interim report and accounts - mulberry€¦ · wholesale as anticipated, wholesale sales declined...

INTER IMREPORT

ANDACCOUNTS

FOR THE HALF YEAR ENDED30 SEPTEMBER 2015

MULBERRY GROUP PLCTHE ROOKERY CHILCOMPTON SOMERSET BA3 4EH

TEL +44 (0)1761 234 500 FAX +44 (0)1761 234 555 MULBERRY.COM

24645.04 14 December 2015 2:51 PM Proof 2Mulberry-IR-2015-Proof 2.indd 2 14/12/2015 14:52:19

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MulberryInterimReportandAccounts

Sixmonthsended30September2015

FiNaNCiaL highLights

• Totalrevenueup5%to£67.8million(2014:£64.7million)

• Grossprofitmarginincreasedby1.6%to61.5%(2014:59.9%)

• Profitbeforetax£0.1million(2014:lossbeforetax£1.1million)

oPeratiNg highLights

• Digitalsalesincreasedby20%,representing12%ofGroupsales(2014:10%)

• EfficiencygainsinourUKfactories,whichnowproducec.50%ofourhandbags

CUrreNt tradiNg aNd oUtLooK

• TotalRetailsalesforthe10weeksto5Decemberwereup4%(like-for-likeup5%)

• 2015Christmasvideo#MulberryMiraclehasbeenviewedover1.7milliontimes

• NewCreativeDirector,JohnnyCoca,willshowhisfirstMulberrycollectionaspartofLondonFashionWeekduringFebruary2016

24645.04 14 December 2015 2:51 PM Proof 2

1

Mulberry Group plc

Mulberry-IR-2015-Proof 2.indd 1 14/12/2015 14:52:19

ChiefExecutive’sreport


FiNaNCiaL review

Salescontinuedtogrowduringthesixmonthsto30September2015andtheprofitbeforetaxwasaheadoftheprioryearperiod.

Totalrevenuefortheperiodwas£67.8million,up5%from£64.7millionlastyear,reflectinggrowthinRetailsaleswhichwaspartiallyoffsetbytheexpecteddeclineinWholesalesales.Tradinginourownretailstorescontinuedtogrowencouraginglythroughouttheperiod.

Retail

RetailsaleshavecontinuedtogrowfollowingthemomentumgainedduringthesecondhalfoftheyeartoMarch2015.Retailsales(includingDigital) increased12%(£5.3million)to£50.4millionduringtheperiod,withlike-for-likesalesup10%.

• UKRetailsales(includingDigital)wereup12%(like-for-likeup14%)fortheperiodto£40.0million(2014:£35.8million);

• InternationalRetail sales (includingDigital)wereup12% (like-for-likedown3%) for theperiod to£10.4million(2014:£9.3million).SalesinEuropehavegrownencouragingly,benefittingfrombothpositivelike-for-likegrowthandnewstores,whilstNorthAmericawasmorechallenging;and

• Digitalsaleswereup20%to£7.9million,accountingfor12%ofGroupsales(2014:10%);77%ofourDigitalsalesweregeneratedintheUKand46%ofrevenuesweregeneratedthroughordersplacedviamobilephonesortablets.

Wholesale

As anticipated, Wholesale sales declined by 11% to £17.4 million (2014: £19.6 million), reflectingconservativeorderingbyourAsianpartnersaswellasourowneffortstoincreasecontroloverdistributiontoindependentretailers.WeexpectthesalestrendtocontinuefortheshorttermasourpartnersawaitthearrivalofthenewcollectionsfromJohnnyCocaandwecontinuetooptimiseournetwork.

Thefranchisenetworkat30September2015included57partnerstoresinAsiaandEurope(2014:51).

Financial

Grossmargin for the sixmonths to 30 September 2015 increased by 1.6% to 61.5% (2014: 59.9%),reflecting the increased proportion of sales generated in our own retail stores and the efficiencyimprovementsachievedinourUKfactoriesinSomerset.

Netoperatingexpensesfortheperiodincreasedby£1.7millionto£41.7million(2014:£40.0million),reflectinganincreaseinnetRetailcostsforstoresopened/closed(£1.6million)andadditionalseniormanagement (£1.2million), partially offset by reduced advertising and promotion costs due to thephasing of spend (£0.7million) and other cost reductions (£0.4million). In addition, an exceptionalprofitwasrecordedonthesaleoftheleasesoftwostores,whichwasoffsetbytheimpairmentofonedirectlyoperatedstoreandthewritedownofourcontributiontoapartnerstorethatwasclosedaftertheperiodend.

Profitbeforetaxwas£0.1million(2014:lossbeforetax£1.1million).

Theeffectivetaxrateforthefullyearisexpectedtodeclineto48%(2014:63%)asaresultofareductionintheEuropeanandCanadianlossesthatcannotbeoffsetagainstincreasingUKprofits.

Capital and investment expenditure for the period was £2.1 million (2014: £12.0 million), of which£1.3millionrelatedtonewstoresand£0.5milliontoinvestmentindigitalandITsystems.

Theimprovementinfactoryefficiencyisinpartresponsiblefortheincreaseininventoriesto£47.7millionfrom£39.4millionatthestartoftheperiod.Octoberwholesaleshipmentswere£3.0millionhigherthanlastyear,whichenablesourpartnerstohavemoretimetoselltheSS16collection.

TheGrouphadcashof£4.1millionat30September2015(2014:£3.6million),whichincludes£3.6millionreceivedfromthedisposalofthetwostores.

oPeratiNg review

PRoduct and design

Duringthe lasteighteenmonths,ourpriorityhasbeento focusonregainingmomentumwithinoursingle largestcategory,women’shandbags.Thisstrategy isprovingsuccessfuland, looking forward,wewillapplythesameapproachacrossallproductcategoriestoreinforcethebrand’sBritishlifestyleimage.

