Interim Results
John David Group (The) PLC
05 October 2005
5 October 2005
THE JOHN DAVID GROUP PLC
INTERIM RESULTS
FOR THE TWENTY SIX WEEKS TO 30 JULY 2005
The John David Group Plc (the 'Company' or the 'Group'), a leading specialist
retailer of fashionable branded and own brand sports and leisure wear, today
announces its interim results for the twenty six weeks ended 30 July 2005.
• Turnover was slightly down at £209.6 million (2004: £212.1 million)
after a 2.5% fall in average retail square footage.
• Group like for like sales declined 0.6%.
• Gross margin improved to 46.6% (2004: 46.0%).
• Group operating profit (before exceptionals and net financing costs)
increased to £2.8 million (2004: £1.8 million).
• Net exceptional costs of £3.7 million incurred (2004: £5.9 million),
primarily relating to onerous lease costs and store impairment provisions.
• Operating loss before financing costs and tax was reduced to £0.9
million (2004: £4.1 million).
• Interim dividend of 2.30p per ordinary share (2004: 2.20p).
• Inventories reduced by £16.6 million, demonstrating continued success in
eliminating out of season lines.
• Net debt reduced by £22.1 million, lowering gearing from 93% to 46%.
Peter Cowgill, Executive Chairman, said:
'Our results for the twenty six weeks ended 30 July 2005, reported here for the
first time in accordance with International Financial Reporting Standards, show
further progress being made in our first half trading performance as well as in
our programmes to rationalise the store portfolio and reduce debt. However, the
current trading environment is tough and conditions have worsened since our AGM
trading statement in July. It is therefore important that we experience better
trading going forward and particularly over the crucial Christmas period. We are
continuing to cut costs and drive sales wherever possible without moving away
from our basic proposition as the market's leading retailer of style driven
branded sportswear.
'The future success of the Group is still critically dependent on the Sports
Fascias and we have laid the foundations for a significant improvement in future
operating margins with the rationalisation of the store portfolio and the
elimination of substantial quantities of out of season stock.'
Enquiries:
The John David Group Plc Tel: 0870 873 0333
Peter Cowgill, Executive Chairman
Barry Bown, Chief Executive
Brian Small, Finance Director
Hogarth Partnership Limited Tel: 020 7357 9477
Andrew Jaques
Edward Westropp
Introduction
Our results for the twenty six weeks ended 30 July 2005, reported here for the
first time in accordance with International Financial Reporting Standards
('IFRS'), show further progress being made in our first half trading performance
as well as in our programmes to rationalise the store portfolio and reduce debt.
However, the current trading environment is tough and conditions have worsened
since our AGM trading statement in July. It is therefore important that we
experience better trading going forward and particularly over the crucial
Christmas period. We are continuing to cut costs and drive sales wherever
possible without moving away from our basic proposition as the market's leading
retailer of style driven branded sportswear.
IFRS
The results presented in this announcement have been prepared under IFRS for the
first time. Prior period figures have been restated in accordance with an
announcement being released simultaneously today.
Group Results
Operating profit before exceptional items and net financing costs was £2.8
million (2004: £1.8 million) and after financing was £1.1 million (2004: loss of
£0.3 million).
Like for like sales declined 0.6% (Sport Fascias -0.2%; Fashion Fascias -5.3%)
for the twenty six weeks ended 30 July 2005 and average retail square footage
fell by 2.5% against the comparable period.
Total sales for the twenty six weeks ended 30 July 2005 were £209.6 million
compared with £212.1 million for the six months ended 31 July 2004, a fall of
1.2%.
Gross margin has improved in both Fascias and was 46.6% overall (2004: 46.0%).
This is a creditable performance as we have continued to make considerable
efforts to cleanse inventories.
