RNS Number:2475D
Retail Stores PLC
23 September 2004
FOR IMMEDIATE RELEASE
23rd September 2004
RETAIL STORES PLC:
PRELIMINARY RESULTS FOR THE YEAR ENDED 30th JUNE 2004
Contact:
Iain Renwick, Chief Executive, Retail Stores Plc Tel: 020 7734 1234
Baron Phillips, Baron Phillips Associates Tel: 020 7920 3161
CHAIRMAN'S STATEMENT
for the year ended 30th June 2004
---------------------------------
Although the overall outturn for the year has been disappointing, with a
marginal drop in sales, the figures mask the considerable changes which have
been made within Liberty over the past 12 months. It is also encouraging to note
the sales trend of the second half of the year, which saw an 6% rise in
turnover.
The past year has witnessed a further dramatic transformation at Liberty as we
have restructured and repositioned the business. I believe the impact of that
transformation is now being seen in the flagship store.
Under the direction of Iain Renwick, Chief Executive, there have been a number
of key senior appointments throughout the Liberty operation but with particular
emphasis on buying and design. Because of the relatively long lead time in
retailing, the effects of these changes are now highly visible within the store,
and will be even more so as we progress towards Christmas.
In line with many other retailers, we felt the continued impact of the Gulf War
and fewer tourists, especially in the first half of the year. As a result,
Christmas trading in 2003 was late to build and therefore the Winter sales were
brought forward with emphasis on clearing Autumn stocks. However it was pleasing
to see stronger sales through Spring, which were driven primarily by womenswear,
beauty and menswear. Additionally our fabric wholesale business performed well,
generating a 9.5% increase in sales over last year.
Turnover for the 12 months to 30th June 2004 dipped slightly to #39.5m from
#40.1m in the previous year. Gross margins for the year also fell slightly from
44.4% to 43.9% reflecting the aggressive clearance of Autumn/Winter and prior
seasons' stock in January to provide a cleaner inventory profile in the second
half of the year.
At the operating level before exceptional costs, last year's losses of #1.5m
rose to #3.2m, leading to losses before tax of #6.2m against #4.6m last year.
Losses per share were 32.3p compared to 24.3p for the previous year. There was a
small increase in the value of our properties, principally the flagship store,
up from #79.1m to #81.1m while the brand value remained the same at #18.2m.
Great progress is being made to re-establish Liberty's uniqueness both as a West
End retailer and as a brand. This is becoming increasingly evident in a number
of key product areas, such as, ladies fashion, accessories, men's fashion,
beauty and home, especially furniture. As a result we are laying the foundations
of a solid recovery in margins throughout those key product areas where we have
been under-performing in previous years.
An important sector for us is Liberty Branded Products. Our own branded products
set both our unique style tone whilst also generating healthy margins. The
recent appointment therefore of Tamara Salman, previously with Prada and Romeo
Gigli in Milan, as the Director of Design for Liberty Branded Product, and the
building of a dedicated team, has been an important step forwards in creating
long-term profitability at Liberty. Our priority is to increase the level of own
brand products within the store over the next few years aiming for 25% of all
sales by 2007. The success of our own brand products will be monitored closely
and assessed for suitability for wider distribution and wholesaling
opportunities as success is achieved.
We have adopted a new approach to certain key departments, such as furniture,
bed linen, bath and fashion accessories, which will clearly position Liberty as
a speciality retailer offering a different and dynamic product range in the
unique environment of London's West End. The new concepts have been created by
our in-house teams who have developed standards of product display and
presentation that deliver a clear Liberty style in fashion, fashion accessories
and home products. There has been a phased unveiling of these new concepts that
began in July 2004 with the introduction of fashion accessories, this programme
will continue throughout the Autumn as the new furniture and home floors are
unveiled.
The early indications are that our new approach is being well received. We
launched our new Autumn/Winter fashion ranges earlier than last year and the
initial reaction is encouraging. We believe that the impact of the new
management team, new product concepts and their successful introduction into the
store will continue to grow sales and improve profitability.
Just before the year-end we strengthened the Board with two key appointments.
Fraser Allan became the new Finance Director, replacing Nick Mather who left to
pursue other interests, having made an important contribution to Liberty's
transformation. Fraser joined us from Fired Earth where he had been Chief
Executive from 1999 until 2003, during which time he successfully developed the
business and realised shareholder value through a trade sale in 2001.
