23rd Jun 2005 07:00
Mulberry Group PLC23 June 2005 MULBERRY GROUP PLC23 JUNE 2005 MULBERRY GROUP PLC ("Mulberry" or the "Group") PRELIMINARY RESULTS FOR THE YEAR TO 31 MARCH 2005 Mulberry Group Plc, the AIM listed luxury brand, today announced its preliminaryresults for the year ended 31 March 2005. HIGHLIGHTS Sales increased by 19% to £30.1 million.Profit after tax of £2.0 million (2004: £31,000).Gross margin increased from 50% to 54%.Significantly strengthened balance sheet with net cash £2.0 million (2004: netdebt £2.2 million). Current trading and outlook positive:The Autumn 2005 order book more than 80% ahead of last year.UK full price like for like retail sales for 9 weeks to 4 June 2005 up by 47%. GODFREY DAVIS, CHAIRMAN AND CHIEF EXECUTIVE COMMENTED: "We have delivered sales growth and a substantial increase in profit. The outlook is very positive with growing order books and retail sales. Theprogramme of expansion in the USA, Asia and Japan has made an encouraging start." FOR FURTHER DETAILS PLEASE CONTACT: WMC CommunicationsDavid Wynne-Morgan or Charlie Geller 020 7930 9030 CHAIRMAN'S STATEMENT The Group has made excellent progress achieving good sales growth in the UK andEurope combined with strong order intake from the new markets of the USA, Asiaand Japan. This has generated a substantial increase in profit. This positivetrend has continued into the new financial year. The Group made a profit on ordinary activities after tax for the year of £2.0million (2004 : £31,000). Sales for the year increased by 19% to £30.1 million (2004: £25.3 million).Sales accelerated as the year progressed and in the six months to 31 March 2005grew by 36% compared to the same period in the preceding year. This reflectsstrong demand for handbags and accessories from existing and new markets. Gross profit margin, increased from 50% to 54%. Accessories margins continue toimprove with increased volume, while sales of lower margin men's and women'swear have declined. Operating expenses increased by £1.8 million (14%) reflecting the increasedlevel of activity. At 31 March 2005, the Group had net cash of £2.0 million (2004: net debt £2.2million). The Group has term loan and overdraft facilities of £7.5 million withits principal bankers HSBC Bank plc. BUSINESS REVIEW Accessories, which are our core business, account for over 85% of Group sales.Spring/Summer 2005 wholesale orders from the UK and Europe increased by 36% onthe prior year and accounted for 82% of the order book. Orders from the newmarkets of the USA, Asia and Japan grew to 17% of the total compared to lessthan 1% in the previous year. Sales of leather handbags were the main driving force behind these salesincreases. The men's and women's wear collections support the brand image and positioning.The strategy continues to be to limit the distribution of these collections andto focus on growing the sales of accessories. Like for like sales in our UK full price shops were 19% higher for the year. Ashop is included as 'like for like' if it was open throughout the period inquestion and the comparative period in the prior year. In November 2004, the new website, mulberry.com, was launched with a newstreamlined online shop, bringing the site into line with our new image andmarketing approach. Our marketing effort has expanded to include the USA, Asia and Japan. Theadvertising and PR campaigns have succeeded in their objective of bringing thebrand to the attention of a wide spectrum of fashion conscious customersworldwide. The new campaigns for Autumn/Winter 2005 and Spring/Summer 2006 willfeature in leading UK, European, Asian and Japanese fashion publications. NEW MARKETS In Autumn 2004, Mulberry handbags were launched in the USA with BergdorfGoodman, New York. The launch achieved our objectives and sales havesubstantially exceeded the initial plan. In Autumn 2005, Mulberry handbags willbe available in 63 carefully selected US department stores and independentfashion retailers. As previously announced, Club 21 was appointed as the distributor for Asiaexcluding Japan. They have taken over the successful relationship with LaneCrawford, the leading department store chain in Hong Kong and China. The firstMulberry standalone shop opened in an excellent position in Harbour City, HongKong, in October 2004 and has made a good start. The second shop opened inBangkok in May 2005 followed by a third in Kuala Lumpur in June 2005. Furthershops throughout the region are planned over the next 2 years subject tosecuring appropriate sites. In Japan, our new distributors, Mitsui and Sanki Shoji have made a sound start.The first major event was the opening, in February 2005, of a handbag sales areaon the ground floor in Isetan in Tokyo, which is generally considered to be themost influential department store in Japan. Isetan has traded well and space hasbeen secured in 2 more leading department stores in Osaka for Autumn 2005. Thestrategy in Japan is similar to that adopted in the USA, selecting the beststore in each location rather than making blanket agreements with departmentstore groups. CURRENT TRADING AND OUTLOOK As reported on 12 May 2005, demand for the Group's products continues to growstrongly. The Spring 2005 third party accessories wholesale order book closed at the endof May 2005 65% ahead of the previous year. The accessories third party orderbook for the Autumn 2005 season is approximately 80% ahead of the order book atthe same point in the prior year. It is estimated that more than three quartersof the orders for the Autumn 2005 season have been taken at this date. Thirdparty wholesale sales account for approximately half of the Group's turnover. Alower rate of growth is expected for Spring 2006 because of the significantgains that were achieved in the previous year. Mulberry's own stores continue to trade strongly and we opened a new shop inHeathrow Terminal 1 in May. Like for like sales in the full price UK shops forthe first nine weeks of the new financial year continue to be up by over 47%.This rate of growth is expected to decline as the year progresses because thefigures in the second half of the year will be compared to the period last yearwhen substantial sales growth was achieved. DIVIDENDS