OurnewCreativeDirector,JohnnyCoca,joinedMulberryduringJulyandhasbeenworkingcloselywiththedesignandproductdevelopmentteamstopreparetheAW16collection.Duringtheperiod,wehavetakentheopportunitytobuildourdesignteambyhiringnewtalentwithspecialistskillsinordertoenhancetheimportantandcomplementarycategoriesofmen’sbags,smallleathergoods,women’sshoesandready-to-wear.Inparticular,wearefocussingupondeliveringMulberrystyleandqualitywhilstadheringtoourwelldefinedpricepositioningstrategy.

We look forward to showing the firstMulberry collection under JohnnyCoca’s creative direction atLondonFashionWeekduringFebruary2016.TheserangeswillreachourdistributionnetworkduringJune2016.

BRand and MaRketing

Wecontinuetoinvestindigitalmarketingandhaveupgradedourwebsitewww.mulberry.com.Throughanincreaseduseofstories,filmandstrongervisualaesthetic,thesiteaimstocommunicateourrichbrandheritageandconnectwithourcustomers.

Wehavefollowedthesuccessof lastyear’stongueincheekChristmasvideowithanewofferingfor2015inouruniquelyBritishway.Thevideo,#MulberryMiracle,hasbeenviewedover1.7milliontimes.OurcollaborationwithGeorgiaMayJaggerenabledustoreachnewcustomers,whilstincreasingoursocialmediafollowers.


32

Mulberry Group plcMulberry Group plc




FiNaNCiaL review

Salescontinuedtogrowduringthesixmonthsto30September2015andtheprofitbeforetaxwasaheadoftheprioryearperiod.

Totalrevenuefortheperiodwas£67.8million,up5%from£64.7millionlastyear,reflectinggrowthinRetailsaleswhichwaspartiallyoffsetbytheexpecteddeclineinWholesalesales.Tradinginourownretailstorescontinuedtogrowencouraginglythroughouttheperiod.

Retail

RetailsaleshavecontinuedtogrowfollowingthemomentumgainedduringthesecondhalfoftheyeartoMarch2015.Retailsales(includingDigital) increased12%(£5.3million)to£50.4millionduringtheperiod,withlike-for-likesalesup10%.

• UKRetailsales(includingDigital)wereup12%(like-for-likeup14%)fortheperiodto£40.0million(2014:£35.8million);

• InternationalRetail sales (includingDigital)wereup12% (like-for-likedown3%) for theperiod to£10.4million(2014:£9.3million).SalesinEuropehavegrownencouragingly,benefittingfrombothpositivelike-for-likegrowthandnewstores,whilstNorthAmericawasmorechallenging;and

• Digitalsaleswereup20%to£7.9million,accountingfor12%ofGroupsales(2014:10%);77%ofourDigitalsalesweregeneratedintheUKand46%ofrevenuesweregeneratedthroughordersplacedviamobilephonesortablets.

Wholesale

As anticipated, Wholesale sales declined by 11% to £17.4 million (2014: £19.6 million), reflectingconservativeorderingbyourAsianpartnersaswellasourowneffortstoincreasecontroloverdistributiontoindependentretailers.WeexpectthesalestrendtocontinuefortheshorttermasourpartnersawaitthearrivalofthenewcollectionsfromJohnnyCocaandwecontinuetooptimiseournetwork.

Thefranchisenetworkat30September2015included57partnerstoresinAsiaandEurope(2014:51).

Financial

Grossmargin for the sixmonths to 30 September 2015 increased by 1.6% to 61.5% (2014: 59.9%),reflecting the increased proportion of sales generated in our own retail stores and the efficiencyimprovementsachievedinourUKfactoriesinSomerset.

Netoperatingexpensesfortheperiodincreasedby£1.7millionto£41.7million(2014:£40.0million),reflectinganincreaseinnetRetailcostsforstoresopened/closed(£1.6million)andadditionalseniormanagement (£1.2million), partially offset by reduced advertising and promotion costs due to thephasing of spend (£0.7million) and other cost reductions (£0.4million). In addition, an exceptionalprofitwasrecordedonthesaleoftheleasesoftwostores,whichwasoffsetbytheimpairmentofonedirectlyoperatedstoreandthewritedownofourcontributiontoapartnerstorethatwasclosedaftertheperiodend.

Profitbeforetaxwas£0.1million(2014:lossbeforetax£1.1million).

Theeffectivetaxrateforthefullyearisexpectedtodeclineto48%(2014:63%)asaresultofareductionintheEuropeanandCanadianlossesthatcannotbeoffsetagainstincreasingUKprofits.

Capital and investment expenditure for the period was £2.1 million (2014: £12.0 million), of which£1.3millionrelatedtonewstoresand£0.5milliontoinvestmentindigitalandITsystems.

Theimprovementinfactoryefficiencyisinpartresponsiblefortheincreaseininventoriesto£47.7millionfrom£39.4millionatthestartoftheperiod.Octoberwholesaleshipmentswere£3.0millionhigherthanlastyear,whichenablesourpartnerstohavemoretimetoselltheSS16collection.

TheGrouphadcashof£4.1millionat30September2015(2014:£3.6million),whichincludes£3.6millionreceivedfromthedisposalofthetwostores.

oPeratiNg review

PRoduct and design

Duringthe lasteighteenmonths,ourpriorityhasbeento focusonregainingmomentumwithinoursingle largestcategory,women’shandbags.Thisstrategy isprovingsuccessfuland, looking forward,wewillapplythesameapproachacrossallproductcategoriestoreinforcethebrand’sBritishlifestyleimage.

