OLIVER GROUP PLC
30 September 1999
The Oliver Group Plc
'Family Footwear Retailers for the UK'
Interim Results
for the 26 weeks ended 31 July 1999
Turnover increased 3% to £34.5 million
Like for like sales up 2.4% - ahead of the footwear
market by 1.5%
30% improvement in trading at the 35 stores converted in
the period to Olivers Timpson 'family' format
Product margins improved
Distribution and administrative costs reduced by 8.4%
Pre-exceptional operating loss reduced to £1.25 million
Merger discussions ended
'We will continue the conversion programme and intend to have
83 stores trading in the Olivers Timpson 'family' format by
the start of the peak Christmas trading period.
'Since the end of July trading conditions have been difficult.
Back to school trading showed good growth on last year,
particularly in the new format stores. Summer trade was,
however, very disappointing due to shortfalls in sales of
ladies' summer product and the aggressive discounting by
competitors. Sales of the Autumn product range have been slow
to lift and it is only very recently, with the arrival of more
autumnal weather, that positive reactions to new season's
ranges have been recorded.
'Whilst the Group under-performed the market in August, it has
both earlier in the year and in recent weeks outperformed the
market, restoring the pattern of the Group's performance of
the last two and a half years. The converted stores continue
to demonstrate strong growth.
'The outcome of Christmas trade will determine the full year's
performance but, at this stage, whilst we are behind
expectations, we expect to demonstrate continued progress in
the full year.'
Alan Cole, Chairman
FULL STATEMENT BELOW
Enquiries:
Martin Watts, Chief Executive
Paul Ryan, Group Finance Director
The Oliver Group Plc
Tel: 0116-222 3010
Interim Results
for the 26 weeks ended 31 July 1999
STATEMENT BY THE CHAIRMAN, ALAN COLE
In the first half of the year we have continued to implement
the strategy which we outlined to shareholders at the time of
our Rights Issue in July 1998.
Half Year Results
Turnover for the period increased by 3% overall to £34.5m
(1998: £33.5m) and gross profit was £1.1m (1998: £1.1m).
Normal operating costs were £2.4m (1998: £2.6m) and the pre-
exceptional operating loss was reduced to £1.25m (1998:
£1.44m). Property profits were £115,000 (1998: £51,000) while
interest costs were £293,000 (1998: £391,000). With a nil tax
charge (1998: nil) the loss for the financial period, after
accounting for an exceptional expense of £148,000 (1998: nil),
was £1.58m (1998: £1.78m).
No interim dividend is being paid.
Like for like sales were up by 2.4%, 1.5% ahead of the
footwear market. This growth was driven by the performance of
the stores converted to the Olivers Timpson 'family' format of
which 35 stores were refurbished or fitted out in the period.
In those stores, sales growth ran at about +30%, while in all
the converted stores, including those trading in their second
or third year post conversion, sales growth was 10% ahead of
the remainder of the chain.
Achieved product margins were up by 0.4 percentage points, but
in the first half, which in sales terms is always the weaker
half, this was offset by a 4% increase in store costs. In
particular, depreciation costs were up 16% to £1.0m (1998:
£878,000) as a consequence of the capital investment
programme. Gross profit was therefore 3.20% (1998: 3.38%).
Distribution and administrative costs were down by 8.4% on
those in the comparable period in 1998. This reflected a
10.6% reduction in warehouse and distribution costs and a 5.8%
reduction in administrative costs. During the period the
Group completed its Year 2000 programme and, whilst it cannot
be guaranteed that no problems will arise, we are confident
that the Group is compliant for Year 2000.
During the period seven stores, which were inappropriate for
future investment, have been closed and disposed of by either
sale, surrender or lease expiry. The Group ended the period
with 280 stores trading. Property transactions gave rise to a
profit in the period of £115,000 (1998: £51,000).
Interest costs were down 25% to £293,000 (1998: £391,000) due
to both lower borrowings and reduced borrowing costs.
As a result of the above, the pre-exceptional loss before tax
of £1.43m was £351,000 lower than in the same period last
year.
Stocks were down by £1.4m on last year. Net debt was £7.8m (1
August 1998: £3.2m) and gearing was 40.2% (1 August 1998:
16.5%). The low gearing at 1 August 1998 was due to the
receipt in July 1998 of the £5.4m net proceeds of the Rights
Issue.
Merger Discussions
It was announced at the AGM on 6 May that the Group was in
discussions with another footwear retail specialist with a
view to completing a merger or acquisition. Those discussions
have been long and complex and have culminated in the Board's
decision that, despite best endeavours, the merger cannot
currently be achieved on terms which can be recommended to
shareholders. The discussions are therefore at an end. The
costs necessarily incurred in the course of the merger
discussions total £148,000 and this amount has been charged in
the profit and loss account as an exceptional administrative
expense.
