JD Sports Fashion

ANNUAL REPORT 
& ACCOUNTS 2005

thejohn davidgroupplcCONTENTS:

02. SUMMARY OF FINANCIAL PERFORMANCE
04. CHAIRMAN’S STATEMENT
11. FINANCIAL REVIEW 
12. PROPERTY REVIEW AND STORES
14. THE BOARD
16. DIRECTORS’ REPORT
20. CORPORATE GOVERNANCE
25. CORPORATE AND SOCIAL RESPONSIBILITY
26. REPORT ON REMUNERATION 
AND RELATED MATTERS

35. INDEPENDENT AUDITOR’S REPORT
37. CONSOLIDATED PROFIT 
AND LOSS ACCOUNT

38. BALANCE SHEETS
39. CONSOLIDATED CASH FLOW STATEMENT
40. RECONCILIATION OF NET CASH FLOW 

TO MOVEMENT IN NET DEBT

41. ACCOUNTING POLICIES
42. NOTES TO THE FINANCIAL STATEMENTS
59. FIVE YEAR RECORD
60. FINANCIAL CALENDAR
60. SHAREHOLDER INFORMATION
60. HEAD OFFICE

 
SUMMARY 
OF FINANCIAL 
PERFORMANCE

TURNOVER

GROSS PROFIT

ADJUSTED OPERATING PROFIT*

ADJUSTED OPERATING PROFIT AFTER INTEREST*

OPERATING PROFIT

PROFIT BEFORE TAXATION

BASIC EARNINGS PER ORDINARY SHARE

TOTAL DIVIDEND PER ORDINARY SHARE

NET DEBT AT END OF PERIOD

BUSINESS HIGHLIGHTS

• Sales up 3.0% and 4.7% on a like for like basis.
• Gross margin maintained at 45.6%.
• Net debt reduced by £20.3m to £30.8m.
• Overheads tightly controlled.
• 41 stores closed during the period.
• Acquisition of RD Scott Limited on 15 December 2004, contributing £0.31m to operating profit.

52 weeks ended
29 January 2005
£000

Year ended 
31 January 2004
£000

471,656

215,152

17,891

13,734

8,356

2,630

2.85p

6.60p

30,767

458,073

208,694

10,498

5,964

7,734

2,105

1.39p

6.50p

51,066

2003 represents a 10 month period ended 31 January 2003.

*before exceptional items, goodwill amortisation and loss on disposal of fixed assets

02

03

                       
CHAIRMAN’S
STATEMENT

INTRODUCTION
The 52 week period to 29 January 2005 was an encouraging one as the
Group made considerable progress in turning round its trading
performance, particularly in the Sports fascias, and reduced its stocks by
£11.9 million and its net debt by £20.3 million to £30.8 million. This debt
reduction was achieved after the purchase of RD Scott Limited (“Scotts”)
at a cost of £4.5 million in December 2004.

Operating profit and results
Operating profit before exceptional, goodwill amortisation and loss on
disposal rose from £10.5 million to £17.9 million. Our objective is to
continually drive the net margin ratio upward. 

Operating profit in the year rose from £7.7 million to £8.4 million after
exceptional items of £8.7 million (2004: £2.0 million) and goodwill
amortisation of £0.8 million (2004: £0.8 million). 

GROUP PERFORMANCE
Sales
Total sales increased by 3.0% in the year to £471.7 million from 
£458.1 million and by 4.7% on a like for like basis. 

We continually aim to enhance our customer footfall and conversion by
constantly changing our brand and product portfolio to maintain the best
differentiated footwear and apparel offer in our sector. We have also
embarked on a stock clearance programme to reduce older and under
performing stocks in the business. This has allowed our stores to carry
fresher stock and a greater proportion of newer ranges. This attracts more
consumers to shop in our stores and increases sales densities. 

We have also continued to work more closely with our branded suppliers
to ensure we have a wide range of exclusive and more narrowly
distributed product creating real differentiation from our competitors. 
Our offer is complemented by McKenzie and Carbrini own brand product,
which accounted for 8% of sales (2004: 6%). In addition, we continue to
be innovative with instore windows and merchandising and align our
fascias and brands with the sports and music icons of our core customer
group.

Gross margin and stocks
Gross margin for the year was static at 45.6% but this figure was held
back by the much more aggressive elimination of aged and under
performing stocks, particularly Fashion stocks. We believe this will lead to
some margin enhancement in the current year even in the face of a very
competitive environment. Year end Group stocks were £53.9 million
(including £1.9 million of Scotts stocks), a reduction of £11.9 million since
January 2004. 

Debt reduction and gearing
Net debt was reduced from £51.1 million to £30.8 million in the year
bringing gearing down to 55% (2004: 89%).

Overheads
Overheads were well contained and controlled with a small reduction in
normal selling, distribution and administration costs in the year. This was
achieved by reducing the number of under performing inefficient stores in
our portfolio, by continuing to tighten control of retail wages, and by the
reduction of other central costs.

The exceptional items comprised a £6.7 million impairment charge on
under performing stores closed in the year or stores earmarked for
disposal, a £1.3 million charge for expected onerous lease rental costs on
five stores, and £0.7 million, principally for the termination costs of the
previous Chairman and a number of senior staff in buying, merchandising,
marketing and human resources. The impairment provision has been
substantially increased since our half year results were announced as we
have continued to add to our store disposal list in a determined effort to
ensure we have a more productive portfolio for the future. After closing 41
stores in the year, there remained 52 stores in our portfolio which were
fully impaired. We are aiming to close approximately 20 in the current year,
and we have already closed five. 

After charging a loss on disposal of fixed assets of £1.6 million 
(2004: £1.1 million) arising largely out of store closures, the profit on
ordinary activities before interest was £6.8 million (2004: £6.6 million).

Net interest charges in the year fell from £4.5 million to £4.2 million. 
The impact of debt reduction was offset by increases in base rates and 
by a 0.3% increase in the margin early last year which has been reversed
early in the new year.

Profit on ordinary activities before taxation was £2.6 million 
(2004: £2.1 million) and after taxation was £1.3 million (2004: £0.6 million).

Sports fascias
It is pleasing to report that in spite of the increasingly competitive retail
sports environment, we have made considerable progress both in the
trading performance of the Sports fascias  and in laying the foundations
for further performance improvement by the elimination of under
performing stores and stocks. In addition to this we have continued to
enhance our position as the leading fashion oriented retailer of sportswear
by the development of sales from newly introduced brands and our own
brand product. The two biggest challenges for the Sports fascias are the
increasingly wide distribution of sportswear by value retailers and the
optimisation of the store portfolio.

04

05

              
CHAIRMAN’S
STATEMENT

(CONTINUED)

Fashion fascias
The ATH-, AV and Open Fashion fascias under performed throughout the
year saddled with a very poor stock situation, comprising ill advised buys
for Spring/Summer 2004 both in quality and quantity terms, an excess of
brought forward aged stock, the absence of certain key brands and
inadequate brand consistency. The latter stemmed from the previous
inability of these fascias to present a consistent message and appropriate
brand adjacencies. This was weakening the business and led to these
fascias, which accounted for approximately 8% of Group sales in the
year, making no contribution to central overheads. It was for these
reasons that the opportunity to purchase Scotts was taken in December
2004.

Scotts was a small privately owned branded fashion chain operating in
the same market but which had better access to aspirational brands such
as Henri Lloyd, Ted Baker and Hackett. The acquisition has given the
Fashion business improved access to key brands and a stronger more
focused management team. The two businesses will be run
autonomously with accountability being greatly increased as a result. 
The intention is to retain only the Scotts and Open fascias and the brands
have responded very positively to both the acquisition and our strategy. 

Store portfolio
There has been considerable progress in closing under performing stores
in the last year and there has been no net cash cost to those disposals.
41 stores were closed and, following the exceptional impairment charge
as a result of our store portfolio review, the Group still retained 52 fully
impaired stores which we either have to close and dispose of or improve
efficiencies considerably. It has to be recognised that certain stores may
become increasingly difficult to dispose of and consequently there will be
a cost to this process.

Continuing rises in rent, rates and minimum wages  at levels above
inflation, combined with continual change and development in the
shopping centres within many regional centres mean that the programme
for elimination of under performing stores is ongoing. It is not expected
that there will be exceptional costs on the scale of those reported for the
last year because of write downs already made. Nevertheless some net
cash cost is likely to be incurred on the closure of approximately 20 more
stores in the current year.

New store opportunities are not being overlooked and we opened 13 new
stores in the last year in addition to the acquisition of 23 Scotts stores.
Square footage of retail space at 29 January 2005 was 1,206,000
(2004:1,236,000).  We expect to open less than 10 new stores in the
current year with the store appraisal process recognising the demanding
competitive environment.

A fuller analysis of store movements is set out on page 12 of this Annual
Report.

DIVIDEND AND EARNINGS PER ORDINARY SHARE
The Board indicated during the last year that it would change its dividend
policy to ensure that the dividend declaration was more proportionate to
the results of each half year. The Board proposes paying a final dividend
of 4.4p per ordinary share bringing the total dividend paid for the year to
6.6p per ordinary share (2004: 6.5p). The proposed final dividend will be
paid on 1 August 2005 to all shareholders on the register on 20 May
2005.

The adjusted earnings per ordinary share before exceptional items and
amortisation of goodwill was 18.39p (2004: 6.21p).

The basic earnings per ordinary share was 2.85p (2004: 1.39p).

CURRENT TRADING AND OUTLOOK
Trading has continued to be satisfactory since the year end. Sales for the
thirteen week period ended 30 April 2005 have been up 2.4% on a like for
like basis against prior year with Sport fascias up 2.7% and Fashion
fascias up 0.3%. The Fashion figures are not likely to be more positive
until recent gains in brand distribution are added to our Autumn offer. 
The Board remains confident that continuing progress is being made in
the restoration of more favourable operating ratios throughout the Group.

EMPLOYEES
The Group has come through a difficult period as a result of the skills and
efforts of its managers and the dedication of all its employees. The whole
Board thanks them all for their loyalty, support and commitment. We must
maintain that commitment to ensure the business now delivers on its
renewed promise.

Peter Cowgill
Executive Chairman
11 May 2005

06

07

           
“TOTAL SALES INCREASED
BY 3.0% IN THE YEAR TO
£471.7 MILLION FROM
£458.1 MILLION AND 
BY 4.7% ON A LIKE FOR
LIKE BASIS.”

08

09

 
FINANCIAL
REVIEW

The principal objectives of the business at the
beginning of the year were to facilitate the clean
up and reduction of stocks, to identify and
eliminate under performing stores and to
reduce bank debt. Considerable progress has
been and is being made on all of these
objectives:

STOCKS
Stocks have been analysed in greater detail as
the year has progressed with the sell through of
all non-current season stocks now being
closely monitored. The sell through of current
season lines is also monitored earlier. The
results of this programme can be seen both in
the value and the quality of the stocks carried
forward at the year end. 

DEBT AND GEARING
The Group’s net debt has been reduced from
£51.1 million at 31 January 2004 to £30.8
million at 29 January 2005, a reduction of £20.3
million, even after acquiring Scotts for £4.5
million. Stock reduction and reduced capital
expenditure combined with much better
operational cashflows led to this very positive
result. Our payment record against terms was
much improved throughout the year with year
end creditor days being 35 (2004: 40).

