12th Oct 2005 07:00
Moss Bros Group PLC12 October 2005 INTERIM RESULTS FOR THE HALF YEAR ENDED 30 JULY 2005 HIGHLIGHTS Financial • Pre-tax profit of £1.7m (£0.8m profit last year)• Like for like sales up 3% and like for like gross profit up 4%• Gross profit percentage increased from 52.1% to 53.1%• Operating costs tightly controlled (+1.8% up on last year like for like)• Interim dividend maintained at 0.5p (0.5p last year)• Current trading: like for like sales in the first 10 weeks of the new financial year + 1.5% with margin growth ahead of sales. Operational • Improved sales performance across Moss and Hugo Boss with the refitted Cecil Gee stores achieving sales growth of 10%• Improved gross margin benefiting from performance of owned brands and more effective product sourcing• Moss strategy of branded merchandise at good prices delivering increased market share• Cecil Gee stores re-branded; 4 new concept stores delivering positive customer reaction• Improved operating efficiency being achieved throughout the Company Commenting on the results, Philip Mountford, Chief Executive, said: "The Company made further progress in the first half despite the challenging trading conditions. Profits more than doubled to £1.7m against £0.8m last year. It is encouraging that we maintained steady growth in sales and gross margin whilst maintaining a tight control on costs. The Moss fascia is showing particularly good growth and continues to buildmarket share. The product led strategy of branded merchandise at good prices isattracting new customers to the stores. The Board expects market conditions to remain challenging remains optimisticthat the Company can outperform the menswear market and is targeting profitablesales growth in the second half." For further information please contact: Moss Bros Telephone: 0207 447 7239Philip Mountford, Chief ExecutiveAndrew Barclay, Head of Marketing INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JULY 2005 The Company has made further progress in the first half of the financial year,profit before tax was £1.7m against £0.8m as adjusted under InternationalFinancial Reporting Standards (as described in note 2) in the equivalent periodlast year. Underlying trading continued to improve with like for like sales up 3%, andgross margin up 4%, gross profit percentage increased by a further 1 percentagepoint from 52.1% to 53.1%. Trading Results 2005/06 2004/05-------------------------------------------------------------------------------- 1st Half 1st Half 2nd Half--------------------------------------------------------------------------------Sales v last year (like for like) +3% +8% +10%Gross profit v last year (like for like) +4% +11% +13%% Gross profit 53.1% 52.1% 52.4%% Gross profit v last year +1.0% +2.1% +2.0%--------------------------------------------------------------------------------Operating profit £m 1.5 0.6 4.8--------------------------------------------------------------------------------v last year £m +0.9 +2.5 +2.0--------------------------------------------------------------------------------Trading conditions were more challenging than expected with the Moss fasciadriving the progress made in the first half. The Moss (106 stores) offer builds from strength in quality branded suits atgood prices, complemented by shirts, ties and casualwear as well as the sale andhire of dresswear and formalwear. The Moss fascia is performing well in a highlycompetitive market with like for like sales up 4% and gross margin improving bya further 2 percentage points. The sales growth in Moss is driven by suits,formal shirts, casualwear and dresswear. The trading stance for the Moss fascia is promotion driven and offers product ata broad range of prices which appeal to a wide range of customers. As awareness of the Moss offer improves more new customers are being attractedto Moss stores and the fascia is growing market share and profitability. Hugo Boss (11 stores) sales were up 3% like for like whilst Cecil Gee (22stores) sales flat were against the first half of last year. The four refittedCecil Gee stores, trading under the new concept, achieved sales growth of 10%. The Company's like for like increase in gross margin of 4% builds on the 11%growth achieved in the first half of last year. The improvement in gross marginreflects: improved product ranges, better buying terms, better sourcing, moreeffective promotions and a higher mix of own brand sales. Total operating costs were up 1.3% on last year; after adjusting for the impactof new stores and closed stores, like for like operating costs were up 1.8%.Costs are being tightly controlled and further improvements made in operationalefficiency that partly offset a 4% increase in rent and a 7% increase in rates.Marketing expenditure has been increased by 11% with more investment ineffective local marketing to build awareness and attract new customers. For the first time, financial results have been reported under InternationalFinancial Reporting Standards (IFRS). Comparative figures have been restatedwith reconciliations to UK GAAP provided in the Appendices to these results.The impact of applying IFRS on first half profit before tax, this year and lastyear, is less than £0.1m. CASH FLOW The cash position of the Company continues to improve: the average cash balancein the first half of £7.4m was 6% up on the first half of last year. The cashbalance at the end of the half increased by £0.7m to £10.3m. Capital expenditure in the half was £2.5m against a depreciation charge of£2.1m. The Moss refit programme