TIDMFISH
RNS Number : 0741C
Fishing Republic PLC
27 September 2018
27 September 2018
AIM: FISH
FISHING REPUBLIC PLC
("Fishing Republic" or "the Group")
Interim Results
For the six months ended 30 June 2018
KEY POINTS
Summary
-- Company is in a year of transition and results reflect the
challenging period, including the very difficult trading backdrop
-- New CEO, Daniel Quinn, appointed, with effect from 17 October
2018 - see separate announcement issued today
- highly experienced retailer - joins from GO Outdoors; previously
held senior commercial roles at Tesco PLC
Financial
-- Revenues of GBP3.4m (H1 2017: GBP4.1m), partly reflected store
closures
-- Loss before exceptional items, interest and taxation, depreciation
and amortisation of GBP1.4m (H1 2017: GBP0.0m)
-- Exceptional costs of GBP0.9m incurred, mainly as a result of
reorganisation, store closure costs and a write down of stock
values
-- Operating loss after exceptional items of GBP2.5m (H1 2017:
loss GBP0.1m)
-- Reported loss for the period was GBP2.5m (H1 2017: loss of
GBP0.1m)
-- Basic loss per share of 5.05p (H1 2017: loss of 0.25p)
-- Equity placing raised GBP1.3m (gross) in January and a GBP0.5m
loan was secured in June from existing shareholders
Operational
-- Following a comprehensive review of operations, restructuring
of the business is ongoing
-- Senior management team strengthened
-- Store network and product ranges rationalised
-- Principal website upgraded and relaunched in May
-- New distribution centre was opened and became operational in
April
James Newman, Chairman, said:
"Fishing Republic is in a year of transition. Following a
comprehensive review of the Group's operations, we have taken firm
action in the first six months of the financial year to stabilise
the business and to implement changes to improve its
performance.
"The restructuring of the business was undertaken against very
difficult trading conditions - so it has been a particularly
challenging period. While the sales environment continues to be
tough, with strong competitive pressures, our major shareholders
have supported our plans, and we remain confident of the prospects
for the business as we navigate through the current challenges.
"We are pleased to welcome Dan Quinn as Chief Executive Officer.
He shares the Board's vision that there is a significant
opportunity for the Group to build its presence as a multi-channel
retailer of fishing tackle and equipment."
Enquiries:
Fishing Republic plc T: 020 3178 6378 (today)
James Newman, Executive Chairman
KTZ Communications Limited T: 020 3178 6378
Katie Tzouliadis, Emma Pearson
Northland Capital Partners Limited T: 020 3861 6625
Nominated Adviser and Broker
Matthew Johnson, Jamie Spotswood,
David Hignell (Corporate Finance)
Rob Rees (Corporate Broking)
CHAIRMAN'S STATEMENT
Introduction
The Company is in a year of transition, as we have previously
reported. Following changes to the Board in November 2017, and a
comprehensive review of the Group's operations, we have taken firm
action in the first six months of the financial year to stabilise
the business and to implement changes to improve its performance.
These changes have included significant organisational and
operational initiatives, including key senior management
appointments, the closure of underperforming stores and overhead
cost reductions.
The restructuring of the business was undertaken against very
difficult trading conditions and so it has been a particularly
challenging period for the Group. Nevertheless, we have remained
focused on re-establishing a sound base for the Group's future
development. Our major shareholders have supported our plans and we
remain confident of the prospects for the business as we navigate
through the current challenges.
I am particularly pleased to report that our recruitment process
for a new Chief Executive Officer has concluded very successfully
and that Daniel Quinn will be joining the Board in that role, with
effect from 17 October 2018. Daniel has over 26 years' experience
in the retail sector, including in senior commercial roles at Tesco
PLC, and, latterly, at GO Outdoors, one of the UK's largest
retailers of outdoor clothing and equipment, where he was
Commercial Director.
