RNS Number : 1336K
JD Sports Fashion Plc
14 April 2010
14 April 2010
JD SPORTS FASHION PLC
PRELIMINARY RESULTS
FOR THE 52 WEEKS ENDED 30 JANUARY 2010
JD Sports Fashion Plc (the 'Group'), the leading retailer and distributor of
sport and athletic inspired fashion apparel and footwear, today announces
its Preliminary Results for the 52 weeks ended 30 January 2010.
2010 2009
£000 £000 % Change
Revenue 769,785 670,855 +15%
Gross profit % 49.3% 49.3%
Operating profit (before exceptional items) 67,294 54,473 +24%
Share of results of joint venture before 539 (166)
exceptional items
(net of income tax)
Net financial expenses (442) (681)
Profit before tax and exceptional items 67,391 53,626 +26%
Exceptional items (see note 2) (4,986) (16,323)
Share of exceptional items of joint venture (net (1,012) 914
of income tax) (a)
Profit before tax 61,393 38,217 +61%
Basic earnings per ordinary share 88.16p 50.49p +75%
Adjusted basic earnings per ordinary share (see 93.64p 72.33p +29%
note 4)
Total dividend payable per ordinary share 18.00p 12.00p +50%
Net cash at end of period (b) 60,465 23,455
a) The share of exceptional items of joint venture relates to the
movement in the fair value of the foreign exchange contracts which were
outstanding at the period end.
b) Net cash consists of cash and cash equivalents together with other
borrowings from bank loans, other loans, loan notes and finance lease and
hire purchase contracts.
Highlights
· Total revenue increased by £98.9 million to £769.8 million
(2009: £670.9 million) including £48.1 million from the acquired
businesses
· Like for like revenue increased by 2.5% (Sports Fascias 2.3%;
Fashion Fascias 3.6%)
· Gross margin maintained at 49.3% with improvement in like for
like margin from 49.3% to 49.8% diluted by a lower margin in the acquired
businesses
· Group profit before tax and exceptional items up 26% to £67.4
million (2009: £53.6 million)
· Profit before tax up 61% to £61.4 million (2009: £38.2
million)
· Net cash position at the period end increased to £60.5 million
(2009: £23.5 million)
· Expenditure on acquisitions and associated asset purchases
increased significantly to £15.8 million (2009: £1.4 million)
· Key strategic acquisitions made in the year included Chausport
in France for £7.9 million and the Canterbury of New Zealand companies in
the UK, New Zealand (51% interest), Australia, USA, and Hong Kong for £7.0
million
· Final dividend payable increased by 65% to 14.7p (2009: 8.9p)
bringing the total dividends payable for the year up to 18.0p (2009: 12.0p),
an increase of 50%
Peter Cowgill, Executive Chairman, said:
"The year ended 30 January 2010 has been the sixth successive year of good
progress in revenue and profitability for the Group. During the period, we
have improved our profit before tax and exceptional items by 26% to £67.4
million (2009: £53.6 million). This follows increases of 24%, 73% and 51%
in the previous three years and such sustained performance, in the face of
less than favourable economic conditions and exchange rates, reflects the
strength and uniqueness of our brand and fascia offers as well as the
strength of our management teams.
"Trading in the 10 weeks to 10 April 2010 has been encouraging with UK and
Ireland retail like for like sales up 2.0% (Sports Fascias 3.0%; Fashion
Fascias -3.5%) on an underlying basis taking into account the change in the
timing of Easter and school holidays. Although like for like sales are
lower, the performance of the Fashion Fascias has benefitted from a 2%
improvement in gross margin in the same period.
"The Board remains focused on continuing to deliver operational and
financial progress for the Group over the long term. Opportunities for
profit growth overseas, the rollout of our principal Fashion Fascia,
development of our differentiated and own brand proposition, and growth in
our Distribution business all help to reduce threats to Group profitability
and give us the opportunity to maintain the positive momentum in our
business."
Enquiries:
JD Sports Fashion Plc Tel: 0161 767 1000
Peter Cowgill, Executive Chairman
Barry Bown, Chief Executive
Brian Small, Finance Director
Hogarth Tel: 020 7357 9477
Andrew Jaques
Barnaby Fry
Ian Payne
Executive Chairman's Statement
Introduction
The year ended 30 January 2010 has been the sixth successive year of good
progress in revenue and profitability for the Group. During the period, we
have improved our profit before tax and exceptional items by 26% to £67.4
million (2009: £53.6 million). This follows increases of 24%, 73% and 51%
in the previous three years and such sustained performance, in the face of
less than favourable economic conditions and exchange rates, reflects the
strength and uniqueness of our brand and fascia offers as well as the
strength of our management teams.
Group profit before tax has increased by 61% in the year to £61.4 million
(2009: £38.2 million) and Group profit after tax has increased by 74% to
£42.7 million (2009: £24.5 million).
Group operating profit (before exceptional items and joint venture results)
for the year was up 24% to £67.3 million (2009: £54.5 million) and
comprises a Sports Fascias' profit of £64.1 million (2009: £54.2 million),
a Fashion Fascias' profit of £3.3 million (2009: £0.2 million) and a
Distribution companies loss of £0.1 million (2009: profit of £0.1
million).
