RNS Number : 0345X
Mulberry Group PLC
19 June 2008
MULBERRY GROUP PLC
19 JUNE 2008
MULBERRY GROUP PLC ("Mulberry" or the "Group")
PRELIMINARY RESULTS FOR
THE YEAR TO 31 MARCH 2008
Mulberry Group Plc, the AIM listed luxury brand announced sales growth of 14% to �51.2 million (2007: �45.1 million) and profit before
tax slightly ahead of market expectations of �5.2 million (2007: �6.2 million). This was the fifth successive year of sales growth. The rate
of growth accelerated through the year with global sales in the second half 22% up on the same period last year.
As indicated at the beginning of the year the decrease in profit was due to the additional marketing investment in building Mulberry as
a global brand.
HIGHLIGHTS
* Sales increased by 14% to �51.2 million (2007: �45.1 million)
* UK retail sales growth of 29%, like for like growth of 10%
* 8 Mulberry shops and 6 department store concessions opened worldwide during the year
* Marketing expenditure increased by �2.1 million to �4.8 million
* Cash net of bank borrowings of �10.2 million (2007: �9.0 million)
* Positive current trading outlook - strong order books and UK retail sales 36% ahead for the first ten weeks (like for like sales
up 17%)
* Dividend increased by 33% to 2 pence per share (2007: 1.5 pence)
GODFREY DAVIS, CHAIRMAN AND CHIEF EXECUTIVE COMMENTED:
"We have achieved another year of strong sales growth, delivering an increase of 14% for the year. These results reflect the continued
investment in the brand. With our substantial cash resources, we are well placed to continue to build Mulberry as a global brand. The new
financial year has started strongly."
FOR FURTHER DETAILS PLEASE CONTACT:
Pelham PR
David Wynne-Morgan 0203 178 4416
Kate Catchpole 0207 743 6678
Landsbanki Securities (UK) Ltd
Rashmi Sinha/Fred Walsh 0207 426 9000
CHAIRMAN'S STATEMENT
The Group has completed a successful year with sales growth of 14% to �51.2 million (2007: �45.1 million). The rate of growth
accelerated through the year with sales in the second half increasing by 22% compared to the same period in 2007.
Profit before tax was ahead of market expectations at �5.2 million (2007: �6.2 million) and a final dividend of 2 pence per share is
being recommended (2007: 1.5 pence).
We continue to invest in the business both in the UK and internationally, using the retained profits and cash flow to invest in the
opening of new shops and to significantly increase the expenditure on marketing. This strategy reduces profits in the short term, as we
spend today to build for the future, but is the key to developing future shareholder value.
The Group's balance sheet has strengthened further during the year, with shareholders' funds rising by 33% to �22.5 million (2007: �16.9
million). Cash generation continues to be strong and at 31 March 2008 the Group had cash net of bank borrowings of �10.2 million (2007: �9.0
million). Group stocks of prior season items are at low levels. The combination of this strong stock and cash position means that the Group
is able to pursue its growth objectives without being constrained by the difficult economic climate.
BUSINESS REVIEW
Accessories remain our core business and continue to account for over 90% of Group sales. The iconic Bayswater handbag continues to sell
strongly supported by the new Mabel and Roxanne Tote handbags which have joined the bestseller lists. The design team has been successful in
broadening our product offer to meet the specific requirements of our emerging markets in the USA, Asia and the Middle East.
We have continued the expansion of our own retail network in the UK, where we have opened shops in Glasgow, Covent Garden, Stansted
Airport and Heathrow Terminal 5, as well as four concessions in House of Fraser department stores and a new outlet store in Cheshire Oaks,
near Liverpool.
For the year to 31 March 2008 sales from our UK shops, which benefited from the full year trading of the shops opened last year and the
new openings this year, increased by 29% and like for like sales for the same period increased by 10%.
Our associate company, Mulberry USA LLC opened its fifth store during May 2007. The five stores have incurred start up losses as
expected, but sales are growing as they build consumer awareness. This is a long term project. We plan to build the individual existing
shops to profitability and there is potential to open further shops, which will enable the USA business to reach critical mass and cover its
head office management costs. Our sales from the UK to the USA dipped slightly in the year following the initial input of stock to start up
the shops in the prior year.
In Asia, the shops run by our partner, Club 21, continue to develop satisfactorily. New shops were opened in Terminal 3 at Changi
Airport, Singapore, and in the Elements development in Hong Kong, bringing the total number of Mulberry shops operated by Club 21 to seven.
