TIDMBAE
RNS Number : 0349G
Beale PLC
27 February 2015
BEALE PLC
("BEALES" OR THE "GROUP")
RESULTS FOR THE YEAR ENDED 1 NOVEMBER 2014
26th February 2015
Beale PLC, the specialist department store operator, announces
Preliminary Results for the 52 weeks ended
1 November 2014.
l Gross sales (inclusive of concession sales and VAT) reduced
3.6% to GBP116.2m (2013: GBP120.6m) affected by;
o Two store closures during the year, Keighley Home (losses) and
Harrogate (site development)
o Planned exit from loss making TV/Audio product category during
2012/13
o Change of promotional stance during the first quarter
2012/13
l Like for like (excluding closures) gross sales were only 1.1%
lower;
o Quarter on quarter management led like for like sales
improvement;
Q1:-4.4%, Q2:-0.6%, Q3: +0.2%, Q4:+1.9%
o Positive trend has continued into the current year
l Gross margin improved from 52.1% to 53.3%, a two year rise of
270 basis points as a result of;
o Improved intake margin through better sourcing &
buying
o Less use of promotional markdowns
o Better stock control and resultant lower stock loss
o Improved brands and mix of own bought and concession products
and services
l Loss before interest, tax, depreciation, amortisation and
exceptional items reduced substantially 44% to GBP0.6m (2013:
GBP1.1m);
o Gross profit gains secured GBP0.6m
o Inflationary administrative expenses totally mitigated by
improved cost controls
l Operating Loss before exceptional items reduced substantially
to GBP2.0m (2013: GBP3.3m)
l Pre-tax loss after exceptional items GBP4.6m (2013:
GBP4.1m);
o Includes GBP1.4m increase in non-cash charge for embedded
derivative revaluation
o Includes GBP0.4m increase in non-cash finance charge on
preference shares
-- During the 14 days of Christmas and New Year from 21 December
2014, gross sales increased 6.1%; for the first 16 weeks of the
current financial year like for like gross sales were 1.7% ahead of
the previous year
-- The balance sheet retains GBP4.8m of net assets (2013: GBP6.6m)
-- Post period under review, bid of GBP1.2m for the business
announced and subsequently declared unconditional, additional
financing secures the required growth capital for investment in the
store estate and helps to confirm the long term viability of
Beales.
Michael Hitchcock CEO commented:
"Much was achieved during 2014 towards our strategic objectives
in the turnaround of the Beales business and since the period end,
trading has continued to improve further following actions taken to
revitalise the business. A quarter on quarter improvement in like
for like sales through 2014, an improvement in gross margin, a
material reduction in the operating losses and continued
improvement in the operational management of the business, are all
indicators that the business is responding positively to the
actions taken. The business is stronger as a result, with options
to move forward now with a far greater degree of confidence having
secured a bid for the business which comes with up to GBP2 million
of capital growth funding."
Further Information
Beale PLC Tel: 01202 552 022
Michael Hitchcock, Chief Executive
Shore Capital Tel: 0207 408 4090
Anita Ghanekar
Edward Mansfield
Buchanan Tel: 0207 466 5000
Charles Ryland
Sophie McNulty
Gabriella Clinkard
Group Strategic Report
Beales ambition is to be the local high street department store
at the heart of the community, securing repeat business by offering
the best customer experience which, aligned to absolute fiscal
responsibility, is the foundation of all successful businesses.
What we do and where we do it?
About the Group
Founded in 1881, today Beales operate a Group of 29 distinctive
department stores, predominantly in secondary and tertiary market
towns, across the country, from Hexham in the north, Bournemouth in
the south, Lowestoft in the east and Southport in the West.
Its revenue is derived through selling product it has bought for
resale, both food and non-food, and taking a commission on product
and services sold by concessions selling their own product and
services, both food and non-food.
The objective of Beales is to provide a quality mix of both
branded and own branded product and services to the local
community, giving an exemplary and traditional local customer
experience, selling at a higher price to that which it was bought
and operating the business at the most cost effective level
possible. Beales offers branded, functional and aspirational
merchandise and services for men, women, children and the home,
tailored to the individual local requirements of our customers, the
discerning ABC1 consumer, who is seeking quality, style and value
for money.
The Group is proud of its individuality and unique heritage,
which is drawn on to provide exceptional levels of personal
customer experience. This experiential journey starts online and
via social media, continuing to visually through the windows and
the store entrances and into the store environments, which are all
being enhanced and updated constantly to meet the customers'
expectations.
The Group continues to develop its internet sales, with the
introduction of many new ranges, some of which may not be available
in all stores. Visit www.beales.co.uk to review our wide range of
direct delivered merchandise. Beales offers a loyalty card scheme,
Love Rewards, which it launched in May 2012 and now has close to
440,000 members.
Beales can be summarised as a business which is 'asset rich',
i.e. it owns GBP19.0m of freehold and long leasehold property
assets and GBP14.6m of stock, yet 'cash poor', i.e. it has GBP16.5m
of net debt and has produced net trading cash outflows for a number
of years. Since the current CEO, Michael Hitchcock, joined the
business in May 2012 as interim CFO, considerable progress has been
made to generate and secure value for Beales Shareholders during a
period of uncertainty for secondary and tertiary high street
retailers and at a time when material risks have faced the
business. In particular, initiatives were put in place to refinance
the business and to rebuild and refocus the brand with material
consequential improvements to gross margin and operating
performance.
This was initially achieved by closing the Company backed store
card, closing surplus operating assets, exiting loss making stores
where lease terms allowed, removing inefficient and non-productive
operational costs and introducing more efficient retail processes
into the business. This assisted with the immediately required
first refinance of the business's debt, with its then current
lender HSBC and allowed the second timely and more appropriate
refinance of the businesses debt, with its current lender
Burdale.
Following the appointment to CEO in February 2013, Michael
Hitchcock along with the Trading Director Tony Richards, sought to
operate Beales more akin to its heritage of a trusted, local and
community based secondary and tertiary high street department
store. The business moved entirely away from constant promotional
discounting which was causing dissention both internally with
staff, brands and concessions and externally with customers. The
business also exited loss making categories such as TV/Audio.
Through the continuation of exiting loss making stores where
lease terms allowed, removing inefficient and non-productive
operational costs and introducing more efficient retail processes
into the business, and alongside regaining both brands and
concessions belief in the Beales brand name, the operational
performance of Beales has improved markedly over the last two
years.
Group Strategic Report continued
Beales intends to exploit its position in the predominantly
secondary and tertiary high street locations where it trades and
actively works with the local community to give customers a reason
to continue to come back onto the high street. All recent evidence
suggests a move towards localised and frequent shopping trips.
Collaborating with local councils and local Business Improvement
Districts will ensure that Beales plays its own part in the
rejuvenation of the UK's High Streets. Occupying one of the biggest
sites, if not the biggest site in these high streets, provides the
opportunity for brands new, re-emerging or traditional, to enter,
return or remain on the high street at minimal risk.
Strategy
The ongoing strategy for Beales turnaround is to continue with
the following initiatives,
1. Exit operating units, concession brands and categories that
are not commercial or economically viable
2. Introduce new products and categories to fulfil the objective
of being the local high street department store of choice
3. Continue the extensive cultural change within the business to
ensure the customer interests are always the top priority for every
employee and deliver the best customer experience every time
4. Continue the reorganisation of internal structures to make
processes more efficient and cost effective, maximising synergies
wherever possible
5. Secure the retention of funding to ensure Beales remains a
going concern, and utilise the injection of growth capital secured
through the declared unconditional bid for Beales, to invest in the
store estate
and to consolidate the following initiatives,
1. Position Beales at the heart of the community it trades in,
by turning over excess space for community use
2. Leverage the considerable talent and resource it has at the
centre, to offer management services to other independent
department stores around the UK
3. Utilise the material freehold and leasehold assets that
Beales owns to facilitate the generation of cash to reinvest back
into their stores
4. Build on the more recent investment in Beales online offer to
replicate the in-store experience
5. Build on the click and collect service it currently provides
Progress Indicators
Progress will be measured by the financial results of Beales,
namely loss reduction and then profit making and cash
self-sufficiency. As the business turns itself around - execution
to the highest standard of the initiatives listed above will
continue to move the business from loss making to profit making,
towards cash self-sufficiency and to one which affords growth both
organically and through acquisition. Everyday standard retail KPIs
such as sales per square foot, average transaction value, gross
margin, cost percentages and many more, are constantly referred to
as guidance to ensure the critical objectives set out above are
achieved.
