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Footasylum PLC (FOOT)

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Tuesday 16 October, 2018

Footasylum PLC

Half-year Report

RNS Number : 1158E
Footasylum PLC
16 October 2018
 

16 October 2018

 

This announcement contains inside information

Footasylum plc

Results for the 26 weeks ended 25 August 2018

 

Revenue growth across all channels and major product categories, despite challenging trading conditions

Profitability impacted by lower gross margin and by the extensive investments being made to position the Company for future growth

 

Footasylum plc ("Footasylum" or the "Company"), the UK-based fashion retailer focusing on branded footwear and apparel, today announces its unaudited results for the 26 week period ended 25 August 2018 (comparative figures are shown for the 26 week period ended 26 August 2017).

 

HY19

HY18

Revenue (£m)

98.6

83.2

 

 

 

Adjusted EBITDA (£m)1

(1.5)

4.4

Adjusted EBITDA margin

(1.5)%

5.3%

 

 

 

Adjusted (loss) / profit before tax (£m)2

(4.0)

2.3

 

 

 

Non-GAAP adjusted diluted EPS (p)3

(3.98)p

1.70p

 

 

 

Net cash (£m) (cash less bank overdrafts)

4.5

(0.7)

 

Financial highlights

·      Currently trading in line with the FY19 expectations that were rebased with the trading update of 3 September 2018

·      Revenue up 19% to £98.6m, (HY18: £83.2m) with growth across all channels and major product categories

Store revenue up 12% to £66.3m (HY18: £59.0m) albeit impacted by challenging trading conditions and delays in store openings and upsizes

Online sales up 29% to £30.2m (HY18: £23.5m) now accounting for 31% of total revenue (HY18: 28%)

Wholesale up 200% to £2.1m (HY18: £0.7m)

·      Adjusted EBITDA of (£1.5m) (HY18: £4.4m) reflects a lower gross margin and increased investment for future growth

·      Adjusted loss before tax of (£4.0m) (HY18: profit £2.3m)

·      Net cash balances at period end of £4.5m (FY18: (£0.7m))

 

Operational highlights

·      Opened one new store, bringing the total store estate to 66, with plans well advanced to open a further five stores and upsize a total of five stores across the financial year, with four upsizes planned before peak trading

·      Significantly improved the online experience with further investment in the footasylum.com website and the relaunch of our app

·      Launched a new consumer rewards programme, UNLCKD, to improve the consumer experience and provide greater consumer insight

 

Barry Bown, Executive Chairman of Footasylum, commented:

"This has been a difficult trading period for Footasylum as we have contended with tough conditions on the high street and some delays in our programme of new store openings and upsizes ahead of the peak trading period.

While we are pleased to be reporting good top line growth, and a particularly strong year-on-year revenue performance in both online and wholesale, our profitability has been impacted both by a lower overall gross margin from higher clearance activity in stores, as well as the extensive investments that are being made to position the Company for future growth.

We are encouraged by the early results and trends that we are seeing from our investments in key areas such as digital and marketing, and see substantial opportunity for further progress across these and other parts of our operations. In the longer-term, we remain confident that the Company's differentiated, product-led, multi-channel proposition, combined with strong partnerships with core suppliers, will underpin our future progress."

 

Analyst meeting and availability of Half Year Report

A meeting for analysts will be held today at the London Stock Exchange commencing at 10.00am. Please contact Powerscourt on the details below for further information or to confirm attendance. A copy of the presentation will be available on the Company's Investor website: http://investors.footasylum.com/. Copies of this Half Year Report are available from the Company's website http://investors.footasylum.com/ and from the Company Secretary at Sandbrook House, Sandbrook Park, Rochdale, Lancashire, OL11 1RY

 

Enquiries:

Footasylum plc                                                                              Tel: +44 (0) 1706 714 265

Barry Bown, Executive Chairman                                                                

Danielle Davies, Chief Financial Officer

 

GCA Altium Limited (Financial and Nominated Advisor)          Tel: + 44 (0) 20 7484 4040

Phil Adams

Sam Fuller

Tim Richardson

 

Liberum Capital Limited (Broker)                                                Tel: +44 (0) 20 3100 2222

John Fishley

Andrew Godber

 

Powerscourt (Financial Public Relations)                                   Tel: + 44 (0) 20 7250 1446

Rob Greening                                                                                               

Lisa Kavanagh

Isabelle Saber

 

Consumer website: https://www.footasylum.com/  

Investor website: http://investors.footasylum.com/

 

Notes

1 Adjusted EBITDA is stated as earnings before interest, tax, depreciation, amortisation, exceptional items and the share-based payment charge.

2 Adjusted profit before tax is stated as adjusted EBITDA after interest, depreciation and amortisation.

3 Non-GAAP adjusted diluted earnings per share ("EPS") is stated as profit after tax ("PAT") before exceptional items and the share-based payment charge per the diluted issued ordinary shares as at 25 August 2018. Share options are not included in the calculation at HY19 as they would be anti-dilutive.

