Final Results

Mulberry Group PLC 06 August 2003 MULBERRY GROUP PLC 6 AUGUST 2003 MULBERRY GROUP PLC ('Mulberry' or the 'Company') PRELIMINARY RESULTS FOR THE YEAR TO 31 MARCH 2003 Mulberry Group Plc, the AIM listed designer and manufacturer of a portfolio of accessories, ready to wear clothing and interior design products, today announced its preliminary results for the year ended 31 March 2003 HIGHLIGHTS • Sales for the year increased to £28.2 million (2002: £27.8 million) with a loss of £2.1m (2002: £1.7m) • Cost reduction programme continuing with total savings over £1m • £3.5m to be raised through a fully underwritten open offer at 28p • Continued repositioning of the Mulberry brand, involving refitting of shops and roll-out into Europe • Accessories sales proving resilient in the UK (Spring/Summer sales to the UK have increased by 14% on the prior year) • Current full price UK retail trading - 2% ahead of same period last year GODFREY DAVIS, CHAIRMAN AND CHIEF EXECUTIVE COMMENTED: 'It has been a difficult year for the Group, due largely to management changes and a public shareholder dispute. Going forward, the underwritten open offer, the strengthened management team and the continued reduction of costs mean that we are on our way to enabling the Group to trade profitably. Our largest shareholder, Challice, has shown its full support for the prospects of Mulberry not only by confirming its take-up of the open offer, but by underwriting the whole issue.' CHAIRMAN'S STATEMENT It has been eight months since my appointment as Chairman and this is my second report to shareholders. For the second year running we have recorded a loss predominantly owing to substantial one-off costs. This year the one-off costs were mainly associated with the resignation of Roger Saul as Chairman and Chief Executive after an extended shareholder dispute, the costs of that dispute including the requisitioned EGM and further management changes concluded in the year. Roger has now taken on a Non-Executive role as President. We are on our way to achieving my first objective of breaking the loss making pattern of recent years and we have continued to address vigorously, the issues that face the Group. We have continued with the programme of cost reduction, which started as soon as I was appointed, increasing the total annualised saving to more than £1 million. The management team has been completed with the appointment of a new Chief Operating Officer and a new Director of Sales and Marketing, adding to the Director of Design appointed last year. Shareholders and customers will see stylish and commercial new product ranges launched over the next year, adding to the classic Mulberry favourites and broadening the appeal of our brand. In the last two years the Group has spent in excess of £3 million on renewing the brand presentation, including refurbishing the Bond Street flagship store. I believe that the brand has been considerably strengthened as a result and that the business is now well positioned to progress. This expenditure combined with the losses of £4 million in the same period has consumed all of the money raised from the share placing in September 2000. In the light of this, we have carefully considered the funding requirements of the business and the Board has concluded that the Group should raise £3.5 million from shareholders in order to put the Group in a secure financial position and fund future growth. This will be achieved by an open offer underwritten by Challice Limited. This offer is subject to shareholder approval. We have received irrevocable undertakings from certain shareholders which will ensure that the open offer proceeds. This is explained in more detail in the circular to shareholders which will accompany the Annual Report and Financial Statements. RESULTS FOR THE YEAR ENDED 31 MARCH 2003 Sales for the year increased to £28.2 million (2002: £27.8 million). Sales of continuing operations increased by 3% to £27.7 million (2002: £26.9 million) The Group made a loss before tax for the year of £2.1 million (2002: loss £1.7 million). The continuing operations of the business made an operating loss of £0.6 million before exceptional costs of £0.9 million and the trading losses of the shop in Tokyo of £0.2 million, prior to its closure in the first quarter of the year. We have completed a comprehensive review of all Group stocks and the Board has concluded that provisions should be increased by £0.5 million. Gross profit for the year reduced by £1.3 million, with the gross margin, for continuing operations, falling from 50.3% to 45.3%. As reported at the half year, this reflected the higher proportion of sales made through the off price business and discounting to clear