29 Sep 2009 07:00
Moss Bros Group Plc
Half Yearly Financial Report for the six months to 1 August 2009
HEADLINES
Financial
Pre-tax loss of £3.0m (2008: Pre tax loss of £2.2m) in line with current full year expectations
Total Group sales down 0.6%; like for like sales down 2.6%
EBITDA * of £0.6m (2008: EBITDA of £1.6m) in line with current full year expectations
Gross margin held at 56.0%
Total stock down 22% at £15.1m (26 July 2008: £19.3m)
Cash balance of £5.0m (26 July 2008: £8.0m) as expected
No interim dividend is being proposed as previously indicated
Current trading: like for like retail sales in the first eight weeks of the second half of 2009 have continued to improve; gross margin is being maintained
Business
To protect the Group's strong cash position, the strategy of opening new stores and refurbishing existing stores was held back in the first six months; no new stores were opened and no stores were refurbished
The business is looking into a number of new store opportunities for the second six months and it will resume its store opening program dependent on market conditions
Further changes were made in the first six months to strengthen the Board
Commenting on the results, Brian Brick, Chief Executive Officer, said:
"The first six months ended with a noticeable improving sales trend which has continued at the start of the second half; the business is being managed recognising the state of the economy, protecting its strong cash position, optimising stock levels whilst pushing ahead with sales training initiatives and improving store service levels. The early response to the Autumn/Winter range across all fascias is positive which is clearly encouraging. However management are moving forward cautiously in case the UK economy should move into a 'double-dip' scenario.
There are a number of opportunities being considered which form part of our new strategy and that leverage on the solid platform which currently exists."
* EBITDA is defined as "Earnings before Interest, Taxes, Depreciation and Amortisation, and excludes Exceptional Items"
For further information please contact:
Moss Bros Group Plc: 0207 447 7200
Brian Brick, Chief Executive Officer
Michael Hitchcock, Finance Director
Buchanan Communications: 0207 466 5000
Charles Ryland/Nicola Cronk/Miranda Higham
INTERIM MANAGEMENT REPORT
FOR THE SIX MONTHS TO 1 AUGUST 2009
To the members of Moss Bros Group Plc
CAUTIONARY STATEMENT
The Interim Management Report ("IMR") has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.
The IMR contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this Interim Management Report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward looking information.
This IMR has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to Moss Bros Group Plc and its subsidiary undertakings when viewed as a whole.
OPERATIONS
Moss Bros Group Plc retails and hires formal wear and fashion products for men, predominantly in the UK. As well as retailing menswear through the Moss fascia, the Group also trades through the Savoy Taylors Guild and Cecil Gee fascia. The Group hires formal wear under the Moss Bros Hire brand through its mainstream stores. In addition the Group currently operates 16 Hugo Boss retail franchises, two Canali retail franchise and one Simon Carter retail franchise.
LONG-TERM STRATEGY AND BUSINESS OBJECTIVES
During the first six months, we strengthened the Board structure to drive change through the business and increase shareholder value; and the process to confirm the strategy for the business is nearly now complete. It is not possible to lay out that strategy in its entirety yet but some indicators in addition to other previously mentioned strategic initiatives include:
Routes to market - in addition to a review of the business resource allocation, the business intends to focus on growth opportunities which play to its core competency of formal menswear. There are at least two further routes to market that the business is looking to develop which leverage off existing operations.
Moss store refurbishments - as previously announced, the business has adopted a store refit strategy to make the Moss stores more contemporary. This strategy continues although the pace of change has slowed in the current economic climate to protect our strong cash balance. New stores - management still have a considerable list of sites within the UK and Ireland identified as ideal locations for the Group's fascias; as opportunities present themselves and meet the internal hurdle rates set for new investment, management will apply the appropriate level of due diligence whilst always giving serious consideration to the current state of the local economy.
Product - in the core Moss chain the product is being honed to achieve the objective of becoming the first choice menswear specialist. This will include delivering quality formal menswear in all styles to every man in the UK, irrespective of size.