We also announced the appointment of Christian Viros as a Non-Executive
Director. Christian spent more than 10 years as President and Chief Executive of
the Swiss watch company Tag Heuer. Under his direction sales increased some
seventeenfold to #250m, he sold the business to the luxury goods group LVMH.
Christian then became President of the LVMH watches and jewellery division and a
member of its Group Executive Committee until the end of 2001.
I would like to take this opportunity to thank all the staff and my fellow
directors for their hard work over the year as well as welcoming those who have
joined the Liberty family over the past few months.
It is difficult to forecast how the current year is likely to develop. I can say
that we have made tremendous progress in transforming Liberty and bringing back
its sense of style and excitement, on which its historic success was built. The
early indications are that the changes we have implemented are being well
received and I look forward to the year ahead with great anticipation.
Richard Balfour-Lynn
Chairman
23rd September 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30th June 2004
------------------------------------
Year Period
ended ended
30th 30th
June June
2004 2003
(restated)*
Notes #'000 #'000
Turnover 1 39,527 40,070
Cost of sales (22,193) (22,264)
-----------------------------------------------------------------------------
Gross profit 17,334 17,806
Selling and distribution costs (including
exceptional operating charges) (21,354) (20,956)
Administrative expenses (2,919) (2,671)
Other operating income 3,353 3,608
-----------------------------------------------------------------------------
Operating loss on ordinary activities before
interest and taxation (3,586) (2,213)
-----------------------------------------------------------------------------
Operating loss before exceptional operating
charges (3,219) (1,519)
Exceptional operating charges 2 (367) (694)
-----------------------------------------------------------------------------
Operating loss on ordinary activities before
interest and taxation (3,586) (2,213)
-----------------------------------------------------------------------------
Net interest payable and similar charges 3 (2,606) (2,435)
-----------------------------------------------------------------------------
Loss on ordinary activities before taxation (6,192) (4,648)
Taxation on loss on ordinary activities 4 (682) (467)
-----------------------------------------------------------------------------
Loss on ordinary activities after taxation (6,874) (5,115)
Equity minority interests (360) (310)
Non-equity minority interests (55) (55)
-----------------------------------------------------------------------------
Loss attributable to ordinary shareholders (7,289) (5,480)
Undeclared non-equity preference dividends (23) (23)
-----------------------------------------------------------------------------
Retained loss for the year (7,312) (5,503)
-----------------------------------------------------------------------------
Basic and diluted loss per share 5 (32.3p) (24.3p)
Basic and diluted loss per share before
exceptional operating charges 5 (30.7p) (21.3p)
------------------------------------------------------------------------------
All operations are continuing.
The results for the year ended 30th June 2003 have been restated to accord with
the amendment to FRS5 that was published in November 2003. This has no effect on
the gross profit/(loss) or results below that level in the profit and loss
account.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 30th June 2004
-----------------------------------------------------------
Year Period
ended ended
30th June 30th June
2004 2003
#'000 #'000
Loss for the year (7,289) (5,480)
Unrealised surplus on revaluation of property 3,464 1,651
Currency translation differences on foreign currency
net investments 5 (141)
-----------------------------------------------------------------------------
Total recognised gains and losses for the year (3,820) (3,970)
-----------------------------------------------------------------------------
All recognised gains and losses are attributable to equity shareholders'
interests.
RECONCILIATIONS OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 30th June 2004
---------------------------------------------------
2004 2003
#'000 #'000
Opening shareholders' funds 48,699 52,669
Loss for the financial year (7,289) (5,480)
Undeclared non-equity preference dividends (23) (23)
Net revaluation surplus on fixed assets 3,464 1,651
Currency translation differences on foreign currency net
investments 5 (141)
Unpaid non-equity preference dividends 23 23
------------------------------------------------------------------------------
Closing shareholders' funds 44,879 48,699
------------------------------------------------------------------------------
Included in closing shareholders' funds is an amount attributable to non-equity
shareholders.