continued with a further 11 stores refitted in thefirst half at a cost of £0.4m. This relatively low cost investment, combinedwith a stock offer to match the local market, achieved strong incremental growthin sales and is on target to achieve a two year payback. Four new Moss stores were opened in the first half at Banbury, Ipswich, York andLeicester. The reaction of customers in these locations is very encouraging,with Moss Bros Hire in particular showing strong brand recognition. A furthersix new stores are planned to be opened in the second half. Following the successful launch of the new Cecil Gee concept store in Lakesidein October last year, £0.4m has been invested in refitting new concept stores atBrent Cross, Gateshead and Edinburgh. The results of this investment have beenencouraging with a sales gain of 10% post refit. Four Cecil Gee stores were closed in and around London; these stores were inlocations with limited trading potential and did not fit with the strategy offocusing on the major shopping centre locations. These stores were exited at nilnet cost to the Company. Stock at the half year was up 3% on July 2004 with total net selling space up 1%year on year. Availability of stock continues to improve and the investment in fixturing anddisplay equipment is focused on better and more efficient presentation ofmerchandise. Suppliers continue to hold buffer stock on short lead times tosupport the drive to increase sales density. Working capital in the first half (stock plus debtors less creditors excludingdeferred tax) increased by £7.0m from the season low at the end of January. Thiswill reverse in the second half, with cash flow expected to be stronglypositive. EARNINGS PER SHARE AND DIVIDEND Basic earnings per share was 1.29p against 0.54p last year (as restated). The Board is recommending an interim dividend of 0.50p per share (2004/05interim 0.50p). This will be paid on 25 November 2005 to shareholders on theregister at the close of business on 28 October 2005. OPERATIONAL REVIEW The Company's strategy over the last two years has remained consistent. The aimis to realise fully the potential of the Moss and Cecil Gee fascia and todevelop the Hugo Boss chain on a selective basis. This will be achieved throughinvestment in existing stores, where there remains considerable unrealisedpotential, and selective acquisition of new stores. This growth strategy is underpinned by four key objectives: • understanding customer requirements; • improving product ranges; • improving operational efficiency; and • developing people. By consistently re-focusing and organising activity on these objectives andadapting plans to meet changing market circumstances the Company has been ableto grow sales profitably and maintain momentum despite more challenging marketconditions. UNDERSTANDING CUSTOMER REQUIREMENTS The Moss customer seeks branded merchandise at good prices. The brands andstyles are selected to provide ranges which appeal to a broad customer base. Keyto the success of Moss is ensuring that the mix of brands and ranges within eachstore are relevant to that market and that the prices offered are competitive. Effective promotional offers are key to the success of Moss and lead offers areset to provide a proposition that attracts customers to the stores on a regularbasis. The Moss refit programme aims to raise standards in store, both in terms of theenvironment and the presentation of product. Improved store standards, relevantproduct mix and focused promotions result in increased sales. 58 Moss storeshave been refitted since the programme commenced in 2003. The Cecil Gee customer wants exciting brands in an aspirational environment.Refitted stores have performed well; the image of these stores has beentransformed and branded offers have been enhanced. Sales of fashion suits and formal shirts continue to grow, with the Cecil Geebrand growing sales by 11%. The Hugo Boss stores provide ranges which have been segmented into Black, Orangeand Green labels as well as the Hugo sub-brand. Through careful range selectionand space planning, the mix of offer is varied to match customer requirements.The Hugo Boss brand continues to hold a premium rating and appeal to a broadrange of customers. IMPROVING PRODUCT RANGE Branded suit sales continue to grow and achieved margin has been enhanced withstrong sales performance from own brands, including Ventuno 21, styled to appealto the fashion conscious customer. Younger fashion brands, including Ventuno 21,YSL, Ben Sherman and Ted Baker performed exceptionally well and it is clear thatthe Moss fascia is now attracting more customers aged 18 to 30. The formal shirt market offers considerable growth potential. The shirt rangehas been extended with the launch of the Savoy Taylors Guild business shirt.This prestigious brand was successfully re-launched in six London stores in thefirst half and is being rolled out to 26 Moss stores in Autumn 2005 and formspart of the Moss Direct Shirt Catalogue, an exciting collection of exclusiveshirts on the website: WWW.mossdirect.co.uk. IMPROVING OPERATIONAL EFFICIENCY Selling skills in the Company are improving. Customers want to be well informedand value the product knowledge and advice a good salesperson can bring. Thisrelationship builds trust and confidence and encourages repeat visits to thestores. Sales and product knowledge training 'schools' have been successfullyrun across all three fascia and have raised staff skill levels and awareness ofproduct. Visual merchandising standards in the Company