TIDMKOOV
RNS Number : 5895F
Koovs PLC
29 July 2016
29 July 2016
Preliminary Results for the year ended 31 March 2016
Koovs plc ("Koovs" or the "Company")
Koovs plc (AIM:KOOV), the fashion-forward business focused on
the young Indian e-commerce market, today announces its preliminary
results for the year to 31 March 2016.
Preliminary results highlights for the year to 31 March 2016
-- Strong sales* growth at KOOVS.COM of 189% to INR981 million /
GBP10.0 million in the year to 31 March 2016
-- Visits to the website up 110% from 20.9 million to 43.8
million, exceeding one million visits a week and one million
registered users
-- Continued delivery on strategy and business plan as outlined in the Chairman's Statement.
-- Koovs plc revenue in the year up 148% at INR512.4 million /
GBP5.2 million (2015: INR204.1 million / GBP2.1 million) and loss
before tax of INR1,650.4 million / GBP16.7 million (2015: INR922.6
million / GBP9.4 million).
* Gross sales order value placed through the KOOVS.COM website
including taxes. This does not represent the revenue of the Koovs
plc Group. The revenue of the Koovs plc Group is the wholesale
value of products sold to the independent operator of the Koovs.com
website under a licence granted by Koovs Group.
Mary Turner, CEO, said:
"We are pleased to report another set of strong results as we
continue to deliver on our strategy. During the period we
successfully closed the recent tranche of capital raising, and
brought ownership of KOOVS India to 100% at Group level.
"The Indian market continues to grow rapidly, particularly in
ecommerce and fashion where online only fashion is growing at 48% a
year(1) and Koovs is growing significantly faster than this market
rate. Koovs remains focused on our unique brand promise to deliver
exclusive, on-trend, affordable western fashion for the
style-conscious, aspirational young adult in India."
(1)Annual growth forecast online only fashion 2015-17 48% CAGR -
Technopak 2015.
Preliminary results
Year to Year to Year to Year to
31 March 31 March 31 March 31 March
2016 2015 2016 2015
Memorandum Memorandum
INR million INR million GBP000 GBP000
Revenue(#) 512.4 204.1 5,198 2,075
Operating
loss (1,687.8) (1,062.8) (17,121) (10,801)
Loss before
tax (1,650.4) (922.6) (16,741) (9,376)
Net assets 844.2 1,967.3 8,865 21,290
Closing
cash and
bank deposits;
note 5 241.5 1,266.9 2,536 13,712
----------- -----------
(#) Koovs plc revenue reflects the wholesale value of products
supplied for sale on the KOOVS.COM website
Notes to Editors
Koovs is focused on building KOOVS.COM into the leading fashion
destination in India. The Company is headquartered in London, where
the majority of its design and buying team is based, with all other
operational functions based in India.
For further information,
please contact:
Koovs plc Tel: +44 (0)20 7151 0170
Rob Pursell
Peel Hunt LLP
Dan Webster / Richard Tel: +44 (0) 20 7418
Brown 8900
Jock Maxwell Macdonald
(ECM)
Brunswick Group LLP
Nick Claydon /Alison Tel: +44 (0) 20 7404
Kay 5959
CHAIRMAN'S STATEMENT FOR THE YEAR TO 31 MARCH 2016
I'm pleased to report that our business plan and strategy
continues to deliver growth in sales, brand awareness and traffic
to the web site, with Gross Order Value in the year to March 2016
reaching INR 981m (GBP10m), an increase of 189% on the previous
year. Web site traffic has increased by 110% and conversion by 55%,
resulting in more than a threefold increase in the number of orders
shipped.
The opportunity in the e-commerce market in India continues to
grow and we are successfully positioning Koovs as the fashion
leader in the market by maintaining our exclusive focus on fashion,
by offering leading brands from around the world, by broadening the
range of our exclusive own-label products, and by maintaining our
delivery and price promises which position us at the heart of the
market.
While revenues are growing strongly, the costs of operations has
resulted in a loss for the period of INR1,650.4 / GBP16,741k. Our
business plan envisages rapid growth in revenues and improvement in
margins so that the combination of increased scale and improved
profitability results in a profitable and cash-generative business.
To achieve this, the Board expect to implement the next phase of
the staged equity funding plan in the latter part of the current
financial year.
Mary Turner has brought a wealth of expertise to the company,
the fruits of which were seen in our first TV-led marketing
campaign in the autumn of 2015 which successfully raised our brand
awareness significantly with a resulting strong growth in website
traffic and ultimately sales. The next phase of the campaign is now
under way to drive the on-going growth in sales.
I am also pleased to report that we have received strong support
for our capital raising plans with INR3,079.3 million / GBP31.75
million invested over the past nine months since October 2015
providing the capital required to both support to the business
development plans and also to allow us to "normalise" the Group
structure through the acquisition of the remaining shares in Koovs
India which saw that business become a wholly-owned subsidiary in
May 2016.
