Final Results

RNS Number : 1377V
JD Sports Fashion Plc
14 April 2016
 

14 April 2016                                                         

 

JD SPORTS FASHION PLC

PRELIMINARY RESULTS

FOR THE 52 WEEKS ENDED 30 JANUARY 2016

 

 

JD Sports Fashion Plc (the "Group"), a leading retailer of sports, fashion and outdoor brands, today announces its Preliminary Results for the 52 weeks ended 30 January 2016 (2015: 52 weeks ended 31 January 2015).

 

The results of Bank Fashion Limited, which was disposed of on 25 November 2014, are presented as a discontinued activity in the results for the 52 weeks to 31 January 2015.

 

 
2016
2015
% Change
 
£000
£000
 
Continuing Operations
 
 
 
Revenue
1,821,652
1,522,253
+20%
 
 
 
 
Gross profit %
48.5%
48.6%
 
 
 
 
 
Operating profit (before exceptional items)
158,902
102,173
+56%
Net interest expense
(1,775)
(2,150)
 
 
 
 
 
Profit before tax and exceptional items
157,127
100,023
+57%
Exceptional items (see note 2)
(25,496)
(9,527)
 
 
 
 
 
Profit before tax
131,631
90,496
+45%
 
 
 
 
Discontinued Operations
 
 
 
 
 
 
 
Loss from discontinued operation, net of tax (see note 6)
-
(15,784)
 
 
 
 
 
 
 
 
 
Basic earnings per ordinary share
50.16p
35.17p
 
Adjusted earnings per ordinary share
61.34p
38.89p
 
 
 
 
 
Total dividend payable per ordinary share
7.40p
7.05p
 
 
 
 
 
Net cash at period end (a)
209,421
84,230
 

  

a)   Net cash consists of cash and cash equivalents together with interest-bearing loans and borrowings

 

 

Group Highlights

 

·    Record result with headline profit before tax and exceptional items of £157.1 million (2015: 100.0 million) and group operating profit before exceptional items increasing by 56% to £158.9 million (2015: £102.2 million)

 

·    Very pleasing performance in Sports Fashion with like for like store sales growth in excess of 10% for the second consecutive year resulting in operating profit before exceptional items increasing by 49% to £162.9 million (2015: £109.3 million)

 

·     European rollout continues with a net increase of 38 stores for the JD fascia across Europe

 

·   Encouraging progress in Outdoors with additional operational management changes put in place to drive further improvements in performance in a challenging market

 

·   Strong cash generation with period end net cash of £209.4 million (2015: £84.2 million) which facilitates continued investment in the Sports Fashion fascias

 

·    Sales, gross margin and operating profit / (loss) before exceptional items of the two business segments are tabulated below:

 

Period to 30 January 2016

 

 

Sports Fashion

£000

 

 

Outdoor

£000

 

 

Total

£000

 

 

 

 

 

 

Gross revenue

1,666,477

 

155,313

 

1,821,790

Intersegment revenue

(138)

 

-

 

(138)

 

 

 

 

 

 

Revenue

1,666,339

 

155,313

 

1,821,652

 

 

 

 

 

 

Gross margin %

49.0%

 

43.3%

 

48.5%

Operating profit / (loss) before exceptional items

 

162,864

 

 

(3,962)

 

 

158,902

 

Period to 31 January 2015

(re-presented)

 

Sports Fashion

£000

 

 

Outdoor

£000

 

 

Total

£000

 

 

 

 

 

 

Gross revenue

1,382,408

 

139,924

 

1,522,332

Intersegment revenue

(79)

 

-

 

(79)

 

 

 

 

 

 

Revenue

1,382,329

 

139,924

 

1,522,253

 

 

 

 

 

 

Gross margin %

49.2%

 

42.2%

 

48.6%

Operating profit / (loss) before exceptional items

 

109,315

 

 

(7,142)

 

 

102,173

 

·   Total capital expenditure of £83.5 million (2015: £70.2 million) which is expected to increase further in the current financial year as the international rollout of JD continues to gain momentum

 

·   Final dividend payable increased by 5.1% to 6.20p (2015: 5.90p) bringing the total dividends payable for the year to 7.40p (2015: 7.05p) per ordinary share, an increase of 5.0%


Peter Cowgill, Executive Chairman, said:

 

"I am delighted to report that the Group has delivered another very strong set of results for the year to 30 January 2016 with the headline profit before tax and exceptional items increased by 57% to £157.1 million. Given that last year's result was a record for our Group then the performance in the year was very pleasing, further demonstrating the increasing influence of the JD fascia in the UK and beyond.

 

"During the year we have expanded our international presence with additional stores in existing European territories together with a number of stores in new countries. We continue to gain traction in Europe and are confident of the opportunities that exist for the JD fascia in these markets.

 

"We are encouraged by the continued positive trading across our core fascias in the year to date and the Board continues to believe that the Group is very well positioned for profitable growth."

 

 

Enquiries:

 

JD Sports Fashion Plc                                                                                                    Tel:  0161 767 1000

Peter Cowgill, Executive Chairman

Brian Small, Chief Financial Officer

 

MHP Communications                                                                                                    Tel:  0203 128 8100

Andrew Jaques

Barnaby Fry

Gina Bell

 
Executive Chairman's Statement

 

Introduction

 

I am delighted to report that the Group has delivered another very strong set of results for the year to 30 January 2016 with the headline profit before tax and exceptional items increased by 57% to £157.1 million. Given that last year's result was a record for our Group then the performance in the year was very pleasing, further demonstrating the increasing influence of the JD fascia in the UK and beyond.

 

The foundation of our continued success remains our world class core Sports Fashion fascias. The investments made over a number of years in developing our multichannel retail proposition and driving improved buying, merchandising and retailing disciplines have given us the platform to exploit the favourable trends which exist for athletic inspired footwear and apparel throughout Europe. We remain committed to continually enhancing our proposition for both customers and third party brand partners. During the period we demonstrated this through the opening of new larger spaced flagship style JD stores in London, Glasgow, Newcastle and Amsterdam. JD has continued to develop its reputation for setting the highest standards of visual merchandising and retail theatre and the new flagship stores, which also embrace the latest innovations in digital technology, take these standards to a new level.

