Final Results
John David Group (The) PLC
04 May 2006
4 May 2006
THE JOHN DAVID GROUP PLC
PRELIMINARY RESULTS
FOR THE 52 WEEKS ENDED 28 JANUARY 2006
The John David Group Plc (the 'Group'), the specialist retailer of sports and
fashion footwear and apparel, today announces its Preliminary Results for the 52
weeks ended 28 January 2006.
2006 2005
£000 £000 (1) % Change
Revenue 490,288 471,656 +4%
Gross profit % 46.2% 45.6%
Operating profit (before net financing costs and
exceptional items) 20,121 17,098 +18%
Operating profit after net financing costs
(before exceptional items) 16,633 12,941 +29%
Exceptional items (12,983) (9,339)
Operating profit before net financing costs
(after exceptional items) 7,138 7,759 -8%
Profit before tax 3,650 3,602 +1%
Basic earnings per ordinary share 4.92p 4.81p +2%
Adjusted basic earnings per ordinary share (see
note 3) 25.32p 18.62p +36%
Total dividend per ordinary share 6.90p 6.60p +5%
Net debt at end of period (2) 13,247 30,767 -57%
(1) As restated for IFRS.
(2) Net debt consists of cash and cash equivalents together with interest
bearing loans and borrowings, loan notes and finance lease and hire
purchase contracts.
Highlights
• Total revenue increased by 4.0% in the year and by 0.3% on a like for
like basis in the JD Sports Fascias.
• Gross margin improved from 45.6% to 46.2% reflecting improved stock
quality in the Fashion Fascias.
• Net debt reduced by £17.6 million in the year and £37.8 million in two
years, even after the purchase of Allsports for £15.0 million in the
current year and RD Scott for £4.5 million in the previous year.
• Exceptional items of £13.0m mainly as a result of continuing store
portfolio rationalisation.
Peter Cowgill, Executive Chairman, said:
'The period was another year of encouraging progress for our core Sports
Fascias. As well as improving the operating profitability of the Group, we have
reduced net debt by a further £17.6 million bringing total net debt to £13.2
million, a two year fall of £37.8 million.
'We remain convinced that the Allsports store portfolio which we have retained
will generate a profit in the future. Overall the Board expects results to
continue to improve, particularly in the second half, and trading remains in
line with expectations.'
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
Barnaby Fry
Charlie Field
EXECUTIVE CHAIRMAN'S STATEMENT
INTRODUCTION
The 52 week period to 28 January 2006 was another year of encouraging progress
for our core Sports Fascias. Our long term plans are to enhance operating
profitability, eliminate underperforming stores, and to control overhead growth
against a background of above inflationary increases in rents, rates, utilities
and minimum wage rates. Our success against these objectives has enabled us to
improve our operating profit before exceptional items and after net financing
costs to £16.6 million (2005: £12.9 million).
The Group operating profit before exceptional items and net financing costs for
the year of £20.1 million (2005: £17.1 million) includes a Sports Fascias profit
of £22.6 million. The Sports Fascias profit includes the Allsports stores'
results from 29 October 2005 when they were acquired from the Administrators of
Allsports Retail Limited. These stores have now become an integral part of the
JD Sports store portfolio. The balance is a £2.5 million loss from the Fashion
Fascias which now run with autonomous management, their own separate stock files
and fully identifiable overhead. The total Fashion Fascias store contribution
improved in the year as a result of a substantial improvement in margin after
the high stock writedowns and clearance activity of the previous year.
As well as improving the operating profitability of the Group we have again
improved its stock quality and year end stocks were only up by £1.6 million even
after the Allsports acquisition. This has helped us to reduce net debt by a
further £17.6 million bringing down total net debt to £13.2 million, a two year
fall of £37.8 million despite the purchase of RD Scott Limited in December 2004
for £4.5 million and the Allsports' business and assets in October 2005 for
£15.0 million.