The year end net cash position has risen to £60.5 million (2009: £23.5
million) and the Group retains £70 million of committed rolling credit and
working capital facilities. The Board wishes to retain the funding
capability to further develop the Group operationally and by acquisition and
this will be taken into account when new facilities are negotiated in the
next year. Confidence arising from the cash position and the sustained
period of results improvement and balance sheet strengthening has enabled
the Board to propose an increase in the level of the dividend with a final
proposed dividend increase of 65% to 14.7p (2009: 8.9p) bringing the total
dividends payable for the year to 18.0p (2009: 12.0p), an increase of 50%
following on from the 41% increase last year.
Acquisitions
The Group is very well funded currently and has a Sports Fashion retail
offer which provides the consumer with a unique mix of sports and fashion
brands in both apparel and footwear including licensed and our own brands
such as McKenzie and Carbrini. The strength of this offering gives our
retail model the potential to be replicated in other countries.
On 19 May 2009 we acquired the French retailer Chausport for £7.9 million
including fees. In addition, we inherited net debt of £1.7 million.
Chausport is based near Lille and is primarily a retailer of sports shoes.
With only 75 small stores, nearly all located outside the largest
conurbations, we see opportunities for growth in France. We expect to
introduce progressive access to JD brands, exclusive product and supplier
terms over the next two years. The acquisition contributed £27.7 million of
revenue and £0.7 million of operating profit in the period from acquisition
to 30 January 2010.
On 4 August 2009 we acquired the key trading assets and trade of Canterbury
Europe Limited along with the global rights to the world famous heritage
rugby brands of 'Canterbury' and 'Canterbury of New Zealand'. The brand,
goodwill and fixed assets, along with a Hong Kong based distribution
company, were acquired for £6.7 million including fees. The required
elements of the remaining inventory were also purchased for £4.3 million.
The Canterbury brand was established in New Zealand over 100 years ago and
has become the world's foremost rugby brand, distributing both technical and
lifestyle footwear, apparel and accessories and with scope for product and
distribution extension.
On 24 November 2009, the Group took further steps to control the global
distribution of the Canterbury brands by purchasing the key assets of the
USA distribution company for Canterbury (Sail City Apparel Limited in
liquidation) for £0.4 million. On 23 December 2009, we also acquired 100%
of the Australian distribution company (Canterbury International (Australia)
Pty Limited) and 51% of the New Zealand distribution company (Canterbury of
New Zealand Limited) for £0.3 million including fees. A £0.8 million debt
to a minority shareholder was assumed with these transactions. The results
to date of all these operations are summarised in this statement within the
Distribution segment commentary.
Two other acquisitions were completed in the period. Kooga Rugby Limited,
based in Rochdale, was acquired for a nominal sum on 3 July 2009. Duffer of
St George Limited, a fashion brand company, whose brand 'The Duffer of St
George' is now used as an own brand in the JD stores, was acquired for £0.9
million on 24 November 2009.
Sports Fascias
The Sports Fascias' total revenue increased by 10% during the period to
£615.5 million (2009: £559.2 million), including post-acquisition revenue
from newly acquired Chausport of £27.7 million. Like for like sales in the
retail Sports Fascias for the year were up 2.3% (2009: 3.3%).
The Sports Fascias' results reported last year included those of Topgrade
but given the development of the Group over the last year we have split the
operations into three segments with the additional one being Distribution.
This now includes Topgrade which previously diluted the margin in the Sports
Fascias. Under this new segmental presentation, the gross margin in the
Sports Fascias rose from 50.5% to 50.6%. We are particularly pleased with
this gross margin performance given uncertainties over the impact of
sterling weakness at the start of the year and attribute this to further
improvement in the management of terminal stocks, continued strength in our
own brands, and the benefits to us from competitor failures and weaknesses.
As a result of improved margin and continuing enhancement of the store
portfolio and its efficiencies, the operating profit (before exceptional
items) of the Sports Fascias rose to £64.1 million (2009: £54.2 million)
in the year, including a contribution of £0.7 million from Chausport.
The programme of store development has continued with 12 new JD and 2 Size?
store openings and 17 major store refurbishments (15 JD, 1 Chausport and 1
Size?). This substantial refurbishment programme started in 2007 and will
continue. The store refurbishments often result in full store closures for a
number of weeks but we expect this to be justified by their subsequent
performance. 17 Sports Fascias stores were closed in the period including 3
smaller Chausport stores and 2 JD stores which were transferred to Bank.
Fashion Fascias
The Fashion Fascias are Bank and Scotts. The results of Deakins were
previously included with those of the Fashion Fascias but are now included
in those of the Distribution segment.
The Bank Fascia stores sell largely branded fashion to both males and
females, predominantly for the teenage to mid twenties sector. Bank is
expected to be the core of future Fashion Fascias' growth. In the year the
store portfolio grew from 54 stores to 65 stores, still based predominantly
in the North and the Midlands. Total revenue in the year was £82.8
million (2009: £66.5 million), up 4.7% organically (2009: +9.5%). Operating
profit (before exceptional items) was £3.0 million (2009: £1.2 million).
The Board remains confident that there is a significant opportunity to grow
operating margin in this Fascia through better stock management, own brand
development and disciplined store rollout. Gross margin achieved in the year
was 48.4% (2009: 46.1%).
The Scotts Fascia stores sell branded fashion to younger males and there
were 38 stores at the year end, again, largely in the North and the
Midlands. Total revenue in the year was £31.8 million (2009: £32.0
million) and the operating profit (before exceptional items) was £0.3
million (2009 loss: £1.0 million), helped by an achieved gross margin of
47.4% (2009: 45.2%) and efficiencies achieved through prior year store
rationalisation. Like for like sales rose by 1.2% (2009: +5.1%). The start
to the new year has been relatively disappointing and consequently we have
very recently strengthened the management team.
