New Trend Lifestyle Group Plc : PRELIMINARY RESULTS FOR THE YEAR ENDED 31st DECEMBER 2012

New Trend Lifestyle Group plc

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5 June 2013

New trend lifestyle GROUP PLC

("NTL", the "Company" or the "Group")

PRELIMINARY RESULTS FOR THE YEAR ENDED 31st DECEMBER 2012

New Trend Lifestyle Group (AIM: NTLG), the Feng Shui products and services group, operating in Singapore, Hong Kong and mainland China, announces its preliminary results for the year to 31 December 2012.

At present, the majority of NTL's business is transacted in Singapore Dollars (SGD) and therefore Group figures are presented in that currency.

Financial Highlights

·     Revenues reduced to SGD 10,663k (2011: SGD 11,973)

·     Loss before taxation of SGD 323k (2011: profit SGD 2,842)

·     Adjusted* profit before tax of SGD 835k (2011: SGD 2,842k)

·     Earnings per share SGD (0.19)(2011:  SGD 0.035)

·     Net Cash inflow from operations of SGD 462k (2011: SGD 672k)

Operational Highlights

·     Admitted to AIM in June to accelerate regional market expansion/ penetration

·     Successful establishment of pilot sites in China

Post Period Events

·     Sale of Sims Avenue investment property for SGD 3,350k

·     Creation of convertible loan note for GBP 250,000 and GBP 100,000 issued to date

* Before AIM admission costs

Robert Goddard, Chairman of NTL, commented:

"The main features of the year were our establishment in China and the admission of the NTL group to the AIM market in London. 

Our team in Shenzhen, China is now fully established and has developed a useful understanding of the market dynamics.  Naturally, and as planned, the cost of this investment has adversely impacted profitability but we are confident that it is money well spent.  Based partly on the findings from the pilot stores, a completely new model of outlet has been designed and during the course of the year we will be rolling this out in major centres.  This new approach sees larger, more attention-grabbing outlets in major centres.

Prior to AIM admission in early 2012, we ceased trading at our China Town branch due to government construction. Representing 21% of sales in 2011, this affected sales adversely on a comparative basis.  However, it is very pleasing to note that a replacement site in China Town began operating early in 2013 and that after only a few months of trading its run rate of sales exceeds that from the original store nearby, and at an enhanced gross margin. 

I am please that investors  recognise the considerable potential for the company in mainland China and the benefit that it is believed would arise from accelerating our investment there.  We are therefore in active discussion with a number of Hong Kong investors for a substantial injection of new funds and hope to announce new investment during the course of the current year

Sales in the first quarter of 2013 were 9% up on the same period last year and gross margin also improved.  Based on this and other factors, we are confident that further improvements over 2012 will be achieved in the rest of 2013."

For further information:

New Trend Lifestyle Group Plc Robert Goddard Ajay Rajpal	Tel: [phone] Tel: [phone]
Zeus Capital Limited Corporate: Ross Andrews, Andrew Jones Institutional Sales: John Goold	Tel: [phone] Tel: [phone]

About New Trend Lifestyle

The Company was established in 2005 by Master Hillary Phang. NTL's Feng Shui services include building and office design consultancy, astrology readings, marriage matching, aura readings, business talks and seminars for large corporations.  These are complemented by Tarot Card readings and an on-line dating service using Feng Shui principles.

CHAIRMAN'S & CEO'S STATEMENT

OVERVIEW

We are pleased to present the first Annual Rreport of the Company since its admission at the end of June 2012 to the AIM Market of the London Stock Exchange.

Flotation

During the year to 31st December 2012, in addition to it becoming a publically-traded company, there were a number of other important developments for New Trend Lifestyle Group Plc (the Group).  Our headquarters in China was established and began its programme of opening trial outlets to better establish the market dynamics. 

Trading, in summary

Government infrastructure works meant that one of our most important outlets in Singapore had to cease trading in February 2012.  This, together with the diversionary effect on management of the flotation of the company, resulted in lower turnover and trading profit.  Respectively, these were SGD 10,663k and SGD 205k.  (2011: SGD 11,973k and SGD 2,842k.)  However, as explained below, on a like-for like basis product sales held up whilst service revenue fell back sharply.  Gross margins improved to 89.0% (2011: 87.4%).  There was also a range of one-off and development expenses and these too are explained below in more detail.