Restated
52 weeks 52 weeks 53 weeks 52 weeks
to 1 November to 2 November to 3 November to 29 October
2014 2013 2012 2011
GBP000 GBP000 GBP000 GBP000
------------------------------------------ --------------- --------------- --------------- ---------------
Number of Trading Units 29 31 33 33
------------------------------------------ --------------- --------------- --------------- ---------------
Operating loss before exceptional
items (1,925) (2,530) (2,936) (3,832)
------------------------------------------ --------------- --------------- --------------- ---------------
Loss before interest, tax, depreciation
and amortisation and before exceptional
items (623) (1,118) (1,353) (2,013)
------------------------------------------ --------------- --------------- --------------- ---------------
Net (decrease)/increase in cash
and cash equivalents in the period (1,085) (696) (289) 272
------------------------------------------ --------------- --------------- --------------- ---------------
Net Debt (16,461) (14,846) (15,346) (11,009)
------------------------------------------ --------------- --------------- --------------- ---------------
Group Strategic Report continued
Review
Business Context
The period since the end of the last financial year (2 November
2013) has seen continued improvement in the turnaround of the
Beales business. A quarter on quarter improvement in like for like
sales, an improvement in gross margin, a material reduction in the
operating losses and continued improvement in the operational
management of the business. The business is stronger as a result,
with options to now move forward with a far greater degree of
confidence having subsequently secured a bid for the business which
comes with a minimum of GBP1 million and up to GBP2 million of
capital growth funding (see further progress below).
Quarter on quarter like for like sales improvement:
During the year ended 1 November 2014, the quarter on quarter
improvement in like for like sales shows the operational turnaround
is gaining momentum.
Quarter -4.4% very poor start to the Autumn/Winter season in 2013
1 due to warm weather
-------- ------ -----------------------------------------------------------
Quarter -0.6% strong Easter trading and seasonal weather for start
2 of Spring/Summer 2014 season
-------- ------ -----------------------------------------------------------
Quarter +0.2% strong late summer trading as consumer confidence
3 rose
-------- ------ -----------------------------------------------------------
Quarter +1.9% the fourth quarter improvement would have been materially
4 higher, had it not been for a now recognised unseasonably
warm autumn
-------- ------ -----------------------------------------------------------
Gross margin improvement:
The year ended 1 November 2014 has seen a further increase of
120bp in gross margin, following the 150bp increase in gross margin
for the year ended 2 November 2013. Over the space of two years
gross margin has improved nearly 3 percentage points. This has been
achieved through better own bought product sourcing and buying,
delivering a higher intake margin, and less use of promotional
markdown and the continued reduction in stock loss, delivering a
higher retained margin.
Material reduction in operating losses:
Having secured the improvement in both like for like sales and
gross margin, the business has strenuously worked to mitigate away
any inflationary and contractual cost increases that it has been
faced with. Further diligent control over staff rotas and the
improvement in back office processing has enabled material
reductions in certain cost areas to leave administrative costs
level with last year and GBP4.8m lower than two years ago.
Gains in operational management:
There was far more stability in the trading stance of Beales
across the year ended 1 November 2014. It was the first complete
trading calendar with none of the previous management's favoured
'Mega' promotions, and was rewarded with a 1.8% improvement in
gross profit against a 3.6% reduction in gross sales, compared to
the prior year. There were fewer concession partner administrations
across the same period compared to the prior year, one versus five,
which minimised the disruption to trading. The concessions 'mats'
across the entire business were 100% full very early into the
trading period, with new concessions such as Woods of Dorchester,
Bobbi Brown, Bon Marche, Dorothy Perkins, and Gagliardi all opening
across varying stores.
Business interruption and retail unpredictability:
There were a number of interruptions to trade across the
financial year. Two store closures, Keighley Home store and
Harrogate; a warm autumn at the start of the year held back sales
at full margin; floods in spring across much of the country not
only held back sales at full margin but also prevented sales in
some circumstances. The abnormal and unhelpful weather patterns
across the year were negatively correlated with the normally
expected seasonal product launches.
Stronger business:
The people changes made in the prior year, the ongoing material
cultural shift in the business, the focus on creating 'the best
customer experience', playing to our position at the heart of the
community and being local, have all created a game change in the
performance and turnaround of Beales. We have continued to invest
in the Web platform to maximize the opportunity for growth through
this channel. The business currently has a list of both new and
existing high street retail brands keen to join Beales in the
future when the opportunity presents itself. The foundation has
been laid and the launch pad created for the further turnaround
following the subsequently secured bid for the business which comes
with a minimum of GBP1 million and up to GBP2 million of capital
growth funding (see further progress below).
Group Strategic Report continued
Clear vision:
The vision for Beales is very clear with (1) the need to secure
an injection of growth capital into the business to create a buffer
against any short term retail shocks (achieved subsequent to the
year end; see further progress below), (2) to exit up to five loss
making stores that drain in total cGBP1.5m of cash each year, and
(3) invest in strategic store refits to retain and attract key
cosmetic and fashion brands, which in turn attract further quality
brands into the Beales stores.
Further progress - Offer for Beales
Since the year end, the Board has made further progress to
confirm the long term viability of Beales. On 19 January 2015 the
Boards of Beales and English Rose Enterprises Limited (English
Rose), a company controlled by Andrew Perloff, announced that they
had reached agreement on the terms of a recommended cash offer by
English Rose for the entire issued and to be issued ordinary share
capital of Beales (the "Offer").
Under the terms of the Offer, which was subject to the
conditions and further terms set out in the announcement and the
full terms and conditions set out in the Offer Document issued on
29 January 2015, Beales Shareholders who accepted the Offer were
entitled to receive for each Beales Share 6p in cash. The Offer
valued the entire issued ordinary share capital of Beales at
approximately GBP1.23 million.
The Board of Beales carefully considered the terms of the Offer.
Under the Code, the Beales Directors were required to obtain
independent advice on the Offer and to make the substance of such
advice and its own views known to Beales Shareholders.
The Offer Price represented a discount of approximately 48 per
cent. to the Closing Price of 11.5p per Beales Share on 16 January
2015, being the last business day prior to the date of the
announcement. The Board of Beales believed that the Offer Price was
disappointing and that in different circumstances it could have
achieved a price that would value the business and assets of Beales
more fully.
However, the complex capital structure inherited by the current
Beales Board imposed a number of restrictions on Beales' ability to
fund its activities, including the requirement for the Concert
Party (a group of companies and individuals controlled by Andrew
Perloff) to agree to any of the alternative funding options the
Beales Board had identified. As a result, Beales may have been
unable to generate sufficient cash flows to meet its longer term
financial commitments in the future. Accordingly, the Beales Board
believed that Beales Shareholders should carefully consider the
future risks facing the Group and may wish to accept the Offer,
depending on their own individual circumstances and appetite for
risk.
As was seen in early Autumn/Winter 2014 when the UK retail
sector suffered a period of weak trading given the unseasonably
warm weather, Beales trading remains volatile and difficult to
predict. Importantly, the Board of Beales, giving consideration to
its statutory and regulatory obligations to consider the medium to
long term prospects of the Group, believed that the business
required additional capital to maintain and accelerate the pace of
the turnaround of the business, so as to ensure that it is robust
in the event of further negative market dynamics and/or future
balance sheet commitments which could otherwise have a
significantly detrimental impact on the Group.