TREASURY POLICY
The Group’s treasury policy is to arrange
funding whilst limiting exposure to financial risk
and minimising funding costs. It seeks to
reduce uncertainty over future cashflows arising
from movements in interest rates by adopting a
mixture of fixed rate and variable rate
borrowings. 

In practice, no new funding or swap
arrangements have been put in place or
required since the syndicated facilities were put
in place for the First Sport acquisition in 2002.
Indeed, the banking syndicate have supported
us through a period of under performance since
that acquisition and it was only after our solid
Christmas trading performance that we have
regained more flexibility to start to review our
funding for the development of the business.
The opportunity to buy Scotts arose prior to our
successful Christmas and there was a
competitive offer for the business necessitating
speedy financing of the deal. We were able to
complete the deal with short term finance on
arm’s length terms from Manchester Square
Enterprises Limited, a large shareholder, which
is a subsidiary of Pentland Group Plc. This was
subsequently refinanced in March 2005 by our
banking syndicate. Further details of this
arrangement are included in note 26 to the
accounts.

DIVIDEND POLICY
Dividends have been restrained as a result of
under performance and the need to cut debt in
the two previous years. This year the proposed
final dividend of 4.40p per ordinary share (2004:
3.64p) brings the total dividend paid to 6.60p
(2004: 6.50p) per ordinary share and reflects the
Board’s intention to split the full year’s
payments more in line with the earnings pattern
of the business. There is no scrip dividend
alternative this year. 

TAXATION
The taxation charge for the year at £1.3 million
(2004: £1.5 million) was 49.2% (2004: 69.2%) of
profit on ordinary activities before taxation. The
charge remained high principally as a result of
the large impairment charge in the year which
led to a relatively high depreciation charge on 
non-qualifying assets for the year. This
combined with other disallowables, including
the goodwill charge, have a disproportionate
impact on the percentage charge when the
reported profit on ordinary activities before tax
is low, as it is this year after exceptional items
and losses on disposal of fixed assets.

Brian Small
Group Finance Director
11 May 2005

10

11

             
PROPERTY
REVIEW AND
STORES

The ongoing review of the property portfolio has resulted in the closure of 41 under performing stores during the period (including one Scotts store) as
we continue to drive the efficiency of the store base. We have also converted 18 stores to alternative fascias within the Group with the intention of
utilising the space more effectively. In addition, minor refurbishment works have been undertaken on a number of stores with a view to enhancing future
performance.

During the period 13 new stores have been opened with 22 Scotts stores also having been integrated into the portfolio.

The effect of the store openings and closures over the last 12 months on the overall retail space has not been significant with the Group operating out of
1,206,000 sq ft as at 29 January 2005 (1,236,000 in 2004).

The store portfolio at 29 January 2005 and 31 January 2004 can be analysed as follows:

STORES BY REGION AT 29 JANUARY 2005

REGIONAL KEY:

SCOTLAND/IRELAND REGION
42 sports stores, 6 fashion stores.

NORTHERN REGION
57 sports stores, 26 fashion stores.

CENTRAL REGION
71 sports stores, 14 fashion stores.

SOUTHERN REGION
54 sports stores, 2 fashion stores.

LONDON REGION
75 sports stores, 5 fashion stores.

SPORTS FASCIAS

High Street
Out of Town

Total

FASHION FASCIAS

Ath-/AV
Open
Scotts

Total

Group Total

No. of Stores

Retail (000 sq ft)

2005

2004

2005

2004

267
32

299

29
2
22

53

290
30

320

35
2
-

37

822
220

900
206

1,042

1,106

71
44
49

164

86
44
-

130

352

357

1,206

1,236

The strategy to keep the portfolio under review will be maintained into future financial years and the efficiency of the portfolio will continue to improve as
a result. It is anticipated that approximately 20 stores will be closed this year.

The retail environment remains competitive and property outgoings continue to be evermore demanding. Therefore the selection of new store
opportunities is becoming increasingly important to the future of the business and in light of these circumstances the number of new store openings is
likely to be limited to less than 10 in the current year.

12

13

                     
THE BOARD

PETER COWGILL
Executive Chairman aged 52

BARRY BOWN
Chief Executive aged 44

BRIAN SMALL
Finance Director aged 48

Barry joined the Board in 2000 and
has been with The John David
Group Plc since 1984. He held the
positions of Head of Retail, Head
of Buying and Merchandising and
Chief Operating Officer prior to his
appointment as Chief Executive in
2000.

Brian was appointed Finance
Director and Company Secretary
in January 2004. Immediately prior
to his appointment, he was
Operations Finance Director at
Intercare Group Plc and has also
been Finance Director of a number
of other companies. He qualified
as a Chartered Accountant with
Price Waterhouse in 1981.

Peter was appointed Executive
Chairman in March 2004. He was
previously Finance Director of the
Group until his resignation in June
2001. Since then he has been a
partner in Cowgill Holloway
Chartered Accountants, and he is
also a Non-Executive Director of a
number of private companies.
During the year he was appointed
Non-Executive Chairman of United
Carpets Plc.

14

JOHN WARDLE 
Non-Executive Director 
aged 60

John was a co-founder of JD
Sports and he was the Chairman
of the Group throughout its various
stages of growth from 1980 until
2003. In January 2004, John
became a Non-Executive Director.

DAVID MAKIN
Non-Executive Director 
aged 41

David was a co-founder of JD
Sports in 1980 and for most of the
Group’s existence was responsible
for the Group’s overall strategic
development as well as the buying
strategy. In January 2004, David
became a Non-Executive Director.

COLIN ARCHER
Non-Executive Director, Audit
Committee and Remuneration
Committee member aged 63

CHRIS BIRD
Non-Executive Director, Audit
Committee and Remuneration
Committee member aged 42

Colin was appointed a 
Non-Executive Director in
November 2001. He has over 40
years experience in the banking
and financial arenas, having
previously been Assistant
Corporate Director with Barclays
Bank Plc. He is also a member of
the Chartered Institute of Bankers. 

Chris was appointed to the Board
in May 2003. He is a marketing
specialist with his own public
relations and marketing agency.
Chris has 20 years media
experience in newspapers,
commercial radio and sport.

15

               
DIRECTORS’
REPORT

The directors present their annual report and the audited financial statements for the 52 week period ended 29 January 2005.

PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
The principal activity of the Group continues to be the retail of sports and leisure wear.

A review of operations for the year and likely future developments are set out in the Chairman’s Statement.

RESULTS
Turnover for the 52 week period ended 29 January 2005 was £471.7 million and profit before taxation £2.6 million compared with £458.1 million and
£2.1 million respectively in the previous financial year. The consolidated profit and loss account is set out on page 37.

PROPOSED DIVIDEND
The directors recommend a final dividend of 4.40p per ordinary share (2004: 3.64p), which together with the interim dividend of 2.20p per ordinary share
(2004: 2.86p) makes a total for the year of 6.60p (2004: 6.50p).

If approved at the next Annual General Meeting, the dividend will be paid on 1 August 2005 to shareholders on the register at the close of business on
20 May 2005.

DIRECTORS
The names of the current directors of the Company and their biographical details are given on pages 14 to 15. Mr J Wardle and Mr D Makin retire by
rotation at the next Annual General Meeting and are eligible for re-election.

On 16 March 2004, Mr R Best resigned from the Company and Mr P Cowgill was appointed as Executive Chairman.

Following the resignation of Mr F Martin on 25 March 2004, Mr C Archer became chairman of both the Audit Committee and the Remuneration
Committee.

DIRECTORS’ INTERESTS
The interests of the directors who held office at 29 January 2005 and their immediate families in the Company’s shares are shown below:

J WARDLE
D MAKIN
P COWGILL
B BOWN
B SMALL
C ARCHER
C BIRD

29 January 2005
Ordinary shares of 5p each

31 January 2004
Ordinary shares of 5p each

Beneficial Non-Beneficial

Options

Beneficial Non-Beneficial

Options

7,019,064
10,081,579
380,263
5,625
-
8,771
-

(i) 2,084,255
3,192,296
-
-
-
-
-

-
-
-
230,000
100,000
-
-

12,213,770
9,910,610
-
5,625
-
8,771
-

(i) 2,063,070
3,138,160
-
-
-
-
-

-
-
-
230,000
100,000
-
-

17,495,302

5,276,551

330,000

22,138,776

5,201,230

330,000

(i) Includes 1,249,255 shares (2004: 1,228,070) duplicated within the beneficial interests of Mr D Makin.

Except as disclosed in the substantial interests in share capital on page 19, there have been no changes to the interests of the directors disclosed
above after the period end.

SHARE OPTION SCHEMES
The Company operates an Inland Revenue Approved Employee Share Option Scheme and an Unapproved Employee Share Option Scheme. During the
year the Company granted no new options (2004: 342,348) under the Inland Revenue Approved Employee Share Option Scheme and no new options
(2004: 1,154,170) under the Unapproved Employee Share Option Scheme. Further information on share options is given in note 19 to the financial
statements.

16

17

                              
DIRECTORS’
REPORT

(CONTINUED)

SUBSTANTIAL INTERESTS IN SHARE CAPITAL
As at 11 May 2005, the directors are aware of the following substantial interests (those greater than 3%) in the ordinary share capital of the Company, 
in addition to the directors’ interests: 

Schroder Investment Management Limited
Manchester Square Enterprises Limited
Aberforth Partners
Fidelity International Limited

Number of ordinary shares

9,304,894
5,405,406
2,971,991
2,071,355

%

19.68
11.43
6.29
4.38

On 11 May 2005 Manchester Square Enterprises Limited announced a cash offer in respect of the entire issued and to be issued ordinary share capital
of The John David Group Plc. Manchester Square Enterprises Limited is a wholly owned subsidiary of Pentland Group Plc. The offer was for 211.2p per
ordinary share.

On 11 May 2005 Manchester Square Enterprises Limited received irrevocable undertakings to accept the offer from Mr J Wardle and Mr D Makin in
respect of a total of 21,127,939 ordinary shares, which together with their current holding of 5,405,406 ordinary shares, means that Manchester Square
Enterprises Limited has acquired or agreed to acquire 26,533,345 ordinary shares in total, carrying approximately 57% of the voting rights normally
excercisable at a general meeting of the company. The remaining shareholders have until 15 June 2005 to accept or decline the offer.

EMPLOYEES
The Group is committed to promote equal opportunities in employment regardless of employees’ or potential employees’ sex, marital status, creed, colour,
race, ethnic origin or disability. This commitment applies in respect of all terms and conditions of employment. Recruitment, promotion and the availability of
training are based on the suitability of any applicant and full and fair consideration is always given to disabled persons in such circumstances.

Should an employee become disabled during his or her employment by the Group, every effort is made to continue employment and training within
their existing capacity wherever practicable, or failing that, in some alternative suitable capacity.

The Group has continued throughout the year to provide employees with relevant information and to seek their views on matters of common concern.
Priority is given to ensuring that employees are aware of all significant matters affecting the Group’s performance and of any significant organisational changes.

