Information  X 
Enter a valid email address

JJB Sports PLC (JJB)

  Print      Mail a friend       Annual reports

Thursday 05 April, 2012

JJB Sports PLC

Preliminary Results

RNS Number : 8927A
JJB Sports PLC
05 April 2012
 



THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN AND SOUTH AFRICA AND SHOULD NOT BE DISTRIBUTED IN, FORWARDED TO OR TRANSMITTED INTO ANY JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF LOCAL APPLICABLE SECURITIES LAWS OR REGULATIONS

 

4 April 2012

 

JJB Sports plc announces full year results for the 52 weeks to 29 January 2012

and trading update for the nine weeks to 1 April 2012

 

JJB Sports plc ("JJB" or the "Company") today announces its full year results for the 52 weeks to 29 January 2012 and a trading update for the nine weeks to 1 April 2012.

 

 

Key Financial Data                             52 weeks to                   52 weeks to

                                                           29 January 2012             30 January 2011          Change

Continuing operations

Revenue                                               £284.2m                         £362.9m                       (21.7)%

Gross margin                                        35.7%                             34.4%                          1.3%

Operating loss                                      £(103.5)m                       £(181.8)m                     43.1%

Adjusted operating loss*                        £(56.2)m                         £(73.9)m                       24.0%

Loss before taxation                              £(101.1)m                       £(181.4)m                     44.3%

Adjusted loss before taxation*                £(53.9)m                         £(73.3)m                       26.5%

Basic loss per share                             (40.40)p                          (72.45)p                        32.05p

Net debt                                               £(11.3)m                         £(18.8)m                       39.9%

 

*The adjusted operating loss and adjusted loss before tax measures are shown before charging various exceptional items totalling £47.2 million (52 weeks to 30 January 2011: £108.0 million) as shown in note 2 to this announcement.

 

Summary for the 52 weeks to 29 January 2012

 

·      Revenue decreased by £78.7 million as a result of store closures and like-for-like sales reducing by 13.1%

·      Gross margin increased from 34.4% to 35.7%

·      Adjusted operating loss decreased from £73.9 million to £56.2 million

·      Completion of the capital raisings with combined gross proceeds of £96.5 million

·      A Company Voluntary Arrangement with our landlords enabling us to reduce our overhead base - 41 store closures within the first phase of the Company Voluntary Arrangement in the period

 

Highlights since period end and trading update for the nine weeks to 1 April 2012

 

·      Announcement of £30 million strategic investment package including investment by Dick's Sporting Goods, Inc. and further investment by existing shareholders, subject to shareholder approval

·      Agreement with adidas Group for the provision of security for a two-stage loan  of up to £15 million to assist in the Group's store transformation programme

·      Successful re-negotiation of the Group's banking facility with Bank of Scotland to 31 May 2015

·      Economic conditions continue to make prospects for UK retailers challenging

·      In the nine week period since the period end to 1 April 2012

Group like-for-like sales decreased by 5.7%

Like-for-like cash gross margin decreased by 24.9% in monetary terms

Trading and margin continued to be affected by management's careful control of the Group's cash intake and stock profile

·      Net debt at 1 April 2012 was £20.6 million (£11.3 million as at 29 January 2012)

·      Positive results from enhanced store concept in Broughton Park, Chester

 

 

Keith Jones, Chief Executive of JJB Sports said:

 

"The 52 week period to 29 January 2012 has once again proven to be an extremely challenging time for the Company. However, we believe that the investment package and strategic alliance with Dick's will provide a real opportunity to accelerate JJB's turnaround".

 

 

For further information, please contact:

 

Keith Jones

Dave Williams

JJB Sports plc

01942 221 400

 

Neil Bennett

Emma Burdett

Maitland

020 7379 5151

 

Heraclis Economides

Richard Thomas

Numis Securities Limited (joint financial adviser, broker and nominated adviser)

020 7260 1000

 

A copy of this announcement can also be viewed on the JJB corporate website, www.jjbcorporate.co.uk.  Neither the content of the JJB corporate website nor any website accessible by hyperlinks on the JJB corporate website is incorporated in, or forms part of, this announcement.

 

Analyst / Investor Presentation

 

There will be a presentation for analysts and investors on Thursday 5 April at 9.00 a.m. at Numis Securities Limited, 10 Paternoster Square, London EC4M 7LT.

 

For those unable to attend, there is a live audiocast facility available for participants to listen to the presentation at: http://www1.axisto.co.uk/webcasting/investis/jjb/jjb-announcement/ and on the JJB Sports website: www.jjbcorporate.co.uk

 

About JJB Sports

 

JJB Sports is one of the UK's leading multi-channel sporting goods retailers. The Group, headquartered in Wigan and listed on AIM, currently trades from over 185 JJB branded retail stores in the UK and Ireland and employs approximately 4,000 people. Further information about the Group can be found on the Group's corporate website, www.jjbcorporate.co.uk

 

This announcement is for information purposes only and does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in any jurisdiction and should not be relied upon in connection with any decision to subscribe for or acquire any securities. In particular, this announcement does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States.

 

The securities referred to in this announcement have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), or with any securities regulatory authority of any state or other jurisdiction of the United States and, accordingly, may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, in or into the United States absent registration under, or an applicable exemption from the registration requirements of, the Securities Act, and in compliance with any applicable securities laws of any state or other jurisdiction of the United States.  There will be no public offer of the securities referred to in this announcement in the United States.

 

Certain statements made in this announcement constitute forward-looking statements.  Forward looking statements can be identified by the use of words such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "plan", "seek", "continue" or similar expressions and relate to, among other things, the performance of the business of JJB in the near to medium term, the business strategy of JJB and its plans and objectives for future operations.  Such statements are based on current expectations and, by their nature, are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance, expressed or implied, by the forward-looking statement.  Factors that might cause forward looking statements to differ materially from actual results, include among other things, general economic conditions in the United Kingdom.  These forward-looking statements speak only as of the date of this announcement.  The information and opinions contained in this announcement are subject to change without notice and, subject to compliance with applicable law, JJB assumes no responsibility or obligation to update publicly or review any of the forward-looking statements.

 

Chairman's statement

Mike McTighe

 

Our last financial year was another significant one in JJB's history.  As has been well documented the early part of the year was dominated by the need to stabilise the financial position of the business and during this time we completed:

 

·      Two capital raisings through Firm Placing and Placing and Open Offers raising combined gross proceeds of £96.5 million;

·      A Company Voluntary Arrangement with our landlords enabling us to reduce our overhead base;

·      A Capital Reorganisation;

·      A transfer to AIM from the main list of the London Stock Exchange; and

·      A re-negotiation of a three year extension to our existing bank facilities.

