28th Jun 2010 07:00
Beale PLC Profits Grow Significantly
Beale PLC, the specialist department store operator, announce Interim Results for the 26 weeks ended 1 May 2010.
• Profit before tax increased by 67% to £909,000 (2009: £543,000).
• Gross sales which include concession sales and VAT fell by only 1.1% despite January snow.
• Revenue at £26.2M (2009: £26.7M) declined by 1.8% in the challenging environment.
• Administrative expenses at £13.1M (2009: £13.7M) were 4% down on previous year.
• Earnings per share of 4.43p (2009: 2.65p).
• On 4 June acquired new store of Robbs of Hexham for £250,000.
Mike Killingley, Chairman commented:
"We are pleased to report the Group profit for the 26 week period ended 1 May 2010 was
£909,000, up from £543,000 in the equivalent period last year".
"The economic environment in the UK remains challenging for retailers. While we expect
recovery from the recent recession to continue, we expect the pace of that recovery to be
relatively subdued".
For further Information:
Beale PLC Astaire Securities
Tony Brown, Chief Executive Toby Gibbs/Antony Legge/Katie Shelton
Ken Owst, Finance Director 0207 492 4750
01202 552022
Interim Management Report - 26 weeks ended 1 May 2010
Financial results
We are pleased to report that Group profit for the 26 week period ended 1 May 2010 was £909,000, up from £543,000 in the equivalent period last year. There was no tax charge.
Gross sales, which includes the full value of concession sales and VAT, declined by 1.1%. Revenue, which comprises own bought sales and the commission received on concession sales, fell by 1.8%. These declines were offset by a small improvement in achieved gross margin and a further reduction in administrative expenses, which were 4% lower than in the equivalent period last year.
Trading
Since our last statement we have seen some of the buying and concessions strategies, especially on fashions, starting to deliver the expected results. Our combined womenswear sales were greater than in the first half of last year. This has been achieved through the success of new concessions, including GIVe, Joules, Noa Noa, and by the continued success of our large concession partners Jacques Vert group and Alexon group. Our own label fashion brand Crimson now contributes 36% of our own bought womenswear sales and 42% of its profits.
We have also made progress in menswear. Our new young fashion area in our Bournemouth store continues to exceed our expectations. Our new own label young menswear brand Redi has quickly become one of our top performing brands, and we have recently introduced a men's shirt, tie and cufflink range called Broadbents and Boothroyds, taken from the name of our store in Southport. Although these are recent initiatives, we are encouraged by initial results.
These positive achievements were offset by a decline in furniture sales, reflecting the caution being exercised by consumers over large ticket purchases.
Robbs of Hexham
On 4 June we announced the acquisition of Robbs department store in Hexham, Northumberland, from the Administrator of Vergo Retail Limited for £250,000. Hexham is a relatively affluent market town, and fits well with our strategy of being the principal destination department store in such towns.
Dividends
No dividend is proposed (2009: nil).
Cash and balance sheet
Net debt increased slightly, from £6.46 million to £6.66 million. We have met our banking covenants and have traded comfortably within our bank facilities. The bank loan has been shown as a current liability because the present facility expires within 12 months, in February 2011. We have commenced discussions with our bankers over the renewal of these facilities and are confident of a successful conclusion to these negotiations before the year end.
Related party transactions
No related party transactions took place during the period which had a material impact on the financial position or performance of the Group.
Outlook, including risks and uncertainties
The economic environment in the UK remains challenging for retailers. While we expect recovery from the recent recession to continue, we expect the pace of that recovery to be relatively subdued. As we explained in our 2009 annual report, and as described in note 1 to these condensed interim financial statements, this constitutes the principal risk and uncertainty facing the Group. However, based on current trading and our detailed forecasts, and after taking into account such mitigating action as may be required should sales and margins fall short of our expectations, the Group expects to continue to comply with its financial covenants for the foreseeable future.
Following the acquisition earlier this month of Robbs of Hexham, we are seeking further opportunities to increase the number of stores in the Group. We have the infrastructure to manage a larger portfolio of stores, so that any such acquisitions should be profit enhancing.
The restoration of full year profitability depends on increasing sales and improving margins. We are continuing to pursue an aggressive promotional strategy, to increase our buying-in margins and to focus on cost control, which we are confident will enable us to meet this objective.
Mike Killingley Tony Brown
Chairman Chief Executive
25 June 2010 25 June 2010
Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit and loss of the Group, included in the consolidation as a whole as required by DTR 4.2.4R;
(b) the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';
(c) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
(d) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
By order of the Board,
Mike Killingley Ken Owst
Chairman Finance Director
25 June 2010 25 June 2010
The Interim Management Report contains certain forward-looking statements about the future outlook for the Group. Although the Directors believe that these statements are based on reasonable assumptions, any such statements should be treated with caution as future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.
Condensed Consolidated Income Statement
26 week period ended 1 May 2010 - Unaudited
|
|
Notes |
26 weeks to 1 May 2010 £000 |
26 weeks to 2 May 2009 £000 |
52 weeks to 31 October 2009 £000 |
|
Gross sales* |
2 |
46,065 |
46,599 |
84,950 |
|
Revenue - continuing operations |
2 |
26,232 |
26,713 |
47,566 |
|
Cost of sales |
|
(12,118) |
(12,407) |
(21,655) |
|
Gross profit |
|
14,114 |
14,306 |
25,911 |
|
Administrative expenses |
|
(13,100) |
(13,654) |
(26,668) |
|
Operating profit/(loss) - continuing operations |
|
1,014 |
652 |
(757) |
|
Interest payable |
|
(105) |
(110) |
(231) |
|
Interest receivable |
|
- |
1 |
1 |
|
Profit/(loss) on ordinary activities before tax |
|
909 |
543 |
(987) |
|
Tax |
4 |
- |
- |
70 |
|
Profit/(loss) for the period from continuing operations |
|
909 |
543 |
(917) |
|
Basic and diluted earnings/(loss) per share (pence) |
5 |
4.43p |
2.65p |
(4.47p) |
|
* |
Gross sales reflect revenue inclusive of concession sales and VAT, all from continuing operations. |
Condensed Consolidated Balance Sheet
As at 1 May 2010 - Unaudited
|
|
Notes |
1 May 2010 £000 |
2 May 2009 £000 |
31 October 2009 £000 |
|
Non-current assets |
|
|
|
|
|
Goodwill |
6 |
892 |
892 |
892 |
|
Property, plant and equipment |
|
23,795 |
24,564 |
24,201 |
|
Financial assets |
|
16 |
16 |
16 |
|
|
|
24,703 |
25,472 |
25,109 |
|
Current assets |
|
|
|
|
|
Inventories |
|
7,728 |
7,017 |
8,234 |
|
Trade and other receivables |
|
4,182 |
4,968 |
4,266 |
|
Cash and cash equivalents |
|
241 |
1,293 |
671 |
|
|
|
12,151 |
13,278 |
13,171 |
|
Total assets |
|
36,854 |
38,750 |
38,280 |
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
(6,800) |
(6,508) |
(8,935) |
|
Tax liabilities |
|
(35) |
(35) |
(35) |
|
Bank loan |
|
(6,900) |
- |
- |
|
|
|
(13,735) |
(6,543) |
(8,970) |
|
Net current (liabilities)/ assets |
|
(1,584) |
6,735 |
4,201 |
|
Non-current liabilities |
|
|
|
|
|
Bank loan |
|
- |
(7,750) |
(7,100) |
|
Retirement benefit obligations |
8 |
(4,533) |
(1,369) |
(4,533) |
|
Deferred tax liabilities |
|
(2,893) |
(4,135) |
(2,893) |
|
Obligations under finance leases |
|
(979) |
(979) |
(979) |
|
Total liabilities |
|
(8,405) (22,140) |
(14,233) (20,776) |
(15,505) (24,475) |
|
Net assets |
|
14,714 |
17,974 |
13,805 |
|
Equity |
|
|
|
|
|
Share capital |
|
1,026 |
1,026 |
1,026 |
|
Share premium account |
|
440 |
440 |
440 |
|
Revaluation reserve |
|
8,151 |
7,510 |
8,209 |
|
Capital redemption reserve |
|
242 |
242 |
242 |
|
ESOP reserve |
|
(28) |
(23) |
(27) |
|
Retained earnings |
|
4,883 |
8,779 |
3,915 |
|
Total equity |
|
14,714 |
17,974 |
13,805 |
Condensed Consolidated Statement of Comprehensive Income
26 week period ended 1 May 2010 - Unaudited
|
|
|
26 weeks to 1 May 2010 £000 |
26 weeks to 2 May 2009 £000 |
52 weeks to 31 October 2009 £000 |
|
Actuarial loss on pension scheme |
|
- |
- |
(3,881) |
|
Tax on items taken directly to equity |
|
- |
- |
1,172 |
|
Net income recognised directly in equity |
|
- |
- |
(2,709) |
|
Profit/(loss) for the period |
|
909 |
543 |
(917) |
|
Total comprehensive income for the period |
|
909 |
543 |
(3,626) |
Condensed Consolidated Statement of Changes in Equity
26 week period ended 1 May 2010 - Unaudited
|
|
|
26 weeks to 1 May 2010 £000 |
26 weeks to 2 May 2009 £000 |
52 weeks to 31 October 2009 £000 |
|
Opening equity |
|
13,805 |
17,431 |
17,431 |
|
Total comprehensive income for the period |
|
909 |
543 |
(3,626) |
|
Total movements in equity for the period |
|
909 |
543 |
(3,626) |
|
Closing equity |
|
14,714 |
17,974 |
13,805 |
Condensed Consolidated Cash Flow Statement
26 week period ended 1 May 2010 - Unaudited
|
|
Note |
26 weeks to 1 May 2010 £000 |
26 weeks to 2 May 2009 £000 |
52 weeks to 31 October 2009 £000 |
|
Cash flows from operating activities before interest and tax |
7 |
391 |
1,819 |
2,433 |
|
Interest paid |
|
(104) |
(130) |
(253) |
|
Interest received |
|
- |
1 |
1 |
|
Net cash inflow from operating activities |
|
287 |
1,690 |
2,181 |
|
Cash flows from investing activities |
|
|
|
|
|
Purchase of property, plant and equipment |
|
(517) |
(320) |
(1,115) |
|
Proceeds from sale of fixed assets |
|
- |
- |
332 |
|
Net cash used in investing activities |
|
(517) |
(320) |
(783) |
|
Cash flows from financing activities |
|
|
|
|
|
New bank loans raised |
|
- |
7,750 |
7,100 |
|
Repayment of bank loans |
|
(200) |
(7,500) |
(7,500) |
|
Net proceeds from obligations under finance leases |
|
- |
1 |
1 |
|
Net cash (used in)/generated from financing activities |
|
(200) |
251 |
(399) |
|
Net (decrease)/ increase in cash and cash equivalents in the period |
|
(430) |
1,621 |
999 |
|
Cash and cash equivalents at beginning of period |
|
671 |
(328) |
(328) |
|
Cash and cash equivalents at end of period (being cash and bank overdrafts) |
|
241 |
1,293 |
671 |
Condensed Analysis of Consolidated Net Debt
Period ended 1 May 2010 - Unaudited
|
|
|
26 weeks to 1 May 2010 £000 |
26 weeks to 2 May 2009 £000 |
52 weeks to 30 October 2009 £000 |
|
Cash at bank Bank overdrafts |
|
241 - |
1,293 - |
671 - |
|
Cash and cash equivalents (including overdrafts) |
|
241 |
1,293 |
671 |
|
Borrowings: |
|
|
|
|
|
Due within one year |
|
(6,900) |
- |
- |
|
Due after one year |
|
- |
(7,750) |
(7,100) |
|
Total borrowings |
|
(6,900) |
(7,750) |
(7,100) |
|
Net debt |
|
(6,659) |
(6,457) |
(6,429) |
Notes to the Condensed Consolidated Financial Statements
Unaudited
|
1. |
|
Accounting Policies |
|
|
|
|
|
|
|
Basis of preparation |
|
|
|
The Interim Financial Statements for the 26 weeks ended 1 May 2010 have been prepared on the basis of the accounting policies set out in the Group's financial statements for the 52 weeks ended 31 October 2009.
|
|
|
|
Going Concern |
|
|
|
The Group and Company have met their day-to-day working capital requirements through the use of one principal bank loan of £9 million which is repayable on 28 February 2011 and an overdraft facility of £112,000 which is repayable on demand. The bank loan has been shown as a current liability because the present facility expires within 12 months. The Group has commenced discussions with its bankers over the renewal of these facilities and is confident of a successful conclusion to these negotiations before the year end.
The bank facilities are secured on the freehold properties of the Group. These properties, excluding the Bolton warehouse, were independently revalued to £12.9 million as at 1 November 2008. The Directors do not consider there has been any material change in the value of these properties.
The facilities include key financial covenants which require testing based on interim as well as full year financial information, the major one being the operating result for the period after interest and before taxation. The Directors have prepared forecast information for the 2009/10 and 2010/11 years, covering a period of more than 12 months from the date of their approval of these financial statements. Forward covenant tests after applying appropriate financial sensitivities and mitigating actions show that none of the covenants are likely to be breached for the foreseeable future.
A breach of one or more of the covenants could result in the Group's debt becoming immediately repayable. Should a covenant breach become likely, there are a number of mitigating actions that the Group could take to avoid being in breach; these include seeking cost reductions and stimulating trade by promotions. The Group has not been required to seek any commitment from its bank to waive or amend any existing covenants and is not aware of any reason why its bank would refuse to support such a request, subject to acceptable terms, were one to be made.
The Group is subject to a number of risks and uncertainties which arise as a result of the current economic environment. In determining that the Group is a going concern, these risks, the most significant of which is the impact on consumer behaviour and thus impact on the level of the Group's sales, have been considered by the directors. The directors have reviewed the Group's future cash forecasts and revenue projections, which they believe are based on prudent market data and past experience and have formed a judgement that at the time of approving these interim statements, based on those forecasts and projections, there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the going concern basis is adopted in preparing these accounts. |
|
2. |
|
Revenue |
|
|
|
All the Group's revenue is derived from retail sales made in the UK. Revenue excludes VAT and the non-commission element of sales made by concession outlets.
|
|
|
|
26 weeks to 1 May 2010 £000 |
26 weeks to 2 May 2009 £000 |
52 weeks to 31 October 2009 £000 |
|
Gross sales |
|
46,065 |
46,599 |
84,950 |
|
VAT |
|
(6,436) |
(6,239) |
(11,215) |
|
Gross sales (excluding VAT) Agency sales less commission |
|
39,629 (13,397) |
40,360 (13,647) |
73,735 (26,169) |
|
Revenue |
|
26,232 |
26,713 |
47,566 |
|
|
|
Seasonality of sales The Group sales are more heavily weighted towards the first half of the calendar year, with 54.9% of gross annual sales of the previous year being made in the first half.
|
|
3. |
|
Segment information |
|
|
|
The Board have reviewed the requirements of IFRS 8 (Segmental Reporting) and consider the business to be one segment.
|
|
4. |
|
Corporation tax |
|
|
|
No tax arises on the result for the period due to the availability of brought forward losses for which no deferred tax asset has previously been recognised. Interim period taxation is accrued based on an estimated effective tax rate of nil (6 months ended 2 May 2009: Nil). The total tax credit for the 52 weeks ended 31 October 2009 was calculated at 7%. |
|
5. |
|
Earnings per share From continuing operations The calculation of the basic and diluted earnings per share is based on the following data: |
|
|
26 weeks to 1 May 2010 £000 |
26 weeks to 2 May 2009 £000 |
52 weeks to 31 October 2009 £000 |
|
Earnings |
|
|
|
|
Earnings/(loss) for the purposes of basic and diluted earnings per share |
909 |
543 |
(917) |
|
Number of shares |
|
|
|
|
Weighted average number of ordinary shares for the purpose of basic earnings per share and for the purposes of diluted earnings per share |
20,524,797 |
20,524,797 |
20,524,797 |
The denominators used are the same as the above for both basic and diluted earnings per share.
No dividend was paid (2009: nil per share).
|
6. |
|
Goodwill As at 1 May 2010 the directors carried out an impairment review. The Board concluded the goodwill had not suffered any impairment.
|
|
7. |
|
Reconciliation of operating profit/(loss) to cash generated from operating activities |
|
|
|
26 weeks to 1 May 2010 £000 |
26 weeks to 2 May 2009 £000 |
52 weeks to 31 October 2009 £000 |
|
|
|
Operating profit/(loss) |
1,014 |
652 |
(757) |
|
|
|
Adjustments for: |
|
|
|
|
|
|
Cash disbursements of pension obligations (net of charge included within the income statement) |
- |
- |
(717) |
|
|
|
Depreciation |
923 |
975 |
1,972 |
|
|
|
Profit on fixed asset disposal |
- |
- |
(171) |
|
|
|
Decrease in inventories |
506 |
1,432 |
215 |
|
|
|
Decrease/(increase) in trade and other receivables |
84 |
(284) |
418 |
|
|
|
(Decrease)/increase in trade and other payables |
(2,136) |
(956) |
1,473 |
|
|
|
Cash generated from operations |
391 |
1,819 |
2,433 |
|
|
|
|
|
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|
8. |
|
Retirement benefit obligations |
|||
|
|
|
The defined benefit obligation at 1 May 2010 has not been restated from the obligation at 31 October 2009 as, in the directors' opinion, there have not been any significant fluctuations. |
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9. |
|
Post balance sheet event |
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|
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On 4 June 2010 Beale PLC acquired the business and assets of the department store Robbs of Hexham from MCR, the Administrator of Vergo Retail Limited (in administration), through its subsidiary J E Beale PLC for £250,000. |
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10. |
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Basis of financial information |
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The condensed set of financial statements included in this interim financial report, approved by the Board of directors on 25 June 2010, does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 and have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union. This Interim Report and Accounts will be sent to shareholders. Further copies may be obtained from the Company Secretary, Beale PLC, The Granville Chambers, 21 Richmond Hill, Bournemouth BH2 6BJ or directly from the Company website www.beales.co.uk.
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The information included in this Interim Financial Statement for the 52 weeks ended 31 October 2009 does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The statutory accounts for the 52 weeks ended 31 October 2009, which were prepared under International Financial Reporting Standards, have been delivered to the Registrar of Companies. The Auditors' report on these accounts was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement made under Section 498(2) or (3) of the Companies Act 2006.
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The financial year ending 30 October 2010 is a 52 week year. |
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Independent Review Report to Beale PLC
We have been engaged by the Company to review the condensed set of financial statements in the interim financial report for the 26 weeks ended 1 May 2010 which comprises the condensed consolidated income statement, the condensed consolidated balance sheet, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and related notes 1 to 10. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The interim financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdoms' Financial Services Authority.
As disclosed in note 10, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this interim financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the 26 weeks ended 1 May 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
Deloitte LLP
Chartered Accountants and Registered Auditors
Southampton, United Kingdom
25 June 2010
Related Shares:
BAE.L