TIDMDESC
RNS Number : 4218V
Designcapital PLC
11 January 2012
11 January 2012
designcapital plc
("designcapital" or the "Group")
Interim Results for the six months ended 30 June 2011
designcapital plc, the AIM listed investment company dedicated
to high end contemporary furniture design, announces its unaudited
consolidated results for the six months ended 30 June 2011.
Designcapital plc EXECUTIVE CHAIRMAN'S STATEMENT
I am pleased to present the Company's Interim Results for the
six months ended 30 June 2011
designcapital plc (the Company) was incorporated in June 2007,
and was admitted to AIM on 21 January 2008, with the strategic
objective of becoming a major pan-European design-focused
investment company.
We were admitted to the AIM market during one of the most
difficult periods in living memory, with great uncertainty as to
the impact of the "credit crunch", the banking crisis, as well as
energy prices and raw material costs, on economic activity.
There were also significant uncertainties as to whether these
pressures could be managed by the world's monetary authorities
without triggering a deeper recession or a sharp rise in
inflation.
The most immediate consequences of the economic crisis that has
dominated since 2008, and continues to the present day, has been a
sharp contraction in credit, a downturn in economic activity and a
worldwide slowdown in most of the industry sectors, including the
high-end furniture design industry.
Amidst this very difficult economic background, which affects
most of the major markets in which the Company's investment targets
operate, the Company has moved quickly to restructure its trading
activities and to adopt a strategy appropriate for the adverse
market conditions that it expects to continue for the foreseeable
future.
In June 2010, after 24 months of restructuring within the
intricate and cumbersome framework of French labour regulations,
both our Paris based subsidiaries, Artelano, involved in the
edition of high-end contemporary design furniture, and Forum
Diffusion, a multi-brand retailer of high-end design furniture to
the contract and office markets, were allowed to exit their
restructuring status and to operate again within the normal
commercial markets.
As highlighted in the interim results for the Group at June
2010, the obligation placed on our subsidiaries by the French
courts to remain under the restructuring status for the maximum
period of "redressement judiciaire" allowed by the French law, had
seriously compromised the Company's ability to bid for business in
their strategic market segments such as banks, public institutions
and large multinational companies.
In June 2010 the operating cost base of both companies was
running significantly below 2009 levels, and like for like figures
demonstrated the overall progress that we had made in the first
half of the year as we continued to restructure the businesses,
reduce costs and improve operational efficiencies within the
logistics side of the business.
Forum Diffusion's business has been refocused on the more
profitable contracts market. The show-room of the company,
structurally loss-making, was sold in June 2010 for EUR1.1m after
costs. This strategy began to produce results as, in September
2010, the Company had identified and targeted more than EUR7.5m
worth of projects; bids worth EUR3.2m were being assessed by
clients, and EUR1.2m worth of orders had already been contracted
for delivery before the end of the year.
In September 2010, we had also re-orientated our Artelano
business around its show-room and contract activities and our
strategy was to present new higher-end products to clients, and to
work on the opening of the first international show-room of
Artelano in Mayfair, London.
Notwithstanding the progress brought about through the
restructuring, the opportunities that were being identified, most
notably at Forum Diffusion, which supported a reasonable
anticipation of growth in our French subsidiaries during 2011,
subsequently suffered from delays and were ultimately contracted
with very thin margins.
The worsening economic conditions that we had started to
identify in the latter part of 2010, and the near term business
focus that resulted from these extra-ordinary market conditions,
prompted us to re-consider the business model and markets that we
were active in.
Following the transfer of the Artelano brand and contracts with
designers to designcapital plc in London, it had become
increasingly apparent to us that maintaining the operations of
Artelano s.a. in Paris, which had undergone an 18 month
restructuring under the French "Redressement Judiciaire" process,
had neither operational or strategic value to the Group.
Following careful consideration, it was decided to cease the
trading activities of Artelano S.A. as soon as was practicable and
on 17 May 2011 the liquidation commenced.
Responsibility for the international development of the Artelano
brand had previously been re-located to London to be driven and
managed through Artelano International Ltd ("Artelano
International"), designcapital's UK subsidiary with its head office
in London.
The winding up of the business on 17 May 2011 resulted in a
termination of the restructuring plan agreed as part of the
"Redressement Judiciaire" process, which included the obligation to
repay historical "frozen" trade liabilities amounting to
approximately GBP1.9 million. Given the losses reported during the
year ended 31 December 2010, together with the expected level of
future losses, this resulted in a non-cash provision being made
against designcapital's investment in Artelano S.A. of GBP1.8
million plus intra group receivables of GBP0.9 million in the
Company's financial statements for the year ended 31 December 2010.
