FOR IMMEDIATE RELEASE 25 March 2002 ALEXON GROUP PLC Preliminary results for the 52 weeks ended 26 January, 2002 Alexon Group plc, the leading retailer of ladieswear, menswear and shoes, announces Preliminary Results for the 52 weeks ended 26 January 2002. • Operating profit, before amortisation of goodwill, increased 77.6% to £24.2 million (2001: £13.6 million) • Turnover increased 9.7% to £373.6 million (2001: £340.5 million) • Like-for-like sales increased by 9.3% on improved margins • Alexon Brands performed well, growing both sales and margins. • Bay Trading goes from strength to strength with more interest and variety into the fashion ranges, whilst continuing to offer exceptional vale for money • Style Menswear benefited from a powerful surge of profitability in Envy as a result of strong product ranges and shop expansion programme • Earnings per share, before amortisation of goodwill, increased 85.9% to 24.58p (2001: 13.22p) John Osborn, Chief Executive, commented: “It has been an outstanding year for Alexon and one that has seen results well ahead of expectations. Our two most recent acquisitions, Bay Trading and Style Menswear, have performed strongly and have clearly demonstrated the potential they hold for the Group. Our Alexon Brands division has also enjoyed solid growth and has continued its excellent contribution to Group profitability.” For further information: Alexon Group 020 7623 8000 (today) & 01582 723131 (thereafter) John Osborn, Chief Executive Robin Piggott, Finance Director Buchanan Communications 020 7466 5000 Richard Darby/Bobbie Swanson Alexon Group Plc / Page 2 CHAIRMAN’S STATEMENT It gives me great pleasure to report on an excellent year, which saw results well ahead of expectations. It is particularly gratifying to see our two most recent acquisitions, Bay Trading and Style Menswear, performing so strongly and to recognise the potential they both have for further growth in the future. Whilst Dolcis had a disappointing year, Alexon Brands enjoyed solid growth and remains the main profit contributor of the Group. The Group enjoyed strong cash flow during the year, and the Board are recommending a final dividend of 2p per Ordinary Share be paid on 28 June 2002 to shareholders on the register on 7 June 2002, making a total of 3p for the year, an increase of 50%. It only remains for me to thank all our employees for their contribution to the success of the business. Patrick Cooper 25 March 2002 Alexon Group Plc / Page 3 CHIEF EXECUTIVE’S REPORT Results Operating profit for the year before amortisation of goodwill was £24.2 million as against £13.6 million for the prior year, an increase of 78%. Group sales for the year increased on a like-for-like basis by 9.3% and margins were slightly stronger than last year. Strong performances came from Alexon Brands, Style and Bay Trading, the latter two divisions benefiting in particular from the buoyant trading conditions experienced in the run up to Christmas. Stocks ended the year well under control and the strong cash inflow enjoyed during the year left the Group with net debt of £2.3 million, as against £13.4 million at the end of the prior year. Alexon Brands Operating profit for the division was £20.2 million against £15.2 million (before property gains) last year, reflecting a good performance from all the brands in the second half of the year. Like-for-like sales increased by 6% during the half and 7% for the full year. Margins were higher than the previous year and closing stocks were level on a like-for-like basis. The strongest performing brands were Dash, which benefited from a broader, more commercial casualwear offer, and Minuet, which despite being our newest brand is already making a sizeable contribution to Group profitability; Ann Harvey made up for lost ground in the prior year with a better performance; Kaliko continued to attract new customers with its individualistic fashion handwriting; and the continued introduction of younger, more fashionable elements into the ranges resulted in increased sales for the classic brands, Alexon and Eastex. Current Trading Sales to date in the current year are in line with our expectations, with the strongest performances coming from Alexon and Kaliko. Customer reaction to new seasons merchandise is generally encouraging. Alexon Group Plc / Page 4 Dolcis Dolcis ended the year with an operating loss of £0.6 million, against a previous year loss of £0.2 million (excluding property gains). This was disappointing in the light of the improvements registered in all the prior years that Dolcis has been under Alexon Group management control. Whilst like-for-like sales were some 3% higher than the prior year, margins were adversely impacted by the need to clear slow selling lines, particularly boots, where the business significantly over estimated demand. The product issues are now being addressed, following a re-organisation of buying and merchandising, the full