continue to improve. The image ofstores and presentation of product is being enhanced through investment infixturing, display equipment and product visuals that make the stores a moreexciting shopping experience. Work remains to be done but the customer'sperception is improving and more customers are visiting the stores. DEVELOPING PEOPLE Energy and ambition from employees throughout the Company is encouraged. TheCompany looks for staff who are 'passionate about clothing', one of the six corevalues. Store Managers are incentivised to play a full part in shaping theproduct range on offer and to feed back what their customers want. It is encouraging the degree of ownership which has built up in the Company andthe pride staff take in presenting their stores. In the first half, 12 AssistantManagers were promoted to Manager level and their enthusiasm and drive has beenof great encouragement. OUTLOOK The UK retail market is subdued and the menswear sector remains highlycompetitive. Sales in the first ten weeks of the second half are 1.5% up on lastyear like for like with margin growth ahead of sales. The Board remains optimistic that the Company can outperform the menswear marketand is targeting profitable sales growth in the second half. CONSOLIDATED INCOME STATEMENTfor the six months to 30 July 2005-------------------------------------------------------------------------------- Year to 6 months to 29 January 31 July 2005 2004 6 months to (Restated) (Restated) 30 July 2005 (note 2) (note 2) £'000 £'000 £'000--------------------------------------------------------------------------------Revenue 62,377 130,203 61,006Cost of Sales (29,280) (62,244) (29,214)--------------------------------------------------------------------------------Gross Profit 33,097 67,959 31,792Administration Expenses (2,404) (5,257) (2,577)Distribution Expenses (29,147) (57,221) (28,578)--------------------------------------------------------------------------------Operating Profit before financingcosts 1,546 5,481 637Financial Income 158 265 136Financial Expenses - (2) ---------------------------------------------------------------------------------Profit before taxation 1,704 5,744 773Taxation (526) (2,097) (276)--------------------------------------------------------------------------------Profit after taxation 1,178 3,647 497-------------------------------------------------------------------------------- Basic earnings per share 1.29 p 3.98 p 0.54 pDiluted earnings per share 1.25 p 3.90 p 0.53 p-------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETas at 30 July 2005-------------------------------------------------------------------------------- As at As at 29 January 31 July 2005 2004 As at (Restated) (Restated) 30 July 2005 (note 2) (note 2) £'000 £'000 £'000--------------------------------------------------------------------------------AssetsProperty, plant and equipment 21,122 20,207 19,758Lease prepayments 2,386 2,913 2,513Deferred tax asset - - 1,394--------------------------------------------------------------------------------Total non-current assets 23,508 23,120 23,665 Inventories 22,449 21,357 21,767Trade and other receivables 5,163 6,040 4,861Cash and cash equivalents 10,250 16,815 9,614--------------------------------------------------------------------------------Total current assets 37,862 44,212 36,242--------------------------------------------------------------------------------Total Assets 61,370 67,332 59,907-------------------------------------------------------------------------------- EquityIssued capital 4,603 4,603 4,603Share premium account 8,028 8,028 8,028Share option reserve 134 86 29Retained earnings 35,406 35,143 32,442--------------------------------------------------------------------------------Total equity 48,171 47,860 45,102--------------------------------------------------------------------------------LiabilitiesTrade and other payables 971 845 824Deferred tax liabilities 952 427 ---------------------------------------------------------------------------------Total non-current liabilities 1,923 1,272 824-------------------------------------------------------------------------------- Trade and other payables 11,276 18,200 13,981--------------------------------------------------------------------------------Total current liabilities 11,276 18,200 13,981--------------------------------------------------------------------------------Total liabilities 13,199 19,472 14,805--------------------------------------------------------------------------------Total equity and liabilities 61,370 67,332 59,907-------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CASH FLOWSFor the six months to 30 July 2005-------------------------------------------------------------------------------- 12 months to 6 months to 29 January 31 July 2005 2004 6 months to (Restated) (Restated) 30 July 2005 (note 2) (note 2) £'000 £'000 £'000--------------------------------------------------------------------------------CASH FLOWS FROM OPERATING ACTIVITIESProfit before tax for the period 1,704 5,744 773Adjustments for:(Profit)/loss on sale of fixed assets (86) 45 (2)Interest received (158) (265) (136)Depreciation 2,101 3,945 2,007Equity settled share-based payment expenses 48 86 29Decrease in trade and other receivables 877 204 1,432Increase in inventories (1,092) (1,786) (2,196)Decrease in trade and other payables (6,814) (1,960) (6,201)--------------------------------------------------------------------------------Net cash from operating activities (3,420) 6,013 (4,294)-------------------------------------------------------------------------------- CASHFLOWS FROM INVESTING ACTIVITIESProceeds from sale of property, plantand equipment 100 453 452Proceeds from sale of investments - 16 7Interest received 158 265 136Acquisition of property, plant andequipment (2,488) (4,891) (2,104)--------------------------------------------------------------------------------Net cash from investing activities (2,230) (4,157) (1,509)-------------------------------------------------------------------------------- CASHFLOWS FROM FINANCING ACTIVITIESProceeds from the issue of sharecapital - 19 19Dividends paid (915) (1,373) (915)--------------------------------------------------------------------------------Net cash from financing activities (915) (1,354) (896)--------------------------------------------------------------------------------Net (decrease)/increase in cash andcash equivalents (6,565) 502 (6,699)Cash and cash equivalents atbeginning 16,815 16,313 16,313of period --------------------------------------------------------------------------------Cash and cash equivalents at end ofperiod 10,250 16,815 9,614-------------------------------------------------------------------------------- Consolidated Statement of Changes in Shareholders' EquityFor the six months to 30 July 2005-------------------------------------------------------------------------------- Share Share Share Option Retained Total Capital Premium Reserve Earnings-------------------------------------------------------------------------------- At 1 February 2004 4,598 8,014 - 32,853 45,465Shares issued 5 14 19Contribution to QUEST 7 7Employee share basedpayments 29 29Profit after taxation 497 497Dividends (915) (915)--------------------------------------------------------------------------------At 31 July 2004 4,603 8,028 29 32,442 45,102-------------------------------------------------------------------------------- Contribution to QUEST 9 9Employee share basedpayments 57 57Profit after taxation 3,150 3,150Dividends (458) (458)--------------------------------------------------------------------------------At 29 January 2005 4,603 8,028 86 35,143 47,860-------------------------------------------------------------------------------- Employee share basedpayments 48 48Profit after taxation 1,178 1,178Dividends (915) (915)--------------------------------------------------------------------------------At 30 July 2005 4,603 8,028 134 35,406 48,171-------------------------------------------------------------------------------- Notes to the Interim Resultsfor the six months to 30 July 2005 1. Basis of preparation EU law (IAS Regulation EC 1606/2002) requires that the next annual consolidated financial statements of Moss Bros Group Plc ("the Group"), for the year ending 28 January 2006, be prepared in accordance with International FinancialReporting Standards adopted for use in the EU ("IFRSs"). The Group adopted IFRSs with effect from 30 January 2005. The transition date was 1 February 2004 being the start date of the earliest period for which the Group presents full comparative information in its 2006 Annual Report and Accounts. These condensed consolidated interim financial statements have been prepared on the basis of the recognition and measurement requirements of IFRSs for interim financial statements. These are the Group's first IFRS condensed consolidated interim financial statements for part of the period covered by the first IFRS annual financial statements and IFRS 1 "First-time Adoption of International Financial Reporting Standards" has been applied. The condensed consolidatedinterim financial statements do not include all of the information required for full financial statements. An explanation of how the transition to IFRS has affected the reported financial position, financial performance and cash flows of the Group is provided in note 2. Appendix I includes reconciliation of equity and profit for comparativeperiods reported under UK GAAP to those periods reported under IFRS. The adopted IFRSs that will be effective (or available for early adoption) in the annual financial statements for the year ending 28 January 2006 are still subject to change and to additional interpretations and therefore cannot bedetermined with certainty. Accordingly, the accounting policies for that annual period will be determined finally only when the annual financial statements are prepared for the year ending 28 January 2006. The comparative figures for the year ended 29 January 2005 are not the Group's statutory accounts for that financial year. Those accounts, which were prepared under UK GAAP, have been reported on by the Group's auditors and delivered to the Registrar of Companies. This report of the auditors was unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. The interim information for the 6 months ended 30 July 2005 and 31 July 2004 has not been audited or reviewed by the auditors. The preparation of financial information in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting policies are recognised in the period in which the estimate is revised if the revision affects only that period, or in the periodof revision and future periods if the revision affects both current andfuture periods. 