Final Results

Retail Stores PLC 30 September 2003 FOR IMMEDIATE RELEASE 30th September 2003 RETAIL STORES PLC: PRELIMINARY RESULTS FOR 12 MONTHS TO 30TH JUNE 2003 HIGHLIGHTS •Further reduction in operating losses before exceptional items and brand impairment to £1.5m from £1.9m last year •Overall operating losses reduced to £2.2m from £13.3m last year •Despite difficult trading environment during second half, total sales virtually unchanged at £46.5m against £46.8m •Gross margins remained strong over period while cost base fell •Strengthened management team with key appointments in: Buying, Retail Operations, Marketing and Visual Merchandising •Increase in Liberty 'own brand' products through Autumn/Winter 2003 in flagship store with planning underway for expansion into international markets. •Increased retailing area delivered through relocation of head office to adjacent building - creating a further 10,000 sq ft of retail space 'We are looking to the Christmas trading period with confidence and optimism as the effects of Liberty's strengthened skill base are seen.We continue to be focused on returning this landmark store to profitability although we remain cautious about the short term economic outlook. We now have an excellent management team with ability and dedication to drive the business forward and capitalise on the opportunities for growth.' Richard Balfour-Lynn, Executive Chairman. -more- Contact: Retail Stores PLC Tel: 020 7734 1234 Iain Renwick, Chief Executive Nick Mather, Finance Director Baron Phillips Associates Tel: 020 7920 3161 or 07050 124119 Baron Phillips CHAIRMAN'S STATEMENT for the period ended 30th June 2003 The steady progress we reported at the half year stage was largely reversed in the second six months by the impact of the Gulf War combining with the London transport disruption caused by the introduction of the Congestion Charge and the closure of the Central Line. These issues resulted in lower footfall throughout London's West End by between 10% and 20%. However I can report that since the year end there has been a steady improvement in footfall both at the Regent Street flagship store and our outlets at Heathrow. Against this background, total sales for the 12 months to 30th June 2003 remained virtually unchanged at £46.6m against the previous year's £46.8m. However, it is encouraging to note that Liberty's underlying business has shown steady improvement with a further reduction in operating losses before exceptional items and brand impairment to £1.5m compared to £1.9m last year. It is also pleasing to report that our gross margins remained strong and our cost base has started to fall. The full impact of our drive to cut costs and increase margins will begin to be seen during the current year, as will many of the changes we have implemented. One of the most important areas of change has been the strengthening of Liberty's management team following the arrival of Iain Renwick as Chief Executive in November 2002. Recent key appointments have been made in a range of areas including: Buying, Retail Operations, Marketing and Visual Merchandising. The impact of stronger management is already being seen throughout the store and reflects a more dynamic retail offer. Throughout Autumn more changes to the store's retail offer will become obvious as the programmes from our strengthened buying teams are fully implemented. These developments are part of the overall revitalisation programme that aims to reposition Liberty, and the Liberty brand, re-establishing the store as a leading retail destination. As part of that programme the team is working hard to create coherent ranges of Liberty own brand products that will generate sales and improve margins, not only in the flagship store but in other leading international retail outlets. CHAIRMAN'S STATEMENT for the period ended 30th June 2003 The rate of introduction of Liberty own brand products will increase through Autumn and Winter, especially in areas such as childrenswear, men's shirts and suits, ladies lingerie and shirts, food and beauty. An own brand development design team is being recruited to create a two year programme focusing on Homeware, Accessories, Beauty and Ladieswear fashion. The effects of these changes are already being seen in a number of key areas. In Homeware, for example, we have strengthened the buying team and are introducing a more contemporary and unique range of products. This is perhaps best seen in our kitchen and related delicatessen department where there