30th Jun 2008 07:00
30 June 2008
Beale PLC, the specialist department store operator, announces Interim Results for the 26 weeks ended 3 May 2008.
Like for like gross sales* declined by 6.4%, because of the continuing depressed retail environment. Gross sales for the period declined by 14.5%, reflecting the closure of the Ealing store at the end of October 2007.
Revenue for the period was £27 million (2007: £32.4 million including Ealing).
Substantial cost reductions achieved during the period with like for like costs £1.25 million lower than the comparative period. Total administration expenses for the period of £13.9 million reduced from £16.6 million (including Ealing).
Despite the fall in sales, Group profit before tax increased slightly to £881,000 (2007: £875,000).
Tight control of working capital has resulted in net debt of £5.3 million, unchanged from the comparative period end.
Tony Brown, previously retail director of British Home Stores, joined the company as Chief Executive on 1 June 2008 bringing invaluable experience and energy to Beales.
Mike Killingley, Chairman, commented: "The deterioration of the UK economy since this time last year has dramatically affected consumer confidence and it seems likely that the economy will remain depressed for some time. We have limited the impact of these difficulties by reducing our cost base substantially and we are continuing to examine costs critically to enable further savings to be made. A return to profitability, however, depends on reversing the decline in sales. Our senior management team, under Tony Brown, is developing its strategy to deliver such improvements, and we will report on this strategy and its implementation more fully at the time of the full year results. We do not anticipate any significant improvement in our sales performance during the remainder of the current financial year."
For further information:
|
Beale PLC |
Tavistock Communications |
Blue Oar Securities PLC |
|
Mike Killingley, Chairman |
Lulu Bridges |
Mike Coe |
|
Ken Owst, Finance Director |
Polly Hutchinson |
Tel: 0117 933 0020 |
|
Tel: 01202 552022 |
Tel: 020 7920 3150 |
* Gross sales include the full value of concession sales and VAT and, in the opinion of the Directors, provides a more realistic indication of customers' spending patterns than revenue. See note 2 for further information.
Interim Management Report - 26 weeks ended 3 May 2008
Financial results
The Group profit before tax for the 26 week period ended 3 May 2008 was similar to last year at £881,000 (2007: £875,000). This was achieved as a result of substantial reductions in our costs, and despite a significant fall in sales, due to a depressed retail environment.
Gross like for like sales, which include the full value of concession sales and VAT, were 6.4% lower than in the same period last year, at £48.7 million. As previously reported our Ealing store closed at the end of October 2007. The decline in total gross sales was 14.5%. Revenue, which excludes the non-commission element of concession sales and VAT, was 16.7% down on last year at £27.0 million (2007: £32.4 million).
Gross margins were maintained at levels similar to those of last year.
We have undertaken a thorough review of the cost base of Beales, and like for like costs in the first half were £1.25 million lower than the comparative period last year. Cost savings have been made throughout the business, and it is this which has enabled us to report an unchanged first half profit despite the fall in sales. The total costs have, of course, fallen by substantially more than this because of the closure of Ealing. The like for like saving of £1.25 million in just the first 6 months is much greater than the £1 million annual saving included in our current year budget, and which we reported in the chairman's statement accompanying our accounts for the 53 weeks ended 3 November 2007.
Earnings per share increased to 2.79p (2007: 2.56p) reflecting the increase in profit for the period.
Dividends
No dividend is proposed, nor will a return to the dividend list be considered until full year profitability has been restored.
Financial position
Tight management of our working capital has enabled us to end the period with net debt of £5.3 million, the same as at 28 April 2007. Our inventories and trade payables both declined, in large part due to the reduced scale of the business following the closure of our Ealing store.
We continue to trade well within our available bank facilities.
Board
Tony Brown joined the company as chief executive on 1 June 2008, to replace Allan Allkins, who has retired, with our good wishes for the future. As the retail director of British Home Stores for the past seven years, Tony brings invaluable experience and energy to Beales. He is rapidly getting to know the business and seeking to identify opportunities for improving our performance, and I shall look forward to reporting on progress when we announce our full year results.
