Prelim results and Open Offer

RNS Number:2302M
Victory Corporation PLC
12 June 2003



              Victory Corporation plc ("Victory" or "the Company")

       Audited Results for the Year Ended 31st March 2003 and Open Offer



Summary of Audited Results:

   *The strategy of focusing on the cosmetics business continues to impact
    favourably on the Company's performance with group turnover for the period
    increasing by 21% to #57.6 million (2002: #47.5 million)

   *The cosmetics business demonstrated solid growth with sales increasing by
    34% following the introduction of an innovative Performance Incentive Plan
    for Independent Sales Consultants

   *The cosmetics business became EBITDA positive, before exceptional items

   *Capo, the unprofitable non-core retail clothing business, was sold in
    April

   *Current trading: For the first 10 weeks of the current financial year,
    sales through our direct selling channel have increased by 34% whilst
    like-for-like sales in our 22 retail stores have increased by 10% compared
    with the same period last year. Overall cosmetics sales increased by 37%
    during this period



Today, commenting on the results John Jackson, Chairman of Victory, said: "We
are pleased that our strategy of concentrating our resources on the highly
successful Virgin Cosmetics business has resulted in another year of strong
growth".


Victory to raise #10 million of new equity by Open Offer:

The Company is also pleased to announce that it will raise approximately #10
million (net of expenses) of new equity to reduce its outstanding debt
obligations. The fundraising will be structured as an open offer ("Open Offer")
available to all shareholders. To ensure that the Company has committed funding,
Virgin Retail Investment Holdings Limited has agreed to underwrite the proposed
Open Offer.

Victory intends to use the net proceeds of the fundraising to improve its
balance sheet position by repaying #10 million of the working capital loan
currently provided by Barfair Limited, a company in the same group of companies
as its majority shareholder, Virgin Retail Holdings Limited. The fundraising is
important in order to underpin the Company's working capital position as the
cosmetics business continues to grow strongly, as described in detail in the
Chairman's statement accompanying the preliminary results for the year ended 31
March 2003 released today.

The Company also proposes to undertake a capital reorganisation alongside the
Open Offer. The capital reorganisation will involve consolidating every 100
existing ordinary shares of 0.05p nominal value into 1 new ordinary share of 5p
nominal value. Offer shares will be made available to shareholders on the basis
of 1 offer share for every 84 existing ordinary shares held. The issue price of
the shares is 170p.

The fundraising is subject to shareholder approval and a document containing
full details of the proposed Open Offer has been sent to all shareholders today.

Victory Chairman John Jackson concluded: "Following the proposed fundraising and
disposal of the non-core retail clothing business, Capo, I believe the Company
will be well positioned to deliver strong growth for a number of years ahead
and, importantly, to deliver sustainable profits for our shareholders".



For further information, please contact:

John Jackson, Chairman Victory Corporation plc           01243 622 226

David Simonson or Clare Maciocia Merlin Financial        0207 606 1244
Communications




Audited results for the year ended 31 March 2003



Chairman's statement

Highlights

   *Turnover up by 21% to #57.6 million and operating losses, from continuing
    operations before exceptional items, reduced by 44% to #2.0 million

   *Cosmetics business continues to demonstrate solid growth with sales
    increasing by 34% and became EBITDA positive #0.2 million

   *Number of Cosmetics Consultants grew by 36% to 7,774

   *Continue our focus on the Cosmetics business with the disposal of Capo,
    the unprofitable non-core retail clothing business

Solid Growth

The strategy of concentrating our resources behind our highly successful Virgin
Cosmetics business has resulted in another year of strong growth, especially
within our Direct Selling channel. One of the key drivers within Direct was the
introduction of an innovative Performance Incentive Plan for Independent Sales
Consultants that resulted in higher activity throughout the network and a
positive impact on growth.

