RNS Number:5133Y
John David Group (The) PLC
11 May 2004
11 May 2004
THE JOHN DAVID GROUP PLC
PRELIMINARY RESULTS
FOR THE YEAR ENDED 31 JANUARY 2004
The John David Group Plc (the "Company" or the "Group"), a leading specialist
retailer of fashionable branded sports and leisure wear, today announces its
Preliminary Results for the year ended 31 January 2004.
* Group turnover increased to #458.1 million (10 month period ended 31
January 2003: #370.8 million).
* Group operating profit (before goodwill, exceptional items and loss on
disposal) of #10.5 million (10 month period ended 31 January 2003: #18.0
million).
* Profit before tax (before goodwill, exceptional items and loss on
disposal) of #6.0 million (10 month period ended 31 January 2003: #15.1
million).
* Reported operating profit of #7.7 million (10 month period ended 31
January 2003: #14.1 million).
* Final dividend of 3.64p maintaining the full year dividend at the same
level as last period (total dividend of 6.50p - 10 month period ended 31
January 2003: 6.50p).
* Positive like for like sales in the second half reduced the decline for
the year ended 31 January 2004 to 0.4%.
* Gross margin was 45.6% against 45.5% in the 10 month period ended 31
January 2003.
* Group like for like sales for the thirteen weeks to 1 May 2004 have been
up 0.9% overall against prior year.
* Core Sports Fascias like for like sales growth for the thirteen weeks to
1 May 2004 has been up 2.5%.
* During the same period gross margin has been maintained in line with
management expectations.
Peter Cowgill, Executive Chairman, said: "Our core Sports business continues to
perform strongly without recourse to discounting. Since my return to the Group,
we have been carefully evaluating our operations and procedures with a view to
improving the future prospects of the business. All strategic options remain
under review. "
Enquiries: Tel: 0161 767 1000
The John David Group Plc
Peter Cowgill, Executive Chairman
Barry Bown, Chief Executive
Brian Small, Finance Director
Hogarth Partnership Limited Tel: 020 7357 9477
Andrew Jaques
Tom Leatherbarrow
CHAIRMAN'S STATEMENT
The year to 31 January 2004 proved to be very difficult for the Group. This has
led to a number of management changes including my own return to the Group as
Executive Chairman in March 2004. I am delighted to be back after leaving the
position of Finance Director in 2001 and pleased to report that our core
business proposition, selling Sportswear with style and fashion, is still
clearly an effective consumer offer which differentiates our business from our
competition. However, as Chairman, as a shareholder, and as a key member of the
team which brought this business to and beyond flotation in the first place, it
does not give me any pleasure to report disappointing results for the year.
The results for the last year were adversely impacted by continuing First Sport
integration problems. The integration process is well advanced and all fascias
are now managed by a single management team based at our Bury Head Office.
Optimism in October 2003 about the second half was not justified in the final
result owing to patchy trading in the last quarter in which a strong November
was followed by a weak pre Christmas period which affected many retailers. This
was followed by a comparatively strong sales performance in late December but at
lower margins during the sale period which extended into January. Nevertheless,
there are now grounds for optimism as the core Sports business is performing
well in the new year.
The JD Sports fascia continues to be recognised as a style leader by our target
teenage market and offers a market leading range from our key branded suppliers
(Nike, Adidas, Puma, Lacoste) which includes exclusive product as well as an
improved range of own label (McKenzie, Carbrini) product. Our relationship with
these key suppliers, who recognise our pre-eminence as visual merchandisers of
their products to target consumer groups, is key to our continuing success. This
part of our business will drive the future business performance.
Whilst performance in our Sports Fascias is encouraging, our Fashion Fascias
continue to disappoint. We are actively addressing the key issues in this area
including the continuation of our fascia rationalisation and the development of
stronger brand relationships with fewer Fashion suppliers. Following recent
management changes we are now applying the same successful management principles
employed in the Sports business to the Fashion business. Given that
rationalisation and a strategic review are continuing, it is, in the Board's
opinion, inappropriate to report in detail on the Fashion Fascias separately at
this stage.
The challenges facing the Group have been extensively reported. In difficult
market conditions, however, I have been encouraged by the fact that the core
Sports business, which represents approximately 90% of Group sales, is
increasingly robust.
RESULTS
Total sales increased to #458.1 million during the period in comparison with
#370.8 million for the 10 month period ended January 2003 which incorporated
eight months post acquisition trading from First Sport. Gross margin for the
year rose slightly from 45.5% to 45.6%.
