TERN PLC 
By
PRESS RELEASE
For release: 27 January 2009
The Core Business: Preliminary Results - Half Year ended 30 November
2008
The Core Business PLC, ('the Company') the innovative beauty brand
business is pleased to announce its preliminary results for the half
year to 30 November 2008.
HIGHLIGHTS
* Revenue for the half year increased by approximately 55% to
£1,506,000 versus £972,000 for the corresponding half year period
last year.
* Reduced loss for the half year of £76,000 (six months to 30
November 2007: £143,000 loss).
* The Company's focus on distributing brands into major retailers
and creating and owning its own brands has had a significant
effect on revenues. Bloom colour cosmetics, a distributed brand
under a five year exclusive UK agreement, launched in September
2008 and generated sales of £458,000 in the half year period.
Grace Your Face, an innovative wholly owned skin care solutions
brand, launched in June and delivered sales of just below
£100,000 for the period.
* Elite Models Beauty accessories - sold in Superdrug and Tesco
stores - delivered sales of £178,000 for the period, an increase
of 1.4% on the corresponding half year period last year.
* Consultancy contracts delivered revenues of £54,000, an increase
of £15,000 on the corresponding half year period last year, but
in line with the Company's strategy of focussing on distributing
and owning brands.
CHIEF EXECUTIVE'S STATEMENT
Despite the downturn in consumer spending, the Company has performed
well in the half year period growing sales by approximately 55% to
£1,506,000. The Company concentrates its efforts in the beauty
business, a sector which has historically proved resilient to the
effects of recession. In each of the last three recessions the
personal care sector has outperformed the market - an economic
indicator known as the 'Lipstick Factor', where consumers unable to
afford high ticket items will spoil themselves on small low cost
indulgent products such as lipsticks. The Company, with its
cosmetics, skincare and beauty accessories brands and its penetration
in volume mass and mid retail distribution channels, is well placed
to take advantage of consumers trading down and seeking high quality
value-for-money products.
To increase efficiency, improve communication and save costs the
Company moved all its operations to the Amirose site during the half
year. In addition the Board has been strengthened with the
appointment of Matt Cooper as Non-Executive Chairman and Muriel
Zingraff as Non-Executive Director.
Mr Cooper is Chairman of Octopus Investments Limited, one of the UK's
leading venture capital fund managers, a Non-Executive Director at
Carbon Search Limited, and Chairman at TDX Group Limited and 10Duke
Software Limited. Prior to joining Octopus, he was the Principal
Managing Director of Capital One Bank (Europe) plc where he was
responsible for all aspects of the company's strategic direction and
day-to-day operations in Europe.
Ms Zingraff has over 20 years' experience in the luxury goods,
fashion and retail industry and has developed brands for
international companies such as Jimmy Choo, La Quinta and Paco
Rabanne. More recently, Ms Zingraff was a main board director of
Harrods, where she was responsible for women's wear, accessories and
beauty products. Currently, Ms Zingraff acts as a senior consultant
to 3i Group advising on their luxury goods, fashion and retail
investments and corporate finance transactions.
The business operates in a highly dynamic fast changing market where
"newness" is vital. The Core Business has a strategic objective of
delivering 35% of sales from products or brands that are newly
launched and were unavailable in the previous year. For the half year
period new brands have accounted for 36% of sales. This strategy
requires a strong focus on new product development and continual
critical assessment of new brand distribution opportunities. This
takes a high proportion of management time but will be worthwhile as
we seek to build critical mass in revenue and profitability.
FINANCIAL OVERVIEW
Turnover for the six months to 30 November 2008 was up by
approximately 55% to £1,506,000 (six months to 30 November 2007:
£972,000) and the loss for the half year was £76,000 (six months to
30 November 2007: £143,000 loss) equivalent to 0.03 pence loss per
share (six months to 30 November 2007: 0.10 pence loss per share). Of
this total turnover figure The Core Business generated £868,000 (58%
of sales) and Amirose £638,000 (42% of sales).
The Group's net assets at 30 November were £1,569,000, £261,000
higher than at 31 May 2008. The increase is due to the issue of
shares for cash in June 2008. Total liabilities were £989,000, a
decrease of £395,000 since 31 May 2008. The decrease is due to the
repayment of loan notes and a reduction in trade and other payables.
OUTLOOK
We have continued to build our business through brand distribution
and development and are encouraged by the continued volume and
quality of opportunities we are sourcing. We are confident that our
strategy to focus on distributing and developing brands leaves us
well placed to create value for our shareholders in the years to
come.
