TIDMJJB
RNS Number : 8927A
JJB Sports PLC
05 April 2012
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR
RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN
WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA,
JAPAN AND SOUTH AFRICA AND SHOULD NOT BE DISTRIBUTED IN, FORWARDED
TO OR TRANSMITTED INTO ANY JURISDICTION WHERE TO DO SO MIGHT
CONSTITUTE A VIOLATION OF LOCAL APPLICABLE SECURITIES LAWS OR
REGULATIONS
4 April 2012
JJB Sports plc announces full year results for the 52 weeks to
29 January 2012
and trading update for the nine weeks to 1 April 2012
JJB Sports plc ("JJB" or the "Company") today announces its full
year results for the 52 weeks to 29 January 2012 and a trading
update for the nine weeks to 1 April 2012.
Key Financial Data 52 weeks to 52 weeks to
29 January 2012 30 January 2011 Change
Continuing operations
Revenue GBP284.2m GBP362.9m (21.7)%
Gross margin 35.7% 34.4% 1.3%
Operating loss GBP(103.5)m GBP(181.8)m 43.1%
Adjusted operating loss* GBP(56.2)m GBP(73.9)m 24.0%
Loss before taxation GBP(101.1)m GBP(181.4)m 44.3%
Adjusted loss before taxation* GBP(53.9)m GBP(73.3)m 26.5%
Basic loss per share (40.40)p (72.45)p 32.05p
Net debt GBP(11.3)m GBP(18.8)m 39.9%
*The adjusted operating loss and adjusted loss before tax
measures are shown before charging various exceptional items
totalling GBP47.2 million (52 weeks to 30 January 2011: GBP108.0
million) as shown in note 2 to this announcement.
Summary for the 52 weeks to 29 January 2012
-- Revenue decreased by GBP78.7 million as a result of store
closures and like-for-like sales reducing by 13.1%
-- Gross margin increased from 34.4% to 35.7%
-- Adjusted operating loss decreased from GBP73.9 million to GBP56.2 million
-- Completion of the capital raisings with combined gross proceeds of GBP96.5 million
-- A Company Voluntary Arrangement with our landlords enabling
us to reduce our overhead base - 41 store closures within the first
phase of the Company Voluntary Arrangement in the period
Highlights since period end and trading update for the nine
weeks to 1 April 2012
-- Announcement of GBP30 million strategic investment package
including investment by Dick's Sporting Goods, Inc. and further
investment by existing shareholders, subject to shareholder
approval
-- Agreement with adidas Group for the provision of security for
a two-stage loan of up to GBP15 million to assist in the Group's
store transformation programme
-- Successful re-negotiation of the Group's banking facility
with Bank of Scotland to 31 May 2015
-- Economic conditions continue to make prospects for UK retailers challenging
-- In the nine week period since the period end to 1 April 2012
o Group like-for-like sales decreased by 5.7%
o Like-for-like cash gross margin decreased by 24.9% in monetary
terms
o Trading and margin continued to be affected by management's
careful control of the Group's cash intake and stock profile
-- Net debt at 1 April 2012 was GBP20.6 million (GBP11.3 million as at 29 January 2012)
-- Positive results from enhanced store concept in Broughton Park, Chester
Keith Jones, Chief Executive of JJB Sports said:
"The 52 week period to 29 January 2012 has once again proven to
be an extremely challenging time for the Company. However, we
believe that the investment package and strategic alliance with
Dick's will provide a real opportunity to accelerate JJB's
turnaround".
For further information, please contact:
Keith Jones
Dave Williams
JJB Sports plc
01942 221 400
Neil Bennett
Emma Burdett
Maitland
020 7379 5151
Heraclis Economides
Richard Thomas
Numis Securities Limited (joint financial adviser, broker and
nominated adviser)
020 7260 1000
A copy of this announcement can also be viewed on the JJB
corporate website, www.jjbcorporate.co.uk. Neither the content of
the JJB corporate website nor any website accessible by hyperlinks
on the JJB corporate website is incorporated in, or forms part of,
this announcement.
Analyst / Investor Presentation
There will be a presentation for analysts and investors on
Thursday 5 April at 9.00 a.m. at Numis Securities Limited, 10
Paternoster Square, London EC4M 7LT.
For those unable to attend, there is a live audiocast facility
available for participants to listen to the presentation at:
http://www1.axisto.co.uk/webcasting/investis/jjb/jjb-announcement/
and on the JJB Sports website: www.jjbcorporate.co.uk
About JJB Sports
JJB Sports is one of the UK's leading multi-channel sporting
goods retailers. The Group, headquartered in Wigan and listed on
AIM, currently trades from over 185 JJB branded retail stores in
the UK and Ireland and employs approximately 4,000 people. Further
information about the Group can be found on the Group's corporate
website, www.jjbcorporate.co.uk
This announcement is for information purposes only and does not
constitute or form part of any offer to issue or sell, or the
solicitation of an offer to acquire, purchase or subscribe for, any
securities in any jurisdiction and should not be relied upon in
connection with any decision to subscribe for or acquire any
securities. In particular, this announcement does not constitute or
form part of any offer to issue or sell, or the solicitation of an
offer to acquire, purchase or subscribe for, any securities in the
United States.
The securities referred to in this announcement have not been
and will not be registered under the US Securities Act of 1933, as
amended (the "Securities Act"), or with any securities regulatory
authority of any state or other jurisdiction of the United States
and, accordingly, may not be offered, sold, resold, taken up,
transferred, delivered or distributed, directly or indirectly, in
or into the United States absent registration under, or an
applicable exemption from the registration requirements of, the
Securities Act, and in compliance with any applicable securities
laws of any state or other jurisdiction of the United States. There
will be no public offer of the securities referred to in this
announcement in the United States.
Certain statements made in this announcement constitute
forward-looking statements. Forward looking statements can be
identified by the use of words such as "may", "will", "expect",
"intend", "estimate", "anticipate", "believe", "plan", "seek",
"continue" or similar expressions and relate to, among other
things, the performance of the business of JJB in the near to
medium term, the business strategy of JJB and its plans and
objectives for future operations. Such statements are based on
current expectations and, by their nature, are subject to a number
of risks and uncertainties that could cause actual results and
performance to differ materially from any expected future results
or performance, expressed or implied, by the forward-looking
statement. Factors that might cause forward looking statements to
differ materially from actual results, include among other things,
general economic conditions in the United Kingdom. These
forward-looking statements speak only as of the date of this
announcement. The information and opinions contained in this
announcement are subject to change without notice and, subject to
compliance with applicable law, JJB assumes no responsibility or
obligation to update publicly or review any of the forward-looking
statements.
Chairman's statement
Mike McTighe
Our last financial year was another significant one in JJB's
history. As has been well documented the early part of the year was
dominated by the need to stabilise the financial position of the
business and during this time we completed:
-- Two capital raisings through Firm Placing and Placing and
Open Offers raising combined gross proceeds of GBP96.5 million;
-- A Company Voluntary Arrangement with our landlords enabling us to reduce our overhead base;
-- A Capital Reorganisation;
-- A transfer to AIM from the main list of the London Stock Exchange; and
-- A re-negotiation of a three year extension to our existing bank facilities.
These actions provided an opportunity to commence the turnaround
in business performance. However as I set out below whilst many
positive things have been achieved and our trading performance
improved in the second half of the year, the actions we have taken
have not delivered the scale of improvement required in the
timeframe originally envisaged at the time of our capital raisings.
In light of this, the Board concluded that both additional capital
and expertise was required to complete the turnaround and to this
end has been seeking a strategic investment partner to fulfil this
role.
Our search has been successful and I am delighted to announce
that subject to shareholder approval, Dick's Sporting Goods, Inc.
