ANNUAL
REPORT &
ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
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03
CONTENTS
04 SUMMARY OF KEY PERFORMANCE INDICATORS
05 WHO WE ARE
19 EXECUTIVE CHAIRMAN’S STATEMENT
28 FINANCIAL AND RISK REVIEW
32 PROPERTY AND STORES REVIEW
35 CORPORATE AND SOCIAL RESPONSIBILITY
42 THE BOARD
43 DIRECTORS’ REPORT
48 CORPORATE GOVERNANCE REPORT
54 DIRECTORS’ REMUNERATION REPORT
60 STATEMENT OF DIRECTORS’ RESPONSIBILITIES
INDEPENDENT AUDITOR’S REPORT
61
62 CONSOLIDATED INCOME STATEMENT
63 GROUP AND COMPANY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
64 GROUP AND COMPANY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
65 GROUP AND COMPANY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
66 GROUP AND COMPANY CONSOLIDATED STATEMENT OF CASHFLOWS
67 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
131 FIVE YEAR RECORD
132 FINANCIAL CALENDAR
132 SHAREHOLDER INFORMATION
CONTACT
JD Sports Fashion Plc
Hollinsbrook Way
Pilsworth
Bury
BL9 8RR
Tel: +44 (0)161 767 1000
Fax: +44 (0)161 767 1001
www.jdplc.com
Trading Websites
www.jdsports.co.uk
www.size.co.uk
www.scottsonline.co.uk
www.bankfashion.co.uk
www.chausport.com
www.getthelabel.com
www.champion.ie
www.kooga-rugby.com
www.kukrisports.com
www.nicholasdeakins.com
www.thedufferofstgeorge.com
www.peterwerth.co.uk
www.blacks.co.uk
www.millets.co.uk
www.squirrelsports.co.uk
www.cloggs.co.uk
www.sprinter.es
www.tessuti.co.uk
www.footpatrol.co.uk
Non trading websites
www.uksourcelab.com
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SUMMARY OF KEY PERFORMANCE INDICATORS
Financial KPIs
Revenue
Gross profit %
Operating profit (before exceptional items)
Profit before tax and exceptional items
Exceptional items (i)
Operating profit
Profit before tax
Basic earnings per ordinary share
Adjusted basic earnings per ordinary share
Total dividend payable per ordinary share
Net cash at end of year (ii)
Non Financial KPI
Trading space at year end (sq ft ‘000) (iii)
53 weeks to
2 February 2013
£000
52 weeks to
28 January 2012
£000
1,258,892
48.7%
61,323
60,465
(5,348)
55,975
55,117
79.71p
88.51p
26.30p
45,636
2,894
1,059,523
49.2%
76,461
75,957
(9,685)
66,776
67,442
96.27p
105.89p
25.30p
60,295
3,058
%
Change
+18.8
-19.8
-20.4
-16.2
-18.3
-17.2
-16.4
+4.0
(i) Excludes share of exceptional items of joint venture in the 52 week period to 28 January 2012
(ii) Net cash consists of cash and cash equivalents together with interest-bearing loans and borrowings
(iii) 123 loss making Blacks stores closed in year
GROUP HIGHLIGHTS
• Ongoing robust performance in core Sports fascias which
continue to provide investment platform for future profitability
in JD in Europe. In the UK and Ireland, these fascias
contributed an additional £4.7m of operating profits in
the year (before exceptional items) and we are building an
appropriate store base in Europe for future success there
• The good performance in the Sports fascias has continued
in the current financial year with like for like sales growth in
the UK and Ireland stores (excl Champion) of 1.9% in the
9 weeks to 6 April 2013
• £14(cid:15)9 million of operating losses (before exceptional items)
incurred in Outdoor fascias but performance improving now
that new management team has been installed with stocks
being better managed, store investment commenced and
ongoing cost reduction programme to deliver benefits in the
current financial year
• Like for like sales for the 53 week period in the UK and
Ireland combined core retail fascias increased by 1.2%:
Sport
UK & Ireland
(excl Champion)
+2.5%
Fashion
(excl Premium)
-4.1%
Combined Core
UK & Ireland
+1.2%
• Final dividend payable increased by 3(cid:15)8(cid:6) to 22(cid:15)00p
(2012: 21.20p) bringing the total dividends payable for the
year to 26.30p (2012: 25.30p) per ordinary share,
an increase of 4.0%
REVENUE (£M)
NET CASH (£M)
PROFIT BEFORE TAX
& EXCEPTIONAL ITEMS (£M)
670.9
2009
769.8
2010
883.7
1,059.5
1,258.9
2011
2012
2013
23.5
2009
60.5
2010
86.1
2011
60.3
2012
45.6
2013
53.6
2009
67.4
2010
81.6
2011
76.0
2012
60.5
2013
WHO WE ARE
Established in 1981 with a single store in Bury, in the North West
of England, JD Sports Fashion Plc is a leading retailer and distributor
of sport and athletic inspired fashion apparel, footwear and fashion
and outdoor clothing and equipment in the UK and Europe.