CONSOLIDATED BALANCE SHEET
at 30th June 2004
--------------------------
30th 30th
June June
2004 2003
Notes #'000 #'000
Fixed assets
Intangible asset 18,200 18,200
Tangible assets 6 81,103 79,029
-----------------------------------------------------------------------------
99,303 97,229
-----------------------------------------------------------------------------
Current assets
Stocks 7 6,343 5,537
Debtors:
amounts falling due after more than one year 878 1,138
amounts falling due within one year 5,869 6,132
Cash 13 4,490 4,513
-----------------------------------------------------------------------------
17,580 17,320
Creditors: amounts falling due within one year 8 (14,534) (12,423)
-----------------------------------------------------------------------------
Net current assets 3,046 4,897
-----------------------------------------------------------------------------
Total assets less current liabilities 102,349 102,126
Creditors: amounts falling due after more than
one year 9 (55,009) (51,109)
-----------------------------------------------------------------------------
Net assets 47,340 51,017
-----------------------------------------------------------------------------
Capital and reserves
Called up share capital 6,036 6,036
Merger reserve 10 61,503 61,503
Revaluation reserve 10 12,337 8,887
Profit and loss account 10 (34,997) (27,727)
-----------------------------------------------------------------------------
Total shareholders' funds 44,879 48,699
Analysed as:
Equity shareholders' funds 44,402 48,245
Non-equity shareholders' funds 477 454
-----------------------------------------------------------------------------
Equity minority interests 1,883 1,740
Non-equity minority interests 578 578
-----------------------------------------------------------------------------
47,340 51,017
-----------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30th June 2004
---------------------------------
2004 2003
Notes #'000 #'000
Net cash inflow from operating activities 11 520 4,606
Returns on investments and servicing of finance 12 (2,640) (3,471)
Tax paid (766) (375)
Capital expenditure (1,148) (2,329)
-----------------------------------------------------------------------------
Net cash outflow before financing and use of liquid
resources (4,034) (1,569)
Management of liquid resources (500) -
Financing 4,000 3,000
-----------------------------------------------------------------------------
(Decrease)/increase in cash during the year (534) 1,431
-----------------------------------------------------------------------------
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the year ended 30th June 2004
-------------------------------------------------------
2004 2003
Notes #'000 #'000
(Decrease)/increase in cash during the year 13 (534) 1,431
Increase in liquid resources 13 500 -
Increase in loans during the year 13 (4,000) (3,000)
------------------------------------------------------------------------------
Increase in net debt during the year (4,034) (1,569)
Translation differences 13 11 (164)
------------------------------------------------------------------------------
Movement in net debt during the year (4,023) (1,733)
Opening net debt 13 (43,487) (41,754)
------------------------------------------------------------------------------
Closing net debt 13 (47,510) (43,487)
------------------------------------------------------------------------------
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
2004 2004 2004 2003 2003 2003
(restated)
#'000 #'000 #'000 #'000 #'000 #'000
By class of
business:
Retail 27,139 (5,651) 90,122 28,753 (3,985) 92,381
Wholesale 12,388 2,065 2,446 11,317 1,772 1,750
-------------------------------------------------------------------------------------
39,527 (3,586) 92,568 40,070 (2,213) 94,131
-------------------------------------------------------------------------------------
By geographical
origin:
United Kingdom 33,940 (4,774) 91,736 34,516 (3,318) 93,205
Japan 5,587 1,188 832 5,554 1,105 926
-------------------------------------------------------------------------------------
39,527 (3,586) 92,568 40,070 (2,213) 94,131
-------------------------------------------------------------------------------------
By geographical
destination:
United Kingdom 28,571 30,380
Japan 5,585 5,738
Other 5,371 3,952
------------------------------------------------------------------------------------
39,527 40,070
------------------------------------------------------------------------------------
Historically, sales from concessions have been shown on a gross basis in
accordance with industry practice. Following the amendment to FRS5, sales from
concession departments are now shown on a commission only basis as follows:-
2004 2003
#'000 #'000
Gross turnover 45,213 46,550
Less concession departments turnover net of commission (5,686) (6,480)
------------------------------------------------------------------------------
Net turnover 39,527 40,070
------------------------------------------------------------------------------
The segmental analysis of operations reflects the structure of the Group. Retail
includes the UK retail operations at Regent Street and Heathrow. Wholesale
includes the results of the UK and Japanese fabric businesses. Net operating
assets exclude short term deposits, cash and loans.
The Retail loss before interest and taxation includes net rental income from
properties and is after deducting exceptional operating charges.