("Dick's") has agreed to become a strategic partner to our
business. In addition to the significant capital resources to be
provided, the Board is of the view that the introduction of Dick's
as a strategic partner will enable the Company to draw upon Dick's
valuable experience in the sports retail market, which, in turn,
will assist management in accelerating the Group's revised business
plan. Dick's is an authentic full-line sporting goods retailer
based in the USA, offering a broad assortment of brand name
sporting goods equipment, apparel and footwear in a specialty store
environment.
We believe that this partnership will enable the business to
complete its turnaround plan and deliver our vision of a true
authentic multi-channel sports retailer.
In addition, our existing major shareholders continue to be
tremendously supportive of the business and will again participate
in this round of investment. The Company intends to raise GBP30
million (before expenses) by way of an exercise of warrants by our
major shareholders, a private placement of shares with our major
shareholders and Dick's and an issue of Convertible Loan Notes to
Dick's. The Board has also reached agreement with adidas Group, one
of the Company's key supplier partners, for the provision of a
trade loan to assist in funding the Group's store transformation
programme, and an agreement with Bank of Scotland ("BoS"), the
Company's lender, regarding the continued provision of bank
facilities through to 31 May 2015. Once again I would like to place
on record my thanks to these and other stakeholders for the support
they have shown and continue to show the business.
Full details of the investment package are set out in the
announcement issued today.
Our strategy
The Company has made progress in implementing the Group's
business plan. However, in light of the increasingly poor
macroeconomic conditions, management was forced to prioritise the
preservation of cash in the short term and scale back its
investment in store and proposition development, particularly in
respect of those stores that management has identified as requiring
a full transformation or refit. In spite of this, achievements so
far include:
-- The closure of the first 41 CVA stores;
-- Operationalising our plans to drive continuous improvement
across the Company's basic retail disciplines, product sourcing,
market planning, allocation and supply chain to forecast
milestones;
-- Rolling out training to all in-store colleagues covering
customer service, management techniques and improving product
knowledge;
-- Establishing a multi-channel programme to drive improvements
in online capability, aligned to the in-store channel experience.
Our second half like-for-like growth in multi-channel sales was 77%
compared to a first half of 15%; and
-- Reducing the Company's cost base, by working systematically
through identified areas of opportunity, including savings at the
Company's Retail Support Centre in Wigan. We have already begun to
realise cost savings in respect of warehousing and distribution,
store wages and central overhead costs.
Successful completion of the strategic investment and financing
package will improve the Group's working capital position and help
to implement the Group's capital expenditure plans, particularly in
respect of its store transformation programme and multi-channel
offering. Over the course of the next 18 months, management intend
to transform up to 60 stores into a format recently trialled with
success at our Broughton store near Chester.
Our Board
There have been some changes to the Board during the period
under review.
Richard Bernstein joined the Board on 6 May 2011 following his
nomination by Crystal Amber Fund and on 1 November 2011 Lawrence
Christensen also joined the Board. Both have already brought their
own expertise to the Company which will help in delivering JJB's
turnaround strategy. In addition Lawrence has taken on the role of
Chairman of the Remuneration Committee.
As has previously been announced Richard Manning and Alan Benzie
left the Board at the Company's Annual General Meeting in July
2011. Following Alan's departure our Senior Independent Director,
David Adams, became Chairman of the Audit Committee.
Our colleagues
As ever I would like to thank all our colleagues for their
continued hard work and contribution to our turnaround in a time of
continuing change.
Going concern
In determining the appropriate basis of preparation of the
Annual Report, the Directors are required to consider whether the
Group can continue in operational existence for the foreseeable
future; that is for at least 12 months from the date of signing of
this Report. After making enquiries, and considering the matters
which are described in note 1 to this announcement, the Directors
have concluded that they have a reasonable expectation that the
Group and the Company will have adequate resources to continue in
operational existence for the foreseeable future. However, the
Directors have concluded that there are material uncertainties
facing the business. Further details are set out in the note 1 to
this announcement.
Outlook
Looking ahead, the ongoing credit squeeze on consumers and
weaker UK employment numbers creates a tough environment. However,
the platform we have built over the past 12 months and the
strategic investment and financing package that the Company has
announced today have given JJB a chance to complete its turnaround
programme.
Mike McTighe
Chairman
4 April 2012
Chief executive's review
Overview
The 52 week period ended 29 January 2012 has once again proven
to be an extremely challenging time for the Company mainly as a
result of external factors.
Review of operating results
The operating results for the 52 weeks ended 29 January 2012 and
the comparative figures for the 52 weeks ended 30 January 2011 are
summarised below, together with a review of our turnaround
strategy:
52 weeks 52 weeks
to to
29 January 30 January
2012 2011
Total Total
GBP'000 GBP'000
Continuing operations
Revenue 284,206 362,894
Cost of sales (182,722) (238,020)
Gross profit 101,484 124,874
Other operating income 2,682 1,848
Distribution expenses (16,732) (20,810)
Administration expenses (21,800) (24,075)
Selling expenses (169,084) (263,649)
Operating loss (103,450) (181,812)
Adjusted operating loss* (56,242) (73,856)
*Adjusted operating loss is shown before charging other
exceptional operating items of GBP47.2 million largely attributable
to increases in property provisions, impairment of tangible and
intangible assets, an HMRC provision and reorganisation costs
incurred during the Group's restructuring in the period (2011:
GBP(92.6) million - goodwill impairment, GBP(15.4) million - other
items), as shown in the Consolidated statement of financial
performance.
Strategy and progress
Since completion of the April 2011 Capital Raising and the
Company's move to trading on AIM on 28 April 2011, the Board has
progressed with the key elements of the Group's revised business
plan as follows:
Rightsizing the store portfolio through implementation of the
CVA - The Group has successfully implemented the first phase of the
CVA with 41 of the 43 stores identified for closure on or before 24
April 2012 (referred to in the CVA Proposal Document as the "First
Period Compromised Leases") now closed, of which 11 have been
surrendered to the landlords, generating an annualised rent saving
of GBP1.6 million. For the remaining two stores that were
identified as First Period Compromised Leases, rents continue to be
paid on a reduced basis of 50 per cent of the contractual liability
(plus 5 per cent dilapidations and any contractual amount for
service charges) until 24 April 2012. For the additional 46 stores
identified for closure on or before 24 April 2013 (referred to in
the CVA Proposal Document as the "Second Period Compromised
Leases"), 12 stores have been surrendered to the landlords as at 29
January 2012, generating an annualised rent saving of GBP1.7
million and one store has returned to the core estate. For the
remaining 33 stores that were identified as Second Period
Compromised Leases, rents continue to be paid on a reduced basis of
50 per cent of the contractual liability (plus 5 per cent
dilapidations and any contractual amount for service charges) and
will continue to be paid until 24 April 2013. As at 29 January
2012, management has also achieved annualised rates savings of
approximately GBP2.8 million. Management estimate savings of
approximately GBP4.0 million in negative contribution and further
incremental working capital savings.
-- Aligning the Company's cost base and working capital
management - Management has secured significant cost savings across
all key business functions. Warehouse and distribution costs have
reduced by GBP4.1 million from GBP20.4 million to GBP16.3 million,
with estimated annualised savings in excess of GBP5.6 million now
identified as compared to management's original target of GBP3.5
million (as announced on 6 April 2011), with further opportunities
identified beyond this original target. Through better deployment
of our colleagues particularly at peak trading periods, management
has achieved savings in respect of core store wages of GBP5.1
million, again with estimated annualised savings in excess of
management's original target of GBP3.3 million (as announced on 6
April 2011). Other store costs and central costs have also been
reduced on a systematic basis through better procurement, improved
utilisation and efficiencies and tighter cost control processes,
with actual annualised savings exceeding management's original
target of GBP2.4 million (as announced on 6 April 2011). In
addition, the Company continues to prudently manage its working
capital, cash and available resources and has targeted an
acceleration of its stock efficiency initiatives through better
management of stock intake, improved stock allocation and
replenishment and being more pro-active in respect of in-season
stock clearance.