Distribution
Topgrade (which is 51% owned) is now one of the two major parts of the
Distribution segment. It was bought with the intention of adding a new
business selling sports and fashion brands at discounted prices through
catalogues and online, complementing its existing end of line wholesaling
operation. This has been launched as Get The Label (www.getthelabel.com) in
the current year and has made a very encouraging start which has continued
in the new year. It is not expected to be profitable this year or next and
total revenues for Topgrade of £19.7 million (2009: £12.6 million) and an
operating loss of £0.4 million (2009 profit: £0.1 million) were in line
with our expectations.
The second major part of the Distribution segment is the newly acquired UK
and overseas Canterbury operations which contributed revenue of £15.4
million and an operating profit of £0.1 million in the short periods they
have been part of the Group. Canterbury's prospects have already been
outlined earlier in this statement under Acquisitions.
The other parts of the Distribution segment are Kooga Rugby (which is also
referred to under Acquisitions) and Deakins, the predominantly fashion
footwear brand, which continues to breakeven on a low turnover with both
group companies and external customers.
Joint Venture
Our 49% owned joint venture, Focus Brands Limited, is involved in the
design, sourcing and distribution of footwear and apparel both for own brand
and under license brands for both group and external customers. Our share of
operating results for the year was an operating profit before exceptional
items of £0.5 million (2009 loss: £0.2 million).
Group Performance
Revenue
Total revenue increased by 14.7% in the year to £769.8 million (2009:
£670.9 million) principally as a result of three factors: the Group's
positive like for like sales performance of 2.5%, net store openings and
£48.1 million of sales from newly acquired operations.
Gross margin
The improved gross margin performance in the UK & Ireland retail fascias has
been commented on earlier in this statement. It is only the lower margins
realised in Chausport and the Distribution segment, combined with the
increased sales in this segment, which have resulted in overall group gross
margin being held at 49.3%.
Operating profits
Operating profit (before exceptional items) increased by £12.8 million to
£67.3 million (2009: £54.5 million), a 24% increase on last year which
follows a 24% rise in the previous year. Group operating margin (before
exceptional items) has therefore increased by a further 0.6% to 8.7% (2009:
8.1%).
Following a decrease in the exceptional items to £5.0 million (2009: £16.3
million), Group operating profit rose significantly from £38.2 million to
£62.3 million.
The exceptional items (excluding share of exceptional items in joint
venture) comprise:
£m
Impairment of goodwill in Scotts store portfolio 2.6
Loss on disposal of fixed assets 2.2
Onerous lease provision 3.9
Impairment of fixed assets in underperforming stores 0.4
Profit on disposal of investment in JJB Sports Plc (4.1)
Total exceptional charge 5.0
The share of exceptional items of joint venture (Focus Brands) consists
primarily of the reversal of an unrealised gain on exchange contracts booked
in the year to 31 January 2009 under IAS 39 'Financial Instruments:
Recognition and Measurement'.
Working capital and financing
Net financing costs have decreased from £0.7 million to £0.4 million,
principally as a result of lower utilisation of debt facilities combined
with lower cost of debt.
Year end net cash of £60.5 million represented a £37.0 million improvement
on the position at January 2009 (£23.5 million). This net cash balance has
been achieved after expenditure on acquisitions and associated asset
purchases in the year (excluding the investment in JJB Sports Plc) totalling
£15.8 million (2009: £1.4 million). Net proceeds from the disposal of the
investment in JJB Sports Plc after allowing for a full participation in the
placing and rights issue were £6.1 million.
Net capital expenditure including disposal costs and premia received
decreased in the year to £23.0 million (2009: £30.1 million) with capital
expenditure excluding disposal costs decreasing by £5.9 million to £22.9
million (2009: £28.8 million). This decrease does not mean that the Group
is reducing its investment programme and is more a function of the timing of
projects. Accordingly, the Board would expect the capital expenditure in the
year to January 2011 to exceed the amount spent in the year to January 2010
with significant investment in both the Bank and Chausport fascias. The
decrease in capital expenditure was focused on the Sports Fascias where the
spend reduced by £8.7 million to £14.9 million with expenditure increasing
in the Fashion Fascias by £2.4 million to £7.4 million reflecting the
investment in the Bank Fashion chain. The capital expenditure in the year
included £10.2 million on new stores and £10.8 million on refurbishments
(including the transfer of 3 stores between fascias).
Working capital remains well controlled and suppliers continue to be paid to
agreed terms and settlement discounts are taken whenever due.
Store Portfolio
We have made a further significant investment in the store portfolio during
the year with expenditure on both new stores and refurbishments of existing
space. We have also continued to rationalise our store portfolio wherever
possible but, with the current economic climate impacting heavily on retail
property occupancy levels, it has become much more difficult to dispose of
underperforming and/or duplicate stores.
There has been no net increase in the number of JD & Size? stores with 14
new stores offset by 12 closures and the transfer of 2 stores to Bank.
However, there has been a net addition of 11 stores to the Bank Fascia with
14 store openings (including the 2 transferred from JD and 1 transferred
from Scotts) offset by the closure of 3 stores.
We have refurbished a total of 22 stores (including transfers of space
between fascias) in the year. This means that over the last three years we
have opened a total of 67 stores and refurbished a further 94 stores.
