MOSB.L Regulatory News (MOSB)

13 Apr 2005 07:00

Moss Bros Group PLC13 April 2005 MOSS BROS GROUP PLC Preliminary results for the year ended 29 January 2005 HIGHLIGHTS Financial • Pre-tax profit of £5.5m (£1.0m profit last year) • Like for like sales up 9% and like for like gross profit up 12% • Gross profit percentage increased from 50.2% to 52.2% • Average cash balance for the year up 30% on last year • Final dividend proposed of 1.0p (1.5p for the year). Dividend up 50% on last year • Current trading: like for like sales in the first 10 weeks of the new financial year +6% Operational • Product led strategy delivering improved performance across Moss, Cecil Gee and Boss • Improved gross margin benefiting from better operational efficiency • Moss strategy of branded merchandise at good prices delivering increased market share • Cecil Gee re-branding/new concept store delivering positive customer reaction • Moss refit stores performing ahead of expectations Commenting on the results, Philip Mountford, Chief Executive, said: "The Company made good progress in the last financial year: like for like salesgrowth of 9%, at better margin, represents a solid performance in a competitiveretail market. The three fascia, Moss, Cecil Gee and Boss, achieved sales growth and theprofitability of the Company has significantly improved. Our product led strategy is attracting new customers into our stores withimproved ranges of shirts and casualwear complementing the appeal of ourextensive suit and formalwear offer. The refitting of Moss stores is being well received and Cecil Gee re-brandingrepresents an exciting stage in the re-development of Cecil Gee. There remains substantial unrealised potential in our existing stores. The newfinancial year has started well, with like for like sales growth of 6%, andcontinuing improvement in margin. We are focused on further developing theCompany." For further information please contact: Moss Bros Group Plc Telephone: 020 7426 7792Philip Mountford, Chief ExecutiveRoddy Murray, Finance Director FINANCIAL RESULTS OVERVIEW Pre-tax profit for the year for Moss Bros Group Plc was £5.5m against a £1.0mprofit last year. Operating profit for the year of £5.3m is against £0.8m last year. Tradingperformance of the Company has improved significantly: sales have increased by9% like for like; gross profit has increased by 12% like for like; and the grossmargin percentage has increased by 2 percentage points from 50.2% to 52.2%. 2004/05 -------------------------------------------Trading results (like for like) 1st Half 2nd Half Full Year Sales v last year +8% +10% +9%Gross profit v last year +11% +13% +12%% gross profit 52.1% 52.4% 52.2%% gross profit v last year +2.1% +2.0% +2.0%------------------------------------------------------------------------------- Profit before tax £m 0.7 4.8 5.5Profit before tax v last year £m +2.5 +2.0 +4.5------------------------------------------------------------------------------- Each of the Company's three fascia made good progress: Moss sales increased by9% like for like, Cecil Gee sales increased by 6% (2% in the first half and 10%in the second half) and Boss sales increased by 14%. Gross margin percentage continued to strengthen reflecting the improvements madein product ranges, supply chain efficiencies, better buying terms and moreeffective sales promotions. Understanding of our customer and the market has improved within the Company andthe sales growth achieved reflects improved product ranges and offers which havestronger customer appeal. Total operating costs in the year increased by 2% but, after excluding closedstores, like for like operating costs increased by 6%. More staff were recruitedin the year, with store staff levels increased by 5%, improving customer serviceduring peak trading hours which helped build sales growth. Rent and rates, yearon year, increased by 6% and more investment was made in marketing, up 18%, andvisual merchandising up 16%. Operating costs remain tightly controlled and the Company continues to seek waysto improve operational efficiency which can help fund investment in marketingand improved presentation in stores. CASH FLOW The underlying cash position of the Company continues to improve: the averagecash balance throughout the financial year was 30% up on last year. Interestreceived increased by more than 50%, reflecting improved liquidity and higherinterest rates for cash on deposit. The year-end cash balance of £16.8m was £0.5m up on last year. Followingre-negotiations with suppliers, full advantage has been made of improvedsettlement terms which represent a more efficient utilisation of capital. Additional investment in fixtures and fittings has increased the selling spacewithin existing stores which supported the increase in stock of 9% year on year. Capital expenditure in the year was £4.9m against a depreciation charge of£4.2m. A two-year payback is targeted for investment in Moss stores and a three-yearpayback applied in evaluating investment in Cecil Gee and Boss stores. £2.3m has been invested in refitting 40 Moss stores. This relatively low costinvestment combined with range selection tailored to meet local market needs hasbeen well received by our customers and the investment criteria set are ontarget to be achieved. A further 40 Moss stores are being refitted in 2005. The new Cecil Gee concept store was launched at the Lakeside shopping centre inOctober and has performed well ahead of expectations. Three Cecil Gee stores, inmajor shopping centres, will be refitted to the new concept in 2005. Design work on re-branding Cecil Gee has been completed and a roll out programmehas commenced, which combined with