Final Results

Liberty PLC 21 March 2007 FOR IMMEDIATE RELEASE 21st March 2007 LIBERTY PLC PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE EIGHTEEN MONTHS ENDED 31ST DECEMBER 2006 HIGHLIGHTS LIBERTY PLC • Group sales ahead 3.5% for the year to December 2006 at approximately £44m, despite 20% less trading area following move out of Regent Street space. • Flagship store sales up 6.4% for the year to December 2006 at £31.6m. • Strong performance from Menswear up 14% with positive increases in Ladieswear and Accessories on less space. • Liberty of London branded luxury goods sales continuing to advance. • Progression of international launch of Liberty of London brand - discussions regarding a Japanese distribution agreement are progressing with a view to launching the range in Autumn 2008. • Earnings before tax, excluding property profits and exceptional income, shows strong improvement. This year shows a loss of £2.2m for the year, against a loss of £4.4m for the year to December 2005. 'We believe we are in the process of creating the team that will establish Liberty as a global luxury brand and a profitable business. The team is working together to produce the right designs and products in an environment that is attractive to our increasingly expanding and loyal customer base. With that in mind, the Board of Liberty views the future with cautious optimism.' Richard Balfour-Lynn, Chairman Liberty Plc 21st March 2007 LIBERTY PLC CHAIRMAN'S STATEMENT Liberty, the iconic London emporium, continued its upward progress that I reported in September 2006 with strong sales growth in the second half of the calendar year as the business shrugged off the depression seen in other parts of the retail sector. It is worth re-stating that this continued improvement has been achieved against a background of 20% less sales space at Liberty, following the closure of the Regent Street frontage in March 2006, and a generally tough retailing climate. Before I comment on business performance in more detail I thought I would mention the fact that during 2006 the Group changed its year end from 30th June to 31st December. For ease of understanding the Group's underlying performance I have referred to the proforma unaudited accounts for the 12 months ended 31st December 2005 and 31st December 2006 in this statement. Virtually all aspects of the business performed well, with overall flagship store sales at £47.9m for the 18 month period to 31st December 2006. Over the 12 months to 31st December 2006 sales were £31.6m, up 6.4% from £29.7m in the previous year to December 31st 2005. The Liberty group comprises three operating businesses - Retail, Fabric and Liberty of London (our luxury branded goods division). Across the group, EBITDA before exceptionals and brand investment for the 18 months ended 31st December 2006 was £1.5m. For the year to 31st December 2006 EBITDA before exceptionals and brand expenditure was £1.4m compared to a negative £0.6m for the year to December 2005; an improvement of some £2.0m. Sales across the business totalled £66.4m for the 18 months ended 31st December 2006. Comparative sales for the year to 31st December 2006 were £44.0m,up from £42.5m in the previous 12 month period. Alongside this solid improvement in trading results has been a strong rental growth combined with further yield compression in the West End of London where Liberty is based. This has resulted in the valuation of our freehold property in Great Marlborough Street (the Tudor Building) increasing from £26m at 30th June 2005 to £35m at 31st December 2006. This extra value underpins the further growth being achieved across the business. Pre-tax losses for the 18 month period ended 31st December 2006 before exceptional items and brand expenditure, showed a loss of £0.9m. Pre-tax results before exceptional items and brand expenditure for the year ended 31st December 2006 were greatly improved at a near break-even position, against a loss of £3.2m for the 2005 calendar year. Within the flagship store, ladieswear and accessories continued to improve while menswear produced a dramatic 14% sales increase over the 12 month period, as the impact of our new merchandising and buying regimes was felt. I am also delighted to report that our luxury brand, Liberty of London, continues to make a tremendous impact among our customers. Sales of Liberty of London product, through the retail business relocated to our central atrium, grew by nearly 40% to £1.3m for the year to December 2006, as our leather goods ranges continued to find favour with a highly discerning retail public. One of this year's 'must