It has been a very busy and dynamic period for the Koovs group
and I thank all of our staff in both the UK and India for their
focus and hard work, while looking forward to an exciting and even
busier period ahead.
Waheed Alli
Chairman
28 July 2016
OPERATING REVIEW
Objectives and strategy
Our objective is to build KOOVS.COM into India's leading western
fashion destination by 2020.
Our strategy continues to focus on five elements:
Build the Koovs private label - which has been extended into
denim and a range of fashion basics to support the more directional
products. The Koovs label accounts for 45% of our sales and we
intend to increase that to over 50%;
Bring international brands to India - we constantly review and
amend our range of brands and currently carry over 150 different
brands from around the world. During the year we added Boohoo which
has achieved great success in the UK.
Extend fashion credentials - we have continued our run of
exclusive collaborations with high profile designers including
Pankaj & Nidhi, star designers from Mumbai, and shortly to
include Hattie Stewart from London.
Delivery and price promise - our refinement of our pricing
architecture has resulted in a lower average sale price across the
ranges, providing a more accessible offer for our customers and we
are now working with six courier companies in order to access the
best delivery options for our customers.
Technology - the Koovs fashion hub "The Hotlist" provides a
constantly updated feed of fashion news, style advice, celebrity
updates and guides to interesting events, providing more reason for
our customers to visit the site. Our app continues to be the
most-used access to the site and an update is being prepared for
launch in the early autumn. The main site also continues to be
developed, with recent changes including easier check-out, the
ability to offer "complex promotions" and improved size guides.
Operations and trading performance
As shown by the Key Performance Indicators discussed below, the
business achieved very strong growth during the financial year,
supported by a focussed and efficient advertising campaign in the
autumn of 2015 which achieved its aim of increasing brand awareness
among Koovs' target customers from below 1% to 8% at the peak. The
campaign was targeted at the major conurbations and used a
combination of TV, outdoor and press advertising with an innovative
and eye-catching creative exuding the style, fun and youthfulness
of the Koovs brands.
Our overall aim is to increase our share of the youth fashion
market to over 10% by 2020 and to do this we will continue to
invest in strong, targeted and efficient marketing campaigns. The
second phase of the "Step into Koovs" campaign launched in late
April 2016, again using TV and press and covering a broader range
of cities. Subsequent campaigns are being planned for autumn
2016.
Our database of customers now stands at over 1.2 million and the
proportion of customers who are returning to buy again shows a
steady increase even as the total number of active customers (those
who have purchased in the last 12 months) increases, now standing
at over 300,000.
Key performance indicators
The Group supplies branded fashion garments and accessories for
exclusive distribution through the KOOVS.COM website including
international fashion brands, iconic British high street brands and
Koovs own-label product designed by a talented team based in
London. We monitor the Group's performance in a number of ways
including assessing the performance of KOOVS.COM, which, although
it is operated by Marble E-retail Private Limited ("Marble"), an
independently owned and managed company, reflects the performance
of the products and marketing managed by the Group. The statistics
are generated internally with the use of website monitoring tools
and data supplied by the operator of the website. The Group
monitors such metrics as the gross value of orders received (value
of orders placed, including VAT), visits to the website (number of
times the website is accessed; "traffic"), the rate of conversion
of that traffic to sales orders (number of orders generated divided
by the number of visits to the site), and the average value of
orders placed and the net sales (value
of sales orders including VAT, net of orders cancelled, not
delivered or returned by the customer). Each of these reflect the
success of the Koovs brand and the KOOVS.COM website which is the
Group's major customer and whose success is fundamental to the
success of the Group.
Over the past year, compared with the previous year, we have
achieved the following:
Year ended Year ended Growth
March 2016 March 2015
Measure of
Gross order attractiveness
value* of offer INR981m/GBP10.0m INR340m/GBP3.4m +189%
Measure of
Net sales, financial
after returns* growth INR687m/GBP7.0m INR266m/GBP2.7m +158%
Measure of
Visits to growth in
the site* awareness 43.8m 20.9m +110%
Measure of
relevance
Conversion* to audience 1.5% 0.97% +55%
Wholesale
revenue of
Revenue Koovs plc INR512.4m INR204.1m +151%
Loss before Measure of
tax overall performance INR1,650.4m INR922.6m +79%
*in relation to the Koovs.com website
The Board also monitors the Gross Margin generated by the
business. The reported Group gross margin is currently negative,
reflecting the limitations caused by the business's limited scale
and the resulting purchase prices of goods offered for sale along
with the effect of offering a broad range of products while volumes
are low.
The group gross margin reported in these financial statements is
the margin generated on the sales of product to Marble, the
operator of the KOOVS.COM website. The Group also monitors the
"trading gross margin". The trading gross margin considers the
gross profit implied by the net price at which goods are sold to
consumers by Marble and the cost which Koovs incurs in buying the
products from suppliers. The helps the business understand the
dynamics of the market and to properly plan its product strategy.
