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Share Name | Share Symbol | Market | Type |
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Pegasystems | TG:PEA | Tradegate | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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-1.50 | -2.31% | 63.50 | 65.00 | 65.50 | 63.50 | 63.50 | 63.50 | 40 | 17:58:42 |
RNS Number:5916L Peacock Group PLC 28 May 2003 28th May 2003 THE PEACOCK GROUP PLC PRELIMINARY RESULTS FOR THE 52 WEEKS ENDED 31 MARCH 2003 "This has been a year of massive change and real progress for The Peacock Group. The acquisition of bonmarche has strengthened our business by adding a fast-growing and successful brand whose customer profile ideally complements that of the Peacocks chain. Peacocks has developed and begun to roll out a new fascia and image that reflects its growing focus on more fashionable clothing for the 25 - 45 age group, projected through a much simpler brand portfolio and supported by a reconfigured supply chain." * Sales up 47% to #396.6 million, including a #108.8 million contribution from bonmarche * Gross product margins improved in both divisions through better buying and stock control * Operating profit before goodwill amortisation and exceptionals increased by 50% to #26.8 million. * Profit before tax, goodwill amortisation and exceptional items increased by 41% to #23.1 million. * Adjusted earnings per share increased by nearly 20% to 15.3p (2002: 12.8p). * 77 new format Peacocks stores now trading; average 13.5% sales uplift in refits against chain * bonmarche chain increased by 11 stores since acquisition to 270 stores by year end; Peacocks chain increased by 25 stores during year to 370 stores. * Like-for-like sales for 13 week period to 24 May (which includes impact of Easter trading) up 5% at Peacocks and 13% at bonmarche * Uplift of 19% in total dividend for year to 5.7p, reflecting confidence in progress of enlarged Group "I am confident that both divisions have management teams with the right mix of experience and skills to ensure that they operate effectively and fulfil their undoubted growth potential." - John Lovering, Chairman An analyst meeting will be held today at 11.00am at the offices of Hudson Sandler, 29 Cloth fair, London, EC1A 7NN. Please contact Rebecca Ghent on 020 7796 4133 for further details or to confirm attendance. High resolution photographs will be available to media at www.vismedia.co.uk ENQUIRIES: The Peacock Group plc Hudson Sandler Richard Kirk, Group Chief Executive Andrew Hayes/Keith Hann Keith Bryant, Group Finance Director Tel: 020 7796 4133 Tel: 020 7796 4133 (on 28 May) Thereafter: 029 2027 0000 THE PEACOCK GROUP PLC PRELIMINARY RESULTS FOR THE 52 WEEKS ENDED 31 MARCH 2003 CHAIRMAN'S STATEMENT This has been a year of massive change and real progress for The Peacock Group. The acquisition of bonmarche has strengthened our business by adding a fast-growing and successful brand whose customer profile ideally complements that of the Peacocks chain. Peacocks has developed and begun to roll out a new fascia and image that reflects its growing focus on more fashionable clothing for the 25 - 45 age group, projected through a much simpler brand portfolio and supported by a reconfigured supply chain. Results Total sales for the 52 weeks ended 31 March 2003 grew by 47.0% to #396.6 million (2002: #269.8 million), including #108.8 million from bonmarche in the 36 weeks since its acquisition. Sales grew by 6.7% in the Peacocks division, and by 19.1% in bonmarche. Group like-for-like sales, being the sales made at stores that have been open for at least a year at the start of the financial year, increased by 1.3%, comprising a 7.5% uplift in bonmarche and a 0.9% decline in Peacocks. After a disappointing first half, Peacocks responded to improved product ranges and store enhancements with a 0.7% like-for-like sales gain over the Christmas trading period and a 4.7% advance in the final quarter. By the end of the year, newly opened and refitted stores in the new Peacocks fascia comprised some 21% of the division's portfolio. Gross product margins improved in both divisions, as we maintained our focus on improved buying and stock control in Peacocks, and applied our experience in these disciplines to bonmarche. Group operating profit, before exceptional items and goodwill amortisation, increased by 50.2% to #26.8 million, including a contribution of #11.7 million from bonmarche. After increased pre-exceptional interest payable of #3.7 million (2002: #1.4 million) resulting from the acquisition, profit before taxation, goodwill amortisation and exceptional items was #23.1 million (2002: #16.4 million), a rise of 40.7%. This included non-trading profit of #0.2 million (2002: #0.4 million) that arose on the sale of properties held for resale. Exceptional items