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Homestyle Group PLC (HME)

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Thursday 28 July, 2005

Homestyle Group PLC

Final Results

Homestyle Group PLC
28 July 2005

                                                                    28 July 2005



                              HOMESTYLE GROUP PLC



        UNAUDITED PRELIMINARY RESULTS FOR THE 52 WEEKS TO 30 APRIL 2005



Homestyle is a multi-site retailer operating across the UK and specialising in
furniture retailing through its Furniture Division (177 Harveys stores) and its
Beds Division (436 outlets across Bensons, Sleepmasters and Bed Shed Brands).



Financial Performance


•   Turnover from continuing businesses up 20% at £453.6 million (2004 -
    53 weeks: £379.5 million)

•   Profit before interest, exceptional items and goodwill amortisation
    of £15.6 million (2004 - 53 weeks: £18.3 million)

•   Exceptional items of £38.8 million (2004: £110.0 million)

•   Loss on ordinary activities before tax of £32.3 million (2004 - 53
    weeks: loss of £107.8 million)

•   Adjusted EPS* of 11.3p (2004: 12.4p)

•   Bed Division continues to perform well

•   Furniture Division stabilised with good medium term potential

•   Trading performance has been severely constrained by re-financing
    issues



Refinancing and benefits

•   Group's primary focus to reduce indebtedness has been achieved in
    June 2005 through a £100 million share placing underwritten by Steinhoff 
    Europe AG

•   HM Customs and Excise claim satisfactorily resolved

•   Strong financial position now gives Homestyle solid foundation to
    achieve long term growth

•   Commercial opportunities in product sourcing and innovation to be
    developed through relationship with Steinhoff



Board Structure

•   David Brock is standing down as Chairman following completion of the
    refinancing

•   Donald Macpherson, Senior Non-Executive Director, to act as Interim
    Chairman - a new independent Non-Executive Chairman to be appointed

•   Ian Topping appointed as Chief Executive

•   Ron Spinney retires as Non-Executive Director and Rian du Plessis
    appointed

•   Markus Jooste and Jan van der Merwe appointed as Steinhoff
    Non-Executive Directors


Commenting on the outlook for the Group, Donald Macpherson, Interim Chairman,
said :


'The recent refinancing has enabled us to keep the Group intact, eliminate debt,
improve our competitiveness, settle our outstanding dispute with HM Customs and
Excise and begin to realise commercial benefits from our strategic partnership
with Steinhoff International Holdings.  The business now has a strong balance
sheet enabling management to focus on the development of our retail operations.
However, as has been recently widely publicised, trading in our home related
markets has been highly competitive and consumer confidence weak.'


*Adjusted for goodwill amortisation and exceptional items


ENQUIRIES:

Ian Topping, Chief Executive                             Andrew Hayes/James Hill

Tim Kowalski, Finance Director
Homestyle Group PLC                                      Hudson Sandler
Tel:  020 7796 4133 on 28 July 2005                      Tel:  020 7796 4133
Tel:  01925 647 200 thereafter


www.homestylegroup.com
www.harveys4furniture.co.uk
www.bensonsforbeds.co.uk
www.bensons4beds.co.uk
www.thebedshed.net



CHAIRMAN'S STATEMENT


Homestyle has undergone significant change and development this year against a
backdrop of an increasingly challenging trading environment.  Whilst management
have implemented a number of initiatives to reinvigorate the Furniture Division
and build on the successful development of the Beds Division, the key focus for
the year was to reduce the Group's level of indebtedness. As a result of the
recent refinancing, the business now has a strong balance sheet enabling
management to focus on the development of our retail operations.



Refinancing and benefits



Reducing debt was a key priority this year. After exploring a number of options
to achieve this, including the possible sale of the Beds Division, the Board
considered the refinancing of the business to be the most attractive option and
shareholders overwhelmingly passed all resolutions associated with this at an
EGM on 17 June 2005.  The refinancing was by way of an open offer and placing of
191 million shares at 55p which raised a net £100 million for the company.  This
has enabled us to keep the Group intact, return the balance sheet to a net asset
position, eliminate debt, settle our outstanding dispute with HM Customs &
Excise and begin to realise commercial benefits from our strategic partnership
with Steinhoff International Holdings, one of the world's leading furniture and
household goods groups. Our dealings with Steinhoff are governed by an 'arms
length' relationship agreement and we are confident that their manufacturing,
sourcing and logistics expertise and capabilities will prove invaluable to our
development over the longer term.