 

These actions provided an opportunity to commence the turnaround in business performance.  However as I set out below whilst many positive things have been achieved and our trading performance improved in the second half of the year, the actions we have taken have not delivered the scale of improvement required in the timeframe originally envisaged at the time of our capital raisings.  In light of this, the Board concluded that both additional capital and expertise was required to complete the turnaround and to this end has been seeking a strategic investment partner to fulfil this role.

 

Our search has been successful and I am delighted to announce that subject to shareholder approval, Dick's Sporting Goods, Inc. ("Dick's") has agreed to become a strategic partner to our business.  In addition to the significant capital resources to be provided, the Board is of the view that the introduction of Dick's as a strategic partner will enable the Company to draw upon Dick's valuable experience in the sports retail market, which, in turn, will assist management in accelerating the Group's revised business plan. Dick's is an authentic full-line sporting goods retailer based in the USA, offering a broad assortment of brand name sporting goods equipment, apparel and footwear in a specialty store environment.

 

We believe that this partnership will enable the business to complete its turnaround plan and deliver our vision of a true authentic multi-channel sports retailer.

 

In addition, our existing major shareholders continue to be tremendously supportive of the business and will again participate in this round of investment.  The Company intends to raise £30 million (before expenses) by way of an exercise of warrants by our major shareholders, a private placement of shares with our major shareholders and Dick's and an issue of Convertible Loan Notes to Dick's.  The Board has also reached agreement with adidas Group, one of the Company's key supplier partners, for the provision of a trade loan to assist in funding the Group's store transformation programme, and an agreement with Bank of Scotland ("BoS"), the Company's lender, regarding the continued provision of bank facilities through to 31 May 2015.  Once again I would like to place on record my thanks to these and other stakeholders for the support they have shown and continue to show the business.

 

Full details of the investment package are set out in the announcement issued today.

 

Our strategy

 

The Company has made progress in implementing the Group's business plan.  However, in light of the increasingly poor macroeconomic conditions, management was forced to prioritise the preservation of cash in the short term and scale back its investment in store and proposition development, particularly in respect of those stores that management has identified as requiring a full transformation or refit.  In spite of this, achievements so far include:

 

·      The closure of the first 41 CVA stores;

·      Operationalising our plans to drive continuous improvement across the Company's basic retail disciplines, product sourcing, market planning, allocation and supply chain to forecast milestones;

·      Rolling out training to all in-store colleagues covering customer service, management techniques and improving product knowledge;

·      Establishing a multi-channel programme to drive improvements in online capability, aligned to the in-store channel experience.  Our second half like-for-like growth in multi-channel sales was 77% compared to a first half of 15%; and

·      Reducing the Company's cost base, by working systematically through identified areas of opportunity, including savings at the Company's Retail Support Centre in Wigan.  We have already begun to realise cost savings in respect of warehousing and distribution, store wages and central overhead costs.

 

Successful completion of the strategic investment and financing package will improve the Group's working capital position and help to implement the Group's capital expenditure plans, particularly in respect of its store transformation programme and multi-channel offering.  Over the course of the next 18 months, management intend to transform up to 60 stores into a format recently trialled with success at our Broughton store near Chester.

 

Our Board

 

There have been some changes to the Board during the period under review.

 

Richard Bernstein joined the Board on 6 May 2011 following his nomination by Crystal Amber Fund and on 1 November 2011 Lawrence Christensen also joined the Board.  Both have already brought their own expertise to the Company which will help in delivering JJB's turnaround strategy.  In addition Lawrence has taken on the role of Chairman of the Remuneration Committee.

 

As has previously been announced Richard Manning and Alan Benzie left the Board at the Company's Annual General Meeting in July 2011.  Following Alan's departure our Senior Independent Director, David Adams, became Chairman of the Audit Committee.

 

Our colleagues

 

As ever I would like to thank all our colleagues for their continued hard work and contribution to our turnaround in a time of continuing change.

 

Going concern

 

In determining the appropriate basis of preparation of the Annual Report, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future; that is for at least 12 months from the date of signing of this Report. After making enquiries, and considering the matters which are described in note 1 to this announcement, the Directors have concluded that they have a reasonable expectation that the Group and the Company will have adequate resources to continue in operational existence for the foreseeable future. However, the Directors have concluded that there are material uncertainties facing the business.  Further details are set out in the note 1 to this announcement.

 

Outlook

 

Looking ahead, the ongoing credit squeeze on consumers and weaker UK employment numbers creates a tough environment.  However, the platform we have built over the past 12 months and the strategic investment and financing package that the Company has announced today have given JJB a chance to complete its turnaround programme.

 

 

Mike McTighe

Chairman

4 April 2012

 

 

 

Chief executive's review

 

Overview

 

The 52 week period ended 29 January 2012 has once again proven to be an extremely challenging time for the Company mainly as a result of external factors.

 

Review of operating results

 

The operating results for the 52 weeks ended 29 January 2012 and the comparative figures for the 52 weeks ended 30 January 2011 are summarised below, together with a review of our turnaround strategy:

 




 

 


52 weeks to

29 January


52 weeks to

30 January




 

 


2012


2011




 

 


Total


Total




 

 


£'000


£'000

Continuing operations

 

 





Revenue


 

 


284,206


362,894


 

 


(182,722)


(238,020)

Gross profit


 

 


101,484


124,874

Other operating income

 

 


2,682


1,848

Distribution expenses

 

 


(16,732)


(20,810)

Administration expenses

 

 


(21,800)


(24,075)

Selling expenses

 

 


(169,084)


(263,649)


 

 


(103,450)


(181,812)


 

 


(56,242)


(73,856)

 

*Adjusted operating loss is shown before charging other exceptional operating items of £47.2 million  largely attributable to increases in property provisions, impairment of tangible and intangible assets, an HMRC provision and reorganisation costs incurred during the Group's restructuring in the period (2011: £(92.6) million - goodwill impairment, £(15.4) million - other items), as shown in the Consolidated statement of financial performance.

 

Strategy and progress

 

Since completion of the April 2011 Capital Raising and the Company's move to trading on AIM on 28 April 2011, the Board has progressed with the key elements of the Group's revised business plan as follows:

 

Rightsizing the store portfolio through implementation of the CVA - The Group has successfully implemented the first phase of the CVA with 41 of the 43 stores identified for closure on or before 24 April 2012 (referred to in the CVA Proposal Document as the "First Period Compromised Leases") now closed, of which 11 have been surrendered to the landlords, generating an annualised rent saving of £1.6 million. For the remaining two stores that were identified as First Period Compromised Leases, rents continue to be paid on a reduced basis of 50 per cent of the contractual liability (plus 5 per cent dilapidations and any contractual amount for service charges) until 24 April 2012. For the additional 46 stores identified for closure on or before 24 April 2013 (referred to in the CVA Proposal Document as the "Second Period Compromised Leases"), 12 stores have been surrendered to the landlords as at 29 January 2012, generating an annualised rent saving of £1.7 million and one store has returned to the core estate. For the remaining 33 stores that were identified as Second Period Compromised Leases, rents continue to be paid on a reduced basis of 50 per cent of the contractual liability (plus 5 per cent dilapidations and any contractual amount for service charges) and will continue to be paid until 24 April 2013. As at 29 January 2012, management has also achieved annualised rates savings of approximately £2.8 million. Management estimate savings of approximately £4.0 million in negative contribution and further incremental working capital savings.