included a #0.3 million (2002: #0.4 million) charge to write off the unamortised portion of set-up fees on former bank facilities, and integration costs relating to the acquisition of #0.8 million. Goodwill amortisation was #1.5 million (2002: nil) and there was a loss on disposal of fixed assets of #0.2 million (2002: nil). After these and the exceptional items, profit before taxation was #20.3 million (2002: #16.0 million), an increase of 26.9%. The Group's reported tax rate has increased from 26.9% to 30.7% (excluding goodwill which is non-deductible for tax purposes), which we expect to be the normal level going forwards. In consequence, earnings per share adjusted to exclude exceptional items and goodwill were 15.3 pence (2002: 12.8 pence), an increase of 19.5%. Basic earnings per share were 13.0 pence (2002: 12.5 pence). Finances Net debt at the year end was #67.2 million (2002: #16.7 million), reflecting the acquisition of bonmarche. This represented gearing of 93.5%, which we expect to reduce in the current year, while normalised interest cover was a comfortable 7.2 times. Stock investment was well controlled, despite our development of more fashionable ranges, and we ended the year with a much better stock balance than in 2002. Dividend The Board proposes a final dividend of 3.9 pence per share (2002: 3.3 pence), a rise of 18.2%. Together with the increased interim dividend of 1.8 pence paid in January, this makes a total for the year of 5.7 pence, an uplift of 18.8%, covered 2.7 times by adjusted earnings per share (adjusted to exclude exceptional items and goodwill). The proposed increase reflects the Board's confidence in the success of the bonmarche acquisition and in the growth prospects of the enlarged Group. Subject to the approval of the Annual General Meeting, the final dividend will be paid on 1st August 2003 to shareholders on the register at 6th June 2003. Prospects We have made a most encouraging start to the new financial year. In the eight weeks ending 24th May 2003 like-for-like sales are up 5% in Peacocks and 11% in bonmarche. Gross product margins have continued to improve in both divisions and so like-for-like gross profit is up 6% and 12% respectively. Taking a longer thirteen week period, to ensure that each year includes the impact of Easter trading, the like-for-like sales growth has been 5% in Peacocks and 13% in bonmarche. The repositioning of the Peacocks brand is well advanced. Refurbishment in the new fascia and store design is also gaining momentum, with 60 refits scheduled for the current year, together with around 25 new store openings. We will also continue the successful expansion of bonmarche, with around 35 new stores planned. Integration of Group logistics is also well advanced, benefiting from the opening in April 2003 of bonmarche's major new distribution and head office facility at Grange Moor, near Huddersfield. Other common functions such as IT, finance and store maintenance are also being brought together, in line with our plans. We are seeing real benefits, in addition, from the sharing of skills and ideas between the divisions, notably through the application of Peacocks' proven merchandising and stock control capabilities to bonmarche and the trial of Peacocks' priorityclub based on the highly successful bonmarche bonusclub loyalty scheme. I am confident that the Group has been greatly strengthened by the bonmarche acquisition. We now have two strong and highly complementary brands in the growing value sector, with clear and distinct growth strategies and excellent, highly motivated management teams. I look forward to reporting on another year of growth and progress. John Lovering Chairman GROUP CHIEF EXECUTIVE'S REVIEW The last year has been the most exciting period for The Peacock Group since I joined the business in 1995. The bonmarche acquisition has made us the UK's third largest value retailer of clothing and footwear, and a strong second in the women's outerwear sector. It has added a successful business with considerable further growth potential to which we can add value and from which we can also learn. Consequently, the enlarged Group is much more than the sum of its two parts. The radical repositioning of the Peacocks chain over the last 12 months has restrained its progress in the short term but has much to offer for the future, as we provide our customers with the more fashionable products and up-to-date retail environment that they demand. We are already seeing a step change in performance at these new format stores. The Peacock Group Market place The value sector in UK clothing and footwear has continued to grow strongly overall, increasing its share of the market as a whole. However, competition has undoubtedly grown more intense, with the continued expansion of established discounters, a growing focus on clothing