2. Significant accounting policies and explanation of impact of transition to IFRSs Accounting policies adopted have been applied consistently and are consistent with those set out in the annual financial statements for the year ended 29 January 2005 except as detailed below. The accounting policies have been applied in preparing the condensed consolidated interim financial statements for the six months ended 30 July 2005, the comparative information for the six months to 31 July 2004, the financial information for the year ended 29 January 2005 and the preparation of an opening IFRS balance sheet at 31 January 2004. The impact on deferred tax of the adjustments described below is set out in note (e). (a) ImpairmentPolicy The carrying amounts of the Group's assets are reviewed on a store by store basis at each balance sheet date to determine whether there is any indication of impairment. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in profit.The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows generated by the asset are discounted to their present value. Rationale and impact Under IAS 36, individual assets should be reviewed for impairment when there are any indicators of impairment. The IASB indicates that retailers should consider individual stores as 'Cash-Generating Units' for impairment purposes; underUK GAAP, retailers considered stores on a brand basis. Following impairment reviews at the opening balance sheet date 31 January 2004, a small number of stores were identified which required a provision for impairment of £1,325,000, reducing both retained earnings and non-currentassets by this amount. The effect of this impairment was to reduce distribution expenses (depreciation plus losses on disposal) and increase profit by £366,000 for the year ended 29 January 2005. Trade and other payables have been reduced by £63,000 as at 29 January 2005 as an accrual for disposal costs no longer needs to be recognised at that date due to the earlier impairment charge.A similar review was performed at 29 January 2005 but no further stores required an impairment provision. (b) Share-based payment transactionsPolicy The share option plan allows employees to acquire shares in the Group. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using the Black-Scholes model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that are expected to vest. Details of the assumptions used are set out in note 6. Rationale and impact In accordance with IFRS 2, a charge to the income statement has been recognised representing the fair value of share based payments granted to employees after 7 November 2002. The effect of accounting for equity-settled share-based payment transactions at fair value is to increase administrative expenses by £29,000 for the six months to 31 July 2004 and by £86,000 for the year to 29 January 2005. (c) Operating lease paymentsPolicy Payments made under operating leases are recognised in the income statement on a straight line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense. Rationale and impact Under UK GAAP, rent free periods and premiums received were spread to the first market rent review date. Under IFRS SIC 15 "Operating leases - incentives", the requirement is for such incentives to be spread over the length of the lease.As a result, the adjustment required for incentives as at 31 January 2004 was to increase deferred income within trade and other payables and reduce retained earnings by £969,000. The impact on the year to 29 January 2005 financial statements was a further increase in deferred income and a reduction in retained earnings of £51,000. (d) DividendsPolicy Dividends are recognised as a liability in the period in which they aredeclared. Rationale and impact Dividends declared after the balance sheet date will not be recognised as a liability as at that balance sheet date. The final dividend of £915,000 declared in May 2004 relating to the 2003/04 financial year has been reversed in theJanuary 2004 balance sheet and charged to retained profit for the six months to 31 July 2004. Similarly the July 2004 and January 2005 balance sheets have been adjusted to reverse the dividends declared in October 2004 and April 2005 respectively. (e) TaxationPolicy Income tax on the profit for the periods presented comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investmentsin subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided uses tax rates that areexpected to apply to the period when the asset is realised or liability settled based on tax rates that have been enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Rationale and impact Under IFRS, a deferred tax liability has been recognised in relation to chargeable gains that have been previously rolled over into qualifying capital asset additions. The adjustment required to the opening balance sheet as at 31 January 2004 is to recognise a deferred tax liability of £2,145,000. No further gains have been rolled over since 31 January 2004. A deferred tax asset of £1,594,000 has been recognised as at 31 January 2004 representing trading losses offsettable against the capital gains deferred tax liability rolled over as the losses and capital gains arose in the same periods. A further deferred tax asset of £1,823,000 representing further trading losses, net of deferred tax temporary differences, has been recognised at 31 January 2004 as it was anticipated that there would be sufficient future profits to offset these losses. In addition, deferred tax has been provided in respect of certain of the aboveIFRS transitional adjustments where the requirements of IAS 12 require so. The impact was to increase the deferred tax asset by £398,000 as at 31 January 2004.As at 31 July 2004, the net adjustment is a debit to the income statement due to the trading losses having been recognised under UK GAAP at