RNS Number : 2338V
Stylo PLC
27 May 2008
Release Date: 27 May 2008
FINAL AUDITED RESULTS OF STYLO PLC FOR THE
YEAR ENDED 2 FEBRUARY 2008
SUMMARY
The Board of Stylo plc, the footwear retailer, today announces its final audited results for the year ended 2 February 2008. The
highlights of the results for the year compared with 53 weeks ended 3 February 2007, which have been restated for the adoption of
International Financial Reporting Standards as adopted by the European Union ('IFRS'), are:
* Total revenue of £223.3m (2007: £239.6m), representing a 3.98% decrease on a like for like sales basis.
* Improvement in gross profit percentage (excluding property impairment of £4.8m) to 7.1% (2007: 6.7%) as a result of lower
markdowns and lower product costs due to improved sourcing. Including the property impairment the gross profit percentage is 5.0%.
* Exceptional property impairment charge of £4.8m included within cost of sales arising on freehold, long leasehold and investment
properties as a result of the recoverable amount of certain properties falling below carrying value.
* Loss before taxation and before the exceptional property impairment charge of £7.8m (2007: £7.1m).
* Loss before taxation, and including the property impairment charge, is £12.5m (2007: £7.1m).
* Tax credit of £2.3m (2007: £0.4m) principally comprising deferred tax credits due to the reduction in the corporation tax rate
from 30% to 28% and the property impairment.
* Loss for the year of £10.3m (2007: loss of £6.7m).
* Basic loss per share of 32.96 pence (2007: basic loss per share of 21.45 pence).
* Net assets of £34.7m represent 100.4 pence per share (2007: £45.9m and 132.8 pence per share).
* Net debt at the end of the period of £38.0m (2007: £34.4m).
* As in previous years, no dividend is to be proposed at the forthcoming Annual General Meeting.
Michael A Ziff, Chairman and Chief Executive, commented:
"The poor performance of the Group reflects the current difficult retail trading environment in which we operate which has resulted in a
number of our direct competitors being sold or closed. We have taken positive actions to enable us to focus on our core Barratts and
PriceLess fascias, including the disposal of our loss making division Shellys and increased the depth of experience of our Barratts senior
management team. We are well positioned to take advantage of any improvements in the retail environment."
For Further Information
Stylo plc
Michael Ziff 01274 617 761
Dawnay Day Corporate Finance
David Floyd 020 7509 4570
CHAIRMAN'S STATEMENT AND BUSINESS REVIEW
RESULTS
I previously reported in my Interim Statement, the disappointing results of the Group are a reflection of a number of factors including
an exceptionally difficult and competitive shoe market with low barriers to entry, increasing costs in the form of rents, business rates,
minimum wage and power costs, increases in interest rates, unseasonal weather and generally unfavourable economic conditions for retailers.
This difficult trading environment has seen some significant changes within our competitors during the year with Stead & Simpson, following
administration, and Shoefayre being sold to ShoeZone, Clarks closing their Ravel outlets and Dolcis being placed into Administration. Whilst
I have detailed further within this Statement the opportunities that we have managed to take advantage of, a summary of the key features of
the year is as follows:
* Revenue of £223.3m for the 52 week period compared to £239.6m for the 53 week period last year, with a like for like fall in
sales of 3.98%.
* Improvement in gross profit percentage (excluding the exceptional property impairment) to 7.1% from 6.7% last year as a result of
lower markdowns and lower product costs due to improved sourcing. Including the property impairment, the gross profit percentage is 5.0%.
* Exceptional property impairment charge of £4.8m arising on freehold, long leasehold and investment properties as a result of an
independent market valuation at 31 January 2008.
* Loss before taxation and before the exceptional property impairment charge of £7.8m, compared with a loss last year of £7.1m.
* Loss before taxation, and including the property impairment, of £12.5m (2007: £7.1m).
* Tax credit of £2.3m (2007: £0.4m) principally comprising deferred tax credits due to the reduction in the corporation tax rate
from 30% to 28% and the property impairment.
* Loss after taxation of £10.3m compared with a loss last year of £6.7m.
* No dividend to be proposed at the forthcoming Annual General Meeting.