by food retailers, and the revival of mid-market specialists. Customers have become ever more demanding not just of choice and value, but also of products that are in tune with current fashion trends. Peacocks has responded to these challenges through the development of a much more focused product range that, whilst not at the cutting edge of fashion, is stylish, up-to-date and well presented, while continuing to represent exceptional value for money. bonmarche, while also committed to value, has a somewhat higher quality and price profile than Peacocks and is uniquely positioned as the only targeted high street retailer of womenswear for the 45+ age group. Strategy and management Given their distinct market positions and customer profiles, it was always our intention to manage the Group's two brands independently, while securing the benefits of increased scale in purchasing, from the sharing of best practice, and from the creation of centralised support functions in areas such as finance, IT and logistics. Good progress has been made in all these areas, in accordance with our plans. The operational management of the Peacocks division is based in Cardiff and comprises the Group directors - myself as Chief Executive, Keith Bryant (Finance and Property Director), Neil Burns (IT, Logistics and Estates Director) - together with Tim Bettley (Buying and Merchandising Director). The divisional board of bonmarche is based at Grange Moor near Huddersfield and comprises David Pidgeon (Managing Director), Andrew McDonald (Retail and Marketing Director), Gurchait Chima (Buying and Merchandising Director) and Stephen Alldridge (Finance Director). Having successfully completed the initial stages of integrating bonmarche into The Peacock Group, Steve Bullas (ex Managing Director) left the company in March 2003 and was succeeded by David Pidgeon, who was previously Merchandise Director of the Peacocks chain. I am confident that both divisions have management teams with the right mix of experience and skills to ensure that they operate effectively and fulfil their undoubted growth potential. Group functions The acquisition of bonmarche was not predicated on synergies or cost savings, but on the strategic positioning of the two businesses and their ability to work constructively together in a mutually beneficial way. The key areas that are being organised on a Group-wide basis are Logistics, Information Technology, Human Resources and Finance. Logistics Good progress has been made in integrating the management of the two divisions' transport fleets to maximise efficiency, and in developing shared services where appropriate, for example in the co-ordination of third party deliveries to stores in Northern Ireland. We have also standardised management processes and procedures in many areas. However, given the distinctness of the two product ranges and the importance of maintaining brand integrity in the eyes of the consumer, we will continue to operate separate distribution facilities and fleets for Peacocks and bonmarche albeit under the umbrella of an integrated management. A major design and build warehouse project for bonmarche at Grange Moor was well advanced at the time of acquisition, and this new 150,000 sq ft facility opened in April 2003. Volumes will build progressively and we expect the new facility to be fully operational by September, replacing four existing warehouses. This development provides us with the capacity to handle distribution for at least 500 bonmarche stores in the UK, in line with the division's long-term development plan. In Peacocks, all key performance targets for logistics were met or exceeded, and further investment has been made to keep pace with the expansion of the retail chain. A second large sortation machine is under construction at Nantgarw, near Cardiff, and is due to be commissioned in August, and we have received planning permission for an 85,000 sq ft extension to the distribution centre. Information Technology In Peacocks, a #6 million two year investment programme is underway in the replacement of our EPoS system to enhance its capabilities, including handling the new 'chip and PIN' credit card technology. This is scheduled for completion in February 2005. Human resources The well developed Peacocks 'people first' culture, with its emphasis on training and development opportunities for all our colleagues and on clear and open two-way communication, is being progressively extended to bonmarche as part of the integration process. The process of re-accreditation for Peacocks' ' Investor in People' status is currently under way, and we hope to extend this across the enlarged Group as soon as possible. Corporate social responsibility We are pleased that the enlarged Group has retained its place in the FTSE4Good Index of ethical investments, reflecting the