RNS Number:6533W
Retail Stores PLC
18 March 2004
FOR IMMEDIATE RELEASE
18th March 2004
RETAIL STORES PLC:
INTERIM RESULTS FOR SIX MONTHS ENDED 31ST DECEMBER 2003
HIGHLIGHTS
* Despite a process of repositioning, turnover was #21.2m compared with
#22.8m last year
* Gross margins were maintained and the underlying overhead cost base
continued to fall
* Operating loss of #0.8 compared with #0.3m last year
* New management team in place and core restructuring completed
* Revitalised contemporary Ladies Fashion and a more focused Menswear offer
introduced
* New initiatives introduced in Fine Jewellery, Gift Room and Chocolate
Shop
* Strengthened Christmas offer, improved quality and breadth of Arts and
Crafts furniture and successfully introduced new Liberty branded
Childrenswear range
"Our firm intention is to increase the Liberty branded mix within the flagship
store to both drive gross margin and provide a sound base for wider
distribution."
"The building blocks for a return to profitability are in place and the true
value of the skills of the new team will start to impact bothsales and
operating profits as we move through 2004." Richard Balfour-Lynn, Chairman
-more-
Contact:
Iain Renwick, Chief Executive, Retail Stores. Tel:020 7734 1234
Nick Mather, Finance Director, Retail Stores. Tel: 020 7734 1234
Baron Phillips, Baron Phillips Associates Tel: 020 7920 3161
CHAIRMAN'S STATEMENT
for the six months ended 31st December 2003
Satisfactory progress has been made in the commercial turnaround of the business
over the six months ended 31st December 2003. This was a period of
transformation for the Group driven by the new management team installed at the
beginning of the period. Significant changes in both product mix andthe store
environment have repositioned Liberty as a more contemporary experience with
real relevance to today's consumer.
Footfall has continued to grow. However a complete review of the product offer
and floor plans across all of the Home andFashion areas necessitated a
short-term reduction in stock levels to allow a more authoritative and
directional product range to come in. Despite this repositioning process,
turnover was #21.2m for the period against #22.8m last year. Gross margins were
in line with last year and the underlying overhead cost base continued to fall.
The resultant operating loss was #0.8m compared to #0.3m last year. I am pleased
to say that a concerted stock build of new product is now underway and will be
present in strength and depth as we move through the Summer season.
Our new management team is now in place and the core restructuring completed.
Our focus remains on returning the business to profitability whilst building a
range of compelling Liberty branded products. During the Autumn/Winter season we
introduced new initiatives in Fine Jewellery, in the Gift Room and in our ground
floor Chocolate Shop. We strengthened our Christmas offer, improved the quality
and breadth of our Arts and Crafts furniture and successfully introduced a new
Liberty branded Childrenswear range. The changes in the instore environment have
successfully heightened our profile, attracting more fashion and design aware
customers back to Liberty.
This season has seen the introduction of a revitalised Contemporary Ladies
Fashion offer on the first floor and a more commercially focused and vibrant
Menswear range on the lower ground floor. We have reopened the ground floor
Central Atrium as a luxury Contemporary Accessories area with an original
selection of must-have accessories. In Home, we are focused on building an
authoritative and credible offer through 2004 encompassing a dedicated furniture
floor on the 4th floor of Tudor House, complemented by extensive new offers in
real depth across the Bed and Bath, Tabletop and Kitchen areas. A new Outdoor
Living concept successfully opened this month presenting customers with an
inspirational collection of outdoor furniture and accessories.
Our firm intention is to increase the Liberty branded mix within the flagship
store to both drive gross margin and provide a sound base for wider
distribution. This mix has increased in Gift, Ladies Fashion and Accessories for
Spring/Summer and we will see significant increases in Bed and Bath and Toiletry
products for Autumn/Winter.
We are concentrating hard on improving processes and customer service and are
currently driving an extensive programme to extend our brand proposition
throughout the business.
The building blocks for a return to profitability are in place and the true
value of the skills of the new team will start to impact both sales and
operating profits as we move through 2004.