The Group has over 800 stores across a number of retail fascias in
the UK, Republic of Ireland, France and Spain and is proud of the fact
that it always provides its customers with the latest products from the
very best brands.
The Group also operates on-line businesses for these retail fascias,
providing the Group with a truly multichannel, international platform.
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UNDISPUTED
JD is acknowledged as the leading specialist multiple retailer of
fashionable branded and own brand sports and casual wear in the
UK and Republic of Ireland combining globally recognised brands
such as Nike and adidas with strong own brand labels such as
Mckenzie, Carbrini and The Duffer of St George. JD now has entered
the European market with 10 stores in France and during 2012 has
opened five stores in Spain.
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SIZE MATTERS
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HAVE
YOU
HUGGED
YOUR
FOOT
TODAY?
Size? was originally established to trial edgier brands and footwear
styles before introducing them to the mass market through the JD
fascia. Size? is positioned as an ‘independent’ retailer with each store
having its own feel and loyal catchment. Size? has also opened its
first European store in Paris during 2012.
The Air Huarache OG from Nike.
“The Shoe that stretches with your
foot” is back for the first time
in its original form
since 1991.
www.size.co.uk
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AUTHORITY
Scotts delivers brand authority to an older, more affluent male
consumer offering brands such as Fred Perry, adidas Originals
and Original Penguin, amongst others(cid:15)
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ATTITUDE
Bank is aimed at the young male and female, branded
fashion-conscious consumer selling fast fashion brands such
as Superdry, Paul’s Boutique, Lipsy and Jack & Jones as well as
own brands such as Ribbon, Blonde & Blonde, and Rivington.
Bank opened its first store in the Republic of Ireland during 2012.
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LIFE OUTDOORS
Blacks was acquired from administration in January 2012 and is a
long established retailer of specialist outdoor footwear, apparel and
equipment with two distinct fascias in Blacks and Millets. The Blacks
stores primarily stock more technical products from the premium
brands such as The North Face and Berghaus with Millets catering
for a more casual outdoor customer. Millets is also the major fascia
for our two strong own brands, Peter Storm and Eurohike.
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GROUP FASCIAS
Chausport was acquired in May 2009
and sells a strong range of international
brands such as Nike, adidas and
Le Coq Sportif together with brands
more specific to the French market
such as Redskins.
Sprinter was acquired in June 2011
and is one of the leading sports retailers
in Spain selling footwear, apparel,
accessories and equipment for a wide
range of sports as well as lifestyle casual
wear and childrenswear. This offer
includes both international sports brands
and successful own brands.
Champion was acquired in April 2011
and is one of the leading retailers
of sports apparel and footwear in the
Republic of Ireland with 17 stores in
premium locations in town centres
and shopping centres.
Getthelabel.com is an on-line and
catalogue business which offers
customers significant savings on
branded fashion and footwear.
Premium branded fashion is a new
opportunity for the Group and our
vision is to become the first choice
retailer for branded premium fashion
in the UK(cid:15) Our stores offer customers
a strong mix of brands including
Hugo Boss, Ralph Lauren Polo,
Diesel and Stone Island.
Cloggs was acquired out of
administration in February 2013 and
is an on-line niche retailer of premium
branded footwear.
The Group also has a number of businesses which design and distribute team wear and fashion product.
Kooga design, source and wholesale
rugby apparel and equipment, with
teamwear, replica and leisurewear
ranges. Kooga is also sole kit supplier
to a number of professional rugby clubs
across both codes.
