Interim Results

RNS Number : 8654D
Mulberry Group PLC
10 December 2009
 



MULBERRY GROUP PLC ("Mulberry" or the "Group")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009



Mulberry Group plc, the luxury British fashion brand specialising in the design, manufacture and sale of leather goods and accessoriesis pleased to announce its results for the six months ended 30 September 2009. 


HIGHLIGHTS - MULBERRY DELIVERS SALES AND PROFITS GROWTH 

  • Total sales increased by 16% to £32.3 million (30 September 2008: £27.8 million)

  • UK retail sales up 41%, like-for-like UK retail sales up 39%

  • Operating profit increased by 28% to £1.5 million (30 September 2008: £1.2 million)

  • Profit before tax increased by 16% to £1.5 million (30 September 2008: £1.3 million) 

  • The Group has cash of £4.3 million and no debt


OUTLOOK - FULL YEAR RESULTS EXPECTED TO SUBSTANTIALLY EXCEED CURRENT MARKET EXPECTATIONS

  • UK retail sales up 47for the 10 weeks to 5 December 2009, like-for-like up 46%

  • Spring/Summer 2010 wholesale order books level compared to the same period last year

  • Strong demand for new Alexa range of women's bags


GODFREY DAVIS, CHAIRMAN AND CHIEF EXECUTIVE COMMENTED:

"Mulberry has delivered further growth during the first half of the year due to strong demand for new and existing designs. Since September, demand has continued to grow for both the retail and wholesale channels. The outlook is positive and on current trends the results for the year will be substantially ahead of market expectations."




FOR FURTHER DETAILS PLEASE CONTACT:


Pelham PR

   

Kate Catchpole

0207 337 1512

   

   

Altium Capital

   

Ben Thorne

0207 484 4076

Melanie Szalkiewicz

0207 484 4187

  CHAIRMAN'S STATEMENT


The Group has continued to deliver sales and profit growth.  Sales increased 16% to £32.3 million (2008: £27.8 million).


Gross profit margins at 55.0% (2008: 57.7%) have been under some pressure due to the increased cost of leather purchased in Euros and metal components which are purchased in US dollars. This has necessitated some product price increases which consumers have accepted.


Net operating expenses for the period increased by £1.4 million to £16.3 million (2008: £14.9 million).  Of this increase, £0.6 million relates to extra costs directly linked to the UK sales growth, £0.3 million relates to new shops and £0.2 million relates to the one off costs of the USA restructuring.


Operating profits increased by 28% from £1.2 million to £1.5 million. When the one off USA costs are added back, underlying operating profits increased by 50% compared to the prior period.


Profit before tax has increased 16from £1.3 million in 2008 to £1.5 million in 2009.


The Group balance sheet is strong with cash of £4.3 million and no debt.


BUSINESS REVIEW


Sales for the six months to 30 September 2009 were significantly ahead of our expectations. Sales through our UK retail shops started well and have improved further, while sales through the wholesale channel were initially down due to cautious buying by our customers. However, our order books have improved progressively throughout the six month period as customers reordered to replace product selling strongly in their shops. The comparative period up to 30 September 2008 was a period of good growth for Mulberry.


Bags and accessories remain our core business and continue to account for over 90% of Group sales. The new Daria range introduced during August 2009 has become a best seller in addition to continued strong demand for our successful Bayswater and Mitzy ranges.

 

For the six months to 30 September 2009, total retail sales in the UK were 41% above the prior year with like-for-like sales up 39%.  This increase was due to strong customer demand for our new and existing ranges of bags and accessories.  The sales increase was similar in both our full price and our off price shops


Sales through our website, www.mulberry.com, grew by 80% during the period, increasing from 4% to 7% of Group sales.  In addition to being a profitable and growing sales channel, the web is a key marketing tool for the brand.


Wholesale shipments to third parties during the six months to 30 September were down 24% compared to the prior year. As expected, customers reduced their initial buying budgets due to the economic climate. Sell through remained good however and so for the Autumn/Winter 2009 season we have seen an unusually high amount of top up orders, some of which will be delivered during the fourth calendar quarter. The final order book for the Autumn/Winter 2009 season will be 5% below the prior year.


The combination of the strong sales in our own shops and the stronger than expected wholesale demand has resulted in the business having very little surplus stock from the Autumn/Winter 2009 season This will limit the amount of merchandise available for our January sale. 


CURRENT TRADING AND OUTLOOK


The strong consumer demand for Mulberry products experienced during the six months to 30 September 2009 continues.  


During the ten weeks leading up to 5 December 2009, total UK retail sales were 47% above last year with like-for-like sales up 46%.  These figures are slightly flattered by the weak sales during the same period last year (-12%), but the underlying trend is of strong growth.


The Spring/Summer 2010 season has started more strongly than Autumn/Winter 2009 and the order book is currently on a par with the previous year.