 

During the year we have expanded our international presence with additional stores in existing European territories together with a number of stores in new countries. We continue to gain traction in Europe and are confident of the opportunities that exist for the JD fascia in these markets. More recently, we have opened our first store outside of Europe at Sunway Pyramid in Kuala Lumpur as part of a newly formed venture with Stream Enterprise in Malaysia. Opening a store outside of Europe has brought the expected challenges and we continue to enhance the flexibility of both our proposition and our operational processes to cope with the increasing scale of our international ambitions. Our key international brand partners strongly support the continued international development of JD.

 

In the early part of the year we made a number of operational management changes in our Outdoor operations. This brought the Blacks and Millets and the newer Ultimate Outdoors fascias under common leadership and greater use has been made of the merchandising and commercial management expertise in the core JD team.

 

Whilst there is a continual requirement to refine the product proposition, we believe that this new operational framework has given our Outdoor fascias a more efficient and appropriate cost base from which to operate and we are optimistic that this, combined with ongoing refinements to the product offering, will deliver a further improvement in the financial performance of these fascias in the year to January 2017.

 

 

Sports Fashion

 

Sports Fashion has had an exceptional year with operating profits (before exceptional items) increased by 49% to £162.9 million (2015: £109.3 million). Our fascias have successfully exploited the buoyant market for branded athletic footwear and apparel across Western Europe with like for like store sales growth in excess of 10% for the second consecutive year. Whilst we would not expect a third year of organic growth at this level, the JD fascia is developing well in both its core and international markets.

 

Our global brand partners support our continued international development and we would anticipate further significant investments in the current year. Indeed, we have already made one investment in the Netherlands market through the acquisition of the trade and store assets of Aktiesport and Perry Sport from the trustee in bankruptcy of Unlimited Sports Group BV. We are currently assessing the Aktiesport and Perry Sport store portfolio in order to create a viable and sustainable business across the Netherlands.

 

As anticipated, the overall gross margin in Sports Fashion is slightly lower than the previous year reflecting the impact of the weaker euro through the majority of the year on the JD fascia's euro denominated businesses where product is sourced and distributed from the UK. Whilst the euro has strengthened since the year end, we are mindful of the potential impact of increased volatility in margin as the results of the European businesses increase in relative importance. We continue to work on mitigating any adverse currency impacts with our global brand partners.

 

We are satisfied with the progress in the Chausport business in France and the Sprinter business in Spain and are also pleased to report a turnaround in the trading performance of Kukri, our supplier of multisport kit for schools, universities and sports teams at all levels.

 

Finally, we believe that we have successfully established Tessuti and Scotts as premium brand multichannel fashion retailers based on our strong relationships with the major global premium brands where we foster their brand equity to secure product longevity and stimulate further growth.

 

 

Outdoor

 

The Outdoor fascias have made pleasing progress in the year with the operating loss (before exceptional items) reduced to £4.0 million (2015: £7.1 million) with the loss in the current year arising largely from initial losses and other significant property related costs associated with the newer larger space Ultimate Outdoors stores which remain a trial at this stage. We are encouraged that the original Blacks and Millets fascia stores have delivered a breakeven result.

 

Margins were improved over the full year with reduced levels of discounting of Autumn and Winter ranges relative to the prior year. We are striving for further improvements in margins in this year as the merchandising and commercial disciplines increasingly align themselves with the core JD team. However, in a sector with significant presence from retailers with a high proportion of private label product in their proposition, more significant improvements in margin will require enhanced levels of product differentiation and other support from the major brands.

 

 

Financial Summary - Continuing Businesses

 

Revenue, gross margin and overheads

 

Total revenue increased by 20% in the year to £1,821.7 million (2015: £1,522.3 million). Like for like sales for the 52 week period across all Group fascias, including those in Europe, increased by 11.6%.

 

Total gross margin in the year of 48.5% was broadly consistent with the prior year with an increase in the margin in Outdoor to 43.3% (2015: 42.2%) offset by a slight reduction in the margin in Sports Fashion to 49.0% (2015: 49.2%).

 

Operating profits and results

 

Operating profit (before exceptional items) increased substantially by £56.7 million to £158.9 million (2015: £102.2 million) driven by the performance in Sports Fashion assisted by a further reduction in the losses in Outdoor.

 

There were net exceptional items in the year of £25.5 million (2015: £9.5 million) from the impairment of certain intangible assets and the write off of costs on the project to replace the Group's core IT systems. We took the decision not to continue with this project as we believe that enhanced internally developed systems will enable further growth of the Group, including increasing internationalisation, with more agility, lower cost and reduced risk.

 

The exceptional items comprised:

 

 

2016

2015

 

 £m

 £m

 

 

 

Impairment of intangible assets  (1)

10.6

5.1

Termination of project to replace core IT systems (2)

14.9

-

Other property related items

-

4.4

 

 

 

Total exceptional charge

25.5

9.5

 

1.   Relates to the impairment in the period to 30 January 2016 of the goodwill arising in prior years on the acquisition of ActivInstinct Limited, a partial impairment of the Blacks fascia name and the impairment of other goodwill and fascia name balances which were not significant. The charge in the prior period related to the goodwill arising in prior years on the acquisition of Blacks Outdoor Retail Limited, the goodwill arising in prior years on the acquisition of Kukri Sports Limited, the Kukri brand name and the Ark fascia name

2.   One off exceptional charge writing off costs to date including certain other related costs

 

Group profit before tax in the year ultimately increased by 45% to £131.6 million (2015: £90.5 million).

 

 

Working Capital and Cash

 

Strong cash generation from the ongoing trading in our core retail fascias combined with further management focus on driving improvements in stock management disciplines has meant that we ended the year with a net cash balance in excess of £200 million for the first time. The positive cash position provides the Group with a strong financial foundation for our ongoing retail developments, both in the UK and internationally. Whilst there were no acquisitions in the year to 30 January 2016, we will continue to make selected acquisitions and investments, as we have done recently in the Netherlands, where they benefit our strategic development.