Richard Balfour-Lynn
Executive Chairman
London
18th march 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 31st December 2003
6 months 6 months 12 months
ended ended ended
31st December 31st December 30th June
2003 2002 2003
(restated)* (restated)*
Notes #'000 #'000 #'000
Turnover 2 21,152 22,795 40,070
Cost of sales (11,626) (12,495) (22,264)
------------------------------------------------------------------------------------
Gross profit 9,526 10,300 17,806
Selling and distribution (10,663) (11,175) (20,956)
costs
Administrative expenses (1,425) (1,307) (2,671)
Other operating income 1,808 1,902 3,608
------------------------------------------------------------------------------------
Operating loss (754) (280) (2,213)
Operating loss before
exceptional charges (754) (280) (1,519)
Exceptional operating 3 - - (694)
charges
------------------------------------------------------------------------------------
Operating loss (754) (280) (2,213)
------------------------------------------------------------------------------------
Loss on ordinary
activities before interest
and taxation 2 (754) (280) (2,213)
Net interest payable and
similar charges (1,215) (1,234) (2,435)
------------------------------------------------------------------------------------
Loss on ordinary
activities before
taxation (1,969) (1,514) (4,648)
Taxation on loss on
ordinary activities (332) (146) (467)
------------------------------------------------------------------------------------
Loss on ordinary
activities after
taxation (2,301) (1,660) (5,115)
Equity minority
interests (173) (142) (310)
Non-equity minority
interests (27) (27) (55)
------------------------------------------------------------------------------------
Loss attributable to
ordinary shareholders (2,501) (1,829) (5,480)
Undeclarednon-equity
preference dividends 4 (11) (12) (23)
------------------------------------------------------------------------------------
Retained loss for the
period 7 (2,512) (1,841) (5,503)
====================================================================================
Basic and diluted loss per
share 5 (11.1p) (8.1p) (24.3p)
Basic and diluted loss per
share before exceptional
operating charges 5 (11.1p) (8.1p) (21.3p)
====================================================================================
All operations are continuing.
* The comparative periods profit and loss accounts have been restated as
explained in note 1.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the six months ended 31st December 2003
6 months 6 months 12 months
ended ended ended
31st December 31st December 30th June
2003 2002 2003
(restated)
#'000 #'000 #'000
--------------------------------------------------------------------------------
Loss for the period (2,501) (1,829) (5,480)
Unrealised surplus on revaluation
of property - - 1,651
Currency translation differences
on foreign currency net
investments 71 (101) (141)
--------------------------------------------------------------------------------
Total recognised gains and losses
for the period (2,430) (1,930) (3,970)
--------------------------------------------------------------------------------
All recognised gains and losses are attributable to equity shareholders'
interests.
NOTE OF CONSOLIDATED HISTORICAL COST PROFITS AND LOSSES
for the six months ended 31st December 2003
6 months 6 months 12 months
ended ended ended
31st December 31st December 30th June
2003 2002 2003
(restated)
#'000 #'000 #'000
--------------------------------------------------------------------------------
Reported loss on ordinary
activities before taxation (1,969) (1,514) (4,648)
Difference between historical
cost of depreciation charge and
depreciation charge based on
revalued amounts 7 3 1
--------------------------------------------------------------------------------
Historical cost loss on ordinary
activities before taxation (1,962) (1,511) (4,647)
================================================================================
Historical cost loss after
taxation, minority interests and
dividends (2,505) (1,838) (5,502)
RECONCILIATIONS OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 31st December 2003
6 months 6 months 12 months
ended ended ended
31st December 31st December 30th June
2003 2002 2003
(restated)
#'000 #'000 #'000
--------------------------------------------------------------------------------
Opening shareholders' funds 48,699 52,669 52,669
Loss for the financial period (2,501) (1,829) (5,480)
Undeclared non-equity preference
dividends proposed for the period (11) (12) (23)
Net revaluation surplus on fixed
assets - - 1,651
Currency translation differences
on foreign currency net
investments 71 (101) (141)
Unpaid non-equity preference
dividends 11 12 23
--------------------------------------------------------------------------------
Closing shareholders' funds 46,269 50,739 48,699
================================================================================
Included in closing shareholders' funds is an amount attributable to non-equity
shareholders.
