Interim Results

Retail Stores PLC 29 March 2005 FOR IMMEDIATE RELEASE 29th March 2005 RETAIL STORES PLC INTERIM RESULTS FOR SIX MONTHS TO 31st DECEMBER 2004 HIGHLIGHTS â€¢ Christmas trading improved by 14% - in contrast to industry trends â€¢ Sales advance to Â£23.7m over six months to 31st December, up 12% over comparable period last year â€¢ Sales momentum continued into the New Year with turnover in February and March 2005 showing a healthy increase over the previous year â€¢ Improved performance being led by: Ladies Accessories, Jewellery, Ladies and Menswear, while re-vamped Home departments proving popular and selling well â€¢ Creation of fully dedicated design studio to support planned expansion of Liberty branded goods â€¢ Aim to eliminate Â£50m of borrowings through property sales â€¢ Operating results, before interest and tax, improved to a loss of Â£550,000 against a loss of Â£754,000 in six months to December 2003 â€¢ Name to be changed to Liberty Plc â€¢ 'Considerable progress is being made at Liberty, and the signs are encouraging. It is pleasing to see that Liberty continues to deliver sales growth as we re-establish the store as a luxury goods emporium. Early indications are that this growth will continue for the remainder of the second half, and I am confident of reporting a healthy uplift in sales at the year end,' Richard Balfour-Lynn, Chairman. Contact: Retail Stores Plc Tel: 020 7734 1234 Iain Renwick, Chief Executive Fraser Allan, Finance Director Baron Phillips Associates Tel: 020 7920 3161 Baron Phillips CHAIRMAN'S STATEMENT for the six months ended 31st December 2004 Our performance over the six months to 31st December 2004 has been encouraging. Sales advanced 12% over the comparable period last year to Â£23.7m, reflecting the management team's efforts to transform Liberty, once more, into a destination shopping location. The level of activity in the store began to pick up during September and October, as our new concepts unveiled in fashion accessories and four new home departments were well received by our customers. Store sales during these two months were particularly strong, recording a 22% uplift over the previous year. Our investment programmes in people, marketing and new concepts continued during the period, although they did incur upfront costs. This meant that our stronger sales did not fully translate into greater bottom line profitability. There was improvement at the operating level, before interest and taxation, where we reduced the loss from Â£754,000 for the same period a year ago, to a loss of Â£550,000 this time. However at the pre-tax level, losses increased from Â£2.0m to Â£2.3m as the impact of increased interest charges was felt. Losses per share were 11.8p against 11.1p last time. We propose to remove the burden of interest charges on the Company by repaying our external borrowings, which currently amount to approximately Â£50m. We aim to achieve this through the sale of our office building, Lasenby House, and by the sale and leaseback of Regent House. I can report there has been strong interest among investors for these two prime properties in the heart of London's West End . It is pleasing to note that, unlike a great majority of retailers, Liberty enjoyed an excellent run up to Christmas. Turnover in the store picked up dramatically in December, with sales in the 24 days up to Christmas advancing by 14% over December 2003. This momentum continued through the post Christmas Sales and into the New Year. Since the end of the Winter Sale, Liberty has maintained its attractiveness to shoppers as turnover during February and March showed very healthy increases over the previous year. Liberty's overall improved performance is being led by a number of key areas within the store: Ladies Accessories, Jewellery, Ladies and Menswear, while the re-vamped Home departments are proving extremely popular and are selling well. As I outlined at the June year end our strategy to develop the Liberty business, under the leadership of Iain Renwick, Chief Executive, and Fraser Allan, Finance Director, is through the expansion of Liberty branded goods. Currently only 10% of sales are Liberty branded goods and our aim over the next 5 years is to increase this to 25%. At the heart of our planned expansion of Liberty branded goods is the establishment, for the first time, of a fully dedicated design studio headed by Tamara Salman who joined Liberty in September 2004 as Director of Design. We anticipate the first fruits of the studio's work will be seen in the store this coming Autumn with the launch of a range of ladies fashion accessories, travel bags and stationery. We are also taking the opportunity to change the name of the Company from Retail Stores Plc to Liberty Plc, reflecting the trading name of the business. A shareholders' meeting will be held in April to consider this change, but it has no affect on shareholders' interests in the