impact of which should be reflected in improved performance during the second half. The nature of the business has also been substantially changed over the last year or so. There is now a greater emphasis on concessions, particularly in Bay and Envy, with uneconomic shops either being converted to other Group fascias or being disposed. Current Trading There has been a pleasing reaction to the new season’s merchandise, and whilst it is still early days, we remain confident that the changes being made in the product area, coupled with the outlet restructure, will bring the division into profitability, albeit more slowly than was originally envisaged. Bay Trading Bay Trading went from strength to strength during the course of the year, achieving an operating profit of £2.1 million for the year as against an operating loss of £2.5 million (before non-recurring property costs) in the prior year. The new management team have made a number of key changes to the business proposition – injecting more interest and variety into the fashion ranges, ensuring a broader age appeal, and at the same time continuing to offer exceptional value for money. This has all paid off handsomely in terms of like-for-like sales (11% up on the prior year) and strong margin growth. Profitability has also been enhanced by the progressive introduction of Dolcis shoe concessions into Bay shops and the development of Bay Angel, a sub-brand geared to the fast growing ‘teen’ market. Alexon Group Plc / Page 5 Current Trading Sales and margins have continued strongly in the current year and it is our intention to capitalise on the current strength of the business by opening several new outlets (both shops and in-store concessions) in the year ahead. Style Menswear The operating profit for the division was £2.5 million, as against £1.0 million in the prior year reflecting a like-for-like sales increase of 12%. Whilst the contribution from the concession business continued to decline, the result of reduced trading footage in host stores and weakness of demand for suits, this was more than compensated by a powerful surge of profitability in Envy. Envy benefited from strong product ranges (both in-house and third party brands), the shop expansion programme which has seen 18 new openings in the last two years, and the development of a womenswear offer, which now operates in 10 Envy shops. Current Trading The division has made a sound start to the new season. Whilst there have been further closures of concessions in Top Man, new concessions have been secured in Debenhams and this business is growing well. Sales in Envy continue to be strong and further Envy shop openings are planned during the course of the year. Outlets UK UK European Shops Concessions Concessions Total Alexon Brands 87 743 93 923 Dolcis 80 88 168 Style Menswear 43 125 168 Bay Trading 138 35 173 Total 348 991 93 1,432 Alexon Group Plc / Page 6 Outlook The business, in its current form, now has a good spread of quality brands across three sectors of retailing (Ladieswear, Menswear, and Shoes), and is well balanced between High Street Shops and Departmental Stores. Whilst much has been achieved in the past year there is still good scope for further progress, particularly in Bay Trading and Style Menswear, through a combination of product development and outlet expansion. Alexon Group Plc / Page 7 Consolidated Profit and Loss Account 2002 2001 (restated) For the 52 weeks to 26 January 2002 Note £000 £000 Turnover 1 373,632 340,531 Cost of sales (324,125) (303,694) Gross profit 49,507 36,837 Administrative expenses : before goodwill amortisation (9,838) (9,123) goodwill amortisation (2,400) (2,400) (12,238) (11,523) Distribution costs (15,437) (14,069) Operating profit before goodwill amortisation 24,232 13,645 Goodwill amortisation (2,400) (2,400) Operating profit 1 21,832 11,245 Net interest payable (1,048) (1,637) Profit on ordinary activities before tax 20,784 9,608 Tax on profit on ordinary activities (6,661) (2,376) Profit for the financial period 14,123 7,232 Ordinary dividend (1,814) (1,253) Non-equity preference dividend (1,267) (1,269) Transfer to reserves 11,042 4,710 Earnings per share 2 Basic 20.72p 9.42p Diluted 20.23p 9.37p Adjusted 24.58p 13.22p Alexon Group Plc / Page 8 Consolidated Balance Sheet 2002 2001 (restated) As at 26 January 2002 £000 £000 £000 £000 Fixed assets Intangible assets 41,974 44,374 Tangible assets 17,873 20,040 Investments 836 - 60,683 64,414 Current assets Stock 49,192 47,949 Debtors 23,508 24,071 Cash at bank and in hand 2,225 1,873 74,925 73,893 Creditors falling due within one year (44,821) (54,042) Net current assets 30,104 19,851 Total assets less current liabilities 90,787 84,265 Creditors falling due after more than one year (22) (1,070) Provisions for liabilities and charges (4,584) (5,935) 86,181 77,260 Capital and reserves Called up share capital 8,234 8,403 Share premium account 30,907 30,876 Capital redemption