TIDMMUL
RNS Number : 1867T
Mulberry Group PLC
13 November 2019
Mulberry Group plc
Results for the twenty six weeks ended 28 September 2019
Direct to customer and International strategy advanced,
challenging UK market conditions
Mulberry Group plc ("the Group" or "Mulberry"), the British
luxury brand, announces unaudited results for the twenty six weeks
ended 28 September 2019 (the "period").
FINANCIAL SUMMARY
-- Revenue of GBP68.9 million (2018: GBP68.3 million) with International up 12% and UK down 4%
-- Loss before tax and IFRS 16 of GBP9.9 million(1) (2018:
GBP8.2 million(2) ) including further investment costs and the
effect of a challenging UK market
-- Net cash of GBP6.4 million(3) at period end (2018: GBP12.1
million) with inventory reduced 18%
business and strategic HIGHLIGHTS
-- Direct to customer sales(4) account for circa 90% of Group revenue (2018: 84%)
-- Asia represents 14% of Group revenue (2018: 9%) with 32
Retail stores at period end (2018: 28)
-- Mulberry Korea now a wholly owned subsidiary
-- Global Digital sales grew 23%
-- UK business impacted by an increasingly promotion led
environment and lower traffic to stores
-- Newly launched bags represent over 80% of full price bag
sales, with two new popular styles, Millie and Iris
CURRENT TRADING AND OUTLOOK
-- Retail sales reflect similar trends with International up and the UK challenging
-- Asia is generating double digit sales growth and the Board is
confident this momentum will continue
-- Against an uncertain backdrop in the UK and with the
important Christmas period ahead, the Board expects the Group to
trade profitably and to generate cash during the second half of the
financial year
THIERRY ANDRETTA, CHIEF EXECUTIVE OFFICER, COMMENTED:
"We have made further progress with our strategy through
continued investment in a direct to customer, International,
Digital and omni-channel model.
We are seeing the benefit of recent initiatives in Asia which
remains a significant growth opportunity. This will support our
ambition for International to become a greater proportion of Group
revenue.
As part of our approach to sustainability, we are progressing
the use of recycled materials and sourcing 65% of our leathers from
environmentally certified tanneries while maintaining an accessible
luxury price positioning.
Looking forward, we will continue to build Mulberry as a global
luxury brand with a strong focus on sustainability and innovative
product, appealing to both our existing customers and new
audiences."
1 The net impact of IFRS 16 'Leases' on loss before tax for the
period was GBP1.1 million
2 2018 loss before tax is stated after GBP2.1 million of one off
costs in respect of House of Fraser administration
3 Net cash comprises cash balances of GBP11.7 million less bank
borrowings of GBP5.3 million (this excludes loans from related
parties and controlling interests of GBP4.3 million)
4 Direct to customer represents sales generated through all
Mulberry stores, department store concessions and digital
channels
FOR FURTHER DETAILS PLEASE CONTACT:
Headland
Lucy Legh / Emma Ruttle 020 3805 4822
Mulberry Investor Relations
Allegra Perry 020 7605 6795
GCA Altium
Sam Fuller / Tim Richardson 020 7484 4040
Barclays
Nicola Tennent / Stuart Muress 020 3134 9801
About Mulberry
Mulberry, founded in Somerset in 1971, is a British luxury brand
with a rich heritage in leather craftsmanship combined with a
sustainable approach. The Group is pursuing a strategy to become a
global luxury brand through international development and extension
of its lifestyle ranges. Mulberry operates a direct to customer
model with 102 owned stores and 21 franchise partner stores across
25 countries (as at 28 September 2019), with a strong focus on
further enhancing its Digital business and omni-channel
capability.
1. BUSINESS and strategy REVIEW
Overview
During the period, the Group progressed its strategy to develop
Mulberry as a global luxury brand through a direct to customer
model, in particular through continued investment in its recently
established Retail territories in Asia. Direct to customer sales,
i.e. those generated through Mulberry stores, department store
concessions and digital channels, account for approximately 90% of
Group revenue during the period (2018: 84%).
Asia accounts for 14% of Group revenue (2018: 9%). As part of
the Group's ongoing investment in the region, recently established
local management teams are focused on implementing the Group's
direct to customer model with strategically positioned stores,
targeted marketing activities and enhanced Digital and omni-channel
capability.
The UK accounts for 65% of Group revenue (2018: 68%). Trading
conditions remained challenging with subdued demand from domestic
UK customers and an increasingly promotion led market. Performance
in this market significantly affected the Group's results during
the period. The Board continues to focus on advancing its direct to
customer model and enhancing its sector leading Digital and
omni-channel platform.