In this context, the Board of Beales appointed
PriceWaterhouseCoopers LLP (PwC) in October 2014 to review the
Group's financial position and to consider options to raise
additional capital. As part of this exercise, Beales and PwC held
discussions with the two largest shareholders of Beales and with
the Group's lender, Burdale Financial Ltd, now referred to as Wells
Fargo Capital Finance. A number of options were considered, but the
Beales Board believed that none could realistically deliver greater
value to Beales Shareholders without the agreement of the Concert
Party. As an alternative, English Rose put forward the Offer.
With the Offer being declared wholly unconditional on the 20
February 2015, the Concert Party has committed to support the
business with additional growth capital which is expected to
improve the future security of the business, its employees and the
Beales pension schemes. English Rose has also extended the offer
period to 12 March 2015 in case other shareholders now wish to
accept.
Group Strategic Report continued
The Offer has been declared unconditional in all respects and on
no event of default having arisen (save where such event of default
has been waived by Wells Fargo Capital Finance) under the Facility,
Portnard (a company controlled by Andrew Perloff) has agreed that
it will procure the lodging of a GBP2.0 million deposit with Wells
Fargo Capital Finance. On receipt of such deposit, under the terms
of the Collateralised Term Loan Facility, Wells Fargo Capital
Finance will make GBP1.0 million available for immediate use by
Beales (subject to the Facility continuing to be available for
drawdown at that time and in addition to any current ability to
draw down on the Facility), with a further amount up to a maximum
of GBP1.0 million potentially being made available to Beales by
Wells Fargo Capital Finance (through the Collateralised Term Loan
Facility subject to the re-registration of Beales as a private
company and to further conditions which may be agreed and which may
include recommendations arising from English Rose's detailed
operational and strategic review with Beales' management. English
Rose has indicated its intention to work closely with management to
assess the options available to Beales to protect, promote and
develop its business.
Market Overview
The retail sector saw an improving second half of the year as
people started to feel more confident about their jobs and their
financial security. The improvement has been limited as the pace of
real wage growth was held back by inflation running at higher rates
that wage increases. The independent department store sector is
still under increasing pressure with more and more stores and
chains coming up for sale and a number of solus units falling into
administration as they have been unable to facilitate the access to
higher levels of working capital funding.
Customers have continued to shop cleverly and seek out products
which come with a promotion and/or a discount and prioritizing
value; the first area customers go to in store is still the 'sale'
rail. As customer confidence has improved, notwithstanding the
'perverse' British weather, they have also started to move into the
full price product at the start of each fashion season.
The vagaries of the English weather have also served to make it
very difficult, for fashion in particular, to form any sort of
normal sales pattern; warm and wet when fashion dictates it should
be cold and dry and cold and wet when fashion dictates it should be
warm and dry.
Online is becoming an ever more established and greater share of
the retail market with huge sums of money being invested to offer
an Omni-channel route to market.
Principal Risks and Uncertainties
The principal risks and uncertainties have not changed from last
year and the Board continues to apply mitigating actions. All
retailers continue to face a very challenging and competitive
trading environment. Sound risk management is an essential
discipline for running the business efficiently.
Beales, as with all retailers, is highly operationally cost
geared, i.e. there are a majority of costs that need to be spent
before any sales are made, which means relatively small movements
in sales and gross margin can materially affect the profitability
of the business, both positively and negatively. To that end and
given the absolute levels of losses before interest, tax,
depreciation and amortisation generated by Beales, and covenants
set based on the trading cash flow of the business, there will
always be uncertainty.
The nature of risk is that no list can be totally comprehensive,
though the Directors believe the principal risks and uncertainties
faced and the mitigating actions taken to manage these risks and
uncertainties are as follows:
The single biggest risk is our customers continued uncertainty
resulting from the long period of austerity that the UK has been
through, the forthcoming General Election in the UK and instability
in the Eurozone. Beales may offer the best customer experience with
the best looking shops and the best product, but if the customers
do not have increasing free disposable cash, and an increasing
propensity to spend, the trading results will be negatively
affected. A slowing return of consumer confidence and any resultant
need for increased discounting and promotions to stimulate demand,
adversely impacts on revenues and margins. In mitigation we:
-- Continually review the markets and performances of the trading environment;
-- Balance our exposure by managing product mix, supplier mix and profit margins;
-- Regularly monitor strategic key performance indicators; and
-- Seek to enhance our sourcing margins and improve commercial terms.
Group Strategic Report continued
Weather plays an important factor in the short term trading of
any retailer, particularly those which have a core fashion offer
and are dependent upon a 'normal' spring/summer and autumn/winter
weather sequence; the mitigation to this, to an extent, is to adopt
a more trans-seasonal product buying strategy.
Concession product or business failure: the last financial year
has shown a much reduced level of disruption to trading through
concession failure and poor product or line failure, however as the
prior year showed, the level of disruption can be much higher.
These events are synonymous with the prevailing economic state of
the nation. The business mitigates the likelihood of these events
through careful and considered choice of concession partners.
In uncertain economic conditions the level of resources may be
inappropriate to deliver the expected business benefits. In
mitigation we:
-- Regularly review the Group corporate plan against expectation;
-- Monitor our cost controls against structured financial plans and act accordingly; and
-- Invest in appropriate systems to cost effectively monitor performance and add value.
Cash resources; Beales, being asset rich and cash poor with a
material external debt needs to generate cash through sales. In the
event that sales do not meet targets, to ensure that the terms of
the external debt are met, other mitigating measures will need to
be adopted to generate cash. In mitigation we:
-- Maintain a strong relationship with major stakeholders;
-- Ensure consistent and disciplined monitoring of working capital; and
-- Review the allocation of Group resource and capital investment on a daily basis.
The Group may lose expertise with resignation of key Directors
and senior management who are key to delivering success. In
mitigation we:
-- Seek to motivate all colleagues to fulfil Group targets;
-- Have an ethos of candid and honest communication;
-- Relevant review of remuneration appropriate to all areas of the business; and
-- Seek to develop our people to take on greater responsibility.
The Group has continued to work within its lending facilities.
However, the Group is subject to a number of risks and
uncertainties, the principal ones being set out above, which it
continually reviews in determining that the Group continues to
operate as a going concern. Please refer to the Going Concern
statement note 1
Other Key Considerations
Employees
People and their characters are at the centre of every retail
business and Beales places the highest attention on securing and
retaining the best talent open to them. Beales recognises that to
ensure repeat business you need the right character of people
working in stores. Choice of character in the first instance is a
critical recruitment factor for the business.
Beales is continuing its strategy of ensuring that its employees
look forward to coming into work. Culturally the business has moved
forward massively and this positive momentum will be continued.
There are basic and expected requirements from all our
employees, all geared at giving the customers the best customer
experience. In turn we strive to give back to our employees' career
opportunities, training and development, and financial incentives
and rewards wherever and whenever possible.
The analysis of gender of our employees at year end is set out
below:
Male Female
----- -------
Directors 2 0
Senior Managers 48 79
Employees 244 1,054
----- -------
Total 294 1,133
----- -------
Group Strategic Report continued
Environment
Beales has an ageing property estate which in turn makes energy
efficiency challenging; however Beales takes every opportunity to
limit the energy it uses, actively monitoring energy use each hour
across each building to ensure responsible and efficient use. All
locations undertake to recycle materials of every sort wherever
possible and to dispose of waste in the proficient and prescribed
manner.
Human rights
Beales does not have a specific human rights policy at present
but it does have policies representative of human rights
principles.
Beales does not have a specific sourcing policy at present but
it makes every effort to ensure that where it buys direct, or where
it buys through a third party, the rights of all workers are
respected.
Beales is an equal opportunities employer and actively seeks to
protect the rights of all individuals to be free from
discrimination or harassment. It operates a very strict and
diligent approach to human rights ensuring each individual has the
right and appropriate opportunities afforded to each human
being.