During the year we also acquired Chausport SA. On acquisition, Chausport had
78 small stores, in premium locations, in town centres and shopping centres
across France. Three loss making stores were subsequently disposed in the
period after acquisition.
During the year, store numbers (excluding trading websites) moved as
follows:
Sports Fascias
JD & Size? Chausport Total
Units '000 sq ft Units '000 sq ft Units '000 sq ft
Start of year 345 1,105 - - 345 1,105
Acquisitions - - 78 80 78 80
New stores 14 47 - - 14 47
Transfers (2) (9) - - (2) (9)
Closures (12) (26) (3) (2) (15) (28)
Remeasures - (17) - - - (17)
Close of year 345 1,100 75 78 420 1,178
Fashion Fascias
Bank Scotts Total
Units '000 sq ft Units '000 sq ft Units '000 sq ft
Start of year 54 119 38 86 92 205
New stores 11 35 2 2 13 37
Transfers 3 11 (1) (2) 2 9
Closures (3) (6) (1) (1) (4) (7)
Remeasures - 17 - - - 17
Close of year 65 176 38 85 103 261
Dividends and Earnings per Share
The Board proposes paying a final dividend of 14.70p (2009: 8.90p) bringing
the total dividend payable for the year to 18.00p (2009: 12.00p) per
ordinary share. The proposed final dividend will be paid on 2 August 2010 to
all shareholders on the register at 7 May 2010. The final dividend has been
increased by 65% with total dividends payable for the year increased by 50%.
This follows a 41% increase in the full year dividend in the prior year.
The adjusted earnings per ordinary share before exceptional items were
93.64p (2009: 72.33p).
The basic earnings per ordinary share were 88.16p (2009: 50.49p).
Employees
The Group's excellent results would not have been possible without the
support of a dedicated workforce for which the Board is very grateful. We
are committed to continue increasing training and other support to enhance
both their career prospects and our own customer service.
Current Trading and Outlook
Trading in the 10 weeks to 10 April 2010 has been encouraging with UK and
Ireland retail like for like sales up 2.0% (Sports Fascias 3.0%; Fashion
Fascias -3.5%) on an underlying basis taking into account the change in the
timing of Easter and school holidays. Although like for like sales are
lower, the performance of the Fashion Fascias has benefitted from a 2%
improvement in gross margin in the same period. Chausport has started the
year well. It is too early in the year to report on progress in the
Distribution business. We recognise the increasing challenges of strong
comparatives and the current economic and fiscal threats to consumers'
expenditure. A further update will be made in our Interim Management
Statement in June.
The Board remains focused on continuing to deliver operational and financial
progress for the Group over the long term. Opportunities for profit growth
overseas, the rollout of our principal Fashion Fascia, development of our
differentiated and own brand proposition, and growth in our Distribution
business all help to reduce threats to Group profitability and give us the
opportunity to maintain the positive momentum in our business.
Peter Cowgill
Executive Chairman
14 April 2010
Consolidated Income Statement
For the 52 weeks ended 30 January 2010
52 weeks to 52 weeks to
30 January 2010 31 January 2009
Continuing Continuing
Note Operations Operations
£000 £000
Revenue 769,785 670,855
Cost of sales (390,248) (340,309)
Gross profit 379,537 330,546
Selling and distribution expenses - (288,462) (256,315)
normal
Selling and distribution expenses - (6,458) (8,201)
exceptional
Administrative expenses - normal (26,051) (20,867)
Administrative expenses - 1,472 (8,122)
exceptional
Other operating income 2,270 1,109
Operating profit 62,308 38,150
Before exceptional items 67,294 54,473
Exceptional items 2 (4,986) (16,323)
Operating profit 62,308 38,150
Share of results of joint venture
before exceptional items (net of
income tax)
3 539 (166)
Share of exceptional items (net of 3 (1,012) 914
income tax)
Share of results of joint venture 3 (473) 748
Financial income 385 529
Financial expenses (827) (1,210)
Profit before tax 61,393 38,217
Income tax expense (18,647) (13,707)
Profit for the period 42,746 24,510
Attributable to equity holders of 42,900 24,379
the parent
Attributable to minority interest (154) 131
Basic earnings per ordinary share 4 88.16p 50.49p
Diluted earnings per ordinary share 4 88.16p 50.49p
Consolidated Statement of Comprehensive Income
For the 52 weeks ended 30 January 2010
52 weeks to 52 weeks to
30 January 2010 31 January 2009
£000 £000
Profit for the period 42,746 24,510
Other comprehensive income:
Exchange differences on translation of (248) 4
foreign operations
Total other comprehensive income for the (248) 4
period
Total comprehensive income and expense for
the period
42,498 24,514
(net of income tax)
Attributable to equity holders of the 42,652 24,383
parent
Attributable to minority interest (154) 131
Consolidated Statement of Financial Position
As at 30 January 2010
As at As at
30 January 31 January
2010 2009
£000 £000
Assets
Intangible assets 50,121 42,890
Property, plant and equipment 67,434 62,668
Investment property 4,053 4,102
Other receivables 13,232 5,459
Equity accounted investment in joint 635 1,108
venture
Total non-current assets 135,475 116,227
Available for sale investments - 2,053
Inventories 74,569 58,287
Trade and other receivables 31,657 20,453
Cash and cash equivalents 64,524 23,538
Total current assets 170,750 104,331
Total assets 306,225 220,558
Liabilities
Interest bearing loans and borrowings (2,712) (83)
