Half Yearly Report

RNS Number : 0738Y
Liberty PLC
27 August 2009
 





FOR IMMEDIATE RELEASE

27 August 2009

LIBERTY Plc:

RESULTS FOR SIX MONTHS TO 30 JUNE 2009 


HIGHLIGHTS


  • Revenue grew by 18% to £25.3m against £21.5m, resulting in positive operating EBITDA of £30,000 against negative £2.7m for the same period last year. Greater efficiencies achieved within business - 10% reduction in overheads.

  • Impact of successful Liberty Renaissance launch continues to be felt in flagship store:




    -

    Revenue, including concession sales, 12% higher at £18.6m




    -

    Positive EBITDA of £1.2m




    -

    Healthy sales growth recorded in most product categories.

  • Fabrics continued strong growth:




    -

    28% revenue increase to £9.7m against £7.6m for June 2008 period




    -

    Positive EBITDA of £2.2m




    -

    All growth achieved outside of Japan and reflects upsurge in worldwide interest in Liberty fabrics.

  • Liberty of London




    -

    Improved product range




    -

    £0.7m cash premium for Sloane Streeet shop




    -

    £0.5m future annual saving as retailing refocused into flagship store

  • During second half of year:




    -

    Liberty partnering Hermès with in-store 'pop-up shop'




    -

    Limited edition Liberty-Hermès ties and scarves released




    -

    pansion of Beauty offer - launch of 12 new exclusive lines

  • World class management team assembled since 2007 turning Liberty into both authoritative retail destination and one of the fastest growing UK brands.

  • Strategic review underway to identify ways of expanding Liberty.

 'We have already demonstrated our ability to deliver solid progress in difficult market conditions and I have no doubt we have the products, the people and infrastructure in place to take full advantage of any upswing in retail spending,' Richard Balfour-Lynn, Chairman


Contact:


Richard Balfour-Lynn, Chairman, Liberty.


Tel: 020 7706 2121


Geoffroy de La Bourdonnaye, CEO, Liberty


Tel: 020 7734 1234


Paul Harris, Finance Director, Liberty


Tel: 020 7734 1234


Baron Phillips, Baron Phillips Associates


Tel: 020 7920 3161


Nicola Marrin, Seymour Pierce


Tel: 020 7107 8018




NOTE TO PICTURE EDITORS:

A series of hi-resolution imagesof Freida Pinto unveiling the 'Renaissance of Liberty' and the Hermes 'pop-up store' can be downloaded by clicking on the hyperlink below.

http://media3.marketwire.com/docs/hermes.pdf

  CHAIRMAN'S STATEMENT

___________________________________________________________________________________


While much has been written about the state of the UK economy and its impact on the retail sector, I am pleased to report that Liberty, Britain's iconic luxury brand, has recorded its best first half for many years. Even more pleasing is the double-digit sales growth we are reporting across the business for the six months to 30 June 2009 and the fact we have recorded positive operating EBITDA, for the first time in ten years.


There is little doubt our efforts to raise Liberty's profile as an increasingly global luxury brand are beginning to pay dividends, not only in direct sales but also in reputation as some of the world's leading brands, such as Apple, MAC Cosmetics and Hermès have all approached Liberty for collaborations.


Group revenue grew by 18% to £25.3m during the first half compared to £21.5m over the same period a year ago. As a result operating EBITDA was a positive £30,000 against a negative £2.7m for the six months to 30 June 2008, a substantial improvement over the last few years' performance.


But the real story of the first half has been the highly successful Liberty Renaissance launch in February 2009. Liberty's 'new look' flagship store and greatly improved offer was unveiled by 'Slumdog Millionaire' actress Freida Pinto. With the addition of new brands such as Balmain, Marni and Fendi in ladies ready-to-wear, Paul Morelli and Stephen Dweck in jewellery, Givenchy in handbags and Burberry Prorsum in men's ready-to-wear, Liberty has recaptured its authority in fashion. 


The sales upsurge following the Renaissance has resulted in revenue at the flagship store for this six months being 12% higher than 2008 levels. Virtually all product categories recorded healthy sales growth following the Renaissance launch, but in particular, fashion accessories such as scarves, jewellery and gift items, ladies' and men's ready-to-wear, fabrics and furniture were all well received by customers.


