RNS Number:7310B
Retail Stores PLC
27 September 2002
FOR IMMEDIATE RELEASE
27th September 2002
RETAIL STORES PLC:
PRELIMINARY RESULTS FOR 12 MONTHS TO 29TH JUNE 2002
HIGHLIGHTS
Retail Stores plc was formed in April 2000 with the express purpose of acquiring
the department store group Liberty plc. Retail Stores plc is 68% owned by
Marylebone Warwick Balfour Group Plc.
* Operating losses, before brand impairment, cut to #1.9m from #4.9m last
year.
* EBITDA before brand impairment was a positive #0.2m - reflecting Liberty's
return to positive operating cashflow
* Despite the impact of September 11th and operating from 12% less
floorspace in the flagship store, sales only down by 10.8% to #46.8m
* Overhead base reduced by #6.0m
* #9m redevelopment of 17,000 sq ft of Regent House building opened in March
2002 resulting in a footfall increase into Regent House of over 50%
* Management team re-structured and strengthened
"Our key objective is to return the flagship store to profitability, something
we believe we are close to achieving. At the same time, we continue to enhance
and develop our retail offer along with improved service and merchandising. The
first phase in our planned refurbishment of the Tudor Building is underway and
forms part of what will be the overall repositioning of the flagship store.
This will help drive sales and margins as well as improving the Liberty brand,
which, in turn, will provide the platform from which new Liberty branded
products can be launched in the future." Richard Balfour-Lynn, Chairman
-more-
Contact:
Nicholas Mather, Finance Director Tel: 020 7734 1234
Baron Phillips, Baron Philips Consultants Tel: 020 7600 2288, Mobile: 0705012419
CHAIRMAN'S STATEMENT
for the year ended 29th June 2002
This has been something of a rollercoaster year for Liberty. On one hand the
period saw the refurbishment and re-opening of 17,000 sq ft of new and modern
retailing in Regent House to great acclaim while on the other, the events of
11th September had an instant impact on our overseas customer base.
Despite the tragic events and general economic uncertainty, Liberty produced
overall sales of #46.8m, down only 10.8% on the previous year despite operating
from 12% less floorspace in the flagship store. At the same time gross margins
remained strong even after accounting for the clearout of old and excessive
stocks.
Furthermore, substantial inroads have been made into cutting running costs
through the closure of non-core activities and an aggressive streamlining of the
business operations resulting, overall, in a #6.0m lowering of overheads. As
reported at the half year, an #11.4m impairment provision was made against the
carrying value of our global brand. The provision was based on an external
valuation reflecting a generally tougher retailing climate.
The impact of these measures is seen in operating losses before brand
impairment, which have been cut to #1.9m from #4.9m, after adjusting for last
year's property sale. EBITDA before brand impairment was a positive #0.2m, which
represents a major milestone in Liberty's return to positive operating cashflow
and profitability.
Undoubtedly the year's highlight was the launch of the newly created retail
space in Regent House which, since its opening in March, has done much to regain
Liberty's reputation as a destination retail centre. As well as considerably
raising the store's profile it has, more importantly, increased Liberty's
footfall into Regent House by over 50%.
Liberty's management team has been re-structured and strengthened through the
appointment of John Ball as Retail Director and Nicholas Mather as Finance
Director. It is with sadness that Fiona Harrison's resignation as Chief
Executive of Liberty due to ill health was accepted. Fiona worked tirelessly to
create and implement a strategy that would restore Liberty's standing as an
international brand. A replacement is being actively sought to complement the
existing team and continue development of the brand.
CHAIRMAN'S STATEMENT
for the year ended 29th June 2002
Liberty's stock position at the year end has been greatly improved through
better buying and more focused stock management disciplines putting us in a much
stronger position for the new Autumn season.
We continue to reorganise and consolidate our fabric business and there are some
early indications that it is moving forward, especially in the USA and the UK.
Trade in Japan remains difficult but we continue to look for new avenues to
develop both the brand and the fabric business in the Far East.