In Korea, business with our partner SHK has made good progress with the opening of two additional department store shop in shops, bringing
the total to four. Aggregate sales to the Asian markets have started to grow in the second half as sales move beyond the initial orders for
the stock required to open the shops.
CURRENT TRADING AND OUTLOOK
The sales growth experienced during the six months to 31 March 2008 has continued into the new financial year. Confirmed orders for
sales to third parties for the Autumn/Winter 08 season are more than 30% ahead of last year. In the first ten weeks of the new financial
year, total retail sales in the UK are running 36% above prior year with like for like sales up 17%. This is a very encouraging start to the
new financial year. However, economic conditions are concerning and we remain cautious, particularly in the light of cost inflation in the
supply chain which will put pressure on our margins.
This autumn we will be introducing an exciting new line of women's shoes exclusively in the Mulberry shops. Distribution of this line
will be restricted to Mulberry shops for the first two to three seasons.
We continue to expand the business both in the UK and internationally. During May 2008, we have opened a new shop in Leeds and reopened
our original shop in St Christopher's Place, London, after refurbishment. During the autumn, we will open a new store in the luxury mall
development at White City, London.
We have appointed a new partner for Greece and a new shop will open in Athens later this year. Our existing partner in Denmark will open
a new shop at Copenhagen Airport this summer to build on their extremely successful business.
In Asia, a new shop opened in Shanghai during April and our partner in Korea plans to open two more department store shop in shops
during the autumn. Business through our partner in Japan has not met our requirements for growth and market penetration. We have agreed to
terminate the arrangement during January 2009. We will develop a new approach to this market in due course.
In the Middle East our partner plans to open in Dubai, Jeddah and Kuwait by the end of the year.
The next project in the USA is to extend our website to trade in US dollars.
As a consequence of our business expansion, we have outgrown our London office and showroom premises and so are planning to relocate
before the end of the financial year.
DIVIDENDS
The Board is recommending the payment of a final dividend on the ordinary shares of 2 pence per share (2007: 1.5 pence) which will be
paid on 15 August 2008 to ordinary shareholders on the register on 18 July 2008.
STAFF
I would like to thank all of our staff for their enthusiasm and commitment which are so important to the brand's future development. The
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
18 June 2008
FINANCIAL REVIEW
Gross margin
Group gross profit as a percentage of revenue was 60% compared to 58% in 2007. This increase reflects the change in sales mix, where
there has been an increase in the proportion of Retail sales against Design sales.
OPERATING EXPENSES
Operating expenses for the year increased by �6.2 million to �25.8 million (2007: �19.6 million). This increase reflects the planned
�2.1 million of extra marketing investment in building the international Mulberry brand and �2.8 million additional costs associated with
the expanding retail network in the UK and France.
SHARE OF RESULTS OF ASSOCIATES
Income of �0.1 million has been recognised in the year in relation to the Group's investment in Mulberry Oslo AS, which operates a
retail store in Norway. In the prior year losses included �0.5 million of start-up losses for Mulberry USA LLC.
FINANCE INCOME AND EXPENSE
The increase in net finance income of �0.3 million has resulted from the conversion of the B preference shares (see below) and the
increase in cash balances held on deposit throughout the year.
Taxation
The Group reported a 33.7% effective tax rate (2007: 35.8%) on profit before tax, resulting in a tax charge of �1.8 million (2007: �2.2
million). The effective rate has declined due to the reduction in expenses not deductible for tax purposes. During 2007, the disallowable
expenditure included the �0.1 million charge for share based payments and the Group's share of losses in Mulberry USA LLC of �0.5 million.
Balance Sheet
Capital expenditure on tangible fixed assets for the year totaled �2.6 million (2007: �2.8 million) and included the fit out of the new
stores opened during the year. The expenditure of �0.4 million on intangible fixed assets reflects the ongoing investment in the Group's new
ERP system.
Stock levels increased by �1.1 million to �7.8 million resulting from the growth of the business and the additional stock held at the
new retail outlets.
Cashflow
The principal source of funds was cash flow generated from operations which amounted to �6.1 million (2007: �7.9 million) during the
year. The cash balance has remained stable at �10.2 million.
A property loan of �1.25 million was repaid during February 2008. The Group had further committed but unutilised facilities of �6.25
million at the end of the year comprising a �3.5 million multicurrency overdraft which is renewable annually and a revolving credit facility
of �2.75 million which expires during June 2009.