This trading gross margin, which is currently in the mid-single
digits, has shown good improvement in the year.
Current trading and outlook
In the early weeks of the new financial year we have continued
to achieve strong year-on-year growth in traffic to the website and
gross order values. Our aim is to carry on building market share
and significantly grow the orders placed on the website over the
year through maintaining a strong and carefully targeted product
offering and increasing awareness of the brand through carefully
selected but high-profile marketing campaigns, the first of which
launched in May 2016. The Group's business plan envisages rapid
growth in revenues and improvement in margins so that the
combination of increased scale and improved profitability results
in a profitable and cash-generative business. To achieve this, the
Board expect to implement the next phase of the staged equity
funding plan in the latter part of the current financial year.
FINANCE REVIEW
The financial results of the Koovs plc Group in this report
cover the year ended 31 March 2016.
The Group's principal activity is that of supplying branded
fashion garments and accessories for sale by a third party through
a branded website principally in the Republic of India.
Financial results
The Group achieved revenue of INR512.4 million / GBP5,198k
(2015: INR204.1 million / GBP2,075k) during the year from the
wholesale of fashion garments and accessories to its sole customer
for onward sale to consumers. In these early days of development
and relatively low volumes, gross margins are low and therefore the
Group generated a gross loss of INR235.0 million /GBP2,383k (2015:
INR85.6 million /GBP869k).
Overhead costs comprise the costs of the design and
merchandising team in the UK, the creative, content, marketing and
IT teams in India, infrastructure costs, marketing expenditure and
corporate costs. Altogether this amounted to INR1,452.8 million /
GBP14,738k (2015: INR977.2 million / GBP9,932k) during the year to
give an operating loss of INR1,687.8 million / GBP17,121k (2015:
INR1,062.8 million / GBP10,801k).
Interest income arising mainly in India, net of finance
expenses, amounted to INR37.4 million / GBP380k (2015: INR140.2
million / GBP1,425k) to give a loss before tax of INR1,650.4
million / GBP16,741k (2015: INR922.6 million / GBP9,376k).
Taxation
Due to the losses generated in the period, and the likelihood
that it will be some time before tax losses can be utilised, no
deferred tax has been accounted for and therefore there is no tax
charge or credit in the current or prior period.
Loss for the period
The loss for the period was INR1,650.4 million / GBP16,741k
(2015: INR922.6 million / GBP9,376k). As described in this
Strategic Report, the business is in the early phase of a plan to
create a significant business in India and the losses reflect the
low but rapidly growing sales revenue and the overhead base which
has been put in place to support significantly larger volumes.
Basic earnings per share
Earnings per share amounted to a loss of 36.7 rupees / 37.2
pence per share based on the loss attributable to equity holders of
INR1,045.2 million / GBP10,602k and weighted shares in issue of
28,482,540. The loss per share in the previous period was 27.1
rupees / 27.6 pence based on the weighted shares in issue of
24,110,719.
Cash flow and funds
During the year to 31 March 2016 the Group utilised INR1,537.2
million / GBP15,594k (2015: INR1,044.4 million / GBP10,614k) in
operations mainly funding the operating losses and increasing
inventory in support of the growing sales.
During the year to 31 March 2015 excess funds were deposited
with a range of banks in India. Subsequently, during the year to 31
March 2016, the majority of these funds were withdrawn in order to
provide funding for the business. After allowing for the interest
generated on the deposits and investments in fixed assets, the net
increase in cash from these activities was INR1,157.2 million /
GBP11,738k (2015: net decrease in cash of INR1,179.2million /
GBP11,983k).
As noted in the Annual Report for the year to 31 March 2015, the
Board of Directors implemented a Capital Raising process during the
year resulting in the issue of new equity shares. The proceeds from
the Capital Raising process during the year to 31 March 2016
amounted to INR545.3 million / GBP5,550k (2015: nil) before costs
of INR27.6 million / GBP280k (2015: nil). In addition a loan of
INR62.2 million / GBP631k was put in place to provide further
flexibility in the funding of the business.
As a result of these movements, the net increase in cash and
cash equivalents was INR191.8 million / GBP1,962k (2015: net
decrease of INR2,226.0 million / GBP22,601k). The closing net cash
and cash equivalents was INR127.6 million / GBP1,340k (2015:
overdraft of INR54.7 million / GBP592k).
Taken along with the bank deposits the Group had access to
INR241.5 million / GBP2,536k (2015: INR1,266.9 million /
GBP13,712k) at the end of the financial period as described in Note
5.
Financial position
At the end of the financial period the net assets of the Group
amounted to INR844.2 million / GBP8,865k (2015: INR1,967.3 million
/ GBP21,290k). This included INR621.2 million /GBP6,524k of
goodwill arising from the acquisition of Koovs India. Further
information on the funding position of the Group is given in the
Directors' Report and in the next section of this report.
