RNS Number:9856E
Mulberry Group PLC
22 June 2006
MULBERRY GROUP PLC ("Mulberry" or the "Group")
PRELIMINARY RESULTS FOR
THE YEAR TO 31 MARCH 2006
Mulberry Group Plc, the AIM listed luxury brand, announced pre-tax profits that
have trebled to #6.2 million and the payment of the first dividend since 1998.
GODFREY DAVIS, CHAIRMAN AND CHIEF EXECUTIVE COMMENTED:
"We have delivered exceptional sales and profit growth and generated substantial
cash balances. This was a result of focusing on our core products of handbags
and leather accessories and the early benefits of our international expansion
programme. There will be a dividend of 1 penny per share.
Mulberry's current trading outlook is positive, in what are more challenging
times. Our priority now is to build the brand in the USA, Asia and Japan."
HIGHLIGHTS
* Sales increased by 44% to #43.4 million (2005: #30.1 million)
* Operating profit of #6.2 million (2005: #2.1 million)
* Net cash #7.3 million (2005: #2.2 million)
* Dividend of 1.0 pence per ordinary share (2005: nil)
* Current trading and outlook positive:
* Autumn 2006 order book 12% ahead of last year
* UK Retail sales for 11 weeks to 17 June 2006 up by 19%
FOR FURTHER DETAILS PLEASE CONTACT:
WMC Communications
David Wynne-Morgan or Charlie Geller 0207 930 9030
Teather & Greenwood Limited
Mark Dickenson or Fred Walsh 0207 426 9000
CHAIRMAN'S STATEMENT
The Group has continued to make excellent progress delivering strong sales
growth and a significant increase in operating profit to #6.2 million (2005:
#2.1 million).
Strong cash generation from operations of #8.0 million (2005: #4.9 million)
resulted in cash balances increasing by #5.1 million. This was after #784,000 of
preference dividends, including #638,000 of arrears from previous periods, were
paid and $1.0 million was invested in Mulberry USA LLC.
A dividend of 1.0 pence per share is being recommended (2005: nil).
Sales for the year increased by 44% to #43.4 million (2005: #30.1 million). This
rise was due to a combination of continued growth in the UK and strong demand
from Europe, USA, Asia and Japan as the international expansion strategy
developed.
Gross profit margin, increased from 53.7% to 56.4%. Margins improved due to the
increased volumes achieved.
Operating expenses increased by #4.3 million reflecting the rent and staff costs
of new shops and concessions as well as the increased investment in marketing,
people and infrastructure to support the future growth of the business.
The Group made a profit on ordinary activities before tax for the year of #6.2
million (2005: restated #1.7 million).
The results for the year to 31 March 2005 have been partially restated due to
the adoption of FRS25. The 'B' Preference shares are now defined as compound
financial instruments and disclosed partly as equity and partly as a financial
liability. This has also resulted in the dividends on the shares and associated
finance costs being reclassified from dividends to interest payable. The
relevant prior year comparatives have been restated to reflect the new
treatment.
At 31 March 2006, the Group had net cash on hand and at bank of #7.3 million
(2005: #2.2 million). The Group has term loan and overdraft facilities of #7.5
million with its principal bankers HSBC Bank plc.
BUSINESS REVIEW
Accessories, which are our core business, account for over 90% of Group sales.
Spring 2006 wholesale orders from the UK and Europe increased by 25% on the
prior year and accounted for 67% of the order book. Orders from the new markets
of the USA, Asia and Japan grew to 30% of the total compared to 17% in the
previous year.
Sales of leather handbags continued to be the main driving force behind these
sales increases.
Third party wholesale sales to the international distribution partners,
franchisees and independent retailers, account for over 55% of the Group's
sales, compared to 50% last year.
For the 52 weeks to 1 April 2006 sales in our own UK shops increased by 26%.
Like for like sales in our shops increased by 14%.
We opened a Mulberry shop in Heathrow Terminal 1 in May 2005 and a new shop in
Edinburgh and four concessions in House of Fraser stores in February 2006.
We continue to expand our advertising and PR campaigns with the objective of
bringing the brand to the attention of a wide spectrum of fashion conscious
customers worldwide. The campaigns for Autumn 2006 and Spring 2007 will feature
in leading UK, European, Asian and Japanese fashion publications.