Results

For the financial year ended 31st March 2003, I am able to report a 21% increase
in turnover to #57.6m (2002: #47.5m), generated primarily from organic growth.
Group operating losses before discontinued businesses and exceptionals were
#2.0m (2002: #2.9m). The overall net loss for the Group, after exceptionals, was
#7.9m (2002: #4.0m).

Overall, borrowings at the year-end totalled #18.3m which included a working
capital loan from Virgin of #8.4m. Capital expenditure during the year amounted
to #1.9m.

Business Activities

Virgin Cosmetics

The Cosmetics business delivered an encouragingly strong performance, recording
a 34% increase in sales as compared with the previous year. I anticipate a
strong level of growth to be sustainable over the next two years.

Virgin Cosmetics Direct

Virgin Cosmetics Direct, which accounts for 79% of our Cosmetics Sales,
delivered a very strong performance, with turnover increasing by 36% as compared
with last year.

The strength of the Direct Selling Cosmetics business lies in the enthusiasm and
professionalism of the retail and self-employed Consultant team, the quality and
popularity of the products and the informed and trusted customer service.

During the year, our Consultant network increased to 7,774 (2002: 5,700), an
increase of 36%. Over 162,500 classes were held (2002: 121,000) attended by over
1,516,000 customers (2002: 1,076,000).

The Performance Incentive Plan, introduced in January 2002, proved to be very
successful. The scheme, which is directly linked to sales performance, has
resulted in significantly higher levels of recruitment, class activity and
sales. This plan, combined with our highly competitive commission structure and
outstanding incentives, promotions and recognition programme, provides a Virgin
Vie Consultant or Manager with a lucrative and exciting career. Our Independent
Manager network, who direct, train and motivate the Consultant teams, increased
by 53%.

Virgin Cosmetics Retail & Treatments

The retail environment once again proved to be a highly competitive and
challenging sector. Against this background, another year of strong
like-for-like sales +6% is testimony to the Retail Team's continued focus on
good practice, improving customer service and merchandising. The strategy of
supporting the nationwide network of Direct Consultants with retail outlets
remains on course. New stand-alone retail stores have opened successfully in
Edinburgh, Brent Cross and Bluewater, bringing the total number of stand-alone
stores to 12.

As part of our strategy to have stores in key locations, we continued to open
new stores incorporating our Virgin Spa Treatment Rooms in each new Virgin
Active Life Centre. During the year, we opened three further Virgin Spas in
Islington, Acton and Wandsworth. At the end of March 2003, we had 22 stores
including those in Virgin Active.

In partnership with the Sound & Media Group, Virgin Cosmetics factory outlet
stores have been opened in Ashford, Cheshire Oaks, Livingston, Brighton, York
and Doncaster. The six new stores merchandise discontinued and seasonal lines as
well as products in obsolete packaging. The opening of this new channel enables
us to benefit from an increasingly popular retail sector, manage stockholding
more efficiently and bring new products to the market quickly.

Virgin Cosmetics - New Products

Once again our design, marketing and new product development teams have produced
an array of outstanding new products. Virgin Cosmetics has a reputation for
producing dynamic, innovative and creative new products.

Highlights this year include:

   *Stop The Clock Anti-Ageing Energising Day Cream, Anti-Ageing Hand Cream,
    Vitamin C Energising Skin Fix, Vitamin C Energising Skin Polisher;

   *New eye shadows, and lipsticks as Colour Drench Lipsticks in new colours
    and formulations. A range of High Shine lip-gloss, and new lip and eye
    definers, as well as Masquerade Colour Collection;

   *A fabulous new Spa range including Instant Action Hydrating Skin Drink,
    Rise & Shine Foaming Bath Exfoliator, Floatation Bath Detox Mineral Salts
    and Buff & Polish Salt Scrub plus Nip & Tuck Contouring Body Gel; and

   *Glittering and Shimmering Christmas ranges, our best selling new seasonal
    collection

2003 was a very successful year for new products and a range of further new
products are being introduced in 2003/04.