Principal risks and uncertainties
There are a number of market and business risks that could
affect the Company and the Group. We set out below the Group's view
of the main risks which, should any actually materialise, could
materially adversely affect the Group's business, financial
condition and returns to shareholders. Further risks and
uncertainties which are not presently known to the Directors at the
date of this document, or that the Directors currently deem less
significant, may also have an adverse effect on the business,
financial condition or results of the Group.
Funding
The Group's business plan envisages a period of investment in
marketing, product and the warehouse in order to grow the business
to significant scale over the next three years and through to
profitability.
In September 2015 the Board set out its intention to raise new
equity funding over the next three years and subsequently announced
an intention to normalise the Group structure at an additional cost
of approximately INR900 million / GBP9 million.
Initial equity issues were successfully concluded in October
2015 and January 2016 generating new investment amounting to
INR545.3 million / GBP5,550k. Subsequently, in April and May 2016,
a further INR2,534.0 million / GBP26,200k was raised. Of this,
INR869.8 million / GBP9,039k was utilised in May 2016 to acquire
the remaining portion of Koovs India not already owned by the
Company.
The capital raising process has therefore secured a total of
INR2,209.5 million / GBP22,711k for the funding of the business.
The Board is planning to resume its capital raising process in the
autumn of 2016 and based on the success of the process so far, is
confident that appropriate funding will be secured in due
course.
Market and Economic Risks
Economic outlook
The Group's revenue is dependent on the sales by Koovs India to
Marble which, in turn, is dependent on the retail sales Marble
achieves, so the Group is sensitive to the impacts of the general
economic climate in India and on the population's propensity to
spend on fashion clothing and accessories. Global economic factors
may impact the costs of inputs such as cotton and fuel and the
Group's ability to pass on such cost increases may be limited. The
Board monitors projections for the Indian economy on a regular
basis and amends plans based on the expected growth.
Market and competition
The retail fashion industry and market is subject to changing
customer tastes. The Group's performance is dependent upon
effectively predicting and quickly responding to changing consumer
demands and translating market trends into saleable merchandise.
Internet fashion retailing is global and highly competitive. Any
failure by KOOVS.COM to compete effectively with bricks and mortar
retailers and other internet retailers may affect the Group's
revenue. The Group uses third parties to provide assessments of the
developments of fashion in the global markets and designers attend
international trade shows to provide direction and inspiration.
Suppliers
The Group makes arrangements with manufacturers for the supply
of products designed by the Group. The ability to source products
promptly at competitive prices and at appropriate quality is key to
the success of the business and while there is a broad range of
potential suppliers and well-developed competition in the market,
the Group is dependent on being able to find appropriate
manufacturing capability for its products in order to meet
delivery, quality and price expectations. The Group uses a broad
range of suppliers within the Indian market and also
internationally and ensures that there is no concentration of
supply. The employment of experienced sourcing experts ensures
access to a broad range of manufacturing capability.
Foreign country and political risk
Most of the Group's personnel, operations and other assets
including Koovs India's warehouse, all inventory and computer
servers are located in India and, consequently, the Group is
subject to changes in regulations or market conditions in that
country. With the majority of operations located in India, local
management maintain close monitoring of local developments and
amend plans as necessary.
Financial risks
Interest rate risk
The Group's exposure to interest rate risk arises from the
fluctuations in the rate of interest income or charges on cash and
cash equivalent balances. In the period under review, the Group has
operated in a net cash position. UK interest rates continue to be
very low and therefore the potential adverse interest rate risk in
the UK is very low. Interest rates in India are in the region of 9%
and the majority of the Group's cash is held in Indian Rupees in
India. There is therefore a potential adverse interest rate risk
affecting the interest income generated in India. No interest rate
hedging is in place. The bank deposits are made for a variety of
tenures to balance liquidity and security of interest
generation.
Currency risk
The Group operates in the United Kingdom and India. Following
the acquisition of Koovs India, all revenues and the majority of
costs are denominated in Indian Rupees. However, approximately half
of the Group's overheads are incurred in Sterling and therefore the
Group results are susceptible to fluctuations as a result of
changes in exchange rates. No foreign currency hedging is in place
to mitigate this risk.
Credit and customer risk
The Group's revenues arise predominately from invoices for goods
to a single customer. As Marble is currently the only channel
through which Koovs India's products are sold to consumers, the
Group's revenue is dependent upon the relationship with Marble and
upon the success of Marble in servicing its customers, delivering
products as promised, recovering payment from its customers and
maintaining high levels of customer service. The Group has
considered the credit risk associated with the customer and has
assessed the credit worthiness of the customer to be good. The
Group minimises the risk through a requirement for prompt, monthly
payment of invoices issued to which the customer is committed and
has demonstrated consistent adherence.
Liquidity risk
Liquidity risk is managed through the assessment of short,
medium and long-term cash flow forecasts to ensure the adequacy of
funding in order to meet the Group's working capital requirements.