commitment of both divisions to sound environmental practice and to ethical sourcing policies that ensure our suppliers' adherence to internationally recognised standards. Both divisions have long-standing partnership agreements with national charities, on which the fund-raising efforts of our colleagues are focused. Peacocks supports NCH, and has raised nearly #600,000 over the last four and a half years, while bonmarche has contributed over #900,000 to Macmillan Nurses over the last six years and is well on course to meet its goal of raising #1 million. bonmarche Stores The bonmarche chain comprised 259 stores at the time of acquisition. By the year end we had increased this to 270 through the opening of 14 new stores and the closure of three under performing ones. The average size of a bonmarche store is 2,650 sq ft, compared with 5,100 sq ft for Peacocks, reflecting the more tightly focused bonmarche product range. A three-year store refit campaign was completed during the year. During the current year we plan to add around 35 new stores, significantly strengthening our presence particularly in Scotland, Northern Ireland, East Anglia and the South East. The differing property requirements and customer profiles of bonmarche and Peacocks enable the fascias to trade comfortably alongside each other, enabling us to undertake joint developments where suitable opportunities arise. Buying and merchandising Older consumers are becoming increasingly youthful in their approach to clothing purchases and in their desire to keep in tune with current trends. The drive towards a more fashionable bonmarche range began before the acquisition and has been given added momentum by the application of Group skills; we have also been able to assist bonmarche in the extension of its range into new areas including lingerie and accessories. bonmarche enjoys a niche positioning and strong customer loyalty, underpinned by its commitment to offering products fully comparable in fabric quality, style and finish with the leading mainstream high street retailers, at compelling value prices. Its historic strength has been in its buying skills, notably its Amatexa production management division, which is responsible for sourcing product mainly from factories in eastern Europe. Action is already well in hand to complement this with improved supply chain and in-store processes, based on the best-practice models in use by Peacocks, including the introduction of more scientific range planning, stock control, distribution and allocation and replenishment systems. There is a significant opportunity to improve profitability through better control of stock and markdowns in particular. Marketing A key driver of bonmarche's strong like-for-like sales growth has been its successful bonusclub loyalty card scheme, whose membership grew from 250,000 to 800,000 customers in the course of the year. This provides us with an exceptional database on our core customers and their shopping habits, and has enabled us to undertake a number of successful direct mail initiatives. These have achieved response rates well above the industry norm and generated substantial uplifts in the average transaction values of bonusclub members. We anticipate that bonusclub will achieve a membership of 1.2 million by the end of the current year and are continuing to enhance its value to members with a range of strategic alliances with companies offering complementary products and services that are of interest to our customers. Peacocks Stores We opened 29 new Peacocks stores during the year and closed four, giving us a total of 370 at the year end. The average size of our new stores continued to rise and last year was 6,000 sq ft, adding a total of 174,000 sq ft of gross new trading space. This resulted in 165,000 sq ft (or 9%) of net new space added after taking account of the four store closures. In addition to new stores we also embarked on a major programme to modernise and upgrade the environment in our established stores, with the introduction of a new Peacocks brand and fascia coupled with upgraded lighting, flooring and product display systems. After a successful trial in Bridgend at the beginning of the year, this format had been extended to 77 locations, including new stores, by the end of March 2003. Refurbished stores are generating sales uplifts of some 13.5% compared with the chain as a whole, giving us the confidence to press ahead with a #6 million investment programme to refit a further 60 stores during the current year. Together with our planned new store openings, this will mean that over 40% of the Peacocks chain will be in the latest format by March 2004. Buying and merchandising Over the last two years we have comprehensively reconfigured the Peacocks supply chain and product range. Our aim has been to meet our customers' demands