Overall, the Group loss before tax was SGD 323k, with central costs of SGD 1,412k (including SGD 1,158 AIM admission costs) and profits of SGD 786k in Singapore and SGD 303k in the China region; albeit the China region benefited from the SGD 630k uplift in the value of an investment held by the NTL Hong Kong entity.

The balance sheet was bolstered by the placing of new shares at admission.  The net amount raised before all expenses, was SGD 1,909k.  The new funds have enabled us to initiate our strategy to expand into mainland China.  Here, a new 'model' has been developed for the preferred location, style and size of outlet.  As a result the Company is now in the process of working with local partners to roll out several new, large, 'flagship' stores.

Cash outflow from operating activities was SGD 551k (2011: inflow of SGD 673k)

Looking forward

In Singapore, we will continue to refresh and upgrade our portfolio of retail outlets, as well as offer new services and expect to see improved trading in 2013, which has already started well.  We will develop the market in China with a new style of outlet.

The board is confident that the financial performance in 2013 will show an improvement on 2012 and that the pace of development China will accelerate.

PROFIT & LOSS ACCOUNT AND TRADING

In the latter months of 2012 we opened two 'pilot' outlets in China although sales from our Singapore outlets still dominated (98.6% of sales overall). Accordingly, in order to provide a sensible comparison and unless otherwise noted the sales and gross profits discussed below are for both Singapore and China.

Sales

Due mainly to public construction work causing the closure of our primary outlet in Singapore in China Town, together with the diversionary effect of the work involved in listing the company, there was a 11% decline in overall sales of SGD 1,310k (10.9%) to SGD 10,663k (from SGD 11,973k in 2011).   The decline was due almost entirely to service income reducing by approximately 25%, or SGD 1,428k to SGD 4,315k.  (2011: SGD 5,743k).  There were two main reasons for this.  First, public construction works forced the temporary suspension of trading at our substantial business in China Town; one of our top two outlets.  The other major factor was the diversionary effect of the extensive preparations for the admission of the Company to AIM in London. 

Despite these adverse factors, overall sales of product held steady at SGD 6,348k.  Importantly, on a like-for-like basis, product sales increased by 6.4% (SGD 330k) to SGD 5,484k, compared with SGD 5,154k in 2011.  This is testament to the growing appeal of the Company's unique and wide range of physical products.

Margins

There was a small increase in overall gross margin.  Gross margin on product sales of SGD 6,348k improved to 91.1% from 90.9% in 2011.  On service revenue the gross margin rose to 85.8% from 83.6% in 2011.  As a result, gross margin overall improved to 89.0% (2011:87.4%).  The result of these improvements partly offset the decline in sales as there was just a 9.3% fall in gross profit to SGD 9,489k (2011 SGD: 10,466k).

In China, sales in 2012 totalled SGD 145k, all of which took place in the later part of the  year. Gross profit margins were mixed by outlet and by product and service but overall they were slightly higher than in Singapore.

Expenses

Most prominent among the operating expenses at Group level were the fees and other costs associated with the listing process.  These amounted to SGD 1,158k. 

After adjusting for this and other non-trading items, expenses overall at the operating level rose to SGD 8,024k (2011: SGD 7,624k).  This difference of SGD 400k was more than accounted for by SGD 1,104k of extra personnel costs.  This increase was due partly to the cost of new staff in the Shenzhen office, which amounted to SGD 298k (2011: SGD 42k).  Establishment in China also meant a substantial increase in general operating expenses from SGD 1,079k in 2011 to SGD 1,806k.  Advertising and promotion costs were held steady.  Meanwhile there were savings elsewhere, notably a reduction in commissions of SGD 205k and a fall in depreciation expenses of 29% from SGD 596k to SGD 424k as more fixed assets became fully depreciated. 

Profit and loss

The net result for Singapore was a profit before tax of SGD 786k (2011: SGD 2,842k) and in China a profit of SGD 303k (2011: nil). 

At Group level; profit before tax and before accounting for AIM admission costs of SGD 1,158k was SGD 835k, down SGD 2,007k from SGD 2,842k in 2011.  The 2012 figure includes an SGD 630k gain on conversion of unsecured convertible loan notes held by NTL's Hong Kong subsidiary.