CONSOLIDATED BALANCE SHEET
at 31st December 2003
31st December 31st December 30th June
2003 2002 2003
(restated)*
Notes #'000 #'000 #'000
------------------------------------------------------------------------------------
Fixed assets
Intangible asset 18,200 18,200 18,200
Tangible assets 6 78,304 78,221 79,029
------------------------------------------------------------------------------------
96,504 96,421 97,229
------------------------------------------------------------------------------------
Current assets
Stocks 5,820 6,739 5,537
Debtors:
amounts falling due within
one year 6,473 7,121 6,132
amounts falling due after more
than one year 1,007 1,236 1,138
Cash 4,901 6,715 4,513
------------------------------------------------------------------------------------
18,201 21,811 17,320
Creditors: amounts falling due
within one year (15,180) (14,094) (12,423)
------------------------------------------------------------------------------------
Net current assets 3,021 7,717 4,897
------------------------------------------------------------------------------------
Total assets less current
liabilities 99,525 104,138 102,126
Creditors: amounts falling due
after more than one year (50,933) (51,086) (51,109)
Provisions for liabilities and
charges - (120) -
------------------------------------------------------------------------------------
Net assets 48,592 52,932 51,017
====================================================================================
Capital and reserves
Called up share capital 6,036 6,036 6,036
Merger reserve 7 61,503 61,503 61,503
Revaluation reserve 7 8,880 7,234 8,887
Profit and loss account 7 (30,150) (24,034) (27,727)
------------------------------------------------------------------------------------
Total shareholders' funds46,269 50,739 48,699
Analysed as:
Equity shareholders' funds 45,804 50,296 48,245
Non-equity shareholders'
funds 465 443 454
------------------------------------------------------------------------------------
Equity minority interests 1,745 1,615 1,740
Non-equity minority
interests 578 578 578
------------------------------------------------------------------------------------
48,592 52,932 51,017
====================================================================================
The balance sheet at 31st December 2002 has been restated as explained in note 1.
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31st December 2003
6 months 6 months 12 months
ended ended ended
31st 31st 30th
December December June
2003 2002 2003
(restated)*
Notes #'000 #'000 #'000
--------------------------------------------------------------------------------
Net cash inflow from operating
activities 8 2,856 4,751 4,606
Returns on investments and
servicing of finance 9 (1,359) (2,022) (3,471)
Taxation paid (526) (449) (375)
Capital expenditure (683) (1,930) (2,329)
--------------------------------------------------------------------------------
Net cash inflow/(outflow)
before financing and use of
liquid resources 288 350 (1,569)
Management of liquid
resources (2,200) - -
Financing 10 - 3,000 3,000
--------------------------------------------------------------------------------
(Decrease)/increase in cash 11 (1,912) 3,350 1,431
during the period
================================================================================
* The previous six month period cash flow statement has been restated as
explained in note 1.
RECONCILIATION OF NETCASH FLOW TO MOVEMENT IN NET DEBT
for the six months ended 31st December 2003
6 months 6 months 12 months
ended ended ended
31st December 31st December 30th June
2003 2002 2003
(restated)
Notes #'000 #'000 #'000
--------------------------------------------------------------------------------
(Decrease)/increase in
cash during the period 11 (1,912) 3,350 1,431
Increase in liquid
resources 11 2,200 - -
Increase in loans during
the period - (3,000) (3,000)
--------------------------------------------------------------------------------
Increase/(decrease) in net
debt during the period 288 350 (1,569)
Translation differences 11 100 119 (164)
--------------------------------------------------------------------------------
Movement in net debt
during the period 388 469 (1,733)
Opening net debt 11 (43,487) (41,754) (41,754)
--------------------------------------------------------------------------------
Closing net debt 11 (43,099) (41,285) (43,487)
================================================================================
NOTES TO THE ACCOUNTS
1. ACCOUNTING POLICIES
The interim results of the Group for the six months ended 31st December 2003
incorporate the results of the Company and its subsidiary undertakings for the
six months then ended. The results have been prepared on thebasis of the
accounting policies adopted in the accounts of the Group for the period ended
30th June 2003, consistently applied in all material respects, except as noted
below.
The interim accounts of the Group include the interim accounts of the Company
and its subsidiary undertakings made up to the six months ended 31st December
2003. The interim accounts for the comparative period were previously reported
for the 26 weeks ended 28th December 2002 and have now been restated to the
period ended 31st December 2002. This restatement had no material effect on the
loss on ordinary activities before taxation disclosed in the interim accounts of
the Group.
Amendment to FRS5 (Application note G: Revenue Recognition) published in
November 2003 requires sales by concession departments to be accounted for on a
commission only basis. Due to the significance of concession sales to the
business, the Group's accounting policy with regard to recognition of sales has
been amended so that turnover includes only the commission earned on such sales.