is an increasingly wide range of exclusive products on offer that are proving popular with our customers. Another area that is currently undergoing dramatic change is Menswear. A more co-ordinated and cutting edge approach has been introduced and we are expanding the product offer to include more fashionable suits, casualwear and shirts with a look that is both contemporary and bold. We have also freed up retailing space on the fourth floor of Tudor House by relocating the head office to space in the adjacent Regent House. Part of the fourth floor was reinstated before the year end while the remaining space will come on stream during the course of the current year adding a further 10,000 sq ft of retailing to Tudor House. Despite a good July Sale, the new financial year has started slowly, as West End retailing suffered from the impact of the summer's heat wave. However, we are looking to the Christmas trading period with confidence and optimism as the effects of Liberty's strengthened skill base are seen. The Christmas period will see the introduction of new merchandise across a number of areas in the store. In addition to our newly extended Menswear area, a number of areas of the Ladieswear floor have undergone a complete transformation over the last few weeks. Our Christmas decoration and gift offer will be dramatically displayed on the newly revamped fourth floor in Tudor House from next month and at the same time new Home and Gift products will have arrived in the store. CHAIRMAN'S STATEMENT for the period ended 30th June 2003 We continue to be focused on returning this landmark store to profitability although we remain cautious about the short term economic outlook. We now have an excellent management team with the ability and dedication to drive the business forward and capitalise on the opportunities for growth. Richard Balfour-Lynn EXECUTIVE CHAIRMAN London 30th September 2003 CONSOLIDATED PROFIT AND LOSS ACCOUNT for the period ended 30th June 2003 Period ended Year ended 30th June 29th June 2003 2002 Notes £'000 £'000 -------------------------------- ------ ---------- --------- Turnover 1 46,550 46,798 Cost of sales (28,744) (28,952) -------------------------------- ------ ---------- --------- Gross profit 17,806 17,846 Selling and distribution costs (including (20,956) (21,246) exceptional operating charges) Administrative expenses (including brand (2,671) (13,549) impairment) Other operating income 3,608 3,687 -------------------------------- ------ ---------- --------- Operating loss (2,213) (13,262) -------------------------------- ------ ---------- --------- Operating loss before exceptional (1,519) (1,885) operating charges and brand impairment Exceptional operating charges 2 (694) - Brand impairment - (11,377) -------------------------------- ------ ---------- --------- Operating loss (2,213) (13,262) -------------------------------- ------ ---------- --------- Loss on ordinary activities before (2,213) (13,262) interest and taxation Net interest payable and similar charges (2,435) (2,278) -------------------------------- ------ ---------- --------- Loss on ordinary activities before (4,648) (15,540) taxation Taxation on loss on ordinary activities (467) (477) -------------------------------- ------ ---------- --------- Loss on ordinary activities after (5,115) (16,017) taxation Equity minority interests (310) (298) Non-equity minority interests (55) (132) -------------------------------- ------ ---------- --------- Loss attributable to ordinary (5,480) (16,447) shareholders -------------------------------- ------ ---------- --------- Undeclared non-equity preference (23) (46) dividends -------------------------------- ------ ---------- --------- Retained loss for the period (5,503) (16,493) -------------------------------- ------ ---------- --------- Basic and diluted loss per 3 (24.3p) (73.0p) share Basic and diluted loss per share 3 (21.3p) (22.7p) before exceptional operating charges -------------------------- ------ ---------- --------- The results for the current period and previous year relate to continuing operations CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the period ended 30th June 2003 Period ended Year ended 30th June 29th June 2003 2002 £'000 £'000 ------------------------------------ ---------- --------- Loss for the period (5,480) (16,447) Unrealised surplus/(deficit) on revaluation of 1,651 (184) property Currency translation differences on foreign (141) (76) currency net investments ------------------------------------ ---------- --------- Total recognised gains and losses for the period (3,970) (16,707) ------------------------------------ ---------- --------- All recognised gains and losses are attributable to equity shareholders' interests. NOTE OF CONSOLIDATED STATEMENT OF HISTORICAL COST PROFITS AND LOSSES for the period ended 30th June 2003 Period ended Year ended 30th June 29th June 2003 2002 £'000 £'000 ----------------------------------- ---------- --------- Reported loss on ordinary activities before (4,648) (15,540) taxation Difference between historical cost of depreciation 1 24 charge and depreciation charge based on revalued amounts ----------------------------------- ---------- --------- Historical cost loss on ordinary activities before (4,647) (15,516) taxation ----------------------------------- ---------- --------- Historical cost loss retained after taxation, (5,502) (16,469) minority interests and dividends ----------------------------------- ---------- --------- CONSOLIDATED BALANCE SHEET at 30th June 2003 30th June 29th June 2003 2002 Notes £'000 £'000 ------------------------------- -------- --------- --------- Fixed assets Intangible asset 4 18,200 18,200 Tangible assets 5 79,029 77,845 ------------------------------- -------- --------- --------- 97,229 96,045 ------------------------------- -------- --------- --------- Current assets Stocks 5,537 6,222 Debtors: amounts falling due within one year 6,132 9,136 amounts falling due after more than one year 1,138 701 Cash 4,513 3,246 ------------------------------- -------- --------- --------- 17,320 19,305 Creditors: amounts falling due within one (12,423) (15,870) year ------------------------------- -------- --------- --------- Net current assets 4,897 3,435 ------------------------------- -------- --------- --------- Total assets less current liabilities 102,126 99,480 Creditors: amounts falling due after more than (51,109) (44,240) one year Provisions for liabilities and charges - (120) ------------------------------- -------- --------- --------- Net assets 51,017 55,120 Capital and reserves Called up share capital 6,036 6,036 Merger reserve 61,503 61,503 Revaluation reserve 8,887 7,237 Profit and loss account (27,727) (22,107) ------------------------------- -------- --------- --------- Total shareholders' funds 48,699 52,669 ------------------------------- -------- --------- --------- Analysed as: ------------------------------- -------- --------- --------- Equity shareholders' funds 48,245 52,238 Non-equity shareholders' funds 454 431 Equity minority interests 1,740 1,741 Non-equity minority interests 578 710 ------------------------------- -------- --------- --------- --------- 51,017 55,120 -------- --------- --------- Included in called up share capital is an amount attributable to non-equity shareholders CONSOLIDATED CASH FLOW STATEMENT for the period ended 30th June 2003 Group Group 2003 2002 £'000 £'000 Notes -------------------------------- ------ ---------- ---------- Net cash inflow from operating activities 6 4,606 211 Returns on investments and servicing of 7 (3,471) (2,579) finance Tax paid (375) (614) Capital expenditure 8 (2,329) (9,280) -------------------------------- ------ ---------- ---------- Net cash outflow before financing (1,569) (12,262) Financing 9 3,000 29,000 -------------------------------- ------ ---------- ---------- Increase in cash during the period 1,431 16,738 -------------------------------- ------ ---------- ---------- RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT for the period ended 30th June 2003 Group Group 2003 2002 £'000 £'000 Increase in cash during the period 10 1,431 16,738 Increase in loans during the period 10 (3,000) (29,000) -------------------------------- ------ ---------- ---------- Increase in net debt during the period (1,569) (12,262) Translation differences 10 (164) - -------------------------------- ------ ---------- ---------- Movement in net debt during the period (1,733) (12,262) Opening net debt 10 (41,754) (29,492) -------------------------------- ------ ---------- ---------- Closing net debt 10 (43,487) (41,754) -------------------------------- ------ ---------- ---------- NOTES TO THE ACCOUNTS 1. DIVISIONAL ANALYSIS Loss Loss before before interest Net interest Net and operating and operating Turnover taxation assets Turnover taxation assets 2003 2003 2003 2002 2002* 2002 £'000 £'000 £'000 £'000 £'000 £'000 By class of business: Retail 35,233 (3,985) 92,381 35,611 (14,774) 94,963 Wholesale 11,317 1,772 1,750 11,187 