range improvements, will lead to revitalisingthe Cecil Gee fascia and brand. A new Boss store was opened in February 2004 in Covent Garden, London and hasexceeded sales expectations. Working capital (stock, debtors not including the deferred tax asset, lesscreditors) increased by £2.6m in the year, of which stock accounted for £1.8m ofthe increase. Investment in stock was made to improve product availability andthis helped underpin the sales growth achieved. Trade creditors have beenreduced as benefit has been taken from revised supplier terms agreed during theyear. Creditors were £1.5m lower at year-end. No corporation tax was paid during the year as the Company has losses broughtforward which are now being utilised. The exceptional deferred tax credit of£3.3m represents recognition of cumulative prior year tax losses and theexpectation that these will be utilised in future profitable years. EARNINGS PER SHARE AND DIVIDEND Earnings per share (adjusted for the exceptional tax credit) is 4.19 pence pershare compared to 1.11 pence per share last year. Basic earnings per share of 7.89 pence includes 3.70 pence relating torecognition of the deferred tax asset. The Board is recommending a final dividend of 1.00 pence per share which inaddition to the interim dividend of 0.50 pence per share paid in November,represents a 50% increase on last year. This will be paid on 14 June 2005 toshareholders on the register at the close of business on 13 May 2005. OPERATIONAL REVIEW The operational capability of the Company has improved during the year but thereremains considerable unrealised potential and much work still to do. The growth strategy focuses on four objectives: • Understanding customer requirements; • Improving product ranges; • Improving operational efficiency; and • Developing people. The Company is organised to focus on the three fascias: Moss, Cecil Gee andBoss. By presenting and selling relevant product effectively, we believe theCompany can profitably grow sales and we look to the future with confidence. Understanding Customer Requirements The Moss offering (102 stores) is branded merchandise at good prices. Theproduct offering extends beyond strength in suits and dresswear withcontemporary and classic collections of shirts and casualwear both growing interms of sales and display space in existing stores. The objective remains to make Moss a destination store as a menswear retailer.Customers are attracted by strong promotional offers and new customers are beingattracted by stronger window displays and comprehensive ranges that meet theneeds of the local market. Moss Bros Hire focuses on dresswear and the wedding market. The Company has madea significant investment in new hire stock over the last three years to ensurethat its offer to customers represents quality product which meets theiraspiration of dressing up for key social events. Moss Bros Hire sales increasedby 9% in 2004. Cecil Gee (26 stores) casualwear targets a younger, fashion conscious customerwho understands brands. Cecil Gee formalwear offers fashion suits with strongdesign and style influence. Core brands within the Cecil Gee offering are: CecilGee, Hugo Boss, Armani, D&G and Burberry. The new Lakeside concept store presents aspirational product in an excitingstore environment which is attracting new customers. The roll out andre-branding of Cecil Gee offers the opportunity to maximise the full potentialfrom existing stores in high density shopping locations. Hugo Boss (11 Stores) is an established international brand. Boss ranges havebeen segmented into Black, Orange and Green label plus Hugo, to appeal to abroad range of customers. The 14% growth in Boss like for like sales benefited from successful investmentin Regent Street and Bluewater (at the end of 2003) and the conversion of theCovent Garden store in early 2004. Boss womenswear ranges are offered in fourstores. This investment, plus improved range planning and selection together withstronger operational performance underpinned the sales gain achieved. Improving Product Ranges The Moss suit offering has been segmented to match the needs of a broad range oftarget customers. The Ventuno 21 brand has been positioned and styled to appealto a younger fashion conscious suit customer. The 50% increase in Ventuno 21sales reflects growing share of this important segment of the market. Brandssuch as Dehavilland, Pierre Cardin, Baumler, Ted Baker and YSL have contributedto the 12% growth in suit sales achieved in the year. The extension of the Dehavilland brand into casualwear has been successfullylaunched; positioned to provide a contemporary range of fashionable casualwearfor the mid-market. The Blazer casualwear range is being extended to additionalstores to provide more stylish ranges for the upper end of the market. Cecil Gee has re-established itself as an authority in fashion suits with newranges which have contributed to the 20% increase in Cecil Gee suit sales. The re-branding of Cecil Gee casualwear is reflected in the Spring 2005 rangeand initial customer reaction to the new product has been encouraging. Improving Operational Efficiency A key element of re-vitalising the Company is to change our customers'perception of the stores, making them more attractive and appealing to a broaderrange of customer. The Company has invested in improving window displays and visual presentation ofproduct. Stronger images have been used which attract customers to themerchandise. There remains considerable room for improvement in presentational standards andfurther investment is being made to take the Company on to a new level during2005. Customer service in the stores improved with the