 

On 1 September 2015, the Group amended and extended its syndicated committed £155 million bank facility which previously expired on 11 October 2017. The facility has been amended by increasing the syndicated committed facility by £60 million to £215 million. The expiry date has also been extended by two years and so the amended facility now expires on 11 October 2019.

 

Gross capital expenditure (excluding disposal costs) increased by £13.3 million to £83.5 million (2015: £70.2 million). Our continuing commitment to enhancing our customers' experience, including the development of the new flagship concept, and to developing our overseas businesses means that investment in our retail fascias, both in terms of taking new stores where appropriate and refurbishing existing space, remains very substantial with the spend on our retail fascias increasing by £14.5 million to £51.7 million (2015: £37.2 million). We anticipate a further increase in capital expenditure in the new financial year although the ultimate level of spend will depend on the final availability of appropriate retail sites.

 

Elsewhere, we have now completed the project to increase the operational capacity and flexibility of our Kingsway warehouse at a cost in the year of £9.7 million (2015: £11.5 million). We have also acquired a plot of land next to our existing Kingsway site at a cost of £4.7 million to facilitate future development.

 

Store Portfolio

 

During the period, store numbers have moved as follows:

 

Sports Fashion Fascias                                                                               

 

 

(Store Nos.)

JD

UK & ROI

JD Europe

JD Asia

 

Size

Sub-Total

JD & Size?

 

Chausport

 

Sprinter

 

Other

 

Total

 

 

 

 

 

 

 

 

 

 

Period start

351

65

-

31

447

73

80

60

660

New stores

25

41

1

7

74

-

24

16

114

Transfers

(1)

-

-

-

(1)

-

-

(1)

(2)

Closures

(14)

(3)

-

(2)

(19)

(1)

-

(16)

(36)

 

 

 

 

 

 

 

 

 

 

Period end

361

103

1

36

501

72

104

59

736

 

 

 

 

 

 

 

 

 

 

(000 Sq Ft)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period start

1,292

121

-

49

1,462

82

838

129

2,511

New stores

106

104

4

15

229

-

135

46

410

Extensions

21

-

-

-

21

-

-

1

22

Transfers

(4)

-

-

-

(4)

-

-

(1)

(5)

Closures

(44)

(3)

-

(1)

(48)

(1)

-

(31)

(80)

 

 

 

 

 

 

 

 

 

 

Period end

1,371

222

4

63

1,660

81

973

144

2,858

 

In addition, there were four JD branded Gyms at the period end in Hull, Liverpool, Preston and Coventry. A fifth gym has opened in Washington subsequent to the period end.

 

Outdoor Fascias

     

(Store Nos.)

Blacks

Millets

Tiso

Other

Total

 

 

 

 

 

 

Period start

73

92

17

2

184

New stores

3

9

-

2

14

Transfers

(10)

8

-

4

2

Closures

(6)

(10)

(1)

(1)

(18)

 

 

 

 

 

 

Period end

60

99

16

7

182

 

 

 

 

 

 

(000 Sq Ft)

 

 

 

 

 

 

 

 

 

 

 

Period start

270

175

101

62

608

New stores

9

24

-

73

106

Transfers

(54)

23

-

36

5

Closures

(18)

(17)

(4)

(8)

(47)

 

 

 

 

 

 

Period end

207

205

97

163

672

                                                                   

 

Dividends and Earnings per Share

 

The Board proposes paying a final dividend of 6.20p (2015: 5.90p) bringing the total dividend payable for the year to 7.40p (2015: 7.05p) per ordinary share, an increase of 5%. The proposed final dividend will be paid on 1 August 2016 to all shareholders on the register at 24 June 2016. We believe that this level of dividend strikes a fair balance for shareholders with appropriate capital retained to facilitate ongoing developments, particularly investment in the international Sports Fashion fascias, which will drive success for the Group, and increased benefits to shareholders, over the longer term.

 

The adjusted earnings per ordinary share before exceptional items have increased by 58% to 61.34p (2015: 38.89p).

 

The basic earnings per ordinary share have increased by 43% to 50.16p (2015: 35.17p).

 

 

People

 

We are fortunate, as a Group, to have talented and committed people in every aspect and level of our business. The record result is principally due to their expertise, energy and passion. I thank everybody involved in all of our businesses for delivering these excellent results.

 

 

Current Trading and Outlook

 

We are encouraged by the continued positive trading across our core fascias in the year to date and the Board continues to believe that the Group is very well positioned for profitable growth.

 

Our next scheduled update will take place upon the announcement of our Interim Results which is scheduled for 13 September 2016.

 

 

Peter Cowgill

Executive Chairman

14 April 2016

 

Consolidated Income Statement

For the 52 weeks ended 30 January 2016

 

 

 

 

 

Note

 

 

52 weeks to

30 January 2016

£000

 

 

52 weeks to

31 January 2015

£000

Continuing operations

 

 

 

 

 

 

Revenue

 

 

 

1,821,652

 

1,522,253

Cost of sales

 

 

 

(937,431)

 

(782,703)

 

 

 

 

 

 

 

Gross profit

 

 

 

884,221

 

739,550

Selling and distribution expenses - normal

 

 

 

(648,333)

 

(564,333)

Selling and distribution expenses - exceptional

 

 

 

-

 

(4,467)

Administrative expenses - normal

 

 

 

(78,228)

 

(73,969)

Administrative expenses - exceptional

 

 

 

(25,496)

 

(5,060)

Other operating income

 

 

 

1,242

 

925

 

 

 

 

 

 

 

Operating profit

 

 

 

133,406

 

92,646

 

 

 

 

 

 

 

Before exceptional items

 

 

 

158,902

 

102,173

Exceptional items

 

2

 

(25,496)

 

(9,527)

 

 

 

 

 

 

 

Operating profit

 

 

 

133,406

 

92,646

Financial income

 

 

 

388

 

657

Financial expenses

 

 

 

(2,163)

 

(2,807)

 

 

 

 

 

 

 

Profit before tax

 

 

 

131,631

 

90,496

Income tax expense

 

 

 

(31,001)

 

(20,741)

 

