Final Results

Mulberry Group PLC 24 June 2004 MULBERRY GROUP PLC 24 JUNE 2004 MULBERRY GROUP PLC ('Mulberry' or the 'Group') PRELIMINARY RESULTS FOR THE YEAR TO 31 MARCH 2004 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 2004. HIGHLIGHTS Operating profit of £0.6 million achieved (2003: loss £1.7 million). Profit before tax for the year of £41,000 (2003: loss £2.1 million). Significantly strengthened balance sheet with borrowings reduced by £4.3 million to £2.2 million. Gross margin, increased from 45% to 50%. Overheads reduced by £2.1 million (15%). Continued repositioning of the Mulberry brand in the UK and overseas. GODFREY DAVIS, CHAIRMAN AND CHIEF EXECUTIVE COMMENTED: 'We have achieved a substantial business turnaround. The first financial objective for the year was to break the loss making pattern of previous years. We have achieved this by focusing on our core accessories business, improving margins, reducing costs and eliminating non profitable sales. The second was to reduce borrowings and restore the balance sheet. This has been achieved by the Open Offer completed in September 2003 and by generating cash from operations. As a result, the Group is profitable, adequately funded and has a sound base from which it can build. Our strategy for the brand is to invest in design and to focus our marketing resources to significantly raise our game.' FOR FURTHER DETAILS PLEASE CONTACT : WMC Communications Alex Glover or Jo Livingston 0207 7591 3999 CHAIRMAN'S STATEMENT We have achieved a substantial business turnaround. The Group made an operating profit of £0.5 million (2003: loss £1.7 million). The balance sheet is greatly strengthened with net debt reduced by £4.3 million to £2.2 million. Equally importantly, Mulberry's product range and brand image have been transformed. This has resulted in extensive press coverage in both the leading fashion magazines and the national newspapers. Our Piccadilly, Bayswater and Roxy bags are 'must have' fashion accessories carried by many of the most fashionable celebrities. This renaissance has been recognised worldwide. The first financial objective for the year was to break the loss making pattern of previous years. We have achieved this by focusing on our core accessories business, improving margins, reducing costs and eliminating non profitable sales. The second was to reduce borrowings and restore the balance sheet. This has been achieved by the Open Offer completed in September 2003 and by generating cash from operations. As a result, the Group is profitable, adequately funded and has a sound base from which it can build. Our strategy for the brand is to invest in design and to focus our marketing resources to significantly raise our game. This has resulted in strong demand for our new more fashionable products and excellent reviews from the UK press. RESULTS FOR THE YEAR ENDED 31 MARCH 2004 Sales for the year reduced to £25.3 million (2003: £28.2 million). The reduction reflects the elimination of loss making and strategically flawed sales channels, reduced clearance sales of discontinued lines and lower sales of men's and women's clothing. Sales of our core accessory products are growing in our UK and European markets. Gross margin, increased from 45% to 50%. This reflected the continuing improvement in accessories margins and the lower level of discounting to clear stocks, which have fallen by a further £0.9 million after last year's reduction of £1.7 million. Overheads reduced by £2.1 million (15%) and the Group made an operating profit of £0.5 million (2003: loss £1.7 million). The Group made a profit before tax for the year of £41,000 (2003: loss £2.1 million) after accounting for the costs of shop closures and the related loss on disposal. Gearing reduced to 23% at 31 March 2004. Net bank borrowings reduced to £1.8 million. The Group has term loan and overdraft facilities of £7.5 million with its principal bankers HSBC Bank plc. THE MULBERRY BRAND Our marketing effort has focused on the UK, with advertising and PR campaigns which succeeded in their objective of bringing our brand to the attention of a more fashion conscious customer. Our new campaigns for Autumn/Winter 2004 and Spring/Summer 2005 will be designed to communicate our unique brand values to develop demand from consumers outside the UK as well as continuing to build on the progress we have achieved in the UK. ACCESSORIES Accessories, which are our core business, account for over 70% of Group sales. Spring/Summer 2004 wholesale orders for accessories from department stores and others in the UK have increased by 14% on the prior year. In Europe, orders have increased by 2%, after several years of decline, despite the recession in fashion retail in those markets. New designs of handbags for women and unisex casual work bags in the new leathers, 'Darwin' and 'Matt Glove', have become best sellers. In the forthcoming year, we will complete the updating and renewal of the classic 'Congo' and 'Scotchgrain' product ranges. MEN'S AND WOMEN'S CLOTHING We have continued to restrict the distribution of the men's and women's wear collections, which we are repositioning to bring them into line with our accessories range. This has resulted in lower sales. These collections are bringing a more fashion conscious consumer into our stores and have achieved extensive press coverage. Our strategy will continue to be to limit the distribution of men's and women's wear and to focus on growing the sales of accessories. HOME COLLECTION Our licensed home furnishings and bath towel collections continue to develop