Nicholas Deakins designs and
manufactures predominantly men’s
footwear and clothing. Since its inception
in 1991, the brand has been moulded
into several collections with labels
including Nicholas Deakins Green Label
clothing and footwear, Deakins and
Deakins kids. Nicholas Deakins supplies
both Group and external businesses.
Source Lab Limited, which was
established in 2005, design, source and
distribute football related apparel under
license from some of the biggest clubs
in Europe including Manchester United,
Chelsea, Arsenal and Barcelona.
Kukri, acquired in February 2011,
sources and provides bespoke sports
teamwear to schools, universities and
sports clubs. Teams design and order
their personalised kit on-line, with over
75 different sports catered for.
In addition, Kukri also is sole kit supplier
to a number of professional sports teams.
Focus are involved in the design,
sourcing and distribution of footwear
and apparel both for own brand and
licensed brands, such as Peter Werth,
Fly 53, Ecko, Ellesse, and Voi Footwear,
for both group and external customers.
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EXECUTIVE CHAIRMAN’S
STATEMENT
INTRODUCTION
The year to January 2013 was one of substantial change
for the Group and it is worth reflecting on the key changes:
• (cid:56)e entered the Outdoor market in January 2012 with the
purchase of the Blacks and Millets store portfolios from the
administrators of Blacks Leisure Group Plc. Although initial
results have been more disappointing than originally
anticipated we now have a firm foothold in a different and
growing lifestyle market in the UK. With our capacity for
creating efficient and appealing environments already
evidenced through the stores which we have refurbished,
along with our capable support systems, we remain
optimistic that these Outdoor fascias will prove to be
a successful core retail operation
• (cid:56)e consolidated our warehousing into the new central
distribution facility in Rochdale, eliminating the capacity
constraints we previously had and reducing double
handling of stock. The new warehouse has subsequently
absorbed both the Christmas period and the transfer in the
current year of the Outdoor business from its facility in
Northampton although there are still improvements in
efficiency to be achieved
• (cid:56)e have continued our expansion of the Sports Fascias
in France and Spain and are expecting to continue to add
stores in existing and new territories in 2013(cid:15) Our product
offer in Southern Europe can be improved but we now have
a greater understanding of the key ingredients for success in
Europe. We expect to move into other territories in Europe
this year
• (cid:56)e have strengthened the Group(cid:8)s executive
team in the last six months with the appointment of
Dave Williams as Group Commercial Director and
Pat Lee as Group Supply Chain and Change Director.
We have also invested significantly in our Multichannel team
• (cid:56)e have committed to changing our legacy IT systems
to Oracle(cid:15) (cid:56)e have already successfully implemented
Oracle Financials with the main retail system following
through 2014 and 2015
Although we have a number of short term challenges we
believe we are developing our infrastructure appropriately to
support the future anticipated growth of our businesses in all
channels. This investment in infrastructure also ensures that
we protect the core Sports fascias in the UK which continue
to produce excellent results and provide the Group with
a very solid foundation for ongoing profitability and future
cash generation.
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STRATEGIC DEVELOPMENTS
Retail remains the core focus for the Group and the strategic
developments and acquisitions which we have made in the
period reflect this focus(cid:15)
(cid:56)e have continued the international development of our
JD fascia through further expansion in France and the
opening of our first stores in Spain(cid:15) By 2 February 2013 we
had 11 JD and Si(cid:91)e? stores in France with one further store
opening to date in the new financial period(cid:15) (cid:56)e now feel that
we are beginning to generate some momentum in France(cid:15)
(cid:56)e will maintain this momentum with further openings
through 2013(cid:15)
During the year we opened five JD stores in Spain including
the conversion of a pre-existing Sprinter store(cid:15) One further
store has opened to date in the new financial year(cid:15) Spain has
proved a more difficult market than France for JD to date and
improvements need to be made to both our product offer
and price architecture there(cid:15)
(cid:56)e made our initial entry into the Premium Fashion sector
in 2011 through the acquisition of eight Cecil Gee stores(cid:15)
(cid:56)e have subsequently complemented this in the current year
