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EDU HOLDINGS LIMITED Interim / Quarterly Report 2011

Feb 24, 2011

64821_rns_2011-02-24_9e7cec87-e464-436f-94c5-fb36bc614832.pdf

Interim / Quarterly Report

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UnderCoverWear

APPENDIX 4D FOR THE HALF YEAR ENDED 31 DECEMBER 2010

1. Details of the reporting period

Current period 1 July 2010 to 31 December 2010
Previous corresponding period 1 July 2009 to 31 December 2009

2. Results for announcement to the market

$ Up /
down
Movement %
$ Up /
down
Movement %
2.1 Revenues from ordinary activities 10,751,754
down
19.8%
2.2 Profit/(loss) from ordinary activities after tax
attributable tomembers
(2,647,282)
down
396.6%
2.3 Net profit/(loss) for the period attributable to
members
(2,647,282)
down
396.6%
2.4 Dividends Amount per Security
(cents)
Franked amount per
security
(cents)
Current Period
Final
Interim
N/A
N/A
N/A
N/A
Previous corresponding period
Final
Interim –paid 09April 2010
N/A
1.25
N/A
1.25
2.5 Record date for determining entitlements to dividends N/A
2.6 During the half-year ended 31 December 2010, other than disclosed in the Directors’ Report,
there were no significant items that impacted on the results recorded in our Income Statement.
Refer to the Directors’ Report contained in attached interim financial report for further
explanation of the results.

3. Net Tangible Assets per security

3. Net Tangible Assets per security
31 Dec 2010 31 Dec 2009
Net tangible asset backing per ordinary security 6.37 cents 9.18 cents

UnderCoverWear Limited A.B.N. 85 108 962 152 | Page 1

Appendix 4D

4. Details of entities over which control has been gained or lost during the period

i. Name of entity (or group of entities) over which control was
gained/lost
N/A
ii. Date control was gained/lost N/A
iii. Consolidated profit (loss) from ordinary activities and
extraordinary items after tax of the controlled entity (or group
of entities) since the date in the current period on which
control was acquired/lost
Profit (loss) from ordinary activities and extraordinary items
after tax of the controlled entity (or group of entities) for the
whole of the previous corresponding period
N/A
N/A

5. Details of dividends / distributions

N/A as no interim dividend will be paid.

6. Details of dividend / distribution reinvestment plan

At 31 December 2010, there was no dividend reinvestment plan in operation for UnderCoverWear Limited.

7. Details of associates and joint venture entities

N/A

8. Accounting Standards used by foreign entities

N/A

9. Qualification of audit / review

N/A as there is no audit dispute or qualification. Refer to the attached interim financial report which includes our auditor’s Independent Review Report.

UnderCoverWear Limited A.B.N. 85 108 962 152 | Page 2

UNDERCOVERWEAR LIMITED A.B.N 85 108 962 152

INTERIM FINANCIAL REPORT Half-Year Ended 31 December 2010

UNDERCOVERWEAR LIMITED A.B.N 85 108 962 152

CONTENTS

Page
Company Details 3
Directors’ Report 4
Consolidated Statement of Comprehensive Income 6
Consolidated Statement of Financial Performance 7
Consolidated Statement of Changes In Equity 8
Consolidated Statement of Cash Flows 9
Notes to the Interim Financial Statements 10
Directors’ Declaration 13
Auditor's Independence Declaration 14
Independent Auditor’s Review Report 15

[ 2 ]

UNDERCOVERWEAR LIMITED A.B.N. 85 108 962 152

COMPANY DETAILS Directors Stuart Richardson, Chairman John Everett AM Richard Lowry Nick Geddes (Alternate for John Everett) Company Secretary Nick Geddes Registered & Principal UnderCoverWear Limited Office ABN 85 108 962 152 ACN 108 962 152 8 Solent Circuit Norwest Business Park Baulkham Hills NSW 2153 Tel: +61 2 8853 2800 Fax: +61 2 8853 2899 Website: www.ucw.com.au Auditor Grant Thornton Audit Pty Ltd Level 17, 383 Kent Street Sydney NSW 2000 Share Registry ComputerShare Investor Services Pty Ltd Level 5, 115 Grenfell Street Adelaide SA 5000 Stock Exchange Quotation has been granted for all the ordinary shares Listing of the company on all Member Exchanges of the Australian Stock Exchange Limited.

[ 3 ]

UNDERCOVERWEAR LIMITED A.B.N. 85 108 962 152

DIRECTORS’ REPORT

Your directors submit the financial report of UnderCoverWear Limited and its controlled entities for the half-year ended 31 December 2010.

Directors

The names of directors who held office during or since the end of the half-year:

Stuart Richardson

John H Everett

Richard Lowry

Nick Geddes (Alternate for John Everett effective 6[th] August 2010)

All directors held office from the start of the half year to the date of this report unless otherwise stated.

Review of Operations

The six months of trading for UnderCoverWear for the period ended 31 December 2010 was in line with the advice to the market early December.