The goodwill impairment in the Group Financial Statements regarding
Artelano S.A. was GBP1.2 million.
During the early part of 2011, and despite the fact that Forum
Diffusion had gained a number of significant orders, the market
started to deteriorate further and more quickly.
In the light of this deterioration the Forum Diffusion
restructuring plan was reviewed. As part of the "Redressement
Judiciaire" process, Forum Diffusion S.A. was obliged to repay
historical "frozen" trade liabilities amounting to approximately
EUR4.5 million over a ten year period, however the Company
concluded that in the current global economic environment, the
restructuring plan was not reasonably achievable.
Following careful consideration, it was decided to cease the
trading activities of Forum Diffusion s.a.s. and of Forum
Developpement s.a.s. as soon as practicable. The liquidation of
Forum Diffusion commenced on 25 August 2011.
The winding up of the Forum Diffusion business resulted in a
termination of the restructuring plan agreed as part of the
"Redressement Judiciaire" process, including the obligation on
Forum Diffusion s.a.s. to repay the residual historical "frozen"
trade liabilities amounting to approximately EUR4.5 million.
This resulted in a non-cash provision being made against
designcapital's investments in Forum Diffusion s.a.s and Forum
Developpement s.a.s of GBP1.7 million plus intra group receivables
of GBP0.2 million in the Company's Financial Statements for the
year ended 31 December 2010. The goodwill impairment in the Group
Financial Statements relating to Forum Diffusion s.a.s. and Forum
Developpement s.a.s. was GBP1.4 million.
Financial Performance
Consolidated revenues for the six months to 30 June 2011 were
GBP40,666 (2009 - GBP2,403,163) and cost of sales were GBP18,318
(2009 - GBP1,582,365), producing a gross profit of GBP22,348 (2009
- GBP920,798).
After taking account of finance income, finance costs and
taxation, the retained loss attributable to shareholders was
GBP876,358 (2009 - GBP1,216,886).
designcapital plc EXECUTIVE CHAIRMAN'S STATEMENT
Outlook
designcapital was established to act as a consolidator within
the European design space.
The recession, lack of credit for smaller businesses and the
fact that the entrepreneurs behind many businesses which started in
the late 1960's and 1970's are now reaching retirement age without
natural successors, together with the impact of e-commerce and of
the internet on high-street furniture show-room businesses, means
that in a fragmented and difficult market there are numerous
opportunities.
Whilst 2009 and 2010 were years in which designcapital worked to
establish the foundations for creating a profitable growth business
and secure acquisition opportunities within a reasonably steady
market environment, the economic crisis that continued to develop
and expand throughout 2011 and that is likely to have negative
implications for the foreseeable future has prompted us to
reconsider our strategy and to adapt to the new and medium term
market conditions.
That said, the Board of designcapital maintains its vision and
despite the current market environment and overall economic
outlook, believes that within the medium term, the Group can be
generating an attractive margin on solid revenues, from a business
model based upon a combination of the procurement of high-end
design furniture for business to business (B2B) and contract
clients; classic e-commerce distribution of high-end design
furniture brands such as Artelano to consumers (B2C); and the
provision of financial and other services serving clients and
brands of the high-end design furniture industry.
We have a wealth of experience and an excellent practical
understanding of the marketaided in part through the
restructuringof our French operations. As a result we have adapted
our strategy as follows:-
Artelano:
The manufacture of Artelano products has stopped for six months
in 2011 to allow for the implementation of the new business model.
Taking account of the market conditions, we believe that this
temporary suspension of the business has allowed us to reduce costs
and preserve cash, without damaging the brand.