 

 

 

·      Aligning the Company's cost base and working capital management - Management has secured significant cost savings across all key business functions. Warehouse and distribution costs have reduced by £4.1 million from £20.4 million to £16.3 million, with estimated annualised savings in excess of £5.6 million now identified as compared to management's original target of £3.5 million (as announced on 6 April 2011), with further opportunities identified beyond this original target. Through better deployment of our colleagues particularly at peak trading periods, management has achieved savings in respect of core store wages of £5.1 million, again with estimated annualised savings in excess of management's original target of £3.3 million (as announced on 6 April 2011). Other store costs and central costs have also been reduced on a systematic basis through better procurement, improved utilisation and efficiencies and tighter cost control processes, with actual annualised savings exceeding management's original target of £2.4 million (as announced on 6 April 2011). In addition, the Company continues to prudently manage its working capital, cash and available resources and has targeted an acceleration of its stock efficiency initiatives through better management of stock intake, improved stock allocation and replenishment and being more pro-active in respect of in-season stock clearance.

 

·      Improving the Company's basic retail disciplines - Management has made significant progress in improving the basic retail disciplines in the Company. Since completion of the April 2011 Capital Raising, management has been defining and implementing key processes and systems, and identifying and recruiting new talent particularly to advance the Company's buying, merchandising, marketing and multi-channel functions. Management is confident that it now has clear visibility around stock intake, improved stock allocation, better stock sell-through, defined clearance capability and improved stock file integrity. Improved visibility of stock intake has facilitated the development of a multi-channel trading and marketing calendar with co-ordinated campaigns aligned to and supported by key supplier partners.

 

·      Investment in store development - The Company announced on 6 April 2011 (in connection with the April 2011 Capital Raising) that it had devised three levels of store and proposition development that had been incorporated into the Group's revised business plan - retail basics, refresh refit and full transformation. Since completion of the April 2011 Capital Raising, the macroeconomic deterioration in retail trading conditions led the Group to prioritise the preservation of cash in the short term and scale back the extent to which the Group was able to invest in store and proposition development. However, despite the challenging trading conditions, the Group has still completed 103 stores for its retail basics programme, 8 stores for its refresh refit programme and 2 stores for full transformation. The refit programme cascaded the key initiatives from the original 6 transformation stores including navigation, product adjacencies, space mix and point of sale. These store programmes were completed at a significantly lower cost than originally budgeted, this supported the improvement in second half performance. The Group's capital expenditure in respect of stores forming part of the refresh refit programme was £0.3 million, a considerable saving on original estimates.

 

·      Continuing to source new ranges and product- The Company's own-brand development has gained momentum, with the introduction of an own-brand swimming range H2O in September 2011, and expansion of the exclusive Run 365 footwear and apparel range in October 2011. In addition, the Company has added Mind, Body & Soul, Travel Fox, Ecko Unltd and Pro Performance as exclusive branded products in the second half of 2011. In aggregate, exclusive and own branded product was 6.7 per cent of the sales mix at year end. Management continues to work closely with all its key supplier partners to develop exclusive and differentiated products and propositions. Recent additions include ASICS and Saucony, which also underpin the Company's positioning as the authentic multi-channel sports retailing brand in the UK. In addition, management has developed a number of new service initiatives, such as introducing Gait analysis into a number of stores to ensure each customer is fitted with the right footwear for them and their sport. We have also built on the successful Footwear Recycling initiative, where in excess of 25,000 training shoes have been recycled, with the proceeds going to Whizz Kids who provide wheelchairs to enable children to participate in sport.

 

·      Focusing on customer service training and people capability training - Customer service and people capability training remains a key objective for management and remains a key differentiator in the market. Since completion of the April 2011 Capital Raising, the Company has significantly upgraded its senior management team and invested in new personnel to the Group's Retail Support Centre in the 52 weeks to 29 January 2012. In addition, the Company has recruited 10 new store managers externally; completed customer service training for over 4,000 colleagues; graduated 26 colleagues from its "stepping into management" personal development programme; and trained 191 store managers in sales floor coaching.

 

·      Improving the multi-channel proposition - Following the recruitment of a new Head of Multi-channel on 4 July 2011, the Company has made progress in enhancing its multi-channel proposition resulting in significant growth in sales. Developments include the launch of a mobile version of the website, introducing Paypal and developing an eBay and Amazon offering. In addition, the Company has enhanced the online customer shopping experience by adding new online exclusive products as well as improving the landing pages and site navigation. Alongside other initiatives and improvements this has provided customers with an easier and more convenient shopping experience and resulted in significantly increased traffic and conversion rates.

 

Ongoing retail operations 

 

Revenue from ongoing retail operations for the 52 weeks to 29 January 2012 decreased by £78.7 million (21.7 per cent) compared to the previous accounting period as a result of store closures and reflected a like-for-like decrease of 13.1 per cent (on operating units that have been trading in the same format for over 52 weeks). 

 

Overall gross margin from ongoing retail operations increased to 35.7 per cent from 34.4 per cent for the prior year.

 

Cumulative like-for-like sales in the second half of the financial period for the 26 weeks ended 29 January 2012 decreased by 7.6 per cent compared to a decrease of 17.9 per cent in the 26 weeks ended 31 July 2011. However, in the same period, our like-for-like cash gross margin increased by 0.3 per cent compared to a decrease of 37.4 per cent in the first half. Operating costs before exceptional items for the 52 weeks to 29 January 2012 have decreased by 20.0 per cent to £160.4 million from £200.6 million.

 

At the period end the Company comprised 190 (2011: 247) trading retail stores operating from 2.1 million square feet (2011: 2.7 million square feet) of retail space.

