JD Sports Regulatory News (JD.)

11 May 2005 07:01

John David Group (The) PLC11 May 2005 11 May 2005 THE JOHN DAVID GROUP PLC PRELIMINARY RESULTS FOR THE 52 WEEKS ENDED 29 JANUARY 2005 The John David Group Plc (the "Group"), a leading specialist retailer offashionable branded sports and leisure wear, today announces its PreliminaryResults for the 52 weeks ended 29 January 2005. 2005 2004 % Change £000 £000Turnover 471,656 458,073 +3%Gross profit % 45.6% 45.6%Operating profit (before exceptionals, goodwill,and 17,891 10,498 +70%loss on disposal)Operating profit after interest (beforeexceptionals, 13,734 5,964 +130%goodwill and loss on disposal)Operating profit 8,356 7,734 +8%Profit before tax 2,630 2,105 +25%Basic earnings per ordinary share 2.85p 1.39p +105%Adjusted basic earnings per ordinary share 18.39p 6.21p +196%Total dividend per ordinary share 6.60p 6.50p +2%Net debt at end of period 30,767 51,066 -40% • Total sales increased by 3.0% in the year and 4.7% on a like for like basis. • Gross margin static at 45.6% held back by the aggressive elimination of aged and under performing stocks. • Overheads tightly controlled. • 41 under performing stores closed in the year but no significant reduction in retail space following the acquisition of RD Scott Limited Fashion fascias. • Group like for like sales for the 13 weeks to 30 April 2005 up 2.4%. Peter Cowgill, Executive Chairman, said: "The Group made considerable progressin turning around its trading performance and reduced its net debt by £20.3million to £30.8 million. The Board remains confident that continuing progressis being made in the restoration of more favourable operating ratios across theGroup." Enquiries: The John David Group Plc Tel: 0870 873 0333Peter Cowgill, Executive ChairmanBarry Bown, Chief ExecutiveBrian Small, Finance Director Hogarth Partnership Limited Tel: 020 7357 9477Andrew JaquesBarnaby Fry EXECUTIVE CHAIRMAN'S STATEMENT INTRODUCTION The 52 week period to 29 January 2005 was an encouraging one as the Group madeconsiderable progress in turning round its trading performance, particularly inthe Sports fascias, and reduced its stocks by £11.9 million and its net debt by£20.3 million to £30.8 million. This debt reduction was achieved after thepurchase of RD Scott Limited ("Scotts") at a cost of £4.5 million in December2004. GROUP PERFORMANCE Sales Total sales increased by 3.0% in the year to £471.7 million from £458.1 millionand by 4.7% on a like for like basis. We continually aim to enhance our customer footfall and conversion by constantlychanging our brand and product portfolio to maintain the best differentiatedfootwear and apparel offer in our sector. We have also embarked on a stockclearance programme to reduce older and under performing stocks in the business.This has allowed our stores to carry fresher stock and a greater proportion ofnewer ranges. This attracts more consumers to shop in our stores and increasessales densities. We have also continued to work more closely with our branded suppliers to ensurewe have a wide range of exclusive and more narrowly distributed product creatingreal differentiation from our competitors. Our offer is complemented by McKenzieand Carbrini own brand product, which accounted for 8% of sales (2004: 6%). Inaddition, we continue to be innovative with instore windows and merchandisingand align our fascias and brands with the sports and music icons of our corecustomer group. Gross margin and stocks Gross margin for the year was static at 45.6% but this figure was held back bythe much more aggressive elimination of aged and under performing stocks,particularly Fashion stocks. We believe this will lead to some marginenhancement in the current year even in the face of a very competitiveenvironment. Year end Group stocks were £53.9 million (including £1.9 million ofScotts stocks), a reduction of £11.9 million since January 2004. Debt reduction and gearing Net debt was reduced from £51.1 million to £30.8 million in the year bringinggearing down to 55% (2004: 89%). Overheads Overheads were well contained and controlled with a small reduction in normalselling, distribution and administration costs in the year. This was achieved byreducing the number of under performing inefficient stores in our portfolio, bycontinuing to tighten control of retail wages, and by the reduction of othercentral costs. Operating profit and results Operating profit before exceptionals, goodwill amortisation and loss on disposalrose from £10.5 million to £17.9 million. Our objective is to continually drivethe net margin ratio upward. Operating profit in the year rose from £7.7 million to £8.4 million afterexceptional items of £8.7 million (2004: £2.0 million) and goodwill amortisationof £0.8 million (2004: £0.8 million). The exceptional items comprised a £6.7 million impairment charge on underperforming stores closed in the year or stores earmarked for disposal, a £1.3million charge for expected onerous lease rental costs on five stores, and £0.7million, principally