OurnewCreativeDirector,JohnnyCoca,joinedMulberryduringJulyandhasbeenworkingcloselywiththedesignandproductdevelopmentteamstopreparetheAW16collection.Duringtheperiod,wehavetakentheopportunitytobuildourdesignteambyhiringnewtalentwithspecialistskillsinordertoenhancetheimportantandcomplementarycategoriesofmen’sbags,smallleathergoods,women’sshoesandready-to-wear.Inparticular,wearefocussingupondeliveringMulberrystyleandqualitywhilstadheringtoourwelldefinedpricepositioningstrategy.

We look forward to showing the firstMulberry collection under JohnnyCoca’s creative direction atLondonFashionWeekduringFebruary2016.TheserangeswillreachourdistributionnetworkduringJune2016.

BRand and MaRketing

Wecontinuetoinvestindigitalmarketingandhaveupgradedourwebsitewww.mulberry.com.Throughanincreaseduseofstories,filmandstrongervisualaesthetic,thesiteaimstocommunicateourrichbrandheritageandconnectwithourcustomers.

Wehavefollowedthesuccessof lastyear’stongueincheekChristmasvideowithanewofferingfor2015inouruniquelyBritishway.Thevideo,#MulberryMiracle,hasbeenviewedover1.7milliontimes.OurcollaborationwithGeorgiaMayJaggerenabledustoreachnewcustomers,whilstincreasingoursocialmediafollowers.


32




(continued)

distRiBution

Ourdistributionstrategyistoexpandthebusinessinternationallyasanomni-channelbrandwithwell-placedstorescomplementedbyastrongdigitaloffering.A largeproportionofourNorthAmericanandEuropeanstoreshavebeenopenedrelativelyrecentlyandsointheshorttomediumtermwewillfocusupon improving theirproductivitywith limitednewstoreopenings.Wewill continue to refineourwholesaledistribution,focussinguponfranchisepartnersandbrandenhancingdepartmentstores.

Duringtheperiod,weopenedaflagshipstoreinParis(andclosedoursmallerstore)andclosedtwodirectlyoperatedstoresinSanFrancisco,CaliforniaandShortHills,NewJersey.OurpartnersopenedthreestoresinMacau,JakartaandSingaporewhilstclosingonestoreinKuwait.At30September2015Mulberry’sglobalstorefootprintwas122stores,includingdirectlyoperatedandpartnerstores.

oPeRations

WehavecontinuedtoinvestinourtwoUKfactories,whichemployc.600peopleandhaveachievedsignificantimprovementsinefficiencyoverthepast12months.Theyareworkingatfullcapacity,deliverontimeandproducec.50%ofourhandbags.

We have continued to develop our IT systems during the first half and have implemented furtherenhancementstoouromni-channelcapability, includingthe integrationofDigital, in-storesalesandcustomerdatainourUKdirectlyoperatedstores.


TotalRetailsales for the10weeksto5December2015wereup4%relativetothesameperiod lastyear(like-for-likeup5%).Retailsaleshavecontinuedtogrowinthesecondhalfbutthecomparativesaretougherasourstrategyhadstartedtotakeeffect inthesecondhalfof lastyear.Thiswasdrivenby strong growth in ourDigital business, where sales increased by 18%.Digital contributed to thecontinuedstrongperformanceoftheUK,wheretotalRetailsales(includingDigital)duringthe10weeksroseby6%(like-for-likeup6%).

Whilst trading for the year todatehasgrown in linewithourexpectations,our full year results aredependentonthenextfewweeksoftradingthroughChristmasandintoJanuary.

retail total sales retail like-for-like sales*

this year vs last year (%)26 weeks to

30 sep 1510 weeks to

5 dec 1526 weeks to


5 dec 15

UKRetail** +12% +6% +14% +6%InternationalRetail** +12% -6% -3% +1%

TotalRetail +12% +4% +10% +5%

* Like-for-likedefinedastheyear-on-yearchangeinsalesfromstoreswhichhavebeentradingbothduringthecurrentandpreviousperiods

** Regionalsplitsincludedigitalsales*** Digitalsalesroseby+20%inthe26weeksto30September2015andby+18%inthe10weeksto

5December2015

ConsistentwithourstrategytobuildonourBritishlifestyleimageacrossallofourcollections,therewillbeanincreasedinvestmentindesigning,developingandlaunchingourAW16collectionsduringthesixmonthsto31March2016.ThesecollectionswillreachourRetailandWholesalenetworksduringJune2016,whichfallswithinournextfinancialyearending31March2017.

Women’sready-to-wearandshoesareaverysmallproportionofoursalesbuthavepotentialforgrowthinthefutureandareanimportantfactorinbuildingthelifestyleimagethatwillhelpdevelopMulberryinternationally.Aftercarefulanalysis,wehaveconcludedthatlicensingthemanufactureanddistributionofthesecategorieswillenableustodeliverbestinclassqualitywhilstachievingourtargetpricerange.Wehavesignedaletterofintentwithhighqualitythirdpartypartnerswhohavebeenselectedbasedupontheirproventrackrecordintheluxuryindustry.

SincetheendofSeptemberwehavereopenedourdirectlyoperatedstoreinStanstedAirportfollowingtheredevelopmentoftheterminalandwillberelocatingourstoreinWestfieldWhiteCitytoalargerandimprovedlocationon11December.WehavealsoopenedonepartnerstoreinAbuDhabi.