SPORTS FASCIAS AND ALLSPORTS ACQUISITION
The Sports Fascias continue to benefit from a differentiated sports fashion led
product positioning and a well designed own brand and licensed brand
proposition. The results of the Sports Fascias are encouraging and their
improved performance endorses the positioning and the operational strategy we
have been pursuing for the last two years.
The appointment of Administrators at the heavily loss making Allsports chain in
September 2005 afforded us the chance to be a major player in the further
consolidation which is ongoing amongst sports retailers. Allsports operated
nearly 270 generally small stores immediately before the appointment of
Administrators but over 90 of the stores were closed very shortly after that
appointment. On 28 October 2005 we acquired most of the business assets of
Allsports and the right to occupy and trade from its premises under licence for
£15.0 million.
The acquired store portfolio enabled us to clear most of the excessive and poor
quality stocks of Allsports in the financial period whilst further assessing the
business and its prospects store by store, initially with the incumbent
management team. Although our original intention was to operate the Allsports
stores under the Allsports name, we decided in January that this Fascia was no
longer of value as a trading format and that it was difficult to obtain a
sufficiently differentiated product offer to allow it to reclaim a profitable
market position. Consequently its management team was made redundant and we now
operate nearly 80 of the acquired stores as JD Sports stores with the remainder
reverting to the Administrators. Nearly all the long term retained stores have
been converted to the JD fascia in the first quarter of the new financial period
and the lease assignments for the long term store portfolio are progressing
well.
Like for like sales figures for the Allsports chain will not become meaningful
until after next year when the impact of clearance activity drops out of the
comparatives. We remain convinced that the Allsports store portfolio we have
retained will generate a profit in the future as a result of the actions we have
taken.
FASHION FASCIAS
After the acquisition of RD Scott Limited in December 2004 we have endeavoured
to concentrate on converting nearly all the Fashion stores to the Scotts fascia
and 8 ex Ath stores have been converted in the period to date. The business
suffered in midyear from a shortage of stock as two separate stock files and
warehouses were integrated into one but these issues have been resolved.
The like for like sales performance of the business has remained disappointing.
However the performance of the acquired and converted Scotts stores has been
better than that of the old JD Fashion Fascias. Overall, the results are below
our expectations and the Fashion Fascias will only provide profit to the
business if some of the larger rented and over rented ex JD Fashion Fascia
stores can be disposed of.
GROUP PERFORMANCE
Revenue and gross margin
Total revenue increased by 4.0% in the year (2006: £490.3 million; 2005: £471.7
million) and by 0.3% on a like for like basis in the Sports Fascias (Allsports
stores excluded as they were deployed for stock clearance only in the period).
The Fashion Fascias fell back by 8.5% on a like for like basis, being split
-2.0% in the ex Scotts stores and -13.4% in the JD Fashion Fascia stores where
the prior year revenue performance benefited from stock clearance activity.
We are committed to improving like for like sales and gross margin in the
long-term in order to compensate for increases in costs, particularly property
costs. Gross margin increased in the year from 45.6% to 46.2% helped by a
reduction in writedowns and clearance activity in the Fashion division.
Debt reduction and working capital
Net debt was reduced from £30.8 million to £13.2 million in the year bringing
gearing down from 57% to 24%.
This brings total debt reduction in the last two years to £37.8 million, a 74%
reduction. Inventories have increased only nominally in spite of the acquisition
of Allsports. Trade creditors continue to be paid to terms to maximise
settlement discounts.
Overheads
Non-store overheads are constantly being reviewed and managed downwards wherever
it is possible without damaging the business although the retail sector
continues to suffer above average increases in costs such as rents, rates,
utility costs and the minimum wage. In spite of these pressures, the selling and
distribution overhead ratio was very marginally improved and the biggest gains
we can achieve in further improving the ratios will be through increasing sales
and the continuing disposal of lossmaking and underperforming stores.
Administration overheads have increased reflecting both the full year impact of
Scotts and the part year impact of Allsports. This ratio will improve as a
result of the elimination of most of Allsports' central administration costs in
January 2006.