Financial Results
The Group's revenues in the first six months to 30 June 2018
were lower than the same period last year at GBP3.4m (H1 2017:
GBP4.1m). Overall store sales reduced by GBP0.5m to GBP2.7m (H1
2017: GBP3.2m), with like-for-like store sales decreasing by 22%
(H1 2017: up 21%). Online sales over the six months decreased by
GBP0.2m to GBP0.7m (H1 2017: GBP0.9m).
As anticipated, gross margin in the first quarter was well below
last year's level, reflecting our actions to clear old product
lines and surplus stock, but there was also downward pressure as a
result of the competitive environment, which meant that, while
second quarter margins improved, overall gross margin was 27% (H1
2017: 35.3%).
The significant scaling of the Group's operations in 2017,
including adding additional resources, meant that selling,
distribution and administration expenses were higher year-on-year
at GBP2.5m (H1 2017: GBP1.6m). However, our restructuring programme
has included measures to redress these costs, which should benefit
the second half.
LBITDA (loss before exceptional items, interest and taxation,
depreciation and amortisation) for the half year was GBP1.4m (H1
2017: GBP0.0m).
Exceptional costs incurred in the period totalled GBP0.9m and
are mainly accounted for by reorganisation and store closure costs
of GBP0.5m, and an additional write-down of stock values totalling
GBP0.4m.
Reflecting the reduction in gross profit and the higher cost
base, the Group incurred an operating loss, after exceptional
items, of GBP2.5m (H1 2017: loss of GBP0.1m). The reported loss for
the period was GBP2.5m (H1 2017: loss of GBP0.1m), and basic loss
per share was 5.05p (H1 2017: loss of 0.25p).
Inventories at the half year end, which typically represents the
high point in the fishing season, stood at approximately GBP2.7m at
30 June 2018 (30 June 2017: GBP5.3m and GBP3.3m at 31 December
2017). Cash in the bank at 30 June 2018 was GBP0.5m (30 June 2017:
GBP0.7m).
Placing of Shares
At the end of January 2018, the Company raised GBP1.3m (gross)
through a placing of 13,000,000 new ordinary shares at a price of
10p per share. The placing was supported by existing shareholders,
including Directors, as well as by a number of new shareholders.
The Company also issued 1,350,000 ordinary shares at 10p per share
as part-payment for consultancy services in respect of the review
of the business and operations.
Loan
On 29 June 2018, the Company agreed a secured loan of GBP0.5m
from existing shareholders. The loan bears an interest rate charge
of nine per cent. per annum and is repayable after one year.
Review of Operations
The trading environment remained tough over the period,
affecting both store and online sales, with competitive pressures
exacerbated by the exceptionally hot weather, which typically
drives a reduction in angling activity.
Stores
As previously reported, after undertaking a thorough examination
of the performance of our 19 stores, we took decisive action to
reconfigure the Group's network in order to generate more
acceptable returns.
As a result, in early January 2018, we closed our store in
Clavering, Essex and, subsequently, in April and May, closed four
further stores, in Ipswich, Mildenhall, Swindon and Huntingdon.
We also implemented a number of initiatives to address store
performance, improving branding and layout, and have introduced new
store management incentives. Some of the benefits of these changes
were shown in an improvement in like-for-like sales in the latter
part of the period, and further initiatives to stimulate sales are
being implemented.
Online
A major focus in the period was the relaunch of the Group's core
website and the rationalisation of our specialist websites, in line
with our decision to refocus the Group's product range.
We launched the Group's new upgraded website in mid-May, and
this has significantly enhanced our online presence, which should
help to drive future growth. We are also continuing to move away
from third party online sales.
In August, we appointed a new Head of E-commerce, who is working
on further initiatives to maximise the potential of this important
sales channel.
Logistics and Customer Service
We opened a new distribution centre in mid-March 2018, which
became fully operational from the beginning of April, receiving and
making all deliveries from suppliers and onwards to the stores.
This has improved our costs and operational efficiencies and will
help to support our high customer service ratings.
Merchandising and Inventory
We have instigated a new policy of centrally-controlled buying
and also rationalised the Group's product range. As a result, we
have refined our offering, including refocusing on premium brands.
