RNS Number:1433J
Retail Stores PLC
25 March 2003
FOR IMMEDIATE RELEASE
25th March 2003
RETAIL STORES PLC:
INTERIM RESULTS
FOR SIX MONTHS TO 28TH DECEMBER 2002
HIGHLIGHTS
* Sales over period increased by almost 10% to #26.1m
* Significant improvement of EBITDA to #1.1m from #0.2m last year
* Pre-tax losses greatly reduced to #1.5m from #13.1m last year, after
charging for brand impairment last year
* Impact of newly opened Regent House:
o footfall increased by 40%
o attracting new customers
o greater draw for remaining store
* Strengthened management team with appointment of Iain Renwick and
Lucille Lewin
* Strong Christmas and New Year Sale trading
* A further 10,000 sq ft of sales area to be reinstated during 2004
* Autumn launch of Liberty own label clothes and accessories commencing
with a childrenswear range followed by an edited range of ladieswear,
menswear and accessories
"We believe we are reaching a very exciting stage in Liberty's development
where, for the first time in many years, there is a clearly defined strategy
aimed at creating both a strong brand and a profitable business," Richard
Balfour-Lynn, Chairman.
-more-
Contact: Retail Stores plc Tel: 020 7734 1234
Iain Renwick, Chief Executive
Nick Mather, Finance Director
Baron Phillips Associates Tel: 020 7600 2288
Baron Phillips
CHAIRMAN'S STATEMENT
for the six months ended 28th December 2002
The six months under review has been an extremely eventful period for the
Company. The full impact of Liberty's newly opened Regent House was felt for
the first time, as was the refurbished ground floor of the Tudor building, and
the new Carnaby Street entrance. Even more importantly, there is a new sense of
purpose and leadership within Liberty following a strengthening of the senior
management team.
The redesigned and refurbished Regent House has been a great success, both with
our existing customers, as well as attracting new customers into the store. The
exciting range of branded luxury goods presented in a modern retailing
environment has proved to be very popular among the shopping public. The
increased footfall has heightened awareness and drawn more customers into the
rest of the store.
Since Regent House was re-launched a year ago, footfall has risen by 40% and
remained at this level until only a few weeks ago when the combined effects of
the Congestion Charge, Central Line tube closure and the build up to war in the
Gulf have deterred shoppers from the West End of London.
The other key events were the appointment last autumn of Iain Renwick as Chief
Executive and Lucille Lewin as Creative Director. We anticipate that the
combined strength of Liberty's management team will considerably enhance the
store's product mix, merchandising and marketing through the remainder of 2003
and well into the future. This strengthened management team is also laying the
foundations for the long-term development of the Liberty brand.
The effect of all these positive changes is that sales for the six months to
28th December 2002 advanced by almost 10% to #26.1m from #23.8m for the same
period a year ago. Much effort has been directed towards improving gross
margins together with ensuring a clean stock position.
Overheads net of operating income and excluding last year's impairment cost
increased by #1.2m to #10.4m. The increase principally comprises #0.5m of Regent
House overheads, which was not open during the comparative period last year, and
#0.4m of additional marketing costs. We continue to focus on reducing costs and
the effect of our current restructuring programme will be seen later in the
year.
CHAIRMAN'S STATEMENT
for the six months ended 28th December 2002
Earnings before interest, tax, depreciation and amortisation (EBITDA) improved
significantly to #1.1m from #0.2m last year. Overall, we produced a greatly
reduced loss before tax of #1.5m against a pre tax loss of #13.1m for the same
period a year ago after charging for brand impairment.
Liberty traded well during the critical Christmas period and through the New
Year Sale. However, trading over the past few weeks has become increasingly
tough due to the build up and commencement of war in the Gulf.
Although there is a degree of uncertainty in the present climate we are
implementing a number of changes and initiatives that, we believe, will lay
solid foundations for Liberty's future viability and success. A total review of
the entire Liberty management structure has been completed and we are now in the
process of reorganising, which will result in significant cost savings and
increased operational efficiency.