 

Operating loss

 

Operating loss from the ongoing retail operations was £103.5 million (2011: £181.8 million), after charging exceptional operating items of £47.2 million, compared to £108.0 million in 2011. Principal exceptional items this period were provisions of £15.0 million relating to property provisions, an impairment of brand licences of £7.8 million as a result of uncertainties of associated future cash flows, an HMRC provision of £5.3 million, an impairment of fixed assets of CVA stores of £6.8 million and an impairment of £4.7 million on review of the tangible assets of stores which are loss making and are expected to continue making losses. The principal exceptional item in 2011 related to an impairment to the carrying value of goodwill in respect of Blane Leisure Limited and Sports Division (Eireann) Limited and was included within selling expenses. Operating loss from ongoing retail operations before exceptional items was £56.2 million (2011: £73.9 million).

 

There has been an improvement in operating performance in the second half of the accounting period. Operating loss from ongoing retail operations before exceptional items in the second half of the period was £(19.5) million compared to £(36.7) million in the first half of the period.

 

Full details are shown on the face of the Consolidated statement of financial performance.

 

 

Net loss before taxation

 

The net loss before taxation decreased to a £101.1 million loss from a £181.4 million loss in the prior period.

 

Taxation

 

Owing to the losses incurred there is no taxation payable.

 

Loss per share

 

Continuing operations

 

Basic loss per Ordinary Share for the 52 weeks to 29 January 2012 was 40.40 pence compared to 72.45 pence (represented - see note 3) in the previous accounting period. The loss per share has decreased due to the decrease in operating losses from £181.8 million to £103.5 million including a reduction in exceptional items to £47.2 million (2011: £108.0 million).

 

The adjusted basic loss per Ordinary Share (before deduction of exceptional items) for the 52 weeks to 29 January 2012 was 21.54 pence compared to 29.33 pence (represented - see note 3) in the previous accounting period. The number of shares for the purpose of basic loss per Ordinary Share and adjusted basic loss per Ordinary Share has been adjusted retrospectively in 2011 to take account of the Firm Placing and Placing and Open Offers completed during February 2011 and April 2011.

 

 

 

Key performance indicators

 

During the period, the Board monitored its performance by reference to a number of key performance indicators ("KPIs") of which the most important were:

 


52 weeks to

29 January

2012

52 weeks to

30 January

2011

Financial KPIs



Change in like-for-like revenue

(13.1)%

5.9%

Gross margin

35.7%

34.4%

Cash flow from operations

£(78.6)m

£(71.9)m

Net debt

£11.3m

£18.8m

Inventories

£47.3m

£52.7m

Inventories less trade payables

£29.6m

£14.3m

Non-financial KPIs



Retail selling space (sq ft)

2,095,000

2,748,000

Number of Full Time Equivalent Employees

2,866

3,779

 

In order to measure and monitor the success of its turnaround plans the Board has developed a more comprehensive set of financial and non- financial KPIs aligned to each element of the plan which are reported on a regular basis. These include conversion rates within stores, conversion rates for multi-channel, average transaction value and multi-channel like-for-like.

 

Review of Statement of financial position

 

Goodwill and intangible assets

Goodwill has been subject to an impairment review as at the period end and no impairment was found to be necessary as at 29 January 2012. This value remains at £13.8 million.

 

Other intangible assets, represented by brand licences, have been impaired by £7.8 million due to uncertainty around associated future cash flows.

 

Capital expenditure

Capital expenditure on property, plant and equipment for the 52 weeks to 29 January 2012 was £2.9 million compared to £4.1 million in the previous accounting period. This capital expenditure was principally incurred on the refurbishment of stores and the opening of two new stores relocating during the period.

 

Property Plant and Equipment

As a result of a review of the carrying value of the tangible assets within the Group, the Group has recognised an impairment charge of £6.8 million on the closure of stores within the 2011 CVA and an impairment of £4.7 million on the tangible assets of stores which are loss making and are expected to continue making losses. Tangible assets of £1.0 million have also been written off on the closure of one of the remaining soccerdomes.

 

Inventories       

The value of inventories at 29 January 2012 was £47.3 million compared to £52.7 million at 30 January 2011.  This decrease is due to the reduction in the number of stores offset by a reassessment of provisioning requirements as at the period end date.

 

Net debt

The Group's net debt at 29 January 2012 was £11.3 million compared to £18.8 million at 30 January 2011. The principal reason for this reduction is the net funds from the capital raisings, albeit that this was offset by the net cash outflow from operations of £78.6 million.

 

Trade and other payables

Trade and other payables have reduced to £45.7 million at 29 January 2012 from £68.4 million at 30 January 2011 owing to the reduction in the stock values at the period end and a reduction in creditor days.

 

Dividend

 

The Board is unable to recommend payment of a dividend in respect of the 52 weeks to 29 January 2012 (2011: nil).

 

Share capital

 

Details of the share capital movements, including the two Firm Placing and Placing and Open Offers referred to earlier, and the Capital Reorganisation are described in note 26 of the Group's Annual Report and Accounts for the 52 weeks to 29 January 2012.

 

The mid-market share price of the Ordinary Shares at the close of business on 27 January 2012 was 11.50 pence, representing an equity market capitalisation of approximately £33.7 million.

 

Director update

 

There have been the following changes to the Board over the last 12 months:

 

> On 6 May 2011, Richard Bernstein was appointed to the Board as a Non-executive Director appointed by Crystal Amber Fund Limited.

> On 8 July 2011, Richard Manning and Alan Benzie resigned as Legal and Operations Director and Non-executive Director respectively.

> On 1 November 2011, Lawrence Christensen joined the Board as a Non-executive Director.

 

Events after the Statement of financial position

 

Please refer to note 8 of this announcement.

 

 

 

Consolidated statement of financial performance

For the 52 weeks to 29 January 2012

 



52 weeks to

29 January

2012

52 weeks to

30 January

2011

 

Notes

Total

£'000

Total

£'000

Continuing operations

 

 

 

Revenue

 

284,206

362,894

Cost of sales

 

(182,722)

(238,020)

Gross profit

 

101,484

124,874

Other operating income

 

2,682

1,848

Distribution expenses

 

(16,732)

(20,810)

Administration expenses

 

(21,800)

(24,075)

Selling expenses

 

(169,084)

(263,649)

Operating loss

 

(103,450)

(181,812)

Adjusted operating loss

 

(56,242)

(73,856)

Exceptional items       - goodwill impairment                                          - other exceptional items

2

-

(47,208)

(92,610)

(15,346)

Operating loss

 

(103,450)

(181,812)

Investment income

 

113

512

Finance costs

 

(566)

(1,162)

Finance costs are stated after charging

 

 

 

Exceptional bank arrangement fees and charges

 

-

(100)

Fair value adjustments to derivative instruments

 

3,048

1,919

Debt issue costs

 

(274)

(822)

Loss before taxation

 

(101,129)

(181,365)

Taxation

 

-

-

Loss after taxation for the period attributable to equity holders of the Parent Company

 

(101,129)

(181,365)

Loss per share

 

 

 

From continuing operations

3

 

 

Basic loss per Ordinary Share*

Pence

(40.40)

(72.45)

Diluted loss per Ordinary Share*

Pence

(39.00)

(72.45)

 

*The prior year figures for Basic and Diluted loss per Ordinary Share have been represented to take into consideration the capital raises which occurred in the current period. See note 3 for further details on the retrospective adjustment to loss per share.