This has resulted in a further write down of inventory in the
period.
These changes, together with the new distribution centre, place
the Group in a stronger position as we look towards the buying
season for 2019, which commences in the autumn.
Staff
I would like to thank all our staff for their hard work and
commitment during a challenging period. We have many talented and
knowledgeable people within the Group and their collective skills
and energy will help to move the business forward as we make
progress with our turnaround initiatives.
Board Appointments
We are delighted to welcome Dan Quinn to the Board as Chief
Executive Officer with effect from 17 October 2018. For the last
six years, Dan has been the Commercial Director of GO Outdoors,
which became part of the JD Sports Group plc in 2016. Prior to
this, he worked for Tesco PLC for over 20 years where he held a
number of senior commercial positions, both in the UK and overseas
in Asia and Central Europe. We look forward to working with him to
realise the opportunities that exist for the business. Following
Dan's appointment, I will resume my role as Chairman in a
non-executive capacity.
As previously announced, in early March 2018, we were very
pleased to appoint Stephen Kyriacou to the Board as Chief Operating
Officer.
Outlook
We have made significant structural and organisational changes
to the Group over the course of the last 10 months, which puts the
business in a better position to resume its growth path.
Sales have continued to be affected by strong competitive
pressures, especially online, although we have seen a small
improvement in like-for-like store sales in the third quarter.
Further cost savings have been made to help mitigate the shortfall
in sales.
We welcome Dan Quinn as Chief Executive Officer. He shares the
Board's vision that there is a significant opportunity for the
Group to build its presence as a multi-channel retailer of fishing
tackle and equipment.
We would like to thank our shareholders for their continuing
support as we continue to implement our turnaround plans.
James H Newman, OBE
Executive Chairman
Income Statement
for the six months ended 30 June 2018
Six months Six months Twelve months
to 30 June to 30 June to 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP GBP GBP
------------------------------------- -------------- ------------- ----------------
Revenue 3,354,554 4,094,653 9,153,169
Cost of sales (2,450,137) (2,632,451) (6,170,127)
------------------------------------- -------------- ------------- ----------------
Gross profit before exceptional
charges 904,417 1,462,202 2,983,042
------------------------------------- -------------- ------------- ----------------
Exceptional provision for inventory
write-down (441,534) - (568,079)
------------------------------------- -------------- ------------- ----------------
Gross profit after exceptional
charges 462,883 1,462,202 2,414,693
------------------------------------- -------------- ------------- ----------------
Other income 8,718 11,006 18,630
------------------------------------- -------------- ------------- ----------------
Selling and distribution costs (1,471,845) (814,088) (2,183,123)
Administrative expenses (1,033,667) (766,849) (1,778,298)
------------------------------------- -------------- ------------- ----------------
Operating loss before exceptional
costs (2,033,911) (107,729) (1,527,828)
Exceptional costs (467,802) - (707,464)
------------------------------------- -------------- ------------- ----------------
Operating loss after exceptional
costs (2,501,713) (107,729) (2,235,292)
Finance costs (9,229) (9,815) (20,924)
Loss on ordinary activities
before taxation (2,510,942) (117,544) (2,256,216)
Taxation - 23,509 41,389
------------------------------------- -------------- ------------- ----------------
Loss after taxation (2,510,942) (94,035) (2,214,827)
Basic (loss)/earnings per share
(pence) (5.05) (0.25) (5.85)
------------------------------------- -------------- ------------- ----------------
Statement of Comprehensive Income
for the six months ended 30 June 2018
Six months Six months to Twelve months
to 30 June to
30 June 2017 31 December
2018 Unaudited 2017
Unaudited Audited
GBP GBP GBP
---------------------- ------------- -------------- --------------
Loss for the period (2,510,942) (94,035) (2,214,827)
---------------------- ------------- -------------- --------------
Other comprehensive
income - - -
Total comprehensive
loss for the period
attributable to the
equity shareholders (2,510,942) (94,035) (2,214,827)
====================== ============= ============== ==============
Company Registration Number 09196822
Statement of Financial Position
at 30 June 2018
As at As at As at
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP GBP GBP
----------------------------------------- ------------ --- ----------- --- -------------
Non-current assets
Intangible assets 507,483 613,880 556,246