We also anticipate that during the course of 2004 we will be able to reinstate
the fourth floor of the Tudor building as retail space, increasing our sales
area by 10,000 sq ft.
The other major initiative that is currently underway is a comprehensive
development programme for the introduction of Liberty own label products. In
the early autumn, we expect to introduce a range of Liberty childrenswear
clothing and accessories, which will be followed by an edited range of own label
ladieswear, menswear and accessories.
We believe we are reaching a very exciting stage in Liberty's development where,
for the first time in many years, there is a clearly defined strategy aimed at
creating both a strong brand and a profitable business. However we cannot look
at Liberty in isolation, there are many external factors, not least of all,
international conflict, that will impact on consumer spending. With this in
mind, we view the future with caution.
Richard Balfour-Lynn
Executive Chairman
London
25th March 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 28th December 2002
Six months Six months Year
ended ended ended
28th December 29th December 29th June
2002 2001 2002
(restated)*
Notes #'000 #'000 #'000
Turnover 2 26,058 23,830 46,798
Cost of sales (15,901) (15,251) (28,952)
Gross profit 10,157 8,579 17,846
Selling and distribution costs (10,984) (10,372) (21,246)
Administrative expenses (including brand
impairment in 2001) (1,307) (12,107) (13,549)
Other operating income 1,867 1,921 3,687
Operating loss (267) (11,979) (13,262)
Operating loss before brand impairment (267) (602) (1,885)
Brand impairment - (11,377) (11,377)
Operating loss (267) (11,979) (13,262)
Loss on ordinary activities before interest
and taxation 2 (267) (11,979) (13,262)
Net interest payable and similar charges (1,209) (1,076) (2,278)
Loss on ordinary activities before taxation (1,476) (13,055) (15,540)
Taxation on loss on ordinary activities (146) (266) (477)
Loss on ordinary activities after taxation (1,622) (13,321) (16,017)
Equity minority interests (142) (73) (298)
Non-equity minority interest (27) - (132)
Loss attributable to ordinary shareholders (1,791) (13,394) (16,447)
Undeclared non-equity preference dividends 3 (12) - (46)
Retained loss for the period 6 (1,803) (13,394) (16,493)
Loss per share Basic 4 (8.0p) (59.3p) (73.0p)
Diluted 4 (8.0p) (59.3p) (73.0p)
All operations are continuing.
* The previous six month period profit and loss account has been restated to a
comparable period as explained in note 1.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the six months ended 28th December 2002
Six months Six months Year
ended ended ended
28th December 29th December 29th June
2002 2001 2002
(restated)
#'000 #'000 #'000
Loss for the period (1,791) (13,394) (16,447)
Unrealised deficit on revaluation of property - (3,855) (184)
Currency translation differences on (116) (76)
foreign currency net investments (101)
Other movements - 42 -
Total recognised gains and losses for the period (1,892) (17,323) (16,707)
All recognised gains and losses are attributable to equity shareholders'
interests.