for more stylish and contemporary products, while reducing our dependence on traditional basic lines that are more exposed to weather-related peaks and troughs in demand. To do this effectively, we have tightened our focus on customers in the 25 - 45 age group, and have concentrated on a small range of our own clothing 'power brands': e-vie for womenswear, Urban Spirit for menswear, and miss e-vie and Street Gear for girls and boys respectively. We also offer our exclusive Curtess brand in footwear and Peacocks Home across our homeware range. This much more focused approach has significantly improved the clarity of our presentation in-store. While we do not aim to be at the leading edge of fashion, with all the risk that entails, we do intend to offer our customers products that reflect the major high street trends. This has been made possible by reducing our dependence on traditional Far Eastern suppliers, with their inevitably long lead times, and developing new relationships with manufacturers in eastern Europe in particular. This gives us the flexibility to respond much more quickly than before to changing consumer tastes. At the same time we have redefined and updated our traditional basic products, such as jeans and T-shirts, to offer our customers more stylish alternatives that still represent outstanding value for money. We continue to benefit from robust range planning and merchandise information systems, and during the year we completed the roll-out to all stores of a new replenishment system, following successful trials. This combines initial stock deliveries tailored to the profile of each store, supported by flexible replenishment driven by their rate of sale. This has produced availability levels which we believe to be comparable with the very best on the high street. Marketing Peacocks' key advertising medium has always been its own shop windows, and we are using these ever more effectively to communicate the scale and pace of change within the stores. Displays change every 2 - 3 weeks to reflect our increased focus on timely fashion wear, and the continuing, strong, value promotions that remain one of the cornerstones of our appeal. Sales are also benefiting from the introduction of more colleague- and customer-friendly display equipment within the stores, supported by improved visual merchandising. Trials began in February of a new Peacocks priorityclub loyalty card, based on the successful bonmarche bonusclub concept. Initial results are very encouraging, with 60,000 customers already participating in the scheme through just 40 stores. Wholesale Shortly before the year end we concluded a new agreement with Woolworths for a three year period to August 2006. This contract provides for Peacocks' continued participation in Woolworths' 18 current big W stores and in all future openings of the concept, three of which are scheduled for 2003. The Future There are significant benefits still to come from leveraging the complementary strengths of bonmarche and Peacocks. There is also substantial scope for continued physical expansion, with ultimate potential for at least 700 Peacocks and 500 bonmarche stores across the UK. This year we plan to open some 60 new stores under our two fascias, creating 900 new jobs to add to our current total of 8,500 colleagues. In the future as in the past, our success will be dependent on the commitment of all our team to putting customers first and delivering quality service. On behalf of the Board, I would like to extend a warm welcome to the 3,000 people who joined the Group through the merger with bonmarche and to thank all our colleagues across both divisions for their contributions to the integration of Peacocks and bonmarche, and the successful development of both businesses throughout the year. Richard Kirk Group Chief Executive Consolidated profit and loss account (summary) 2003 2003 2003 2002 Before goodwill Goodwill and Total Total and exceptional exceptional items items Note #'000 #'000 #'000 #'000 Turnover Existing operations 287,803 - 287,803 269,818 Acquisitions 108,793 - 108,793 - __________ __________ __________ __________ Continuing operations 396,596 - 396,596 269,818 Cost of sales (320,775) - (320,775) (221,326) __________ __________ __________ __________ Gross profit 75,821 - 75,821 48,492 Other operating expenses 1 (49,255) (2,317) (51,572) (31,024) Other operating income 1 227 - 227 368 __________ __________ __________ __________ Operating profit 26,793 (2,317) 24,476 17,836 Comprises: Existing operations 15,080 (397) 14,683 17,836 Acquisitions 11,713 (1,920) 9,793 - __________ __________ __________ __________ Continuing operations 26,793 (2,317) 24,476 17,836 Loss on disposal of fixed assets - (190) (190) - Net finance charges 1 (3,718) (264) (3,982) (1,834) __________ __________ __________ __________ Profit on ordinary