First Day of Dealings
14 August 2007 - 10:00AM
UK Regulatory
RNS Number:0280C
Hitchens Group PLC
14 August 2007
Hitchens Group plc
("Hitchens" or "the Group")
(AIM: HIT.L)
First Day of Dealings
Hitchens Group plc, which provides clearance outlets for surplus stocks of
clothing, footwear, electrical and household goods, is pleased to announce the
admission of its shares to trading on AIM today. The shares will be traded under
the symbol HIT.L.
The Company (previously "Azurite Investments plc"), a PLUS traded company
established for the purpose of making acquisitions in the retail sector, will
complete its acquisitions of Novabrand Limited and Hot Deals Limited immediately
following Admission ("the Acquisitions"). Novabrand Limited and Hot Deals
Limited provide clearance outlets for clothing, footwear, electrical and
household goods, selling through stores based in prime locations in secondary
towns and through an online auction site respectively.
HIGHLIGHTS:
Financial
*Placing at 0.75p a share to raise GBP2.32m;
*All share acquisitions of Novabrand Limited and Hot Deals Limited
immediately following Admission for GBP6.78m at the placing price; and
*Market capitalisation of GBP9,325,000 on Admission at the Placing Price.
Business
* Proven format which can be easily replicated;
*Strong relationships with a number of large suppliers;
*Good gross margin at store level;
*Low cost roll out, including surplus EPOS technology sufficient to equip
another seven to eight stores;
*High growth, internet business;
*Experienced management.
Commenting on the admission, Paul Harris, non-executive Chairman, said:
"We are delighted to begin trading on AIM as we enter this new phase of the
business. Hitchens has a strong brand built up from its high street presence in
the Midlands and the North of England. Proceeds from the flotation will allow us
to raise our profile further as well as fund additional working capital and the
growth of the enlarged Group."
Enquiries:
Hitchens Group plc Tel: 0161 487 5850
www.hitchensgroupplc.com
Simon Fine
Daniel Stewart & Company plc Tel: 020 7776 6550
Graham Webster/Oliver Rigby
Bishopsgate Communications Ltd Tel: 020 7562 3350
Maxine Barnes/ Nick Rome/ Nick Farmer
hitchens@bishopsgatecommunications.com
ACQUISITION AND PLACING STATISTICS:
Placing price 0.75p
Number of Existing Ordinary Shares in issue prior to 276,666,667
the Placing and Acquisitions
Number of Placing shares being issued pursuant to the 310,000,000
Placing
Percentage of Enlarged Share Capital immediately 24.9 per cent.
following Admission being placed pursuant to the
Placing
Estimated gross proceeds of the Placing GBP2,325,000
Estimated net proceeds of the Placing receivable by the GBP1,610,500
Company
Initial Consideration Shares to be issued pursuant to 656,666,707
the Acquisition Agreements
Percentage of Enlarged Share Capital represented by the 52.8 per cent.
Initial Consideration Shares
The maximum number of Earn-out Consideration Shares to 246,833,293
be issued pursuant to the Acquisition Agreements
Percentage of Enlarged Share Capital represented by the 60.6 per cent.
Earn-out Consideration Shares and Initial Consideration
Shares
Number of Ordinary Shares in issue on Admission 1,243,333,374
Market capitalisation of the Company on Admission at GBP9,325,000
the Placing Price
The Directors believe that an AIM listing of the Company will enable it to fund
the working capital requirements and growth of the Enlarged Group as well as
raise the profile of Hitchens and Hot Deals Limited.
Daniel Stewart & Company plc is acting as the Company's nominated adviser and
broker.
ACQUISITION DETAILS
Pursuant to the terms of the Acquisition Agreements, the consideration payable
under the Acquisitions will be the sum of GBP6,776,250 to be satisfied by way of
the payment of the Initial Consideration (a sum of GBP4,925,000 to be satisfied
by the allotment and issue by the Company to the Vendors of the Initial
Consideration Shares credited as fully paid up at the Placing Price,
representing 52.8 per cent of the Company) and the payment of the Earn-out
Consideration (a sum of GBP1,851,250 to be satisfied by the allotment and issue
by the Company to the Earn-out Vendors of the Earn-out Consideration Shares).
Payment of the Earn-out Consideration however is dependent on the level of
profitability of the Enlarged Group during the five year period commencing with
the financial year ended 30 September 2008.
FUTURE PROSPECTS
It is the intention of the Board to seek locations for new stores following one
of two formats:
* approximately 2,000 square feet selling only electrical merchandise; or
* a larger store of approximately 5,000 - 7,000 square feet selling a full range
of products.
Merchandise is typically "end of line" or "end of season" which Hitchens
purchases at a significant mark down on its original retail price. These are
then re-tagged showing the original retail price against the Hitchens price to
highlight the significant cost saving. The majority of electrical goods are
latest technology items, which have been returned by consumers to retailers,
suppliers, or distributors, and which are subsequently inspected, serviced and
repaired (if necessary) before being sold as graded products. This allows
Hitchens to sell latest technology items, such as plasma or LCD televisions, at
a significant discount to the original retail price. Hot Deals' sales strategy
has so far focused on its online auction shop where turnover has consistently
increased in relation to the number of stock lines offered on the site. The
Board is confident that through increased purchasing power it will be able to
increase weekly turnover.
