Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • FEAnalytics.com
  • FEInvest.net
  • FETransmission.com
  • Investegate.co.uk
  • Trustnet.hk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email publishing@financialexpress.net in the first instance.

 Information  X 
Enter a valid email address

Beale Plc (BAE)

  Print      Mail a friend       Annual reports

Monday 04 February, 2013

Beale Plc

Final Results

RNS Number : 0705X
Beale PLC
04 February 2013
 



 

 

BEALE PLC

("BEALE" OR THE "GROUP")

RESULTS FOR THE YEAR ENDED 3 NOVEMBER 2012

 

 

4th February 2013

 

 

Beale PLC, the specialist department store operator, announces Preliminary Results for the 53 weeks ended 3 November 2012.

 

 

Gross sales (inclusive of concession sales and VAT) up 23% as a result of the ARCS acquisition partway through 2011

 

Like for like (excluding acquisitions, closures and week 53) gross sales declined 5.6%

 

Gross margin declined from 51.33% to 50.63% due to shift in product mix

 

Operating Loss before exceptional items reduced to £2.9m (2011: £3.8m)

 

Pre tax loss after exceptional items of £5.8m (2011: profit 0.5m)

 

Net exceptional expense relates to asset impairment and restructuring £2.1m (2011: net exceptional income £4.8m)

 

·      During the key Christmas period of the five weeks to 5th January, like for like net sales (excluding VAT) declined 1.6%

 

·      The balance sheet retains in excess of £9.5m of net assets

 

·      Bank refinancing secured for the next three years

 

 

 

 

 

 

Keith Edelman Chairman commented:

 

"2011/12 has been another difficult year for UK retailers as we continue to operate in a very subdued economic environment.  Consumer finances are stretched as salary levels remain constant and households struggle with the challenge of increasing prices whilst trying to reduce their personal levels of debt.  Additionally, the relentless growth of online retailing continues to be at the expense of poorly prepared high street retailers. Nevertheless, I believe Beale have ended the year in a far stronger position.  This has been achieved through reducing our cost base, launching our own loyalty programme, exiting our store card, outsourcing our catering operation, and introducing some exciting new product ranges and concessions to our stores".

 

Further Information

 

Beale PLC                                                                                 Shore Capital

Tony Brown, Chief Executive                                                       Bidhi Bhoma

Michael Hitchcock, Interim Finance Director                                 Anita Ghanekar

 

Tel: 01202 552022                                                                      Tel: 0207 408 4090

           

 



Chairman's Statement

 

2011/12 has been another difficult year for UK retailers as we continue to operate in a very subdued economic environment.  Consumer finances are stretched as salary levels remain constant and households struggle with the challenge of increasing prices whilst trying to reduce their personal levels of debt.  Additionally, the relentless growth of online retailing continues to be at the expense of poorly prepared high street retailers. Nevertheless, I believe Beale have ended the year in a far stronger position.  This has been achieved through reducing our cost base, launching our own loyalty programme, exiting our store card, outsourcing our catering operation, and introducing some exciting new product ranges and concessions to our stores.  We have decisive action to reduce our reliance on the electrical, TV and Audio segment of our business which has suffered with the double impact of reducing sales at ever lower margins.  In our online business, we have launched the Discount Linen Shop which has performed well albeit at relatively low volumes of turnover to date.

The management actions we took in 2011/12 resulted in our operating loss before exceptionals reducing by £0.9m compared to the previous year. Our cost base following the Anglia Regional Cooperative Society Limited ("ARCS") acquisition in May of the previous year has reduced substantially throughout the year which means that 2012/13 should show further cost reductions as compared to 2011/12. 

During the key Christmas period of the five weeks to 5th January, our like for like net sales were down by 1.6% but, due to our diligent management of margin and costs, our profit over this key trading period has improved.

We have already announced that Tony Brown, who has led our business as chief executive since 2008, will be leaving Beale to pursue another opportunity.  Tony has run our business in an exemplary fashion and we are very sad to see him leave.  As previously reported, Ken Owst resigned from the business during the year and was replaced by Michael Hitchcock as an interim financial director (Non statutory).  Since joining Beale, Michael has been instrumental in leading many of our business initiatives and has accomplished all these tasks in an efficient and effective manner.  In a very short period of time, he has had a major impact on the business.  I am therefore very pleased to announce that Michael has accepted our offer of becoming the next Chief Executive of Beale. Tony Richards will now take a greater pivotal role in the development of our trading position by taking on responsibility for marketing.  Chris Varley FCA, our Company Secretary, will become Head of Finance.  I am certain that this management team has the right mix of skills to meet our major objective of returning Beale to profitability.