Liberty's sales growth has been driven by the domestic market although we continue to benefit from the increase in overseas shoppers, especially those from Europe who are discovering the relative cheapness of the UK in comparison to Euro denominated countries. 


  CHAIRMAN'S STATEMENT (continued)

___________________________________________________________________________________


Our fabrics division has continued its strong growth with a 28% revenue increase over the period to £9.8m against £7.6m in the first six months of 2008, and produced EBITDA 27% higher at £2.2m. All of this growth has been achieved outside of Japan and reflects the upsurge in interest in Liberty fabrics - both new and old. Apart from some of our collaborations, both with fashion houses and individual artists and designers such as Grayson Perry, Liberty fabrics are being incorporated into a wide range of traditional and other products and clothing.


We continue to make progress with our transactional website which is benefiting from the brand's increasingly higher profile. As the website was only launched in July 2008 there are no meaningful comparatives to prior periods. We will be able to judge performance better once we have completed six quarters of activity and have a clearer idea of the product range that is most appealing to our international customer base. However, we are pleased with the progress that this part of our business has already made to date.


Liberty of London, our in-house designed luxury brand business, producing leather goods, accessories and scarves, has continued to improve both its product range and distribution. Today, more than 80 stores around the world stock Liberty of London products and there was a slight increase in revenue at £1.4m over the period compared to the 2008 first half. 


We announced in late June 2009 that we had surrendered the lease on the Liberty of London Sloane Street shop following an unsolicited offer from a European fashion brand. Liberty received a £0.7m cash premium for the lease and we estimate there will be future annual cost savings of approximately £0.5m by refocusing Liberty of London's retail operation back into the flagship store. As a result, Liberty of London will have greater ability to be profitable as it will operate from a much lower cost base.


  CHAIRMAN'S STATEMENT (continued)

___________________________________________________________________________________


While the business has had a strong first half, we are, nevertheless, adopting a cautious approach to the remainder of the year. We believe trading conditions continue to be tough, as the future direction of the economy, both in the UK and abroad, remains uncertain. However, over the past 12 months Liberty's senior management team has worked hard at generating greater efficiencies within the business and as a result there has been an overall reduction of more than 10% in overheads. This has been achieved in some of the back office areas, such as payroll and support services, but at no cost to the important customer service where we continue to see great improvements.


Although recognising the future economic environment is unpredictable we remain committed to ensuring that Liberty generally and the flagship store in particular is one of London's most exciting and innovative shopping experiences. We have developed a number of initiatives that will be launched over the next two months. 


As one of the world's leading scarf authorities, Liberty is partnering Hermès on an historical collaboration. From September there will be a Hermès 'pop-up' shop within the flagship store that focuses on this luxury brand's traditional accessories, such as scarves and ties, but with a Liberty twist. To mark the collaboration, Hermès has created an exclusive limited edition range of scarves and ties using Liberty's renowned Tana Lawn cottons. The collection will include two different size scarves in six different micro floral prints and a new range of Hermès super slim ties.


The second half of the year also sees the renaissance and expansion of Liberty's Beauty offering with the launch of 12 new exclusive beauty and fragrance lines such as Le Métier de Beauté, Revive, Byredo and Francis Kurkdjian.


With Christmas looming on the horizon we have invited British Fashion Award winner Luella to create this year's festive theme. The flagship store will be Christmas themed from mid-October onwards. This promises to be an exciting backdrop to what we anticipate will be a very busy time for Liberty and there are a number of special events and promotions planned to attract an increasing number of customers into the store.


  CHAIRMAN'S STATEMENT (continued)

___________________________________________________________________________________


A world-class team has been assembled since 2007 and is now turning Liberty not only into the most authoritative retail destination for fashion, design and beauty but also one of the fastest growing brands globally in both fashion and retail.


We want to maintain this trend and, as a result, we have appointed advisors to undertake a strategic review of Liberty with the express aim of identifying ways in which it can be further developed and expanded, both within the UK and internationally. 