Property, plant & equipment 1,409,445 1,412,847 1,589,109
1,916,928 2,026,727 2,145,355
----------------------------------------- ------------ --- ----------- --- -------------
Current assets
Inventories 2,679,554 5,286,718 3,306,197
Trade and other receivables 282,809 453,261 218,000
Cash and cash equivalents 516,637 681,409 360,170
----------------------------------------- ------------ --- ----------- --- -------------
3,479,000 6,421,388 3,884,367
----------------------------------------- ------------ --- ----------- --- -------------
Total Assets 5,395,928 8,448,115 6,029,722
----------------------------------------- ------------ --- ----------- --- -------------
Non-current liabilities - - -
Interest bearing loans and borrowings
Current liabilities
Trade and other payables 1,391,082 1,681,930 1,402,209
Deferred Tax Liability - 17,880 -
Interest bearing loans and borrowings 500,000 - -
----------------------------------------- ------------ --- ----------- --- -------------
1,891,082 1,699,810 1,402,209
----------------------------------------- ------------ --- ----------- --- -------------
Total Liabilities 1,891,082 1,699,810 1,402,209
----------------------------------------- ------------ --- ----------- --- -------------
Equity
Called up share capital 522,062 378,562 378,562
Share premium 6,302,414 5,057,639 5,057,639
Reserves (3,319,630) 1,312,104 (808,688)
----------------------------------------- ------------ --- ----------- --- -------------
Total Equity 3,504,846 6,748,305 4,627,513
----------------------------------------- ------------ --- ----------- --- -------------
Total Equity and Liabilities 5,395,928 8,448,115 6,029,722
----------------------------------------- ------------ --- ----------- --- -------------
Statement of Changes in Equity
For the six months ended 30 June 2018
Share Share Premium Retained
Capital account Profit Total
GBP GBP GBP GBP
----------------------- ---------- -------------- ------------- ------------
At 1 January 2017 378,268 5,052,933 1,406,139 6,837,340
Loss for the period - - (94,035) 125,878
Share issue 294 4,706 - 5,000
Share issue costs - - - -
At 30 June 2017 378,562 5,057,639 1,312,104 6,748,305
Profit for the period - - (2,120,792) (2,120,792)
At 31 December 2017 378,562 5,057,639 (808,688) 4,627,513
Loss for the period - - (2,510,942) (2,510,942)
Share issue 143,500 1,291,500 - 1,435,000
Share issue costs - (46,725) - (46,725)
At 30 June 2018 522,062 6,302,414 (3,319,630) 3,504,846
----------------------- ---------- -------------- ------------- ------------
Statement of Cash Flows
for the six months ended 30 June 2018
Six months Six months Twelve months
to 30 June to 30 June to 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP GBP GBP
------------------------------------ ------------ ------------- ----------------
Operating activity
(Loss)/profit before tax (2,510,942) (117,544) (2,256,216)
Depreciation and Amortisation 166,124 97,214 252,576
Impairment of tangible assets 7,179 - -
Impairment of intangible assets 40,707 - 162,462
Interest expense 9,229 9,815 20,924
Loss on disposal of tangible
assets 130,511 - 49,835
Loss on disposal of intangible
assets - - 33,065
(Increase)/decrease in inventories 626,643 (1,030,088) 950,433
(Increase)/decrease in receivables (64,809) (247,583) (12,322)
Increase/(decrease) in payables (11,127) 801,874 522,154
Net cash generated from operating
activity (1,606,485) (486,312) (277,089)
------------------------------------ ------------ ------------- ----------------
Investing activity
Purchase of property, plant
and equipment (63,574) (713,941) (1,032,250)
Acquisition of intangible assets (52,520) (169,222) (370,266)
Net cash used from investing
activity (116,094) (883,163) (1,402,516)
------------------------------------ ------------ ------------- ----------------
Financing activity
Issue of share capital (net
of expenses) 1,388,275 5,000 5,000
Loan introduced 500,000 - -
Loan repayments - - -
Interest paid (9,229) (9,815) (20,924)
Net cash inflow/(outflow) from
financing activity 1,879,046 (4,815) (15,924)
------------------------------------ ------------ ------------- ----------------
Net increase/(decrease) in cash
and cash
equivalents 156,467 (1,374,290) (1,695,529)
Cash and cash equivalents at
start of period 360,170 2,055,699 2,055,699
------------------------------------ ------------ ------------- ----------------
Cash and cash equivalents at
end of period 516,637 681,409 360,170
------------------------------------ ------------ ------------- ----------------
Notes to the Interim Statement
1. Basis of preparation
The interim financial information has been prepared in
accordance with the accounting policies that are expected to be
adopted in the Company's full financial statements for the year
ending 31 December 2018. These policies are not expected to be
significantly different to those set out in Note 1 of the Group's
audited financial statements for the year ended 31 December 2017.
