TIDMJD.
RNS Number : 6180O
JD Sports Fashion Plc
21 September 2011
21 September 2011
JD SPORTS FASHION PLC
INTERIM RESULTS
FOR THE TWENTY SIX WEEKS TO 30 JULY 2011
JD Sports Fashion Plc (the "Group"), the leading retailer and
distributor of sport and athletic inspired fashion apparel and
footwear, today announces its Interim Results for the 26 weeks
ended 30 July 2011 (comparative figures are shown for the 26 week
period ended 31 July 2010).
Results
2011 2010
GBP000 GBP000 % Change
Revenue 439,768 383,894 +14.6%
======== ========
Gross profit % 48.0% 48.2%
======== ========
Operating profit (before exceptional
items) 16,251 18,615 -12.7%
Share of results of joint venture
before exceptional items
(net of tax) (102) 687
Net financial (expenses) / income (113) 89
-------- --------
Profit before tax and exceptional
items 16,036 19,391 -17.3%
Exceptional items (see note 3) 2,866 (2,754)
Share of exceptional items of joint
venture
(net of tax) (a) 1,170 -
-------- --------
Profit before tax 20,072 16,637 +20.6%
Income tax expense (5,539) (4,909)
-------- --------
Profit after tax 14,533 11,728 +23.9%
======== ========
Basic earnings per ordinary share 28.51p 24.14p +18.1%
Interim dividend payable per ordinary
share 4.10p 3.80p +7.9%
Net cash at end of period (see note
7) (b) 19,151 34,462
(a) The share of exceptional items of joint venture in the 26
week period to 30 July 2011 relate to the reversal of the
impairment of the investment held by Focus Brands Limited in Focus
Group Holdings Limited, following repayment of original purchase
consideration by the vendors of Focus Group Holdings Limited.
(b) Net cash consists of cash and cash equivalents together with
other borrowings from bank loans, other loans and finance
leases.
Highlights
-- Total Group revenue increased by 14.6% to GBP439.8 million
(2010: GBP383.9 million) of which GBP35.1 million came from
businesses not wholly owned in both six month periods
-- Profit before taxation increased by 20.6% to GBP20.1 million
(2010: GBP16.6 million)
-- Underlying group profit before tax and exceptionals declined
from GBP19.4 million to GBP16.0 million in line with the Board's
expectations at the time of the preliminary announcement of results
for the last financial year in April
-- Net cash at 30 July 2011 was GBP19.2 million (31 July 2010:
GBP34.5 million) after net cash investment of GBP12.4 million on
the new warehouse site in Rochdale (2010: GBP1.3 million) and
GBP22.2 million of net investments and repayments of debt
associated with acquisitions (2010: GBP1.2 million) in the six
month period
-- Interim dividend increased by 7.9% to 4.1p (2010: 3.8p)
-- Acquisitions in Ireland (Champion Sports) and Spain
(Sprinter) have continued the international expansion of the Sports
Retail concepts
-- The gross margin performance is pleasing in the light of all
the pressures impacting on gross margin at the start of the year.
Sales, gross margin performance and underlying profit of the three
business sectors are tabulated below:
Sport Fashion
Retail Retail Distribution Total
Period to 30 July 2011 GBP000 GBP000 GBP000 GBP000
Gross revenue 322,780 59,546 60,461 442,787
-------- -------- -------------
Intersegment revenue (3,019)
--------
Revenue 439,768
--------
Gross margin % 49.5% 48.0% 37.4% 48.0%
-------- -------- ------------- --------
Operating profit / (loss)
before exceptional items 20,196 (3,397) (548) 16,251
-------- -------- ------------- --------
Sport Fashion
Retail Retail Distribution Total
Period to 31 July 2010 GBP000 GBP000 GBP000 GBP000
Gross revenue 297,331 51,213 37,382 385,926
-------- -------- -------------
Intersegment revenue (2,032)
--------
Revenue 383,894
--------
Gross margin % 49.3% 48.6% 36.7% 48.2%
-------- -------- ------------- --------
Operating profit / (loss)
before exceptional items 21,568 (2,002) (951) 18,615
-------- -------- ------------- --------
-- Overall gross LFL sales for the 26 week period in the UK and
Ireland combined core retail segments increased by 0.8% but on a
net basis fell by 0.9%:
Combined
Core UK &
Sport Fashion Ireland
Gross Sales (Incl
VAT) -0.1% +5.3% +0.8%
Net Sales -1.6% +3.0% -0.9%
-- Like for like sales for the seven weeks to 17 September
were:
Combined
Core UK &
Sport Fashion Ireland
Gross Sales (Incl
VAT) +2.5% +7.4% +3.3%
Net Sales +1.0% +5.0% +1.6%
Peter Cowgill, Executive Chairman, said:
"It is pleasing to report that Group profit before tax rose by
20.6% to GBP20.1 million (2010: GBP16.6 million). Our continual
focus on exploiting all avenues of revenue growth and margin
protection has enabled us to deliver a level of profit that
represents a platform for meeting expectations for the full year,
although trading conditions remain tough.
"Trading since the period end has continued to improve with
gross like for like sales for the core UK and Ireland retail
fascias in the seven week period to 17 September up by 3.3% (+2.5%
Sports Fascias; +7.4% Fashion Fascias). Excluding the impact of
VAT, the net revenues have increased in this period by 1.6% (+1.0%
Sports Fascias; +5.0% Fashion Fascias). The result for the full
year remains very dependent on the sales and margin performance in
December and January and we will issue an Interim Management
Statement on the third quarter in November.
"We continue to look for appropriate acquisition opportunities
which can deliver additional sources of future earnings growth
principally in overseas Sports Retail but also to compliment our
core retail fascias.
"The Board again believes that the Group is well positioned for
future growth across its markets and trading is in line with its
expectations."
Enquiries:
JD Sports Fashion Plc Tel: 0161 767 1000
Peter Cowgill, Executive Chairman
Barry Bown, Chief Executive
Brian Small, Finance Director
MHP Communications Tel: 020 3128 8100
Andrew Jaques
Barnaby Fry
Ian Payne
Executive Chairman's Statement
Introduction
In my statement on the results for the period to 29 January
2011, which I made in April, I referred to the adverse impact on
the retail environment from both fiscal changes and multiple macro
economic pressures. These influences have had the expected impact
on the retail businesses in the first half of the year. However,
our continual focus on exploiting all avenues of revenue growth and
margin protection has enabled us to deliver a level of profit that
represents a platform for meeting expectations for the full year,
although trading conditions remain tough.
The 26 week period to 30 July 2011 saw a gross like for like
sales improvement in the core UK and Ireland Retail Fascias of
+0.8% (-0.1% Sports Fascias; +5.3% Fashion Fascias). However, after
taking into account the impact of the increase in VAT to 20%, net
sales have declined by 0.9% (-1.6% Sports Fascias; +3.0% Fashion
Fascias).
Gross margins have declined slightly to 48.0% (2010: 48.2%)
although this is due to the higher proportion of total sales
generated by the lower margin distribution segment of the business
rather than a decline in overall retail margins. This has been an
excellent performance given the current pressures on margin but,
looking forward, we still have tough margin comparatives in the
second half of the year.
The period end net cash was GBP19.2 million (2010: GBP34.5
million). This represents a reduction of GBP67.0 million compared
to the year end position at January (2010: reduction of GBP26.0
million). However, included within the outflow of cash in the
current period is GBP22.2 million for the net cost of investments
and repayments of debt associated with acquisitions (2010: GBP1.2
million). We have also incurred GBP26.1 million (2010: GBP16.1
million) on capital expenditure which includes GBP12.4 million of
investment on the new warehouse site in Rochdale (2010: GBP1.3
million). The remainder of the movement represents more normal cash
flows, including the impact of seasonal working capital
movements.
Acquisitions
We continue to look for appropriate acquisition opportunities
which can deliver additional sources of future earnings growth
principally in overseas Sports Retail but also to compliment our
core retail fascias.