NOTE OF CONSOLIDATED STATEMENT OF HISTORICAL COST PROFITS AND LOSSES
for the six months ended 28th December 2002
Six months Six months Year
ended ended ended
28th December 29th December 29th June
2002 2001 2002
(restated)
#'000 #'000 #'000
Reported loss on ordinary activities before taxation (1,476) (13,055) (15,540)
Reduction in depreciation during the period based on 3 8 24
historical cost of properties held at valuation
Historical cost loss on ordinary activities before (1,473) (13,047) (15,516)
taxation
Historical cost loss retained after taxation, minority (1,800) (13,386) (16,469)
interests and dividends
RECONCILIATIONS OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 28th December 2002
Six months ended Six months ended Year
ended
28th December 29th December 29th June
2002 2001 2002
(restated)
#'000 #'000 #'000
Opening shareholders' funds 52,669 69,335 69,335
Loss for the financial period (1,791) (13,394) (16,447)
Undeclared non-equity preference dividends proposed for
the period (12) - (46)
Net revaluation deficit on fixed assets - (3,855) (184)
Currency translation differences on foreign currency net
investments (101) (116) (76)
Other movements - 42 41
Unpaid non-equity preference dividends 12 - 46
Closing shareholders' funds 50,777 52,012 52,669
CONSOLIDATED BALANCE SHEET
at 28th December 2002
28th December 29th December 29th June
2002 2001 2002
(restated)*
Notes #'000 #'000 #'000
Fixed assets
Intangible asset 18,200 18,200 18,200
Tangible assets 5 78,248 70,629 77,845
96,448 88,829 96,045
Current assets
Stocks 6,788 7,262 6,222
Debtors:
amounts falling due within one year 7,630 7,213 9,136
amounts falling due after more than one
year 890 548 701
Cash 6,194 3,466 3,246
21,502 18,489 19,305
Creditors: amounts falling due within one (16,969) (37,433) (15,870)
year
Net current assets/(liabilities) 4,533 (18,944) 3,435
Total assets less current liabilities 100,981 69,885 99,480
Creditors: amounts falling due after more (47,891) (15,376) (44,240)
than one year
Provisions for liabilities and charges (120) (121) (120)
Net assets 52,970 54,388 55,120
Capital and reserves
Called up share capital 6,036 6,036 6,036
Merger reserve 6 61,503 61,503 61,503
Revaluation reserve 6 7,234 3,582 7,237
Profit and loss account 6 (23,996) (19,109) (22,107)
Total shareholders' funds 50,777 52,012 52,669
Analysed as:
Equity shareholders' funds 50,334 51,627 52,238
Non-equity shareholders' funds 443 385 431
Equity minority interests 1,615 1,798 1,741
Non-equity minority interests 578 578 710
52,970 54,388 55,120
* The previous six month period balance sheet has been restated to a comparable
period end as explained in note 1.
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 28th December 2002
Six months Six months Year
ended ended ended
28th December 29th December 29th June
2002 2001 2002
Notes (restated)*
#'000 #'000 #'000
Net cash inflow from operating activities 7 4,349 4,577 211
Returns on investments and servicing of finance 8 (2,022) (1,013) (2,579)
Taxation paid (449) (619) (614)
Capital expenditure 9 (1,930) (4,206) (9,280)
Net cash outflow before financing (52) (1,261) (12,262)
Financing 10 3,000 - 29,000
Increase/(decrease) in cash during the period 2,948 (1,261) 16,738
* The previous six month period cash flow statement has been restated to a
comparable period as explained in note 1.
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the six months ended 28th December 2002
Six months Six months Year
ended ended ended
28th December 29th December 29th June
2002 2001 2002
Notes (restated)
#'000 #'000 #'000
Increase/(decrease) in cash during the period 2,948 (1,261) 16,738
Increase in loans during the period 11 (3,000) - (29,000)
Exchange differences 11 - (126) -
Increase in net debt during the period 11 (52) (1,387) (12,262)
Opening net debt (41,754) (29,492) (29,492)
Closing net debt 11 (41,806) (30,879) (41,754)
NOTES TO THE ACCOUNTS
1. ACCOUNTING POLICIES
The interim results of the Group for the six months ended 28th December 2002
incorporate the results of the Company and its subsidiary undertakings for the
period then ended. The results have been prepared on the basis of the
accounting policies adopted in the accounts of the Group for the year ended 29th
June 2002, consistently applied in all material respects.
The Group accounts include the accounts of the Company and its subsidiary
undertakings made up to the Saturday nearest to the accounting reference date.
Accordingly, the accounts for the current period are for ---26 weeks to 28th
December 2002 and those for the comparative period are for the 26 weeks to 29th
December 2001. These were previously prepared for the 25 weeks to 22nd December
2001 and they have been restated accordingly. The year end accounts were for
the 52 weeks to 29th June 2002.