Financials



Turnover on continuing businesses for the 52 weeks to 30 April 2005 increased by
20% to £453.6 million (2004: 53 weeks £379.5 million). Total sales for the prior
year were £588.7 million, which included a full year contribution from Rosebys
(the home textiles business disposed of in May 2004) of £201.5 million. In
comparison total sales from textiles this year was £11.4 million.



Operating profit before exceptional items and goodwill amortisation was £15.6
million (2004: £18.3 million).  The net interest charge before exceptional
charges for the period including pension finance costs was £4.5 million (2004:
£6.6 million).



A number of exceptional items totalling £38.8 million (2004: £110.0 million)
were charged during the year, principally relating to a full repayment of the
outstanding VAT claim and settlement fees to HM Customs & Excise of £19.7
million, exceptional finance charges of £7.9 million (2004 £4.3 million) and a
further £7.6 million (2004: £4.7 million) being a provision for Harveys' onerous
property leases.



The loss before tax after these exceptional items and after goodwill
amortisation was £32.3 million (2004: £107.8 million) with the basic loss per
share at 44.0p (2004: 156.2p). Earnings per share adjusted for exceptional items
and goodwill amortisation were 11.3p (2004: 12.4p). The Board is not proposing
to pay a final dividend.



During the year there was an overall cash inflow of £16.5 million versus a cash
inflow last year of £20.7 million reducing net debt from £85.6m at 1st May 2004
to £70.2 million at 30th April 2005.  Since the year-end there was a net cash
injection of a further £100 million from the refinancing and consequently the
Group is free of bank debt with a committed debt facility of £20.0 million from
Steinhoff Europe AG on a commercial basis.  After adjusting the net liability
balance sheet position of £15.2 million at 30th April 2005 for the net proceeds
from the refinancing of £100 million in June 2005 the Group has proforma net
assets of £89.8 million (2004: May £13.2 million).



Review of continuing businesses



Furniture Division (Harveys)



The Furniture Division trades under the Harveys brand and operates from 177
locations across the UK. Now that the refinancing is complete, we are fully
committed and focussed on driving Harveys' performance by differentiating
further our in-store environment and product offer.



Total sales in the year were £253.5 million (2004: £223.6 million excluding
textile sales), despite a 12% reduction in space, following the transfer of beds
related space to the Beds Division.  Operating profit before interest,
exceptional items, goodwill amortisation and tax was £1.0 million (2004: £2.0
million).



The newly strengthened management team implemented a number of trading
initiatives to improve the performance of the business.  A renewed emphasis on
retail disciplines to enhance the presentation of the offer and improved
in-store marketing have established the foundations for long-term recovery.



However, the financial issues of the Group became a major distraction for
management from February 2005 onwards. This, coupled with a progressively more
challenging trading environment, led to the deferral of some key retail
initiatives to build on the recovery momentum established last year. In
consequence, performance in recent months has been poor.  Positive momentum has
now been quickly re-established following the refinancing.  The key element of
this is a cost effective store refurbishment programme that is being rolled out
across the estate. The refurbished stores will include a more subtle lifestyle
orientated point of sale, expanded room sets - particularly bedroom ranges -
simpler ranging, voiles to soften and better articulate the in-store
environment, as well as promotional 'feature' bays to excite customers and drive
aspirational purchases.  The initial customer response has been positive and we
will be evaluating performance at selected trial stores to refine this new
approach before we re-invigorate the rest of the estate



Whilst we do not underestimate the task facing us, we believe we are now better
positioned to consolidate the turnaround of the business and leverage our
critical mass to establish Harveys as one of the leading out of town furniture
retailers.



Beds Division (Bensons Beds, Sleepmasters and Bed Shed)



The Beds Division operates from 436 outlets through three formats: Bensons for
Beds, Sleepmasters and The Bed Shed. It has achieved another strong performance
this year, building on its position as the UK's leading bed specialist. Total
sales increased by 33% at £200.1 million (2004: £150.3 million), with a large
part of the sales uplift attributable to the additional space transferred to the
business from Harveys. Operating profit for the year was £14.1 million (2004:
£13.5 million).