We have expanded further in mainland Europe through our
acquisition during the period of 50.1% of the Sprinter business in
Spain. Sprinter's experienced management team and established
infrastructure provides the JD fascia with the opportunity to
expand both its European retail presence and the distribution of
its own and licensed brands. It is our intention that the Sprinter
store chain will continue to grow and a joint venture has been
established between Sprinter and JD (in which JD will have an
effective shareholding of 65%) to rollout JD as a more fashion
oriented retail fascia in Spain, emulating the UK format. We
anticipate that the first JD stores in Spain will open in Spring
2012.
We have also enhanced our previously limited position in the
Republic of Ireland through the acquisition of 100% of the Champion
Sports business. We are working with the Champion management team
on their legacy profitability issues in a difficult retail market
in Ireland.
The acquisition of 8 Cecil Gee stores, from Moss Bros Group plc,
provides the Group with the opportunity to develop a premium
fashion fascia which will continue to stock brands unavailable to
the Group's existing fascias. We believe that by applying our
established merchandising and buying skills and disciplines it will
have the opportunity to become a profitable standalone entity. We
are currently working on a proposition which would involve
re-launching these stores under a new style in Spring 2012.
The acquisition of the Fenchurch and Peter Werth brands together
with the agreement for exclusive licences in the UK and Ireland for
Fila and Diadora, is a further demonstration of our commitment to
developing a unique product offering to our Retail consumers.
Elsewhere, in the Distribution segment, we have further
increased our general teamwear offering through the acquisition of
80% of the Kukri business and have increased our shareholding in
the Focus business by 31% to 80% making it a subsidiary for the
first time.
Sports Fascias
The Sports Fascias are JD, Size?, Chausport, Sprinter and
Champion Sports.
The Sports Fascias' total revenue (after elimination of
inter-group sales) increased by 9.0% during the period to GBP322.7
million (2010: GBP296.2 million) although like for like sales for
the period in the core UK and Ireland sports fascia stores were
down by 1.6% (2010: +3.9%) which represents a significant
improvement from the position announced in the Interim Management
Statement in June when the like for like performance after 18 weeks
was -3.0%. Chausport had a satisfactory half year with LFL sales up
by 4.9% (2010: 10.5%) which is pleasing given the strong
comparative of the prior year. The newly acquired Champion and
Sprinter businesses contributed turnover of GBP13.4 million (4
months) and GBP6.5 million (1 month) respectively.
Gross margin achieved in the Sports Fascias has improved
marginally to 49.5% helped by improved margins in France primarily
from the JD stores where the premium product being sold can command
higher price points. This is a robust performance in current
economic conditions.
Overall, operating profits (before exceptional items) in the
Sports Fascias reduced from GBP21.6 million to GBP20.2 million.
Within this, following the like for like sales decline in the core
UK and Ireland business, operating profit in JD reduced by GBP1.5
million to GBP20.5 million (2010: GBP22.0 million). The continued
progress in Chausport combined with the encouraging start to JD in
France saw first half operating losses in France reduce from
GBP(0.4) million to GBP(0.1) million. On a combined basis, the
newly acquired Champion and Sprinter businesses contributed a net
operating loss of GBP(0.2) million.
We continue to invest heavily in JD, Size? and the new
businesses. The returns to date from investing in the existing
fascias whether that be from refurbishment, relocations or new
locations mean that we will continue our investment programme. We
have completed 12 new stores in the period and 3 refurbishments
(including one upsizing of space from taking a neighbouring unit)
in the UK Sports Fascia stores.
We are cautiously pleased with the development of the JD stores
in France with the new locations at Lyon and Evry both performing
ahead of our initial expectations. The converted store in Lille is
performing over 50% ahead of its historic performance as a
Chausport. The performance to date of these three stores has given
us the confidence to look at further new stores and conversions.
Before the end of the year, we anticipate opening a new store in
Marseille and converting at least one more Chausport to the JD
fascia. We have also engaged new property agents in France to
identify opportunities for further JD stores. Elsewhere in France,
we have opened one new Chausport store and completed two
refurbishments.
The initial performance of JD in France has also given us the
confidence to look at additional European territories. As with
France, our preferred model is to work with a local business which
has knowledge of relevant retail locations in its territory and has
an existing distribution network which we can access. We are
currently working with the Sprinter management team on this basis
with a view to opening JD stores in Spain in early to mid 2012. We
will focus the initial openings on the major metropolitan areas.
The Sprinter team will also continue to develop the existing
Sprinter business, which is currently largely based in the South
and East of Spain.
Champion Sports is still experiencing difficult trading
conditions with the Irish economy not yet showing any recovery
momentum. We do not believe that Champion will deliver a
significant operating profit until we see economic improvement in
the Republic of Ireland although there is a plan in place to
enhance operating margins.
Fashion Fascias
The Fashion Fascias are Bank, Scotts and the recently acquired
Cecil Gee.
The Fashion Fascias' total revenue increased by 16.3% during the
period to GBP59.5 million (2010: GBP51.2 million) which includes
GBP1.2 million from the Cecil Gee stores (1 month). Like for like
sales for the period were up by 3.0% (2010: -3.8%) being Bank +5.9%
(2010: -3.7%) and Scotts -4.5% (2010: -4.0%). As with the Sports
Fascias, the performance after 26 weeks represents a significant
improvement from the position announced in the Interim Management
Statement in June when the like for like performance after 18 weeks
was -1.6% (Bank -0.4% and Scotts -4.8%).
Gross margin achieved in the Fashion Fascias has reduced from
48.6% to 48.0% which we attribute to current market conditions.
We have continued our investment in the Bank fascia stores with
6 new stores opened in the period. These openings included a store
in Belfast which is Bank's first store in Northern Ireland. We have
also invested in additional resource within the Bank commercial
teams with particular emphasis on buying and merchandising. We
believe this will lead to an enhanced future performance although
given the lead times for ordering product the impact will be most
evident in future years.
The operating loss (before exceptional items) in the Fashion
Fascias has increased to GBP3.4 million (2010: GBP2.0 million).
Although there was pleasing like for like sales growth in the Bank
fascia, the reduced margin and the investment in new stores and
additional resource resulted in operating losses increasing by
GBP1.1 million to GBP3.1 million (2010: GBP2.0 million). Scotts,
which broke even in the first half of 2010, saw a small loss in the
current period of GBP0.1 million. The recently acquired Cecil Gee
business delivered a small loss of GBP0.2 million.
The current performance of the Fashion fascias is more
encouraging although it is being boosted currently by significant
growth in Bank's ecommerce sales and the performance of these
fascias remains more volatile than those in Sports.
Distribution
The Distribution businesses are now Canterbury, Topgrade,
Deakins, Kooga and the recently acquired Kukri and Focus.
The first half operating losses in the Distribution businesses
have reduced to GBP0.5 million (2010: GBP1.0 million) primarily
from an increased profit from Canterbury, where first half profits
grew to GBP0.9 million (2010: GBP0.5 million) principally from a
strong performance in Australia and New Zealand where there was a
sales build up in advance of the Rugby World Cup, combined with
favourable local exchange rates relative to the US Dollar.
Performance in the other parts of Canterbury still needs to improve
but we remain excited by brand development prospects.
The operating losses in Topgrade increased to GBP1.1 million
(2010: GBP0.5 million) with ongoing investment in Get The Label. We
are still encouraged by the sales growth in Get The Label with
revenues increased by approximately 80% compared to the prior year
and we remain optimistic about the long term profitability of this
venture. End of line wholesaling sales within Topgrade also
increased in the period.
Focus has been accounted for as a subsidiary since March and has
contributed revenues of GBP10.4m and an operating profit of GBP0.4
million. Focus will continue to concentrate on the design, sourcing
and distribution of footwear and apparel both for own brand and
under license brands for both group and external customers.
Included within Focus's stable of brands going forward is Peter
Werth which we acquired in the period for GBP0.4 million.
The operational processes and disciplines around sponsorship
properties in Kooga Rugby have benefitted from a strengthened
management team but losses have only slightly reduced.
Deakins has made an encouraging start to the year.
Joint Venture
We have now increased our shareholding in Focus Brands Limited
to 80% by purchasing an additional 31% shareholding for a maximum
consideration of GBP1.25 million. As such, the results for the
period represent one month only with Focus recognised as a
subsidiary for the balance of the period.
