Information  X 
Enter a valid email address

Jimmy Choo PLC (CHOO)

  Print   

Thursday 19 March, 2015

Jimmy Choo PLC

Preliminary Results

RNS Number : 8424H
Jimmy Choo PLC
19 March 2015
 



 

 

 

19 March 2015

Preliminary Results

For the year ended 31 December 2014

 

A Year of Great Progress

 

Jimmy Choo PLC, the luxury accessories company with shoes at its core, today announces a strong operational and financial performance for 2014.

 

 

 

£m


Year ended 31 December 2014

Year ended 31 December 2013

Growth at reported currency

Growth at constant currency1

Like for like sales growth2








Retail


192.9

177.4

8.8%

15.4%

5.7%

Wholesale


99.6

97.7

1.9%

6.3%


Licensing/other


7.2

6.4

11.1%

17.3%




            

            

           

           


Total revenue


299.7

281.5

6.4%

12.2%









Adjusted EBITDA3


50.2

46.9

7.2%



Adjusted EBITDA margin


16.8%

16.6%




Adjusted EBIT4


35.4

35.0

0.9%



Adjusted EPS5


6.1p

5.6p

7.6%










 

Pierre Denis, CEO of Jimmy Choo PLC commented:

 

"This has been a year of great financial, strategic and operational progress for the Company. 

 

With our unique DNA and experienced team we have continued to deliver products that resonate strongly with our clients.  As a specialist brand we have invested to outperform in this attractive and complex category thus delivering operating leverage.  We are expanding in Asia and selected new markets where we are underpenetrated compared to our peers. Our investment programme in new DOS and our new concept has continued.

 

In 2014 we report 12.2% constant currency net revenue growth led by retail as well as by our performance in Asia ex-Japan and Japan.  I am particularly pleased with our new store concept which contributed towards the 5.7% LFL and 15.4% constant currency retail revenue growth.  Our Adjusted EBITDA growth is also on track at +7.2%, together with an increase in EBITDA margin of 0.2% to 16.8% and cash conversion of 92.2% of Adjusted EBITDA.

 

We remain focused on executing our growth strategy and pursuing growth without compromising our brand or its luxury position despite the more challenging macroeconomic environment."

 

Highlights for 2014

·      Nine new directly operated stores ("DOS")

·      Successful start to the roll out of the new store concept with the opening of the New Bond Street and Beverly Hills flagships.

·      Introduction of new Made to Order service for our iconic styles lifts luxury experience

·      Successful launch of CHOO.080, the new seasonal collection based around boots and sneakers with a cool London feel

·      Men's remains our fastest growing category

·      Industry recognition for creative and quality excellence results in Marie Claire's prestigious Prix d'Excellence de la Mode Award for best shoe collection



 

 

Enquiries

 

Jimmy Choo PLC                                                                                                                                  +44 (0) 207 368 5000

Pierre Denis, Chief Executive Officer

Jonathan Sinclair, Chief Financial Officer and Executive Vice President

Will Smith, Director of Investor Relations

 

Montfort Communications:                                                                                                              +44 (0) 203 514 0897

Hugh Morrison                                                                                                                                    +44 (0) 7739 655 492

Sophie Blythe                                                                                                                                       +44 (0) 7881 580 756

 

Jimmy Choo PLC will be hosting a presentation to analysts at 9:30 today at 10 Howick Place, London SW1P 1GW.  The Company will next update the market on trading at the time of its AGM on 27 May, 2015.

 

Notes to Editors

Today, Jimmy Choo encompasses a complete luxury accessories brand. Women's shoes remain the core of the product offer, alongside handbags, small leather goods, scarves, sunglasses, eyewear, belts, fragrance and men's shoes. Pierre Denis was appointed CEO in July 2012 and the creative direction is overseen by Sandra Choi. Together, they share a vision to create one of the world's most treasured luxury brands. In October 2014 Jimmy Choo PLC was publicly listed on the London Stock Exchange with the ticker CHOO.

 

This announcement includes forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the Company's control and all of which are based on the Directors' current beliefs and expectations about future events. Forward-looking statements are sometimes identified by the use of forward looking terminology such as ''believe'', ''expects'', ''may'', ''will'', ''could'', ''should'', ''shall'', ''risk'', ''intends'', ''estimates'', ''aims'', ''plans'', ''predicts'', ''continues'', ''assumes'', ''positioned'' or 'anticipates'' or the negative thereof, other variations thereon or comparable terminology.  These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the intentions, beliefs or current expectations of the Directors or the Company concerning, among other things, the results of operations, financial condition, prospects, growth, strategies (including continued store roll out plans) and the industry in which it operates. In particular, the statements regarding the Company's strategy and other future events or prospects are forward-looking statements.

 

 

1 Constant currency revenue growth is calculated by applying the exchange rates for the year ended 31 December 2014 to the year ended 31 December 2013 on a month by month basis and calculating the growth percentage by reference to the total year.

2Like for like sales growth is calculated by taking retail sales in all locations where trading occurred for a full financial year prior to the start of the period being measured and calculating sales growth for those locations at constant currency.

3Adjusted EBITDA is defined as operating profit for the year adjusted for exceptional costs, loss on disposal of property, plant and equipment and intangible assets, depreciation and amortisation charges and realised and unrealised foreign exchange gains and losses on the revaluation of monetary items.