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 deterioration in the UK economy since this time last year has dramatically affected consumer confidence and hence the level of spending in department stores. Inflation, particularly in food and fuel costs, is preventing the authorities using lower interest rates to boost the economy. It therefore seems likely that the economy will remain depressed for some time, and this constitutes the principal risk and uncertainty facing the Company. As reported earlier in this statement, we have limited the impact of these difficulties by reducing our cost base substantially, and we are continuing to examine our costs critically to enable further savings to be made. A return to profitability depends, however, on reversing the decline in sales. Our senior management team, under newly arrived chief executive Tony Brown, is developing its strategy to deliver such improvements, and we will report on this strategy and its implementation more fully when we announce our results for the full year in due course. We do not, however, anticipate any significant improvement in our sales performance during the remainder of the current financial year.
Mike Killingley
Chairman
27 June 2008
Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';
(b) 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
(c) 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 |
|
27 June 2008 |
27 June 2008 |
Independent Review Report to Beale PLC
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the 26 week period ended 3 May 2008 which comprises the condensed consolidated income statement, the condensed consolidated balance sheet, the condensed consolidated statement of recognised income and expense, the condensed consolidated reconciliation of changes in equity, the condensed consolidated cash flow statement and related notes 1 to 9. We have read the other information contained in the half-yearly 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 2410 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 half-yearly 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 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly 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 half-yearly 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 half-yearly financial report for the 26 week period ended 3 May 2008 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 & Touche LLP
Chartered Accountants and Registered Auditor
Southampton, United Kingdom
27 June 2008
Condensed Consolidated Income Statement
Period ended 3 May 2008 - Unaudited
|
Notes |
26 weeks to 3 May 2008 £000 |
26 weeks to 28 April 2007 £000 |
53 weeks to 3 November 2007 £000 |
|
|
Gross sales* |
2 |
48,750 |
57,021 |
108,171 |
|
Revenue |
2 |
27,011 |
32,416 |
59,132 |
|
Cost of sales |
(12,129) |
(14,773) |
(26,933) |
|
|
Gross profit |
14,882 |
17,643 |
32,199 |
|
|
Administrative expenses |
(13,872) |
(16,642) |
(33,273) |
|
|
Operating profit/(loss) |
1,010 |
1,001 |
(1,074) |
|
|
Interest payable |
(135) |
(134) |
(331) |
|
|
Interest receivable |
6 |
8 |
14 |
|
|
Profit/(loss) on ordinary activities before tax |
881 |
875 |
(1,391) |
|
|
Tax |
4 |
(308) |
(350) |
417 |
|
Profit/(loss) for the period from continuing operations |
573 |
525 |
(974) |
|
|
Basic earnings/(loss) per share (pence) |
5 |
2.79p |
2.56p |
(4.75p) |
|
Dividend paid per share |
7 |
- |
1.1p |
1.1p |
|
* |
Gross sales reflect revenue inclusive of concession sales and VAT from continuing operations. |
Condensed Consolidated Balance Sheet
As at 3 May 2008 - Unaudited
|
3 May 2008 £000 |
28 April 2007 £000 |
3 November 2007 £000 |
||
|
Non-current assets |
||||
|
Goodwill |
892 |
892 |
892 |
|
|
Property, plant and equipment |
28,090 |
30,196 |
28,986 |
|
|
Financial assets |
16 |
17 |
16 |
|
|
Deferred tax asset |
- |
1,308 |
- |
|
|
28,998 |
32,413 |
29,894 |
||
|
Current assets |
||||
|
Inventories |
8,089 |
9,634 |
10,238 |
|
|
Trade and other receivables |
5,209 |
5,586 |
5,962 |
|
|
Tax asset |
- |
- |
43 |
|
|
Cash and cash equivalents |
221 |
115 |
91 |
|
|
13,519 |
15,335 |
16,334 |
||
|
Total assets |
42,517 |
47,748 |
46,228 |
|
