Interim Results
Retail Stores PLC
8 March 2001
FOR IMMEDIATE RELEASE
8th March 2001
RETAIL STORES PLC:
INTERIM RESULTS - SIX MONTHS TO 31ST DECEMBER 2000
HIGHLIGHTS
Retail Stores plc was formed in April 2000 with the express purpose of
acquiring the department store group Liberty plc. This acquisition was
completed on 3rd July 2000 and the period covered by these results is from the
date of completion until 31st December 2000. Retail Stores plc is 68% owned by
Marylebone Warwick Balfour Group plc.
* Stated objective to transform Liberty into gobal luxury goods brand
* Appointment of Fiona Harrison as Chief Executive in December 2000
* Value being realised from Liberty's property assets:
+ Foubert Estate sold in August - delivered approx £2m profit.
+ Remaining surplus space converted into serviced offices to generate
£2.4m of annual income for Liberty
* Pre-Christmas trading affected by poor weather, erratic train services
and impact of media exaggerated fire
* Operating losses of £2.2m reflect cost of one-off items but property
investment sales profits reduced pre-tax losses to £323,000
* Since January: Announced withdrawal from e-commerce, mail order + high
fashion ready-to-wear ventures and commenced £4-£5m refurbishment of
Regent Street store
* 'I firmly believe we now have the basis of an entrepreneurial management
team capable of both delivering results over the medium term and making
Liberty synonymous with luxury goods around the world. The Board is
cautiously optimistic about the company's future,' Richard Balfour-Lynn,
Chairman
-more-
Contact:
Fiona Harrison, Chief Executive, Retail Stores plc.
Tel: 020 7734 1234
Baron Phillips, Bankside Consultants
Tel: 020 7220 7477
CHAIRMAN'S STATEMENT
This is my first statement to shareholders since Retail Stores Plc, owned 68%
by Marylebone Warwick Balfour Group plc, completed its takeover of Liberty in
July 2000. Results cover the trading period for the six months to 31st
December 2000. As Retail Stores was formed specifically for the purpose of
acquiring Liberty there are no formal comparative results, although broad
operating results for the similar period a year ago are included in this
statement.
I stated at the time of the acquisition that, in our view, it would take up to
five years to reverse Liberty's decline and achieve our key objective of
transforming the Group into a global luxury goods brand. In the short term our
priority is to stem the losses and return Liberty to profitability, although
shareholders should bear in mind that the business is underpinned by valuable
West End properties.
Trading during the important pre Christmas period, was particularly affected
by November's fire in the Regent Street building and exacerbated by extremely
poor weather and difficult and erratic train services into Central London.
Unfortunately the extent of this very small fire, in a disused lift shaft, was
greatly exaggerated in the national media resulting in a 30% decline in store
sales over the following fortnight, compared to the same period in previous
years.
To counter the impact of the fire we embarked on a £500,000 press advertising
campaign, supported by in-store promotions, aimed at restoring sales and
visitors to pre-fire levels. We are still negotiating a full insurance claim
and £1.5m has been accounted for in these results.
Against this background we achieved sales of £28m for the six months to 31st
December 2000, compared with £30m for a comparable period a year ago.
Operating losses of £2.2m over the period reflect the cost of one-off items
such as redundancies and restructuring. However, pre-tax losses were reduced
to £323,000 by a profit of almost £2m from the sale of the Foubert Estate for
£9.5m. Losses per share for the period amounted to 4.3p. We are not declaring
an interim dividend.
In addition, the conversion of 54,000 sq ft of surplus space into serviced
offices managed by MWB Business Exchange will shortly be completed. We
estimate that in a full year this property will generate approximately £2.4m
in additional rental income for Liberty.
Management changes included the departure of Finance Director, Brian Muirhead
in August and the Managing Director, Michele Jobling in September. Nick Otten
from Marylebone Warwick Balfour Group Plc stepped in as Acting Managing
Director until a permanent replacement was recruited.
I am pleased to announce that Fiona Harrison, a highly experienced senior
retailer accepted an invitation to join the Board as Chief Executive effective
from 5th DecemberFiona has already completed an initial review of the
business. She has concluded that investment and management focus, in the
immediate future, must be directed to strengthening the retail core of the
Company in order to provide a healthy base from which to develop the wider
potential for the Liberty brand. She has also determined that the Company
should simplify its activities and withdraw from sub-scale loss-making
ventures.
As a result of that review we announced in February that Liberty is
withdrawing from both its e-commerce and mail order businesses together with
the high fashion ready-to-wear collection.
Equally important is that we have closed our Regent Street store to undertake
a major £4 - £5m refurbishment programme of the retail space for our own use.
This reverses a decision taken by Liberty's previous management to close the
store and re-let it to a third party retailer. When our Regent Street store
re-opens in February 2002, we will have 15,000 sq ft net of new modern and
efficient retailing space on one of London's busiest streets. The new space
will also provide a natural link into our Great Marlborough Street 'Tudor'
building.
These initiatives have put in place the building blocks for the first phase of
the regeneration of the Liberty business. Work continues apace on developing
a compelling retail offer for the refurbished store. In addition, planning
has already been started to identify the most appropriate way to realise value
from the huge strengths associated with the Liberty name.
I firmly believe we now have the basis of an entrepreneurial management team
capable of both delivering results over the medium term and making Liberty
synonymous with luxury goods around the world. The Board is cautiously
optimistic about the Company's future, whilst also recognising the concerns
over the UK economy following the slow down in the USA. Against this
background and the work still to do revitalising the Liberty offering, we are
adopting a prudent approach.