Wecontinuetofocusuponimprovingtheproductivityofourexistingstores.Omni-channelremainsapriority,withcontinuedinvestmentplannedduringthisfinancialyeartoenhancetheUKofferingandtorollouttheseservicestokeyinternationalmarkets.DuringNovember,welaunchedourlocallanguagewebsite inGermany. In addition, wewill soon be rolling out the omni-channel offer to our directlyoperatedstoresinEurope.

Operating costs will increase during the second half, reflecting the additional design and productdevelopmentcostsasexplainedabove,thecostsofnewstoresopenedboththisyearandlastyear,aswellasthecostsrelatingtothenewseniormanagementteam.

Capitalexpenditureforthefullyearto31March2016isexpectedtobeintheregionof£9.0million(2015:£17.0million),ofwhichthemajoritywillbeonstores.


54




(continued)

distRiBution

Ourdistributionstrategyistoexpandthebusinessinternationallyasanomni-channelbrandwithwell-placedstorescomplementedbyastrongdigitaloffering.A largeproportionofourNorthAmericanandEuropeanstoreshavebeenopenedrelativelyrecentlyandsointheshorttomediumtermwewillfocusupon improving theirproductivitywith limitednewstoreopenings.Wewill continue to refineourwholesaledistribution,focussinguponfranchisepartnersandbrandenhancingdepartmentstores.

Duringtheperiod,weopenedaflagshipstoreinParis(andclosedoursmallerstore)andclosedtwodirectlyoperatedstoresinSanFrancisco,CaliforniaandShortHills,NewJersey.OurpartnersopenedthreestoresinMacau,JakartaandSingaporewhilstclosingonestoreinKuwait.At30September2015Mulberry’sglobalstorefootprintwas122stores,includingdirectlyoperatedandpartnerstores.

oPeRations

WehavecontinuedtoinvestinourtwoUKfactories,whichemployc.600peopleandhaveachievedsignificantimprovementsinefficiencyoverthepast12months.Theyareworkingatfullcapacity,deliverontimeandproducec.50%ofourhandbags.

We have continued to develop our IT systems during the first half and have implemented furtherenhancementstoouromni-channelcapability, includingthe integrationofDigital, in-storesalesandcustomerdatainourUKdirectlyoperatedstores.


TotalRetailsales for the10weeksto5December2015wereup4%relativetothesameperiod lastyear(like-for-likeup5%).Retailsaleshavecontinuedtogrowinthesecondhalfbutthecomparativesaretougherasourstrategyhadstartedtotakeeffect inthesecondhalfof lastyear.Thiswasdrivenby strong growth in ourDigital business, where sales increased by 18%.Digital contributed to thecontinuedstrongperformanceoftheUK,wheretotalRetailsales(includingDigital)duringthe10weeksroseby6%(like-for-likeup6%).

Whilst trading for the year todatehasgrown in linewithourexpectations,our full year results aredependentonthenextfewweeksoftradingthroughChristmasandintoJanuary.

retail total sales retail like-for-like sales*

this year vs last year (%)26 weeks to


5 dec 1526 weeks to


5 dec 15

UKRetail** +12% +6% +14% +6%InternationalRetail** +12% -6% -3% +1%

TotalRetail +12% +4% +10% +5%

* Like-for-likedefinedastheyear-on-yearchangeinsalesfromstoreswhichhavebeentradingbothduringthecurrentandpreviousperiods

** Regionalsplitsincludedigitalsales*** Digitalsalesroseby+20%inthe26weeksto30September2015andby+18%inthe10weeksto

5December2015

ConsistentwithourstrategytobuildonourBritishlifestyleimageacrossallofourcollections,therewillbeanincreasedinvestmentindesigning,developingandlaunchingourAW16collectionsduringthesixmonthsto31March2016.ThesecollectionswillreachourRetailandWholesalenetworksduringJune2016,whichfallswithinournextfinancialyearending31March2017.

Women’sready-to-wearandshoesareaverysmallproportionofoursalesbuthavepotentialforgrowthinthefutureandareanimportantfactorinbuildingthelifestyleimagethatwillhelpdevelopMulberryinternationally.Aftercarefulanalysis,wehaveconcludedthatlicensingthemanufactureanddistributionofthesecategorieswillenableustodeliverbestinclassqualitywhilstachievingourtargetpricerange.Wehavesignedaletterofintentwithhighqualitythirdpartypartnerswhohavebeenselectedbasedupontheirproventrackrecordintheluxuryindustry.

SincetheendofSeptemberwehavereopenedourdirectlyoperatedstoreinStanstedAirportfollowingtheredevelopmentoftheterminalandwillberelocatingourstoreinWestfieldWhiteCitytoalargerandimprovedlocationon11December.WehavealsoopenedonepartnerstoreinAbuDhabi.

Wecontinuetofocusuponimprovingtheproductivityofourexistingstores.Omni-channelremainsapriority,withcontinuedinvestmentplannedduringthisfinancialyeartoenhancetheUKofferingandtorollouttheseservicestokeyinternationalmarkets.DuringNovember,welaunchedourlocallanguagewebsite inGermany. In addition, wewill soon be rolling out the omni-channel offer to our directlyoperatedstoresinEurope.

Operating costs will increase during the second half, reflecting the additional design and productdevelopmentcostsasexplainedabove,thecostsofnewstoresopenedboththisyearandlastyear,aswellasthecostsrelatingtothenewseniormanagementteam.

Capitalexpenditureforthefullyearto31March2016isexpectedtobeintheregionof£9.0million(2015:£17.0million),ofwhichthemajoritywillbeonstores.