The Group made a loss before tax and IFRS 16 of GBP9.9 million
(please refer to the reconciliation of adjusted loss/profit before
tax and IFRS 16 on pages 16 and 17) reflecting elevated investment
in International markets as well as the effect of a challenging UK
market. Due to the increased proportion of revenue generated from
selling through direct to customer channels, the phasing of the
Group's profits has become increasingly second half weighted.
The Group continues to make the necessary preparations for
potential Brexit outcomes. An internal committee regularly assesses
the likely primary impacts of various Brexit scenarios including a
potential further deterioration in UK consumer sentiment, foreign
currency fluctuations, import and export duty rate changes and
supply chain disruption.
Strategic goals
The Group continued to progress its four key strategic
pillars:
1. Direct to customer model
Through its direct to customer model, the Group aims to enhance
the customer experience and drive engagement across its global
omni-channel, Digital and store network.
Stores
The Group is enhancing the global store portfolio through
selective openings and closures with the continued roll out of the
new Mulberry store concept.
The store network at the period end was as follows:
Number of stores as at: 28-Sep 2019 22-Sep Total change
2018 (this period
vs last
period)
------------ -------
China, Hong Kong, Taiwan 7 6 +1
Japan 7 5 +2
South Korea 18 17 +1
--------------------------------- ------------ ------- --------------
Total Asia Retail 32 28 +4
--------------------------------- ------------ ------- --------------
Europe 7 9 -2
North America 8 7 +1
--------------------------------- ------------ ------- --------------
Total International Retail 47 44 +3
--------------------------------- ------------ ------- --------------
Total International Franchise
Partner 21 19 +2
--------------------------------- ------------ ------- --------------
Total International (Retail &
Franchise Partner) 68 63 +5
--------------------------------- ------------ ------- --------------
Total UK Retail 55 43 +12
--------------------------------- ------------ ------- --------------
Total Group Retail 102 87 +15
--------------------------------- ------------ ------- --------------
Total Group (Retail & Franchise
Partner) 123 106 +17
--------------------------------- ------------ ------- --------------
In the UK, the Group operated 55 Retail stores at the end of the
period, with 19 John Lewis concessions and 14 House of Fraser
concessions. During the period, the Group further rebalanced the
concession portfolio with the opening of 4 John Lewis locations and
the closure of 3 House of Fraser locations. The Group will continue
to manage the business proactively and focus on optimising the UK
store network.
The new Mulberry store concept includes innovative, customer
facing technology to enhance the in store experience. The new store
concept has been introduced to 11 stores in the UK and 13 stores in
International markets as of 13 November 2019 and has generated a
positive customer reaction. The Group plans to complete the global
roll out of the new store concept in coming years.
Digital and Omni-channel
The Group continues to develop its Digital and omni-channel
platform with enhanced functionality and localisation introduced to
mulberry.com and further development of its network of digital
concessions. Global Digital sales increased 23% during the
period.
Following the recent launch of local fulfilment in Japan and in
Australia, mulberry.com sites with enhanced localised customer
services are due to launch in other markets including China and the
Middle East, as well as local fulfilment in South Korea. In the UK,
omni-channel services were further extended, with the launch of
same day delivery in all standalone Retail stores.
During the period, the Mulberry global digital store was
launched on Farfetch, the leading global technology platform for
the luxury fashion industry. The Farfetch partnership complements
other Mulberry digital concessions which have been recently
established in China including Tmall (Alibaba), Secoo and JD.com.
The Digital concession model is expected to be further developed
with new strategic partnerships.
Marketing and Brand
The Group remains focused on enhancing the customer experience
and driving engagement whilst enhancing Mulberry's focus on
developing a market leading approach to sustainability across its
products, materials, supply chain and people.
The Group has shifted an increasing portion of marketing
investment to digital and social media channels. A new format for
seasonal collection launches reinforces the direct to customer
model and delivers innovative customer experiences, offering an
instantly shoppable, real time experience.
During the period, the Group held an immersive set of global
events as part of its 'My Local' series taking inspiration from the
British pub. The concept was replicated across key international
cities including Tokyo, Seoul and New York City.
2. International development
Sales generated from International markets represent 35% of
Group revenue (2018: 32%) and are expected to continue to rise,
driven by Asia which continues to represent a significant growth
opportunity and a key strategic focus for the Group.
The International store network totaled 68 stores as at 28
September 2019 (2018: 63), including 47 Retail stores, of which 32
are in Asia, and 21 franchise partner stores.
During the period, the focus has remained on developing Mulberry
in Asia:
-- South Korea: The Retail store network was further enhanced
during the period with the relocation of the Lotte Busan store. In
addition to these enhancements and continued targeted marketing
investment, new management in Seoul has been introduced and the
Group's merchandising systems were implemented. Mulberry Korea
became a wholly owned subsidiary during July 2019 following the
purchase of the 40% of shares which the Group did not already own.
The sales performance on a comparable basis has been strong in
recent months.