4Adjusted EBIT is defined as operating profit for the year adjusted for exceptional costs, share of the result of associates and joint ventures and realised and unrealised foreign exchange gains and losses on the revaluation of monetary items.

5 Adjusted EPS is calculated as Adjusted consolidated net income divided by 377,786,469 shares.


 

 

Operational Review

 

Product collections

 

Our focus on product quality and innovation has ensured we continued to produce innovative collections which resonate strongly with our clients around the world. 

 

In 2014 this was apparent in achieving revenue growth ahead of the market.  We also received external validation of this at Paris Fashion Week in 2014, where Sandra Choi and Jimmy Choo won Marie Claire's Prix d'Excellence de la Mode Award for best shoe collection. 

 

Shoes continued to be at the heart of the brand, representing three quarters of the business, underpinned by strong seasonal and continuative collections.  In accessories, evening bags and Small Leather Goods (SLG) continued to perform well.

 

We launched a number of product initiatives in 2014, including:

 

·      Made To Order shoes, giving our clients the opportunity to choose a pair of bespoke shoes from a range of our iconic designs, materials and heel heights. 

·      CHOO.080 a new seasonal collection which created a cohesive offer based around boots and sneakers with a cool London feel.  This had a very positive response, especially with our Asian and European clients.

·      Men's remained our strongest growth category, representing 5% of net revenue.  We also launched Jimmy Choo Man, our first male fragrance, with our partner InterParfums SA, which has performed well above our expectations. 

 

Distribution

 

We continued to drive our retail channel expansion, with a net nine new directly operated stores (DOS) opened in the period.  The focus of our retail expansion remains in Asia, where we are underrepresented relative to our luxury peers.  In addition, we began to renovate our store portfolio in the new store concept launched in 2014.  We are greatly encouraged by the early results, with the newly renovated stores consistently outperforming the rest of the portfolio.  At the year end, we numbered 125 DOS, 15 of which were in the new concept.  We renovated and relocated a total of 10 DOS (including two flagships at Beverly Hills and New Bond Street, London).

 

Asian Growth Opportunity

 

The focused strategy in the Asian region has been successful, with very strong growth rates in our stores on the ground in China and travelling Chinese becoming our second largest travelling client group.  Our products were featured in a 2014 story line of 'My Love from the Star', a popular television series in Korea.  The shoe featured in the story line has been a global best seller and continues to outstrip our expectations.  At the end of 2014, we numbered 13 DOS in China.

 

Investment in Systems and Processes

 

During the year we made good progress on the replacement of our systems infrastructure including SAP, product life cycle management and our online platform. 



 

Revenue Analysis

Revenue by channel £m

 

12 months to

31 December 2014

12 months to

31 December 2013

Growth

at reported currency

Growth at constant currency

Retail

192.9

177.4

8.8%

15.4%

Wholesale

99.6

97.7

1.9%

6.3%

Licensing/Other

7.2

6.4

11.1%

17.3%

Total

299.7

281.5

6.4%

12.2%

 

Revenue increased by 6.4%, or 12.2% on a constant currency basis, with continued growth across all segments.  Retail grew ahead of wholesale, in line with our previously stated strategic aim of retail led growth and for 2014 represented just over 64% of revenue.

 

Retail

In 2014 retail revenue grew by 8.8% to £192.9m as a result of LFL growth of 5.7% and the net addition of nine new DOS, half of which are in China.  In constant currency terms, retail revenue grew by 15.4% in 2014. LFL sales were also positively impacted by the roll out of the new store concept, with 10 existing stores renovated or relocated in the year and a total of 15 stores trading in the new concept at the year end.  The early indications from the new concept renovations undertaken in the year are that they enjoy noticeably improved LFL sales.

 

Wholesale

Our wholesale business also performed well, although growth was held back by adverse movements in the US dollar exchange rate against sterling during the year, as a significant proportion of our wholesale accounts are denominated in US dollars.   In constant currency terms, wholesale revenue grew by 6.3% during 2014, compared to 1.9% at reported rates. 

 

Other Revenue

Other revenues were positively impacted this year by the launch of Jimmy Choo Man, our first men's fragrance, which was very well received following its launch in August 2014 and has outstripped expectations consistently since launch.

 

 

Revenue by destination £m

 

12 months to

31 December 2014

12 months to

31 December 2013

Growth

at reported currency

EMEA

132.4

126.4

4.7%

Americas

99.8

99.2

0.6%

Japan

32.7

30.0

8.8%

Asia ex-Japan

34.8

25.9

34.5%

Total

299.7

281.5

6.4%

 

All regions suffered FX headwinds which averaged 5.8% globally.  Asia remains our strongest growth region.  Asia ex-Japan grew by 34.5%, with strong acceptance of our collections and increasing brand penetration driving like for like supported by our continued build out of new stores.  Despite the devaluation of the Yen, our Japanese business grew by 8.8% in reported currency, with a strong response to the launch of CHOO.080.  EMEA grew by 4.7%, despite reduced activity by travelling clients, as the marked currency shifts impacted behaviour and fewer Russian visitors reduced footfall offset by growth in travelling Chinese clients.  Americas performed in line with expectations, up 0.6% despite currency headwind for most of the year and a number of temporary store closures as we began to roll out the new store concept. 

 

Profit Analysis

 

Gross margin

 

Gross margin continued to improve on a constant currency basis from increased buying volumes and the favourable shift in channel mix in the year more than offset by strong currency headwinds for most of the year. As a result reported gross margin reduced from 62.3% in 2013 to 61.8% in 2014.