Social and community issues
Beales places significant emphasis on the local area it serves.
All stores have a chosen local charity which they support in a
number of ways and seek to allow local groups to use the store as
fund raising venues or provide resources to support local events in
the community.
Beales is a huge supporter of the initiative to put the high
street at the heart of local communities. This forms one strand of
the strategy outlined above and adds to the initiatives already
being undertaken by Beales, the 'local high street department
store' of choice.
Signed on behalf of the Board
Michael Hitchcock
Chief Executive
Chairman's Statement
Overview
As we progressed through this financial year, it became
increasingly apparent that the UK economy was improving. This was
reflected by a cautious increase in consumer confidence in their
own disposable income and consequently their spending power. We
reported in our September trading statement that the 'improving
macro-economic environment and a more positive consumer, aligned
with a more seasonal weather pattern in the second half of the
year, had improved trading markedly.' This was evidenced by our
increasing quarter on quarter like for like percentage sales
increases in 2013/14. However, in common with many other UK retail
businesses, the arrival of autumn seasonal merchandise in our
stores, coincided with a prolonged period of unseasonably warm
weather, which negatively impacted sales, through to the end of the
financial year at the beginning of November and indeed this trend
continued until the end of that month.
Operationally, Beales has returned to its core brand heritage as
a trusted, local and community based department store chain,
located in secondary and tertiary locations. We offer our customers
access to great value, brands and quality products through a
balanced mix of own bought products and concession brands, through
which we have once again, enhanced margin this year. We worked hard
to address the concession partner challenges we suffered last year
with failure/underperformance and I am pleased to report that all
concession space in our stores is now filled. Our decision to move
away from constant promotional discounting has paid dividends with
many high street brands seeking to work with us as future
concession partners. Our loyalty programme continues to go from
strength to strength and has now attracted c. 440,000 members since
its launch in May 2012. It is appropriate that I give great praise
to our people, throughout our business for their dedication and
hard work, to deliver great customer service which differentiates
us from our competitors, builds Beales brand loyalty, generating
future footfall and sales.
Recent Events
As you are all aware, Beales is a business in turnaround and
once again, we have continued to concentrate and focus all our
efforts and available resources, to the very best of our ability,
on what we can control. Whilst further positive progress has been
made in 2013/14 towards the Group's major objective of returning
our business to profitability, significant challenges remain which
cannot be ignored and must be addressed by the Board on behalf of
shareholders. Specifically, these challenges relate to the Board's
statutory and regulatory obligations to consider the medium to
long-term prospects of Beales, together with the future financial
obligations that result from legacy balance sheet issues arising
from the ARCS transaction in 2011.
The Board concluded that in order to maintain and accelerate the
pace of the progress made in the business turnaround to date,
further capital was required to invest in the Beales business, not
only in store environments, but also to insulate our business from
the volatility of the marketplace and vagaries of our UK climate.
We engaged PriceWaterhouseCoopers LLP to investigate all options to
raise additional capital, but none could be implemented without the
agreement and consent of the major shareholder, Andrew Perloff (and
connected parties). As an alternative, subsequent discussions
resulted in a recommended cash offer agreed between the Boards of
Beale Plc and English Rose, a vehicle used by Andrew Perloff (and
his connected parties) for this transaction. This offer was
announced to all shareholders in January 2015 for their
consideration.
Your Board believes that the offer was disappointing and that in
different circumstances it would have achieved a price that would
value the business and assets of Beales more fully. However, the
capital structure of Beales inherited by the current Board is
complex and restrictive. The forecast impact of this capital
structure on the ability to fund our activities going forward,
coupled with the requirement of the major shareholder to agree and
consent to any of the alternative funding options your Board had
identified, led us to conclude that we may be unable to generate
sufficient cash flows to meet our longer term financial
commitments.
On 20 February 2015, English Rose exercised their right to waive
an acceptance condition of not less than 75% in nominal value of
Beale Plc shares, having achieved 63%, and declared the bid
unconditional.
Chairman's Statement continued
Results
The Group loss before tax for the year (52 weeks ended 1
November 2014) was GBP4.6m after exceptional charges of GBP0.1m
(further details of which are detailed in the Financial Review).
This was GBP0.5m worse than the previous year's (52 weeks ended 2
November 2013) GBP4.1m loss after exceptional charges of GBP0.8m.
This reduction was due to the revaluation of the embedded
derivative and additional non-cash finance expenses relating to the
preference shares, offset by improved margin and continuing cost
savings achieved through our ethos of fiscal responsibility. Sales
were negatively impacted by Board decisions to exit a loss-making
store in Keighley Home and a landlord decision to close Harrogate
for redevelopment. Sales were also affected by the decisions made
by the Board last year to exit loss-making TV and audio categories
and stop 'Mega' promotions which chased sales at the detriment of
margin, whilst devaluing our Beales brand proposition and confusing
our customers, suppliers and concessionaires.
Gross sales (including VAT and Concession Sales) for the 52
weeks ended 1 November 2014 were GBP116.2m (52 weeks ended 2
November 2012 GBP120.5m). Gross profit for the year was GBP34.0m
(2013: GBP33.4m) and was achieved at a much improved margin of
53.3% (2012: 52.1%). As mentioned earlier, Sales were negatively
impacted by store closures in 2013/14 and Board decisions in
2012/13 to exit TV/Audio categories and stop 'Mega' promotions.
Excluding the preference shares, net debt of GBP9.2m at 1
November 2014 is GBP0.8m higher than the previous year (2013:
GBP8.4m) due mainly to the operating loss on ongoing trading.
A more detailed review of Group performance can be found in the
Chief Executive's Statement. The financial results are discussed in
greater detail in the Financial Review.
Trading Update
Beales had a much better start to the new financial year than in
2013/14, despite the warm autumn weather which impacted demand for
seasonal merchandise and the growing impact of 'Black Friday' (28
November) which some commentators believe has changed the shape of
Christmas trading and the emphasis on January sales. Like for like
sales (including concessions and VAT) were 1.5% higher for the nine
weeks to 3 January 2015 compared to the same period last year on an
improved margin. Total sales including concessions and VAT were
1.1% lower in the same period to 3 January 2015 due to the store
closures mentioned earlier.
Christmas trading was good in a very competitive and challenging
environment. During the 14 days of Christmas, like for like sales
were 6.1% higher than the same period last year.
Overall, for the first 16 weeks of the current financial year
compared to the same period last year, like for like sales were
1.7% higher, than the same period last year, and with continuing
progress in raising the retained margin on products and
services.
Board Succession
On 26 June 2014, John Chillcott retired as a non executive
director from the Board. John had acted as a non independent non
executive director looking after ARCS interests since the
completion of the ARCS transaction in 2011. The directors are
grateful to John for his considerable contribution.
On 22 July 2014, following consultation with Panther Securities
Plc and Simon Peters, the Board decided that there was no longer a
necessity for a Panther representative on the Board of Beale Plc.
Consequently Simon Peters was removed as a non-independent non
executive director representing the interests of Panther Securities
Plc/Maland Pension Funds and Andrew Perloff. The Board wish to
thank Simon for his contribution.
Chairman's Statement continued
Staff
I would like to place on record, on behalf of the Board and
shareholders, our enormous thanks and gratitude to all Beales staff
throughout our Group, wherever they work - whether in stores or
head office. I would like to thank each and every one of them for
their shared desire to play their part in the turnaround and for
their support, loyalty and commitment. We recognise the massive
contribution you continue to play in the turnaround of this
business and could not do this without you.
It is also appropriate that I express on behalf of the Board and
shareholders of Beale Plc, our sincere appreciation to our most
valued concession partners, suppliers and to AIS, a key buying
group. I thank you for your contribution and value our partnership
and the business looks forward to continuing to work with you in
the future.