Operating profits and results
Operating profit before net financing costs and exceptional items increased by
£3.0 million from £17.1 million to £20.1 million, representing an 18% increase
on last year. Our Group operating profit margin (before net financing costs and
exceptional items) has therefore increased from 3.6% to 4.1%.
As a result of increased exceptional items of £13.0 million (2005: £9.3
million), operating profit after exceptional items but before net financing
costs fell slightly from £7.8 million to £7.1 million.
The exceptional items comprise:
£m
Onerous lease and lease variation costs 8.7
Allsports restructuring 1.8
Store impairments 3.2
Profit on disposal of fixed assets (0.7)
-----------
Total 13.0
-----------
The onerous lease costs relate to the return of properties from recently failed
assignments, originally completed in 2002 and 2003, to Pilot and Eisenegger
(£3.2 million), vacant stores (£0.8 million), over rented stores (£3.0 million),
and the cost of varying an onerous lease to create a break option (£1.7
million).
The Allsports restructuring costs are principally redundancy and store and
warehouse closure related costs.
The impairment charge is on a further 25 underperforming stores and half of the
charge relates to the Fashion division. Nearly all of these stores have been
earmarked for disposal.
Net financing costs of £3.5 million are £0.7 million down on the prior year as a
result of reduced debt levels.
STORE PORTFOLIO
The Group store portfolio has had too many underperforming stores and property
issues ever since First Sport was acquired in 2002. After my appointment as
Executive Chairman in March 2004, I significantly accelerated the store disposal
programme and there have been significant exceptional charges again this year as
a result of our continuing drive to rationalise the store portfolio. This
process will continue for at least a further year.
The future cost of this process is extremely difficult to estimate. Some
disposals are achieving premiums which to date have resulted in the net cash
cost of disposals not being substantial. The property market is now more
difficult than it was two years ago, not helped by a spate of retail failures.
We have suffered from those failures this year with the return of assigned
property from Eisenegger and Pilot. Overall though, the disposal programme
continues to provide an improving store portfolio from which to increase
profitability.
During the year store numbers changed as follows:
Sport excluding Allsports:
At 30 January 2005 299
New stores 5
Conversions from Fashion 2
Size concessions in Open 2
Disposals (18)
----------
At 28 January 2006 290
----------
Fashion:
At 30 January 2005 53
Conversions to Sport (2)
Shop within JD Leicester 1
Disposals (6)
----------
At 28 January 2006 46
----------
DIVIDENDS AND EARNINGS PER ORDINARY SHARE
The Board proposes paying a final dividend of 4.60p (2005: 4.40p) per ordinary
share bringing the total dividend paid for the year to 6.90p (2005: 6.60p) per
ordinary share. The proposed final dividend will be paid on 31 July 2006 to all
shareholders on the register at 12 May 2005.
The adjusted earnings per ordinary share before exceptional items is 25.32p
(2005: 18.62p).
The basic earnings per ordinary share was 4.92p (2005: 4.81p).
CURRENT TRADING AND OUTLOOK
Trading since the year end has been satisfactory with like for like sales in the
JD Sports Fascia stores up 2.1% to 29 April 2006. The Fashion Fascias like for
like sales for the same thirteen week period are -5.2% and trading continues to
be held back by the ex JD Fashion Fascia stores. Fashion sales presently
represent less than 8% of Group sales. Overall the Board expects results to
continue to improve, particularly in the second half, and trading remains in
line with our expectations.
EMPLOYEES
The Group's employees are an essential part of the Group's success and we
continue to invest in training to improve our customer service and operations.
The Board appreciates their hard work and commitment and thanks them for it.
