Stylo plc

Interim results for the six month period ended 2 august 2003 - Chairman's interim statement

    London (ots) - After the positive progress made over the last three years, the trading performance of the group in the six months ended 2 August 2003 has been disappointing. The loss of £4.6m on ordinary activities after tax and exceptional items was £1.3m higher than last year. As in previous years, no interim dividend is declared at this stage.

    In relation to the existing business, the loss on ordinary activities before taxation and exceptional items was slightly lower than the previous year at £2.9m (2002 loss of £3.4m). However, the impact of Shellys and various exceptional items such as the cost of restructuring the warehouse and distribution activities, a reduction in the pension fund prepayment in accordance with SSAP24, offset by profits on the disposal of properties, have led to the overall increase in the total pre-tax loss.

    In the year-end Chairman's Statement and Operating Review, I made mention of three main areas of concern, all of which have affected these results:

    · The increased concession commission arrangements, which cost the     business an extra £0.7m in the six months;

    · Economic uncertainty surrounding the conflict in Iraq, which modestly dampened sales in the first quarter;

    · The potential for further deterioration in the pension fund deficit, which led to an adverse impact on the profit and loss account as a result of a reduction in the pension prepayment of £0.7m, in addition to the increased cash contribution of £0.2m in the six month period.

    Trading in the Barratts division has been below expectations, primarily due to the lack of depth of seasonal product. The PriceLess division has continued to grow, with excellent results throughout the season. Trading in both divisions has unfortunately been adversely affected by changes in our distribution arrangements and the underperformance of our distribution centre.

    On 4 April 2003 we acquired Shelly's Shoes Limited for a purchase price of £1.5m. Turnover in Shellys has been broadly in line with expectations, albeit margin has been adversely affected both by the significant amount of surplus stock carried by Shellys on acquisition, which we have been addressing by means of an aggressive and ongoing clearance programme, and by the delay experienced in placing orders for the Autumn season, which has made the margin recovery slower than anticipated. A new management team has been put in place to take this business forward.

    Shellys has very strong brand recognition and design capability and we remain confident that the business will be an important contributor to group profits in the coming years.

    Profit and Loss

    Total turnover of £102.7m is £7.4m (7.8%) ahead of last year, of which £5.8m comes from the acquisition of Shellys with £1.6m from the existing business. This represents a like-for-like increase in sales in the existing business of 2.6% for the six months ended 2 August 2003. The improvement in sales performance in the existing business was supported by an improvement in the margins achieved on those sales.

    Costs of sales of £94.7m were £6.6m higher than last year, of which £6.0m comes from Shellys and £0.6m from the existing business. Overall gross profit increased by £0.8m (11.7%) to £8.1m, with the existing business increasing by £1.2m (16.7%), despite a £0.5m increase in the depreciation charge resulting from the significant investment in stores last year and the decision to shorten the expected lives of capitalised refurbishment expenditure from 9 to 5 years. This has generated an increase in the gross profit margin from 7.6% last year to 7.9% this year (8.7% for the existing business).

    Distribution and administrative expenses have increased by £2.7m
to £11.8m. Pre-exceptional distribution and administrative expenses
have increased by £1.9m to £10.7m. Whilst there has been an increase
in variable costs as sales volumes have grown, there has been a
growth in costs in the warehouse following the  change of management
earlier in the year and the underperformance in the distribution
centre which was experienced as a result. These have been tackled.
Administrative expenses in the existing business have increased by
£0.2m in the period as a result of increased pension fund
contributions. In addition, the Group has absorbed £1.2m of
distribution and administrative expenses with the      acquisition of
Shellys.

    There have been a number of exceptional costs incurred in the six month period, including accelerated depreciation (£218k), warehouse and distribution restructuring (£345k), legal and professional fees for the share buyback completed in February (£123k), and the reduction in the pension fund prepayment in accordance with SSAP24 (£671k).

    In the six-month period we made an exceptional profit of £1.1m on property disposals compared with £0.4m for the equivalent period last year.

    Balance Sheet

    Net assets of £52.1m at 2 August 2003 reflect both the loss for the first half of £4.6m on ordinary activities after tax and exceptional items and the capital reduction and share buyback schemes over the past twelve months.

    Fixed tangible assets of £76.2m are £1.2m lower than at 3 August 2002 as a result of net disposals of property in the twelve-month period. Provisional goodwill of £1.6m has arisen on the acquisition of Shelly's Shoes Limited.

    Investment in both Barratts and PriceLess has continued, leading to a total capital expenditure of £2.3m for the six months. At 2 August 2003 we had net debt of £35.9m compared with £29.2m at 3 August 2002 (within this, restricted cash deposits of £3.1m are held for reinvestment in property, compared with £2.2m in 2002). This is after paying out £13.6m to shareholders in the form of capital repayment and share buybacks over the course of the last twelve months.