Company. Considerable progress is being made at Liberty, and the signs are encouraging. It is pleasing to see that Liberty continues to deliver sales growth, as we re-establish the store as a luxury goods emporium. Early indications are that this growth will continue for the remainder of the second half and I am confident of reporting a healthy uplift in sales at the year end. Richard Balfour-Lynn Executive Chairman 29th March 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT for the six months ended 31st December 2004 6 months 6 months Year ended ended ended 31st December 31st December 30th June 2004 2003 2004 Notes Â£'000 Â£'000 Â£'000 Turnover 2 23,695 21,152 39,527 Cost of sales (13,027) (11,626) (22,193) ----------------------------------------------------------------------------- Gross profit 10,668 9,526 17,334 ----------------------------------------------------------------------------- Selling and distribution costs (including exceptional (11,575) (10,663) (21,354) operating charges) Administrative expenses (1,362) (1,425) (2,919) Other operating income 1,719 1,808 3,353 ----------------------------------------------------------------------------- Operating loss on ordinary activities before interest and taxation (550) (754) (3,586) ----------------------------------------------------------------------------- Operating loss before exceptional operating charges (550) (754) (3,219) Exceptional operating charges 3 - - (367) ----------------------------------------------------------------------------- Operating loss on ordinary activities before interest and taxation 2 (550) (754) (3,586) ----------------------------------------------------------------------------- Net interest payable and similar charges (1,751) (1,215) (2,606) ----------------------------------------------------------------------------- Loss on ordinary activities before taxation (2,301) (1,969) (6,192) Taxation on loss on ordinary activities (217) (332) (682) ----------------------------------------------------------------------------- Loss on ordinary activities after taxation (2,518) (2,301) (6,874) Equity minority interests (104) (173) (360) Non-equity minority interests (27) (27) (55) ----------------------------------------------------------------------------- Loss attributable to ordinary shareholders (2,649) (2,501) (7,289) Undeclared non-equity preference dividends 4 (11) (11) (23) ----------------------------------------------------------------------------- Retained loss for the period 7 (2,660) (2,512) (7,312) ----------------------------------------------------------------------------- Basic and diluted loss per share 5 (11.8p) (11.1p) (32.3p) ----------------------------------------------------------------------------- All operations are continuing. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the six months ended 31st December 2004 6 months 6 months Year ended ended ended 31st December 31st December 30th June 2004 2003 2004 Â£'000 Â£'000 Â£'000 Loss for the period (2,649) (2,501) (7,289) Unrealised surplus on revaluation of property 4,154 - 3,464 Currency translation differences on foreign currency net investments (29) 71 5 ----------------------------------------------------------------------------- Total recognised gains and losses for the period 1,476 (2,430) (3,820) ----------------------------------------------------------------------------- All recognised gains and losses are attributable to equity shareholders' interests. NOTE OF CONSOLIDATED STATEMENT OF HISTORICAL COST PROFITS AND LOSSES for the six months ended 31st December 2004 6 months 6 months Year ended ended ended 31st December 31st December 30th June 2004 2003 2004 Â£'000 Â£'000 Â£'000 Reported loss on ordinary activities before taxation (2,301) (1,969) (6,192) Difference between historical cost of depreciation charge and depreciation charge based on revalued amounts 2 7 14 ----------------------------------------------------------------------------- Historical cost loss on ordinary activities before taxation (2,299) (1,962) (6,178) ----------------------------------------------------------------------------- Historical cost loss retained after taxation, minority interests and dividends (2,658) (2,505) (7,298) ----------------------------------------------------------------------------- RECONCILIATIONS OF MOVEMENTS IN SHAREHOLDERS' FUNDS for the six months ended 31st December 2004 6 months 6 months Year ended ended ended 31st December 31st December 30th June 2004 2003 2004 Â£'000 Â£'000 Â£'000 Opening shareholders' funds 44,879 48,699 48,699 Loss for the financial period (2,649) (2,501) (7,289) Undeclared non-equity preference dividends (11) (11) (23) Net revaluation surplus on fixed assets 4,154 - 3,464 Currency translation differences on foreign currency net investments (29) 71 5 Unpaid non-equity preference dividends 11 11 23 ----------------------------------------------------------------------------- Closing