-- Improving the Company's basic retail disciplines - Management
has made significant progress in improving the basic retail
disciplines in the Company. Since completion of the April 2011
Capital Raising, management has been defining and implementing key
processes and systems, and identifying and recruiting new talent
particularly to advance the Company's buying, merchandising,
marketing and multi-channel functions. Management is confident that
it now has clear visibility around stock intake, improved stock
allocation, better stock sell-through, defined clearance capability
and improved stock file integrity. Improved visibility of stock
intake has facilitated the development of a multi-channel trading
and marketing calendar with co-ordinated campaigns aligned to and
supported by key supplier partners.
-- Investment in store development - The Company announced on 6
April 2011 (in connection with the April 2011 Capital Raising) that
it had devised three levels of store and proposition development
that had been incorporated into the Group's revised business plan -
retail basics, refresh refit and full transformation. Since
completion of the April 2011 Capital Raising, the macroeconomic
deterioration in retail trading conditions led the Group to
prioritise the preservation of cash in the short term and scale
back the extent to which the Group was able to invest in store and
proposition development. However, despite the challenging trading
conditions, the Group has still completed 103 stores for its retail
basics programme, 8 stores for its refresh refit programme and 2
stores for full transformation. The refit programme cascaded the
key initiatives from the original 6 transformation stores including
navigation, product adjacencies, space mix and point of sale. These
store programmes were completed at a significantly lower cost than
originally budgeted, this supported the improvement in second half
performance. The Group's capital expenditure in respect of stores
forming part of the refresh refit programme was GBP0.3 million, a
considerable saving on original estimates.
-- Continuing to source new ranges and product- The Company's
own-brand development has gained momentum, with the introduction of
an own-brand swimming range H2O in September 2011, and expansion of
the exclusive Run 365 footwear and apparel range in October 2011.
In addition, the Company has added Mind, Body & Soul, Travel
Fox, Ecko Unltd and Pro Performance as exclusive branded products
in the second half of 2011. In aggregate, exclusive and own branded
product was 6.7 per cent of the sales mix at year end. Management
continues to work closely with all its key supplier partners to
develop exclusive and differentiated products and propositions.
Recent additions include ASICS and Saucony, which also underpin the
Company's positioning as the authentic multi-channel sports
retailing brand in the UK. In addition, management has developed a
number of new service initiatives, such as introducing Gait
analysis into a number of stores to ensure each customer is fitted
with the right footwear for them and their sport. We have also
built on the successful Footwear Recycling initiative, where in
excess of 25,000 training shoes have been recycled, with the
proceeds going to Whizz Kids who provide wheelchairs to enable
children to participate in sport.
-- Focusing on customer service training and people capability
training - Customer service and people capability training remains
a key objective for management and remains a key differentiator in
the market. Since completion of the April 2011 Capital Raising, the
Company has significantly upgraded its senior management team and
invested in new personnel to the Group's Retail Support Centre in
the 52 weeks to 29 January 2012. In addition, the Company has
recruited 10 new store managers externally; completed customer
service training for over 4,000 colleagues; graduated 26 colleagues
from its "stepping into management" personal development programme;
and trained 191 store managers in sales floor coaching.
-- Improving the multi-channel proposition - Following the
recruitment of a new Head of Multi-channel on 4 July 2011, the
Company has made progress in enhancing its multi-channel
proposition resulting in significant growth in sales. Developments
include the launch of a mobile version of the website, introducing
Paypal and developing an eBay and Amazon offering. In addition, the
Company has enhanced the online customer shopping experience by
adding new online exclusive products as well as improving the
landing pages and site navigation. Alongside other initiatives and
improvements this has provided customers with an easier and more
convenient shopping experience and resulted in significantly
increased traffic and conversion rates.
Ongoing retail operations
Revenue from ongoing retail operations for the 52 weeks to 29
January 2012 decreased by GBP78.7 million (21.7 per cent) compared
to the previous accounting period as a result of store closures and
reflected a like-for-like decrease of 13.1 per cent (on operating
units that have been trading in the same format for over 52
weeks).
Overall gross margin from ongoing retail operations increased to
35.7 per cent from 34.4 per cent for the prior year.
Cumulative like-for-like sales in the second half of the
financial period for the 26 weeks ended 29 January 2012 decreased
by 7.6 per cent compared to a decrease of 17.9 per cent in the 26
weeks ended 31 July 2011. However, in the same period, our
like-for-like cash gross margin increased by 0.3 per cent compared
to a decrease of 37.4 per cent in the first half. Operating costs
before exceptional items for the 52 weeks to 29 January 2012 have
decreased by 20.0 per cent to GBP160.4 million from GBP200.6
million.
At the period end the Company comprised 190 (2011: 247) trading
retail stores operating from 2.1 million square feet (2011: 2.7
million square feet) of retail space.
Operating loss
Operating loss from the ongoing retail operations was GBP103.5
million (2011: GBP181.8 million), after charging exceptional
operating items of GBP47.2 million, compared to GBP108.0 million in
2011. Principal exceptional items this period were provisions of
GBP15.0 million relating to property provisions, an impairment of
brand licences of GBP7.8 million as a result of uncertainties of
associated future cash flows, an HMRC provision of GBP5.3 million,
an impairment of fixed assets of CVA stores of GBP6.8 million and
an impairment of GBP4.7 million on review of the tangible assets of
stores which are loss making and are expected to continue making
losses. The principal exceptional item in 2011 related to an
impairment to the carrying value of goodwill in respect of Blane
Leisure Limited and Sports Division (Eireann) Limited and was
included within selling expenses. Operating loss from ongoing
retail operations before exceptional items was GBP56.2 million
(2011: GBP73.9 million).
There has been an improvement in operating performance in the
second half of the accounting period. Operating loss from ongoing
retail operations before exceptional items in the second half of
the period was GBP(19.5) million compared to GBP(36.7) million in
the first half of the period.
Full details are shown on the face of the Consolidated statement
of financial performance.
Net loss before taxation
The net loss before taxation decreased to a GBP101.1 million
loss from a GBP181.4 million loss in the prior period.
Taxation
Owing to the losses incurred there is no taxation payable.
Loss per share
Continuing operations
Basic loss per Ordinary Share for the 52 weeks to 29 January
2012 was 40.40 pence compared to 72.45 pence (represented - see
note 3) in the previous accounting period. The loss per share has
decreased due to the decrease in operating losses from GBP181.8
million to GBP103.5 million including a reduction in exceptional
items to GBP47.2 million (2011: GBP108.0 million).
The adjusted basic loss per Ordinary Share (before deduction of
exceptional items) for the 52 weeks to 29 January 2012 was 21.54
pence compared to 29.33 pence (represented - see note 3) in the
previous accounting period. The number of shares for the purpose of
basic loss per Ordinary Share and adjusted basic loss per Ordinary
Share has been adjusted retrospectively in 2011 to take account of
the Firm Placing and Placing and Open Offers completed during
February 2011 and April 2011.
Key performance indicators
During the period, the Board monitored its performance by
reference to a number of key performance indicators ("KPIs") of
which the most important were:
52 weeks 52 weeks
to to
29 January 30 January
2012 2011
----------------------------------------- ----------- -----------
Financial KPIs
----------------------------------------- ----------- -----------
Change in like-for-like revenue (13.1)% 5.9%
----------------------------------------- ----------- -----------
Gross margin 35.7% 34.4%
----------------------------------------- ----------- -----------
Cash flow from operations GBP(78.6)m GBP(71.9)m
----------------------------------------- ----------- -----------
Net debt GBP11.3m GBP18.8m
----------------------------------------- ----------- -----------
Inventories GBP47.3m GBP52.7m
----------------------------------------- ----------- -----------
Inventories less trade payables GBP29.6m GBP14.3m
----------------------------------------- ----------- -----------
Non-financial KPIs
----------------------------------------- ----------- -----------
Retail selling space (sq ft) 2,095,000 2,748,000
----------------------------------------- ----------- -----------
Number of Full Time Equivalent Employees 2,866 3,779
----------------------------------------- ----------- -----------
In order to measure and monitor the success of its turnaround
plans the Board has developed a more comprehensive set of financial
and non- financial KPIs aligned to each element of the plan which
are reported on a regular basis. These include conversion rates
within stores, conversion rates for multi-channel, average
transaction value and multi-channel like-for-like.