 

Disclaimer

This announcement contains inside information for the purposes of article 7 of EU Regulation 596/2014. The person responsible for making this announcement on behalf of Footasylum is Nancy Kelsall, Company Secretary.

Certain statements in this financial report are forward-looking. Where the financial report includes forward-looking statements, these are made by the Directors in good faith based on the information available to them at the time of their approval of this report. Such statements are based on current expectations and are subject to a number of risks and uncertainties, including both economic and business risk factors that could cause actual events or results to differ materially from any expected future events or results referred to in these forward-looking statements. Unless otherwise required by applicable law, regulation or accounting standards, the Company undertakes no obligations to update any forward-looking statements whether as a result of new information, future events or otherwise.

 

About Footasylum

Footasylum is a UK-based fashion retailer focusing on the branded footwear and apparel markets. The Company retails "on-trend" product ranges which are predominantly aimed at 16 to 24-year-old fashion-conscious consumers and are sourced from an extensive stable of third-party and own brands. These include well-known sports and casual footwear and apparel brands, as well as up-and-coming brands and own label products.

Examples of third-party brands include: adidas; Nike; The North Face; Gym King; Converse; New Balance; EA7; Vans; Nicce London; Under Armour; Tommy Hilfiger; and Calvin Klein. Examples of Footasylum's own brands include: Kings Will Dream and Alessandro Zavetti.

The Company operates a multi-channel model which combines a 66-strong store estate - in a variety of high street, mall and retail park locations in cities and towns throughout Great Britain - with a fast-growing online platform and a recently launched wholesale arm for distributing its own brand ranges via a network of partners.

Footasylum was founded in 2005 and the Company's ordinary shares were admitted to trading on AIM in November 2017.  

 

 

 

EXECUTIVE CHAIRMAN'S STATEMENT

While it has undoubtedly been a challenging trading period for the Company, I am pleased that we continued to deliver good top line growth. We continue to evolve with changing market conditions and our multi-channel proposition affords us the ability to refocus our investment across channels to ensure we remain well positioned to capture the growth opportunities that we see ahead of us.

Our strategic priorities

The key pillars of our growth strategy continue to be: the development of our online and digital marketing platforms; a disciplined UK store roll out and upsizing in key locations; and the expansion of our wholesale operation alongside the growth of our own brand products. Our strategy, combined with our differentiated offering and hyper-local approach, is aimed at leveraging the trends and opportunities that we see in the marketplace.

Online

There is substantial further growth potential in the online channel and we are investing significantly in technology and talent to enable us to reach consumers more effectively, improve their online experience with Footasylum, and make it easier for them to buy more from us. We continue to target 50% of our revenue to come from online and wholesale channels in the medium-term.

Stores

Physical stores form the foundation of our brand and provide a solid base for our multichannel approach. They drive growth by accessing more key brands, a wider range of product and more exclusives. Our store rollout and upsizing strategy builds on these foundations by increasing floor space in key locations, allowing us to present our product range more effectively, improve selling capacity and become an even more attractive proposition for our key suppliers.

Wholesale

Our wholesale operation enhances the market positioning of our own brands and gives them a longer life cycle. Where appropriate, it allows us to take advantage of a broader market allowing us to maximise their potential as well as building their credibility in the market. We see volume potential in this area and believe it represents another route to access international markets.

INVESTMENTS for growth

In order to maximise the growth opportunities ahead of us, we have continued to invest in necessary technology, people and infrastructure both online and in stores.

Digital

We have made great improvements in our online offering by placing our app and rewards scheme at the centre of consumer transactions. We have fundamentally redesigned the website, introduced live chat, improved imagery, checkout and the basket to improve conversion. We are seeing early indicators of success with online conversion rates improving meaningfully.

Mobile conversion has been particularly strong and revenue generated from mobile devices increased from 60% to 66% in the period. To continue to address this growth opportunity, we have relaunched our new Footasylum app alongside our rewards scheme, "UNLCKD". In addition to offering tiered benefits to our consumers, this cross-channel rewards scheme, in combination with the app, also gives us a deeper understanding of our consumers.

Other actions to grow the online consumer base and their order frequency have included extending the cut-off time for next day delivery and trialling same day delivery in some areas. Early feedback is positive; click and collect now accounts for 12% of all online orders (HY18: 11%) and our trust pilot score has improved considerably to 7.7.

Marketing

Our marketing function has been restructured in order to create focused teams dedicated to brand, marketing and creativity, which will enable us to plan and execute the creative campaigns needed to engage and entertain our consumers.

Our marketing approach is designed to access the rapidly growing online consumer base whilst also driving footfall into stores. We have improved our social media engagement through continued collaboration with key influencers while steadily building our content and presence on key platforms. In addition, we are improving our data analytics and consumer segmentation to better understand our tribes, targeting online shoppers with a high propensity to purchase in-store and rolling out location specific digital campaigns to drive in-store sales.

Our 10,000 sq ft studio in Manchester has strengthened our in-house design, photography and videography capabilities to support our activities, both digitally and through our stores. The studio allows us to increase the output and quality of product photography and videography whilst dramatically increasing distribution efficiency; all of which means we are reacting faster to evolving trends and maximising relevance to our consumers.

Marketing campaigns with big brands have stepped up significantly in the first half with successful campaigns executed for Nike and adidas, amongst others.

Stores

Investment in our store estate is important for the success of our business. In the last six months, we have refocussed our investment priorities to scale back the number of new store openings in favour of refitting and upsizing strategically important locations. We employ a robust and consistent investment framework that not only delivers a return on capital, but - even more importantly at this stage in our development - also enables us to engage with key suppliers more effectively. In this financial year alone, we plan to upsize a total of five stores, including the strategically important, flagship stores in London's Stratford and White City shopping centres. By the end of FY20, after including the two upsizes planned for that year, we will have completed a total 14 out of the 20 stores we initially identified as potential upgrades. We have been encouraged by the early success of our upsized stores and the resulting progress with suppliers, and firmly believe that the investments we are making in this area are an effective use of capital.

brands

Our continued ability to build relationships with global brands is imperative for our growth. One of my personal immediate priorities on joining the business was to utilise my experience and network of contacts to help boost the team's capabilities to further develop our already strong third-party relationships.

Building brand relationships takes time, but through a combination of store openings and upsizes, targeted marketing campaigns and streamlined systems, we believe that we are differentiating ourselves and positioning the Company for success.

Our actions in this area continue to bear fruit. Multiple new brands are launching, we have gained access to additional categories from key third party suppliers and are pleased that we are now gaining access to exclusive product. At the same time, we are broadening the range of brands and product offered in our stores.

The development of our own brands also remains a priority, as they underline the quality and choice we offer our consumers and ensure that we can drive trends quickly when we identify gaps in the ranges of our third-party brands.

Capital structure and dividend policy

The Board is satisfied that the current capital and funding structure of the Company is robust, allowing it to invest in the systems and stores that will fuel future growth. The Board continues to apply strong cash controls and we remain (and expect to remain) in compliance with the covenants of our bank facilities.

In the short-term, we will retain the Company's earnings for re-investment to continue funding growth. Therefore, we are not proposing an interim dividend for HY19. Ultimately it is the Board's intention to pursue a progressive dividend policy which will be balanced against the need to retain sufficient earnings to expand and develop the Company.

Our COLLEAGUES

We have continued to strengthen several of our teams, attracting and retaining top talent and reinforcing our existing capabilities in areas including retail, buying and human resources. In particular, we've brought on a vastly experienced Head of Retail to lead on tactical strategy, delivery, consumer experience and trading in stores.

We are a business that is committed to delivering on our strategic objectives and focused on delivering sustainable long-term growth, and our colleagues across the business remain more committed than ever to this objective. I would like to take this opportunity to thank our senior management team and all our colleagues for their continuing hard work and continued dedication in what has been, at times, a challenging six months.

Current trading and outlook

The Company is trading in line with the FY19 expectations that were rebased at the time of the trading update of 3 September 2018.

While the UK high street is undoubtedly a challenging trading environment, the Board stands behind its growth strategy and is confident that targeted new store openings and upsizes, combined with focused investment in the online channel will materially improve Footasylum's existing strong brand relationships and enhance the consumer experience. However, in order to preserve the balance sheet given the lower expectations for profitability in the near term, from FY20 the Company will scale back its targeted store expansion programme to two new stores and two upsizes per annum, until the capacity for greater investment returns. As a result, associated costs in FY20 will be lower than previously expected.

Consequently, expected capital expenditure of £16m in FY19 is expected to represent its peak level with the associated depreciation flowing through in later years. The Company's forecast for its FY19 cash position is unchanged and remains in line with market expectations.

The Board is encouraged by the progress made to date in strengthening its partnerships with core suppliers and improvements in its technology and consumer systems. In the longer-term, the Board remains confident that the Company's differentiated, product-led, multi-channel proposition, combined with strong partnerships with core suppliers, will underpin its continued progress.

 

Barry Bown

EXECUTIVE CHAIRMAN

 

FINANCIAL REVIEW

 

HY19

HY18

Absolute
Change

Revenue (£m)

98.6

83.2

+15.4

Gross profit (£m)

42.3

37.3

+5.0

Gross margin

42.9%

44.8%

(190) bps

Adjusted EBITDA (£m)1

(1.5)

4.4

(5.9)

Adjusted EBITDA margin

(1.5)%

5.3%

(680) bps

Adjusted (loss) / profit before tax (£m)2

(4.0)

2.3

(6.3)

(Loss) / Profit before tax (£m)

(2.5)

1.7

(4.2)

Non-GAAP adjusted diluted EPS (p)3

(3.98)

1.70

(5.68)

Net cash (£m) (cash less bank overdraft)

4.5

(0.7)

+5.2

1.  Adjusted EBITDA is stated as earnings before interest, tax, depreciation, amortisation, exceptional items and the share-based payment charge.

2.  Adjusted profit before tax is stated as adjusted EBITDA after interest, depreciation and amortisation.

3.  Non-GAAP adjusted diluted earnings per share ("EPS") is stated as profit after tax ("PAT") before exceptional items and the share-based payment charge per the diluted issued ordinary shares as at 25 August 2018. Share options are not included in the calculation at HY19 as they would be anti-dilutive.

 

Revenue for the period increased 19 per cent, reflecting sales growth in major product categories, across all channels, from further store roll out, increasing volumes of online traffic and the growth of the Company's wholesale business. The gross margin was 42.9 per cent, down 190 basis points (HY18: 44.8 per cent) due to a combination of channel mix and clearance activity in stores and online contributing to a reduction in both footwear and apparel margin.

Footasylum continued to invest in its infrastructure and talent to support further growth. This, combined with the lower sales and gross margin, resulted in an adjusted EBITDA loss of £1.5m (HY18: profit of £4.4m).

Revenue

Overall revenue increased 19 per cent in HY19 to £98.6 million (HY18: £83.2 million). Revenue is reported net of sales taxes and returns, which remained low as a proportion of revenue reflecting Footasylum's product offering.

Revenue by channel

£m

HY19

HY18

Change

Store

 66.3

59.0

12%

Online

 30.2

 23.5

29%

Wholesale

 2.1

 0.7

200%

 

 98.6

 83.2

19%

Footasylum operates a multi-channel model across a 66-strong store estate in the UK, online and via a wholesale business which distributes Footasylum own brand products to select partners. In HY19 the store estate accounted for 67 per cent of total revenue (HY18: 71 per cent), online for 31 per cent of total revenue (HY18: 28 per cent) and wholesale for 2 per cent of total revenue (HY18: 1 per cent).

Menswear, including both apparel and footwear, represented 68 per cent of total revenue in HY19. This has decreased as a proportion of total revenue from 70 per cent in HY18, reflecting growth in women's ranges which, along with children's ranges, were launched in selected stores as well as online.

Stores

Store revenue increased 12% on last year, and although a good performance, growth was impacted by challenging summer trading combined with delays in delivering both planned upsizes and new stores. Footasylum opened one new store (HY18: three) in the period and is planning to deliver four upsizes ahead of the peak Christmas trading period. Across this financial year, we plan to deliver a total of six new stores and five upsizes.

Of the 66 stores open at 25 August 2018, 64 were operated under the core Footasylum fascia, while a further two stores operate under offshoot fascia, branded Drome and SEVEN. These offshoot stores accounted for c.1 per cent of total revenue in both HY19 and HY18 but play a strategic role in strengthening supplier relationships and providing access to third party products.

Online

Online revenue continues to grow strongly, up 29 per cent in HY19 to £30.2 million (HY18: £23.5 million), accounting for 31 per cent of total revenue, up from 28 per cent in HY18. The Company sells across five platforms including one for each of its three fascias, Footasylum, Drome and SEVEN, as well as its own brand website for Kings Will Dream, which launched in FY18.

More than 80 per cent of the traffic to these websites in HY19 came from mobile and tablet devices, in line with the prior period. The Company continues to develop its mobile offering, with apps launched in the year for Footasylum, Kings Will Dream and SEVEN. Several of our technological enhancements, including the website redesign and consumer rewards programme, were launched late in the period but are showing promising early outcomes.

Wholesale

In March 2017 Footasylum launched its wholesale operation, selling its own brands - initially Kings Will Dream - through a network of partners from small stores to major European operators. Revenue from wholesale was £2.1 million in HY19 (HY18: £0.7 million), around 2 per cent of total revenue (HY18: 1 per cent).

As a result of its online and wholesale operations, the Company generated 3 per cent of its revenue internationally in HY19 (HY18: 2 per cent).

Revenue by product category

£m

HY19

HY18

Change

Footwear

53.8

45.9

17%

Apparel

41.2

33.5

23%

Accessories

3.6

3.8

(5)%

 

98.6

83.2

19%

Footwear experienced the largest absolute increase of £7.9m, or 17 per cent, to £53.8 million while apparel grew the fastest at 23 per cent, to £41.2 million. Accessories, which remain a small proportion of overall revenue, were down 5 per cent to £3.6 million. In HY19, Footasylum sold around 18,000 SKUs (HY18: 15,000 SKUs) across all channels, with the top 20 SKUs accounting for just 8 per cent of HY19 revenue (HY18: 7 per cent), highlighting a limited reliance on any one product.

Gross margin

Footasylum's routes to market have differing margin profiles, reflecting the underlying product mix across footwear, apparel and accessories. The overall gross margin will vary due to the impact of this mix, as well as the proportion of revenue coming from the Company's own brand labels in any given period. As previously announced, gross margin in the Period was adversely impacted by a combination of mix and a higher amount of clearance activity in stores and online.

In the last six months we highlighted two stock issues - footwear and some bedroom brands apparel - as the key drivers of our lowered gross margin expectations for FY19 and beyond. In the period we worked through the footwear stock and we are pleased to see footwear margins beginning to improve. However, the impact of the loss of exclusivity on some bedroom brands' apparel has driven increased clearance activity.

Investing for growth

Footasylum is investing ahead of the curve in its infrastructure to support future business expansion. The Company is now operating a second distribution facility in Rochdale in addition to its existing distribution centre. It has also upgraded its technology systems to support its growing digital presence and has a larger Head Office team and central functions. During the period Footasylum had on average 1,432 full time equivalent employees across the Company (HY18: 1,162). Admin expenses include rent and rates on the Company's store portfolio, distribution costs, marketing costs as well as head office costs. Excluding exceptional items, depreciation, amortisation and the share-based payment charge, admin expenses have increased to 44.5 per cent of revenue (HY18: 39.5 per cent of revenue).

Adjusted EBITDA decreased to (£1.5) million (HY18: £4.4 million) reflecting the lower gross margin and higher costs from investment in the Company's operations.

Depreciation and amortisation was £2.3 million for the period (HY18: £2.0 million), reflecting the increased capital expenditure in new and upsized stores, investments in IT and in the distribution facility.

Exceptional items

Exceptional items in the period totalled £2.3 million income (HY18: £(0.6) million cost) relating to the early exit and surrender of one of our store premises.

Earnings per share

After exceptional items, profit / (loss) after tax was £(2.7) million (HY18: £1.3 million). Following a capital reorganisation and an issue of new ordinary shares at the time of the IPO in November 2017, the Company had 104,474,390 ordinary shares of £0.001 each in issue (pre-IPO: 6,000 ordinary shares of £1 each) as at 25 August 2018. The non-GAAP adjusted diluted EPS of (3.98)p (HY18: 1.70p) is stated as profit after tax before exceptional items and the share-based payment charge per the diluted issued ordinary shares as at 25 August 2018 for both HY19 and HY18. Share options are not included in the calculation at HY19 as they would be anti-dilutive.

 

Cash and financial position

£m

26 week
period ended
25 Aug 2018

26 week
period ended
26 Aug 2017

Adjusted EBITDA

(1.5)

4.4

Working capital

(2.0)

(4.0)

Corporation tax

(0.9)

(0.9)

Free cash flow

(4.4)

(0.5)

Property, plant and equipment and intangible assets

(4.8)

(2.6)

Cash (used in) / generated from financing activities

(0.2)

0.2

Net exceptional income / (cost)

2.3

(0.6)

Other

0.2

0.0

Net cash flow

(6.9)

(3.5)

Cash and cash equivalents at beginning of period

11.4

2.8

Cash and cash equivalents / (overdraft) at end of period

4.5

(0.7)

 

Footasylum had net cash of £4.5 million at 25 August 2018 (26 August 2017: £(0.7) million) with a reduction in free cash flow to £(4.4) million (HY18: £(0.5) million). The change in free cash flow was due to lower EBITDA and a seasonal working capital out flow.

 

Capex

£m

At 25 Aug
2018

At 26 Aug
2017

Capex on stores

1.5

2.5

Warehouse

0.8

0.2

Technology

1.2

0.5

Other

0.8

0.3

Total capital expenditure

4.3

3.5

During HY19 capital expenditure was £4.3 million (HY18: £3.5 million). Of this amount, £1.5 million (HY18: £2.5 million) was spent on enhancing the store estate, including opening 1 new store and preliminary work on the new stores and upsizes which are planned ahead of the peak trading period.

In July 2017 Footasylum negotiated a new multi-currency revolving credit facility with HSBC of £30 million. The facility was made available to fund capital expenditure and future working capital requirements. The interest payable on the loan is LIBOR plus 1.9 per cent. At 25 August 2018 the facility was undrawn and the company was, and remains compliant with the associated covenants.

Dividend policy

As disclosed at the time of the IPO the Directors intend, in the short-term, to retain the Company's earnings for re-investment to fund growth. It is the Directors' ultimate intention to pursue a progressive dividend policy subject to the need to retain earnings to expand the growth and development of the Group.

 

FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT

for the 26 weeks ended 25 August 2018

 

 

Unaudited

 

Audited

 

Audited

 

Notes

26 Week

Period

Ended

25 August

2018

£'000

 

26 Week

Period

Ended

26 August

2017

£'000

 

52 Week

Period

Ended

24 February

2018

£'000

Revenue

2

98,552

 

83,173

 

194,769

Cost of sales

 

(56,263)

 

(45,922)

 

(107,160)

Gross profit

 

42,289

 

37,251

 

87,609

Administrative expenses

3

(44,650)

 

(35,473)

 

(85,399)

Operating (loss) / profit

 

(2,361)

 

1,778

 

2,210

Underlying EBITDA*

3

(1,547)

 

4,359

 

12,457

Depreciation and amortisation

3

(2,269)

 

(2,000)

 

(3,803)

Share-based payments charge

3

(837)

 

-

 

(421)

Operating (loss) / profit before exceptional items

 

(4,653)

 

2,359

 

8,233

Exceptional items

3

2,292

 

(581)

 

(6,023)

Operating (loss) / profit

 

(2,361)

 

1,778

 

2,210

Finance expense

 

(175)

 

(36)

 

(269)

(Loss) / profit before income tax

 

(2,536)

 

1,742

 

1,941

Taxation

 

(169)

 

(463)

 

(1,780)

(Loss) / profit and total comprehensive income for the financial period attributable to shareholders

 

(2,705)

 

1,279

 

161

* Underlying EBITDA is stated as earnings before interest, tax, depreciation, amortisation, exceptional items and share-based payments charge

All activities relate to continuing operations.

 

 

Unaudited

 

Audited

 

Audited

 

Notes

26 Week

Period

Ended

25 August

2018

 

26 Week

Period

Ended

26 August

2017

 

52 Week

Period

Ended

24 February

2018

Basic and diluted earnings per share attributable to equity shareholders of the Company:

 

 

 

 

 

 

Basic

5

-2.59p

 

1.64p

 

0.19p

Diluted

5

-2.59p

 

 

0.18p

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

for the 26 weeks ended 25 August 2018

 

 

Unaudited

 

Audited

 

Audited

 

 

At

25 August

2018

£'000

 

At

26 August

2017

£'000

 

At

24 February

2018

£'000

Non-current assets

 

 

 

 

 

 

Intangible assets

 

791

 

21

 

477

Property and equipment

 

21,441

 

15,652

 

19,905

 

 

22,232

 

15,673

 

20,382

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Inventory

 

43,479

 

30,620

 

35,720

Trade and other receivables

 

13,318

 

7,890

 

7,493

Deferred tax asset

 

104

 

110

 

104

Cash and cash equivalents

 

4,511

 

4,008

 

11,416

 

 

61,412

 

42,628

 

54,733

Total assets

 

83,644

 

58,301

 

75,115

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

(38,513)

 

(25,993)

 

(27,977)

Bank overdraft

 

-

 

(4,728)

 

-

Preference shares

 

-

 

(18,700)

 

-

 

 

(38,513)

 

(49,421)

 

(27,977)

Net current assets / (liabilities)

 

22,899

 

(6,793)

 

26,756

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Accruals and deferred income

 

(4,745)

 

(2,989)

 

(4,693)

Net obligation under finance lease and hire purchase

 

(147)

 

(183)

 

(235)

Director loans

 

-

 

(3,850)

 

-

 

 

(4,892)

 

(7,022)

 

(4,928)

Total liabilities

 

(43,405)

 

(56,443)

 

(32,905)

Net assets

 

40,239

 

1,858

 

42,210

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Share capital

 

104

 

6

 

104

Share premium account

 

3,510

 

249

 

3,510

Retained earnings

 

36,625

 

1,603

 

38,596

Total equity

 

40,239

 

1,858

 

42,210

 

FINANCIAL STATEMENTS
CONSOLIDATED CASH FLOW STATEMENT

for the 26 weeks ended 25 August 2018

 

 

 

Unaudited

 

Audited

 

Audited

 

Notes

At

25 August

2018

£'000

 

At

26 August

2017

£'000

 

At

24 February

2018

£'000

 

 

 

 

 

 

 

Cash generated from operating activities

 

 

 

 

 

 

(Loss) / profit for the period:

3

(2,705)

 

1,279

 

161

Adjustments for:

 

 

 

 

 

 

Depreciation of property, plant and equipment

3

2,269

 

2,000

 

3,803

Loss / (Gain) on disposal of tangible assets

3

212

 

(1)

 

(7)

Net finance charge

 

175

 

36

 

269

Share-based payments charge

3

837

 

-

 

421

Taxation charge

 

169

 

463

 

1,780

Increase in stock

 

(7,759)

 

(7,098)

 

(12,199)

Increase in debtors

 

(5,825)

 

(4,281)

 

(3,878)

Increase in creditors

 

11,549

 

7,347

 

10,727

Corporation tax paid

 

(879)

 

(884)

 

(1,787)

Net cash used in operating activities

 

(1,957)

 

(1,139)

 

(710)

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Purchases of property, plant and equipment

 

(4,298)

 

(2,581)

 

(8,005)

Purchase of intangible assets

 

(453)

 

-

 

(530)

Sale of property, plant and equipment

 

-

 

9

 

18

Net cash used in investing activities

 

(4,751)

 

(2,572)

 

(8,517)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Repayment of finance lease liabilities

 

(66)

 

188

 

(75)

Interest paid

 

(131)

 

(36)

 

(214)

Proceeds from the issue of ordinary share capital

 

-

 

-

 

43,418

Share issue costs

 

-

 

-

 

(2,318)

Debt issue costs

 

-

 

-

 

(330)

Repayment of preference shares

 

-

 

-

 

(18,700)

Repayment of Director loan account capital

 

-

 

-

 

(3,850)

Repayment of Director loan account interest

 

-

 

-

 

(127)

Net cash (used in) / generated from financing activities

 

(197)

 

152

 

17,804

Net (decrease) / increase in cash and cash equivalents

 

(6,905)

 

(3,559)

 

8,577

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

11,416

 

2,839

 

2,839

Cash and cash equivalents / (overdraft) at end of period

 

