Final Results
April 09 2003 - 3:01AM
UK Regulatory
RNS Number:8030J
Matalan PLC
09 April 2003
MATALAN PLC
Preliminary Results for the 53 weeks ended 1st March 2003
Profit before tax up 9%
* Profit before tax up 9% to #117.4m (2002: #107.6m)
* Turnover up 21% to #1,021.5m (2002: #847.4m)
* Retail like for like sales up 3% (2002: 8%)
* Earnings per share up 16% to 21.3p (2002: 18.4p)
* Final dividend up 13% to 5.4p per share (2002: 4.8p)
* Total dividends up 13% to 8.1p per share (2002: 7.2p).
John Hargreaves, Group Chairman, commented:
"I am pleased to report that sales and profits have once again
increased. Sales in the period grew by 21% and profits before
tax by 9%. Our retail business has increased sales and profits
again, despite the slowing growth in retail markets. The
investments made over the past eighteen months in Lee Cooper
and Wolsey have made satisfactory returns.
In a more value conscious market, we believe that Matalan's
strong combination of price and quality will be increasingly
attractive to our members. Matalan is now the UK's fifth
largest clothing retailer, having increased market share by
0.3% to 3.1%. Our active membership, which has grown over the
period by 0.9 million to 9.1 million, remains a unique resource
and, together with our planned range and product improvements,
provides the platform for continued sustainable sales and
profit growth."
Results
In the 53 week period ended 1st March 2003 sales increased
20.5% to #1,021.5m (2002: #847.4m). Profit before tax
increased by 9.1% to #117.4m (2002: #107.6m). The tax charge
for the period was #30.7m (2002: #33.5m), resulting in an
effective rate of 26.1% (2002: 31.2%). The decrease in the
effective rate was due to continuing focus on expenditure
eligible for tax relief, recognition of tax assets within the
group and lower taxes outside of the United Kingdom. Earnings
per share improved by 15.8% to 21.3p (2002: 18.4p).
Capital investment was #57.4m (2002: #45.4m), of which #39.4m
(2002: #37.7m) related to store investment and #13.2m (2002:
#1.9m) related to systems investment. All new stores continue
to exceed internal return on capital criteria.
The stock position at the period end was #135.0m, #29.7m higher
than the previous period end. Retail stocks have grown
approximately in line with space. Current season stock levels
are on plan and terminal stock levels are lower than those of
the previous period.
The Group's operating cash flow was #107.8m (2002: #118.6m).
The period on period reduction principally reflects the timing
of February month end creditor payments which are not
comparable. After interest and tax, dividends, capital
expenditure (including financial investment) of #56.0m (2002:
#49.5m) and acquisition costs of #7.3m (2002: #45.4m), the net
liquid position was reduced by #15.7m (2002: #33.4m), giving a
closing net debt position of #17.8m (2002: #2.1m).
Dividend
The Board is recommending a final dividend of 5.4p per share
(2002: 4.8p per share). Subject to approval by shareholders at
the Annual General Meeting on 4th June 2003, this dividend will
be paid on 3rd July 2003 to those shareholders on the register
at the close of business on 6th June 2003. This will mean
total dividends for the period of 8.1p per share (2002: 7.2p
per share), which are covered 2.6 times (2002: 2.5 times) by
earnings.
Matalan Retail
Matalan Retail's sales in the period increased by 17.9% to
#956.0m (2002: #811.0m) with a 3.0% (2002: 8.3%) contribution
from the like for like estate. Operating profit increased by
7.3% to #115.6m (2002: #107.7m), representing a sales ratio of
12.1% (2002: 13.3%). This reduction results from investment in
people costs, increased advertising, and rent and rate cost
pressures, being partially offset by improved margin gains
through better sourcing.
At the end of the period, Matalan traded from 163 stores,
having opened 20 new stores, resited 5 and extended 3. In
total, 0.8 million sq ft was added to the estate in the period,
increasing trading space by 21.6% to 4.5 million sq ft. It is
planned to add an additional 0.6 million sq ft this current
period in line with our long term target of 8 million sq ft in
the UK.
Matalan's UK clothing market share has increased 0.3% to 3.1%.
In value terms, Matalan is now the UK's fifth largest clothing
retailer and the third largest by volume. The home product
market share has increased from 2.3% to 3.3%.
During the period, the Company commenced a major business
systems investment programme. When completed, the new systems
will generate further efficiencies, particularly in stock
management and stock availability, improving the platform for
profitable and sustainable growth in the future.