additional staffing helping toraise standards. Sales effectiveness is a key store priority and store trainingprogrammes are focusing on developing selling skills and product knowledge toimprove awareness of the product offering. Sales during the year outperformed plan and the flexibility built into thesupply chain has been key to supporting the higher sales achieved. This includedsuppliers holding fabric and stocks of finished goods which could be called onat relatively short lead times. The Company is grateful for all the support itssuppliers have given during the year and the Company continues to work with themto source stock from production centres, including the Far East, which offerbest value to customers. Developing People The Senior Management Team in the Company has now worked together for more thantwo years and has developed a good understanding of the customer and tradeacross all three fascia. The culture of the Company is hands on and direct, ambition is encouraged. Storemanagers form a key part of the people development strategy and are incentivisedto take responsibility and achieve good performance. It is encouraging to seethe positive impact that managers and their teams are having in improving storeperformance. OUTLOOK The UK menswear market remains highly competitive but the Company seesconsiderable opportunity to grow its share of the market. Five new Moss stores will be opened in the first half of the new financial yearand a further five new stores are planned for the second half. The Company is operationally stronger and has an experienced management teamwhich understands the business. The New Year has started positively with likefor like sales up 6% in the first 10 weeks at improved margin on last year. The Board is targeting profitable sales growth in the current financial year andis focused on developing the Company further. Print resolution images are available for the media to view and download free ofcharge from http://www.vismedia.co.uk Consolidated Profit and Loss Account For the year ended 29 January 2005 29 January 2005 31 January 2004 Audited Audited £'000 £'000--------------------------------------------------------------------------------Turnover 130,203 124,071Cost of sales (62,244) (61,760)--------------------------------------------------------------------------------Gross profit 67,959 62,311 Administration expenses (5,171) (4,950)Shops selling and marketing costs (57,536) (56,524) Operating costs (62,707) (61,474)--------------------------------------------------------------------------------Operating profit 5,252 837Net interest receivable 263 166--------------------------------------------------------------------------------Profit on ordinary activities before taxation 5,515 1,003 Exceptional tax credit 3,388 -Tax charge (1,679) - ----------------------------Total tax credit 1,709 ---------------------------------------------------------------------------------Profit on ordinary activities after taxation 7,224 1,003Dividend (1,373) (915)--------------------------------------------------------------------------------Retained profit for the financial year 5,851 88-------------------------------------------------------------------------------- --------------------------------------------------------------------------------Earnings per share--------------------------------------------------------------------------------Basic 7.89p 1.11pAdjusted Basic (excluding exceptional tax credit) 4.19p 1.11pDiluted 7.63p 1.09pAdjusted Diluted (excluding exceptional tax credit) 4.05p 1.09p--------------------------------------------------------------------------------Dividend per share 1.50p 1.00p-------------------------------------------------------------------------------- Consolidated Balance Sheet As at 29 January 2005 29 January 2005 31 January 2004 Audited Audited restated (note 8) £'000 £'000--------------------------------------------------------------------------------Fixed assetsTangible assets 24,142 23,500Investments - 48-------------------------------------------------------------------------------- 24,142 23,548Current assets Stocks 21,357 19,571Debtors 6,040 6,694Deferred tax asset 1,709 -Total debtors 7,749 6,694 Cash 16,815 16,313-------------------------------------------------------------------------------- 45,921 42,578Creditors: amounts falling due within one year (18,986) (20,437)--------------------------------------------------------------------------------Net current assets 26,935 22,141--------------------------------------------------------------------------------Total assets less current liabilities 51,077 45,689 Provisions for liabilities and charges (17) (515)--------------------------------------------------------------------------------Net assets 51,060 45,174--------------------------------------------------------------------------------Capital and reserves--------------------------------------------------------------------------------Called up share capital 4,603 4,598Share premium account 8,028 8,014Acquisition reserve 353 353Profit and loss account 38,076 32,209--------------------------------------------------------------------------------Shareholders' funds - equity 51,060 45,174-------------------------------------------------------------------------------- Consolidated Cash Flow Statement For the year ended 29 January 2005 29 January 2005 31 January 2004 Audited Audited £'000 £'000 £'000 £'000--------------------------------------------------------------------------------Net cash inflow from operating activities 6,015 4,599 Return on investment and servicing of finance Net interest 263 166 Taxation Corporation tax paid - (9) Capital expenditure