Purchasing strategy
Hitchens has a strong relationship with a number of suppliers, which gives the
business access to surplus and returned stock at a substantial discount to the
original retail price. This expansive and varied supplier base provides Hitchens
with its desired blend of stock at low prices. Hitchens receives stock from
suppliers either direct to stores, thus reducing distribution and storage costs,
or through its own dedicated warehouse and distribution facilities. The Board
believes that there is currently an abundance of graded electrical and other
discounted merchandise in the market, and it is confident that it will be able
successfully to stock a larger chain of outlets and e-commerce sites without
difficulty.
Store roll-out plan and internet development strategy
The Board believes that there is currently a good stock of prime locations in
secondary towns and research has found that landlords will offer attractive
incentives to interested tenants. The fit out of a new store is relatively low
cost and from the point of exchange on a lease it generally takes four weeks
before a new store can be opened. Due to existing stock of IT equipment, the
business already has sufficient EPOS and other equipment to install in seven to
ten new stores at little additional cost. The main cash expense of a new store
is the provision of the initial stock range. The Board also intends to seek
partners to facilitate the provision of extended credit which it believes will
significantly increase revenue from existing customers and attract new
customers. The Board intends to consider extended warranties through an
outsourcing agreement with an insurance company, which it believes has the
potential to be a lucrative revenue stream for the Enlarged Group.
It is also the Board's intention to develop its stand alone web site further
together with a number of satellite sites to enable the business to benefit from
saving expensive online auction and payment charges that are currently incurred.
DIRECTORS:
John Edward Taylor, aged 48, Chief Executive Officer
John is a career retailer with experience in a number of sectors. John joined
Hitchens in August 2004 as Managing Director and has overseen the restructuring
of the business. Previously John was Chief Executive of Ponden Mill Limited and
was directly responsible for the expansion of the business from 23 stores to
130. Prior to joining Ponden Mill limited, John was Retail Director of Lloyds
Chemists plc. John joined Lloyds Chemists Retail Limited as a trainee manager
and progressed through the company undertaking various roles including Sales
director of the drugstore division which helped to grow from 85 stores to over
200, and subsequently transferred to the Chemist Division controlling over 1,000
stores.
Simon Daniel Fine, ACA, aged 39, Finance Director
Simon is a Chartered Accountant with corporate finance experience. During his
time as a director of BAI International Limited ("BAI"), Simon led the
negotiations with Littlewoods for the acquisition of the Hitchens store chain.
He has also been involved in the financial and operational restructuring of the
business and with John Taylor acquired the business in July 2005. Simon
qualified with Deloitte & Touche and prior to joining BAI and Hitchens, was
financial director of the Modus Property Group - a property investment and
development company focusing on the retail sector, where he successfully sourced
and negotiated funding for investments and developments both from banking
sources and private investment.
Paul Melvyn Harris, aged 68, Non-Executive Chairman
Paul Harris is an experienced retailer having spent 24 years in a variety of
senior posts with GUS plc including main board director of GUS plc and Chief
Executive Officer of GUS plc's home shopping division. On retiring from GUS plc,
Paul was appointed chairman of the Tulchan Group Limited which operated the
Jumper and Sock shop brand with a number of sites. Paul is currently a director
of Dunham Associates, a consultancy and product sourcing business.
David Geoffrey Wilson, OBE, aged 74, Non-Executive Director
David Wilson was a career banker in Manchester from 1953 to 1991 with Williams
Deacon's Bank, Williams & Glyn's Bank and then British Linen Bank. He served as
a regional director of the National Enterprise Board (British Technology Group)
from 1982 to 1985. Since retiring from banking in 1991 he has been a member of
the Council of the University of Salford as Chairman of its Audit Committee and
then of its Finance Committee. David Wilson is currently the Vice
Lord-Lieutenant of Greater Manchester and Honorary Counsel of Iceland. He is a
Governor of the Manchester College of Arts and Technology and has previously
been a Non-Executive Director of the Lancastrian Building Society and of The
Healthsure Group.
DIRECTOR/PDMR SHAREHOLDING:
Name No of Ordinary Shares Percentage of Number of Shares
Ordinary Shares under Option
following Admission following Admission
John Taylor 89,794,000 7.2 49,733,335
Simon Fine 89,794,000 7.2 49,733,335
Paul Harris 13,333,333 1.1 49,733,335
David Wilson 2,000,001 0.2 -
SIGNIFICANT SHAREHOLDERS:
Name No of Ordinary Shares Percentage of
Ordinary Shares
following Admission following Admission
Simon Corney 66,666,667 5.4
Samuel Halpern * 80,000,000 6.4
Joshua Halpern * 80,000,000 6.4
Aubrey Weiss ** 66,666,667 5.4
Littlewoods 336,000,012 27.0
Martin Abramson *** 101,668,694 8.2
*
Samuel and Joshua Halpern's holdings after Admission include 26,666,667 Ordinary
Shares held by Statebourne Limited, Ventgrove Limited and Linmere Limited, all
jointly owned by them. Their holdings after admission also include 13,333,333
Ordinary Shares held by each of their wives.
**
Aubrey Weiss' holding following Admission includes 20,000,000 Ordinary Shares
held by his son.
***
Martin Abramson's holding following Admission includes 18,000,001 Ordinary
Shares representing 1.4% of the Company held by M & K International Limited, a
company owned by him.
---ENDS---
This information is provided by RNS
The company news service from the London Stock Exchange
END
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