-- China, Hong Kong, Taiwan: The Group's Retail and Digital and
omni-channel platform was further enhanced and whilst progress in
China and Taiwan has been promising, trading in Hong Kong has been
significantly affected by ongoing disruption in this market.
-- Japan: A customer event, #MulberryxTokyo, was held in Tokyo,
Japan during August 2019, featuring the 'My Local' series and
taking inspiration from the British pub, with accompanying musical
and interactive events, a pop up shop in Isetan Shinjuku which
introduced a limited edition bag and the launch of the Group's
Japanese social media channel with LINE. Whilst Japan remains a
relatively nascent market for Mulberry with 7 stores (2018: 5
stores), momentum has accelerated since the event driven by a
particularly strong performance from a new soft bag, Iris.
In other international markets, the Group continues to refine
and enhance its presence. A store was opened during April 2019 in
Rockefeller Center, New York on 5(th) Avenue, the first in this
market to introduce the new store concept. Digital and omni-channel
sales in the US grew by double digits. In Europe, sales in the
Group's Paris store were affected by the well documented social
disruption.
3. Product
The Group continues to introduce innovative and distinctive
leather goods with a focus on enhancing the sustainability of
collections with an accessible luxury positioning for women and men
and further develop complementary lifestyle products.
Newly launched women's bags continue to enhance well established
ranges and represent over 80% of full price bag sales. Product
innovation remains a focus, with the successful launch during the
period of Millie and Iris, two new soft bags. The Amberley remained
the bestselling bag family for the third consecutive season. The
mini bag range has been further extended and enhanced and has
delivered positive results. A personalisation offer has been
introduced and will continue to be developed during coming
seasons.
A new direction for men's leather accessories, introduced during
the Autumn Winter 2019 season, is aimed at attracting the Digital,
fashion forward customer and has generated encouraging momentum
with the newly created Urban family becoming a bestseller.
Lifestyle categories, including ready to wear, shoes, soft
accessories, jewellery and eyewear continue to be developed with a
strong performance from new trainer styles and sunglasses.
On 5 November 2019, the Group launched a new collaboration with
Swedish fashion brand, Acne Studios, featuring leather accessories
incorporating the Swedish design of Acne Studios with the British
heritage of Mulberry. The capsule collection enables Mulberry to
offer an innovative range to new and existing customers.
4. UK Manufacturing
The Group maintains its distinctive "Made in England"
positioning through further enhancement of its two UK factories in
Somerset, which became carbon neutral during 2019. Investment will
continue to ensure the Group's heritage in leather craftsmanship is
protected and developed.
The Group is further developing sustainable product ranges,
including the use of recycled materials and maintaining an
accessible luxury price positioning. In addition, 65% of the
Group's leathers are sourced from environmentally certified
tanneries and 25% are gold standard, as per the Leather Working
Group's auditing protocol. Mulberry products have been 'made to
last' since the brand was established in 1971 and this concept
continues to be further developed and enhanced, supported by a
lifetime service commitment.
The recently created Artisan Studio, which produces limited
edition product, was further developed and the number of limited
edition products doubled relative to last year. Initiatives have
included support for the Tokyo customer event with a unique capsule
collection, and bespoke products for the Korean market, select
wholesale customers and global new store openings (e.g. Rockefeller
Center during April 2019).
The Group continues to run an extensive apprentice programme to
develop the next generation of craftspeople and expects its UK
factories to continue to manufacture approximately 50% of
handbags.
2. financial REVIEW
Results for the period were affected by the challenging UK
retail environment and further investments made in developing the
brand in international markets.
Group revenue for the period was GBP68.9 million (2018: GBP68.3
million) with Retail sales up 8% and, as anticipated, Wholesale
sales down 24%. Global Digital sales increased 23% during the
period to GBP13.9 million. Whilst progress achieved in Asia has
been encouraging, the UK remains challenging.