KEY PERFORMANCE INDICATORS
We monitor our performance implementing our strategy with reference to clear targets set for seven key performance indicators ("KPIs"). These KPIs are applied on a Group wide basis across the stores and include the following:
- sales; which are further analysed by: - average transaction value - units per transaction - average selling price
- gross profit margin- cash and cash equivalents - inventories
Management assesses these KPIs against forecasts and the prior year.
Given the challenging economic environment in which the Group is currently operating, the Directors consider the performance against expectations to be robust.
Whilst other performance measures may be discussed in this IMR, it is the above seven measures which the Directors utilise and apply as the Group's KPIs.
REVENUE
Total revenue has decreased 0.6% for the six months to 1 August 2009 compared with the comparative period in 2008. This is attributable to a net sales increase from new and closed stores more than offset by like for like sales decline. The closed stores in the second half of the prior year were strategic decisions which fit with the overall strategy of the business.
A summary of the key financial results is set out in the table below.
| Key financials | 26 weeks to 1 August 2009 £'000 | 26 weeks to 26 July 2008 £'000 | 53 weeks to 31 January 2009 £'000 |
| Revenue | |||
| Retail (1) | 52,120 | 52,426 | 114,916 |
| Hire | 8,662 | 8,707 | 14,768 |
| Total revenue | 60,782 | 61,133 | 129,684 |
| Gross profit | |||
| Retail (1) | 27,622 | 27,652 | 58,175 |
| Hire | 6,387 | 6,580 | 10,428 |
| Total gross profit | 34,009 | 34,232 | 68,603 |
| Administrative expenses (2) | (2,511) | (2,937) | (6,602) |
| Shops' selling and marketing costs (2) | (34,495) | (33,691) | (71,538) |
| Operating loss | (2,997) | (2,396) | (9,537) |
| Financial income | 2 | 197 | 255 |
| Loss before taxation | (2,995) | (2,199) | (9,282) |
(1) Mainstream and fashion fascias are both components of retail. (2) Administrative expenses and shops' selling and marketing costs are not analysed between retail and hire.
Like for like retail sales in the mainstream fascias decreased 2.3%. This is largely due to the performance of the high street stores in the earlier part of the first half; latterly the performance of the high street stores has markedly improved. Performance across all mainstream fascias at the start of the second half has been encouraging.
Like for like retail sales in the fashion fascias decreased 3.5%, all brands registering a slow start to the half. Hugo Boss registered a material improvement as the half progressed and the Autumn/Winter ranges in all fascias have been well received.
Moss Bros Hire maintains its position as the leading brand name in formal hire. The lack of corporate black tie events continued to drag down dinner suit hires and Ascot hires were also down due to reduced corporate entertainment for such events. Wedding hires however, continued to be strong, with wedding parties attracted by the extensive range and quality of morning suits on offer. The net result is like for like hire sales down only 1.6%.
GROSS MARGIN AND UNDERLYING OPERATING PROFITS
Gross margin was maintained in the first six months. This was despite considerable promotional pressure from our competitors who clearly invested gross margin to attract sales. The exercise to consolidate volume into a smaller number of suppliers and attain a better unit purchase price has enabled tactical promotions to attract new and existing customers. Whilst the quantity of customers has decreased, investment in extensive sales training across our retail stores lifted the number of units per transaction and therefore the overall average transaction value.
Total operating costs (excluding one-off items) increased 2.5% against the same period last year, the result of new stores opening in the second half of last year; total like for like operating costs increased 1.8%, largely due to continued, albeit slowing, increase in occupancy costs.
The operating loss is £3.0m, £0.6m higher than the comparative period in 2008; allowing for one off items in the comparative period, the difference is £1.2m, that period's operating loss having been impacted by bid costs and property disposal costs of £0.6m. This deterioration is largely sales related, since retailers of our size with the fixed operating cost base which is required, cannot offset to the full extent of the reduction in sales. Towards the end of the first half trading improved and the business has seen this trend continue into the start of the second half of the year. The last quarter trading period is an important one for the Group. However, despite continued uncertainty within the UK economy, the Board believes the Group is well placed and on track to achieve its objectives for the full year.