 

Costs

 

Overall, total costs charged in arriving at Adjusted EBITDA increased by 5.1% in 2014, compared to a 6.4% growth in revenue.

 

Selling and distribution expenses increased by £9.6m (13.1%) in 2014, reflecting the impact of the addition of new stores and the variable costs of revenue growth.  Retail costs were also negatively impacted by increased costs during the refurbishments of the London and Beverly Hills flagship locations as well as costs in relation to stores due to open in subsequent years.  Excluding these two elements, costs rose by 11.4% in 2014.

 

Brand communication benefitted from the achievement of significant economies of scale having insourced our media production.  We also grew our media presence and were ranked consistently as number 1 in global editorial ranking globally for luxury shoes.  In addition we were ranked as 'Gifted' for our digital presence by the digital agency L2 with our social presence being rated 'Genius'.  We launched Kit Harrington as our key male personality which coincided with our first catwalk show in London in June 2014.   This was achieved with spend just under 5% of revenue and £2.8m (16.6%) lower than the previous year. 

 

Overheads for 2014 were £37.9m, down 0.8% or £0.3m compared to the prior year, reflecting tight cost control now that the replatforming of the business is largely complete and savings due to movements in foreign exchange rates.  As a percentage of revenue, overheads fell from 13.6% in 2013 to 12.6% in 2014.

 

Exceptional costs of £13.0m (2013: £6.0m) were incurred during the year, of which £7.8m (2013: £nil) were IPO related costs.  The remaining exceptional costs included replatforming costs of £3.6m (2013: £3.4m) and acquisition and integration costs, of £1.6m (2013: £2.6m). 

 

Profits and earnings

 

2014 Adjusted EBITDA grew by £3.4m or 7.2% compared to the prior year, with Adjusted EBITDA margin increasing from 16.6% to 16.8%.  This represents a strong result for the Group in a year which saw significant foreign exchange headwind.

 

2014 Adjusted EBIT grew more modestly than Adjusted EBITDA, as expected, increasing by 0.6% compared to the prior year as a result of additional depreciation and amortisation, which increased by 26.3% as a result of the investment in new stores, refurbishment of flagship stores and improvements to the Group's information systems.

 

Adjusted EBT for the year was £28.3m (2013: £23.6m).  In addition to the growth in Adjusted EBIT described above we realised a net gain on realised and unrealised foreign exchange of £1.8m (2013: net loss of £4.0m) and financing charges of £8.8m (2013: £7.5m).   The increased financing charges in the year represented the fair value of the open currency swaps at the year end, excluding which financing charges fell by £4.5m or 38.4% in the year ended 31 December 2014 compared to the previous year.

 

Adjusted consolidated net income for the year was £22.9m compared to £21.0m in the preceding period, generating Adjusted EPS of 6.1p per share in 2014 (2013: 5.6p).

 

Cash flow

 

Cash conversion was 92.2% of Adjusted EBITDA (2013: 97.4%), despite the investment in working capital during the year as we have built inventory to support the expansion of the store portfolio.

 

Free operating cash flow decreased from an inflow of £8.8m in 2013 to an outflow of £4.1m largely due to the impact of exceptional payments associated with the IPO.

 

Net debt

 

Net debt reduced from £582.4m at 31 December 2013 to £125.6m at 31 December 2014 following the conversion of the shareholder credit facility from JAB Luxury to equity in October 2014 prior to IPO.

 

External net debt increased from £121.9m to £125.6m, principally due to the timing of drawdowns on the revolving credit facility to fund IPO related costs.  As at 31 December 2014 we had drawn down £5.5m on the revolving credit facility (2013: £nil).  During 2014 we prepaid £13.3m in respect of our term loans and drew down £5.5m on the capital expenditure facility.

Outlook

We continue to pursue our overall growth strategy, of focussing on the design of high quality collections which resonate with our clients and growth in the retail business through like for like growth and opening additional stores. 

 

We are rolling out 10 to 15 new DOS per annum, with a focus on China, and renovating 10 to 15 of our existing portfolio of DOS per annum in the new store concept.  Japan and Asia ex-Japan continue to grow well, while EMEA remains impacted by a reduction in Russian travellers.  We continue to see outperformance by stores in the new store concept.

 

We remain focused on executing our growth strategy and pursuing growth without compromising our brand or its luxury position despite the more challenging macroeconomic environment.

 

 

 

 

Appendix 1 - Financial Information

 

Consolidated income statement

for the year ended 31 December


Note

2014

2013



£000

£000





Revenue

2

299,670

281,544

Cost of sales


(114,357)

(106,188)



              

              

Gross profit


185,313

175,356





Selling and distribution expenses


(93,750)

(81,911)

Administrative expenses


(54,436)

(62,287)


              

              

Operating profit before exceptional costs


37,127

31,158

Exceptional costs

3

(13,047)

(6,009)



              

              





Operating profit


24,080

25,149





Financial income

6

1,480

68

Financial expenses

6

(30,963)

(50,909)

(Loss)/gain on financial instruments

6

(2,908)

4,374



              

              

Loss after financing expense


(8,311)

(21,318)





Share of profit/(loss) of associates


12

(85)



              

              

Loss before tax


(8,299)

(21,403)





Taxation

7

(2,543)

3,735



              

              

Loss for the year


(10,842)

(17,668)



              

              