Full Year Outlook
In the second half, we will continue the conversion programme
and intend to have 83 stores trading in the Olivers Timpson
'family' format by the start of the peak Christmas trading
period.
Since the end of July trading conditions have been difficult.
Back to school trading showed good growth on last year,
particularly in the new format stores. Summer trade was,
however, very disappointing due to shortfalls in sales of
ladies' summer product and the aggressive discounting by
competitors. Sales of the Autumn product range have been slow
to lift and it is only very recently, with the arrival of more
autumnal weather, that positive reactions to new season's
ranges have been recorded.
Whilst the Group under-performed the market in August, it has
both earlier in the year and in recent weeks outperformed the
market, restoring the pattern of the Group's performance of
the last two and a half years. The converted stores continue
to demonstrate strong growth.
The outcome of Christmas trade will determine the full year's
performance but, at this stage, whilst we are behind
expectations, we expect to demonstrate continued progress in
the full year.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the Restated For the
26 weeks for the 52 weeks
ended 26 weeks ended
31 July ended 30 January
1999 1 August 1999
£'000 1998 £'000
£'000
Turnover 34,473 33,470 73,917
Cost of sales - normal items 33,369 32,340 69,374
- exceptional item - - (1,323)
Gross profit 1,104 1,130 5,866
Distribution costs 1,220 1,365 2,635
Administrative expenses - 1,136 1,206 2,626
normal items
- exceptional item (note 3) 148 - -
2,504 2,571 5,261
Operating (loss)/profit (1,400) (1,441) 605
Profit/(loss) on disposal of 115 51 (90)
properties
(Loss)/profit on ordinary (1,285) (1,390) 515
activities before interest
Net interest payable (293) (391) (622)
Loss on ordinary activities (1,578) (1,781) (107)
before tax
Tax on loss on ordinary - - -
activities
Loss for the financial period (1,578) (1,781) (107)
Equity dividends - - -
Retained loss for equity (1,578) (1,781) (107)
shareholders
Loss per ordinary share (note 4) (3.12)p (6.93)p (0.28)p
Diluted loss per ordinary share (3.06)p (6.87)p (0.28)p
ADDITIONAL STATEMENTS
CONSOLIDATED HISTORICAL COST PROFITS AND LOSSES
For the Restated For the
26 weeks for the 52 weeks
ended 26 weeks ended
31 July ended 30 January
1999 1 August 1999
£'000 1998 £'000
£'000
Reported loss on ordinary (1,578) (1,781) (107)
activities before tax
Realisation of property
revaluation gains of previous - - 15
periods
Historical cost retained loss on
ordinary activities (1,578) (1,781) (92)
before tax
Historical cost retained loss for (1,578) (1,781) (92)
equity shareholders
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the Restated For the
26 weeks for the 52 weeks
ended 26 weeks ended
31 July ended 30 January
1999 1 August 1999
£'000 1998 £'000
£'000
Loss for the financial period (1,578) (1,781) (107)
Prior year adjustment (note 1) - - (458)
Total recognised gains and losses (1,578) (1,781) (565)
for the period
RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS
For the Restated For the
26 weeks for the 52 weeks
ended 26 weeks ended
31 July ended 30 January
1999 1 August 1999
£'000 1998 £'000
£'000
Loss for the financial period (1,578) (1,781) (107)
Proceeds of share issue (note 5) - 6,320 6,320
Associated expenses written off
against share - (906) (912)
premium account
Net (decrease)/increase in (1,578) 3,633 5,301
shareholders' funds
Shareholders' funds at the 20,949 15,648 15,648
beginning of the period
Shareholders' funds at the end of 19,371 19,281 20,949
the period
ADDITIONAL STATEMENTS
CONSOLIDATED BALANCE SHEET
As at Restated As at
31 July as at 30 January
1999 1 August 1999
£'000 1998 £'000
£'000
Fixed Assets 19,865 15,996 17,227
Current Assets
Stock 14,070 15,499 11,953
Debtors 7,747 6,409 4,200
Cash at bank and in hand 91 352 262
21,908 22,260 16,415
Creditors: Amounts falling due (21,875) (18,347) (12,119)
within one year
Net current assets 33 3,913 4,296
Total assets less current 19,898 19,909 21,523
liabilities
Creditors: Amounts falling due (205) (204) (184)
after more than one year
Provisions for liabilities and (322) (424) (390)
charges
19,371 19,281 20,949
Capital and reserves
Called up share capital (note 5) 12,641 12,641 12,641
Share premium account 994 1,000 994
Revaluation reserve 5,145 5,160 5,145
Capital redemption reserve 125 125 125
Profit and loss account 466 355 2,044
Equity Shareholders' Funds 19,371 19,281 20,949
SUMMARY CONSOLIDATED CASH FLOW STATEMENT
For the Restated For the
26 weeks for the 52 weeks
ended 26 weeks ended
31 July ended 30 January
1999 1 August 1999
£'000 1998 £'000
£'000
Cash (outflow)/inflow from (400) 155 1,925