Review of Statement of financial position
Goodwill and intangible assets
Goodwill has been subject to an impairment review as at the
period end and no impairment was found to be necessary as at 29
January 2012. This value remains at GBP13.8 million.
Other intangible assets, represented by brand licences, have
been impaired by GBP7.8 million due to uncertainty around
associated future cash flows.
Capital expenditure
Capital expenditure on property, plant and equipment for the 52
weeks to 29 January 2012 was GBP2.9 million compared to GBP4.1
million in the previous accounting period. This capital expenditure
was principally incurred on the refurbishment of stores and the
opening of two new stores relocating during the period.
Property Plant and Equipment
As a result of a review of the carrying value of the tangible
assets within the Group, the Group has recognised an impairment
charge of GBP6.8 million on the closure of stores within the 2011
CVA and an impairment of GBP4.7 million on the tangible assets of
stores which are loss making and are expected to continue making
losses. Tangible assets of GBP1.0 million have also been written
off on the closure of one of the remaining soccerdomes.
Inventories
The value of inventories at 29 January 2012 was GBP47.3 million
compared to GBP52.7 million at 30 January 2011. This decrease is
due to the reduction in the number of stores offset by a
reassessment of provisioning requirements as at the period end
date.
Net debt
The Group's net debt at 29 January 2012 was GBP11.3 million
compared to GBP18.8 million at 30 January 2011. The principal
reason for this reduction is the net funds from the capital
raisings, albeit that this was offset by the net cash outflow from
operations of GBP78.6 million.
Trade and other payables
Trade and other payables have reduced to GBP45.7 million at 29
January 2012 from GBP68.4 million at 30 January 2011 owing to the
reduction in the stock values at the period end and a reduction in
creditor days.
Dividend
The Board is unable to recommend payment of a dividend in
respect of the 52 weeks to 29 January 2012 (2011: nil).
Share capital
Details of the share capital movements, including the two Firm
Placing and Placing and Open Offers referred to earlier, and the
Capital Reorganisation are described in note 26 of the Group's
Annual Report and Accounts for the 52 weeks to 29 January 2012.
The mid-market share price of the Ordinary Shares at the close
of business on 27 January 2012 was 11.50 pence, representing an
equity market capitalisation of approximately GBP33.7 million.
Director update
There have been the following changes to the Board over the last
12 months:
> On 6 May 2011, Richard Bernstein was appointed to the Board
as a Non-executive Director appointed by Crystal Amber Fund
Limited.
> On 8 July 2011, Richard Manning and Alan Benzie resigned as
Legal and Operations Director and Non-executive Director
respectively.
> On 1 November 2011, Lawrence Christensen joined the Board
as a Non-executive Director.
Events after the Statement of financial position
Please refer to note 8 of this announcement.
Consolidated statement of financial performance
For the 52 weeks to 29 January 2012
52 weeks to 52 weeks to
29 January 30 January
2012 2011
Total Total
Notes GBP'000 GBP'000
------------------------------------------------------------------------------------- ----- ----------- -----------
Continuing operations
------------------------------------------------------------------------------------- ----- ----------- -----------
Revenue 284,206 362,894
------------------------------------------------------------------------------------- ----- ----------- -----------
Cost of sales (182,722) (238,020)
------------------------------------------------------------------------------------- ----- ----------- -----------
Gross profit 101,484 124,874
------------------------------------------------------------------------------------- ----- ----------- -----------
Other operating income 2,682 1,848
------------------------------------------------------------------------------------- ----- ----------- -----------
Distribution expenses (16,732) (20,810)
------------------------------------------------------------------------------------- ----- ----------- -----------
Administration expenses (21,800) (24,075)
------------------------------------------------------------------------------------- ----- ----------- -----------
Selling expenses (169,084) (263,649)
------------------------------------------------------------------------------------- ----- ----------- -----------
Operating loss (103,450) (181,812)
------------------------------------------------------------------------------------- ----- ----------- -----------
Adjusted operating loss (56,242) (73,856)
------------------------------------------------------------------------------------- ----- ----------- -----------
- (92,610)
Exceptional items - goodwill impairment - other exceptional items 2 (47,208) (15,346)
------------------------------------------------------------------------------------- ----- ----------- -----------
Operating loss (103,450) (181,812)
------------------------------------------------------------------------------------- ----- ----------- -----------
Investment income 113 512
------------------------------------------------------------------------------------- ----- ----------- -----------
Finance costs (566) (1,162)
------------------------------------------------------------------------------------- ----- ----------- -----------
Finance costs are stated after charging
------------------------------------------------------------------------------------- ----- ----------- -----------
Exceptional bank arrangement fees and charges - (100)
------------------------------------------------------------------------------------- ----- ----------- -----------
Fair value adjustments to derivative instruments 3,048 1,919
------------------------------------------------------------------------------------- ----- ----------- -----------
Debt issue costs (274) (822)
------------------------------------------------------------------------------------- ----- ----------- -----------
Loss before taxation (101,129) (181,365)
------------------------------------------------------------------------------------- ----- ----------- -----------
Taxation - -
------------------------------------------------------------------------------------- ----- ----------- -----------
Loss after taxation for the period attributable to equity holders of the Parent
Company (101,129) (181,365)
------------------------------------------------------------------------------------- ----- ----------- -----------
Loss per share
------------------------------------------------------------------------------------- ----- ----------- -----------
From continuing operations 3
------------------------------------------------------------------------------------- ----- ----------- -----------
Basic loss per Ordinary Share* Pence (40.40) (72.45)
------------------------------------------------------------------------------------- ----- ----------- -----------
Diluted loss per Ordinary Share* Pence (39.00) (72.45)
------------------------------------------------------------------------------------- ----- ----------- -----------
*The prior year figures for Basic and Diluted loss per Ordinary
Share have been represented to take into consideration the capital
raises which occurred in the current period. See note 3 for further
details on the retrospective adjustment to loss per share.