Net exceptional costs of £3.7 million (2004: £5.9 million) were incurred in the
period, comprising store impairment provisions of £1.1 million (2004: £3.0
million), and onerous lease provisions and store disposal costs of £2.6 million
(2004: £2.2 million). The 2004 exceptional costs also included a further £0.7
million, principally for staff termination costs. This year's onerous lease
charge relates to stores previously assigned to failed retailers for which rent
responsibility has returned to JD under privity of contract following the demise
of those retail chains.
After charging exceptional costs, the operating loss before financing and tax
was reduced to £0.9 million (2004: £4.1 million). Net financing costs were also
reduced to £1.7 million (2004: £2.1 million) reflecting both a reduction in
average debt and in bank margin.
Loss before tax was reduced to £2.6 million and after tax to £1.6 million (2004:
£6.2 million and £3.5 million respectively).
The basic and diluted earnings per ordinary share were minus 3.29p (2004: minus
7.47p). The adjusted basic earnings per ordinary share were 2.49p (2004: minus
0.04p).
Balance Sheet and Financial Resources
Total expenditure on property, plant and equipment during the period was £3.3
million (2004: £3.2 million).
Inventories were reduced by £16.6 million from its level a year previously to
£55.5 million, and were only £1.6 million higher than the £53.9 million at 31
January 2005, demonstrating continued success in eliminating out of season
lines.
Net debt was reduced by £22.1 million from £45.4 million at 31 July 2004 to
£23.3 million bringing gearing down in the same period from 93% to 46%.
Store Portfolio and Property
The store portfolio changed as follows in the twenty six weeks reported on:
Sports: Store nos. Sq Ft '000s
At start of year 299 1,042
New stores 1 6
Store closures (9) (19)
Transfers/ stores within stores 4 10
Total 295 1,039
Fashion: Store nos. Sq Ft '000s
At start of year 53 164
New stores 0 0
Store closures (4) (9)
Transfers/ stores within stores (1) (7)
Total 48 148
Group: Store nos. Sq Ft '000s
At start of year 352 1,206
New stores 1 6
Store closures (13) (28)
Transfers/ stores within stores 3 3
Total 343 1,187
The only new store opened in the period was Maidstone in July. A further store
was opened in Norwich in September. Both are JD Sports stores.
Maximising performance from our current property portfolio including elimination
of underperforming stores remains a priority. Thirteen stores were closed in the
period and a further four have been closed since 30 July 2005.
Current Trading and Outlook
Trading in both the Sports and Fashion Fascias has been disappointing in most
recent weeks. Even with our differentiated and significantly exclusive product
offer, increasing competition and overcapacity in sportswear retail channels has
meant that we have not been immune to the current downturn in consumer spending
and footfall. We referred to the impact of the London bombings on Central London
trade in our AGM statement in July and that impact was exacerbated by the
subsequent further attempted bombings on the day of that announcement. London
trade has seen significant double digit declines year on year since that time.
The negative impacts on trade in August and the first three weeks of September
also included some late deliveries on key lines and a delay in momentum building
on the sale of Autumn ranges against last year. Like for like sales for the nine
week period from 31 July to 1 October have been -7.6% (Sports -6.8%; Fashion
-17.3%). The Group like for like sales performance for the thirty five weeks to
1 October is -2.5% (Sports -2.0%; Fashion -8.2%).
On the positive side, we are heartened that last week was a significantly better
week being positive in both Sports and Fashion Fascias for the first time since
May. It is important that we now experience a sustained period of better trading
going forward and particularly over the crucial Christmas period.
The Fashion business still represents less than 10% of sales and is now managed
autonomously with separate systems from a head office in Congleton and a
warehouse in Middlewich. The reorganisation was satisfactorily completed in June
though initially the amalgamation of two stock files both physically and in
system terms left us significantly short of stock in July and August. A new look
Scotts store was opened in Hull (in an old AV store) in September and this store
has traded well. Further conversions are already underway in Bradford and
Bluewater, and brand support is still increasing. Gross margin and operating
costs performance are satisfactory but ultimately increases in sales per square
foot are required to drive the business forward.