DIVIDEND AND DIVIDEND POLICY
The Board is recommending that no interim dividend is paid (26 July 2008: £nil). The conservation of cash is still vitally important in what remains an uncertain and credit constrained environment.
FINANCIAL POSITION
Net assets have decreased by 6% to £37.0m (31 January 2009: £39.4m).
The daily management of cash remains a focus which has resulted in an absolute minimal use of the overdraft facility at the Group's disposal during the half year. The underlying cash position at 1 August 2009 is £5.0m, £3.0m lower than at the same time in 2008 (31 January 2009: £8.1m) in line with management's expectations.
Funds are only invested in significant capital expenditures approved by the Board and the Group did not need to take on any debt during the first six months.
The Group continues to meet its day to day working capital requirements through surplus cash balances and when needed through a £5m uncommitted overdraft facility which is due to renew at the end of March 2010 on a twelve monthly rolling basis. Current economic conditions will create uncertainty particularly over the level of demand for the Group's products and the availability of bank financing in the foreseeable future. However, despite this uncertainty, the Board has concluded, in light of the detailed cash flow projections and given the level of cash in the business and available overdraft facility that the Group has adequate resources to continue in operational existence for the foreseeable future.
CASH FLOW
Net cash outflow from operating activities for the six months ended 1 August 2009 was £3.1m, £4.5m better than the comparative in 2008. Lower trading profit for the Group was partially offset by improved working capital management, restrained capital spending and no dividends being paid in the period. Because of the 53 week reporting cycle at the last year end, there is a £1.5m adverse movement in the half year cash balance due to the timing of when certain significant amounts were paid this year compared to last.
BOARD CHANGES
As part of the strengthening of the Board, on 29 May 2009 Simon Berwin and on 1 June 2009 Debbie Hewitt, were both appointed as Non Executive Directors of the Board.
RELATED PARTY TRANSACTIONS
Berwin & Berwin Limited, a key supplier, is considered a related party of the Group because a Non Executive Director of Moss Bros Group Plc, Simon Berwin, is the Chief Executive and a significant shareholder of Berwin & Berwin Limited. All transactions have been carried out at arm's length as disclosed in note 9 to the condensed set of financial statements.
RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The Directors do not consider that the principal risks and uncertainties have changed since the publication of the annual report for the year ended 31 January 2009, which can be found on pages 6 and 7 of the annual report and is available at www.mossbros.co.uk.
CASH AND FUNDING
Cash and funding are the key risks in the current uncertain macro economic climate made more acute with the lack of liquidity in the UK banking sector. Cash balances are managed and monitored on a daily basis, the peaks and troughs in the cash cycle are well known through experience and appropriate cash management takes place to limit the use of the ongoing banking facilities in place. Going forward into the second half of 2009 this daily practice is to be maintained.
INVENTORY AND CONTINUITY OF SUPPLY
Demand forecasting, inventory ordering and inventory intake are totally aligned to the cash management focus discussed above. The placing of all orders is subject to diligent product demand forecasting models and ongoing rates of sale of all product lines. The consolidation of supply into fewer suppliers creates sufficient scale to mitigate the risk of suppliers going out of business in the short to medium term. Negotiations take place regularly with key suppliers regarding rate and payment terms, always mindful of the need for partnership to ensure continuity. Proactive dialogue is maintained with supplier credit insurers to ensure they have the relevant and most current information on which to base their insurance levels.
PROPERTY
The business operates from a portfolio of high street, shopping centre and factory outlet stores all held under operating leases. Each store is evaluated annually to assess its ongoing commercial viability. There are a number of locations in the UK and Ireland, which would suit one of the businesses' fascias, and the Group engages property agents to identify opportunities for the development of its store portfolio. In the current macro environment, even more stringent and enhanced financial hurdles are required to be met before any consideration is given to new stores.