As I have already indicated it is difficult to forecast with certainty what the remaining four months of the year hold for us. We have had an excellent first half and we believe the momentum we have achieved over the past eight months will help Liberty buck the adverse market trend. We have already demonstrated our ability to deliver solid progress in difficult market conditions and I have no doubt we have the products, people and infrastructure in place to take full advantage of any upswing in retail spending. Therefore I view the future with a degree of cautious confidence.



Richard Balfour-Lynn

Chairman

Liberty Plc


27 August 2009

  KEY FINANCIAL HIGHLIGHTS 

___________________________________________________________________________________


The historical trading and balance sheet performance of Liberty Plc is summarised below:-



Six months ended

Six months
ended

Year

ended


30 June

30 June

31 December


2009

2008 *

2008 *

Financial performance

£'000

£'000

£'000

Total revenue

25,295

21,494

49,889

Operating EBITDA before brand expenditure, reorganisation costs and lease surrender

2,257

251

1,822

Results from operating activities before brand expenditure, reorganisation costs and lease surrender

987

(753)

(535)

Brand expenditure

(2,227)

(1,971)

(4,344)

Reorganisation costs

-

(936)

(1,346)

Gain on lease surrender

85

-

-

Loss before taxation

(2,404)

(4,180)

(6,975)






30 June

30 June

31 December


2009

2008

2008

Balance sheet composition

£'000

£'000

£'000

Intangible assets - brand and goodwill

18,382

18,382

18,382

Property, plant and equipment

30,382

33,400

31,006

Net debt

(24,335)

(12,721)

(19,937)

Net assets 

24,201

34,307

29,835




* Restated as a result of adoption of IFRIC 13: Customer Loyalty Programmes - see note 8.

 

 

 

CONSOLIDATED INCOME STATEMENT

for the six months ended 30 June 2009

__________________________________________________________________________________________




Six months ended

Six months ended

Year

ended



30 June

30 June

31 December



2009

2008 *

2008 *


Notes

£'000

£'000

£'000

Revenue

2

25,295

21,494

49,889

Cost of sales


(13,928)

(11,872)

(27,561)

Gross profit


11,367

9,622

22,328

Selling and distribution costs


(11,341)

(11,140)

(24,310)

Administrative expenses


(1,584)

(2,453)

(4,934)

Other operating income


318

311

691

Results from operating activities

 

(1,240)

(3,660)

(6,225)

Gain on lease surrender

5

85

-

-

Finance income


430

37

1,439

Finance expenses


(1,679)

(557)

(2,189)

Loss before taxation


(2,404)

(4,180)

(6,975)

Taxation 


(357)

(226)

(395)

Loss for the period

2

(2,761)

(4,406)

(7,370)

Attributable to:





Equity shareholders of the Company


(2,788)

(4,433)

(7,424)

Minority interests


27

27

54

Loss for the period


(2,761)

(4,406)

(7,370)

Loss per share (basic and diluted)

4

(12.3p)

(19.6p)

(32.8p)


All results relate to continuing operations. The notes on pages 14 to 22 form part of these financial statements. * Restated as a result of adoption of IFRIC 13: Customer Loyalty Programmes - see note 8.

  CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2009




Six months ended

Six months ended

Year

ended


30 June

30 June

31 December


2009

2008

2008


£'000

£'000

£'000

Other comprehensive income for period after tax:




Foreign exchange translation differences for foreign operations

(461)

(308)

1,070

Revaluation of property, plant and equipment

(747)

(946)

(3,520)

Effective portion of changes in fair value of cash flow hedges

-

(37)

-

Defined benefit pension scheme actuarial losses

(1,665)

(1,611)

(2,019)

Other comprehensive income for the period 

(2,873)

(2,902)

(4,469)

Loss for the period

(2,761)

(4,406)

(7,370)

Total comprehensive income for the period

(5,634)

(7,308)

(11,839)

Attributable to:




Equity shareholders of the Company

(5,661)

(7,335)

(11,893)

Minority interests

27

27

54

Total comprehensive income for the period

(5,634)

(7,308)

(11,839)