In the future the Group will continue to manage the overall
strategy of the brand; the selection of designers and products;
marketing and communication. All other non-core activities will be
sub-contracted or licensed to strategic partners, through long-term
contracts:
-- The brand will not be distributed through wholesale networks,
but rather through direct distribution channels, contract or B2B
channels and a show-room located in London;
-- The distribution strategy for the B2C segment is focussed on
a new e-commerce enabled internet site that will go live in late
January 2012, first in France and subsequently in the UK, to allow
fast entry into the main European markets;
-- The management of the internet site will be licensed to an
existing internet venture that manages brand sites;
-- This distribution strategy allows the Group to better
position and manage the brand's pricing strategy and to decrease
the retail price to clients by 25% on average, compared to retail
prices of the same or similar Artelano product previously sold
through classic show-rooms;
-- The new distribution strategy also facilitates a strong
affiliation programme internationally and in other markets where
the brand will have market presence;
-- Two distribution joint-venture and licence agreements have
been established with local partners to cover the Middle East
market, and also the US and Canada regions;
-- The production of our products, instead of being spread
between a variety of small artisan manufacturers located mostly in
Italy will, in the future, be managed in partnership with another
editor of high-end furniture. This partnership will allow the Group
to generate immediate economies of scale and to mutualise
transportation, warehousing and ancillary costs;
-- The product range of Artelano, which was previously
considered to be niche, too "designer" and unrealistically
expensive, has gained breadth and depth by the addition of new
designers and products which adds a more contemporary, classic
style "twist" to the brand;
-- A range of products exclusively aimed at the contract market
is also being developed to better answer the needs of this market
segment.
designcapital plc EXECUTIVE CHAIRMAN'S STATEMENT
E-Procurement:
The Group has accelerated the development of of DEEZPLAY.com,
something the Directors believe will be the first B2B e-procurement
platform for the high-end design market. This B2B e-procurement
platform is expected to go live in Spring 2012 and aims to:
-- become the standard for presenting furniture products to the
professional market. Such a market standard does not exist
currently;
-- offer initially 150 brands and 35,000 selected products that
were previously distributed by Forum Diffusion, presented in 3D,
with a wealth of technical information;
-- offer functionality that brings together a mix of
space-planning, drag and drop 3D planning, financing, asset and
facilities management services, that has no equivalent on the
market;
-- offer products to professionals at a price 15% to 25% below
the price at which they currently buy from their traditional retail
suppliers;
-- target a market of architects, interior designers or
decorators, space-planners, and purchase directors for major
corporations and central buyers.
This platform will not be a mass market e-procurement tool; it
is dedicated to a very specific, well identified population of
users. On the basis that there are 27,000 active architects in
France it is anticipated that 4,000 to 5,000 users could become
clients of DEEZPLAY.com within 24 months from launch.
Thereafter, it will be rolled out in all European markets where
the Group is able to partner with local internet distribution
partners, on a subcontracted or licensed basis.
Whilst not contributing greatly to 2012 numbers, this platform
should accelerate growth from 2013 onwards.
designcapital*Finance:
Recent experience at Forum Diffusion made us appreciate that the
office and contract furniture industry lacks financial solutions to
fund or re-finance sizeable furniture assets, which are in essence
non-strategic assets.
We intend to create a new company, "designcapital*finance",
which it is expected to adapt financing methods common in IT and
automobile management to the procurement of furniture. Initial
financial "sale and rent back" proposals have been developed for
large and medium sized companies, hotels chains and related sector
companies.
The relevant services are centred around the concept of sale and
rent back (operational leasing) of non-strategic assets such as
high-end furniture which, although necessary for the functioning of
a company, add little to valuation and therefore should be
"externalised" in order not to consume shareholder's equity or
debt.
The financing proposition can be offered to our corporate
clients as well as being made available to our industry partners
where we can provide made to measure rental products in support of
their sales efforts.
The market for high-end furniture for the office and contract
segments is estimated to be around EUR2bn per year in Europe, of
which EUR450m is found in each of France and the UK.
We estimate the installed asset base of high-end furniture in
large corporations, not currently debt or lease financed,
representing an inadequate allocation of cash for such companies,
amounts to at least EUR2bn in France, and similar in the UK.
designcapital plc EXECUTIVE CHAIRMAN'S STATEMENT
Board of Directors
As the business moves towards delivering its new strategy, a
number of complimentary appointments will be made to strengthen the
Board. In particular, expertise will be required in support of the
development of the North American and Middle East markets as well
as in the key area of brand and product development.
2010 and 2011 to date have been periods of significant change
during which actions were taken to refocus designcapital's business
and to ensure the long term future and success for its
shareholders. New distribution channels have been established
through which the Groups products can be sold and on terms that
reduce the risk and costs of distribution. Manufacturing and
logistics have been outsourced further reducing the fixed costs of
the Group. As a result of the restructuring and liquidation of the
French subsidiaries, the Group's obligation to pay trade
liabilities frozen under the "Redressement Judiciaire" process
totalling approximately EUR6.1 million have been terminated.