STAFF HIRING AND RETENTION
The Group has the reputation of attracting some of the brightest young talent in fashion and it tries to ensure that it not only maintains this attraction but also retains this talent. There is a strong capability, passion and drive at all levels in the business to ensure that the Group will come out of the current recession ideally placed to take full advantage of a recovery.
RETAIL MARKET DOWNTURN
Management is planning for the next 12 months to be tough and challenging and has already prepared the business, where possible. The expected downturn is taken into account in planning the cash flow forecast; there are a number of actions which the Group can take to mitigate the impact on cash for any further unexpected market downturns.
FUTURE OUTLOOK
Trading in the first eight weeks of the second half has continued the improving trend, seen at the end of the first half, with both mainstream and fashion showing gains compared with the first 26 weeks. Like for like total sales were ahead noticeably when compared with the comparative period last year.
The positive impact of new management initiatives, coupled with other operational changes across the business, lead the Board to believe the Group will meet its expectations for the full year. This is predicated on the fiscal state of the economy remaining broadly in line with the current situation and not materially worsening.
Moss Bros Group Plc 8 St. John's HillLondon SW11 1SA
By order of the Board,
| Chief Executive Officer Brian Brick | Finance Director Michael Hitchcock |
CONDENSED CONSOLIDATD STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS TO 1 AUGUST 2009
| 26 weeks to 1 August 2009 £'000 | 26 weeks to 26 July 2008 £'000 | 53 weeks to 31 January 2009 £'000 | |
| (Unaudited) | (Unaudited) | (Audited) | |
| Revenue | 60,782 | 61,133 | 129,684 |
| Cost of sales | (26,773) | (26,901) | (61,081) |
| Gross profit | 34,009 | 34,232 | 68,603 |
| Administrative expenses | (2,511) | (2,937) | (6,602) |
| Shops' selling and marketing costs | (34,495) | (33,691) | (71,538) |
| Operating loss | (2,997) | (2,396) | (9,537) |
| Financial income | 2 | 197 | 255 |
| Loss before taxation | (2,995) | (2,199) | (9,282) |
| Taxation | 574 | 358 | 318 |
| Loss after taxation attributable to equity holders of the parent | (2,421) | (1,841) | (8,964) |
| Basic loss per share | (2.56)p | (1.95)p | (9.48)p |
| Diluted loss per share | (2.56)p | (1.95)p | (9.48)p |
All revenues and profits relate to the continuing operations of the Group.
There are no other items of comprehensive income in either period other than the loss for the period.
All the loss is attributable to the owners of the parent.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS TO 1 AUGUST 2009
| 26 Weeks ended 1 August 2009 (Unaudited) | Share capital | Share premium account | Retained earnings | Total equity |
| £'000 | £'000 | £'000 | £'000 | |
| Balance at 1 February 2009 | 4,727 | 8,673 | 25,985 | 39,385 |
| Loss for the period | - | - | (2,421) | (2,421) |
| Issue of share capital | - | - | - | - |
| Dividends | - | - | - | - |
| Balance at 1 August 2009 | 4,727 | 8,673 | 23,564 | 36,964 |
| 26 Weeks ended 26 July 2008 (Unaudited) | Share capital | Share premium account | Retained earnings | Total equity |
| £'000 | £'000 | £'000 | £'000 | |
| Balance at 29 January 2008 | 4,724 | 8,666 | 36,177 | 49,567 |
| Loss for the period | - | - | (1,841) | (1,841) |
| Issue of share capital | 3 | 7 | - | 10 |
| Dividends | - | - | (1,228) | (1,228) |
| Balance at 26 July 2008 | 4,727 | 8,673 | 33,108 | 46,508 |
| 53 Weeks ended 31 January 2009 (Unaudited) | Share capital | Share premium account | Retained earnings | Total equity |