* Loss per share of 32.96p compared to 21.45p last year.
* Net assets of £34.7m representing net assets per share of 100.4p compared to £45.9m and 132.8p last year.
* Net debt increase of £3.6m to £38.0m compared with £34.4m at the end of the previous year end.
REVIEW OF OPERATIONS
Group
The principal activity of the Stylo Group is that of footwear retailing, operating from 383 stores and 166 concessions across the UK and
Eire. At 2 February 2008 the Group consisted of the following fascias and number of stores: Barratts (168) PriceLess (206) Shellys (4) and
Shutopia (4). The Group also traded from concessions in 156 Dorothy Perkins stores and 10 Bay Trading stores.
As detailed above, the retail performance in the year has been adversely affected by a number of factors, many of which are a reflection
of the economic climate in which we currently operate and to which we can only react.
A key factor in achieving profitability is the success of the Autumn/Winter season that depends heavily on the ability to sell boots in
large quantities. The mild weather, together with ranges that were not as focussed as required by the customer, were major factors in
reducing demand particularly for boots and this, combined with an already competitive retail environment, reduced our profitability
considerably in this important period.
Whilst cost increases in the form of rents, business rates, minimum wage and power bills, together with increased costs associated with
legislative compliance, have continued to impact on margin, we have been successful in reducing the cost of purchased product through
finding alternative and cheaper sources of supply.
Barratts
This division, which serves the middle footwear market, was affected by the difficult economic retail trading conditions and failed to
sell the volume of boots required in the second half of the year. As I highlighted last year, the strategy of disposing of unprofitable
stores has continued, together with a significant investment in the format of the stores and a refocus on the product offering. We have
developed a new, modern store format that is to be trialled in four stores commencing Spring 2008, the first of these stores having opened
in Meadowhall, Sheffield, in mid-May. Assuming the trials are successful, the impact of the rollout to the remainder of the Barratts
portfolio is not expected to have a significant effect on the results of this division until 2009.
During the year we opened seven stores, six unprofitable stores were closed and one was transferred from PriceLess. In addition we
refitted fifteen stores during the course of the year. We have exchanged contracts to open four new Barratts stores this year in Blackpool,
Bristol, Liverpool and White City.
Concessions
At the year end we traded from 156 Dorothy Perkins ('DP') concessions and 10 Bay Trading concessions.
I previously highlighted in my Interim Statement that 37 DP concession stores were closed in August 2007 following notice given by DP
and that we had been given notice to close a further 26 outlets during Spring 2008. Following management changes in our DP team we have
experienced improved trading in DP outlets and DP decided to delay the closure of 20 of the 26 stores until March 2008. We continue to
operate in the remaining six stores on which notice had been given, and to trade in 6 additional stores. We remain confident that our
performance and improved relationship with DP will help us to expand into further outlets.
During the year we entered into a new concession agreement with Bay Trading that initially allowed us to operate in 10 of their stores.
As detailed previously, as a result of Dolcis being placed into Administration we were invited to take on the remaining Bay Trading
concessions, such that at the end of April we operate from 75 Bay Trading stores.
PriceLess
At the end of the year PriceLess traded from 206 stores and during the year we opened six new stores and closed six stores.
During the course of the year the discount shoe retail market continued to be exceptionally competitive with pressure coming not only
from individual shoe shops but also from supermarkets and multiples. The impact of this competitive environment resulted in the sale of both
Stead & Simpson and Shoefayre to ShoeZone, a competitor to PriceLess in the discount shoe retail market. We continue to seek new sources of
supply to ensure we maintain our competitive advantage.
Shellys
At the end of the year Shellys operated from four stores. Despite a number of actions that we have taken, the business has produced
pre-tax losses of £9.0m since we acquired it in 2003. A decision was taken last year to significantly reduce the operations by focusing on
a London base, selling Shellys product through the Barratts division, and concentrating on wholesaling and website sales. Following an
on-going review of this strategy and cognisant of both the amount of time incurred by management and no sign of a return to profitability in
the medium term, the Board decided to dispose of Shellys. Subsequent to the year end we agreed to sell the brand name 'Shellys' and certain
intellectual property associated with the brand for consideration of £1.1m. Since the end of the financial year we have reached agreement
to surrender the leases of three stores, thereby saving significant on-going lease costs, and we will convert the remaining Oxford Street
store to Barratts.