54



Consolidatedincomestatement


Consolidatedstatementofcomprehensiveincome


Note

Unauditedsix months

30 sept 2015£’000

Unauditedsix months

30 sept 2014£’000

auditedyear ended

31 Mar 2015£’000

Revenue 67,768 64,700 148,680Costofsales (26,083) (25,950) (58,745)

gross profit 41,685 38,750 89,935

Otheroperatingexpenses (42,077) (40,127) (85,932)Exceptionaloperatingincome 4 1,078 – –Exceptionaloperatingexpenses 5 (942) – (2,662)

Operatingexpenses (41,941) (40,127) (88,594)

Otheroperatingincome 198 159 359

operating (loss)/profit (58) (1,218) 1,700Shareofresultsofassociates 128 100 190Financeincome 2 13 17Financeexpense (12) (5) (46)

Profit/(loss) before tax 60 (1,110) 1,861Taxcredit/(charge) 6 60 700 (3,253)

Profit/(loss) for the period 120 (410) (1,392)

attributable to:

Equityholdersoftheparent 120 (410) (1,392)

Basicearnings/(loss)pershare 9 0.2p (0.7p) (2.3p)Dilutedearnings/(loss)pershare 9 0.2p (0.7p) (2.3p)

Allactivitiesarisefromcontinuingoperations.

Unauditedsix months

30 sept 2015£’000

Unauditedsix months

30 sept 2014£’000

auditedyear ended

31 Mar 2015£’000

Profit/(loss)fortheperiod 120 (410) (1,392)Exchangedifferencesontranslation offoreignoperations (218) (436) (1,084)Taximpactarisingonabove exchangedifferences 44 89 (137)

total comprehensive expense for the period

(54) (757) (2,613)

attributable to:Equityholdersoftheparent (54) (757) (2,613)


76



Consolidatedbalancesheet

At30September2015

Consolidatedstatementofchangesinequity


Unaudited30 sept 2015

£’000


£’000

audited31 Mar 2015

£’000

Non-current assetsIntangibleassets 11,125 14,020 12,713Property,plantandequipment 28,918 36,274 33,289Interestsinassociates 155 120 93Deferredtaxasset 1,381 550 1,260

41,579 50,964 47,355Current assetsInventories 47,666 39,329 39,379Tradeandotherreceivables 12,864 13,988 13,260Currenttaxasset 110 1,199 –Cashandcashequivalents 4,057 3,585 9,900

64,697 58,101 62,539

total assets 106,276 109,065 109,894

Current liabilitiesTradeandotherpayables (27,380) (28,639) (28,733)Currenttaxliabilities – – (2,472)

(27,380) (28,639) (31,205)

total liabilities (27,380) (28,639) (31,205)

Net assets 78,896 80,426 78,689

equitySharecapital 3,000 3,000 3,000Sharepremiumaccount 11,961 11,961 11,961Ownsharereserve (1,498) (1,641) (1,601)Capitalredemptionreserve 154 154 154Specialreserves – 1,467 1,467Foreignexchangereserve (1,607) (559) (1,433)Retainedearnings 66,886 66,044 65,141

total equity 78,896 80,426 78,689

equity attributable to equity holders of the parent

sharecapital£’000

sharepremiumaccount

£’000

ownshare

reserve£’000

Capitalreserve

£’000

specialreserves

£’000

Foreignexchange

reserve£’000

retainedearnings

£’000total

£’000

as at 1 april 2014 3,000 11,961 (1,676) 154 1,467 (212) 69,264 83,958Totalcomprehensive expensefortheperiod – – – – – (347) (410) (757)Chargeforemployee share-basedpayments – – – – – – 90 90Exerciseofshareoptions – – – – – – 66 66Ownshares – – 35 – – – – 35Ordinarydividendspaid – – – – – – (2,966) (2,966)

as at 30 september 2014 3,000 11,961 (1,641) 154 1,467 (559) 66,044 80,426Totalcomprehensive expensefortheperiod – – – – – (874) (982) (1,856)Chargeforemployee share-basedpayments – – – – – – 46 46Exerciseofshareoptions – – – – – – 33 33Ownshares – – 40 – – – – 40

as at 31 March 2015 3,000 11,961 (1,601) 154 1,467 (1,433) 65,141 78,689Totalcomprehensive expensefortheperiod – – – – – (174) 120 (54)Chargeforemployee share-basedpayments – – – – – – 259 259Exerciseofshareoptions – – – – – – (101) (101)Ownshares – – 103 – – – – 103Redemptionofreserve – – – – (1,467) – 1,467 –

as at 30 september 2015 3,000 11,961 (1,498) 154 – (1,607) 66,886 78,896


98



Consolidatedbalancesheet

At30September2015

Consolidatedstatementofchangesinequity



£’000


£’000

audited31 Mar 2015

£’000

Non-current assetsIntangibleassets 11,125 14,020 12,713Property,plantandequipment 28,918 36,274 33,289Interestsinassociates 155 120 93Deferredtaxasset 1,381 550 1,260

41,579 50,964 47,355Current assetsInventories 47,666 39,329 39,379Tradeandotherreceivables 12,864 13,988 13,260Currenttaxasset 110 1,199 –Cashandcashequivalents 4,057 3,585 9,900

64,697 58,101 62,539

total assets 106,276 109,065 109,894

Current liabilitiesTradeandotherpayables (27,380) (28,639) (28,733)Currenttaxliabilities – – (2,472)

(27,380) (28,639) (31,205)

total liabilities (27,380) (28,639) (31,205)

