RNS Number:2764U
Supercart PLC
03 April 2007
Supercart PLC
3rd April 2007
Supercart plc ('Supercart' or the 'Company')
Preliminary results for the 12 months to 31st December 2006
CHAIRMAN'S STATEMENT
I am pleased to present our results for 2006, which has been a year of both
challenges and successes.
We have had another successful year in South Africa where pre-tax profits, prior
to intra group adjustments, showed an increase of about 33% on 2005. As
previously reported, in terms of sales achieved North America has not lived up
to our earlier hopes. Having said this, our team there has worked tirelessly and
to good effect in terms of introducing our product to the major retail groups in
the USA. Although we have only achieved modest sales during 2006, we will
shortly be introducing new product into North America, and we believe we are
well positioned for a better 2007.
Our European 225 litre trolley has concluded its modifications and has been
successfully tested by our European distributor Ateliers Reunis Caddie SA ('
Caddie'). We will be introducing this product, and a new 135 litre trolley into
the European market about the middle of the year.
2006 has also been a year of much effort in the design, development and
construction of new trolleys in addition to those mentioned above. Without
detracting from our emphasis on our most important markets, we also have our eye
on other exciting markets for later in 2007 and beyond.
Results
For the year ended 31st December 2006, Supercart generated turnover of
#2,893,000 (2005 - #2,415,000) an increase of 20%. Margin retention improved by
over 2% to 18.4% (2005 - 16.3%).
Operating expenses in North America increased by over #200,000 when compared
with 2005 as a result of including a full sales staff cost for 2006. The
operating expenses from all other trading areas decreased by #50,000 over 2005,
and an increase in group operating expenses of #21,000 arose from the
implementation of FRS 20 "Share-based payment", giving a group operating
expenses increase of #171,000 (net) as a result of the North American increase.
The loss before tax is #791,000 (2005 as restated for FRS 20 - loss of
#701,000). The loss per share is 3.64p (2005 as restated - loss of 3.42p).
Supercart had net cash balances of #1,147,000 (2005 - #408,000) at the year end.
The Directors are not recommending the payment of a dividend in respect of the
year ended 31st December 2006.
South Africa
Despite this being a mature market, we have continued with increases of over 25%
in both unit sales and revenue for the second year running of our 'Grocer' 165
litre trolley. Importantly, we have also continued to improve our gross profit
margin by 2.4% over 2005 through a process of rigorously examining our product
cost structure.
Key to our sales success has been the development, over the last two years, of
our recycled trolley project. Acceptance of this project amongst retailers is
high and continues with confirmed orders for 2007 at similar or higher levels
than 2006. Progressive retailers who are focusing on Corporate Social
Responsibility (CSR) issues are seeing clear benefits in this project which we
are looking to replicate in our other trading areas.
Our new 30 litre hand basket performed well in 2006, almost doubling the
original planned unit sales. We expect continued success with this product in
2007 and we will monitor with a view to producing further similar moulds in our
other markets.
North America
Like on like sales of the 'Classic' 165 litre increased by 16% over 2005 but
were still far short of our expectations a year ago. As we said six months ago,
we have not been able to translate the clear retailer demand into actual orders.
Of the two national retail chains that were testing our 'Classic' trolley in the
last half of 2006, one has now confirmed a successful conclusion to the test and
we are now their sole trolley supplier. The other test will conclude at the end
of this month.
We will be introducing a new trolley into this market in the coming months. The
moulds are currently undergoing trials in China prior to shipment to our US
manufacturer and the first off tool samples give us cause for optimism. We
believe that we will be live testing this product in June for which we already
have a contracted retailer.
Europe
Modifications to our 225 litre 'Hyper' trolley have now been completed and the
trolley has now been successfully tested by our European distributor 'Caddie'.
We expect that production will start in our European manufacturer with test
stores before the end of June.
We are also finalising the manufacture of the moulds for a new European trolley,
of which we expect to commence live retailer tests later this year.
Australia
The new chassis mould for our 'Auzzie' 180 litre trolley has now been finalised
and we are testing the 'off tool' samples of this product for planned sales
during the second half of 2007.
Other
We have been successful in largely ameliorating our manufacturer price increase
in South Africa for 2007 through improved sourcing and quality of our components
in order to optimise our product cost mix. Further, we have been successful not
only in absorbing most of the price increases that have occurred in the last 3
years, but also in keeping our price increases to a significantly lower level
than the consumer price inflation rate over the same period.