have' handbags was our Carriage Bag with a £695 price tag, and this flew out of the store in impressive style. There is little doubt that our move into the luxury branded goods market has been a great success and under the guidance and design flair of Creative Director Tamara Salman, the Liberty of London label is going from strength to strength. This area of our business was reinforced in August 2006 with the appointment of James Crespo, recruited from Burberry Prorsum, as Commercial Director, who is looking to expand the label outside our flagship store. Reflecting the importance of Liberty of London to our business, we re-opened the new look central atrium in the flagship store in February 2007 devoted entirely to our luxury label. Significantly this re-fit of the central atrium has been designed, and branded, in a way which enables it to be easily replicated elsewhere. This could take the form of either a 'store within a store' concept, or a stand-alone store devoted entirely to the Liberty of London range, either elsewhere in London or abroad. Discussions are ongoing regarding a distribution agreement in Japan, with these likely to be concluded by the second half of the year. This will allow us to take full advantage of the Liberty brand awareness among local consumers. Our fabric business has been particularly successful with sales, including our Japanese joint venture, at £12.0m for the year to end December 2006 against £12.1m for the previous 12 month period. This was an extremely creditable performance as Sterling strengthened by 12% against the Yen during the year under review. This translated into EBITDA for our fabrics business of £2.0m for the 12 months to 31st December 2006, against £1.8m for the comparative 2005 period. Over the 18 months to December 2006, sales totalled £17.7m, which generated EBITDA of £2.6m. The Japanese joint venture expires this year and we have been actively organising the next phase of our business there. In the future our global fabric business will be run from London and as part of this re-organisation, I am delighted to report that we have recruited Kirstie Carey to head up the division's sales and marketing activities. She is looking to open new markets for our fabrics business, particularly for our high quality shirting fabrics, as well as looking to diversify into new base cloths and special designs. Throughout the business we have been looking to strengthen our management and over the past year there have been a number of key appointments aimed at creating an integrated team that will mastermind and oversee Liberty's continued business programme. It is particularly pleasing that we have also been able to promote a number of established executives from within the business to key management positions during the past year. This includes Mandy Brooks who joined Liberty two and half years ago from LK Bennett where she was Retail Director and before that joint managing director of Whistles. Mandy is being appointed to the Liberty Retail board where she and Jane Davies (previously at Selfridges) who has been our Buying and Merchandising Director for over three years, will focus on the continuing revival of the flagship store. At the same time Julia Reardon, who also joined us from Selfridges, has been appointed Head of Retail Operations, and will concentrate on further development of our customer initiatives. Elsewhere I am pleased to report the appointment of Louise Gorringe as Head of Liberty Retail Marketing with overall responsibility for marketing and public relations initiatives for the flagship store, with particular emphasis on customer events and the increasingly successful Liberty Loyalty Card. Louise joined the group from our loyalty card partner, Ikano. Also Paul Harris, who joined the group in July 2006 from Selfridges and Kurt Geiger, has been appointed Group Financial Controller to continue the improvement in our financial management and performance reporting. I would also like to thank Joe Shashou for his support over the last few years as he steps down from his role as non-executive director. He is replaced by Jagtar Singh who will work closely with the executive team at Liberty. Overall we are delighted with the progress being made at Liberty and particularly as one of our key objectives during 2006 was to establish a point of difference within our customers' minds and to make the flagship store a truly retail destination. The extent to which we have achieved that objective can be seen from our sales in the run-up to Christmas when many retailers struggled to attract their normal level of customers. In