  CONSOLIDATED BALANCE SHEET

at 30 June 2009

___________________________________________________________________________________




30 June

30 June

31 December



2009

2008

2008


Notes

£'000

£'000

£'000

Non-current assets





Intangible assets and goodwill


18,382

18,382

18,382

Property, plant and equipment

5

30,382

33,400

31,006



48,764

51,782

49,388

Current assets





Inventories


9,515

7,339

9,190

Trade and other receivables


8,181

8,566

10,108

Cash and cash equivalents


1,968

1,346

1,903

Derivative financial instruments 


-

-

341



19,664

17,251

21,542

Total assets


68,428

69,033

70,930

Current liabilities





Derivative financial instruments 


(182)

(37)

-

Trade and other payables

6

(25,444)

(17,949)

(23,689)

Tax payable


(289)

(222)

(157)



(25,915)

(18,208)

(23,846)

Non-current liabilities





Loans and borrowings

7

(14,155)

(14,067)

(14,633)

Employee benefits


(3,607)

(1,855)

(2,066)

Trade and other payables


-

(46)

-

Provisions


(550)

(550)

(550)



(18,312)

(16,518)

(17,249)

Total liabilities


(44,227)

(34,726)

(41,095)

Net assets


24,201

34,307

29,835

Equity





Share capital


6,036

6,036

6,036

Other reserves


67,524

70,845

68,271

Retained earnings


(50,156)

(43,317)

(45,242)

Total equity attributable to shareholders of the Company


23,404

33,564 

29,065 

Minority interests


797

743

770

Total equity


24,201

34,307

29,835


The notes on page 14 to 22 form part of these financial statements.





CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 June 2009

___________________________________________________________________________________________________________________________________








Total equity




Share

Merger

Revaluation

Translation

Retained

attributable

Minority

Total


capital

reserve

reserve

reserve

earnings

to shareholders

interest

equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000










Balance at 1 January 2009

6,036

61,5032

6,768

1,113

(46,355)

29,065

770

29,835










Loss for the period

-

-

-

-

(2,788)

(2,788)

27

(2,761)










Foreign exchange translation differences for foreign operations

-

-

-

(461)

-

(461)

-

(461)










Revaluation of property, plant and equipment

-

-

(747)

-

-

(747)

-

(747)










Defined benefit pension scheme actuarial gains, net of tax

-

-

-

-

(1,665)

(1,665)

-

(1,665)



















Balance at 30 June 2009

6,036

61,5032

6,0212

6521

(50,808)1


23,404

797

24,201


⁽1

Disclosed as 'Retained earnings' of (£50,156,000) in consolidated balance sheet.

2

Disclosed as 'Other reserves' totalling £67,524,000 in consolidated balance sheet

  CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)

for the six months ended 30 June 2008

_______________________________________________________________________________________________________________________________









Total equity




Share

Merger

Revaluation

Translation

Retained

attributable

Minority

Total


capital

reserve

reserve

reserve

earnings

to shareholders

interest

equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000










Balance at 1 January 2008

6,036

61,503

10,288

43

(36,912) 

40,958

578

41,536










Loss for the period

-

-

-

-

(4,433)

(4,433)

27

(4,406)










Reclassification from trade and other payables

-

-

-

-

-

-

138

138










Foreign exchange translation differences for foreign operations

-

-

-

(308)

-

(308)

-

(308)










Revaluation of property, plant and equipment

-

-

(946)

-

-

(946)

-

(946)










Effective portion of changes in fair value of cash flow hedges

-

-

-

-

(37)

(37)

-

(37)










Defined benefit pension scheme actuarial gains, net of tax

-

-

-

-

(1,611)

(1,611)

-

(1,611)










Share based payments

-

-

-

-

(59)

(59)

-

(59)










Balance at 30 June 2008

6,036

61,5032

9,3422

(265)1

(43,052)1


33,564

743

34,307













⁽1

Disclosed as 'Retained earnings' of (£43,317,000) in consolidated balance sheet.

⁽2

Disclosed as 'Other reserves' totalling £70,845,000 in consolidated balance sheet.

  CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)

for the year ended 31 December 2008

_______________________________________________________________________________________________________________________________





 




Total equity




Share

Merger

Revaluation

Translation

Retained

attributable

Minority

Total


capital

reserve

reserve

reserve

 earnings

to shareholders

interest

equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000










Balance at 1 January 2008

6,036

61,5032

10,2882

431

(36,912)1)

40,958

578

41,536










Loss for the year

-

-

-

-

(7,424)

(7,424)

192

(7,232)










Foreign exchange translation differences for foreign operations

-

-

-

1,070

-

1,070

-

1,070










Revaluation of property, plant and equipment

-

-

(3,520)

-

-

(3,520)

-

(3,520)










Defined benefit pension scheme actuarial gains, net of tax

-

-

-

-

(2,019)

(2,019)

-

(2,019)










Balance at 31 December 2008

6,036

61,5032

6,7682

1,113(1)

(46,355)1


29,065

770

29,835


1

Disclosed as 'Retained earnings' of (£45,242,000) in consolidated balance sheet.

⁽2

Disclosed as 'Other Reserves' totalling £68,271,000 in consolidated balance sheet.


CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 30 June 2009




Six months
ended

Six months
ended

Year

ended


30 June

30 June

31 December


2009

2008

2008


£'000

£'000

£'000

Loss for the period

(2,761)

(4,406)

(7,370)

Adjustments




Taxation

357

226

395

Finance income

(430)

(37)

(1,439)

Finance expenses

1,679

557

2,189

Gain on lease surrender

(85)

-

-

Depreciation of property, plant and equipment

1,270

1,004

2,357

Currency translation differences

(109)

66

64

Equity settled share based payment transactions

-

(59)

-

Cash flows from operations before changes in working capital

(79)

(2,649)

(3,804)

Change in inventories

(325)

256

(1,595)

Change in trade and other receivables

1,927

(1,754)

(3,296)

Change in trade and other payables

(2,769)

(1,330)

1,789

Cash used in operating activities

(1,246)

(5,477)

(6,906)

Interest paid

(160)

(438)

(877)

Taxation paid

(132)

(199)

(303)

Net cash used in operating activities

(1,539)

(6,114)

(8,086)

Cash flows from investing activities




Interest received

1

37

-

Purchase of property, plant and equipment 

(1,980)

(950)

(2,483)

Net cash used in investing activities 

(1,979)

(913)

(2,483)

Cash flows from financing activities




Proceeds from drawdown of borrowings

(478)

1,067

1,633

Proceeds from drawdown from related parties

4,061

3,010

6,543

Net cash from financing activities

3,583

4,077

8,176

Net (decrease) / increase in cash and cash equivalents 

65

(2,950)

(2,393)

Opening cash and cash equivalents

1,903

4,296

4,296

Closing cash and cash equivalents 

1,968

1,346

1,903






NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the six months ended 30 June 2009

___________________________________________________________________________________


1.    ACCOUNTING POLICIES

___________________________________________________________________________________


Basis of preparation


The Half-Yearly Financial Report of Liberty Plc ('the Company') for the six months ended 30 June 2009 has been prepared in accordance with the IAS 34 'Interim Financial Reporting' as adopted for use in the European Union ('EU'). The financial information contained in this Half-Yearly Financial Report has been neither audited nor reviewed by the auditors.


The Half-Yearly Financial Report of the Company for the six months ended 30 June 2009 incorporates the results of the Company and its subsidiary undertakings ('the Group') for the period then ended. The results have been prepared on the basis of the accounting policies adopted in the financial statements of the Group at the previous year end of 31 December 2008, consistently applied in all material respects in the preparation of these financial results, with the addition of new standards that have come into effect during the period under review and which are listed below.


New accounting standards impacting the financial statements:


IFRIC 13 Customer loyalty programmes


The Group has applied in its Interim Financial Statements IFRIC 13 which clarifies the accounting treatment for customer loyalty programmes. This standard has been applied retrospectively in accordance with IAS8 and comparatives have been restated accordingly (see note 8).


Amendments to IAS 1 Presentation of financial statements


The Group has applied revised IAS1 Presentation of financial statements, which became effective on 1 January 2009. This presentation has been applied in this Half-Yearly Financial Report for the period ended 30 June 2009. Comparative information has been re-presented so that it is also in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on the previously disclosed pre-tax profit of the Group.