As described in the Directors' Report, in September 2015 the Board
set out its intention to raise up to INR3,500 million / GBP35
million of equity funding over the next three years and
subsequently announced an intention to normalise the Group
structure at a further cost of INR900 million / GBP9 million. The
Board and its advisors have therefore been engaged in a staged
capital raising process which has secured additional equity funding
amounting to INR3,079.3 million / GBP31.75 million by the date of
this report. The Company has completed the normalisation of the
Group structure and has retained sufficient funds to support the
next phase of the business plan. Plans for the next phase of the
Capital Raising will be prepared in due course.
Other risks
Technological risks
The Group is dependent on its IT infrastructure and any system
performance issues (for example system or infrastructure failure,
damage or denial of access) could seriously affect our ability to
trade. The infrastructure has been designed specifically for
robustness, flexibility and scalability and these objectives form a
core part of the IT development strategy.
Warehouse disruption
Any disruption to the Group's warehousing facility due to
physical property damage, breakdown in warehouse systems, capacity
shortages or poor logistics management could lead to significant
operational difficulties in order fulfilment, which may have a
consequent adverse effect on the Group's business. The Group has
recruited an experienced logistics manager to oversee these
operations.
Intellectual property and content liability
The business of the Group carries with it the risk of
intellectual property right infringement. The Group may need to
engage in litigation to enforce its intellectual property rights,
or to protect itself from third party claims. Our designers are
professionally trained to ensure that intellectual property rights
are appropriately handled. Competitors' products are regularly
monitored and any infringement brought to managements'
attention.
Key personnel
The Group depends on the services of its key technical,
marketing and management personnel. The Group personnel structure
is being developed as the business grows to provide appropriate
quality, depth of experience and succession planning.
On behalf of the Board of Directors
Mary Turner Robert Pursell
Director Director
28 July 2016 28 July 2016
Consolidated Income Statement
for the year to 31 March 2016
MEMORANDUM
Notes Year to Year to Year to Year to
31 March 31 March 31 March 31 March
2016 2015 2016 2015
INR million INR million GBP000 GBP000
Revenue 2 512.4 204.1 5,198 2,075
Cost of sales (747.4) (289.7) (7,581) (2,944)
----------- ------------ --------- ---------
Gross loss (235.0) (85.6) (2,383) (869)
Operating expenses (1,452.8) (977.2) (14,738) (9,932)
Operating loss 3 (1,687.8) (1,062.8) (17,121) (10,801)
Finance income 47.8 141.9 485 1,442
Finance expense (10.4) (1.7) (105) (17)
Loss for the period
before tax (1,650.4) (922.6) (16,741) (9,376)
Tax expense - - - -
Loss for the period (1,650.4) (922.6) (16,741) (9,376)
----------- ------------ --------- ---------
Loss attributable
to:
Equity holders
of the Company (1,045.2) (654.2) (10,602) (6,648)
Non-controlling
interests (605.2) (268.4) (6,139) (2,728)
----------- ------------ --------- ---------
Loss for the period (1,650.4) (922.6) (16,741) (9,376)
----------- ------------ --------- ---------
Loss per share
Basic and diluted
loss per share 4 INR(36.7) INR(27.1) (37.2)p (27.6)p
----------- ------------ --------- ---------
All results relate to continuing operations.
Consolidated Statement of Comprehensive Income
for the year to 31 March 2016
MEMORANDUM
Year to Year to Year to Year to
31 March 31 March 31 March 31 March
2016 2015 2016 2015
INR million INR million GBP000 GBP000
Loss for the period (1,650.4) (922.6) (16,741) (9,376)
-------------------------------------- ----------- ----------- --------- ---------
Other comprehensive income
Items that may be reclassified
to Income Statement in subsequent
periods:
Currency translation differences
from operations denominated
in currencies other than Rupee
- equity holders of the parent,
net of tax 3.5 (4.6) 35 (46)
Items that will not be reclassified
to Income Statement in subsequent
periods:
Re-measurement of defined benefits
plan, net of tax 2.1 (0.4) 21 (4)
-------------------------------------- ----------- ----------- --------- ---------
Other comprehensive income,
net of tax 5.6 (5.0) 56 (50)
----------- ----------- --------- ---------
Total comprehensive loss for
the period (1,644.8) (927.6) (16,685) (9,426)
----------- ----------- --------- ---------
Total comprehensive loss attributable
to:
Equity holders of the Company (1,040.5) (659.0) (10,555) (6,697)
Non-controlling interests (604.3) (268.6) (6,130) (2,729)
----------- ----------- --------- ---------
Total income and expense recognised
in the period (1,644.8) (927.6) (16,685) (9,426)
----------- ----------- --------- ---------
All results relate to continuing operations.