Trade and other payables (115,742) (80,073)
Provisions (2,920) (2,859)
Income tax liabilities (10,789) (8,395)
Total current liabilities (132,163) (91,410)
Interest bearing loans and borrowings (1,347) -
Other payables (24,050) (19,690)
Provisions (7,395) (5,310)
Deferred tax liabilities (748) (379)
Total non-current liabilities (33,540) (25,379)
Total liabilities (165,703) (116,789)
Total assets less total liabilities 140,522 103,769
Capital and reserves
Issued ordinary share capital 2,433 2,433
Share premium 11,659 11,659
Retained earnings 125,341 88,378
Other reserves (244) 4
Total equity attributable to equity holders of the 139,189 102,474
parent
Attributable to minority interest 1,333 1,295
Total equity 140,522 103,769
Consolidated Statement of Changes in Equity
As at 30 January 2010
Foreign
Ordinary Currency
Share Translation
Capital Share Retained Reserve Minority Total
£000 Premium Earnings £000 Interest Equity
£000 £000 £000 £000
Balance at 2 2,413 10,823 68,391 - 1,164 82,791
February 2008
Shares issued 20 836 - - - 856
in the period
Profit for the - - 24,379 - 131 24,510
period
Exchange
differences on
translation of
foreign
operations - - - 4 - 4
Dividends to - - (4,392) - - (4,392)
shareholders
Balance at 31 2,433 11,659 88,378 4 1,295 103,769
January 2009
Profit for the - - 42,900 - (154) 42,746
period
Exchange
differences on
translation of
foreign
operations - - - (248) - (248)
Dividends to - - (5,937) - - (5,937)
shareholders
Acquisition of - - - - 192 192
minority
interest
Balance at 30 2,433 11,659 125,341 (244) 1,333 140,522
January 2010
Consolidated Statement of Cash Flows
For the 52 weeks ended 30 January 2010
52 weeks to 52 weeks to
30 January 2010 31 January 2009
£000 £000
Cash flows from operating activities
Profit for the period 42,746 24,510
Share of results of joint venture 473 (748)
Income tax expense 18,647 13,707
Financial expenses 827 1,210
Financial income (385) (529)
Depreciation and amortisation of 17,863 14,332
non-current assets
Exchange differences on translation (49) (399)
Impairment of intangible assets 2,617 2,045
Impairment of non-current assets 408 2,225
Impairment of available for sale - 6,077
investments
Profit on disposal of available for sale (4,089) -
investments
Loss on disposal of non-current assets 2,148 2,976
Increase in inventories (6,062) (57)
Increase in trade and other receivables (8,179) (3,832)
Increase in trade and other payables 25,326 9,513
Interest paid (827) (1,210)
Income taxes paid (15,848) (15,572)
Net cash from operating activities 75,616 54,248
Cash flows from investing activities
Interest received 385 529
Proceeds from sale of non-current assets 532 23
Disposal costs of non-current assets (644) (1,271)
Acquisition of intangible assets (6,672) -
Acquisition of property, plant and (21,472) (28,019)
equipment
Acquisition of non-current other (1,429) (810)
receivables
Cash consideration of acquisitions (9,100) (1,370)
Cash acquired with acquisitions 2,273 60
Overdrafts acquired with acquisitions (1,129) -
Acquisition of available for sale (9,990) (8,130)
investment
Proceeds from disposal of available for 16,132 -
sale investment
Third party loan repayments 80 -
Loan repayments received from joint 1,750 -
venture
Net cash used in investing activities (29,284) (38,988)
Cash flows from financing activities
Repayment of interest bearing loans and (1,836) (99)
borrowings
Payment of finance lease and similar hire - (56)
purchase contracts
Dividends paid (5,937) (3,536)
Net cash used in financing activities (7,773) (3,691)
Net increase in cash and cash equivalents 38,559 11,569
Cash and cash equivalents at the beginning 23,538 11,969
of the period
Cash and cash equivalents at the end of 62,097 23,538
the period
Analysis of Net Cash
As at 30 January 2010
At 31 On acquisition of At 30 January
January 2009 subsidiaries Cash flow 2010
£000 £000 £000 £000
Cash at bank and 23,538 2,273 38,713 64,524
in hand
Overdrafts - (1,129) (1,298) (2,427)
Cash and cash 23,538 1,144 37,415 62,097
equivalents
Interest bearing
loans and
borrowings:
Bank loans - (2,013) 1,128 (885)
Loan notes (83) - 83 -
Other loans - (1,388) 641 (747)
23,455 (2,257) 39,267 60,465
1. Segmental analysis
The Group has adopted IFRS 8 'Operating Segments' for the current period.
IFRS 8 requires operating 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.
In prior years, segment information reported externally was analysed on the
basis of the categories of product sold by the Group (Sport or Fashion).
However, information reported to the Chief Operating Decision Maker is
focused more on the nature of the businesses within the Group which has
changed significantly in the current year, due to the acquisition of a
number of distribution businesses. The Group's reportable segments under
IFRS 8 are therefore as follows:
· Sport retail - includes the results of the sport retail trading
companies JD Sports Fashion Plc, John David Sports Fashion (Ireland)
Limited, Chausport SA and Duffer of St George Limited
· Fashion retail - includes the results of the fashion retail
trading companies Bank Fashion Limited and RD Scott Limited
· Distribution businesses - includes the results of the
distribution companies Topgrade Sportswear Limited, Nicholas Deakins
Limited, Canterbury Limited (including global subsidiary companies) and
Kooga Rugby Limited
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 'Sport retail' 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 products and
customers is not appropriate.