In terms of space the Beds Division has increased by 25% this year, and this has
resulted in an increase in overall costs, as well as having to open two new
warehouses in Thurrock and Gillingham, to support the increased volumes.



As stated at the interim results, our focus on product innovation and
re-engineering products continues to drive sales, as well as helping to offset
considerable rises in raw material costs.  A great deal of emphasis continues to
be placed on customer service through a series of regular training seminars and
in addition, promotions were significantly keener this year, with sales being
extended and advertised extensively through local media.



Although the performance of the Division was encouraging during the year,
consumer spending on 'big ticket' household items has slowed and this has
impacted trading.  Sales are broadly in line with last year but the cost base to
support these sales is at this point disproportionately greater and this is
being currently addressed.



As previously indicated, Bill Wolstenholme (Managing Director) and Bernard Kelly
(Chairman) are standing down from the Beds Division from the end of October 2005
to pursue other interests.  I would like to take this opportunity to thank both
Bill and Bernard for their invaluable contribution over the last 8 years and I
wish them well in the future.  The appointment of a new divisional Managing
Director is well underway.



Board



In the light of the new circumstances a number of changes have been made to the
Board.  David Brock is standing down as Chairman.  We thank him for the role he
has played in securing the refinancing of the company over the last year.  A new
independent non-executive Chairman will be appointed over the next few months
and in the meantime, I will be acting as Chairman on an interim basis.



Ian Topping, currently Managing Director of Steinhoff's UK operation, and who
joined the Board recently as a non-executive Director, is appointed Chief
Executive with immediate effect.



Ian has spent the last 15 years running a variety of furniture and related
businesses and has been Managing Director of Steinhoff's UK operations since
Steinhoff's acquisition of Relyon Group plc in 2001, a business of which he was
Chief Executive at the time of acquisition.



Markus Jooste and Jan van der Merwe*, Chief Executive and Chief Financial
Officer of Steinhoff respectively have joined the Board as non-executive
Directors.  We are sure their extensive knowledge of the global furniture
industry will prove of great value and I am delighted to welcome all of our new
appointees to the company.



Ron Spinney CBE, currently a Non-Executive Director and Chairman of Hammerson
plc, will be retiring with effect from 28 July 2005. We are most grateful to him
for his wise and supportive contribution over the last few years as a valued
Board member.  Rian du Plessis has been appointed a non-executive Director with
immediate effect following Ron Spinney's departure.  He is Chief Executive of
Comparex Holdings Limited.



On a final note, I would like to thank all my colleagues and the divisional
teams for their hard work and commitment in what has been a year of significant
change and tough challenges.



Outlook



As has been recently widely publicised, trading in our home related markets has
been highly competitive and consumer confidence weak. In this environment total
customer orders for the 12 weeks to 23rd July were down 13% reflecting both the
slower retail environment and the impact of the weak financial position the
Company was in until our successful refinancing.  However, the current tough
trading conditions are also presenting opportunities to the Group in relation to
the consolidation trends that are prevalent in the markets we are serving.



Following the refinancing, we believe we have secured a brighter future for the
business.  We now have a strong balance sheet which has enabled us to keep the
Group intact, eliminate debt, improve our competitiveness, settle our
outstanding dispute with HM Customs and Excise and begin to realise the
commercial benefits from our strategic partnership with the Steinhoff group.  It
also allows us to focus fully on driving renewed momentum in the recovery of the
Furniture Division and continuing progress at the Beds Division.



                                                               Donald Macpherson

                                                                Interim Chairman

                                                                    28 July 2005



* Jan van der Merwe and Willem de Plessis have nothing to declare in relation to
paragraphs 6.1.2 (b) to (g) of the Listing Rules





Notes to editors



Homestyle Group PLC



Homestyle, the Warrington based company, enjoys leading positions in each of the
home related markets, in which it operates. The Group consists of two divisions,
the Beds Division and the Furniture Division.