As a result of the actions taken, the Group now has a cost base
considerably lower than in 2011 and with the significant proportion
of cost being incurred on a variable basis, the level of sales
required to achieve a profit and to generate cash is a fraction of
that required in previous years.
Frederic Bobo
Executive Chairman
23 December 2011
For further information:
designcapital plc
Tel : +44 20 7554 8555
Frederic Bobo
Executive Chairman
Mike Hosie
Chief Financial Officer
designcapital plc CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
For the six monthsended 30 June 2011
Six months Six months
ended ended
30 June 30 June
2011 2010
Note (unaudited) (unaudited)
GBP GBP
Revenue 40,666 2,503,163
Cost of sales (18,318) (1,582,365)
------------- -------------
Gross Profit 22,348 920,798
Other income 6 - 847,240
Administrative and other
operating expenses (557,455) (2,925,754)
Exceptional Costs (257,979) -
------------- -------------
Operating Loss (793,086) (1,157,716)
Finance income - 321
Finance costs (83,272) (39,800)
------------- -------------
Loss before Tax (876,358) (1,197,195)
Taxation 3 - (19,691)
------------- -------------
Retained Loss for the
Half Year attributable
to Equity Shareholders (876,358) (1,216,886)
============= =============
Other Comprehensive Income
Exchange differences on
translating foreign operations - 300,238
------------- -------------
Other Comprehensive Income
for the Half Year, Net
of Tax (876,358) 300,238
------------- -------------
Total Comprehensive Loss
for the Half Year attributable
to Equity Shareholders (876,358) (916,648)
============= =============
Basic Loss per Share
(pence per share) attributable
to Equity Shareholders
of the Company 4 (1.28) (1.97)
============= =============
designcapital plc CONSOLIDATED BALANCE SHEET
Company Number: 06290400 As at 30 June 2011
As at As at As at
30 June 30 June 31 December
2011 2010 2010
(unaudited) (unaudited) (audited)
GBP GBP GBP
ASSETS
Non-Current Assets
Property, plant and equipment 6 168,003 371,435 190,015
Intangible assets 1,969 70,172 1,969
Goodwill 5 - 2,481,235 -
Other receivables 162,973 263,563 162,973
Deferred income tax assets 47,273 50,706 47,273
---------------- ------------- -------------
Total Non-Current Assets 380,218 3,237,111 402,230
---------------- ------------- -------------
Current Assets
Inventories 461,148 688,387 479,181
Trade and other receivables 936,138 1,079,765 1,118,225
Cash and cash equivalents 338,072 385,740 356,890
---------------- ------------- -------------
Total Current Assets 1,735,358 2,153,892 1,954,296
---------------- ------------- -------------
TOTAL ASSETS 2,115,576 5,391,003 2,356,526
---------------- ------------- -------------
EQUITY AND LIABILITIES
Shareholders' Equity
Ordinary shares 8 7,028,222 6,212,061 6,530,085
Share premium 204,089 146,929 196,816
Shares to be issued - - 100,000
Other reserve 6,211 245,031 6,211
Retained earnings (14,015,326) (9,280,443) (13,138,968)
---------------- ------------- -------------
Total Equity - Capital and Reserves (6,776,805) (2,676,422) (6,305,856)
---------------- ------------- -------------
Non-Current Liabilities
Trade and other payables 3,407,160 4,851,549 3,407,160
Borrowings 278,940 293,463 278,940
Provisions for other liabilities and charges 477,243 506,544 477,243
---------------- ------------- -------------
Total Non-Current Liabilities 4,163,343 5,651,556 4,163,343
------------- -------------
Current Liabilities
Trade and other payables 3,012,204 1,096,183 2,884,869
Borrowings 7 1,630,798 1,319,686 1,528,134
Provisions for other liabilities and charges 86,036 - 86,036
------------- -------------
Total Current Liabilities 4,729,038 2,415,869 4,499,039
---------------- ------------- -------------
Total Liabilities 8,892,381 8,067,425 8,662,382
------------- -------------
TOTAL EQUITY AND LIABILITIES 2,115,576 5,391,003 2,356,526
---------------- ------------- -------------
designcapital plc CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
For the six months ended 30 June 2011
Share Share Translation Retained
Capital Premium Reserve Losses Total
GBP GBP GBP GBP GBP
Balance as at 1
January 2011 6,630,085 196,816 6,211 (13,138,968) (6,305,856)
---------- --------- ------------ ------------- ------------
Comprehensive income
Loss for the period - - - (876,358) (876,358)
Other comprehensive
income
Currency translation - - - - -
differences
---------- --------- ------------ ------------- ------------