The net loss of $2,647,282 for the period includes goodwill impairment of $2,400,000. The impairment loss has been recognised to ensure that the value of the asset is not overstated, and has taken in consideration future earnings, expected growth, share price and the value of the goodwill in the current market.

The headline results comparing first half results for the 2011 financial year with the previous year’s first half are as follows:

Revenue $10.75m down 19.8% Loss (excluding impairment) ($0.35m) down 127.7%

Trading for the six month period has remained challenging. Issues relating to product quality, sizing consistency and product availability that occurred during the first half of the year have all been addressed.

UnderCoverWear ceased local production as from 31st December, moving to off-shore. This involved one-off restructuring costs which were expensed in the first half of 2010.

As the product range moves to 100% purchased off shore in the second half, there will be improvement to the margin in the third and fourth quarter of 2011.

Other cost saving measures including reduction in head office costs have been implemented.

The focus remains to improve sales volumes, gross margin and the bottom line.

[ 4 ]

UNDERCOVERWEAR LIMITED A.B.N. 85 108 962 152

DIRECTORS’ REPORT

Auditor's Independence Declaration

A copy of the auditor's independence declaration in relation to the review of the interim financial report for the half year ended 31 December 2010 is shown on page 14 and forms part of this report.

This report is signed in accordance with a resolution of the board of directors.

==> picture [163 x 82] intentionally omitted <==

Stuart Richardson

Director

Dated 25th February 2011

[ 5 ]

UNDERCOVERWEAR LIMITED A.B.N. 85 108 962 152

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

Revenue
Changes in inventories and work in progress
Distribution costs
Commissions paid
Promotions and advertising expense
Depreciation and amortisation expense
Impairment expense
Insurance expense
Employee benefits expense
Rental expenses
Finance costs
Other expenses
Consolidated Entity
31 December 2010
$
31 December 2009
$
10,751,754
13,401,225
(4,521,070)
(5,641,414)
(580,797)
(682,525)
(784,456)
(972,624)
(1,140,148)
(1,300,231)
(146,036)
(73,483)
(2,400,000)
-
(86,061)
(59,416)
(2,421,283)
(2,288,758)
(525,788)
(458,276)
(76,734)
(19,390)
(822,343)
(765,705)
(Loss) / Profit before income tax expense
Income tax expense
(2,752,962)
1,139,403
105,680
(246,853)
(Loss) / Profit attributable to members of the
parent entity
Other comprehensive income
(2,647,282)
-
892,550
-
Total comprehensive income (2,647,282)
892,550
Basic earnings per share (cents per share) (6.13)c
2.05c
Diluted earnings per share (cents per share) (6.13)c
2.05c

The accompanying notes form part of this financial report.

[ 6 ]

UNDERCOVERWEAR LIMITED A.B.N. 85 108 962 152

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE AS AT 31 DECEMBER 2010

CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Consolidated Entity
31 December 2010
$
30 June 2010
$
69,068
308,322
637,696
786,466
4,046,702
4,365,924
223,702
194,755
TOTAL CURRENT ASSETS 4,977,168
5,655,467
NON-CURRENT ASSETS
Plant and equipment
Deferred tax assets
Intangible assets
1,149,146
1,266,021
371,248
359,178
12,217,498
14,617,499
TOTAL NON-CURRENT ASSSETS 13,737,892
16,242,698
TOTAL ASSETS 18,715,060
21,898,165
CURRENT LIABILITIES
Trade and other payables
Interest bearing liabilities
Short-term provisions
1,001,473
1,997,734
1,608,889
454,463
640,910
1,038,660
TOTAL CURRENT LIABILITIES 3,251,272
3,490,857
NON-CURRENT LIABILITIES
Interest bearing liabilities
Deferred tax liabilities
Long-term provisions
404,970
653,361
30,835
59,105
68,915
68,872
TOTAL NON-CURRENT LIABILITIES 494,910
791,148
TOTAL LIABILITIES 3,746,182
4,282,005
NET ASSETS 14,968,878
17,616,160
EQUITY
Issued capital
Retained earnings
22,809,146
22,809,146
(7,840,268)
(5,192,986)
TOTAL EQUITY 14,968,878
17,616,160

The accompanying notes form part of this financial report .

[ 7 ]

UNDERCOVERWEAR LIMITED A.B.N. 85 108 962 152

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

Note
Balance at 1 July 2009
Total comprehensive income for the
period
Share buy back
Dividends paid or provided for
3
Balance at 31 December 2009
Balance at 1 July 2010
Total comprehensive income for the
period
Dividends paid or provided for
3
Balance at 31 December 2010
Ordinary
Share Capital
Retained
Profits Total
23,960,750
1,595,696
25,556,446
-
892,550
892,550
(1,062,254)
-
(1,062,254)
-
(480,000)
(480,000)
22,898,496
2,008,246
24,906,742
22,809,146
(5,192,986)
17,616,160
-
(2,647,282)
(2,647,282)
-
-
-
22,809,146
(7,840,268)
14,968,878

The accompanying notes form part of this financial report.