DONATIONS
During the year the Group made charitable donations of £12,300 (2004: £nil).
No political donations were made in the year (2004: £nil).

CREDITORS PAYMENT POLICY
For all trade creditors, it is the Group’s policy to:

• Agree the terms of payment at the start of business with the supplier.
• Ensure that suppliers are aware of the terms of payment.
• Pay in accordance with its contractual and other legal obligations.

The average number of days taken to pay trade creditors by the Group and the Company at the period end was 35 (2004: 40).
The Group does not follow any code or statement on payment practice.

AUDITORS
In accordance with Section 384 of the Companies Act 1985, a resolution is to be proposed at the Annual General Meeting for the re-appointment of 
KPMG Audit Plc as auditors of the Company.

ANNUAL GENERAL MEETING
Notice of the Annual General Meeting to be held at 1.00pm on 21 July 2005 at Hollinsbrook Way, Pilsworth, Bury, Lancashire BL9 8RR incorporating
explanatory notes of the resolutions to be proposed at the meeting is enclosed. A Form of Proxy is also enclosed with this Annual Report and Financial
Statements.

By order of the Board

B SMALL
Secretary
11 May 2005

Hollinsbrook Way
Pilsworth, Bury
Lancashire BL9 8RR

19

18

                     
CORPORATE 
GOVERNANCE

The Group recognises the importance of
corporate governance and supports the
principles of corporate governance set out in
Section 1 of the July 2003 FRC Combined Code
on Corporate Governance (“the Code”).

The Board has adopted core values and group
standards which set out the behaviours
expected of staff in their dealings with
shareholders, customers, colleagues, suppliers
and other stakeholders of the Group. One of the
core values communicated within the Group is a
belief that the highest standard of integrity is
essential in business.

The Group has complied throughout the year
with the provisions of the Code.

BOARD COMPOSITION,
MEETINGS AND COMMITTEES
The Board of directors carries the ultimate
responsibility for the conduct of the business. 

The Board consists of four non-executive
directors, two of whom are independent under
the Code, and three executive directors. Brief
profiles of each director and their positions are
set out on pages 14 to 15.

The Board accepts that Mr J Wardle and Mr D
Makin are not independent as they have recently
held executive positions in the Group and they
are substantial shareholders. 

However, it is the Board’s view that all directors
are able to bring independent judgement to bear
on Board matters and individual directors
possess a wide variety of skills and experience.
The composition of the Board is kept under
review and changes are made when appropriate
and in the best interests of the Group. There
have been no changes to the membership of 
the Board since the last Annual Report was
published. 

Mr F Martin was the recognised senior
independent non-executive director until his
resignation in March 2004 when Mr C Archer
became the recognised senior independent 
non-executive director. Whilst a third
independent non-executive director has not
been appointed since the resignation of 
Mr F Martin, the Board believes that the four
remaining non-executives, who include the two
business founder shareholders, have provided
ample guidance to and control over the three
executive directors in a demanding turnaround
period for a small capitalisation listed Group.

None of the directors have served for more than
three years without having been re-elected by
the shareholders.

The Board held fifteen Board Meetings in the
year including those convened to discuss and
sanction the acquisition of RD Scott Limited and
to approve the Annual Report and Accounts.
Board papers including reports from the Chief
Executive and Group Finance Director as well as
reports from the Operations, Property and Loss

Control Directors (who are not on the main Board
and attend the meetings as required) are
circulated in advance of each meeting.

All the directors have access to the Company
Secretary and a procedure exists for directors, 
in the furtherance of their duties, to take
independent professional advice if necessary, 
at the Group’s expense.

The two principal Board Committees to which
responsibilities are delegated are:-

REMUNERATION COMMITTEE
The Remuneration Committee currently
comprises the two independent non-executive
directors, Mr C Archer (Chairman) and Mr C Bird.
The Board sets the terms of reference for the
Remuneration Committee.

The Committee’s principal duties are to assist
the Board in determining the Group’s policy on
executive directors’ remuneration and to
determine specific individual remuneration
packages for senior executives, including the
executive directors, on behalf of the Board.

The Committee met on three occasions during
the year.

During the last year Halliwell Consulting were
appointed to advise the Committee on senior
remuneration policy. Halliwell Consulting have
also been appointed to provide IFRS2 share
option valuations.

AUDIT COMMITTEE
The Audit Committee currently comprises the
two independent non-executive directors, 
Mr C Archer (Chairman) and Mr C Bird. 
The Board sets the terms of reference for the
Audit Committee.

The Committee’s principal duties are to review
published financial statements, monitor financial
accounting procedures and policies and to
review the appointment and fees of the auditors.

The Audit Committee met three times in the year
with the auditors attending each meeting. 

In 2005 the Audit Committee discharged its
responsibilities by:

• Reviewing the Group’s draft financial

statements and interim results statement
prior to Board approval and reviewing the
external auditor’s detailed reports thereon.

• Reviewing the Group’s pre-close

Christmas trading update announcement
prior to release.

• Reviewing the appropriateness of the

Group’s accounting policies.

• Reviewing regularly the potential impact on
the Group’s financial statements of certain
matters such as impairments of fixed asset
values and proposed International
Accounting Standards.

• Reviewing and approving the audit fee and
reviewing non-audit fees payable to the
Group’s external auditors.

• Reviewing the external auditor’s plan for

the audit of the Group’s financial
statements, key risks of misstatement in
the financial statements, confirmations of
auditor independence and the proposed
audit fee, and approving the terms of
engagement for the audit.

The Audit Committee also monitors the Group’s
whistle blowing procedures ensuring that
appropriate arrangements are in place for
employees to be able to raise matters of
possible impropriety in confidence, with suitable
subsequent follow-up action. An alternative
reporting channel has been created whereby
perceived wrong doing may be reported via
telephone, anonymously if necessary.

NOMINATION COMMITTEE
The Board also sanctioned the creation of a
Nomination Committee which will comprise the
Chairman and the independent non-executive
directors. Historically, senior appointments have
been dealt with directly by the Board. The
Nominations Committee has not been required
to meet since its creation. The performance of
individual Board Members is reviewed by the
Remuneration Committee who consult with the
Executive Chairman by invitation on this subject.

DIRECTORS’ REMUNERATION
The report on remuneration and related matters
is set out on pages 26 to 30.

DIRECTORS’ RESPONSIBILITIES
General
The Board’s main roles are to create value to
shareholders, to provide entrepreneurial leadership
of the Group, to approve the Group’s strategic
objectives and to ensure that the necessary
financial and other resources are made available
to enable them to meet those objectives.

The specific responsibilities reserved to the Board
include: 

• Setting Group strategy and approving an

annual budget and medium-term
projections. 

• Reviewing operational and financial

performance. 

• Approving major acquisitions, divestments

and capital expenditure. 

• Reviewing the Group’s systems of internal

control and risk management. 

• Ensuring that appropriate management

development and succession plans are in
place. 

• Reviewing the environmental and health
and safety performance of the Group. 

• Approving appointments to the Board and

of the Company Secretary. 

• Approving policies relating to Director’s
remuneration and the severance of
Director’s contracts. 

• Ensuring that a satisfactory dialogue takes

place with shareholders.

20

21

              
CORPORATE 
GOVERNANCE

(CONTINUED)

PREPARATION OF FINANCIAL
STATEMENTS
Company law requires the directors to prepare
Financial statements for each financial period
which give a true and fair view of the state of
affairs of the Group and Company and of the
profit or loss of the Group for that period. In
preparing those financial statements, the
directors are required to:

• Select suitable accounting policies and

then apply them consistently.

• Make judgements and estimates that are

reasonable and prudent.

• State whether applicable accounting

standards have been followed, subject to
any material departures disclosed and
explained in the financial statements.

• Prepare the financial statements on the

going concern basis unless it is
inappropriate to presume that the Group
and the Company will continue in
business.

The directors are responsible for keeping proper
accounting records which disclose with
reasonable accuracy at any time the financial
position of the Group and Company and to
enable them to ensure that the financial
statements comply with the Companies Act
1985. They have general responsibility for taking
such steps as are reasonably open to them to
safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.

INTERNAL CONTROL AND AUDIT
The Listing Rules require all listed companies to
follow the guidance “Internal Control: Guidance
for Directors on the Combined Code”. The
procedures for complying with this guidance
have been in place throughout the period under
review and up to the date of approval of the
annual report and accounts.

The directors are responsible for the Group’s
system of internal controls and monitoring their
effectiveness. However, such a system is
designed to manage rather than eliminate the
risk of failure to achieve business objectives,
and can only provide reasonable and not
absolute assurance against material
misstatement. The directors have established
an organisation structure with clear operating
procedures, lines of responsibility, delegated

authority to executive management and
comprehensive financial reporting. In particular
there are clear procedures for the following:-

• Identification of, and monitoring of the
business risks facing the Group, with
major risks identified and reported to the
Audit Committee and the Board.

• Capital investment, with detailed appraisal

and authorisation procedures.

• Prompt preparation of comprehensive

monthly management accounts providing
relevant, reliable and up-to-date
information. These allow for comparison
with budget and previous year’s results.
Significant variances from approved
budgets are investigated as appropriate.

• Preparation of comprehensive annual
profit and cash flow budgets allowing
management to monitor business
activities and major risks and the progress
towards financial objectives in the short
and medium term.

• Monitoring of store procedures and the
reporting and resolution of suspected
fraudulent activities.

• Reconciliation and checking of all cash
and stock balances and investigation of
any material differences.

The Board has reviewed the effectiveness of
internal controls by reviewing reports covering
the testing of internal controls. In establishing
the system of internal control the directors have
regard to the materiality of relevant risks, the
likelihood of a loss being incurred and costs of
control. It follows, therefore, that the system of
internal control can only provide a reasonable,
and not absolute, assurance against the risk of
material misstatement or loss.

The scope of internal audit work performed is
determined by the Board in conjunction with the
Loss Control Director who reports directly to the
Board every month. The primary focus has
continued to be on security and minimisation of
unauthorised losses in the business using a
team of appropriately qualified employees. 
The Board has decided not to employ a full time
internal audit function as there is a robust
control environment and culture in the business
and nothing has occurred during the last year
which suggests such a function is necessary
and cost justified.

SHAREHOLDER RELATIONS
In fulfilment of the Chairman’s obligations under
the new Combined Code, the Chairman gives
feedback to the Board on issues raised by
major shareholders. This is supplemented by
twice yearly feedback to the Board on meetings
between management and investors, and the
non-executive directors will receive an annual
briefing from the Group’s brokers on the
financial market’s perception of the Group. 
The whole Board periodically receives a
presentation by external advisors on investor
perceptions and external brokers’ reports on the
Group are circulated to all directors. The Annual
General Meeting (“AGM”) is normally attended
by all directors, and shareholders are invited to
ask questions during the meeting and to meet
with directors after the formal proceedings have
ended. At the AGM the level of proxies lodged
on each resolution is announced to the meeting
after the show of hands for that resolution.