Peter Cowgill
Executive Chairman
4 May 2006
CONSOLIDATED INCOME STATEMENT
for the 52 weeks ended 28 January 2006
52 weeks to 52 weeks to
January 2006 29 January 2005
Continuing Continuing
Operations Operations
Note £000 £000
Revenue 490,288 471,656
Cost of sales (263,608) (256,504)
------------- -------------
Gross profit 226,680 215,152
Selling and distribution expenses -
normal (192,730) (186,230)
Selling and distribution expenses -
exceptional (11,206) (8,603)
Administrative expenses - normal (15,438) (12,777)
Administrative expenses - exceptional (1,777) (736)
Other operating income 1,609 953
------------- -------------
Operating profit before financing 7,138 7,759
Before exceptional items 20,121 17,098
Exceptional items 2 (12,983) (9,339)
Operating profit before financing 7,138 7,759
Financial income 230 304
Financial expenses (3,718) (4,461)
------------- -------------
Profit before tax 3,650 3,602
Income tax expense (1,302) (1,341)
------------- -------------
Profit for the period 2,348 2,261
============= =============
Basic earnings per ordinary share 3 4.92p 4.81p
------------- -------------
Diluted earnings per ordinary share 3 4.92p 4.81p
============= =============
The Group has no recognised gains or losses other than the results reported
above.
The results above also represent the historic cost profit.
CONSOLIDATED BALANCE SHEET
as at 28 January 2006
As at As at
28 January 2006 29 January 2005
£000 £000
Assets
Intangible assets 21,767 19,130
Property, plant and equipment 49,200 54,074
Other receivables 2,515 2,715
------------- -------------
Total non-current assets 73,482 75,919
------------- -------------
Inventories 55,450 53,857
Income tax receivable 1,736 -
Trade and other receivables 12,039 11,707
Cash and cash equivalents 9,336 6,531
------------- -------------
Total current assets 78,561 72,095
------------- -------------
Total assets 152,043 148,014
============= =============
Liabilities
Interest bearing loans and borrowings (12,178) (11,212)
Trade and other payables (56,346) (43,629)
Provisions (2,569) (674)
Income tax liabilities - (1,417)
------------- -------------
Total current liabilities (71,093) (56,932)
------------- -------------
Interest bearing loans and borrowings (10,405) (26,086)
Other payables (9,299) (10,266)
Provisions (4,988) (940)
Deferred tax liabilities (1,665) (190)
------------- -------------
Total non-current liabilities (26,357) (37,482)
------------- -------------
Total liabilities (97,450) (94,414)
============= =============
Total assets less total liabilities 54,593 53,600
============= =============
Capital and reserves
Issued ordinary share capital 2,413 2,364
Share premium 10,823 9,042
Retained earnings 41,357 42,194
------------- -------------
Total equity attributable to equity
shareholders 54,593 53,600
============= =============
RECONCILIATION OF MOVEMENT IN CAPITAL AND RESERVES
as at 28 January 2006
Issued
Ordinary
Share Share Retained Total
Capital Premium Earnings Equity
£000 £000 £000 £000
Balance at 1 February 2004 2,338 8,917 41,749 53,004
Issue of ordinary share
capital 26 120 - 146
Total recognised income
and expense - - 2,261 2,261
Dividends - - (1,816) (1,816)
Scrip dividend adjustment - 5 - 5
-------- -------- -------- --------
Balance at 29 January 2005 2,364 9,042 42,194 53,600
Issue of ordinary share
capital 37 1,160 - 1,197
Total recognised income
and expense - - 2,348 2,348
Dividends - - (3,185) (3,185)
Irrevocable dividend
waiver 12 621 - 633
-------- -------- -------- --------
Balance at 28 January 2006 2,413 10,823 41,357 54,593
======== ======== ======== ========
CONSOLIDATED STATEMENT OF CASH FLOWS
for the 52 weeks ended 28 January 2006
52 weeks to 52 weeks to
28 January 29 January
2006 2005
£000 £000
Cash flows from operating activities
Profit for the period 2,348 2,261
Income tax expense 1,302 1,341
Financial expenses 3,718 4,461
Financial income (230) (304)
Depreciation of property, plant and
equipment 10,236 10,823
Impairment of property, plant and equipment 3,172 6,301
Amortisation of non-current other
receivables 396 288