    Pension Fund

    The Report and Accounts for the fifty-two weeks ended 1 February 2003 highlighted the impact of the deterioration in the stock market during that year and the consequent impact on the underlying pension fund deficit at that date. As noted at the time, action was taken to address the imbalance over the medium term by way of an increase in contributions and a reduction in future service benefits. In accordance with SSAP24 this deficit is being spread over the average service lives of employees resulting in an exceptional non-cash charge of £671k for the six-month period. There is likely to be a similar charge in the second half of the year.

    Future Prospects

    Shareholders will be aware that our second half performance is traditionally better than the first half. It is very difficult to predict the outcome of the full year particularly as we are so dependent on the sale of Autumnal products and Christmas trading. However, at this stage, sales in the second half have started slowly. The future benefits from Shellys are unlikely to materialise in the results until 2004.

    People

    I am delighted to welcome Howard Stanton to the Board as a non-executive director. Howard joined us on 1 October 2003 and will make a very positive contribution to the development of the business.

    My thanks as ever go to the staff for their continued support and commitment.

    Michael Ziff

    Chairman and Chief Executive

    16 October 2003

    Consolidated Profit & Loss Account
    for the 26 weeks ended 2 August 2003
                              
                                                Unaudited
                                26 Weeks ended 2 August 2003


                                                         Before
                        Acquisition      Exceptionals      Exceptionals        Total
                                  £000                  £000                  £000         £000


    Turnover                5,819                96,926                      -      102,745

    Cost of Sales    (5,968)            (88,471)                (218)    (94,657)

    Gross profit/
    (loss)                  (149)                 8,455                (218)         8,088

    Distribution         (311)              (3,266)                (345)      (3,922)
    costs                      

    Administrative      (931)              (6,196)                (794)      (7,921)
    expenses

    Operating          (1,391)              (1,007)            (1,357)      (3,755)
    (loss)/              
    profit

    Operating                                    (2,398)
    loss)/                                                    
    profit before
    exceptionals
                                        
    Profit on disposal of                          -                1,072         1,072
    fixed assets                                                              

    Net interest payable                  (1,936)                      -        (1,936)

    (Loss)/profit on                         (4,344)                 (285)      (4,619)
    ordinary activities
    before taxation
                                  
    Taxation payable/                                -                         -                -
    (credit)

    (Loss)/profit on                         (4,334)                 (285)      (4,619)

    ordinary          
    activities after
    taxation                                      

    Dividend proposed                                                                            -

    (Deducted                                                                                (4,619)
    from)/
    added to                                                                                            
    reserves                                                                                            

    Basic              (11.38)                                                            (11.55)
    (loss)/
    earnings
    per                
    share (pence)

    Diluted          (11.38)                                                            (11.55)
    (loss)/
    earnings
    per                  
    share
    (pence)                    

    Dividend per                                                                                    -
    share (pence)

    Consolidated Profit & Loss Account     for the 26 weeks ended 2 August 2003

                                          Unaudited
                                26 Weeks ended 3 August 2002

                                                Before
                                      Exceptionals      Exceptionals         Total        
                                                  £000                  £000          £000        

    Turnover                              95,332                        -        95,332

    Cost of Sales                  (88,089)                        -    (88,089)

    Gross profit/(loss)              7,243                        -         7,243

    Distribution costs            (2,828)                        -      (2,828)

    Administrative                  (5,997)                 (288)      (6,285)
    expenses

    Operating (loss)/              (1,582)                 (288)      (1,870)
    profit                              

    Operating loss)/                (1,582)
    profit before
    exceptionals
                                          
    Profit on disposal of                -                      357            357
    fixed assets                                                              

    Net interest payable        (1,793)                         -      (1,793)

    (Loss)/profit on              (3,375)                        69      (3,306)
    ordinary activities
    before taxation
                                                  
    Taxation payable/                      -                         -                -
    (credit)                        

    (Loss)/profit on ordinary(3,375)                        69      (3,306)
    activities after
    taxation      

    Dividend proposed                                                                    -

    (Deductedfrom)/added to                                                (3,306)
    reserves

    Basic (loss)/earnings per         (5.90)                          (5.76)
    share (pence)

    Diluted (loss)/earnings per      (5.90)                          (5.76)
    share (pence)                    

    Dividend                                                                                -
    per share (pence)

    Consolidated Profit & Loss Account (contd.)     for the 52 weeks ended 1 February 2003

                                                                Audited
                                          52 Weeks ended 1 February 2003

                                                    Before        
                                          Exceptionals      Exceptionals          Total
                                                        £000                  £000            £000