 

 

 

 

 

 

Profit from continuing operations

 

 

 

100,630

 

69,755

 

 

 

 

 

 

 

Discontinued operation

 

 

 

 

 

 

Loss from discontinued operation, net of tax

 

6

 

-

 

(15,784)

 

 

 

 

 

 

 

Profit for the period

 

 

 

100,630

 

53,971

 

 

 

 

 

 

 

Attributable to equity holders of the parent

 

 

 

97,634

 

52,677

Attributable to non-controlling interest

 

 

 

2,996

 

1,294

 

 

 

 

 

 

 

Basic earnings per ordinary share from continuing operations

 

 

3

 

 

50.16p

 

 

35.17p

Diluted earnings per ordinary share from continuing operations

 

 

3

 

 

50.16p

 

 

35.17p

  

 

Consolidated Statement of Comprehensive Income

For the 52 weeks ended 30 January 2016

 

 

 

52 weeks to

30 January 2016

£000

 

52 weeks to

31 January 2015

£000

 

Profit for the period

 

 

100,630

 

 

53,971

 

Other comprehensive income:

Items that may be classified subsequently to the Consolidated Income Statement:

Exchange differences on translation of foreign operations

 

 

 

 

 

4,144

 

 

 

 

 

(4,512)

 

 

 

 

 

Total other comprehensive income for the period

 

4,144

 

(4,512)

 

 

 

 

 

Total comprehensive income and expense for the period

(net of income tax)

 

 

104,774

 

 

49,459

 

 

 

 

 

Attributable to equity holders of the parent

 

101,828

 

49,983

Attributable to non-controlling interest

 

2,946

 

(524)

 

 

Consolidated Statement of Financial Position

As at 30 January 2016

 

 

 

 

 

 

As at

30 January 2016

£000

 

As at 

31 January 2015

£000

Assets

 

 

 

 

 

 

Intangible assets

 

 

 

73,611

 

101,075

Property, plant and equipment

 

 

 

173,317

 

147,934

Other assets

 

 

 

33,191

 

32,402

Deferred tax assets

 

 

 

482

 

-

Total non-current assets

 

 

 

280,601

 

281,411

 

 

 

 

 

 

 

Inventories

 

 

 

238,324

 

225,020

Trade and other receivables

 

 

 

56,375

 

53,922

Cash and cash equivalents

 

 

 

215,996

 

121,317

Total current assets

 

 

 

510,695

 

400,259

 

 

 

 

 

 

 

Total assets

 

 

 

791,296

 

681,670

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Interest-bearing loans and borrowings

 

 

 

(6,301)

 

(36,713)

Trade and other payables

 

 

 

(324,964)

 

(274,006)

Provisions

 

 

 

(1,132)

 

(3,098)

Income tax liabilities

 

 

 

(15,757)

 

(12,931)

Total current liabilities

 

 

 

(348,154)

 

(326,748)

 

 

 

 

 

 

 

Interest-bearing loans and borrowings

 

 

 

(274)

 

(374)

Other payables

 

 

 

(40,834)

 

(41,733)

Provisions

 

 

 

(1,209)

 

(1,020)

Deferred tax liabilities

 

 

 

-

 

(1,804)

Total non-current liabilities

 

 

 

(42,317)

 

(44,931)

 

 

 

 

 

 

 

Total liabilities

 

 

 

(390,471)

 

(371,679)

 

 

 

 

 

 

 

Total assets less total liabilities

 

 

 

400,825

 

309,991

 

 

 

 

 

 

 

Capital and reserves

 

 

 

 

 

 

Issued ordinary share capital

 

 

 

2,433

 

2,433

Share premium

 

 

 

11,659

 

11,659

Retained earnings

 

 

 

378,898

 

297,161

Other reserves

 

 

 

(10,570)

 

(14,764)

 

 

 

 

 

 

 

Total equity attributable to equity holders of the parent

382,420

 

296,489

Non-controlling interest

 

 

 

18,405

 

13,502

 

 

 

 

 

 

 

Total equity

 

 

 

400,825

 

309,991

 

 

Consolidated Statement of Changes in Equity 

For the 52 weeks ended 30 January 2016

           

 

 

Ordinary

Share Capital

£000

 

 

Share

Premium

£000

 

 

Retained

Earnings

£000

 

 

Other

 Equity

£000

Foreign Currency Translation Reserve

£000

Total Equity Attributable to Equity Holders

 of The Parent

£000

 

 

 

 

 

 

 

Balance at 1 February 2014

2,433

11,659

257,744

(3,073)

(8,997)

259,766

 

 

 

 

 

 

 

Profit for the period

-

-

52,677

-

-

52,677

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

Exchange differences on translation of foreign operations

 

-

 

-

 

-

 

-

 

(2,694)

 

(2,694)

 

Total other comprehensive income

 

-

 

-

 

-

 

-

 

(2,694)

 

(2,694)

 

 

 

 

 

 

 

Total comprehensive income for the period

 

-

 

-

 

52,677

 

-

 

(2,694)

 

49,983

Dividends to equity holders

-

-

(13,260)

-

-

(13,260)

Non-controlling interest arising on acquisition

 

-

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

Balance at 31 January 2015

2,433

11,659

297,161

(3,073)

(11,691)

296,489

 

 

 

 

 

 

 

Profit for the period

-

-

97,634

-

-

97,634

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

Exchange differences on translation of foreign operations

 

-

 

-

 

-

 

-

 

4,194

 

4,194

 

Total other comprehensive income

 

-

 

-

 

-

 

-

 

4,194

 

4,194

 

 

 

 

 

 

 

Total comprehensive income for the period

 

-

 

-

 

97,634

 

-

 

4,194

 

101,828

Dividends to equity holders

-

-

(13,820)

-

-

(13,820)

Acquisition of non-controlling interest

 

-

 

-

 

(2,077)

 

-

 

-

 

(2,077)

 

 

 

 

 

 

 

Balance at 30 January 2016

2,433

11,659

378,898

(3,073)

(7,497)

382,420

 

 

 

 

 

 

 

               

 

 

Total Equity Attributable to Equity Holders

 of The Parent

£000

 