Intersegment transactions are undertaken in the ordinary course of business
on arms length terms.
The Board consider that certain items are cross divisional in nature and
cannot be allocated between the segments on a meaningful basis. The share
of results of joint venture is presented as unallocated in the following
tables, as this entity has trading relationships with companies in all of
the three segments. An asset of £635,000 (2009: £1,108,000) for the
equity accounted investment in joint venture is included within the
unallocated segment. Net funding costs and taxation are treated as
unallocated reflecting the nature of the Group's syndicated borrowing
facilities and its tax group. A liability of £11,537,000 (2009:
£8,774,000) for taxation is 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 Sport retail) to other companies in the Group and
intercompany trading between companies in different segments.
Business Segments
Information regarding the Group's operating segments for the 52 weeks to 30
January 2010 is reported below:
Income statement
Sport Fashion
Retail Retail Distribution Total
£000 £000 £000 £000
Gross revenue 615,507 114,640 42,551 772,698
Intersegment revenue (1,225) (394) (1,294) (2,913)
Revenue 614,282 114,246 41,257 769,785
Operating profit / (loss) before
financing and exceptional items
64,125 3,333 (164) 67,294
Exceptional items (642) (4,355) 11 (4,986)
Operating profit / (loss) 63,483 (1,022) (153) 62,308
Share of results of joint venture (473)
Financial income 385
Financial expenses (827)
Profit before tax 61,393
Income tax expense (18,647)
Profit for the period 42,746
Total assets and liabilities
Sport Fashion
Retail Retail Distribution Unallocated Eliminations Total
£000 £000 £000 £000 £000 £000
Total 264,394 51,180 40,572 635 (50,556) 306,225
assets
Total (112,618) (51,561) (40,543) (11,537) 50,556 (165,703)
liabilities
Other segment information
Sport Fashion
Retail Retail Distribution Total
£000 £000 £000 £000
Capital expenditure:
Property, plant and equipment 13,517 7,383 572 21,472
Non-current other receivables 1,424 5 - 1,429
Goodwill on acquisition - - 1,443 1,443
Brands on acquisition 2,042 - 453 2,495
Brands purchased - - 6,672 6,672
Available for sale investment 9,990 - - 9,990
Depreciation, amortisation and
impairments:
Depreciation and amortisation
of non-current assets
14,067 3,279 517 17,863
Impairment of intangible assets - 2,617 - 2,617
Impairment of non-current 105 303 - 408
assets
The comparative divisional results for the 52 weeks to 31 January 2009 are
as follows:
Income statement
Sport Fashion
Retail Retail Distribution Total
£000 £000 £000 £000
Gross revenue 559,209 98,518 14,819 672,546
Intersegment revenue - - (1,691) (1,691)
Revenue 559,209 98,518 13,128 670,855
Operating profit before financing
and
54,159 233 81 54,473
exceptional items
Exceptional items (14,204) (2,119) - (16,323)
Operating profit / (loss) 39,955 (1,886) 81 38,150
Share of results of joint venture 748
Financial income 529
Financial expenses (1,210)
Profit before tax 38,217
Income tax expense (13,707)
Profit for the period 24,510
Total assets and liabilities
Sport Fashion
Retail Retail Distribution Unallocated Eliminations Total
£000 £000 £000 £000 £000 £000
Total 194,272 48,006 7,482 1,108 (30,310) 220,558
assets
Total (86,388) (47,947) (3,990) (8,774) 30,310 (116,789)
liabilities
Other segment
information
Sport Fashion
Retail Retail Distribution Total
£000 £000 £000 £000
Capital
expenditure:
Property, plant and 22,830 5,015 174 28,019
equipment
Non-current other 810 - - 810
receivables
Goodwill on - 864 - 864
acquisition
Available for sale 8,130 - - 8,130
investment
Depreciation, amortisation
and impairments:
Depreciation and
amortisation of
non-current assets
11,576 2,669 87 14,332
Impairment of 2,045 - - 2,045
intangible assets
Impairment of 798 1,427 - 2,225
non-current assets
Impairment of 6,077 - - 6,077
available for sale
investments
Geographical Information
The Group's operations are located in the UK, Republic of Ireland, France,
Australia, New Zealand, United States of America 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 52 weeks to
30 January 2010 31 January 2009
£000 £000
UK 722,221 657,052
Europe 45,094 13,803
Rest of world 2,470 -
769,785 670,855
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 value of segmental non-current
assets, excluding investments in joint venture £635,000 (2009: £1,108,000)
and other financial assets £922,000 (£2,629,000), by the geographical area
in which the assets are located:
2010 2009
£000 £000
UK 120,322 109,725
Europe 13,311 2,765
Rest of world 285 -
133,918 112,490
2. EXCEPTIONAL ITEMS
52 weeks to 52 weeks to
30 January 31 January
2010 2009
£000 £000
Loss on disposal of non-current 2,148 2,976
assets
Impairment of non-current assets 408 2,225
Onerous lease provision 3,902 3,000
Selling and distribution expenses - 6,458 8,201
exceptional
Impairment of intangible assets 2,617 2,045
Impairment of available for sale - 6,077
investments
Profit on disposal of available for (4,089) -
sale investments
Administrative expenses - exceptional (1,472) 8,122
4,986 16,323
3. INTEREST IN JOINT VENTURE
The Group's share of the revenue generated by the joint venture in the
period was £11,774,000 (2009: £13,043,000). The amount included in the
Consolidated Income Statement for the period ended 30 January 2010 in
relation to the joint venture is as follows:
Before After
exceptionals Exceptionals exceptionals
£000 £000 £000
Share of result before tax 740 (1,406) (666)
Income tax (201) 394 193
Share of result after tax 539 (1,012) (473)
The exceptional items relate to the movement in the fair value of foreign
exchange contracts which were outstanding at the period end.