Banking Facilities and Going Concern
We are very appreciative of the financial support and
partnership extended to us by Burdale with whom we began a
three-year loan facility in February 2013 subsequently extended to
1 April 2016. We continue to have an excellent working relationship
with them.
As you would expect, the Group continues to manage its cash very
closely and has worked within its facility during the 2013/14
financial year. I have already mentioned that Beales operates in a
very challenging and competitive trading environment and there are
a number of risks and uncertainties facing the Group that are
likely to impact its future development, performance and position.
The Board continually assesses the Group's performance and manages
those risks and uncertainties by careful consideration of the
appropriate resources required by the Group and makes decisions
accordingly.
The Board believes that the Group should be able to operate
within its borrowing facilities for at least the next 12 months and
the Board has therefore continued to adopt the going concern basis
in preparing the annual report and accounts, as detailed in the
Financial Review.
Outlook
As we look forward to the rest of 2014/15, we hope that consumer
confidence and spending will continue to increase as the economy
follows its predicted course of recovery. However, as I said last
year, we recognise that with continued recovery comes the prospect
of increased interest rates and also the possibility of higher
taxes, both of which will impact on disposable incomes. On top of
that, we have a General Election in May 2015. As I said earlier, we
at Beales will continue to concentrate and focus all of our effort
and available resources on what we can control to the very best of
our ability.
Finally, I would like to pay particular thanks to Michael
Hitchcock for his exemplary leadership and, together with Tony
Richards, for their continuing superlative efforts and achievements
over the last financial year.
Will Tuffy
Independent Non-Executive Chairman
Financial Review
Overview of the Year
The business has continued to reset the operational cost base
throughout the year and is now operating close to its optimum
leveraged level for a retailer of its size. At the head office in
particular the cost as a percentage of sales are the lowest they
have been for many years. Initiatives to drive the sales line will
now ensure the maximum productivity from this fixed cost base.
Further initiatives have been taken to maximise the availability of
cash resources and minimise the level of debt in the business. The
business has sought to work with all key stakeholders to ensure as
much cash as possible remains in the business and put to best
use.
The loss after taxation increased from GBP4.0m to GBP4.2m.
GBP1.4m of the loss is the reduction in the value of the embedded
derivative asset and GBP0.8m of the loss is linked to the movement
in the carrying value of the preference shares, both of which are
non-cash items. The balance sheet net asset value of GBP4.8m (2013:
GBP6.6m) contains freehold assets of GBP12.5m (2013: GBP12.4m),
long leasehold assets of GBP6.5m (2013: GBP5.5m) and a stock
balance of GBP14.6m (2013: GBP15.2m).
Since 1 February 2013 the business' loan facility has been with
Burdale. Having the Group loan facility with Burdale has allowed
the Board to allocate greater focus on the running of the
department store business, rather than continually facing the
possibility of covenant breaches. Burdale have been a highly
supportive lender to Beales throughout their ongoing
association.
Results
Gross sales, which include VAT and concessional sales, decreased
to GBP116.2m (2013: GBP120.5m). During the year, the Group ceased
trading in two stores, Harrogate and Keighley Home. Excluding the
two stores which closed, gross sales were 1.1% down on the previous
year. Revenue from continuing operations fell to GBP63.8m from
GBP64.1m. During the year 22 of the Group's restaurants/cafes
within the department stores became own services rather than being
concessionees. As a consequence concession sales now account for
45.6% (2013: 48.8%) of gross sales.
Gross margin rose from 52.1% to 53.3%. This is the result of
improved intake margin, lower promotional markdowns and discounts,
reduced stock losses and provisions.
Total administration expenses fell from GBP36.7m to GBP36.0m.
The business strenuously worked to mitigate away any inflationary
and contractual cost increases that the business has been faced
with, diligent control over staff rotas and the improvement in back
office processing.
During the year there was a net exceptional charge of GBP0.1m
(2013: net exceptional charge GBP0.8m); this related to refinancing
costs.
The operating loss has decreased to GBP2.0m (2013: GBP3.3m).
The net cost of financing the business rose from GBP0.8m to
GBP2.6m, 86% of the current year's cost comes from the finance
charge on the preference shares and the reduction in the carrying
value of the embedded derivative which are non-cash
adjustments.
The Group has property operating leases which include agreed
annual rent charges across the lease term. IAS 17 Leases states
that operating lease expenses should be recognised straight line
over the lease.
Prior to the current financial year the Group had not complied
with this requirement. Consequently, as at the year ended 1
November 2014 the Board corrected this position by processing an
adjustment to prior year opening reserves and losses. The
adjustment to the Group reserves as at 3 November 2012 was GBP0.7m.
The Group have also restated the loss for the period to 2 November
2013 from continuing operations attributable to equity members from
GBP3.9m to GBP4.0m.
Taxation
Deferred tax is provided in the accounts at 20%. There is a
deferred tax credit of GBP0.4m (2013: credit GBP0.1m).
Financial Review continued
Earnings
The loss per share and diluted loss per share was 20.4p (2013:
loss per share and diluted loss per share 19.5p).
Loss before interest, depreciation, amortisation, exceptional
items and tax reduced to GBP0.6m (2013: GBP1.1m loss).
No dividends were paid in the year (2013: nil per share). The
Board considers that a significant trading improvement will be
necessary before dividends are paid.
Pensions
The Group's defined benefit pension plans are closed to future
accrual and all ongoing pension benefits to employees are provided
on defined contribution basis.
From 1 September 2013, the Group's defined contribution pensions
are provided via a Group Personal Pension Scheme with Scottish
Widows and the People's Pension as part of Auto-enrolment.
At the year end, there was a pension surplus under IAS19 in the
Group's closed defined benefit pension plans of GBP2.2m (2013:
GBP0.8m); details of this are shown in note 34 of the financial
statements. The total actuarial gain for the period was GBP1.4m
(2013: GBP1.5m).
During the year the Group continued to meet the contribution
schedules agreed with the trustees for both schemes, contributing
GBP0.2m (2013: GBP0.5m). Agreement was reached with the trustees of
the Beales scheme regarding the triennial valuation based upon the
year end of October 2013. For the first three months of the
financial year, a monthly contribution of GBP41,667 was paid into
the scheme. Following discussions between the Group and the pension
trustees no contribution has been paid to the scheme between 1
February 2014 and 1 November 2014. The Denners scheme October 2011
triennial valuation has been finalised by the actuary and no
employer contributions are required. The calculations for the
Denners scheme triennial valuation for the year ended 1 November
2014 are ongoing.
Group systems
The Group systems are being continually improved to allow
expedient and more effective decision making; retail is a 24/7
sector which requires information on a real time basis to be able
to react to customer demands, market trends and environmental
changes. The business is specifically investing in the tills used
in over half the stores to align them on to one system. The
improved alignment will continue to drive further efficiency cost
savings.
Financial Review continued
Treasury and banking
Treasury activities are governed by procedures and policies
approved by the Board. The Group's policy is to take a conservative
stance on treasury matters and no speculative positions are taken
in financial instruments. The treasury function manages the Group's
financial resources in the most appropriate and cost-effective
manner.
Following the impairment of Beale PLC's investment in J.E. Beale
PLC, there are no longer sufficient distributable reserves to
redeem the preference shares early and given that the Company would
be unable to borrow at the required rate to take advantage of the
repayment option in terms of the underlying preference shares,
management have valued the embedded derivative at nil.
The valuation of the preference shares is based on an amortised
cost model. Following the impairment of the investment in J.E.
Beale PLC in the current year, Beale PLC has insufficient
distributable reserves to make redemptions or pay dividends as they
fall due. At the present time, the Group is unable to assess with
any reasonable certainty when Beale PLC will have sufficient
distributable reserves available to make any redemption of or pay
dividends on the preference shares. Accordingly, under IAS 39.9,
the Group has used the contractual cashflows over the full
contractual term of the financial instrument in arising at the
carrying value of the preference shares.
The Burdale loan has been extended by 2 months to 1 April 2016.