Non-Controlling Interest

£000

 

 

Total

Equity

£000

 

 

 

 

Balance at 1 February 2014

259,766

13,074

272,840

 

 

 

 

Profit for the period

52,677

1,294

53,971

 

 

 

 

Other comprehensive income:

 

 

 

Exchange differences on translation of foreign operations

 

(2,694)

 

(1,818)

 

(4,512)

 

Total other comprehensive income

 

(2,694)

 

(1,818)

 

(4,512)

 

 

 

 

Total comprehensive income for the period

 

49,983

 

(524)

 

49,459

Dividends to equity holders

(13,260)

(63)

(13,323)

Non-controlling interest arising on acquisition

 

-

 

1,015

 

1,015

 

 

 

 

Balance at 31 January 2015

296,489

13,502

309,991

 

 

 

 

Profit for the period

97,634

2,996

100,630

 

 

 

 

Other comprehensive income:

 

 

 

Exchange differences on translation of foreign operations

 

4,194

 

(50)

 

4,144

 

Total other comprehensive income

 

4,194

 

(50)

 

4,144

 

 

 

 

Total comprehensive income for the period

 

101,828

 

2,946

 

104,774

Dividends to equity holders

(13,820)

(120)

(13,940)

Acquisition of non-controlling interest

 

(2,077)

 

2,077

 

-

 

 

 

 

Balance at 30 January 2016

382,420

18,405

400,825

         

 

Consolidated Statement of Cash Flows

For the 52 weeks ended 30 January 2016

 

 

52 weeks to 

30 January 2016

£000

 

52 weeks to 

31 January 2015

£000

Cash flows from operating activities

 

 

 

 

Profit for the period

 

100,630

 

53,971

Income tax expense

 

31,001

 

20,531

Financial expenses

 

2,163

 

2,881

Financial income

 

(388)

 

(657)

Depreciation and amortisation of non-current assets

 

48,778

 

45,241

Forex losses on monetary assets and liabilities

 

7,997

 

4,979

Loss on disposal of Bank Fashion Limited, net of tax

 

-

 

6,318

Loss on disposal of non-current assets

 

-

 

986

Termination of IT project

 

14,896

 

-

Impairment of fixed assets

 

10,600

 

6,043

Increase in inventories

 

(13,304)

 

(54,696)

Decrease in trade and other receivables

 

47

 

7,760

Increase in trade and other payables

 

55,738

 

46,097

Interest paid

 

(2,163)

 

(2,881)

Income taxes paid

 

(29,981)

 

(20,811)

Net cash from operating activities

 

226,014

 

115,762

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Interest received

 

388

 

657

Proceeds from sale of non-current assets

 

1,145

 

705

Investment in bespoke software development

 

(4,401)

 

(7,123)

Acquisition of other intangible assets

 

-

 

(29)

Acquisition of property, plant and equipment

 

(72,765)

 

(52,924)

Acquisition of non-current other assets

 

(6,343)

 

(10,124)

Cash consideration of acquisitions

 

-

 

(12,686)

Cash acquired with acquisitions

 

-

 

3,563

Consideration received on disposal of Bank Fashion Limited

 

-

 

18,150

Net cash used in investing activities

 

(81,976)

 

(59,811)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Repayment of interest-bearing loans and borrowings

 

(191)

 

(291)

Repayment of finance lease liabilities

 

(30)

 

(9)

Draw down of finance lease liabilities

 

75

 

-

(Repayment) / draw down of syndicated bank facility

 

(31,000)

 

5,000

Equity dividends paid

 

(13,820)

 

(13,260)

Dividends paid to non-controlling interest in subsidiaries

 

(120)

 

(63)

Net cash used in financing activities

 

(45,086)

 

(8,623)

 

Net increase in cash and cash equivalents

 

 

98,952

 

 

47,328

 

 

 

 

 

Cash and cash equivalents at the beginning of the period

 

115,697

 

72,043

Foreign exchange losses on cash and cash equivalents

 

(4,790)

 

(3,674)

 

Cash and cash equivalents at the end of the period

 

 

209,859

 

 

115,697

 

 

Analysis of Net Cash

As at 30 January 2016

 

 

 

At 31

January

2015

£000

 

 

Cash

flow

£000

 

Non-

cash

movements

£000

 

At 30

 January

2016

£000

 

 

 

 

 

Cash at bank and in hand

121,317

99,586

(4,907)

215,996

Overdrafts

(5,620)

(634)

117

(6,137)

 

 

 

 

 

Cash and cash equivalents

115,697

98,952

(4,790)

209,859

 

 

 

 

 

Interest-bearing loans and borrowings:

 

 

 

 

Bank loans

(60)

123

(117)

(54)

Syndicated loan facility

(31,000)

31,000

-

-

Finance lease liabilities

(63)

(45)

-

(108)

Other loans

(344)

68

-

(276)

 

 

 

 

 

 

84,230

130,098

(4,907)

209,421

 

 

1.   Segmental analysis

 

IFRS 8 'Operating Segments' requires the Group's segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker to allocate resources to the segments and to assess their performance. The Chief Operating Decision Maker is considered to be the Executive Chairman of JD Sports Fashion Plc.

 

Information reported to the Chief Operating Decision Maker is focused on the nature of the businesses within the Group. The Group's reportable segments under IFRS 8 are therefore as follows:

           

·      Sports Fashion - includes the results of JD Sports Fashion Plc, John David Sports Fashion (Ireland) Limited, Spodis SA, Champion Sports Ireland, JD Sprinter Holdings 2010 SL (including subsidiary companies), JD Sports Fashion BV, JD Sports Fashion Germany GmbH, JD Sports Fashion SRL, JD Sports Fashion Belgium BVBA, JD Sports Fashion Sweden AB, JD Sports Fashion Denmark ApS, JD Sports Fashion SDN BHD, Size GmbH, ActivInstinct Limited, JD Gyms Limited, Duffer of St George Limited, Topgrade Sportswear Limited, Kooga Rugby Limited, Focus Brands Limited (including subsidiary companies), Kukri Sports Limited (including global subsidiary companies), Source Lab Limited, R.D. Scott Limited, Tessuti Group Limited (including subsidiary companies), Nicholas Deakins Limited, Cloggs Online Limited, Ark Fashion Limited and Mainline Menswear Limited.