The Group has frequent discussions with
institutional shareholders on a range of issues
affecting its performance. These include
meetings following the announcement of the
annual results with the Group’s largest
institutional shareholders on an individual basis.
In addition, the Group responds to individual ad
hoc requests for discussions from institutional
shareholders. The senior independent director is
available to shareholders if they have concerns
which the normal channels of Chairman, Chief
Executive or Group Finance Director have failed
to resolve or for which such contact is
inappropriate. All major shareholders are given
the opportunity to meet any new non-executive
Directors on appointment.

GOING CONCERN
After making enquiries, the directors have a
reasonable expectation that the Group has
adequate resources to continue in operational
existence for the foreseeable future. For this
reason, they continue to adopt the going
concern basis in preparing the financial
statements.

22

23

        
CORPORATE 
AND SOCIAL 
RESPONSIBILITY

The Group recognises that it has a
social responsibility to ensure that
its business is carried out in a way
that ensures high standards of
environmental and human
behaviour. With the help and
cooperation of all employees, the
Group endeavours to comply with
all relevant laws in order to meet
that duty and responsibility
wherever it operates. The major
contributions of the Group in this
respect are detailed below.

EMPLOYMENT 
The Group is a large equal
opportunities employer and a large
training organisation providing
direct employment and career
development to thousands of
people all over the UK and in Eire.
We employ large numbers of
school leavers and university
graduates. We also provide
opportunities for large numbers of
people seeking flexible or part-time
hours.

Our involvement with SKILLCITY in
Manchester, the largest annual
interactive careers event outside
London, has been an example of
our commitment to young people.
The event welcomes up to 35,000
young people, aged 13-19, and
encourages them to pursue further
education and skills training, as well
as introducing them to major
employers who actively encourage
career development through
training and skills enhancement.

We also participate regularly in
Work Experience schemes with
schools and colleges throughout
the country.

HEALTH AND SAFETY
The Group employs a Health and
Safety Officer who endeavours to
ensure that we provide healthy and
safe environments for working and
shopping for all our employees,
customers and visitors. He also
coordinates all training in this area
of our work, carries out risk
assessments, and ensures that safe
working practices and equipment
are used throughout our business.

ENVIRONMENTAL
The Group fulfils its duty to
minimise adverse environmental
impacts by:

• Ensuring efficient use of

materials and energy and
recycling wherever possible.

• Minimising waste.

• Ensuring compliance with

relevant legislation.

• Monitoring and targeting.

ETHICAL LABOUR
CONSIDERATIONS
The Group seeks to provide its
customers with high quality and
value merchandise from
manufacturers who can
demonstrate compliance with
internationally accepted good
practice in terms of employment
policies and environments. We visit
our own brand suppliers and some
of our branded product suppliers
where practicable but on occasion
we rely on their good faith and
statements of policy.

24

25

           
REPORT ON
REMUNERATION AND
RELATED MATTERS

This report sets out the remuneration policy operated by the Group in
respect of the executive directors, together with disclosures on Directors’
remuneration required by The Directors’ Remuneration Report Regulations
2002, (“the Regulations”). The auditors are required to report on the
‘auditable’ part of this Report and to state whether, in their opinion, that part
of the Report has been properly prepared in accordance with the Companies
Act 1985 (as amended by the Regulations).  The Report is therefore
divided into separate sections for audited and unaudited information. 

The Board have reviewed the Group’s compliance with the Combined
Code (“the Code”) on remuneration related matters.  It is the opinion of
the Board that the Group complied with all remuneration related aspects
of the Code during the year.

The Report will be put to shareholders for approval at the Annual General
Meeting on 21 July 2005.

REMUNERATION COMMITTEE
The Remuneration Committee (the “Committee”) comprises both
independent Non Executive Directors, being Chris Bird and myself as
Chairman of the Committee since the resignation of Frank Martin from
that position and the Board on 25 March 2004.

The Committee assists the Board in determining the Group’s policy on
executive directors’ remuneration and determines the specific
remuneration packages for senior executives, including the executive
directors, on behalf of the Board.  The Committee appointed Halliwell
Consulting, an independent executive compensation and share scheme
consultancy, during the year to assist in its deliberations.  Halliwell
Consulting have also been engaged by the Group during the year to
prepare IFRS2 share option valuations.  

The Committee is formally constituted with written Terms of Reference.  
A copy of the Terms of Reference is available to shareholders by writing 
to the Company Secretary.

The Committee has met three times during the last year. 

POLICY
The policy of the Committee is to attract, motivate and retain executives
of the necessary calibre required to execute the Group’s business strategy
and enhance shareholder value.  

The overriding principle behind the above remuneration policy of the
Group is that levels of base salary should be conservative but balanced
with the opportunity to earn generous rewards from short and long-term
incentives provided stretching performance targets are met which lead to
the enhancement of shareholder value.   

Since the year-end, the Committee, in conjunction with Halliwell
Consulting, has conducted a full review of its remuneration policy.  The
review has  resulted in changes to how the Group operates its
performance-based incentives.  These changes are fully explained in the
circular to shareholders and Notice of Annual General Meeting enclosed
with this report.  However, in summary the changes are:

• The movement away from using share options to incentivise,

motivate and retain executive directors and senior executives to
whole share awards under the proposed The John David Group Plc
Long-Term Incentive Plan.

26

• Changes to the maximum bonus potential and performance

conditions attaching to the annual bonus.

• The introduction of shareholding requirements for executive directors.

The Committee believes that these changes will focus the executives on
enhancing value for shareholders and further align the interests of
executives with those of the shareholders.

COMPONENTS OF REMUNERATION
The main components of the current remuneration package are:

BASE SALARY
The policy of the Committee during the period ended 29 January 2005
was to set base salaries around the lower quartile when compared to UK
quoted retailers with similar corporate attributes to the Group.  

Factors taken into account by the Committee when determining base
salary levels are:

• Objective research based on a review of the remuneration in

comparator companies from Halliwell Consulting.

• The performance of the individual executive directors.

• Experience and responsibilities of each executive director.

• Pay and conditions throughout the Group.

It is the intention of the Committee that base salaries will continue to
remain around the lower quartile of comparator companies.

ANNUAL BONUS
For the period ended 29 January 2005, each executive director was
entitled to be paid a bonus which is calculated (in bands) by reference to
the percentage by which the earnings per ordinary share for a financial
year exceeds the earnings per ordinary share for the preceding financial
period. The maximum bonus payable to each director is 80% of salary,
and is not pensionable.  All executive directors earned the maximum
bonus for the period after achieving annual earnings per ordinary share
growth well in excess of the 40% required as well as an operating profit
before exceptional items and goodwill amortisation growth of 70% and a
reduction in debt of over £20 million. 

As part of the full review of remuneration policy, the Committee is proposing
changes to how it operates its short-term cash incentives.  Details of these
changes are explained in the enclosed circular to shareholders.

SHARE OPTIONS
Share options are granted on a selective basis to key positions in the
Group, including executive directors. Options are granted at the discretion
of the Committee based on the individuals’ key skills and potential
importance to the future of the Company. Details of directors’ options are
set out on page 30. These options carry a performance target in relation
to growth in earnings per ordinary share over a consecutive three-year
period and cannot be exercised until at least the third anniversary of grant.
The performance targets have been determined in order to align
management and shareholder interests.

The Committee has reviewed the Company’s long-term share incentive
arrangements.  Details of the Committee’s proposed ongoing long-term
share incentive policy are set out in the enclosed circular to shareholders.

27

              
REPORT ON
REMUNERATION AND
RELATED MATTERS

(CONTINUED)

TOTAL SHAREHOLDER RETURN
The following graph shows the Total Shareholder Return (“TSR”) of the
Group in comparison to the FTSE All Share General Retailers Index over
the past five years. The Committee consider the FTSE All Share General
Retailers Index a relevant index for total shareholder return comparison
disclosure required under the Regulations as the index represents the
broad range of UK quoted retailers.  

TSR is calculated for each year relative to the base date of 31 January
2000 and taking the percentage change of the market price over the
relevant period, re-investing any dividends at the ex-dividend rate.

OTHER BENEFITS
These include entitlement to pension contributions, fully expensed car,
private health care for the executive director and immediate family and life
assurance to provide cover equal to four times the executive director’s
salary. Car benefits have been calculated in accordance with Inland
Revenue scale charges.

SERVICE CONTRACTS
Details of the contracts currently in place for executive directors are as
follows:

Date of 
contract

Notice
period 
(months)

Unexpired
Term

B BOWN
B SMALL
P COWGILL

10 December 2001
10 March 2004
16 March 2004

12 Rolling 12 months
12 Rolling 12 months
12 Rolling 12 months

Each service contract includes provision for compensation commitments
in the event of early termination. For Mr P Cowgill and Mr B Small these
commitments do not exceed one year’s salary and benefits. For Mr B
Bown the agreement provides for compensation to be paid to him upon
termination of appointment of a sum equivalent to 12 months’ salary plus
£170,000 (net of PAYE and NIC) plus an amount equal to the value over 12
months of the benefits to which he was entitled at the date of termination.

Each service contract expires upon the director reaching the age of 65
(subject to re-election by shareholders).

The Committee consider these levels of compensation appropriate in light
of the levels of basic salary provided and market conditions prevailing.

Mr R Best, the former Chairman, was paid £264,000 compensation for
loss of office following his resignation on 16 March 2004. Under his
service contract he was entitled to a rolling twelve months’ notice.

The non-executive directors have entered into letters of appointment with
the Company for a fixed period of 12 months which are renewable by the
Board and the non-executive director, and are terminable by the non-
executive director or Company on not less than three months’ notice.

In the event of gross misconduct, the Company may terminate the service
contract of an executive director immediately and with no liability to make
further payments other than in respect of amounts accrued at the date of
termination.

Directors retiring by rotation at the next Annual General Meeting are
shown in the directors’ report on page 16.

28

29

             
REPORT ON
REMUNERATION AND
RELATED MATTERS

(CONTINUED)

INDIVIDUAL DIRECTORS’ EMOLUMENTS
Directors’ salaries and benefits are set out below. This excludes amounts in respect of any gains on the exercise of share options which are detailed
below: 

Salary
and fees
£000

Benefits Performance Compensation 
for loss
related
of office  
bonus
£000
£000

excluding
pensions 
£000

P COWGILL
R BEST
B BOWN
B SMALL
M BLACKHURST
F MARTIN
J WARDLE
D MAKIN
C ARCHER
C BIRD

178
33
208 
140
-
5
22
22
28
22

658

-
-
1
14
-
- 
-
-
-
-

15

144
-
156
100
-
-
-
-
-
-

400

-
264
-
-
-
-
-
-
-
-

264

2005
Total
£000

322
297
365
254
-
5
22
22
28
22

1,337

The pension contributions represent amounts payable to defined contribution pension schemes.

Mr M Blackhurst resigned on 31 December 2003.