Dolcis
Dolcis was placed into Administration towards the end of January 2008. As a result, our concession agreement with Bay Trading was
extended to include a further 54 of their concession outlets that were previously supplied by Dolcis. In order to fulfil the immediate stock
requirements of these new outlets we reached agreement on 13 February 2008 with the Administrators to purchase the trading stock of Dolcis
together with its brand name. In addition, we negotiated the temporary right to trade from 24 Dolcis leasehold stores, primarily to sell
Dolcis sale stock, and we are now actively negotiating with landlords to operate from seven of these stores for a longer term, when they
will be transferred to, and reported within, the Barratts division. Whilst there is no impact on the current year results being reported of
this transaction, there will be a one-off gain in 2008 arising from the sale of the Dolcis stock. In the long term we expect a very positive
effect on the performance of our Barratts and PriceLess stores that had previously competed against Dolcis in the same town as the competition is reduced. Where the Dolcis store is closed we are
already seeing good increases in sales in our own stores.
BALANCE SHEET
Net assets of £34.7m at 2 February 2008 compare to £45.9m at 3 February 2007. This reduction reflects the loss for the period of
£10.3m, including the property impairment charge of £4.8m, and an actuarial loss on the pension scheme of £1.0m. On transition to IFRS
the Group took the option of bringing in properties at fair value, being deemed cost under IFRS. At 2 February 2008 this resulted in an
uplift to property carrying values at transition of £20.3m with a related deferred tax liability of £9.2m. Following a review of
recoverable amounts (based on fair value less costs to sell), at the year end an impairment charge of £4.8m was recorded on certain
properties. The independent valuation supporting the impairment assessment also identified an increase of £2.3m in the value of other
properties that has not been reflected in the accounts in accordance with our accounting policies.
BUSINESS RISKS
The shoe industry remains highly competitive. We are faced with increasing costs in the form of rents, business rates, minimum wage and
power costs along with the exposure to currency risk. In addition, recent increases in inflation and the general downturn in consumer
spending will continue to put sales under pressure. We are further affected by the problems that unseasonal weather patterns have on what is
a fashion business. Exposure to business risks is minimised by managing weekly performance against budgets for all aspects of the business.
Key performance indicators ('KPIs')
The Board uses a series of KPIs to monitor and manage performance against budgets and strategic objectives. The principal KPIs that are
used to monitor and manage the business include: weekly sales are compared with performance last year and against budget; the worst branches
are analysed to establish the cause for their under performance and appropriate action taken; forward stock cover is reviewed in the light
of changes in weather and or fashion; costs, and their consequential impact on operating loss, are managed against tightly set budgets with
variances to those budgets explained within monthly board reports. All orders placed in foreign currency for the future supply of goods are
economically hedged by forward currency contracts.
Performance against KPIs has been as follows:
* Like for like sales, which are defined as sales in stores that have been open for the equivalent period in each financial year,
experienced a decrease of 3.98% (2007: like for like sales decrease of 1.75%);
* Forward stock cover was 3.3 times (2007: 3.3 times); and
* The income statement, and Financial Review, detail the costs incurred within the Group and their impact on operating loss.
SUPPLIERS
Once again I want to take the opportunity of thanking our suppliers for their continued support in a very difficult environment. From
the discussions I have had with our suppliers who we have earmarked as major partners, and whose businesses will grow with ours, it appears
that the feeling of support is mutual and that our suppliers welcome the fact that we remain a major force in the British shoe market.
FUTURE PROSPECTS
This year has highlighted the impact that the exceptionally difficult shoe market has had on a number of our direct competitors and our
results show that we have also been adversely impacted.
I have previously explained that in 2007 the Group initiated a strategic recovery programme with the three main objectives being:
* to dispose of unprofitable stores;
* to implement a substantial investment programme in our stores, computer systems and website; and
* seek new sources of supply to enable us to achieve higher margins.