 

 

 

Consolidated statement of comprehensive income

For the 52 weeks to 29 January 2012

 


52 weeks to

29 January

2012

£'000

52 weeks to

30 January

2011

£'000

Loss after taxation for the period

(101,129)

(181,365)

Exchange loss on translation of foreign operations

(126)

(662)

Other comprehensive income for the period

(126)

(662)

 

 

 

Total comprehensive income for the period

(101,255)

(182,027)

 

 

 

 

Consolidated statement of changes in equity

For the 52 weeks to 29 January 2012

 


Share

capital

£'000

 

Share premium

 account

£'000

 

Capital redemption

 reserve

£'000

 

Own shares

£'000

Share

 based

payment

 reserve

£'000

Foreign

currency translation

 reserve

£'000

Retained

 earnings

£'000

Total

 equity

£'000

At 31 January 2010

32,542

174,055

1,069

(3,083)

448

(41)

18,563

223,553

Loss for the period

-

-

-

-

-

-

(181,365)

(181,365)

Exchange differences on translation of foreign operations

-

-

-

-

-

(662)

-

(662)

Total comprehensive income for the period

-

-

-

-

-

(662)

(181,365)

(182,027)

Credit to equity for equity-settled share based payment

-

 -

 -

 -

2,545

-

-

2,545

At 30 January 2011

32,542

174,055

1,069

(3,083)

2,993

(703)

(162,802)

44,071

Loss for the period

-

-

-

-

-

-

(101,129)

(101,129)

Exchange differences on translation of foreign operations

-

-

-

-

-

(126)

-

(126)

Total comprehensive income for the period

-

-

-

-

-

(126)

(101,129)

(101,255)

Credit to equity for equity-settled share based payment

-

 -

 -

 -

1,710

-

-

1,710

Firm Placing and Placing and Open Offers

2,267

83,942

 -

 -

-

-

-

86,209

Exercise of warrants

15

224

 -

 -

-

-

-

239

At 29 January 2012

34,824

258,221

1,069

(3,083)

4,703

(829)

(263,931)

30,974

 

 

 

Consolidated statement of financial position

As at 29 January 2012

 


Notes

As at

29 January

2012

£'000

As at

30 January

2011

£'000

Non-current assets

 

 

 

Goodwill

 

13,796

13,796

Other intangible assets

 

10,405

20,175

Property, plant and equipment

 

46,091

64,859

 

 

70,292

98,830

Current assets

 

 

 

Inventories

 

47,302

52,725

Trade and other receivables

 

7,792

9,077

Cash and cash equivalents

 

4,638

5,859

 

 

59,732

67,661

Total assets

 

130,024

166,491

Current liabilities

 

 

 

Trade and other payables

 

(45,689)

(68,384)

Provisions

4

(6,488)

(6,636)

Derivative financial instruments

 

(958)

(113)

 

 

(53,135)

(75,133)

Net current assets (liabilities)

 

6,597

 (7,472)

Non-current liabilities

 

 

 

Bank loans and overdrafts

6

(15,915)

(24,678)

Deferred lease incentives

 

(10,292)

(11,733)

Provisions

4

(19,708)

(10,876)

 

 

(45,915)

(47,287)

Total liabilities

 

 (99,050)

 (122,420)

Net assets

 

 30,974

 44,071

 

 

 

 

Equity

 

 

 

Share capital

 

34,824

32,542

Share premium account

 

258,221

174,055

Capital redemption reserve

 

1,069

1,069

Investment in own shares

 

(3,083)

(3,083)

Share based payment reserve

 

4,703

2,993

Foreign currency translation reserve

 

(829)

(703)

Retained losses

 

(263,931)

(162,802)

Total equity

 

 30,974

 44,071

 

 

 

 

Consolidated statement of cash flow

For the 52 weeks to 29 January 2012

 


Notes

52 weeks to

29 January

2012

£'000

52 weeks to

30 January

2011

£'000

Net cash outflow from operating activities

7

(78,570)

(71,895)

 

 

 

 

Cash flows from investing activities

 

 

 

Interest received

 

113

512

Proceeds on disposal of property, plant and equipment

 

18

155

Purchase of intangible assets

 

(972)

(1,100)

Purchase of property, plant and equipment

 

(2,862)

(4,089)

 

 

 

 

Net cash used investing activities

 

(3,703)

(4,522)

 

 

 

 

Cash flows from financing activities

 

 

 

Interest paid

 

(545)

(946)

Proceeds from issues of share capital

 

90,102

-

Exercise of warrants

 

239

-

Drawdown of current asset investment

 

-

168,117

Settlement of loan notes

 

-

(168,117)

Net proceeds from bank loans and bank overdrafts

 

16,216

25,000

Repayment of bank loan

 

(25,000)

-

 

 

 

 

Net cash from financing activities

 

81,012

24,054

 

 

 

 

Net decrease in cash and cash equivalents

 

(1,261)

(52,363)

 

 

 

 

Cash and cash equivalents at beginning of period

 

5,859

58,812

Effect of foreign exchange rate changes

 

40

(590)

 

 

 

 

Cash and cash equivalents at end of period

6

4,638

5,859

 

 

 

 

Notes to the financial information for the 52 weeks to 29 January 2012

 

1. Basis of preparation

 

The financial information set out above does not constitute the Company's statutory accounts for the 52 week period ended 29 January 2012 or the 52 week period ended 30 January 2011, but is derived from those accounts.  Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following the Company's Annual General Meeting.  The auditor has reported on those accounts; their reports were unqualified, and did not contain statements under section 498(2) or (3) Companies Act 2006 or equivalent preceding legislation.  However, for the 2012 Annual Report & Accounts, the auditor's included an emphasis of matter paragraph in their opinion relating to material uncertainties with respect to going concern. No such matter was included in 2011.  Further details with respect to Going Concern are included below.

 

A copy of the Group accounts for the 52 week period ended 29 January 2012 can be found at www.jjbcorporate.co.uk and will be posted to shareholders shortly.

 

Going Concern

 

In determining the appropriate basis of preparation of the Annual Report, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future; that is for at least 12 months from the date of signing of this report. After making enquiries, and considering the matters which are described in the Annual Report, the Directors have concluded that they have a reasonable expectation that the Group and the Company will have adequate resources to continue in operational existence for the foreseeable future. However, the Directors have concluded that there are material uncertainties facing the business.