Outlook
During 2007, an enormous amount of work and forward planning on new products
will come to fruition. We expect to be offering a total of four new trolleys in
our different markets. We are aiming for all of our new trolley projects to be
ready for delivery by about, or shortly after, the middle of the year.
We continue to be encouraged by retailer feed-back on our products and are
confident that they respond to the needs of our present and prospective
customers. It is however by the achieved level of sales that we will measure our
performance, and we continue to believe that 2007 will be a turning point for
Supercart.
Victor Segal
Chairman
3rd April 2007
Consolidated profit and loss account
Year ended 31st December 2006
Year ended
Year 31st December
ended 31st 2005
December -as restated
2006
Notes #'000 #'000
Turnover 2 2,893 2,415
Cost of Sales (2,362) (2,021)
____________ __________
Gross Profit 531 394
Administrative expenses (1,303) (1,132)
___________ __________
Operating loss 3 (772) (738)
Interest receivable 12 46
Interest payable (31) (9)
__________ __________
Loss on ordinary activities before taxation (791) (701)
Tax on loss on ordinary activities - -
__________ __________
Loss on ordinary activities after taxation (791) (701)
__________ __________
Loss per ordinary share
- Basic and diluted 4 (3.64)p (3.42)p
__________ __________
All profits and losses arose from continuing activities.
Consolidated statement of total recognised gains and losses
Year ended 31st December 2006
Year ended
Year 31st December
ended 31st 2005
December -as restated
2006
Notes #'000 #'000
Loss on ordinary activities after taxation (791) (701)
Currency translation differences on foreign currency net
investments (146) (22)
__________ __________
Total recognised gains and losses for the year (937) (723)
__________
Prior year adjustment (28)
__________
Total gains and losses recognised since last (965)
annual report
__________
Consolidated balance sheet at 31st December 2006
2006 2005
-as restated
Notes #'000 #'000
Fixed Assets
Intangible fixed assets - 8
Tangible fixed assets 1,090 927
__________ __________
1,090 935
__________ __________
Current Assets
Stocks 11 17
Debtors 988 1,127
Cash at bank and in hand 1,192 460
__________ __________
2,191 1,604
Creditors: amounts falling due within one year (1,055) (1,015)
__________ __________
Net current assets 1,136 589
__________ __________
Total assets less current liabilities 2,226 1,524
Creditors: amounts falling due after one year 427 -
__________ __________
Net assets 1,799 1,524
__________ __________
Capital and reserves
Called up share capital 5 142 82
Share premium account 4,057 2,952
Share option reserve 75 28
Profit and loss account (2,475) (1,538)
__________ __________
Shareholders' funds 1,799 1,524
__________ __________
Consolidated cash flow statement
Year ended 31st December 2006
Year ended
Year 31st December
ended 31st 2005
December
2006
Notes #'000 #'000
Net cash outflow from operating activities (781) (902)
_______ _______
Returns on investments and servicing of finance
Interest received 12 46
Interest paid (31) (9)
_______ _______
(19) 37
_______ _______
Taxation refunded/(paid) 105 (25)
_______ _______
Capital expenditure
Purchase of tangible fixed assets (334) (394)
Sale of fixed assets 5 12
_______ _______
(329) (382)
_______ _______
(1,024) (1,272)
Net cash outflow before financing
Financing
Issue of ordinary share capital - net of costs 1,165 -
Finance leases 606 (15)
Capital element of finance lease repayments (3) -
_______ _______
1,768 (15)
_______ _______
Net cash inflow/(outflow) 744 (1,287)
Translation differences (5) (56)
_______ _______
Increase/(decrease) in cash in the year 739 (1,343)
__________ __________
Notes on the financial statements
1. Accounting policies
Basis of accounting
The financial information has been prepared under the historical cost convention
and in accordance with applicable United Kingdom accounting standards.
Going concern
The financial statements are prepared on the going concern basis, which assumes
that the company and the group will continue in operational existence for the
foreseeable future. Up to 31st December 2006 the group has made operating losses
totalling #2.4 million.
It has agreed, with certain manufacturers with whom it has relationships,
arrangements by which the cost of constructing and/or modifying moulds for
production is to be borne principally by the manufacturer, rather than the
group.
