grow. In June 2007 we moved our web platform to
Storefront, maintained by Maginus Software Solutions. This move was necessary to
provide the co-branded web stores which are part of our growth strategy.. The
new platform also allows the creation of single brand stores for our own brands,
all run from a central database and inventory.
However, because the new e-commerce platform required extensive fine-tuning, the
transition has resulted in a reduction in online conversion rates. As we address
and rectify these difficulties, conversion continues to improve but is not yet
fully restored to the level achieved prior to the transition. We are already
beginning to see the benefits of the new platform and are confident that the new
system will enable substantial growth in the product range, the customer
database and most importantly sales.
Online sales in the key four weeks leading to the last shipment date for
Christmas were up 47% year on year but, despite record levels of traffic during
this period, the lower conversion rates resulted in materially lower than
expected sales growth.
A plan is in place to restore conversion rates to historic levels by 30 April
2008. The company is currently on target to achieve this.
Acquisition of Lowlife Corporation Limited
On 31 May 2007, the Company entered into a contract to acquire the entire issued
share capital of Core Brands Limited, whose main trading subsidiary at the time
was Lowlife Corporation Limited ("Lowlife"). Lowlife is a wholesaler of music
inspired clothing and accessories. For the year ended 31 December 2006, Lowlife
reported sales of �3.5 million, and profits before tax of �646,000. At that date
it had net assets of �846,000.
In order to fund this acquisition the Company issued 110,526,315 new ordinary
shares of 0.5 pence each in the capital of the Company at 4.75 pence per share
("the Placing"). EBTM paid a total of �4.75 million prior to costs to acquire
the Lowlife business, which was settled as to �3.25 million in cash, financed by
the Placing and �1.5 million by way of an issue of 26,785,714 new ordinary
shares in the Company to Dale Masters, who owned 100% of the share capital in
Core Brands Limited.
Lowlife's products are marketed under a variety of brand names, some of which
are the subject of third party ownership and for which it pays royalties for the
right to use the brand name.
Lowlife has continued its expansion with sales growth of 40% year-on-year for
the six months to 31 October 2007. However, the Board is taking a cautious view
of the outlook for the remainder of this financial year and into the next given
current consumer sentiment on the high street. Specifically, a view has recently
been taken that several material wholesale opportunities that previously had
been viewed as having a reasonable chance of being closed in the period to 30
April 2008, will not now happen prior to this date.
The financial and operational management of the acquired businesses will be
further consolidated in 2008, creating additional cost synergies
Acquisition of Atticus clothing brand
The remaining funds from the placing were used to acquire the intellectual
property rights relating to the Atticus clothing brand for which EBTM paid
US$4.2 million prior to costs. This transaction was completed on 9 July 2007.
This is a brand which sits squarely with our proposition of music inspired
fashion.
The acquisition of the intellectual property in Atticus ensures that EBTM
controls the design process in house and we no longer have to pay royalties for
sales of the brand. The Atticus clothing brand continues to trade well through
the Lowlife distribution network in the UK and Europe and the savings in royalty
payments, anticipated at the point of acquisition in June 2007, have been
delivered in line with management expectations.
Sales of Atticus continue to grow and on 15 August 2007, EBTM announced an order
of some �800,000 for Atticus clothing from a major high street retailer in the
UK. The effect of this transaction is recognised in the period ended 31 October
2007.
Management believes that working with the right partners is crucial to build
long term value in the brand. The search for an appropriate North American
licensee and the agreement of appropriate terms with the licensee has taken
longer than expected. As a result royalty income from the USA will fall
significantly short of previous expectations in the current financial year and
is now not anticipated to reach a material level until the year ending 30 April
2009.
Since the period end we are pleased to have concluded licence agreements for the
Atticus brand with licencees in the USA and Canada. We will work closely with
our partners and expect to begin to develop revenues from these markets in
future periods.
Brands
Our in-house design and sourcing functions, capabilities acquired with the
acquisition of Lowlife, have started to enable the further acceleration of "own
brand" products which began in 2006 and the roster of brands which we own or
distribute continues to grow.
Alongside the Atticus clothing brand there are a number of other music inspired
fashion brands which we either own or operate.