for the termination costs of the previous Chairman and anumber of senior staff in buying, merchandising, marketing and human resources.The impairment provision has been substantially increased since our half yearresults were announced as we have continued to add to our store disposal list ina determined effort to ensure we have a more productive portfolio for thefuture. After closing 41 stores in the year, there remained 52 stores in ourportfolio which were fully impaired. We are aiming to close approximately 20 inthe current year, and we have already closed five. After charging a loss on disposal of fixed assets of £1.6 million (2004: £1.1million) arising largely out of store closures, the profit on ordinaryactivities before interest was £6.8 million (2004: £6.6 million). Net interest charges in the year fell from £4.5 million to £4.2 million. Theimpact of debt reduction was offset by increases in base rates and by a 0.3%increase in the margin early last year which has been reversed early in the newyear. Profit on ordinary activities before taxation was £2.6 million (2004: £2.1million) and after taxation was £1.3 million (2004: £0.6 million). Sports fascias It is pleasing to report that in spite of the increasingly competitive retailsports environment, we have made considerable progress both in the tradingperformance of the Sports fascias and in laying the foundations for furtherperformance improvement by the elimination of under performing stores andstocks. In addition to this we have continued to enhance our position as theleading fashion oriented retailer of sportswear by the development of sales fromnewly introduced brands and our own brand product. The two biggest challengesfor the Sports fascias are the increasingly wide distribution of sportswear byvalue retailers and the optimisation of the store portfolio. Fashion fascias The ATH-, AV and Open Fashion fascias under performed throughout the yearsaddled with a very poor stock situation, comprising ill advised buys for Spring/Summer 2004 both in quality and quantity terms, an excess of brought forwardaged stock, the absence of certain key brands and inadequate brand consistency.The latter stemmed from the previous inability of these fascias to present aconsistent message and appropriate brand adjacencies. This was weakening thebusiness and led to these fascias, which accounted for approximately 8% of Groupsales in the year, making no contribution to central overheads. It was for thesereasons that the opportunity to purchase Scotts was taken in December 2004. Scotts was a small privately owned branded fashion chain operating in the samemarket but which had better access to aspirational brands such as Henri Lloyd,Ted Baker and Hackett. The acquisition has given the Fashion business improvedaccess to key brands and a stronger more focused management team. The twobusinesses will be run autonomously with accountability being greatly increasedas a result. The intention is to retain only the Scotts and Open fascias and thebrands have responded very positively to both the acquisition and our strategy. Store portfolio There has been considerable progress in closing under performing stores in thelast year and there has been no net cash cost to those disposals. 41 stores wereclosed and, following the exceptional impairment charge as a result of our storeportfolio review, the Group still retained 52 fully impaired stores which weeither have to close and dispose of or improve efficiencies considerably. It hasto be recognised that certain stores may become increasingly difficult todispose of and consequently there will be a cost to this process. Continuing rises in rent, rates and minimum wages at levels above inflation,combined with continual change and development in the shopping centres withinmany regional centres mean that the programme for elimination of underperforming stores is ongoing. It is not expected that there will be exceptionalcosts on the scale of those reported for the last year because of write downsalready made. Nevertheless some net cash cost is likely to be incurred on theclosure of approximately 20 more stores in the current year. New store opportunities are not being overlooked and we opened 13 new stores inthe last year in addition to the acquisition of 23 Scotts stores. Square footageof retail space at 29 January 2005 was 1,206,000 (2004:1,236,000). We expect toopen less than 10 new stores in the current year with the store appraisalprocess recognising the demanding competitive environment. DIVIDEND AND EARNINGS PER ORDINARY SHARE The Board indicated during the last year that it would change its dividendpolicy to ensure that the dividend declaration was more proportionate to theresults of each half year. The Board proposes paying a final dividend of 4.4pper ordinary share bringing the total dividend paid for the year to 6.6p perordinary share (2004: 6.5p). The proposed final dividend will be paid on 1August 2005 to all shareholders on the register on 20 May 2005. The