The comparative amount included in the Consolidated Income Statement for the
period ended 31 January 2009 in relation to the joint venture is as follows:
Before exceptionals After
£000 Exceptionals exceptionals
£000 £000
Share of result before tax (155) 1,270 1,115
Income tax (11) (356) (367)
Share of result after tax (166) 914 748
4. EARNINGS PER ORDINARY SHARE
Basic and diluted earnings per ordinary share
The calculation of basic and diluted earnings per ordinary share at 30
January 2010 is based on the profit for the period attributable to equity
holders of the parent of £42,900,000 (2009: £24,379,000) and a weighted
average number of ordinary shares outstanding during the 52 weeks ended 30
January 2010 of 48,661,658 (2009: 48,287,502).
52 weeks to 52 weeks to
30 January 31 January
2009
2010
Issued ordinary shares at beginning of 48,661,658 48,263,434
period
Issued ordinary shares at end of period 48,661,658 48,661,658
Weighted average number of ordinary 48,661,658 48,287,502
shares during the period
Adjusted basic and diluted earnings per ordinary share
Adjusted basic and diluted earnings per ordinary share have been based on
the profit 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.
52 weeks to 52 weeks to
30 January 31 January
Note 2010 2009
£000 £000
Profit 42,900 24,379
attributable
to equity
holders of
the parent
Exceptional
items
excluding
loss on
disposal of 2 2,838 13,347
non-current
assets
Tax relating (1,184) (1,885)
to
exceptional
items
Share of
exceptional
items of
joint
venture (net 3 1,012 (914)
of income
tax)
Profit
attributable
to equity
holders of
the parent 45,566 34,927
excluding
exceptional
items
Adjusted 72.33p
basic and 93.64p
diluted
earnings per
ordinary
share
5. ACQUISITIONS
A number of acquisitions have been made in the period. Provisional fair
values are disclosed below, where the acquisitions are within the 12 month
hindsight period.
Acquisition of Chausport SA
On 19 May 2009, the Group (via its new subsidiary JD Sports Fashion (France)
SAS) acquired 100% of the issued share capital of Chausport SA for a cash
consideration of £7,211,000 (8,000,000) together with associated fees of
£696,000. Chausport SA is a French retailer with 78 stores in premium
locations in town centres and shopping centres across France.
The provisional goodwill calculation is summarised below:
Fair value Provisional
Book adjustments fair value
value £000 £000
£000
Acquiree's net
assets at the
acquisition
date:
Property, plant 1,637 (79) 1,558
& equipment
Non-current 6,581 2,697 9,278
other
receivables
Inventories 6,282 (512) 5,770
Trade and other 1,350 - 1,350
receivables
Cash and cash 639 - 639
equivalents
Interest bearing (2,318) - (2,318)
loans and
borrowings
Trade and other (8,370) - (8,370)
payables
Net identifiable 5,801 2,106 7,907
assets
Goodwill on -
acquisition
Consideration 7,907
paid - satisfied
in cash
Non-current other receivables comprise landlord deposits and key money,
which gives Chausport SA the right to occupy certain retail locations.
Included in the result for the 52 week period to 30 January 2010 is revenue
of £27,678,000 and a profit before tax of £692,000 in respect of Chausport
SA.
Acquisition of Kooga Rugby Limited
On 3 July 2009, the Group acquired 100% of the issued share capital of Kooga
Rugby Limited for a consideration of £1 together with associated fees of
£30,000. Kooga Rugby Limited is involved in the design, sourcing and
wholesale of rugby apparel, footwear and accessories and is sole kit
supplier to a number of professional rugby union and rugby league clubs.
The provisional goodwill calculation is summarised below:
Book Fair value Provisional
value
£000 adjustments fair value
£000 £000
Acquiree's net
liabilities at the
acquisition date:
Intangible assets 262 191 453
Property, plant & 347 (245) 102
equipment
Inventories 1,450 (368) 1,082
Trade and other 1,956 (938) 1,018
receivables
Interest bearing (4,824) 3,375 (1,449)
loans and
borrowings
Trade and other (1,937) (98) (2,035)
payables
Provisions - (584) (584)
Net identifiable (2,746) 1,333 (1,413)
(liabilities) /
assets
Goodwill on 1,443
acquisition
Consideration paid 30
- satisfied in cash
Fair value adjustments include a reduction of £3,375,000 in interest
bearing loans and borrowings following an agreement with the lender.
The Board believe that the excess of consideration paid over net
identifiable liabilities is best considered as goodwill on acquisition,
representing customer loyalty and employee expertise. The Kooga brand has
been identified as a separate intangible asset and has been valued using the
'royalty relief' method of valuation, which takes projected future sales,
applies a royalty rate to them and discounts the projected future post tax
royalties to arrive at a net present value. This amount is included in
intangible assets as a brand name.