During October 2009, we completed the transaction to assume operational control of the two New York shops previously held by our joint venture partner. In addition, we reclaimed the full distribution rights for the North American market. Under the terms of the transaction, we took management control of the two shops with effect from 1 April 2009 and they have been fully accounted for in the results of the Group for the period from that date.


During January 2010, we will deliver the new Alexa family of bags, which has been well received around the world.  We have waiting list for this bag and it has the potential to become another best seller in our growing family of successful designs. 


Christmas trading is a key contributor to turnover and profit as are the January sales. The Group will not discount product in the lead up to Christmas.  On the basis of current trends, it is expected that the financial performance for the year will be substantially ahead of market expectations and ahead of last year.


DIVIDENDS


The full year dividend of 2.0 pence per ordinary share was paid on 21 August 2009. In line with prior years, the Board is not recommending the payment of an interim dividend.


STAFF


I would like to take this opportunity to thank all of our staff and our partners for their enthusiasm and commitment to Mulberry and its strategy. The significant achievements of the last six months would not have been possible without them.  




Godfrey Davis

Chairman and Chief Executive

10 December 2009

  Consolidated income statement

Six months ended 30 September 2009





Note

Unaudited

six months

30 Sept 2009

£'000


Unaudited

six months

30 Sept 2008

£'000


Audited

year ended

31 Mar 2009

£'000








Revenue


32,316


27,779


58,585

Cost of sales


(14,528)


(11,762)


(23,449)








Gross profit


17,788


16,017


35,136








Administration expenses


(16,197)


(14,961)


(31,627)

Exceptional USA transaction costs

4

(256)


-


-

Other operating income


150


103


421








Operating profit


1,485


1,159


3,930








Share of results of associates


54


2


34

Finance income


10


179


229

Finance expense


(14)


(12)


(16)








Profit before tax


1,535


1,328


4,177








Tax

5

(508)


(435)


(1,596)








Profit for the period


1,027


893


2,581















Attributable to:







Equity holders of the parent


1,027


893


2,581

















pence


pence


pence








Basic earnings per share

6

1.8


1.6


4.5

Diluted earnings per share

6

1.8


1.5


4.5


All activities arise from continuing operations.



Consolidated statement of comprehensive income

Six months ended 30 September 2009





Unaudited

six months

30 Sept 2009

£'000


Unaudited

six months

30 Sept 2008

£'000


Audited

year ended

31 Mar 2009

£'000








Net profit for the period


1,027


893


2,581

Exchange differences on translation of foreign operations


(26)


22


278

Total comprehensive income for the period


1,001


915


2,859








Attributable to:







Equity holders of the parent


1,001


915


2,859



    

    

Consolidated balance sheet

At 30 September 2009






Unaudited

30 Sept 2009

£'000


Unaudited

30 Sept 2008

£'000


Audited

31 Mar 2009

£'000








Non-current assets







Intangible assets


2,568


2,032


2,527

Property, plant and equipment


8,603


9,221


8,872

Interests in associates


351


246


295

Deferred tax assets


-


6


-



11,522


11,505


11,694

Current assets







Inventories


12,268


11,834


14,830

Trade and other receivables


7,207


7,437


6,032

Cash and cash equivalents


4,267


2,636


3,710



23,742


21,907


24,572








Total assets


35,264


33,412


36,266








Current liabilities







Trade and other payables


(10,259)


(10,646)


(10,726)

Current tax liabilities


(498)


(439)


(1,024)



(10,757)


(11,085)


(11,750)

Non-current liabilities







Deferred tax liabilities


(71)


-


(132)








Total liabilities


(10,828)


(11,085)


(11,882)








Net assets


24,436


22,327


24,384















Equity







Share capital


2,871


2,871


2,871

Share premium account


7,007


7,007


7,007

Own share reserve


(34)


(49)


(49)

Capital redemption reserve


154


154


154

Special reserves


1,467


1,470


1,467

Foreign exchange reserve


467


237


493

Retained earnings


12,504


10,637


12,441








Total equity


24,436


22,327


24,384









  Consolidated statement of changes in equity

Six months ended 30 September 2009 





Equity attributable to equity holders of the parent











Share 

capital

Share

premium

account

Own

share

reserve

Capital

reserves

Special

reserves

Foreign

exchange

reserve

Retained

earnings

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000










As at 1 April 2008

2,871

7,007

-

154

1,485

215

10,787

22,519










Total comprehensive income for the period

-

-

-

-

-

22

893

915

Amortisation of revaluation surplus

-

-

-

-

(15)

-

15

-

Charge for employee share based payments

-

-

-

-

-

-

90

90

Own shares

-

-

(49)

-

-

-

-

(49)

Ordinary dividends paid

-

-

-

-

-

-

(1,148)

(1,148)










As at 30 September 2008

2,871

7,007

(49)

154

1,470

237

10,637

22,327










Total comprehensive income for the period

-

-

-

-

-

256

1,688

1,944

Amortisation of revaluation surplus

-

-

-

-

(3)