IFRS 8 Operating segments


The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009. This new accounting policy in respect of segment operating disclosures has not led to a change in the number and/or definition of segments previously presented, on the basis that the information disclosed is consistent to that provided to the Board of Liberty Plc, led by the Chief Executive, who is the Group's chief operating decision maker.


  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the six months ended 30 June 2009

___________________________________________________________________________________


2.    SEGMENT REPORTING

___________________________________________________________________________________



Six months ended

Six months ended

Year

ended


30 June

30 June

31 December


2009

2008 *

2008 *


£'000

£'000

£'000

Revenue by business division




Retail including Liberty of London retail and Internet

15,313

13,405

31,497

Wholesale fabric

9,749

7,641

17,426

Liberty of London wholesale

233

448

966


25,295

21,494

49,889

Revenue by geographical origin




United Kingdom

20,258

17,919

42,832

Japan

5,037

3,575

7,057


25,295

21,494

49,889


* Restated as a result of adoption of IFRIC 13: Customer Loyalty Programmes - see note 8.




Six months ended

Six months ended

Year

ended


30 June

30 June

31 December


2009

2008

2008


£'000

£'000

£'000

(Loss) / profit by business division




Retail including Liberty of London retail

(2,563)

(4,119)

(7,411)

Wholesale fabric

1,967

1,579

3,738

Liberty of London wholesale (including brand expenditure)

(644)

(1,120)

(2,552)

Results from operating activities

(1,240)

(3,660)

(6,225)

Gain on lease surrender

85

-

-

Net finance expenses

(1,249)

(520)

(750)

Taxation

(357)

(226)

(395)

Loss for the period

(2,761)

(4,406)

(7,370)


  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the six months ended 30 June 2009

___________________________________________________________________________________


2.    SEGMENT REPORTING (continued)

___________________________________________________________________________________


Concession revenue


Sales from concession departments are included on a commission only basis within revenue above. Gross revenue of concession departments was as follows:



Six months ended

Six months ended

Year

ended


30 June

30 June

31 December


2009

2008

2008


£'000

£'000

£'000

Gross revenue of concession departments

5,119

3,959

9,379

 



3.    EARNINGS BEFORE INTEREST, TAXATION, DEPRECIATION AND AMORTISATION ('EBITDA')    

___________________________________________________________________________________



Six months ended

Six months ended

Year

ended


30 June

30 June

31 December


2009

2008

2008

The EBITDA of the Group is calculated as follows:


£'000


£'000


£'000


Results from operating activities

(1,240),827)

(3,660)

(6,225)

Depreciation for the period

1,270

1,004

2,357

Operating EBITDA

30

(2,656)

(3,868)

Gain on lease surrender

85

-

-

Write down of fixtures charged against lease surrender

587

-

-

Total EBITDA for the period

702

(2,656)

(3,868)


  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the six months ended 30 June 2009

___________________________________________________________________________________


4.    LOSS PER SHARE 

___________________________________________________________________________________


The loss per share figures are calculated by dividing the loss attributable to equity shareholders of the Company for the period, by the weighted average number of ordinary shares in issue during the period, as follows:-



Six months ended

Six months ended

Year

ended



30 June

30 June

31 December



2009

2008

2008

Loss for the period attributable to equity shareholders of the Company

£'000

(2,788)

(4,433)

(7,424)

Weighted average number of ordinary shares in issue during the period

'000

22,603

22,603

22,603

Loss per share (basic and diluted)

Pence

(12.3p)

(19.6p)

(32.8p)




5.    PROPERTY, PLANT AND EQUIPMENT

____________________________________________________________________________________



Freehold

Plant, machinery,



property

fixtures & equipment

Total


£'000

£'000

£'000

Cost or valuation




At 1 January 2009

25,595

16,428

42,023

Additions

-

1,980

1,980

Disposals

-

(587)

(587)

Revaluation

(917)

-

(917)

At 30 June 2009

24,678

17,821

42,499

Depreciation




At 1 January 2009

-

(11,017)

(11,017)

Charge for the period

(170)

(1,100)

(1,270)