Our key objective is to return the flagship store to profitability, something we
believe we are close to achieving. At the same time we continue to enhance and
develop our retail offer along with improved service and merchandising. The
first phase in our planned refurbishment of the Tudor Building is underway and
forms part of what will be the overall repositioning of the flagship store. This
will help drive sales and margins as well as improving the Liberty brand, which,
in turn, will provide the platform from which new Liberty branded products can
be launched in the future.
Richard Balfour-Lynn
EXECUTIVE CHAIRMAN
London
26th September 2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 29th June 2002
Year ended Year ended
29th June 30th June
2002 2001
Notes #'000 #'000
Turnover 1 46,798 52,488
Cost of sales (28,952) (31,652)
Gross profit 17,846 20,836
Selling and distribution costs (21,246) (26,081)
Administrative expenses (including brand impairment) (13,549) (3,138)
Other operating income 3,687 3,442
Operating loss (13,262) (4,941)
Operating loss before brand impairment (1,885) (4,941)
Brand impairment (11,377) -
Operating loss (13,262) (4,941)
Profit on disposal of fixed assets - 1,990
Loss on ordinary activities before interest and taxation (13,262) (2,951)
Net Interest payable and similar charges (2,278) (1,378)
Loss on ordinary activities before taxation (15,540) (4,329)
Taxation on loss on ordinary activities (477) (626)
Loss on ordinary activities after taxation (16,017) (4,955)
Equity minority interests (298) (526)
Non-equity minority interest (132) -
Loss attributable to ordinary shareholders (16,447) (5,481)
Undeclared non-equity preference dividends (46) -
Retained loss for the year (16,493) (5,481)
Loss per share Basic 2 (73.0p) (24.4p)
Diluted 2 (73.0p) (24.4p)
The results for the current and previous year relate to continuing operations
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 29th June 2002
Year ended Year ended
29th June 30th June
2002 2001
#'000 #'000
Loss for the year (16,447) (5,481)
Unrealised (deficit)/ surplus on revaluation of property (184) 7,445
Currency translation differences on foreign currency net investments (76) (168)
Total recognised gains and losses for the year (16,707) 1,796
All recognised gains and losses are attributable to equity shareholders'
interests.
NOTE OF CONSOLIDATED STATEMENT OF HISTORICAL COST PROFITS AND LOSSES
for the year ended 29th June 2002
Year ended Year ended
29th June 30th June
2002 2001
#'000 #'000
Reported loss on ordinary activities before taxation (15,540) (4,329)
Reduction in depreciation during the period based on historical cost of 24 -
properties held at valuation
Historical cost loss on ordinary activities before taxation (15,516) (4,329)
Historical cost loss retained after taxation, minority interests and (16,469) (5,481)
dividends
CONSOLIDATED BALANCE SHEET
at 29th June 2002
29th June 30th June
2002 2001
Notes #'000 #'000
Fixed assets
Intangible asset 3 18,200 29,577
Tangible assets 4 77,845 70,931
96,045 100,508
Current assets
Stocks 6,222 8,881
Debtors:
amounts falling due within one year 9,136 6,957
amounts falling due after more than one year 701 581
Cash 3,246 4,794
19,305 21,213
Creditors: amounts falling due within one year (15,870) (34,501)
Net current assets/(liabilities) 3,435 (13,288)
Total assets less current liabilities 99,480 87,220
Creditors: amounts falling due after more than one year (44,240) (15,292)
Provisions for liabilities and charges (120) (182)
Net assets 55,120 71,746
Capital and reserves
Called up share capital 6,036 6,036
Merger reserve 61,503 61,503
Revaluation reserve 7,237 7,445
Profit and loss account (22,107) (5,649)
Total shareholders' funds 52,669 69,335
Analysed as:
Equity shareholders' funds 52,238 68,950
Non-equity shareholders' funds 431 385
Equity minority interests 1,741 1,833
Non-equity minority interests 710 578
55,120 71,746
Included in called up share capital is an amount attributable to non-equity
shareholders.