Virgin Cosmetics - Logistics

Virgin Cosmetics supply chain was restructured during the second half of the
year, in order to facilitate future tax and operating cost efficiencies. We
opened a central warehousing facility in Hungary and our Cosmetics supply chain
will be relocated to the Far East during 2003/04. A number of one-off costs were
incurred during the supply chain reconstruction.

International

The Liwa Group, our Middle East franchisee, opened eight stores in the Middle
East - one in Sharjah, Kuwait, two in Abu Dhabi, Dubai and Qatar. Despite the
Gulf war, an outlet was opened in Bahrain and two further stores in Dubai.

An additional eight Virgin Spas were opened in Virgin Active Life Centres in
South Africa, making ten in total. The Spas were opened by our South African
franchisee, BVI Franchising of South Africa.

The existing licensing arrangements for the Asian region with Luxasia Pte
Limited are currently being terminated. Luxasia adopted a model of selling
Virgin Vie products primarily in department stores in Asia. After an initial
trial period, Luxasia found sales through this selling channel to be
unsatisfactory and believe the UK model of Direct Selling more appropriate for
Asia. Since Luxasia does not wish to sell through the Direct Selling channel, we
are currently looking for a Direct Selling organisation to take over the Asian
licence.

Virgin Clothing

Our strategy continues to be the development of our clothing business through
licencing arrangements with key strategic partners. Unique Commerce Limited
("UCL"), our underwear licencee, is concentrating its resources on proving the
concept in the UK before expanding internationally. UCL plans to open further
stand-alone lingerie stores in the UK. Fast Fashion, our women's wear licencee,
is operating satisfactorily in Italy, France, Spain and Greece and we expect
good sales growth from this licencee in 2003. Davenport, our women's wear
franchisee in Australia, is performing well and expects to expand the number of
its trading outlets in the year ahead. We have just signed a footwear licence
for the UK with a company called Experate-UK, and they are planning to launch a
range of men's footwear in the last quarter of 2003.

Capo

Capo, a non-core retail clothing business, experienced difficult trading
conditions throughout the year, in a very challenging retail clothing sector,
with margins being further eroded. The trading losses for Capo for the year
amounted to #1.3m, before taking into account fixed asset and stock impairments.

The Capo business was sold in April 2003 for a nominal sum and impairment
charges of #2.3m have been provided for in the 2003 accounts. Accordingly, the
loss on disposal in the 2004 accounts will not be material.

As part of the sale, Victory Corporation provided a #900,000 working capital
facility to GW385 Limited, a company set up by the Capo management and a third
party investor to purchase the Capo business. The facility is supported by
#350,000 in guarantees from the Directors of GW385 Limited. The facility reduces
on an annual basis and falls away to nil by 31st May 2009.

In the event of any subsequent disposal of the business by GW385 Limited,
Victory Corporation, as part of the sale consideration, has a call option over
25% of its shares.

Management

As at 31st December 2002, John Rogers resigned as Chairman and became a
Non-Executive Director. The Board thanks John for steering the Group through
difficult times and overseeing the transformation of the Group into primarily a
cosmetics led company. I became Executive Chairman from 1st January 2003 and Ros
Simmons was appointed to the newly created post of Managing Director Cosmetics.
As Marketing and New Product Director, Ros has played a pivotal role in the
successful development of Virgin Cosmetics and she is very well qualified to
lead the Cosmetics team into the future.

Ratan Daryani, a founding Director of Virgin Cosmetics, resigned as a Director
of Victory Corporation on 7th April 2003, and we thank him for his contribution
and wish him every success in the future.

The Future

Against a strong sales performance this time last year, trading levels achieved
in the first 10 weeks of the current financial year are very encouraging for
Cosmetics. Sales through the Direct Selling channel have increased by 34% whilst
like-for-like sales in our 22 retail stores have increased by 10%. Overall in
the 10 weeks Cosmetics sales have increased by 37%.