[ 8 ]

UNDERCOVERWEAR LIMITED A.B.N. 85 108 962 152

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Dividends & trust distributions received
Finance costs
Income taxes paid
Consolidated Entity
31 December 2010
$
31 December 2009
$
11,971,071
15,104,978
(12,970,268)
(13,970,184)
33
28,877
19
16
(76,734)
-
(44,035)
(300,338)
Net cash provided by operating activities (1,119,914)
863,349
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of non-current assets
Purchase of non-current assets
Share buy back
2,170
(27,545)
-
-
(1,100,679)
(1,062,254)
Net cash used in investing activities (25,375)
(2,162,933)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid
Interest bearing liabilities
Financing costs
-
(238,936)
-
(480,000)
1,107,338
(19,390)
Net cash provided by/(used in) financing activities (238,936)
607,948
Net decrease in cash held
Cash at beginning of period
(1,384,225)
(691,636)
308,322
1,702,317
Cash at end of period (1,075,903)
1,010,681

The accompanying notes form part of this financial report.

[ 9 ]

UNDERCOVERWEAR LIMITED A.B.N. 85 108 962 152

NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

NOTE 1: BASIS OF PREPARATION

The half-year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001 , Accounting Standard AASB 134: Interim Financial Reporting, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards.

It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2010 and any public announcements made by UnderCoverWear Limited and its controlled entities during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001 .

The accounting policies have been consistently applied by the entities in the consolidated entity and are consistent with those applied in the 30 June 2010 financial report.

Reporting basis and conventions

The half year report has been prepared on an accruals basis and is based on historical costs.

[ 10 ]

UNDERCOVERWEAR LIMITED A.B.N. 85 108 962 152

NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

Consolidated Entity 31 December 2010 31 December 2009

NOTE 2: PROFIT BEFORE TAX

The following revenue and expense items are relevant in explaining the financial performance for the interim period: Revenue:


sale of goods
10,316,692 12,861,399

distribution charges
124,782 171,677

rental revenue
241,848 258,165

other revenue
68,381 81,091

interest & dividends received
51 28,893
Total Revenue 10,751,754 13,401,225

Profit before income tax has been determined after:

Expenses Expenses
- cost of sales 4,271,069 5,641,414
- borrowing costs 76,734 19,390
- depreciation of non-current assets 123,465 73,227
- bad & doubtful debts 18,453 22,856
- rental expense on operating leases 524,469 551,115
- impairment expense 2,400,000 -
- inventory write-off 250,000 -

[ 11 ]

UNDERCOVERWEAR LIMITED A.B.N. 85 108 962 152

NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

Consolidated Entity

31 December 2010 31 December 2009

NOTE 3: DIVIDENDS

Dividends provided for and paid during the half year are listed below:

  • Dividends paid 480,000 An interim fully franked ordinary dividend will not be paid. (2009: 1.25 cent per share franked at the tax rate of 30% - 543,325

NOTE 4: BORROWINGS

The consolidated group has borrowed funds via a revolving equipment finance facility to assist with upgrading the fleet of motor vehicles. The facility is for $1,500,000, of which $868,889 has been utilised by the end of the interim reporting period.

UnderCoverWear Limited is guarantor for the amount borrowed, and the vehicles purchased are provided as security for the borrowings.

The consolidated group has an overdraft facility of $1,200,000, of which $1,161,028 has been utilised by the end of the interim reporting period.

NOTE 5: EVENTS SUBSEQUENT TO REPORTING DATE

A temporary extension of the overdraft facility to $1,850,000 was approved to 30[th] April 2011.

NOTE 6: CONTINGENT LIABILITIES

There has been no change in contingent liabilities since the last annual reporting date.

NOTE 7: SEGMENT INFORMATION

The consolidated group has identified its operating segments based on internal reports that are reviewed and used by the Board of Directors (chief decision makers) in assessing performance and determining the allocation of resources.

The group only operated in one business segment being the manufacturing and distribution of underwear and garments through the home party plan, which is supported by an administration office in Sydney, Australia. All segment assets, segment liabilities and segment results relate to the one business segment and therefore no segment analysis has been prepared.

Revenues sourced from New Zealand, the groups only export market, are deemed not to be material and therefore disclosure of assets and revenues by geographic segment is deemed not to be required.

[ 12 ]

UNDERCOVERWEAR LIMITED A.B.N. 85 108 962 152

DIRECTORS’ DECLARATION

The directors of the company declare that:

  1. The financial statements and notes, as set out on pages 6 to 12:

  2. a. comply with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations; and

  3. b. give a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of its performance for the half year ended on that date.

  4. In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

==> picture [163 x 82] intentionally omitted <==

Stuart Richardson

Director

Dated 25th February 2010

[ 13 ]

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Grant Thornton Audit Pty Ltd ACN 130 913 594

Level 17, 383 Kent Street Sydney NSW 2000 Locked Bag Q800 QVB Post Office Sydney NSW 1230

T +61 2 8297 2400 F +61 2 9299 4445 E [email protected] W www.grantthornton.com.au

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Liability limited by a scheme approved under Professional Standards Legislation

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Liability limited by a scheme approved under Professional Standards Legislation

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