satisfactorily. RETAIL Like for like sales in our full price shops were 1% lower for the year. This was due to reduced sales in the July and January mark- down sale periods, which we were able to limit to a shorter period at reduced discounts due to improved stock management. As a result, margins improved. We have continued to refit our shops with the new retail format. The most recent is our shop in Heathrow Terminal 4. OUTLOOK Early indications for the Autumn/Winter 2004 wholesale season for our core accessory business are encouraging and show growth in both the UK and export markets. Like for like sales in our full price shops for the first 9 weeks of the new financial year are 4% higher than last year. We are planning to open a limited number of new shops in the UK to sell accessories but will only consider these where the property deals are attractive. We have agreed to launch Mulberry in the USA this autumn with Bergdorf Goodman, the leading New York store. Mulberry USA LLC, the joint venture formed at the time of the original share subscription by Challice Limited, has commenced trading and is the distributor for this market. The impact on the current year will be small but is expected to increase thereafter. In parallel with these developments in the USA, we are working on opportunities in Japan and the rest of Asia. 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 determination and commitment and without whom, the achievements of the last year would not have been possible. Godfrey Davis CHAIRMAN AND CHIEF EXECUTIVE 24 June 2004 Contacts: WMC Communications Alex Glover or Jo Livingstone 020 7591 3999 Teather & Greenwood Limited Christopher Hardie 020 7426 9576 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31 March 2004 2004 2003 Total Total £'000 £'000 TURNOVER 25,327 28,177 Cost of sales (12,539) (15,499) ---------- ---------- GROSS PROFIT 12,788 12,678 Other operating expenses (net) (12,248) (14,340) ---------- ---------- OPERATING PROFIT/(LOSS) 540 (1,662) Group share of profit of associated undertakings 3 1 Loss on disposal of fixed assets (166) - Interest payable and similar charges (336) (450) ---------- ---------- PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 41 (2,111) Tax on profit/(loss) on ordinary activities (10) (91) ---------- ---------- PROFIT/(LOSS) ON ORDINARY ACTIVITIES AFTER TAXATION, BEING PROFIT FOR THE FINANCIAL 31 (2,202) YEAR 7% preference dividend proposed on non-equity shares (196) (196) 1% preference dividend proposed on non-equity shares 4 (3) Difference between non-equity finance costs and the related dividends (53) - ---------- ---------- RETAINED LOSS FOR THE YEAR (214) (2,401) ---------- ---------- LOSS PER ORDINARY SHARE - basic (0.49p) (6.64p) ========== ========== CONSOLIDATED BALANCE SHEET 31 March 2004 2004 2003 £'000 £'000 FIXED ASSETS Tangible assets 5,385 6,533 Investments 73 76 ------------- ---------- 5,458 6,609 ------------- ---------- CURRENT ASSETS Stocks 6,565 7,435 Debtors 3,441 4,027 Cash at bank and in hand 1,245 71 ------------- ---------- 11,251 11,533 CREDITORS: Amounts falling due within one year (3,912) (10,996) ------------- ---------- NET CURRENT ASSETS 7,339 537 ------------- ---------- TOTAL ASSETS LESS CURRENT LIABILITIES 12,797 7,146 CREDITORS: Amounts falling due after more than one year (3,178) (373) ------------- ---------- NET ASSETS 9,619 6,773 ============= ========== CAPITAL AND RESERVES Called-up share capital 2,838 2,457 Share premium account 11,371 8,931 Revaluation reserve 142 173 Capital redemption reserve 154 154 Preference dividend reserve 442 250 Profit and loss account (5,328) (5,192) ------------- ---------- SHAREHOLDERS' FUNDS 9,619 6,773 ============= ========== Shareholders' funds may be analysed as: Equity interests 6,615 3,764 Non-equity interests 3,004 3,009 ------------- ---------- 9,619 6,773 ============= ========== CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 March 2004 2004 2003 £'000 £'000 NET CASH INFLOW FROM OPERATING ACTIVITIES 1,684 1,293 Returns on investments and servicing of finance (345) (453) Taxation - (2) Capital expenditure 303 (600) ------------- ----------- Cash inflow before financing 1,642 238 Financing 3,511 (328) ------------- ----------- INCREASE/(DECREASE) IN CASH IN THE YEAR 5,153 (90) ============= =========== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 2004 2003 £'000 £'000 Increase/(Decrease) in cash in the year 5,153 (90) Cash(inflow)/outflow from(increase)/decrease in debt and lease financing (690) 318 ------------- ---------- 4,463 228 Inception of finance leases (130) (41) ------------- ---------- Movement in net debt 4,333 187 NET DEBT, BEGINNING OF YEAR (6,564) (6,751) ------------- ---------- NET DEBT, END OF YEAR (2,231) (6,564) ============= ========== NOTES 1. The financial information set out above does not constitute the Group's statutory financial statements for the years ended 31 March 2004 and 2003, but is derived from those financial statements. Statutory accounts for the year ended 31 March 2003 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 March 2004 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 2003 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 2004 contained in this report 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 2003. 3. Basic 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 43,453,282 (2003: 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. This information is provided by RNS The company news service from the London Stock Exchange NUAR

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