Group Performance
Revenue, gross margin and overheads
Total Group revenue increased by 14.6% in the period to GBP439.8
million (2010: GBP383.9 million) with a decline of 0.9% on a like
for like basis in the net sales in the UK and Ireland retail
fascias.
Revenue decreased by 1.6% on a like for like basis in the Sports
Fascias but increased by 3.0% in the Fashion Fascias.
Group gross margin decreased in the period from 48.2% to 48.0%
reflecting the increased participation of the lower margin
distribution businesses.
Non-store retail overheads have risen by more than the rate of
inflation as we have built infrastructure to support acquisitions
and international growth. This has impacted the results of the
Sports Fascias operating segment.
Operating profits and results
Group operating profit (before exceptional items) for the period
was down 12.7% to GBP16.3 million (2010: GBP18.6 million) and
comprises a Sports Fascias profit of GBP20.2 million (2010: GBP21.6
million), a Fashion Fascias loss of GBP3.4 million (2010: loss of
GBP2.0 million) and a Distribution segment loss of GBP0.5 million
(2010: loss of GBP1.0 million).
An exceptional credit of GBP2.8 million (2010: charge of GBP2.7
million) arose primarily following a dividend received from the
Focus Brands joint venture prior to the Group's acquisition of the
enlarged shareholding which has now made Focus a group subsidiary.
The dividend received was eliminated against the carrying value of
the investment with the excess of GBP2.7 million recognised as an
exceptional credit. Including the exceptional items, Group
operating profit rose by GBP3.2 million to GBP19.1 million (2010:
GBP15.9 million).
We continue to separate exceptional items as we believe that
this better reflects the underlying performance of the business.
The exceptional items comprise:
GBPm
Dividend received from Focus joint
venture 2.7
Gain on disposal of Focus joint venture 0.8
Loss on disposal of non-current assets (0.7)
Total 2.8
------
The gain on the disposal of the Focus joint venture arose from
the remeasurement to fair value of the Group's previously held
investment in Focus Brands Limited
Group profit before tax in the period ultimately increased by
20.6% to GBP20.1 million (2010: GBP16.6 million).
Working capital and cash
Net cash at 30 July 2011 was GBP19.2 million (31 July 2010:
GBP34.5 million).
Inventories have increased to GBP127.7 million at 30 July 2011
from GBP90.0 million at 31 July 2010. The rise is principally due
to stocks of GBP24.0 million in new and acquired businesses.
Elsewhere, stocks have increased in JD from the earlier receipt of
own brand stocks, in Bank as the business grows both organically
and through new space and Topgrade for the ongoing development of
Get The Label. Trade creditors continue to be paid to terms to
maximise settlement discounts.
Store Portfolio
During the period, store numbers (excluding trading websites)
have moved as follows:
Sports Fascias
JD & Size? JD France Chausport Sprinter Champion Total
sq sq sq sq sq
No. sq ft No. ft No. ft No. ft No. ft No. ft
000s 000s 000s 000s 000s 000s
At 29 Jan
11 351 1,131 3 5 73 79 - - - - 427 1,215
Acquisitions - - - - - - 47 678 23 99 70 777
New stores 12 32 - - 1 2 1 8 - - 14 42
Closures (6) (10) - - (2) (2) - - - - (8) (12)
Remeasures - 1 - - - - - - - - - 1
---- ------ ---- ----- ----- ----- ---- ----- ---- ----- ---- ------
At 30 July
11 357 1,154 3 5 72 79 48 686 23 99 503 2,023
---- ------ ---- ----- ----- ----- ---- ----- ---- ----- ---- ------
Fashion Fascias
Bank Scotts Cecil Gee Total
sq sq sq
No. sq ft No. ft No. ft No. ft
000s 000s 000s 000s
At 29 Jan
11 74 210 37 76 - - 111 286
Acquisitions - - - - 8 22 8 22
New stores 6 26 - - - - 6 26
Closures (1) (3) - - - - (1) (3)
At 30 July
11 79 233 37 76 8 22 124 331
---- ------ ---- ----- ----- ----- ---- -----
Impact of Recent Riots
The Group's businesses, particularly JD, were impacted in
certain areas by the recent riots. Stock totalling GBP0.7 million
was looted from a total of 16 stores with 6 stores in the London
area suffering very significant thefts. Whilst London was impacted
more than other areas, we also saw damage to stores in Birmingham,
Manchester and Nottingham. This damage could have been
significantly worse but for the pre-emptive actions which we took
in certain locations to prevent looters accessing the stores. The
JD store at Woolwich suffered fire damage in the riots and has not
yet reopened. However, all other stores were reopened by Sunday 21
August.
We are currently working with our insurers on the subsequent
claim, covering theft of stock, repair costs and business
interruption. We do not believe that the riots will have a material
adverse impact on the outturn for the current year.
Dividends and Earnings per Ordinary Share
The Board has decided to pay an interim dividend of 4.10p per
ordinary share, which represents an increase of 7.9% over the prior
year (2010: 3.80p). The Board still believes that the level of
increase in the total dividend for the year should be determined
after the year end as the results are so dependent on Christmas
trading. Whilst the Board intends to continue with the progressive
dividend policy which has seen total dividends rise from 8.50p in
the year to 2 February 2008 to 23.00p in the year to 29 January
2011, it also wishes to retain funding flexibility in the business
to continue to allow it to make strategic acquisitions and other
capital investments which are in the long term interests of the
Group.
The dividend will be paid on 6 January 2012 to shareholders on
the register as at close of business on 2 December 2011. A scrip
dividend alternative will not be offered.
The adjusted basic earnings per ordinary share before
exceptional items are 18.78p (2010: 27.29p).
The basic earnings per ordinary share are 28.51p (2010:
24.14p).
Employees
The Board recognises the skills, talent and dedication of our
many colleagues around the World. The Board would like to extend
its thanks to all employees and would particularly like to record
their appreciation for the efforts of all colleagues who have been
caught up in the recent riots. This was a very demanding time but
thanks to their determination, we were able to minimise the
disruption to the business.
Current Trading and Outlook
Trading since the period end has continued to improve with gross
like for like sales for the core UK and Ireland retail fascias in
the seven week period to 17 September up by 3.3% (+2.5% Sports
Fascias; +7.4% Fashion Fascias). Excluding the impact of VAT, the
net revenues have increased in this period by 1.6% (+1.0% Sports
Fascias; +5.0% Fashion Fascias). The result for the full year
remains very dependent on the sales and margin performance in
December and January and we will issue an Interim Management
Statement on the third quarter in November.
Nevertheless, the Board believes that the Group is well
positioned for future growth across its markets and trading is in
line with its expectations.