We are making good progress in a number of these areas but the general economic environment has more than offset these beneficial
effects. In this environment it is important to concentrate on core activities and the disposal of Shellys has enabled us to do this. The
acquisition of Dolcis was an excellent opportunity for us to strengthen our position on the high street and provided the stock to enable us
to take over all the Bay Trading stores on a faster timescale than originally envisaged.
In Barratts, where the change required has been most intense, we have strengthened our management team with the appointment of David
Lockyer as Managing Director, following David Patrick's resignation. We have also appointed a new retail sales director, a ladies buying
director and a new merchandising director. In addition, we have had significant focus on the product offering with the assistance on a
consultancy basis of Richard Wharton, the founder of Office, a fashionable footwear retailer. We have reviewed our ranges to ensure that we
are offering the products which our customers want and are segmenting that offer through the development of sub-brands and the introduction
of more external brands where appropriate. In addition we are looking at presentation in store to ensure that the customer is better able to
understand, and purchase, the product available. The benefit of these changes will start to come through as we move into the Autumn Winter
season. Availability of best selling lines and reducing the amount of markdowns are essential features of our plans.
We have also devoted significantly more attention to our concessions business, which has historically been very profitable. We have
strengthened our management team and I have resumed direct responsibility for the relationship with Dorothy Perkins. We have already
demonstrated our ability to deliver like for like increases in excess of 10% over the first quarter of the current year for Dorothy Perkins
and I am confident that we will continue to develop this business further. In addition, I look forward to growing the Bay Trading
concessions business together with taking advantage of any other concession opportunities.
In PriceLess we are also concentrating on ensuring availability of best selling lines and increasing the amount of product we sell at
the first price. Presentation standards in store have been developed to ensure that the product is displayed in the best light possible. The
range has been developed to enhance our offer in relation to everyday wear, fashion and colour.
In mid April we launched a much improved transactional website for Barratts and a new site for PriceLess to test the opportunity for
online sales in this segment of the market. We anticipate significant growth over the next few years and trading is currently in line with
expectations.
Against the background of an increasingly uncertain economic environment we are looking at all ways to manage our cost base both in
relation to cost of sales, branch activities and Head Office costs. We aim to ensure that our spending is directed where it can add most
value in the business and to concentrate on reducing our debt.
We are currently in the process of renegotiating our main banking facilities since they are due for renewal in the Autumn. Our bankers
are very supportive and I, and my directors, are confident that we will secure the necessary funding to support our plans for the
development of the business.
Given the above, I remain confident that we are well positioned to take advantage of any improvements in the retail environment.
PEOPLE
I am delighted to welcome David Lockyer to the Board. David joined us in January as a non-executive director, replacing Barry Morris who
retired at the end of January, but since late March he has been acting Managing Director of Barratts whilst David Patrick was on sick leave.
Following David Patrick's resignation for personal reasons, David Locker is appointed as Managing Director of Barratts on a permanent basis
and he brings a wealth of experience to the business having been involved in the British shoe industry for a number of years. He started his
career with C&J Clark Limited and more recently was involved in the turnaround and subsequent sale of footwear retailer Stead & Simpson,
prior to leaving that business in March 2007.
I would like to express my thanks to both David Patrick and Barry Morris for their contribution to the Group, which has been much
appreciated and valued and wish them both well for the future.
I am grateful as ever to my colleagues, both retail and head office staff, for their continued support and commitment. The Dolcis
transaction, that was concluded, executed and integrated into the Group in an extremely short period, illustrated to the Board and I, the
commitment, enthusiasm, motivation, drive and teamwork of our employees.
Michael Ziff
Chairman and Chief Executive
FINANCIAL REVIEW
EFFECT OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
The Group is required to adopt International Financial Reporting Standards, incorporating International Accounting Standards (IAS) and
Interpretations (collectively IFRS), as endorsed by the European Union as its accounting basis for the year ended 2 February 2008. These
financial statements are, therefore, produced for the first time under IFRS. The adoption of IFRS has required the Group to restate its
results for the year ended 3 February 2007 in addition to restating the balance sheet at the date of transition to IFRS, being 28 January
2006.