£

£





Earnings per share - basic and diluted

4

(0.12)

(176,680)



              

              

Non-GAAP measures




Adjusted EBITDA

11

50,230

46,877

Adjusted EBIT

11

35,353

35,039

Adjusted EBT

11

28,291

23,612

Adjusted Consolidated Net Income

11

22,888

21,004

Adjusted Earnings per share (pence)

4

6.1

5.6





 



 

Consolidated statement of other comprehensive income

 


2014

2013

£000

£000





Loss for the year


(10,842)

(17,668)





Other comprehensive income








Items that are or may be recycled subsequently to profit or loss:




Gain on non-controlling interest


-

128

Foreign currency translation differences


(425)

407

Income tax credit on items that are or may be recycled subsequently to profit or loss


-

184



              

              

Other comprehensive (loss)/income for the year, net of tax


(425)

719





Total comprehensive loss for the year


(11,267)

(16,949)



              

              

 

 



 

Consolidated statement of financial position

as at 31 December 2014



Note

2014
£000

2013
£000

Non-current assets




Intangible assets and goodwill


585,244

584,958

Property, plant and equipment


50,908

39,094

Investments in equity-accounted investees


191

179

Deferred tax asset


11,370

8,320



              

              

Total non-current assets


647,713

632,551



              

              

Current assets




Inventories


58,068

42,864

Trade and other receivables


41,087

35,520

Other financial assets


-

1,450

Current tax assets


59

146

Cash and cash equivalents


12,045

20,334



              

              

Total current assets


111,259

100,314



              

              

Total assets


758,972

732,865



              

              

Current liabilities




Borrowings


(12,604)

(7,588)

Trade and other payables


(94,494)

(86,640)

Current tax liabilities


(5,287)

(5,503)

Other financial liabilities


(2,903)

 (419)  



              

              

Total current liabilities


(115,288)

(100,150)



              

              

Non-current liabilities




Borrowings


(124,982)

(595,140)

Trade and other payables


(5,165)

(3,552)

Other non-current liabilities


(15,374)

-

Deferred tax liabilities


(54,010)

(53,824)

Share based payments liability

10

-

(5,872)



              

              

Total non-current liabilities


(199,531)

(658,388)



              

              

Total liabilities


(314,819)

(758,538)



              

              

Net assets/(liabilities)


444,153

(25,673)



              

              

Equity attributable to equity holders of the parent




Share capital

9

389,738

-

Share premium

9

99,480

-

Own shares reserve

9

(16,732)

-

Translation reserve

9

(2,864)

(2,439)

Retained deficit

9

(25,469)

(23,234)



              

              

Total equity


444,153

(25,673)



              

              



 

Consolidated statement of changes in equity

 


 

 

 


Note

Share
capital
£000

Share
premium
£000

Own
shares
£000

Translation
reserve
£000

Retained
earnings
£000

Total
equity
£000









Balance at 1 January 2013


-

-

-

(2,846)

(5,878)

(8,724)









Loss for the year


-

-

-

-

(17,668)

(17,668)









Other comprehensive income


-

-

-

407

312

719



            

            

           

           

           

           

Total comprehensive income/(loss) for the year


-

-

-

407

(17,356)

(16,949)



            

            

           

           

           

           

Balance at 31 December 2013

9

-

-

-

(2,439)

(23,234)

(25,673)



            

            

           

           

           

           

Loss for the year



-

-


(10,842)

(10,842)









Other comprehensive loss



-

-

(425)

-

(425)



            

            

           

           

           

           

Total comprehensive loss for the year


-

-

-

(425)

(10,842)

(11,267)









Issue of shares in consideration for shareholder credit facility


389,738

99,480

-

-

-

489,218









Acquisition of own shares


-

-

(16,732)

-

-

(16,732)









Capital contribution from controlling shareholder


-

-

-

-

1,358

1,358









Effect of cancellation of cash-settled share based payments


-

-

-

-

6,690

6,690









Charge for the year under equity- settled share based payments


-

-

-

-

526

526









Deferred tax on share based payments


-

-

-

-

33

33



            

            

            

            

            

            

Total transactions with owners


389,738

99,480

(16,732)

-

8,607

481,093



            

            

           

           

           

           

Balance at 31 December 2014

9

389,738

99,480

(16,732)

(2,864)

(25,469)

444,153



            

            

           

           

           

           

 



 


Consolidated statement of cash flows

for the year ended 31 December 2014

 



2014

2013



£000

£000

Cash flows from operating
   activities




Operating profit


24,080

25,149

Adjustments for:




Depreciation of property, plant and equipment


14,225

11,001

Amortisation of intangible assets


793

752

Gain on disposal of property, plant and equipment and intangibles


(129)

-

Effects of foreign exchange


1,339

3,158

Share based payment expense


1,344

1,999



              

                 





  Increase in trade and other receivables


(5,880)

(8,031)

  Increase in inventories


(16,418)

(4,020)

  Increase in trade and other payables


13,917

9,647



              

                 

Cash generated from operating activities


33,271

39,655





Income taxes paid


(5,542)

(33)

Interest paid


(6,251)

(9,321)

Interest received


23

67

Settlement of derivatives


1,007

939



              

                 

Net cash inflow from operating activities


22,508

31,307



              

                 

Cash flows from investing activities




Dividends received from associates


-

65

Proceeds from sale of property, plant and equipment and intangibles


530

-

Acquisition of subsidiary, net of cash acquired


570

(786)