Lee Cooper and Wolsey
Wolsey, which was acquired in April 2002 at a cost of #10.1m,
contributed sales of #8.7m and operating profit of #0.5m (after
charging #0.3m for goodwill amortisation). Lee Cooper
contributed sales of #56.8m (2002: #36.4m) and operating profit
of #2.2m (2002: #0.2m) after a charge of #1.7m for goodwill
amortisation.
Directors
In March 2003 John King was appointed Group Chief Executive.
John joined Matalan in February 2002 as Chief Executive of Lee
Cooper, before being appointed Matalan Trading Director in
October 2002.
In March 2003, Paul Mason and Andy Clarke (who was appointed in
June 2002) resigned as Group Chief Executive and Retail
Director respectively. I would like to thank them for their
contribution in the period they were with the Company.
In November 2002, Phil Dutton joined the Board as Group Finance
Director following Ian Smith's retirement after 13 years
service. I would like to take this opportunity to thank Ian
for his invaluable contribution and support over that period.
Outlook
Matalan's management team remains focused on reinforcing the
core values which have been the foundation of the Company's
success, and which are given to all staff on joining, namely:
* offer outstanding value to members
* respect each other
* respect the customer
* keep it simple, and
* keep the costs under control
In a more value conscious market, we believe that Matalan's
strong combination of price and quality will be increasingly
attractive to our members. Our active membership, which has
grown over the period by 0.9 million to 9.1 million, remains a
unique resource and, together with our planned range and
product improvements, provides the platform for continued
sustainable sales and profit growth.
John Hargreaves
GROUP CHAIRMAN
9th April 2003
Consolidated Profit and Loss Account
for the 53 weeks ended 1st March 2003
Notes 2003 2002
#'m #'m
unaudited
Turnover 1,021.5 847.4
Cost of sales (855.3) (710.4)
-------------------------------------------------------------------------
Gross profit 166.2 137.0
Administrative expenses 1 (47.9) (29.1)
-------------------------------------------------------------------------
Operating profit 118.3 107.9
Net interest payable (0.9) (0.3)
-------------------------------------------------------------------------
Profit on ordinary activities before taxation 117.4 107.6
Taxation (30.7) (33.5)
-------------------------------------------------------------------------
Profit on ordinary activities after taxation 86.7 74.1
Dividends (33.3) (29.3)
-------------------------------------------------------------------------
Profit retained for the period 53.4 44.8
=========================================================================
Earnings per share
Basic 2 21.3p 18.4p
Diluted 2 21.2p 18.1p
The Group has no recognised net gains or losses except as reported
in the above profit and loss accounts for the period or the
prior period.
All the above results arose from continuing operations.
Consolidated Balance Sheet
at 1st March 2003
Notes 2003 2002
#'m #'m
unaudited
Fixed assets
Intangible assets 3 37.3 32.3
Tangible assets 167.6 132.3
Investments 4 22.5 25.7
-------------------------------------------------------------------------
227.4 190.3
-------------------------------------------------------------------------
Current assets
Stocks 135.0 105.3
Debtors 22.5 20.8
Cash at bank and in hand 16.2 17.8
-------------------------------------------------------------------------
173.7 143.9
-------------------------------------------------------------------------
Creditors: amounts falling due within
one year (159.8) (149.6)
-------------------------------------------------------------------------
Net current assets/(liabilities) 13.9 (5.7)
-------------------------------------------------------------------------
Total assets less current liabilities 241.3 184.6
-------------------------------------------------------------------------
Creditors: amounts falling due after
more than one year (14.8) (13.4)
Provisions for liabilities and charges (9.5) (7.6)
-------------------------------------------------------------------------
Net assets 217.0 163.6
=========================================================================
Capital and reserves
Called up share capital 42.0 42.0
Share premium account 2.0 2.0
Profit and loss account 173.0 119.6
-------------------------------------------------------------------------
Equity shareholders' funds 217.0 163.6
=========================================================================
Consolidated Cash Flow Statement
for the 53 weeks ended 1st March 2003
Notes 2003 2002
#'m #'m
unaudited
Net cash inflow from operating activities 5 107.8 118.6
Returns on investments and servicing of finance (0.9) (0.4)
Taxation (26.2) (32.5)
Capital expenditure and financial investment (56.0) (49.5)
Acquisitions (7.3) (45.4)
Equity dividends paid to shareholders (30.6) (23.8)
-------------------------------------------------------------------------------
Net cash outflow before management of
liquid resources and financing (13.2) (33.0)
Management of liquid resources 11.8 12.2
Financing (0.2) (0.8)
-------------------------------------------------------------------------------
Decrease in cash in the period (1.6) (21.6)
===============================================================================
Reconciliation of cash flow to movement in net debt.