Peter Cowgill
Executive Chairman
21 September 2011
Condensed Consolidated Income Statement
For the 26 weeks to 30July 2011
26 weeks 52 weeks
26 weeks to to to
30 July 31 July 29 January
2011 2010 2011
Note GBP000 GBP000 GBP000
Revenue 439,768 383,894 883,669
Cost of sales (228,689) (198,806) (446,657)
------------------------------- ----- ------------ ---------- ------------
Gross profit 211,079 185,088 437,012
Selling and distribution
expenses - normal (178,227) (153,510) (326,296)
Selling and distribution
expenses - exceptional 3 (696) (2,754) (3,277)
------------ ---------- ------------
Selling and distribution
expenses (178,923) (156,264) (329,573)
------------ ---------- ------------
Administrative expenses -
normal (17,913) (13,892) (32,966)
Administrative expenses -
exceptional 3 3,562 - (1,007)
------------ ---------- ------------
Administrative expenses (14,351) (13,892) (33,973)
------------ ---------- ------------
Other operating income 1,312 929 2,177
------------------------------- ----- ------------ ---------- ------------
Operating profit 19,117 15,861 75,643
Before exceptional items 16,251 18,615 79,927
Exceptional items 3 2,866 (2,754) (4,284)
------------------------------- ----- ------------ ---------- ------------
Operating profit 19,117 15,861 75,643
Share of results of joint
venture before exceptional
items (net of income tax) (102) 687 1,475
Share of exceptional items
(net of income tax) 1,170 - 1,348
------------------------------- ----- ------------ ---------- ------------
Share of results of joint
venture 1,068 687 2,823
Financial income 323 313 618
Financial expenses (436) (224) (455)
------------------------------- ----- ------------ ---------- ------------
Profit before tax 20,072 16,637 78,629
Income tax expense (5,539) (4,909) (22,762)
------------------------------- ----- ------------ ---------- ------------
Profit for the period 14,533 11,728 55,867
------------------------------- ----- ------------ ---------- ------------
Attributable to equity holders
of the parent 13,873 11,745 55,884
Attributable to non
controlling interest 660 (17) (17)
Basic earnings per ordinary 4 28.51p 24.14p 114.84p
share
Diluted earnings per ordinary 4 28.51p 24.14p 114.84p
share
------------------------------- ----- ------------ ---------- ------------
Condensed Consolidated Statement of Comprehensive Income
For the 26 weeks to 30 July2011
26 weeks 52 weeks
26 weeks to to
to 30 July 31 July 29 January
2011 2010 2011
GBP000 GBP000 GBP000
Profit for the period 14,533 11,728 55,867
Other comprehensive income:
Exchange differences on translation
of foreign operations (1,395) (619) 95
Total other comprehensive income for
the period (1,395) (619) 95
--------------------------------------- ------------ --------- ------------
Total comprehensive income and expense
for the period (net of income tax) 13,138 11,109 55,962
--------------------------------------- ------------ --------- ------------
Attributable to equity holders of
the parent 12,478 11,126 55,979
Attributable to non controlling
interest 660 (17) (17)
--------------------------------------- ------------ --------- ------------
Condensed Consolidated Statement of Financial Position
As at 30 July 2011
As at As at As at
30 July 31 July 29 January
2011 2010 2011
Note GBP000 GBP000 GBP000
Assets
Intangible assets 88,254 51,478 58,315
Property, plant and equipment 108,498 72,444 78,120
Investment property 2,983 4,033 3,000
Other receivables 14,087 12,261 13,047
Equity accounted investment
in joint venture - 1,323 3,458
Deferred tax assets - - 125
Total non-current assets 213,822 141,539 156,065
--------------------------------- ----- ---------- ---------- ------------
Inventories 127,652 90,022 84,490
Trade and other receivables 58,630 39,638 37,105
Cash and cash equivalents 7 39,076 39,074 90,131
--------------------------------- ----- ---------- ---------- ------------
Total current assets 225,358 168,734 211,726
--------------------------------- ----- ---------- ---------- ------------
Total assets 439,180 310,273 367,791
--------------------------------- ----- ---------- ---------- ------------
Liabilities
Interest bearing loans and
borrowings 7 (17,077) (3,452) (2,874)
Trade and other payables (171,395) (122,036) (128,445)
Provisions (3,189) (2,918) (2,591)
Income tax liabilities (5,427) (5,321) (12,370)
Total current liabilities (197,088) (133,727) (146,280)
--------------------------------- ----- ---------- ---------- ------------
Interest bearing loans and
borrowings 7 (2,848) (1,160) (1,117)
Other payables (31,637) (23,687) (28,782)
Provisions (6,510) (7,639) (6,437)
Deferred tax liabilities (1,879) (781) -
--------------------------------- ----- ---------- ---------- ------------
Total non-current liabilities (42,874) (33,267) (36,336)
--------------------------------- ----- ---------- ---------- ------------
Total liabilities (239,962) (166,994) (182,616)
--------------------------------- ----- ---------- ---------- ------------
Total assets less total
liabilities 199,218 143,279 185,175
--------------------------------- ----- ---------- ---------- ------------
Capital and reserves
Issued ordinary share capital 2,433 2,433 2,433
Share premium 11,659 11,659 11,659
Retained earnings 176,446 129,306 171,916
Other reserves (3,313) (863) (1,918)
--------------------------------- ----- ---------- ---------- ------------
Total equity attributable
to equity holders of the parent 187,225 142,535 184,090
--------------------------------- ----- ---------- ---------- ------------
Non controlling interest 11,993 744 1,085
--------------------------------- ----- ---------- ---------- ------------
Total equity 199,218 143,279 185,175
--------------------------------- ----- ---------- ---------- ------------
Condensed Consolidated Statement of Changes in Equity
(continued)
For the 26 weeks to 30 July 2011
Total Equity
Foreign Attributable
Ordinary Currency To Equity
Share Share Retained Translation Other Holders Of
Capital Premium Earnings Reserve Equity The Parent
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 29
January 2011 2,433 11,659 171,916 (149) (1,769) 184,090
Profit for the
period - - 13,873 - - 13,873
Other
comprehensive
income:
Exchange
differences on
translation of
foreign
operations - - - (1,395) - (1,395)
Total other
comprehensive
income - - - (1,395) - (1,395)
----------------- --------- -------- --------- ------------ -------- -------------
Total
comprehensive
income for the
period - - 13,873 (1,395) - 12,478
Dividends to
equity holders - - (9,343) - - (9,343)
Non-controlling
interest arising
on acquisition - - - - - -
Balance at 30
July 2011 2,433 11,659 176,446 (1,544) (1,769) 187,225
----------------- --------- -------- --------- ------------ -------- -------------
Total Equity
Attributable To Non
Equity Holders Controlling Total
Of The Parent Interest Equity
(continued) GBP000 GBP000 GBP000
Balance at 29
January 2011 184,090 1,085 185,175
Profit for the
period 13,873 660 14,533
Other
comprehensive
income:
Exchange
differences on
translation of
foreign
operations (1,395) - (1,395)
Total other
comprehensive
income (1,395) - (1,395)
------------------ -------------------------- -------------- --------------
Total
comprehensive
income for the
period 12,478 660 13,138
Dividends to
equity holders (9,343) (140) (9,483)
Non-controlling
interest arising
on acquisition - 10,388 10,388
Balance at 30
July 2011 187,225 11,993 199,218
------------------ ------------------------------ ---------- --------------
Condensed Consolidated Statement of Changes in Equity
(continued)
For the 26 weeks to 31 July 2010
Total Equity
Foreign Attributable
Ordinary Currency To Equity
Share Share Retained Translation Holders Of
Capital Premium Earnings Reserve The Parent
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 30
January 2010 2,433 11,659 125,341 (244) 139,189
Profit for the
period - - 11,745 - 11,745
Other
comprehensive
income:
Exchange
differences on
translation of
foreign
operations - - - (619) (619)
Total other
comprehensive
income - - - (619) (619)
----------------- --------- -------- --------- ------------ -------------
Total
comprehensive
income for the
period - - 11,745 (619) 11,126
Dividends to
equity holders - - (7,153) - (7,153)
Acquisition of
non-controlling
interest - - (627) - (627)
Balance at 31
July 2010 2,433 11,659 129,306 (863) 142,535
----------------- --------- -------- --------- ------------ -------------
Total Equity
Attributable To Non
Equity Holders Controlling Total
Of The Parent Interest Equity
(continued) GBP000 GBP000 GBP000
Balance at 30 January
2010 139,189 1,333 140,522
Profit for the period 11,745 (17) 11,728
Other comprehensive
income:
Exchange differences
on translation of foreign
operations (619) - (619)
Total other comprehensive
income (619) - (619)
-------------------------------- ----------------- ------------- --------
Total comprehensive
income for the period 11,126 (17) 11,109
Dividends to equity
holders (7,153) - (7,153)
Acquisition of non-controlling
interest (627) (572) (1,199)
Balance at 31 July 2010 142,535 744 143,279
-------------------------------- ----------------- ------------- --------
Condensed Consolidated Statement of Cash Flows
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2011 2010 2011
For the 26 weeks to 30 July 2011 Note GBP000 GBP000 GBP000
Cash flows from operating
activities
Profit for the period 14,533 11,728 55,867
Share of results of joint venture (1,068) (687) (2,823)
Income tax expense 5,539 4,909 22,762
Financial expenses 436 224 455
Financial income (323) (313) (618)