Simon Peters will resign as a non-executive director shortly after the AGM and Stuart Lyons CBE, chairman of Airsprung Group PLC, will then be appointed as a non-executive director as Panther Securities PLC's representative.

We are also pleased to announce that we have refinanced our debt at improved rates with Burdale Financial Limited securing our funding for the next three years.

As already announced, we have asked shareholders to approve a transfer of listing from a Premium to Standard listing.  We believe that, over the next few years, we will need to be able to take advantage of any property opportunities that arise in an expedient manner.  It will be more efficient to complete such transactions with a Standard listing.  We are therefore recommending this change to shareholders in order that we can capture any opportunities that arise over the next few years to enhance shareholder value.

I would particularly like to thank all our staff for their tremendous efforts during the year.  Our staff are a key differentiator in our consumer proposition vis-a-vis our competitors and I do believe we offer both a more friendly and helpful level of customer service.  In addition I would also like to thank all our concession partners, suppliers and AIS, our buying group, as without their contribution we would not be able to develop such a wide product offer for our customers.

In conclusion, we still have much to do and we do not believe that the economic environment will assist us in 2013 in our major objective of returning the Company to profitability.  We are, nevertheless, completely focussed on the task in hand and believe we have the leadership, energy and resilience required to accomplish our objectives as set out in the Chief Executive's statement.  I would, in closing, once again wish to voice my sincere thanks and appreciation to Tony Brown for his dedication and professionalism in leading Beale over the last four and a half years. 

 

 

 

Keith Edelman

Chairman

 

 

Chief Executive's Statement

 

Introduction

 

The much reported challenging retail environment has continued this year as the government continues to reduce spending, combined with depressed economic growth which saw the economy slip into a double dip recession and a number of high profile retail administrations. Our gross sales (including concessions and VAT) were £136m (2011: £110m), although after taking into account the acquisitions and 53 week year our like for like sales actually fell 5.6%.  A part of this drop can be attributed to the fall off in the electrical market especially TV and Audio sales which fell by 38.3% to £2.6m. Whilst I am disappointed at any loss, we have managed to reduce the pre-exceptional loss by 23.4% on last year. However we had exceptional charges of £2.1m in respect of restructuring and impairment (2011: £4.8m exceptional credit).  Actions taken by management such as staff restructuring and improved stock management in the first half of the financial year came through in the second half, with the year 2012/13 expecting to see the full year positive effect. The pre-tax loss for the year was £5.8m. It will be noted that last year's £0.5m profit included a £4.8m exceptional profit from the acquisition of the 19 department stores from ARCS.

 

After extensive customer research we introduced our first loyalty programme (Love Rewards). This has been very well received and now has over 160,000 members. This gives us a great platform to talk to more of our customers than the store card which had around 35,000 active members. Whilst closing the store card was a difficult decision, it has been handled exceptionally well by the team with very few complaints.

 

Product sales

 

The expansion of the Group has provided us with a significant increase in buying power which has provided more opportunities to buy volume lines at better pricing. We have also been able to bring more own bought product groups such as small domestic appliances and occasional furniture into the core business and these new areas are continuing to deliver incremental sales.

 

We continue to build and strengthen our own label portfolio: Whitakers Finest Linens is a high thread-count sheeting and towel range. Home Basics provides entry price point towels, sheeting, duvets and pillow ranges. In fashions we have grown our own label menswear brand, Broadbents & Boothroyds, a casual life style brand which is now our biggest performing menswear brand. We continue to add to the successful All Cooks housewares collection expanding into kitchen textiles.

 

We continue to develop our internet sales offering with the introduction of many new ranges. The Board sees the continued growth in this sales channel as an important part of our future sales strategy especially as we now have stronger geographical presence in many parts of the country which is improving our brand awareness. We will continue to develop our email address base to help grow such internet sales. We have invested more resources into our online business and have seen some impressive 230% uplift in sales. We do however remain a very small player in this market and are reviewing our options to continue to develop this important aspect of the business's future.

 

We have made the decision to come out of the TV and Audio business in most of our stores and convert the space into more profitable use. We continue to develop the concession business with concessions now accounting for 45.95% (2011: 43.63%) of gross sales.

 

Buying in margin

 

Our overall buying in margin has been affected by the mix of product in the acquired stores, many of which have large electrical departments which generate higher revenues as a result of the larger ticket prices but operate on considerably lower margins. However, we continue to exploit opportunities to enhance the achieved margin by the growth in our own label products which has been helped considerably by the increase in scale of our business. We will see an improved margin performance as we reduce the concentration on low margin products in electrical.

 

Service and people

 

Customer service is pivotal to our proposition and a core value.  We have invested considerable time, energy and money in training programmes aimed at improving our levels of customer service.  We continue to invest in our stores to improve the customer experience whilst shopping with us and our ambition continues to be to deliver levels of service that our customers simply cannot get anywhere else. 