The future success of the Group is still critically dependent on the Sports
Fascias. We have laid the foundations for a significant improvement in future
operating margins with the rationalisation of the store portfolio and the
elimination of substantial quantities of out of season stock lines. What we now
need is a return in consumer confidence and footfall. Above average inflationary
cost pressure makes earnings growth difficult without like for like sales
growth. We continue to look at all overhead savings opportunities but we are
also looking more at new merchandising, customer service and footfall conversion
tracking initiatives to ensure we capitalise on our differentiated style led
fashion product offer. We are also continuing to pursue opportunities to
increase returns from our larger space stores.
Dividend
The Board has considered both the improved first half trading performance and
current trading conditions and has decided to propose an increased interim
dividend of 2.30p per ordinary share (2004: 2.20p). It is intended that all
shareholders will be offered a scrip dividend alternative to this dividend in a
separate circular to shareholders. The dividend will be paid on 13 January 2006
to shareholders on the register as at close of business on 9 December 2005.
Peter Cowgill
Executive Chairman
5 October 2005
CONSOLIDATED INCOME STATEMENT
For the 26 weeks ended 30 July 2005
Unaudited Unaudited Unaudited
26 weeks ended 6 months ended 52 weeks ended
30 July 31 July 29 January
2005 2004 2005
Note £000 £000 £000
REVENUE 209,608 212,079 471,656
Cost of sales (111,935) (114,530) (256,504)
_______ _______ _______
GROSS PROFIT 97,673 97,549 215,152
Net operating expenses (98,608) (101,652) (207,393)
_______ _______ _______
OPERATING (LOSS)/PROFIT (935) (4,103) 7,759
BEFORE FINANCING
Before exceptional items 2,799 1,853 17,098
Exceptional items 2 (3,734) (5,956) (9,339)
OPERATING (LOSS) / PROFIT (935) (4,103) 7,759
BEFORE FINANCING
_______ _______ _______
Financial income 156 170 304
Financial expenses (1,814) (2,285) (4,461)
_______ _______ _______
(LOSS)/PROFIT BEFORE TAX (2,593) (6,218) 3,602
Income tax credit/(expense) 3 1,037 2,727 (1,341)
_______ _______ _______
(LOSS)/PROFIT FOR THE (1,556) (3,491) 2,261
PERIOD
_______ _______ _______
Earnings per ordinary share:
- Basic 4 (3.29p) (7.47p) 4.81p
- Diluted 4 (3.29p) (7.47p) 4.81p
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the 26 weeks ended 30 July 2005
The Group has no recognised gains or losses during the current or previous
period other than the results reported above.
CONSOLIDATED BALANCE SHEET
As at 30 July 2005
Unaudited Unaudited Unaudited
As at As at As at
30 July 31 July 29 January
2005 2004 2005
Note £000 £000 £000
ASSETS
Intangible assets 19,732 14,976 19,130
Property, plant and equipment 50,170 58,438 54,074
Other receivables 2,545 3,231 2,715
_______ _______ _______
TOTAL NON-CURRENT ASSETS 72,447 76,645 75,919
_______ _______ _______
Inventories 55,499 72,113 53,857
Income tax receivable 3,207 3,561 -
Trade and other receivables 11,010 10,623 11,707
Cash and cash equivalents 8,355 24,583 6,531
_______ _______ _______
TOTAL CURRENT ASSETS 78,071 110,880 72,095
_______ _______ _______
TOTAL ASSETS 150,518 187,525 148,014
_______ _______ _______
LIABILITIES
Bank overdraft (939) - (1,800)
Interest-bearing loans and (10,000) (8,000) (9,000)