2005
Pension

2004
2004
Pension
Total contributions contributions
£000
£000
£000

-
187
193
11
356
20
59
85
22
17

950

-
-
16
15
-
-
-
-
-
-

31

-
20
17
1
8
-
-
-
-
-

46

SHARE OPTIONS
Details of share options held by the directors at 29 January 2005 and at 31 January 2004 were as follows:

B BOWN
B BOWN
B BOWN
B BOWN
B SMALL
R BEST

Number of
share options
at 29 January
2005

Number of
share options
at 31 January Option exercise
2004 price per share

20,000
120,000
20,000
70,000
100,000
-

20,000
120,000
20,000
70,000
100,000
518,518

306.5p 
331.0p 
262.0p
162.0p
168.0p 
162.0p

Usual date 
from which
exercisable

23.10.1999 
07.06.2004 
29.07.2005
12.06.2006
20.01.2007
Expired

Usual
expiry date

23.10.2006
07.06.2011
29.07.2012
12.06.2013
20.01.2014
Expired

No options held by directors were exercised during the current or previous period. The market value of the Company’s shares at 29 January 2005 was
248.5p. The highest and lowest prices during the year were 248.5p and 147.5p respectively.

On behalf of the Board

Colin Archer
Chairman, Remuneration Committee
11 May 2005

30

31

                                     
“WE CONTINUALLY 
AIM TO ENHANCE OUR 
CUSTOMER FOOTFALL
AND CONVERSION BY
CONSTANTLY CHANGING
OUR BRAND AND 
PRODUCT PORTFOLIO”

32

33

 
INDEPENDENT 
AUDITOR’S
REPORT

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE JOHN DAVID GROUP PLC
We have audited the financial statements on pages 37 to 58. We have also audited the information in the directors’ remuneration report that is described
as having been audited. 

This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act 1985.  Our audit work has
been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The directors are responsible for preparing the Annual Report and the directors’ remuneration report.  As described on page 22, this includes
responsibility for preparing the financial statements in accordance with applicable United Kingdom law and accounting standards.  Our responsibilities,
as independent auditors, are established in the United Kingdom by statute, the Auditing Practices Board, the Listing Rules of the Financial Services
Authority, and by our profession’s ethical guidance.

We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements and the part of the
directors’ remuneration report to be audited have been properly prepared in accordance with the Companies Act 1985.  We also report to you if, in our
opinion, the directors’ report is not consistent with the financial statements, if the Company has not kept proper accounting records, if we have not
received all the information and explanations we require for our audit, or if information specified by law regarding directors’ remuneration and
transactions with the Group is not disclosed.

We review whether the corporate governance statement on page 20 to 22 reflects the Company’s compliance with the nine provisions of the 2003 FRC
Code specified for our review by the Listing Rules, and we report if it does not.  We are not required to consider whether the Board’s statements on
internal control cover all risks and controls, or form an opinion on the effectiveness of the Group’s corporate governance procedures or its risk and
control procedures. 

We read the other information contained in the Annual Report, including the corporate governance statement and the unaudited part of the directors’
remuneration report, and consider whether it is consistent with the audited financial statements.  We consider the implications for our report if we
become aware of any apparent misstatements or material inconsistencies with the financial statements.

BASIS OF AUDIT OPINION
We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board.  An audit includes examination, on a test basis,
of evidence relevant to the amounts and disclosures in the financial statements and the part of the directors’ remuneration report to be audited.  It also
includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether
the accounting policies are appropriate to the Group’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements and the part of the directors’ remuneration report to be audited are free
from material misstatement, whether caused by fraud or other irregularity or error.  In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the financial statements and the part of the directors’ remuneration report to be audited.

OPINION
In our opinion:

• the financial statements give a true and fair view of the state of affairs of the Company and the Group as at 29 January 2005 and of the profit of

the Group for the period then ended; and

• the financial statements and the part of the directors’ remuneration report to be audited have been properly prepared in accordance with the

Companies Act 1985.

KPMG Audit Plc
Chartered Accountants 
Registered Auditor
Preston
11 May 2005

34

35

           
CONSOLIDATED PROFIT 
AND LOSS ACCOUNT

FOR THE PERIOD ENDED 29 JANUARY 2005

Continuing operations

Note

£000

Acquisitions
£000

52 weeks to
29 January 2005
Continuing
operations
£000

12 months to
31 January 2004
Continuing 
operations
£000

468,790
(254,997)

213,793
(184,463)
(7,987)
(13,518)
(736)
953

8,042

17,577
(8,723)
(812)

8,042

2,866
(1,507)

1,359
(974)
-
(71)
-
-

314

314
-
-

314

TURNOVER
Cost of sales

GROSS PROFIT
Distribution costs - normal
Distribution costs - exceptional
Administrative expenses - normal
Administrative expenses - exceptional
Other operating income

OPERATING PROFIT

Before exceptional items
and goodwill amortisation
Exceptional items 
Goodwill amortisation

OPERATING PROFIT
Loss on disposal of fixed assets

PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST
Other interest receivable and similar income
Interest payable and similar charges

PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
Taxation on profit on ordinary activities

PROFIT FOR THE FINANCIAL PERIOD
Dividends paid and proposed

1

2
10

5
6

1
7

8

RETAINED LOSS FOR THE FINANCIAL PERIOD

20

EARNINGS PER ORDINARY SHARE
- basic
- adjusted basic to exclude exceptional items and goodwill amortisation
- diluted

9

471,656
(256,504)

215,152
(185,437)
(7,987)
(13,589)
(736)
953

458,073
(249,379)

208,694
(186,117)
(1,366)
(13,503)
(612)
638

8,356

7,734

17,891
(8,723)
(812)

8,356
(1,569)

6,787
304
(4,461)

2,630
(1,293)

1,337
(3,119)

(1,782)

2.85p
18.39p
2.85p

10,498
(1,978)
(786)

7,734
(1,095)

6,639
100
(4,634)

2,105
(1,457)

648
(3,038)

(2,390)

1.39p
6.21p
1.39p

The Group and Company has no recognised gains or losses during the current period or previous period other than the results reported
above. The results above also represent the historical cost profit.

36

37

                                                                          
13,138

29,446

21,722

30,293

(5,146)

(9,229)

88,245
(28,653)
(3,929)

112,605
(51,555)
(3,756)

94,379
(35,074)
(3,565)

113,452
(51,531)
(4,033)

ACQUISITIONS AND DISPOSALS
Cash consideration
Net overdrawn balances acquired

BALANCE SHEETS

AS AT 29 JANUARY 2005

GROUP

COMPANY

29 January
2005
£000

31 January
2004
£000

29 January
2005 
£000

31 January
2004
£000

Note

FIXED ASSETS
Intangible fixed assets
Tangible fixed assets
Fixed asset investment

CURRENT ASSETS
Stocks
Debtors
Cash at bank and in hand

CREDITORS: amounts falling due within one year

NET CURRENT ASSETS

TOTAL ASSETS LESS CURRENT LIABILITIES
CREDITORS: amounts falling due after more than one year
PROVISIONS FOR LIABILITIES AND CHARGES

NET ASSETS

CAPITAL AND RESERVES
Called up share capital
Share premium account
Profit and loss account

EQUITY SHAREHOLDERS’ FUNDS

10
11
12

13
14

15

16
18

19
20
20

21

18,318
56,789
-

75,107

53,857
11,707
6,531

72,095
(58,957)

14,976
68,183
-

83,159

65,727
14,452
4,934

85,113
(55,667)

14,190
53,997
4,470

72,657

51,977
17,889
6,012

75,878
(54,156)

14,976
68,183
-

83,159

65,727
22,123
4,933

92,783
(62,490)

55,663

57,294

55,740

57,888

2,364
9,042
44,257

55,663

2,338
8,917
46,039

57,294

2,364
9,042
44,334

55,740

2,338
8,917
46,633

57,888

These financial statements were approved by the Board of directors on 11 May 2005 and were signed on its behalf by:

B Bown
B Small
Directors

38

CONSOLIDATED 
CASH FLOW STATEMENT

FOR THE PERIOD ENDED 29 JANUARY 2005

NET CASH INFLOW FROM OPERATING ACTIVITIES

RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received
Interest paid
Interest element of finance lease and hire purchase contracts

Note

24

TAXATION

CAPITAL EXPENDITURE
Purchase of tangible fixed assets
Proceeds from disposal of fixed assets

52 weeks to
29 January
2005
£000

12 months to
31 January
2004
£000

37,219

23,600

304
(4,442)
(19)

(4,157)

244

(8,056)
2,910

100
(4,402)
-

(4,302)

(1,287)

(11,493)
2,264

EQUITY DIVIDENDS PAID

NET CASH INFLOW BEFORE FINANCING

FINANCING
Receipts from new loans
Loan repayments
Proceeds from issue of equity shares
Capital element of finance lease and hire purchase repayments

INCREASE IN CASH IN THE PERIOD

25

(4,183)
(420)

(4,603)

(1,816)

21,741

5,000
(26,500)
146
(170)

(21,524)

217

-
-

-

(4,375)

4,407

-
(3,000)
-
-

(3,000)

1,407

39

                                                                                                                                                        
RECONCILIATION OF NET
CASH FLOW TO MOVEMENT
IN NET DEBT

FOR THE PERIOD ENDED 29 JANUARY 2005

Increase in cash in the period
Cash outflow from decrease in debt
Issue of redeemable loan notes
Overdrafts and finance leases acquired with subsidiary undertaking

MOVEMENT IN NET DEBT IN THE PERIOD
NET DEBT AT 1 FEBRUARY 2004

NET DEBT AT 29 JANUARY 2005

Note

25

25

52 weeks to
29 January
2005
£000

12 months to
31 January
2004
£000

217
21,670
(287)
(1,301)

20,299
(51,066)

1,407
3,000
-
-

4,407
(55,473)

(30,767)

(51,066)

ACCOUNTING POLICIES

The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Group’s financial
statements.

BASIS OF PREPARATION
The financial statements have been prepared in accordance with applicable accounting standards and under the historical cost accounting rules.

These financial statements have been prepared for the 52 week period to 29 January 2005. During the period the Group moved its financial calendar
from an annual basis to 4,5,4 weekly accounting periods, in common with other major retailers, with the year end being the nearest Saturday to 
31 January. The following financial period will therefore comprise of 52 weeks ending 28 January 2006.

BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial statements of The John David Group Plc and its subsidiary undertakings. Subsidiary
undertakings acquired during the period are accounted for under the acquisition method of accounting. Under this method, the results of subsidiary
undertakings are included in the consolidated profit and loss account from the date of acquisition or up to the date of disposal.

Goodwill arising on acquisitions is capitalised in the consolidated balance sheet and amortised through the consolidated profit and loss account over its
estimated useful economic life, being 20 years. Goodwill is based on the costs of acquisition less the fair value of assets acquired.

COMPANY FINANCIAL STATEMENTS
In the Company’s financial statements, investments in subsidiary undertakings are stated at cost less provisions for diminution in value. Dividends
received and receivable are credited to the Company’s profit and loss account to the extent that they represent a realised profit for the Company. As
permitted by Section 230(4) of the Companies Act 1985, the Company has not presented its own profit and loss account.

FIXED ASSETS AND DEPRECIATION
Depreciation is provided by the Group to write off the cost less the estimated residual value of tangible fixed assets on a straight line basis or reducing
balance basis over their estimated useful economic lives as follows:
Long leasehold land and buildings
Short leasehold land and buildings
Computer equipment
Fixtures and fittings
Motor vehicles

2% per annum on a straight line basis
life of lease on a straight line basis 
3-6 years on a straight line basis
10 years, or length of lease if shorter, on a straight line basis
25% per annum reducing balance

PROPERTY INCENTIVES
Benefits received as an incentive to sign a lease, whatever form they may take, are credited to the profit and loss account on a straight line basis over
the lease term or, if shorter than the full lease term, over the period to the review date on which the rent is first expected to be adjusted to the prevailing
market rate.

Capital contributions received on acquisition of short leasehold properties are credited to the balance sheet and released to the profit and loss account
over 10 years, or the length of the lease if shorter, on a straight line basis.

LEASES
Where the Group enters into a lease which entails taking substantially all the risks and rewards of ownership of an asset, the lease is treated as a
‘finance lease’. The asset is recorded in the balance sheet as a tangible fixed asset and is depreciated over its estimated useful life or the term of the
lease, whichever is shorter. Future instalments under such leases, net of finance charges, are included within creditors. Rentals payable are apportioned
between the finance element, which is charged to the profit and loss account, and the capital element which reduces the outstanding obligation for
future instalments.

All other leases are accounted for as ‘operating leases’ and the rental charges are charged to the profit and loss account on a straight line basis over the
life of the lease.

PENSIONS AND OTHER POST-RETIREMENT BENEFITS
The Group only operates defined contribution pension schemes, the assets of which are held separately from those of the Group in independently
administered funds. The amount charged against profits represents the contributions payable to the schemes in respect of the accounting period.

STOCKS
Stocks are stated at the lower of cost and net realisable value.  Provision is made for obsolete, slow moving and damaged items where appropriate.

TURNOVER
Turnover represents the amounts (excluding value added tax) derived from the provision of goods and services to customers during the period and
relates to the principal business activity.

DEFERRED TAXATION
Deferred tax liabilities are recognised without discounting in respect of all material timing differences that have originated but not reversed at the balance
sheet date, except as otherwise required by FRS19.

40

41

                                            
NOTES TO THE 
FINANCIAL STATEMENTS

1. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION

PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION IS STATED
after charging 
Auditor’s remuneration:

Audit services - Statutory audit

- Other non-audit services

Tax services 

Depreciation and other amounts written off tangible fixed assets:

Owned
Held under finance lease and hire purchase contracts
Impairments (see note 2)

Goodwill amortisation
Rentals payable under operating leases for:

Land and buildings
Other - plant and machinery

after crediting
Rents receivable and other income from property

52 weeks to
29 January
2005
£000

12 months to
31 January
2004
£000

75
18
63

11,080
31
6,701
812

57,887
672

70
15
20

10,060
-
-
786

57,894
402

953

638

NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

4. STAFF NUMBERS AND COSTS

The average number of persons employed by the Group (including directors) during the period, analysed by category, was as follows:

Sales and distribution
Administration

Full time equivalents

The aggregate payroll costs of these persons were as follows:

Wages and salaries
Social security costs
Other pension costs (see note 23)

Included in auditor’s remuneration above is £55,000 (2004: £50,500) relating to the statutory audit of the parent Company.

5. OTHER INTEREST RECEIVABLE AND SIMILAR INCOME

2. EXCEPTIONAL OPERATING ITEMS

Provision for rentals on onerous property leases
Impairment of tangible fixed assets on loss making stores
Redundancy costs
Bank reorganisation costs
Store closure costs
Lease and contract exit payments
Warehousing, distribution and other reorganisation costs
OFT investigation into replica kits

3. REMUNERATION OF DIRECTORS

Directors’ emoluments:
As non-executive directors
As executive directors
Pension contributions
Compensation for loss of office

52 weeks to
29 January
2005
£000

12 months to
31 January
2004
£000

1,286
6,701
440
296
-
-
-
-

8,723

-
-
978
-
479
314
130
77

1,978

52 weeks to
29 January
2005
£000

12 months to
31 January
2004
£000

99
974
31
264

1,368

68
641
46
241

996

Bank interest
Other interest

6.

INTEREST PAYABLE AND SIMILAR CHARGES

On bank loans and overdrafts
Finance charges payable in respect of finance leases and hire purchase contracts
Other interest charges

Number of employees

2005

8,389
233

8,622

4,931

2004

8,947
254

9,201

5,141

52 weeks to
29 January
2005
£000

12 months to
31 January
2004
£000

66,066
4,355
288

70,709

68,054
4,012
303

72,369

52 weeks to
29 January
2005
£000

12 months to
31 January
2004
£000

249
55

304

96
4

100

52 weeks to
29 January
2005
£000

12 months to
31 January
2004
£000

4,399
19
43

4,461

4,565
-
69

4,634

Information on directors’ share options and further information on directors’ emoluments is shown in the Report on Remuneration and Related
Matters on page 30.

42

43

                                                                                                                                    
NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

7. TAXATION ON PROFIT ON ORDINARY ACTIVITIES

UK corporation tax at 30% (2004: 30%)
Adjustment relating to an earlier period

Total current tax charge
Deferred taxation 
Adjustment relating to an earlier period

Total deferred tax charge (see note 18)

TAX CHARGE RECONCILIATION

52 weeks to
29 January
2005
£000

52 weeks to
29 January
2005
£000

12 months to
31 January
2004
£000

12 months to
31 January
2004
£000

3,440
(755)

(1,557)
165

2,685

(1,392)

1,293

215
(56)

1,330
(32)

159

1,298

1,457

Profit on ordinary activities before tax multiplied by the standard rate of tax - 30% (2004:30%)
Effects of:
Expenses not deductible - normal
Expenses not deductible - exceptional re: lease and contract exit payments
Income not taxable
Depreciation in excess of capital allowances on qualifying assets
Depreciation on non qualifying fixed assets
Profit on sale of non qualifying fixed assets
Goodwill amortisation not deductible
Impact of tax allowable fair value adjustments
Utilisation of tax losses
Other differences
Adjustments to tax charge in respect of previous periods

Total current tax charge

52 weeks to
29 January
2005
£000

12 months to
31 January
2004
£000

789

24
-
(29)
1,733
1,006
(83)
236
(113)
(87)
(36)
(755)

2,685

632

110
34
-
(797)
722
(128)
236
(594)
-
-
(56)

159

8. DIVIDENDS PAID AND PROPOSED

Ordinary shares:
Interim paid - 2.20p per ordinary share (2004: 2.86p)
Final proposed  - 4.40p per ordinary share (2004: 3.64p)

Total dividend 6.60p per ordinary share (2004: 6.50p)

52 weeks to
29 January
2005
£000

12 months to
31 January
2004
£000

1,063
2,056

3,119

1,337
1,701

3,038

9. EARNINGS PER ORDINARY SHARE

Basic earnings per ordinary share represents the profit for the financial period of £1,337,000 (2004: £648,000) divided by the weighted average
number of ordinary shares in issue of 46,978,013 (2004: 46,748,607).

Adjusted basic earnings per ordinary share has been based on the profit on ordinary activities after taxation for each financial period but excluding
exceptional items and goodwill amortisation since the directors consider that this gives a more meaningful measure of the underlying performance of the
Group.

The diluted earnings per ordinary share is based on 46,981,420 (2004: 46,750,776) ordinary shares, the difference to the basic calculation
representing the additional shares that would be issued on the conversion of all the dilutive potential ordinary shares. There is no material difference
to earnings per ordinary share if all the dilutive potential ordinary shares are converted.

ADJUSTED BASIC EARNINGS PER ORDINARY SHARE

Profit on ordinary activities after taxation

Exceptional items
Tax relating to exceptional items
Goodwill amortisation

Profit after taxation excluding exceptional items and goodwill amortisation

Adjusted basic earnings per ordinary share

52 weeks to
29 January
2005
£000

12 months to
31 January
2004
£000

1,337
8,723
(2,235)
812

8,637

18.39p

648
1,978
(509)
786

2,903

6.21p

Accelerated capital allowances are likely to reduce the current tax charge in future periods, being in excess of depreciation on non-qualifying assets
and goodwill amortisation which are not tax deductible.

44

45

                                                                                            
NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

10. INTANGIBLE FIXED ASSETS
GROUP AND COMPANY

COST
At beginning of period
Additions

At end of period

AMORTISATION
At beginning of period
Charge in the period

At end of period

NET BOOK VALUE AT 29 JANUARY 2005

Net book value at 31 January 2004

GOODWILL

Group
£000

Company 
£000

16,183
4,154

20,337

1,207
812

2,019

14,976
-

14,976

-
786

786

18,318

14,190

14,976

14,976

On 15 December 2004 The John David Group Plc purchased the entire share capital of RD Scott Limited. The goodwill calculation is summarised
below:

Book value
and fair value
£000

2,841
2,805
211
566
5
(425)
(3,386)
(881)
(816)
(163)
(441)

316

4,154

4,470

Tangible fixed assets
Stocks
Corporation tax debtor
Prepayments and other debtors
Cash at bank in hand
Bank overdraft
Trade creditors
Obligations under finance lease and hire purchase contracts
Other creditors
Provisions - deferred taxation

- onerous lease costs

Net assets acquired

Goodwill capitalised

Consideration

46

INTANGIBLE FIXED ASSETS (CONTINUED)
The total purchase price at acquisition was £4,470,000 comprising cash consideration of £4,183,000 and loan notes of £287,000 which are
redeemable at par in three equal annual instalments commencing 28 December 2007. This resulted in goodwill on acquisition of £4,154,000 which
will be amortised over its estimated useful life of 20 years.

During the period since acquisition, the directors have performed a review into the fair values of the assets acquired. Based on this review, goodwill
arising on acquisition has remained at £4,154,000.

The following table shows highlights of the pre-acquisition profit and loss account for the acquired business.

Turnover

Operating loss

Loss before tax
Tax
Loss after tax

5 April 2004
to 15 December
2004
£000

15 months
ended 4 April
2004
£000

12,265

17,869

(565)

(769)
211
(558)

(138)

(479)
93
(386)

These results are based on the management accounts. There are no recognised gains or losses during the periods above other than those results
above.

On 31 January 2004, the trade, assets and liabilities of First Sport Limited were transferred up to The John David Group Plc. The balances
transferred are summarised below:

Tangible fixed assets
Trade debtors
Other debtors
Cash at bank and in hand
Trade creditors
Other creditors
Inter-company balance
Provisions

Net liabilities acquired
Goodwill capitalised

Consideration

The total purchase price on transfer of the trade, assets and liabilities was £6,582,000 comprising an inter-company debtor.

Book value
and fair value
£000

19,724
1,020
6,508
(419)
(1,435)
(10,046)
(23,828)
82

(8,394)
14,976

6,582

47

        
NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

11. TANGIBLE FIXED ASSETS

GROUP

Long leasehold
land and
buildings
£000 

Short leasehold
land and
buildings
£000 

TANGIBLE FIXED ASSETS (CONTINUED)
COMPANY

Long leasehold
land and
buildings
£000 

Short leasehold
land and
buildings
£000 

Computer
equipment
£000

COST
At beginning of period
Additions
Disposals
Acquisition

At end of period

DEPRECIATION
At beginning of period
Charge for period
Impairments
Disposals
Acquisition

At end of period

NET BOOK VALUE
AT 29 JANUARY 2005

At 31 January 2004

4,448
-
(1)
-

4,447

508
90
-
(1)
-

597

3,850

3,940

Computer
equipment
£000

11,251
622
(1,642)
483

Fixtures 
and
fittings
£000

85,398
4,970
(7,564)
4,135

Motor
vehicles
£000

1,595
28
(676)
18

Total
£000

127,219
8,056
(15,161)
4,789

24,527
2,436
(5,278)
153

21,838

10,714

86,939

965

124,903

11,612
1,593
1,881
(2,890)
108

12,304

9,534

12,915

7,574
1,218
163
(1,565)
215

7,605

38,695
8,000
4,657
(5,835)
1,612

47,129

3,109

39,810

3,677

46,703

647
210
-
(391)
13

479

486

948

59,036
11,111
6,701
(10,682)
1,948

68,114

56,789

68,183

COST
At beginning of period
Additions
Disposals

At end of period

DEPRECIATION
At beginning of period
Charge for period
Impairments
Disposals

At end of period

NET BOOK VALUE
AT 29 JANUARY 2005

At 31 January 2004

4,448
-
(1)

4,447

508
90
-
(1)

597

3,850

3,940

12. FIXED ASSET INVESTMENT

COMPANY

Fixtures 
and
fittings
£000

85,398
4,951
(7,564)

Motor
vehicles
£000

1,595
28
(676)

Total
£000

127,219
8,037
(15,161)

21,685

10,231

82,785

947

120,095

24,527
2,436
(5,278)

11,251
622
(1,642)

11,612
1,591
1,881
(2,890)

12,194

9,491

12,915

7,574
1,207
163
(1,565)

7,379

38,695
7,946
4,657
(5,835)

45,463

2,852

37,322

3,677

46,703

647
209
-
(391)

465

482

948

59,036
11,043
6,701
(10,682)

66,098

53,997

68,183

Investment in
Group undertaking
£000

-
4,470

4,470

Included in the total net book value of tangible fixed assets is £1,318,000 (2004: £nil) in respect of assets held under finance lease and hire purchase
contracts. Depreciation for the period on these assets was £31,000 (2004: £nil).

All assets held under finance lease and hire purchase contracts are in respect of assets held by RD Scott Limited. The depreciation above therefore
relates to the period from 15 December 2004 to 29 January 2005.

Cost and net book value at beginning of period
Addition in period

Cost and net book value at end of period

The investment represents the total consideration for the acquisition of RD Scott Limited (see note 10).

13. STOCKS

Finished goods and goods for resale

53,857

65,727

51,977

65,727

GROUP

COMPANY

2005
£000

2004 
£000

2005
£000

2004
£000

48

49

                                 
NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

14. DEBTORS

16. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Trade debtors
Amounts owed by other Group companies
Other debtors
Prepayments and accrued income

2005
£000

956
-
11
10,740

11,707

GROUP

COMPANY

2004
£000

1,086
-
-
13,366

14,452

2005
£000

956
6,920
-
10,013

17,889

2004
£000

1,194
7,563
-
13,366

22,123

Amounts owed by other Group companies includes £6,920,000 (2004: £7,563,000) due after more than one year.

15. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

GROUP

COMPANY

Bank loans and overdrafts (see note 16)
Obligations under finance lease and hire purchase contracts
Other loans
Trade creditors
Other creditors including taxation and social security:

Corporation tax
Other taxes and social security

Amounts owed to other Group companies
Other creditors
Accruals and deferred income
Dividends proposed

2005
£000

5,800
412
5,000
26,426

1,417
9,368
-
-
8,454
2,080

2004
£000

8,000
-
-
30,430

(611)
8,191
-
-
8,876
781

2005
£000

4,000
-
5,000
24,872

1,417
8,831
-
-
7,956
2,080

2004
£000

8,000
-
-
30,430

(551)
8,191
6,582
345
8,712
781

58,957

55,667

54,156

62,490

Bank loans and overdrafts (see notes 15 and 17)
Redeemable loan notes (see note 10)
Obligations under finance lease and hire purchase contracts
Amounts owed to other Group companies
Accruals and deferred income

2005
£000

25,500
287
299
-
2,567

28,653

GROUP

2004 
£000

48,000
-
-
-
3,555

51,555

2005
£000

25,500
287
-
6,582
2,705

35,074

COMPANY
2004
£000

48,000
-
-
-
3,531

51,531

The loan notes do not carry interest and are redeemable at par in three equal annual instalments commencing 28 December 2007.

The bank loans and overdrafts fall due for repayment as follows:

Bank loans and overdrafts
Within one year
Between one and two years
Between two and five years

2005
£000

5,800
12,000
13,500

31,300

GROUP

COMPANY

2004
£000

8,000
8,000
40,000

56,000

2005
£000

4,000
12,000
13,500

29,500

2004
£000

8,000
8,000
40,000

56,000

The rates of interest payable on current bank loans and overdrafts are detailed in note 17 to the accounts.

The maturity of obligations under finance leases and hire purchase contracts is as follows:

Within one year
In the second to fifth years

GROUP

COMPANY

2004
£000

-
-

-

2005
£000

-
-

-

2004
£000

-
-

-

2005
£000

412
299

711

Amounts owed under finance leases and hire purchase contracts are secured on the assets to which they relate.

50

51

                                                                                                                                                          
NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

17. FINANCIAL INSTRUMENTS

The Group’s financial instruments at the period end comprised cash, bank borrowings and various non-derivative financial instruments such as trade
debtors and trade creditors. As permitted by Financial Reporting Standard 13 (FRS13), in this note short term debtors and creditors have been
excluded from all FRS13 disclosures.

FINANCIAL INSTRUMENTS (CONTINUED)
FINANCIAL LIABILITIES
The interest rate risk profile of the Group’s financial liabilities is as follows:

The Group uses financial instruments to manage financial and commercial risk wherever it is appropriate to do so. An explanation of the Group’s
treasury policy can be found in the financial review on page 11.

The main risks arising from the Group’s financial instruments are interest rate risk and liquidity risk.

Bank fixed rate financial liabilities
Bank floating rate financial liabilities
Other fixed rate financial liabilities

INTEREST RATE RISK
The Group finances its operations by a mixture of retained profits and bank borrowings. Interest rate risk therefore arises from bank borrowings. The
Group manages its risk by using a combination of fixed and floating interest rates, which it reviews on a regular basis.

Fixed rate weighted average interest rate at 29 January

2005
£000

26,000
5,300
5,000

36,300

7.7%

2004
£000

34,000
22,000
-

56,000

6.9%

A hedging agreement is in place in relation to the core Group borrowings.

CURRENCY RISK
The Group does not face significant currency risk since its operations are largely UK based and the majority of transactions are denominated in sterling.

FINANCIAL ASSETS
Financial assets comprise short term cash deposits with major United Kingdom and European clearing banks and earn floating rates of interest
based upon bank base rates or rates linked to LIBOR.

Cash at bank and in hand

The currency profile of financial assets was:

Sterling
Euros

2005
£000

6,531

2005
£000

6,355
176

6,531

2004
£000

4,934

2004
£000

4,759
175

4,934

The weighted average period for which the fixed rate bank borrowings are fixed is 2.3 years (2004: 3.3 years). No new hire purchase contracts were
entered into during the period other than those acquired on acquisition of RD Scott Limited (see note 10). The Company has a swap agreement in
relation to the bank fixed rate financial liabilities of £26,000,000. The swap expires on 3 May 2007 and fixes the base interest rate payable at 5.55%
on the reducing balance of the fixed term loan.

Interest on the bank fixed and floating rate financial liabilities from 7 May 2004 to 4 March 2005 was based on the relevant LIBOR rate or swap rate
plus 1.68%.

In March 2005 the interest rate was revised down to the relevant base rate plus 1.38%, which was the margin applicable until 6 May 2004.

The fair value of the bank fixed rate financial liabilities is £26,282,000.

The other fixed rate financial liabilities relates to a loan provided by Manchester Square Enterprises Limited (see note 26), with an interest rate of
10%. This loan was used to finance the acquisition of RD Scott Limited. This loan was repaid in full on 24 March 2005.

In the opinion of the Board, the fair value of the Group’s financial assets and liabilities is not considered materially different to that of the book value.

LIQUIDITY RISK
During the period, the Group’s policy has been to ensure continuity through loan funding, with short term flexibility achieved by a revolving credit
facility. 

The maturity profile of drawn down financial liabilities at the end of the year is shown in note 16.

In addition, there are undrawn committed facilities with a maturity profile as follows. Interest on these facilities is 0.69%.

Due within one year or less, or on demand
Due between one and two years
Due between two and five years

2005
£000

-
-
36,500

36,500

2004
£000

-
-
18,000

18,000

52

53

                                                       
NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

19. CALLED UP SHARE CAPITAL 

GROUP AND COMPANY

AUTHORISED
Ordinary shares of 5p each

ALLOTTED, CALLED UP AND FULLY PAID
Ordinary shares of 5p each

2005
£000 

2004
£000

3,108

3,108

2,364

2,338

During the period a total of 528,021 ordinary shares were issued. Of these, 438,021 ordinary shares were issued in lieu of the prior year scrip
dividend. The remaining 90,000 ordinary shares were issued for a total cash consideration of £146,000.

SHARE OPTIONS
The Company has outstanding options in respect of the following shares under the Inland Revenue Approved Employee Share Option Scheme and
the Unapproved Employee Share Option Scheme:

NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

18. PROVISIONS FOR LIABILITIES AND CHARGES

GROUP

COMPANY

2005
£000

2,315
1,614

3,929

2004
£000

3,756
-

3,756

2005
£000

2,385
1,180

3,565

2004
£000

4,033
-

4,033

GROUP
£000

COMPANY
£000

3,756
(1,392)
163
(212)

4,033
(1,648)
-
-

Deferred taxation
Provision for rentals on onerous property leases

At end of period

DEFERRED TAXATION
Movement in the provision during the period was as follows:

At beginning of period
Credit to profit and loss account (see note 7)
Acquisition (see note 10)
Other movements

The amounts provided for deferred taxation are set out below:

Accelerated capital allowances
Tax losses recoverable
Other provisions

2,315

2,385

Inland Revenue Approved Employee Share Option Scheme

2005
£000

2,636
(130)
(191)

2,315

GROUP

COMPANY

2004
£000

4,032
-
(276)

3,756

2005
£000

2,435
-
(50)

2,385

2004
£000

4,033
-
-

4,033

Unapproved Employee Share Option Scheme

Date of grant

Number of
share options

Subscription
price per share

23.10.96
30.01.98
07.06.01
29.07.02
12.06.03
14.10.03
20.01.04

23.10.96
07.06.01
29.07.02
12.06.03
20.01.04

47,148
8,130
166,255
11,450
225,274
32,000
17,857

100,852
232,808
73,550
445,762
82,143

306.5p
123.0p
331.0p
262.0p
162.0p
165.0p
168.0p

306.5p
331.0p
262.0p
162.0p
168.0p

PROVISION FOR RENTALS ON ONEROUS PROPERTY LEASES
This provision relates to five stores (Company: four stores) and represents the anticipated future rental costs until the date of disposal.

The share options are exercisable during the period beginning three years after and ending ten years after the date of grant, and are subject to a
performance condition that requires a growth in earnings per ordinary share over a consecutive three year period.

At beginning of period
Charge to profit and loss account (see note 2)
Acquisition (see note 10)
Amounts released in period

GROUP
£000

COMPANY
£000

-
1,286
441
(113)

-
1,286
-
(106)

1,614

1,180

20. RESERVES

At beginning of period
Retained loss for the financial period
Premium on share issues
Scrip dividend adjustment re 2004

GROUP

COMPANY

Share 
premium
account
£000

8,917
-
142
(17)

Profit
and loss
account
£000

46,039
(1,782)
-
-

Share 
premium
account
£000

8,917
-
142
(17)

Profit
and loss
account
£000

46,633
(2,299)
-
-

At end of period

9,042

44,257

9,042

44,334

54

55

                                                                       
NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

21. RECONCILIATIONS OF MOVEMENTS IN SHAREHOLDERS’ FUNDS

GROUP

COMPANY

Profit/(loss) for the financial period
Dividends paid and proposed

Retained loss for the financial period
Scrip dividend adjustment re 2004
Proceeds from issue of ordinary shares

Net movement in equity shareholders’ funds
Equity shareholders’ funds at beginning of period

2005
£000

1,337
(3,119)

(1,782)
5
146

(1,631)
57,294

2004 
£000

648
(3,038)

(2,390)
920
-

(1,470)
58,764

2005
£000

820
(3,119)

(2,299)
5
146

(2,148)
57,888

Equity shareholders’ funds at end of period

55,663

57,294

55,740

22. COMMITMENTS

GROUP
(i) Capital commitments at the end of the financial period for which no provision has been made are as follows:

2004
£000

(2,430)
(3,038)

(5,468)
920
-

(4,548)
62,436

57,888

Contracted

(ii) Annual commitments under non-cancellable operating leases are as follows:

Operating leases which expire:

Within one year
In the second to fifth years inclusive
Over five years

29 January
2005
Land and 
buildings
£000

2,436
4,698
51,415

58,549

29 January
2005
Other

£000

58
313
102

473

29 January
2005
£000

31 January
2004
£000

1,552

1,696

31 January
2004
Land and
buildings 
£000

1,363
3,783
52,359

57,505

31 January
2004
Other

£000

181
25
-

206

NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

COMMITMENTS (CONTINUED)
COMPANY
(i) Capital commitments at the end of the financial period for which no provision has been made are as follows:

Contracted

(ii) Annual commitments under non-cancellable operating leases are as follows:

Operating leases which expire:

Within one year
In the second to fifth years inclusive
Over five years

29 January
2005
Land and 
buildings
£000

2,436
4,561
48,699

55,696

29 January
2005
Other

£000

51
288
102

441

29 January
2005
£000 

31 January
2004
£000

1,552

1,696

31 January
2004
Land and 
buildings
£000

1,363
3,783
52,359

57,505

31 January
2004
Other

£000

181
25
-

206

23. PENSION SCHEMES

The Group only operates defined contribution pension schemes. The pension charge for the period represents contributions payable by the Group
of £257,000 (2004: £257,000), plus £31,000 (2004: £46,000) in respect of directors. The amount owed to the schemes at the period end was
£22,000 (2004: £7,000).

24. RECONCILIATION OF GROUP OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES

Operating profit
Goodwill amortisation
Depreciation and impairment charges
Decrease in stocks
Decrease in debtors
(Decrease)/increase in creditors

Net cash inflow from operating activities

The exceptional costs disclosed in note 2 result in operating cash outflows of £736,000 (2004: £1,978,000)

52 weeks to
29 January
2005
£000

12 months to
31 January
2004
£000

8,356
812
17,812
14,674
2,360
(6,795)

37,219

7,734
786
10,060
1,990
80
2,950

23,600

56

57

                                                                                                                         
NOTES TO THE 
FINANCIAL STATEMENTS

(CONTINUED)

25. ANALYSIS OF NET DEBT

At 31 January
2004
£000

Cash at bank and in hand
Debt due after one year
Debt due within one year
Redeemable loan notes (see note 10)
Obligations under finance leases and hire purchase contracts

4,934
(48,000)
(8,000)
-
-

Total

(51,066)

Cash
flow
£000

217
18,500
3,000
-
170

21,887

Acquisition
£000

Other non
cash changes
£000

At 29 January
2005
£000

(420)
-
-
-
(881)

-
4,000
(4,000)
(287)
-

4,731
(25,500)
(9,000)
(287)
(711)

(1,301)

(287)

(30,767)

FIVE YEAR RECORD

CONSOLIDATED PROFIT AND LOSS ACCOUNTS

52 weeks ended
29 January
2005
£000

Year ended
31January
2004
£000

10 months to
31January
2003
£000

Year ended
31 March
2002
£000

Year ended
31 March
2001
£000

TURNOVER
Cost of sales

GROSS PROFIT
Distribution costs - normal
Distribution costs - exceptional
Administrative expenses - normal
Administrative expenses - exceptional
Other operating income

471,656
(256,504)

215,152
(185,437)
(7,987)
(13,589)
(736)
953

458,073
(249,379)

208,694
(186,117)
(1,366)
(13,503)
(612)
638

370,804
(202,229)

168,575
(141,145)
(2,933)
(10,167)
(581)
333

245,621
(130,144)

115,477
(88,346)
-
(6,759)
-
67

204,465
(109,469)

94,996
(72,014)
-
(6,152)
-
22

26. RELATED PARTY TRANSACTIONS

OPERATING PROFIT

8,356

7,734

14,082

20,439

16,852

The Group has taken advantage of the exemption available under FRS8 whereby it does not need to disclose related party transactions with other
90% Group companies.

Fixed asset additions include £28,000 in relation to a motor vehicle purchased from the Company’s Chief Executive, Mr Barry Bown, at an arms
length valuation.

Administrative expenses includes £nil (2004: £139,000) relating to a Group Management Conference. In the prior period this was organised and
invoiced by Bird Consultancy. These charges were largely recharges of venue and presentation costs. Chris Bird is a director of Bird Consultancy as
well as being a Non-Executive Director of the Company. 

Included within creditors due within 1 year is a £5,000,000 loan used to finance the acquisition of RD Scott Limited. This loan was provided by
Manchester Square Enterprises Limited, with a fixed interest rate of 10% until the loan was repaid in full on 24 March 2005.
At 11 May 2005 Manchester Square Enterprises Limited owned 11.43% of the Company’s share capital (see page 19).

27. PRINCIPAL SUBSIDIARY UNDERTAKINGS

The following companies were the principal subsidiary undertakings of The John David Group Plc at 29 January 2005. The companies are wholly
owned, operate in the UK and are included in the consolidated financial statements.

RD Scott Limited
First Sport Limited
Active Venture Limited
The Sports Shop (Fife) Limited
Sport and Fashion Retail Distribution Limited
Athleisure Limited
JD Sports Limited

Nature of business

Retailer of fashion clothing and footwear
Non trading
Dormant
Dormant
Dormant
Investment Company
Dormant

With the exception of RD Scott Limited, Athleisure Limited and JD Sports Limited, all these holdings were indirectly owned by the parent Company
at the balance sheet date.

Before exceptional items 
and goodwill amortisation
Exceptional items
Goodwill amortisation

OPERATING PROFIT
Loss on disposal of fixed assets

PROFIT ON ORDINARY ACTIVITIES 
BEFORE INTEREST
Other interest receivable and similar income
Interest payable and similar charges

PROFIT ON ORDINARY ACTIVITIES 
BEFORE TAXATION
Taxation on profit on ordinary activities

PROFIT FOR THE FINANCIAL PERIOD 
Dividends paid and proposed

RETAINED (LOSS)/PROFIT
FOR THE FINANCIAL PERIOD

17,891
(8,723)
(812)

8,356
(1,569)

6,787
304
(4,461)

2,630
(1,293)

1,337
(3,119)

(1,782)

BASIC EARNINGS PER ORDINARY SHARE

2.85p

ADJUSTED BASIC EARNINGS 
PER ORDINARY SHARE

DIVIDENDS PER ORDINARY SHARE

18.39p

6.60p

10,498
(1,978)
(786)

7,734
(1,095)

6,639
100
(4,634)

2,105
(1,457)

648
(3,038)

(2,390)

1.39p

6.21p

6.50p

18,017
(3,514)
(421)

14,082
(433)

13,649
212
(3,080)

10,781
(4,024)

6,757
(3,038)

3,719

14.46p

20,439
-
-

20,439
(187)

20,252
104
(283)

20,073
(6,235)

13,838
(3,646)

10,192

29.61p

16,852
-
-

16,852
(95)

16,757
154
(443)

16,468
(5,120)

11,348
(3,220)

8,128

24.38p

21.18p

29.61p

24.38p

6.50p

7.80p

6.90p

Adjusted basic earnings per ordinary share is based on earnings before exceptional items and goodwill amortisation.

58

59

                                                                                
FINANCIAL CALENDAR

FINAL RESULTS ANNOUNCED

FINAL DIVIDEND RECORD DATE

FINANCIAL STATEMENTS PUBLISHED

ANNUAL GENERAL MEETING

FINAL DIVIDEND PAYABLE

INTERIM RESULTS ANNOUNCED

PERIOD END

FINAL RESULTS ANNOUNCED

11 MAY 2005

20 MAY 2005

10 JUNE 2005

21 JULY 2005

1 AUGUST 2005

SEPTEMBER 2005

28 JANUARY 2006

APRIL 2006

SHAREHOLDER INFORMATION

REGISTERED OFFICE
The John David Group Plc
Hollinsbrook Way
Pilsworth
Bury
Lancashire BL9 8RR

COMPANY NUMBER
Registered in England and Wales, 
number 1888425

AUDITORS
KPMG Audit Plc
Edward VII Quay
Navigation Way
Ashton-on-Ribble
Preston
Lancashire PR2 2YF

FINANCIAL ADVISERS AND
STOCKBROKERS
Investec
2 Gresham Street
London EC2V 7QP

REGISTRARS
Lloyds TSB Registrars
The Causeway
Worthing
West Sussex BN99 6DA

FINANCIAL PUBLIC RELATIONS
Hogarth Partnership Limited
The Butlers Wharf Building
36 Shad Thames
London SE1 2YE

PRINCIPAL BANKERS
Barclays Bank Plc
43 High Street
Sutton
Surrey SM1 1DR

SOLICITORS
DLA Piper Rudnick Gray Cary UK LLP
Princes Exchange
Princes Square
Leeds LS1 4BY

HEAD OFFICE

THE JOHN DAVID GROUP PLC
Hollinsbrook Way
Pilsworth
Bury
Lancashire BL9 8RR
Telephone 0870 873 0333
Facsimile 0161 767 1001

Website address
www.jdsports.co.uk

60

                  
Hollinsbrook Way, Pilsworth, Bury, Lancashire, BL9 8RR  Tel: 0870 873 0333  Fax: 0161 767 1001
Web: jdsports.co.uk  Registered Office as above. Registered in England No. 1888425