Balance sheet

As mentioned in the Admission document, the Singapore government required the sale of our freehold shop at Sims Avenue.  The sale took place during the first half of 2013 and the asset was classified as 'held for sale' in the Company's year-end balance sheet.  Net proceeds from the sale were SGD 2.87m.

Other fixed asset movements were largely offsetting with the result that total, fixed assets at SGD 4,027k were little changed from 2011.

Within current assets, there was decrease of SGD 202k in inventories to SGD 1,111k.  This reflects an inventory build-up in 2011 that took advantage of volume discounts. There was also an increase in the provision for obsolescence.  Trade & other receivables increased sharply from SGD 693k to SGD 1,162k at the end of 2012, this was due mostly to a loan to a distributor of SGD 291k. The loan was repaid in May 2013.

The increase in non-current liabilities of SGD 2,052k is mainly accounted for by the addition of a new term loan of SGD 2,290k for the Kaki Bukit property.                 

At the year end, the Group held equity securities in LZYE Group plc to a value of SGD 1,050k. They are classified as current assets since they are tradable.  Before conversion in August 2012 these were convertible loans and are shown on the 2011 balance sheet as 'derivative financial assets at fair value'.

The cash balance at the year-end was SGD 2,430k (SGD 3,315k) of which SGD 2,229k was cash and bank balances and the remainder was held in fixed deposits.

Cash flow

Cash outflow from operating activities amounted to SGD 66k (2011: inflow of SGD 3,194k) from trading and adverse movements in working capital contributed another SGD 102k of outflow, bringing the total cash outflow from operations for the year to SGD 168k (2011: inflow of SGD 1,003k).  In the previous year, a larger cash inflow from operating activities was offset by a large corresponding increase in receivables.

Admission to AIM

New Trend Lifestyle was admitted to AIM on 28 June 2012 following the raising of £960,000 (prior to expenses) through a placing by Zeus Capital of 12,000,000 new Ordinary Shares at a price of 8p per share.  The funds raised are being used to expand the business into the Chinese market, as well as promoting new ranges of products.  Developments in the Singapore operations are funded from the cash flow from trading there.

POST BALANCE SHEET EVENTS

In March 2013, the investment property 145/145A Sims Avenue, Singapore, was sold for SGD 3,350,000. The net proceeds, after repaying the loan and all costs of the transaction, will be used for working capital purposes.

In May 2013, a convertible loan note for up to GBP 250,000 was created, at an annual rate of 12% p.a. and convertible at GBP 0.10 into ordinary shares at any time up to 30 April 2016.  To date GBP 100,000 has been issued.

In May 2013, the loan to the distributor in Guangzhou was repaid to the Group.

These have all had a positive impact on the cash balances of the Group, and keep the Group more than adequately funded.

OUTLOOK

Good progress is being made in planning for the development of other regions in China; which is a vital part of our overall strategy. 

We are looking forward to moving forward with the new 'model' outlets in major cities, lay the ground for entry into other regions and begin testing our distribution channels.  However, we will only commit to each stage of the plan once we have confidence in the new model outlet and developed sufficient expertise among staff so that they can be deployed readily in other regions. 

The strength of the Group's offering, combining as it does feng shui services with the retailing of associated physical product, is especially well regarded and understood by potential investors in Hong Kong.  Those investors also recognise the considerable potential for the company in mainland China and the benefit that it is believed would arise from accelerating our investment there.  We are therefore in active discussion with a number of Hong Kong investors for a substantial injection of new funds and we will make a further announcement when appropriate.

The first quarter of trading has seen overall sales up by nearly 9% compared with the same period in 2012. At the same time, there has been a further improvement in overall gross margin to 90.4% (2012 Q1: 87.8%).