Net assets 78,896 80,426 78,689

equitySharecapital 3,000 3,000 3,000Sharepremiumaccount 11,961 11,961 11,961Ownsharereserve (1,498) (1,641) (1,601)Capitalredemptionreserve 154 154 154Specialreserves – 1,467 1,467Foreignexchangereserve (1,607) (559) (1,433)Retainedearnings 66,886 66,044 65,141

total equity 78,896 80,426 78,689

equity attributable to equity holders of the parent

sharecapital£’000

sharepremiumaccount

£’000

ownshare

reserve£’000

Capitalreserve

£’000

specialreserves

£’000

Foreignexchange

reserve£’000

retainedearnings

£’000total

£’000

as at 1 april 2014 3,000 11,961 (1,676) 154 1,467 (212) 69,264 83,958Totalcomprehensive expensefortheperiod – – – – – (347) (410) (757)Chargeforemployee share-basedpayments – – – – – – 90 90Exerciseofshareoptions – – – – – – 66 66Ownshares – – 35 – – – – 35Ordinarydividendspaid – – – – – – (2,966) (2,966)

as at 30 september 2014 3,000 11,961 (1,641) 154 1,467 (559) 66,044 80,426Totalcomprehensive expensefortheperiod – – – – – (874) (982) (1,856)Chargeforemployee share-basedpayments – – – – – – 46 46Exerciseofshareoptions – – – – – – 33 33Ownshares – – 40 – – – – 40

as at 31 March 2015 3,000 11,961 (1,601) 154 1,467 (1,433) 65,141 78,689Totalcomprehensive expensefortheperiod – – – – – (174) 120 (54)Chargeforemployee share-basedpayments – – – – – – 259 259Exerciseofshareoptions – – – – – – (101) (101)Ownshares – – 103 – – – – 103Redemptionofreserve – – – – (1,467) – 1,467 –

as at 30 september 2015 3,000 11,961 (1,498) 154 – (1,607) 66,886 78,896


98



Consolidatedcashflowstatement


Notestothecondensedfinancialstatements


Unauditedsix months

30 sept 2015£’000

Unauditedsix months

30 sept 2014£’000

auditedyear ended

31 Mar 2015£’000

operating (loss)/profit for the period (58) (1,218) 1,700adjustments for:Depreciationandimpairmentofproperty, plantandequipment 4,104 3,462 10,300Amortisationofintangibleassets 904 1,027 2,028(Loss)/profitonsaleofproperty,plantandequipment (694) (4) 8Lossonsaleofintangibleassets (388) – –Effectsofforeignexchange 8 51 204Share-basedpaymentscharge 259 107 155

operating cash flows before movements in working capital 4,135 3,425 14,395Increaseininventories (8,346) (5,581) (5,595)Decrease/(increase)inreceivables 398 (389) 106(Decrease)/increaseinpayables (634) 498 838

Cash (used in)/generated by operations (4,447) (2,047) 9,744Corporationtaxespaid (2,599) (873) (2,103)Interestpaid (12) (5) (46)

Net cash (outflow)/inflow from operating activities (7,058) (2,925) 7,595

investing activities:Interestreceived 2 13 17Purchasesofproperty,plantandequipment (2,036) (6,074) (10,057)Proceedsfromsalesofproperty, plantandequipment 2,089 9 157Acquisitionofintangiblefixedassets (335) (7,755) (8,130)Proceedsfromsalesofintangibleassets 1,495 – –

Net cash generated from/(used in) investing activities 1,215 (13,807) (18,013)

Financing activities:Dividendspaid – (2,966) (2,966)Settlementofshareawards – (131) (130)

Net cash used in financing activities – (3,097) (3,096)

Net decrease in cash and cash equivalents (5,843) (19,829) (13,514)Cashandcashequivalentsatbeginningofperiod 9,900 23,414 23,414

Cash and cash equivalents at end of period 4,057 3,585 9,900

1. geNeraL iNForMatioN

MulberryGroupplcisacompanyincorporatedintheUnitedKingdomundertheCompaniesAct2006.Thehalfyear resultsandcondensedconsolidated financial statements for thesixmonthsended30September2015(theinterimfinancialstatements)comprisetheresultsfortheCompanyanditssubsidiaries(togetherreferredtoastheGroup)andtheGroup’sinterestinassociates.

The information for the year ended 31March 2015 does not constitute statutory accounts asdefinedinsection434oftheCompaniesAct2006. AcopyofthestatutoryaccountsforthatyearhasbeendeliveredtotheRegistrarofCompanies. Theauditor’sreportonthoseaccountswasnotqualified,didnotincludeareferencetoanymatterstowhichtheAuditordrewattentionbywayofemphasiswithoutqualifyingthereportanddidnotcontainstatementsundersection498(2)or(3)oftheCompaniesAct2006.

The interim financial statements for the sixmonths ended 30 September 2015, have not beenreviewedoraudited.

2. sigNiFiCaNt aCCoUNtiNg PoLiCies

TheaccountingpoliciesandmethodsofcomputationfollowedintheinterimfinancialstatementsareconsistentwiththoseaspublishedintheGroup’sAnnualReportandFinancialStatementsfortheyearended31March2015.

Atthedateofapprovalofthesefinancialstatements,thefollowingStandardsandInterpretationswhichhavenotbeenappliedinthesefinancialstatementswereinissuebutnotyeteffective:

• IFRS9:FinancialInstruments;and

• IFRS15:RevenuefromContractswithCustomers.

TheDirectorsdonotexpectthattheadoptionoftheseStandardswillhaveamaterialimpactonthefinancialstatementsoftheGroupinfutureperiods.Beyondthe informationabove, it isnotpracticabletoprovideareasonableestimateoftheeffectoftheseStandardsuntiladetailedreviewhasbeencompleted.

The Annual Report and Financial Statements are available from the Group’s website(www.mulberry.com) or from the Company Secretary at the Company’s registered office, TheRookery,Chilcompton,Bath,England,BA34EH.