The terms of the facility are for up to a maximum GBP12.0m senior
secured credit facilities. The actual value that the Group can
borrow is determined by the Group stock and property value and
following the declaration of the unconditional bid, there is a
further GBP2.0m cash collateral, GBP1.0m available immediately,
which will increase the borrowing capability. The maximum the Group
could borrow from Burdale in the year ended 1 November 2014 was
GBP9.4m The bank facilities include a financial covenant which
requires the Group to procure that the trading cash flow in respect
of each review period as set out in the facility agreement shall
not be less than the amounts agreed between the Group and the
lender, calculated on the basis of the financial projection.
In addition there is a condition that for a period of 14 days
between 1 December and 31 January each year drawings do not exceed
GBP2.5m except that for the periods 1 December 2013 to 31 January
2014 and 1 December 2014 to 31 January 2015, in which case the
limit shall be GBP3.0 million.
The facilities are secured by a first debenture over the Group
assets (excluding the Kendal freehold to the extent of the Beales
Pension Trustee charge). The Group is dependent on bank support to
remain as a going concern. Furthermore, given the size of the
Group's borrowing its loss will be affected by variations in
interest rates.
Going Concern
Please see the full going concern note in note 1.
Balance sheet and cash flow
The balance sheet retains a net asset value of GBP4.8m (2013:
GBP6.6m).
Inventories have been reduced by GBP0.7m in part as a result of
the closure of Harrogate and Keighley Home stores and due to
improved monitoring and management of stock balances. The
revaluation of freehold and the long leasehold increased fixed
assets by GBP1.3m. The restricted cash balance at the end of last
year was released during the year. Other movements include the
revaluation of the carrying value of the preference shares GBP0.8m
and a restatement to lease provisions GBP0.8m in relation to
accounting for lease incentives which has been corrected as a prior
year adjustment. Total net borrowing (excluding the preference
shares and restricted cash) is GBP9.2m (2013: 8.4m), including both
current and non-current elements.
During the year the net decrease in cash and cash equivalents
was GBP1.1m (2013: GBP0.7m) which reflects the financing and
repayment of the net debt GBP0.6m and minimal capital expenditure
of GBP0.5m. The prior period was impacted by the cash inflow
arising on the closure of the store card. The business has been
very adept managing its working capital which has generated a net
inflow of cash of GBP0.8m.
Financial Review continued
Capital and Financial Risk Management
The Group manages its capital to ensure that it can continue as
a going concern. The capital structure of the Group consists of
borrowings, preference shares, cash, cash equivalents, share
capital, share premium account, revaluation reserve, ESOP reserve
and retained earnings.
The Group's Treasury function provides services to the business,
co-ordinates access to domestic financial markets, monitors and
manages the financial risks relating to the operations of the
Group. These risks include market risk (including currency risk,
fair value interest rate risk and price risk), credit risk,
liquidity risk and cash flow interest rate risk.
The Group does not enter into or trade financial instruments,
including derivative financial instruments, for speculative
purposes. The Corporate Treasury function reports to the Board
regularly. No dividend accrues on the preference shares until five
years from the date of issue. Thereafter a preferential dividend of
8% per annum will be payable on each of the preference shares for 4
years, increasing to 9% thereafter. The preference shares can be
repaid at any time at no penalty. In the event that the Company
should fail to redeem preference shares or pay a dividend an
additional dividend becomes payable at 4% 12 months after the due
date.
The valuation of the embedded derivative has decreased to nil as
the Directors have reassessed the inputs to the valuation
model.
The Group's activities do not expose it to changes in foreign
exchange rates as nearly all imports are purchased in sterling.
However, the Group is exposed to interest rate risk because
entities in the Group borrow funds from third parties, the interest
rates on which are linked to LIBOR.
Consolidated Income Statement
For the 52 weeks ended 1 November 2014
Notes Restated
Note 4
52 weeks 52 weeks
to to
1 November 2 November
2014 2013
GBP000 GBP000
------------------------------------------------ ------- ------------ ------------
Gross sales* 2 116,215 120,526
------------------------------------------------ ------- ------------ ------------
Revenue - continuing operations 2 63,766 64,098
Cost of sales (29,751) (30,698)
------------------------------------------------ ------- ------------ ------------
Gross profit 34,015 33,400
------------------------------------------------ ------- ------------ ------------
Administrative expenses (35,940) (35,930)
Exceptional administrative expenses 5 (69) (800)
------------------------------------------------ ------- ------------ ------------
Total administrative expenses (36,009) (36,730)
------------------------------------------------ ------- ------------ ------------
Operating loss before exceptional items (1,925) (2,530)
------------------------------------------------ ------- ------------ ------------
Operating Loss - continuing operations (1,994) (3,330)
------------------------------------------------ ------- ------------ ------------
Finance expense (1,210) (789)
Revaluation of embedded derivative (1,407) -
Finance income - 1
------------------------------------------------ ------- ------------ ------------
Loss on ordinary activities before taxation (4,611) (4,118)
Taxation credit 420 112
------------------------------------------------ ------- ------------ ------------
Loss for the period from continuing operations
attributable to equity members of the parent (4,191) (4,006)
------------------------------------------------ ------- ------------ ------------
Basic loss per share 3 (20.4p) (19.5p)
Diluted loss per share 3 (20.4p) (19.5p)
------------------------------------------------ ------- ------------ ------------
* Gross sales include revenue from concession sales and VAT.
Consolidated Balance Sheet
As at 1 November 2014
Restated
Note 4 Restated
1 November 2 November Note 4
3 November
2014 2013 2012
GBP000 GBP000 GBP000
---------------------------------- ---- ----------- ------------ ------------
Non-current assets
Goodwill 892 892 892
Property, plant and equipment 24,309 23,852 25,204
Financial assets 40 - 16
Derivative asset - 1,407 1,416
Retirement Benefit asset 2,234 789 -
27,475 26,940 27,528
Current assets
Inventories 14,595 15,254 15,816
Trade and other receivables due
within one year 2,395 2,640 5,191
Trade and other receivables due
after one year - 9 104
Cash and cash equivalents 189 194 454
Restricted Cash - 1,000 -
---------------------------------- ---- ----------- ------------ ------------
17,179 19,097 21,565
Total assets 44,654 46,037 49,093
---------------------------------------- ----------- ------------ ------------
Current liabilities
Trade and other payables (13,208) (13,788) (14,449)
Provisions (118) (100) (271)
Lease provisions (390) (106) (106)
Preference shares - - (307)
Borrowings and overdraft (1,896) (1,816) (255)
Tax liabilities (35) (35) (35)
(15,647) (15,845) (15,423)
Net current assets 1,532 3,252 6,142
Non-current liabilities
Preference shares (7,257) (6,426) (6,213)
Borrowings (7,497) (7,798) (9,025)
Retirement benefit obligations - - (1,171)
Lease provisions (6,031) (5,814) (4,366)
Deferred tax (2,455) (2,610) (3,066)
Obligations under finance leases (975) (977) (978)
---------------------------------------- ----------- ------------ ------------
(24,215) (23,625) (24,819)
Total liabilities (39,862) (39,470) (40,242)
---------------------------------------- ----------- ------------ ------------
Net assets 4,792 6,567 8,851
---------------------------------------- ----------- ------------ ------------
Equity
Share capital 1,026 1,026 1,026
Share premium account 440 440 440
Revaluation reserve 10,157 9,226 9,082
Capital redemption reserve 570 570 54
ESOP reserve (10) (8) (15)
Retained earnings (7,391) (4,687) (1,736)
---------------------------------------- ----------- ------------ ------------
Total equity 4,792 6,567 8,851
---------------------------------------- ----------- ------------ ------------
Consolidated Statement of Comprehensive Loss
Restated
52 weeks 52 weeks
to to
1 November 2 November
2014 2013
GBP000 GBP000
------------------------------------------ ------------ ------------
Actuarial gain on pension scheme 1,397 1,465
Revaluation reserve 1,303 -
Tax on revaluation reserve (258) 258
Tax on items taken directly to equity (26) (1)
Net income recognised directly in equity 2,416 1,722
Loss for the period (4,191) (4,006)
------------------------------------------- ------------ ------------