operating activities
Returns on investments and (276) (524) (421)
servicing of finance
Taxation (6) 2 2
Capital expenditure and financial (3,209) (1,401) (3,798)
investment
Cash flow before use of liquid (3,891) (1,768) (2,292)
resources and financing
Financing (130) 5,203 5,003
(Decrease)/increase in cash in (4,021) 3,435 2,711
the period
RECONCILIATION OF OPERATING LOSS TO CASH FLOW FROM OPERATING ACTIVITIES
For the Restated For the
26 weeks for the 52 weeks
ended 26 weeks ended
31 July ended 30 January
1999 1 August 1999
£'000 1998 £'000
£'000
Operating (loss)/profit (1,400) (1,441) 605
Depreciation charges 1,017 878 1,896
Profit on disposal of fixed 1 (15) (6)
assets other than property
Movement on provisions (68) (34) (68)
(Increase) in stocks (2,117) (4,861) (1,315)
(Increase) in debtors (3,150) (2,737) (528)
Increase in creditors 5,317 8,365 1,341
Net cash (outflow)/inflow from (400) 155 1,925
operating activities
NOTES
1) The accounts for the 26 weeks ended 31 July 1999 have not
been audited, nor have the accounts for the equivalent
comparative period in 1998. The figures for the 52 weeks
ended 30 January 1999 have been extracted from the
accounts which have been filed with the Registrar of
Companies and which contain an unqualified audit report.
The figures for the comparative period to 1 August 1998
have been restated to reflect the change in accounting
policy adopted in the financial statements for the period
ended 30 January 1999, in recognition of provisions for
onerous property leases as required by Financial
Reporting Standard 12.
2) These accounts comply with relevant accounting standards
and have been prepared using accounting policies set out
in the 1998/99 Report and Accounts.
3) The amount of £148,000 (1998: nil) which relates to
professional fees associated with the aborted merger
transaction has been charged as an exceptional cost.
4) Loss per share
Basic: the loss per share has been calculated using the
loss for the financial period and the number of Ordinary
shares in issue throughout the period which was
50,564,772 (26 weeks ended 1 August 1998: weighted
average 25,699,129).
Diluted: the diluted loss per share is the loss per share
after allowing for the dilutive effect of conversion into
Ordinary shares of the weighted average number of options
outstanding during the period. The number of shares used
for the diluted calculation for the period was 51,487,716
(26 weeks ended 1 August 1998: 25,929,892).
5) On 29 July 1998, pursuant to a one for one Rights Issue
of Ordinary shares approved by shareholders at an
Extraordinary General Meeting of the Company on 3 July
1998. 25,282,386 Ordinary shares at 25p were issued,
generating a gross amount of £6.32m of new equity capital
for the business.
6) This statement has been sent to shareholders and further
copies are available from the Registered Office of the
Company: The Oliver Group Plc, Murrayfield Road,
Braunstone, Leicester, LE3 1DZ (Tel: 0116-222 3000, Fax:
0116-222 3001).
INDEPENDENT REVIEW REPORT BY KPMG AUDIT Plc TO THE OLIVER
GROUP Plc
Introduction
We have been instructed by the Company to review the financial
information set out on pages 4 to 7 and we have read the other
information contained in the interim report and considered
whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information
contained therein, is the responsibility of, and has been
approved by, the Directors. The Listing Rules of the London
Stock Exchange require that the accounting policies and
presentation applied to the interim figures should be
consistent with those applied in preparing the preceding
annual accounts except where they are to be changed in the
next annual accounts in which case any changes, and the
reasons for them, are to be disclosed.
Review work performed
We conducted our review in accordance with guidance contained
in Bulletin 1999/4: Review of interim financial information
issued by the Auditing Practices Board. A review consists
principally of making enquiries of group management and
applying analytical procedures to the financial information
and underlying financial data and based thereon, assessing
whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is
substantially less in scope than an audit performed in
accordance with Auditing Standards and therefore provides a
lower level of assurance than an audit. Accordingly we do not
express an audit opinion on the financial information.
Review conclusion
on the basis of our review we are not aware of any material
modifications that should be made to the financial information
as presented for the 26 weeks ended 31 July 1999.
KPMG Audit Plc
1 Waterloo Way
Leicester
LE1 6LP
Chartered Accountants
30 September 1999