26 weeks 26 weeks Total change
to 28-Sep to 22-Sep (this period
2019 2018 vs last
period)
(GBP million)* (GBP million)
----------------- ---------------
International Retail Sales* 15.5 12.4 +25%
International Wholesale and Franchise
Sales 8.7 9.2 -5%
--------------------------------------- ----------------- --------------- --------------
Total International Sales 24.2 21.6 +12%
--------------------------------------- ----------------- --------------- --------------
UK Retail Sales* 41.6 40.4 +3%
UK Wholesale and Franchise Sales 3.1 6.3 -51%
--------------------------------------- ----------------- --------------- --------------
Total UK Sales 44.7 46.7 -4%
--------------------------------------- ----------------- --------------- --------------
Total Retail Sales* 57.1 52.8 +8%
Total Wholesale and Franchise
Sales 11.8 15.5 -24%
--------------------------------------- ----------------- --------------- --------------
Total Group Revenue 68.9 68.3 +1%
--------------------------------------- ----------------- --------------- --------------
* Regional splits include Digital revenue which increased by 23%
during the twenty six weeks to 28 September 2019
Nb: Given the high level of store rotation relative to the prior
year period, like for like sales growth is not relevant
International Retail sales increased 25% to GBP15.5 million and
represents 22% of Group revenue (2018: 18%). This growth was driven
by Asia where sales rose 63% to represent 14% of Group revenue
(2018: 9%). South Korea was a new Retail territory for most of the
period, following the creation of Mulberry Korea and the market's
transition from a franchise arrangement during August 2018. During
the period, the Group established a new local management team in
Seoul, enhanced the store portfolio and invested further in
targeted marketing activities. Progress in China and Taiwan has
been promising during the period following the ongoing enhancement
of the Group's Retail and Digital and omni-channel platform
including the recent introduction of strategic digital partnerships
including Farfetch (global) and in China,Tmall (Alibaba), Secoo and
JD.com. Trading in the Group's two Hong Kong stores has been
significantly affected by the ongoing disruption in this market.
Whilst still a nascent market for Mulberry, Japan has started to
deliver encouraging growth following the #MulberryxTokyo event held
during August 2019 with the accompanying pop up shop in Isetan
Shinjuku generating a strong uplift in sales.
Against the backdrop of a challenging retail environment, the
Group's UK Retail sales, including Digital, rose 3% to GBP41.6
million during the period, reflecting management actions to advance
the direct to customer strategy in the Group's home market. Digital
sales increased whilst store sales continue to be impacted by lower
traffic.
Global Wholesale sales totaled GBP11.8 million during the period
(2018: GBP15.5 million) reflecting the continued focus on the
direct to customer strategy. International Wholesale sales were
GBP8.7 million (2018: GBP9.2 million), primarily reflecting the
shift in South Korea sales from Wholesale to Retail during August
2018 as part of the creation of Mulberry Korea. UK Wholesale sales
were GBP3.1 million (2018: GBP6.3 million) primarily reflecting the
conversion of the Group's business with John Lewis from wholesale
to a concession model during November 2018.
Gross margin for the period was 59.4% (2018: 61.5%). This
primarily reflects the increasingly promotional nature of the UK
market, amidst challenging trading conditions.
Underlying operating expenses (net), excluding charges in
respect of IFRS 16 this year and costs relating to House of Fraser
last year, increased to GBP51.1 million (2018: GBP48.3 million).
This primarily reflects increased investment in the direct to
customer model in Asia, with the expansion and enhancement of the
Retail store network, and in the UK with the conversion of the
Group's business with John Lewis to a concession model and the roll
out of the new store concept.
The Group adopted IFRS 16 'Leases' from the beginning of the
period. IFRS 16 specifies how to recognise, measure, present and
disclose leases and replaces IAS 17 'Leases'. The Group adopted
IFRS 16 using a simplified modified retrospective transition
approach, under which the comparative information presented for the
53 weeks ended 30 March 2019 and the 26 weeks ended 22 September
2018 has not been restated and therefore continues to be shown
under IAS 17. The net impact on the reported loss before tax for
the 26 weeks ended 28 September 2019 was GBP1.1 million. Further
information is provided in Note 9.
The Group's loss before tax and IFRS 16 for the period was
GBP9.9 million (2018: GBP8.2 million). After accounting for IFRS 16
during the period, the loss before tax was GBP10.9 million. Further
information is provided in Note 9.
The Group had net cash balances at 28 September 2019 of GBP6.4
million (2018: GBP12.1 million). The net cash balance as at 22
September 2018 benefitted from the timing of the period end
date.
Capital expenditure for the period was GBP3.6 million (2018:
GBP4.3 million), including GBP2.6 million on stores and Digital,
GBP0.6 million on IT systems and GBP0.4 million on factories.
Inventories decreased by 18% to GBP38.7 million at 28 September
2019 (2018: GBP47.1 million) driven by a disciplined approach to
inventory management as well as agile supply chain initiatives.
3. CURRENT TRADING AND OUTLOOK
Retail sales have continued to reflect similar trends with Asia
generating double digit sales growth, driven by South Korea and
Japan, and trading in the UK challenging.
International Retail sales
Sales growth in South Korea and Japan accelerated during recent
months and this momentum has continued during into the second half
of the financial year. The performance of the Group's China and
Taiwan business is promising, driven by ongoing enhancements to the
store network and Digital and omni-channel platform. Sales in Hong
Kong remain down double digits due to ongoing disruption in this
market.
In Digital, localised mulberry.com sites with enhanced customer
services are due to launch in China, South Korea and Australia.
The Board anticipates that International sales will continue to
increase as a proportion of Group revenue.
UK Retail sales
The UK retail environment has remained challenging, as has been
well documented.