The board is confident of further improvement during the remainder of 2013.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Notes	Year ended	Year ended
Continuing operations		31 December 2012	31 December 2011
		SGD'000	SGD'000
Revenue		10,663	11,973
Direct purchases and costs		(1,174)	(1,507)
Personnel expenses		(4,054)	(2,950)
Depreciation and amortisation expenses		(424)	(596)
Finance expenses		(112)	(66)
Commission expenses		(1,685)	(1,890)
Advertising and promotional expenses		(274)	(257)
Bank charges		(337)	(373)
Operating lease expenses		(1,298)	(1,490)
Other operating expenses		(1,806)	(1,079)
Other income		1,336	1,077
AIM admission costs		(1,158)	-
Profit/(Loss) before tax		(323)	2,842
Income tax charges		(172)	(457)
Profit/(Loss) for the year		(495)	2,385
Other comprehensive loss		(39)	(2)
Total comprehensive income for the year		(534)	2,383
Attributable to:
- Owners of the parent		(534)	2,383
Basic and diluted profit/(loss) per share	3	(0.01)	0.03
Basic and diluted profit/(loss) per share before AIM admission costs	3	0.01	0.03

		31 December 2012	31 December 2011
		SGD'000	SGD'000
ASSETS
Non-current assets
Property, plant and equipment		1,791	4,044
Investment property		2,236	-
		4,027	4,044
Current assets
Inventories		1,111	1,313
Trade and other receivables		1,162	693
Derivative financial assets		-	204
Financial assets at fair value through profit or loss		1,050	-
Cash and cash equivalents		2,430	3,315
		5,753	5,525
Asset classified as held for sale		2,873	-
Total assets		12,653	9,569
EQUITY and LIABILITIES
Capital and reserves attributable to equity shareholders
Share capital		199	3,000
Share premium		1,731	-
Share based payment reserve		154	-
Group reorganisation reserve		2,845	-
Currency translation reserve		(41)	(2)
Accumulated surplus		1,247	1,742
Total equity		6,135	4,740

Current liabilities
Trade and other payables		1,327	976
Current income tax liabilities		239	456
Borrowings		2,545	3,053
Restoration costs		11	-
		4,122	4,485
Non-current liabilities
Restoration costs		48	57
Borrowings		2,348	287
		2,396	344
Total equity and liabilities		12,653	9,569

			Year ended 31 December 2012			Year ended 31 December 2011
			SGD'000			SGD'000
Cash flows from operating activities
Profit/(loss) before income tax			(323)			2,842
Adjustments for:
Depreciation and amortisation expense			424			595
Interest expense			118			105
Interest income			(6)			(38)
(Gain)/Loss on disposal of plant and equipment			(20)			(72)
Gain on conversion of convertible loan notes			(630)			-
Impairment of the asset classified as held for sale			411			-
Net fair value gains on financial assets at fair value through profit or loss			(40)			-
Reversal of provision for restoration costs			-			(238)
			(66)			3,194
Changes in working capital:-
Decrease in inventories			202			4
Decrease/(increase) in receivables			(621)			(2,048)
Increase/(decrease) in payables			314			(118)
Provision for restoration costs			3			(29)
Cash generated from operations			(168)			1,003
Interest received			6			38
Income tax paid			(389)			(368)
Net cash(outflow)/ inflow from operating activities			(551)			673
Cash flows from investing activities
Acquisition of property, plant and equipment			(3,729)			(1,193)
Proceeds from disposal of PPE			52			38
Subscription to unsecured convertible loan notes			-			(418)
Net cash (outflow) from investing activities			(3,677)			(1,573)
Cash flows from financing activities
Proceeds from issues of share capital			1,909			-
Proceeds from bank borrowings (net)			2,444			2,240
Repayment of bank loans			(365)			(211)
Repayment from a shareholder			-			1,242
Repayment of finance lease liabilities			(488)			(290)
Interest paid			(118)			(105)
Repayment/(Placement) of fixed deposit			401			(501)
Net cash from financing activities			3,783			2,375
Net increase/(decrease) in cash and cash equivalents					(445)		1,475
Effects of changes in exchange rates				(39)			(2)
Cash and cash equivalents at start of year - cash					2,713		1,240
Cash and cash equivalents at end of year					2,229		2,713

Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with maturity of three months or less, as adjusted for any bank overdrafts.