Previously turnover included total sales by concession departments and cost of
sales included turnover net of the commission on these sales. The effect on
turnover and cost of sales is explained in note 2. This amendment had no effect
on the loss on ordinary activities before taxation disclosed in the Group
accounts. Comparative amounts for turnover and cost of sales as disclosed in the
profit and loss account have been restated accordingly.
2. DIVISIONAL ANALYSIS
6 months 6 months 12 months
ended ended ended
Turnover 31st December 31stDecember 30th June
2003 2002 2003
(restated) (restated)
#'000 #'000 #'000
By class of business:
Retail 15,270 17,013 28,753
Wholesale 5,882 5,782 11,317
--------------------------------------------------------------------------------
21,152 22,795 40,070
================================================================================
By geographical origin:
United Kingdom 18,753 20,610 34,516
Japan 2,399 2,185 5,554
--------------------------------------------------------------------------------
21,152 22,795 40,070
================================================================================
By geographical destination:
United Kingdom 16,082 18,230 30,380
Japan 2,401 2,302 5,738
Other 2,669 2,263 3,952
--------------------------------------------------------------------------------
21,152 22,795 40,070
================================================================================
Historically sales from concessions have been shown on a gross basis in
accordance with industry practice. Following the amendment to FRS5 (see note 1)
sales from concession departments are now shown on a commission only basis as
follows:-
6 months 6 months 12 months
ended ended ended
31st December 31st December 30th June
2003 2002 2003
#'000 #'000 #'000
Gross Turnover 24,409 26,520 46,550
Less concession departments
turnover net of commission (3,257) (3,725) (6,480)
--------------------------------------------------------------------------------
Net Turnover 21,152 22,795 40,070
================================================================================
6 months 6 months 12 months
ended ended ended
Loss on ordinary activities 31st December 31st December 30th June
before interest and taxation 2003 2002 2003
(restated)
#'000 #'000 #'000
By class of business:
Retail (1,713) (1,011)(3,985)
Wholesale 959 731 1,772
--------------------------------------------------------------------------------
(754) (280) (2,213)
================================================================================
By geographical origin:
United Kingdom (1,308) (650) (3,318)
Japan 554 370 1,105
--------------------------------------------------------------------------------
(754) (280) (2,213)
================================================================================
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.
The Retail loss on ordinary activities before interest and taxation includes net
rental income from properties.
3. EXCEPTIONAL OPERATING CHARGES
During the period ended 30th June 2003 the Group underwent a major restructuring
of its management and business operations. The statutory accounts for that
period included exceptional operating charges relating to redundancy,
recruitment and closure costs of #694,000. The amount was included in selling
and distribution costs in the Profit and Loss account. These costs are not
expected to re-occur.
4. DIVIDENDS
6 months 6 months 12 months
ended ended ended
31st December 31st December 30th June
2003 2002 2003
#'000 #'000 #'000
Undeclared non-equity preference
dividends 11 12 23
------------------------------------------------------------------------------
Due to a deficiency of distributable reserves in the Company, the preference
shares are currently in arrears of dividend for 3 1/2 years (#80,000). Payment
will be made when this deficiency is made good from future profits.
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 during the period and in the comparative periods of 22,602,808.
6 months 6 months 12 months
ended ended ended
31st December 31st December 30th June
2003 2002 2003
(restated)
Retained loss for the period #'000 #'000 #'000
Loss for the financial period (2,512) (1,841) (5,503)
Exceptional operating charges - - 694
--------------------------------------------------------------------------------
Loss for the financial period
before exceptional operating
charges (2,512) (1,841) (4,809)
================================================================================
Basic and diluted loss per share pence pence pence
Loss for the financial period (11.1p) (8.1p) (24.3p)
Exceptional operating charges - - 3.0p
--------------------------------------------------------------------------------
Loss for the financial period
before exceptional operating
charges (11.1p) (8.1p) (21.3p)
================================================================================
As the exercise price of share options is equal to or higher than the average
share price for the period and for comparative periods, the basic loss per share
and the diluted loss per share are the same.