Our own brand, Lowlife, has established itself within the accessories market and
there are many opportunities to expand the reach of Lowlife products. We have
also begun to develop two new brands called Panic! and LIFE, which will
complement our existing product portfolio as we move into the next financial
year.
In addition, we entered into wholesale and online retail agreements with Adeline
Clothing (announced on 5 September 2007) and Clandestine Industries (announced
19 September 2007) and since the period end we have entered into a distribution
agreement with Rockett clothing (an established music inspired fashion brand
from California).
We intend to continue to build a strong pipeline of music inspired brands to
augment those already in our stable.
Outlook
The Group is now trading profitably. In the limited period since Christmas,
trading has been encouraging with sales of our own brands continuing to grow as
part of the overall sales mix, thereby enhancing gross margins.
While the directors are confident that the initiatives taken in the first half
year will add to future growth, we are cautious in outlook for 2008. The
temporary difficulties we have experienced with the transition to our new
e-commerce platform and the delay in the appointment of licensees for the
Atticus brand in North America, along with this cautious view for the wholesale
business as high street retail and consumer spending slows in 2008, lead us to
believe that full year results will fall materially short of our previous
expectations.
Richard Breeden
Chief Executive
21 January 2008
INDEPENDENT REVIEW REPORT TO EBTM Plc
Introduction
We have been instructed by the Company to review the financial information for
the six month period ended 31 October 2007 which comprises the Consolidated
Income Statement, Consolidated Balance Sheet, Consolidated Cash flow Statement,
Consolidated Statement of Changes in Equity and the related notes. We have read
the other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
This report is made solely to the Company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the Company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the AIM market which require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
International Financial Reporting Standard
As disclosed in note 1, the next annual financial statements of the group will
be prepared in accordance with International Financial Reporting Standards as
adopted for use in the EU. Accordingly, the interim report has been prepared in
accordance with the recognition and measurement criteria of IFRS and the
disclosure requirements of the Listing Rules of the AIM market.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board. A review consists principally of making
enquiries of Group management and applying analytical procedures to the
financial information and underlying financial data and based thereon, assessing
whether the accounting policies and presentation have been consistently applied
unless otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with
International Standards on Auditing (UK and Ireland) and therefore provides a
lower level of assurance than an audit. Accordingly we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six month
period ended 31 October 2007.
Kingston Smith LLP
Chartered Accountants and Registered Auditors
141 Wardour Street
London
W1F 0UT
Consolidated Income Statement
For the six months ended 31 October 2007
As restated As restated
Note 5.4 Note 5.3
6 months to 6 months to Year to
31 October 31 October 30 April
2007 2006 2007
Unaudited Unaudited Audited
� � �
Turnover 3,586,578 520,454 1,354,447
Cost of Sales (1,914,875) (277,301) (704,726)
-------- -------- --------
Gross Profit 1,671,703 243,153 649,721
Administrative (1,434,429) (564,890) (1,245,311)
expenses -------- -------- --------
Profit/ (Loss)
before amortisation,
depreciation, interest
payable and taxation 237,274 (321,737) (595,590)
Amortisation and
depreciation (74,856) (2,269) (8,644)
-------- -------- --------
Operating
Profit/(Loss) 162,418 (324,006) (604,234)
Interest receivable 8,506 11,073 25,983
Interest pay (13,929) (2,486) (3,745)
-------- -------- --------
Profit/ (Loss) on
Ordinary Activities
Before Taxation 156,995 (315,419) (581,996)
Taxation (20,111) 18,424 36,848
-------- -------- --------
Retained Profit/
(Loss)for the
financial period 136,884 (296,995) (545,148)
======== ======== ========
Profit/ (Loss)
per share
Basic 0.06 (0.27) (0.53)
Fully diluted 0.06 (0.27) (0.53)
======== ======== ========
The above results have been restated to reflect the IFRS standards and IFRIC
interpretations issued and effective as at the time of preparing these
statements.
The profit and loss account has been prepared on the basis that all operations
are continuing operations.
There are no recognised gains and losses other than those passing through the
profit and loss account.
