Interim Results

Mulberry Group PLC 18 December 2003 MULBERRY GROUP PLC 18 DECEMBER 2003 MULBERRY GROUP PLC ('Mulberry' or the 'Group') INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2003 Mulberry Group Plc, the AIM listed designer and manufacturer of a portfolio of accessories, ready to wear clothing and interior design products, today announced its interim results for the six months to 30 September 2003. HIGHLIGHTS - Operating losses halved, reducing losses for period by £0.4 million to £0.6 million (2002: £1.1 million) - Reduced overheads by £0.7 million - Reduced stocks by £1 million - Gross profit margin increased to 46.3% from 44.1% - Accessories sales proving resilient in the UK GODFREY DAVIS, CHAIRMAN AND CHIEF EXECUTIVE COMMENTED: 'After two difficult years we have made progress in returning the Group to profit. Operating losses for the period have been halved and stock levels reduced. The underwritten Open Offer was completed successfully and the Group is now in a position to take advantage of the traditionally stronger second half.' ENQUIRIES: For further information, please contact: WMC Communications Alex Glover / Jo Livingston - 020 7591 3999 MULBERRY GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2003 CHAIRMAN AND CHIEF EXECUTIVE'S REVIEW In my last report I stated that your Board was focused on returning the Group to profit. We have made progress in the first six months of the financial year. Operating losses have halved and we have reduced the loss for the period by more than £0.4 million to £0.6 million on reduced sales of £12.1 million. The first half of the year is historically weaker than the second half, which benefits from the sales boost of the Christmas trading season. In that same review I explained that we had identified annualised savings in excess of £1 million, although these would be moderated by the impact of inflation, National Insurance and the new additions to our management team. In the first half of the financial year we have delivered increased savings by reducing overheads by £0.7 million. Furthermore we have reduced stocks by £1 million from the same time last year, resulting in a reduction of over £2 million in the last 2 years. The fund raising by way of the Open Offer, announced in August, was completed successfully delivering a substantially strengthened balance sheet for the Group. The Board is concentrating on building the foundations for future growth and increasing profitability. We will focus on developing our overseas markets through partnerships. There will be continued emphasis on reducing costs and improving margins. At the end of July, we successfully launched the first collections under our new design direction, broadening the consumer appeal of our brand. The launch of those collections was linked to a new style advertising campaign and the new collections have been well received by the press with greatly increased coverage. RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2003 Sales reduced during the period by 9% to £12.1 million (2002: £13.3 million). The reduction principally reflects the impact of reduced wholesale sales of ready to wear as the collections are repositioned, the closure last year of some loss making outlets including the store in Japan and reduced stock clearance activities in the UK through the off price outlets. Gross profit margin increased by 2.2% to 46.3% in the six months under review from 44.1% for the same period last year. This reflected improved accessories margins, the reduced proportion of wholesale ready to wear sales and less stock clearance activity in the period. At the end of September stocks were over £1 million lower than the prior year. Operating expenses have been reduced by £0.7 million to £6.0 million (2002: £6.7 million). Net debt at the end of September, which is in the peak period of the Group's normal borrowing cycle, is £3.1 million lower than at the same time in the prior year reflecting the benefit of the Open Offer transaction that raised £3.5 million of cash, before expenses. THE MULBERRY BRAND Our marketing and public relations activities have achieved good coverage in the media and it was encouraging to see a high proportion of the fashion editors carrying Mulberry Bayswater bags at London Fashion Week. ACCESSORIES Accessories are our core business and account for over 70% of Group sales. Autumn/Winter 2003 wholesale sales of accessories to department stores and independent retailers in the UK have increased by 8% and they are reporting sales growth of Mulberry products. The recession in fashion retail in Northern Europe continues, as has been widely reported and this has held back the Group this year. We have begun to see signs of growth in Scandinavia. MEN'S AND WOMEN'S CLOTHING The distribution of the men's and women's wear business has been cut back to coincide with the launch of the new ranges under the new design direction. These ranges have started well in our own shops and are targeted to include a more fashion conscious consumer. They have achieved favourable press reaction. We plan to limit the distribution of these ranges to establish their exclusivity, while we focus on our core accessory business. HOME COLLECTION Our licensed home furnishings and bath towel collections continue to develop satisfactorily. RETAIL Retail trading for the first half of the financial year was tough. Immediately following my last review on 5 August, we were badly hit by a spell of extremely hot weather with shoppers staying away. September saw a marked improvement when the weather