shareholders' funds 46,355 46,269 44,879 ----------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEET at 31st December 2004 31st December 1st December 30th June 2004 2003 2004 Notes Â£'000 Â£'000 Â£'000 ---------------------------------------------------------------------------------- Fixed assets Intangible asset 18,200 18,200 18,200 Tangible assets 6 84,794 78,304 81,103 ---------------------------------------------------------------------------------- 102,994 96,504 99,303 ---------------------------------------------------------------------------------- Current assets Stocks 7,839 5,820 6,343 Debtors: amounts falling due after more than one year 745 1,007 5,869 amounts falling due within one year 6,107 6,473 878 Cash 5,887 4,901 4,490 ---------------------------------------------------------------------------------- 20,578 18,201 17,580 Creditors: amounts falling due within one year (15,636) (15,180) (14,534) ---------------------------------------------------------------------------------- Net current assets 4,942 3,021 3,046 ---------------------------------------------------------------------------------- Total assets less current liabilities 107,936 99,525 102,349 Creditors: amounts falling due after more than one year (59,291) (50,933) (55,009) ---------------------------------------------------------------------------------- Net assets 48,645 48,592 47,340 ---------------------------------------------------------------------------------- Capital and reserves Called up share capital 6,036 6,036 6,036 Merger reserve 7 61,503 61,503 61,503 Revaluation reserve 7 16,489 8,880 12,337 Profit and loss account 7 (37,673) (30,150) (34,997) ---------------------------------------------------------------------------------- Total shareholders' funds 46,355 46,269 44,879 Analysed as: Equity shareholders' funds 45,867 45,804 44,402 Non-equity shareholders' funds 488 465 477 ---------------------------------------------------------------------------------- Equity minority interests 1,712 1,745 1,883 Non-equity minority interests 578 578 578 ---------------------------------------------------------------------------------- 48,645 48,592 47,340 ---------------------------------------------------------------------------------- CONSOLIDATED CASH FLOW STATEMENT for the six months ended 31st December 2004 6 months 6 months Year ended ended ended 31st December 31st December 30th June Notes 2004 2003 2004 ----------------------------------------------------------------------------- Â£'000 Â£'000 Â£'000 Net cash inflow from operating activities 8 391 2,856 520 Returns on investments and servicing of finance 9 (1,763) (1,359) (2,640) Tax paid (265) (526) (766) Capital expenditure (921) (683) (1,148) ----------------------------------------------------------------------------- Net cash (outflow)/inflow before financing and use of liquid resources (2,558) 288 (4,034) Management of liquid resources (1,500) (2,200) (500) Financing 10 4,000 - 4,000 ----------------------------------------------------------------------------- Decrease in cash during the period 11 (58) (1,912) (534) ----------------------------------------------------------------------------- RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT for the six months ended 31st December 2004 6 months 6 months Year ended ended ended 31st December 31st December 30th June Notes 2004 2003 2004 ------------------------------------------------------------------------------------- Decrease in cash during the period 11 (58) (1,912) (534) Increase in liquid resources 11 1,500 2,200 500 Increase in loans during the period (4,000) - (4,000) ------------------------------------------------------------------------------------- (Decrease)/increase in net debt during the period (2,558) 288 (4,034) Foreign currency translation 11 (45) 100 11 ------------------------------------------------------------------------------------- Movement in net debt during the period (2,603) 388 (4,023) Opening net debt 11 (47,510) (43,487) (43,487) ------------------------------------------------------------------------------------- Closing net debt 11 (50,113) (43,099) (47,510) ------------------------------------------------------------------------------------- NOTES TO THE ACCOUNTS 1. ACCOUNTING POLICIES The interim accounts of the Group for the six months ended 31st December 2004 incorporate the results of the Company, Retail Stores Plc, and its subsidiary undertakings for the six months 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 30th June 2004, consistently applied in all material respects. 2. DIVISIONAL ANALYSIS Turnover represents the amounts charged to third party customers for goods and services, less returns, and excluding value added tax. Sales by concession departments are included in turnover on a commission only basis. 