Consolidated statement of comprehensive income
For the 52 weeks to 29 January 2012
52 weeks to 52 weeks to
29 January 30 January
2012 2011
GBP'000 GBP'000
--------------------------------------------------- ----------- -----------
Loss after taxation for the period (101,129) (181,365)
--------------------------------------------------- ----------- -----------
Exchange loss on translation of foreign operations (126) (662)
--------------------------------------------------- ----------- -----------
Other comprehensive income for the period (126) (662)
--------------------------------------------------- ----------- -----------
Total comprehensive income for the period (101,255) (182,027)
--------------------------------------------------- ----------- -----------
Consolidated statement of changes in equity
For the 52 weeks to 29 January 2012
Share Foreign
Capital based currency
Share Share premium redemption payment translation Retained Total
capital account reserve Own shares reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------------- -------------- ----------- -------- -------------- --------- ---------
At 31 January
2010 32,542 174,055 1,069 (3,083) 448 (41) 18,563 223,553
--------------- -------- -------------- -------------- ----------- -------- -------------- --------- ---------
Loss for the
period - - - - - - (181,365) (181,365)
--------------- -------- -------------- -------------- ----------- -------- -------------- --------- ---------
Exchange
differences on
translation of
foreign
operations - - - - - (662) - (662)
--------------- -------- -------------- -------------- ----------- -------- -------------- --------- ---------
Total
comprehensive
income for the
period - - - - - (662) (181,365) (182,027)
--------------- -------- -------------- -------------- ----------- -------- -------------- --------- ---------
Credit to
equity for
equity-settled
share based
payment - - - - 2,545 - - 2,545
--------------- -------- -------------- -------------- ----------- -------- -------------- --------- ---------
At 30 January
2011 32,542 174,055 1,069 (3,083) 2,993 (703) (162,802) 44,071
--------------- -------- -------------- -------------- ----------- -------- -------------- --------- ---------
Loss for the
period - - - - - - (101,129) (101,129)
--------------- -------- -------------- -------------- ----------- -------- -------------- --------- ---------
Exchange
differences on
translation of
foreign
operations - - - - - (126) - (126)
--------------- -------- -------------- -------------- ----------- -------- -------------- --------- ---------
Total
comprehensive
income for the
period - - - - - (126) (101,129) (101,255)
--------------- -------- -------------- -------------- ----------- -------- -------------- --------- ---------
Credit to
equity for
equity-settled
share based
payment - - - - 1,710 - - 1,710
--------------- -------- -------------- -------------- ----------- -------- -------------- --------- ---------
Firm Placing
and Placing
and Open
Offers 2,267 83,942 - - - - - 86,209
--------------- -------- -------------- -------------- ----------- -------- -------------- --------- ---------
Exercise of
warrants 15 224 - - - - - 239
--------------- -------- -------------- -------------- ----------- -------- -------------- --------- ---------
At 29 January
2012 34,824 258,221 1,069 (3,083) 4,703 (829) (263,931) 30,974
--------------- -------- -------------- -------------- ----------- -------- -------------- --------- ---------
Consolidated statement of financial position
As at 29 January 2012
As at As at
29 January 30 January
2012 2011
Notes GBP'000 GBP'000
------------------------------------- ----- ----------- -----------
Non-current assets
------------------------------------- ----- ----------- -----------
Goodwill 13,796 13,796
------------------------------------- ----- ----------- -----------
Other intangible assets 10,405 20,175
------------------------------------- ----- ----------- -----------
Property, plant and equipment 46,091 64,859
------------------------------------- ----- ----------- -----------
70,292 98,830
------------------------------------- ----- ----------- -----------
Current assets
------------------------------------- ----- ----------- -----------
Inventories 47,302 52,725
------------------------------------- ----- ----------- -----------
Trade and other receivables 7,792 9,077
------------------------------------- ----- ----------- -----------
Cash and cash equivalents 4,638 5,859
------------------------------------- ----- ----------- -----------
59,732 67,661
------------------------------------- ----- ----------- -----------
Total assets 130,024 166,491
------------------------------------- ----- ----------- -----------
Current liabilities
------------------------------------- ----- ----------- -----------
Trade and other payables (45,689) (68,384)
------------------------------------- ----- ----------- -----------
Provisions 4 (6,488) (6,636)
------------------------------------- ----- ----------- -----------
Derivative financial instruments (958) (113)
------------------------------------- ----- ----------- -----------
(53,135) (75,133)
------------------------------------- ----- ----------- -----------
Net current assets (liabilities) 6,597 (7,472)
------------------------------------- ----- ----------- -----------
Non-current liabilities
------------------------------------- ----- ----------- -----------
Bank loans and overdrafts 6 (15,915) (24,678)
------------------------------------- ----- ----------- -----------
Deferred lease incentives (10,292) (11,733)
------------------------------------- ----- ----------- -----------
Provisions 4 (19,708) (10,876)
------------------------------------- ----- ----------- -----------
(45,915) (47,287)
------------------------------------- ----- ----------- -----------
Total liabilities (99,050) (122,420)
------------------------------------- ----- ----------- -----------
Net assets 30,974 44,071
------------------------------------- ----- ----------- -----------
Equity
------------------------------------- ----- ----------- -----------
Share capital 34,824 32,542
------------------------------------- ----- ----------- -----------
Share premium account 258,221 174,055
------------------------------------- ----- ----------- -----------
Capital redemption reserve 1,069 1,069
------------------------------------- ----- ----------- -----------
Investment in own shares (3,083) (3,083)
------------------------------------- ----- ----------- -----------
Share based payment reserve 4,703 2,993
------------------------------------- ----- ----------- -----------
Foreign currency translation reserve (829) (703)
------------------------------------- ----- ----------- -----------
Retained losses (263,931) (162,802)
------------------------------------- ----- ----------- -----------
Total equity 30,974 44,071
------------------------------------- ----- ----------- -----------
Consolidated statement of cash flow
For the 52 weeks to 29 January 2012
52 weeks to 52 weeks to
29 January 30 January
2012 2011
Notes GBP'000 GBP'000
------------------------------------------------------ ----- ----------- -----------
Net cash outflow from operating activities 7 (78,570) (71,895)
------------------------------------------------------ ----- ----------- -----------
Cash flows from investing activities
------------------------------------------------------ ----- ----------- -----------
Interest received 113 512
------------------------------------------------------ ----- ----------- -----------
Proceeds on disposal of property, plant and equipment 18 155
------------------------------------------------------ ----- ----------- -----------
Purchase of intangible assets (972) (1,100)
------------------------------------------------------ ----- ----------- -----------
Purchase of property, plant and equipment (2,862) (4,089)
------------------------------------------------------ ----- ----------- -----------
Net cash used investing activities (3,703) (4,522)
------------------------------------------------------ ----- ----------- -----------
Cash flows from financing activities
------------------------------------------------------ ----- ----------- -----------
Interest paid (545) (946)
------------------------------------------------------ ----- ----------- -----------
Proceeds from issues of share capital 90,102 -
------------------------------------------------------ ----- ----------- -----------
Exercise of warrants 239 -
------------------------------------------------------ ----- ----------- -----------
Drawdown of current asset investment - 168,117
------------------------------------------------------ ----- ----------- -----------
Settlement of loan notes - (168,117)
------------------------------------------------------ ----- ----------- -----------
Net proceeds from bank loans and bank overdrafts 16,216 25,000
------------------------------------------------------ ----- ----------- -----------
Repayment of bank loan (25,000) -
------------------------------------------------------ ----- ----------- -----------
Net cash from financing activities 81,012 24,054
------------------------------------------------------ ----- ----------- -----------
Net decrease in cash and cash equivalents (1,261) (52,363)
------------------------------------------------------ ----- ----------- -----------
Cash and cash equivalents at beginning of period 5,859 58,812
------------------------------------------------------ ----- ----------- -----------
Effect of foreign exchange rate changes 40 (590)
------------------------------------------------------ ----- ----------- -----------
Cash and cash equivalents at end of period 6 4,638 5,859
------------------------------------------------------ ----- ----------- -----------
Notes to the financial information for the 52 weeks to 29
January 2012
1. Basis of preparation
The financial information set out above does not constitute the
Company's statutory accounts for the 52 week period ended 29
January 2012 or the 52 week period ended 30 January 2011, but is
derived from those accounts. Statutory accounts for 2011 have been
delivered to the Registrar of Companies and those for 2012 will be
delivered following the Company's Annual General Meeting. The
auditor has reported on those accounts; their reports were
unqualified, and did not contain statements under section 498(2) or
(3) Companies Act 2006 or equivalent preceding legislation.
However, for the 2012 Annual Report & Accounts, the auditor's
included an emphasis of matter paragraph in their opinion relating
to material uncertainties with respect to going concern. No such
matter was included in 2011. Further details with respect to Going
Concern are included below.
A copy of the Group accounts for the 52 week period ended 29
January 2012 can be found at www.jjbcorporate.co.uk and will be
posted to shareholders shortly.
Going Concern
In determining the appropriate basis of preparation of the
Annual Report, the Directors are required to consider whether the
Group can continue in operational existence for the foreseeable
future; that is for at least 12 months from the date of signing of
this report. After making enquiries, and considering the matters
which are described in the Annual Report, the Directors have
concluded that they have a reasonable expectation that the Group
and the Company will have adequate resources to continue in
operational existence for the foreseeable future. However, the
Directors have concluded that there are material uncertainties
facing the business.