 

The Board wishes to thank all of our staff for their hard work and contribution throughout the year.

 

 

 

Cost controls

 

We continue to challenge all our cost areas and it remains uppermost in our minds whilst ensuring that we balance this ambition with maintaining our service levels, sales drive, operating systems and central support.  We will continue to look for cost savings opportunities and further synergies throughout the coming year. We have invested in technology within our accounts department, our store card and our procurement methods which has seen some significant cost savings. Unfortunately this has resulted in a number of head office redundancies.  The Board would like to thank those affected for their many years of service.

 

Following the Board's impairment review a charge of £1.4m (2011: Nil) has been included in exceptional items where the carrying value of certain store fixed assets exceed the future value expected to be derived from holding the assets.

 

Principal risks and uncertainties

 

The principal risks and uncertainties have not changed from last year and your Board continues to apply mitigating actions. All retailers face a very challenging and competitive trading environment.  Sound risk management is an essential discipline for running the business efficiently. The nature of risk is that no list can be totally comprehensive, though the directors believe the principal risks and uncertainties faced and the mitigating actions taken to manage these risks and uncertainties are as follows:

 

A sustained economic downturn with the need for increased discounting and promotions adversely impacts on revenues and margins. In mitigation we:

 

•    Continually review the markets and performances of the trading environment

•    Balance our exposure by managing product mix, supplier mix and profit margins

•    Regularly monitor strategic key performance indicators

•    Seek to enhance our sourcing margins and improve commercial terms

 

In uncertain economic conditions the level of resources may be inappropriate to deliver the expected business benefits. In mitigation we:

 

•    Regularly review the group corporate plan against expectation

•    Monitor our cost controls against structured financial plans and act accordingly

•    Invest in appropriate systems to cost effectively monitor performance and add value

 

The Group has inadequate financial resources to deliver the planned business benefits. In mitigation we:

 

•    Maintain a strong relationship with major stake-holders

•    Ensure consistent and disciplined monitoring of working capital

•    Review the allocation of Group resource and capital investment

 

The Group strategy for enhanced profitability from acquisition benefits is delayed. In mitigation we:

 

•    Undertake regular reviews and reappraisals of integration plans

•    Seek to capture the identified synergy benefits from acquisitions

•    Continually challenge the supply base to deliver enhanced margins

•    Regularly monitor performance to ensure the expected economies of scale are delivered

 

The Group may lose further expertise in addition to the Directors who have resigned which is key to delivering success: In mitigation we:

 

•    Seek to motivate all colleagues to fulfil Group targets

•    Have an ethos of candid and honest communication

•    Relevant review of remuneration appropriate to all areas of the business

•    Seek to develop our people to take on greater responsibility

 

We have continued to work within our banking facilities. However, the Group is subject to a number of risks and uncertainties, the principal ones being set out above, which we continually review in determining that the Group continues to operate as a going concern.

 

Environment

 

We believe in working with and supporting the communities in which we operate and we are closely involved with the town centre and councils in many of the towns in which we trade.  We continue to seek ways to reduce product packaging and bag usage in addition to increasing the recycling of cardboard, plastic and other waste.  We also continue to pay particular attention to reducing the environmental impact of the Group's carrier bags and with assistance from the Carbon Trust seek opportunities for greater energy efficiency in our stores, service buildings and offices.  The financial implications of the government policy in relation to the carbon limits will be a continued burden on all businesses, we continue to seek to reduce our carbon footprint by working with the relevant government agencies.

 

 

Outlook and summary

 

Since my last statement, the economic outlook has not changed significantly. We continue in a difficult economic environment with the high street becoming more challenging, and the reality of the government's spending now starting to have an effect on the economy. We have seen big ticket items such as electrical (i.e. TVs and white goods) and furniture become more aggressively promoted across the retail sector. Quite simply it is very difficult to accurately forecast consumers' attitude to retail spending set against a backdrop of increasing media speculation on the high street that continues to paint a bleak future, the overall UK economic conditions and the possible impact of further financial contagion.

 

We will therefore focus our attention on what we can control. We will continue to monitor our customers' reaction to any changes and adjust our trading strategy accordingly but in my view the uncertain economic environment will continue to make our customers cautious throughout the year.  Our increased focus on commercial direct purchasing has assisted us to date, benefiting our input margins. Our balance sheet remains strong.  As a management team, we are continuously and rigorously focused on improving our business not just for today, but also for when the economic upturn comes.  The Board will work hard to deliver the improvement in results, with the ultimate objective of returning the Group to operational profitability.

 

I will be leaving the Group on 8th February 2013 to pursue a new opportunity.  I am grateful for all the support I have received from stakeholders and colleagues over the last 4½years.  I wish the Group well for the future.