6 months 6 months Year ended ended ended 31st December 31st December 30th June Turnover 2004 2003 2004 Â£'000 Â£'000 Â£'000 By class of business: Retail 17,285 15,270 27,139 Wholesale 6,410 5,882 12,388 ------------------------------------------------------------------------------ 23,695 21,152 39,527 ------------------------------------------------------------------------------ By geographical origin: United Kingdom 21,517 18,753 33,940 Japan 2,178 2,399 5,587 ------------------------------------------------------------------------------ 23,695 21,152 39,527 ------------------------------------------------------------------------------ By geographical destination: United Kingdom 17,948 16,082 28,571 Japan 2,193 2,401 5,585 Other 3,554 2,669 5,371 ------------------------------------------------------------------------------ 23,695 21,152 39,527 ------------------------------------------------------------------------------ By category: Gross turnover 26,674 24,409 45,213 Less concession departments turnover net of commission (2,979) (3,257) (5,686) ------------------------------------------------------------------------------ Net turnover 23,695 21,152 39,527 ------------------------------------------------------------------------------ 6 months 6 months Year Operating loss on ended ended ended ordinary activities 31st December 31st December 30th June before interest and taxation 2004 2003 2004 Â£'000 Â£'000 Â£'000 By class of business: Retail (1,902) (1,713) (5,651) Wholesale 1,352 959 2,065 ------------------------------------------------------------------------------ (550) (754) (3,586) ------------------------------------------------------------------------------ By geographical origin: United Kingdom (920) (1,308) (4,774) Japan 370 554 1,188 ------------------------------------------------------------------------------ (550) (754) (3,586) ------------------------------------------------------------------------------ The segmental analysis of operations reflects the structure of the Group. Retail includes the UK retail operations at Regent Street and Heathrow. Wholesale includes the results of the UK and Japanese fabric businesses. The Retail loss on ordinary activities before interest and taxation includes net rental income from properties and is after deducting exceptional operating charges. 3. EXCEPTIONAL OPERATING CHARGES During the year ended 30th June 2004 the Group completed a major restructuring of its management and business operations. The statutory accounts for that year included exceptional operating charges relating to redundancy, recruitment and closure costs of Â£367,000. These costs are not expected to re-occur. 4. DIVIDENDS 6 months 6 months Year ended ended ended 31st December 31st December 30th June 2004 2003 2004 Â£'000 Â£'000 Â£'000 Undeclared non-equity preference dividends 11 11 23 ------------------------------------------------------------------------------ Due to a deficiency of distributable reserves, the preference shares are currently in arrears of dividend of 41/2 years. Payment of Â£103,950 will be made when this deficiency has been made good from future profits. 5. LOSS PER SHARE The basic and diluted loss per share figures are calculated by dividing the loss after taxation and minority interests by the weighted average number of ordinary shares in issue during the period and in the comparative periods of 22,602,808. 6 months 6 months Year ended ended ended 31st December 31st December 30th June 2004 2003 2004 Â£'000 Â£'000 Â£'000 Retained loss for the period Loss for the financial period (2,660) (2,512) (7,312) Exceptional operating charges - - 367 ------------------------------------------------------------------------------ Loss for the financial period before exceptional operating charges (2,660) (2,512) (6,945) ------------------------------------------------------------------------------ Basic and diluted loss per share pence pence pence Loss for the financial period (11.8p) (11.1p) (32.3p) Exceptional operating charges - - 1.6p ------------------------------------------------------------------------------ Loss for the financial period before exceptional operating charges (11.8p) (11.1p) (30.7p) ------------------------------------------------------------------------------ As the exercise price of share options is equal to the average share price for the period there is no difference between the basic loss per share and the diluted loss per share. 