1,512 1,911 --------------- -------- -------- -------- -------- ------- -------- 46,550 (2,213) 94,131 46,798 (13,262) 96,874 --------------- -------- -------- -------- -------- ------- -------- By geographical origin: United Kingdom 40,996 (3,318) 93,205 40,160 (14,306) 95,513 Japan 5,554 1,105 926 6,526 1,077 1,413 North America - - - 112 (33) (52) --------------- -------- -------- -------- -------- ------- -------- 46,550 (2,213) 94,131 46,798 (13,262) 96,874 --------------- -------- -------- -------- -------- ------- -------- By geographical destination: United Kingdom 36,860 36,820 Japan 5,738 6,782 North America 483 378 Other 3,469 2,818 --------------- -------- -------- -------- -------- ------- -------- 46,550 46,798 --------------- -------- -------- -------- -------- ------- -------- *The comparative has been restated to more accurately reflect the loss before interest and tax relating to each class of business. The segmental analysis of operations reflects the structure of the Group. Retail includes the UK retail operations at Regent Street and Heathrow. Wholesale includes the results of the UK and Japanese fabric businesses. Net operating assets exclude short term deposits, cash, bank balances and loans. The Retail loss before interest and taxation includes net rental income from properties and is after deducting exceptional operating charges and brand impairment. 2. EXCEPTIONAL OPERATING CHARGES 2003 2002 £'000 £'000 Redundancy and recruitment costs 643 - Closure costs 51 - -------------------------------- ------------- ---------- 694 - -------------------------------- ------------- ---------- During the period the Group underwent a major restructuring of its management and business operations. The costs are not expected to re-occur. NOTES TO THE ACCOUNTS 3. LOSS PER SHARE The basic and diluted loss per share figures are calculated by dividing the loss after taxation and minority interests by the weighted average number of ordinary shares in issue of 22,603,000 (2002: 22,603,000). 2003 2002 Basic Basic and and 2003 diluted 2002 diluted £'000 pence £'000 pence Loss for the financial period (5,503) (24.3p) (16,493) (73.0p) and loss per ordinary share Exceptional operating charges 694 3.0p - - Brand Impairment - - 11,377 50.3p ------------------------------ ------- ------- ------- ------- Loss for the financial year and (4,809) (21.3p) (5,116) (22.7p) loss per ordinary share before ------- ------- ------- ------- exceptional operating charges ------------------------------ As the exercise price of share options is equal to the average share price for the period there is no difference between the basic loss per share and the diluted loss per share. 4. INTANGIBLE ASSET - BRAND Following the acquisition of Liberty plc during the six months ended 31st December 2000, the Group has included the Liberty brand at its independent valuation at the date of acquisition and conducted an impairment assessment at the end of each financial period. An impairment assessment was conducted at 30th June 2003, which confirmed that no additional impairment was necessary. Group £'000 Cost at 29th June 2002 and 30th June 2003 29,577 Provision for impairment at 29th June 2002 and 30th June 2003 (11,377) ------------------------------------------ ---------- Net Book value at 29th June 2002 and 30th June 2003 18,200 ------------------------------------------ ---------- NOTES TO THE ACCOUNTS 5. TANGIBLE FIXED ASSETS Long Short Fixtures & Freehold leasehold leasehold equipment Total Group £'000 £'000 £'000 £'000 £'000 Cost or valuation At 30th June 2002 37,600 36,650 297 6,221 80,768 Foreign exchange - - - (16) (16) adjustment Additions 944 422 2 781 2,149 Disposals (64) - - (167) (231) Revaluation (1,730) 1,937 - - 207 ------------------ -------- -------- -------- --------- -------- At 30th June 2003 36,750 39,009 299 6,819 82,877 ------------------ -------- -------- -------- --------- -------- Depreciation -------------- --- --- --- --- --- At 30th June 2002 - - (60) (2,863) (2,923) Foreign exchange - - - 14 14 adjustment Charge for the (845) (624) (33) (1,055) (2,557) period Disposals 25 - - 149 174 Revaluation 820 624 - - 1,444 ------------------ -------- -------- -------- --------- -------- At 30th June 2003 - - (93) (3,755) (3,848) ------------------ -------- -------- -------- --------- -------- Net book value 36,750 39,009 206 3,064 79,029 At 30th June 2003 ------------------ -------- -------- -------- --------- -------- Net book value 37,600 36,650 237 3,358 77,845 At 29th