|
Current liabilities |
||||
|
Trade and other payables |
(7,256) |
(8,801) |
(12,162) |
|
|
Tax liabilities |
(35) |
(224) |
(15) |
|
|
Bank overdrafts and loans |
(500) |
(651) |
(4,957) |
|
|
(7,791) |
(9,676) |
(17,134) |
||
|
Net current assets /(liabilities) |
5,728 |
5,659 |
(800) |
|
|
Total assets less current liabilities |
34,726 |
38,072 |
29,094 |
|
|
Non-current liabilities |
||||
|
Bank loan |
(5,000) |
(4,750) |
(250) |
|
|
Retirement benefit obligations |
(2,304) |
(5,199) |
(2,304) |
|
|
Deferred tax liabilities |
(5,194) |
(5,937) |
(4,886) |
|
|
Obligations under finance leases |
(977) |
(975) |
(976) |
|
|
Total liabilities |
(13,475) (21,266) |
(16,861) (26,537) |
(8,416) (25,550) |
|
|
Net assets |
21,251 |
21,211 |
20,678 |
|
|
Equity |
||||
|
Share capital |
1,026 |
1,026 |
1,026 |
|
|
Share premium account |
440 |
440 |
440 |
|
|
Revaluation reserve |
9,104 |
8,926 |
9,152 |
|
|
Capital redemption reserve |
242 |
242 |
242 |
|
|
ESOP reserve |
(26) |
(53) |
(48) |
|
|
Retained earnings |
10,465 |
10,630 |
9,866 |
|
|
Total equity |
21,251 |
21,211 |
20,678 |
Condensed Consolidated Statement of Recognised Income and Expense
Period ended 3 May 2008 - Unaudited
|
26 weeks to 3 May 2008 £000 |
26 weeks to 28 April 2007 £000 |
53 weeks to 3 November 2007 £000 |
||
|
Actuarial gain on pension scheme |
- |
- |
1,579 |
|
|
Tax on items taken directly to equity |
- |
- |
(869) |
|
|
Impact of change in tax rate |
- |
- |
256 |
|
|
Net income recognised directly in equity |
- |
- |
966 |
|
|
Profit/(loss) for the period |
573 |
525 |
(974) |
|
|
Total recognised income and expense for the period |
573 |
525 |
(8) |
Condensed Consolidated Reconciliation of Changes in Equity
Period ended 3 May 2008 - Unaudited
|
Note |
26 weeks to 3 May 2008 £000 |
26 weeks to 28 April 2007 £000 |
53 weeks to 3 November 2007 £000 |
|
|
Opening equity |
20,678 |
20,912 |
20,912 |
|
|
Total recognised income and expense for the period |
573 |
525 |
(8) |
|
|
Dividends paid |
7 |
- |
(226) |
(226) |
|
Total movements in equity for the period |
573 |
299 |
(234) |
|
|
Closing equity |
21,251 |
21,211 |
20,678 |
Condensed Consolidated Cash Flow Statement
Period ended 3 May 2008 - Unaudited
|
Note |
26 weeks to 3 May 2008 £000 |
26 weeks to 28 April 2007 £000 |
53 weeks to 3 November 2007 £000 |
|
|
Cash flows from operating activities before interest and tax |
8 |
125 |
2,722 |
3,176 |
|
Interest paid |
(145) |
(136) |
(332) |
|
|
Interest received |
6 |
8 |
14 |
|
|
Tax received |
63 |
- |
160 |
|
|
Net cash flow from operating activities |
49 |
2,594 |
3,018 |
|
|
Cash flows from investing activities |
||||
|
Purchase of property, plant and equipment |
(213) |
(758) |
(1,014) |
|
|
Proceeds from sale of property, plant and equipment |
- |
- |
1 |
|
|
Net cash used in investing activities |
(213) |
(758) |
(1,013) |
|
|
Cash flows from financing activities |
||||
|
Dividends paid |
- |
(226) |
(226) |
|
|
Increase in/(repayment of) loans |
750 |
(1,750) |
(1,750) |
|
|
Net proceeds from obligations under finance leases |
1 |
1 |
2 |
|
|
Net cash generated from/(used in) financing activities |
751 |
(1,975) |
(1,974) |
|
|
Net increase/(decrease) in cash and cash equivalents in the period |
587 |
(139) |
31 |
|
|
Cash and cash equivalents at beginning of period |
(366) |
(397) |
(397) |
|
|
Cash and cash equivalents at end of period (being cash and bank overdrafts) |
221 |
(536) |
(366) |
Condensed Analysis of Consolidated Net Debt
Period ended 3 May 2008 - Unaudited
|
26 weeks to 3 May 2008 £000 |
26 weeks to 28 April 2007 £000 |
53 weeks to 3 November 2007 £000 |
||
|
Cash at bank Bank overdrafts |
221 - |
115 (651) |
91 (457) |
|
|
Cash and cash equivalents (including overdrafts) |
221 |
(536) |
(366) |
|
|
Borrowings: |
||||
|
Due within one year |
(500) |
(4,500) |
(4,500) |
|
|
Due between two and five years |
(5,000) |
(250) |
(250) |
|
|
Total borrowings |
(5,500) |
(4,750) |
(4,750) |
|
|
Net debt |
(5,279) |
(5,286) |
(5,116) |
As at 3 May 2008 the Group had drawn down £500,000 on a term loan repayable in less than one year and £5,000,000 on a term loan repayable between two and five years.