										Attributable to equity shareholders of the Company
					Share capital	Share premium			Accumulated surplus			Share based payment reserve		Group reorganisation reserve		Currency translation reserve		Total
					SGD'000	SGD'000			SGD'000			SGD'000		SGD'000		SGD'000		SGD'000
At 1 January 2011					3,000	-			69			-		-		-		3,069
Comprehensive income
Profit for the period					-	-			2,385			-		-		-		2,385
Other comprehensive income
Currency translation reserve					-	-			-			-		-		(2)		(2)
Total comprehensive income for the year					-	-			2,385			-		-		(2)		2,383
Dividend					-	-			(712)			-		-		-		(712)
At 31 December 2011					3,000	-			1,742			-		-		(2)		4,740
At 1 January 2012					3,000	-			1,742			-		-		(2)		4,740
Comprehensive income
Loss for the period					-	-			(495)			-		-		-		(495)
Other comprehensive income
Currency translation reserve					-	-			-			-		-		(39)		(39)
Total comprehensive income for the year					-	-			(495)			-		-		(39)		(534)
Proceeds from shares issued					199	1,731			-			154		-		-		2,084
Group reorganisation reserve					(3,000)	-			-			-		2,845		-		(155)
At 31 December 2012					199	1,731			1,247			154		2,845		(41)		6,135
		1.   General information New Trend Lifestyle Group Plc ("the Company") is a company incorporated in England on 21 March 2012 under the Companies Act 2006 but domiciled in Singapore. It was listed on the AIM market on 28 June 2012. The address of the registered office is given at the start of the annual report. The nature of the Group's operations and its principal activities are set out in the Chairman's Statement on pages 1 to 4. 2.   Basis of preparation and significant accounting policies The consolidated financial statements of New Trend Lifestyle Group Plc have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS's as adopted by the EU), IFRS Interpretations Committee and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of land and buildings, available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgementin the process of applying the group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3. The comparatives included are for NTL subgroup prior to the group reorganisation. The consolidated income statement for the year consists of the Group from 1 January 2012 to 31 December 2012. These financial statements have been prepared on the assumption that the Group is a going concern. When assessing the foreseeable future, the directors have looked at a period of twelve months from the date of approval of this report. The forecast cash-flow requirements of the business are contingent upon the ability of the Group to generate future sales. After making enquiries, the directors firmly believe that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. Were the Group to be unable to continue as a going concern, adjustments may have to be made to the balance sheet of the Group to reduce balance sheet values of assets to their recoverable amounts, to provide for future liabilities that might arise and to reclassify non-current assets and long-term liabilities as current assets and liabilities. There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 January 2013 that would be expected to have a material impact on the group. 3.   Profit per share Profit per share data is based on the Group profit for the year and the weighted average number of shares in issue. Year ended Year ended 31 December 2012 31 December 2011 Basic and diluted profit per share (0.01) 0.03 Profit/(loss) for the purposes of basic and diluted profit per share (SGD   494,695) SGD 2,383,000 Basic and diluted profit per share before AIM admission costs 0.01 0.03 Profit/(loss) for the purposes basic and diluted profit per share before AIM admission costs SGD 663,000 SGD 2,383,000 Number of shares No. No. Weighted average number of ordinary shares for the purposes of basic earnings per share 94,015,849 87,900,000 The weighted average number of ordinary shares for the year ended 31 December 2011 has been restated to reflect the total number of shares arising from the share for share exchange on acquisition and is considered to be in place from the earliest period. In order to calculate diluted earnings per share, the weighted average number of ordinary shares in issue would be adjusted to assume conversion of all dilutive potential ordinary shares according to IAS 33. In each of the years ended 31 December 2012 and 2011 the Group has made a profit after taxation and the effect of the potential ordinary shares is anti-dilutive and therefore the diluted earnings per share is the same as basic earnings per share. The weighted average number of potentially dilutive shares for the year ended 31 December 2012 was 94,015,849(2011: 87,900,000). 4.Events subsequent to 31 December 2012 In March 2013, the investment property described in Note 20 at 145/145A Sims Avenue, Singapore, was sold for SGD 3,350,000. In May 2013, a convertible loan note for up to GBP 250,000 was created, at an annual rate of 12% p.a. and convertible at GBP0.10 into ordinary shares at any time up to 30 April 2016.  To date GBP 100,000 has been issued. 5. Annual Report and Accounts The annual report and accounts, and notice of Annual General Meeting, will be sent to shareholders later today. Additional copies of each will be available on the Company's website: www.newtrendlifestylegroup.com 6. Annual General Meeting The Company's Annual General Meeting is to be held in Singapore on 28 June 2013.

This information is provided by RNS

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