activities before taxation 23,075 (2,771) 20,304 16,002 Tax on profit on ordinary activities 2 (6,695) (4,301) __________ __________ Profit on ordinary activities after taxation 13,609 11,701 Dividends paid and proposed 3 (6,295) (4,422) __________ __________ Retained profit for the year transferred to reserves 7,314 7,279 __________ __________ Earnings per ordinary share: 4 - Basic 13.0p 12.5p - Adjusted to exclude exceptional items 15.3p 12.8p - Diluted 13.0p 12.4p There were no recognised gains and losses other than the profit in each year. Consolidated balance sheet (summary) Note 2003 2002 #'000 #'000 Fixed assets Goodwill 5 42,640 - Tangible assets 101,659 60,990 Investments 4 3,128 3,128 147,427 64,118 Current assets Goods for resale 61,858 37,601 Debtors 17,609 10,574 Cash at bank and in hand 6,892 6,143 86,359 54,318 Creditors: Amounts falling due within one year (119,065) (58,958) Net current liabilities (32,706) (4,640) Total assets less current liabilities 114,721 59,478 Creditors: Amounts falling due after more than one year (34,437) (4,406) Provisions for liabilities and charges (8,387) (7,058) Net assets 71,897 48,014 Capital and reserves Called-up share capital 1,135 952 Share premium account 42,762 42,762 Merger reserve 16,386 - Capital redemption reserve 57 57 Profit and loss account 11,557 4,243 Equity shareholders' funds 6 71,897 48,014 Consolidated cash flow statement (summary) Note 2003 2002 #'000 #'000 Net cash inflow from operating activities 7 50,361 26,603 Returns on investments and servicing of finance (3,402) (1,394) Taxation (7,839) (4,051) Capital expenditure and financial investment (31,388) (18,108) Acquisitions (24,970) - Equity dividends paid (5,028) (3,905) Net cash outflow before financing (22,266) (855) Financing 23,015 3,857 Increase in cash in the year 749 3,002 Reconciliation of net cash flow to movement in net debt 2003 2002 #'000 #'000 Increase in cash in the year 749 3,002 Cash outflow from increase in debt and lease financing (24,763) (3,857) Change in net debt arising from cash flows (24,014) (855) Loan notes acquired (2,750) - Write-off of unamortised finance costs on repayment of debt (264) (403) Costs of debt issue 1,208 - Net debt acquired with subsidiary (24,029) - New finance leases (530) - Amortisation of finance costs of debt issue (176) (95) Movement in net debt in year (50,555) (1,353) Net debt at start of year (16,652) (15,299) Net debt at end of year (67,207) (16,652) Notes 1. Operating profit and exceptional items Operating exceptional items include #1,470,000 of goodwill amortisation, together with #847,000 of costs incurred during the current year relating to the group restructuring that commenced following the acquisition of Bon Marche Group Limited in July 2002. Net finance charges includes #264,000 (2002: #403,000) of exceptional costs being the write-off of financial costs relating to the Group's borrowings that were repaid in July 2002 and September 2001 respectively. Operating profit includes income from the sale of properties held for resale. The key financial results are adjusted below to exclude the impact of property disposals, goodwill amortisation and exceptional items: 2003 2002 #'000 #'000 Profit on ordinary activities after taxation 13,609 11,701 Exceptional group re-organisation costs 847 - Exceptional non-operating items: - write-off of financing costs repaid during the period 264 403 - loss on disposal of fixed assets 190 - Profit on sale of properties held for resale (227) (368) Goodwill amortisation 1,470 - Tax arising on above items (excluding goodwill) (330) (9) Profit after tax excluding exceptional items, goodwill 15,823 11,727 amortisation and profit on sale of properties held for resale Adjusted basic earnings per share 15.1p 12.5p 2. Tax on profit on ordinary activities 2003 2002 #'000 #'000 UK corporation tax - current 6,256 4,767 - deferred 439 (83) Adjustment in respect of prior years (current tax) - (383) 6,695 4,301 3. Dividends paid and proposed 2003 2002 #'000 #'000 Interim paid of 1.8p (2002: 1.5p) per ordinary share 1,988 1,382 Final proposed dividend of 3.9p (2002: 3.3p) per ordinary share 4,307 3,040 6,295 4,422 Dividends have been waived on the shares held by the EBT. 4. Earnings per ordinary share Basic earnings per ordinary share have been calculated by dividing the profit on ordinary activities after taxation for each financial period by the weighted average number of ordinary shares in issue during the year. Diluted earnings per share have been calculated by dividing the profit on ordinary activities after taxation for each financial year by the weighted average number of ordinary shares in issue during the year adjusted for the dilutive effect of all outstanding share options. The weighted average number of shares excludes 3,062,000 shares, held by the Employee Benefit Trust (2002: 3,064,000 shares) for subsequent transfer to employees under various incentive schemes. The market value of these shares at year end was #3,123,000 (2002: #4,075,000). In order to exclude the effect of the exceptional items on the results of the group, adjusted earnings per ordinary share have been based on the profit on ordinary activities after taxation for each financial year but excluding exceptional items and goodwill amortisation. The number of shares and earnings used to calculate earnings per share is as follows: 2003 2002 Number Number Weighted average number of shares used for basic earnings per share 104,737,203 93,548,329 Impact of share options 130,527 516,254 Number of shares used for diluted earnings per share 104,867,730 94,064,583 4. Earnings per ordinary share (continued) Earnings attributable to ordinary shareholders 2003 2003 2002 2002 #'000 EPS #'000 EPS Profit on ordinary activities after taxation 13,609 13.0p 11,701 12.5p Exceptional group re-organisation costs 847 0.9p - - Exceptional non-operating items 454 0.4p 403 0.4p Tax arising on exceptional items (400) (0.4p) (121) (0.1p) Goodwill amortisation 1,470 1.4p - - Profit after taxation excluding exceptional items 15,980 15.3p 11,983 12.8p and goodwill 5. Acquisition of Bon Marche Group Limited The group purchased Bon Marche Group Limited on 22nd July 2002 for a total consideration of #46.1m (#45.3m plus acquisition costs of #0.8m). The total consideration was satisfied by #26.2m in cash, #17.1m of newly issued shares and #2.8m in guaranteed bank loans. The transaction was accounted for as an acquisition. As part of the acquisition, underlying external debt of #23.9m was settled in cash and is now accounted for as an intercompany balance. The total fair value of net assets of the business at acquisition was #2.3m. These values are considered to be provisional as they may be adjusted in light of subsequent property disposals that provide further evidence regarding the value of assets acquired. Goodwill arising has been capitalised as an intangible asset and amortised over 20 years, in accordance with FRS 10. Goodwill amortisation of #1,470,000 has been charged to operating profit since the acquisition date. 5. Acquisition of Bon Marche Group Limited (continued) The following table sets out the book values of the identifiable assets and liabilities acquired and their provisional fair value to the group: Book Value Derecognition Reclassifications Provisional Of Goodwill Fair Value #'000 #'000 #'000 #'000 Goodwill 294 (294) - - Tangible fixed assets 23,579 - - 23,579 Stock 18,339 - - 18,339 Debtors 10,222 - - 10,222 Cash 1,285 - - 1,285 Creditors < 1 year (23,928) - - (23,928) Creditors > 1 year (55) - (2,027) (2,082) Loans (23,890) - - (23,890) Provisions (3,538) - 2,027 (1,511) Net assets acquired 2,308 (294) - 2,014 Goodwill 44,110 Net consideration 46,124 6. Reconciliation of movements in group shareholders' funds 2003 2002 #'000 #'000 Profit on ordinary activities after taxation 13,609 11,701 Dividends paid and proposed (6,295) (4,422) New shares issued 17,118 - Costs of share issue (549) - Net addition to shareholders' funds 23,883 7,279 Opening shareholders' funds 48,014 40,735 Closing shareholders' funds 71,897 48,014 7. Reconciliation of operating profit to operating cash flows 2003 2002 #'000 #'000 Operating profit 24,476 17,836 Depreciation charges 16,653 11,659 Amortisation of goodwill 1,470 - Loss / (profit) on sale of tangible fixed assets 120 (25) (Increase) / decrease in stocks (5,918) 1,326 Decrease / (increase) in debtors 3,188 (1,053) Increase / (decrease) in creditors 10,372 (3,140) Net cash inflow from operating activities 50,361 26,603 The Group has benefited from reverse premiums and rent-free periods on some of its retail properties. The impact on profit for the year was #3,448,000 (2002: #2,720,000). Such incentives are spread on a straight-line basis over the shorter of the lease term or the period to the next rental review date. 8. Basis of preparation The financial information set out above does not constitute statutory accounts within the meaning of the Companies Act 1985. The figures in this preliminary announcement have been taken from the Group's audited statutory accounts upon which the company's auditors expressed an unqualified opinion. The Group's statutory accounts for the year ended 31 March 2003 have not yet been filed with the Registrar of Companies. The preliminary financial information has been prepared on the basis of the accounting policies set out in the 2002 Annual Report and Accounts. The company's directors approved the financial information set out above during a meeting held on 27 May 2003. This information is provided by RNS The company news service from the London Stock Exchange END FR BIGDUIXDGGXR
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