Depreciation and amortisation of
non-current assets 11,092 8,981 20,375
Exchange differences on
translation 503 406 (158)
Impairment of investment property - - 1,007
Dividend received from joint
venture (2,691) - -
Gain on disposal of joint venture 3 (871) - -
Loss on disposal of non-current
assets 3 696 621 1,440
Increase in inventories (18,255) (15,547) (9,622)
Increase in trade and other
receivables (12,514) (8,014) (5,209)
(Decrease) / increase in trade
and other payables (6,397) (894) 14,676
Interest paid (436) (224) (455)
Income taxes paid (13,380) (10,312) (22,002)
----------------------------------- ----- --------- --------- ------------
Net cash from operating activities (23,136) (9,122) 75,695
----------------------------------- ----- --------- --------- ------------
Cash flows from investing
activities
Interest received 323 313 618
Proceeds from sale of non-current
assets 132 1,070 1,082
Disposal costs of non-current
assets (282) (15) (491)
Acquisition of intangible assets (1,500) (1,910) (9,560)
Acquisition of property, plant
and equipment (25,722) (14,643) (30,855)
Acquisition of non-current other
receivables (340) (1,420) (2,114)
Cash consideration of acquisitions (20,134) - -
Cash acquired with acquisitions 17,988 - -
Overdrafts acquired with
acquisitions (3,326) - -
Dividend received from joint
venture 7,217 - -
Loan repayments received from
joint venture - 923 923
Net cash used in investing
activities (25,644) (15,682) (40,397)
----------------------------------- ----- --------- --------- ------------
Condensed Consolidated Statement of Cash Flows (continued)
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2011 2010 2011
For the 26 weeks to 30 July 2011 Note GBP000 GBP000 GBP000
Cash flows from financing
activities
Repayment of interest bearing
loans and borrowings 7 (16,149) (199) (310)
Repayment of finance lease
liabilities 7 (720) - -
Draw down of syndicated bank
facility 7 13,000 - -
Acquisition of non controlling
interest - (1,200) (1,200)
Sale of subsidiary shares to non
controlling interest - 1 662
Equity dividends paid - - (9,002)
Dividends paid to non-controlling
interest in subsidiaries (140) - -
----------------------------------- ----- --------- --------- ------------
Net cash used in financing
activities (4,009) (1,398) (9,850)
----------------------------------- ----- --------- --------- ------------
Net (decrease) / increase in cash
and
cash equivalents 7 (52,789) (26,202) 25,448
----------------------------------- ----- --------- --------- ------------
Cash and cash equivalents at the
beginning of the period 7 87,545 62,097 62,097
----------------------------------- ----- --------- --------- ------------
Cash and cash equivalents at the
end of
the period 7 34,756 35,895 87,545
----------------------------------- ----- --------- --------- ------------
1. Basis of Preparation
JD Sports Fashion Plc (the 'Company') is a company incorporated
and domiciled in the United Kingdom. The half-year financial report
for the 26 week period to 30 July 2011 represents that of the
Company and its subsidiaries (together referred to as the
'Group').
This half-year financial report is an interim management report
as required by DTR 4.2.3 of the Disclosure and Transparency Rules
of the UK's Financial Services Authority and was authorised for
issue by the Board of Directors on 21 September 2011.
The half-year financial report is prepared in accordance with
the EU endorsed standard IAS 34 'Interim Financial Reporting'. The
comparative figures for the 52 week period to 29 January 2011 are
not the Group's statutory accounts for that financial year. Those
accounts have been reported on by the Group's Auditor and delivered
to the Registrar of Companies. The Report of the Auditor was (i)
unqualified, (ii) did not include a reference to any matters to
which the Auditor drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under section 498 of the Companies Act 2006.
The information contained in the half-year financial report for
the 26 week period to 30 July 2011 and 31 July 2010 is
unaudited.
As required by the Disclosure and Transparency Rules of the UK's
Financial Services Authority, the half-year financial report has
been prepared by applying the same accounting policies and
presentation that were applied in the preparation of the Company's
published consolidated financial statements for the 52 week period
to 29 January 2011.
The following amendments to accounting standards and
interpretations, issued by the International Accounting Standards
Board (IASB), have been adopted for the first time by the Group in
the period with no significant impact on its consolidated results
or financial position:
-- Amendments to IAS 32 'Financial Instruments: Presentation'
(Classification of rights issues)
-- Revised IAS 24 'Related Party Disclosure'
-- Amendments to IAS 34 'Interim Financial Statements'
Use of estimates and judgements
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets
and liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making the judgements about
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these
estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements for the 52 week period to 29
January 2011.
Going concern
The Board has considered the risks and uncertainties for the
remaining 26 week period to 28 January 2012 and determined that the
risks presented in the Annual Report and Accounts 2011, noted
below, remain relevant:
Retail specific
-- Damage to reputation of brands
-- Retail property factors
-- Consolidation of warehouse operations
-- Seasonality of sales
-- Reliance on legacy IT systems
Distribution specific
-- Credit risk in distribution businesses;
All businesses
-- Economic factors
-- Reliance on non-UK manufacturers
-- Protection of intellectual property
-- Retention of key personnel
-- Treasury risks from movement in interest rates and currency
exposures
A major variable, and therefore risk, to the Group's financial
performance for the balance of the financial period is the sales
and margin performance in the retail fascias, particularly in
December and January. Further comment on this and other risks and
uncertainties faced by the Group is provided in the Executive
Chairman's statement included within this half-year report.
As at 30 July 2011, the Group had net cash balances (cash net of
debt) of GBP19,151,000 with available committed borrowing
facilities of GBP75,000,000 of which GBP13,000,000 had been drawn
down (see note 7). As a consequence, the Directors believe that the
Group is well placed to manage its business risks successfully
despite the current uncertain economic outlook.
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
2. Segmental Analysis
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the Chief Operating Decision Maker to
allocate resources to the segments and to assess their performance.
The Chief Operating Decision Maker is considered to be the
Executive Chairman of JD Sports Fashion Plc.
Information reported to the Chief Operating Decision Maker is
focused more on the nature of the businesses within the Group. The
Group's reportable segments under IFRS 8 are therefore as
follows:
-- Sport retail - includes the results of the sport retail
trading companies JD Sports Fashion Plc, John David Sports Fashion
(Ireland) Limited, Chausport SA, Champion Sports (Holdings), JD
Sprinter Holdings 2010 SL and Duffer of St George Limited
-- Fashion retail - includes the results of the fashion retail
trading companies Bank Fashion Limited, RD Scott Limited and
Premium Fashion Limited
-- Distribution businesses - includes the results of the
distribution companies Topgrade Sportswear Limited, Nicholas
Deakins Limited, Canterbury Limited (including global subsidiary
companies), Kooga Rugby Limited, Nanny State Limited, Focus Brands
Limited and Kukri Sports Limited (including global subsidiary
companies)
The Chief Operating Decision Maker receives and reviews
segmental operating profit. Certain central administrative costs
including Group Directors' salaries are included within the Group's
core 'Sport retail' result. This is consistent with the results as
reported to the Chief Operating Decision Maker.
IFRS 8 requires disclosure of information regarding revenue from
major products and customers. The majority of the Group's revenue
is derived from the retail of a wide range of apparel, footwear and
accessories to the general public. As such, the disclosure of
revenues from major products and customers is not appropriate.
Intersegment transactions are undertaken in the ordinary course
of business on arms length terms.
The Board consider that certain items are cross divisional in
nature and cannot be allocated between the segments on a meaningful
basis. The share of results of joint venture is presented as
unallocated in the following tables, as this entity has trading
relationships with companies in all of the three segments. An asset
of GBPnil (2010: GBP1,323,000) for the equity accounted investment
in joint venture is included within the unallocated segment. The
exceptional credits pertaining to the dividend received from joint
venture (GBP2,691,000) and gain on disposal of joint venture
(GBP871,000) (see note 3) are included within the unallocated
segment. Draw downs from the Group's syndicated borrowing facility
of GBP13,000,000 (2010: GBPnil) and liabilities for taxation of
GBP7,306,000 (2010: GBP6,102,000) are also treated as unallocated
reflecting the nature of the Group's syndicated borrowing
facilities and its tax group.