1110



Consolidatedcashflowstatement




Unauditedsix months

30 sept 2015£’000

Unauditedsix months

30 sept 2014£’000

auditedyear ended

31 Mar 2015£’000

operating (loss)/profit for the period (58) (1,218) 1,700adjustments for:Depreciationandimpairmentofproperty, plantandequipment 4,104 3,462 10,300Amortisationofintangibleassets 904 1,027 2,028(Loss)/profitonsaleofproperty,plantandequipment (694) (4) 8Lossonsaleofintangibleassets (388) – –Effectsofforeignexchange 8 51 204Share-basedpaymentscharge 259 107 155

operating cash flows before movements in working capital 4,135 3,425 14,395Increaseininventories (8,346) (5,581) (5,595)Decrease/(increase)inreceivables 398 (389) 106(Decrease)/increaseinpayables (634) 498 838

Cash (used in)/generated by operations (4,447) (2,047) 9,744Corporationtaxespaid (2,599) (873) (2,103)Interestpaid (12) (5) (46)

Net cash (outflow)/inflow from operating activities (7,058) (2,925) 7,595

investing activities:Interestreceived 2 13 17Purchasesofproperty,plantandequipment (2,036) (6,074) (10,057)Proceedsfromsalesofproperty, plantandequipment 2,089 9 157Acquisitionofintangiblefixedassets (335) (7,755) (8,130)Proceedsfromsalesofintangibleassets 1,495 – –

Net cash generated from/(used in) investing activities 1,215 (13,807) (18,013)

Financing activities:Dividendspaid – (2,966) (2,966)Settlementofshareawards – (131) (130)

Net cash used in financing activities – (3,097) (3,096)

Net decrease in cash and cash equivalents (5,843) (19,829) (13,514)Cashandcashequivalentsatbeginningofperiod 9,900 23,414 23,414

Cash and cash equivalents at end of period 4,057 3,585 9,900

1. geNeraL iNForMatioN

MulberryGroupplcisacompanyincorporatedintheUnitedKingdomundertheCompaniesAct2006.Thehalfyear resultsandcondensedconsolidated financial statements for thesixmonthsended30September2015(theinterimfinancialstatements)comprisetheresultsfortheCompanyanditssubsidiaries(togetherreferredtoastheGroup)andtheGroup’sinterestinassociates.

The information for the year ended 31March 2015 does not constitute statutory accounts asdefinedinsection434oftheCompaniesAct2006. AcopyofthestatutoryaccountsforthatyearhasbeendeliveredtotheRegistrarofCompanies. Theauditor’sreportonthoseaccountswasnotqualified,didnotincludeareferencetoanymatterstowhichtheAuditordrewattentionbywayofemphasiswithoutqualifyingthereportanddidnotcontainstatementsundersection498(2)or(3)oftheCompaniesAct2006.

The interim financial statements for the sixmonths ended 30 September 2015, have not beenreviewedoraudited.

2. sigNiFiCaNt aCCoUNtiNg PoLiCies

TheaccountingpoliciesandmethodsofcomputationfollowedintheinterimfinancialstatementsareconsistentwiththoseaspublishedintheGroup’sAnnualReportandFinancialStatementsfortheyearended31March2015.

Atthedateofapprovalofthesefinancialstatements,thefollowingStandardsandInterpretationswhichhavenotbeenappliedinthesefinancialstatementswereinissuebutnotyeteffective:

• IFRS9:FinancialInstruments;and

• IFRS15:RevenuefromContractswithCustomers.

TheDirectorsdonotexpectthattheadoptionoftheseStandardswillhaveamaterialimpactonthefinancialstatementsoftheGroupinfutureperiods.Beyondthe informationabove, it isnotpracticabletoprovideareasonableestimateoftheeffectoftheseStandardsuntiladetailedreviewhasbeencompleted.

The Annual Report and Financial Statements are available from the Group’s website(www.mulberry.com) or from the Company Secretary at the Company’s registered office, TheRookery,Chilcompton,Bath,England,BA34EH.


1110




(continued)

3. goiNg CoNCerN

TheGrouphasconsiderablefinancialresourcestogetherwithacustomerbasesplitacrossdifferentgeographicareasandbetweendirectlyoperatedstores,partnerstoresandwholesaleaccounts.TheGroup’sforecastsandprojections,takingaccountofreasonablypossiblechangesintradingperformance,showthattheGroupshouldbeabletooperatewithinthelevelofitscurrentfacilities.Asaconsequence,theDirectorsbelievethattheGroupiswellplacedtomanageitsbusinessriskssuccessfullydespitetheuncertaineconomicoutlook.

Aftermakingenquiries,theDirectorshaveareasonableexpectationthattheCompanyandtheGroupwillhaveadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.Accordingly,theycontinuetoadoptthegoingconcernbasisinpreparingthehalfyearresults.

4. exCePtioNaL oPeratiNg iNCoMe

Theexceptionaloperatingincomeof£1,078,000(2014:nil)representstheprofitondisposaloftheinterestintwostoreleases(207RueSaintHonoré,ParisandGrantAvenue,SanFrancisco).

5. exCePtioNaL oPeratiNg exPeNses

Theexceptionaloperatingexpensesof£942,000(2014:nil)represents:

• An impairment charge of £548,000 relating to the retail assets of one international store.Thestorehasnotbeentradinginlinewithitsexpectedpotential;and

• Animpairmentchargeof£394,000forthecontributiontowardstheopeningofaflagshipstoreforafranchisepartnerinprioryearsandwherethestorehasnowbeenclosed.

6. taxatioN

Thetaxcreditiscalculatedbyapplyingtheforecastfullyeareffectivetaxratetotheinterimprofitandcalculatingthedeferredtaxbalancefortheperiod.