During the six months to 3 May 2008 the Group repaid £4,000,000 on a term loan which was repayable in less than one year and drew down £4,750,000 on a term loan repayable between two and five years.
Notes to the Condensed Consolidated Financial Statements
Unaudited
|
1. |
Basis of preparation |
|
The Interim Financial Statements for the 26 weeks ended 3 May 2008 have been prepared on the basis of the accounting policies set out in the Group's financial statements for the 53 weeks ended 3 November 2007. |
|
|
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 3 May 2008 £000 |
26 weeks to 28 April 2007 £000 |
53 weeks to 3 November 2007 £000 |
||
|
Gross sales |
48,750 |
57,021 |
108,171 |
|
|
VAT |
(7,205) |
(8,165) |
(15,953) |
|
|
Gross sales (excluding VAT) Agency sales less commission |
41,545 (14,534) |
48,856 (16,440) |
92,218 (33,086) |
|
|
Revenue |
27,011 |
32,416 |
59,132 |
|
Seasonality of sales The Group sales are more heavily weighted towards the first half of the calendar year, with approximately 52.7% of gross annual sales of the previous year being made in the first half. However, it should be noted the last financial year was a 53 week period with the first half containing 26 weeks. |
||
|
3. |
Segment information |
|
|
The directors regard the business as one segment. |
||
|
4. |
Corporation tax charge |
|
|
Interim period taxation is accrued based on an estimated effective tax rate of 35% (6 months ended 28 April 2007: 40%). The total tax credit for the 53 weeks ended 3 November 2007 was calculated at 30%. |
||
|
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 3 May 2008 £000 |
26 weeks to 28 April 2007 £000 |
53 weeks to 3 November 2007 £000 |
|
|
Earnings |
|||
|
Earnings/(loss) for the purposes of basic and diluted earnings per share |
573 |
525 |
(974) |
|
Number of shares |
|||
|
Weighted average number of ordinary shares for the purpose of basic earnings per share and for 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.
|
6. |
Goodwill As at 3 May 2008 the directors carried out an impairment review as required by IAS 36. The Board concluded the goodwill had not suffered impairment loss. |
|
7. |
Dividends |
|
The dividends shown in the period are those actually declared in line with IAS 10. During the first half of the current year, no dividend was paid (2007: 1.1p per share) to the shareholders. |
|
8. |
Reconciliation of operating profit/(loss) to cash generated from operations |
|
26 weeks to 3 May 2008 £000 |
26 weeks to 28 April 2007 £000 |
53 weeks to 3 November 2007 £000 |
|
|
Operating profit/(loss) |
1,010 |
1,001 |
(1,074) |
|
Adjustments for: |
|||
|
Cash disbursements of pension obligations (net of charge included within the income statement) |
- |
- |
(1,316) |
|
Depreciation |
1,109 |
1,260 |
2,552 |
|
Loss on fixed asset disposals |
- |
- |
174 |
|
Decrease in inventories |
2,149 |
1,926 |
1,322 |
|
Decrease/(increase) in trade and other receivables |
753 |
207 |
(169) |
|
(Decrease)/increase in trade and other payables |
(4,896) |
(1,672) |
1,687 |
|
Cash generated from operations |
125 |
2,722 |
3,176 |
|
9. |
Basis of financial information |
|
The condensed set of financial statements included in this half yearly financial report, approved by the Board of directors on 27 June 2008, do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985 and have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union. The 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. |
|
|
The information included in the Interim Financial Statements for the 53 weeks ended 3 November 2007 does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The statutory accounts for the 53 weeks ended 3 November 2007, which were prepared under IFRS, have been delivered to the Registrar of Companies. The Auditors' report on these accounts was unqualified and does not contain a statement made under Section 237(2) and Section 237(3) of the Companies Act 1985. |
|
|
The financial year ended 1 November 2008 is a 52 week year. |
Related Shares:
BAE.L