Whilst Digital sales, including the contribution of the JL.com
digital concession, increased, store sales continue to be impacted
by lower traffic and weak consumer demand.
Since the end of the period, 2 UK pop up stores have been opened
(Canary Wharf, Gatwick Airport).
The Group will continue to invest in enhancing the customer
experience and in optimising the store network.
Selective Wholesale and Franchise
In line with the Group's continued focus on a direct to customer
strategy, Wholesale revenue for the second half of the financial
year is expected to decline. This primarily reflects the conversion
of the Group's business with John Lewis from wholesale to a Retail
concession basis from November 2018.
Capital expenditure
Capital expenditure for the 52 weeks ending 28 March 2020 is
expected to be in the region of GBP6.0 million (2019: GBP11.9
million), the majority of which will be on stores as the Group
continues the new store concept roll out and ongoing investment in
Digital and IT systems.
Full year outlook
During the second half of the financial year, the Board expects
Asia to continue to generate double digit sales growth and for
International sales to increase as a proportion of overall Group
revenue.
Further initiatives are planned to advance the Group's
sustainable approach across its products, materials, supply chain
and people, while maintaining an accessible luxury price
positioning.
Digital and omni-channel sales are also expected to grow as
plans to continue to enhance the Group's sector leading platform
are implemented.
Against an uncertain backdrop in the UK and with the important
Christmas period ahead, the Board expects the Group to trade
profitably and to generate cash during the second half of the
financial year.
CONSOLIDATED INCOME STATEMENT
26 WEEKSED 28 september 2019
Note Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 53 weeks ended 30 March
28 September 2019 GBP'000 22 September 2018 GBP'000 2019
GBP'000
Revenue 68,871 68,336 166,268
Cost of sales (27,959) (26,341) (63,984)
Gross profit 40,912 41,995 102,284
Operating expenses (50,010) (50,398) (107,702)
Other operating income 422 209 438
Operating loss (8,676) (8,194) (4,980)
Share of results of
associates (9) 42 90
Finance income 35 28 140
Finance expense (2,275) (53) (258)
Loss before tax (10,925) (8,177) (5,008)
Tax credit 6 1,160 2,877 157
Loss for the period (9,765) (5,300) (4,851)
Attributable to:
Equity holders of the
parent (9,305) (3,904) (2,479)
Non-controlling interests (460) (1,396) (2,372)
Loss for the period (9,765) (5,300) (4,851)
Basic loss per share 8 (16.4p) (8.9p) (8.2p)
Diluted losss per share 8 (16.4p) (8.9p) (8.1p)
All activities arise from continuing operations.
Reconciliation of adjusted (loss)/profit before tax and IFRS
16
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 53 weeks ended
28 September 2019 GBP'000 22 September 2018 GBP'000 30 March 2019
GBP'000
Loss before tax (10,925) (8,177) (5,008)
Impairment relating to retail
property, plant and equipment - - 795
Bad debt and other expenses from
House of Fraser administration - 2,073 2,073
Write back of profit on reacquired
stock and set up costs relating to
conversion of John Lewis
to concession - - 1,323
Launch costs relating to Mulberry
Korea - - 1,821
Adjusted (loss)/profit before tax -
non-GAAP measure (10,925) (6,104) 1,004
Impact of IFRS 16 9 1,058 - -
(Loss)/profit before tax, adjusting
items and IFRS 16 adjustments -
non-GAAP measure (9,867) (6,104) 1,004
Adjusted basic (loss)/earnings per
share 8 (14.9p) (6.1p) 0.9p
Adjusted diluted (loss)/earnings per
share 8 (14.9p) (6.1p) 0.9p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
26 WEEKSED 28 SEPTEMBER 2019
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 53 weeks ended 30 March
28 September 2019 GBP'000 22 September 2018 GBP'000 2019
GBP'000
Loss for the period (9,765) (5,300) (4,851)
Items that may be
reclassified subsequently
to profit or loss;
Exchange differences on
translation of foreign
operations 467 576 151
Profits/(losses) on a
hedge of a net
investment taken to
equity 122 119 (3)
Income tax relating to
items that may be
reclassified
subsequently to profit
or loss (84) (131) (30)
Total comprehensive
expense for the period (9,260) (4,736) (4,733)
Attributable to:
Equity holders of the
parent (8,825) (3,340) (2,394)
Non-controlling interests (435) (1,396) (2,339)
Total comprehensive
expense for the period (9,260) (4,736) (4,733)
CONSOLIDATED BALANCE SHEET
AT 28 SEptember 2019
Unaudited Unaudited Audited
28 September 2019 GBP'000 22 September 2018 GBP'000 30 March 2019
GBP'000
Non-current assets
Intangible assets 14,227 12,552 13,970
Property, plant and equipment 25,816 25,160 26,171
Right of use assets 105,259 - -
Interests in associates 268 280 337