Total comprehensive loss for the period (1,775) (2,284)
------------------------------------------- ------------ ------------
Consolidated Statement of Changes in Equity
Restated
52 weeks 52 weeks
to to
1 November 2 November
2014 2013
GBP000 GBP000
------------------------------------------ ------------ ------------
Opening equity 6,567 9,533
Prior year adjustment - (682)
------------------------------------------- ------------ ------------
Revised opening equity - 8,851
Total comprehensive loss for the period (1,775) (2,284)
Total movements in equity for the period (1,775) (2,284)
Closing equity 4,792 6,567
------------------------------------------- ------------ ------------
Capital
Share Share premium Revaluation redemption ESOP Retained
capital account reserve reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------- ---------- ---------------- -------------- ------------ ---------- ----------- ---------
As previously
reported 1,026 440 9,082 54 (15) (1,054) 9,533
Impact to restatement
(see Note 4) - - - - - (682) (682)
Restated
3 November 2012 1,026 440 9,082 54 (15) (1,736) 8,851
---------------------- ---------- ---------------- -------------- ------------ ---------- ----------- ---------
Loss for year - - - - - (4,006) (4,006)
Redemption of
preference shares - - - 516 - (516) -
Deferred tax
change on
revaluation
reserve - - 258 - - - 258
Tax on comprehensive
income - - - - - (1) (1)
Transfer - - (114) - - 114 -
Gain - - - - 7 (7) -
Net actuarial
gain - - - - - 1,465 1,465
Restated
2 November 2013 1,026 440 9,226 570 (8) (4,687) 6,567
---------------------- ---------- ---------------- -------------- ------------ ---------- ----------- ---------
Loss for year - - - - - (4,191) (4,191)
Revaluation - - 1,303 - - - 1,303
Deferred tax
change on
revaluation
reserve - - (258) - - - (258)
Tax on comprehensive
income - - - - - (26) (26)
Transfer - - (114) - - 114 -
Gain - - - - (2) 2 -
Net actuarial
loss - - - - - 1,397 1,397
---------------------- ---------- ---------------- -------------- ------------ ---------- ----------- ---------
1 November 2014 1,026 440 10,157 570 (10) (7,391) 4,792
---------------------- ---------- ---------------- -------------- ------------ ---------- ----------- ---------
Consolidated Cash Flow Statement
For the 52 weeks ended 1 November 2014
Restated
52 weeks 52 weeks
to to
1 November 2 November
2014 2013
Notes GBP000 GBP000
------------------------------------------------- ------------ ------------ ------------
Cash flows generated from operating activities
before interest and tax 6 94 1,927
Interest paid (380) (368)
Interest received - 1
Net cash flow (used in)/generated from
operating activities (286) 1,560
------------------------------------------------- ------------ ------------ ------------
Cash flows from investing activities
Purchase of property, plant and equipment (456) (675)
Purchase of investment (40) -
Proceeds from maturing investment - 37
Net cash used in investing activities (496) (638)
------------------------------------------------- ------------ ------------ ------------
Cash flows from financing activities
Preference shares redeemed - (515)
Net expense from obligations under finance
leases (2) (1)
Decrease in bank loans (51) (977)
Decrease in Panther/ARCS Loan (250) (125)
------------------------------------------------- ------------ ------------ ------------
Net cash used in financing activities (303) (1,618)
------------------------------------------------- ------------ ------------ ------------
Net decrease in cash and cash equivalents
in the period (1,085) (696)
------------------------------------------------- ------------ ------------ ------------
Cash and cash equivalents (including overdrafts
and restricted cash) at beginning of period (247) 449
------------------------------------------------- ------------ ------------ ------------
Cash and cash equivalents (including overdrafts
and restricted cash) at end of period (1,332) (247)
------------------------------------------------- ------------ ------------ ------------
1 Accounting policies
General information
The financial information set out above does not constitute the
Group's statutory accounts for the periods ended 1 November 2014
or 2 November 2013. The financial information for 2014 and 2013
is derived from the statutory accounts for those years. The statutory
accounts for 2013 have been delivered to the Registrar of Companies.
The statutory accounts for 2014 will be delivered to the Registrar
of Companies following the Group's annual general meeting. The
Group auditors, Deloitte LLP, have reported on the 2014 and 2013
accounts, their reports were unqualified, did not draw attention
to any matters by way of emphasis without qualifying their report
and did not contain statements under s498 (2) or (3) Companies
Act 2006. The preliminary announcement is prepared on the basis
of the accounting policies as set out in the previous annual financial
statements. The information included in this preliminary announcement
is based on the Group's financial statements which are prepared
in accordance with International Financial Reporting Standards
(IFRS), as adopted for use in the EU. The Group expects to publish
full financial statements that comply with IFRS on 18 March 2015.
Going concern
On 1 February 2013 the Group entered into a new three year loan
facility with Burdale Financial Limited. The terms of that loan
facility are for up to a maximum of GBP12.0m Senior Secured Credit
Facilities. The facilities are secured by a debenture over most
of the present and future assets and undertakings of the Group.
The new bank facilities include one financial covenant which requires
the Group to procure that trading cash flow in respect of each
review period as set out in the facility agreement shall not be
less than the amounts agreed between the Group and the lender
based on financial projections. At the moment the trading cash
flow covenants are only stated to the end of October 2015. The
bank facility states that, for covenant levels beyond October
2015, the Lender, acting reasonably, will determine new trading
cash flow covenant levels for the following financial year or
remainder of the lending facility based on the Annual Revised
Forecasts and consistent with the methodology applied by the Lender
in determining the financial covenant levels set out in the agreement.
In addition there is a condition that for a period of 14 days
between 1 December and 31 January each year drawings do not exceed
GBP2.5m other than the periods 1 December 2013 to 31 January 2014
and 1 December 2014 to 31 January 2015 where the limit shall be
GBP3.0m. Subsequent to the year ended 1 November 2014, executive
management have secured an extension to the loan facility, on
all existing terms, to 1 April 2016.
All retailers face a very challenging and competitive trading
environment and there are a number of risks and uncertainties
facing the Group which are likely to impact its future development,
performance and position. We are continually assessing our performance
and managing these risks and uncertainties in considering the
appropriate resources required for the Group. The financial position
of the Group, its cash flows, liquidity position and borrowing
facilities are described in the Financial Review and the financial
statements include the Group's objectives, policies and processes
for managing its capital; its financial risk management objectives;
details of its financial instruments and hedging activities; and
its exposures to credit risk, interest rate risk, market risk
and liquidity risk.
The Directors have prepared forecast information for the 2014/15
year and a three year corporate plan. Based on these forecasts,
forward covenant tests to October 2015, after applying financial
sensitivities based on reasonably possible alternative trading
scenarios and mitigating actions, show that the covenant is not
forecast to be breached in the period to October 2015 and that
the business can work within its available facilities. Since the
year end, the Board has made further progress to create additional
headroom to borrowing facilities in case of negative trading movements.
This has been secured following the declared unconditional bid
for the business and the capital injection that comes with that
bid (see the Group Strategic Report for full details). The forecast
and corporate plan are based on market data and past experience
and the Directors have formed a judgement that at the time of
approving these financial statements, based on those forecasts
and projections, there is a reasonable expectation that the Group
has adequate resources to continue in operational existence for
the foreseeable future. On this basis the directors continue to
adopt the going concern basis of accounting in preparing the financial
statements.
The Director's statement that the business is a going concern
has been prepared in accordance with "Guidance on going concern
and liquidity risk: guidance for Directors UK companies 2009".
2 Revenue
The entire Group's revenue is derived from retail sales made in
the UK. Revenue includes the commission earned on sales made by
concession outlets.