The level of interest shown in our business by potential international licencing
partners underpins our belief that the Cosmetics business will significantly
increase its contribution to profitability and is the primary driver of growth
in the business over the longer term.

With the disposal of the non-core retail clothing business, Capo, the Group's
strategy is firstly to maximise the opportunity presented by the UK Cosmetics
market, with our prime selling channel being Direct, before expanding Direct
Selling into other large Cosmetics markets internationally. I believe the
structure of the business is capable of supporting strong growth for a number of
years ahead, that will deliver sustainable future profits. As importantly, we
have the creative talent necessary to ensure that our outstanding product range
maintains a competitive edge.

I would like to thank the staff and our self-employed Consultant network, for
their hard work, dedication and enthusiasm. We all look forward to a profitable
future going forward.


John Jackson

12 June 2003



Consolidated profit and loss account

For the year ended 31 March 2003



                  Continuing  Discontinued      Total    Continuing  Discontinued      Total
                operations    operations       2003    operations    operations       2002

                      #000          #000       #000          #000          #000       #000
------------       -------      --------     ------       -------       -------     ------



Turnover            47,954         9,664     57,618        37,639         9,862     47,501

Cost of            (19,462)       (6,074)   (25,536)      (15,939)       (5,741)   (21,680)
sales

------------       -------      --------     ------       -------       -------     ------

Gross profit        28,492         3,590     32,082        21,700         4,121     25,821



Administrative     (31,787)       (7,157)   (38,944)      (24,650)       (4,692)   (29,342)
expenses

Other                    -             -          -            62             -         62
operating
income

------------       -------      --------     ------       -------       -------     ------

Operating loss      (1,975)       (1,256)    (3,231)       (2,888)         (571)    (3,459)
before
exceptional
items



Exceptional         (1,320)       (2,311)    (3,631)            -             -          -
items

------------       -------      --------     ------       -------       -------     ------

Operating           (3,295)       (3,567)    (6,862)       (2,888)         (571)    (3,459)
loss



Interest
receivable and
similar
income

                                                  7                                      1

Interest
payable and
similar
charges

                                             (1,080)                                  (530)

------------       -------      --------     ------       -------       -------     ------

Loss on                                      (7,935)                                (3,988)
ordinary
activities
before
taxation

------------       -------      --------     ------       -------       -------     ------

Tax on losses                                     -                                      -
on ordinary
activities

------------       -------      --------     ------       -------       -------     ------

Loss on                                      (7,935)                                (3,988)
ordinary
activities
after
taxation

------------       -------      --------     ------       -------       -------     ------

Retained loss                                (7,935)                                (3,988)
for the            
financial
year
-----------        -------      --------     ------       -------       -------     ------



Loss per share                                 (1.5)p                                 (0.8)p
- basic              -------      --------     ------       -------       -------     ------
-----------



Consolidated statement of total recognised gains and losses

                                                       2003       2002

                                                       #000       #000
---------------------------------------------     ---------  ---------

Loss for the financial year                          (7,935)    (3,988)

Currency translation differences                          4         17
---------------------------------------------      ---------  ---------

Total gains and losses recognised since last         (7,931)    (3,971)
annual report                                       
---------------------------------------------       ---------  ---------



Consolidated balance sheet

As at 31 March 2003

                                            2003       2003       2002

                                 Note       #000       #000       #000
------------------------------  -----   --------   --------   --------

Fixed assets
Intangible assets                                       161        303
Tangible assets                                       4,367      5,998

------------------------------   -----   --------   --------   --------

                                                      4,528      6,301

Current assets
Stock                                      9,929                 9,389
Debtors                                    4,549                 3,409

------------------------------   -----   --------   --------   --------

                                          14,478                12,798

Creditors: amounts falling due           (28,316)              (20,298)
within one year

------------------------------   -----   --------   --------   --------

Net current liabilities                             (13,838)    (7,500)

------------------------------   -----   --------   --------   --------

Total assets less current                            (9,310)    (1,199)
liabilities