| £'000 | £'000 | £'000 | £'000 | |
| Balance at 29 January 2008 | 4,724 | 8,666 | 36,177 | 49,567 |
| Loss for the period | - | - | (8,964) | (8,964) |
| Issue of share capital | 3 | 7 | - | 10 |
| Dividends | - | - | (1,228) | (1,228) |
| Balance at 31 January 2009 | 4,727 | 8,673 | 25,985 | 39,385 |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE SIX MONTHS TO 1 AUGUST 2009
| As at 1 August 2009£'000 | As at 26 July 2008£'000 | As at 31 January 2009 £'000 | |
| (Unaudited) | (Unaudited) | (Audited) | |
| Assets | |||
| Intangible assets | 1,537 | 1,940 | 1,849 |
| Property, plant and equipment | 25,417 | 29,253 | 27,069 |
| Lease prepayments | 2,529 | 2,778 | 2,542 |
| Total non-current assets | 29,483 | 33,971 | 31,460 |
| Inventories | 15,105 | 19,335 | 15,394 |
| Trade and other receivables | 4,855 | 5,885 | 6,411 |
| Current tax asset | 150 | 73 | 44 |
| Cash and cash equivalents | 5,023 | 8,002 | 8,107 |
| Total current assets | 25,133 | 33,295 | 29,956 |
| Total assets | 54,616 | 67,266 | 61,416 |
| Equity | |||
| Issued capital | 4,727 | 4,727 | 4,727 |
| Share premium account | 8,673 | 8,673 | 8,673 |
| Retained earnings | 23,564 | 33,108 | 25,985 |
| Equity attributable to equity holders of parent | 36,964 | 46,508 | 39,385 |
| Liabilities | |||
| Other payables | 2,295 | 1,823 | 2,504 |
| Deferred tax liabilities | 3,080 | 3,540 | 3,655 |
| Total non-current liabilities | 5,375 | 5,363 | 6,159 |
| Trade and other payables | 12,275 | 15,327 | 15,672 |
| Provisions | 2 | 68 | 200 |
| Total current liabilities | 12,277 | 15,395 | 15,872 |
| Total liabilities | 17,652 | 20,758 | 22,031 |
| Total equity and liabilities | 54,616 | 67,266 | 61,416 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS TO 1 AUGUST 2009
| 26 weeks to 1 August 2009 £'000 | 26 weeks to 26 July 2008 £'000 | 53 weeks to 31 January 2009 £'000 | |
| (Unaudited) | (Unaudited) | (Audited) | |
| Cash flows from operating activities | |||
| Loss before taxation | (2,995) | (2,199) | (9,282) |
| Adjustment for: | |||
| Net finance income | (2) | (197) | (255) |
| Amortisation of intangible assets | 319 | 235 | 516 |
| Impairment of property, plant and equipment | - | - | 2,406 |
| Depreciation of property, plant and equipment | 3,321 | 3,128 | 6,113 |
| Loss on disposal of property, plant and equipment | 10 | - | 18 |
| Decrease/(increase) in inventories | 289 | (156) | 3,785 |
| Decrease in trade and other receivables | 1,556 | 1,867 | 1,341 |
| Decrease in trade and other payables | (3,924) | (4,746) | (3,588) |
| Taxation received | - | - | 105 |
| Net cash from operating activities | (1,426) | (2,068) | 1,159 |
| Cash flows from investing activities | |||
| Net finance income | 2 | 197 | 255 |
| Purchase of intangible assets | (185) | (273) | (461) |
| Purchase of property, plant and equipment | (1,885) | (4,177) | (7,169) |
| Proceeds on disposal of property, plant and equipment | 410 | - | - |
| Net cash used in investing activities | (1,658) | (4,253) | (7,375) |
| Cash flows from financing activities | |||
| Dividends paid | - | (1,228) | (1,228) |
| Proceeds from the issue of share capital | - | 10 | 10 |
| Net cash from financing activities | - | (1,218) | (1,218) |
| Cash and cash equivalents at beginning of period | 8,107 | 15,541 | 15,541 |
| Net decrease in cash and cash equivalents | (3,084) | (7,539) | (7,434) |
| Cash and cash equivalents at end of period | 5,023 | 8,002 | 8,107 |
NOTES TO THE CONDENSED CONSOLIDATED SET OF FINANCIAL STATEMENTS
FOR THE SIX MONTHS TO 1 AUGUST 2009
1. GENERAL INFORMATION
The information for the year ended 31 January 2009 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 237(2) or (3) of the Companies Act 1985.