The directors' assessment of the group's ability to continue as a going concern
beyond the date of approval of the financial statements has concluded that it is
appropriate to apply the going concern basis, and that the group will continue
to be able to realise its assets and discharge its liabilities in the normal
course of business on the basis of the arrangements in place described above and
based on assumptions concerning:
* The availability of new products
* The time at which those new products become available
* The demand for those products
Should there be any significant delay in the new products becoming available or
demand fall short of expectations, the group would require access to further
funds to continue as a going concern. Preliminary discussions have already been
held with the group's bankers concerning additional borrowing facilities secured
on other of the group's moulds and the directors would also consider further
equity issues should the need arise.
Share-based payments
Equity-settled share-based payments to employees and others providing similar
services are measured at the fair value of the equity instrument at the grant
date. Fair value is measured by use of a Black-Scholes based option pricing
model. The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations. The fair value determined at the
grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group's estimate of
shares that will eventually vest.
The above policy is applied to all equity-settled share-based payments that were
granted after 10 November 2003 (the date of the company's incorporation) and are
due to vest after 1 January 2006.
This represents a change of accounting policy and prior years' results have been
restated accordingly.
2. Turnover
The turnover of the group was wholly attributable to its principal activity,
which is the design, marketing, sale and distribution of plastic supermarket
trolleys and hand baskets.
3 Operating Loss
Operating loss on ordinary activities was stated after charging/(crediting):
Year Year ended 31st
ended 31st December 2005
December -as restated
2006
#'000 #'000
Exceptional gain-forgiveness of amounts owed to suppliers - (77)
Exceptional gain-recovery of salary costs from former employee - (36)
Exceptional gain - reimbursement of overseas sales duty - (28)
Operating leases - Land and buildings 23 39
Depreciation of tangible fixed assets (owned) 33 31
Depreciation of tangible fixed assets (leased) 6 5
Loss on disposal of fixed assets 1 11
Amortisation of intangible fixed assets 5 8
Auditors' remuneration-audit work 35 29
Auditors' remuneration-tax compliance work 4 3
Auditors' remuneration-general financial advice 4 8
Auditors' remuneration-advice on accounting matters 13 20
Share based payment-equity settled transactions (note 19) 47 26
Foreign exchange profit (10) (52)
__________ __________
4 Loss per share
The calculation of loss per share is based on the loss for the financial year of
#790,740 (2005 as restated - #700,243) and the weighted average number of shares
in issue of 21,750,000 (2005 - 20,500,000).
The losses attributable to ordinary shareholders and weighted average number of
shares for the purposes of calculating the diluted loss per share are identical
to those used for basic loss per share. This is because the exercise of share
options would have the effect of reducing the loss per ordinary share and is
therefore not dilutive under the terms of FRS 22.
5. Called up share capital
2006 2005
#'000 #'000
Authorised:
50 million (2005-25 million) Ordinary shares of 0.4p each 200 100
_________ _________
Issued, allotted and fully paid:
35.5 million (2005 - 20.5 million) Ordinary shares of 0.4p each 142 82
_________ _________
At an EGM held on 27th November 2006, the shareholders approved the raising of
#1,200,000 through a placing of 15,000,000 new Ordinary Shares at 8p per share.
The Placing was undertaken to improve the working capital position of the
Company and to provide additional capital to bring new products to the market.
6. Employee Share Option Plan
The Group has an ownership-based compensation scheme for executives and
employees of the Group. In accordance with the provisions of the plan,
executives and employees may be granted options to purchase ordinary shares.
Each employee share option converts into one ordinary share of Supercart Plc on
exercise.
No amounts are paid or payable by the recipient on receipt of the option. The
options carry neither rights to dividends nor voting rights. Options may be
exercised at any time from the date of vesting to the date of their expiry.
The number of options granted is subject to approval by the Remuneration
Committee. The formula rewards executives and employees for improvements in the
Company's share price.
The options granted expire as set out below or 12 months from the resignation of
the executive or employee, whichever is the earlier. The following share-based
payment arrangements were in existence during the current and comparative
reporting periods:
The company operates both a share option scheme approved by H M Revenue &
Customs and an unapproved share option scheme under which options have been
granted to employees and directors.