Consolidated Balance Sheet at 31 October 2007
As restated As restated
- note 5.2 - note 5.1
31 October 2007 31 October 2006 30 April 2007
Unaudited Unaudited Unaudited Unaudited Audited Audited
� � � � � �
Fixed Assets
Intangible
assets 8,670,818 1,511,903 1,511,903
Tangible assets 227,617 8,483 124,426
Deferred tax
asset 85,221 39,810 58,234
-------- -------- -------
8,983,656 1 ,560,196 1,694,563
Current Assets
Stock 1,211,694 326,350 433,643
Debtors 2,407,524 177,062 300,105
Cash at bank
and in hand 45,130 394,821 617,710
-------- -------- -------
3,664,348 898,233 1,351,458
Creditors:
Amounts
falling
Due within
one year (2,970,726) (308,943) (583,140)
-------- -------- -------
Net Current
Assets 693,622 589,290 768,318
-------- -------- -------
Total Assets
less Current
Liabilities 9,677,278 2,149,486 2,462,881
Creditors:
Amounts
falling
Due after
more than
one year (237,905) (19,639) (16,273)
-------- -------- -------
Net Assets /
(Liabilities) 9,439,373 2,129,847 2,446,608
======== ======== =======
Capital and
Reserves
Called up share
capital 1,241,560 486,250 552,500
Share premium
account 8,695,864 2,180,175 2,617,425
Deferred
compensation
reserve 284,069 132,700 194,114
Profit and
loss account (782,120) (669,278) (917,431)
-------- -------- -------
Shareholders'
Funds 9,439,373 2,129,847 2,446,608
======== ======== =======
Approved by the Board on 21
January 2008
R T Breeden
Director
Consolidated Cash Flow Statement
For the six months ended 31 October 2007
As restated As restated
- note 5.2 and 5.4 - note 5.1 and 5.3
Six months ended Six months ended Year ended
31 October 2007 31 October 2006 30 April 2007
Unaudited Unaudited Unaudited Unaudited Audited Audited
� � � � � �
Operating
cash flow (328,915) (337,002) (505,580)
Net finance
(outflow)/
inflow (5,423) 8,587 22,238
Tax paid - - -
-------- -------- -------
(5,423) 8,587 22,238
-------- -------- -------
Net cash
outflow from
operating
activities (334,338) (328,415) (483,342)
Investing
activities
Overdraft
acquired on
acquisition of
subsidiary
undertakings (237,798) - -
Acquisition of
subsidiary
undertakings (5,859,313) - -
Purchase of
tangible
fixed
assets (88,749) (4,839) (127,157)
-------- -------- -------
Net cash
outflow
from
investing
activities (6,185,860) (4,839) (127,157)
Financing
activities
Issue of
ordinary
share
capital 5,267,500 - 503,500
Loans
repaid (3,368) (40,867) (44,233)
Bank and
other loans
taken out 450,000 - -
-------- -------- -------
Net Cash
Inflow/(Outflow)
From
Financing
Activities 5,714,132 (40,867) 459,267
-------- -------- -------
Decrease in
Cash (806,066) (374,121) (151,232)
======== ======== =======
Consolidated Statement of Changes in Equity
For the six months ended 31 October 2007
Called up Deferred Profit
share Share compensation and loss
capital premium reserve account Total
� � � � �
At 1 May
2006 486,250 2,180,175 71,286 (372,283) 2,365,428
New shares
issued - - - - -
Share
options
granted - - 61,414 - 61,414
Loss for
the
period - - - (296,995) (296,995)
-------- -------- -------- ------- -------
At 31 October
2006 486,250 2,180,175 132,700 (669,278) 2,129,847
======== ======== ======== ======= =======
At 1 November
2006 486,250 2,180,175 132,700 (669,278) 2,129,847
New shares
issued 66,250 437,250 - - 503,500
Share options
granted - - 61,414 - 61,414
Loss for the
period - - - (248,153) (248,153)
-------- -------- -------- ------- -------
At 30 April
2007 552,500 2,617,425 194,114 (917,431) 2,446,608
======== ======== ======== ======= =======
At 1 May 2007 552,500 2,617,425 194,114 (917,431) 2,446,608
New shares
issued 689,060 6,078,439 - - 6,767,499
Share options
granted - - 89,955 - 89,955
Profit for
the period - - - 136,884 136,884
Foreign
exchange
difference (1,573) (1,573)
-------- -------- -------- ------- -------
At 31 October
2007 1,241,560 8,695,864 284,069 (782,120) 9,439,373
======== ======== ======== ======= =======
Notes to the Consolidated Cash Flow Statement
For the six months ended 31 October 2007
As restated As restated
Note 5.2 and 5.4 Note 5.1 and 5.3
6 months to 6 months to Year to
31 October 31 October 30 April