 

 

 

 

 

 

 

 

 

 

 

 

Tony Brown

Chief Executive

 



Financial Review

 

 

Overview of the Year

 

The business has taken great strides this year to re-set the operational cost base to one that is right for the size of the Group and one that concurs with more efficient retail practices.  Process efficient cost reductions have been made across the business which will see the full year effects in the next year.  Further work in this area is on-going.  

 

In a retail sector materially and adversely affected by abnormal weather, sporting and Jubilee events and the continuing global economic turmoil, the focused management of cash flow and debt balances has been critical; this has been achieved through diligence across the entire business.

 

The balance sheet retains in excess of £9.5m net asset value with significant freehold assets and a more current stock balance than more recent years.  This has allowed refinancing of the debt (see below), which will allow the focus of management to shift from the bank's requirements to the business needs. 

 

The refinancing of the revolving credit facility in June 2012 provided the business with the opportunity to take the necessary strategic steps to see itself through the on-going recession.  However it was evident that the softer than expected trading results through the summer, alongside the renewed and arguably restrictive covenant levels that were set at the time, would not allow the business the scope nor the headroom to operate free of continuing bank scrutiny. 

 

The refinancing of the debt in January 2013 means that there are a number of key strategic expenditure projects that the business can now start to look at with more certainty.

 

Results

 

Gross sales, which includes VAT and concessional sales increased to £136m (2011: £110m), benefiting from the full year contribution of the 19 Anglian Regional Co-operative Society Limited stores which were acquired part way through the prior year.  The Gross sales in the current year also benefit from an additional trading week at the end of the current year.  Excluding both the acquired stores and the 53rd week, the 13 core Beales stores gross sales were 5.6% below the prior year, but with an improving trend at the end of the year.

 

Group revenue from continuing operations increased 20.4%, largely reflecting the 19 acquired stores and the extra trading week referred to above and affected adversely with a change in the sales mix shifting in favour of concession sales as opposed to own bought sales.

 

Gross margins have been impacted following the actions to cleanse the stock holding in stores; old stock has been sold through to free up both cash and the ability to buy in fresher more current stock.  The business continues to make further progress in identifying the optimum and reduced stock carried in the business at any one time.

 

Despite the full year effect of the 19 Anglian Regional Co-operative Society Limited stores, which were acquired part way through the prior year, and the effect of the added week of administrative expenses, the total administrative expense before exceptionals increase was held to 14.2% and represents an improvement as a percentage of gross sales from 32.4% in the prior year to 30.0% in the current year.  A considerable amount of work has gone into improving the process and structure of the cost base and this has led to reductions in costs with no impact on the customer except for the closure of the store card.

 

The operating loss before exceptionals has reduced markedly by 23.4%, to £2.9m and with the initiatives referred to above, this trend is expected to show a continuing improvement in to the future.

 

Following an impairment review carried out by the directors, a charge of £1.4m (2011: Nil) has been included in exceptional items where the carrying value of certain individual store fixed assets exceed the future value expected to be derived from holding the assets.

 

The net cost of financing the business has increased markedly, although the majority of the increase, £0.2m, relates to the implied annual finance charge on the preference shares which is not paid in cash as it represents an accounting charge.

 

Taxation

 

Due to the increase in the deferred tax liability associated with the prior year, which more than offset the beneficial impact of the reduction of the standard rate of corporation tax in the UK, the tax charge is £59k.

 

The loss for the period after taxation was £5,809k (2011: £601k Profit).

 

Earnings

 

The loss per share was (28.3p) (2011: earnings per share 2.93p) and the diluted loss per share was (28.3p) (2011: earnings per share 2.80p).

 

Loss before interest, depreciation, amortisation and pre exceptional items improved to £1,353k (2011: £2,013k).

 

No dividends were paid during the year (2011: nil per share).  The Board considers that a significant trading improvement will be necessary before further dividends are paid.

 

Pensions

 

The Group offers new employees the opportunity to join the Beales defined contribution pension scheme.  During April 2009 the Group closed its defined benefit pension scheme to future accrual, having been closed to new entrants since April 1997.  The scheme is operated by the main trading subsidiary, J E Beale plc, which also has the responsibility for the Denners pension scheme.  That scheme was closed to new members and future accrual when Denners Limited was acquired by the Group in 1999.  The net liability for both schemes remains on balance sheet.

 

The Group's total final salary net pension liability under IAS 19 at the year-end increased by £1m to £1.2m (2011: £0.2m); details of this are shown in the financial statements.  The total actuarial losses for the period were £2.2m (2011: £0.7m gain). The Beales scheme has an IAS19 deficit of £1.7m (2011: £0.8m deficit).  The Denners scheme has an IAS 19 surplus of £0.5m (2011: £0.5m surplus).