Each segment is shown net of intercompany transactions and
balances within that segment. The eliminations remove intercompany
transactions and balances between different segments which
primarily relate to the net down of long term loans and short term
working capital funding provided by JD Sports Fashion Plc (within
Sport retail) to other companies in the Group and intercompany
trading between companies in different segments.
Operating Segments
Information regarding the Group's operating segments for the 26
weeks to 30 July 2011 is reported below:
Income statement
Sport Fashion
Retail Retail Distribution Unallocated Total
GBP000 GBP000 GBP000 GBP000 GBP000
Gross revenue 322,780 59,546 60,461 - 442,787
Intersegment
revenue (37) (30) (2,952) - (3,019)
------------------- -------- -------- ------------- ------------ --------
Revenue 322,743 59,516 57,509 - 439,768
------------------- -------- -------- ------------- ------------ --------
Operating profit /
(loss) before
exceptional
items 20,196 (3,397) (548) - 16,251
Exceptional items (446) (220) (30) 3,562 2,866
------------------- -------- -------- ------------- ------------ --------
Operating profit /
(loss) 19,750 (3,617) (578) 3,562 19,117
Share of results
of joint venture 1,068
Financial income 323
Financial expenses (436)
------------------- -------- -------- ------------- ------------ --------
Profit before tax 20,072
Income tax expense (5,539)
------------------- -------- -------- ------------- ------------ --------
Profit for the
period 14,533
------------------- -------- -------- ------------- ------------ --------
Total assets and liabilities
Sport Fashion
Retail Retail Distribution Unallocated Eliminations Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Total assets 379,682 64,073 71,573 - (76,148) 439,180
Total
liabilities (162,221) (62,360) (71,223) (20,306) 76,148 (239,962)
--------------- ---------- --------- ------------- ------------ ------------- ----------
Total segment
net assets /
(liabilities) 217,461 1,713 350 (20,306) - 199,218
--------------- ---------- --------- ------------- ------------ ------------- ----------
The Board believes that the losses experienced in the fashion
and distribution segments at the half year are due to the
seasonality of the businesses and are comfortable with the carrying
value of the assets of these segments at this point in time.
The comparative segmental results for the 26 weeks to 31 July
2010 are as follows:
Income statement
Sport Fashion
Retail Retail Distribution Total
GBP000 GBP000 GBP000 GBP000
Gross revenue 297,331 51,213 37,382 385,926
Intersegment revenue (1,162) (118) (752) (2,032)
--------------------------- -------- -------- ------------- --------
Revenue 296,169 51,095 36,630 383,894
--------------------------- -------- -------- ------------- --------
Operating profit / (loss)
before exceptional items 21,568 (2,002) (951) 18,615
Exceptional items (1,557) (1,166) (31) (2,754)
--------------------------- -------- -------- ------------- --------
Operating profit / (loss) 20,011 (3,168) (982) 15,861
Share of results of joint
venture 687
Financial income 313
Financial expenses (224)
--------------------------- -------- -------- ------------- --------
Profit before tax 16,637
Income tax expense (4,909)
--------------------------- -------- -------- ------------- --------
Profit for the period 11,728
--------------------------- -------- -------- ------------- --------
Total assets and liabilities
Sport Fashion
Retail Retail Distribution Unallocated Eliminations Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Total assets 270,689 52,158 48,188 1,323 (62,085) 310,273
Total
liabilities (117,989) (55,735) (49,253) (6,102) 62,085 (166,994)
--------------- ---------- --------- ------------- ------------ ------------- ----------
Total segment
net assets/
(liabilities) 152,700 (3,577) (1,065) (4,779) - 143,279
--------------- ---------- --------- ------------- ------------ ------------- ----------
Geographical Information
The Group's operations are located in the UK, Republic of
Ireland, France, Australia, New Zealand, United States of America,
Canada and Hong Kong.
The following table provides analysis of the Group's revenue by
geographical market, irrespective of the origin of the goods /
services.
Revenue
26 weeks to 26 weeks to
30 July 30 July
2011 2010
GBP000 GBP000
UK 364,909 342,545
Europe 53,262 26,759
Rest of world 21,597 14,590
--------------- ------------ ------------
439,768 383,894
--------------- ------------ ------------
The revenue from any individual country, with the exception of
the UK, is not more than 10% of the Group's total revenue.
The following is an analysis of the carrying amount of segmental
non-current assets, excluding investments in joint ventures GBPnil
(2010: GBP1,323,000), by the geographical area in which the assets
are located:
As at As at
30 July 31 July
2011 2010
Non-current assets GBP000 GBP000
UK 173,278 126,388
Europe 40,093 13,611
Rest of world 451 217
-------------------- --------- ---------
213,822 140,216
-------------------- --------- ---------
3. Exceptional Items
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2011 2010 2011
GBP000 GBP000 GBP000
Loss on disposal of non-current
assets (1) 696 621 1,440
Onerous lease provision (2) - 2,133 1,837
Selling and distribution expenses
- exceptional 696 2,754 3,277
--------------------------------------- --------- --------- ------------
Gain on disposal of joint venture
(3) (871) - -
Dividend received from joint venture
(4) (2,691) - -
Impairment of investment property
(5) - - 1,007
Administrative expenses - exceptional (3,562) - 1,007
(2,866) 2,754 4,284
--------------------------------------- --------- --------- ------------
(1) Relates to the excess of net book value of property, plant
and equipment and non-current other receivables disposed over
proceeds received
(2) Relates to the net movement in the provision for onerous
property leases on trading and non trading stores
(3) Relates to the remeasurement to fair value of the Group's
previously held investment in Focus Brands Limited (see note 5)
(4) A dividend of GBP7,217,000 was received from Focus Brands
Limited on 15 February 2011 prior to the Group's acquisition of a
further 31% of the issued share capital of Focus Brands Limited.
The dividend received was eliminated against the carrying value of
the Group's equity accounted investment with the excess of
GBP2,691,000 recognised in the Consolidated Income Statement as an
exceptional credit
(5) Relates to the impairment in the period to 29 January 2011
of investment property
4. Earnings per Ordinary Share
Basic and diluted earnings per ordinary share
The calculation of basic and diluted earnings per ordinary share
at 30 July 2011 is based on the profit for the period attributable
to equity holders of the parent of GBP13,873,000 (26 weeks to 31
July 2010: GBP11,745,000; 52 weeks to 29 January 2011:
GBP55,884,000) and a weighted average number of ordinary shares
outstanding during the 26 weeks to 30 July 2011 of 48,661,658 (26
weeks to 31 July 2010: 48,661,658; 52 weeks to 29 January 2011:
48,661,658) calculated as follows:
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2011 2010 2011
Issued ordinary shares at beginning
and end of period 48,661,658 48,661,658 48,661,658
------------------------------------- ----------- ----------- ------------
Adjusted basic and diluted earnings per ordinary share
Adjusted basic and diluted earnings per ordinary share have been
based on the profit for the period attributable to equity holders
of the parent for each financial period but excluding the post tax
effect of certain exceptional items. The Directors consider that
this gives a more meaningful measure of the underlying performance
of the Group.
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2011 2010 2011
GBP000 GBP000 GBP000
Profit for the period attributable
to equity holders of the parent 13,873 11,745 55,884
Exceptional items excluding loss
on disposal of non-current assets (3,562) 2,133 2,844
Tax relating to exceptional items - (598) (514)
Share of exceptional items of
joint venture (net of income
tax) (1,170) - (1,348)
Profit for the period attributable
to equity holders of the parent
excluding
exceptional items 9,141 13,280 56,866
------------------------------------- --------- --------- ------------
Adjusted basic and diluted earnings 18.78p 27.29p 116.86p
per ordinary share
------------------------------------- --------- --------- ------------
5. Acquisitions
Current Period Acquisitions
Acquisition of Kukri Sports Limited
On 7 February 2011, the Group acquired 80% of the issued share
capital of Kukri Sports Limited for a cash consideration of GBP1.
Kukri Sports Limited has a number of subsidiaries around the world,
which source and provide bespoke sports teamwear to schools,
universities and sports clubs. In addition, Kukri Sports Limited is
sole kit supplier to a number of professional sports teams and
international associations.