During 2011, the Group successfully completed a number of key
steps to refinance the business and reduce the cost base through a
Company Voluntary Arrangement. These steps were fully disclosed in
our 2011 Annual Report. During the year, the Group also commenced
to implement its turnaround programme and has disclosed key
elements of its progress in the Chief Executive's review on pages 5
to 10.
The Group continues to make progress with its turnaround
programme and on 20 February 2012 we announced that our cash
margins were improving and that our second half performance was
stronger than the first half. However progress has not been as
rapid as originally envisaged, and whilst trading remains
challenging, in order to expedite our turnaround and take advantage
of the opportunities presented by the key trading periods of the
UEFA Euro Championships and the London 2012 Olympics, the Group has
sought and agreed the terms of a strategic investment from Dick's,
a new strategic partner, and also agreed a package of further
support from the Group's other key investors and stakeholders.
The Board decided to accept a strategic investment from Dick's
as, in addition to the significant capital resources to be
provided, the Board is of the view that the introduction of Dick's
as a strategic partner will enable the Company to draw upon Dick's
valuable experience in the sports retail market, which, in turn,
will assist management in accelerating the Group's revised business
plan. Dick's is an authentic full-line sporting goods retailer
based in the USA, offering a broad assortment of brand name
sporting goods equipment, apparel and footwear in a specialty store
environment.
The Company intends to raise GBP30 million (before expenses) in
aggregate by way of the exercise of 2011 Warrants and the issue of
the Subscription Shares and the First Convertible Loan Notes,
conditional, among other things, upon the passing of the
Subscription Resolutions at the General Meeting.
The Company's four largest shareholders and Dick's have entered
into a Subscription Agreement with the Company pursuant to
which:
-- The four largest shareholders have agreed to exercise 2011
Warrants resulting in the issue of 22,712,894 Warrant Shares at an
exercise price of 10 pence per share;
-- The four largest shareholders and Dick's have agreed to
subscribe for a total of 89,787,106 Subscription Shares at 10 pence
per share; and
-- Dick's has agreed to subscribe for the First Convertible Loan
Notes in an aggregate principal amount of GBP18.75 million and has
been granted the right (but does not have the obligation) to
subscribe for the Second Convertible Loan Notes in an aggregate
principal amount of up to GBP20 million, in each case subject to
the terms and conditions set out in the Convertible Loan Note
Instrument.
On 4 April 2012, the Board also announced that it had reached
agreement with BoS, the Company's lender, regarding the continued
provision of the BoS Facility through to 31 May 2015, an agreement
with adidas Group, one of the Company's key supplier partners, for
the provision of a loan of up to GBP15 million (of which GBP8.4
million will be available for drawdown in the first year) and the
terms of an intercreditor arrangement with BoS, Dick's and adidas
Group, each agreement subject to completion of the Subscription and
the satisfaction of certain other conditions precedent.
The strategic investment and financing package will not address
the medium term financing requirements of the Group and accordingly
the Company currently believes that it will require additional
funding in the first quarter of 2013. Whilst this additional
funding is not committed, the further round of funding is expected
to be provided through:
-- The subscription by Dick's for the Second Convertible Loan
Notes in the aggregate principal amount of GBP20 million (that
Dick's has the right (but not the obligation) to subscribe for
under the terms of the Subscription Agreement);
-- A further share offering of new Ordinary Shares, to the
extent permitted by law and regulation, to all of the Company's
shareholders to raise the aggregate sum of GBP5 million; and
-- The continued support of BoS and the second tranche of the
loan from adidas Group, amounting to GBP6.6 million, being made
available for drawdown by the Company.
Shareholder approval will be required for the issue of the
various securities and to obtain approval from the Takeover Panel
for the level of Dick's future holdings (being up to a maximum of
61 per cent of the Company's voting share capital). The shareholder
vote to approve this transaction will take place on 26 April 2012.
If the shareholder vote is not passed by Shareholders at the
General Meeting and the transaction does not proceed, the Company
will be in default of the current BoS Facility and the Amended BoS
Facility and the Adidas Loan Agreement will not become effective.
In these circumstances, and in the absence of any other funding
proposal given the limited headroom in the Group's short term cash
flow forecasts, the Directors would be likely to conduct a formal
sale process for the Company. However, if a purchaser cannot be
found for the Company under the formal sale process, the Directors
believe that the Company will not be able to continue to trade as a
going concern which would result in the appointment of receivers,
liquidators or administrators.
If the transaction is approved, the Directors are confident that
this package of support will provide the Group with a solid
platform from which to deliver growth over the key trading periods
of the UEFA Euro Championships and the London 2012 Olympics.
However our view remains that the UK retail market continues to be
extremely challenging and is likely to remain so for some time.
As part of their going concern assessment, the Directors have
reviewed trading and cashflow forecasts which take into
consideration the uncertainties in the current operating
environment. The Directors have now concluded that there are
material uncertainties surrounding going concern. These material
uncertainties are:
-- securing the pre-requisite approval from Shareholders of the Resolutions;
-- the ability of the Group to continue to implement its
business recovery turnaround strategy in light of:
o the current macroeconomic environment and its impact on
consumer confidence and the UK retail sector: this uncertain and
volatile outlook in the UK economy results in difficulties in
forecasting sales performance in the short and medium term; and
o the Group's current stock profile which has been affected by
management's control of costs and available resources with the
result that the Group's intake, availability, stock holding and
profile of stock continue to be substantially lower than it should
be;
both of these factors are critical to the achievability of the
Group's business plan, which will be both vital factor in
maintaining sufficient headroom on cash and covenants, but also an
important factor in determining the timing of the additional
funding expected to be required in the first quarter of 2013;
and
-- if the pre-requisite approval from Shareholders of the
Resolutions is not secured, securing ongoing support from BoS to
continue to trade whilst alternative support is sought.
The Group's short-term cash flow forecasts indicate that the
Group will not experience a funding shortfall before the expected
date of receipt of the net proceeds of the Subscription on or
around 27 April 2012. However, the headroom available to the
Company in the period leading up to 27 April 2012 is limited and
management must continue to carefully control its cash and
available resources during this period.
Based on the commercial basis of this transaction which is to
the benefit of the shareholders, the Directors have no reason to
believe that the vote will not proceed with a majority. Having
regard to the factors set out in this going concern assessment, the
Directors have a reasonable expectation that, should the investment
proceed, the Group will be in a position to deliver its turnaround
strategy.
The Directors have identified a number of management initiatives
that the business could pursue and which they are confident it can
achieve to help offset a potential decline in trading
including:
-- further cost reductions in addition to the current cost reduction programme;
-- an improvement in its stockholding and/or extending terms with suppliers;
-- management of capital expenditure; and
-- the disposal of certain stores or operating units.
The Directors have concluded that the combination of these
circumstances represents a material uncertainty which may cast
significant doubt upon the Company's and the Group's ability to
continue as a going concern and therefore the Company and Group may
be unable to continue to realise assets and discharge liabilities
in the normal course of business. However, given the strategic
investment and financing package that we are announcing today, the
Board is confident that they have a reasonable expectation that the
Group and the Company will have adequate resources to continue in
operational existence for the foreseeable future. For these
reasons, they continue to adopt the going concern basis in
preparing the annual report and financial statements. The results
in this announcement do not include any adjustments that would
result from the going concern basis of preparation being
inappropriate.