 

During 2011, the Group successfully completed a number of key steps to refinance the business and reduce the cost base through a Company Voluntary Arrangement. These steps were fully disclosed in our 2011 Annual Report. During the year, the Group also commenced to implement its turnaround programme and has disclosed key elements of its progress in the Chief Executive's review on pages 5 to 10.

 

The Group continues to make progress with its turnaround programme and on 20 February 2012 we announced that our cash margins were improving and that our second half performance was stronger than the first half. However progress has not been as rapid as originally envisaged, and whilst trading remains challenging, in order to expedite our turnaround and take advantage of the opportunities presented by the key trading periods of the UEFA Euro Championships and the London 2012 Olympics, the Group has sought and agreed the terms of a strategic investment from Dick's, a new strategic partner, and also agreed a package of further support from the Group's other key investors and stakeholders.

 

The Board decided to accept a strategic investment from Dick's as, in addition to the significant capital resources to be provided, the Board is of the view that the introduction of Dick's as a strategic partner will enable the Company to draw upon Dick's valuable experience in the sports retail market, which, in turn, will assist management in accelerating the Group's revised business plan. Dick's is an authentic full-line sporting goods retailer based in the USA, offering a broad assortment of brand name sporting goods equipment, apparel and footwear in a specialty store environment.

 

The Company intends to raise £30 million (before expenses) in aggregate by way of the exercise of 2011 Warrants and the issue of the Subscription Shares and the First Convertible Loan Notes, conditional, among other things, upon the passing of the Subscription Resolutions at the General Meeting.

 

The Company's four largest shareholders and Dick's have entered into a Subscription Agreement with the Company pursuant to which:

 

·      The four largest shareholders have agreed to exercise 2011 Warrants resulting in the issue of 22,712,894 Warrant Shares at an exercise price of 10 pence per share;

·      The four largest shareholders and Dick's have agreed to subscribe for a total of 89,787,106 Subscription Shares at 10 pence per share; and

·      Dick's has agreed to subscribe for the First Convertible Loan Notes in an aggregate principal amount of £18.75 million and has been granted the right (but does not have the obligation) to subscribe for the Second Convertible Loan Notes in an aggregate principal amount of up to £20 million, in each case subject to the terms and conditions set out in the Convertible Loan Note Instrument.

 

On 4 April 2012, the Board also announced that it had reached agreement with BoS, the Company's lender, regarding the continued provision of the BoS Facility through to 31 May 2015, an agreement with adidas Group, one of the Company's key supplier partners, for the provision of a loan of up to £15 million (of which £8.4 million will be available for drawdown in the first year) and the terms of an intercreditor arrangement with BoS, Dick's and adidas Group, each agreement subject to completion of the Subscription and the satisfaction of certain other conditions precedent.

 

The strategic investment and financing package will not address the medium term financing requirements of the Group and accordingly the Company currently believes that it will require additional funding in the first quarter of 2013.  Whilst this additional funding is not committed, the further round of funding is expected to be provided through:

 

·    The subscription by Dick's for the Second Convertible Loan Notes in the aggregate principal amount of £20 million (that Dick's has the right (but not the obligation) to subscribe for under the terms of the Subscription Agreement);

·    A further share offering of new Ordinary Shares, to the extent permitted by law and regulation, to all of the Company's shareholders to raise the aggregate sum of £5 million; and

·    The continued support of BoS and the second tranche of the loan from adidas Group, amounting to £6.6 million, being made available for drawdown by the Company.

 

Shareholder approval will be required for the issue of the various securities and to obtain approval from the Takeover Panel for the level of Dick's future holdings (being up to a maximum of 61 per cent of the Company's voting share capital).  The shareholder vote to approve this transaction will take place on 26 April 2012.  If the shareholder vote is not passed by Shareholders at the General Meeting and the transaction does not proceed, the Company will be in default of the current BoS Facility and the Amended BoS Facility and the Adidas Loan Agreement will not become effective.  In these circumstances, and in the absence of any other funding proposal given the limited headroom in the Group's short term cash flow forecasts, the Directors would be likely to conduct a formal sale process for the Company. However, if a purchaser cannot be found for the Company under the formal sale process, the Directors believe that the Company will not be able to continue to trade as a going concern which would result in the appointment of receivers, liquidators or administrators.

 

If the transaction is approved, the Directors are confident that this package of support will provide the Group with a solid platform from which to deliver growth over the key trading periods of the UEFA Euro Championships and the London 2012 Olympics.  However our view remains that the UK retail market continues to be extremely challenging and is likely to remain so for some time.

 

As part of their going concern assessment, the Directors have reviewed trading and cashflow forecasts which take into consideration the uncertainties in the current operating environment. The Directors have now concluded that there are material uncertainties surrounding going concern. These material uncertainties are:

 

·    securing the pre-requisite approval from Shareholders of the Resolutions;

·    the ability of the Group to continue to implement its business recovery turnaround strategy in light of:

the current macroeconomic environment and its impact on consumer confidence and the UK retail sector: this uncertain and volatile outlook in the UK economy results in difficulties in forecasting sales performance in the short and medium term; and

the Group's current stock profile which has been affected by management's control of costs and available resources with the result that the Group's intake, availability, stock holding and profile of stock continue to be substantially lower than it should be;

both of these factors are critical to the achievability of the Group's business plan, which will be both vital factor in maintaining sufficient headroom on cash and covenants, but also an important factor in determining the timing of the additional funding expected to be required in the first quarter of 2013; and

·    if the pre-requisite approval from Shareholders of the Resolutions is not secured, securing ongoing support from BoS to continue to trade whilst alternative support is sought.

 

The Group's short-term cash flow forecasts indicate that the Group will not experience a funding shortfall before the expected date of receipt of the net proceeds of the Subscription on or around 27 April 2012. However, the headroom available to the Company in the period leading up to 27 April 2012 is limited and management must continue to carefully control its cash and available resources during this period.

 

Based on the commercial basis of this transaction which is to the benefit of the shareholders, the Directors have no reason to believe that the vote will not proceed with a majority.  Having regard to the factors set out in this going concern assessment, the Directors have a reasonable expectation that, should the investment proceed, the Group will be in a position to deliver its turnaround strategy.

 

The Directors have identified a number of management initiatives that the business could pursue and which they are confident it can achieve to help offset a potential decline in trading including:

 

·      further cost reductions in addition to the current cost reduction programme;

·      an improvement in its stockholding and/or extending terms with suppliers;

·      management of capital expenditure; and

·      the disposal of certain stores or operating units.