borrowings
Trade and other payables (51,804) (54,657) (44,041)
Provisions (1,504) (845) (674)
Income tax liabilities - - (1,417)
_______ _______ _______
TOTAL CURRENT LIABILITIES (64,247) (63,502) (56,932)
_______ _______ _______
Interest-bearing loans and (20,000) (62,000) (25,500)
borrowings
Other payables (10,369) (11,196) (10,852)
Provisions (2,434) (167) (940)
Deferred tax liabilities (2,335) (1,929) (190)
_______ _______ _______
TOTAL NON-CURRENT LIABILITIES (35,138) (75,292) (37,482)
_______ _______ _______
TOTAL LIABILITIES (99,385) (138,794) (94,414)
_______ _______ _______
TOTAL ASSETS LESS TOTAL LIABILITIES 51,133 48,731 53,600
_______ _______ _______
EQUITY
Issued ordinary share capital 5 2,400 2,338 2,364
Share premium 5 10,173 8,917 9,042
Retained earnings 5 38,560 37,476 42,194
_______ _______ _______
TOTAL EQUITY ATTRIBUTABLE TO EQUITY 51,133 48,731 53,600
SHAREHOLDERS
_______ _______ _______
CONSOLIDATED STATEMENT OF CASH FLOWS
For the 26 weeks ended 30 July 2005
Unaudited Unaudited Unaudited
26 weeks 6 months 52 weeks
ended ended ended
30 July 31 July 29 January
2005 2004 2005
Note £000 £000 £000
CASH FLOWS FROM OPERATING
ACTIVITIES
(Loss)/profit for the period (1,556) (3,491) 2,261
Income tax (credit)/expense (1,037) (2,727) 1,341
Financial expenses 1,814 2,285 4,461
Financial income (156) (170) (304)
Depreciation 4,817 5,183 11,111
(Profit) / loss on disposal of (84) 1,239 616
property, plant and equipment
Impairment of property, plant and 1,097 2,976 6,701
equipment
(Increase)/decrease in (1,642) (6,386) 14,674
inventories
Decrease in trade and other 697 2,878 2,360
receivables
Increase/(decrease) in trade, 7,953 7,645 (6,002)
other payables and provisions
Interest paid (1,814) (2,285) (4,461)
Income tax (paid)/received (1,441) 1,074 244
_______ _______ _______
NET CASH FROM OPERATING 8,648 8,221 33,002
ACTIVITIES
_______ _______ _______
CASH FLOWS FROM INVESTING
ACTIVITIES
Interest received 156 170 304
Proceeds from sale of property, 774 493 2,910
plant and equipment
Acquisition of property, plant (3,327) (3,235) (8,056)
and equipment
Cash consideration on acquisition - - (4,183)
of subsidiary
Net overdrawn balances acquired - - (420)
on acquisition of subsidiary
_______ _______ _______
NET CASH USED IN INVESTING (2,397) (2,572) (9,445)
ACTIVITIES
_______ _______ _______
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issue of ordinary 1,167 - 146
share capital
(Repayment)/drawdown of (4,500) 14,000 (21,500)
borrowings
Payment of finance lease (233) - (170)
liabilities
Dividends paid - - (1,816)
_______ _______ _______
NET CASH (USED)/RECEIVED FROM (3,566) 14,000 (23,340)
FINANCING ACTIVITIES
_______ _______ _______
NET INCREASE IN CASH AND CASH 7 2,685 19,649 217
EQUIVALENTS
1. BASIS OF PREPARATION
European Union ('EU') law (IAS Regulation EC 1606/2002) requires that the next
annual consolidated financial statements of The John David Group Plc ('The
Group'), those covering the 52 weeks ending 28 January 2006, are prepared in
accordance with International Financial Reporting Standards ('IFRS') adopted for
use in the E.U..
The Group has adopted IFRS with effect from 30 January 2005. The transition date
is 1 February 2004, being the start date of the earliest period for which full
comparative information in the 2006 Annual Report and Accounts will be
presented.