Impairment of non-current other receivables 34 400
(Profit)/loss on disposal of non-current
assets (676) 616
Decrease in inventories 10,585 14,674
Decrease in trade and other receivables 1,169 2,360
Increase/(decrease) in trade and other
payables and provisions 13,895 (6,002)
Interest paid (3,718) (4,461)
Income taxes (paid)/received (2,841) 244
--------- ---------
Net cash from operating activities 39,390 33,002
--------- ---------
Cash flows from investing activities
Interest received 230 304
Proceeds from sale of non-current assets 1,782 2,910
Disposal costs of non-current assets (683) (1,885)
Acquisition of property, plant and equipment (6,566) (5,803)
Acquisition of non-current other receivables (261) (368)
Cash consideration of acquisitions (15,020) (4,183)
Net cash / (overdrawn) balances acquired on
acquisitions 3 (420)
--------- ---------
Net cash used in investing activities (20,515) (9,445)
Cash flows from financing activities
Proceeds from issue of ordinary share
capital 1,197 146
Repayment of interest bearing loans and
borrowings (12,500) (21,500)
Payment of finance lease and hire purchase
contracts (415) (170)
Dividends paid (2,552) (1,816)
--------- ---------
Net cash used in financing activities (14,270) (23,340)
Net increase in cash and cash equivalents 4,605 217
--------- ---------
ANALYSIS OF NET DEBT
for the 52 weeks ended 28 January 2006
At 29 Other At 28
January non cash January
2005 Cashflow changes 2006
£000 £000 £000 £000
Cash at bank
and in hand 6,531 2,805 - 9,336
Overdraft (1,800) 1,800 - -
--------- --------- --------- ---------
Cash and cash
equivalents 4,731 4,605 - 9,336
Interest bearing loans and
borrowings
Current (9,000) 3,000 (6,000) (12,000)
Non-current (25,500) 9,500 6,000 (10,000)
Loan notes (287) - - (287)
Finance lease and hire
purchase contracts (711) 415 - (296)
--------- --------- --------- ---------
(30,767) 17,520 - (13,247)
========= ========= ========= =========
1. SEGMENTAL ANALYSIS
The Group manages its business activities through two Divisions - Sport and
Fashion. Each Division has its own executive board responsible for managing day
to day operations through its trading outlets. Revenue and costs are readily
identifiable for each segment, for the 52 weeks ended 28 January 2006.
The Divisional results for the 52 weeks to 28 January 2006 are as follows:
INCOME STATEMENT Sport Fashion Unallocated Total
£000 £000 £000 £000
Revenue 448,884 41,404 - 490,288
====== ====== ====== ======
Operating profit/(loss) before
financing and exceptional items 22,659 (2,538) - 20,121
Exceptional items (8,716) (4,267) - (12,983)
Financial income - - 230 230
Financial expenses - - (3,718) (3,718)
====== ====== ====== ======
Profit/(loss) before tax 13,943 (6,805) (3,488) 3,650
====== ====== ====== ======
The Board consider that net funding costs are cross-divisional in nature and cannot
be allocated between the Divisions in a meaningful way.
BALANCE SHEET Sport Fashion Unallocated Total
£000 £000 £000 £000
Total assets 113,204 15,336 23,503 152,043
====== ====== ====== ======
Total liabilities (54,295) (19,490) (23,665) (97,450)
====== ====== ====== ======
Unallocated assets and liabilities relate to items which are cross-divisional
including tax, goodwill and net debt.
OTHER SEGMENT Sport Fashion Unallocated Total
INFORMATION £000 £000 £000 £000
Capital expenditure:
Property, plant and
equipment 4,786 1,780 - 6,566
Non-current other
receivables 192 69 - 261
Goodwill on
acquisition - - 2,174 2,174
Fair value adjustment
to goodwill - - 463 463
Depreciation, amortisation and
impairments:
Depreciation 9,121 1,115 - 10,236
Amortisation of
non-current other
receivables 363 33 - 396
Impairments of
property, plant and
equipment 1,605 1,567 - 3,172
Impairments of
non-current other
receivables 23 11 - 34
Following the acquisition of RD Scott Limited on 15 December 2004, the Fashion
Division has been managed by the management team of that company. Prior to that
it shared its facilities and management with the Sports Fascias. Consequently no
meaningful comparatives are available.