the four week trading period running up to Christmas in 2006, sales rose by almost 6% and we recorded our highest ever normal day's trading, where over two consecutive days, sales totalled almost £1m. With our UK operations improving and with an enlarged and capable management team now in place, we have been concentrating on expanding the Liberty of London brand. This involves taking the business forward through an international expansion of the brand and by exploring new ways in which our products can be profitably sold outside the UK. We look forward to reporting on this further expansion in our June 2007 interim results. Liberty has been through a period of major change and re-structuring as we aim to transform the business into a vibrant and dynamic retailer capable of competing globally as well as nationally. We have made tremendous progress in achieving our corporate objectives and, while there is still much work to do, we could not have delivered that progress without the support, commitment and energy of Liberty's staff and management. We believe we are in the process of creating the team that will establish Liberty as a global luxury brand and a profitable business. The team is working together to produce the right designs and products in an environment that is attractive to our increasingly expanding and loyal customer base. With that in mind, the Board of Liberty views the future with cautious optimism. Richard Balfour-Lynn Chairman 21st March 2007 LIBERTY PLC OPERATING REVIEW During the eighteen months ended 31st December 2006, Liberty Plc has continued its transformation into a dynamic retail destination, underpinned by a strong and expanding retail brand. The historical trading and balance sheet performance of Liberty Plc is summarised below:- Year ended Year ended Eighteen months 31st December 31st December ended 2006 2005 31st December proforma proforma 2006 unaudited unaudited Financial performance £'000 £'000 £'000 Turnover 66,407 44,012 42,460 Depreciation (2,234) (1,491) (1,453) Brand expenditure (2,843) (1,971) (1,182) Operating loss (1,897) (2,047) 875 Profit on disposal of properties - - 2,432 Operating EBITDA before profit on sale of 1,461 1,415 (642) properties, exceptionals and brand expenditure Total recognised gains and losses 2,705 8,668 2,465 ---------------------------- ----------- ---------- ----------- 31st December 2005 31st December proforma 30th June 2006 unaudited 2005 Balance sheet composition £'000 £'000 £'000 Intangible asset - brand 18,200 18,200 18,200 Tangible assets - Property, plant and equipment 36,587 28,609 27,909 (Net debt)/Cash (1,191) 3,892 3,630 Net assets after pension deficit 51,141 42,523 42,345 Equity shareholders' funds per share 215p 177p 173p ---------------------------- ----------- ---------- ----------- CONSOLIDATED PROFIT AND LOSS ACCOUNT for the eighteen months ended 31st December 2006 Year ended Year Eighteen months 31st December ended ended 2006 30th June 31st December proforma 2005 2006 unaudited (Restated) Notes £'000 £'000 £'000 ------------------------ ------ ------------ ---------- --------- Turnover 2 66,407 44,012 43,760 Cost of sales (36,197) (24,000) (24,754) ------------------------ ------ ------------ ---------- --------- Gross profit 30,210 20,012 19,006 Selling and distribution (30,932) (19,952) (21,154) costs Administrative expenses (3,804) (2,680) (2,576) Exceptional operating income 3 1,720 - - Other operating income 909 573 2,710 ------------------------ ------ ------------ ---------- --------- Operating loss (1,897) (2,047) (2,014) Profit on disposal of investment and operational properties - - 2,432 ------------------------ ------ ------------ ---------- --------- (Loss)/Profit on ordinary activities before interest (1,897) (2,047) 418 Net interest (payable)/receivable and similar charges 7 (147) (2,925) Other finance costs (159) (12) (114) ------------------------ ------ ------------ ---------- --------- Loss on ordinary activities before taxation (2,049) (2,206) (2,621) Taxation on loss on ordinary activities 4 (669) (437) (651) ------------------------ ------ ------------ ---------- --------- Loss on ordinary activities after taxation (2,718) (2,643) (3,272) Equity minority interests (411) (313) (245) Non-equity minority interests (82) (55) (55) ------------------------ ------ ------------ ---------- --------- Loss attributable to ordinary shareholders (3,211) (3,011) (3,572) Undeclared non-equity preference dividends (35) (23) (23) ------------------------ ------ ------------ ---------- --------- Retained loss for the period (3,246) (3,034) (3,595) ------------------------ ------ ------------ ---------- --------- Basic loss per share 5 (14.2p) (13.3p) (15.8p) Diluted loss per share (14.2p) (13.3p) (14.8p) ------------------------ ------ ------------ ---------- --------- All operations are continuing. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the eighteen months ended 31st December 2006 Year ended Year Eighteen months 31st December ended ended 2006 30th June 31st December proforma 2005 2006 unaudited (Restated) £'000 £'000 £'000 ---------------------------- ------------ ---------- --------- Loss for the period (3,246) (3,034) (3,595) Revaluation surplus on fixed assets credited to revaluation reserve 8,072 7,183 5,513 Actuarial gain/(loss) on pension scheme 4,977 4,714 (1,205) Currency translation differences on foreign currency net investments (235) (195) (11) ---------------------------- ------------ ---------- --------- Total recognised gains and losses for the period 9,568 8,668 702 Prior period adjustment - adoption of FRS17 (6,863) - - ---------------------------- ------------ ---------- --------- Total recognised gains and losses since last Annual Report 2,705 8,668 702 ---------------------------- ------------ ---------- --------- All recognised gains and losses are attributable to equity shareholders' interests. NOTE OF CONSOLIDATED STATEMENT OF HISTORICAL COST PROFITS AND LOSSES for the eighteen months ended 31st December 2006 Year ended Year Eighteen months 31st December ended ended 2006 30th June 31st December proforma 2005 2006 unaudited (Restated) £'000 £'000 £'000 ---------------------------- ------------ ---------- --------- Reported loss on ordinary activities before taxation (2,049) (2,206) (2,621) ---------------------------- ------------ ---------- --------- Realisation of property revaluation surplus recorded in previous years - - 13,266 Difference between historical cost of depreciation charge and depreciation charge based on revalued amounts. 543 362 56 ---------------------------- ------------ ---------- --------- Historical cost (loss)/profit on ordinary activities before taxation (1,506) (1,844) 10,701 ---------------------------- ------------ ---------- --------- Historical cost (loss)/profit retained after taxation, minority interests and dividends (2,703) (2,672) 9,727 ---------------------------- ------------ ---------- --------- RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS for the eighteen months ended 31st December 2006 Year Eighteen ended Months ended 30th June 31st December 2005 2006 (Restated) £'000 £'000 ---------------------------- ---------------- ------------- Opening shareholders' funds as originally 46,760 44,879 stated Prior year adjustment - adoption of FRS17 (6,863) (5,707) ---------------------------- ---------------- ------------- Opening shareholders' funds as restated 39,897 39,172 Loss for financial period (3,211) (3,572) Undeclared non-equity preference dividends (35) (23) Revaluation surplus on fixed assets credited to revaluation reserve 8,072 5,513 Actuarial gain/(loss) on pension scheme 4,977 (1,205) Currency translation differences on foreign currency net investments (235) (11) Unpaid non-equity preference dividends 35 23 ---------------------------- ---------------- ------------- Closing shareholders' funds 49,500 39,897 ---------------------------- ---------------- ------------- CONSOLIDATED BALANCE SHEET at 31st December 2006 31st December 2005 30th June 31st December proforma 2005 2006 unaudited (Restated) ------------------------- ------ ----------- ----------- --------- Notes £'000 £'000 £'000 Fixed assets Intangible asset 6 18,200 18,200 18,200 Tangible assets 7 36,587 28,609 27,909 ------------------------- ------ ----------- ----------- --------- 54,787 46,809 46,109 ------------------------- ------ ----------- ----------- --------- Current assets Stocks 7,489 6,830 6,653 Debtors (including £251k over 1 5,997 6,984 8,141 year) Cash 1,020 3,892 3,630 ------------------------- ------ ----------- ----------- --------- 14,506 17,706 18,424 Creditors: amounts falling due within one 8 (14,908) (13,656) (13,580) year ------ ----------- ----------- --------- ------------------------- Net current assets (402) 4,050 4,844 ------------------------- ------ ----------- ----------- --------- Total assets less current 54,385 50,859 50,953 liabilities Creditors: amounts falling due after more (1,696) (1,746) (1,745) than one year ------ ----------- ----------- --------- ------------------------- Net assets before pension 52,689 49,113 49,208 deficit Pension deficit (1,548) (6,590) (6,863) ------------------------- ------ ----------- ----------- --------- Net