Acquisition of property, plant and equipment


(27,228)

(17,530)

Acquisition of other intangible assets


(489)

(4,266)



              

                 

Net cash outflow from investing activities


(26,617)

(22,517)



              

                 

Cash flows from financing activities




Proceeds from borrowings


15,062

1,760

Repayment of borrowings


(19,256)

(13,740)

Capital contribution from joint venture partner


-

305



              

                 

Net cash outflow from financing activities


(4,194)

(11,675)



              

                 

Net decrease in cash and cash equivalents


(8,303)

(2,885)

Cash and cash equivalents at start of  year


20,334

23,360

Effect of exchange rate fluctuations on cash held


14

(141)



              

                 

Cash and cash equivalents at end of year


12,045

20,334



              

                 



Notes to the consolidated financial statements

1          Basis of preparation

The financial information contained in this preliminary announcement has have been prepared on the historical cost basis except for the revaluation of certain financial instruments which are carried at fair value.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2014 or 2013 but is derived from those accounts. Statutory accounts for 2013 have been delivered to the registrar of companies, and those for 2014 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Full financial statements for the year ended 31 December 2014, will be posted to shareholders at least 20 working days prior to the Company's first Annual General Meeting on 27 May 2015 and delivered to the registrar after this meeting.

Basis of consolidation

On 16 October 2014 the Company obtained control of the entire share capital of Choo Luxury Group Limited by way of a share for share exchange with one share in the Company being exchanged for each share in Choo Luxury Group Limited. There were no changes in rights or proportion of control exercised as a result of this transaction.

Although the share for share exchange resulted in a change in legal ownership, in substance these financial statements reflect the continuation of the pre-existing Group, headed by Choo Luxury Group Limited.

As a result the comparatives presented in these financial statements are the consolidated results of Choo Luxury Group Limited. The prior year statement of financial position reflects the share capital structure of Choo Luxury Group Limited. The current year statement of financial position presents the legal change in the ownership of the Group, as well as the issue of shares in satisfaction of the shareholder credit facility. The consolidated statement of changes in equity explains the impact of these transactions in more detail.

 

Changes in accounting policies

Whilst the financial information included in this preliminary announcement has been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted for use in the European Union and as issued by the International Accounting Standards Board, this announcement does not itself contain sufficient information to comply with IFRS. The accounting policies applied in preparing this financial information are consistent with those applied by the Group in its Prospectus issued in connection with the listing of the Group on the London Stock exchange issued on 17 October 2014 and as published on the Group's website except in relation to the mandatory adoption of new accounting standards and revisions and amendments to existing accounting standards, none of which had any significant impact on the Group's results or financial position

Except for the changes below, the Group has consistently applied the accounting policies set out in this note to all periods presented in these consolidated financial statements.

The Group has adopted the following new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 1 January 2014. There was no material impact on the reported financial performance or position of the Group.

IFRS 10

Consolidated Financial Statements

IFRS 11

Joint Arrangements

IFRS 12

Disclosure of Interests in Other Entities

IAS 27

Separate Financial Statements

IAS 28

Investments in Associates and Joint Ventures

 

 

 

Going concern

The Group's consolidated financial statements are prepared on a going concern basis as the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group has considerable financial resources, together with a strong ongoing trading performance.

The directors have reviewed the Group's forecasts and projections. These include the assumptions around the Group's products and markets, expenditure commitments, expected cash flows and borrowing facilities.

Taking into account reasonably possible changes in trading performance, and after making enquiries, the directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. Accordingly the directors consider it appropriate to continue to adopt the going concern basis in preparing the financial statements.

2          Operating segments

The Chief Operating Decision Maker ("CODM") is the Board of Directors. Internal management reports are reviewed by the CODM. Key measures used to evaluate segment performance are revenue and segment contribution to EBITDA.  Management believes that these measures are the most relevant in evaluating the performance of the segment and for making resource allocation decisions as central costs are not allocated across the segments.

The CODM considers the Group's segments to be its three channels to market, being retail (including online), wholesale and other.

Retail revenue is generated through the sale of luxury goods to end consumers via Jimmy Choo directly operated stores in Europe, the USA, Hong Kong, China and Japan and via the Group's website.  Wholesale revenue is generated through the sale of luxury goods to distribution partners, multi-brand department stores and speciality stores worldwide.  Other revenue is predominantly generated through receipt of royalties from the Group's global licensees of Jimmy Choo branded fragrance, sunglasses and eyewear products.

There are no material inter-segment transactions.

The following is an analysis of the Group's revenue and results by reportable segment for the year ended 31 December 2014.

 


Retail

2014

Wholesale

2014

Other

2014

Total

2014


£000

£000

£000

£000

Revenue

192,896

99,583

7,191

299,670


               

               

               

               

Segment result

45,049

45,260

1,254

91,563


               

               

               

               

Administrative expenses




(54,436)

Exceptional costs




(13,047)

Finance income




1,480

Finance expense




(30,963)

Loss on financial instruments




(2,908)

Share of profit of associates




12





               

Loss before tax




(8,299)





               

The following is an analysis of the Group's revenue and results by reportable segment for the year ended 31 December 2013.