7. CoNtiNgeNt LiabiLity

TheGroupiscurrentlyindiscussionwiththeUKtaxauthoritiesregardingtheresidencyofitsUSsubsidiary for tax purposes. Following the acquisition of the retail store business during 2009,MulberryCompany (USA) Inchasbeentreatedasdual residentandtaxespaid in theUKwhentheCompanymadeprofitsandanylossesusedtooffsettheUKtaxableprofits.InarrivingattheoverallGrouptaxcharge,theUStaxlosseshavebeengrouprelieved,reducingthetaxpayableintheUKbyatotalof£5,700,000(£700,000inthecurrentperiodand£5,000,000inprioryears).TheDirectorsaresatisfiedthatthebusinessisoperatedandcontrolledintheUKandthereforemeetstherelevantUKCentralManagementandControltestandcanoffsetthe losses.ShouldHMRCsuccessfullychallengetheGroup’sposition,additionaltaxandinterestmayneedtobepaid.

8. divideNd

six months30 sept 2015

£’000


£’000

year ended31 Mar 2015

£’000

Dividendof5pperordinaryshare paidduringtheperiod – 2,966 2,966

Thefinaldividendfortheyearended31March2015waspaidtoshareholderson26November2015.Thefinaldividendfortheyearended31March2014waspaidon15August2014.


1312




(continued)

3. goiNg CoNCerN

TheGrouphasconsiderablefinancialresourcestogetherwithacustomerbasesplitacrossdifferentgeographicareasandbetweendirectlyoperatedstores,partnerstoresandwholesaleaccounts.TheGroup’sforecastsandprojections,takingaccountofreasonablypossiblechangesintradingperformance,showthattheGroupshouldbeabletooperatewithinthelevelofitscurrentfacilities.Asaconsequence,theDirectorsbelievethattheGroupiswellplacedtomanageitsbusinessriskssuccessfullydespitetheuncertaineconomicoutlook.

Aftermakingenquiries,theDirectorshaveareasonableexpectationthattheCompanyandtheGroupwillhaveadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.Accordingly,theycontinuetoadoptthegoingconcernbasisinpreparingthehalfyearresults.

4. exCePtioNaL oPeratiNg iNCoMe

Theexceptionaloperatingincomeof£1,078,000(2014:nil)representstheprofitondisposaloftheinterestintwostoreleases(207RueSaintHonoré,ParisandGrantAvenue,SanFrancisco).

5. exCePtioNaL oPeratiNg exPeNses

Theexceptionaloperatingexpensesof£942,000(2014:nil)represents:

• An impairment charge of £548,000 relating to the retail assets of one international store.Thestorehasnotbeentradinginlinewithitsexpectedpotential;and

• Animpairmentchargeof£394,000forthecontributiontowardstheopeningofaflagshipstoreforafranchisepartnerinprioryearsandwherethestorehasnowbeenclosed.

6. taxatioN

Thetaxcreditiscalculatedbyapplyingtheforecastfullyeareffectivetaxratetotheinterimprofitandcalculatingthedeferredtaxbalancefortheperiod.

7. CoNtiNgeNt LiabiLity

TheGroupiscurrentlyindiscussionwiththeUKtaxauthoritiesregardingtheresidencyofitsUSsubsidiary for tax purposes. Following the acquisition of the retail store business during 2009,MulberryCompany (USA) Inchasbeentreatedasdual residentandtaxespaid in theUKwhentheCompanymadeprofitsandanylossesusedtooffsettheUKtaxableprofits.InarrivingattheoverallGrouptaxcharge,theUStaxlosseshavebeengrouprelieved,reducingthetaxpayableintheUKbyatotalof£5,700,000(£700,000inthecurrentperiodand£5,000,000inprioryears).TheDirectorsaresatisfiedthatthebusinessisoperatedandcontrolledintheUKandthereforemeetstherelevantUKCentralManagementandControltestandcanoffsetthe losses.ShouldHMRCsuccessfullychallengetheGroup’sposition,additionaltaxandinterestmayneedtobepaid.

8. divideNd


£’000


£’000


£’000

Dividendof5pperordinaryshare paidduringtheperiod – 2,966 2,966

Thefinaldividendfortheyearended31March2015waspaidtoshareholderson26November2015.Thefinaldividendfortheyearended31March2014waspaidon15August2014.


1312




(continued)

9. earNiNgs Per share (‘ePs’)




Basicearnings/(loss)pershare 0.2p (0.7p) (2.3p)Dilutedearnings/(loss)pershare 0.2p (0.7p) (2.3p)

Earningspershareiscalculatedbasedonthefollowingdata:


£’000


£’000


£’000

Profit/(loss)fortheperiodforbasic anddilutedearningspershare 120 (410) (1,392)

30 sept 2015Million

30 sept 2014Million

31 Mar 2015Million

Weightedaveragenumberofordinary sharesforthepurposeofbasicEPS 59.3 59.3 59.3Effectofdilutivepotentialordinary shares:shareoptions 0.5 0.6 0.6

Weightedaveragenumberofordinary sharesforthepurposeofdilutedEPS 59.8 59.9 59.9


1514




1616



INTER IMREPORT

ANDACCOUNTS

FOR THE HALF YEAR ENDED30 SEPTEMBER 2015

MULBERRY GROUP PLCTHE ROOKERY CHILCOMPTON SOMERSET BA3 4EH

TEL +44 (0)1761 234 500 FAX +44 (0)1761 234 555 MULBERRY.COM


interim report and accounts - mulberry€¦ · wholesale as anticipated, wholesale sales declined...

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