Revaluation

170

-

170

At 30 June 2009

-

(12,117)

(12,117)

Net book value at 30 June 2009

24,678

5,704

30,382


  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the six months ended 30 June 2009

___________________________________________________________________________________


5.    PROPERTY, PLANT AND EQUIPMENT (continued)

___________________________________________________________________________________



On 19 June 2009 Liberty surrendered the lease on its Sloane Street store for a cash premium of £700,000. As a result, Liberty released a rent-free provision with residual value of £79,000 previously held as a liability and incurred costs of £107,000. In addition, fixtures and fittings relating to the shop with a net book value of £587,000 were deemed to have no further value in use and written off, giving rise to a net gain on lease surrender of £85,000.




Freehold property

Plant, machinery,

fixtures & equipment

Total


£'000

£'000

£'000

Cost or valuation




At 1 January 2008

29,474

13,945

43,419

Additions

-

2,483

2,483

Revaluation

(3,879)

-

(3,879)

At 31 December 2008

25,595

16,428

42,023

Depreciation




At 1 January 2008

-

(9,019)

(9,019)

Charge for the year

(359)

(1,998)

(2,357)

Revaluation

359

-

359

At 31 December 2008

-

(11,017)

(11,017)

Net book value at 31 December 2008

25,595

5,411

31,006


  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the six months ended 30 June 2009

___________________________________________________________________________________


5.    PROPERTY, PLANT AND EQUIPMENT (continued)

__________________________________________________________________________________


Valuation


The Group's property, plant and equipment is primarily located in the United Kingdom, with a minor amount located in Japan. The Group's property was valued at 30 June 2009 by qualified professional valuers working for the company of DTZ, 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 ('RICS').


DTZ act as valuers to the Group and undertake half year and year end valuations for accounting purposes. DTZ has been carrying out this valuation instruction for the Group for a continuous period since 1999 and Paul Wolfenden has been the signatory of Valuation Reports provided to the Group for the same period. In addition, DTZ provide ad-hoc valuation advice to the Group. DTZ is a wholly owned subsidiary of DTZ Holdings plc. In the financial year to 30 April 2009, the proportion of total fees payable by the Group to the total fee income of DTZ Holdings plc was less than 5%. It is not anticipated that this situation will vary in terms of the financial year of DTZ to 30 April 2010. DTZ has not received any introductory fees or acquisition fees in respect of the property owned by the Liberty Group within the 12 months prior to the date of valuation.


The valuation was carried out in accordance with the RICS Appraisal and Valuation Standards 6th Edition ('the Manual') and the property was valued on the basis of Existing Use Value. Existing Use Value is defined in the Manual as the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction, after proper marketing, wherein the parties had acted knowledgeably, prudently and without compulsion, assuming that the buyer is granted vacant possession of all parts of the property required by the business and disregarding potential alternative uses and any other characteristics of the property that would cause its Market Value to differ from that needed to replace the remaining service potential.


The valuation includes the land and buildings; the trade fixtures, fittings, furniture, furnishings and equipment; and the market's perception of the trading potential excluding personal goodwill; together with an assumed ability to renew existing licences, consents, certificates and permits. The value excludes consumables and stock in trade. The valuation excludes any goodwill associated with the management by the Company or its subsidiaries.


The valuation of the Tudor property and fixtures totalled £28.8m, including fixtures and equipment with a net book value of £4.1m at 30 June 2009. The historic cost of the Group's property at 30 June 2009 includes capitalised interest of £0.2m (2008: £0.2m).


  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the six months ended 30 June 2009

___________________________________________________________________________________


6.    TRADE AND OTHER PAYABLES

___________________________________________________________________________________



30 June

30 June

31 December


2009

2008

2008


£'000

£'000

£'000





Trade payables 

8,191

8,311

9,349

Amounts due to related parties 

11,966

3,357

7,548

Other payables

1,465

1,169

1,436

PAYE, NIC and VAT

720

825

1,157

Accruals and deferred income

3,102

4,287

4,199


25,444

17,949

23,689


7.    LOANS AND BORROWINGS

___________________________________________________________________________________


The Group's interest-bearing loans and borrowings are measured at amortised cost. The Group utilises a financing facility provided by Bank of Scotland ('BOS') of £20m which comprises a revolving credit facility of £15m and an ancillary facility of £5m. At 30 June 2009, the Group has drawn £14.2m (30 June 2008: £14.4m) of the £15m revolving credit facility and £0.2m (30 June 2008: nil) of the ancillary facility.