 


Retail

2013

Wholesale

2013

Other

2013

Total

2013


£000

£000

£000

£000

Revenue

177,362

97,707

6,475

281,544


               

                

               

               

Segment result

49,394

43,195

856

93,445


               

                

               

               

Administrative expenses




(62,287)

Exceptional costs




(6,009)

Finance income




68

Finance expense




(50,909)

Gain on financial instruments




4,374

Share of loss of associates




(85)





               

Loss before tax




(21,403)





               

3              Exceptional costs


2014

2013


£000

£000

Acquisition and integration costs

1,644

2,584

Replatforming costs

3,559

3,425

IPO costs

7,844

-


                 

                 

Total

13,047

6,009


                 

                 

Acquisition and integration costs relate to initiatives put in place following the acquisition of Passion Holdings Limited on 1 July 2011 and the subsequent costs incurred integrating the operations of the business into the wider JAB Luxury GmbH group. These costs include legal and other professional fees associated with the refinancing and integration of the Group and the restructuring of the senior management team, including severance, recruitment costs and retention bonuses. These initiatives came to an end on the IPO of the Group in October 2014.

Replatforming costs represent costs associated with strengthening product development (in the Florence facility), reinforcing the team in key functions, undertaking regional buyouts in Asia and scaling up the information systems capability and office infrastructure to support the growth strategy.

IPO costs represent costs directly associated with the listing of the Group on the London Stock Exchange in October 2014. IPO costs includes an exceptional charge of £1.6m in respect of the accelerated vesting of the Group's cash settled share based payment scheme at IPO (note 10).

4              Earnings per share

Basic earnings per share are calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year. There are no dilutive shares.

The weighted average number of shares for the year was:


Shares issued

Own shares

Shares outstanding


No of shares

No of shares

No of shares

1 January 2014

100

-

100

3 October 2014

389,737,488

(11,951,119)

377,786,369


                  

                  

                  

31 December 2014

389,737,588

(11,951,119)

377,786,469


                  

                  

                  

Weighted average number of shares



93,152,879




                  

In order to provide a measure of underlying performance, the Group has chosen to present an additional illustrative measure of Adjusted earnings per share. Adjusted earnings per share has been calculated using Adjusted consolidated net income (see note 11) and dividing by the number of ordinary shares outstanding as at 31 December 2014 for both years to eliminate the impact of shares issued during the year.


2014

2013


No of shares

No of shares




Basic weighted average shares

93,152,879

100

Outstanding shares as at 31 December 2014

377,786,469

377,786,469


                  

                  





2014

2013


£000

£000




Loss for the year

(10,842)

(17,668)

Adjusted consolidated net income for the year

22,888

21,004


                  

                  




Earnings per share is calculated as follows:

2014

2013




Basic and diluted earnings per ordinary share (£)

(0.12)

(176,680)

Adjusted earnings per ordinary share (pence)

6.1

5.6


                  

                  

5              Staff numbers and costs

The average number of persons employed by the Group (including directors) during the year, analysed by category, was as follows:


2014

2013




Administration

320

266

Selling and distribution

659

564


                  

                  

Total staff numbers

979

830


                  

                  

The aggregate payroll costs incurred were as follows:


2014

2013


£000

£000

Wages and salaries

40,914

37,804

Social security costs

5,042

5,094

Share based payments

3,541

1,999

Contributions to defined contribution plans

1,354

282


                  

                  

Total staff costs

50,851

45,179


                  

                  

Included within share based payments expenses for the year ended 31 December 2014 is an expense of £1.6m (2013: £nil) that relates to the accelerated vesting of the Group's cash settled share based payment scheme and is disclosed within exceptional costs (see note 3).

 

6              Financial income and expense


2014

2013


£000

£000

Bank interest income

24

68

Foreign exchange gain on external borrowings

1,456

-


                  

                  

Total financial income

1,480

68


                  

                  




Interest expense on bank loans and overdrafts

(5,955)

(7,386)

Interest expense on shareholder credit facility

(23,646)

(29,496)

Finance charges

(1,362)

(12,962)

Foreign exchange loss on external borrowings

-

(1,065)


                  

                  

Total finance expense

(30,963)

(50,909)




Net result on financial instruments

(2,908)

4,374


                  

                  

Net financing expense

(32,391)

(46,467)


                  

                  

Interest incurred on the shareholder credit facility ceased on 3 October 2014 when the Group entered into a debt for equity swap agreement, which discharged the shareholder credit facility in exchange for the issue of ordinary shares in Choo Luxury Group Limited (see note 9).

7              Taxation


2014

2013


£000

£000

Corporation tax charge for the year

(4,455)

(3,803)

Adjustments for prior year

(911)

320

Double taxation relief

130

1,000

Foreign tax for current year

(167)

(125)


                  

                  

Current taxation

(5,403)

(2,608)


                  

                  




Origination and reversal of temporary differences

2,860

6,343


                  

                  

Deferred tax credit

2,860

6,343


                  

                  




Total tax (charge)/credit for the year

(2,543)

3,735


                  

                  

The tax (charge)/credit is reconciled with the standard rates of UK corporation tax as follows:


2014

2013


£000

£000

Loss before tax

(8,299)

(21,403)


                  

                  




UK corporation tax at standard rate of 21.25% (2013: 23.25%)

1,763

4,976




Factors affecting the charge for the year:



Expenses not deductible for tax purposes

(2,196)

(8,681)

Utilisation of losses brought forward

(327)

393

Impact of change in tax rate

-

7,011

Adjustments in respect of prior years

(911)

320

Group relief claimed and paid for

242

318

Difference of overseas rate

(1,114)

(602)


                  

                  

Total tax (charge)/credit for the year

(2,543)

3,735


                  

                  

8              Acquisitions of subsidiaries

On 5 August 2014, Itachoo S.r.l., a wholly owned subsidiary undertaking of the Group, purchased 100% of Studio Luxury S.r.l. for consideration of EUR 1.9m (£1.5m) from Luxury Italia Holding S.r.l, a wholly owned subsidiary of JAB Luxury GmbH. The consideration is payable in four tranches between 1 January 2015 and 31 December 2018. 