 

During the year the Group continued to meet the contribution schedules agreed with the trustees for both schemes, contributing £1.2m (2011: £1.6m).  Agreement was reached with the trustees of the Beales scheme regarding the triennial valuation based upon the year end of October 2010 and a new schedule of contributions was then agreed. This was subsequently revised at the time of the renewed revolving credit facility in June 2012.  This resulted in a rate of contribution of £0.5m per annum, a reduction from the £1.55m per annum previously agreed.  The Denners scheme October 2011 triennial valuation has been finalised by the actuary and no employer contributions are required.

 

Group systems

 

The Group systems are being continually improved to allow expedient and more effective decision making; retail is a 24/7 sector which requires information on a real time basis to be able to react to customer demands, market trends and environmental changes.  The improved efficiency will continue to drive further efficiency cost savings.

 

Treasury and banking

 

Treasury activities are governed by procedures and policies approved by the Board.  The Group's policy is to take a conservative stance on treasury matters and no speculative positions are taken in financial instruments.  The treasury function manages the Group's financial resources in the most appropriate and cost-effective manner. 

 

In negotiating the acquisition of the stores from ARCS in May 2011, the Group negotiated a five year term loan facility of £2.5m and issued £8.5m of preference shares at their nominal value. The term loan was repayable at a rate of £0.5m per annum although this was subsequently revised at the time of the renewed revolving credit facility in June 2012.  The 8.5m £1 preference shares issued on 22 May 2011 are interest free for a period of five years, then interest is payable at a rate of 8.0% for four years, there after interest is payable at 9.0% for the residual life. They are to be redeemed at a rate of £0.5m bi-annually from year five. The Group has the option to redeem the preference shares at any time without any penalty for settlement. The specific terms of the preference shares create an embedded derivative for the Group. The fair value of the preference shares and the valuation of the embedded derivative were included in calculating the negative goodwill arising from the acquisition in 2011. There will be non-cash charges and/or credits in the financial statements for future years relating to accreted interest on the preference shares and fair value gains and/or losses in relation to the contracts' embedded derivative. Details of the preference shares and embedded derivative are shown in note 20 and 30 of the financial statements.

 

Ahead of the half year in June 2012, the Group successfully negotiated an amendment and extension of its revolving credit facility with HSBC (the "HSBC Facility").  The HSBC Facility extended for three years and four months and came with covenant criteria which were more stringent than previously.  The facilities are secured on the Group's freehold properties which were independently revalued in October 2011 at £12.6m, a value well in excess of the current bank facility.  The Group has continued to operate within its banking facility, which comprises a £8.5m term loan which is due to expire in October 2015 and an operating overdraft of £112,000. The Group net bank debt at year-end was £7.5m (2011: £2.4m).

 

It was evident that, following the June renewal and extension, and the softer than expected trading results throughout the second half of the financial year, that the renewed covenant levels would not allow the business the scope nor the headroom to operate free of continuing bank scrutiny.

 

Subsequent to the balance sheet date, the business has therefore sought to create the flexibility to return the Group to a positive profit position whilst allowing the business to meet its on-going working capital needs and financing obligations.  It has achieved this by negotiating a refinance arrangement with Burdale, an asset backed lender.  Burdale Financial Limited are a subsidiary of Wells Fargo Bank in the USA.  The terms of that loan facility are for up to £12,000,000 Senior Secured Credit Facilities.  The facilities will be secured by first security interests in and liens/charges upon certain present and future assets and undertakings.

 

Going concern

 

As noted in both the Chairman's and Chief Executive's Statement all retailers face a very challenging and competitive trading environment and there are a number of risks and uncertainties facing the Group which are likely to impact its future development, performance and position. We are continually assessing our performance and managing these risks and uncertainties in considering the appropriate resources required for the Group. The financial statements includes the Group's objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and hedging activities, and its exposures to credit risk, interest rate risk, market risk and liquidity risk.

 

The new financing facilities which were concluded post the balance sheet date contain one financial covenant relating to trading cashflows which requires testing at specific dates determined by the lender. 

 

The Board is aware of the challenging and uncertain economic conditions and the risks and uncertainties facing the Group and has prepared detailed forecast information for the 2012/13 financial year and higher level forecasts for financial years to 2016/17.  The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the company should be able to operate within the level of the new facility and in compliance with the covenants and other stated conditions. 

 

Based upon the forecasts and projections, coupled with the strategies set out in the Chairman's and Chief Executive's Statements and the support of the Group's lenders and other key stakeholders, the Board has a reasonable expectation that the Group and Company has adequate resources to continue in operational existence for the foreseeable future. On this basis the directors continue to adopt the going concern basis of accounting in preparing the annual financial statements.