·      Outdoor - includes the results of Blacks Outdoor Retail Limited and Tiso Group Limited (including subsidiary companies).

 

Activinstinct Limited is now included in the Sports Fashion segment reflecting the fact that there has been a restructure of the business in the year and the website is now held on a different platform more closely aligned with the Group's other Sports Fashion businesses than with the businesses classified as Outdoor.

 

The Chief Operating Decision Maker receives and reviews segmental operating profit. Certain central administrative costs including Group Directors' salaries are included within the Group's core 'Sports Fashion' result. This is consistent with the results as reported to the Chief Operating Decision Maker.

 

IFRS 8 requires disclosure of information regarding revenue from major products and customers. The majority of the Group's revenue is derived from the retail of a wide range of apparel, footwear and accessories to the general public. As such, the disclosure of revenues from major customers is not appropriate. Disclosure of revenue from major product groups is not provided at this time due to the cost involved to develop a reliable product split on a same category basis across all companies in the Group.

 

Intersegment transactions are undertaken in the ordinary course of business on arm's length terms.

 

The Board consider that certain items are cross divisional in nature and cannot be allocated between the segments on a meaningful basis. Net funding costs and taxation are treated as unallocated reflecting the nature of the Group's syndicated borrowing facilities and its tax group. Drawdowns from the Group's syndicated borrowing facility of £nil (2015: £31,000,000), a deferred tax asset of £482,000 (2015: liability of £1,804,000) and an income tax liability of £15,757,000 (2015: £12,931,000) are included within the unallocated segment.

 

Each segment is shown net of intercompany transactions and balances within that segment. The eliminations remove intercompany transactions and balances between different segments which primarily relate to the net down of long term loans and short term working capital funding provided by JD Sports Fashion Plc (within Sports Fashion) to other companies in the Group, and intercompany trading between companies in different segments.

 

Business Segments

 

Information regarding the Group's reportable operating segments for the 52 weeks to 30 January 2016 is shown below:

 

Income statement

 

 

 

 

 

 

 

 

 

 

Sports Fashion

£000

 

Outdoor

£000

Continuing Operations

£000

 

 

 

 

 

 

 

 

Gross revenue

 

 

1,666,477

155,313

1,821,790

 

Intersegment revenue

 

 

(138)

 

Revenue

 

 

1,666,339

155,313

1,821,652

 

 

Operating profit / (loss) before exceptional items

 

 

 

 

162,864

 

 

(3,962)

 

 

158,902

 

Exceptional items

 

 

(25,496)

 

 

 

 

 

 

 

 

Operating profit / (loss)

 

 

141,230

(7,824)

133,406

 

Financial income

 

 

 

 

388

 

Financial expenses

 

 

(2,163)

 

 

 

 

 

 

 

 

Profit / (loss) before tax

 

 

 

 

131,631

 

Income tax (expense) / credit

 

 

(31,001)

 

 

 

 

 

 

 

 

Profit / (loss) for the period

 

 

 

 

100,630

 

 

 

 

Total assets and liabilities

 

Sports Fashion

£000

Outdoor

£000

Unallocated

£000

Eliminations

£000

Total

£000

 

 

 

 

 

 

Total assets

792,411

82,016

482

(83,613)

791,296

Total liabilities

(336,736)

(15,757)

83,613

Total segment net assets / (liabilities)

 

455,675

 

(39,575)

 

(15,275)

 

-

 

400,825

             

 

 

 

 

Other segment information

 

 

 

 

Sports Fashion

£000

Outdoor

£000

Total

£000

Capital expenditure:

 

 

 

Software development

4,401

-

4,401

Property, plant and equipment

69,025

3,740

72,765

Non-current other assets

6,343

6,343

 

 

 

 

Depreciation, amortisation and impairments:

 

 

 

Depreciation and amortisation of non-current assets

45,326

3,452

48,778

Impairment of intangible assets

6,739

3,861

10,600

Termination of IT project

14,896

-

14,896

Impairment of non-current assets

843

1,427

 

 

 

 

The comparative segmental results (re-presented) for the 52 weeks to 31 January 2015 are as follows:

 

Income statement (re-presented)

 

 

 

 

 

 

Sports Fashion

£000

 

Outdoor

£000

Continuing Operations

£000

Discontinued Operations

£000

 

Total

£000

 

 

 

 

 

 

Gross revenue

1,382,408

139,924

1,522,332

83,441

1,605,773

Intersegment revenue

(79)

(79)

-

(79)

Revenue

1,382,329

139,924

1,522,253

83,441

1,605,694

 

Operating profit / (loss) before exceptional items

 

 

109,315

 

 

(7,142)

 

 

102,173

 

 

(7,832)

 

 

94,341

Exceptional items

(4,876)

(9,527)

(8,088)

(17,615)

 

 

 

 

 

 

Operating profit / (loss)

104,439

(11,793)

92,646

(15,920)

76,726

Financial income

 

 

657

-

657

Financial expenses

 

(2,807)

(74)

(2,881)

 

 

 

 

 

 

Profit / (loss) before tax

 

 

90,496

(15,994)

74,502

Income tax (expense) / credit

 

(20,741)

210

(20,531)

 

 

 

 

 

 

Profit / (loss) for the period

 

 

69,755

(15,784)

53,971

             

 

 

 

Total assets and liabilities (re-presented)

 

Sports Fashion

£000

Outdoor

£000

Unallocated

£000

Eliminations

£000

Total

£000

 

 

 

 

 

 

Total assets

670,491

94,873

-

(83,694)

681,670

Total liabilities

(274,031)

(45,735)

83,694

Total segment net assets / (liabilities)

 

396,460

 

(40,734)

 

(45,735)

 

-

 

309,991

             

 

 

 

 

 

Other segment information (re-presented)

 

 

 

 

Sports Fashion

£000

Outdoor

£000

Total

£000

Capital expenditure:

 

 

 

Software development

7,123

-

7,123

Other intangible assets

29

-

29

Property, plant and equipment

49,770

3,154

52,924

Non-current other assets

10,124

10,124

 

 

 

 

Depreciation, amortisation and impairments:

 

 

 

Depreciation and amortisation of non-current assets

42,047

3,194

45,241

Impairment of intangible assets

2,560

2,500

5,060

Impairment of non-current assets

233

750

983

  

Geographical Information

 

The Group's operations are located in the UK, Republic of Ireland, France, Spain, Germany, the Netherlands, Italy, Sweden, Denmark, Belgium, Malaysia, Australia, New Zealand, Canada, Dubai, Singapore and Hong Kong.