relented. The combined effect was that like for like sales in our full price shops were flat for the six month period. CURRENT TRADING AND OUTLOOK Like for like sales in our full price shops for the ten weeks to 6 December 2003 were 3% higher than last year. The outlook for the second half of the year will become clearer when we see the results of the key Christmas trading period. Early indications for the Spring/Summer 2004 wholesale season are satisfactory for accessories while clothing sales will be reduced as explained above. As part of the strategy of eliminating loss making or marginal operations one of our two shops in Paris was disposed of at the beginning of December. This transaction has generated £0.5 million of cash but will result in a loss on disposal of £0.1 million in the second half. DIVIDENDS In view of the current losses and in the absence of distributable reserves, the Board is not recommending the payment of a dividend on the ordinary or preference shares. STAFF Once again I would like to thank our staff for their commitment and enthusiasm. They have worked tirelessly with the management team as we strive to make Mulberry the success we all want it to be. GODFREY DAVIS CHAIRMAN AND CHIEF EXECUTIVE 18 December 2003 ENQUIRIES: For further information, please contact: WMC Communications Alex Glover / Jo Livingston - 020 7591 3999 CONSOLIDATED PROFIT AND LOSS ACCOUNT Unaudited Unaudited Audited 6 months 6 months 12 months to 30.9.03 to 30.9.02 to 31.3.03 £'000 £'000 £'000 TURNOVER 12,050 13,263 28,177 Cost of sales (6,467) (7,409) (15,499) ---------- ---------- ---------- GROSS PROFIT 5,583 5,854 12,678 Other operating expenses (net) (5,997) (6,676) (14,340) ---------- ---------- ---------- OPERATING LOSS (414) (822) (1,662) Group share of profit of associated company - - 1 Interest payable and similar charges (201) (229) (450) ---------- ---------- ---------- Loss on ordinary activities before taxation (615) (1,051) (2,111) Tax on loss on ordinary activities (note 2) - - (91) ---------- ---------- ---------- LOSS FOR THE PERIOD (615) (1,051) (2,202) Preference dividends proposed (99) (99) (199) ---------- ---------- ---------- ACCUMULATED LOSS (714) (1,150) (2,401) ========== ========== ========== Loss per share (1.87p) (3.18p) (6.64p) Dividend per ordinary share Nil pence Nil pence Nil pence CONSOLIDATED BALANCE SHEET Unaudited Unaudited Audited 30.9.03 30.9.02 31.3.03 £'000 £'000 £'000 FIXED ASSETS 6,371 6,900 6,609 CURRENT ASSETS Stocks 7,450 8,472 7,435 Debtors 4,506 5,707 4,027 Cash 41 1 71 ---------- ---------- ---------- 11,997 14,180 11,533 CREDITORS: Amounts falling (5,066) (12,658) (10,996) due within one year ---------- ---------- ---------- NET CURRENT ASSETS 6,931 1,522 537 ---------- ---------- ---------- TOTAL ASSETS LESS CURRENT 13,302 8,422 7,146 LIABILITIES CREDITORS: Amounts falling due after one year (4,104) (538) (373) ---------- ---------- ---------- NET ASSETS 9,198 7,884 6,773 ========= ========== ========== CAPITAL AND RESERVES Called up share capital 3,088 2,457 2,457 Reserves 6,110 5,427 4,316 ---------- ---------- ---------- 9,198 7,884 6,773 ========= ========== ========== CONSOLIDATED CASH FLOW STATEMENT Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30.9.03 30.9.02 31.3.03 £'000 £'000 £'000 Operating loss (414) (822) (1,662) Depreciation 396 430 862 Decrease/(increase) in stocks (15) 624 1,661 Increase in debtors (479) (1,769) (178) Increase/(decrease) in creditors (368) 826 610 ---------- ---------- ---------- NET CASH FLOW FROM OPERATIONS (880) (711) 1,293 Interest (201) (229) (453) Taxation - - (2) Capital expenditure (131) (180) (600) ---------- ---------- ---------- NET CASH FLOW BEFORE FINANCING (1,212) (1,120) 238 Financing 4,893 (138) (328) ---------- ---------- ---------- INCREASE/(DECREASE)IN CASH IN 3,681 (1,258) (90) THE PERIOD ========== ========== =========== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Increase/(decrease) in cash in the year 3,681 (1,258) (90) Cash outflow/(inflow) from decrease/(increase) in debt and lease finance (1,855) 138 318 ---------- ---------- ---------- 1,826 (1,120) 228 Inception of finance leases (38) (41) (41) ---------- ---------- ---------- Movement in net debt 1,788 (1,161) 187 NET DEBT, BEGINNING OF PERIOD (6,564) (6,751) (6,751) ---------- ---------- ---------- NET DEBT, END OF PERIOD (4,776) (7,912) (6,564) ========== ========== =========== NOTES 1. ACCOUNTING POLICIES The interim results contained in this report, which have not been reviewed or audited, have been prepared using accounting policies consistent with those used in the preparation of the annual report and accounts for the year ended 31 March 2003. 2. TAXATION The corporation tax charge for the period is based on the effective rate which it is estimated will apply for the full year. 3. COMPARATIVE FIGURES The comparative figures for the year ended 31 March 2003, which do not constitute statutory accounts, are abridged from the company's statutory accounts which have been filed with the Registrar of Companies. The report of the auditors, Deloitte & Touche LLP, on these accounts was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. 4. APPROVAL AND DISTRIBUTION This report was approved by the Board of Directors on 17 December 2003 and is being sent to all shareholders. Additional copies are available from the Company Secretary at the Registered Office Kilver Court, Shepton Mallet, Bath, BA4 5NF. This information is provided by RNS The company news service from the London Stock Exchange

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