stocks, which have reduced by £1.7 million compared to last year. The gross margin, for continuing operations, improved in the second half to 45.8% from 44.8% in the first half. THE MULBERRY BRAND The repositioning of the Mulberry brand has continued, focusing on the UK market, and we are seeing the benefit with increased UK sales of accessories. In the light of the poor economic situation in Europe, we are focusing on the business of our franchise partners, which account for 58% of wholesale sales to Europe in the Spring/Summer 2003 season. We have continued the introduction of the new retail format. In Harvey Nichols, in London, we have refitted the accessory area on the ground floor. We continue to work on the roll-out in Europe with our franchise partners. The Copenhagen franchised store, which has been fitted with the new look, continues to show strong sales growth. ACCESSORIES Accessories are our core business and account for over 70% of Group sales. Spring/Summer 2003 wholesale sales of accessories to department stores and others in the UK have increased by 14% on the prior year. The recession in fashion retail in Europe and Scandinavia, which has hit Germany particularly badly, has been widely reported. In the Spring/Summer 2003 season, it has resulted in a reduction of 12% in our wholesale export business. MEN'S AND WOMEN'S CLOTHING The overhaul of our women's wear business to bring it into line with the accessories collections is underway and the first collection under the new regime reached the shops in July 2003. Our strategy is to limit the distribution of men's and women's wear and to focus on growing the sales of accessories, which is our core business. HOME COLLECTION Sales of our Home furnishings collection, licensed with Kravet Lee Jofa, continues to grow satisfactorily in the USA while sales in Europe have been more difficult. The first deliveries of the new Mulberry bath towel collection, licensed with Christy UK Limited, were made in April 2003. The Mulberry bed linen collection, licensed with Peter Reed Limited, will arrive in the shops shortly. Initial revenues from these licenses will be modest but they have good potential for the future. RETAIL Retail trading in London where most of the Group's own shops are based continues to be affected by the lack of tourists. However, total sales in our UK retail business increased by 3% in the year. As mentioned in my interim report in December, it is not possible to produce reliable like-for-like sales statistics for the period because of the extended closure of our Bond Street flagship store for sixteen weeks last year and the impact of shop openings and closures in both the year under review and the prior year. During the year two small loss making outlets were closed and a new accessories concession was opened in Harvey Nichols in Edinburgh. OUTLOOK Sales in our full price UK shops for the first thirteen weeks of the new financial year are 2% higher than last year. Early indications for the Autumn/Winter 2003 wholesale season for our core accessory business show growth in the UK and reduced export orders reflecting the continued economic problems in Europe. The appointment of the Director of Sales and Marketing and more recently, the Chief Operating Officer reflect the importance that the board attaches to the need to improve market share and sales performance. Following a successful project to improve accessory margins, a progressive increase is reported for Autumn/Winter 2003 and Spring/Summer 2004, despite the strengthening Euro. The cost reduction programme referred to above will lead to reduced operating expenses in the current year, notwithstanding the impact of inflation, National Insurance increases and the new additions to the management team. DIVIDENDS The Board is not recommending the payment of a dividend on the ordinary or preference shares. STAFF I would like to thank all our staff who have continued to drive the brand forward with optimism and commitment despite the exceptional events of the year. Godfrey Davis CHAIRMAN AND CHIEF EXECUTIVE 5 August 2003 Contacts: WMC Communications David Wynne-Morgan 020 7591 3999 Teather & Greenwood Limited Christopher Hardie 020 7426 9576 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31 March 2003 Unaudited Audited 2003 2003 2003 2002 Before exceptional Exceptional Total Total Items Items £'000 £'000 £'000 £'000 TURNOVER Continuing operations 27,736 - 27,736 26,916 Discontinued operations 441 - 441 901 ----------- ----------- ---------- ---------- 28,177 - 28,177 27,817 Cost of sales (15,499) - (15,499) (13,873) ----------- ----------- ---------- ---------- GROSS PROFIT 12,678 - 12,678 13,944 Other operating expenses (net) (13,467) (873) (14,340) (14,757) ----------- ----------- ---------- ---------- OPERATING LOSS Continuing operations (608) (873) (1,481) (183) Discontinued operations (181) - (181) (630) ----------- ----------- ---------- ---------- (789) (873) (1,662) (813) Loss of disposal on fixed assets - (593) Group share of profit of associated undertakings 1 1 Finance charges (450) (343) ---------- ---------- LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (2,111) (1,748) Tax on loss on ordinary activities (91) (6) ---------- ---------- LOSS ON ORDINARY ACTIVITIES AFTER TAXATION, BEING LOSS (2,202) (1,754) FOR THE FINANCIAL YEAR ========== ========== 7% preference dividend on non-equity shares (196) (196) 1% preference dividend on non-equity shares (3) (3) ---------- ---------- LOSS FOR THE YEAR TRANSFERRED FROM RESERVES (2,401) (1,953) ========== ========== LOSS PER ORDINARY SHARE - basic (6.64p) (5.40p) ========== ========== - diluted (6.64p) (5.40p) ========== ========== CONSOLIDATED BALANCE SHEET 31 March 2003 Unaudited Audited 2003 2002 £'000 £'000 FIXED ASSETS Tangible assets 6,533 6,952 Investments 76 75 ------------- ---------- 6,609 7,027 ------------- ---------- CURRENT ASSETS Stocks 7,435 9,096 Debtors 4,027 3,938 Cash at bank and in hand 71 151 ------------- ---------- 11,533 13,185 CREDITORS: Amounts falling due within one year (10,996) (8,623) ------------- ---------- NET CURRENT ASSETS 537 4,562 ------------- ---------- TOTAL ASSETS LESS CURRENT LIABILITIES 7,146 11,589 CREDITORS: Amounts falling due after more than one year (373) (2,654) ------------- ---------- NET ASSETS 6,773 8,935 ============= ========== CAPITAL AND RESERVES Called-up share capital 2,457 2,457 Share premium account 8,931 8,941 Revaluation reserve 173 204 Capital redemption reserve 154 154 Preference dividend reserve 250 51 Profit and loss account (5,192) (2,872) ------------- ---------- SHAREHOLDERS' FUNDS 6,773 8,935 ============= ========== Shareholders' funds may be analysed as: Equity interests 3,764 6,125 Non-equity interests 3,009 2,810 ------------- ---------- 6,773 8,935 ============= ========== CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 March 2003 Unaudited Audited 2003 2002 £'000 £'000 NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 1,293 (2,248) Returns on investments and servicing of finance (453) (579) Taxation (2) (6) Capital expenditure (600) (2,146) ------------- ----------- Cash inflow/(outflow) before financing 238 (4,979) Financing (328) 829 ------------- ----------- DECREASE IN CASH IN THE YEAR (90) (4,150) ============= =========== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Unaudited Audited 2003 2002 £'000 £'000 Decrease in cash in the year (90) (4,150) Cash outflow/(inflow) from decrease/ (increase)in debt and lease financing 318 (829) ------------- ---------- 228 (4,979) Inception of finance leases (41) (997) ------------- ---------- Movement in net debt 187 (5,976) NET DEBT, BEGINNING OF YEAR (6,751) (775) ------------- ---------- NET DEBT, END OF YEAR (6,564) (6,751) ============= ========== NOTES 1. The financial information set out above does not constitute the Company's statutory accounts. Statutory accounts for the year ended 31 March 2002 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 March 2003 will be filed at Companies House upon receiving the approval of the Annual General Meeting. The auditors have reported on the accounts for the year ended 31 March 2002 and their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. 2. The results for the year ended 31 March 2003 contained in this report, which have not been audited, have been prepared using accounting policies consistent with those used in the preparation of the Annual Report and Financial Statements for the year ended 31 March 2002. 3. Basic and diluted earnings per ordinary share has been calculated by dividing the loss on ordinary activities after taxation and dividends on non-equity shares for each financial year by 36,147,123 (2002: 36,147,123) ordinary shares, being the weighted average number of ordinary shares in issue during the year. 4. Copies of the Annual Report and Financial Statements will be posted to shareholders. Further copies can be obtained from Mulberry Group plc's registered office at Kilver Court, Shepton Mallet, Bath, BA4 5NF. Copies of this announcement are available for a period of one month from the date hereof from the Company's registered office, Kilver Court, Shepton Mallet, Bath, BA4 5NF and from the Company's nominated adviser, Teather & Greenwood Limited, Beaufort House, 15 St. Botolph Street, London, EC3A 7QR. END This information is provided by RNS The company news service from the London Stock Exchange

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