The interim accounts for the Group for the six months ended 28th December 2002
and the comparative figures for the six months ended 29th December 2001 are
unaudited. The comparative figures for the financial year ended 29th June 2002
are extracted from the Group's statutory accounts. Those accounts have been
reported on by the Group's auditors and delivered to the Registrar of Companies.
The report of the Auditors was unqualified and does not contain a statement
under section 237(2) or (3) of the Companies Act 1986.
2. DIVISIONAL ANALYSIS
Six months Six months Year
ended ended ended
Turnover 28th December 29th December 29th June
2002 2001 2002
(restated)
#'000 #'000 #'000
By class of business:
Retail 20,278 18,927 35,611
Wholesale 5,780 4,903 11,187
26,058 23,830 46,798
By geographical origin:
United Kingdom 23,873 21,255 40,160
Japan 2,185 2,463 6,526
North America - 112 112
26,058 23,830 46,798
By geographical destination:
United Kingdom 21,493 19,619 36,820
Europe 1,560 809 2,123
Japan 2,302 2,583 6,782
North America 231 185 378
Other 472 634 695
26,058 23,830 46,798
NOTES TO THE ACCOUNTS
2. DIVISIONAL ANALYSIS (continued)
Six months Six months Year
ended ended ended
28th December 29th December 29th June
Loss on ordinary activities before 2002 2001 2002
interest and taxation (restated)
#'000 #'000 #'000
By class of business:
Retail (998) (12,545) (13,104)
Wholesale 731 566 (158)
(267) (11,979) (13,262)
By geographical origin:
United Kingdom (637) (12,351) (14,306)
Japan 370 410 1077
North America - (38) (33)
(267) (11,979) (13,262)
The segmental analysis of operations reflects the structure of the Group. Retail
includes the UK retail operations at Regent Street, Heathrow, Windsor and York.
Wholesale includes the results of the UK and Japanese fabric businesses.
The Retail loss before interest and taxation includes net rental income from
properties and is after deducting any brand impairment provision.
3. DIVIDENDS
Six months Six months Year
ended ended ended
28th December 29th December 29th June
2002 2001 2002
#'000 #'000 #'000
Undeclared non-equity preference dividends 12 - 46
Due to a deficiency of distributable reserves, the preference shares are
currently in arrears of dividend. Payment will be made when this deficiency has
been made good from future profits.
NOTES TO THE ACCOUNTS
4. LOSS PER SHARE
The basic and diluted loss per share figures are calculated by dividing the loss
after taxation and minority interests of #1,803,000 (six months to 29th December
2001: #13,394,000, year ended 29th June 2002: #16,493,000), by the weighted
average number of ordinary shares in issue during the period of 22,602,808 (six
months to 29th December 2001: 22,602,808, year ended 29th June 2002: 22,602,808)
As the exercise price of share options is equal to or higher than the average
share price for the period and comparative periods, there is no difference
between the basic loss per share and the diluted loss per share.
5. TANGIBLE FIXED ASSETS
Long Short Fixtures &
Freehold leasehold leasehold equipment Total
Group #'000 #'000 #'000 #'000 #'000
Cost or valuation
At 30th June 2002 37,600 36,650 297 6,221 80,768
Additions 936 392 - 423 1,751
At 28th December 2002 38,536 37,042 297 6,644 82,519
Depreciation
At 30th June 2002 - - (60) (2,863) (2,923)
Charge for the period (442) (357) (1) (548) (1,348)
At 28th December 2002 (442) (357) (61) (3,411) (4,271)
Net book value
At 28th December 2002 38,094 36,685 236 3,233 78,248
At 29th December 2001 35,850 31,650 254 2,875 70,629
At 29th June 2002 37,600 36,650 237 3,358 77,845
Valuation
All of the Group's properties were valued at 29th June 2002 by qualified
professional valuers working for the Company of DTZ Debenham Tie Leung,
Chartered Surveyors, ("DTZ") acting in the capacity of External Valuers. All
such valuers are Chartered Surveyors, being members of the Royal Institution of
Chartered Surveyors. All properties were valued on the basis of Open Market
Value.