Operating profit before exceptional items, losses on disposals and amortisation
of goodwill was #10.5 million and after interest charges was #6.0 million (10
month period ended 31 January 2003: #18.0 million and #15.1 million after
interest charges).
After charging exceptional items of #2.0 million and goodwill amortisation of
#0.8 million, operating profit before interest charges and loss on disposal of
fixed assets was #7.7 million (10 month period ended 31 January 2003: #14.1
million).
Profit before tax and after exceptional items and goodwill amortisation was #2.1
million (10 month period to 31 January 2003: #10.8 million).
Net interest charges increased to #4.5 million compared with #2.9 million (10
month period) due to the full year's charge on the additional debt taken on to
fund our recent acquisition. Earnings per share, before exceptional items and
goodwill, were 6.21p compared with 21.18p in the previous period.
DIVIDEND
The Board proposes to pay a final dividend of 3.64p per ordinary share (10 month
period ended 31 January 2003: 3.64p) bringing the total dividend paid to 6.50p
per ordinary share (10 month period ended 31 January 2003: 6.50p). The Board is
offering a scrip dividend alternative to shareholders, full details of which
will be included in a circular to be issued with the Annual Report. Irrevocable
undertakings to elect to receive the scrip dividend alternative have been given
by holders of 54% of the ordinary share capital in relation to the beneficial
interest holdings of John Wardle and David Makin, the founding shareholders. The
proposed final dividend will be paid on 2 August 2004 to shareholders on the
register as at 21 May 2004.
As the Group's performance is heavily weighted to the key Christmas trading
period it is likely that future dividend payments will be more weighted towards
the final dividend than they have been in the current year.
OPERATING REVIEW
The year ended 31 January 2004 has been a challenging one for the Group and has
seen a substantial change in the shape of our store portfolio as we sought to
eliminate the old First Sport trading fascias. In the year, over 100 First Sport
stores were converted into JD stores. We also closed 37 loss making stores and
acquired 9 new stores. At 31 January 2004, we had 306 Sports Stores (2003: 337)
and 51 Fashion Stores (2003: 48) trading from a total of 1,236,000 square feet
(2003: 1,264,000 square feet) of which 13% is devoted to Fashion Fascias. Our
focus in the current year will be to continue to eliminate loss making stores
either by disposal or conversion. One new store has been opened so far this year
and six more are committed to. All new stores will only be added to the
portfolio if they meet prudent selection criteria and very few others are likely
to be added this year.
The basic product proposition across the Sports Fascias remains Sportswear with
fashion and style and is now uniform across those fascias. Our objective is to
provide main brand fashionable product, introducing new ranges quickly and
efficiently, including a great number of lines exclusively available at JD. We
supplement the branded ranges with an innovative and exclusive range of both
McKenzie and Carbrini own brand merchandise.
The Fashion business continues to concentrate on fashionable branded leisurewear
but is currently seeking to focus on fewer brands than in the recent past so
that we can more effectively leverage our buying relationships. This is the
approach which has been successfully developed in the Sports business.
Our Group product mix for the year as a whole was broadly 50% Footwear (2003:
50%), 46% Apparel (2003: 46%), and 4% Accessories (2003: 4%). Replica kit
continues to be a minimal part of our turnover.
The main marketing thrust of the current year has been to rationalise our
fascias with JD being the principal Sports fascia and Ath (formerly Ath-Leisure)
being our principal Fashion fascia.
The Group also moved into its new head office facilities in Bury at the start of
the year and the key management is based there. We retain bulk warehousing
facilities in Peterlee as well as Bury. Service to the business from these
facilities continues to improve and was very effective in the key Christmas and
New Year trading period.
BALANCE SHEET & FINANCIAL RESOURCES
Shareholders' funds at the balance sheet date have decreased by 2.5% to #57.3
million from the previous level of #58.8 million at the end of January 2003
after dividend payments of #2.1m (net of irrevocable elections for the scrip
dividend alternative).
Total expenditure on fixed assets during the period amounted to #11.5 million of
which #9.4 million related to stores. Net borrowings at the end of January 2004
were #51.1 million (2003: #55.5 million). A small reduction in gearing is
presently expected by the end of January 2005 and #8 million of our core
borrowings are planned to be repaid during the year in accordance with the
original schedule of repayments. Gearing should fall following reduced capital
expenditure and improving retained earnings in the year to 31 January 2005.
