RNS Number : 9273J
Mulberry Group PLC
11 December 2008
MULBERRY GROUP PLC
11 December 2008 - Embargoed until 7am
MULBERRY GROUP PLC ("Mulberry" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008
Mulberry Group plc, the luxury British fashion brand specialising in the design, manufacture and sale of leather goods and accessories,
is pleased to announce its results for the six months ended 30 September 2008.
HIGHLIGHTS
* Sales increased by 29% to �27.8 million (30 September 2007: �21.5 million)
* Profit before tax increased by 6% to �1.33 million (30 September 2007: �1.25 million) despite significant investment in the
business
* UK retail sales up 21%, like-for-like sales up 5%
* Shipments to third parties up by more than 40%
OUTLOOK
* UK retail sales down 1% for the 10 weeks to 6 December 2008, like-for-like sales down 12%
* Spring/Summer 2009 wholesale order books up by more than 15% compared to the same period last year
GODFREY DAVIS, CHAIRMAN AND CHIEF EXECUTIVE COMMENTED:
"Mulberry has delivered strong growth during the first half of the year as a result of our sustained investment in building the
business. Since September, the global economic outlook has become significantly more difficult. However we believe we are well positioned,
with our strong brand and balance sheet, to weather the challenges ahead."
FOR FURTHER DETAILS PLEASE CONTACT:
Pelham PR
David Wynne-Morgan 0203 178 4416
Gavin Davis 0207 743 6677
Altium
Ben Thorne 0207 484 4076
CHAIRMAN'S STATEMENT
The Group has performed strongly during the first six months of the year, however the outlook has become more challenging.
Sales increased 29% to �27.8 million (2007: �21.5 million) and the gross profit margin improved to 57.7% compared to 57.4% in 2007.
Net operating expenses for the period increased by �3.6 million to �14.9 million (2007: �11.3 million). The two most significant
elements of this increase were �1.3 million of additional costs directly related to the expansion of the UK retail network and �0.5 million
of additional marketing investment to build the Mulberry brand internationally.
Profit before tax has increased from �1.25 million in 2007 to �1.33 million in 2008.
The Group balance sheet remains strong with no debt following the repayment of a medium term loan of �1.25 million during February 2008.
The increase in stock of �4.0 million from 31 March 2008 reflects both the growth in our business and the fact that there has been a build
up prior to scheduled deliveries for the 2008 Christmas period.
BUSINESS REVIEW
Sales for the six months to 30 September 2008 started extremely strongly and remained robust as evidenced by our results. However, there
were clear signs that consumers were being affected by the adverse economic climate as we reached the end of the period.
Accessories remain our core business and continue to account for over 90% of Group sales. The design team have been successful in
broadening our product offer to meet the specific requirements of the USA, Asia and the Middle East. Shipments to third parties, including
our international distributors, increased by more than 40% during the period.
We continued expanding our own retail network in the UK. During the period we opened a new shop in Leeds, completed the refurbishment of
our original shop in St Christopher's Place, London and opened two further department store concessions.
For the six months to 30 September 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 21% and like-for-like sales for the same period increased by 5%.
Sales through our website, mulberry.com, continue to grow strongly and now account for 4% of Group sales. In addition to being a
profitable and growing sales channel, the web is a key marketing tool for the business. We are developing a large customer database and a
growing number of those visiting our shops have researched online beforehand.
In the USA, the shops have started their second year of operations. The business is still at a very early stage of development and we
continue to evaluate the best way to expand in this market.
Elsewhere, our partners opened stores in Shanghai, Copenhagen Airport and an additional department store shop-in-shop in Korea.
CURRENT TRADING AND OUTLOOK
The slowdown in consumer demand experienced during the last weeks of September 2008 has continued. It is clear that the economic
climate is having an adverse impact on the buying behaviour of our customers.
The most immediate effect of this has been seen within our UK retail business, where overall sales are down by 1% for the first 10 weeks of
the second half (like-for-like sales are down 12%).
In contrast, the confirmed third party order book for Spring/Summer 2009 is more than 15% ahead of the same time last year. This is due
to increased market penetration and new shop openings by our partners. It is clear however, that trading conditions in all markets are being
affected by the difficult economic environment.
During the first half of the year we experienced a significant increase in raw material costs. Recently, this trend has reversed, but
has been more than compensated for by the weakness of Sterling. It is likely therefore that there will be margin pressure going forwards.
Our financial performance for the year ending 31 March 2009 is expected to fall short of that achieved last year and below current
market expectations. This is a result of the slowdown in consumer demand and in our strategy of continuing to invest in product development
and marketing internationally. We believe that this continued investment in the brand is the key to building market share and future value.
The expansion of our retail business in the UK is largely complete following the opening of a new store in the luxury mall development
at Westfield, West London during October 2008.