           

The following table provides analysis of the Group's revenue by geographical market, irrespective of the origin of the goods / services:

 

 

52 weeks to 30 January 2016

52 weeks to 31 January 2015

 

Continuing

Discontinued

Total

Continuing

Discontinued

Total

 

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

UK

1,407,866

-

1,407,866

1,184,966

82,940

1,267,906

Europe

391,954

-

391,954

317,472

189

317,661

Rest of world

21,832

-

21,832

19,815

312

20,127

 

 

 

 

 

 

 

 

1,821,652

-

1,821,652

1,522,253

83,441

1,605,694

 

The revenue from any individual country, with the exception of the UK, is not more than 10% of the Group's total revenue.

 

The following is an analysis of the carrying amount of segmental non-current assets by the geographical area in which the assets are located:

 

 

2016

£000

 

2015

£000

 

 

 

 

 

UK

 

183,623

 

206,692

Europe

 

96,437

 

74,523

Rest of world

 

541

 

196

 

 

 

 

 

 

 

280,601

 

281,411

 

 

2.   Exceptional items

 

 

 

 

 

52 weeks to

30 January

2016

£000

 

52 weeks to 

31 January

2015

        £000

 

 

 

 

 

Property related exceptional costs

 

-

 

4,467

Selling and distribution expenses - exceptional

 

-

 

4,467

 

 

 

 

 

Impairment of goodwill, brand names and fascia names (1)

 

10,600

 

5,060

Termination of project to replace core IT systems (2)

 

14,896

 

-

Administrative expenses - exceptional

 

25,496

 

5,060

 

 

 

 

 

Exceptionals - continuing operations

 

25,496

 

9,527

 

 

 

 

 

Exceptionals - discontinued operations (see note 6)

 

-

 

8,088

 

 

 

 

 

 

 

25,496

 

17,615

 

 

1.   Relates to the impairment in the period to 30 January 2016 of the goodwill arising in prior years on the acquisition of ActivInstinct Limited, a partial impairment of the Blacks fascia name and the impairment of several other goodwill and fascia name balances which were not significant. The charge in the prior period related to the goodwill arising in prior years on the acquisition of Blacks Outdoor Retail Limited, the goodwill arising in prior years on the acquisition of Kukri Sports Limited, the Kukri brand name and the Ark fascia name.

 

2.   One off exceptional charge writing off costs to date including certain other related costs

 

These selling and distribution expenses and administrative expenses are exceptional items as they are,

individually, and in aggregate, material in size and/or unusual or infrequent in nature.

 

  

3.   Earnings per ordinary share

 

Basic and diluted earnings per ordinary share

 

The calculation of basic and diluted earnings per ordinary share at 30 January 2016 is based on the profit from continuing operations for the period attributable to equity holders of the parent of £97,634,000 (2015: £68,461,000) and a weighted average number of ordinary shares outstanding during the 52 week period ended 30 January 2016 of 194,646,632 (2015: 194,646,632).

 

An Ordinary Resolution was passed at the Annual General Meeting, effective 30 June 2014, resulting in a share split whereby four Ordinary shares were issued for each Ordinary share. In accordance with IAS 33, the number of shares outstanding before the event has been adjusted for the proportionate change as if the event had occurred at the beginning of the earliest period presented.

 

 

52 weeks to

30 January

2016

 

     52 weeks to 

31 January

 2015

 

 

 

 

Issued ordinary shares at beginning and end of period

194,646,632

 

194,646,632

 

 

Adjusted basic and diluted earnings per ordinary share

 

Adjusted basic and diluted earnings per ordinary share have been based on the profit for the period from continuing operations attributable to equity holders of the parent for each financial period but excluding the post-tax effect of certain exceptional items. The Directors consider that this gives a more meaningful measure of the underlying performance of the Group.

 

 

 

 

 

 

Note

52 weeks to

30 January

2016

£000

 

     52 weeks to 

31 January

2015

                 £000

 

 

 

 

 

Profit for the period from continuing operations attributable to equity holders of the parent

 

 

97,634

 

 

68,461

Exceptional items excluding loss on disposal of non-current assets

 

2

 

25,496

 

 

8,541

Tax relating to exceptional items

 

(3,737)

 

(1,309)

Profit for the period from continuing operations attributable to equity holders of the parent excluding exceptional items

 

 

119,393

 

 

75,693

 

 

 

 

 

Adjusted basic and diluted earnings per ordinary share from continuing operations

 

 

61.34p

 

          

 38.89p

 

4.   Acquisitions

 

Current period acquisitions

 

During the period, the Group has increased its shareholding in three non-wholly owned subsidiaries. These transactions were not material.

 

Prior period acquisitions

 

Mainline Menswear Limited

On 21 March 2014, the Group acquired 80% of the issued share capital of Mainline Menswear Holdings Limited for cash consideration of £10,924,000 with additional consideration of up to £500,000 payable after 30 November 2014 if certain performance criteria were achieved. At acquisition, management believed that Mainline Menswear was on course to meet the performance criteria for the maximum contingent consideration to be payable and therefore the fair value of this contingent consideration at this time was £500,000. The deferred consideration was subsequently paid in full in February 2015. Mainline Menswear is primarily an online niche retailer of premium branded Men's apparel and footwear.

 

The measurement period concluded in the 52 week period ended 30 January 2016, with no measurement adjustments being made to the fair values in the period.