EBITDA interest cover fell to a manageable 4.5 times in the year ended 31
January 2004 and will rise again in the current year.
Stocks at the year end were #65.7 million, lower than last year's level of #69.2
million.
BOARD CHANGES
There have been a number of Board changes in the past twelve months.
The Company's founders and principal shareholders, John Wardle and David Makin,
stepped down from their executive roles in January 2004 and are now
non-executive directors. Their considerable market, product, retail and consumer
knowledge is something the Board will continue to draw on although they are no
longer involved in the day to day management of the business.
Malcolm Blackhurst resigned as Group Finance Director and Company Secretary in
December 2003 and Brian Small was appointed to those positions in January 2004.
Roger Best was replaced as Executive Chairman in March 2004 by me.
Frank Martin, a non-executive director, left the Board in March 2004 and will be
replaced as soon as possible.
CURRENT TRADING
It is pleasing to be able to report that trading since the year end has been in
line with management expectations although the Fashion Fascias will take some
time to recover from some of the buying decisions in the past year. During the
thirteen weeks to 1 May 2004, Group like for like sales have been up 0.9%
against the prior period whilst our core Sports business has been up 2.5%.
During the same period,gross margin has been in line with management
expectations.
PROSPECTS
On my appointment eight weeks ago, I promised to oversee a Board review of all
the strategic options open to the Group. I have concentrated in my opening weeks
on ensuring we have the right management team, the right operating controls and
the right targets so that the Board's expectation of a progressive improvement
in results can be delivered.
The strategic review will take some time to complete and we will announce its
findings and conclusions as soon as it is practicable.
Peter Cowgill
Chairman
11 May 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 January 2004
Note 12 months to 31 10 months to 31
January 2004 January 2003
Continuing Continuing
operations operations
#000 #000
Turnover 458,073 370,804
Cost of sales (249,379) (202,229)
_______ _______
Gross profit 208,694 168,575
Distribution
costs - normal (186,117) (141,145)
Distribution
costs -
exceptional (1,366) (2,933)
Administrative
expenses -
normal (13,503) (10,167)
Administrative
expenses -
exceptional (612) (581)
Other
operating
income 638 333
_______ _______
Operating
profit 7,734 14,082
------------------- ------ --------- -------- ---------- ---------
Before
exceptional
items and
goodwill
amortisation 10,498 18,017
Exceptional
items 1 (1,978) (3,514)
Goodwill 1 (786) (421)
------------------- ------ --------- -------- ---------- ---------
Operating
profit 7,734 14,082
Loss on
disposal of
fixed assets (1,095) (433)
_______ _______
Profit on
ordinary
activities
before
interest 6,639 13,649
Interest
receivable and
similar income 100 212
Interest
payable and
similar
charges (4,634) (3,080)
_______ _______
Profit on
ordinary
activities
before
taxation 2,105 10,781
Taxation on
profit on
ordinary
activities (1,457) (4,024)
_______ _______
Profit on
ordinary
activities
after taxation 648 6,757
Dividends paid
and proposed (3,038) (3,038)
_______ _______
Retained
(loss)/profit (2,390) 3,719
_______ _______
Earnings per
ordinary
share: 2
- Basic 1.39p 14.46p
- Adjusted to
exclude
exceptional
items and
goodwill
amortisation 6.21p 21.18p
- Diluted 1.39p 14.45p
The group has no recognised gains or losses other than the results reported
above.
The results above also represent the historic cost profit.
