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Fishing Republic PLC (FISH)

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Tuesday 12 April, 2016

Fishing Republic PLC

Final Results

RNS Number : 8498U
Fishing Republic PLC
12 April 2016
 
 
12 April 2016

AIM: FISH

 

 

FISHING REPUBLIC PLC

("Fishing Republic" or "the Company" or "the Group")

 

Final Results for the year ended 31 December 2015

 

 

Fishing Republic, one of the largest retailers of fishing tackle in the UK, catering for all types of anglers from stores and online, is pleased to announce its maiden audited final results for the year ended 31 December 2015. 

 

KEY POINTS

 

·  Admission to AIM and placing to raise gross proceeds of £1.5m in June 2015

 

·  Encouraging results in line with market expectations

 

·  Revenue increased by 22% to £4.12m (2014: £3.39m) - with H2 sales up by 45%, year-on-year

-      benefiting from the deployment of capital raised in June

 

·  Gross profit rose by 21% to £1.88m (2014: £1.55m)

 

·  Profit before tax and exceptional items up by 3% to £305,000 (2014: £295,000) 

     Reported profit before tax of £5,700 (2014: £295,000)

 

·  Placing of £0.5m in H2 to fund expansion of store network

-      acquisition in December of "Cotswold Angling", near Swindon, establishes the Group with a presence in the South of England

 

-      leases signed on three stores, in Hull, Birmingham and Crewe, which opened in Q1 2016

 

·  Online sales (via third party and own websites) are growing well - up 30% year-on-year

-      own website sales, a key focus, more than doubled in H2

 

·  Group is well positioned for the commencement of the main fishing season

 

 

Steve Gross, Chief Executive, said:

 

"It has been an exciting year for Fishing Republic, with our admission to AIM marking an important step in the business's development. The funds we raised at admission have helped to support a 45% increase in sales in the second half year-on-year and, along with the additional new funds raised in December, we have also been able to expand our store network and to grow online sales.

 

The business is well placed for the new fishing season and we remain very optimistic about prospects as we look to continue to develop the business."

 

James Newman, Chairman, said:

 

"The Group has made encouraging progress since joining AIM last June, benefiting from both the deployment of additional funds and a greater market profile. Trading in the first few months of the new financial year, seasonally our quietest quarter, has been in line with the Board's expectations. The Board has a strong pipeline of opportunities to expand the store network and we expect the Group to continue to develop over the current financial year."

 

 

Enquiries:

 

Fishing Republic plc


T: 020 3178 6378 (today)

Steve Gross, Chief Executive


T: 01709 724 700

Russell Holmes, Finance Director






Northland Capital Partners Limited


T: 020 3861 6625

(Nominated Adviser and Broker)



Matthew Johnson, David Hignell (Corporate Finance)



John Howes, Abigail Wayne (Broking)






KTZ Communications Limited



Katie Tzouliadis, Viktoria Langley, Emma Pearson


T: 020 3178 6378

 

 

 

About Fishing Republic plc

www.fishingrepublic.net

 

Fishing Republic is one of the largest fishing tackle retailers in the UK and caters for all types of anglers (coarse, carp, game and sea fishing). Operating from a chain of 'destination' retail outlets principally in the North of England, it also has an online presence through its own websites (www.fishingrepublic.net and www.yorkshiregameangling.co.uk) and through third party online retailers. Its comprehensive product offering includes own-brand ranges, such as Klobba and Theseus, as well as leading brands. 

 



 

CHAIRMAN'S STATEMENT

 

Introduction

 

I am very pleased to present Fishing Republic's trading results for the year ended 31 December 2015, which are the Company's first as a publicly quoted company.

 

It has been a significant year for Fishing Republic, with the Company successfully joining AIM on 4 June 2015 and raising a total of £2.0m (gross) to support the Group's growth plans.

 

Business Development

 

As we have previously stated, the Board believes that there is an exciting opportunity for Fishing Republic to build a significant market presence in the highly fragmented fishing tackle market and it is our intention to increase our store network and broaden our geographic presence, as well as to expand the Group's online sales. 