During the year, the main London offices and design studio were consolidated to
a new single location at Shepherds Bush. The sales offices and showrooms remain
in Bond Street above our flagship store. This reduces the number of office
locations in London from three to two. A similar process is underway in
Somerset. In December 2005, the Group's distribution centre was moved to a
modern 40,000 sq ft unit, providing space for future expansion. This has freed
space at our Rookery factory which will be used to increase UK production of our
premium leather bags over the next two years. In July 2006, the Group's Somerset
head office will move to new offices, which are under construction at the
Rookery factory. This will complete the rationalisation of the Group's UK
offices, warehouse and factory, significantly improving communication and
providing space for future expansion.
CURRENT TRADING AND OUTLOOK
The Spring 2006 third party accessories wholesale order book closed at the end
of May 2006 53% ahead of the previous year. The accessories third party order
book for the Autumn 2006 season is approximately 12% ahead of the order book at
the same point in the prior year. This reflects a period of relative
consolidation following the exceptional growth in Autumn 2005 when the order
book increased by approximately 80%. It is estimated that more than three
quarters of the orders for the Autumn 2006 season have been taken at this date.
Although conditions are more difficult, our retail sales in the UK, for the
first eleven weeks of the new financial year, are up by approximately 19% and
like for like sales in the same period are up by approximately 4%.
In the USA our associated company, Mulberry USA LLC, has signed a lease for its
first shop in Bleecker Street, New York. Further shops are under negotiation
with the objective of opening five shops by 31 March 2007. In parallel with
opening these shops, we expect that the distribution through department stores
will reduce as the retail phase of our strategy to develop the market takes
effect. As a result, we expect that sales to the USA will be flat in the year
ahead and that Mulberry USA LLC will make a loss due to the normal pre-trading
and start up costs of the shops.
In Japan, our partners have opened the first shop in Roppongi Hills, Tokyo and
continue to open Mulberry corners in department stores as space becomes
available.
In the rest of Asia, our partners now operate five Mulberry branded shops having
opened a new shop in Taipei, Taiwan in April 2006. A lease has been agreed on a
shop in Orchard Road, Singapore, which will open later this year. In Korea, we
have signed a distribution agreement and expect that the first department store
concession will open in the Autumn.
In the Middle East, we have signed a new franchise agreement in Dubai with a
shop planned in 2007 when the new Dubai Mall opens.
Management's primary aim for the current year is to increase the international
penetration of our brand. The impact on sales in the current year will be
moderate as we digest and consolidate the substantial gains achieved last year.
Other operating expenses will increase to include the rent and staff costs of
the new shops and concessions for the whole year. Marketing expenditure will
increase to support the new markets. We expect that the full impact of the
international expansion will benefit the year to 31 March 2008 and subsequent
periods.
DIVIDENDS
The Board is recommending the payment of a dividend on the ordinary shares of
1.0 pence per share. The dividend on the preference shares of #196,000 per
annum is paid in two instalments on 30 June and 31 December each year.
STAFF
I would like to thank all of our people for their enthusiasm, energy and
commitment. The outstanding achievements of the last year are a direct result of
their efforts and would not have been possible without them.
Godfrey Davis
Chairman and Chief Executive
22 June 2006
Contacts:
WMC Communications
David Wynne-Morgan or Charlie Geller 020 7930 9030
Teather & Greenwood Limited
Mark Dickenson or Fred Walsh 0207 426 9000
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 March 2006
2006 2005
#'000 #'000
Restated
TURNOVER 43,406 30,064
Cost of sales (18,912) (13,926)
---------- ----------
GROSS PROFIT 24,494 16,138
Other operating expenses (net) (18,255) (14,001)
---------- ----------
OPERATING PROFIT 6,239 2,137
Group share of profit/(loss) of associated undertakings 95 (17)
Interest receivable and similar income 163 27
Finance costs on preference shares (249) (249)
Other interest payable and similar charges (31) (193)
Interest payable (280) (442)
---------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 6,217 1,705
Taxation on profit on ordinary activities (1,304) 33
---------- ----------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION, 4,913 1,738
BEING PROFIT FOR THE FINANCIAL YEAR