Creditors: amounts falling due
after more than one year                               (110)      (290)

------------------------------   -----   --------   --------   --------

Net liabilities                                      (9,420)    (1,489)

------------------------------   -----   --------   --------   --------

Capital and reserves
Called up share capital                                 258        258
Share premium account                                53,765     53,765
Capital reserve                                      13,724     13,724
Profit and loss account                             (77,167)   (69,236)

------------------------------   -----   --------   --------   --------

Equity shareholders' deficit                         (9,420)    (1,489)

------------------------------   -----   --------   --------   --------



Consolidated cash flow statement
For the year ended 31 March 2003

                                              2003      2003      2002

                                              #000      #000      #000
----------------------------------------  --------  --------  --------

Operating loss                              (6,862)             (3,459)
Depreciation and amortisation                3,633               1,962
Profit on disposal of fixed assets               -                 (31)
Movement in stock                             (540)                (60)
Movement in debtors                         (1,140)              1,123
Movement in creditors                         (163)             (3,312)
----------------------------------------  --------  --------  --------

Cash outflow from operating activities                (5,072)   (3,777)

Interest received                                7                   1
Interest paid                               (1,076)               (524)
Interest element of finance lease rental        (4)                 (6)
----------------------------------------  --------  --------  --------

Returns on investments and servicing of               (1,073)     (529)
finance

Sale of tangible fixed assets                    -                 469
Purchase of intangible fixed assets            (37)
Purchase of tangible fixed assets           (1,823)             (2,010)
----------------------------------------  --------  --------  --------

Capital expenditure                                   (1,860)   (1,541)

Cash outflow before financing                         (8,005)   (5,847)
----------------------------------------  --------  --------  --------

Debt: new secured loan                      10,939               1,325
Debt: secured loan repayment                (3,825)                  -
Debt: new unsecured loan                         -                 296
Debt: unsecured loan repayment                 (89)                  -
Capital element of finance lease rentals       (72)               (110)
----------------------------------------  --------  --------  --------

Financing                                              6,953     1,511
----------------------------------------  --------  --------  --------

Decrease in cash in the period                        (1,052)   (4,336)
----------------------------------------  --------  --------  --------

Reconciliation of net cash flow to movement in net debt as at 31 March

                                                     2003         2002

                                                     #000         #000
--------------------------------------------    ---------    ---------

Decrease in cash in period                         (1,052)      (4,336)
Cash inflow from increase in debt financing        (7,025)      (1,621)
Cash outflow from lease financing                      72          110
--------------------------------------------    ---------    ---------

Movement in net debt                               (8,005)      (5,847)

Net debt at beginning of period                   (10,291)      (4,444)
--------------------------------------------    ---------    ---------

Net debt at end of period                         (18,296)     (10,291)
--------------------------------------------    ---------    ---------

Segmental analysis

               Retail and  Wholesale    Clothing  Other net   Total Retail and  Wholesale  Clothing  Other net  Total
                 direct                 licenses     assets             Direct             licenses     assets

                   2003         2003        2003       2003    2003       2002       2002      2002       2002   2002

                   #000         #000        #000       #000    #000       #000       #000      #000       #000   #000
                -------      -------    --------   --------  ------     ------     ------    ------    ------- ------ 

Turnover
Continuing
operations       46,260        1,445         249          -  47,954     32,924      1,904     2,811          - 37,639

Discontinued
operations        9,664            -           -          -   9,664      9,862          -         -          -  9,862
                -------      -------    --------   --------  ------     ------     ------    ------    ------- ------ 

      Total      55,924        1,445         249          -  57,618     42,786      1,904     2,811          - 47,501
                -------      -------    --------   --------  ------     ------     ------    ------    ------- ------ 

Net
(liabilities)
/
assets          (18,059)           -       1,612      7,027  (9,420)   (14,137)         -     1,523     11,125 (1,489)
                -------      -------    --------   --------  ------     ------     ------    ------    ------- ------ 

All the turnover originated within the United Kingdom or Eire. Turnover by
destination is not materially different from turnover by origin shown here.
Turnover above represents sales to third parties.