Consolidated Statement of Financial Position
at 31 March 2016
MEMORANDUM
Notes 31 March 31 March 31 March 31 March
2016 2015 2016 2015
INR million INR million GBP000 GBP000
Non-current assets
Intangible assets 623.0 623.8 6,543 6,751
Property, plant
& equipment 25.2 22.2 265 240
Non-current financial
assets 5 8.7 8.7 91 94
----------- -----------
Total non-current
assets 656.9 654.7 6,899 7,085
----------- ----------- ---------- --------
Current assets
Inventories 275.4 195.4 2,891 2,115
Trade receivables,
other receivables,
prepayments and
other assets 62.5 64.4 656 697
Bank deposits 5 105.2 1,312.9 1,105 14,210
Cash and cash
equivalents 5 188.9 46.8 1,984 507
----------- ----------- ---------- --------
Total current
assets 632.0 1,619.5 6,636 17,529
----------- ----------- ---------- --------
Total assets 1,288.9 2,274.2 13,535 24,614
----------- ----------- ---------- --------
Non-current liabilities
Long-term liabilities (11.0) (7.3) (116) (79)
----------- -----------
Total non-current
liabilities (11.0) (7.3) (116) (79)
----------- ----------- ---------- --------
Current liabilities
Bank short-term
borrowing (125.5) (101.5) (1,318) (1,099)
Trade and other
payables (308.2) (198.1) (3,236) (2,146)
----------- -----------
Total current
liabilities (433.7) (299.6) (4,554) (3,245)
----------- ----------- ---------- --------
Total liabilities (444.7) (306.9) (4,670) (3,324)
----------- ----------- ---------- --------
NET ASSETS 844.2 1,967.3 8,865 21,290
----------- ----------- ---------- --------
Capital and reserves
Equity share capital 44.9 24.5 471 265
Share premium
reserve 2,768.4 2,271.1 29,071 24,580
Other reserves (1.6) (9.1) (16) (99)
Retained earnings (1,978.0) (857.7) (20,771) (9,284)
Non-controlling
interest 10.5 538.5 110 5,828
----------- ----------- ---------- --------
TOTAL EQUITY 844.2 1,967.3 8,865 21,290
----------- ----------- ---------- --------
Consolidated Statement of Changes in Equity
for the year to 31 March 2016
Attributable to the equity holders
of the parent
-------------------------------------------------------------------------
Share
Equity Share based Currency Total Non-controlling
share premium payment translation other Retained interests Total
capital reserve reserve reserve reserves earnings Total Equity
INRm INRm INRm INRm INRm INRm INRm INRm INRm
------------------
At 31 March
2014 24.5 2,271.1 0.1 (7.6) (7.5) (203.3) 2,084.8 807.1 2,891.9
------------------ ---------- ------- ------- ----------- -------- --------- --------- ---------------- ---------
Loss for
the period - - - - - (654.2) (654.2) (268.4) (922.6)
Other
comprehensive
income - - - (4.6) (4.6) (0.2) (4.8) (0.2) (5.0)
------------------ ---------- ------- ------- ----------- -------- --------- --------- ---------------- ---------
Total
comprehensive
income - - - (4.6) (4.6) (654.4) (659.0) (268.6) (927.6)
Share based
payments
reserve - - 3.0 - 3.0 - 3.0 - 3.0
At 31 March
2015 24.5 2,271.1 3.1 (12.2) (9.1) (857.7) 1,428.8 538.5 1,967.3
------------------ ---------- ------- ------- ----------- -------- --------- --------- ---------------- ---------
Loss for
the period - - - - - (1,045.2) (1,045.2) (605.2) (1,650.4)
Other
comprehensive
income - - - 3.5 3.5 1.2 4.7 0.9 5.6
------------------ ---------- ------- ------- ----------- -------- --------- --------- ---------------- ---------
Total
comprehensive
income - - - 3.5 3.5 (1,044.0) (1,040.5) (604.3) (1,644.8)
Equity
issue 20.4 524.9 - - - - 545.3 - 545.3
Costs of
equity
issue - (27.6) - - - - (27.6) - (27.6)
Change
in
non-controlling
interest - - - - - (76.3) (76.3) 76.3 -
Share based
payments
reserve - - 4.0 - 4.0 - 4.0 - 4.0
------------------ ---------- ------- ------- ----------- -------- --------- --------- ---------------- ---------
At 31 March
2016 44.9 2,768.4 7.1 (8.7) (1.6) (1,978.0) 833.7 10.5 844.2
------------------ ---------- ------- ------- ----------- -------- --------- --------- ---------------- ---------
Memorandum GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 31 March
2016 471 29,071 75 (91) (16) (20,771) 8,755 110 8,865
------------------ ---------- ------- ------- ----------- -------- --------- --------- ---------------- ---------
Consolidated Statement of Cash Flows
for the year to 31 March 2016
MEMORANDUM
Year to Year to Year to Year to
31 March 31 March 31 March 31 March
2016 2015 2016 2015
INR million INR million GBP000 GBP000
Operating activities
Loss for the period (1,650.4) (922.6) (16,741) (9,376)
Adjustments to reconcile profit
for the period to net cash
flow from operating activities
Depreciation and amortisation 11.2 10.0 116 102
Cost of acquisition - - - -
Share based payment 4.0 3.0 40 30
Other non-cash items 9.1 9.9 91 100
Interest income and finance
expense (37.4) (140.2) (381) (1,425)
Taxation charge in period - - - -
Working capital adjustments:
Increase in inventories (80.0) (86.5) (812) (879)
Decrease / (increase) in trade
and other receivables 83.6 (18.3) 848 (186)
Increase in trade and other
payables 122.7 100.3 1,245 1,020
----------- ----------- --------- ---------
Cash flow from operations (1,537.2) (1,044.4) (15,594) (10,614)
Income tax paid - - - -
----------- ----------- --------- ---------
Net cash flow from operating
activities (1,537.2) (1,044.4) (15,594) (10,614)
----------- ----------- --------- ---------
Investing activities
Withdrawal: original maturity
greater than 12m 1,229.2 (1,141.4) 12,469 (11,599)
Deposits: original maturity
less than 12m (106.3) (82.7) (1,078) (840)
Purchase of non-current assets (13.5) (12.0) (137) (122)
Proceeds from sale of plant
and equipment - 0.1 - 1
Interest income received 47.8 56.8 484 577
----------- -----------
Net cash flow from investing
activities 1,157.2 (1,179.2) 11,738 (11,983)
----------- ----------- --------- ---------
Financing activities
Proceeds from issue of shares 545.3 - 5,550 -
Costs of share issues (27.6) - (280) -
Repayment of lease liability - (0.5) - (5)
Proceeds from short-term borrowings 65.0 - 659 -
Repayment of short-term borrowings (2.8) (0.3) (29) (3)
Interest and finance expense (8.1) (1.6) (82) (16)
---------
Net cash flow from financing
activities 571.8 (2.4) 5,818 (24)
----------- ----------- --------- ---------
Net increase/(decrease) in
cash and cash equivalents 191.8 (2,226.0) 1,962 (22,621)
Cash and cash equivalents at
start of period (54.7) 2,173.1 (592) 21,731
Exchange differences (9.5) (1.8) (30) 298
----------- ----------- --------- ---------
Cash and cash equivalents at
end of period 127.6 (54.7) 1,340 (592)
----------- ----------- --------- ---------
1. Basis of preparation
Whilst the information included in this condensed consolidated
financial information ("preliminary announcement") has been
prepared in accordance with the recognition and measurement
criteria of International Financial Reporting Standards ("IFRSs")
as adopted for use in the European Union, this preliminary
announcement does not itself contain sufficient information to
comply with IFRSs.
The financial information contained within this preliminary
announcement for the period to 31 March 2016 does not comprise
statutory financial statements within the meaning of section 434 of
the Companies Act 2006. The Report and Financial Statements for the
period to 31 March 2015 have been filed with the Registrar of
Companies and those for the period to 31 March 2016 will be filed
by 30 September 2016. This preliminary announcement has been
prepared on a basis consistent with the financial accounting
policies set out in the Accounting Policies section of the Report
and Financial Statements for the period ended 31 March 2016.
The Group's annual report for the period ended 31 March 2015 is
available for viewing and downloading from the Group's corporate
website: www.koovs.com/corporate. The annual report will also be
circulated to shareholders.
The Auditors' Report on those accounts states contains a
statement under s498(3) of the Companies Act 2006 that an emphasis
of matter has been included referring to the matters described in
the going concern section below.
The condensed consolidated financial information contained in
this report should be read in conjunction with the Group's Report
and Financial Statements for the period ended 31 March 2016, which
have been prepared in accordance with IFRSs as adopted by the
European Union.
The Group's business activities together with the factors that
are likely to affect its future developments, performance and
position are set out in the Operating Report. This describes the
Group's financial position and cash flows and also highlights the
principal risks and uncertainties facing the Group. The Report and
Financial Statements for the period ended 31 March 2016 includes
the Group's objectives, policies and processes for managing its
capital; its financial risk management objectives; details of its
financial instruments; and its exposures to credit risk and
liquidity risk.
Going concern
These condensed consolidated financial statements have been
prepared on the assumption that the business is a going
concern.
The Board identified, in the Annual Report for the year ended 31
March 2015 (published in September 2015), that approximately
INR3,500 million / GBP35 million of additional funding would be
required over the next three years. In addition to the operational
funding, shareholders have requested that the ownership structure
of the Koovs Group should be "normalised", requiring that the
remaining shares in Koovs India which were not already owned by the
Group should be purchased, a process which required a further
INR900 million / GBP9 million of funding, bringing the total
investment required to INR4,400 million / GBP44 million.