that date. Deferred tax assets of £20,000 and £100,000 have been recognised in the six months to 31 July 2004 and the year to 29 January 2005 in relation to share based payments under IFRS 2. These amounts are calculated by reference to thedifference between the option exercise price and the share market price at each balance sheet date. The part of the deferred tax credit in respect of this asset in excess of the share based payment charge (£14,000) has been taken to equity as required by IAS 12 3. Seasonality The Group's operations have historically experienced higher revenue during the second half of the financial year. This is primarily due to the Christmas period and post Christmas sale. Accordingly, the results of operations for the interimperiod are not indicative of the results which may be expected for the entire financial year. 4. Earnings per share Basic earnings per ordinary share are based on the weighted average of 91,572,615 (January 2005 : 91,545,602; July 2004 : 91,500,279) ordinary sharesin issue during the period and are calculated by reference to the profit attributable to shareholders of £1,178,000 (January 2005 : £3,647,000; July 2004 : £497,000). Diluted earnings per ordinary share are based upon the weighted average of 94,215,981 (January 2005 : 93,552,349; July 2004 : 93,334,197) ordinary shares which takes into account share options outstanding and are calculated by reference to the profit attributable to shareholders as stated above. 5. Dividends The following dividends were paid in the period: Six months Year to Six months to 30 July 29 January to 31 July 2005 2005 2004 £'000 £'000 £'000 --------------------------------------------------------------------------------Final dividend 1.00 pence per share (2004 :1.00 pence per share) 920 920 920 Interim dividend (2004 : 0.50 penceper share) - 458 - Write back of waived dividends onshares held by QUEST (5) (5) (5) -------------------------------------------------------------------------------- 915 1,373 915 -------------------------------------------------------------------------------- The directors have declared a dividend of 0.50 pence per share, totalling £458,000, payable on 25 November 2005. 6. Share based payments Four equity settled share option grants made prior to 7 November 2002 are outstanding. In accordance with the transitional provisions in IFRS 1 and IFRS 2, the recognition and measurement principles in IFRS 2 have not been appliedto these grants. On 11 May 2004, share options were granted to key management personnel and senior employees to purchase shares in the Group under the Executive Share Option Scheme. The terms and conditions of the share option scheme are disclosed in the annual financial statements for the year ended 29 January 2005. On 26 May 2005, a further grant on similar terms was made to senior employees. In accordance with the schemes, options are exercisable at the market price of the shares at the date of grant. Both these grants are subject to IFRS 2 as set out in note 2. The terms and conditions of the grants made during the prior year and for the six months ended 30 July 2005 are as follows; all option exercises are settled by physical delivery of shares: Grant date/employees No of Contractual entitled instruments Vesting conditions life of options-------------------------------------------------------------------------------- Option grant to 2,550,000 3 years of service 10 years(7 yearssenior employees Earnings per Share must after end of at 11 May 2004 reach at least 5 pence vesting period) 10 years per Ordinary Share--------------------------------------------------------------------------------Option grant to 520,000 3 years of service 10 years (7 yearssenior employees 12.5% plus RPI per annum after end of at 26 May 2005 compounded over 3 years vesting period) -------------------------------------------------------------------------------- The fair values of services received in return for share options granted to employees is measured by reference to the fair value of share options granted.The estimate of the fair value of the services received is measured based on theBlack-Scholes model. The contractual life of the options (10 years) is used as an input into this model. Expectations of early exercise are input into themodel. Fair value of share options and assumptions 2005 grant 2004 grant--------------------------------------------------------------------------------Fair value at measurement date (pence per share) 31.30 18.90Share price (pence per share) 104.00 61.75Exercise price (pence per share) 104.00 61.75Expected volatility (expressed as weighted averagevolatility used in the modelling under theBlack-Scholes model) 29.70% 29.80%Option life 4 4Expected dividend yield 1.70% 1.70%Risk-free interest rate (based onnational government bonds) 4.00% 4.00%--------------------------------------------------------------------------------The expected volatility is based on the historic volatility adjusted for any expected change to future volatility. 