The results for the six months ended 1 August 2009 and 26 July 2008 are neither audited nor reviewed by the Group's auditors.
2. ACCOUNTING POLICIES
The annual financial statements of Moss Bros Group Plc are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting", as adopted by the European Union.
BASIS OF PREPARATION
The Directors believe the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current committed facilities.
After making enquiries, the Directors have reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly condensed financial statements.
The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements for the year ended 31 January 2009, except for as described below.
CHANGES IN ACCOUNTING POLICY
In the current year, the Group has adopted International Accounting Standard 1 "Presentation of Financial Statements" (revised 2007) ("IAS 1") and International Financial Reporting Standard 8 "Operating Segments" ("IFRS 8").
IAS 1 (revised) requires the presentation of a statement of changes in equity as a primary statement, separate from the statement of comprehensive income. As a result, a condensed consolidated statement of changes in equity has been included in the primary statements, showing changes in each component of equity for each period presented.
IFRS 8 requires operating segments to be identified on the basis of internal reports about companies of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their performance. As a result, the segmental information required by IAS 34 which is included in note 3 below is presented in accordance with IFRS 8.
3. BUSINESS SEGMENTS
Information reported to the Group's Chief Executive for the purposes of resource allocation and assessment of segment performance is more specifically focused on the split between retail and hire.
Information regarding the Group's operating segments is reported below. Amounts reported for the prior periods have been restated to conform to the requirements of IFRS 8.
The following is an analysis of the Group's revenue and gross profit in the six months ended 1 August 2009:
| Key financials | 26 weeks to 1 August 2009 £'000 | 26 weeks to 26 July 2008 £'000 | 53 weeks to 31 January 2009 £'000 |
| Revenue | |||
| Retail | 52,120 | 52,426 | 114,916 |
| Hire | 8,662 | 8,707 | 14,768 |
| Total revenue | 60,782 | 61,133 | 129,684 |
| Gross profit | |||
| Retail | 27,622 | 27,652 | 58,175 |
| Hire | 6,387 | 6,580 | 10,428 |
| Total gross profit | 34,009 | 34,232 | 68,603 |
| Administrative expenses | (2,511) | (2,937) | (6,602) |
| Shops' selling and marketing costs | (34,495) | (33,691) | (71,538) |
| Operating loss | (2,997) | (2,396) | (9,537) |
| Financial income | 2 | 197 | 255 |
| Loss before taxation | (2,995) | (2,199) | (9,282) |
The accounting policies for the reportable segments are the same as the Group's accounting policies.
Only revenue and gross profit have been reported for the Group's business segments; retail and hire, as the main operating costs, being property, related overheads and staff, cannot be seperately identifiable as they both use the same stores and hence operating profit is not reported to the Chief Executive by retail and hire. On the same basis, assets cannot be allocated between retail and hire, and are not reported to the Chief Executive.
4. SEASONALITY OF SALES
The Group's operations have historically experienced higher revenue during the second half of the financial year, with approximately 55% of annual sales occurring from August to January. This is primarily due to the Christmas period and post Christmas sale. Accordingly, the results of operations for the interim are not indicative of the results which may be expected for the entire financial year.
5. PROPERTY TRANSACTIONS
Shops' selling and marketing costs include £78,000 of losses on disposal of non-current assets during the period (2008: £24,000 loss).
6. TAX
Tax for the six month period is charged at 19.2% (six months ended 26 July 2008: 16.2%; year ended 31 January 2009: 28.33%), representing the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax income of the six month period.