 

We completed some important developments in the second half of the year, deploying the new funds raised at IPO into our existing business and raising further funds in December to support our store expansion strategy. With these new funds we completed our first acquisition, purchasing Cotswold Angling, near Swindon in December. This well-established fishing tackle business was an important strategic move and has established our presence in the South of England.  We also extended our geographic reach into the West Midlands, with the addition of a store in South Birmingham, and added two further new stores, in Crewe and Hull, with the store at Hull replacing our existing, much smaller outlet. All three stores have recently commenced trading, in time for the start of the 2016 fishing season.

 

The benefits of these strategic moves will be felt in the current financial year together with our ongoing investment in support of our online sales strategy. 

 

Financial Results

 

The Group's results for the year ended 31 December 2015 are in line with market expectations and it should also be noted that for almost half the year, until 4 June 2015, the Company was in private ownership. 

 

Sales for the year as a whole increased by approximately 22% to £4.12m (2014: £3.39m), with sales in the second half rising by 45% year-on-year. This significant rise reflected the benefit of additional resources spent on online sales and marketing activity as well as improved stock availability in stores as we invested the funds raised at IPO.

 

The Group's gross profit increased by 21% to £1.88m (2014: £1.55m) and, although operating profit before exceptional IPO costs decreased by 12% to £321,000 (2014: £366,000), as the Group absorbed the additional costs of being a quoted company and increased marketing expenditure, profit before tax excluding exceptional IPO costs increased by 3% to £305,000 (2014: £295,000), following a reduction in finance charges payable.  Reported profit before tax which includes expensed IPO costs of £299,000, was £5,700 (2014: £295,000). 

 

After a tax charge of £37,000 (2014: £58,000), the profit for the period excluding exceptional IPO costs increased to £268,000 (2014: £237,000). Underlying basic earnings per share was 1.36 pence (2014: 1.72 pence).  After IPO costs, the Group generated an after tax loss of £31,000 and the reported basic loss per share was 0.16p (2014: earnings per share of 1.72p).

 



 

Cash Flow

 

There was a cash inflow of £2.00m (£1.41m after expenses) following two share placings, respectively raising £1.50m (gross) on 4 June 2015 and £0.50m (gross) on 18 December 2015. There was a net cash outflow from operating activities of £919,000, mainly as a result of reducing creditors and the investment in stock for the new store openings in early 2016.  Cash at 31 December 2015 stood at £646,000 (2014: £52,000).

 

Dividend

 

As we stated at the time of the Company's admission to AIM, the Board's objective is to continue to grow the Group's business and, therefore, the Directors will be reinvesting any surplus cash resources into the Group and are not expecting to recommend a dividend in the short term. However, once the Board considers it commercially prudent for the Company to do so, it intends that the Company will recommend or declare dividends at some future date.

 

The Board

 

The Board was strengthened at IPO with an additional executive appointment, Paul Hagerty, as IT Director and two non-executive appointments. I was delighted to join as Non-Executive Chairman with Ed McDermott joining as a Non-Executive Director. 

 

In December, we announced the appointment of Russell Holmes as Finance Director with effect from 1 January 2016. Russell has been working with Fishing Republic since 2008, prior to which he has held roles in private practice and industry.  He takes over this role from Robert Tippett, whom the Board would like to thank for his significant contribution to the Group over many years and especially during the IPO process.

 

Outlook

 

The Group has made encouraging progress since joining AIM last June, benefiting from both the deployment of additional funds and a greater market profile.

 

Operationally, we have had an active start to the new financial year, completing the integration of our acquisition, Cotswold Angling, in Swindon, and preparing our three new stores in Birmingham, Crewe and Hull for opening in time for the new fishing season. All these new stores are now fully operational and our launch events have gone very well, attracting encouraging levels of customer interest. We remain focused on building online sales, particularly from our own websites and our initiatives here are progressing well.

 

From a trading perspective, the first quarter of the year is traditionally our quietest period, with the fishing season typically starting at the onset of the better spring weather. Trading in the first few months of the new financial year has been in line with the Board's expectations and the Group is well positioned for the main fishing season. 

 

The Board has a strong pipeline of opportunities to expand the store network and the Group's geographic reach, and expects the Group to continue to make progress over the current financial year. 