7. Interim report This interim report is available on application from the Company Secretary, Moss Bros Group Plc, 8 St John's Hill, Clapham Junction, London, SW11 1SA. Consolidated Income Statement IFRS RestatementAppendix 1 ---------------------------------------------------------------------------------------------------------------- 6 months to IFRS 2 IAS 36 IAS 12 31 July 2004 IAS 17 Share based Impairment Deferred 6 months to (Reported under Leasing payments of FA tax 31 July 2004 UK GAAP) (note 2c) (note 2b) (note 2a) (note 2e) (Restated) £'000 £'000 £'000 £'000 £'000 £'000----------------------------------------------------------------------------------------------------------------Revenue 61,006 61,006Cost of Sales (29,214) (29,214)----------------------------------------------------------------------------------------------------------------Gross Profit 31,792 31,792Administration Expenses (2,548) (29) (2,577)Distribution Expenses (28,677) (27) 126 (28,578)----------------------------------------------------------------------------------------------------------------Operating Profit before financing costs 567 (27) (29) 126 637Financial Income 136 136Financial Expenses - -----------------------------------------------------------------------------------------------------------------Profit before taxation 703 (27) (29) 126 773Taxation 2,499 20 (2,795) (276)----------------------------------------------------------------------------------------------------------------Profit after taxation 3,202 (27) (9) 126 (2,795) 497---------------------------------------------------------------------------------------------------------------- Year to IFRS 2 IAS 36 IAS 12 Year to January 2005 IAS 17 Share based Impairment Deferred 9 January (Reported under Leasing payments of FA tax 2005 UK GAAP) (note 2c) (note 2b) (note 2a) (note 2e) (Restated) £'000 £'000 £'000 £'000 £'000 £'000 ------------------------------------------------------------------------------------------------------------- Revenue 130,203 130,203 Cost of Sales (62,244) (62,244) -------------------------------------------------------------------------------------------------------------- Gross Profit 67,959 67,959 Administration Expenses (5,171) (86) (5,257) Distribution Expenses (57,536) (51) 366 (57,221) -------------------------------------------------------------------------------------------------------------- Operating Profit before financing costs 5,252 (51) (86) 366 5,481 Financial Income 265 265 Financial Expenses (2) (2) -------------------------------------------------------------------------------------------------------------- Profit before taxation 5,515 (51) (86) 366 5,744 Taxation 1,709 86 (3,892) (2,097) -------------------------------------------------------------------------------------------------------------- Profit after taxation 7,224 (51) - 366 (3,892) 3,647 -------------------------------------------------------------------------------------------------------------- IFRS RestatementAppendix 1----------------------------------------------------------------------------------------------------------------------- As at IFRS 2 IAS 12 31 January 2004 IAS 17 Share based IAS 10 IAS 36 Deferred As at 31 (Reported under Leasing payments Dividends Impairment tax January 2004 UK GAAP) (note 2c) (note 2b) (note 2d) (note 2a) (note 2e) (Restated) £'000 £'000 £'000 £'000 £'000 £,000 £'000-----------------------------------------------------------------------------------------------------------------------AssetsProperty,plant and equipment 20,258 (1,125) 19,133Lease prepayments 3,242 (200) 3,042Deferred tax asset - 1,670 1,670-----------------------------------------------------------------------------------------------------------------------Total non-current assets 23,500 (1,325) 1,670 23,845-----------------------------------------------------------------------------------------------------------------------Inventories 19,571 19,571Trade and other receivables 6,742 6,742Cash and cash equivalents 16,313 16,313-----------------------------------------------------------------------------------------------------------------------Total current assets 42,626 42,626-----------------------------------------------------------------------------------------------------------------------Total assets 66,126 - - - (1,325) 1,670 66,471----------------------------------------------------------------------------------------------------------------------- EquityIssued capital 4,598 4,598Share premium account 8,014 8,014Retained earnings 32,562 (969) 915 (1,325) 1,670 32,853-----------------------------------------------------------------------------------------------------------------------Total equity 45,174 (969) - 915 (1,325) 1,670 45,465----------------------------------------------------------------------------------------------------------------------- LiabilitiesTrade and other payables - 849 849-----------------------------------------------------------------------------------------------------------------------Total non-current liabilities - 849 849-----------------------------------------------------------------------------------------------------------------------Trade and other payables 20,952 120 (915) 20,157-----------------------------------------------------------------------------------------------------------------------Total current liabilities 20,952 120 (915) 20,157-----------------------------------------------------------------------------------------------------------------------Total liabilities 20,952 969 (915) 21,006-----------------------------------------------------------------------------------------------------------------------Total equity and liabilities 66,126 - - - (1,325) 1,670 66,471----------------------------------------------------------------------------------------------------------------------- IFRS Restatement continuedAppendix 1 As at IFRS 2 IAS 12 31 July 2004 IAS 17 Share based IAS 10 IAS 36 Deferred As at 31 (Reported under Leasing payments Dividends Impairment tax July 2004 UK