This interim financial information has been prepared on the basis of the
recognition and measurement requirements of IFRS in issue that either are
endorsed by the EU and effective (or available for early adoption) at 28 January
2006 or are expected to be endorsed and effective (or available for early
adoption) at 28 January 2006, the Group's first annual reporting date at which
it is required to use endorsed IFRS. Based on these endorsed IFRS, the directors
have made assumptions about the accounting policies expected to be applied when
the first annual IFRS financial statements are prepared for the 52 weeks ending
28 January 2006.
Furthermore, the adopted IFRS that will be effective (or available for early
adoption) in the annual financial statements for the 52 weeks ending 28 January
2006 are still subject to change and to additional interpretations and therefore
cannot be determined with certainty. Accordingly, the accounting policies for
that annual period will be determined finally only when the annual financial
statements are prepared for the 52 weeks ending 28 January 2006.
The comparative figures for the 52 weeks ended 29 January 2005 do not constitute
the Group's statutory accounts for that financial period. Those accounts, which
were prepared under UK GAAP, have been reported on by the Group's auditors and
delivered to the Registrar of Companies. The report of the auditors was
unqualified and did not contain statements under section 237(2) or (3) of the
Companies Act 1985.
The interim financial information for the 26 weeks ended 30 July 2005 and 6
months ended 31 July 2004 has not been audited. In relation to the financial
statements for the 52 weeks ended 29 January 2005, this has been extracted from
a restatement of the financial information taken from the Group's statutory
accounts for that financial year.
The interim financial reports are not prepared in accordance with the EU
endorsed standard IAS34 'Interim Financial Reporting' as permitted by the
Listing Rules.
The financial statements are presented in pounds sterling, rounded to the
nearest thousand.
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amount of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision only affects that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
This is the Group's first consolidated interim financial report prepared in
accordance with IFRS. A detailed review of the changes in the accounting
policies and reconciliations of the financial statements from UK GAAP to IFRS at
key dates has today been provided to the London Stock Exchange.
The accounting policies set out in the IFRS transition statement have been
applied consistently to all periods presented in these consolidated financial
statements and in preparing an opening IFRS balance sheet at 1 February 2004 for
the purposes of the transition to IFRS.
The accounting policies have been applied consistently by all Group entities.
2. EXCEPTIONAL ITEMS
Unaudited Unaudited Unaudited
26 weeks ended 6 months ended 52 weeks ended
30 July 31 July 29 January
2005 2004 2005
£000 £000 £000
(Profit)/loss on disposal of (84) 1,239 616
property, plant and equipment
Provision for rentals on onerous 2,721 1,012 1,286
property leases
Impairment of property, plant and 1,097 2,976 6,701
equipment on loss making stores
Redundancy costs - 440 440
Bank reorganisation costs - 289 296
_______ _______ _______
TOTAL EXCEPTIONAL ITEMS 3,734 5,956 9,339
_______ _______ _______
3. INCOME TAX (CREDIT)/EXPENSE
Unaudited Unaudited Unaudited
26 weeks ended 6 months ended 52 weeks ended
30 July 31 July 29 January
2005 2004 2005
£000 £000 £000
CURRENT TAX (CREDIT) / EXPENSE
UK corporation tax (1,033) (3,073) 3,440
Adjustment relating to prior - - (755)
periods
_______ _______ _______
(1,033) (3,073) 2,685
DEFERRED TAX (CREDIT) / EXPENSE
Deferred tax (4) 346 (1,344)
_______ _______ _______
TOTAL INCOME TAX (CREDIT) / EXPENSE (1,037) (2,727) 1,341
IN INCOME STATEMENT
_______ _______ _______
4. EARNINGS PER ORDINARY SHARE
The calculation of basic earnings per ordinary share at 30 July 2005 is based on
the loss attributable to ordinary shareholders of £1,556,000 (2004: £3,491,000)
and a weighted average number of ordinary shares outstanding during the 26 weeks
ended 30 July 2005 of 47,308,292 (2004: 46,748,607).
