RNS Number:4032M
Hamleys PLC
17 June 2003
17 June 2003
RESULTS FOR THE 52 WEEKS TO 29 MARCH 2003
Hamleys plc today announces preliminary results for the 52 weeks to 29 March
2003.
Highlights
* Group profit before tax and exceptional items increased by
35% to #5.6m (2002: #4.1m)
* Group profit on ordinary activities before tax up by 45%
to #5.4m (2002 - #3.7m)
* Like-for-like sales for the Hamleys brand (including
Regent Street and Hamleys Direct) up 9.4%
* Increased contribution from Hamleys and Bear Factory
businesses.
* Bear Factory franchising started successfully with five
stores and now growing fast.
* Integration of English Teddy Bear Company proceeding to
plan
* Group operating profit before exceptional items up by 27%
to #6.3m (2002: #4.9m)
* Earnings per share 16.8p (2002: 12.0p)
* Recommended cash offer announced today at 205p per share
Simon Burke, Chairman, said:
"In a year of increasingly difficult trading conditions, this continued profit
growth from both key brands is evidence of the strength of our business. We have
also announced today that we have received a cash offer of 205p per share which,
following a competitive process, the Independent Directors are pleased to
recommend to shareholders. This offer price represents a 62% premium to the
share price before the announcement of bid talks on 17 March 2003."
For further information, please call:
Hamleys plc Simon Burke, Chairman (020) 7479 7316
Brunswick Rebecca Blackwood (020) 7404 5959
Melissa McVeigh
Carolyn Esser
Chairman's Statement
Last year I promised to focus on building growth in our core businesses, Hamleys
and Bear Factory. I can report that this has been achieved, with increased
contributions from both brands driven by higher sales and better gross margins.
Bear Factory franchising has made an excellent start and offers a significant
opportunity for growth in the coming year.
Financial Results
Group operating profit before exceptional costs increased by 27% to #6.3m. This
result is illustrated in the following table:
#millions Total Total
2003 2002
Operating Profit before exceptional items 6.3 4.9
Exceptional Costs (0.2) (0.4)
--------- --------
Operating Profit 6.1 4.5
Interest (0.7) (0.8)
--------- --------
Profit Before Tax 5.4 3.7
--------- --------
Exceptional costs in 2003 are net legal expenses arising from litigation in
relation to Bear Factory which has now been settled. Group profit before tax and
exceptional items was #5.6m (2002: #4.1m) and after exceptional items was #5.4m
(2002: #3.7m).
The Hamleys performance strengthened through a like-for-like sales increase of
9.4%, with Regent Street recording an increase of 7.8%, and improving margins.
Bear Factory achieved a contribution of #3.6m, an increase of 26%.
In September 2002, Hamleys announced the acquisition of the English Teddy Bear
Company ('ETBC'), for #0.7m. The integration of ETBC has gone well and it made a
small contribution in the year. The acquisition was financed by the issue of 2.1
million new shares for total proceeds of #3.4m, which has also contributed to a
significant improvement in gearing.
During February we made down payments of #2.0m (including VAT) towards the
construction of a new warehouse at Royston in Hertfordshire. After careful
consideration of likely returns, the Board has decided that Hamleys should own
this warehouse as a freehold asset. The total investment is expected to be
#4.4m.
We will continue to focus our efforts on our two principal activities, Hamleys
and Bear Factory. As well as sustaining the progress of Regent Street, we plan a
significant improvement in the performance of Hamleys Direct. We are intending
to consolidate the strong position of Bear Factory in the UK market, whilst
aiming for rapid growth in overseas franchising.
Business Overview
The Regent Street store continues to benefit from improving profile and
perception especially amongst British customers, who now account for over 75% of
sales. The new Hamleys own brand range has been very well received and may offer
the opportunity to sell a limited, exclusive range of Hamleys toys through other
retail outlets.
At Hamleys Direct, average transaction values increased again and the new
Hamleys own-brand range was very popular. Changes in both management and systems
led to a number of operational problems, however, which held back sales growth.
As a result, the profit performance of Hamleys Direct was unsatisfactory.