52 weeks to 52 weeks to
1 November 2 November
2014 2013
GBP000 GBP000
------------------------------------------ ---------------- ----------------
Gross sales 116,215 120,526
VAT (19,178) (19,934)
------------------------------------------------ ---------------- ----------------
Gross sales (exc. VAT) 97,037 100,592
Agency sales less commission (33,271) (36,494)
------------------------------------------------ ---------------- ----------------
Revenue 63,766 64,098
------------------------------------------------ ---------------- ----------------
Analysis of gross sales (excluding VAT) and revenue:
52 weeks to 52 weeks to
1 November 2 November
2014 2013
------------------------------- ---------------------- ------------------------
Gross Sales Revenue Gross sales Revenue
GBP000 GBP000 GBP000 GBP000
------------------------------- ------------ -------- ------------ ----------
Own bought sales 52,755 52,755 51,407 51,407
Concession sales 44,260 10,990 49,083 12,589
Interest on customer accounts 21 21 102 102
------------------------------- ------------ -------- ------------ ----------
97,036 63,766 100,592 64,098
------------------------------- ------------ -------- ------------ ----------
3
Loss per share
Restated
52 weeks
52 weeks to to
1 November 2 November
2014 2013
-------------------------------------------- ------------ ------------
Weighted average number of shares in issue
for the purpose of basic earnings per
share 20,524,797 20,524,797
Dilution - share reward schemes - 228,312
------------------------------------------------- ------------ ------------
Diluted weighted average number of shares
in issue 20,524,797 20,753,109
------------------------------------------------- ------------ ------------
GBP000 GBP000
-------------------------------------------- ------------ ------------
Loss for basic and diluted earnings per
share (4,191) (4,006)
Pence Pence
-------------------------------------------- ------------ ------------
Basic loss per share (20.4) (19.5)
Basic loss per share before exceptional
item (20.1) (15.6)
Diluted loss per share (20.4) (19.5)
------------------------------------------------- ------------ ------------
No dividend was paid (2013: nil per share).
The loss attributable to ordinary shareholders and weighted average
number of ordinary shares for
the purpose of calculating the diluted earnings per ordinary share
are identical to those used for basic earnings per ordinary share.
This is because the impact of the share reward schemes would have
the effect of reducing the loss per ordinary share and is therefore
not dilutive under the terms of the International Financial Reporting
Standard 33.
4 Prior Year adjustment
The Group has property operating leases which include agreed annual
rent charges across the lease term. IAS 17 Leases states the operating
lease expenses should be recognised straight line over the lease.
Prior to the current financial year the Group had not complied
with this requirement which became relevant when the Group presented
its financial statements under IFRS in year ended October 2006.
Consequently, as at the year end the Board have corrected this
position by processing an adjustment to prior year opening reserves
and profits. The adjustment to the Group reserves as at 3 November
2012 was GBP0.7m. The Group have also restated the loss for the
period to 2 November 2013 from continuing operations attributable
to equity members from GBP3.9m to GBP4.0m.
52 weeks 53 weeks
to to
2 November 3 November
2013 2012
GBP000 GBP000
-------------------------------------------- ------------ ------------
Lease provisions (as previously stated) (4,389) (3,790)
Balance sheet reclassification from (716) -
Accruals and Deferred Income to Lease
provisions
-------------------------------------------- ------------ ------------
(5,105) (3,790)
Restatement (815) (682)
--------------------------------------------- ------------ ------------
(5,920) (4,472)
-------------------------------------------- ------------ ------------
Within current liabilities (106) (106)
Within non-current liabilities (5,814) (4,366)
--------------------------------------------- ------------ ------------
(5,920) (4,472)
-------------------------------------------- ------------ ------------
Liabilities (as previously stated) (38,655) (39,560)
Restatement (815) (682)
--------------------------------------------- ------------ ------------
Liabilities (restated) (39,470) (40,242)
--------------------------------------------- ------------ ------------
Retained earnings (as previously reported) (3,872) (1,054)
Restatement (815) (682)
--------------------------------------------- ------------ ------------
Retained earnings (restated) (4,687) (1,736)
--------------------------------------------- ------------ ------------
5 Net Exceptional expense
In the year the following net exceptional (expenditure)/income
resulted:
52 weeks to 52 weeks
1 November to
2014 2 November
GBP000 2013
GBP000
Exceptional income on Tonbridge - 250
Fixed asset impairment - (582)
Refinancing and cost of move from premium
to standard listing (69) (468)
Total net exceptional expense (69) (800)
----------------------------------------------- ------------ ------------
The income on Tonbridge in the prior year related to a proportion
of the GBP1.0m received by J.E. Beale PLC following signing of
a conditional agreement which may give rise to the surrender of
the Tonbridge lease. The transaction is conditional on certain
pre-conditions being satisfied in a six year period. Consequently
the GBP1m is being written back to profit over a six year period
from 25(th) April 2013.
In the financial statements for the year ended 2 November 2013
management considered that the GBP1m should be written back to
profit over a 2 year period as the conditions for the surrender
of the lease would materialise during the next two years, rather
than the six years stated in the conditional agreement.
During the year ended 1 November 2014, the landlord of the property
publicly acknowledged that they would not be seeking to redevelop
the site which would trigger the surrender per the conditional
agreement.
However, despite a surrender now being highly unlikely, as the
conditional agreement is still in place, the unconditional receipt
of GBP1.0m is being written back over the six year period from
25(th) April 2013, in line with accounting principles
As a consequence of this change, no credit to the income statement
arises in the current financial year.
The fixed asset impairment occurs where the carrying value of
certain store fixed assets exceeded the future value expected
to be derived from holding the assets.
Refinancing are legal, consultancy and banking costs associated
with refinancing and the change of listing status.
6 Reconciliation of operating loss to net cash flow from operating
activities
Restated
52 weeks 52 weeks
to to
1 November 2 November
2014 2013
GBP000 GBP000
---------------------------------- ------------- -------------
Operating loss (1,994) (3,330)
Adjustments for:
Cash disbursements of pension
obligations (net of charge
included within the income
statement) (48) (495)
Loss on disposal - 33
Fixed Asset Impairment - 582
Profit on disposal of investment - (21)
Depreciation 1,302 1,412
Decrease in inventories 659 562
Decrease/(increase) in trade
and other receivables 254 2,646
(Decrease)/increase in trade
and other payables (79) 538
-------------------------------------- ------------- -------------
Cash generated from/(utilised
in) operations 94 1,927
-------------------------------------- ------------- -------------
7 Analysis of net
debt
2 November Non Cash 1 November
2013 Cash flow Item 2014
Group GBP000 GBP000 GBP000 GBP000
------------------------------ ----------- ------------ --------- -----------
Cash at bank and in hand 194 (5) - 189
Restricted cash 1,000 (1,000) - -
Overdraft (1,441) (80) - (1,521)
------------------------------ ----------- ------------ --------- -----------
(247) (1,085) - (1,332)
Debt due within one year (375) - - (375)
Debt due after one year** (14,224) 301 (831) (14,754)
------------------------------ ----------- ------------ --------- -----------
(14,846) (784) (831) (16,461)
------------------------------ ----------- ------------ --------- -----------
Finance lease* (977) 2 - (975)
------------------------------ ----------- ------------ --------- -----------
8 Report and Accounts
Copies of the Group's Annual Report and Accounts will be sent to
shareholders and will be shown on the Group's website
www.beales.co.uk in due course. Further copies may be obtained from
the Group secretary at Beale Plc, The Granville Chambers, 21
Richmond Hill, Bournemouth BH2 6BJ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PKADDNBKBKBB
Beale (LSE:BAE)
과거 데이터 주식 차트
부터 5월(5) 2024 으로 6월(6) 2024
Beale (LSE:BAE)
과거 데이터 주식 차트
부터 6월(6) 2023 으로 6월(6) 2024