The Board and its advisors have therefore been engaged in a
staged capital raising process which has secured additional equity
funding amounting to INR3,079.3 million / GBP31.75 million by the
date of this report. Of this, INR869.8 million / GBP9 million was
used, during May 2016 to acquire the remaining shares in Koovs
India, which is now a wholly-owned subsidiary.
The remaining operational funding secured during the capital
raising is sufficient to fund the business until May 2017, subject
to the level of marketing investment during year and the
achievement of the growth forecasts. The Board expects to resume
the staged capital raising process in the autumn of 2016 with the
aim of securing sufficient funding to carry the business to
positive cash flows based on, and subject to achieving, any revised
forecasts.
The success of the recently completed capital raising and the
on-going support from existing shareholders give the Board a high
level of confidence that further funding will be secured in due
course and therefore the Board has reasonable expectation that the
Group and Company will have adequate resources to continue in
operational existence for the foreseeable future.
The Directors therefore consider it appropriate for these
financial statements to be prepared on a going concern basis.
Given the requirement for further funding, there remains
material uncertainties related to the next stages of the Capital
Raising and the achievement of the growth forecasts that casts
significant doubt on the entity's ability to continue as a going
concern and, therefore, that the Company may be unable to realise
its assets and discharge its liabilities in the normal course of
business. These condensed consolidated financial statements do not
contain the adjustments that would result if the company was unable
to continue as a going concern.
2. Revenue
Revenue recognised in the Income Statement is analysed as
follows:
MEMORANDUM
2016 2015 2016 2015
INRm INRm GBP000 GBP000
Sale of fashion
garments, India 512.4 204.1 5,198 2,075
The Group's sole operation was that of supplying fashion
garments at wholesale to third parties. All of the revenue was
generated in the Republic of India, based on the location of the
customers.
Operating segment
All of the Group's revenue is generated by Koovs India through
its operations as a supplier of branded fashion products. The chief
operating decision maker is the Chief Executive Office who makes
resource allocation decisions based on financial statements and
operating reports for the entire Group. The Group therefore
represents a single cash generating unit and a single operating
segment.
Information about major customers
All of the revenue arising from the sale of fashion garments
arises from one customer.
3. Operating loss
Operating loss is stated after charging / (crediting):
MEMORANDUM
2016 2015 2016 2015
INR m INR m GBP000 GBP000
Auditor's remuneration 15.1 9.8 154 100
Operating lease payments 49.4 38.7 501 393
Depreciation expense 9.5 8.6 99 87
Amortisation expense 1.7 1.4 17 14
Staff costs 380.7 342.1 3,863 3,476
Net foreign currency exchange
loss/(gain) 1.7 (2.1) 17 (21)
----- ----- ------ ------
All operating expenses are administrative by nature.
4. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to the owners of the Parent Company by the weighted
average number of ordinary shares in issue during the period.
2016 2015
Weighted average shares in
issue for basic earnings per
share 28,482,540 24,110,719
Effect of dilutive options - -
------------ ----------
Weighted average shares in
issue for diluted earnings
per share 28,482,540 24,110,719
------------ ----------
Earnings attributable to the
owners of the Parent (INR
m) (1,045.2) (654.2)
------------ ----------
Basic and diluted loss per
share - Rupees (36.7) (27.1)
Basic and diluted loss per
share - Pence (37.2) (27.6)
------------------------------- ------------ ----------
Diluted earnings per share is calculated by dividing the
earnings attributable to the owners of the Parent Company by the
weighted average number of ordinary shares in issue during the
period, adjusted for the effects of potentially dilutive share
options. The effect of the share options in issue is anti-dilutive
and therefore no adjustment has been made to the weighted average
shares in issue for diluted earnings per share.
5. Cash and bank deposits
MEMORANDUM
Group 2016 2015 2016 2015
INRm INRm GBP000 GBP000
Current assets:
Bank deposits with
an original maturity
of more than 12 months 1.0 1,230.2 11 13,315
Bank deposits with
an original maturity
of not more than 12
months 104.2 82.7 1,094 895
Cash at bank and in
hand 188.9 46.8 1,984 507
------- -------- ------- --------
Total 294.1 1,359.7 3,089 14,717
Non-current assets:
Security deposits 8.7 8.7 91 94
------- -------- ------- --------
Bank overdrafts (61.3) (101.5) (644) (1,099)
Total cash and bank
deposits 241.5 1,266.9 2,536 13,712
------- -------- ------- --------
2016 2015 2016 2015
Cash and cash equivalents INRm INRm GBP000 GBP000
Cash at bank and in
hand 188.9 46.8 1,984 507
Bank overdrafts (61.3) (101.5) (644) (1,099)
------- -------- ------- --------
Total 127.6 (54.7) 1,340 (592)
------- -------- ------- --------
Cash and cash equivalents comprise cash in hand and cash held in
bank accounts from which deposits can be drawn without any
substantial delay and which have not been deposited under any
agreement for a fixed term, net of any bank overdrafts which are
utilised for operational cash flow purposes.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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