Included in the result for the 52 week period to 30 January 2010 is revenue
of £4,986,000 and a profit before tax of £145,000 in respect of Kooga
Rugby Limited.
Canterbury Limited
On 4 August 2009, the Group (via its new subsidiary Canterbury Limited)
acquired the global rights to the rugby brands 'Canterbury' and 'Canterbury
of New Zealand' from Canterbury Europe Limited (in administration) for a
cash consideration of £6,672,000. Inventory with a value of £4,289,000 was
also acquired. The book value of the assets acquired is considered to be the
fair value and no goodwill arose on the acquisition.
Canterbury Limited holds the brand names 'Canterbury' and 'Canterbury of New
Zealand' and receives third party global royalties in relation to these
brands. Included in the result for the 52 week period to 30 January 2010 is
revenue of £nil and a loss before tax of £21,000 in respect of the company
Canterbury Limited.
Canterbury of New Zealand Limited
Canterbury Limited is the parent company of Canterbury of New Zealand
Limited, a newly incorporated company domiciled in the UK, which trades the
Canterbury brand in Europe.
Included in the result for the 52 week period to 30 January 2010 is revenue
of £12,960,000 and a profit before tax of £19,000 in respect of Canterbury
of New Zealand Limited.
Canterbury International (Far East) Limited
On 4 August 2009, Canterbury Limited acquired 100% of the issued share
capital of Canterbury International (Far East) Limited for a cash
consideration of £1. The provisional fair value of the assets and
liabilities acquired was £1. No goodwill arose on this acquisition.
Included in the result for the 52 week period to 30 January 2010 is revenue
of £319,000 and a loss before tax of £67,000 in respect of Canterbury
International (Far East) Limited.
Canterbury (North America) LLC
On 24 November 2009, Canterbury Limited (via its new subsidiary Canterbury
(North America) LLC) acquired the key trading assets from Sail City Apparel
Limited (in liquidation). The total cash consideration paid was £442,000
which included inventory with a value of £392,000 with associated fees of
£50,000. The book value of the assets acquired is considered to be the
fair value and no goodwill arose on the acquisition.
Included in the result for the 52 week period to 30 January 2010 is revenue
of £439,000 and a profit before tax of £40,000 in respect of Canterbury
(North America) LLC.
Acquisition of Canterbury International (Australia) Pty Limited
On 23 December 2009, Canterbury Limited acquired 100% of the issued ordinary
share capital of Canterbury International (Australia) Pty Limited for a cash
consideration of £2 together with associated fees of £100,000. Canterbury
International (Australia) Pty Limited operates the Canterbury brand in
Australia.
The provisional goodwill calculation is summarised below:
Book Fair value Provisional
value fair value
£000 adjustments £000
£000
Acquiree's net assets at the
acquisition date:
Property, plant & equipment 144 - 144
Inventories 1,866 - 1,866
Trade and other receivables 1,175 - 1,175
Cash and cash equivalents 918 - 918
Trade and other payables (3,037) (349) (3,386)
Intercompany loan (7,105) 6,488 (617)
Net identifiable (liabilities) / (6,039) 6,139 100
assets
Goodwill on acquisition -
Consideration paid - satisfied in cash 100
Fair value adjustments include a reduction of £6,488,000 in intercompany
loans following an agreement with the lender.
Included in the result for the 52 week period to 30 January 2010 is revenue
of £1,210,000 and a profit before tax of £84,000 in respect of Canterbury
International (Australia) Pty Limited.
Acquisition of Canterbury of New Zealand Limited
On 23 December 2009, Canterbury Limited acquired 51% of the issued ordinary
share capital of Canterbury of New Zealand Limited for a cash consideration
of £1 together with associated fees of £200,000. Canterbury of New Zealand
Limited operates the Canterbury brand in New Zealand.
The provisional goodwill calculation is summarised below:
Book Fair value Provisional
fair value
value adjustments £000
£000
£000
Acquiree's net
assets at the
acquisition date:
Property, plant & 123 - 123
equipment
Inventories 1,681 (180) 1,501
Trade and other 1,346 (90) 1,256
receivables
Cash and cash 504 - 504
equivalents
Trade and other (966) (484) (1,450)
payables
Income tax (8) - (8)
liabilities
Intercompany loan (794) 23 (771)
Shareholder loan (763) - (763)
Net identifiable 1,123 (731) 392
assets /
(liabilities)
Non-controlling (550) 358 (192)
interest (49%)
Goodwill on -
acquisition
Consideration paid - 200
satisfied in cash
Canterbury Limited and the vendors of Canterbury of New Zealand Limited have
agreed a put and call option whereby Canterbury Limited may acquire the
remaining 49% of the issued share capital of Canterbury of New Zealand
Limited. This option is exercisable by either party on the third anniversary
of the completion of this initial transaction and on each anniversary
thereafter.
Included in the result for the 52 week period to 30 January 2010 is revenue
of £502,000 and a profit before tax of £30,000 in respect of Canterbury of
New Zealand Limited.
Acquisition of Duffer of St George Limited
On 24 November 2009, the Group acquired 100% of the issued ordinary share
capital of Duffer of St George Limited for a cash consideration of
£863,000. Duffer of St George Limited owns the global rights to the brand
name 'The Duffer of St George'.
The provisional goodwill calculation is summarised below:
Book Fair value Provisional
value