Deferred tax asset 2,013 1,984 1,102
147,583 39,976 41,580
Current assets
Inventories 38,691 47,099 39,740
Trade and other receivables 13,561 12,910 13,688
Current tax asset 662 3,383 1,785
Cash and cash equivalents 11,713 13,179 12,377
64,627 76,571 67,590
Total assets 212,210 116,547 109,170
Current liabilities
Trade and other payables (21,950) (31,730) (23,984)
Lease liabilities (17,477) - -
Borrowings (7,142) (1,112) (2,709)
(46,569) (32,842) (26,693)
Net current assets 18,058 43,729 40,897
Non-current liabilities
Lease liabilities (91,755) - -
Borrowings (2,438) - (1,770)
(94,193) - (1,770)
Total liabilities (140,762) (32,842) (28,463)
Net assets 71,448 83,705 80,707
Equity
Share capital 3,004 3,001 3,002
Share premium account 12,160 11,961 12,072
Own share reserve (1,378) (1,387) (1,378)
Capital redemption reserve 154 154 154
Cashflow hedge reserve - - (100)
Foreign exchange reserve 1,226 1,167 821
Retained earnings 58,136 69,269 67,555
Equity attributable to holders of the
parent 73,302 84,165 82,126
Non-controlling interests (1,854) (460) (1,419)
Total equity 71,448 83,705 80,707
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
26 WEEKSED 28 SEPTEMBER 2019
Share Own Capital Cashflow Foreign Non-controlling
Share premium share re-demption hedge exchange Retained Total interest Total
capital account reserve reserve reserve reserve earnings GBP'000 GBP'000 equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 24 March 2018 3,001 11,961 (1,388) 154 (98) 701 73,165 87,496 747 88,243
Loss for the period - - - - - - (3,904) (3,904) (1,396) (5,300)
Other comprehensive
income for the
period - - - - 98 466 - 564 - 564
Total comprehensive
income/(expense) for
the period - - - - 98 466 (3,904) (3,340) (1,396) (4,736)
Charge for employee
share-based payments - - - - - - 9 9 - 9
Exercise of share
options - - - - - - (1) (1) - (1)
Own shares - - 1 - - - - 1 - 1
Adjustment arising
from movement in
non-controlling
interest - - - - - - - - 189 189
As at 22 September
2018 3,001 11,961 (1,387) 154 - 1,167 69,269 84,165 (460) 83,705
Profit/(loss) for the
period - - - - - - 1,425 1,425 (976) 449
Other comprehensive
(expense)/income for
the period - - - - (100) (379) - (479) 33 (446)
Total comprehensive
(expense)/income for
the period - - - - (100) (379) 1,425 946 (943) 3
Issue of share
capital 1 111 - - - - - 112 - 112
Credit for employee
share-based payments - - - - - - (147) (147) - (147)
Exercise of share
options - - - - - - (22) (22) - (22)
Own shares - - 9 - - - - 9 - 9
Adjustments arising
from movement in
non-controlling
interest - - - - - 33 - 33 (16) 17
Dividends paid - - - - - - (2,970) (2,970) - (2,970)
As at 30 March 2019 3,002 12,072 (1,378) 154 (100) 821 67,555 82,126 (1,419) 80,707
Loss for the period - - - - - - (9,305) (9,305) (460) (9,765)
Other comprehensive
income for the
period - - - - 100 380 - 480 25 505
Total comprehensive
income/(loss) for
the period - - - - 100 380 (9,305) (8,825) (435) (9,260)
Issue of share
capital 2 88 - - - - - 90 - 90
Credit for employee
share-based payments - - - - - - (114) (114) - (114)
Adjustments arising
from movement in
non-controlling
interest - - - - - 25 - 25 - 25
As at 28 September
2019 3,004 12,160 (1,378) 154 - 1,226 58,136 73,302 (1,854) 71,448
CONSOLIDATED CASH FLOW STATEMENT
26 WEEKSED 28 september 2019
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 53 weeks ended 30 March 2019
28 September 2019 GBP'000 22 September 2018 GBP'000
GBP'000
Operating loss for the period (8,676) (8,194) (4,980)
Adjustments for:
Depreciation and impairment of
property, plant and equipment 3,124 2,745 6,999
Depreciation of right of use assets 9,100 - -
Amortisation of intangible assets 523 555 1,082
Loss on sale of property, plant and
equipment 113 68 395
Share-based payments
(credit)/charge (114) 9 (138)
Operating cash flows before
movements in working capital 4,070 (4,817) 3,358
Decrease in inventories 1,516 436 7,714
(Increase)/decrease in receivables (339) 2,450 1,541
Increase/(decrease) in payables 1,636 (716) (6,682)
Cash generated by/(used in)
operations 6,883 (2,647) 5,931
Income taxes received/(paid) 1,297 (1,732) (1,730)
Interest paid (130) (53) (258)
Net cash inflow/(outflow) from
operating activities 8,050 (4,432) 3,943
Investing activities:
Interest received and gains on
foreign exchange contracts 35 28 140
Purchases of property, plant and
equipment (2,821) (3,488) (9,455)
Proceeds from disposal of property,
plant and equipment - 43 60
Acquisition of intangible fixed
assets (822) (1,233) (2,234)
Acquisition of subsidiary - (6,175) (5,741)
Net cash used in investing
activities (3,608) (10,825) (17,230)
Financing activities:
Dividends paid - - (2,970)
Proceeds on issue of shares 2 - 1
Increase in loans from related
parties and non-controlling