 

The Directors have concluded that the combination of these circumstances represents a material uncertainty which may cast significant doubt upon the Company's and the Group's ability to continue as a going concern and therefore the Company and Group may be unable to continue to realise assets and discharge liabilities in the normal course of business.  However, given the strategic investment and financing package that we are announcing today, the Board is confident that they have a reasonable expectation that the Group and the Company will have adequate resources to continue in operational existence for the foreseeable future.  For these reasons, they continue to adopt the going concern basis in preparing the annual report and financial statements.  The results in this announcement do not include any adjustments that would result from the going concern basis of preparation being inappropriate.

 

 

 

2. Exceptional items

 


Group

 

52 weeks to

29 January

2012

£'000

52 weeks to

30 January

2011

£'000

Goodwill impairment

-

92,610

Reorganisation costs

5,718

4,524

HMRC provision

5,324

676

Net loss on disposal of property, plant and equipment

1,802

582

Impairment of intangible fixed assets

7,829

-

Impairment of fixed assets of CVA stores

6,815

3,841

Impairment of fixed assets of loss making stores

4,748

-

Property provisions

14,972

5,789

Release of deferred lease incentives

-

(66)

 

47,208

15,346

 

47,208

107,956

 

Goodwill impairment in the prior period represented the write down required following a review of goodwill, which arose on the acquisition of Sports Division. This was a non-cash item. Further details are included in note 14 of the Group's 2012 Annual Report.

 

Reorganisation costs relate to costs incurred from the restructuring of the Group, which remains ongoing.

 

HMRC provision relates to a provision for a non-recurring matter which the Group is currently discussing with HMRC.

 

Details in relation to the impairment of fixed assets can be found in notes 16 and 23, respectively, of the Group's Annual Report.  Further details in relation to property provisions can be found in note 4 to this announcement.

 

 

 

3. Loss per share

 

The calculation of the basic and diluted loss per Ordinary Share and of adjusted basic loss per Ordinary Share is based on the following data:

 


52 weeks to

29 January 2012

52 weeks to

30 January 2011*

52 weeks to

30 January 2011**

From continuing operations

£'000

Loss

per share

(pence)

£'000

Loss

per share

(pence)

£'000

Loss

per share

 (pence)

Loss for the purposes of basic loss per Ordinary Share and diluted loss per Ordinary Share being net loss attributable to equity holders of the parent

(101,129)

(40.40)p

(181,365)

(72.45)p

(181,365)

(278.66)p

Exceptional items - goodwill impairment

                                   - other exceptional items

-

47,208

-

18.86p

92,610

15,346

36.99p

6.13p

92,610

15,346

142.29p

23.58p

Loss for the purposes of adjusted basic loss per  Ordinary Share being net loss attributable to equity holders of the parent before exceptional operating items, net of taxation

(53,921)

(21.54)p

(73,409)

(29.33)p

(73,409)

(112.79)p

 




 

 

52 weeks to

29 January

2012

£'000

52 weeks to

30 January

2011

£'000

Loss for the purposes of basic loss per Ordinary Share and diluted loss per Ordinary Share being net loss attributable to equity holders of the parent

(101,129)

(181,365)

Effect of dilutive potential Ordinary Shares:

 

 

Fair value adjustment of warrants

(2,935)

-

Loss for the purpose of diluted loss per Ordinary Share

 

(104,064)

(181,365)

 



Number of Ordinary Shares (thousands)

 

 

52 weeks to 29 January 2012

52 weeks to

30 January 2011*

 52 weeks to

30 January

2011**

Number of Ordinary Shares for the purposes of basic loss per Ordinary Share

and adjusted basic loss per Ordinary Share (restated - see below)

250,345

250,345

65,083

Effect of dilutive potential Ordinary Shares:

 

 

 

Share options

16,460

-

-

Number of Ordinary Shares for the purposes of diluted loss per Ordinary Share

 

266,805

250,345

65,083

Continuing operations

 

 

 

Basic loss per Ordinary Share

 

(40.40)p

(72.45)p

(278.66)p

Diluted loss per Ordinary Share

 

(39.00)p

(72.45)p

(278.66)p

Adjusted basic loss per Ordinary Share

 

(21.54)p

(29.33)p

(112.79)p

 

*The number of shares in issue for the period ended 30 January 2011 has been represented to take account retrospectively of the Firm Placing and Open Offers completed during February 2011 and April 2011

**The number of shares for the purposes of the prior year loss per share calculations has been restated to remove the effect of the Firm Placing and Open Offers completed during February 2011 and April 2011.  As these were cash-settled, IAS 33 'Earnings per share' requires that they be excluded from retrospective restatement calculations.

 

Due to the current year losses and losses brought forward for taxation purposes, no taxation has been allocated for the purpose of the loss per share calculations.

 

4. Provisions

 
Current liabilities

 




Vacant

stores provision

£'000

Dilapidations

 provision

£'000

Onerous

leases

£'000

Total

£'000

Group

 

 

 

 

 

 

At 30 January 2011

 

 

2,998

3,076

562

6,636

Reclassification from (to) non-current liabilities

 

 

1,343

(1,855)

-

(512)

Created in the period

 

 

8,228

-

38

8,266

Utilised in the period

 

 

(3,157)

(207)

(146)

(3,510)

Released in the period

 

 

(3,518)

(420)

(454)

(4,392)

At 29 January 2012

 

 

5,894

594

-

6,488

                                                                                                                                                                               

Non-current liabilities        


Vacant stores

 provision

£'000

Compromised lease fund

£'000

Dilapidations provision £'000

Onerous

leases

£'000

Total

£'000

Group

 

 

 

 

 

At 30 January 2011

10,598

-

-

278

10,876

Reclassification (to) from current liabilities

(1,343)

-

1,855

-

512

Created in the period

11,742

2,500

15

214

14,471

Utilised in the period

(1,679)

-

-

(350)

(2,029)

Released in the period

(3,980)

-

-

(142)

(4,122)

At 29 January 2012

15,338

2,500

1,870

-

19,708

 

The vacant stores provisions represent the estimated costs expected to be incurred in exiting the relevant lease agreements and in some cases ongoing rents and rates.  The provision includes closed stores and restructured stores comprising units committed to close before the end of April 2008, stores within the 2009 CVA and stores within the 2011 CVA.

 

The compromised lease fund is payable to landlords as part of the 2011 CVA and is due after a Fund Trigger Date, being the earlier of 24 April 2013, the date the equity shares of JJB cease to be listed and traded on any recognised stock exchange and the unconditional date of an offer made for the Company.  The total amount payable by the Company will be between £2.5 million and £7.5 million, the amount determined by comparing the value of the Market Capitalisation of the Company on the Fund Trigger Date to the amount of the Target Equity Raising of £96.5 million.  This compromise can be settled in cash or shares, at the discretion of the Company.