 

Balance sheet and cash flow

 

The balance sheet retains £9.5m (2011: £16.9mil) of Net Assets despite the more recent trading shortfalls and increase in borrowings.  Following an impairment review carried out by the directors, a charge of £1.4m (2011: Nil) has been included in exceptional items where the carrying value of certain individual store fixed assets exceed the future value expected to be derived from holding the assets. There has been a concerted effort to reduce working capital balances through chasing debtors and seeking to obtain improved credit terms.  Stock levels have been carefully managed to ensure the right stock levels are maintained at all times to take advantage of the critical sale periods.

 

Inventories, valued at cost, were £15.8m (2011: £16.5m) a decrease of 4%, which is attributable to better stock management.  This sum includes the peak stock volumes prior to Christmas. Trade and other receivables were £5.3m (2011: £5.7m), a 7% reduction, attributable to diligent actions to collect cash and informing customers the store card facility would close. Trade payables at year-end marginally decreased to £8.2m (2011: £8.3m). Accruals and deferred income decreased to £5.5m (2011: £6.8m) primarily as a result of the fact that this year included a 53rd week and payments were released that would otherwise not have been last year.  The Group has continued to ensure that creditor payments have been prioritised in order to benefit from maximum early settlement discount.

 

Total borrowings of £9.3m (2011: £5.6m) are included in both current and non-current liabilities; the increase reflective in the main of the increasing outflow from operating activities, the investment in critical property, plant and equipment and the on-going disbursement of pension obligations.

 

The increased valuation of the preference shares on an amortised cost basis, coupled with the increase in the IAS19 pension liability and the increase in lease incentives, increased the year-end long-term liabilities other than borrowings, by £1.9m to £15.2m (2011: £13.3m).

 

Group net assets at year-end decreased to £9.5m (2011: £16.9m). The value of net asset per share at year end was 46.4p (2011: 82.1p).

 

 

 

 

Statement of Directors' Responsibilities

 

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year.  Under that law the directors are required to prepare the group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and have also chosen to prepare the parent company financial statements under IFRSs as adopted by the EU.  Under company law the directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.  In preparing these financial statements, International Accounting Standard 1 requires that directors:

 

·              properly select and apply accounting policies;

·              present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

·              provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

·              make an assessment of the company's ability to continue as a going concern.

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006.  They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website.  Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

Responsibility statement

We confirm that to the best of our knowledge:

·           the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and

·           the management report, which is incorporated into the directors' report, includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

 

By order of the Board    

 

 

 

Keith Edelman                                                             Tony Brown

Chairman                                                                      Chief Executive                                                               

4 February 2013                                                             4 February 2013

 

 

 

 

 

 

 

 

Consolidated Income Statement

For the 53 weeks ended 3 November 2012

 

 

 

 

 

 

 

Notes

53 weeks to

3 November

2012

£000

52 weeks to

29 October

2011

£000

 

Gross sales*

 

2

 

135,549

 

110,027

Revenue - continuing operations

2

74,609

61,969

Cost of sales

 

(36,833)

(30,158)

Gross profit

 

37,776

31,811

Administrative expenses

 

(40,712)

(35,643)

Exceptional administration (expenses)/income

 

(2,082)

4,800

Total administration expenses

 

(42,794)

(30,843)

Operating loss before exceptional items

 

(2,936)

(3,832)

Operating (Loss)/Profit - continuing operations

 

(5,018)

968

Finance expense

 

(733)

(426)

Finance income

 

1

1

(Loss)/Profit on ordinary activities before taxation

 

(5,750)

543

Taxation (charge)/credit

 

(59)

58

(Loss)/Profit for the period from continuing operations attributable to equity members of the parent

 

 

(5,809)

 

601

Basic (loss)/earnings per share

3

(28.3p)

2.93p

Diluted (loss)/earnings per share

3

(28.3p)

2.80p

 

* Gross sales include revenue from concession sales and VAT

 

 

 

 

 

 

Consolidated Balance Sheet

As at 3 November 2012


 

 

 

3 November

2012

£000

29 October

2011

£000

Non-current assets




Goodwill


892

892

Property, plant and equipment


25,204

26,586

Financial assets


16

16

Derivative asset


1,416

1,233



27,528

28,727

Current assets




Inventories


15,816

16,462

Trade and other receivables due within one year


5,191

5,610

Trade and other receivables due after one year


104

66

Cash and cash equivalents


454

738



21,565

22,876

Total assets


49,093

51,603

Current liabilities




Trade and other payables


(14,449)

(15,797)

Provisions


(271)

-

Preference shares


(307)

-

Borrowings and overdraft


(255)

(3,850)

Tax liabilities


(35)