assets after pension 51,141 42,523 42,345 deficit ------ ----------- ----------- --------- ------------------------- Capital and reserves Called up share capital 6,036 6,036 6,036 Merger reserve 9 61,503 61,503 61,503 Revaluation reserve 9 12,600 5,418 4,528 Profit and loss account 9 (30,639) (32,151) (32,170) ------------------------- ------ ----------- ----------- --------- Total shareholders' funds 49,500 40,806 39,897 Analysed as: ------------------------- ------ ----------- ----------- --------- Equity shareholders' funds 48,965 40,294 39,397 Non-equity shareholders funds 535 512 500 ------------------------- ------ ----------- ----------- --------- Equity minority interests 1,063 1,139 1,870 Non-equity minority interests 578 578 578 ------------------------- ------ ----------- ----------- --------- 51,141 42,523 42,345 ------------------------- ------ ----------- ----------- --------- Approved by the Board of Directors on 21st March 2007 and signed on its behalf by: Richard Balfour-Lynn Iain Renwick CHAIRMAN CHIEF EXECUTIVE CONSOLIDATED CASH FLOW STATEMENT for the eighteen months ended 31st December 2006 Year ended Eighteen months 31st December Year ended 2006 ended 31st December proforma 30th June 2006 unaudited 2005 Notes £'000 £'000 £'000 ------------------------ ------ ------------ ----------- --------- Net cash (outflow)/inflow from 11 126 (1,890) (9,643) operating activities Returns on investments and servicing (1,173) (362) (3,792) of finance Tax paid (582) (370) (635) Capital expenditure and financial (2,840) (2,287) 65,227 investment ------------------------ ------ ------------ ----------- --------- Net cash (outflow)/inflow before financing and use of liquid (4,469) (4,909) 51,157 resources Management of liquid - 2,940 500 resources Financing - - (52,000) ------------------------ ------ ------------ ----------- --------- Decrease in cash during the (4,469) (1,969) (343) period ------------------------ ------ ------------ ----------- --------- RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT for the eighteen months ended 31st December 2006 Year ended Eighteen months 31st December Year ended 2006 ended 31st December proforma 30th June 2006 unaudited 2005 Notes £'000 £'000 £'000 ------------------------ ------ ------------ ----------- --------- Decrease in cash during the period 12 (4,469) (1,971) (343) (Decrease) in liquid resources 12 - (2,940) (500) Decrease in loans during the period - - 52,000 ------------------------ ------ ------------ ----------- --------- Decrease/(increase) in net debt (4,469) (4,911) 51,157 during the period Translation differences 12 (352) (172) (17) ------------------------ ------ ------------ ----------- --------- Movement in net debt during the period (4,821) (5,083) 51,140 Opening net cash/(debt) 3,630 3,892 (47,510) ------------------------ ------ ------------ ----------- --------- Closing net (debt)/cash 12 (1,191) (1,191) 3,630 ------------------------ ------ ------------ ----------- --------- 1. ACCOUNTING POLICIES Basis of preparation of accounts The accounts have been prepared under the historical cost convention, as modified by the revaluation of investment and operational properties. They have also been prepared in accordance with applicable accounting standards and with the Companies Act 1985, except as noted below under Brands. References to the 'Company' are to Liberty Plc and references to the 'Group' are to the Company and its subsidiaries, or any of them as the context may require. On 7th August 2006, the Company announced its decision to change its accounting reference date from 30th June to 31st December. Each of the Group's three operating divisions report results internally by reference to that period. Accordingly, the change of Accounting Reference Date accords with internal reporting procedures and operational components of the Group, thus aiding management and shareholders in the dissemination of underlying financial information of the Group. These Accounts have therefore been prepared for the eighteen month period from the latest audited accounts that ended on 30th June 2005, through to 31st December 2006. Comparative proforma unaudited information has also been included for the year ended 31st December 2006. The comparative audited information has been derived from the audited accounts of the Group for the year ended 30th June 2005. For comparative purposes a proforma unaudited balance sheet as at 31stDecember 2005 is also shown. These accounts incorporate the results of Liberty Plc and its subsidiary undertakings. The results have been prepared on the basis of the accounting policies adopted in the accounts of the Group for the eighteen month period ended 31st December 2006, consistently applied in all material respects. 