SUMMARY OF RESULTS
In the 52 week period ended 2 February 2008, the Group recorded a loss before taxation of £12.5m compared to a loss of £7.1m for the
53 weeks ended 3 February 2007. After tax the loss is £10.3m (2007: loss of £6.7m).
INCOME STATEMENT
Revenue
Total revenue (excluding VAT) for the 52 week period was £223.3m compared to £239.6m for the 53 week period ended 3 February 2007. A
decline in like for like sales was experienced in each of our fascias resulting in an overall like for like sales reduction of 3.98%.
Gross profit
Gross profit of £11.1m is stated after charging a property impairment of £4.8m. Excluding the property impairment the gross profit was
£15.8m and the gross profit percentage was 7.1%, 0.4% above last year reflecting lower mark downs and lower product costs due to improved
sourcing, offset by continued increases in rent and business rates, minimum wage and energy costs.
Net operating costs
Net operating costs, comprising distribution costs and administrative expenses, were £1.5m above last year. Distribution costs were
£0.4m (4.3%) below last year's level principally due to improved efficiencies in the central warehouse resulting in lower wage costs.
Administrative expenses of £13.8m are £1.8m above last year due to: £0.5m additional costs associated with operating the head office
including increases in business rates and increased repairs and maintenance spend on the head office building; £0.4m due to investment in
computer systems and the websites; and non-recurring pension related income of £0.8m included last year, comprising the one-off gain of
£0.4m arising on the closure of the pension scheme and a further £0.4m credit arising as a result of A-Day changes following the Finance
Act 2006.
Operating loss
Operating loss was £9.1m (2007: loss of £3.2m) due to the decrease in gross profit of £4.9m, including the property impairment of
£4.8m, and the £1.5m increase in net operating costs detailed above, and an increase of £0.4m in other operating income (relating to the
receipt of lease premiums on surrender of leasehold properties) and profit on disposal of fixed assets. The proceeds from property sales are
held as restricted cash deposits and are held for re-investment in further freehold properties.
Net finance expense
Net finance expense of £3.4m (2007: £3.9m) comprises finance income of £3.4m (2007: £2.6m) and finance expense of £6.8m (2007:
£6.5m). The £0.5m reduction in net finance expense is due to an increase of £0.6m relating to the excess of return on pension scheme
assets less interest on pension liabilities and an increase of £0.1m in net interest payable.
Average bank borrowings of £39.2m, including the £30m First Mortgage Debenture Stock which bears interest at a fixed rate of 11.5%,
are higher than the average borrowings of £35.7m last year principally as a result of the trading performance.
Loss before and after taxation
The resulting loss before taxation, including the property of impairment of £4.8m, was £12.5m (2007: loss of £7.1m). The increase in
the loss is due to the increase in operating loss of £6.0m and a reduction in the net finance expense of £0.5m.
The taxation credit for the year was £2.3m (2007: credit of £0.4m), principally comprising a deferred tax credit of arising from a
reduction in future corporation tax rates from 30% to 28% of £1.0m and a deferred tax credit of £1.3m arising from the property
impairment.
There is no dividend charge in the year (2007: £nil) and the resultant loss for the year of £10.3m has been deducted from reserves
(2007: £6.7m loss deducted from reserves).
BALANCE SHEET
Non-current assets
Non-current assets of £84.6m (2007: £89.6m) comprise property, plant and equipment and investment properties. Capital expenditure of
£6.2m was incurred in the year (2007: £4.7m), reflecting the on-going investment in the retail portfolio, the depreciation of £6.7m was
at a similar level to last year and the property impairment was £4.8m (2007: £nil).
The increase in investment properties of £6.7m reflects the reclassification of properties that were previously classified as property,
plant and equipment as they are no longer utilised by the Group within the retail operations but are sub-let to third parties.
Property Valuation
As a result of the transition to IFRS, the Group took the option to measure properties at 28 January 2006, being the date of transition,
at their fair value and treat this as deemed cost. As a result, the property valuation of £27.1m was incorporated within the accounts at
that date and is depreciated on an annual basis. A recent valuation at 31 January 2008, obtained to review recoverable amounts (based on
fair value less costs to sell), valued the Group's properties at £2.5m lower than their initial carrying value. For accounting purposes, we
are required to reflect an impairment charge of £4.8m against specific properties that had fallen in value and the £2.3m increase in value
of specific properties is not reflected in the balance sheet.