-

3

-

Charge for employee share based payments

-

-

-

-

-

-

113

113

Own shares

-

-

-

-

-

-

-

-

Ordinary dividends paid

-

-

-

-

-

-

-

-










As at 31 March 2009

2,871

7,007

(49)

154

1,467

493

12,441

24,384










Total comprehensive income for the period

-

-

-

-

-

(26)

1,027

1,001

Charge for employee share based payments

-

-

-

-

-

-

184

184

Own shares

-

-

15

-

-

-

-

15

Ordinary dividends paid

-

-

-

-

-

-

(1,148)

(1,148)










As at 30 September 2009

2,871

7,007

(34)

154

1,467

467

12,504

24,436



  Consolidated cash flow statement

Six months ended 30 September 2009



        



Unaudited

six months

30 Sept 2009

£'000


Unaudited

six months

30 Sept 2008

£'000


Audited

year ended

31 Mar 2009

£'000








Operating profit for the period


1,485


1,159


3,930








Adjustments for:







Depreciation of property, plant and equipment


907


710


1,723

Amortisation of intangible assets


145


111


217

Loss on sale of property, plant and equipment


-


-


287

Effects of foreign exchange


22


16


(117)

Share based payments charge


184


90


203








Operating cash flows before movements in working capital


2,743


2,086


6,243








Decrease/(increase) in stocks


2,562


(4,049)


(7,045)

Increase in debtors


(1,177)


(1,889)


(484)

Decrease in creditors


(450)


(229)


(205)








Cash generated by operations


3,678


(4,081)


(1,491)








Corporation taxes paid


(1,095)


(936)


(1,374)

Interest paid


(14)


(11)


(16)








Net cash from/(used in) operating activities


2,569


(5,028)


(2,881)








Investing activities:







Interest received


10


179


229

Purchases of property, plant and equipment


(659)


(1,477)


(2,313)

Proceeds from sale of property, plant and equipment


-


-


11

Acquisition of intangible fixed assets


(215)


(64)


(362)








Net cash used in investing activities


(864)


(1,362)


(2,435)








Financing activities:







Dividends paid


(1,148)


(1,148)


(1,148)

Repayments of obligations under finance leases


-


(14)


(14)

Acquisition of own shares


-


(49)


(49)








Net cash used in financing activities


(1,148)


(1,211)


(1,211)








Net increase/(decrease) in cash and cash equivalents


557


(7,601)


(6,527)








Cash and cash equivalents at beginning of period


3,710


10,237


10,237








Cash and cash equivalents at end of period


4,267


2,636


3,710

    

 

Notes to the condensed financial statements

Six months ended 30 September 2009



1.    General information


Mulberry Group plc is a company incorporated in the United Kingdom under the Companies Act 1985. The half-year results and condensed consolidated financial statements for the six months ended 30 September 2009 (the interim financial statements) comprise the results for the Company and its subsidiaries (together referred to as the Group) and the Group's interest in associates.


The information for the year ended 31 March 2009 contained in these interim financial statements do not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for the year ended 31 March 2009 has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985.

    

The interim financial statements for the six months ended 30 September 2009, have not been reviewed or audited.


2.    Significant accounting policies


The accounting policies and methods of computation followed in the interim financial statements are consistent with those as published in the Group's Annual Report and Financial Statements for the year ended 31 March 2009, except for the adoption of IAS 1 (revised) 'Presentation of Financial Statements'.  This has resulted in a consolidated statement of changes in equity being presented as a primary statement.  The Annual Report and Financial Statements are available from the Group's website (www.mulberrygroupplc.com) or from the Company Secretary at the Company's registered office, The Rookery, Chilcompton, BathEngland, BA3 4EH.


3.    Going concern


After making enquiries, the Directors have a reasonable expectation that the Company will have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half year results.


4.    Exceptional USA transaction costs


During October 2009, the transaction to assume operational control of the two New York shopand the distribution rights to the North American market previously held by our joint venture partner was completed.  Given the nature and amount of the transaction fees associated with this restructuring, they have been disclosed separately on the face of the Income Statement. 


5.    Taxation


The tax charge is calculated by applying the forecast full year effective tax rate to the interim profit.


6.    Earnings per share and share issue


Basic earnings per ordinary share has been calculated by dividing the profit for the period by 57,419,505 (30 September 2008: 57,419,505, 31 March 2009: 57,419,505) ordinary shares, being the weighted average number of ordinary shares in issue during the period.


Diluted earnings per share has been calculated by dividing the profit for the period by 57,435,027 (30 September 2008: 58,545,838, 31 March 200957,438,950) potential ordinary shares. These shares take into account the exercise of dilutive unexercised options.


On 8 October 2009, 1,450,000 5p ordinary shares were issued at par. These shares were issued to the Mulberry Group plc Employee Share Trust for share awards.


This information is provided by RNS
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