6. TANGIBLE FIXED ASSETS Short Fixtures & Freehold leasehold equipment Total Â£'000 Â£'000 Â£'000 Â£'000 Cost or valuation At 1st July 2004 35,550 42,623 7,597 85,770 Additions 15 - 885 900 Revaluation 941 2,513 - 3,454 ------------------------------------------------------------------------------ At 31st December 2004 36,506 45,136 8,482 90,124 ------------------------------------------------------------------------------ Depreciation At 1st July 2004 - (125) (4,542) (4,667) Charge for the period (356) (433) (574) (1,363) Revaluation 356 344 - 700 ------------------------------------------------------------------------------ At 31st December 2004 - (214) (5,116) (5,330) ------------------------------------------------------------------------------ Net book value at 31st December 2004 36,506 44,922 3,366 84,794 ------------------------------------------------------------------------------ Net book value at 31st December 2003 36,409 38,884 3,011 78,304 ------------------------------------------------------------------------------ Net book value at 30th June 2004 35,550 42,498 3,055 81,103 ------------------------------------------------------------------------------ During the year ended 30th June 2004, long leasehold property interests of Â£40m and accumulated depreciation of Â£0.6m were reclassified to short leasehold to reflect the Group's accounting policy. The comparatives for 31st December 2003 have been restated accordingly. 7. MOVEMENT ON RESERVES Profit Merger Revaluation and loss reserve reserve account Â£'000 Â£'000 Â£'000 Group At 1st July 2004 61,503 12,337 (34,997) Loss retained for the period - - (2,660) Surplus arising on revaluation of properties - 4,154 - Transfer of depreciation on revaluation of fixed assets - (2) 2 Currency translation differences on foreign currency net investments - - (29) Unpaid non-equity preference dividends - - 11 ------------------------------------------------------------------------------ At 31st December 2004 61,503 16,489 (37,673) ------------------------------------------------------------------------------ All reserves of the Group are attributable to equity shareholders' interests. 8. RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW FROM OPERATING ACTIVITIES 6 months 6 months Year ended ended ended 31st December 31st December 30th June 2004 2003 2004 Â£'000 Â£'000 Â£'000 Operating loss (550) (754) (3,586) Depreciation 1,363 1,187 2,317 Increase in stock (1,503) (259) (804) (Increase)/decrease in debtors (95) (391) 281 Increase in creditors 1,176 3,073 2,312 ------------------------------------------------------------------------------ Net cash inflow from operating activities 391 2,856 520 ------------------------------------------------------------------------------ 9. RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 6 months 6 months Year ended ended ended 31st December 31st December 30th June 2004 2003 2004 Â£'000 Â£'000 Â£'000 Equity dividend paid to minorities (247) (236) (224) Non-equity dividend paid to minorities (27) - (82) Interest paid (1,525) (1,163) (2,408) Interest received 36 40 74 ------------------------------------------------------------------------------ Returns on investments and servicing of finance (1,763) (1,359) (2,640) ------------------------------------------------------------------------------ 10. FINANCING 6 months 6 months Year ended ended ended 31st December 31st December 30th June 2004 2003 2004 Â£'000 Â£'000 Â£'000 Loans drawn down 4,000 - 4,000 ------------------------------------------------------------------------------ Financing 4,000 - 4,000 ------------------------------------------------------------------------------ 11. ANALYSIS OF NET DEBT Movement Foreign during currency 30th June 31st December period translation 2004 2004 Â£'000 Â£'000 Â£'000 Â£'000 Available cash 3,887 (58) (45) 3,990 Short term investments 2,000 1,500 - 500 ------------------------------------------------------------------------------ Cash at bank and in hand 5,887 1,442 (45) 4,490 Ultimate holding company loan due after more than one year (6,000) (4,000) - (2,000) Bank loan due after more than one year (50,000) - - (50,000) ------------------------------------------------------------------------------ Net debt (50,113) (2,558) (45) (47,510) ------------------------------------------------------------------------------ 12. FINANCIAL INFORMATION The financial information set out in these interim accounts of the Group for the six months ended 31st December 2004 includes information for the year ended 30th June 2004. This information does not constitute the Company's statutory accounts for the year ended 30th June 2004 but is derived from those accounts. Statutory accounts for the year ended 30th June 2004 have been delivered to the Registrar of Companies. The auditors have reported on those accounts; their report was unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. 13. ACCOUNTS AND INTERIM ANNOUNCEMENT A copy of the above document has been submitted to the UK Listing Authority, and will be available for inspection at the UK Listing Authority's Document Viewing Facility, which is situated at The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS, telephone number 020 7676 1000. The interim accounts of the Company are expected to be sent to shareholders at the end of March 2005. The audited accounts of Retail Stores Plc for the year ended 30th June 2004 and further copies of these interim accounts are 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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