They are based on the recognition and measurement principles of
IFRS in issue as adopted by the European Union (EU) and are
effective at 30 June 2018. The financial information has not been
prepared (and is not required to be prepared) in accordance with
IAS 34.
The financial information in this statement relating to the six
months ended 30 June 2018 and the six months ended 30 June 2017 has
neither been audited nor reviewed by the Auditors, pursuant to
guidance issued by the Auditing Practices Board. The financial
information presented for the year ended 31 December 2017 does not
constitute the full statutory accounts for that period. Full
audited financial statements for the year ended 31 December 2017
are available on the company's website.
The Directors prepare annual budgets and cash flow projections
that extend beyond the date of this report. These projections take
account of the timing of expected cash inflows and financial
commitments over that period. Based upon these projections and the
availability of financial resources as required over this period,
the Directors have a reasonable expectation that the company will
meet its future obligations as they fall due and therefore believe
that the going concern basis is appropriate for the preparation of
the financial statements.
2. Exceptional Costs
Six months Six months Twelve months
to 30 June to 30 June to 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP GBP GBP
Charge to cost of sales
Provision for inventory write
down 441,534 - 568,079
Charged to operating loss
as overheads
Re-organisation costs 185,135 - 393,922
Aborted acquisition costs - - 86,472
Store closure costs 241,953 - 64,608
Goodwill & intangible assets
written off 40,714 - 162,462
Total exceptional costs 909,336 - 1,275,543
------------------------------- ------------ ------------ ----------------
3. 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.
Six months Six months Twelve months
to 30 June to 30 June to 31 December
2018 2017 2017
Unaudited Unaudited Audited
(Loss)/ profit for the period
(GBP) (2,510,942) (94,035) (2,214,827)
Weighted average shares in
issue (no.) 49,680,785 37,828,088 37,841,776
Basic (loss)/earnings per
share (pence) (5.05) (0.25) (5.85)
------------------------------- ------------ ------------ ----------------
Basic
The (loss)/earnings attributable to ordinary shareholders is
profit/(loss) 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.
Diluted
Because a loss is reported in the period, the calculation of
diluted earnings per share using the share options in issue would
be anti-dilutive. Therefore, diluted EPS has not been
calculated.
4. Share capital
During the six months to 30 June 2018 the following share issues
took place:
An issue of 13,000,000 ordinary shares on 1 February 2018 at a
price of 10p per placing share to new and existing
shareholders.
An issue of 1,000,000 ordinary shares on 1 February 2018 at a
price of 10p per share as part-payment for consultancy services
provided in relation to a review of the business and operations
completed in January 2018.
An issue of 350,000 ordinary shares on 8 March 2018 at price of
10p per share as payments for eCommerce consultancy services
provided to the Company
5. Interim report
Copies of this interim report are available from Fishing
Republic plc, Vulcan Works, Chesterton Road, Eastwood Trading
Estate, Rotherham, South Yorkshire S65 1SU and on the company's
website at: www.fishingrepublic.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR QQLFLVKFEBBL
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