6. TANGIBLE FIXED ASSETS
Long Short Fixtures &
Freehold leasehold leasehold equipment Total
#'000 #'000 #'000 #'000 #'000
Cost or valuation
At 1st July 2003 36,750 39,009 299 6,819 82,877
Additions 25 32 - 405 462
Disposals - - - (88) (88)
---------------------------------------------------------------------------------------
At 31st December 2003 36,775 39,041 299 7,136 83,251
=======================================================================================
Depreciation
At 1st July 2003 - - (93) (3,755) (3,848)
Charge for the period (366) (347) (16) (458) (1,187)
Disposals - - - 88 88
---------------------------------------------------------------------------------------
At 31st December 2003 (366) (347) (109) (4,125) (4,947)
=======================================================================================
Net book value
at 31st December 2003 36,409 38,694190 3,011 78,304
=======================================================================================
Net book value
at 31st December 2002 38,085 36,678 221 3,237 78,221
---------------------------------------------------------------------------------------
Net book value
at 30th June 2003 36,750 39,009 206 3,064 79,029
---------------------------------------------------------------------------------------
7. 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 period - - (2,512)
Transfers - (7) 7
Currency translation differences on
foreign currency net investments - - 71
Unpaid non-equity preference dividends - - 11
-------------------------------------------------------------------------------
At 31st December 2003 61,503 8,880 (30,150)
===============================================================================
All reserves of the Group are attributable to equity shareholders' interests.
8. RECONCILIATION OF OPERATING COSTS TO NET CASH INFLOW FROM OPERATING ACTIVITIES
6 months 6 months 12 months
ended ended ended
31st December 31st December 30th June
2003 2002 2003
(restated)
#'000 #'000 #'000
Operating loss (754) (280) (2,213)
Depreciation 1,187 1,374 2,557
Loss on disposal of fixed
assets - - 57
Decrease in provisions - - (120)
(Increase)/decrease in stock (259) (517) 633
(Increase)/decrease in debtors (391) 1,810 2,880
Increase in creditors 3,073 2,364 812
--------------------------------------------------------------------------------
Net cash inflow from operating 2,856 4,751 4,606
activities ----------- ------------ ----------
================================================================================
9. RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
6 months 6 months 12 months
ended ended ended
31st December 31st December 30th June
2003 2002 2003
(restated)
#'000 #'000 #'000
Equity dividend paid to minorities (236) (172) (172)
Non-equity dividend paid to
minorities - - (132)
Bank arrangement fees - (431) (457)
Interest paid (1,163) (1,458) (2,806)
Interest received 40 39 96
-----------------------------------------------------------------------------------
Returns on investments and servicing
of finance (1,359) (2,022) (3,471)
===================================================================================
10. FINANCING
6 months 6 months 12 months
ended ended ended
31st December 31st December 30th June
2003 2002 2003
#'000 #'000 #'000
Loans drawn down - 48,000 48,000
Loans repaid - (45,000) (45,000)
-------------------------------------------------------------------------------
Financing - 3,000 3,000
===============================================================================
11. ANALYSIS OF NET DEBT
Currency
31st December Cash translation 30th June
2003 flow movement 2003
#'000 #'000 #'000 #'000
Short term investments 2,200 2,200 - -
Cash 2,701 (1,912) 100 4,513
-------------------------------------------------------------------------------
Cash at bank and in
hand 4,901 288 100 4,513
Bank loan due after more
than one year (48,000) - - (48,000)
-------------------------------------------------------------------------------
Net debt (43,099) 288 100 (43,487)
===============================================================================
12. FINANCIAL INFORMATION
The financial information set out in these interim accounts of the Group for the
six months ended 31st December 2003 includes information for the period ended
30th June 2003. This information does not constitute the Company's statutory
accounts for the period ended 30th June 2003 butis derived from those accounts.
Statutory accounts for the period ended 30th June 2003 have been delivered to
the Registrar of Companies. The auditors have reported on those accounts; their
report was unqualified and did not contain statements undersection 237(2) or
(3) of the Companies Act 1985.
13. ACCOUNTS AND INTERIM ANNOUNCEMENT
A copy of the above document has been submitted to the UK Listing Authority, and
will be available for inspection at the UK Listing Authority's Document Viewing
Facility, which is situated at The Financial Services Authority, 25 The North
Colonnade, Canary Wharf, London E14 5HS, telephone number 020 7676 1000.
The interim accounts of the Company are expected to be sent to shareholders at
the end of March 2004. The audited accounts of Retail Stores plc for the period
ended 30th June 2003 and further copies of these interim accounts 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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