The reconciliation of net assets shown in the consolidated balance sheet to net
operating assets is as follows:-
2004 2003
#'000 #'000
Net assets in consolidated balance sheet 47,340 51,017
Cash (see note 13) (4,490) (4,513)
Bank loans (see note 9) 49,718 47,627
------------------------------------------------------------------------------
Net assets as above 92,568 94,131
------------------------------------------------------------------------------
2. EXCEPTIONAL OPERATING CHARGES
--------------------------------
2004 2003
#'000 #'000
Redundancy and recruitment costs 367 643
Closure costs - 51
------------------------------------------------------------------------------
367 694
------------------------------------------------------------------------------
During the year the Group completed a major restructuring of its management and
business operations that commenced in the prior year; these costs are not
expected to re-occur.
3. NET INTEREST PAYABLE AND SIMILAR CHARGES
-------------------------------------------
2004 2003
#'000 #'000
Interest payable on:
Bank loans and overdrafts (2,626) (2,525)
Loan from ultimate holding company (35) -
Non bank interest (19) (24)
------------------------------------------------------------------------------
(2,680) (2,549)
Less bank and other interest received 74 114
------------------------------------------------------------------------------
(2,606) (2,435)
------------------------------------------------------------------------------
4. TAXATION ON LOSS ON ORDINARY ACTIVITIES
------------------------------------------
2004 2003
#'000 #'000
UK corporation tax on UK results - -
Overseas tax
Withholding tax written off (232) -
Japanese tax on Japanese profits (483) (498)
Adjustments in respect of prior years 33 31
------------------------------------------------------------------------------
(682) (467)
------------------------------------------------------------------------------
The tax on loss on ordinary activities has been reduced from the amount that
would arise from applying the prevailing corporation tax rate as follows:-
2004 2003
#'000 #'000
UK corporation tax credit at 30% on Group losses before tax 1,858 1,394
Permanently disallowable expenditure and unrelieved losses (2,496) (890)
Taxation on chargeable gains in excess of accounting profits - (110)
Withholding tax written off (232) -
Taxation on overseas earnings at a higher rate than UK
corporation tax (126) (167)
Tax losses brought forward utilised in the period 208 100
Adjustments to taxation charge in respect of prior years 33 31
Excess of capital allowances over/(under)depreciation 73 (825)
------------------------------------------------------------------------------
Current taxation charge (682) (467)
------------------------------------------------------------------------------
5. LOSS PER SHARE
-----------------
The basic and diluted loss per share figures are calculated by dividing the loss
after taxation and minority interests by the weighted average number of ordinary
shares in issue for both years of 22,602,808.
2004 2003
Basic Basic
and and
2004 diluted 2003 diluted
#'000 pence #'000 pence
Loss for the financial year
and loss per ordinary share (7,312) (32.3p) (5,503) (24.3p)
Exceptional operating charges 367 1.6p 694 3.0p
-------------------------------------------------------------------------------
Loss for the financial year
and loss per ordinary share
before exceptional operating
charges (6,945) (30.7p) (4,809) (21.3p)
-------------------------------------------------------------------------------
As the exercise price of share options is equal to the average share price for
the year there is no difference between the basic loss per share and the diluted
loss per share.
6. TANGIBLE FIXED ASSETS
------------------------
Group Short Fixtures &
Freehold leasehold equipment Total
#'000 #'000 #'000 #'000
Cost or valuation
At 1st July 2003 36,750 39,308 6,819 82,877
Additions 23 38 866 927
Disposals - - (88) (88)
Revaluation (1,223) 3,277 - 2,054
------------------------------------------------------------------------------
At 30th June 2004 35,550 42,623 7,597 85,770
------------------------------------------------------------------------------
Depreciation
At 1st July 2003 - (93) (3,755) (3,848)
Charge for the year (725) (717) (875) (2,317)
Disposals - - 88 88
Revaluation 725 685 - 1,410
------------------------------------------------------------------------------
At 30th June 2004 - (125) (4,542) (4,667)
------------------------------------------------------------------------------
Net book value at 30th June 2004 35,550 42,498 3,055 81,103
------------------------------------------------------------------------------
Net book value at 30th June 2003 36,750 39,215 3,064 79,029
------------------------------------------------------------------------------
During the year, long leasehold costs (#40m) and accumulated depreciation
(#0.6m) were reclassified to short leasehold to reflect the Group's accounting
policy. The comparatives have been restated accordingly.