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 29th June 2002
Group Group
2002 2001
#'000 #'000
Notes
Net cash inflow/(outflow) from operating activities 5 211 (3,655)
Returns on investments and servicing of finance 6 (2,579) (2,249)
Tax paid (614) (292)
Capital expenditure 7 (9,280) (170)
Acquisitions 8 - (7,176)
Net cash outflow before financing (12,262) (13,542)
Financing 9 29,000 50
Increase/(Decrease) in cash during the year 16,738 (13,492)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the year ended 29th June 2002
Group Group
2002 2001
Notes #'000 #'000
Increase/(Decrease) in cash during the year 10 16,738 (13,492)
Increase in loans during the year 10 (29,000) -
Bank loan acquired with subsidiary undertakings 10 - (16,000)
Increase in net debt during the year 10 (12,262) (29,492)
Opening net debt 10 (29,492) -
Closing net debt 10 (41,754) (29,492)
NOTES TO THE ACCOUNTS
1. DIVISIONAL ANALYSIS
Loss Loss
before before
interest Net interest Net
and operating and operating
Turnover taxation assets Turnover taxation assets
2002 2002 2002 2001 2001 2001
#'000 #'000 #'000 #'000 #'000 #'000
By class of business:
Retail 35,611 (13,104) 94,963 37,694 (3,664) 70,156
Wholesale 11,187 (158) 1,911 14,794 713 1,506
46,798 (13,262) 96,874 52,488 (2,951) 71,662
By geographical origin:
United Kingdom 40,160 (14,306) 95,513 44,879 (3,710) 69,595
Japan 6,526 1,077 1,413 7,464 685 2,078
North America 112 (33) (52) 145 74 (11)
46,798 (13,262) 96,874 52,488 (2,951) 71,662
By geographical destination:
United Kingdom 36,820 40,428
Japan 6,782 8,311
North America 378 608
Other 2,818 3,141
46,798 52,488
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 Fabric and Japanese businesses. Net operating
assets exclude short term deposits, cash, bank balances and loans.
The Retail loss before interest and taxation includes net rental income from
properties and is after deducting the #11.4 million brand impairment provision.
2. LOSS PER SHARE
The basic and diluted earnings per share figures are calculated by dividing the
loss after taxation and minority interests of #16,493,000 (30th June 2001:
#5,481,000), by the weighted average number of ordinary shares in issue during
the year, as follows:-
Basic 2002 Diluted Basic
'000 2002 2001
'000 '000
Weighted average number of ordinary shares in issue during the year 22,603 22,603 22,419
Shares used for calculation of loss per share 22,603 22,603 22,419
Loss per share 73.0p 73.0p 24.4p
As the exercise price of share options is higher than the average share price
for the year there is no difference between the basic loss per share and the
diluted loss per share.
3. INTANGIBLE ASSET - BRAND
With the acquisition of Liberty plc during the six months ended 31st December
2000, the Group has included the Liberty brand at its independent valuation at
the date of acquisition. An impairment assessment was conducted at 31st
December 2001 and at 29th June 2002, which confirmed a reduced value of #18.2
million for the Liberty brand. The difference between this and the acquisition
cost of #29.6m has been written off in the profit and loss account.
Group
#'000
Cost at 1st July 2001 and 29th June 2002 29,577
Provision for impairment
At 1st July 2001 -
Charge for the year to 29th June 2002 (11,377)
Provision for impairment at 29th June 2002 (11,377)
Net Book value at 29th June 2002 18,200
Net Book value at 30th June 2001 29,577
4. TANGIBLE FIXED ASSETS
Long Short Fixtures &
Freehold leasehold leasehold equipment Total
Group #'000 #'000 #'000 #'000 #'000
Cost or valuation
At 1st July 2001 36,000 28,500 297 7,962 72,759
Additions 263 7,551 - 1,357 9,171
Reclassification - 3,098 - (3,098) -
Revaluation 1,337 (2,499) - - (1,162)
At 29th June 2002 37,600 36,650 297 6,221 80,768
Depreciation
At 1st July 2001 - - (28) (1,800) (1,828)
Charge for the year (663) (315) (32) (1,063) (2,073)
Revaluation 663 315 - - 978
At 29th June 2002 - - (60) (2,863) (2,923)
Net book value 37,600 36,650 237 3,358 77,845
At 29th June 2002
Net book value 36,000 28,500 269 6,162 70,931
At 30th June 2001
Valuation
All of the Group's properties were valued as 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. The valuation of the properties was #74.5 million (a valuation deficit
of #0.2 million), which is reflected in the table above.