7. EARNINGS PER SHARE
Basic loss per ordinary share is based on the weighted average of 94,530,752 (26 July 2008: 94,512,537; 31 January 2009: 94,521,817) ordinary shares in issue during the period and is calculated by reference to the loss attributable to shareholders of £2,421,000 (26 July 2008: loss £1,841,000; 31 January 2009: loss £8,964,000).
Diluted loss per ordinary share is based upon the weighted average of 94,530,752 (26 July 2008: 94,512,537; 31 January 2009: 94,512,817) ordinary shares which excludes the effects of share options 5,347,082 (26 July 2008: 7,922,802; 31 January 2009: 8,554,626) that were anti-dilutive for the periods presented but could dilute earnings per share in the future and are calculated by reference to the loss attributable to shareholders as stated above. In the current and prior period the weighted average number of ordinary shares was not diluted, as per IAS 33 'Earnings per Share', as this would decrease the basic loss per share.
8. DIVIDENDS
The following dividends were paid in the period:
| 26 weeks to 1 August 2009 £'000 | 26 weeks to 26 July 2008 £'000 | 53 weeks to 31 January 2009 £'000 | |
| Final dividend nil pence per share | - | - | - |
| Interim dividend nil pence per share | - | - | - |
| Special dividend nil pence per share (2008: 1.30 pence per share) | - | 1,228 | 1,228 |
| - | 1,228 | 1,228 |
The Directors have not declared an interim dividend.
9. RELATED PARTY TRANSACTIONS
TRADING TRANSACTIONS
During the period, the Group entered into the following transactions with related parties who are not members of the Group:
| Berwin & Berwin Limited | 26 weeks to 1 August 2009 £'000 | 26 weeks to 26 July 2008 £'000 | 53 weeks to 31 January 2009 £'000 |
| Total inventory purchases | 3,379 | 3,747 | 7,345 |
| Inventory purchases since appointment of Simon Berwin as a Director | 1,201 | Not applicable | Not applicable |
Berwin & Berwin Limited; a key supplier, is considered a related party of the Group because a Non Executive Director of Moss Bros Group Plc, Simon Berwin, is the Chief Executive and a significant shareholder of Berwin & Berwin Limited. While similar transactions were entered into in the prior period, they were not considered related party transactions, as the related party relationship did not exist in that period.
Purchases of goods from related parties were made on an arm's length basis, consistent with the previous terms.
On 13 September 2009 an agreement was made with Berwin Retail Limited, to supply hire to Berwin Retail Limited to be sold through their House of Fraser concessions. Berwin Retail Limited is considered a related party of the Group because Simon Berwin is a Non Executive Director of Moss Bros Group Plc, and is also the Managing Director and a significant shareholder of Berwin Retail Limited The financial effect of such agreement, which is on an arm's length basis, is not currently measurable having only just been agreed.
10. EXCEPTIONAL ITEMS
| 26 weeks to 1 August 2009 £'000 | 26 weeks to 26 July 2008 £'000 | 53 weeks to 31 January 2009 £'000 | |
| Stock provision adjustment | - | - | 600 |
| Restructuring costs | - | 25 | 567 |
| Impairment charge | - | - | 2,406 |
| Loss on disposals | - | 176 | 185 |
| Bid costs | - | 422 | 423 |
| Other | - | - | 100 |
| - | 623 | 4,281 | |
11. HALF-YEARLY FINANCIAL REPORT
This half-yearly financial report is available on application from the Company Secretary, Moss Bros Group Plc, 8 St. John's Hill, London SW11 1SA (and on the Company's website www.mossbros.co.uk).
RESPONSIBILITY STATEMENT
We confirm to the best of our knowledge:
a: the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting':
b: the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
c: the interim management report includes a fair review of the information required by the DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
By order of the Board,
| Chief Executive Officer Brian Brick | Finance Director Michael Hitchcock |