The financial operation and assets of the Group are principally located in the
United Kingdom. Accordingly, no geographical analysis is presented.
2. EXCEPTIONAL ITEMS
52 weeks to 52 weeks to
28 January 2006 29 January 2005
£000 £000
(Profit)/loss on disposal of non-current
assets (676) 616
Provision for rentals on onerous property
leases 6,954 1,286
Impairment of property, plant and
equipment 3,172 6,301
Impairment of non-current other
receivables 34 400
Lease variation costs 1,722 -
Allsports restructuring costs 1,777 -
Redundancy costs - 440
Bank reorganisation costs - 296
-------- --------
12,983 9,339
======== ========
Non-current other receivables comprises legal fees and other costs associated
with the acquisition of leasehold interests.
3. EARNINGS PER ORDINARY SHARE
Basic earnings per ordinary share
The calculation of basic earnings per ordinary share at 28 January 2006 is based
on the profit attributable to ordinary shareholders of £2,348,000 (2005:
£2,261,000) and a weighted average number of ordinary shares outstanding during
the 52 weeks ended 28 January 2006 of 47,721,276 (2005: 46,978,013), calculated
as follows:
52 weeks to 52 weeks to
28 January 2006 29 January 2005
Issued ordinary shares at beginning of
period 47,276,628 46,748,607
Effect of shares issued during the period 444,648 229,406
---------- ----------
Weighted average number of ordinary shares
during the period 47,721,276 46,978,013
========== ==========
Diluted earnings per ordinary share
The calculation of diluted earnings per ordinary share at 28 January 2006 is
based on the profit attributable to ordinary shareholders of £2,348,000 (2005:
£2,261,000) and a weighted average number of ordinary shares outstanding during
the 52 weeks ended 28 January 2006 of 47,721,276 (2005: 46,981,420), calculated
as follows:
52 weeks to 52 weeks to
28 January 2006 29 January 2005
Weighted average number of ordinary shares
during the period 47,721,276 46,978,013
Dilutive effect of outstanding share
options - 3,407
---------- ----------
Weighted average number of ordinary shares
(diluted) during the period 47,721,276 46,981,420
========== ==========
Adjusted basic earnings per ordinary share
Adjusted basic earnings per ordinary share has been based on the profit
attributable to ordinary shareholders for each financial period but excluding
the post tax effect of exceptional items. The directors consider that this gives
a more meaningful measure of the underlying performance of the Group.
52 weeks to 52 weeks to
28 January 2006 29 January 2005
Note £000 £000
Profit attributable to ordinary
shareholders 2,348 2,261
Exceptional items excluding
(profit)/loss on disposal of
non-current assets 2 13,659 8,723
Tax relating to exceptional items (3,925) (2,235)
---------- ----------
Profit attributable to ordinary
shareholders excluding exceptional
items 12,082 8,749
---------- ----------
Adjusted basic earnings per ordinary
share 25.32p 18.62p
========== ==========
4. ACCOUNTS
These figures are abridged versions of the Group's full accounts for the 52
weeks ended 28 January 2006 and do not constitute the Group's statutory accounts
within the meaning of Section 240 of the Companies Act 1985. The Group's
auditors have audited the statutory accounts for the Group and have issued an
unqualified audit opinion thereon within the meaning of Section 235 of the
Companies Act 1985 and have not made any statement under Section 237 (2) or (3)
of the Companies Act 1985 for the 52 weeks ended 28 January 2006.
The comparative figures for the 52 weeks ended 29 January 2005 do not constitute
the Group's consolidated financial statements 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. These accounts were delivered to the Registrar of
Companies following the Annual General Meeting.
Copies of full accounts will be sent to shareholders in due course. Additional
copies will be available from The John David Group Plc, Hollinsbrook Way,
Pilsworth, Bury, Lancashire, BL9 8RR.
This information is provided by RNS
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