interests 1,996 1,765 1,771
Investment from non-controlling
interest - 173 173
New borrowings 5,000 1,112 1,231
Repayment of loans from (1,090) - -
non-controlling interests
Repayment of borrowings (952) - -
Principle element of lease payments (10,156) - -
Settlement of share awards - (1) (23)
Net cash used in financing
activities (5,200) 3,049 183
Net decrease in cash and cash
equivalents (758) (12,208) (13,104)
Cash and cash equivalents at
beginning of period 12,377 25,071 25,071
Effect of foreign exchange rate
changes 94 316 410
Cash and cash equivalents at end of
period 11,713 13,179 12,377
Notes to the condensed financiAL statements
26 WEEKSED 28 SEPTEMBER 2019
1. GENERAL INFORMATION
Mulberry Group plc is a company incorporated in the United
Kingdom under the Companies Act 2006. The half year results and
condensed consolidated financial statements for the 26 weeks ended
28 September 2019 (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 53 weeks ended 30 March 2019 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditor's
report on those accounts was not qualified, did not include a
reference to any matters to which the Auditor drew attention by way
of emphasis without qualifying the report and did not contain
statements under section 498(2) or (3) of the Companies Act
2006.
The interim financial statements for the 26 weeks ended 28
September 2018 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 53 weeks ended 30 March 2019, except for the adoption of new
standards effective as of 31 March 2019.
The Group has applied for the first time, IFRS 16 "Leases". The
Group has elected to adopt the modified retrospective approach
whereby assets equal liabilities at the date of transition. As a
result, adoption of IFRS 16 has not resulted in any retrospective
changes to the amounts recognised in the Group's Annual Report and
Financial Statements for the 53 weeks ended 30 March 2019 and the
Interim Financial Statements for the 26 weeks ended 22 September
2018. The impact of the transition is shown in note 9.
The Annual Report and Financial Statements are available from
the Group's website (www.mulberry.com) or from the Company
Secretary at the Company's registered office, The Rookery,
Chilcompton, Bath, England, BA3 4EH.
3. GOING CONCERN
The Directors have considered the use of the going concern basis
in the preparation of the financial statements given the
uncertainty around the current economic climate within the retail
market. The Directors have considered the financial position of the
Mulberry Group, the Group forecasts, taking account of reasonable
possible changes in trading performance and the availability of
external finance. On 27 September 2018, Mulberry Group plc signed a
new GBP10.0 million revolving credit facility with HSBC until
October 2021. This facility was increased to GBP15.0 million during
May 2019. The Group also has a GBP4.0 million overdraft facility
until May 2020, which is reviewed annually. As a consequence the
Directors believe that the Group is well placed to manage its
business risks successfully.
After making enquiries and reviewing the Mulberry Group plc
forecasts which cover a period exceeding 12 months from the date of
signature of the financial statements, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future,
taking into account reasonably possible changes in trading.
Accordingly, they have adopted the going concern basis in preparing
the half year results.
4. JUDGEMENTS AND ESTIMATES
The significant judgements and estimates applied in the
preparation of the Interim Financial Statements are consistent with
those described on pages 49-50 of the Group's Annual Report and
Financial Statements for the 53 weeks ended 30 March 2019.
5. ALTERNATIVE PERFORMANCE MEASURES
The main alternative performance measure used by the Group is
adjusted profit/loss before tax.
Adjusted profit/loss before tax is stated after adjusting
statutory profit/loss before tax for fixed asset impairment, the
cost of acquisitions, including the write-back of profit previously
earned on sales of inventories that are subsequently reacquired and
the impact of events which are irregular in nature or beyond the
control of the Board and significant debt or other asset
write-off.
6. TAXATION
The tax credit is calculated by applying the forecast full year
effective tax rate to the interim loss and calculating the deferred
tax balance for the period.
7. DIVID
Unaudited Unaudited Audited
26 weeks ended 28 September 26 weeks ended 22 September 53 weeks ended 30 March
2019 GBP'000 2018 GBP'000 2019
GBP'000
Dividend of 5p per ordinary
share paid during the
period - - 2,970
The final dividend for the 53 weeks ended 30 March 2019 will be
paid to shareholders on 21 November 2019.