2. Exceptional items
Group
52 weeks to 52 weeks to
29 January 30 January
2012 2011
GBP'000 GBP'000
------------------------------------------------------ ----------- -----------
Goodwill impairment - 92,610
------------------------------------------------------ ----------- -----------
Reorganisation costs 5,718 4,524
------------------------------------------------------ ----------- -----------
HMRC provision 5,324 676
------------------------------------------------------ ----------- -----------
Net loss on disposal of property, plant and equipment 1,802 582
------------------------------------------------------ ----------- -----------
Impairment of intangible fixed assets 7,829 -
------------------------------------------------------ ----------- -----------
Impairment of fixed assets of CVA stores 6,815 3,841
------------------------------------------------------ ----------- -----------
Impairment of fixed assets of loss making stores 4,748 -
------------------------------------------------------ ----------- -----------
Property provisions 14,972 5,789
------------------------------------------------------ ----------- -----------
Release of deferred lease incentives - (66)
------------------------------------------------------ ----------- -----------
47,208 15,346
------------------------------------------------------ ----------- -----------
47,208 107,956
------------------------------------------------------ ----------- -----------
Goodwill impairment in the prior period represented the write
down required following a review of goodwill, which arose on the
acquisition of Sports Division. This was a non-cash item. Further
details are included in note 14 of the Group's 2012 Annual
Report.
Reorganisation costs relate to costs incurred from the
restructuring of the Group, which remains ongoing.
HMRC provision relates to a provision for a non-recurring matter
which the Group is currently discussing with HMRC.
Details in relation to the impairment of fixed assets can be
found in notes 16 and 23, respectively, of the Group's Annual
Report. Further details in relation to property provisions can be
found in note 4 to this announcement.
3. Loss per share
The calculation of the basic and diluted loss per Ordinary Share
and of adjusted basic loss per Ordinary Share is based on the
following data:
52 weeks to 52 weeks to 52 weeks to
29 January 2012 30 January 2011* 30 January 2011**
Loss Loss Loss
per share per share per share
From continuing operations GBP'000 (pence) GBP'000 (pence) GBP'000 (pence)
------------------------------------------------- --------- ---------- --------- ---------- --------- ----------
Loss for the purposes of basic loss per Ordinary
Share and diluted loss per Ordinary Share
being net loss attributable to equity holders of
the parent (101,129) (40.40)p (181,365) (72.45)p (181,365) (278.66)p
------------------------------------------------- --------- ---------- --------- ---------- --------- ----------
Exceptional items - goodwill impairment - - 92,610 36.99p 92,610 142.29p
- other exceptional items 47,208 18.86p 15,346 6.13p 15,346 23.58p
------------------------------------------------- --------- ---------- --------- ---------- --------- ----------
Loss for the purposes of adjusted basic loss per
Ordinary Share being net loss attributable
to equity holders of the parent before
exceptional operating items, net of taxation (53,921) (21.54)p (73,409) (29.33)p (73,409) (112.79)p
------------------------------------------------- --------- ---------- --------- ---------- --------- ----------
52 weeks to 52 weeks to
29 January 30 January
2012 2011
GBP'000 GBP'000
------------------------------------------------------------------------------------------- ----------- -----------
Loss for the purposes of basic loss per Ordinary Share and diluted loss per Ordinary Share
being net loss attributable to equity holders of the parent (101,129) (181,365)
------------------------------------------------------------------------------------------- ----------- -----------
Effect of dilutive potential Ordinary Shares:
------------------------------------------------------------------------------------------- ----------- -----------
Fair value adjustment of warrants (2,935) -
------------------------------------------------------------------------------------------- ----------- -----------
Loss for the purpose of diluted loss per Ordinary Share (104,064) (181,365)
------------------------------------------------------------------------------------------- ----------- -----------
Number of Ordinary Shares (thousands)
52 weeks to
52 weeks to 30 January
52 weeks to 29 January 2012 30 January 2011* 2011**
-------------------------------------------------------- --------------------------- ----------------- ------------
Number of Ordinary Shares for the purposes of basic loss
per Ordinary Share
and adjusted basic loss per Ordinary Share (restated -
see below) 250,345 250,345 65,083
-------------------------------------------------------- --------------------------- ----------------- ------------
Effect of dilutive potential Ordinary Shares:
-------------------------------------------------------- --------------------------- ----------------- ------------
Share options 16,460 - -
-------------------------------------------------------- --------------------------- ----------------- ------------
Number of Ordinary Shares for the purposes of diluted
loss per Ordinary Share 266,805 250,345 65,083
-------------------------------------------------------- --------------------------- ----------------- ------------
Continuing operations
-------------------------------------------------------- --------------------------- ----------------- ------------
Basic loss per Ordinary Share (40.40)p (72.45)p (278.66)p
-------------------------------------------------------- --------------------------- ----------------- ------------
Diluted loss per Ordinary Share (39.00)p (72.45)p (278.66)p
-------------------------------------------------------- --------------------------- ----------------- ------------
Adjusted basic loss per Ordinary Share (21.54)p (29.33)p (112.79)p
-------------------------------------------------------- --------------------------- ----------------- ------------
*The number of shares in issue for the period ended 30 January
2011 has been represented to take account retrospectively of the
Firm Placing and Open Offers completed during February 2011 and
April 2011
**The number of shares for the purposes of the prior year loss
per share calculations has been restated to remove the effect of
the Firm Placing and Open Offers completed during February 2011 and
April 2011. As these were cash-settled, IAS 33 'Earnings per share'
requires that they be excluded from retrospective restatement
calculations.
Due to the current year losses and losses brought forward for
taxation purposes, no taxation has been allocated for the purpose
of the loss per share calculations.
4. Provisions
Current liabilities
Vacant Dilapidations Onerous
stores provision provision leases Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------- ----------------- ------------- -------- --------
Group
--------------------------------------------------- ----------------- ------------- -------- --------
At 30 January 2011 2,998 3,076 562 6,636
--------------------------------------------------- ----------------- ------------- -------- --------
Reclassification from (to) non-current liabilities 1,343 (1,855) - (512)
--------------------------------------------------- ----------------- ------------- -------- --------
Created in the period 8,228 - 38 8,266
--------------------------------------------------- ----------------- ------------- -------- --------
Utilised in the period (3,157) (207) (146) (3,510)
--------------------------------------------------- ----------------- ------------- -------- --------
Released in the period (3,518) (420) (454) (4,392)
--------------------------------------------------- ----------------- ------------- -------- --------
At 29 January 2012 5,894 594 - 6,488
--------------------------------------------------- ----------------- ------------- -------- --------
Non-current liabilities
Vacant stores Onerous
provision Compromised lease fund Dilapidations provision leases Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------- ---------------------- ---------------------------- -------- --------
Group
----------------------------- ------------- ---------------------- ---------------------------- -------- --------
At 30 January 2011 10,598 - - 278 10,876
----------------------------- ------------- ---------------------- ---------------------------- -------- --------
Reclassification (to) from
current liabilities (1,343) - 1,855 - 512
----------------------------- ------------- ---------------------- ---------------------------- -------- --------
Created in the period 11,742 2,500 15 214 14,471
----------------------------- ------------- ---------------------- ---------------------------- -------- --------
Utilised in the period (1,679) - - (350) (2,029)
----------------------------- ------------- ---------------------- ---------------------------- -------- --------
Released in the period (3,980) - - (142) (4,122)
----------------------------- ------------- ---------------------- ---------------------------- -------- --------
At 29 January 2012 15,338 2,500 1,870 - 19,708
----------------------------- ------------- ---------------------- ---------------------------- -------- --------
The vacant stores provisions represent the estimated costs
expected to be incurred in exiting the relevant lease agreements
and in some cases ongoing rents and rates. The provision includes
closed stores and restructured stores comprising units committed to
close before the end of April 2008, stores within the 2009 CVA and
stores within the 2011 CVA.
The compromised lease fund is payable to landlords as part of
the 2011 CVA and is due after a Fund Trigger Date, being the
earlier of 24 April 2013, the date the equity shares of JJB cease
to be listed and traded on any recognised stock exchange and the
unconditional date of an offer made for the Company. The total
amount payable by the Company will be between GBP2.5 million and
GBP7.5 million, the amount determined by comparing the value of the
Market Capitalisation of the Company on the Fund Trigger Date to
the amount of the Target Equity Raising of GBP96.5 million. This
compromise can be settled in cash or shares, at the discretion of
the Company.