    Turnover                                 208,851                        -        208,851

    Cost of Sales                      (184,100)                 (566)    (184,666)

    Gross profit/(loss)                 24,751                 (566)        24,185

    Distribution costs                 (5,727)                        -      (5,727)

    Administrative expenses        (12,560)                 (873)    (13,433)

    Operating ((loss)/profit          6,464              (1,439)         5,025

    Operating loss)/profit before
    exceptionals                              6,464

    Profit on disposal of fixed assets -                 5,411         5,411

    Net interest payable              (3,564)                        -        (3,564)

    (Loss)/profit on ordinary
    activities                                 2,900                 3,972          6,872
    before taxation
    Taxation payable/(credit)                -                        -                 -

    (Loss)/profit on ordinary activities
    after taxation                          2,900                 3,972          6,872

    Dividend proposed                                                                  (541)

    (Deducted from)/added to
    reserves                                                                                 6,331

    Basic (loss)/earnings
    per share                                    5.16                                    12.23
    (pence)

    Diluted (loss)/earnings
    per share                                    5.14                                    12.17
    (pence)

    Dividend per share (pence)                                                                
                  1.25

    Consolidated Balance Sheet     as at 2 August 2003

                                              Unaudited            Unaudited         Audited
                                      As at 2 August    As at 3 August         As at 1
                                                                                                February
                                                      2003                    2002              2003
                                                    £'000                  £'000            £'000

    Fixed assets
    Goodwill                                  1,576                         -                  -
    Tangible assets                      76,171                 77,330          77,061
    Investments                              1,474                      773                886

                                                  79,221                 78,103          77,947

    Current assets
    Stocks                                    32,517                 31,703          24,407
    Debtors                                  12,064                  2,495          12,191
    Cash at bank and in hand         3,632                  6,186          11,085

                                                  48,213                 50,384          47,683

    Creditors due within one year
    Borrowings                                9,013                  4,410            6,713
    Other creditors                      36,055                 32,819          28,211

                                                  45,068                 37,229          34,924

    Net current assets                  3,145                 13,155          12,759

    Total assets less current      82,366                 91,258          90,706
    liabilities

    Creditors due after one year
    Borrowings                              30,000                 30,000          30,000
    Other creditors                          231                      501            1,357

                                                  52,135                 60,757          59,349

    Capital and reserves
    Called up share capital              865                 14,895            1,015
    Share premium                                41                 11,667                 41
    Revaluation reserve                41,618                 47,105          43,508
    Profit and loss account          9,611                (12,910)         14,785
    Equity shareholders' funds    52,135                 60,757          59,349

    Group Cash Flow Statement

                          Unaudited                 Unaudited                        Audited
                  26 weeks ended         26 weeks ended            52 weeks ended
                            2 August                  3 August                  1 February
                                  2003                         2002                            2003
                  £000         £000         £000         £000          £000          £000
    Net cash
    (outflow)/
    inflow                 (3,090)                         426                         12,636
    from operating activities

    Returns on investment and     servicing of finance

    Interest
    received        -                              -                            104

    Interest
    element of(40)                         (41)                          (80)
    finance lease payments

    Interest
    paid    (1,896)                    (1,752)                      (3,700)

    Net cash
    outflow
    from                      (1,936)                    (1,793)                      (3,676)
    returns on investment and
    servicing of finance

    Taxation                        -                              -                                 -

    Capital expenditure and     financial investment

    Purchase of
    tangible  (2,573)                    (3,239)                    (11,227)
    fixed assets

    Purchase
    of
    subsidiary  (880)                            -                                -
    undertaking

    Cash
    acquired
    with                15                              -                                -
    subsidiary undertaking

    Purchase of
    shares for  (520)                        (196)                         (309)
    Employee Benefit Trust

    Sale of
    tangible
    fixed            2,944                      3,339                        14,102
    assets

    Net cash
    (outflow)/
    inflow                      (1,014)                         (96)                      2,566
    from capital expenditure
    and financial investment

    Capital repayment    (2,595)                              -                 (10,154)

    Repayment to
    ex-management              (894)                              -                            -
    shareholders

    Cash (outflow)/
    inflow                      (9,529)                    (1,463)                      1,372
    before financing

    Financing
    Net
    (decrease)/
    increase      (2,500)                            -                         6,500
    in bank loans
    Net decrease/
    (increase)      3,185                      (2,183)                      (6,245)
    in restricted cash
    deposits

    Capital element
    of                    (224)                        (248)                         (487)
    finance lease payments
                                                461                      (2,431)                (232)

    (Decrease)/increase
    in cash                         (9,068)                      (3,894)                1,140