Inventories
Inventories of £21.0m are 5.1% below the 2007 level of £22.2m, reflecting the net reduction of 31 branches, predominantly concession
outlets. Average stock holdings during the year were £29.4m, below the previous year average of £31.4m. Stock levels have continued to be
tightly controlled during the year to keep working capital to low, but manageable, levels in the business. Stock turn was consistent with
that achieved last year of 3.3 times.
The movements in working capital generated a cash inflow of £4.8m (2007: outflow of £5.5m), as a result of a £1.1m decrease in
stocks, a decrease in trade and other receivables of £0.9m and an increase in trade and other payables of £4.5m.
Borrowings and net assets
The net decrease in cash and cash equivalents for the year was £4.8m (2007: decrease of £5.5m).
At 2 February 2008 net debt was £38.0m (2007: £34.4m) comprising the £30m First Mortgage Debenture Stock, the £1.0m Term Loan,
restricted cash deposits of £5.6m (2007: £5.3m), net cash borrowings of £9.2m and finance lease liabilities of £3.4m. Gearing at 2
February 2008 was 100% (2007: 67%) and average borrowings during the year were £39.2m (2007: £35.7m). If the Debenture Stock had been
redeemed at the year end, a redemption premium of approximately £8.7m would have been payable to the debenture holder.
The net assets of the Group at 2 February 2008 were £34.7m (2007: £45.9m) representing net assets per share of 100.4p (2007: 132.8p).
Deferred taxation and other financial liabilities
Deferred taxation of £9.2m (2007: £11.5m) comprises the Group's liability on the property valuation gains. This liability, which is
not expected to crystallise within 12 months of the balance sheet date, will only crystallise when the properties to which the liability
relates are disposed.
Other financial liabilities of £3.4m (2007: £3.5m) comprise the liability on leases meeting the criteria to be treated as finance
leases. No additional finance leases have been entered into during the year.
Retained earnings
The movement from the retained earnings reserve at 3 February 2007 of £45.0m to £33.8m at 3 February 2007 reflects: the loss for the
year of £10.3m and the IAS 19 actuarial loss of £1.0m.
PENSION FUND
As previously reported, the Stylo Group Pension Scheme ('the scheme') was closed to future accrual with effect from 5 April 2006. At 2
February 2008 there is an IAS 19 pension scheme surplus of £6.7m (2007: surplus of £4.9m) principally arising as a result of an increase
in bond yields and a recovery in the global equity markets at that date. Since August 2007 the scheme has changed its investment strategy to
match anticipated future pension payments such that 80% of the scheme's assets are now invested in gilts and bonds. In accordance with
accounting standards, the pension scheme surplus is not recognised on the balance sheet as the scheme is now closed and the company is
unable to derive economic benefit either through reduced contributions or refunds.
FINANCIAL INSTRUMENTS, RISKS AND TREASURY POLICIES
The Group's principal financial instruments comprise bank loans and overdrafts, debenture loans, cash and short-term deposits and
finance leases. The main purpose of these financial instruments is to raise finance for the Group's operations. The Group has various other
financial instruments such as trade and other receivables and trade and other payables, which arise directly from its operations.
The Group also enters into derivative transactions (principally forward foreign currency contracts), the purpose of which is to manage
the currency risks arising from the Group's operations.
It is, and has been throughout the period under review, the Group's policy that no trading in financial instruments shall be
undertaken.
The main risks arising from the Group's financial instruments are cash flow interest rate risk, foreign currency risk, credit risk and
liquidity risk. The Board of Directors reviews and agrees policies for managing each of these risks.