The provisional goodwill calculation is summarised below:
Provisional
fair value
Fair value at
Book value adjustments 30 July 2011
GBP000 GBP000 GBP000
Acquiree's net liabilities at
the acquisition date:
Intangible assets - 720 720
Property, plant & equipment 281 - 281
Inventories 749 - 749
Trade and other receivables 1,692 - 1,692
Cash and cash equivalents 128 - 128
Trade and other payables (4,176) - (4,176)
Interest-bearing loans and
borrowings (986) - (986)
Deferred tax asset /
(liabilities) 8 (180) (172)
Net identifiable liabilities (2,304) 540 (1,764)
---------------------------------- ----------- ------------- --------------
Non-controlling interest 633 (108) 525
Goodwill on acquisition 1,239
---------------------------------- ----------- ------------- --------------
Consideration paid - satisfied -
in cash
---------------------------------- ----------- ------------- --------------
The Group's non-controlling interest arising on acquisition of
GBP525,000 includes indirect ownership within the Kukri group of
companies.
The fair value of trade and other receivables is GBP1,692,000
and includes trade receivables with a fair value of GBP1,260,000.
The gross contractual amount for trade receivables due is
GBP1,309,000 of which GBP49,000 is expected to be
uncollectable.
The Kukri brand has been identified as a separate intangible
asset and this amount is included within acquired intangible assets
as a brand name. The Board believes that the excess of
consideration paid over net identifiable liabilities is best
considered as goodwill on acquisition, representing non-contractual
customer loyalty and employee expertise.
Included in the 26 week period to 30 July 2011 is revenue of
GBP7,447,000 and a loss before tax of GBP57,000 in respect of Kukri
Sports Limited.
Acquisition of additional shares in Focus Brands Limited
On 16 February 2011, the Group acquired a further 31% of the
issued share capital of Focus Brands Limited for a cash
consideration of GBP1,000,000, with potential further deferred
consideration of GBP250,000 depending on performance. The Group's
original share of 49% was acquired on 3 December 2007. Focus Brands
Limited was originally incorporated in order to acquire Focus Group
Holdings Limited and its subsidiary companies and was an entity
jointly controlled by the Group and the former shareholders of
Focus Group Holdings Limited. The additional shares purchased take
the Group's holding in Focus Brands Limited to 80%, thereby giving
the Group control. Focus Brands Limited is now a subsidiary of the
Group rather than a jointly-controlled entity. The increase in
Group ownership has resulted in a gain of GBP871,000 being
recognised as an exceptional credit in the Consolidated Income
Statement upon remeasurement of the Group's previously held equity
interest to fair value.
The provisional goodwill calculation is summarised below:
Provisional
fair value
Fair value at
Book value adjustments 30 July 2011
GBP000 GBP000 GBP000
Acquiree's net assets at the
acquisition date:
Property, plant & equipment 635 - 635
Inventories 2,744 - 2,744
Trade and other receivables 1,138 - 1,138
Cash and cash equivalents 543 - 543
Trade and other payables (2,044) (200) (2,244)
Interest-bearing loans and
borrowings (16) - (16)
Income tax liabilities (1,080) 56 (1,024)
Net identifiable assets 1,920 (144) 1,776
---------------------------------- ----------- ------------- --------------
Non-controlling interest (384) 29 (355)
Goodwill on acquisition 700
Gain on remeasurment of
previously held interest in
Focus Brands Limited (see note
3) (871)
---------------------------------- ----------- ------------- --------------
Consideration paid - satisfied
in cash 1,000
Deferred consideration 250
---------------------------------- ----------- ------------- --------------
Total consideration 1,250
---------------------------------- ----------- ------------- --------------
The fair value of trade and other receivables is GBP1,138,000
and includes trade receivables with a fair value of GBP910,000. The
gross contractual amount for trade receivables due is GBP917,000 of
which GBP7,000 is expected to be uncollectable.
The Board believes that the excess of consideration paid over
net identifiable assets is best considered as goodwill on
acquisition, representing employee expertise and anticipated future
operating synergies.
Included in the 26 week period to 30 July 2011 is revenue of
GBP10,355,000 and a profit before tax of GBP374,000 in respect of
Focus Brands Limited.
Acquisition of Champion Sports (Holdings)
On 4 April 2011, the Group (via its subsidiaries The John David
Group Limited and JD Sports Limited) acquired 100% of the issued
share capital of Champion Sports (Holdings) for a cash
consideration of GBP6 (EUR7) and have also advanced GBP15,066,000
(EUR17,100,000) to allow it to settle all of its indebtedness save
for a potential maximum GBP2,203,000 (EUR2,500,000) of leasing
finance.
Champion was founded in 1992 and is one of the leading retailers
of sports apparel and footwear in the Republic of Ireland with 22
stores in premium locations in town centres and shopping centres.
In addition, Champion has one store In Northern Ireland.
The provisional goodwill calculation is summarised below:
Provisional
fair value
Fair value at
Book value adjustments 30 July 2011
GBP000 GBP000 GBP000
Acquiree's net liabilities at
the acquisition date:
Intangible assets - 3,400 3,400
Property, plant & equipment 6,384 - 6,384
Inventories 4,560 - 4,560
Trade and other receivables 2,645 - 2,645
Cash and cash equivalents 1,456 - 1,456
Interest-bearing loans and
borrowings (40,818) 23,695 (17,123)
Trade and other payables (9,660) - (9,660)
Provisions (1,416) - (1,416)
Deferred tax liabilities - (905) (905)
Net identifiable liabilities (36,849) 26,190 (10,659)
---------------------------------- ----------- ------------- --------------
Goodwill on acquisition 10,659
---------------------------------- ----------- ------------- --------------
Consideration paid - satisfied -
in cash
---------------------------------- ----------- ------------- --------------
Fair value adjustments include a reduction of GBP23,695,000 in
interest-bearing loans and borrowings following an agreement with
the lender.
The fair value of trade and other receivables is GBP2,645,000
and includes trade receivables with a fair value of GBP12,000. The
gross contractual amount for trade receivables is GBP12,000, of
which GBPnil is expected to be uncollectable.
The intangible asset acquired represents the fair value of the
'Champion' fascia name. It is the intention of the Group to trade
under the Champion fascia for the foreseeable future. The Board
believes that the excess of consideration paid over net
identifiable liabilities is best considered as goodwill on
acquisition, representing non-contractual customer loyalty,
employee expertise and anticipated future operating synergies.
Included in the 26 week period to 30 July 2011 is revenue of
GBP13,360,000 and a loss before tax of GBP928,000 in respect of
Champion Sports Holdings.
Acquisition of JD Sprinter Holdings 2010 SL
On 17 June 2011, the Group, via its new 50.1% owned subsidiary
JD Sprinter Holdings 2010 SL ('JD Sprinter'), acquired 100% of the
trading businesses that make up the Sprinter group of companies in
Spain. The remaining 49.9% of the shares in JD Sprinter are owned
equally between the Segarra family, who founded Sprinter, and the
Bernad family, who have been investors in Sprinter for 15 years. JD
have made an investment of GBP17,536,000 (EUR20,000,000) into JD
Sprinter by way of subscription for its new shares and the Segarra
and Bernad families have put the Sprinter companies into JD
Sprinter as consideration for their new shares.
Sprinter was founded in 1981 and is one of the leading sports
retailers in Spain selling footwear, apparel, accessories and
equipment for a wide range of sports as well as some lifestyle
casual wear including childrenswear. This offer includes both
international sports brands and successful own brands. Sprinter is
based in Elche in South East Spain and on acquisition had 47 stores
primarily based in Andalucia and Levante.