Furniture Division

Harveys is a leading home furniture retailer with 177 stores in out-of-town
retail formats offering the customer value-for-money contemporary products.



Beds Division

With 436 outlets, the Beds Division, incorporating Bensons for Beds,
Sleepmasters and The Bed Shed, is the largest specialist bed retailer in the UK
offering both branded and un-branded products to the mid-market and value
conscious customer.



Steinhoff International



The Steinhoff Group, based in Johannesburg, is one of the world's leading
furniture and household goods groups, consisting of the holding company, SIL,
and two main subsidiaries, Steinhoff Europe AG and Steinhoff Africa. It employs
over 40,000 people in 15 countries.



During the financial year ended 30 June 2004, the Steinhoff Group generated
revenues of £900 million and normalized earnings of £100 million. It is quoted
on the JSE with a market capitilisation of over £1.7 billion.





HOMESTYLE GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the 52 weeks to 30 April 2005

                                                                                                                        
                                                   Unaudited          Audited
                                                    52 weeks         53 weeks
                                                          to               to
                                                   30-Apr-05        01-May-04
                                          Note          £000             £000

TURNOVER
Continuing operations                                453,573          379,501

Discontinued operations                               11,395          209,232
                                                   ---------        ---------
                                                     464,968          588,733

Cost of sales                                       (234,291)        (291,127)
                                                   ---------        ---------
Gross profit                                         
                                                     230,677          297,606

Operating costs (net)                               (248,099)        (333,891)
                                                   ---------        
Operating (loss)/profit

Continuing operations                                (18,023)         (32,165)

Discontinued operations                                  601           (4,120)
                                                   ---------        ---------
Operating (loss)/profit                              (17,422)         (36,285)
                                                   ---------        ---------


                                              |--------------| |--------------|
Operating profit before exceptional           |              | |              |
items and goodwill amortisation               |       15,628 | |       18,305 |
                                              |              | |              |
Exceptional items                             |      (28,314)| |      (45,042)|
                                              |              | |              |
Goodwill amortisation                      1  |       (4,736)| |       (9,548)|
                                              |--------------| |--------------|

Operating loss                                       (17,422)         (36,285)
                                              
Loss on sale or termination of
operations:

Provision for loss on operations to be
discontinued                                               -          (53,972)

Loss on sale of discontinued operations              (55,984)          (4,265)

Less release of provision made in 2004                53,722                -

                                            2         (2,262)         (58,237)

Loss on sale of properties of discontinued
operations                                                 -           (2,371)

Loss on disposal of fixed asset 
investment of discontinued operation                    (250)               -

Finance Costs (net)                                   (4,144)          (6,046)

Pension finance cost (net)                              (333)            (533)

Exceptional finance costs                             (7,929)          (4,309)
                                                   ---------        ---------


LOSS ON ORDINARY ACTIVITIES BEFORE TAX               (32,340)        (107,781)

TAX                                         3          3,599            6,232
                                                   ---------        ---------
LOSS ON ORDINARY ACTITIVIES                 4
AFTER TAX                                            (28,741)        (101,549)

DIVIDENDS                                   5              -                -
                                                   ---------        ---------

TRANSFER FROM RESERVES                               (28,741)        (101,549)
                                                   ---------        ---------
(Loss)/earnings per share                   6

Basic                                                  (44.0) p        (156.2) p

Fully diluted                                          (44.0) p        (156.2) p

Basic (loss)/earnings per share before
exceptional items, goodwill amortisation, 
loss on sale of operations and loss on 
sale of properties                                       11.3 p          12.4 p
                                                    ---------       ---------
                             

HOMESTYLE GROUP PLC CONSOLIDATED BALANCE SHEET
At 30 April 2005
                                                    30 April            1 May
                                                        2005             2004
                                                        £000             £000


Fixed assets

Intangible assets                                     85,918           90,654

Tangible assets                                       51,968           80,750

Investments                                              137            2,994
                                                   ---------        ---------                   
                                                     138,023          174,398
                                                   ---------        ---------
Current assets

Stocks                                                38,422           68,212

Debtors - due within one year                         35,402           26,064

Cash and bank balances                                 2,032           11,290
                                                   ---------        ---------
                                                      75,856          105,566
Less creditors

Amounts falling due within one year:

Bank borrowing                                       (68,488)         (41,052)

Finance lease obligations                             (1,017)            (278)

Loan notes                                            (2,050)          (2,209)

Creditors and accruals                              (129,856)        (147,076)
                                                   ---------        ---------
Net current liabilities                             (125,555)         (85,049)
                                                   ---------        ---------

Total assets less current liabilities                 12,468           89,349


Less creditors

Amounts falling due after more than one year:

Finance lease obligations                               (313)            (441)

Bank borrowing                                             -          (52,477)

Loan notes                                              (414)            (454)

Creditors and accruals                                     -             (166)



Less provisions for liabilities and charges

Closure and relocation cost provisions               (14,749)         (11,373)
                                                   ---------        ---------


NET (LIABILITIES)/ASSETS (excluding 
pension fund liabilities)                             (3,008)           24,438



Pension fund liabilities                             (12,235)          (11,276)
                                                   ---------         ---------


NET (LIABILITIES)/ASSETS                             (15,243)           13,162
                                                   ---------         ---------

Capital and reserves

Called up share capital - equity shares               17,037           16,751

Share premium account                                 79,229           78,330

Merger reserve                                        38,649           38,649

Capital redemption reserve                               288              288

Other reserve                                          1,731                -

Reserve for treasury shares                           (5,150)          (5,150)

Profit and loss account                             (147,027)        (115,706)
                                                   ---------        ---------


EQUITY SHAREHOLDERS' (DEFICIT)/FUNDS                 (15,243)          13,162
                                                   ---------         --------



HOMESTYLE GROUP PLC
CONSOLIDATED CASH FLOW
For the 52 weeks to 30 April 2005


                                                 52 weeks to      53 weeks to
                                                    30 April            1 May
                                           Note         2005             2004
                                                        £000             £000

Net cash (outflow)/inflow from 
operating activities                        7        (14,661)          51,143

Returns on investments and servicing 
of finance                                            (9,443)         (10,355)

Tax                                                    4,356            2,920

Capital expenditure and financial 
investment                                  8         (6,313)          (7,335)

Acquisitions/disposals                      9         42,544          (10,929)

Equity dividends paid                                      -           (4,704)

                                                  ----------       -----------

Cash inflow before financing                          16,483            20,740



Financing and net debt changes             10        (15,209)           (3,922)
                                                   ---------         ---------


Increase in net funds in period            11          1,274            16,818
                                                   ---------         ---------





CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES



Loss for the year

Actuarial gain/(loss) on pensions 
(net of deferred tax)                                (28,741)         (101,549)

Total recognised gains and losses                     (2,580)              141
                                                   ---------         ---------
                                                     (31,321)         (101,408)
                                                   ---------         ---------


RECONCILIATION OF EQUITY SHAREHOLDERS' FUNDS



Loss for the period

Actuarial pension (loss)/gain (net of 
deferred tax)                                        (28,741)         (114,699)

New ordinary shares issued                            (2,580)              141                                          
                                                    
Share premium on warrants exercised 
in period                                                286                 -                                          
                  
                                                         
Other reserve for unexercised share warrants             899                 -                                        
                                                        
                                                      
Net reduction to equity shareholders funds             1,731                 -
                                                    --------          --------
                                                                                        
                                            6        (28,405)         (114,558)          
                                                                                             
Equity shareholders' funds at beginning of period     13,162           127,720
                                                    --------          --------
                                                     
                                                                                               
Equity shareholders' (deficit)/funds at end 
of period                                            (15,243)           13,162
                                                    --------          --------      

                                                                                             





HOMESTYLE GROUP PLC
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the 52 weeks to 30 April 2005


                                                   52 weeks to      53 weeks to
                                                      30 April            1 May
                                                          2005             2004
                                                          £000             £000
                                                          ----             ----
1.  Exceptional items

Within operating costs

Provision for impairment of Harveys goodwill                -           36,566

Provisions for Harveys onerous leases                   7,595            4,714

Directors' contracts termination costs                      -            1,000

Provision for impairment on Kitchen Studio fixed asssets    -            2,396

Settlement of VAT dispute (including professional 
fees)                                                  19,729              366