Shareholder return
The basic earnings per share for the year declined by 26% to 6.0p. This reflects the increase in the number of shares resulting from the
preference share conversion during April 2007 and the lower profit after tax generated during the year due to the additional spend on
marketing and store expansion.
Conversion of the B preference shares
On 16 April 2007, at the request of the shareholder, Challice Limited, as the relevant conditions set out in the Company's Articles of
Association had been met, the Company converted 8,000,000 B preference shares of 5p each issued to Challice Limited to 8,000,000 ordinary
shares of 5p each. This increased Challice Limited's holding to 34,212,144 shares which is 59.6% of the issued share capital of the
Company.
Adoption of International Financial Reporting Standards ('IFRS')
This is the Group's first set of consolidated financial statements prepared under IFRS. The transition to IFRS has resulted in a number
of immaterial numerical adjustments to the previously reported consolidated financial statements which were prepared under United Kingdom
Generally Accepted Accounting Principles (UK GAAP). The comparative information has been restated in accordance with IFRS.
CONSOLIDATED INCOME STATEMENT
Year ended 31 March 2008
2008 2007
�'000 �'000
Revenue 51,174 45,078
Cost of sales (20,622) (18,818)
---------- ----------
GROSS PROFIT 30,552 26,260
Administrative expenses (25,979) (19,804)
Other operating income 201 216
---------- ----------
OPERATING PROFIT 4,774
6,672
Share of results of associates 63 (498)
Finance income 473 324
Finance expense (124) (298)
---------- ----------
PROFIT BEFORE TAX 5,186 6,200
Tax (1,750) (2,219)
---------- ----------
PROFIT FOR THE YEAR 3,436 3,981
========== ==========
ATTRIBUTABLE TO:
Equity holders of the parent 3,436 3,981
========== ==========
pence pence
Basic earnings per share 6.0 8.1
Diluted earnings per share 6.0 7.4
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND
EXPENSE
Year ended 31 March 2008
2008 2007
�'000 �'000
Net profit for the year 3,436 3,981
Exchange differences on translation of foreign 309 (94)
operations
---------- ----------
TOTAL RECOGNISED INCOME AND EXPENSE FOR THE YEAR 3,745 3,887
========== ==========
ATTRIBUTABLE TO:
Equity holders of the parent 3,745 3,887
========== ==========
CONSOLIDATED BALANCE SHEET
At 31 March 2008
2008 2007
�'000 �'000
NON-CURRENT ASSETS
Intangible assets 2,095 1,587
Property, plant and equipment 8,454 6,997
Interests in associates 242 152
Deferred tax asset - 174
---------- ----------
10,791 8,910
---------- ----------
CURRENT ASSETS
Inventories 7,785 6,688
Trade and other receivables 5,548 3,869
Cash and cash equivalents 10,237 10,271
---------- ----------
23,570 20,828
---------- ----------
TOTAL ASSETS 34,361 29,738
---------- ----------
CURRENT LIABLITIES
Trade and other payables (10,894) (7,950)
Current tax liabilities (917) (892)
Obligations under finance leases (10) (37)
---------- ----------
(11,821) (8,879)
NON-CURRENT LIABILITIES
Borrowings - (1,250)
Preference shares - (2,564)
Deferred tax liabilities (17) (149)
Obligations under finance leases (4) (27)
---------- ----------
(21) (3,990)
---------- ----------
TOTAL LIABILITIES (11,842) (12,869)
---------- ----------
NET ASSETS 22,519 16,869
========== ==========
EQUITY
Share capital 2,871 2,474
Share premium account 7,007 4,633
Revaluation reserves 18 49
Capital redemption reserve 154 154
Special reserve 1,467 1,467
Foreign exchange reserve 215 (94)
Retained earnings 10,787 8,186
---------- ----------
TOTAL EQUITY 22,519 16,869
========== ==========
CONSOLIDATED CASH FLOW STATEMENT
At 31 March 2008
2008 2007
�'000 �'000
OPERATING PROFIT FOR THE YEAR 4,774 6,672
ADJUSTMENTS FOR:
Depreciation of property, plant and equipment 1,231 999
Impairment of property, plant and equipment - 37
Amortisation of intangible assets 137 31
Loss on sale of property, plant and equipment 12 2
Effects of foreign exchange (61) -
Share based payments (credit)/charge (5) 102
---------- ----------
OPERATING CASH FLOWS BEFORE MOVEMENTS IN WORKING 7,843
CAPITAL 6,088
Increase in stocks (1,097) (721)
(Increase)/decrease in debtors (1,679) 1,093
Increase/(decrease)in creditors 2,772 (289)
---------- ----------
CASH GENERATED BY OPERATIONS 6,084 7,926
Corporation taxes paid (1,685) (1,987)
Interest paid (121) (43)
Preference dividends paid (56) (196)
---------- ----------