2. DIVISIONAL ANALYSIS Year ended Eighteen months 31st December Year ended 2006 ended 31st December proforma 30th June 2006 unaudited 2005 Turnover £'000 £'000 £'000 ------------------------- ------------- ----------- ---------- By class of business: Retail 48,708 32,030 31,016 Fabric 17,654 11,969 12,744 Liberty of London branded product 45 13 - ------------------------- ------------- ----------- ---------- 66,407 44,012 43,760 ------------------------- ------------- ----------- ---------- By geographical origin: United Kingdom 59,382 39,036 38,875 Japan 7,025 4,976 4,885 ------------------------- ------------- ----------- ---------- 66,407 44,012 43,760 ------------------------- ------------- ----------- ---------- By geographical destination: United Kingdom 50,641 33,367 32,273 Japan 7,025 4,976 4,885 Other 8,741 5,669 6,602 ------------------------- ------------- ----------- ---------- 66,407 44,012 43,760 ------------------------- ------------- ----------- ---------- (Loss)/profit on ordinary activities before interest ------------------------- ------------- ----------- ---------- By class of business: Retail (3,012) (2,780) (1,175) Fabric 3,958 2,704 2,775 Liberty of London branded product (2,843) (1,971) (1,182) ------------------------- ------------- ----------- ---------- (1,897) (2,047) 418 ------------------------- ------------- ----------- ---------- By geographical origin: United Kingdom (3,312) (3,124) (502) Japan 1,415 1,077 920 ------------------------- ------------- ----------- ---------- (1,897) (2,047) 418 ------------------------- ------------- ----------- ---------- 2. DIVISIONAL ANALYSIS (continued) 31st December 2005 30th June 31st December proforma 2005 2006 unaudited (Restated) £'000 £'000 £'000 Net assets -------------------------- ----------- ----------- ---------- By class of business: Retail 42,494 35,335 34,607 Fabric 8,647 7,188 7,738 Liberty of London branded product - - - -------------------------- ----------- ----------- ---------- 51,141 42,523 42,345 -------------------------- ----------- ----------- ---------- By geographical origin: United Kingdom 48,973 40,197 38,567 Japan 2,168 2,326 3,778 -------------------------- ----------- ----------- ---------- 51,141 42,523 42,345 -------------------------- ----------- ----------- ---------- The segmental analysis of operations reflects the structure of the Group. Retail includes the UK retail operations at Regent Street and Heathrow but does not include Liberty of London branded product which is detailed separately. Fabric includes the results of the UK and Japanese fabric businesses. Cash balances and bank loans are allocated to Retail as this division utilises the cash balances and buildings against which debt is secured. Concession turnover Sales from concession departments are shown on a commission only basis. Gross turnover of concession departments was as follows: Year ended Eighteen months 31st December Year ended 2006 ended 31st December proforma 30th June 2006 unaudited 2005 £'000 £'000 £'000 Gross turnover of concession departments 11,758 7,589 7,622 ------------------------- ------------ ----------- ---------- 3. EXCEPTIONAL OPERATING INCOME Year ended Eighteen months 31st December Year ended 2006 ended 31st December proforma 30th June 2006 unaudited 2005 £'000 £'000 £'000 Profit arising on sale of minor trademark 1,720 - - ------------------------- ------------ ----------- ---------- During the six months ended 31st December 2005, the Group received a payment of £1,720,000, which related to the sale of a minor trademark. This has been reflected in the profit and loss account for the eighteen months ended 31st December 2006 as an exceptional item because of its size. The proceeds received were used to reduce Group debt. 4. TAXATION ON LOSS ON ORDINARY ACTIVITIES Year ended Eighteen months 31st December Year ended 2006 ended 31st December proforma 30th June 2006 unaudited 2005 £'000 £'000 £'000 UK Tax UK Corporation tax on UK results - - (218) Overseas tax Withholding tax written off (134) (36) (57) Japanese tax on Japanese profits (477) (350) (345) Adjustments in respect of prior years (58) (51) (31) ------------------------ ------------- ------------ --------- (669) (437) (651) ------------------------ ------------- ------------ --------- 5. LOSS PER SHARE The loss per share figures are calculated by dividing the loss after taxation and minority interests for the period by the weighted average number of shares in issue