 

 

James Newman

Chairman                                                                                                                           



 

CHIEF EXECUTIVE'S REPORT

 

Introduction

 

It has been an exciting year for Fishing Republic, with our admission to AIM marking an important step in the business's development. The funds we raised at admission have helped to support a 45% increase in year-on-year sales in the second half and, along with the additional new funds raised in December, we have also been able to expand our store network, both organically and via acquisition, and to grow online sales.

 

We have ambitious plans for the business and, as we look forward, we expect to make further good progress in executing our growth strategy. 

 

Review of Operations

 

Stores

 

Our chain of seven stores, located in Barnsley, Doncaster, Hull, Manchester, Rotherham, Sheffield and Sunderland, performed in line with management expectations over the year and generated approximately 55% of the Group's total sales. Sales from these stores rose by approximately 15% over the prior year, benefiting from additional marketing expenditure and better stock availability in the second half. Our stores are typically situated in out-of-town light industrial sites and operate as 'destination' stores, carrying a comprehensive product range, designed to cater for all types of anglers, coarse, carp, game and sea fishing. 

 

In the second half of the year, we signed leases on three additional retail units, in South Birmingham, Hull and Crewe, with the new unit in Hull replacing our existing smaller outlet in that city. All three stores fit our model of 'destination' outlets and, as planned, have recently commenced trading in time for the opening of the 2016 fishing season. 

 

In December, we also acquired the business and assets of a well-established fishing tackle retailer, which traded as Cotswold Angling. Established in 2000, and based near Swindon, Cotswold Angling provides us with a presence in the South of England, expanding our geographic footprint. Its integration is now fully complete and we have been very pleased to welcome its co-founder and Director to our senior management team. 

 

Online

 

Online sales accounted for 45% of Group sales and rose by 30% over the prior year.  Currently, a significant percentage of the Group's online sales are made via third party online retailers and a key objective is to increase the proportion of sales generated by the Group's own websites, www.fishingrepublic.net and www.yorkshiregameangling.co.uk.

 

Utilising the cash available following IPO, we have been focusing on initiatives to enhance our own websites, which together now display over 18,500 different products across all types of fishing disciplines.  Sales from our own websites have more than doubled over the second half of the year and have continued to grow strongly in the new financial year.   

 

Own-brand products

 

We have developed a range of our own brand products, working with manufacturers based in the UK and in the Far East.  Our key brands include 'Klobba' for clothing and 'Theseus' for carp fishing products and we also have established brands across other product areas. We see a good opportunity to grow our own-brand sales and will look to invest further in this area. Own branded products currently contribute approximately 15% of Group sales. 

 

Growth Strategy

 

The Group's growth plans combine both organic and acquisitive growth.

 

We intend to continue to broaden the Group's geographic footprint through selective acquisitions of other specialist fishing tackle retailers. These businesses are typically owner-managed, single unit retail operations, which are often run as 'lifestyle' businesses. These types of acquisitions will allow us to grow our customer base quickly, both in-store and online, as well as increase the Group's buying power with manufacturers and suppliers.  Our previous experience as a wholesaler of fishing tackle means that we are well placed to identify the businesses which may be available for sale.

 

In addition, we will also consider opening new stores in fishing communities, which are not well catered for by an existing specialist fishing tackle retailer as we have done in Crewe, Hull and South Birmingham.

 

Building the Group's web presence is important to us and will be a key driver of growth. We intend to increase on our current own website sales by further enhancing our own websites, both in terms of content and through strategies to drive traffic to the sites. This includes increasing our use of social media to promote the 'Fishing Republic' brand and to provide regular updates, including product offers, to new and existing customers. Our increased use of search engine optimisation should also mean that the 'Fishing Republic' websites feature more prominently when anglers are searching the internet for fishing tackle products.

 

Shareholder Incentive Scheme

 

In September, we were pleased to launch a shareholder incentive scheme, which offers shareholders holding at least 25,000 shares the opportunity to apply for a shareholder privilege card. This card provides holders with access to savings on a par with staff discounts on any purchases made in store or online. The full terms and conditions of the privilege card are available on the Company's website, www.fishingrepublic.net, together with details on how to apply.

 

Staff

 

It has been a year of change for the business and I would like to thank all our staff for their hard work, commitment and enthusiasm. The Group's success reflects the talented team we have and their dedicated efforts are much appreciated.