(35)



(15,317)

(19,682)

Net current assets


6,248

3,194

Non-current liabilities




Preference shares


(6,213)

(6,147)

Borrowings


(9,025)

(1,750)

Retirement benefit obligations


(1,171)

(203)

Lease incentives


(3,790)

(2,736)

Deferred tax


(3,066)

(3,248)

Obligations under finance leases


(978)

(979)

 

Total liabilities


(24,243)

(39,560)

(15,063)

(34,745)

Net assets


9,533

16,858

Equity




Share capital


1,026

1,026

Share premium account


440

440

Revaluation reserve


9,082

9,010

Capital redemption reserve


54

54

ESOP reserve


(15)

(22)

Retained earnings


(1,054)

6,350

Total equity


9,533

16,858

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Comprehensive (Loss)/Income

 


 

 

 

 

53 weeks to

3 November 2012

£000

52 weeks to

29 October

2011

£000

Actuarial (loss)/gain on pension scheme


(2,236)

743

Revaluation gain


-

1,046

ARCS Loan


500

-

Tax on revaluation reserve


183

(163)

Tax on items taken directly to equity


37

39

Net income recognised directly in equity


(1,516)

1,665

(Loss)/profit for the period


(5,809)

601

Total comprehensive (loss)/income for the period


(7,325)

2,266

 

Consolidated Statement of Changes in Equity


 

 

 

53 weeks to

3 November 2012

£000

52 weeks to

29 October 2011

£000

Opening equity


16,858

14,592

Total comprehensive (loss)/income for the period


(7,325)

2,266

Total movements in equity for the period


(7,325)

2,266

Closing equity


9,533

16,858

 

Consolidated Statement of Comprehensive (Loss)/Income

 


 

 

 

 

53 weeks to

3 November 2012

£000

52 weeks to

29 October

2011

£000

Actuarial (loss)/gain on pension scheme


(2,236)

743

Revaluation gain


-

1,046

ARCS Loan


500

-

Tax on revaluation reserve


183

(163)

Tax on items taken directly to equity


37

39

Net income recognised directly in equity


(1,516)

1,665

(Loss)/profit for the period


(5,809)

601

Total comprehensive (loss)/income for the period


(7,325)

2,266

 

 

 

 

 

 

 

 

Consolidated Statement of Changes in Equity


 

 

 

53 weeks to

3 November 2012

£000

52 weeks to

29 October 2011

£000

Opening equity


16,858

14,592

Total comprehensive (loss)/income for the period


(7,325)

2,266

Total movements in equity for the period


(7,325)

2,266

Closing equity


9,533

16,858

 


 

Share capital

£000

 

Share premium account

£000

 

Revaluation

reserve

£000

Capital redemption reserve

£000

 

ESOP

reserve

£000

 

Retained earnings

£000

 

 

Total

£000

At 30 October 2010

1,026

440

8,226

242

(27)

4,685

14,592

Profit for year

-

-

-

-

-

601

601

Transfer

-

-

-

(188)

-

188

-

Revaluation increase land & buildings

-

-

1,046

-

-

-

1,046

Deferred tax change on revaluation reserve

-

-

(163)

-

-

-

(163)

Tax on comprehensive income

-

-

-

-

-

39

39

Transfer

-

-

(99)

-

-

99

-

Gain

-

-

-

-

5

(5)

-

Net actuarial gain

-

-

-

-

-

743

743

29 October 2011

1,026

440

9,010

54

(22)

6,350

16,858

Loss for year

-

-

-

-

-

(5,809)

(5,809)

ARCS Loan

-

-

-

-

-

500

500

Deferred tax change on revaluation reserve

-

-

183

-

-

-

183

Tax on comprehensive income

-

-

-

-

-

37

37

Transfer

-

-

(111)

-

-

111

-

Gain

-

-

-

-

7

(7)

-

Net actuarial loss

-

-

-

-

-

(2,236)

(2,236)

3 November 2012

1,026

440

9,082

54

(15)

(1,054)

9,533

 



Consolidated Cash Flow Statement

For the 53 weeks ended 3 November 2012

 

 

 

 

Note

53 weeks to

3 November

2012

£000

52 weeks to

29 October

2011

£000

Cash flows (used in)/generated from operating activities before interest and tax

4

(2,493)

1,688

Interest paid

 

(360)

(260)

Interest received

 

1

1

Net cash flow (used in)/generated from operating activities

 

(2,852)

1,429

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment

 

(1,611)

(2,267)

Purchase of new business

 

-

(4,390)

Net cash used in investing activities

 

(1,611)

(6,657)

Cash flows from financing activities

 

 

 

Preference shares issued

 

-

8,500

Net expense from obligations under finance leases

 

(1)