Richard Balfour-Lynn
Chairman
8th March 2001
CONSOLIDATED PROFIT AND LOSS ACCOUNT
The Company was incorporated on 7th April 2000 and hence these interim
accounts cover the period from 7th April 2000 to 31st December 2000. During
the period 7th April to 2nd July 2000, the trading activities of the Company
were dormant, and on 3rd July 2000, its offer for Liberty plc was declared
unconditional. Accordingly, the results below are for the six months ended
31st December 2000, as they cover the trading results for the period from 3rd
July to 31st December 2000.
Six months
ended
31st December
2000
Notes £'000
Turnover 2 28,350
Cost of sales (29,527)
Gross loss (1,177)
Administrative expenses (984)
Group operating loss (2,161)
Profit on disposal of investment properties 1,990
Loss on ordinary activities before interest (171)
Net interest payable and similar items 3 (152)
Loss on ordinary activities before taxation (323)
Taxation on loss on ordinary activities 4 (223)
Loss on ordinary activities after taxation (546)
Equity minority interests (114)
Retained loss for the period (660)
Loss per share 5 (4.3p)
All operations are continuing.
There is no difference between losses as stated and losses on the historical
cost basis.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Period ended
31st December
2000
£'000
Loss for the financial period attributable to members of the (660)
parent company
Exchange difference (84)
Total recognised gains and losses for the period (744)
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
Period ended
31st December 2000
£'000
Opening equity shareholders' funds -
Loss for the financial period (660)
Dividends paid and proposed for the period -
Issues of shares during the period 67,064
Other movements (84)
Closing equity shareholders' funds 66,320
CONSOLIDATED BALANCE SHEET
at 31st December 2000
31st December
2000
Notes £'000
Fixed assets
Intangible asset 6 29,700
Tangible assets 7 59,099
88,799
Current assets
Stocks 9,487
Debtors 32,211
Cash 50
41,748
Creditors: amounts falling due within one year (44,661)
Net current liabilities (2,913)
Total assets less current liabilities 85,886
Creditors: amounts falling due after more than one year
Borrowings (16,701)
Provisions for liabilities and charges (146)
Net assets 69,039
Capital and reserves
Called up share capital 5,654
Share premium account 61,410
Profit and loss account (744)
Equity shareholders' funds 66,320
Non-equity minority interests 969
Equity minority interests 1,750
Total capital and reserves 69,039
CONSOLIDATED CASH FLOW STATEMENT
Six months
ended
31st December
Notes 2000
£'000
Net cash inflow from operating activities 8 674
Returns on investments and servicing of finance (913)
Corporation tax recovered 664
Capital expenditure and financial investment (375)
Net cash inflow before financing 50
Increase in cash during the period 50
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Six months
ended
31st December
Notes 2000
£'000
Increase in cash during the period 50
Increase in loans from acquisitions (20,760)
Increase in net debt during the period (20,710)
Opening net debt -
Closing net debt (20,710)
NOTES TO THE ACCOUNTS
1. BASIS OF CONSOLIDATION AND ACCOUNTING POLICIES
The interim results of the Group for the period from the date of incorporation
of the Company on 7th April 2000 to 31st December 2000 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 January 2000 that were
incorporated in the Prospectus issued on 9th June 2000 at the time of the
Company's Admission to the Alternative Investment Market.
2. DIVISIONAL ANALYSIS
Six months
ended
31st December
2000
£'000
Turnover
By class of business:
Retail 22,663
Brand 5,687
28,350
By geographical destination:
United Kingdom 23,485
Europe 1,378
Japan 2,757
North America 198
Rest of World 532
28,350
3. NET INTEREST PAYABLE AND SIMILAR ITEMS
Six months
ended
31st December
2000
£'000
Bank loans and overdrafts 833
Less interest receivable and similar income (681)
152
4. TAXATION ON LOSS ON ORDINARY ACTIVITIES
Six months ended
31st December 2000
£'000
United Kingdom corporation tax at 30% -
Japanese tax on Japanese profits 223
223
5. LOSS PER SHARE
The calculation of the loss per share is based on the loss on ordinary
activities after taxation and minority interests of £660,000, divided by the
weighted average number of ordinary shares of 25p in issue during the period
of 15,313,042.
6. INTANGIBLE ASSET - BRAND VALUE
31st December
2000
£'000
Opening balance -
Brand acquired during the period 29,700
Closing balance 29,700
7. TANGIBLE FIXED ASSETS
Investment Operational properties
properties Long Short Fixtures &
Freehold Freehold Leasehold Leasehold equipment Total
£'000 £'000 £'000 £'000 £'000 £'000
Group
Cost or valuation
At 7th April 2000 - - - - - -
Additions - 653 2,160 - 1,985 4,798
Acquisition of 7,495 21,200 24,300 307 9,493 62,795
subsidiaries
Disposals (7,495) - - - - (7,495)
At 31st December - 21,853 26,460 307 11,478 60,098
2000
Depreciation
At 7th April 2000 - - - - - -
Charge for the
period - (47) - 16) (936) (999)
At 31st December
2000 - (47) (16) (936) (999)
Net book value
At 31st December 21,806 26,460 291 10,542 59,099
2000
8. NET CASH INFLOW FROM OPERATING ACTIVITIES
Six months
ended
31st December
2000
£'000
Total operating loss (171)
Depreciation 999
Profit on disposal of investment properties (1,990)
Increase in debtors (25,255)
Increase in stock (1,634)
Increase in creditors 28,725
Net cash inflow from operating activities 674
9. PROSPECTUS AND INTERIM ANNOUNCEMENT
This interim statement will be sent to shareholders in March 2001. The
Prospectus relating to the Admission of Retail Stores Plc to the Alternative
Investment Market dated 9th June 2000 and further copies of this interim
statement for the period from 7th April 2000 to 31st December 2000 are
available from the Company Secretary, Filex Services Limited at the Company's
registered office of 179 Great Portland Street, London W1N 6LS.