NOTES TO THE ACCOUNTS
5. TANGIBLE FIXED ASSETS (continued)
The reconciliation of the values at which the properties are included in the
above table with the original cost less accumulated depreciation is as follows:-
Original cost less Valuation
accumulated at
depreciation at Valuation 28th December
28th December 2002 surplus 2002
#'000 #'000 #'000
Freehold properties 31,230 6,864 38,094
Long leasehold properties 36,315 370 36,685
Short leasehold properties 236 - 236
67,781 7,234 75,015
Fixtures and equipment 3,233 - 3,233
At 28th December 2002 71,014 7,234 78,248
At 29th December 2001 67,047 3,582 70,629
At 29th June 2002 70,608 7,237 77,845
6. MOVEMENT ON RESERVES
Profit
Merger reserve Revaluation and loss account
reserve
#'000 #'000 #'000
Group
At 30th June 2002 61,503 7,237 (22,107)
Loss retained for the period - - (1,803)
Currency translation differences on foreign currency net
investments
- - (101)
Other movements - (3) 3
Unpaid non-equity preference dividends - - 12
At 28th December 2002 61,503 7,234 23,996
All reserves of the Group are attributable to equity shareholders' interests.
NOTES TO THE ACCOUNTS
7. NET CASH INFLOW FROM OPERATING ACTIVITIES
Six months Six months Year
ended ended ended
28th December 29th December 29th June
2002 2001 2002
(restated)
#'000 #'000 #'000
Operating loss (267) (11,979) (13,262)
Depreciation 1,348 946 2,073
Loss on disposal of tangible fixed assets - 23 -
Impairment of brand - 11,377 11,377
Decrease in provisions - (61) (62)
(Increase)/decrease in stock (566) 1,550 2,659
Decrease/(increase) in debtors 1,647 (341) (2,447)
Increase/(decrease) in creditors 2,187 3,062 (127)
Net cash inflow from operating activities 4,349 4,577 211
8. RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Six months Six months Year
ended ended ended
28th December 29th December 29th June
2002 2001 2002
#'000 #'000 #'000
Dividend paid to minorities (172) - (317)
Bank arrangement fees paid (431) - -
Interest paid (1,458) (1,013) (2,278)
Interest received 39 - 16
Returns on investments and servicing of finance (2,022) (1,013) (2,579)
NOTES TO THE ACCOUNTS
9. CAPITAL EXPENDITURE
Six months Six months Year
ended ended ended
28th December 29th December 29th June
2002 2001 2002
#'000 #'000 #'000
Purchase of tangible fixed assets (1,930) (4,206) (9,280)
Capital expenditure (1,930) (4,206) (9,280)
10. FINANCING
Six months Six months Year
ended ended ended
28th December 29th December 29th June
2002 2001 2002
#'000 #'000 #'000
Loans drawn down 48,000 - 45,000
Loans repaid (45,000) - (16,000)
Financing 3,000 - 29,000
11. ANALYSIS OF NET DEBT
Movement Movement
28th December during 29th June during 29th December
2002 period 2002 period 2001
(restated) (restated)
#'000 #'000 #'000 #'000 #'000
Available cash 6,194 2,948 3,246 (220) 3,466
Bank overdrafts - - - 18,345 (18,345)
Net cash 6,194 2,948 3,246 18,125 (14,879)
Bank loan
Less than one year - 1,000 (1,000) (59) (941)
More than one year (48,000) (4,000) (44,000) (28,941) (15,059)
Net debt (41,806) (52) (41,754) (10,875) (30,879)
NOTES TO THE ACCOUNTS
12. ACCOUNTS AND INTERIM ANNOUNCEMENT
The interim accounts of the Company are expected to be sent to shareholders
during March 2003. Further copies of this interim statement and the interim
accounts for the six months ended 28th December 2002, when they are published,
are available from the Company Secretary, Filex Services Limited, 179 Great
Portland Street, London W1W 5LS.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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