The calculation of diluted earnings per ordinary share at 30 July 2005 is based
on the loss attributable to ordinary shareholders of £1,556,000 (2004:
£3,491,000) and a weighted average number of ordinary shares outstanding during
the 26 weeks ended 30 July 2005 of 47,314,071 (2004: 46,751,332).
ADJUSTED BASIC EARNINGS PER ORDINARY SHARE
Adjusted basic earnings per ordinary share has been based on the (loss)/profit
attributable to ordinary shareholders for each financial period but excluding
the post tax effect of exceptional items since the directors consider that this
gives a more meaningful measure of the underlying performance of the Group.
Unaudited Unaudited Unaudited
26 weeks ended 6 months ended 52 weeks ended
30 July 31 July 29 January
2005 2004 2005
£000 £000 £000
(Loss)/profit attributable to (1,556) (3,491) 2,261
ordinary
shareholders
- Exceptional items excluding 3,818 4,717 8,723
(profit)/loss on disposal of
property, plant and equipment
- Tax relating to exceptional (1,083) (1,245) (2,235)
items
_______ _______ _______
Profit/(loss) attributable to 1,179 (19) 8,749
ordinary
shareholders excluding exceptional
items
_______ _______ _______
Adjusted basic earnings per ordinary 2.49p (0.04p) 18.62p
share
_______ _______ _______
5. EQUITY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Attributable to equity shareholders
Issued Share Retained Total
ordinary premium earnings
share
capital
£000 £000 £000 £000
At 29 January 2005 2,364 9,042 42,194 53,600
Ordinary shares issued in the 36 1,131 - 1,167
period
Loss for the period - - (1,556) (1,556)
Equity dividend - - (2,078) (2,078)
_______ _______ _______ _______
At 30 July 2005 2,400 10,173 38,560 51,133
_______ _______ _______ _______
The ordinary shares issued in the period relate to the exercise of options
granted under the executive share option schemes.
These options were exercised following the acquisition of a controlling interest
in the Group by Manchester Square Enterprises Limited, a wholly owned subsidiary
of Pentland Group Plc. Option holders have until 30 November 2005 to exercise
any remaining options.
Unaudited Attributable to equity shareholders
Issued Share Retained Total
ordinary premium earnings
share
capital
£000 £000 £000 £000
At 31 January 2004 2,338 8,917 41,749 53,004
Ordinary shares issued in the - - - -
period
Loss for the period - - (3,491) (3,491)
Equity dividend - - (782) (782)
_______ _______ _______ _______
At 31 July 2004 2,338 8,917 37,476 48,731
_______ _______ _______ _______
6. DIVIDENDS
After the balance sheet date the following dividends were proposed by the
directors. The dividends were not provided for at the balance sheet date.
Unaudited Unaudited Unaudited
26 weeks ended 6 months ended 52 weeks ended
30 July 31 July 29 January
2005 2004 2005
£000 £000 £000
2.30p per ordinary share
(31 July 2004: 2.20p, 29 January 1,104 1,063 2,056
2005: 4.40p)
7. ANALYSIS OF NET DEBT
Unaudited
At 29 January Cash flow Other At 30 July
2005 2005
£000 £000 £000 £000
Cash and cash equivalents 6,531 1,824 - 8,355
Bank overdraft (1,800) 861 - (939)
_______ _______ _______ _______
4,731 2,685 - 7,416
Interest bearing loans and
borrowings
- Current (9,000) 5,000 (6,000) (10,000)
- Non current (25,500) (500) 6,000 (20,000)
Loan notes (287) - - (287)
Finance leases (711) 233 - (478)
_______ _______ _______ _______
NET DEBT (30,767) 7,418 - (23,349)
_______ _______ _______ _______
8. INTERIM REPORT
The interim report will be posted to all shareholders in due course. Additional
copies are available on application to the Company Secretary, The John David
Group Plc, Hollinsbrook Way, Pilsworth, Bury, Lancashire, BL9 8RR.
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