during the period as follows:- Year ended Year Eighteen months 31st December ended ended 2006 30th June 31st December proforma 2005 2006 unaudited (Restated) £'000 £'000 £'000 Loss on ordinary activities after taxation and minority interests (3,211) (3,011) (3,572) ------------------------ ------------- ------------ --------- Number Number Number '000 '000 '000 Weighted average number of ordinary shares in issue during the period 22,603 22,603 22,603 ------------------------ ------------- ------------ --------- Loss per share (14.2p) (13.3p) (15.8p) ------------------------ ------------- ------------ --------- Potential ordinary shares are treated as dilutive when and only when their conversion to ordinary shares would increase loss per share from continuing operations. Therefore as the total result is a loss the basic and diluted losses per share are the same for all periods shown. 6. INTANGIBLE ASSET - BRAND Group and Company ------------------- 31st December 2005 31st December proforma 30th June 2006 unaudited 2005 £'000 £'000 £'000 Net book value 18,200 18,200 18,200 ------------------------ ------------- ------------ --------- The Directors consider that the Group's brand has an indefinite life due to the durability of the underlying business. This has been demonstrated over many years. Accordingly the brand has not been amortised but has instead been subject to an annual impairment review. The most recent impairment review of the carrying value of the brand was undertaken by the Directors at 31st December 2006. This review was based on the underlying business performance of the Liberty brand over the period from January 2007 to December 2011, and assumed compound sales growth rates of 10.6%, a discount rate of 11.0% and a sales growth rate to perpetuity of 2.25%. This confirmed the value of the Liberty brand at more than the book value of £18.2m at which it has been included in the accounts throughout the year. It has therefore been retained at that level in these accounts. 7. TANGIBLE FIXED ASSETS Operational properties Freehold Fixtures & property equipment Total Group £'000 £'000 £'000 ------- Cost or valuation At 1st July 2005 24,608 8,516 33,124 Additions 11 2,829 2,840 Revaluation 7,529 - 7,529 ------------------------ ------------- ------------ --------- At 31st December 2006 32,148 11,345 43,493 ------------------------ ------------- ------------ --------- Depreciation At 1st July 2005 - (5,215) (5,215) Charge for the period (543) (1,691) (2,234) Revaluation 543 - 543 ------------------------ ------------- ------------ --------- At 31st December 2006 - (6,906) (6,906) ------------------------ ------------- ------------ --------- Net book value at 31st December 2006 32,148 4,439 36,587 ------------------------ ------------- ------------ --------- Net book value at 30th June 2005 24,608 3,301 27,909 ------------------------ ------------- ------------ --------- Valuation The Group's property, plant and equipment is all located in the United Kingdom. The Group's Operational property was valued at 31st December 2006 by qualified professional valuers working for the company of DTZ Debenham Tie Leung, Chartered Surveyors, ('DTZ'), acting in the capacity of External Valuers. All such valuers are Chartered Surveyors, being members of the Royal Institution of Chartered Surveyors ('RICS'). The valuation was carried out in accordance with the RICS Appraisal and Valuation Standards 5th Edition ('the Manual') and the property was valued on the basis of Market Value of the Properties. Market Value is defined in the Manual as the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing, where the parties had each acted knowledgeably, prudently and without compulsion. The DTZ valuation is not qualified by any reference to existing or alternative use and implies the value to which a property will derive, having regard to its most valuable use. The valuation includes the land and buildings; the trade fixtures, fittings, furniture, furnishings and equipment; and the market's perception of the trading potential excluding personal goodwill; together with an assumed ability to renew existing licences, consents, certificates and permits. The value excludes consumables and stock in trade. The valuation excludes any goodwill associated with the management by the Company or its subsidiaries. The Tudor Building valued by DTZ at 31st December 2006 totalled £35.0m. Fixtures and equipment are carried at the lower of cost and realisable value in the table above. These assets had a net book value of £4.4m at 31st December 2006. The historic cost of the Group's properties at 31st December 2006 includes capitalised interest of £0.2m (30th June 2005: £0.2m). 8. CREDITORS: amounts falling due within one year 31st December 2005 31st December proforma 30th June 2006 unaudited 2005 £'000 £'000 £'000 Bank overdraft 2,211 - - Trade creditors 7,851 7,711 8,124 Amounts owed to fellow Group undertakings - 211 567 Corporation tax 135 69 48 Other taxes and social security 1,109 1,015 223 Other creditors 981 649 704 Non-equity dividend payable 82 28 28 Accruals and deferred income 2,539 3,973 3,886 ------------------------ ------------- ------------ --------- 14,908 13,656 13,580 ------------------------ ------------- ------------ --------- At the 31st December 2006 the Group held an overdraft facility of £4m with Barclays Bank Plc secured by a first charge on the freehold of the Tudor building. 9. MOVEMENT ON RESERVES Merger Reserve Revaluation Profit Reserve £'000 £'000 and loss account £'000 Group ------- At 1st July 2005 61,503 4,528 (32,170) Loss retained for the period - - (3,246) Actuarial gain through reserves - 4,977 Surplus arising on revaluation of properties - 8,072 - Currency translation differences on foreign currency net investments - - (235) Transfer of depreciation on - - - revaluation of fixed assets Unpaid non-equity preference dividends - - 35 -------------------------- ----------- ----------- ----------- At 31st December 2006 61,503 12,600 (30,639) -------------------------- ----------- ----------- ----------- All reserves of the Group are attributable to equity shareholders' interests. Profit and loss Account Company £'000 --------- At 1st July 2005 6,013 Loss retained for the period (35) Unpaid non-equity preference dividends 35 ----------------------------------- -------------------- At 31st December 2006 6,013 ----------------------------------- -------------------- 10. EQUITY SHAREHOLDERS FUNDS PER SHARE The equity shareholders' funds per share figures of the Group are calculated by dividing the equity shareholders' funds at the period end by the number of ordinary shares in issue at that date. They are calculated as follows:- 31st December 2005 31st December proforma 30th June 2006 unaudited 2005 £'000 £'000 £'000 Total equity shareholders' funds per consolidated balance sheet 48,965 40,294 39,397 Less Preference share capital (385) (385) (385) ------------------------ ------------ ----------- ----------- Ordinary shareholders' funds 48,580 39,909 39,012 ------------------------ ------------ ----------- ----------- '000 '000 '000 Number of ordinary shares in issue at period end 22,603 22,603 22,603 ------------------------ ------------ ----------- ----------- Ordinary shareholders' funds per 215p 177p 173p share ------------ ----------- ----------- ------------------------ 11. RECONCILIATION OF OPERATING LOSS ON ORDINARY ACTIVITIES TO NET CASH INFLOW FROM OPERATING ACTIVITIES Year ended Year Eighteen months 31st December ended ended 2006 30th June 31st December proforma 2005 2006 unaudited (Restated) £'000 £'000 £'000 Operating (loss) / profit on activities (1,897) (2,047) (2,014) Depreciation 2,234 1,491 2,073 Loss on disposal of fixed assets - - 127 Increase in stock (832) (653) (312) Decrease/(increase) in debtors 2,157 999 (1,437) (Decrease)/increase in creditors (1,536) (1,680) (8,080) ------------------------ ------------ ----------- ----------- Net cash (outflow)/inflow from operating activities 126 (1,890) (9,643) ------------------------ ------------ ----------- ----------- 12. ANALYSIS OF NET DEBT Movement Foreign 31st December during currency 30th June 2006 period translation 2005 £'000 £'000 £'000 £'000 Cash and cash equivalents 1,348 (1,930) (352) 3,630 Overdraft (2,539) (2,539) - - ----------------------- ----------- --------- --------- -------- Net (debt) / cash and cash equivalents (1,191) (4,469) (352) 3,630 ----------------------- ----------- --------- --------- -------- 13. FINANCIAL INFORMATION The financial information set out above does not constitute the Company's statutory accounts for the period ended 31st December 2006 or 30th June 2005 but is derived from those accounts. Statutory accounts for the year ended 30th June 2005 have been delivered to the Registrar of Companies, and those for the eighteen month period ended 31st December 2006 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under Section 237 (2) or (3) of the Companies Act 1985. 14. DESPATCH OF ACCOUNTS The audited accounts of the Company are expected to be sent to shareholders during April 2007. Thereafter copies will be 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

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