4,511

 

(720)

 

11,416

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

Reconciliation of 26 week period to 26 August 2017

 

Share
capital
£'000

Share
premium
£'000

Retained
earnings /
(losses)
£'000

Total
equity
£'000

Balance at 25 February 2017

6

249

324

579

Comprehensive Income:

 

 

 

 

Profit for the period

-

-

1,279

1,279

Balance at 26 August 2017

6

249

1,603

1,858

 

Reconciliation of 26 week period to 25 August 2018

 

Share
capital
£'000

Share
premium
£'000

Retained
earnings /
(losses)
£'000

Total
equity
£'000

Balance at 24 February 2018

104

3,510

38,596

42,210

Comprehensive Income:

 

 

 

 

Loss for the period

-

-

(2,705)

(2,705)

 

104

3,510

35,891

39,505

Transactions with owners recorded directly in equity:

 

 

 

 

Share-based payments charge

-

-

734

734

Balance at 25 August 2018

104

3,510

36,625

40,239

 

Reconciliation of 52 week period to 24 February 2018

 

Share
capital
£'000

Share
premium
£'000

Retained
earnings /
(losses)
£'000

Total
equity
£'000

Balance at 25 February 2017

6

249

324

579

Comprehensive Income:

 

 

 

 

Profit for the period

-

-

161

161

 

6

249

485

740

Transactions with owners recorded directly in equity:

 

 

 

 

Bonus issue of shares (i)

72

(72)

-

-

Issue of shares (ii)

26

43,392

-

43,418

Share issue costs (iii)

-

(2,318)

-

(2,318)

Capital reduction (iv)

-

(37,741)

37,741

-

Share-based payments charge

-

-

370

370

Balance at 24 February 2018

104

3,510

38,596

42,210

i    On the 2 of November 2017, the Company issued bonus shares of 12 to 1 for existing shareholders

ii    On the 2 of November 2017, the Company sub divided existing Ordinary shares by 1000

iii   On the 2 of November 2017, the Company issued 26,474,390 ordinary shares

iv  On the 13 February 2018, the Company reduced share premium account by £37,740,525

 

 

1     BASIS OF PREPARATION

Footasylum plc (the "Company") is a company limited by shares and incorporated and domiciled in the UK. Footasylum plc is incorporated in the United Kingdom. The registered office is Sandbrook House, Sandbrook Park, Rochdale, Lancashire, OL11 1RY. The principal activity of the Company is the retail of sports and fashion footwear and clothing.

The Consolidated and Company Financial Statements have been prepared in accordance with IFRS and the International Financial Reporting Interpretation Committee ("IFRIC") interpretations endorsed by the EU and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The functional currency of the Company and its subsidiary undertakings (the "Group") is pounds sterling and the financial statements are presented in pounds sterling, rounded to the nearest thousand.

These financial statements are prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the EU. The accounting policies applied are consistent with those disclosed in the Feb 2018 Annual Report.

The financial statements have been prepared under the historical cost convention, as modified for financial assets and liabilities at fair value through the Consolidated Income Statement.

The preparation of financial statements in conformity with adopted IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The judgements, estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

The financial information included in this preliminary statement of results does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006 (the "Act"). The financial information for the 52 week period ended 24 February 2018 has been extracted from the statutory accounts on which an unqualified audit opinion has been issued.

 

2     SEGMENTAL REPORTING

The Directors consider there to be one operating and reportable segment, being that of the sale of products through retail outlets, the Group's website and wholesale.

Whilst the business and Chief Operating Decision Maker ('CODM') does review analysis of revenues at a disaggregated level, as disclosed below, information in relation to assess business performance and make resource allocation decisions at a level below the whole business is not made available. In particular, operating profit is not calculated at a level below the whole business. As such, the Directors consider there to be one operating and reportable segment.

 

Unaudited

 

Audited

 

Audited

 

Revenue

26 Week

Period

Ended

25 August

2018

£'000

 

26 Week

Period

Ended

26 August

2017

£'000

 

52 Week

Period

Ended

24 February

2018

£'000

 

Store

66,253

 

59,039

 

133,119

 

Web

30,212

 

23,482

 

59,027

 

Wholesale

2,087

 

652

 

2,623

 

 

98,552

 

83,173

 

194,769

 


Geographic Information

The following table provides analysis of the Group's revenue by geographical market:

 

Unaudited

 

Audited

 

Audited

 

26 Week

Period

Ended

25 August

2018

£'000

 

26 Week

Period

Ended

26 August

2017

£'000

 

52 Week

Period

Ended

24 February

2018

£'000

United Kingdom

96,000

 

81,491

 

191,282

Rest of the World

2,552

 

1,682

 

3,487

 

98,552

 

83,173

 

194,769

 

3     (LOSS) / PROFIT BEFORE TAX

This is stated after charging:

 

Unaudited

 

Audited

 

Audited

 

26 Week

Period

ended
25 August

2018

£'000

 

26 Week

Period

ended
26 August

2017

£'000

 

52 Week

Period

Ended

24 February

2018

£'000

Exceptional (income) / costs

(2,292)

 

581

 

6,023

Depreciation of property, plant and equipment

2,269

 

2,000

 

3,803

Loss / (Gain) on disposal of property, plant and equipment

212

 

(1)

 

(7)

Exchange differences

(103)

 

10

 

30

Hire of assets - operating leases

8,187

 

6,628

 

14,572

Share-based payments charge

837

 

-

 

421

Exceptional income in the period ended 25 August 2018 relate to the early exit and surrender of one of our stores (£2,292,000).