---------- ----------
EARNINGS PER ORDINARY SHARE - basic 10.06p 3.56p
========== ==========
- diluted 8.91p 3.49p
========== ==========
CONSOLIDATED BALANCE SHEET
31 March 2006
2006 2005
#'000 #'000
Restated
FIXED ASSETS
Tangible assets 5,228 4,904
Investments 730 60
---------- ----------
5,958 4,964
---------- ----------
CURRENT ASSETS
Stocks 5,967 5,379
Debtors 5,239 3,522
Cash at bank and in hand 7,282 2,183
---------- ----------
18,488 11,084
CREDITORS: Amounts falling due within one year (8,415) (4,383)
---------- ----------
NET CURRENT ASSETS 10,073 6,701
---------- ----------
TOTAL ASSETS LESS CURRENT LIABILITIES 16,031 11,665
CREDITORS: Amounts falling due after more than one year (2,579) (2,517)
---------- ----------
NET ASSETS 13,452 9,148
========== ==========
CAPITAL AND RESERVES
Called-up share capital 2,467 2,462
Share premium account 4,547 4,514
Revaluation reserve 80 111
Capital redemption reserve 154 154
Preference dividend reserve - 638
Special reserve 1,467 1,467
Profit and loss account 4,737 (198)
---------- ----------
SHAREHOLDERS' FUNDS 13,452 9,148
========== ==========
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2006
2006 2005
#'000 #'000
Restated
NET CASH INFLOW FROM OPERATING ACTIVITIES 7,958 4,857
Returns on investments and servicing of finance (655) (162)
Taxation (550) (11)
Capital Expenditure (1,543) (460)
---------- ----------
Cash inflow before financing 5,210 4,224
Financing (111) (3,286)
---------- ----------
INCREASE IN CASH IN THE YEAR 5,099 938
========== ==========
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS/(DEBT)
2006 2005
#'000 #'000
Restated
Increase in cash in the year 5,099 938
Cash outflow from decrease in debt and lease financing 145 3,297
---------- ----------
5,244 4,235
Other non-cash changes
Inception of finance leases (73) -
Preference shares (50) (50)
---------- ----------
Movement in net funds 5,121 4,185
NET DEBT, BEGINNING OF YEAR (460) (4,645)
---------- ----------
NET FUNDS/(DEBT), END OF YEAR 4,661 (460)
========== ==========
NOTES
1. The financial information set out above does not constitute the Group's
statutory financial statements for the years ended 31 March 2006 and 2005,
but is derived from those financial statements. Statutory accounts for the
year ended 31 March 2005 have been filed with the Registrar of Companies.
The statutory accounts for the year ended 31 March 2006 will be filed at
Companies House upon receiving the approval of the Annual General Meeting.
The auditors have reported on the accounts for the year ended 31 March 2005
and their report was unqualified and did not contain a statement under
section 237 (2) or (3) of the Companies Act 1985.
2. The results for the year ended 31 March 2006 contained in this report have
been prepared using accounting policies consistent with those used in the
preparation of the Annual Report and Financial Statements for the year
ended 31 March 2005 apart from the adoption of FRS25 Financial Instruments:
disclosure and presentation and FRS21 Events after the Balance Sheet date.
Under FRS25 the 'B' Preference shares are now defined as compound financial
instruments and disclosed partly as equity and partly as a financial
liability. This has also resulted in the dividends on the shares and
associated finance costs being reclassified from dividends to interest
payable. The relevant prior year comparatives have been restated to reflect
the new treatment. Consistent with the requirements of FRS21, which was
introduced this year, the proposed dividend will not be recorded as a
liability until it is approved at the Annual General Meeting.
3. Basic earnings per ordinary share has been calculated by dividing the
profit on ordinary activities after taxation for each financial year by
48,833,591. (2005: 48,765,968) ordinary shares, being the weighted average
number of ordinary shares in issue during the year.
Diluted earnings per share has been calculated by dividing the profit on
ordinary activities after taxation excluding the interest and finance costs
relating to the preference shares for each financial year by 57,909,182
(2005: 56,945,735) potential ordinary shares taking account of the
potential conversion of the preference shares and exercise of unexercised
options.
4. Copies of the Annual Report and Financial Statements will be posted to
shareholders. Further copies can be obtained from Mulberry Group plc's
registered office at Kilver Court, Shepton Mallet, Bath, BA4 5NF.
Copies of this announcement are available for a period of one month from the
date hereof from the Company's registered office, Kilver Court, Shepton Mallet,
Bath, BA4 5NF and from the Company's nominated adviser, Teather & Greenwood
Limited, Beaufort House, 15 St. Botolph Street, London, EC3A 7QR.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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