reserve fund 381 206 Profit and loss account 46,659 37,775 Total shareholders' funds 86,181 77,260 Alexon Group Plc / Page 9 Consolidated Statement of Cash Flows 2002 2001 For the 52 weeks to 26 January 2002 Note £000 £000 £000 £000 Net cash flow from operating activities 3 26,892 21,483 Returns on investments and servicing of finance Interest received 41 13 Interest paid (1,084) (1,123) Interest element of finance lease payments (219) (385) Non-equity dividends paid (1,267) (1,269) (2,529) (2,764) Taxation Corporation tax paid (4,154) (4,751) Capital expenditure Purchase of tangible fixed assets (4,356) (5,098) Receipts from sales of tangible fixed assets 12 1,015 (4,344) (4,083) Equity dividends paid (1,847) - Financing Issue of ordinary share capital 37 26 Purchase of own shares (2,994) (1,552) Repayment of loan notes (9,341) (144) Capital element of finance lease payments (1,120) (1,527) Increase in cash in the period 600 6,688 Alexon Group Plc / Page 10 Notes 1. Turnover and operating profit comprise: Turnover Operating profit 52 weeks to 52 weeks to 52 weeks to 52 weeks to 26 January 2002 27 January 2001 26 January 2002 27 January 2001 £000 £000 £000 £000 Alexon Brands 175,666 157,685 20,199 15,913 Bay Trading 80,083 71,432 2,081 (3,986) Dolcis 62,167 64,125 (574) 726 Style Menswear 55,716 47,289 2,526 992 373,632 340,531 24,232 13,645 Goodwill amortisation (2,400) (2,400) 21,832 11,245 2. The calculation of basic earnings per ordinary share is based on profits of £12,856,000 (2001 restated : £5,963,000) and on 62,054,976 ordinary shares (2001 : 63,280,148 ) being the weighted average number of ordinary shares in issue. The earnings figure for adjusted earnings per share excludes goodwill amortisation. In calculating diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of the convertible preference shares and the exercise of all dilutory share options granted to directors and key employees. Reconciliations of the earnings and weighted average number of shares are set out below. Earnings (£) Weighted average Per share number of shares (pence) Adjusted earnings per share 15,256,000 62,054,976 24.58 Goodwill amortisation (2,400,000) - (3.86) Basic earnings per share 12,856,000 62,054,976 20.72 Effect of dilutive securities : convertible preference shares 1,262,000 6,658,926 (0.17) options - 1,061,797 (0.32) Diluted earnings per share 14,118,000 69,775,699 20.23 3. Reconciliation of operating profit to net cash inflow 2002 2001 from operating activities : £000 £000 Operating profit 21,832 11,245 Depreciation 6,189 5,821 Amortisation of goodwill 2,400 2,400 Loss/(profit) on disposal of fixed assets 322 (263) Increase in stock (1,243) (578) Decrease/(increase) in debtors 191 (1,362) (Decrease)/increase in creditors (1,448) 5,310 Decrease in provisions (1,351) (1,090) Net cash inflow from operating activities 26,892 21,483 Alexon Group Plc / Page 11 4. Analysis of change in net debt At At 27 January Cash flow Other non 26 January 2001 cash changes 2002 £000's £000's £000's £000's Cash 1,873 352 - 2,225 Overdrafts (2,039) 248 - (1,791) 600 Loan notes : current (11,044) 9,341 - (1,703) non current - - - - Finance leases : current (1,109) 1,120 (1,048) (1,037) non current (1,070) - 1,048 (22) Total (13,389) 11,061 - (2,328) 2002 2001 5. Reconciliation of movement in cash to movement in net funds £000 £000 Increase in cash 600 6,688 Repayment of finance leases 1,120 1,527 Repayment of loan notes 9,341 144 Movement in the period 11,061 8,359 Net debt at beginning of period (13,389) (21,748) Closing net debt (2,328) (13,389) 6. The financial statements do not constitute statutory accounts. The results for the 52 weeks ended 26 January 2002 are extracts from the group accounts for the period which will be delivered to the Registrar of Companies in due course and on which the auditors have given an unqualified opinion which does not contain a statement under Section 237 (2), (3) or (4) of the Companies Act 1985. These financial statements have been prepared using the accounting policies set out in the Group’s Annual Report and financial statements for 2001, with the exception of the policy on deferred tax. Financial Reporting Standard (FRS) No 19, “Accounting for Deferred Tax”, has been adopted being applicable to financial years ending on or after 23 January 2002, resulting in figures for 2001 being restated. The effect has been to increase opening net assets by £1,499,000 and to increase the tax charge for 2001 by £130,000. Earnings per share have been restated accordingly. 7. The results for the 52 weeks ended 27 January 2001 (amended for the effects of FRS No 19) have been extracted from the statutory accounts for that period which have been delivered to the Registrar of Companies and on which the auditors gave an unqualified report which did not contain a statement under Section 237 (2), (3), or (4) of the Companies Act 1985. 8. The Company’s AGM will be held on 23 May 2002.