Professional fees relating to refinancing                 990                -
                                                    ---------       
                                                       28,314           45,042

Other exceptional items

Loss and provision for loss on sale of operations       2,262           58,237

Loss on sale of properties                                  -            2,371

Loss on disposal of fixed asset investment                250                -

Exceptional finance costs                               7,929            4,309
                                                     --------          -------

                                                       38,755          109,959
                                                    ---------         --------


2.  Loss on ordinary activities before tax is stated after charging/(crediting):
Depreciation and amounts written off tangible fixed assets

-  owned                                               9,811           11,899

-  held under finance leases and hire purchase 
   contracts                                             394              284

-  impairment of tangible fixed assets                     -            4,587

Operating lease rentals

-  plant, equipment and vehicles                       2,793            4,174

-  land and buildings                                 53,928           71,306

Auditors remuneration

-  for audit services                                    317              383

-  for non-audit services                              1,398              669

Landlords inducements                                 (1,782)          (3,544)

Goodwill amortisation                                  4,736            9,548

Impairment of goodwill                                     -           60,864





3.  Loss on sale of operations
Loss on sale of operations                            54,190            5,511

Provision (released)/made for loss on sale of 
operations                                           (53,722)          53,972

Provision made for costs relating to leases 
vacated by sold operations                             2,843                -

Pension curtailment gains related to sold 
operations                                            (1,049)          (1,246)
                                                    ---------        ---------
                                                       2,262           58,237
                                                    ---------        ---------


4.  Tax
UK corporation tax refundable                                               -

Deferred tax                                                           (3,900)

Deferred tax on pension fund liabilities                                  695
                                                                      ----------


Current year credit                                                    (3,205)

Prior year corporation tax overprovision                                 (394)

                                                                       (3,599)

                                                                      ----------
                                                                       (3,787)

                                                                       (3,188)

                                                                          743


                                                                       (6,232)

                                                                            -
                                 
                                                                       (6,232)
                                                                      ----------


5.  Dividend


The directors do not propose to declare a dividend (2004 - nil).




HOMESTYLE GROUP PLC
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the 52 weeks to 30 April 2005

                                                   52 weeks to      53 weeks to
                                                      30 April            1 May
                                                          2005             2004
                                                          £000             £000

6.  (Loss)/earnings per share
(Loss)/earnings per share are based on the following



(Loss)/earnings:

Basic and fully diluted loss in the period             (28,741)        (101,549)

Goodwill amortisation                                    4,736            9,548

Exceptional items (note 1)                              38,755          109,959

Tax adjustments                                         (7,379)          (9,917)
                                                     ---------        ---------


Basic earnings per share before exceptional items, goodwill amortisation, loss 
on sale of operations and loss on sale of fixed assets
                                                         7,371            8,041
                                                     ---------        ---------
                                                           No.              No.
                                                           ---              ---
Weighted average number of shares in issue:               

For basic (loss)/earnings per share                 65,355,690       65,007,857

Held in respect of long term incentive plan          1,825,936        1,994,354
                                                     ---------        ---------
For fully diluted earnings per share                67,181,626       67,002,211
                                                    ----------       ----------




7.  Operating cash flow
Operating loss                                         (17,422)         (36,285)

Exceptional items - non cash items                      16,500            3,396

Depreciation and fixed asset impairments                10,205           12,183

Goodwill amortisation                                    4,736            9,548

Goodwill written off within exceptional items                -           36,566

Amortisation of investments                                  7                -

Cash effect of provisions utilised                      (4,569)            (424)

Provision for Harveys' onerous leases within 
exceptional items                                        7,595            4,714

Provision for dilapidations within operating 
profit                                                     244                -

Pension provision movements                             (1,600)          (1,765)

Stock (increases)/decreases                             (7,255)          10,888

Debtor (increases)/decreases                           (13,015)          13,323

Creditor decreases                                     (10,087)          (1,001)
                                                     ---------        ---------


Net cash (outflow)/inflow from operating 
activities                                             (14,661)          51,143
                                                     ---------        ---------




8.  Capital expenditure and financial investment


Purchase of tangible fixed assets                       10,725           14,110

Sale of tangible fixed assets                           (1,812)          (6,775)