Our new distributor in Greece is due to open a shop in Athens in December. In Korea, our partner, SHK, opened a new department store
shop-in-shop at the beginning of November, bringing their total to six.
In the Middle East, our partners opened a new shop in Dubai during November. This will be followed by shop openings in Kuwait before the
end of the financial year and in Jeddah and Qatar planned for next year.
Our partner in the USA closed underperforming stores in Atlantic City and Manhasset, Long Island during November. We launched the US
version of mulberry.com at the end of October. The success of this project will have a major bearing on how we decide to proceed in this
market.
Christmas trading is an important contributor to turnover and profit as are the January sales. With forecasters continuing to project a
global downturn the outcome for the year will necessarily be impacted by trading in the weeks ahead.
DIVIDENDS
The full year dividend of 2.0 pence per ordinary share was paid on 15 August 2008. In line with prior years, the Board is not
recommending the payment of an interim dividend.
STAFF
As always, I would like to take this opportunity to thank all of our staff and our partners for their enthusiasm and commitment to
Mulberry and its strategy. The significant achievements of the last six months would not have been possible without them.
Godfrey Davis
Chairman and Chief Executive
11 December 2008
Consolidated income statement
Six months ended 30 September 2008
Note Unaudited Unaudited Audited
six months six months year ended
30 Sept 2008 30 Sept 2007 31 Mar 2008
�'000 �'000 �'000
Revenue 27,779 21,517 51,174
Cost of sales (11,762) (9,164) (20,622)
__________ __________ __________
Gross profit 16,017 12,353 30,552
Administrative expenses (14,961) (11,264) (25,979)
Other operating income 103 - 201
__________ __________ __________
Operating profit 1,159 1,089 4,774
Share of results of associates 2 1 63
Finance income 179 226 473
Finance expense (12) (62) (124)
__________ __________ __________
Profit before tax 1,328 1,254 5,186
Tax 3 (435) (439) (1,750)
__________ __________ __________
Profit for the period 5 893 815 3,436
__________ __________ __________
Attributable to:
Equity holders of the parent 893 815 3,436
__________ __________ __________
pence pence pence
Basic earnings per share 4 1.6 1.4 6.0
Diluted earnings per share 4 1.5 1.4 6.0
All activities arise from continuing operations.
Consolidated statement of recognised income and expense
Six months ended 30 September 2008
Unaudited Unaudited Audited
six months six months year ended
30 Sept 2008 30 Sept 2007 31 Mar 2008
�'000 �'000 �'000
Net profit for the period 893 815 3,436
Exchange differences on
translation of
foreign operations 22 79 309
__________ __________ __________
Total recognised income and
expense for the period 915 894 3,745
__________ __________ __________
Attributable to:
Equity holders of the parent 915 894 3,745
__________ __________ __________
Consolidated balance sheet
At 30 September 2008
Note Unaudited Unaudited Audited
30 Sept 2008 30 Sept 2007 31 Mar 2008
�'000 �'000 �'000
Non-current assets
Intangible assets 2,032 1,872 2,095
Property, plant and equipment 9,221 7,789 8,454
Interests in associates 246 164 242
Deferred tax asset 6 151 -
__________ __________ __________
11,505 9,976 10,791
__________ __________ __________
Current assets
Inventories 11,834 7,085 7,785
Trade and other receivables 7,437 5,828 5,548
Cash and cash equivalents 2,636 7,609 10,237
__________ __________ __________
21,907 20,522 23,570
__________ __________ __________
Total assets 33,412 30,498 34,361
__________ __________ __________
Current liabilities
Trade and other payables (10,646) (9,013) (10,894)
Current tax liabilities (439) (409) (917)
Obligations under finance - (25) (10)
leases - (120) -
Bank loans and overdrafts __________ __________ __________
(11,085) (9,567) (11,821)
Non-current liabilities
Borrowings - (1,130) -
Deferred tax liabilities - (158) (17)
Obligations under finance - (20) (4)
leases __________ __________ __________
- (1,308) (21)
__________ __________ __________
Total liabilities (11,085) (10,875) (11,842)
__________ __________ __________
Net assets 22,327 19,623 22,519
__________ __________ __________
Equity
Share capital 2,871 2,871 2,871
Share premium account 7,007 7,007 7,007
Own shares (49) - -
Revaluation reserves 3 33 18
Capital redemption reserve 154 154 154
Special reserve 1,467 1,467 1,467
Foreign exchange reserve 237 (15) 215
Retained earnings 10,637 8,106 10,787
__________ __________ __________
22,327 19,623 22,519
Total equity __________ __________ __________
5
Consolidated cash flow statement
Six months ended 30 September 2008
Unauditedsix Unauditedsix Auditedyear ended31
months30 Sept months30 Sept Mar 2008�*000
2008�*000 2007�*000
Operating profit for the 1,159 1,089 4,774
period
Adjustments for:Depreciation
of property, plant and 710111 614-
equipmentAmortisation of -1690__________ --(49)__________ 1,231
intangible assetsLoss on sale 2,086 1,654 137
of property, plant and 12(61)(5)__________
equipmentEffects of foreign 6,088
exchangeShare based payments
charge/(credit) Operating cash
flows before movements in
working capital
Increase in stocksIncrease in (4,049) (397)(1,958)1,987___ (1,097)
debtors(Decrease)/increase in (1,889)(229)________ _______1,286 (1,679)2,772________
creditors Cash generated by __(4,081) _6,084
operations
Corporation taxes paidInterest (936)(11)-__________ (890)(54)(56)_______ (1,685)(121)(56)____
paidPreference dividends paid (5,028)__________ ___ 286__________ ______
Net cash (used in)/from 4,222__________
operating activities
Investing activities:Interest 179 (1,477) 226 (2,505) 473 (2,418)
receivedPurchases of property, -(64)________(1,362) --_________(2,279)__ 32(389)__________(2,
plant and equipmentProceeds __________ ________ 302)__________
from sale of property, plant
and equipmentAcquisition of
intangible fixed assets Net
cash used in investing
activities
Financing activities:Dividends (1,148)- (861)- (15)207- (861)(1,250) (50)207
paidRepayments of (14)-(49)__________( __________(669)_____ -__________(1,954)__
borrowingsRepayments of 1,211)__________ _____ (2,662) ________ (34)
obligations under finance (7,601)
leasesProceeds on issue of
sharesAcquisition of own
shares Net cash used in
financing activities Net
decrease in cash and cash
equivalents
Cash and cash equivalents at
beginning of period Cash and 10,237__________ 10,271__________ 10,271__________
cash equivalents at end of 2,636__________ 7,609__________ 10,237__________
period
Notes to the condensed financial statements
Six months ended 30 September 2008
1. General information
Mulberry Group plc is a company incorporated in the United Kingdom under the Companies Act 1985. The half-year results and condensed
consolidated financial statements for the six months ended 30 September 2008 (the interim financial statements) comprise the results for the
Company and its subsidiaries (together referred to as the Group) and the Group's interest in associates.
The information for the year ended 31 March 2008 contained in these interim financial statements do not constitute statutory accounts as
defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for the year ended 31 March 2008 has been delivered to
the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain statements under section 237(2) or
(3) of the Companies Act 1985.
The interim financial statements for the six months ended 30 September 2008, have not been reviewed or audited.
2. Significant accounting policies
The accounting policies and methods of computation followed in the interim financial statements are consistent with those as published
in the Group's Annual Report and Financial Statements for the year ended 31 March 2008. These are available from the Group's website
(www.mulberrygroupplc.com) or from the Company Secretary at the Company's registered office, The Rookery, Chilcompton, Bath, England, BA3
4EH.
3. Taxation
The tax charge is calculated by applying the forecast full year effective tax rate to the interim profit.
4. Earnings per share
Basic earnings per ordinary share has been calculated by dividing the profit for the period by 57,419,505 (30 September 2007: 56,517,046, 31
March 2008: 56,968,275) ordinary shares, being the weighted average number of ordinary shares in issue during the period.
Diluted earnings per share has been calculated by dividing the profit for the period excluding the interest and finance costs relating to
the preference shares by 58,545,838 (30 September 2007: 56,707,752, 31 March 2008: 57,832,347) potential ordinary shares. These shares take
into account the exercise of dilutive unexercised options and the dilutive impact of the preference shares prior to their conversion during
April 2007.
5. Reserves
ShareCapital�*000 Share Premium�*000 Ownshares �*000 Reval reserve �*000 Capitalreserve
�*000 Special reserve�*000 Foreign Profit and loss Total �*000
exchangereserve�*000 account �*000
Balance at 1 April 2008 7,007 - - - - - - (49) - - 18 - - (15) - 154 - - - -
1,467 - - - - 215 - - - 22 10,787 90 - 15 22,519 90 (49)
Charges for employee share 2,871 - - - - - - - - - - -
- - - - - - 893 (1,148) - 22 893 (1,148)
based payments Own shares - - __________7,007_____ __________(49)______ __________3_________
__________154_______ __________1,467_____ __________237_______ __________10,637____ __________22,327____
Amortisation of revaluation __________2,871_____ _____ ____ _
___ _____ ___ ______ ______
surplus Currency translation _____
difference Profit for the
period Ordinary dividends paid
Balance at 30 September 2008
This information is provided by RNS
The company news service from the London Stock Exchange
END
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