Richard Bott
Group Director of Finance
FINAL AUDITED RESULTS OF STYLO PLC FOR THE
YEAR ENDED 2 FEBRUARY 2008
CONSOLIDATED INCOME STATEMENT
2008 2007
(52 weeks) (53 weeks)
£'000 £'000
Revenue 223,279 239,565
Cost of sales
- Other cost of sales (207,438) (223,531)
- Property impairment (4,750) -
(212,188) (223,531)
Gross profit 11,091 16,034
Distribution costs (7,911) (8,267)
Administrative expenses (13,758) (11,929)
Other operating income 1,438 749
Profit on disposal of fixed assets - 240
Operating loss (9,140) (3,173)
Finance income 3,367 2,573
Finance expense (6,775) (6,505)
Loss before taxation (12,548) (7,105)
Taxation 2,286 378
Loss for the year attributable to equity holders of (10,262) (6,727)
the parent
Basic loss per share (pence) (32.96) (21.45)
Diluted loss per share (pence) (32.96) (21.45)
CONSOLIDATED BALANCE SHEET
As at As at
2 February 3 February
2008 2007
£000 £000
Non-current assets
Property, plant & equipment 71,621 83,298
Investment properties 13,023 6,298
84,644 89,596
Current assets
Inventories 21,047 22,184
Trade and other receivables 14,056 13,203
Cash and cash equivalents 5,933 5,545
Assets held for sale 594 795
41,630 41,727
Total assets 126,274 131,323
Current liabilities
Short term borrowings 10,578 5,467
Trade and other payables 38,348 33,822
Current tax payable 40 65
Other financial liabilities 16 10
48,982 39,364
Non-current liabilities
Long term borrowings 30,000 31,000
Deferred taxation 9,209 11,516
Other financial liabilities 3,366 3,502
42,575 46,018
Total liabilities 91,557 85,382
Net assets 34,717 45,941
Capital and reserves attributable to
shareholders
of the parent
Called up share capital 692 692
Share premium account 41 41
Capital redemption reserve 174 174
Retained earnings 33,810 45,034
Total equity 34,717 45,941
CONSOLIDATED CASH FLOW STATEMENT
2008 2007
(52 weeks) (53 weeks)
£000 £000
Cash flows from operating activities
Loss for the year (12,548) (7,105)
Adjustments for:
- Depreciation 6,638 6,687
- Impairment of property 4,750 -
- Net finance costs 3,408 3,932
- Difference between pension charge and cash (134) (1,038)
contributions
Changes in working capital:
- Inventories 1,137 2,702
- Trade and other receivables (853) (1,097)
- Trade and other payables 4,532 (7,068)
Interest paid (4,499) (4,190)
Taxation paid (46) (116)
Net cash generated / (absorbed) from operating 2,385 (7,293)
activities
Cash flows from investing activities
Purchases of property, plant & equipment (6,241) (4,673)
Proceeds from sale of property, plant & - 4,670
equipment
Interest received 459 200
Net cash flows from investing activities (5,782) 197
Cash flows from financing activities
Proceeds from borrowings - 3,200
Repayments of borrowings (1,100) (1,100)
Finance lease cash flows (326) (293)
Other financing cash flows - (259)
Net cash flows from financing activities (1,426) 1,548
Net decrease in cash and cash equivalents (4,823) (5,548)
Cash and cash equivalents at beginning of year 1,178 6,726
Cash and cash equivalents at end of year (3,645) 1,178
STATEMENT OF RECOGNISED INCOME AND EXPENSE
2008 2007
(52 weeks) (53 weeks)
£000 £000
Actuarial (loss) / gain on pension scheme (962) 3,248
Net (charge) / income recognised directly in equity (962) 3,248
Loss for the year (10,262) (6,727)
Total recognised losses attributable to equity (11,224) (3,479)
holders of the parent for the year
NOTES
1 Exceptional items
Following conditions in the commercial property market, the directors performed a review for impairment of property, plant and
equipment, including investment properties. An assessment of recoverable amount was made incorporating an external valuation of properties.
Certain properties were carried in excess of recoverable amount and accordingly a charge for impairment of properties of £4,750,000 has
been made and included within cost of sales for the 52 weeks ended 2 February 2008. The property impairment of £4,750,000 comprises an
impairment against the carrying value of freehold and long leasehold properties of £4,169,000 and an impairment against the carrying value
of investment properties of £581,000. The tax effect of this impairment charge is a deferred tax credit of £1,330,000.