-

Increase/(Decrease) in bank loans

 

4,800

(5,500)

(Decrease)/Increase in ARCS Loan

 

(625)

2,500

Net cash generated from financing activities

 

4,174

5,500

Net (decrease)/increase in cash and cash equivalents in the period

 

(289)

272

Cash and cash equivalents at beginning of period

 

738

466

Cash and cash equivalents (including overdrafts) at end of period

 

449

738

 

 

1.  Accounting policies

 

     General Information

 

     The financial information set out above does not constitute the Company's statutory accounts for the periods ended 3 November 2012 or 29 October 2011.  The financial information for 2012 and 2011 is derived from the statutory accounts for those years.  The statutory accounts for 2011 have been delivered to the Registrar of Companies.  The statutory accounts for 2012 will be delivered to the Registrar of Companies following the Company's annual general meeting.  The Group auditors, Deloitte LLP, have reported on the 2012 and 2011 accounts, their reports were unqualified and did not contain any statements required under either s498 (2) or s498 (3) of the Companies Act 2006.  The preliminary announcement has been prepared on the basis of the accounting policies as stated in the financial statements for the 53 week period ended 3 November 2012.  The information included in this preliminary announcement is based on the Company's financial statements which are prepared in accordance with International Financial Reporting Standards (IFRS), as adopted for use in the EU.  The Company expects to publish full financial statements that comply with IFRS on 15 February 2013.


 

2

Revenue

 

 

The entire Group's revenue is derived from retail sales made in the UK.  Revenue includes the commission earned on sales made by concession outlets.

 

 

53 weeks to

3 November

2012

£000

52 weeks to

29 October

2011

£000

 

Gross sales

135,549

110,027

 

VAT

(22,207)

(17,579)

 

Gross sales (exc. VAT)

Agency sales less commission

113,342

(38,733)

92,448

(30,479)

 

Revenue

74,609

61,969

 

 

 

Analysis of gross sales (excluding VAT) and revenue:



53 weeks to

3 November

2012

52 weeks to

29 October

2011



Gross sales

£000

Revenue

£000

Gross sales

£000

Revenue

£000


Own bought sales

60,893

60,893

51,734

51,734


Concession sales

52,081

13,348

40,334

9,855


Interest on customer accounts

368

368

380

380



113,342

74,609

92,448

61,969

 

 

 

3

(Loss)/Earnings per share

 

 



53 weeks to

3 November

2012

52 weeks to

29 October

2011


Weighted average number of shares in issue for the purpose of basic earnings per share

20,524,797

20,524,797


Dilution - share reward schemes

781,562

949,874


Diluted weighted average number of shares in issue

21,306,359

21,474,671



 

£000

 

£000


(Loss)/Profit for basic and diluted earnings per share

(5,809)

601







Pence

Pence


Basic (loss)/earnings per share

(28.3)

2.93


Basic loss per share before exceptional item

(18.16)

 (20.46)


Diluted (loss)/earnings per share

(28.3)

2.80

 

         No dividend was paid (2011: nil per share).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

Cash (utilised in)/generated from operations




Group

 

               


 

53 weeks to

3 November 2012

£000

 

52 weeks to

29 October 2011

£000

 


Operating (loss)/profit

(5,018)

968

 


Adjustments for:

Cash disbursements of pension obligations  (net of charge included within the income statement)

 

(1,268)

 

(1,536)

 


Negative goodwill

-

(6,626)

 


Fixed Asset Impairment

1,410

-

 


Depreciation

1,583

1,819

 


Fair value movement of derivative

(183)

(155)

 


Decrease/(increase) in inventories

646

(169)

 


Decrease/(increase) in trade and other receivables

381

(1,224)

 


(Decrease)/increase in trade and other payables

(44)

8,611

 


Cash (utilised in)/generated from operations

(2,493)

1,688

 

 

 

5

Analysis of net debt


 

 

 

 

Group

29 October

2011

£000

 

Cash flow

£000

Non Cash Item

£000

3 November

2012

£000

 

Cash at bank and in hand

Overdraft

738

-

(284)

(5)

-

-

454

(5)

 

 

Debt due within one year

Debt due after one year**

738

(3,850)

(7,897)

(289)

3,225

(7,400)

-

68

59

449

(557)

(15,238)

 


(11,009)

(4,464)

127

(15,346)

 

Finance lease*

(979)

1

-

(978)

 






 

 

6

 

Report and Accounts


Copies of the Company's Annual Report and Accounts will be sent to shareholders and will be shown on the Company's website www.Beales.co.uk in due course.  Further copies may be obtained from the company secretary, Beale PLC, The Granville Chambers, 21 Richmond Hill, Bournemouth BH2 6BJ

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR NKQDQQBKDABK