 

The dilapidations provision is the best estimate of the present value of expenditure expected to be incurred by the condition required under the individual lease agreements at the end of their term.

 

The onerous lease provision represented the direct expenditure expected to be incurred on one of the two soccer domes relating to a dispute with the existing tenant which has now been settled. The provision consisted of the costs expected to be incurred during the dispute, together with the ongoing overhead expenses, including rent and rates. No rental income is currently being received from the site.  This property is now closed and unoccupied, and the provision has been released and reclassified as a vacant store provision.

 

Current liability provisions are expected to be settled during the 52 weeks to 27 January 2013; the non-current liability provisions are expected to be settled after this date.

 

 

5. Contingent liabilities

 

CVA

 

On 3 March 2011, the Company and its subsidiary, Blane Leisure Limited launched a proposal to enter into a Company Voluntary Arrangement ("CVA").  On 22 March 2011, the CVA proposals made by the Company and Blane Leisure Limited received the approval of the requisite majority of creditors and members of each Company.  On 23 March 2011 the CVA became partially effective, with full implementation conditional on further events.

 

Following the expiry of a 28 day challenge period on 21 April 2011, the CVA proposal was fully implemented upon receipt of the gross proceeds from the Second Firm Placing and Placing and Open Offer on 27 April 2011.

 

As part of the compromise of the claim of the landlords within the April 2011 CVA, the Company has agreed to the creation of a Compromised Lease Fund to affected landlords.  Full details of this are included within note 23 relating to provisions.

 

Full details of the CVA proposal are contained within the Investment circular issued to shareholders on 3 March 2011.

 

Other contingent liabilities

 

The Company has contingent liabilities in connection with contractual obligations arising under certain trading contracts.  At the present time it is not possible to quantify any cash outflow with respect to these matters.

 

 

 

6. Analysis of net debt

 


Group

 

At

30 January

 2011

£'000

Cash flow

£'000

Other

non-cash

 items

£'000

At

29 January

2012

 £'000

Cash and cash equivalents

5,859

(1,261)

40

4,638

Non-current liability

 

 

 

 

Bank loans

(24,678)

8,763

-

(15,915)

Net debt

(18,819)

7,502

40

(11,277)

 

 
Amendments to banking facilities in the period

 

On 1 February 2011, the Company and Bank of Scotland ("BoS") agreed an amendment to the existing BoS Facility including the waiver of (i) the fixed charge cover test on the April 2011 Quarter Date and (ii) the clean down test for the period ended 30 January 2011. Further covenants were included within the amendment agreement.

 

On 15 March 2011 the Company and BoS agreed further amendments to the existing BoS Facility and also agreed an Amended BoS Facility following receipt of proceeds under the Second Firm Placing and Placing and Open Offer (and certain other customary conditions precedent).

 

The Amended BoS Facility came into effect on 27 April 2011.

 

The key terms of the Amended BoS Facility are as follows:

>  The maturity date of the facility was extended to 31 May 2014; and

>  An overdraft facility of £7.5 million is contained within the £25 million facility limit.

 

The weighted average interest rate paid by both Group and Company was 5.6 per cent (2011: 5.6 per cent).

 

Further amendments have been made to the BoS Facility post - period end, see note 8.

 

Undrawn borrowing facilities

 

At 29 January 2012, the Group had an undrawn committed borrowing facility of £8.8 million (2011: £nil), in respect of which all conditions precedent had been met, against the BoS £25 million facility.

 

 

 

7. Reconciliation of operating loss to net cash from operating activities

 


Group

 

52 weeks to

29 January

2012

£'000

52 weeks to

30 January

2011

£'000

Operating loss from continuing operations

(103,450)

(181,812)

Depreciation of property, plant and equipment

8,081

9,269

Amortisation of other intangible assets

2,913

3,294

Impairment of intangible fixed assets

7,829

-

Impairment of goodwill

-

92,610

Net loss on disposal of property, plant and equipment

1,802

582

Impairment of fixed assets of CVA stores

6,815

3,841

Impairment of fixed assets of loss making stores

4,748

-

Increase in provisions

8,684

5,775

Share based payment reserve

1,710

2,545

Bank loan costs

(475)

(125)

Operating cash flow before movements in working capital

(61,343)

(64,021)

Decrease in inventories

5,423

15,858

Decrease in trade and other receivables

1,011

15,982

Decrease in trade and other payables

(23,661)

(39,904)

Cash used in operations

(78,570)

(72,085)

Taxation

-

190

Net cash outflow from operating activities

(78,570)

(71,895)

 

 

8. Events after the Statement of financial position date

 

On 4 April 2012, the Board announced details of a strategic investment and financing package with a number of the Company's key stakeholders and Dick's Sporting Goods, Inc. ('Dick's), a new strategic partner.

 

The Company intends to raise £30 million (before expenses) in aggregate by way of the exercise of 2011 Warrants and the issue of the Subscription Shares and the First Convertible Loan Notes, conditional, among other things, upon the passing of the Subscription Resolutions at the General Meeting.

 

IAML, Harris Associates, Crystal Amber and Gates Foundation, the Company's four largest shareholders, and Dick's have entered into a Subscription Agreement with the Company pursuant to which:

 

·      IAML, Harris Associates, Crystal Amber and Gates Foundation have agreed to exercise 2011 Warrants resulting in the issue of 22,712,894 Warrant Shares at an exercise price of 10 pence per share;

·      IAML, Harris Associates, Crystal Amber, Gates Foundation and Dick's have agreed to subscribe for a total of 89,787,106 Subscription Shares at 10 pence per share; and

·      Dick's has agreed to subscribe for the First Convertible Loan Notes in an aggregate principal amount of £18.75 million and has been granted the right (but does not have the obligation) to subscribe for the Second Convertible Loan Notes in an aggregate principal amount of up to £20 million, in each case subject to the terms and conditions set out in the Convertible Loan Note Instrument.

 

Pursuant to the terms of the Convertible Loan Note Instrument, the First Convertible Loan Notes and the Second Convertible Loan Notes will convert into a maximum of 887,871,178 Ordinary Shares representing approximately 61 per cent of the Company's then fully diluted share capital.

 

On 4 April 2012, the Board also announced that it had reached agreement with BoS, the Company's lender, regarding the continued provision of the BoS Facility through to 31 May 2015, an agreement with adidas Group, one of the Company's key supplier partners, for the provision of a loan of up to £15 million and the terms of an intercreditor arrangement with BoS, Dick's and adidas Group, each agreement subject to completion of the Subscription and the satisfaction of certain other conditions precedent.

 

The strategic investment and financing package requires shareholder approval. In particular, the Subscription and the Rule 9 Waivers are conditional on, among other things, the passing of the Subscription Resolutions by Shareholders at a General Meeting.


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