9              Capital and reserves




2014

2013




£000

£000

Share capital



389,738

-

Share premium



99,480

-

Own shares reserve



(16,732)

-

Translation reserve



(2,864)

(2,439)

Retained earnings



(25,469)

(23,234)




              

              

Total equity



444,153

(25,673)




              

              

Share capital

Share capital is comprised of:




2014

2013




£000

£000

Allotted and called up





100 ordinary shares of £1 each



-

-

389,737,588 ordinary shares of £1 each



389,738

-




                    

                    

The comparative share capital represents that of Choo Luxury Group Limited.

The table below summarises the movements in share capital during the year ended 31 December 2014:

 





No of shares

Balance at 31 December 2013




100

Issue of ordinary shares - Jimmy Choo PLC




1

Issue of preference shares - Jimmy Choo PLC




50,000

Redemption of preference shares - Jimmy Choo PLC




(50,000)

Issue of ordinary shares - Jimmy Choo PLC




389,737,487





                  

Balance prior to capital transaction




389,737,588





                  

Jimmy Choo PLC was incorporated on 1 September 2014 and issued one ordinary share of £1 at par and £50,000 preference shares of £1 each at par. The preference shares were subsequently redeemed as part of the share for share exchanges described below.

On 1 September 2014 Jimmy Choo (Holdings) Limited was incorporated and issued one ordinary share of £1 at par.

On 3 October 2014 JAB Luxury GmbH and Choo Luxury Group Limited entered into a debt for equity swap agreement pursuant to which JAB Luxury GmbH agreed to discharge Choo Luxury Group Limited from the Shareholder Credit Facility in exchange for the issue of 389,737,488 new ordinary £1 shares in Choo Luxury Group Limited.

On 15 October 2014 Jimmy Choo (Holdings) Limited issued 389,737,587 ordinary £1 shares in exchange for all classes of shares of Choo Luxury Group Limited.

On 16 October 2014 Jimmy Choo PLC issued 389,737,587 ordinary £1 shares in exchange for all classes of shares of Jimmy Choo (Holdings) Limited.  

Share premium

Share premium of £99.5m arose on the debt for equity swap transaction between JAB Luxury GmbH and Choo Luxury Group Limited on 3 October 2014. The carrying value of the shareholder credit facility (including accrued interest) at the date of the debt for equity swap was £489.2m. 

Own shares reserve

The cost of the Company's ordinary shares held by the Jimmy Choo PLC Employee Benefit Trust is treated as a deduction in arriving at total shareholder's equity. The movement in the own shares reserve was as follows:



Number of ordinary shares

Average price paid per share

£000






1 January 2014


-

-

-

Shares purchased by the EBT during the year


11,951,119

£1.40

16,732



              

              

__________

At 31 December 2014


11,951,119

£1.40

16,732



              

              

_                 

Shares held by the Jimmy Choo PLC Employee Benefit Trust will be used to satisfy options awarded under the Group's long term incentive plan (see note 10).

 

10           Share based payments

During the year the Group operated two equity-settled share based compensation schemes and one cash-settled share based payment scheme for its directors and employees.  Details of each of these schemes are set out in this note.

Cash-settled share option scheme

Phantom option scheme

The Group operated a long term incentive plan open to invited employees of the Group ("the Participants"), which was accounted for as a cash-settled share based payment scheme.  The Participants in the scheme were required to purchase equity in Choo Luxury Holdings Limited, a wholly owned subsidiary of the Group ("the Subsidiary") in order to receive matching phantom options over the shares of the Subsidiary.

A put and call agreement existed between the Participants and the Subsidiary which enabled the Participant to put their equity shares back to the Subsidiary at fair value.  The Subsidiary could call the shares in the event of a change in control or if the Participant left employment with the Group.  The put and call agreement was accounted for as a cash settled share based payment scheme as the Participants were required to remain employed by the Group in order to participate in any increase in the fair value of the underlying equity shares. 

The IPO of the Group in October 2014 triggered the vesting conditions of the all the options. Of these, 5,387,877 options were exercised at a fair value of £1.40, calculated with reference to the IPO price. The remaining 3,571,713 were cancelled and replaced by the equity-settled JC PLC Scheme detailed below.

At IPO the Participants also exchanged their shares in Choo Luxury Holdings Limited for shares in Jimmy Choo PLC via a series of share-for-share exchanges. The put and call agreement over the Participants' shares in Choo Luxury Holdings Limited lapsed at IPO. The liability of £3.5m that had previously been recognised in respect of the put and call agreement was therefore reclassified to equity.

The total liability recognised in respect of the cash settled share based payment scheme at 31 December 2014 was £nil (2013: £5.9m).  