2007 2006 2007
Unaudited Unaudited Audited
� � �
1 Reconciliation of
Operating Profit/ (Loss)
to Operating cash flow
Operating profit/ (loss) 162,418 (324,006) (604,234)
Depreciation 12,277 2,269 8,644
Amortisation 62,579 - -
Share options (note 4) 89,955 61,414 122,828
Increase in debtors (1,639,640) 29,017 (94,026)
Increase in stock (321,604) (196,346) (303,639)
Increase in creditors 1,305,100 90,650 364,847
--------- --------- ---------
Operating cash flow (328,915) (337,002) (505,580)
========= ========= =========
2 Reconciliation of
Net Cash Flow to Movement
in Net (Debt)/ Cash
Decrease in cash
in the period (806,066) (374,121) (151,232)
Cash inflow from
bank loans advanced (450,000) - -
Cash outflow from
bank loans repaid 3,368 40,867 44,233
--------- --------- ---------
Movement in net
debt in the period (1,252,698) (333,254) (106,999)
Net cash brought
forward 594,704 701,703 701,703
--------- --------- ---------
Net (debt)/ cash
carried forward (657,994) 368,449 594,704
========= ========= =========
3 Analysis of Changes
in Net Debt
At 1 May Cash Other At 31
2007 Flow Movements October 2007
� � � �
Cash at bank and in hand 617,710 (572,580) - 45,130
Overdrafts - (233,486) - (233,486)
Debt due within one year (6,733) (446,632) 221,632 (231,733)
Debt due after one year (16,273) - (221,632) (237,905)
---------- --------- --------- ---------
Total 594,704 (1,252,698) - (657,994)
========== ========= ========= =========
Notes to the Financial Statements
For the six months ended 31 October 2007
1. General information
EBTM plc ('the Company') and its subsidiaries (together 'EBTM plc' or 'the
Group') is a manufacturer and on line and wholesale seller of fashion and
fashion related products.
The Company is a public limited company incorporated and domiciled in the United
Kingdom. The address of its registered office is 141 Wardour Street, London, W1F
0UT.
The Company has its primary listing on the Alternative Investment Market
("AIM").
These consolidated interim financial statements have been approved for issue by
the Board of Directors on 21 January 2008.
2. Accounting policies
The accounting policies adopted by the Group are in accordance with the
accounting policies updated at the prior year end.
(a) Accounting basis and standards
The financial statements have been prepared under the historical cost convention
and in accordance with applicable accounting standards. The accounting policies
are unchanged from the previous year.
(b) Basis of consolidation
The Group profit and loss account and balance sheet consist of the financial
statements of the parent company and its subsidiary undertaking. The results of
subsidiaries sold or acquired are included in the profit and loss account up to
or from the date control passes. Intra-group sales and profits are eliminated
fully on consolidation.
(c) Intangible fixed assets
Purchased intellectual property rights relating to clothing brands are
capitalised at cost as intangible fixed assets. Intellectual property rights are
amortised by equal annual amounts over their expected useful life of ten years.
Goodwill arising on acquisitions is capitalised in accordance with the
requirements of IFRS 3. Goodwill impairment is assessed by comparing the
carrying value of goodwill to the net present value of future cash flows derived
from the operating performance underpinned by each cash generating units'
three-year forecast. After this period, growth rates equivalent to nominal GDP
are generally assumed. In accordance with IFRS 3 the carrying value of goodwill
will continue to be reviewed for impairment on the basis stipulated and adjusted
should this be required. Impairment is recognised in the income statement and is
not subsequently reversed. The individual circumstances of each future
acquisition will be assessed to determine the appropriate treatment of any
related goodwill.
Goodwill arising on acquisitions before the date of transition to IFRS has been
retained at the previous UK GAAP amounts at the date of transition subject to
being tested for impairment at that date.