NET CASH FROM OPERATING ACTIVITIES 4,222 5,700
---------- ----------
INVESTING ACTIVITIES:
Interest received 473 324
Purchases of property, plant and equipment (2,418) (2,335)
Proceeds from sale of property, plant and equipment 32 10
Acquisition of intangible fixed assets (389) (1,517)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (2,302) (3,518)
---------- ----------
FINANCING ACTIVITIES:
Dividends paid (861) (490)
Repayments of borrowings (1,250) -
Repayments of obligations under finance leases (50) (43)
Proceeds on issue of shares 207 90
New bank loans raised - 1,250
---------- ----------
NET CASH FROM FINANCING ACTIVITIES (1,954) 807
---------- ----------
NET (DECREASE)/INCREASE IN CASH AND CASH (34) 2,989
EQUIVALENTS
Cash and cash equivalents at beginning of year 10,271 7,282
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR 10,237 10,271
========== ==========
NOTES
1. BASIS OF PREPARATION
The financial information in this announcement, which was approved by the Board of Directors on 18 June 2008, does not constitute the
Company's statutory accounts for the year ended 31 March 2008 or the year ended 31 March 2007, but is derived from these accounts.
Statutory accounts for the year ended 31 March 2007 have been delivered to the Registrar of Companies and those for the year ended 31
March 2008 will be delivered following the Company's Annual General Meeting. The auditors have reported on these accounts; their reports
were unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985.
Whilst the financial information included in this preliminary announcement has been completed in accordance with International Financial
Reporting Standards (IFRSs), this announcement itself does not contain sufficient information to comply with IFRSs.
2. ACCOUNTING POLICIES
The Group's financial statements for the year ended 31 March 2008 are the first to be prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted for use in the European Union.
Details of the changes in accounting policies arising from the adoption of IFRS, together with the restated information for the year
ended 31 March 2007, were included within the Group's Interim Statement for the period to 30 September 2007.
3. EARNINGS PER SHARE
Basic earnings per ordinary share has been calculated by dividing the profit for the year by 56,968,275 (2007: 48,974,442) 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 for the year excluding the interest and finance costs relating to
the preference shares by 57,832,347 (2007: 57,381,518) potential ordinary shares. These shares take into account the exercise of unexercised
options and the diluting effect of the preference shares prior to their conversion in April 2007.
4. DIVIDENDS
The dividends approved and paid during the year are as follows:
2008 2007
�'000 �'000
1.5p (2007: 1p) per share on 5p ordinary shares 861 490
========== ==========
The directors are recommending the payment of a final dividend of 2.0p per ordinary share (2007: 1.5p) to be paid on 15 August 2008 to
ordinary shareholders on the register as at 18 July 2008. This proposed final dividend is subject to approval by shareholders at the Annual
General Meeting and has not been included as a liability.
5. STATEMENT OF RESERVES
Share capital Share premium Revaluat-ion reserve Capital redempti-on Special reserve Foreign
exchange Profit and loss Total
reserve
reserve account
�'000 �'000 �'000 �'000 �'000
�'000 �'000 �'000
Balance at 1 April 2007 2,474 4,633 49 154 1,467
(94) 8,186 16,869
Charges for employee share - - - - -
- (5) (5)
based payments
New shares issued 20 187 - - -
- - 207
Conversion of preference 377 2,187 - - -
- - 2,564
shares
Amortisation of revaluation - - (31) - -
- 31 -
surplus
Currency translation - - - - -
309 - 309
differences
Profit for the year - - - - -
- 3,436 3,436
Ordinary dividends paid - - - - -
- (861) (861)
------ ------ ------ ------ ------
------ ------ ------
Balance at 31 March 2008 2,871 7,007 18 154 1,467
215 10,787 22,519
===== ===== ===== ===== =====
===== ===== =====
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 The Rookery, Chilcompton, Somerset, BA3 4EH.
Copies of this announcement are available for a period of one month from the date hereof from the Company's registered office, and from
the Company's nominated adviser, Landsbanki Securities (UK) Ltd, 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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