Despite this, we believe strongly in the future of the Direct business, and we
have taken the steps necessary to ensure that its profit profile will be
significantly better in the coming year.
Bear Factory now has 30 UK stores and is represented in almost all the key
shopping catchments. In the coming year we intend to focus on consolidating this
position, with an emphasis on growing sales through new product development and
targeted marketing.
The greater short-term opportunity for Bear Factory lies in overseas
franchising. Five stores were opened in the year to March and have performed
ahead of all expectation. Existing franchisees have strong opening programmes
and I am pleased to announce the recent signing of new franchisees for Austria/
Switzerland and China. Interest in Bear Factory franchises is very strong and we
anticipate more signings in the near future.
People
Last year I referred to the importance of retaining exceptional people in our
business and to some of the initiatives we were taking to achieve this. I can
report that we have been awarded Investor in People status at both Regent Street
and Bear Factory.
Dividend
The Board is not recommending a final dividend in view of the recommended offer
of 205p per share announced today. In the event that this offer lapses and
Hamleys remains an independent company, the Board intends to declare a first
interim dividend for the current year of 5.1p, in addition to the usual interim
dividend.
Outlook
Since the start of 2003, the retail climate has cooled significantly. In central
London, in particular, a number of factors, including the suspension of service
on the Central Line and the effects of war on visitor numbers, have combined to
create a challenging trading environment. It will come as no surprise that sales
in Regent Street since the year end have been slow, showing a fractional decline
on last year. Bear Factory sales have strengthened considerably since a poor
March and trading here is more encouraging.
We have made our plans for the coming year in the expectation that it will be
challenging and we have been aiming to deliver continued profit growth despite
these challenges.
We have also announced today a recommended cash offer of 205p per share which
the Independent Committee of the Board believes is an attractive price for
shareholders in a time of uncertain market conditions.
Simon Burke
Chairman
17 June 2003
Consolidated Profit and Loss Account
For the 52 week period ended 29 March 2003
Unaudited
2003 2002
Note #' 000 #' 000
Turnover 51,782 45,918
Operating profit before exceptional items 6,262 4,912
Bear Factory net litigation costs (200) -
Toystack rebranding related costs - (664)
Release of property provision - 250
-------- --------
Operating profit 2 6,062 4,498
Net interest payable (690) (785)
-------- --------
Profit on ordinary activities before taxation 5,372 3,713
Taxation on profit on ordinary activities 3 (1,678) (1,196)
-------- --------
Profit on ordinary activities after taxation 3,694 2,517
Dividends (508) (1,533)
-------- --------
Retained profit for the period 3,186 984
-------- --------
Earnings per share
Basic 5 16.8p 12.0p
Diluted 5 16.7p 12.0p
-------- --------
Dividends per share 4 2.2p 7.3p
-------- --------
All results are from continuing businesses
Consolidated Balance Sheet
For the 52 week period ended 29 March 2003
Unaudited
Note 2003 2002
#' 000 #' 000
Fixed assets
Intangible assets 908 105
Tangible assets 13,684 10,956
------ -------
14,592 11,061
Current assets
Stocks - goods for resale 6,675 5,542
Debtors 1,952 1,373
Cash at bank and in hand 836 1,279
------- -------
9,463 8,194
Creditors
Amounts falling due within one year (6,510) (17,325)
------- -------
Net current assets / (liabilities) 2,953 (9,131)
------- -------
Total assets less current liabilities 17,545 1,930
Creditors
Amounts falling due after more than one year (8,919) -
Provisions for liabilities and charges (576) (373)
------- -------
Net assets 8,050 1,557
------- -------
Capital and reserves
Called up share capital 1,284 1,167
Share premium account 7 3,511 321
Capital redemption reserve 7 6,403 6,403
Profit and loss account 7 (3,148) (6,334)
------- -------
Equity shareholders' funds 8,050 1,557
------- -------
Consolidated Cash Flow Statement
For the 52 week period ended 29 March 2003
Unaudited
Note 2003 2002
#' 000 #'000
------------ -----------
Net cash inflow from operating 6 8,100 7,884