                  Operating loss  Exceptional   Total    Operating loss  Exceptional   Total
                          before      items                      before      items
                     exceptional                            exceptional
                         items                                  items

                          2003         2003      2003            2002         2002      2002

                          #000         #000      #000            #000         #000      #000
--------------------   -------      -------    ------         -------      -------     -----

Operating activities
Retail and direct       (1,275)      (1,320)   (2,595)         (4,444)           -    (4,444)
Licenses                   110            -       110           2,367            -     2,367
Wholesale                  (13)           -       (13)            110            -       110

Discontinued activities
Retail and direct       (1,256)      (2,311)   (3,567)           (571)           -      (571)

Head office costs         (797)           -      (797)           (921)           -      (921)
----------------       -------      -------    ------         -------      -------     -----

Loss before             (3,231)      (3,631)   (6,862)         (3,459)           -    (3,459)
interest and
tax

Interest                                            7                                      1
receivable

Interest                                       (1,080)                                  (530)
payable

----------------         -------      -------    ------         -------      -------     -----

Loss on ordinary                               (7,935)                                (3,988)
activities
before tax

----------------         -------      -------    ------         -------      -------     -----


Taxation

There is no Corporation Tax charge due to losses incurred.

The current tax charge for the year is higher (2002: higher) than the standard
rate of Corporation Tax in the UK (30% (2002: 30%)). The differences are
explained below:

                                                     2003        2002

                                                     #000        #000
---------------------------------------------   ---------   ---------

Losses before taxation                             (7,695)     (3,988)

---------------------------------------------   ---------   ---------

Tax credit at 30%                                  (2,309)     (1,196)

---------------------------------------------   ---------   ---------

Difference                                         (2,309)     (1,196)

---------------------------------------------   ---------   ---------

Reconciling items
Expenses not deductible                            (1,511)       (194)
Capital allowances in excess of depreciation         (151)       (218)
Utilisation of brought forward tax losses               -         775
Unrelieved tax losses                                (647)     (1,559)

---------------------------------------------   ---------    --------

                                                   (2,309)     (1,196)

---------------------------------------------   ---------    --------

Deferred tax is not provided. As at 31 March 2003 the Group had tax losses to
carry forward of approximately #58.3 million (2002: #64.5 million) and other
short term timing differences of #8.4 million (2002: #9.3 million) against which
no deferred tax asset has been recognised. The asset has not been recognised due
to uncertainty over the eventual timing of crystallisation.

Earnings per share

The basic earnings per share figure is calculated using the loss for the
financial period of #7,935,000 (2002: #3,988,000) and a weighted average number
of shares in issue during the financial period of 515,517,441 (2002:
515,517,441). Diluted loss per share has not been disclosed as the impact of
potential shares is anti-dilutive.

Transfer to reserves

The Directors are unable to recommend the payment of a dividend (2002: #nil).
The retained loss of #7.9 million (2002: #4.0 million) has been transferred to
reserves.

Exceptional charges

Operating loss is stated after the following exceptional charges in 2003:

                                           #000

Capo impairments (1)                      2,311
Supply chain restructuring costs (2)        580
Property provisions (3)                     740

   *In light of the decision by the Group to dispose of or close down Capo
    prior to the year end (it was subsequently sold - see below), certain fixed
    assets and stock were impaired at March 2003 to reflect the realisable value
    of those assets.

   *Set-up costs relating to enhancements made in the year to the Group's
    cosmetics business supply chain arrangements have been written off.

   *The Group has reviewed its property portfolio in the light of, inter
    alia, the Capo disposal and has made provision for certain lease obligations
    and other property issues.