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 Valuation
accumulated at at
depreciation at Valuation 29th June 30th June
29th June 2002 surplus 2002 2001
#'000 #'000 #'000 #'000
Freehold properties 30,736 6,864 37,600 36,000
Long leasehold properties 36,277 373 36,650 28,500
Short leasehold properties 237 - 237 269
67,250 7,237 74,487 64,769
Fixtures and equipment 3,358 - 3,358 6,162
At 29th June 2002 70,608 7,237 77,845 70,931
4. TANGIBLE FIXED ASSETS (continued)
The Group's properties are located within the United Kingdom. The historic cost
of the Group's properties in the table above includes capitalised interest at
29th June 2002 of #761,000 (2001: #626,000). The valuation of freehold and long
leasehold properties includes an amount attributable to operational properties
of #27,461,000.
Taxation on properties held at valuation
The following tax liabilities may arise if the Group's properties were sold at
the values at which they are included in fixed assets:-
Amount not
Amount not provided
provided (restated)
2002 2001
#'000 #'000
Not expected to crystallise in the foreseeable future and therefore not
provided 3,646 7,237
3,646 7,237
Company
All tangible fixed assets of the Group are held by subsidiary undertakings.
5. RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW / (OUTFLOW)
FROM OPERATING ACTIVITIES
2002 2001
#'000 #'000
Operating loss (13,262) (4,941)
Depreciation 2,073 2,595
Loss on disposal of tangible fixed assets - 862
Impairment of brand 11,377 -
Decrease in provisions (62) (20)
Decrease / (increase) in stock 2,659 (1,028)
Increase in debtors (2,447) (609)
Decrease in creditors (127) (514)
Net cash inflow/(outflow) from operating activities 211 (3,655)
6. RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
2002 2001
#'000 #'000
Dividend paid to minorities (317) (227)
Interest paid (2,278) (2,022)
Interest received 16 -
Returns on investments and servicing of finance (2,579) (2,249)
7. CAPITAL EXPENDITURE
2002 2001
#'000 #'000
Purchase of tangible fixed assets (9,280) (9,952)
Sale of tangible fixed assets - 9,782
Capital expenditure (9,280) (170)
8. ACQUISITIONS
2002 2001
#'000 #'000
Net overdraft acquired with subsidiary undertakings - (7,176)
9. FINANCING
2002 2001
#'000 #'000
Issue of ordinary shares - 50
Loans drawn down 45,000 -
Loans repaid (16,000) -
Financing 29,000 50
10. ANALYSIS OF NET DEBT
Movement
2002 during year 2001
#'000 #'000 #'000
Available cash 3,246 (1,548) 4,794
Bank overdrafts - 18,286 (18,286)
Net cash 3,246 16,738 (13,492)
Bank loan
Less than one year (1,000) (59) (941)
More than one year (44,000) (28,941) (15,059)
Net debt (41,754) (12,262) (29,492)
11. FINANCIAL INFORMATION
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 29th June 2002 or 30th June 2001 but is
derived from those accounts. Statutory accounts for 2001 have been delivered to
the Registrar of Companies, and those for 2002 will be delivered following the
Company's Annual General Meeting. The auditors have reported on those accounts;
their reports were unqualified and did not contain statements under Section 237
(2) or (3) of the Companies Act 1985.
12. DESPATCH OF ACCOUNTS
The audited accounts of the Company are expected to be sent to shareholders
during October 2002. Thereafter copies will be 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
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