The final dividend for the 52 weeks ended 24 March 2018 was paid
on 22 November 2018.
8. EARNINGS PER SHARE ('EPS')
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 53 weeks ended 30 March 2019
28 September 2019 22 September 2018
Basic loss per share (16.4p) (8.9p) (8.2p)
Diluted loss per share (16.4p) (8.9p) (8.2p)
Adjusted basic (loss)/earnings per share (14.9p) (6.1p) 0.9p
Adjusted diluted (loss)/earnings per share (14.9p) (6.1p) 0.9p
Earnings per share is calculated based on the following
data:
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 53 weeks ended
28 September 2019 GBP'000 22 September 2018 GBP'000 30 March 2019
GBP'000
Loss for the period for basic and diluted
earnings per share (9,765) (5,300) (4,851)
Adjustments to exclude exceptional items:
Impairment relating to retail assets - - 795
Bad debt and other expenses from House of
Fraser administration* - 1,679 1,679
Write back of profit on reacquired stock
and set up costs relating to conversion
of John Lewis
to concession* - 1,072
Korea launch costs - - 1,821
IFRS 16* 902 - -
Adjusted (loss)/profit for the period for
basic and diluted earnings per share (8,863) (3,621) 516
*These items are included net of tax
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 53 weeks ended 30 March 2019
28 September 2019 Million 22 September 2018 Million Million
Weighted average number of
ordinary shares for the
purpose of basic EPS 59.4 59.4 59.4
Effect of dilutive potential
ordinary shares: share
options - 0.3 0.3
Weighted average number of
ordinary shares for the
purpose of diluted EPS 59.4 59.5 59.7
9. CHANGE IN ACCOUNTING POLICY - IFRS 16
The Group has adopted IFRS 16 "Leases" for the period ending 28
March 2020 and has applied the standard in these Interim Financial
Statements. The Group has elected to adopt the modified
retrospective approach whereby assets equal liabilities at the date
of transition. As a result, adoption of IFRS 16 has not resulted in
any retrospective changes to the amounts recognised in the Group's
Annual Report and Financial Statements for the 53 weeks ended 30
March 2019 and the Interim Financial Statements for the 26 weeks
ended 22 September 2018.
IFRS 16 distinguishes between leases and service contracts on
the basis of whether an identified asset is controlled by a
customer. Distinctions of operating leases (off balance sheet) and
finance leases (on balance sheet) are removed for lessee accounting
and have been replaced by a model where a right to use asset and a
corresponding liability have been recognised for all leases (i.e.
all on balance sheet except for short term leases and leases of low
value assets). Lease incentives relating to rent free periods are
now recognised as part of the measurement of right of use assets
and lease liabilities, whereas under IAS 17 these resulted in the
recognition of a lease liability incentive, amortised as a
reduction of rental expenses on a straight-line basis.
The right of use asset was initially measured at cost (subject
to certain exceptions) less accumulated depreciation and impairment
losses, adjusted for any remeasurement of lease liability. The
lease liability was initially measured at the present value of the
lease payments that are not paid at the date. Subsequently, the
lease liability is adjusted interest and lease payments, as well as
the impact of lease modifications. The weighted average discount
rate applied was 3.8%.
The impact of the adoption of IFRS16 on the Group's opening
balance sheet is summarised as follows:
As previously reported at IFRS16 Restated
30 March 2019 transition adjustments under IFRS16
GBP'000 GBP'000 at 31 March 2019
GBP'000
Non-current assets
Other non-current assets 41,580 - 41,580
Right of use assets - 111,473 111,473
41,580 111,473 153,053
Current assets
Other current assets 53,902 - 53,902
Trade and other receivables 13,688 (632) 13,056
67,590 (632) 66,958
Total assets 109,170 110,841 220,011
Current liabilities
Other current liabilities (2,709) - (2,709)
Trade and other payables (23,984) 3,516 (20,468)
Lease liabilities - (16,357) (16,357)
(26,693) (12,841) (39,534)
Net current assets 40,897 (13,473) 27,324
Non-current liabilities
Other non-current liabilities (1,770) - (1,770)
Lease liabilities - (98,000) (98,000)
(1,770) (98,000) (99,770)
Total liabilities (28,463) (110,841) (139,304)
Net assets 80,707 - 80,707
Total equity 80,707 - 80,707
The table below shows a summary of the impact on loss before
taxation under IFRS16 compared with IAS 17:
Operating lease costs under IAS 17 10,186
Less depreciation of right of use assets (9,100)
Impact on operating loss before taxation for the 26 weeks ended 28
September 2019 1,087
Less finance costs associated with lease liabilities (2,145)
Impact on loss before taxation for the 26 weeks ended 28 September 2019 (1,058)
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FFWFUEFUSEEF
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