The dilapidations provision is the best estimate of the present
value of expenditure expected to be incurred by the condition
required under the individual lease agreements at the end of their
term.
The onerous lease provision represented the direct expenditure
expected to be incurred on one of the two soccer domes relating to
a dispute with the existing tenant which has now been settled. The
provision consisted of the costs expected to be incurred during the
dispute, together with the ongoing overhead expenses, including
rent and rates. No rental income is currently being received from
the site. This property is now closed and unoccupied, and the
provision has been released and reclassified as a vacant store
provision.
Current liability provisions are expected to be settled during
the 52 weeks to 27 January 2013; the non-current liability
provisions are expected to be settled after this date.
5. Contingent liabilities
CVA
On 3 March 2011, the Company and its subsidiary, Blane Leisure
Limited launched a proposal to enter into a Company Voluntary
Arrangement ("CVA"). On 22 March 2011, the CVA proposals made by
the Company and Blane Leisure Limited received the approval of the
requisite majority of creditors and members of each Company. On 23
March 2011 the CVA became partially effective, with full
implementation conditional on further events.
Following the expiry of a 28 day challenge period on 21 April
2011, the CVA proposal was fully implemented upon receipt of the
gross proceeds from the Second Firm Placing and Placing and Open
Offer on 27 April 2011.
As part of the compromise of the claim of the landlords within
the April 2011 CVA, the Company has agreed to the creation of a
Compromised Lease Fund to affected landlords. Full details of this
are included within note 23 relating to provisions.
Full details of the CVA proposal are contained within the
Investment circular issued to shareholders on 3 March 2011.
Other contingent liabilities
The Company has contingent liabilities in connection with
contractual obligations arising under certain trading contracts. At
the present time it is not possible to quantify any cash outflow
with respect to these matters.
6. Analysis of net debt
Group
At Other At
30 January non-cash 29 January
2011 Cash flow items 2012
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ----------- --------- --------- -----------
Cash and cash equivalents 5,859 (1,261) 40 4,638
-------------------------- ----------- --------- --------- -----------
Non-current liability
-------------------------- ----------- --------- --------- -----------
Bank loans (24,678) 8,763 - (15,915)
-------------------------- ----------- --------- --------- -----------
Net debt (18,819) 7,502 40 (11,277)
-------------------------- ----------- --------- --------- -----------
Amendments to banking facilities in the period
On 1 February 2011, the Company and Bank of Scotland ("BoS")
agreed an amendment to the existing BoS Facility including the
waiver of (i) the fixed charge cover test on the April 2011 Quarter
Date and (ii) the clean down test for the period ended 30 January
2011. Further covenants were included within the amendment
agreement.
On 15 March 2011 the Company and BoS agreed further amendments
to the existing BoS Facility and also agreed an Amended BoS
Facility following receipt of proceeds under the Second Firm
Placing and Placing and Open Offer (and certain other customary
conditions precedent).
The Amended BoS Facility came into effect on 27 April 2011.
The key terms of the Amended BoS Facility are as follows:
> The maturity date of the facility was extended to 31 May
2014; and
> An overdraft facility of GBP7.5 million is contained within
the GBP25 million facility limit.
The weighted average interest rate paid by both Group and
Company was 5.6 per cent (2011: 5.6 per cent).
Further amendments have been made to the BoS Facility post -
period end, see note 8.
Undrawn borrowing facilities
At 29 January 2012, the Group had an undrawn committed borrowing
facility of GBP8.8 million (2011: GBPnil), in respect of which all
conditions precedent had been met, against the BoS GBP25 million
facility.
7. Reconciliation of operating loss to net cash from operating
activities
Group
52 weeks to 52 weeks to
29 January 30 January
2012 2011
GBP'000 GBP'000
-------------------------------------------------------- ----------- -----------
Operating loss from continuing operations (103,450) (181,812)
-------------------------------------------------------- ----------- -----------
Depreciation of property, plant and equipment 8,081 9,269
-------------------------------------------------------- ----------- -----------
Amortisation of other intangible assets 2,913 3,294
-------------------------------------------------------- ----------- -----------
Impairment of intangible fixed assets 7,829 -
-------------------------------------------------------- ----------- -----------
Impairment of goodwill - 92,610
-------------------------------------------------------- ----------- -----------
Net loss on disposal of property, plant and equipment 1,802 582
-------------------------------------------------------- ----------- -----------
Impairment of fixed assets of CVA stores 6,815 3,841
-------------------------------------------------------- ----------- -----------
Impairment of fixed assets of loss making stores 4,748 -
-------------------------------------------------------- ----------- -----------
Increase in provisions 8,684 5,775
-------------------------------------------------------- ----------- -----------
Share based payment reserve 1,710 2,545
-------------------------------------------------------- ----------- -----------
Bank loan costs (475) (125)
-------------------------------------------------------- ----------- -----------
Operating cash flow before movements in working capital (61,343) (64,021)
-------------------------------------------------------- ----------- -----------
Decrease in inventories 5,423 15,858
-------------------------------------------------------- ----------- -----------
Decrease in trade and other receivables 1,011 15,982
-------------------------------------------------------- ----------- -----------
Decrease in trade and other payables (23,661) (39,904)
-------------------------------------------------------- ----------- -----------
Cash used in operations (78,570) (72,085)
-------------------------------------------------------- ----------- -----------
Taxation - 190
-------------------------------------------------------- ----------- -----------
Net cash outflow from operating activities (78,570) (71,895)
-------------------------------------------------------- ----------- -----------
8. Events after the Statement of financial position date
On 4 April 2012, the Board announced details of a strategic
investment and financing package with a number of the Company's key
stakeholders and Dick's Sporting Goods, Inc. ('Dick's), a new
strategic partner.
The Company intends to raise GBP30 million (before expenses) in
aggregate by way of the exercise of 2011 Warrants and the issue of
the Subscription Shares and the First Convertible Loan Notes,
conditional, among other things, upon the passing of the
Subscription Resolutions at the General Meeting.
IAML, Harris Associates, Crystal Amber and Gates Foundation, the
Company's four largest shareholders, and Dick's have entered into a
Subscription Agreement with the Company pursuant to which:
-- IAML, Harris Associates, Crystal Amber and Gates Foundation
have agreed to exercise 2011 Warrants resulting in the issue of
22,712,894 Warrant Shares at an exercise price of 10 pence per
share;
-- IAML, Harris Associates, Crystal Amber, Gates Foundation and
Dick's have agreed to subscribe for a total of 89,787,106
Subscription Shares at 10 pence per share; and
-- Dick's has agreed to subscribe for the First Convertible Loan
Notes in an aggregate principal amount of GBP18.75 million and has
been granted the right (but does not have the obligation) to
subscribe for the Second Convertible Loan Notes in an aggregate
principal amount of up to GBP20 million, in each case subject to
the terms and conditions set out in the Convertible Loan Note
Instrument.
Pursuant to the terms of the Convertible Loan Note Instrument,
the First Convertible Loan Notes and the Second Convertible Loan
Notes will convert into a maximum of 887,871,178 Ordinary Shares
representing approximately 61 per cent of the Company's then fully
diluted share capital.
On 4 April 2012, the Board also announced that it had reached
agreement with BoS, the Company's lender, regarding the continued
provision of the BoS Facility through to 31 May 2015, an agreement
with adidas Group, one of the Company's key supplier partners, for
the provision of a loan of up to GBP15 million and the terms of an
intercreditor arrangement with BoS, Dick's and adidas Group, each
agreement subject to completion of the Subscription and the
satisfaction of certain other conditions precedent.
The strategic investment and financing package requires
shareholder approval. In particular, the Subscription and the Rule
9 Waivers are conditional on, among other things, the passing of
the Subscription Resolutions by Shareholders at a General
Meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSFSFIFESEDL
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