Total comprehensive
income - - - (876,358) (876,358)
---------- --------- ------------ ------------- ------------
Transactions with
owners
---------- --------- ------------ ------------- ------------
Issue of ordinary
shares 398,137 7,273 - - 405,410
---------- --------- ------------ ------------- ------------
Balance as at 30
June 2011 7,028,222 204,089 6,211 (14,015,326) (6,776,804)
========== ========= ============ ============= ============
Balance as at 1
January 2010 5,822,533 30,071 (55,207) (8,063,557) (2,266,160)
---------- --------- ------------ ------------- ------------
Comprehensive income
Loss for the period - - - (1,216,886) (1,216,886)
Other comprehensive
income
Currency translation
differences - - 300,238 - 300,238
---------- --------- ------------ ------------- ------------
Total comprehensive
income - - 300,238 (1,216,886) (916,648)
---------- --------- ------------ ------------- ------------
Transactions with
owners
---------- --------- ------------ ------------- ------------
Issue of ordinary
shares 389,528 116,858 - - 506,386
---------- --------- ------------ ------------- ------------
Balance as at 30
June 2010 6,212,061 146,929 245,031 (9,280,443) (2,676,422)
========== ========= ============ ============= ============
Balance as at 1
July 2010 6,212,061 146,929- 245,031 (9,280,443) (2,676,422)
---------- --------- ------------ ------------- ------------
Comprehensive income
Loss for the period - - - (3,858,525) (3,858,525)
Other comprehensive
income
Currency translation
differences - - (238,820) - (238,820)
---------- --------- ------------ ------------- ------------
Total comprehensive
income - - (238,820) (3,858,525) (4,097,345)
---------- --------- ------------ ------------- ------------
Transactions with
owners
---------- --------- ------------ ------------- ------------
Issue of ordinary
shares 418,024 49,887 - - 467,911
---------- --------- ------------ ------------- ------------
Balance as at 31
December 2010 6,630,085 196,816 (6,211 (13,138,968) (6,305,856)
========== ========= ============ ============= ============
designcapital plc CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2011
Six months Six months
ended ended
30 June 30 June
2011 2010
(unaudited) (unaudited)
GBP GBP
Cash Flows from Operating
Activities
Loss before taxation (876,358) (1,197,195)
Adjustments for:
Depreciation of property,
plant and equipment 1,161 179,525
Amortisation of intangible
assets - 23,281
(Profit)/Loss on disposal
of fixed assets 20,851 (847,240)
Finance income (1,777) (321)
Finance expenses 78,511 39,800
Movement in provisions for
liabilities and charges - (16,690)
Foreign Exchange movement 33,614 -
------------- -------------
Operating Loss before Changes
in Working Capital (743,998) (1,818,840)
Decrease in inventories 18,033 220,947
Decrease in trade and other
receivables 182,087 1,522,188
Decrease in trade and other
payables 127,335 (1,362,330)
Net Cash Outflow from Operating
Activities 327,455 (1,438,035)
------------- -------------
Cash Flows from Investing
Activities
Purchase of property, plant
and equipment - (663)
Proceeds from sales of property,
plant and equipment - 955,213
Purchase of intangible assets - (2,420)
Interest received - 322
------------- -------------
Net Cash Inflow/(Outflow)
from Investing Activities - 952,452
------------- -------------
Cash Flows from Financing
Activities
Proceeds from issuance of 406,579 -
ordinary shares
Net movement in borrowings 4,264 622,842
Interest paid - (20,947)
------------- -------------
Net Cash Inflows from Financing
Activities 410,843 601,896
------------- -------------
Increase/(Decrease) in Cash
and Cash Equivalents (5,700) 116,313
Effect of Foreign Exchange
Rate Changes - 5,882
Cash and Cash Equivalents
at Beginning of Period (5,828) (22,061)
------------- -------------
Cash and Cash Equivalents
at End of Period (11,528) 88,370
============= =============
Cash and Cash Equivalents
include the following:
Cash at bank and in hand - 385,740
Bank overdrafts included
in borrowings (11,528) (297,370)
(11,528) 88,370
--------- ----------
designcapital plc Notes to the Condensed Interim Financial
Statements
For the six months ended 30 June 2011
1. Basis of Preparation
The condensed consolidated interim financial information for the
6 months ended 30 June 2011 has been prepared in accordance with
International Accounting Standard 34 'Interim Financial Reporting'.
The condensed consolidated interim financial information should be
read in conjunction with the annual financial statements for the
year ended 31 December 2010, which have been prepared in accordance
with International Financial Reporting Standards as adopted by the
European Union.
The financial information contained in this report does not
constitute statutory accounts within the meaning of Section 435 of
the Companies Act 2006. It has been prepared on a going concern
basis in accordance with the recognition and measurement criteria
of IFRSs as adopted by the European Union.
The 2011 interim financial report of the Company has not been
audited.
This condensed consolidated interim financial information has
been approved for issue by the Board of Directors on 23 December
2011.
2. Accounting Policies
The same accounting policies, presentation and methods of
computation are followed in this condensed consolidated interim
financial information as were applied in the preparation of the
Group's annual financial statements for the year ended 31 December
2010. Those financial statements have been reported on by the
Company's auditors and delivered to the Registrar of Companies. The
report of the auditors was unqualified but did contain an Emphasis
of Matter with respect to the ability of the Company and the Group
to continue as a going concern. The auditors' report did not
contain a statement under section 498(2) or 498(3) of the Companies
Act 2006.
Standards, amendments and interpretations to existing standards
effective in 2011 but not relevant to the Group
-- IFRS 3 (revised), 'Business combinations', and consequential
amendments to IAS 27, 'Consolidated and separate financial
statements' and IAS 28, 'Investments in associates', are effective
prospectively to acquisitions and disposals where the acquisition
or disposal date is on or after the beginning of the first annual
reporting period beginning on or after 1 July 2009. This is not
currently applicable to the Group.
-- IAS 27 (revised), 'Consolidated and separate financial
statements' specifies the accounting when control over a subsidiary
is lost. Any remaining interest in the entity is re-measured to
fair value, and a gain or loss is recognised in profit or loss.
This is not currently applicable to the Group.
-- IFRIC 17, 'Distributions of non-cash assets to owners',
effective for annual periods commencing on or after 1 July 2009.
This is not currently applicable to the Group.
-- IFRIC 18, 'Transfers of assets from customers', effective for
transfer of assets received on or after 1 July 2009. This is not
currently applicable to the Group.
-- IFRS 2 (amendment), 'Group cash settled share based
payments', effective for annual periods commencing on or after 1
January 2010. This is currently not applicable to the Group.
Going Concern
As described in the 2008 and 2009 Executive Chairman's
Statements, the French registered subsidiary undertakings Artelano
S.A. and Forum Diffusion s.a.s. entered into a "Redressement
Judiciaire" arrangement on 30 December 2008. "Redressement
Judiciaire" is a court based procedure which is applied for where a
company is in a state of "cessation des payments" (cessation of
payments) but has not ceased its trading activities and is
considered capable of being rehabilitated. The first stage of the
process is an observation period during which management remain
charged with managing the business and creditors are barred from
taking action to obtain payment for liabilities that arose before
the court initiated the "Redressement Judiciaire".
During the observation period, which typically lasts for three
to six months, although it can be extended to a maximum of 18
months, where the court is confident that the business can be
rehabilitated, the business can be restructured under the
protection of the court and the procedure. Once the observation
period ends a company will continue to manage its old liabilities
in accordance with the "Continuation" plan established with the
court whereby pre-"Redressement Judiciaire" liabilities are settled
over a period that extends to a maximum of ten years.
During 2010 and early 2011 worsening economic conditions
prompted the Group's management to re-consider the business model
and the markets that the Group was active in.
Maintaining the operations of Artelano S.A. in Paris, which had
undergone an 18 month restructuring under the French "Redressement
Judiciaire" process, had neither operational nor strategic value to
the Group. As a consequence it was decided to allow the company to
be liquidated on 17 May 2011 resulting in the termination of the
restructuring plan agreed as part of the "Redressement Judiciaire"
process.
Similarly, the Forum Diffusion s.a.s. restructuring plan was
reviewed. As part of the "Redressement Judiciaire" process, Forum
Diffusion s.a. was obliged to repay historical "frozen" trade
liabilities amounting to approximately EUR4.5 million over a ten
year period. However, the Company concluded that in the current
global economic environment, the restructuring plan was not
reasonably achievable.
Following careful consideration, it was also decided to cease
the trading activities of Forum Diffusion s.a.s. on 25 August
2011.
The ceasing of trading activities and subsequent liquidation of
both businesses resulted in an immediate termination of the
restructuring plans agreed as part of the "Redressement Judiciaire"
process, including the obligation on Artelano S.A. and Forum
Diffusion s.a.s. to repay historical "frozen" trade liabilities of
approximately EUR1.5 million and EUR4.5 million respectively.