Intangible fixed assets are reviewed for impairment at the end of the first full
financial year following the acquisition and in other periods if events or
changes in circumstances indicate that the carrying value may not be
recoverable. The intangible assets have a useful life of 10 years and are
reviewed for impairment on an annual basis.
(d) Depreciation of fixed assets
Fixed assets are stated at historical cost.
Depreciation on fixed assets is provided at rates estimated to write off the
cost or revalued amounts, less estimated residual value, of each asset evenly
over its expected useful life as follows:
Plant and Machinery 3 years straight line
e-commerce software 3 years straight line
Fixtures, fittings and equipment 3 years straight line
(e) Turnover
Turnover represents the invoiced value of goods sold and services provided net
of value added tax.
(f) Stock
Stocks are stated at the lower of cost and net realisable value. Cost includes
all direct costs incurred in bringing the stocks to their present location and
condition, including where appropriate, a proportion of manufacturing overheads.
(g) Investments
Fixed asset investments are stated at historical cost less any provision for
diminution in value
(h) Deferred taxation
In accordance with FRS 19, deferred tax is recognised as a liability or asset if
transactions or events that give the company the obligation to pay more tax in
future or a right to pay less tax in future have occurred by the balance sheet
date.
(i) Foreign currencies
Transactions denominated in foreign currencies are translated into sterling at
the rate of exchange ruling at the date of the transaction. Assets and
liabilities in foreign currencies are translated into sterling at rates of
exchange ruling at the end of the financial year. Exchange differences arising
from the translation of foreign investments, subsidiaries or associates are
taken directly to reserves. All other exchange differences are dealt with in the
profit and loss account.
(j) Leasing and hire purchase commitments
Rentals paid under operating leases are charged to income on a straight line
basis over the lease term.
(k) Share based payments
Certain employees and directors of the Company received equity settled
remuneration in the form of Company share options. The cost is charged to the
profit and loss account on the straight line basis over the vesting period and a
corresponding amount is reflected in the profit and loss reserves in
shareholders' equity adjusted at each balance sheet date to take into account
actual and expected levels of vesting. The charge is calculated as being the
fair value of the shares or the right to the shares on the date of grant,
reduced by any consideration payable by the employee. Fair value is measured
using a modified Black- Scholes option pricing model and is based on a
reasonable expectation of the extent to which performance criteria will be met.
3. Basis of preparation and statutory information
The 31 October 2007 interim consolidated financial statements of EBTM plc are
for the six month period ended 31 October 2007. These interim financial
statements have been prepared in accordance with those IFRS standards and IFRIC
interpretations issued and effective as at the time of preparing these
statements (December 2007) and IAS 34 'Interim Financial Reporting'.
The interim financial information for the six months ended 31 October 2007 and
31 October 2006 has not been audited and does not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985.
The information for the year ended 30 April 2007 does not constitute statutory
accounts as defined in section 240 of the Companies Act 1985. A copy of the
statutory accounts, which were prepared under IAS, has been filed with the
Registrar of Companies. The auditors' report on those accounts was not qualified
and did not contain statements under section 237(2) or (3) of the Companies Act
1985.
4. Prior year adjustment
During the year ended 30 April 2007, the Company adopted FRS20. This relates to
accounting for share based payments. As a result of this the results for the
period ended 31 October 2006 have been restated. The effect of this was that an
additional post tax charge of �42,990 was added to the loss for the period.