The Board is not recommending the payment of a dividend on the ordinary orpreference shares in respect of the year to 31 March 2005. The capital reductionapproved by shareholders at an Extraordinary General Meeting on 11 January 2005was completed by the receipt of a court order from the High Court on 9 February2005. The successful restructuring of Group reserves is expected to bringforward the date at which dividends may be paid. The dividend on the preferenceshares is a contractual commitment which must be paid before any dividend on theordinary shares. At 31 March 2005, the accrued but unpaid dividends on thesepreference shares totalled £638,000 (2004 : £442,000). STAFF I would like to thank all our staff who have continued to drive the brandforward with determination and commitment and without whom, the achievements ofthe last year would not have been possible. Godfrey DavisChairman and Chief Executive 23 June 2005 Contacts: WMC CommunicationsDavid Wynne-Morgan or Charlie Geller 020 7930 9030 Teather & Greenwood LimitedMark Dickenson 020 7426 9000 CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended 31 March 2005 2005 2004 Total Total £'000 £'000TURNOVER 30,064 25,327 Cost of sales (13,926) (12,539) ---------- ---------- GROSS PROFIT 16,138 12,788 Other operating expenses (net) (14,001) (12,248) ---------- ----------OPERATING PROFIT 2,137 540 Group share of (loss)/profit of associated undertakings (17) 3Loss on disposal of fixed assets - (166)Interest receivable and similar income 27 -Interest payable and similar charges (193) (336) ---------- ----------PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 1,954 41Taxation on profit on ordinary activities 33 (10) ---------- ----------PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION, BEING PROFIT FOR THE FINANCIAL YEAR 1,987 317% preference dividend proposed on non-equity shares (196) (196)1% preference dividend proposed on non-equity shares - 4Non-equity finance costs (53) (53) ---------- ---------- RETAINED PROFIT/(LOSS) FOR THE YEAR 1,738 (214) ---------- ----------PROFIT/(LOSS) PER ORDINARY SHARE - basic 3.56p (0.49p) ========== ========== - diluted 3.49p (0.49p) ========== ========== CONSOLIDATED BALANCE SHEET31 March 2005 2005 2004 £'000 £'000 FIXED ASSETSTangible assets 4,904 5,385Investments 60 73 ------------- ---------- 4,964 5,458 ------------- ---------- CURRENT ASSETSStocks 5,379 6,565Debtors 3,522 3,441Cash at bank and in hand 2,183 1,245 ------------- ---------- 11,084 11,251CREDITORS: Amounts falling due within one year (4,383) (3,912) ------------- ----------NET CURRENT ASSETS 6,701 7,339 ------------- ----------TOTAL ASSETS LESS CURRENT LIABILITIES 11,665 12,797CREDITORS: Amounts falling due after more than one year (53) (3,178) ------------- ----------NET ASSETS 11,612 9,619 ============= ========== CAPITAL AND RESERVES Called-up share capital 2,839 2,838Share premium account 6,495 11,371Revaluation reserve 111 142Capital redemption reserve 154 154Preference dividend reserve 638 442 Special reserve 1467 -Profit and loss account (92) (5,328) ------------- ----------SHAREHOLDERS' FUNDS 11,612 9,619 ============= ========== Shareholders' funds may be analysed as:Equity interests 8,359 6,615Non-equity interests 3,253 3,004 ------------- ---------- 11,612 9,619 ============= ========== CONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 March 2005 2005 2004 £'000 £'000NET CASH INFLOW FROM OPERATING ACTIVITIES 4,857 1,684Returns on investments and servicing of finance (162) (345)Taxation (11) -Capital expenditure (460) 303 ------------- -----------Cash inflow before financing 4,224 1,642Financing (3,286) 3,511 ------------- -----------INCREASE IN CASH IN THE YEAR 938 5,153 ============= =========== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS/DEBT 2005 2004 £'000 £'000Increase in cash in the year 938 5,153Cash outflow/(inflow) from decrease/(increase) in debt 3,297 (690)and lease finance ------------- ---------- 4,235 4,463Inception of finance leases - (130) ------------- ----------Movement in net debt 4,235 4,333 NET DEBT, BEGINNING OF YEAR (2,231) (6,564) ------------- ----------NET FUNDS/(DEBT), END OF YEAR 2,004 (2,231) ============= ========== NOTES 1. The financial information set out above does not constitute the Group's statutory financial statements for the years ended 31 March 2005 and 2004, but is derived from those financial statements. Statutory accounts for the year ended 31 March 2004 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 March 2005 will be filed at Companies House upon receiving the approval of the Annual General Meeting. The auditors have reported on the accounts for the year ended 31 March 2004 and their report was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. 2. The results for the year ended 31 March 2005 contained in this report have been prepared using accounting policies consistent with those used in the preparation of the Annual Report and Financial Statements for the year ended 31 March 2004. 3. Basic earnings per ordinary share has been calculated by dividing the profit/loss on ordinary activities after taxation and appropriations of profit in respect of non-equity shares for each financial year by 48,765,968. (2004: 43,453,282) ordinary shares, being the weighted average number of ordinary shares in issue during the year. Diluted earnings per share has been calculated by dividing the profit/loss on ordinary activities after taxation for each financial year by 56,945,735 (2004:51,582,722) potential ordinary shares taking account of the potential conversion of the preference shares and exercise of unexercised options. 4. Copies of the Annual Report and Financial Statements will be posted to shareholders. Further copies can be obtained from Mulberry Group plc's registered office at Kilver Court, Shepton Mallet, Bath, BA4 5NF. Copies of this announcement are available for a period of one month from thedate hereof from the Company's registered office, Kilver Court, Shepton Mallet,Bath, BA4 5NF and from the Company's nominated adviser, Teather & GreenwoodLimited, Beaufort House, 15 St. Botolph Street, London, EC3A 7QR. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Mulberry Group