June 2002 ------------------ -------- -------- -------- --------- -------- Valuation All of the Group's properties were valued as at 30th June 2003 by qualified professional valuers working for the Company of DTZ Debenham Tie Leung, Chartered Surveyors, ('DTZ') acting in the capacity of External Valuers. All such valuers are Chartered Surveyors, being members of the Royal Institution of Chartered Surveyors. All properties were valued on the basis of Market Value and in accordance with the RICS Appraisal and Valuation Manual. The valuation of the properties was £76.7 million (a valuation surplus of £1.6 million), which is reflected in the table above. NOTES TO THE ACCOUNTS 5. TANGIBLE FIXED ASSETS (continued) The reconciliation of the values at which the properties are included in the above table with the original cost less accumulated depreciation is as follows:- Original cost less Valuation Valuation accumulated at at depreciation at Valuation 30th June 29th June 30th June 2003 surplus 2003 2002 £'000 £'000 £'000 £'000 Freehold properties 30,797 5,953 36,750 37,600 Long leasehold 36,075 2,934 39,009 36,650 properties Short leasehold 206 - 206 237 properties -------------------- 67,078 8,887 75,965 74,487 Fixtures and equipment 3,064 - 3,064 3,358 -------------------- ------------ --------- -------- ---------- At 30th June 2003 70,142 8,887 79,029 77,845 -------------------- ------------ --------- -------- ---------- The Group's properties are located within the United Kingdom. The historic cost of the Group's properties in the table above includes capitalised interest at 30th June 2003 of £761,000 (2002: £761,000). The valuation of freehold and long leasehold properties includes an amount attributable to operational properties of £24,061,000 (2002: £27,461,000) and to land of £21,154,000 (2002: £21,082,000). 6. RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW FROM OPERATING ACTIVITIES 2003 2002 £'000 £'000 Operating loss (2,213) (13,262) Depreciation 2,557 2,073 Loss on disposal of fixed assets 57 - Impairment of brand - 11,377 Decrease in provisions (120) (62) Decrease in stock 633 2,659 Decrease/(increase) in debtors 2,880 (2,447) Increase/(decrease) in creditors 812 (127) -------------------------------------- -------- --------- Net cash inflow from operating activities 4,606 211 -------------------------------------- -------- --------- NOTES TO THE ACCOUNTS 7. RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 2003 2002 £'000 £'000 Equity dividend paid to minorities (172) - Non-equity dividend paid to minorities (132) (317) Bank arrangement fees (457) - Interest paid (2,806) (2,278) Interest received 96 16 -------------------------------------- -------- --------- Returns on investments and servicing of finance (3,471) (2,579) -------------------------------------- -------- --------- 8. CAPITAL EXPENDITURE 2003 2002 £'000 £'000 Purchase of tangible fixed assets (2,329) (9,280) -------------------------------------- -------- --------- 9. FINANCING 2003 2002 £'000 £'000 Loans drawn down 48,000 45,000 Loans repaid (45,000) (16,000) --------------------------------------- -------- -------- Financing 3,000 29,000 --------------------------------------- -------- -------- 10. ANALYSIS OF NET DEBT Movement Foreign during currency 2003 period translation 2002 £'000 £'000 £'000 £'000 Available cash 4,513 1,431 (164) 3,246 --------------------------- ------- --------- --------- -------- Net cash 4,513 1,431 (164) 3,246 -------- Bank loan Less than one year - 1,000 - (1,000) More than one year (48,000) (4,000) - (44,000) Net debt (43,487) (1,569) (164) (41,754) --------------------------- ------- --------- --------- -------- NOTES TO THE ACCOUNTS 11. FINANCIAL INFORMATION The financial information set out above does not constitute the Company's statutory accounts for the period ended 30th June 2003 or 29th June 2002 but is derived from those accounts. Statutory accounts for 2002 have been delivered to the Registrar of Companies, and those for 2003 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under Section 237 (2) or (3) of the Companies Act 1985. 12. DESPATCH OF ACCOUNTS The audited accounts of the Company are expected to be sent to shareholders during October 2003. Thereafter copies will be available from the Company Secretary, Filex Services Limited, 179 Great Portland Street, London, W1W 5LS. This information is provided by RNS The company news service from the London Stock Exchange TMMBTBTJ

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