Terms and debt repayment schedule


The Group's loans are denominated in Sterling and no foreign exchange risk existed on its debt arrangements during the period ended 30 June 2009 or during the previous period. The Group's loans bear variable rates of interest which are set by reference to Bank of Scotland base rate as follows:-




30 June 2009

31 December 2008


Nominal
interest rate

per annum

Latest year of 
maturity

Face
value

£'000

Carrying amount

£'000

Face

value
£'000

Carrying amount £'000








Secured bank loan

1.75%  

2010  

14,155

14,155  

14,633  

14,633  


The facility has a term that runs until September 2010, at which time, or prior to which, discussions will be held with BOS with regard to refinancing, repayment or extending the loan repayment date.

  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the six months ended 30 June 2009

___________________________________________________________________________________


7.    LOANS AND BORROWINGS (continued)

___________________________________________________________________________________


The bank loan is secured on freehold property with a carrying amount of £28.8m (2008: £31.5m) (see note 5), and a debenture and corporate guarantee provided by Liberty Plc in favour of BOS.


  Net debt 


30 June

30 June

31 December


2009

2008

2008


£'000

£'000

£'000

Due within one year




Cash and cash equivalents

1,968

1,346

1,903

Derivative financial instruments

(182)

(37)

341

Amount due to related parties

(11,966)

(3,357)

(7,548)

Due within one to two years




Secured bank loan

(14,155)

(14,067)

(14,633)

Net Debt

(24,335)

(16,115)

(19,937)


Undrawn facilities


At 30 June 2009, the Group had £0.8m (2008: £0.9m) of undrawn credit financing facilities available for use by the Group and £4.8m of the ancillary facility available for the specific purposes of the facility.


Funding financial risk


The Group's funding financial risk centres on the total interest cost incurred on the Group's short and medium term loans, which at 30 June 2009 included bank borrowings of £14.2m (2008: £14.1m). The Board has currently chosen to retain the bank borrowings at variable rates due to the low level of current interest rates. The Board reviews this policy on a regular basis to ensure good management of its exposure to interest rate fluctuations.


  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the six months ended 30 June 2009

___________________________________________________________________________________


8.    HALF-YEAR FINANCIAL REPORT AND FINANCIAL STATEMENTS

__________________________________________________________________________________


The financial information set out in this Half-Yearly Financial Report in relation to Liberty Plc includes information for the six months ended 30 June 2009. The comparative figures for the financial year ended 31 December 2008 are not the company's statutory financial statements for that financial year. Those financial statements have been reported on by the company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985.


As a result of the Group's adoption of IFRIC 13 Customer Loyalty Programmes, the Directors have reviewed the accounting policy in respect of the treatment of the Liberty Card reward programme. As a result of this amendment, the Directors believe that it is more appropriate to deduct these costs from revenue as opposed to charging them as a marketing expense as was the case in previous years. The Group therefore adopted a revised accounting policy for such costs in line with IFRIC 13 and will recognise all costs related to the programme within revenue. The effect of this change was to reduce revenue in the period ended 30 June 2008 by £223,000 and in the year ended 31 December 2008 by £270,000, and to reduce selling and distribution costs by the same amounts in the period ended 30 June 2008 and in the year ended 31 December 2008. Accordingly, this has no effect on the pre-tax profits as previously reported by the Group.


This Half-Yearly Financial Report of Liberty Plc will be sent to shareholders in September 2009 and an electronic copy is also available on the Company's website at www.liberty.co.uk from the date of its announcement on 27 August 2009. The audited financial statements of the Company for the year ended 31 December 2008, further copies of this Half-Yearly Financial Report and the Half-Yearly Financial Report for the six months ended 30 June 2008, are available from the Company Secretary, Filex Services Limited at the Company's registered office of 179 Great Portland Street, London W1W 5LS.

 



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