    Reconciliation of net     cash flow movement to     movement in net debt

    (Decrease)/                  (9,068)                    (3,894)                 1,140
    increase in cash
    Net decrease/
    (increase)                        2,500                              -              (6,500)
    in bank loans

    Net (decrease)/
    increase                        (3,185)                        2,183                 6,245
    in restricted cash deposits

    Reduction in
    finance leases                    224                          248                    487

    Change in net
    debt from                      (9,529)                    (1,463)                 1,372
    cash flows

    Net debt at
    beginning of
    year                            (26,322)                  (27,694)            (27,694)

    Net debt at
    end of
    period                         (35,851)                  (29,157)            (26,322)

    Reconciliation of operating (loss)/profit to net cash     (outflow)/inflow from operating activities

                                 26 weeks ended    26 weeks ended    52 weeks ended
                                          2 August              3 August          1 February
                                                 2003                    2002                    2003
                                                 £000                    £000                    £000

    Operating (loss)/profit  (3,755)                (1,870)                  5,025

    Depreciation charge            2,763                  2,250                  4,697

    FRS 11 Impairment                      -                         -                      204

    Goodwill written off                54                         -                         -

    EBT provision released         (68)                         -                  (309)

    Increase in stocks          (4,784)                (7,490)                  (194)

    Decrease in debtors            1,032                  1,302                  1,865

    Increase in creditors         1,668                  6,234                  1,348

    Net cash (outflow)/inflow (3,090)                    426                 12,636
    from operating activities

    Notes to the Accounts

    1    Exceptional items      Unaudited         Unaudited            Audited
                                    26 weeks ended 26 weeks ended 52 weeks ended
                                              2 August          3 August        1 February
                                                    2003                 2002                 2003
                                                    £000                 £000                 £000

    Impairment adjustment                  -                      -                (204)

    Accelerated depreciation        (218)                      -                (362)

    Distribution restructuring
    costs                                      (345)                      -                      -

                                                  (563)                      -                (566)

    Professional fees                  (123)                (288)                (672)

    Decrease in SSAP 24
    pension asset                         (671)                      -                (201)

                                                (1,357)                (288)            (1,439)

    Profit on disposal of
    fixed assets                          1,072                 357                 5,411

                                                  (285)                  69                 3,972

    2    Analysis of net debt    At          Cashflows      Other            At
                                  1 February                          movement  2 August
                                            2003                                                 2003
                                            £000                  £000        £000         £000

    Cash at bank and in
    hand                                4,840              (4,268)            -          572

    Bank overdraft                (213)              (4,800)            -    (5,013)

                                          4,627              (9,068)            -    (4,441)

    Restricted cash              6,245              (3,185)            -        3,060
    deposits

    Bank loans                            -                        -            -              -

    Debt due within one    (6,500)                 2,500            -    (4,000)
    year

    Debt due after one    (30,000)                        -            -  (30,000)
    year

    Finance leases                (694)                    224            -        (470)

    Total                         (26,322)              (9,529)            -  (35,851)

    3    On 4 April 2003, the Group acquired the entire share capital
of Shelly's Shoes Limited for a consideration of £1.5m, incurring
acquisition costs of £130,000. Of the £1.5m, £750,000 was paid on
completion with the balance payable 12 months thereafter. The
provisional fair value of the net assets acquired amounted to £nil
with a resultant goodwill of £1,630,000. The book value of assets and
liabilities are based on management accounts, and whilst a
provisional fair value exercise has been carried out, the review is
not complete and certain provisional amounts are yet to be      
finalised. The expected useful life of the goodwill has provisionally
given rise to a £54,000 amortisation in the current period to
administrative expenses within acquired operations. A full review of
the expected useful economic life of the resultant goodwill will be
completed by the 31 January 2004 year end. The provisional period may
be revised once this review is complete.

    4    The financial information set out herein does not constitute full financial statements within the meaning of the Companies Act 1985. The financial information for the 26 weeks ended 2 August 2003 is unaudited and has been prepared on the basis of the accounting policies set out in the Group's 2003 Report and Accounts. The accounts for the period ended 1 February 2003 received an unqualified audit report and have been filed with the Registrar of Companies.

    5      Copies of the report are being sent to all shareholders and
are available at the company's registered office.
    
                                This information is provided by RNS
                The company news service from the London Stock Exchange
    
ots Originaltext: Stylo plc
Internet: www.newsaktuell.ch

Contact:
Stylo plc
Telephone
Michael Ziff
Phone: +44/1274/617'761

Dawnay Day Corporate Finance plc
David Floyd
Phone: +44/20/7509'4570



Das könnte Sie auch interessieren: