REG - JD Sports Fashion - Final Results <Origin Href="QuoteRef">JD.L</Origin> - Part 1
RNS Number : 1377VJD Sports Fashion Plc14 April 201614 April 2016
JD SPORTS FASHION PLC
PRELIMINARY RESULTS
FOR THE 52 WEEKS ENDED 30 JANUARY 2016
JD Sports Fashion Plc (the "Group"), a leading retailer of sports, fashion and outdoor brands, today announces its Preliminary Results for the 52 weeks ended 30 January 2016 (2015: 52 weeks ended 31 January 2015).
The results of Bank Fashion Limited, which was disposed of on 25 November 2014, are presented as a discontinued activity in the results for the 52 weeks to 31 January 2015.
a) Net cash consists of cash and cash equivalents together with interest-bearing loans and borrowings
Group Highlights
Record result with headline profit before tax and exceptional items of 157.1 million (2015: 100.0 million) and group operating profit before exceptional items increasing by 56% to 158.9 million (2015: 102.2 million)
Very pleasing performance in Sports Fashion with like for like store sales growth in excess of 10% for the second consecutive year resulting in operating profit before exceptional items increasing by 49% to 162.9 million (2015: 109.3 million)
European rollout continues with a net increase of 38 stores for the JD fascia across Europe
Encouraging progress in Outdoors with additional operational management changes put in place to drive further improvements in performance in a challenging market
Strong cash generation with period end net cash of 209.4 million (2015: 84.2 million) which facilitates continued investment in the Sports Fashion fascias
Sales, gross margin and operating profit / (loss) before exceptional items of the two business segments are tabulated below:
Period to 30 January 2016
Sports Fashion
000
Outdoor
000
Total
000
Gross revenue
1,666,477
155,313
1,821,790
Intersegment revenue
(138)
-
(138)
Revenue
1,666,339
155,313
1,821,652
Gross margin %
49.0%
43.3%
48.5%
Operating profit / (loss) before exceptional items
162,864
(3,962)
158,902
Period to 31 January 2015
(re-presented)
Sports Fashion
000
Outdoor
000
Total
000
Gross revenue
1,382,408
139,924
1,522,332
Intersegment revenue
(79)
-
(79)
Revenue
1,382,329
139,924
1,522,253
Gross margin %
49.2%
42.2%
48.6%
Operating profit / (loss) before exceptional items
109,315
(7,142)
102,173
Total capital expenditure of 83.5 million (2015: 70.2 million) which is expected to increase further in the current financial year as the international rollout of JD continues to gain momentum
Final dividend payable increased by 5.1% to 6.20p (2015: 5.90p) bringing the total dividends payable for the year to 7.40p (2015: 7.05p) per ordinary share, an increase of 5.0%
Peter Cowgill, Executive Chairman, said:"I am delighted to report that the Group has delivered another very strong set of results for the year to 30 January 2016 with the headline profit before tax and exceptional items increased by 57% to 157.1 million. Given that last year's result was a record for our Group then the performance in the year was very pleasing, further demonstrating the increasing influence of the JD fascia in the UK and beyond.
"During the year we have expanded our international presence with additional stores in existing European territories together with a number of stores in new countries. We continue to gain traction in Europe and are confident of the opportunities that exist for the JD fascia in these markets.
"We are encouraged by the continued positive trading across our core fascias in the year to date and the Board continues to believe that the Group is very well positioned for profitable growth."
Enquiries:
JD Sports Fashion Plc Tel: 0161 767 1000
Peter Cowgill, Executive Chairman
Brian Small, Chief Financial Officer
MHP Communications Tel: 0203 128 8100
Andrew Jaques
Barnaby Fry
Gina Bell
Executive Chairman's Statement
Introduction
I am delighted to report that the Group has delivered another very strong set of results for the year to 30 January 2016 with the headline profit before tax and exceptional items increased by 57% to 157.1 million. Given that last year's result was a record for our Group then the performance in the year was very pleasing, further demonstrating the increasing influence of the JD fascia in the UK and beyond.
The foundation of our continued success remains our world class core Sports Fashion fascias. The investments made over a number of years in developing our multichannel retail proposition and driving improved buying, merchandising and retailing disciplines have given us the platform to exploit the favourable trends which exist for athletic inspired footwear and apparel throughout Europe. We remain committed to continually enhancing our proposition for both customers and third party brand partners. During the period we demonstrated this through the opening of new larger spaced flagship style JD stores in London, Glasgow, Newcastle and Amsterdam. JD has continued to develop its reputation for setting the highest standards of visual merchandising and retail theatre and the new flagship stores, which also embrace the latest innovations in digital technology, take these standards to a new level.
During the year we have expanded our international presence with additional stores in existing European territories together with a number of stores in new countries. We continue to gain traction in Europe and are confident of the opportunities that exist for the JD fascia in these markets. More recently, we have opened our first store outside of Europe at Sunway Pyramid in Kuala Lumpur as part of a newly formed venture with Stream Enterprise in Malaysia. Opening a store outside of Europe has brought the expected challenges and we continue to enhance the flexibility of both our proposition and our operational processes to cope with the increasing scale of our international ambitions. Our key international brand partners strongly support the continued international development of JD.
In the early part of the year we made a number of operational management changes in our Outdoor operations. This brought the Blacks and Millets and the newer Ultimate Outdoors fascias under common leadership and greater use has been made of the merchandising and commercial management expertise in the core JD team.
Whilst there is a continual requirement to refine the product proposition, we believe that this new operational framework has given our Outdoor fascias a more efficient and appropriate cost base from which to operate and we are optimistic that this, combined with ongoing refinements to the product offering, will deliver a further improvement in the financial performance of these fascias in the year to January 2017.
Sports Fashion
Sports Fashion has had an exceptional year with operating profits (before exceptional items) increased by 49% to 162.9 million (2015: 109.3 million). Our fascias have successfully exploited the buoyant market for branded athletic footwear and apparel across Western Europe with like for like store sales growth in excess of 10% for the second consecutive year. Whilst we would not expect a third year of organic growth at this level, the JD fascia is developing well in both its core and international markets.
Our global brand partners support our continued international development and we would anticipate further significant investments in the current year. Indeed, we have already made one investment in the Netherlands market through the acquisition of the trade and store assets of Aktiesport and Perry Sport from the trustee in bankruptcy of Unlimited Sports Group BV. We are currently assessing the Aktiesport and Perry Sport store portfolio in order to create a viable and sustainable business across the Netherlands.
As anticipated, the overall gross margin in Sports Fashion is slightly lower than the previous year reflecting the impact of the weaker euro through the majority of the year on the JD fascia's euro denominated businesses where product is sourced and distributed from the UK. Whilst the euro has strengthened since the year end, we are mindful of the potential impact of increased volatility in margin as the results of the European businesses increase in relative importance. We continue to work on mitigating any adverse currency impacts with our global brand partners.
We are satisfied with the progress in the Chausport business in France and the Sprinter business in Spain and are also pleased to report a turnaround in the trading performance of Kukri, our supplier of multisport kit for schools, universities and sports teams at all levels.
Finally, we believe that we have successfully established Tessuti and Scotts as premium brand multichannel fashion retailers based on our strong relationships with the major global premium brands where we foster their brand equity to secure product longevity and stimulate further growth.
Outdoor
The Outdoor fascias have made pleasing progress in the year with the operating loss (before exceptional items) reduced to 4.0 million (2015: 7.1 million) with the loss in the current year arising largely from initial losses and other significant property related costs associated with the newer larger space Ultimate Outdoors stores which remain a trial at this stage. We are encouraged that the original Blacks and Millets fascia stores have delivered a breakeven result.
Margins were improved over the full year with reduced levels of discounting of Autumn and Winter ranges relative to the prior year. We are striving for further improvements in margins in this year as the merchandising and commercial disciplines increasingly align themselves with the core JD team. However, in a sector with significant presence from retailers with a high proportion of private label product in their proposition, more significant improvements in margin will require enhanced levels of product differentiation and other support from the major brands.
Financial Summary - Continuing Businesses
Revenue, gross margin and overheads
Total revenue increased by 20% in the year to 1,821.7 million (2015: 1,522.3 million). Like for like sales for the 52 week period across all Group fascias, including those in Europe, increased by 11.6%.
Total gross margin in the year of 48.5% was broadly consistent with the prior year with an increase in the margin in Outdoor to 43.3% (2015: 42.2%) offset by a slight reduction in the margin in Sports Fashion to 49.0% (2015: 49.2%).
Operating profits and results
Operating profit (before exceptional items) increased substantially by 56.7 million to 158.9 million (2015: 102.2 million) driven by the performance in Sports Fashion assisted by a further reduction in the losses in Outdoor.
There were net exceptional items in the year of 25.5 million (2015: 9.5 million) from the impairment of certain intangible assets and the write off of costs on the project to replace the Group's core IT systems. We took the decision not to continue with this project as we believe that enhanced internally developed systems will enable further growth of the Group, including increasing internationalisation, with more agility, lower cost and reduced risk.
The exceptional items comprised:
2016
2015
m
m
Impairment of intangible assets (1)
10.6
5.1
Termination of project to replace core IT systems (2)
14.9
-
Other property related items
-
4.4
Total exceptional charge
25.5
9.5
1. Relates to the impairment in the period to 30 January 2016 of the goodwill arising in prior years on the acquisition of ActivInstinct Limited, a partial impairment of the Blacks fascia name and the impairment of other goodwill and fascia name balances which were not significant. The charge in the prior period related to the goodwill arising in prior years on the acquisition of Blacks Outdoor Retail Limited, the goodwill arising in prior years on the acquisition of Kukri Sports Limited, the Kukri brand name and the Ark fascia name
2. One off exceptional charge writing off costs to date including certain other related costs
Group profit before tax in the year ultimately increased by 45% to 131.6 million (2015: 90.5 million).
Working Capital and Cash
Strong cash generation from the ongoing trading in our core retail fascias combined with further management focus on driving improvements in stock management disciplines has meant that we ended the year with a net cash balance in excess of 200 million for the first time. The positive cash position provides the Group with a strong financial foundation for our ongoing retail developments, both in the UK and internationally. Whilst there were no acquisitions in the year to 30 January 2016, we will continue to make selected acquisitions and investments, as we have done recently in the Netherlands, where they benefit our strategic development.
On 1 September 2015, the Group amended and extended its syndicated committed 155 million bank facility which previously expired on 11 October 2017. The facility has been amended by increasing the syndicated committed facility by 60 million to 215 million. The expiry date has also been extended by two years and so the amended facility now expires on 11 October 2019.
Gross capital expenditure (excluding disposal costs) increased by 13.3 million to 83.5 million (2015: 70.2 million). Our continuing commitment to enhancing our customers' experience, including the development of the new flagship concept, and to developing our overseas businesses means that investment in our retail fascias, both in terms of taking new stores where appropriate and refurbishing existing space, remains very substantial with the spend on our retail fascias increasing by 14.5 million to 51.7 million (2015: 37.2 million). We anticipate a further increase in capital expenditure in the new financial year although the ultimate level of spend will depend on the final availability of appropriate retail sites.
Elsewhere, we have now completed the project to increase the operational capacity and flexibility of our Kingsway warehouse at a cost in the year of 9.7 million (2015: 11.5 million). We have also acquired a plot of land next to our existing Kingsway site at a cost of 4.7 million to facilitate future development.
Store Portfolio
During the period, store numbers have moved as follows:
Sports Fashion Fascias
(Store Nos.)
JD
UK & ROI
JD Europe
JD Asia
Size
Sub-Total
JD & Size?
Chausport
Sprinter
Other
Total
Period start
351
65
-
31
447
73
80
60
660
New stores
25
41
1
7
74
-
24
16
114
Transfers
(1)
-
-
-
(1)
-
-
(1)
(2)
Closures
(14)
(3)
-
(2)
(19)
(1)
-
(16)
(36)
Period end
361
103
1
36
501
72
104
59
736
(000 Sq Ft)
Period start
1,292
121
-
49
1,462
82
838
129
2,511
New stores
106
104
4
15
229
-
135
46
410
Extensions
21
-
-
-
21
-
-
1
22
Transfers
(4)
-
-
-
(4)
-
-
(1)
(5)
Closures
(44)
(3)
-
(1)
(48)
(1)
-
(31)
(80)
Period end
1,371
222
4
63
1,660
81
973
144
2,858
In addition, there were four JD branded Gyms at the period end in Hull, Liverpool, Preston and Coventry. A fifth gym has opened in Washington subsequent to the period end.
Outdoor Fascias
(Store Nos.)
Blacks
Millets
Tiso
Other
Total
Period start
73
92
17
2
184
New stores
3
9
-
2
14
Transfers
(10)
8
-
4
2
Closures
(6)
(10)
(1)
(1)
(18)
Period end
60
99
16
7
182
(000 Sq Ft)
Period start
270
175
101
62
608
New stores
9
24
-
73
106
Transfers
(54)
23
-
36
5
Closures
(18)
(17)
(4)
(8)
(47)
Period end
207
205
97
163
672
Dividends and Earnings per Share
The Board proposes paying a final dividend of 6.20p (2015: 5.90p) bringing the total dividend payable for the year to 7.40p (2015: 7.05p) per ordinary share, an increase of 5%. The proposed final dividend will be paid on 1 August 2016 to all shareholders on the register at 24 June 2016. We believe that this level of dividend strikes a fair balance for shareholders with appropriate capital retained to facilitate ongoing developments, particularly investment in the international Sports Fashion fascias, which will drive success for the Group, and increased benefits to shareholders, over the longer term.
The adjusted earnings per ordinary share before exceptional items have increased by 58% to 61.34p (2015: 38.89p).
The basic earnings per ordinary share have increased by 43% to 50.16p (2015: 35.17p).
People
We are fortunate, as a Group, to have talented and committed people in every aspect and level of our business. The record result is principally due to their expertise, energy and passion. I thank everybody involved in all of our businesses for delivering these excellent results.
Current Trading and Outlook
We are encouraged by the continued positive trading across our core fascias in the year to date and the Board continues to believe that the Group is very well positioned for profitable growth.
Our next scheduled update will take place upon the announcement of our Interim Results which is scheduled for 13 September 2016.
Peter Cowgill
Executive Chairman
14 April 2016
Consolidated Income Statement
For the 52 weeks ended 30 January 2016
Note
52 weeks to
30 January 2016
000
52 weeks to
31 January 2015
000
Continuing operations
Revenue
1,821,652
1,522,253
Cost of sales
(937,431)
(782,703)
Gross profit
884,221
739,550
Selling and distribution expenses - normal
(648,333)
(564,333)
Selling and distribution expenses - exceptional
-
(4,467)
Administrative expenses - normal
(78,228)
(73,969)
Administrative expenses - exceptional
(25,496)
(5,060)
Other operating income
1,242
925
Operating profit
133,406
92,646
Before exceptional items
158,902
102,173
Exceptional items
2
(25,496)
(9,527)
Operating profit
133,406
92,646
Financial income
388
657
Financial expenses
(2,163)
(2,807)
Profit before tax
131,631
90,496
Income tax expense
(31,001)
(20,741)
Profit from continuing operations
100,630
69,755
Discontinued operation
Loss from discontinued operation, net of tax
6
-
(15,784)
Profit for the period
100,630
53,971
Attributable to equity holders of the parent
97,634
52,677
Attributable to non-controlling interest
2,996
1,294
Basic earnings per ordinary share from continuing operations
3
50.16p
35.17p
Diluted earnings per ordinary share from continuing operations
3
50.16p
35.17p
Consolidated Statement of Comprehensive Income
For the 52 weeks ended 30 January 2016
52 weeks to
30 January 2016
000
52 weeks to
31 January 2015
000
Profit for the period
100,630
53,971
Other comprehensive income:
Items that may be classified subsequently to the Consolidated Income Statement:
Exchange differences on translation of foreign operations
4,144
(4,512)
Total other comprehensive income for the period
4,144
(4,512)
Total comprehensive income and expense for the period
(net of income tax)
104,774
49,459
Attributable to equity holders of the parent
101,828
49,983
Attributable to non-controlling interest
2,946
(524)
Consolidated Statement of Financial Position
As at 30 January 2016
As at
30 January 2016
000
As at
31 January 2015
000
Assets
Intangible assets
73,611
101,075
Property, plant and equipment
173,317
147,934
Other assets
33,191
32,402
Deferred tax assets
482
-
Total non-current assets
280,601
281,411
Inventories
238,324
225,020
Trade and other receivables
56,375
53,922
Cash and cash equivalents
215,996
121,317
Total current assets
510,695
400,259
Total assets
791,296
681,670
Liabilities
Interest-bearing loans and borrowings
(6,301)
(36,713)
Trade and other payables
(324,964)
(274,006)
Provisions
(1,132)
(3,098)
Income tax liabilities
(15,757)
(12,931)
Total current liabilities
(348,154)
(326,748)
Interest-bearing loans and borrowings
(274)
(374)
Other payables
(40,834)
(41,733)
Provisions
(1,209)
(1,020)
Deferred tax liabilities
-
(1,804)
Total non-current liabilities
(42,317)
(44,931)
Total liabilities
(390,471)
(371,679)
Total assets less total liabilities
400,825
309,991
Capital and reserves
Issued ordinary share capital
2,433
2,433
Share premium
11,659
11,659
Retained earnings
378,898
297,161
Other reserves
(10,570)
(14,764)
Total equity attributable to equity holders of the parent
382,420
296,489
Non-controlling interest
18,405
13,502
Total equity
400,825
309,991
Consolidated Statement of Changes in Equity
For the 52 weeks ended 30 January 2016
Ordinary
Share Capital
000
Share
Premium
000
Retained
Earnings
000
Other
Equity
000
Foreign Currency Translation Reserve
000
Total Equity Attributable to Equity Holders
of The Parent
000
Balance at 1 February 2014
2,433
11,659
257,744
(3,073)
(8,997)
259,766
Profit for the period
-
-
52,677
-
-
52,677
Other comprehensive income:
Exchange differences on translation of foreign operations
-
-
-
-
(2,694)
(2,694)
Total other comprehensive income
-
-
-
-
(2,694)
(2,694)
Total comprehensive income for the period
-
-
52,677
-
(2,694)
49,983
Dividends to equity holders
-
-
(13,260)
-
-
(13,260)
Non-controlling interest arising on acquisition
-
-
-
-
-
-
Balance at 31 January 2015
2,433
11,659
297,161
(3,073)
(11,691)
296,489
Profit for the period
-
-
97,634
-
-
97,634
Other comprehensive income:
Exchange differences on translation of foreign operations
-
-
-
-
4,194
4,194
Total other comprehensive income
-
-
-
-
4,194
4,194
Total comprehensive income for the period
-
-
97,634
-
4,194
101,828
Dividends to equity holders
-
-
(13,820)
-
-
(13,820)
Acquisition of non-controlling interest
-
-
(2,077)
-
-
(2,077)
Balance at 30 January 2016
2,433
11,659
378,898
(3,073)
(7,497)
382,420
Total Equity Attributable to Equity Holders
of The Parent
000
Non-Controlling Interest
000
Total
Equity
000
Balance at 1 February 2014
259,766
13,074
272,840
Profit for the period
52,677
1,294
53,971
Other comprehensive income:
Exchange differences on translation of foreign operations
(2,694)
(1,818)
(4,512)
Total other comprehensive income
(2,694)
(1,818)
(4,512)
Total comprehensive income for the period
49,983
(524)
49,459
Dividends to equity holders
(13,260)
(63)
(13,323)
Non-controlling interest arising on acquisition
-
1,015
1,015
Balance at 31 January 2015
296,489
13,502
309,991
Profit for the period
97,634
2,996
100,630
Other comprehensive income:
Exchange differences on translation of foreign operations
4,194
(50)
4,144
Total other comprehensive income
4,194
(50)
4,144
Total comprehensive income for the period
101,828
2,946
104,774
Dividends to equity holders
(13,820)
(120)
(13,940)
Acquisition of non-controlling interest
(2,077)
2,077
-
Balance at 30 January 2016
382,420
18,405
400,825
Consolidated Statement of Cash Flows
For the 52 weeks ended 30 January 2016
52 weeks to
30 January 2016
000
52 weeks to
31 January 2015
000
Cash flows from operating activities
Profit for the period
100,630
53,971
Income tax expense
31,001
20,531
Financial expenses
2,163
2,881
Financial income
(388)
(657)
Depreciation and amortisation of non-current assets
48,778
45,241
Forex losses on monetary assets and liabilities
7,997
4,979
Loss on disposal of Bank Fashion Limited, net of tax
-
6,318
Loss on disposal of non-current assets
-
986
Termination of IT project
14,896
-
Impairment of fixed assets
10,600
6,043
Increase in inventories
(13,304)
(54,696)
Decrease in trade and other receivables
47
7,760
Increase in trade and other payables
55,738
46,097
Interest paid
(2,163)
(2,881)
Income taxes paid
(29,981)
(20,811)
Net cash from operating activities
226,014
115,762
Cash flows from investing activities
Interest received
388
657
Proceeds from sale of non-current assets
1,145
705
Investment in bespoke software development
(4,401)
(7,123)
Acquisition of other intangible assets
-
(29)
Acquisition of property, plant and equipment
(72,765)
(52,924)
Acquisition of non-current other assets
(6,343)
(10,124)
Cash consideration of acquisitions
-
(12,686)
Cash acquired with acquisitions
-
3,563
Consideration received on disposal of Bank Fashion Limited
-
18,150
Net cash used in investing activities
(81,976)
(59,811)
Cash flows from financing activities
Repayment of interest-bearing loans and borrowings
(191)
(291)
Repayment of finance lease liabilities
(30)
(9)
Draw down of finance lease liabilities
75
-
(Repayment) / draw down of syndicated bank facility
(31,000)
5,000
Equity dividends paid
(13,820)
(13,260)
Dividends paid to non-controlling interest in subsidiaries
(120)
(63)
Net cash used in financing activities
(45,086)
(8,623)
Net increase in cash and cash equivalents
98,952
47,328
Cash and cash equivalents at the beginning of the period
115,697
72,043
Foreign exchange losses on cash and cash equivalents
(4,790)
(3,674)
Cash and cash equivalents at the end of the period
209,859
115,697
Analysis of Net Cash
As at 30 January 2016
At 31
January
2015
000
Cash
flow
000
Non-
cash
movements
000
At 30
January
2016
000
Cash at bank and in hand
121,317
99,586
(4,907)
215,996
Overdrafts
(5,620)
(634)
117
(6,137)
Cash and cash equivalents
115,697
98,952
(4,790)
209,859
Interest-bearing loans and borrowings:
Bank loans
(60)
123
(117)
(54)
Syndicated loan facility
(31,000)
31,000
-
-
Finance lease liabilities
(63)
(45)
-
(108)
Other loans
(344)
68
-
(276)
84,230
130,098
(4,907)
209,421
1. Segmental analysis
IFRS 8 'Operating Segments' requires the Group's 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 on the nature of the businesses within the Group. The Group's reportable segments under IFRS 8 are therefore as follows:
Sports Fashion - includes the results of JD Sports Fashion Plc, John David Sports Fashion (Ireland) Limited, Spodis SA, Champion Sports Ireland, JD Sprinter Holdings 2010 SL (including subsidiary companies), JD Sports Fashion BV, JD Sports Fashion Germany GmbH, JD Sports Fashion SRL, JD Sports Fashion Belgium BVBA, JD Sports Fashion Sweden AB, JD Sports Fashion Denmark ApS, JD Sports Fashion SDN BHD, Size GmbH, ActivInstinct Limited, JD Gyms Limited, Duffer of St George Limited, Topgrade Sportswear Limited, Kooga Rugby Limited, Focus Brands Limited (including subsidiary companies), Kukri Sports Limited (including global subsidiary companies), Source Lab Limited, R.D. Scott Limited, Tessuti Group Limited (including subsidiary companies), Nicholas Deakins Limited, Cloggs Online Limited, Ark Fashion Limited and Mainline Menswear Limited.
Outdoor - includes the results of Blacks Outdoor Retail Limited and Tiso Group Limited (including subsidiary companies).
Activinstinct Limited is now included in the Sports Fashion segment reflecting the fact that there has been a restructure of the business in the year and the website is now held on a different platform more closely aligned with the Group's other Sports Fashion businesses than with the businesses classified as Outdoor.
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 'Sports Fashion' 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 customers is not appropriate. Disclosure of revenue from major product groups is not provided at this time due to the cost involved to develop a reliable product split on a same category basis across all companies in the Group.
Intersegment transactions are undertaken in the ordinary course of business on arm's length terms.
The Board consider that certain items are cross divisional in nature and cannot be allocated between the segments on a meaningful basis. Net funding costs and taxation are treated as unallocated reflecting the nature of the Group's syndicated borrowing facilities and its tax group. Drawdowns from the Group's syndicated borrowing facility of nil (2015: 31,000,000), a deferred tax asset of 482,000 (2015: liability of 1,804,000) and an income tax liability of 15,757,000 (2015: 12,931,000) are included within the unallocated segment.
Each segment is shown net of intercompany transactions and balances within that segment. The eliminations remove intercompany transactions and balances between different segments which primarily relate to the net down of long term loans and short term working capital funding provided by JD Sports Fashion Plc (within Sports Fashion) to other companies in the Group, and intercompany trading between companies in different segments.
Business Segments
Information regarding the Group's reportable operating segments for the 52 weeks to 30 January 2016 is shown below:
Income statement
Sports Fashion
000
Outdoor
000
Continuing Operations
000
Gross revenue
1,666,477
155,313
1,821,790
Intersegment revenue
(138)
-
(138)
Revenue
1,666,339
155,313
1,821,652
Operating profit / (loss) before exceptional items
162,864
(3,962)
158,902
Exceptional items
(21,634)
(3,862)
(25,496)
Operating profit / (loss)
141,230
(7,824)
133,406
Financial income
388
Financial expenses
(2,163)
Profit / (loss) before tax
131,631
Income tax (expense) / credit
(31,001)
Profit / (loss) for the period
100,630
Total assets and liabilities
Sports Fashion
000
Outdoor
000
Unallocated
000
Eliminations
000
Total
000
Total assets
792,411
82,016
482
(83,613)
791,296
Total liabilities
(336,736)
(121,591)
(15,757)
83,613
(390,471)
Total segment net assets / (liabilities)
455,675
(39,575)
(15,275)
-
400,825
Other segment information
Sports Fashion
000
Outdoor
000
Total
000
Capital expenditure:
Software development
4,401
-
4,401
Property, plant and equipment
69,025
3,740
72,765
Non-current other assets
6,343
-
6,343
Depreciation, amortisation and impairments:
Depreciation and amortisation of non-current assets
45,326
3,452
48,778
Impairment of intangible assets
6,739
3,861
10,600
Termination of IT project
14,896
-
14,896
Impairment of non-current assets
843
584
1,427
The comparative segmental results (re-presented) for the 52 weeks to 31 January 2015 are as follows:
Income statement (re-presented)
Sports Fashion
000
Outdoor
000
Continuing Operations
000
Discontinued Operations
000
Total
000
Gross revenue
1,382,408
139,924
1,522,332
83,441
1,605,773
Intersegment revenue
(79)
-
(79)
-
(79)
Revenue
1,382,329
139,924
1,522,253
83,441
1,605,694
Operating profit / (loss) before exceptional items
109,315
(7,142)
102,173
(7,832)
94,341
Exceptional items
(4,876)
(4,651)
(9,527)
(8,088)
(17,615)
Operating profit / (loss)
104,439
(11,793)
92,646
(15,920)
76,726
Financial income
657
-
657
Financial expenses
(2,807)
(74)
(2,881)
Profit / (loss) before tax
90,496
(15,994)
74,502
Income tax (expense) / credit
(20,741)
210
(20,531)
Profit / (loss) for the period
69,755
(15,784)
53,971
Total assets and liabilities (re-presented)
Sports Fashion
000
Outdoor
000
Unallocated
000
Eliminations
000
Total
000
Total assets
670,491
94,873
-
(83,694)
681,670
Total liabilities
(274,031)
(135,607)
(45,735)
83,694
(371,679)
Total segment net assets / (liabilities)
396,460
(40,734)
(45,735)
-
309,991
Other segment information (re-presented)
Sports Fashion
000
Outdoor
000
Total
000
Capital expenditure:
Software development
7,123
-
7,123
Other intangible assets
29
-
29
Property, plant and equipment
49,770
3,154
52,924
Non-current other assets
10,124
-
10,124
Depreciation, amortisation and impairments:
Depreciation and amortisation of non-current assets
42,047
3,194
45,241
Impairment of intangible assets
2,560
2,500
5,060
Impairment of non-current assets
233
750
983
Geographical Information
The Group's operations are located in the UK, Republic of Ireland, France, Spain, Germany, the Netherlands, Italy, Sweden, Denmark, Belgium, Malaysia, Australia, New Zealand, Canada, Dubai, Singapore and Hong Kong.
The following table provides analysis of the Group's revenue by geographical market, irrespective of the origin of the goods / services:
52 weeks to 30 January 2016
52 weeks to 31 January 2015
Continuing
Discontinued
Total
Continuing
Discontinued
Total
000
000
000
000
000
000
UK
1,407,866
-
1,407,866
1,184,966
82,940
1,267,906
Europe
391,954
-
391,954
317,472
189
317,661
Rest of world
21,832
-
21,832
19,815
312
20,127
1,821,652
-
1,821,652
1,522,253
83,441
1,605,694
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 by the geographical area in which the assets are located:
2016
000
2015
000
UK
183,623
206,692
Europe
96,437
74,523
Rest of world
541
196
280,601
281,411
2. Exceptional items
52 weeks to
30 January
2016
000
52 weeks to
31 January
2015
000
Property related exceptional costs
-
4,467
Selling and distribution expenses - exceptional
-
4,467
Impairment of goodwill, brand names and fascia names (1)
10,600
5,060
Termination of project to replace core IT systems (2)
14,896
-
Administrative expenses - exceptional
25,496
5,060
Exceptionals - continuing operations
25,496
9,527
Exceptionals - discontinued operations (see note 6)
-
8,088
25,496
17,615
1. Relates to the impairment in the period to 30 January 2016 of the goodwill arising in prior years on the acquisition of ActivInstinct Limited, a partial impairment of the Blacks fascia name and the impairment of several other goodwill and fascia name balances which were not significant. The charge in the prior period related to the goodwill arising in prior years on the acquisition of Blacks Outdoor Retail Limited, the goodwill arising in prior years on the acquisition of Kukri Sports Limited, the Kukri brand name and the Ark fascia name.
2. One off exceptional charge writing off costs to date including certain other related costs
These selling and distribution expenses and administrative expenses are exceptional items as they are,
individually, and in aggregate, material in size and/or unusual or infrequent in nature.
3. Earnings per ordinary share
Basic and diluted earnings per ordinary share
The calculation of basic and diluted earnings per ordinary share at 30 January 2016 is based on the profit from continuing operations for the period attributable to equity holders of the parent of 97,634,000 (2015: 68,461,000) and a weighted average number of ordinary shares outstanding during the 52 week period ended 30 January 2016 of 194,646,632 (2015: 194,646,632).
An Ordinary Resolution was passed at the Annual General Meeting, effective 30 June 2014, resulting in a share split whereby four Ordinary shares were issued for each Ordinary share. In accordance with IAS 33, the number of shares outstanding before the event has been adjusted for the proportionate change as if the event had occurred at the beginning of the earliest period presented.
52 weeks to
30 January
2016
52 weeks to
31 January
2015
Issued ordinary shares at beginning and end of period
194,646,632
194,646,632
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 from continuing operations 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.
Note
52 weeks to
30 January
2016
000
52 weeks to
31 January
2015
000
Profit for the period from continuing operations attributable to equity holders of the parent
97,634
68,461
Exceptional items excluding loss on disposal of non-current assets
2
25,496
8,541
Tax relating to exceptional items
(3,737)
(1,309)
Profit for the period from continuing operations attributable to equity holders of the parent excluding exceptional items
119,393
75,693
Adjusted basic and diluted earnings per ordinary share from continuing operations
61.34p
38.89p
4. Acquisitions
Current period acquisitions
During the period, the Group has increased its shareholding in three non-wholly owned subsidiaries. These transactions were not material.
Prior period acquisitions
Mainline Menswear Limited
On 21 March 2014, the Group acquired 80% of the issued share capital of Mainline Menswear Holdings Limited for cash consideration of 10,924,000 with additional consideration of up to 500,000 payable after 30 November 2014 if certain performance criteria were achieved. At acquisition, management believed that Mainline Menswear was on course to meet the performance criteria for the maximum contingent consideration to be payable and therefore the fair value of this contingent consideration at this time was 500,000. The deferred consideration was subsequently paid in full in February 2015. Mainline Menswear is primarily an online niche retailer of premium branded Men's apparel and footwear.
The measurement period concluded in the 52 week period ended 30 January 2016, with no measurement adjustments being made to the fair values in the period.
The final goodwill calculation is summarised below:
Book value
000
Measurement
adjustments
000
Fair value at 30 January 2016
000
Acquiree's net assets at acquisition date:
Intangible assets
-
843
843
Property, plant & equipment
52
-
52
Inventories
1,519
-
1,519
Cash
3,535
-
3,535
Trade and other receivables
60
-
60
Trade and other payables
(692)
-
(692)
Income tax liabilities
(62)
-
(62)
Deferred tax liabilities
(10)
(169)
(179)
Net identifiable assets
4,402
674
5,076
Non-controlling interest (20%)
(880)
(135)
(1,015)
Goodwill on acquisition
7,363
Consideration paid - satisfied in cash
11,424
The intangible asset acquired represents the fair value of the 'Mainline' fascia name. The Board believes that the excess of consideration paid over the fair value of the net identifiable assets of 7,363,000 is best considered as goodwill on acquisition representing employee expertise and anticipated future operating synergies.
Ultimate Outdoors
On 3 February 2014, the Group acquired, via its 100% owned subsidiary Blacks Outdoor Retail Limited, 100% of the entire issued share capital of Ultimate Outdoors Limited for cash consideration of 835,000 which was equal to the fair value of the net identifiable assets acquired.
The measurement period concluded in the 52 week period ended 30 January 2016, with no measurement adjustments being made to the fair values in this period.
Oswald Bailey
On 28 March 2014, the Group acquired, via its 100% owned subsidiary Blacks Outdoor Retail Limited, the trade and assets of 14 stores (and 2 websites) trading as Oswald Bailey for cash consideration of 851,000 which was equal to the fair value of the net identifiable assets acquired. Oswald Bailey is a retailer of outdoor footwear, apparel and equipment.
The measurement period concluded in the 52 week period ended 30 January 2016, with no measurement adjustments being made to the fair values in this period.
5. Disposals
Prior period disposal
Disposal of 100% of the Issued Ordinary Share Capital of Bank Fashion Limited
On 25 November 2014, the Group disposed of its 100% shareholding in Bank Fashion Limited to Huk 57 Limited (a subsidiary of Hilco Capital Limited) for a total consideration of 18.15m. The total cash payment comprised 1 for the entire share capital of Bank Fashion Limited and 18.15m which repaid a substantial part of the intercompany receivable balance of 28.25m. JD Sports Fashion Plc has recorded a provision of 10.1m against the remaining balance.
The assets and liabilities related to Bank Fashion Limited form a disposal group. Bank Fashion Limited has been treated as a discontinued operation as at 31 January 2015 as its fashionwear business offering represented a significant line of business (see note 6).
Financial information related to the disposal is set out below:
000
Consideration received
18,150
Less: carrying value of net assets disposed of
(20,506)
Less: fascia name disposed of
(5,481)
Plus: deferred tax on fascia name
1,519
Loss on disposal
(6,318)
Net cashflow on disposal:
Consideration received
18,150
Less: cash and cash equivalents disposed of
-
Net cash inflow from disposal
18,150
6. Discontinued operation
Results of Discontinued Operation
52 weeks to
30 January
2016
000
52 weeks to
31 January
2015
000
Revenue
-
83,441
Expenses - normal
-
(91,273)
Expenses - exceptional
-
(1,770)
Net interest expense
-
(74)
Results from operating activities
-
(9,676)
Income tax
-
210
Results from operating activities, net of tax
-
(9,466)
Loss on sale of discontinued operation - exceptional
-
(6,318)
Loss for the period
-
(15,784)
Basic loss per ordinary share
-
(8.11)p
Diluted loss per ordinary share
-
(8.11)p
Effect of Disposal on the Financial Position of the Group
52 weeks to
31 January
2015
000
Property, plant and equipment
(9,266)
Inventories
(18,371)
Trade and other receivables
(4,198)
Income tax assets
(21)
Deferred tax assets
(873)
Trade and other payables
10,624
Provisions
1,599
Net assets
(20,506)
Fascia name
(5,481)
Deferred tax on fascia name
1,519
Net fascia name disposed of on divestment of subsidiary
(3,962)
Consideration received, satisfied in cash
18,150
Cash and cash equivalents disposed of
-
Net cash inflow
18,150
7. Subsequent events
Sports Unlimited Retail BV
On 20 March 2016, the Group acquired, via its newly incorporated subsidiary Sports Unlimited Retail BV, the trading assets and trade of the Aktiesport and Perry Sport fascias from the Trustee of Unlimited Sports Group BV which was declared bankrupt by the court of Amsterdam on 23 February 2016. On acquisition there were 187 trading stores and two trading websites.
The Board believe that the cash consideration of 26.5 million represents the current best estimates of the fair value of the net assets acquired.
Provisional fair value at 20 March
2016
000
Acquiree's net assets at the acquisition date:
Property, plant & equipment
3,929
Inventories
23,330
Cash and cash equivalents
58
Trade and other payables
(8,364)
Net identifiable assets
18,953
Goodwill on acquisition
-
Consideration paid - satisfied in cash
18,953
8. Accounts
The financial information set out above does not constitute the Group's statutory accounts for the 52 weeks ended 30 January 2016 or 52 weeks ended 31 January 2015 but is derived from those accounts. Statutory accounts for the 52 weeks ended 31 January 2015 have been delivered to the Registrar of Companies, and those for the 52 weeks to 30 January 2016 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
Copies of full accounts will be sent to shareholders in due course. Additional copies will be available from JD Sports Fashion Plc, Hollinsbrook Way, Pilsworth, Bury, Lancashire, BL9 8RR or online at www.jdplc.com.
This information is provided by RNSThe company news service from the London Stock ExchangeENDFR IJMPTMBBBBJF
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