CONSOLIDATED BALANCE SHEET
As at 31 January 2004
31 January 2004 31 January
2003
#000 #000
Fixed assets
Intangible assets 14,976 11,643
Tangible assets 68,183 74,292
_______ _______
83,159 85,935
_______ _______
Current assets
Stocks 65,727 69,171
Debtors and prepayments 14,452 13,632
Cash at bank and in hand 4,934 3,527
_______ _______
85,113 86,330
Creditors: amounts falling due within one year (55,667) (53,157)
_______ _______
Net current assets 29,446 33,173
_______ _______
Total assets less current liabilities 112,605 119,108
Creditors: amounts falling due after more than
one year (51,555) (56,294)
Provisions for liabilities and charges (3,756) (4,050)
_______ _______
Net assets 57,294 58,764
_______ _______
Capital and reserves
Called up share capital 2,338 2,338
Share premium account 8,917 8,917
Profit and loss account 46,039 47,509
_______ _______
Equity shareholders' funds 57,294 58,764
_______ _______
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
As at 31 January 2004
31 January 31 January
2004 2003
#000 #000
Profit for the year/period 648 6,757
Dividends paid and
proposed (3,038) (3,038)
_______ _______
Retained (loss)/profit for
the year/period (2,390) 3,719
Proceeds from issue of
ordinary shares - 10
Irrevocable dividend
waiver 920 -
_______ _______
Net movement in equity
shareholders' funds (1,470) 3,729
Opening equity
shareholders' funds 58,764 55,035
_______ _______
Closing equity
shareholders' funds 57,294 58,764
_______ _______
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 January 2004
12 months to 31 10 months to
January 2004 31 January 2003
#000 #000
Net cash inflow from
operating activities 23,600 28,194
Returns on investments and
servicing of finance (4,302) (2,734)
Taxation (1,287) (5,957)
Capital expenditure (9,229) (18,005)
Acquisitions - (52,201)
Equity dividends paid (4,375) (2,431)
_______ _______
Net cash inflow/(outflow)
before financing 4,407 (53,134)
Financing (3,000) 55,675
_______ _______
Increase in cash 1,407 2,541
_______ _______
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the year ended 31 January 2004
12 months to 10 months to
31 January 31 January
2004 2003
#000 #000
Increase in cash in the period 1,407 2,541
Cash outflow/(inflow) from movement in debt and
lease financing 3,000 (55,665)
Reduction/(increase) in net debt in the period 4,407 (53,124)
Net debt at start of period (55,473) (2,349)
Net debt at end of period (51,066) (55,473)
RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES
for the year ended 31 January 2004
12 months to 10 months to
31 January 31 January
2004 2003
#000 #000
Operating profit 7,734 14,082
Depreciation charge 10,060 7,907
Amortisation of goodwill 786 421
Decrease in stocks 1,990 227
Decrease/(increase) in debtors 80 (1,230)
Increase in creditors 2,950 6,787
Net cash inflow from operating activities 23,600 28,194
=== ===
All exceptional items shown within operating profit have resulted in cash flows
in the period.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1 Operating profit and exceptional items
Operating profit is stated after charging goodwill amortisation of #786,000.
Exceptional items comprise mainly of expenditure directly relating to the
integration of the First Sport division of Blacks Leisure Group Plc, acquired in
May 2002, as detailed below.
#000
Redundancy costs 978
Store closure costs 479
Lease and contract exit payments 314
Warehousing, distribution and other reorganisation costs 130
OFT replica kit investigation 77
_____
1,978
_____
2 Earnings per ordinary share
Basic earnings per ordinary share represents the profit for the period of
#648,000 (2003: #6,757,000) divided by the weighted average number of ordinary
shares in issue of 46,748,607 (2003: 46,743,692).
Adjusted basic earnings per ordinary share have been based on the profit on
ordinary activities after taxation for each financial period but excluding
exceptional items and goodwill amortisation.
The diluted earnings per share is based on 46,750,776 (2003: 46,747,348)
ordinary shares, the difference to the basic calculation representing the
additional shares that would be issued on the conversion of all the dilutive
potential ordinary shares. There is no material difference to earnings if all
the dilutive potential ordinary shares are converted.
The earnings used to calculate earnings per ordinary share is given below:
Earnings attributable to ordinary shareholders As at 31 As at 31
January
January 2003
2004
#000 #000
Profit on ordinary activities after taxation 648 6,757
- Exceptional items 1,978 3,514
- Tax relating to exceptional items (509) (791)
- Goodwill amortisation 786 421
_______ _______
Profit after taxation excluding exceptional
items and goodwill amortisation 2,903 9,901
_______ _______
Adjusted basic earnings per ordinary share 6.21p 21.18p
_______ _______
3 Accounts
These figures are abridged versions of the Group's full accounts for the year
ended 31 January 2004 and do not constitute the Group's statutory accounts
within the meaning of Section 240 of the Companies Act 1985. The Group's
auditors have audited the statutory accounts for the Group and have issued an
unqualified audit opinion thereon within the meaning of Section 235 of the
Companies Act 1985 and have not made any statement under Section 237 (2) or (3)
of the Companies Act 1985 for the year ended 31 January 2004. Statutory accounts
for the 10 month period ended 31 January 2003 have been delivered to the
Registrar of Companies. Statutory accounts for the year ended 31 January 2004
will be delivered to the Registrar of Companies following the Annual General
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, Hollinsbrook
Way, Pilsworth, Bury, Lancashire, BL9 8RR.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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