The options outstanding at 31 December 2006 were as follows:
Number of shares Exercise price Period of exercise
800,000 15.9p 4th February 2007 - 3rd February 2014
700,000 14.1p 4th February 2007 - 3rd February 2014
200,000 14.1p 19th April 2008 - 19th April 2015
150,000 16.3p 3rd May 2009 - 3rd February 2014
972,500 20.0p 3rd May 2008 - 3rd February 2014
580,000 14.0p 1st December 2008 - 3rd February 2014
375,000 30.0p 1st December 2008 - 3rd February 2014
During the year the following share options were granted to directors:
Director Number of shares Exercise price Period of exercise
V. Segal 100,000 16.3p 3rd May 2009 - 3rd February 2014
20,000 14.0p 1st December 2008 - 3rd February 2014
50,000 30.0p 1st December 2008 - 3rd February 2014
M. Castledine-Wolfe 500,000 14.0p 1st December 2008 - 3rd February 2014
250,000 30.0p 1st December 2008 - 3rd February 2014
S.Wright 50,000 14.0p 1st December 2008 - 3rd February 2014
50,000 30.0p 1st December 2008 - 3rd February 2014
C. Price 50,000 16.3p 3rd May 2009 - 3rd February 2014
10,000 14.0p 1st December 2008 - 3rd February 2014
25,000 30.0p 1st December 2008 - 3rd February 2014
The following share-based payment arrangements were in existence during the current and comparative reporting
periods:
Options series Number Date Expiry Exercise Fair value at
granted date Price grant date
Issued on:
(1) 19/11/04 (*) 890,000 19/11/04 3/2/14 15.9p 4.6p
(2) 19/11/04 (**) 90,000 19/11/04 3/2/14 35p 2.3p
(3) 19/11/04 (**) 67,500 19/11/04 3/2/14 50p 1.1p
(4) 24/1/05 (**) 140,000 24/1/05 3/2/14 19.5p 5.6p
(5) 24/1/05 (**) 130,000 24/1/05 3/2/14 35p 2.8p
(6) 24/1/05 (**) 130,000 24/1/05 3/2/14 50p 1.4p
(7) 19/4/05 900,000 19/4/05 and 14.1p 3.4p
13/10/05
3/2/14
(8) 3/5/06 150,000 3/5/06 3/2/14 16.3p 4.7p
(9) 3/5/06 972,500 3/5/06 3/2/14 20p 4.0p
(10) 1/12/06 580,000 1/12/06 3/2/14 14p 4.0p
(11) 1/12/06 375,000 1/12/06 3/2/14 30p 2.1p
(*) 90,000 of these options have been either forfeited or cancelled.
(**) These options have. been either forfeited or cancelled
The weighted average fair value of the share options granted during the financial year is 3.7p
(2005: 3.4p).
Options were priced using a Black-Scholes option pricing model. Where relevant, the expected life
used in the model has been adjusted based on management's best estimate for the effects of
non-transferability, exercise restrictions (including the probability of meeting market conditions
attached to the option), and behavioural considerations. Expected volatility is based on the
historical share price volatility over the past 3 years.
The inputs into the Black-Scholes option pricing model are as follows:
2006 2005
Weighted average exercise price 19.9p 20.2p
Expected volatility 62% 62%
Expected life 3.5 yrs 3.5 yrs
Risk-free rate 4.75% 4.75%
Expected dividend 0% 0%
The following reconciles the outstanding share options granted under the employee share option
plan at the beginning and end of the financial year
2006 2005
Weighted Number of Weighted
Number of average options average
options exercise exercise
price price
Balance at beginning of the 2,067,500 18.4p 1,047,500 19.8p
financial year
Granted during the financial year 2,077,500 19.9p 1,300,000 20.2p
Cancelled during the financial year (367,500) (34.3p) - -
Forfeited during the financial year - - (280,000) (32.1p)
Balance at end of the financial 3,777,500 17.7p 2,067,500 18.4p
year
Exercisable at end of the financial - - - -
year
There were no share options exercised during the year.
The share options outstanding at the end of the financial year had an exercise
price of between 14p and 30p (2005: 14.1p and 50p), and a weighted average
remaining contractual life of 7.2 years (2005: 8.2 years).
7. Copies of the Report and Accounts will be sent to shareholders by
5th April 2007. Copies are also available free of charge to members of the
public from the Company's registered office at 3 The Mews, 16 Hollybush Lane,
Sevenoaks, Kent, TN13 3JT and shall remain available for at least one month.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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