5. Explanation of transition to IFRSs
This is the first period for which the Group has presented its financial
statements under IFRS. The following disclosures are required in the year of
transition. The last financial statements under UK GAAP were for the year ended
30 April 2007 and the date of transition to IFRS was therefore 1 May 2006.
5.1 Reconciliation of Equity at 30 April 2007 (date of last UK GAAP financial
statements)
UK GAAP Effect of transition As restated
Note As previously reported to IFRSs under IFRSs
� � � � � �
Fixed Assets
Intangible
assets a 1,432,329 79,574 1,511,903
Tangible
assets 124,426 - 124,426
Deferred tax
asset 58,234 - 58,234
-------- -------- -------
1,614,989 79,574 1,694,563
Current
Assets
Stock 433,643 - 433,643
Debtors 300,105 - 300,105
Cash at bank
and in hand 617,710 - 617,710
------- ------- -------
1,351,458 - 1,351,458
------- ------- -------
Creditors:
Amounts
falling
Due within
one year (583,140) - (583,140)
------- ------- -------
Net Current
Assets 768,318 - 768,318
-------- -------- -------
Total Assets
less Current
Liabilities 2,383,307 79,574 2,462,881
Creditors:
Amounts
falling
Due after
more than
one year (16,273) - (16,273)
-------- -------- -------
Net Assets /
(Liabilities) 2,367,034 79,574 2,446,608
======== ======== =======
Capital and
Reserves
Called up
share capital 552,500 - 552,500
Share premium
account 2,617,425 - 2,617,425
Deferred compensation
reserve 194,114 - 194,114
Profit and loss
account (997,005) 79,574 (917,431)
-------- ------ -------
Shareholders' 2,367,034 79,574 2,446,608
Funds ======== ======== =======
Note �
Total equity previously reported under UK GAAP 2,367,034
Reversal of amortization of goodwill from date a 79,574
of transition -------
Total equity as restated under IFRSs 2,446,608
=======
5.2 Reconciliation of Equity at 31 October 2006
UK GAAP Effect of transition As restated
Note As previously reported to IFRSs under IFRSs
� � � � � �
Fixed Assets
Intangible
assets a 1,472,116 39,787 1,511,903
Tangible
assets b 8,483 - 8,483
Deferred tax
asset - 39,810 39,810
-------- -------- -------
1,480,599 79,597 1,560,196
Current
Assets
Stock 326,350 - 326,350
Debtors 177,062 - 177,062
Cash at bank
and in hand 394,821 - 394,821
------- -------- -------
898,233 - 898,233
Creditors:
Amounts falling
Due within
one year (308,943) - (308,943)
------- -------- -------
Net Current
Assets 589,290 - 589,290
-------- -------- -------
Total Assets
less Current
Liabilities 2,069,889 79,597 2,149,486
Creditors:
Amounts falling
Due after more
than one year (19,639) - (19,639)
-------- -------- -------
Net Assets /
(Liabilities) 2,050,250 79,597 2,129,847
======== ======== =======
Capital and Reserves
Called up
share capital 486,250 - 486,250
Share premium
account 2,180,175 - 2,180,175
Deferred
compensation
reserve c - 132,700 132,700
Profit and
loss account a, b, c (616,175) (53,103) (669,278)
-------- -------- -------
Shareholders'
Funds 2,050,250 79,597 2,129,847
======== ======== =======
Note �
Total equity previously reported under UK GAAP 2,050,250
Reversal of amortization of goodwill a 39,787
Tax effect of FRS 20 b 39,810
Creation of Deferred Compensation Reserve following
adoption of FRS 20 regarding share based payments c 132,700
Movement from profit and loss account to create Deferred
Compensation Reserve d (132,700)
-------
Total equity as restated under IFRSs 2,129,847
=======
5.3 Reconciliation of profit or loss for the year ended 30 April 2007
UK GAAP Effect of As restated
As previously transition under
Note reported to IFRSs IFRSs
� � �
Turnover 1,354,447 - 1,354,447
Cost of Sales (704,726) - (704,726)
-------- -------- --------
Gross Profit 649,721 - 649,721
Administrative (1,245,311) - (1,245,311)
expenses -------- -------- --------
Loss before
amortisation,
depreciation,
interest payable
and taxation a (595,590) - (595,590)
Amortisation (88,218) 79,574 (8,644)
and depreciation -------- -------- --------
Operating Loss (683,808) 79,574 (604,234)
Interest receivable 25,983 - 25,983
Interest payable (3,745) - (3,745)
-------- -------- --------
Loss on Ordinary
Activities Before
Taxation (661,570) 79,574 (581,996)
Taxation 36,848 - 36,848
-------- -------- --------
Retained loss
for the financial
period (624,722) 79,574 (545,148)
======== ======== ========
Loss on Retained
ordinary loss for