Analysis of changes in net debt

                     Bank overdraft   Other loans    Finance leases     Total

                              #000           #000             #000       #000
-------------------         --------       --------         --------   --------



At 31 March 2002            (8,591)        (1,621)             (79)   (10,291)

Net cash flow               (1,052)        (7,025)              72     (8,005)
-------------------         --------       --------         --------   --------

Other non cash                   -              -                -          -
flow

-------------------         --------       --------         --------   --------

At 31 March 2003            (9,643)        (8,646)              (7)   (18,296)
-------------------         --------       --------         --------   --------


Post balance sheet events

Capo, a non-core retail clothing business, was sold in April 2003 and its
results are disclosed as discontinued operations. Given the disposal of this
business in April 2003 for a nominal sum, impairment charges totalling #2.3
million have been made against certain assets of the business at March 2003 (see
above), bringing the total net loss from this discontinued operation reflected
in the accounts for the year ended 31 March 2003 to #3.6 million. The loss on
disposal to be recognised in the 2004 accounts is not expected to be material.
As part of the sale, the Group has provided a #900,000 working capital facility
to GW 385 Limited, a company set up by the Capo management and a third party
investor to purchase the Capo business. The facility is supported by #350,000 in
guarantees from the directors of GW 385 Limited. The facility reduces on an
annual basis and falls away to nil by 31 May 2009.

The Company has announced that it is to undertake a fundraising of approximately
#10.4 million (before expenses) by way of an open offer to all shareholders.
Virgin Retail Investment Holdings Limited has agreed to underwrite the proposed
open offer.


Victory intends to use the net proceeds of the fundraising to capitalise up to
#10.1 million of the working capital loan currently owed to Barfair Limited.
This will strengthen the Company's balance sheet position and support its
working capital position as it pursues its strategy of expansion, as described
in the Chairman's Statement.


The Company also proposes to undertake a capital reorganisation alongside the
open offer. The capital reorganisation will involve consolidating every 100
Existing Ordinary Shares of 0.05p nominal value into 1 New Ordinary Share of 5p
nominal value.

Going Concern

The Company has announced today an Open Offer underwritten by Virgin Retail
Investment Holdings Limited by which a substantial proportion of the Group's
non-bank debt will be capitalised. In addition, Virgin Retail Holdings Limited
has indicated its intention to provide continued financial support to the Group
for at least the next 12 months. The Directors are of the opinion that,
notwithstanding the net liabilities of the Group and having made due and careful
enquiry and taking account of existing bank and other available facilities and
the continued financial support of Virgin Retail Holdings Limited, the Group is
a going concern and have continued to adopt the going concern basis in preparing
the financial statements.

Basis of information

The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 March 2003 or 2002 but is derived from
those accounts. Statutory accounts for 2002 have been delivered to the Registrar
of Companies and those for 2003 will be delivered following the Company's Annual
General Meeting. The auditors have reported on those accounts; their reports
were unqualified and did not contain statements under section 237(2) or (3) of
the Companies act 1985.



Open offer timetable of key events:

Record Date for the Open Offer                                                  Close of business on 10 June 2003

Prospectus available                                                                                 12 June 2003

    Latest time date for splitting Application Forms to
    satisfy bona fide market claims under the Open
    Offer                                                                                3.00 p.m. on 2 July 2003
                                                             
    Latest time and date for receipt of completed
    Application Forms and payment in full under the
    Open Offer                                                                           3.00 p.m. on 4 July 2003

Latest time and date for receipt of Form of Proxy                                       10.00 a.m. on 5 July 2003

EGM                                                                                     10.00 a.m. on 7 July 2003
                                                             
    Commencement of trading of Offer Shares and New
    Ordinary Shares on AIM                                                               8.00 a.m. on 8 July 2003

CREST member accounts credited                                                                        8 July 2003

Despatch of definitive share certificates for New
Ordinary Shares                                                                                      15 July 2003








                      This information is provided by RNS
            The company news service from the London Stock Exchange

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