Court decisions were taken on 17 May 2011 for Artelano S.A., and
on 25 August 2011 for Forum Diffusion s.a.s. A decision to wind-up
Forum Developpement s.a.s as soon as practicable has also has been
taken by the Board with the winding-up process expecting to be
initiated before the end of 2011.
An alternative business model has subsequently been adopted
based on the subcontracting of manufacturing and logistics and the
establishment of joint venture distribution agreements which will
reduce the cash requirements of the Group.
Distribution contracts have been established with Mak Design for
the exploitation of the Middle East and North African market and
with Fuaris Consulting Inc. for the United States and Canadian
markets. Additional arrangements are planned for the French and
other European markets. The Group's future is partly dependant on
the success of these distributors.
The Directors' plans and strategy for the short and medium term
assume a growth in income and profitability in the Group's
remaining trading subsidiary undertakings. Due to the time needed
to establish the new business model, further finance will be
required by the Company to implement or acquire the currently
planned growth opportunities. The need to raise additional funds
will depend upon the timing of the development of the trading
subsidiaries and joint ventures and the availability of funds to
secure planned growth opportunities.
The ability of the Company to arrange and secure such financing
in the future will depend on capital market conditions and the
business performance of the Group. There can be no assurance that
the Company will successfully arrange additional finance, if
required, nor that it will be on terms which are satisfactory to
the Company.
The Directors have had discussions with Luxadvor S.A., a
significant shareholder, and have renegotiated the terms of the two
loans made available to the Company on 26 June 2009 and 11 June
2010 respectively whereby the repayment of the loans will not be
required before 31 December 2012. Further discussions are ongoing
and the Directors have a reasonable expectation that they will
reach an agreement with Luxadvor S.A. whereby both parties agree to
ensure that the working capital requirements of the Group are not
threatened.
On 23 December 2011 T1ps Investment Management, a shareholder in
the Company, provided a guarantee to the Company to make available
funds of up to GBP250,000 on an interest free and unsecured basis
should the Company be unable to meet its financial obligations from
its own resources. The guarantee is effective for the period to 31
December 2012, or as otherwise agreed with the Company. The
Directors are confident that T1ps Investment Management has the
financial capability to meet the terms of this facility but have
not seen financial information or confirmations from T1ps
Investment Management to verify this.
On 22 December 2011, Frederic Bobo, a Director of the Company,
provided the Company with an eighteen month working capital
facility of up to GBP150,000, to be drawn down by the Company
should the Company need additional funds.
The Directors have concluded that, notwithstanding the future
financial support described immediately above, the circumstances
set out beforehand represent a material uncertainty that casts
doubt upon the Company's and Group's ability to continue as a going
concern, and therefore the Company may be unable to realise its
assets and discharge its liabilities in the normal course of
business. After considering the uncertainties mentioned above, the
extension of the loans from Luxadvor S.A., the guaranteed
facilities from T1ps Investment Management and Frederic Bobo and
based upon the Board-approved forecasts and projections, the
Directors have a reasonable expectation that the Company will
continue in operational existence for the foreseeable future.
3. Taxation
No current tax arises in the period. The charge for the period
consists of the movement in deferred taxation arising from the
origination and reversal of temporary differences. Deferred tax
assets on unutilised trading losses have not been recognised in the
Financial Statements due to uncertainty over the timing of their
utilisation.
4. Earnings per Share
Basic loss per share is calculated by dividing the loss after
tax attributable to equity holders by the weighted average number
of ordinary shares in issue during the period.
Six months Six months
ended ended
30 June 30 June
2011 2010
Loss attributable to
equity holders of the
Company (GBP) (876,358) (1,216,886)
----------- ------------
Weighted average number
of ordinary shares
in issue 68,280,852 61,471,394
----------- ------------
Basic loss per share
(pence per share) (1.28) (1.97)
----------- ------------
5. Borrowings
On 26 June 2009, the Company entered into a loan agreement with
Luxadvor S.A., a substantial shareholder of the Company, for up to
GBP600,000 at an annual rate of interest of 12 per cent per annum.
The repayment date of the loan has been re-negotiated and the new
date for repayment is not before 31 December 2012.