Included within administrative expenses for the 53 weeks ended 3 February 2007 is an exceptional pensions credit of £790,000 comprising
a £370,000 A-Day credit arising as a result of changes in legislation that allows pension scheme members to increase the cash taken on
retirement, and a £420,000 pension scheme curtailment credit arising on the closure of the Stylo Group Pension Scheme to future accrual.
There was no tax effect of this exceptional item in the year.
2 Other operating income
Other operating income comprises the profit on receipt of lease premiums, net of costs, arising on the early surrender of leasehold
properties during the period.
3 Loss per share
The calculation of basic loss per share is calculated by reference to the weighted average number of ordinary shares in issue during the
year of 31,136,000 (3 February 2007 31,355,000). The calculation of diluted loss per share is calculated by reference to 31,177,000 weighted
average number of shares (3 February 2007 31,420,000).
The basic and diluted loss per share are the same at 2 February 2008 and 3 February 2007 as a loss has been incurred and, therefore, all
potentially diluted shares are deemed to be non-dilutive.
4 Analysis of net debt
As at As at
2 February 2008 3 February 2007
£000 £000
Cash at bank and in hand 361 213
Bank overdrafts (9,578) (4,367)
Restricted cash 5,572 5,332
(3,645) 1,178
Bank loans
- Debt due within one year (1,000) (1,100)
- Debt due after one year (30,000) (31,000)
Finance leases
- Due within one year (16) (10)
- Due after one year (3,366) (3,502)
Net debt (38,027) (34,434)
5 Reconciliation of net cash flow movement to movement in net debt
2008 2007
(52 weeks) (53 weeks)
£000 £000
Decrease in cash (4,823) (5,548)
Decrease / (increase) in bank loans 1,100 (2,100)
Decrease in finance lease liabilities 130 91
Change in net debt from cash flows (3,593) (7,557)
Net debt at beginning of year (34,434) (26,877)
Net debt at end of year (38,027) (34,434)
6 Reconciliation of movement in equity
As at As at
2 February 2008 3 February 2007
£000 £000
At beginning of year 45,941 49,679
Loss for the year (10,262) (6,727)
Actuarial (loss) / gain on pension (962) 3,248
scheme
Consideration paid for own shares by EBT - (306)
Consideration received for EBT shares - 47
At end of year 34,717 45,941
7 Assets held for sale
Assets held for sale amounting to £594,000 (2007: 795,000) comprise certain freehold and long leasehold properties that are being
actively marketed and which the directors consider will be sold within one year of the balance sheet date. No depreciation charge arises on
such properties from the date that the property is first marketed. Assets previously held for sale that no longer meet the criteria as
recognition of being held for sale are transferred to property, plant and equipment or investment properties as appropriate.
8 Dividends
The directors do not propose a dividend for the year ended 2 February 2008 (2007: no final dividend proposed).
9 Basis of preparation of the preliminary announcement
In accordance with the AIM Rules for Companies, the consolidated financial statements for the year ended 2 February 2008 have been
prepared in accordance with International Financial Reporting Standards adopted for use in the EU ("IFRS").
The financial information set out above does not constitute the company's statutory accounts for the periods ended 2 February 2008 or 3
February 2007. Statutory accounts for 2007 have been delivered to the Registrar of Companies. The statutory accounts for 2008 will be
delivered to the Registrar of Companies following the company's Annual General Meeting. The auditors have reported on the 2008 and 2007
accounts: their reports were unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis
without qualifying their reports and did not contain a statement under section 237(2) or (3) of the Companies Act 1985.
As this is the first full financial year that consolidated financial statements have been prepared in accordance with IFRS, the
comparatives for the 53 weeks ended 3 February 2007 have been restated to be reported in accordance with IFRS. An explanation of how the
transition to IFRS has affected the reported financial position and financial performance of the group, together with a summary of
significant accounting policies, was provided to shareholders in the Restatement of Financial Information under International Financial
Reporting Standards issued on 19 September 2007 ("the Restatement Report"), a copy of which can be found on the group's website at
www.stylo.co.uk. The Restatement Report included reconciliations of equity and profit or loss for the comparative period under UK Generally
Accepted Accounting Practice ("UK GAAP") to those reported under IFRS.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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