Disposal of fixed asset investment                      (2,600)               -
                                                     ---------        ---------
                                                         6,313            7,335
                                                     ---------        ---------


9.  Acquisitions/disposals


Purchase of subsidiary undertakings - deferred 
consideration                                                -            (357)

Net proceeds/(costs) of disposals                       42,544         (10,572)
                                                     ---------        ---------
                                                        42,544         (10,929)
                                                     ---------        ---------


10.  Cash flow - financing


Bank loans received                                     20,314            7,785

Bank loans repaid                                      (34,823)         (11,200)

Loan notes repaid                                         (199)            (266)

Issue of ordinary share capital                            286                -

Finance lease capital repayments                          (787)            (241)
                                                     ---------        ---------
                                                       (15,209)          (3,922)
                                                     ---------        ---------






HOMESTYLE GROUP PLC
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the 52 weeks to 30 April 2005

  
                                                   52 weeks to      53 weeks to
                                                      30 April            1 May
                                                          2005             2004
                                                          £000             £000


11.  Reconciliation of net debt


Increase in net funds in period                          1,274           16,818



Bank loan received                                     (20,314)          (7,785)

Bank loans repaid                                       34,823           11,200

Loan notes repaid                                          199              266

Finance lease capital repayments                           787              241
                                                     ---------        ---------


Change in net debt resulting from cash flows            16,769           20,740

New finance leases                                      (1,398)            (321)
                                                     ---------        ---------

Movement in net debt in period                          15,371           20,419

Net debt at beginning of period                        (85,621)        (106,040)
                                                     ---------        ---------


Net debt at end of period                              (70,250)         (85,621)
                                                     ---------        ---------


12.  Segment information




Turnover:

Furniture retailing                                    253,495          223,590

Bed retailing                                          200,078          150,332

Kitchens retailing                                           -            5,579
                                                     ---------        ---------
Continuing operations                                  453,573          379,501



Home Textiles retailing                                 11,395          201,502

Distribution                                                 -            9,460

Inter segment                                                -          (1,730)
                                                     ---------        ---------
                                                       464,968          588,733
                                                     ---------        ---------
(Loss)/profit before tax:

Furniture retailing                                        947            2,005

Bed retailing                                           14,080           13,494

Kitchens retailing                                           -          (3,105)
                                                     ---------        ---------
Continuing operations before exceptional items          15,027           12,394



Home Textiles retailing                                    601            4,641

Distribution                                                 -            1,270

Exceptional items                                      (38,755)        (109,959)

Goodwill amortisation                                   (4,736)          (9,548)

Interest                                                (4,477)          (6,579)
                                                     ---------        ---------
                                                       (32,340)        (107,781)
                                                     ---------        ---------
Net assets:

Furniture retailing                                     (2,104)          (8,595)

Beds retailing                                          53,211           64,678

Kitchens retailing                                           -           (1,826)
                                                     ---------        ---------
Continuing operations                                   51,107           54,257



Home textiles retailing                                      -           41,779

Distribution                                                 -            2,747

Net debt                                               (70,250)         (85,621)

Deferred tax (included in debtors)                       3,900                -                                         
                                                     ---------        ---------                      
                                                       (15,243)           13,162                                        
                                                     ---------        ---------                                         
                                                                      


HOMESTYLE GROUP PLC
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the 52 weeks to 30 April 2005


13.  Basis of accounts

The preliminary announcement has been prepared under the historical cost
convention and in accordance with applicable United Kingdom accounting standards
using the policies set out in the report and accounts for the period ended 1 May
2004.


14.  General information

The financial information set out above does not constitute full accounts within
the meaning of Section 240 of the Companies Act 1985.  The amounts shown in
respect of the period ended 1 May 2004 have been extracted from the full
statutory accounts.  The Auditors' report for the period ended 1 May 2004 was
unqualified, and did not contain any statement under section 237 of the
Companies Act 1985.  The statutory accounts have been filed with the Registrar
of Companies.

Copies of this announcement will be posted to shareholders and are available to
members of the general public from the Company's registered office:  Homestyle
Group PLC, 520 Europa Boulevard, Westbrook, Warrington WA5 7TP.


                      This information is provided by RNS
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