 

The final goodwill calculation is summarised below:

 

 

 

Book value

£000

 

 

Measurement

adjustments

£000

 

Fair  value at 30 January 2016

£000

Acquiree's net assets at acquisition date:

 

 

 

Intangible assets

-

843

843

Property, plant & equipment

52

-

52

Inventories

1,519

-

1,519

Cash

3,535

-

3,535

Trade and other receivables

60

-

60

Trade and other payables

(692)

-

(692)

Income tax liabilities

(62)

-

(62)

Deferred tax liabilities

(10)

(169)

(179)

 

Net identifiable assets

 

4,402

 

674

 

5,076

 

 

 

 

Non-controlling interest (20%)

(880)

(135)

(1,015)

 

 

 

 

Goodwill on acquisition

 

 

7,363

 

Consideration paid - satisfied in cash

 

 

 

11,424

         

 

The intangible asset acquired represents the fair value of the 'Mainline' fascia name. The Board believes that the excess of consideration paid over the fair value of the net identifiable assets of £7,363,000 is best considered as goodwill on acquisition representing employee expertise and anticipated future operating synergies.

 

Ultimate Outdoors

On 3 February 2014, the Group acquired, via its 100% owned subsidiary Blacks Outdoor Retail Limited, 100% of the entire issued share capital of Ultimate Outdoors Limited for cash consideration of £835,000 which was equal to the fair value of the net identifiable assets acquired.

 

The measurement period concluded in the 52 week period ended 30 January 2016, with no measurement adjustments being made to the fair values in this period.

 

Oswald Bailey

On 28 March 2014, the Group acquired, via its 100% owned subsidiary Blacks Outdoor Retail Limited, the trade and assets of 14 stores (and 2 websites) trading as Oswald Bailey for cash consideration of £851,000 which was equal to the fair value of the net identifiable assets acquired.  Oswald Bailey is a retailer of outdoor footwear, apparel and equipment.

 

The measurement period concluded in the 52 week period ended 30 January 2016, with no measurement adjustments being made to the fair values in this period.

 

 

5.   Disposals

 

Prior period disposal

 

Disposal of 100% of the Issued Ordinary Share Capital of Bank Fashion Limited

 

On 25 November 2014, the Group disposed of its 100% shareholding in Bank Fashion Limited to Huk 57 Limited (a subsidiary of Hilco Capital Limited) for a total consideration of £18.15m. The total cash payment comprised £1 for the entire share capital of Bank Fashion Limited and £18.15m which repaid a substantial part of the intercompany receivable balance of £28.25m. JD Sports Fashion Plc has recorded a provision of £10.1m against the remaining balance.

 

The assets and liabilities related to Bank Fashion Limited form a disposal group. Bank Fashion Limited has been treated as a discontinued operation as at 31 January 2015 as its fashionwear business offering represented a significant line of business (see note 6).

 

Financial information related to the disposal is set out below:

 

 

 

£000

 

Consideration received

  18,150

Less: carrying value of net assets disposed of

(20,506)

Less: fascia name disposed of

(5,481)

Plus: deferred tax on fascia name

1,519

Loss on disposal

(6,318)

 

 

Net cashflow on disposal:

 

Consideration received

18,150

Less: cash and cash equivalents disposed of

-

Net cash inflow from disposal

18,150

  

 

6.   Discontinued operation

 

Results of Discontinued Operation

 

 

52 weeks to

30 January

2016

£000

     52 weeks to 

31 January

 2015

£000

 

 

 

Revenue

-

83,441

Expenses - normal

-

(91,273)

Expenses - exceptional

-

(1,770)

Net interest expense

-

(74)

 

 

 

Results from operating activities

-

(9,676)

Income tax

-

210

 

 

 

Results from operating activities, net of tax

-

(9,466)

Loss on sale of discontinued operation - exceptional

-

(6,318)

 

 

 

Loss for the period

-

(15,784)

 

 

 

Basic loss per ordinary share

-

(8.11)p

Diluted loss per ordinary share

-

(8.11)p

 

Effect of Disposal on the Financial Position of the Group

 

 

52 weeks to

31 January

2015

£000

 

 

Property, plant and equipment

(9,266)

Inventories

(18,371)

Trade and other receivables

(4,198)

Income tax assets

(21)

Deferred tax assets

(873)

Trade and other payables

10,624

Provisions

1,599

 

 

Net assets

(20,506)

 

 

Fascia name

(5,481)

Deferred tax on fascia name

1,519

 

 

Net fascia name disposed of on divestment of subsidiary

(3,962)

 

 

Consideration received, satisfied in cash

18,150

Cash and cash equivalents disposed of

-

 

 

Net cash inflow

18,150

 

 

7.   Subsequent events

 

Sports Unlimited Retail BV

 

On 20 March 2016, the Group acquired, via its newly incorporated subsidiary Sports Unlimited Retail BV, the trading assets and trade of the Aktiesport and Perry Sport fascias from the Trustee of Unlimited Sports Group BV which was declared bankrupt by the court of Amsterdam on 23 February 2016. On acquisition there were 187 trading stores and two trading websites.

 

The Board believe that the cash consideration of €26.5 million represents the current best estimates of the fair value of the net assets acquired.

 

 

Provisional fair value at 20 March

 2016

 

£000

Acquiree's net assets at the acquisition date:

 

Property, plant & equipment

3,929

Inventories

23,330

Cash and cash equivalents

58

Trade and other payables

(8,364)

 

 

Net identifiable assets

18,953

 

 

Goodwill on acquisition

-

 

 

Consideration paid - satisfied in cash

18,953

 

 

8.   Accounts

The financial information set out above does not constitute the Group's statutory accounts for the 52 weeks ended 30 January 2016 or 52 weeks ended 31 January 2015 but is derived from those accounts. Statutory accounts for the 52 weeks ended 31 January 2015 have been delivered to the Registrar of Companies, and those for the 52 weeks to 30 January 2016 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 auditors 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.

Copies of full accounts will be sent to shareholders in due course. Additional copies will be available from JD Sports Fashion Plc, Hollinsbrook Way, Pilsworth, Bury, Lancashire, BL9 8RR or online at www.jdplc.com.


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