On 11 June 2010, the Company entered into a short term loan
agreement with Luxadvor S.A. of up to EUR785,000 for the purpose of
satisfying the French court's working capital requirements of the
subsidiary undertakings in the "Redressement Judiciaire"
arrangement. The repayment date of the loan facility has been
renegotiated and is not repayable before 31 December 2012. Interest
accrues at a rate of 12 per cent per annum. The loan is secured
against the shares of certain subsidiary undertakings and F J Bobo
has also provided a personal guarantee to Luxadvor S.A. in relation
to the loan.
As explained in Note 2, the Directors are currently in
discussions with Luxadvor S.A. with a view to further renegotiating
the repayment terms of the two loans.
6. Share Capital
Number Ordinary
Ordinary shares of 10 pence each of shares shares
GBP
At 1 January 2011 65,300,847 6,530,085
Issue of shares 4,981,374 498137
------------ ----------
At 30 June 2011 70,282,221 7,028,222
At 1 January 2010 58,225,330 5,822,533
Issue of shares 3,895,276 389,528
------------ ----------
At 30 June 2010 62,120,606 6,212,061
Issue of shares 3,180,241 318,024
------------ ----------
At 31 December 2010 65,300,847 6,530,085
============ ==========
7. Related Party Transactions
The Group entered into the following related party transactions
during the period:
designcapital plc incurred costs of GBP292,697 (6 months ended
30 June 2009: GBP255,268) in respect of management and advisory
fees payable to Stunning Partners LLC, a limited liability company
incorporated in the State of New York controlled by Frederic Bobo.
Included within trade and other paybles is a balance of GBP119,968
(31 December 2010: GBP66,736) relating to management advisory fees
and success fees from Stunning Partners LLC.
designcapital plc also incurred costs of GBP46,000 (6 months
ended 30 June 2009: GBP54,250) in respect of fees payable to Kerr
Douglas Ltd, a limited liability company incorporated in England
controlled by Michael Hosie. Included within trade and other
liabilities is a balance of GBP237,238 (31 December 2010:
GBP189,684).
The Group owed Luxadvor S.A., a substantial shareholder of the
Company, GBP1,309,764 plus accrued interest of GBP229,468 as at 30
June 2011 (31 December 2010: GBP1,275,650 plus accrued interest of
GBP150,288). The terms of the loans are disclosed within Note 7.
The loans are secured against the entire issued share capital of
Artelano S.A. and Forum Diffusion s.a.s.
8. Segmental Analysis
Management has determined the operating segments based on the
reports reviewed by the Executive Chairman, as the Group's chief
operating decision-maker, that are used to make strategic
decisions. The Executive Chairman considers the business from both
a class of business and a geographical perspective: the design and
distribution of high-end luxury furniture in France and the UK, and
the provision of support services in the UK.
The Executive Chairman assesses the performance of the operating
segments based on operating profit or loss as disclosed in the
Consolidated Statement of Comprehensive Income.
Sales between segments are carried out at arm's length.
Design Support Total
and distribution services
(France (UK)
and the
UK)
GBP GBP GBP
Six months ended
30 June 2011
Total segment revenue 40,666 - 40,666
Inter-segment revenue
------------------ ------------ ------------
Revenue from external
customers 40,666 - 40,666
------------------ ------------ ------------
Operating loss (793,086)
Finance income -
Finance costs (83,272)
------------
Loss before tax (876,358)
Taxation -
------------
Loss for the period (876,358)
------------
Reportable segment
assets 103,046 429,077
------------------ ------------ ------------
Reportable segment
liabilities (23,790) (2,060,121)
------------------ ------------ ------------
Design Support Total
and distribution services
(France) (UK)
GBP GBP GBP
Six months ended
30 June 2010
Total segment revenue 2,503,163 498,019 3,001,182
Inter-segment revenue - (498,019) (498,019)
------------------ ------------ ------------
Revenue from external
customers 2,503,163 - 2,503,163
------------------ ------------ ------------
Operating loss 1,846,075 (688,359) (1,157,716)
Finance income 321
Finance costs (39,800)
------------
Loss before tax (1,197,195)
Taxation (19,691)
------------
Loss for the period (1,216,886)
------------
Reportable segment
assets 4,400,297 990,706 5,391,003
------------------ ------------ ------------
Reportable segment
liabilities (5,992,985,) (2,074,440) (8,067,425)
------------------ ------------ ------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FFLLFLFFZBBQ
Designcapital (LSE:DESC)
Gráfico Histórico do Ativo
De Abr 2024 até Mai 2024
Designcapital (LSE:DESC)
Gráfico Histórico do Ativo
De Mai 2023 até Mai 2024