Note Operating activities the financial
loss before tax period
� � �
Loss as previously reported
under UK GAAP (683,808) (661,570) (624,722)
Reversal of amortization
goodwill a 79,574 79,574 79,574
Adoption of FRS 20 regarding
share based payments - - -
Tax effect of FRS 20 - - -
-------- -------- --------
Loss as restated under IFRSs (604,234) (581,996) (545,148)
======== ======== ========
5.4 Reconciliation of profit or loss for the six months ended 31 October 2006
UK GAAP Effect of As restated
As previously Transition under
Note reported to IFRSs IFRSs
� � �
Turnover 520,454 - 520,454
Cost of Sales (277,301) - (277,301)
-------- -------- --------
Gross Profit 243,153 - 243,153
Administrative a (503,476) (61,414) (564,890)
expenses -------- -------- --------
Loss before
amortisation,
depreciation,
interest payable
and taxation (260,323) (61,414) (321,737)
Amortisation b (42,056) 39,787 (2,269)
and depreciation -------- -------- --------
Operating Loss (302,379) (21,627) (324,006)
Interest receivable 11,073 - 11,073
Interest payable (2,486) - (2,486)
-------- -------- --------
Loss on Ordinary (293,792) (21,627) (315,419)
Activities Before
Taxation
Taxation c - 18,424 18,424
-------- -------- --------
Retained loss
for the financial
period (293,792) (3,203) (296,995)
======== ======== ========
Loss on Retained
Ordinary loss for
Note Operating Activities the financial
loss before tax period
� � �
Loss as previously reported
under UK GAAP (302,379) (293,792) (293,792)
Adoption of FRS 20 regarding
share based payments a (61,414) (61,414) (61,414)
Reversal of amortization of
goodwill b 39,787 39,787 39,787
Tax effect of FRS 20 c - - 18,424
-------- -------- --------
Loss as restated under IFRSs (324,006) (315,419) (296,995)
======== ======== ========
6. Acquistion of Core Brands Limited and Twenty Four Seven Trading Limited
On 31 May 2007, the Company issued 110,526,315 new ordinary shares of 0.5 pence
each in the capital of the Company at 4.75 pence per share ("the Placing").
On 31 May 2007, the Company entered into a contract to acquire the entire issued
share capital of Core Brands Limited and Twenty Four Seven Trading Limited. The
main trading subsidiary of Core Brands Limited at the time was Lowlife
Corporation Limited ("Lowlife"). Lowlife is a wholesaler and on-line retailer of
clothing and accessories in the area of music inspired fashion. For the year
ended 31 December 2006, Lowlife reported sales of �6.7 million, and profits
before tax of �646,000. At that date it had net assets of �846,000.
EBTM paid �4.25 million to acquire Core Brands Limited, settled as follows:
* �1.5 million by way of an issue of 26,785,714 new ordinary shares in the
company to Dale Masters, who owned 100% of the share capital in Core Brands
Limited; and
* �2.75 million in cash, to be financed by the Placing.
EBTM paid �500,000 in cash to acquire Twenty Four Seven Trading Limited.
Core Brands Limited
The fair value of the net assets acquired was �141,868, resulting in goodwill of
�4,579,868 which has been capitalised as an intangible asset.
Book Fair value Fair
value adjustments value
Net assets acquired � � �
Tangible fixed assets 25,689 - 25,689
Stock 449,749 - 449,749
Trade and other receivables 465,240 - 465,240
Cash and cash equivalents (259,078) - (259,078)
Trade and other payables (539,732) - (539,732)
--------- -------- --------
141,868 - 141,868
========= ========
Goodwill 4,579,868
--------
Total consideration 4,721,736
========
Satisfied by
Cash 2,750,000
Shares issued 1,500,000
Acquisition costs 471,736
--------
Total 4,721,736
========
Twenty Four Seven Trading Limited
The fair value of the net liabilities acquired was �4,049, resulting in goodwill
of �504,049 which has been capitalised as an intangible asset.
Book Fair value Fair
value adjustments value
Net assets acquired � � �
Fixed assets 1,030 - 1,030
Stock 6,698 - 6,698
Trade and other receivables 2,539 - 2,539
Cash and cash equivalents 21,280 - 21,280
Trade and other payables (35,596) - (35,596)
-------- --------- --------
(4,049) - (4,049)
======== =========
Goodwill 504,049
--------
Total consideration 500,000
========
Satisfied by
Cash 500,000
Shares issued -
Acquisition costs -
--------
Total 500,000
========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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