Decrease in cash in the period (1.6) (21.6)
Cash outflow from decrease in lease financing 0.2 0.8
Net debt acquired with subsidiary - (0.4)
Net debt issued to acquire subsidiary (2.5) -
Cash flow from liquid resources (11.8) (12.2)
-------------------------------------------------------------------------------
Movement in net debt in the period (15.7) (33.4)
Net (debt)/cash at the beginning of the period (2.1) 31.3
-------------------------------------------------------------------------------
Net debt at the end of the period (17.8) (2.1)
===============================================================================
Notes
1. Administrative expenses
Total administrative expenses have increased from #29.1m to
#47.9m, of which #11.0m is attributable to Lee Cooper, acquired
in July 2001, and Wolsey, acquired in April 2002. In addition,
amortisation of intangible fixed assets has increased period on
period by #1.3m, including #1.0m accounting write off in
respect of the Easy brand acquired in April 2002.
2. Earnings per share
2003 2002
Weighted Weighted
average average
number of Per share number of Per share
Earnings shares amount Earnings shares amount
#'m millions pence #'m millions pence
Basic EPS
Attributable to
ordinary
shareholders 86.7 406.7 21.3 74.1 403.1 18.4
Effect of
dilutive options - 2.1 (0.1) - 6.8 (0.3)
------------------------------------------------------------------------------------------
Diluted EPS
Adjusted figures 86.7 408.8 21.2 74.1 409.9 18.1
==========================================================================================
The actual numbers used for the basic earnings per share
calculation are #86,641,000 (2002: #74,061,000) profit after tax
and 406,735,742 (2002: 403,146,626) weighted average number of
shares. The weighted average number of shares excludes shares
held by the Matalan Employee Benefit Trust (EBT) and the Matalan
Qualifying Employee Share Trust (QUEST) and is adjusted for the
issue of shares during the year. The diluted earnings per share
calculations reflect the weighted average dilutive effect of
options outstanding during the year of 2,137,102 (2002:
6,799,713).
3. Intangible fixed assets
The Group purchased Wolsey Limited on 23rd April 2002 for a total
consideration of #10.1m (#9.9m plus acquisition costs of
#0.2m), financed by cash and bank borrowings of #7.3m (net of
cash acquired of #0.3m) and loan notes of #2.5m, which are due
to be repaid in June 2003. This transaction has been accounted
for as an acquisition.
The total fair value of assets of this business at acquisition
was #3.1m. In accordance with FRS 10, goodwill arising of
#7.0m has been included as an asset and the Directors consider
the useful life to be 20 years. The effect of goodwill
amortisation since the acquisition date is a charge of #0.3m to
operating profit.
4. Investments
Investments comprise the Company's shares held by the EBT and the
QUEST. In accordance with the scheme rules 5,038,674 options
were exercised at a cost of #2.7m during the period. Dividends
have been waived on the shares held by these trusts.
5. Reconciliation of operating profit to net cash inflow from operating
activities
2003 2002
#'m #'m
Reconciliation of operating profit
to net cash inflow from
operating activities
Operating profit 118.3 107.9
Amortisation of investments in own shares 0.5 0.6
Amortisation of intangible fixed assets 3.0 1.7
Depreciation of tangible fixed assets 21.3 16.7
Loss on sale of tangible fixed assets 1.2 3.3
Increase in stocks (27.9) (18.2)
Increase in debtors (0.5) (5.4)
(Decrease)/increase in creditors (8.1) 12.0
----------------------------------------------------------------------
Net cash inflow from operating activities 107.8 118.6
======================================================================
6. Basis of preparation
The preliminary results for the 53 weeks ended 1st March 2003 are
unaudited with the audit report on the full accounts yet to be
signed. The financial information set out above does not
constitute statutory accounts within the meaning of the
Companies Act 1985. The preliminary financial results have
been prepared using accounting policies consistent with those
set out in the 2002 Annual Report and Accounts.
The comparative figures for the period ended 23rd February 2002
do not constitute statutory accounts. These figures have been
extracted from the audited accounts for that year which have
been delivered to the Registrar of Companies and on which the
Auditors issued an unqualified report, which did not contain a
statement under either section 237 (2) or (3) of the Companies
Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR IFFLISTITIIV