Valuation
---------
All of the Group's properties were valued at 30th June 2004 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 Market Value and
in accordance with the RICS Appraisal and Valuation Standards 5th Edition ("the
Manual"). The valuation of the properties was #77.9m (a valuation surplus of
#3.4m), which is reflected in the table above.
7. STOCKS
---------
2004 2003
#'000 #'000
Raw materials 481 405
Work in progress 25 63
Finished goods 5,837 5,069
------------------------------------------------------------------------------
6,343 5,537
------------------------------------------------------------------------------
8. CREDITORS: amounts falling due within one year
-------------------------------------------------
2004 2003
#'000 #'000
Trade creditors 7,122 5,275
Amounts owed to fellow subsidiary undertakings 852 674
Corporation tax 251 507
Other taxes and social security 626 538
Other creditors 1,761 1,340
Non-equity minority interest dividend payable 27 55
Accruals and deferred income 3,895 4,034
------------------------------------------------------------------------------
14,534 12,423
------------------------------------------------------------------------------
9. CREDITORS: amounts falling due after more than one year
----------------------------------------------------------
2004 2003
#'000 #'000
Bank loans 50,000 48,000
Less issue costs (282) (373)
------------------------------------------------------------------------------
Bank loans net of debt issue costs 49,718 47,627
Amounts owed to ultimate holding company 2,031 -
Amounts owed to fellow subsidiary undertakings 3,194 3,194
Other creditors 66 288
------------------------------------------------------------------------------
55,009 51,109
------------------------------------------------------------------------------
10. MOVEMENT ON RESERVES
------------------------
Profit
Merger Revaluation and loss
reserve reserve account
#'000 #'000 #'000
Group
At 1st July 2003 61,503 8,887 (27,727)
Loss retained for the year - - (7,312)
Surplus arising on revaluation
of properties - 3,464 -
Currency translation
differences on foreign
currency net investments - - 5
Transfer of depreciation on
revaluation of fixed assets - (14) 14
Unpaid non-equity preference
dividends - - 23
------------------------------------------------------------------------------
At 30th June 2004 61,503 12,337 (34,997)
------------------------------------------------------------------------------
11. RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
----------------------------------------------------------------------
2004 2003
#'000 #'000
Operating loss (3,586) (2,213)
Depreciation 2,317 2,557
Loss on disposal of fixed assets - 57
Decrease in provisions - (120)
(Increase)/decrease in stock (804) 633
Decrease in debtors 281 2,880
Increase in creditors 2,312 812
------------------------------------------------------------------------------
Net cash inflow from operating activities 520 4,606
------------------------------------------------------------------------------
12. RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
---------------------------------------------------
2004 2003
#'000 #'000
Equity dividend paid to minorities (224) (172)
Non-equity dividend paid to minorities (82) (132)
Bank arrangement fees - (457)
Interest paid (2,408) (2,806)
Interest received 74 96
------------------------------------------------------------------------------
Returns on investments and servicing of finance (2,640) (3,471)
------------------------------------------------------------------------------
13. ANALYSIS OF NET DEBT
------------------------
Movement Foreign
during currency
2004 year translation 2003
#'000 #'000 #'000 #'000
Available cash 3,990 (534) 11 4,513
Short term investments 500 500 - -
------------------------------------------------------------------------------
Cash at bank and in hand 4,490 (34) 11 4,513
Ultimate holding company loan due
after more than one year
(see note 9) (2,000) (2,000) - -
Bank loan due after more than one
year (see note 9) (50,000) (2,000) - (48,000)
------------------------------------------------------------------------------
Net debt (47,510) (4,034) 11 (43,487)
------------------------------------------------------------------------------
14. FINANCIAL INFORMATION
-------------------------
The financial information set out above does not constitute the Company's
statutory accounts for the period ended 30th June 2004 or 29th June 2003 but is
derived from those accounts. Statutory accounts for 2003 have been delivered to
the Registrar of Companies, and those for 2004 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.
15. DESPATCH OF ACCOUNTS
------------------------
The audited accounts of the Company are expected to be sent to shareholders
during October 2004. 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
END
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