Stirling Murray
Chief Executive
ENDS
For further information, please contact:
The Core Business PLC www.thecorebusiness.co.uk
Stirling Murray, Chief Executive 020 8559 8244
Alastair Kennedy, Finance Director 020 8559 8244
Blomfield Corporate Finance Ltd
(Nomad)
Nick Harriss 020 7489 4500
Emily Morgan 01275 871717
SVS Securities plc (Broker)
Ian Callaway 020 7638 5600
Notes to Editors
The Core Business was established in May 2004 by Stirling Murray to
create, develop, launch and distribute personal care and beauty
brands. It also provides consultancy and brand management services.
The Company was listed on AIM in March 2006 under the ticker 'CORE.'
CONSOLIDATED INCOME STATEMENT
HALF YEAR TO 30 NOVEMBER 2008
Group 6 months 6 months Year
ended ended ended
30/11/08 30/11/07 31/5/08
Notes £ £ £
Revenue 1,505,628 972,029 2,163,894
Cost of sales (805,742) (489,461) (1,118,659)
_______ _______ _______
Gross profit 699,886 482,568 1,045,234
Sales and marketing (168,933) (79,804) (234,751)
Administration costs (576,939) (520,722) (1,462,644)
_______ _______ _______
Operating loss (45,986) (117,958) (652,161)
Analysed as: 3
Operating loss before (45,986) 31,592 (109,201)
exceptional items
Exceptional items - (149,550) (542,960)
_______ _______ _______
Operating loss (45,986) (117,958) (652,161)
Financial income 1,208 4,314 6,268
Financial expense (30,853) (29,655) (64,996)
_______ _______ _______
Loss before tax (75,631) (143,299) (710,889)
Income tax credit - - 40,096
_______ _______ _______
Loss for the year 2 (75,631) (143,299) (670,793)
======= ======= =======
Loss per share
Basic and diluted (0.03 pence) (0.10 pence) (0.42 pence)
CONSOLIDATED BALANCE SHEET
HALF YEAR ENDED 30 NOVEMBER 2008
Group As at As at As at
30/11/08 30/11/07 31/5/08
Notes £ £ £
Assets
Non-current assets
Property, plant and equipment 185,214 115,365 95,376
Goodwill 1,648,971 1,648,971 1,648,971
Financial assets - 21,706 -
_______ _______ _______
1,834,185 1,786,042 1,744,347
Current Assets
Inventories 266,776 399,191 435,275
Trade and other receivables 328,886 286,211 344,409
Current tax assets 40,096 - -
Cash and cash equivalents 87,776 179,802 168,473
_______ _______ _______
723,534 865,204 948,157
_______ _______ _______
Total assets 2,557,719 2,651,246 2,692,504
======= ======= =======
Equity and liabilities
Equity attributable to the
Company's equity holders
Share capital 4 1,267,412 1,016,776 1,017,412
Equity reserve 10,722 - 10,722
Share premium 1,182,681 1,095,794 1,096,431
Retained earnings (892,281) (682,565) (816,650)
_______ _______ _______
1,568,534 1,430,005 1,307,915
Current liabilities
Trade and other payables 370,857 459,497 564,642
Borrowings 618,328 460,313 762,713
Current tax liabilities - - 57,234
_______ _______ _______
989,185 919,810 1,384,589
Non Current liabilities
Loan notes - 301,431 -
_______ _______ _______
- 301,431 -
_______ _______ _______
Total liabilities 989,185 1,221,241 1,384,589
_______ _______ _______
Total equity and liabilities 2,557,719 2,651,246 2,692,504
======= ======= =======
CONSOLIDATED CASH FLOW STATEMENT
HALF YEAR TO 30 NOVEMBER 2008
Group 6 months 6 months Year
Notes ended ended ended
30/11/08 30/11/07 31/5/08
£ £ £
Cash flows from operating
activities
Cash generated from operating 6 (40,349) (10,767) 77,475
activities
Interest paid (30,853) (29,655) (64,996)
Tax paid (97,330) - -
_______ _______ _______
(168,532) (40,422) 12,479
Cash flows from investing
activities
Purchases of property, plant (105,239) (111,539) (112,009)
and equipment
Acquisition of subsidiary - (2,002,548) (2,002,548)
Interest received 1,208 4,314 6,268
_______ _______ _______
Net cash (used in) investing (104,031) (2,109,773) (2,108,289)
activities
Cash flows from financing
activities
Net proceeds on issues of 336,250 1,411,273 1,411,273
shares
Proceeds on issue of loan - 850,000 850,000
notes
Repayment of loan notes (144,384) (10,852) (76,566)
_______ _______ _______
Net cash (used in)/from 191,866 2,250,421 2,184,707
financing activities
Net increase/(decrease) in (80,697) 100,226 88,897
cash and cash equivalents
Cash and cash equivalents at 168,473 79,576 79,576
beginning of year
_______ _______ _______
Cash and cash equivalents at 87,776 179,802 168,473
end of year
======= ======= =======
Bank balances and cash 87,776 179,802 168,473
======= ======= =======
NOTES TO THE ACCOUNTS
1. Accounting policies
The principal accounting policies are as set out in the May 2008
annual report.