and financial investment Payments to acquire tangible fixed assets (4,891) (2,664) Proceeds relating to the disposal of assets- Tangible fixed assets 453 1,909- Investments 16 18 ----- -----Net capital expenditure and financialinvestment (4,422) (737) Equity dividends paid Dividends paid (1,373) (678)--------------------------------------------------------------------------------Net cash inflow before financing 483 3,341 Financing Issue of ordinary share capital 19 172--------------------------------------------------------------------------------Increase in cash 502 3,513-------------------------------------------------------------------------------- Notes to the Consolidated Cashflow Statement 29 January 31 January 2005 2004 £'000 £'000--------------------------------------------------------------------------------(a)Reconciliation of operating profit to netcash inflow from operating activities Operating profit 5,252 837Loss/(Profit) on disposal of fixed assets 95 (68)Depreciation 4,198 4,124(Increase)/Decrease in stocks (1,786) 2,244Decrease in debtors 204 475Decrease in creditors (1,568) (2,889)Utilisation of provisions (380) (124)--------------------------------------------------------------------------------Net cash inflow from operating activities 6,015 4,599-------------------------------------------------------------------------------- (b)Analysis of changes in cash during the year Balance at beginning of year 16,313 12,800Net cash inflow 502 3,513--------------------------------------------------------------------------------Balance at end of year 16,815 16,313-------------------------------------------------------------------------------- Reconciliation of movements in shareholders' funds Profit for the year 7,224 1,003Dividend (1,373) (915)--------------------------------------------------------------------------------Retained profit for the year 5,851 88 Ordinary shares issued 19 172Contribution to QUEST 16 ---------------------------------------------------------------------------------Net movements in shareholders' funds 5,886 260Opening shareholders' funds - As originally stated 45,174 45,021 - Restated note 8 - (107)--------------------------------------------------------------------------------Closing shareholders' funds 51,060 45,174-------------------------------------------------------------------------------- Notes to the Preliminary ResultsFor the year ended 29 January 2005 1. Accounting policies adopted are consistent with those set out in the accounts for the year ended 31 January 2004 subject to the restatement described below in note 8. 2. Operating costs include £95,000 of losses on assets disposed of during the year (2004: £68,000 profit). 3. During the year, an exceptional tax credit of £3,388,000 was recognised principally in relation to tax losses brought forward, which are now expected to be utilised in future periods, less the estimated current tax charge of £1,679,000 to give a taxation credit of £1,709,000. 4. Basic earnings per share are based on the weighted average of 91,545,602 (2004: 90,585,412) ordinary shares in issue during the period and are calculated by reference to the profit on ordinary activities after taxation of £7,224,000 (2004: £1,003,000). The calculation of weighted average shares excludes the 492,097 (2004: 518,946) shares held by Moss Bros Group Qualifying Employee Share Ownership Trustee Limited (QUEST). Diluted earnings per ordinary share are based upon the weighted average of 94,709,086 (2004: 92,280,105) ordinary shares which takes into account share options outstanding and is calculated by reference to the profit on ordinary activities after taxation which are under option to employees. In order to provide a trend measure of underlying performance, Group profit on ordinary activities after taxation has been adjusted to exclude the exceptional taxation credit. Year ended 29 Year ended 31 January 2005 January 2004 Pence per Pence per £,000 share £'000 share Profit after tax 7,224 7.89 1,003 1.11Exceptional tax credit (3,388) (3.70) - - ------------------------------------------------------Adjusted basic profit 3,836 4.19 1,003 1.11 ------------------------------------------------------ Profit after tax 7,224 7.63 1,003 1.09Exceptional tax credit (3,388) (3.58) - - ------------------------------------------------------Adjusted diluted profit 3,836 4.05 1,003 1.09 ------------------------------------------------------ 5. There were no recognised gains or losses other than the profit for the year. 6. The figures for the year ended 31 January 2004 are extracted from the statutory accounts for the period (adjusted as in note 8) below which has been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 237(2) or 237(3) of the Companies Act 1985. The figures for the year ended 29 January 2005 are extracted from the statutory accounts for the period which has been reported on by the Company's auditors but not delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 237(2) or 237(3) of the Companies Act 1985. 7. The Board has resolved to declare a year-end dividend of 1.00pence per share (2004: 1.00 pence per share). 8. The 2004 balance sheet has been restated to reflect the treatment of the shares of the Company held under trust by Moss Bros Group Employee Share Ownership Trustee Limited (QUEST) as a deduction from shareholders' funds rather than an investment as a result of UITF 38. This has no impact on the profit and loss account. 9. Like for like comparatives remove the impact of net store closures and the additional week's trading in the prior year. This information is provided by RNS The company news service from the London Stock Exchange