GAAP) (note 2c) (note 2b) (note 2d) (note 2a) note 2e) (Restated) £'000 £'000 £'000 £'000 £'000 £'000 £'000-----------------------------------------------------------------------------------------------------------------------AssetsProperty, plant and equipment 20,775 (1,017) 19,758Lease prepayments 2,695 (182) 2,513Deferred tax asset 2,499 20 (1,125) 1,394-----------------------------------------------------------------------------------------------------------------------Total non-current assets 25,969 20 (1,199) (1,125) 23,665-----------------------------------------------------------------------------------------------------------------------Inventories 21,767 21,767Trade and other receivables 4,861 4,861Cash and cash equivalents 9,614 9,614-----------------------------------------------------------------------------------------------------------------------Total current assets 36,242 36,242-----------------------------------------------------------------------------------------------------------------------Total assets 62,211 - 20 - (1,199) (1,125) 59,907----------------------------------------------------------------------------------------------------------------------- EquityIssued capital 4,603 4,603Share premium account 8,028 8,028Share option reserve - 29 29Retained earnings 35,313 (996) (9) 458 (1,199) (1,125) 32,442-----------------------------------------------------------------------------------------------------------------------Total equity 47,944 (996) 20 458 (1,199) (1,125) 45,102----------------------------------------------------------------------------------------------------------------------- LiabilitiesTrade and other payables - 824 824-----------------------------------------------------------------------------------------------------------------------Total non-current liabilities - 824 824-----------------------------------------------------------------------------------------------------------------------Trade and other payables 14,267 172 (458) 13,981-----------------------------------------------------------------------------------------------------------------------Total current liabilities 14,267 172 (458) 13,981-----------------------------------------------------------------------------------------------------------------------Total liabilities 14,267 996 (458) 14,805-----------------------------------------------------------------------------------------------------------------------Total equity and liabilities 62,211 - 20 - (1,199) (1,125) 59,907----------------------------------------------------------------------------------------------------------------------- IFRS Restatement continuedAppendix 1 As at IFRS 2 IAS 12 29 January 2005 IAS 17 Share based IAS 10 IAS 36 Deferred As at 29 (Reported under Leasing payments Dividends Impairment tax January 2005 UK GAAP) (note 2c) (note 2b) (note 2d) (note 2a) (note 2e) (Restated) £'000 £'000 £'000 £'000 £'000 £'000 £'000-----------------------------------------------------------------------------------------------------------------------AssetsProperty, plant and equipment 21,114 (907) 20,207Lease prepayments 3,028 (115) 2,913Deferred tax asset 1,709 86 (1,795) ------------------------------------------------------------------------------------------------------------------------Total non-current assets 25,851 86 (1,022) (1,795) 23,120-----------------------------------------------------------------------------------------------------------------------Inventories 21,357 21,357Trade and other receivables 6,040 6,040Cash and cash equivalents 16,815 16,815-----------------------------------------------------------------------------------------------------------------------Total current assets 44,212 44,212-----------------------------------------------------------------------------------------------------------------------Total assets 70,063 - 86 - (1,022) (1,795) 67,332----------------------------------------------------------------------------------------------------------------------- EquityIssued capital 4,603 4,603Share premium account 8,028 8,028Share option reserve - 86 86Retained earnings 38,429 (1,020) 915 (959) (2,222) 35,143-----------------------------------------------------------------------------------------------------------------------Total equity 51,060 (1,020) 86 915 (959) (2,222) 47,860----------------------------------------------------------------------------------------------------------------------- LiabilitiesTrade and other payables - 845 845Deferred tax liabilities - 427 427-----------------------------------------------------------------------------------------------------------------------Total non-current liabilities - 845 427 1,272-----------------------------------------------------------------------------------------------------------------------Trade and other payables 19,003 175 (915) (63) 18,200-----------------------------------------------------------------------------------------------------------------------Total current liabilities 19,003 175 (915) (63) 18,200-----------------------------------------------------------------------------------------------------------------------Total liabilities 19,003 1,020 (915) (63) 427 19,472-----------------------------------------------------------------------------------------------------------------------Total equity and liabilities 70,063 - 86 - (1,022) (1,795) 67,332----------------------------------------------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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