activities ------------ -----------
Returns on investments and servicing of
finance
Interest received 731 183
Interest paid (1,463) (1,010)
------------ -----------
(732) (827)
------------ -----------
Taxation paid (1,611) (1,020)
------------ -----------
Capital expenditure and financial
investment
Purchase of intangible fixed assets (69) (37)
Purchase of tangible fixed assets (4,358) (4,669)
------------ ----------
(4,427) (4,706)
------------ ----------
Acquisitions and disposals (770) -
Equity dividends paid (1,580) (1,533)
------------ ----------
Net cash outflow before use of liquid (1,020) (202)
resources and financing ------------ ----------
Financing
Repayment of bank loans (2,729) 719
Issue of ordinary share capital (net of 3,306 -
costs) ------------ ----------
577 719
------------ ----------
Movement in cash (443) 517
------------ ----------
Reconciliation to net debt
Balance at 31 March 2002 (10,369) (10,167)
Net cash (outflow) / inflow (443) 517
Movement in bank borrowings 2,729 (719)
----------- -----------
Balance at 29 March 2003 (8,083) (10,369)
----------- -------------
Notes to the Financial Information
1 Basis of Presentation
The financial information for the 52 week period ended 29 March 2003 is
unaudited and does not constitute statutory accounts as defined in S240 of the
Companies Act 1985. The financial information has been prepared on the basis of
the accounting policies set out in the Group's Annual Report and Accounts for
the 52 week period ended 30 March 2002, and in accordance with UK generally
accepted accounting principles. The financial information for the 52 week period
ended 30 March 2002 is extracted from the statutory accounts, which include an
unqualified audit report and have been delivered to the Registrar of
Companies.
2 Segmental Reporting
2003 2002 2003 2002 2003 2002 2003 2002
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Hamleys (inc Bears Toystack Total
. satellites)
Turnover 32,036 30,293 19,746 13,158 - 2,467 51,782 4l5,918
----- ------ ------ ------ ------ ----- ------ ------
Gross profit 17,212 16,071 13,554 9,138 - 574 30,766 25,783
----- ------ ------ ------ ------ ----- ------ ------
Contribution 8,100 7,818 3,597 2,854 - (847) 11,697 9,825
----- ------ ------ ------ ------ ------
Central and Distribution Costs (5,435) (4,913)
Bear Factory net litigation costs (200) -
Asset write downs and related costs (Toystack) - (664)
Release of property provision (Hamleys) - 250
------ ------
Operating profit 6,062 4,498
------ ------
3 Taxation
The effective tax rate for 2003 is 31% (2002: 32%).
4 Dividends
In view of the recommended offer of 205p per share announced on 17 June 2003 the
Directors do not propose any final ordinary dividend.
5 Earnings Per Share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary share in issue
during the period of 21,944,045 (2002: 20,939,290).
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares. The Group has only one category of dilutive potential ordinary shares:
those share options granted to employees where the exercise price is less than
the average market price of the Company's ordinary shares during the period. The
adjusted weighted average number of ordinary shares in issue during the period
were 22,184,042 (2002: 20,939,290).
6 Reconciliation of operating profit to net cash inflow from operating
activities
2003 2002
#' 000 #' 000
Operating profit 6,062 4,498
Amortisation of intangible fixed assets 53 30
Depreciation of tangible fixed assets 1,624 1,593
Exceptional write off on disposal of Toystack fixed - 669
assets
(Increase) / decrease in stocks (1,133) 657
(Increase) / decrease in debtors (473) 445
Increase in creditors 1,967 242
Decrease in provisions for liabilities and charges - (250)
------ ------
Net cash inflow from operating activities 8,100 7,884
------ ------
7 Reserves
Share Capital Profit and
Premium Redemption Loss
Account Reserve Account
#' 000 #' 000 #' 000
At 31 March 2002 321 6,403 (6,334)
Profit for the period - - 3,186
Premium on shares issued 3,360 - -
Share issue costs (170) - -
-------- -------- ---------
At 29 March 2003 3,511 6,403 (3,148)
-------- -------- ---------
The parent company 's distributable reserves within the profit and loss account
at 29 March 2003 were #3,092,000 (At 30 March 2002: #3,700,000).
This information is provided by RNS
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