adjusted earnings per ordinary share before exceptional items andamortisation of goodwill was 18.39p (2004: 6.21p). The basic earnings per ordinary share was 2.85p (2004: 1.39p). CURRENT TRADING AND OUTLOOK Trading has continued to be satisfactory since the year end. Sales for thethirteen week period ended 30 April 2005 have been up 2.4% on a like for likebasis against prior year with Sport fascias up 2.7% and Fashion fascias up 0.3%.The Fashion figures are not likely to be more positive until recent gains inbrand distribution are added to our Autumn offer. The Board remains confidentthat continuing progress is being made in the restoration of more favourableoperating ratios throughout the Group. EMPLOYEES The Group has come through a difficult period as a result of the skills andefforts of its managers and the dedication of all its employees. The whole Boardthanks them all for their loyalty, support and commitment. We must maintain thatcommitment to ensure the business now delivers on its renewed promise. Peter CowgillExecutive Chairman11 May 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the 52 weeks ended 29 January2005 Note 52 weeks to 12 months to 29 January 31 January 2005 2004 Continuing Continuing Continuing operations Acquisitions operations operations £000 £000 £000 £000 Turnover 468,790 2,866 471,656 458,073Cost of sales (254,997) (1,507) (256,504) (249,379) ________ _______ _______ _______Gross profit 213,793 1,359 215,152 208,694Distributioncosts - normal (184,463) (974) (185,437) (186,117)Distributioncosts -exceptional (7,987) - (7,987) (1,366)Administrativeexpenses -normal (13,518) (71) (13,589) (13,503)Administrativeexpenses -exceptional (736) - (736) (612)Otheroperatingincome 953 - 953 638 ________ _______ _______ _______Operatingprofit 8,042 314 8,356 7,734_________________________________________________________________________________Beforeexceptionalitems andgoodwillamortisation 17,577 314 17,891 10,498Exceptionalitems 1 (8,723) - (8,723) (1,978)Goodwillamortisation 1 (812) - (812) (786)_________________________________________________________________________________Operatingprofit 8,042 314 8,356 7,734 Loss ondisposal offixed assets (1,569) (1,095) _______ _______Profit onordinaryactivitiesbeforeinterest 6,787 6,639Other interestreceivable andsimilar income 304 100Interestpayable andsimilarcharges (4,461) (4,634) _______ _______Profit onordinaryactivitiesbeforetaxation 2,630 2,105Taxation onprofit onordinaryactivities (1,293) (1,457) _______ _______Profit onordinaryactivitiesafter taxation 1,337 648Dividends paidand proposed (3,119) (3,038) _______ _______Retained loss (1,782) (2,390) _______ _______ Earnings perordinaryshare: 2- Basic 2.85p 1.39p- Adjusted toexcludeexceptionalitems andgoodwillamortisation 18.39p 6.21p- Diluted 2.85p 1.39p The Group has no recognised gains or losses other than the results reportedabove.The results above also represent the historic cost profit. CONSOLIDATED BALANCE SHEETAs at 29 January 2005 29 January 2005 31 January 2004 £000 £000Fixed assetsIntangible assets 18,318 14,976Tangible assets 56,789 68,183 _______ _______ 75,107 83,159 _______ _______Current assetsStocks 53,857 65,727Debtors and prepayments 11,707 14,452Cash at bank and in hand 6,531 4,934 _______ _______ 72,095 85,113Creditors: amounts falling due within oneyear (58,957) (55,667) _______ _______Net current assets 13,138 29,446 _______ _______Total assets less current liabilities 88,245 112,605Creditors: amounts falling due after morethan one year (28,653) (51,555)Provisions for liabilities and charges (3,929) (3,756) _______ _______Net assets 55,663 57,294 _______ _______Capital and reservesCalled up share capital 2,364 2,338Share premium account 9,042 8,917Profit and loss account 44,257 46,039 _______ _______Equity shareholders' funds 55,663 57,294 _______ _______ RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDSAs at 29 January 2005 29 January 31 January 2005 2004 £000 £000 Profit for the period 1,337 648Dividends paid and proposed (3,119) (3,038) _______ _______Retained loss for the period (1,782) (2,390)Proceeds from issue of ordinary shares 146 -Scrip dividend adjustment re 2004 5 920 _______ _______Net movement in equity shareholders' funds (1,631) (1,470)Opening equity shareholders' funds 57,294 58,764 _______ _______Closing equity shareholders' funds 55,663 57,294 _______ _______ CONSOLIDATED CASH FLOW STATEMENTfor the 52 weeks ended 29 January 2005 52 weeks to 29 12 months to 31 January 2005 January 2004 £000 £000 Net cashinflow fromoperatingactivities 37,219 23,600 Returns on investments and servicing of financeInterestreceived 304 100Interest paid (4,442) (4,402)Interestelement offinance leaseand hirepurchasecontract (19) - _______ _______ (4,157) (4,302) _______ _______Taxation 244 (1,287) _______ _______Capital expenditurePurchase oftangible fixedassets (8,056) (11,493)Proceeds fromdisposal offixed assets 2,910 2,264 _______ _______ (5,146) (9,229) _______ _______AcquisitionsCashconsideration (4,183) -Net overdrawnbalancesacquired (420) - _______ _______ (4,603) - _______ _______Equitydividends paid (1,816) (4,375) _______ _______Net cashinflow beforefinancing 21,741 4,407 _______ _______FinancingReceipts fromnew loans 5,000 -Loanrepayments (26,500) (3,000)Proceeds fromissue ofequity shares 146 -Capitalelement offinance leaseand hirepurchaserepayments (170) - _______ _______ (21,524) (3,000) _______ _______Increase in cash in theperiod 217 1,407 _______ _______ RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIESfor the 52 weeks ended 29 January 2005 52 weeks to 12 months to 29 January 2005 31 January 2004 £000 £000 Operating profit 8,356 7,734Depreciation charge 17,812 10,060Amortisation of goodwill 812 786Decrease in stocks 14,674 1,990Decrease in debtors 2,360 80(Decrease)/increase in creditors (7,082) 2,950Issue of redeemable loan notes 287 - ______ _______Net cash inflow from operating activities 37,219 23,600 ______ _______ RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBTfor the 52 weeks ended 29 January 2005 52 weeks to 12 months to 29 January 2005 31 January 2004 £000 £000 Increase in cash in the period 217 1,407Cash outflow from decrease in debt 21,670 3,000Issue of redeemable loan notes (287) -Overdraft and finance leases acquired withsubsidiary undertaking (1,301) - _______ _______Reduction in net debt in the period 20,299 4,407Net debt at start of period (51,066) (55,473) _______ _______Net debt at end of period (30,767) (51,066) _______ _______ ANALYSIS OF NET DEBTAs at 29 January 2005 31 January Cashflow £000 Acquisition Other 29 January 2004 £000 £000 2005 £000 £000 Cash at bank and 4,934 217 (420) 1,800 6,531in handOverdraft - - - (1,800) (1,800) ______ ______ ______ ______ ______ 4,934 217 (420) - 4,731Debt due after one (48,000) 18,500 - 4,000 (25,500)yearDebt due within (8,000) 3,000 - (4,000) (9,000)one yearRedeemable loan - - - (287) (287)notesObligations underfinancelease and hire - 170 (881) - (711)purchasecontracts ______ ______ ______ ______ ______Total (51,066) 21,887 (1,301) (287) (30,767) ______ ______ ______ ______ ______ NOTES TO THE FINANCIAL STATEMENTS 1 Operating profit and exceptional items Operating profit is stated after charging goodwill amortisation of £812,000. Exceptional items comprise of expenditure relating to the impairment of lossmaking stores, provisions for rentals on onerous property leases, redundancycosts and bank reorganisation costs. £000Impairment of tangible fixed assets on loss making stores 6,701Provision for rentals on onerous property leases 1,286Redundancy costs 440Bank reorganisation costs 296 _____ 8,723 _____ 2 Earnings per ordinary share Basic earnings per ordinary share represents the profit for the period of£1,337,000 (2004: £648,000) divided by the weighted average number of ordinaryshares in issue of 46,978,013 (2004: 46,748,607). Adjusted basic earnings per ordinary share have been based on the profit onordinary activities after taxation for each financial period but excludingexceptional items and goodwill amortisation. The diluted earnings per share is based on 46,981,420 (2004: 46,750,776)ordinary shares, the difference to the basic calculation representing theadditional shares that would be issued on the conversion of all the dilutivepotential ordinary shares. There is no material difference to earnings if allthe dilutive potential ordinary shares are converted. The earnings used to calculate earnings per ordinary share is given below: Earnings attributable to ordinary shareholders 52 weeks to Year ended 29 January 31 January 2005 2004 £000 £000 Profit on ordinary activities after taxation 1,337 648 - Exceptional items 8,723 1,978- Tax relating to exceptional items (2,235) (509)- Goodwill amortisation 812 786 _______ _______Profit after taxation excluding exceptional itemsand goodwill amortisation 8,637 2,903 _______ _______ Adjusted basic earnings per ordinary share 18.39p 6.21p _______ _______ 3 Accounts These figures are abridged versions of the Group's full accounts for the 52weeks ended 29 January 2005 and do not constitute the Group's statutory accountswithin the meaning of Section 240 of the Companies Act 1985. The Group'sauditors have audited the statutory accounts for the Group and have issued anunqualified audit opinion thereon within the meaning of Section 235 of theCompanies Act 1985 and have not made any statement under Section 237 (2) or (3)of the Companies Act 1985 for the 52 weeks ended 29 January 2005. Statutoryaccounts for the 12 month period ended 31 January 2004 have been delivered tothe Registrar of Companies. Statutory accounts for the 52 weeks ended 29 January2005 will be delivered to the Registrar of Companies following the AnnualGeneral Meeting. Copies of the full accounts will be sent to shareholders in due course.Additional copies will be available from The John David Group Plc, HollinsbrookWay, Pilsworth, Bury, Lancashire, BL9 8RR. This information is provided by RNS The company news service from the London Stock Exchange