Details of the movements during the year are as follows:


2014

2013


Number of share options

Weighted average exercise price

Number of share options

Weighted average exercise price






Outstanding at the beginning of the year

8,959,590

1.00

4,679,620

1.00

Granted during the year

-

1.00

6,000,000

1.00

Cancelled during the year

(3,571,713)

1.00

(1,720,030)

1.00

Exercised during the year

(5,387,877)

-

-

-


                

                

                

                

Outstanding at the end of the year

-

-

8,959,590

-


                

                

                

                

Exercisable at the end of the year

-

-

-

-

 

Equity-settled share option schemes

JC PLC Share Award

Following the partial vesting of the Phantom Option Scheme at IPO in October 2014, 3,571,713 options were cancelled and a new equity-settled share based payment scheme implemented (the "JC PLC Share Award"). The number of shares awarded under the JC PLC Share Award was calculated by reference to the value attributed to the proportion of previously held phantom options. For each phantom option forfeited, Participants received 0.55 share awards, with a nominal exercise price of £1 in total for each exercise. As a result 2,801,120 options were granted during the year.

The options are due to vest in three stages: one third are exercisable on 1 July 2016; one third are exercisable 1 July 2017; and the remaining third are exercisable on 1 July 2018. The vesting of these options is dependent upon continued employment over the vesting period. Any vested but unexercised options will automatically lapse on 21 October 2024.

One-off Award

On 30 October 2014, share awards of 10,192,858 ordinary shares in Jimmy Choo PLC were granted as a one-off award at IPO to members of the Group's senior management team, with a nominal exercise price of £1 in total for each exercise.  The options were awarded in three tranches each with different vesting conditions:

1.           Main award

50% of the options granted are exercisable on the fifth anniversary of the grant date and 50% are exercisable on the sixth anniversary of the grant date. The total number of shares granted under this award was 8,271,429.

2.           Alternate grant 1

33% of the options granted are exercisable on the fourth anniversary of the grant date; 33% are exercisable on the fifth anniversary of the grant date and 33% are exercisable on the sixth anniversary of the grant date. The total number of shares granted under this award was 1,071,429.

3.           Alternate grant 2

850,000 options were granted with vesting conditions that are the same as the JC PLC Share Awards described above.

 

11           Reconciliation to non-GAAP performance measures

Adjusted EBITDA




2014 

2013 




£000  

£000  






Operating profit



24,080

25,149

Adjusted for:





Exceptional costs (note 3)



13,047

6,009

Depreciation



14,225

11,001

Amortisation



793

752

Gain on disposal of property, plant and equipment and intangibles

(129)

-

Realised and unrealised foreign exchange (gain)/loss



(1,786)

3,966




           

           

Adjusted EBITDA



50,230

46,877




           

           

 

Adjusted EBIT




2014 

2013 




£000  

£000  






Operating profit



24,080

25,149

Adjusted for:





Exceptional costs (note 3)



13,047

6,009

Share of associates and jointly controlled entities



12

(85)

Realised and unrealised foreign exchange (gain)/loss



(1,786)

3,966




           

           

Adjusted EBIT



35,353

35,039




           

           

 

Adjusted profit before tax




2014 

2013 




£000  

£000  






Loss before tax



(8,299)

(21,403)

Adjusted for:





Exceptional costs (note 3)



13,047

6,009

Interest on shareholder credit facility



23,646

29,496

Foreign exchange (gain)/loss on external loan



(1,456)

1,065

Loss on financial instruments on external loan



1,353

-

Accelerated amortisation of capitalised debt costs



-

8,445




           

           

Adjusted EBT



28,291

23,612




           

           

 

Adjusted consolidated net income




2014 

2013 




£000  

£000  






Loss for the year



(10,842)

(17,668)

Adjusted for:





Exceptional costs (note 3)



13,047

6,009

Deferred tax



(2,860)

(6,343)

Interest on the shareholder credit facility



23,646

29,496

Foreign exchange (gain)/loss on external loan



(1,456)

1,065

Loss on financial instruments on external loan



1,353

-

Accelerated amortisation of capitalised debt costs



-

8,445




           

           

Adjusted consolidated net income



22,888

21,004




           

           

 

Appendix 2 - Supplemental Financial Information

 

Table 1 - Costs charged in arriving at EBITDA

2014

2013


£m 

£m 

Selling and distribution expenses

83.0

73.4

Brand communication expenses

14.1

16.9

Overheads

37.9

38.2


                  

                  

Costs charged in arriving at EBITDA

135.0

128.5


                  

                  

 

 

Table 2 - Free operating cash flow

2014

2013


£m 

£m 

Adjusted EBITDA

50.2

46.9

Adjusted operating cash flow1

46.3

45.7

Cash conversion2

92.2%

97.4%




Exceptional costs

(13.0)

(6.0)

Tax paid

(5.5)

-

Net financing payments

(5.3)

(8.4)

Capital expenditure

(27.2)

(21.7)

Acquisitions

0.6

(0.8)


                  

                  

Free operating cash flow

(4.1)

8.8


                  

                  

 

 

1Adjusted operating cash flow is defined as Adjusted EBITDA plus/minus non-cash charges in respect of share-based payments, realised and unrealised foreign exchange gains and losses on the revaluation of monetary items and working capital.  Working capital is defined as the sum of changes in trade and other receivables, inventories, trade and other payables and provisions.

 

2Cash conversion is defined as Adjusted operating cash flow (as defined above) divided by Adjusted EBITDA.

  

 

 

 

 

 

 

 

 


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

a d v e r t i s e m e n t