Exceptional costs in the period ended 26 August 2017 relate to preparations for admission (£581,000).

Exceptional costs in the period ended 24 February 2018 relate to preparations for admission (£4,145,000) and HMRC VAT provisions (£1,878,000).

Total costs incurred in relation to the admission to trading on AIM were £6,462,000 with £2,317,000 charged to the share premium as being directly related to newly issued shares.

HMRC VAT provisions are made for known issues based on management's interpretation of legislation and the likely outcome of negotiations or litigation. Each provision is considered separately and the amount provided reflects the best estimate of the most likely outcome, being the single most likely in a range of possible outcomes.

 

 

Unaudited

 

Audited

 

Audited

 

26 Week Period

Ended

25 August

2018

£'000

 

26 Week Period

Ended

26 August

2017

£'000

 

52 Week Period

Ended

24 February

2018

£'000

EBITDA reconciliation

 

 

 

 

 

Operating (loss) / profit

(2,361)

 

1,778

 

2,210

Exceptional items

(2,292)

 

581

 

6,023

Underlying operating (loss) / profit before share-based payments charge, depreciation and amortisation

(4,653)

 

2,359

 

8,233

Depreciation and amortisation

2,269

 

2,000

 

3,803

EBITDA

(2,384)

 

4,359

 

12,036

Share-based payments charge

837

 

-

 

421

Underlying EBITDA

(1,547)

 

4,359

 

12,457

Underlying EBITDA is calculated as Group underlying operating profit under IFRS plus depreciation and amortisation. It excludes exceptional items and IFRS2 related share-based payments charge.

 

4     STAFF NUMBERS AND COSTS

Staff costs (including directors) consist of:

 

Unaudited

 

Audited

 

Audited

 

26 Week

Period

Ended

25 August

2018

£'000

 

26 Week

Period

Ended

26 August

2017

£'000

 

52 Week

Period

Ended

24 February

2018

£'000

Wages and salaries

16,387

 

11,829

 

28,284

Social security costs

909

 

700

 

1,447

Pension costs

112

 

61

 

127

 

17,408

 

12,590

 

29,858

The average number of employees (including directors) during the period was as follows:

 

Unaudited

 

Audited

 

Audited

 

26 Week

Period

Ended

25 August

2018

 

26 Week

Period

Ended

26 August

2017

 

52 Week

Period

Ended

24 February

2018

Retail

894

 

745

 

885

Administration

291

 

224

 

243

Warehouse

247

 

193

 

184

 

1,432

 

1,162

 

1,312

 

 

5     EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share is calculated by dividing the net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential ordinary shares into ordinary shares.

 

Unaudited

Audited

Audited

 

26 Week Period Ended 25 August 2018

26 Week Period Ended 26 August 2017

52 Week Period Ended 24 February 2018

 

PAT

£'000

PAT before exceptional costs and share-based payments charge

£'000

PAT

£'000

PAT before exceptional costs and share-based payments charge

£'000

PAT

£'000

PAT before exceptional costs and share-based payments charge

£'000

Profit / (loss) attributable to equity shareholders of the parent

(2,705)

(4,160)

1,279

1,860

161

6,604

Number of shares

 

 

 

 

 

 

Weighted average number of ordinary shares for the purposes of basic earnings per share

104,474,390

104,474,390

78,000,000*

78,000,000*

86,413,779

86,413,779

Effect of dilutive potential ordinary shares:

Share options

5,218,930

5,218,930

-

-

2,687,286

2,687,286

Weighted average number of ordinary shares for the purposes of diluted earnings per share

109,693,320

109,693,320

78,000,000

78,000,000

89,101,065

89,101,065

Diluted shareholding at 25 August 2018 (Non-GAAP measure)**

109,693,320

109,693,320

109,693,320

109,693,320

109,693,320

109,693,320

Non-GAAP diluted earnings per share**

-2.59p

-3.98p

1.17p

1.70p

0.15p

6.02p

Basic earnings per share

-2.59p

-3.98p

1.64p

2.38p

0.19p

7.64p

Diluted earnings per share***

-2.59p

-3.98p

1.64p

2.38p

0.18p

7.41p

*Restated in accordance with IAS 33 to reflect the impact of the sub-division and bonus issue of shares on 2 November 2017.

** Non-GAAP measure is based on shareholdings as at 25 August 2018. Share options are not included in the calculation at HY19 as they would be anti-dilutive.

*** Share options in the diluted calculation as at 25 August 2018 have not been included as they would be anti-dilutive.


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