The financial statements of The Core Business PLC have been prepared
in accordance with International Financial Reporting Standards
(IFRS), IFRIC interpretations endorsed by the European Union and with
those parts of the Companies Act 1985 applicable to companies
reporting under IFRS. These financial statements have been prepared
under the historic cost convention.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates and
assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
Although these estimates are based on management's best knowledge of
the amount, event or actions, actual results ultimately may differ
from those estimates.
2. Loss per share
6 months 6 months Year
ended ended ended
30/11/08 30/11/07 31/5/08
£ £ £
Loss for the purpose of basic and (75,631) (143,299) (670,793)
diluted loss per share
Number of shares 6 months 6 months Year
ended ended ended
30/11/07 30/11/07 31/5/07
No. No. No.
Weighted average number of
ordinary shares:
- for the purposes of basic and 251,020,916 140,623,891 160,451,379
diluted loss per share
The impact of warrants not exercised is anti dilutive.
3. Exceptional items
Exceptional items are events or transactions that fall within the
activities of the Group and which by virtue of their size or
incidence have been disclosed in order to improve a reader's
understanding of the financial statements.
6 months 6 months Year
ended ended ended
30/11/08 30/11/07 31/5/08
£ £ £
Charge in respect of warrants issued during - - 393,410
the year
Costs in respect of acquisition of Amirose - 149,550 149,550
International
_______ _______ _______
Total exceptional items - 149,550 542,960
======= ======= =======
4. Share capital
6 months 6 months Year
ended ended ended
30/11/08 30/11/07 31/5/08
No. No. No.
Authorised:
Ordinary shares of £0.005 1,000,000,000 1,000,000,000 1,000,000,000
Issued and fully paid:
Reported as at 1 June 203,482,454 42,396,447 42,396,447
Issue of shares 50,000,000 160,958,730 161,086,007
_______ _______ _______
Reported as at end of 253,482,454 203,355,177 203,482,454
period
======= ======= =======
6 months 6 months Year
ended ended ended
30/11/08 30/11/07 31/5/08
£ £ £
Authorised:
Ordinary shares of £0.005 each 5,000,000 5,000,000 5,000,000
Issued and fully paid:
Reported as at 1 June 1,017,412 211,982 211,982
Issue of shares 250,000 804,794 805,430
_______ _______ _______
Reported as at end of period 1,267,412 1,016,776 1,017,412
======= ======= =======
On 6 June 2008, the Company raised £240,000 through the issue of
32,000,000 new ordinary shares of nominal value 0.5 pence each at a
placing price of 0.75 pence. This represented 13.6 per cent of the
enlarged issued share capital of the Company.
On 17 June 2008, the Company raised £135,000 through the issue of
18,000,000 new ordinary shares of nominal value 0.5 pence each at a
placing price of 0.75 pence. This represented 7.1 per cent of the
enlarged issued share capital of the Company.
At 30 November 2008 warrants over 93,372,723 ordinary shares were
outstanding.
Date of At Granted Exercised Forfeits At Exercise/ Exercise/Vesting
grant 1 June /vested 30 Nov Share date
price
2008 2008 From To
Warrants
8/3/06 6,500,000 - - - 6,500,000 6.0p 8/3/06 8/3/11
27/7/07 86,872,723 - - - 86,872,723 1.0p 27/7/07 27/7/12
5. Status of financial information
The interim results for the six months ended 30 November 2008 are
unaudited and do not constitute statutory accounts within the meaning
of section 240 Companies Act 1985. The figures for the year ended 31
May 2008 and for the six months ended 30 November 2007 have been
extracted from audited accounts for those periods.
6. Note to the cash flow statement
6 months 6 months Year
ended ended ended
30/11/08 30/11/07 31/5/08
£ £ £
Loss for the period (75,631) (143,299) (670,793)
Adjustments for:
- Taxation - - (40,096)
- Finance expense 29,645 25,341 58,728
- Depreciation 15,401 6,842 27,303
Share based payment - - 472,085
Changes in working capital:
- (Increase)/decrease in trade and 15,522 209,720 151,522
other receivables
- (Increase)/decrease in inventories 168,499 (164,196) (200,280)
- Decrease in financial assets - - 21,706
- Increase/(decrease) in trade and (193,785) 54,825 257,300
other payables
_______ _______ _______
Cash used in operations (40,349) (10,767) 77,475
======= ======= =======
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