The provisional goodwill calculation is summarised below:
Provisional
fair value
Fair value at
Book value adjustments 30 July 2011
GBP000 GBP000 GBP000
Acquiree's net assets at the
acquisition date:
Intangible assets - 5,055 5,055
Property, plant & equipment 8,192 - 8,192
Non-current other assets 1,035 - 1,035
Inventories 15,426 - 15,426
Trade and other receivables 383 - 383
Cash and cash equivalents 15,861 - 15,861
Interest-bearing loans and
borrowings (3,326) - (3,326)
Trade and other payables (20,330) - (20,330)
Provisions (355) - (355)
Deferred tax asset /
(liabilities) 735 (1,517) (782)
Net identifiable assets 17,621 3,538 21,159
---------------------------------- ----------- ------------- --------------
Non-controlling interest (49.9%) (8,793) (1,765) (10,558)
Goodwill on acquisition - - 6,935
---------------------------------- ----------- ------------- --------------
Consideration paid - satisfied
in cash - - 17,536
---------------------------------- ----------- ------------- --------------
The fair value of trade and other receivables is GBP383,000 and
includes trade receivables with a fair value of GBP87,000. The
gross contractual amount for trade receivables is GBP87,000, of
which GBPnil is expected to be uncollectable.
The intangible asset acquired represents the fair value of the
'Sprinter' fascia name. It is the intention of the Group to trade
under the Sprinter fascia for the foreseeable future. The Board
believes that the excess of consideration paid over net
identifiable assets is best considered as goodwill on acquisition,
representing non-contractual customer loyalty, employee expertise
and anticipated future operating synergies
Included in the 26 week period to 30 July 2011 is revenue of
GBP6,528,000 and a profit before tax of GBP749,000 in respect of JD
Sprinter Holdings 2010 SL.
Premium Fashion Limited
On 18 June 2011, the Group acquired, via its subsidiary Premium
Fashion Limited, the trade and assets of 8 stores trading as Cecil
Gee along with the Cecil Gee name and inventory from Moss Bros
Group Plc for a cash consideration of GBP1,598,000.
Included in the 26 week period to 30 July 2011 is revenue of
GBP1,159,000 and a loss before tax of GBP150,000 in respect of
Premium Fashion Limited.
Half year impact of acquisitions
Had the acquisitions of Kukri Sports Limited, Focus Brands
Limited, Champion Sports (Holdings) Limited JD Sprinter Holdings
2010 SL and Premium Fashion Limited been effected at 30 January
2011, the revenue and profit before tax of the Group for the 26
week period to 30 July 2011 would have been GBP478,734,000 and
GBP16,280,000 respectively.
Prior Period Acquisitions
Acquisition of non-controlling interest in Topgrade Sportswear
Limited
On 21 June 2010, the Group acquired a further 29% of the issued
share capital of Topgrade Sportswear Holdings Limited (formerly
Hallco 1521 Limited) (the intermediate holding company of Topgrade
Sportswear Limited) for a cash consideration of GBP1,200,000. This
takes the Group's holding to 80%. The Group's original share of 51%
was acquired on 7 November 2007. Topgrade Sportswear Limited is a
distributor and on-line retailer of sports clothing and footwear.
As the Group already had control of Topgrade Sportswear Limited,
the increase in Group ownership has been accounted for as an equity
transaction. No measurement adjustments have been made to the fair
values in the 26 week period to 30 July 2011.
Nanny State Limited
On 4 August 2010, the Group (via its new subsidiary Nanny State
Limited) acquired the global rights to the fashion footwear and
apparel brand, 'Nanny State', from D.R.I.P Brands Limited (in
administration) and D.R. Shoes Limited (in administration) for a
cash consideration of GBP350,000. Inventory with a value of
GBP141,000 and other debtors with a value of GBP86,000 were also
acquired. The book value of the assets acquired is considered to be
the fair value. No measurement adjustments have been made to the
fair values in the 26 week period to 30 July 2011.
6. Interest in Joint Venture
On 3 December 2007, the Group acquired 49% of the issued share
capital of Focus Brands Limited for an initial cash consideration
of GBP49,000 together with associated fees of GBP456,000. Focus
Brands Limited was a jointly controlled entity set up for the
purposes of acquiring Focus Group Holdings Limited and its
subsidiary companies ('Focus Group'). The Focus Group is involved
in the design, sourcing and distribution of branded and own brand
footwear, apparel and accessories. Focus Brands Limited was jointly
controlled with the former shareholders of Focus Group Holdings
Limited.
On 16 February 2011, the Group acquired a further 31% of the
issued share capital of Focus Brands Limited for a cash
consideration of GBP1,000,000, with potential further deferred
consideration of GBP250,000 depending on performance. As a result
there is no further deferred consideration payable on the original
transaction. The additional shares purchased since the reporting
date take the Group's holding in Focus Brands Limited to 80%,
thereby giving the Group control. Focus Brands Limited is now a
subsidiary of the Group rather than a jointly-controlled
entity.
The results and assets and liabilities of the Focus Group are
incorporated in the consolidated financial statements using the
equity method of accounting as a joint venture for the period to 16
February 2011. The interest in the joint venture in the Group's
Consolidated Statement of Financial Position is based on the share
of the net assets, which are as follows:
As at As at As at
30 July 2011 31 July 2010 29 January 2011
GBP000 GBP000 GBP000
Non-current assets - 460 447
Current assets - 5,543 5,196
Current liabilities - (4,680) (2,185)
--------------------- --------------- -------------- -----------------
Total net assets - 1,323 3,458
--------------------- --------------- -------------- -----------------
The Group's share of the revenue generated by the joint venture
in the period was GBP841,000 (July 2010: GBP8,264,000, January
2011: GBP15,418,000).
The amount included in the Consolidated Income Statement for the
26 weeks to 30 July 2011 in relation to the joint venture is as
follows:
After
Before exceptionals Exceptionals exceptionals
GBP000 GBP000 GBP000
Share of result before
tax (143) 1,166 1,023
Tax 41 4 45
------------------------- -------------------- ------------- --------------
Share of result after
tax (102) 1,170 1,068
------------------------- -------------------- ------------- --------------
The exceptional items in the 26 week period to 30 July 2011
relate to a further reversal of the impairment of the investment
held by Focus Brands Limited in Focus Group Holdings Limited,
following an additional repayment of original purchase
consideration by the vendors of Focus Group Holdings Limited.
The comparative amount included in the Consolidated Income
Statement for the 26 weeks to 31 July 2010 in relation to the joint
venture is as follows:
After
Before exceptionals Exceptionals exceptionals
GBP000 GBP000 GBP000
Share of result before
tax 954 - 954
Tax (267) - (267)
------------------------- -------------------- ------------- --------------
Share of result after
tax 687 - 687
------------------------- -------------------- ------------- --------------
The comparative amount included in the Consolidated Income
Statement for the period ended 29 January 2011 in relation to the
joint venture is as follows:
After
Before exceptionals Exceptionals exceptionals
GBP000 GBP000 GBP000
Share of result before
tax 2,102 1,549 3,651
Tax (627) (201) (828)
------------------------- -------------------- ------------- --------------
Share of result after
tax 1,475 1,348 2,823
------------------------- -------------------- ------------- --------------
The exceptional items in the 52 week period to 29 January 2011
relate to unrealised gains on foreign exchange contracts and the
reversal of the impairment of the investment held by Focus Brands
Limited in Focus Group Holdings Limited, following an initial
repayment of original purchase consideration by the vendors of
Focus Group Holdings Limited.
7. Analysis of Net Cash
At At
29 January On acquisition 30 July
2011 of subsidiaries Cash flow 2011
GBP000 GBP000 GBP000 GBP000
Cash at bank and in
hand 90,131 17,988 (69,043) 39,076
Overdrafts (2,586) (3,326) 1,592 (4,320)
---------------------- ------------ ----------------- ---------- ---------
Cash and cash
equivalents 87,545 14,662 (67,451) 34,756
---------------------- ------------ ----------------- ---------- ---------
Interest bearing
loans and
borrowings:
Bank loans (575) (16,006) 16,149 (432)
Syndicated bank
facility - - (13,000) (13,000)
Finance lease
liabilities - (2,119) 720 (1,399)
Other loans (830) - 56 (774)
------------ ----------------- ---------- ---------
86,140 (3,463) (63,526) 19,151
---------------------- ------------ ----------------- ---------- ---------
8. Half Year Report
The half-year report will be posted to all shareholders in mid
October. Additional copies are available on application to the
Company Secretary, JD Sports Fashion Plc, Hollinsbrook Way,
Pilsworth, Bury, Lancashire, BL9 8RR, or can be downloaded from
www.jdplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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