 

Outlook

 

We are pleased with the Group's progress since joining AIM last June and the business is well-positioned for the new fishing season. We remain very optimistic about prospects as we look to continue to develop the business.

 

Steve Gross

Chief Executive                                                                                                                                               

 



FINANCIAL REVIEW

 

Income Statement

 

Sales increased by 22% to £4.12m (2014: £3.39m), with gross profit margin stable at 46% (2014: 46%), and gross profit rising by 21% to £1.88m (2014: £1.55m).

 

Operating profit, before the exceptional costs of the IPO in June 2015, decreased to £321,000 (2014: £366,000), as the Group absorbed the on-going costs of being a quoted company and invested in additional marketing activity to support growth.

 

Finance costs reduced to £16,000 (2014: £72,000) reflecting the decrease in the Group's debt. Profit before tax and exceptional items increased by 3% to £305,000 (2014: £295,000), as shown in the table below.

 


2015

2014

Profit before taxation

5,718

294,516

Exceptional items (see below)

299,040

-

Profit before tax and exceptional items

304,758

294,516

 

 

Statement of Financial Position

 

Net assets at 31 December 2015 stood at £2.93m, (2014: £1.25m). Inventories (carried at the lower of cost and net realisable value) at the year-end totalled £2.45m, an increase of £538,000 on the value at 31 December 2014. Included in this figure was £133,000 of inventory held at our store in Swindon (formerly 'Cotswold Angling,' which was purchased in December 2015), as well as stock for the three new stores opened in the first quarter of 2016. Increased stock availability has been a key driver of sales during the second half of 2015.

 

Total liabilities decreased to £708,000 (2014: £1.14m) reflecting a reduction in trade creditors as we took advantage of early payment discounts. Group borrowings comprise a bank loan, which at 31 December 2015 stood at £268,000 (2014: £276,000).

 

 

Cash Flow

 

At the year end, the Group's cash and bank balances totalled £646,000 (2014: £52,000).

 

Proceeds from the share issues in June and December totalled £2.00m (gross), with costs of £294,000 deducted from equity and £299,000 deducted through the Income Statement (as above), to leave £1.41m net of costs.

 

£956,000 has been invested in working capital in the year to support growth (2014: £77,000), primarily through increased stock levels and reduced creditors. A further £135,000 (2014: £26,000) has been invested in fixed assets.

 

Russell Holmes

Finance Director                                                                                                                             



 

The summary information below is extracted from the 2015 financial statements

 

Consolidated Income Statement

Year ended 31 December 2015


Note

2015

£

 

 

2014

£

Revenue


4,124,257

3,390,895

Cost of sales


(2,243,036)

(1,837,460)

Gross profit


1,881,221

1,553,435

Other income


2,057

9,560

Selling and distribution expenses


(1,050,066)

(888,130)

Administration expenses


(512,415)

(308,732)

Operating profit before exceptional costs of IPO


320,797

366,133

Exceptional costs of IPO treated as an expense


  (299,040)

-

Operating profit after exceptional costs of IPO


21,757

 

366,133

Finance costs


(16,039)

(71,617)

Profit on ordinary activities before taxation


5,718

Taxation


(37,176)

(57,763)

(Loss)/profit after taxation


(31,458)

236,753

Other comprehensive income


-

-

Total comprehensive income attributable to the equity owner


(31,458)

236,753

 

Earnings per share - pence per share

2

(0.16)

1.72





 



 

Consolidated Statement of Financial Position

As at 31 December 2015

 




2015

£

 

2014

£

Non-current assets





Property, plant & equipment



181,291

132,641

Intangible assets



84,987

13,437

Deferred tax asset



-

22,919

Investments



-

-




266,278

168,997

Current assets




Inventories



2,446,905

1,908,666

Trade and other receivables



236,323

213,513

Deferred tax asset



40,743

55,000

Cash and cash equivalents



646,303

51,716




3,370,274

2,228,895

Total Assets



3,636,552

2,397,892

 

 

Non-current liabilities





Interest bearing loans and borrowing



243,677

241,254

Current liabilities





Trade and other payables



440,108

867,812

Loans and borrowing



24,000

34,500




464,108

902,312

Total Liabilities



707,785

1,143,566

 

Equity





Share capital



268,750

1,375,000

Share premium



1,574,649

-

Revenue reserve



1,085,368

(120,674)

Total Equity



2,928,767

1,254,326

Total Equity and Liabilities



3,636,552

2,397,892

 



 

Consolidated Statement of Changes in Equity

Year ended 31 December 2015

 


Share

capital

£

Share

premium

£

Retained

profit

£

Total

equity

£

Balance at 1 January 2014

1,375,000

-

(357,427)

1,017,573

Profit after taxation for the financial year

-

-

236,753

  236,753

Balance at 31 December 2014 and brought forward at 1 January 2015

1,375,000

-

(120,674)

1,254,326

Loss after taxation for the financial year

-

-

(31,458)

(31,458)

Capital reduction

(1,237,500)

-

1,237,500

-

Issue of shares

131,250

1,868,750

-

2,000,000

Share issue costs deducted from equity

-

(294,101)

-

(294,101)






Balance at 31 December 2015

268,750

1,574,649

1,085,368

2,928,767







Consolidated Statement of Cash Flows

Year ended 31 December 2015                                                                                                                                                       

 

 



2015

£

2014

£

Operating activity




Total profit before tax


5,718

294,516

Depreciation charge


15,078

10,427

Interest expense


16,039

71,617

Profit on disposal of plant and equipment


-

(167)

(Increase)/decrease in inventories


(538,239)

247,906

(Increase) in receivables


(23,850)

(167,471)

(Decrease) in payables


(393,607)

(157,369)

Net cash outflow/(inflow) from operating activity


(918,861)

299,459

Investing activity



Purchase of property, plant and equipment


(58,872)

(25,707)

Acquisition of intangible assets


(76,406)

-

Acquisition of subsidiary undertakings


-

-

Net cash (outflow) from investing activity


(135,278)

(25,707)

Financing activity




Loan repayments in year


(8,077)

(32,240)

Interest paid


(16,039)

(71,617)

Amount introduced by directors


-

50,000

Amount withdrawn by directors


(33,057)

(167,175)

Proceeds from share issue net of costs


1,705,899

-

Net cash inflow/(outflow) from financing activity


1,648,726

(221,032)

Cash and cash equivalents at start of year


51,716

(1,004)

Cash and cash equivalents at period end


646,303

51,716


NOTES TO THE ACCOUNTS

1.    Basis of preparation

The financial statements have been prepared in accordance with IFRS as adopted by the EU issued by the International Accounting Standards Board ("IASB"), including related Interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").

A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and in some cases have not yet been adopted by the EU.

The Directors have reviewed the potential impact of the introduction of the above accounting standards and interpretations (including the consequential amendments) and consider that they will either be not relevant or immaterial to Fishing Republic plc's operations. In particular, it is considered that IFRS 15 will not have an impact upon a straightforward retail business. 

The Group's financial statements consolidate the financial statements of Fishing Republic plc and its subsidiary undertakings, Fishing Republic Trading Limited and Fishing Republic Retail Limited.

On the basis that the main objectives of the effective Group reconstruction and AIM listing was to facilitate raising finance and future expansion of the business and the ultimate equity holders and their rights were unchanged following the transaction, it is deemed appropriate to adopt the merger method of accounting in respect of the business combination.

There is no guidance within IFRS in relating to merger accounting and therefore the principles set out in UK GAAP, FRS 102 section 19.27 to 19.33 have been adopted;

·     The carrying values of the assets and liabilities of the parties are not adjusted to fair value.

·     The results and cash flows of all the combining entities are brought into the consolidated financial statements from the beginning of the financial year in which the combination occurred.

·     The comparative information has been restated by including the total comprehensive income for all combining entities for the previous reporting period, and their statement of financial position for the previous reporting date.

·     The difference, if any, between the nominal value of the shares issued plus the fair value of any other consideration given, and the nominal value of the shares received in exchange is shown as a movement on other reserves in the consolidated financial statements.

The Group came into existence upon the listing on 4 June 2015, when the entire issued share capital of Fishing Republic Trading Limited (formerly known as Lureflash International Limited) was acquired.

As described above, comparative figures are presented in accordance with merger accounting principles. These are effectively the results and financial position of the single trading entity Lureflash International Limited for the year ended 31 December 2014. Comparative figures effectively present the results and financial position of the same business and are therefore comparable. 

The Directors have reviewed the future viability and going concern position of the Group for the foreseeable future, based upon forecasts and anticipated cash flows extending for a period of at least 12 months from the date of approval of the financial statements. The Directors have accordingly prepared the financial statements on the going concern basis.

 

2.    Earnings per share

 

Earnings per share has been calculated on the attributable profit for the period and the weighted average number of shares in issue during the period.

 

Earnings per share before exceptional IPO costs have also been disclosed on the basis that these are "one-off" costs of the flotation and the result after deducting these expenses does not reflect the operating result of the business.

 



2015

2014

(Loss)/profit for the year (£)


(31,458)

236,753

Profit before IPO costs charged to income statement (£)


267,582

236,753

Weighted average shares in issue - Number


19,623,288

  13,750,000

Basic (loss)/earnings per share (pence)


(0.16)

1.72

Earnings per share before exceptional IPO costs expensed;




Basic earnings per share (pence)


1.36

1.72

 

The earnings attributable to ordinary shareholders is (loss)/profit after tax.

 

The weighted average number of ordinary shares in issue during the period is used for the purpose of calculating basic earnings per share.

 

3.    Flotation and changes in share capital

 

On 4 June 2015, Fishing Republic plc successfully floated on the Alternative Investment Market (AIM), issuing 10,000,000 ordinary 1p shares for consideration of £1,500,000. Total IPO associated costs were £548,606 and the net amount raised was therefore £951,394.

 

In relation to the costs of the IPO, using a method of apportionment where necessary, those considered directly attributable to the issue of shares, £249,566, were deducted from equity and costs of £299,040 were expensed and charged to the Income Statement for the year as an exceptional item.

 

13,750,000 1p ordinary shares were issued on the same date to acquire the entire issued share capital of Fishing Republic Trading Limited (formerly Lureflash International Limited) in a share for share exchange.

 

A further placement on 17 December 2015 of 3,125,000 ordinary 1p shares raised consideration of £500,000, net £455,465 after attributable costs of £44,535.

 



 

4.    Business Combinations

                  

On 4 June 2015, Fishing Republic plc acquired the entire issued share capital of Fishing Republic Trading Limited (formerly Lureflash International Limited) for consideration equal to the nominal value of shares issued, £137,500. The consideration was satisfied by the issue of 13,750,000 ordinary shares of 1p.

 

On 13 July 2015, Fishing Republic plc acquired the entire issued share capital of the newly incorporated Fishing Republic Retail Limited for consideration of £377,000.

 

            The business combinations have been accounted for using merger accounting and therefore;

 

·     The carrying values of the assets and liabilities of the parties are not adjusted to fair values and the combination consolidates assets and liabilities at book values. Therefore, no goodwill arises.

·     The results and cash flows of all the combining entities are brought into the consolidated financial statements from the beginning of the financial year in which the combination occurred. The results of the Group reflect the consolidated results of the parent and its two subsidiaries for the full year ended 31 December 2015. The combined profits of the subsidiary undertakings for the year were £267,639, the loss incurred by the parent was £299,097 and the Group consolidated loss was therefore £31,458.  

·     Comparative information includes the total comprehensive income for combining entities for the previous reporting period and the statement of financial position for the previous reporting date, effectively relating to the single entity Lureflash International Limited.

       

On 15 December 2015 the trade and assets of Cotswold Angling Limited in Swindon were acquired. The consideration paid was equivalent to the agreed inventory valuation of £130,000. In the opinion of the Directors, goodwill and other assets acquired are not material and the transaction has therefore been reflected as an acquisition of trading stock.

                                       

5.    Fishing Republic's Annual General Meeting will be held on 17 May 2016 at noon at the Group's offices at Vulcan Works, Chesterton Road, Eastwood Trading Estate, Rotherham, South Yorkshire S65 1SU.

 

6.    The full financial statements of the Group will be posted to shareholders towards the end of April 2016.  Further copies will also be available on its website (www.fishingrepublic.net) and from the Company's registered office at Vulcan Works, Chesterton Road, Eastwood Trading Estate, Rotherham, South Yorkshire S65 1SU from that date.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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