by making two further small acquisitions (Tessuti Group and
Originals) in this sector(cid:15) These acquisitions have given us
additional critical mass together with management knowledge,
both of which were needed to create a business in this sector
which is capable of delivering future profitability, supported by
the Group(cid:8)s resource(cid:15) The combined business is now run by
the management of Tessuti(cid:15)
In recent years, the Group has steadily increased its stable
of owned and licensed sporting and fashion inspired brands(cid:15)
This strategy has continued and in the year to January 2013
we acquired rights to the (cid:41)enleys, Fly 53 and Gio Goi brands
at a cost of £2(cid:15)6 million, £0(cid:15)4 million and £2(cid:15)4 million respectively(cid:15)
In Distribution, we have been pleased with the performance
to date of the Source Lab business in which we acquired an
85(cid:6) holding in May 2012 at a cost of £2(cid:15)6 million(cid:15)
Source Lab(cid:8)s management have proven experience of
developing ranges of sport related product and we believe
we can use this experience to enhance the return from the
Group(cid:8)s stable of brands and other Sports inspired businesses(cid:15)
After the year end, we also acquired the intellectual property
and other assets associated with the Cloggs online footwear
business from its administrators for a cash consideration of
£0(cid:15)6m(cid:15) Cloggs is an online niche retailer of premium
branded footwear and so whilst its product offering is very
complementary it also gives us opportunities to extend our
customer base and the width of our offer(cid:15)
(cid:56)e have also made significant investments in the year
in two projects which will not only support our current retail
businesses in future years but which will also have the capacity
to deal with growth both organically and by acquisition
whether that be in the UK or overseas(cid:15) The first of these
projects is our new centralised warehouse in Kingsway,
Rochdale which became fully operational in Summer 2012
with substantially all stock for the UK and Ireland retail fascias
now channelled through this facility(cid:15) The second major project
concerns the development of replacement of our legacy
bespoke commercial systems with Oracle Retail(cid:15)
This project is in its early stages and we currently plan to bring
the first of the Group(cid:8)s businesses on to this system in 2014(cid:15)
Thereafter, the retail businesses will be transferred in stages
with all current retail businesses anticipated to be working on
the new system by Autumn 2015(cid:15)
DISPOSAL OF CANTERBURY
During the year we completed the disposal of the Canterbury
business to Pentland Group Plc for a total consideration of
£22(cid:15)7 million which represented a full repayment of the net
cash investment made by the Group into Canterbury since
our acquisition of the initial interest in August 2009(cid:15)
SPORTS FASCIAS
The Sports Fascias are JD, Si(cid:91)e?, Chausport, Sprinter and
Champion Sports(cid:15)
The Sports Fascias(cid:8) total revenue (after elimination of
inter-group sales) increased by 10(cid:15)2(cid:6) during the period
to £854(cid:15)0 million (2012: £774(cid:15)6 million) with like for like
sales growth of 2(cid:15)5(cid:6) (2012: (cid:12)0(cid:15)3(cid:6)) in the core UK and
Ireland sports fascia stores (excl Champion)(cid:15) This represents
a significant improvement on the (cid:12)1(cid:15)2(cid:6) that we announced
in the results for the first half of the year and is a very robust
performance in the current economic climate(cid:15) It is clear that
our largely unique product offering combined with a
well-executed retail environment is attractive to the consumer(cid:15)
Our challenge is to ensure that these basic principles are
repeated in all of our retail fascias(cid:15)
Gross margin achieved in the Sports Fascias decreased only
marginally to 50(cid:15)6(cid:6) (2012: 50(cid:15)8(cid:6)) which includes a full year
of the lower margin Sprinter and Champion businesses for
the first time(cid:15)
Operating profit (before exceptional items) of the
Sports Fascias increased by £3(cid:15)5 million to £77(cid:15)8 million
(2012: £74(cid:15)3 million)(cid:15) Most pleasing was the increase of
£4(cid:15)7m in the operating profit (before exceptional items)
of the core JD businesses in the UK and Ireland
(including Si(cid:91)e?) to £72(cid:15)9 million (2012: £68(cid:15)2 million)(cid:15)
The contribution from Chausport decreased to £0(cid:15)6 million
(2012: £1(cid:15)5 million)(cid:15) Although there was growth in like for like
sales of 0(cid:15)7(cid:6) (2012: 2(cid:15)2(cid:6)), this growth did not generate
sufficient margin to cover an increased investment in resource
both in stores and centrally(cid:15)
FASHION FASCIAS
The established Fashion Fascias of Bank and Scotts are now
complemented by a Premium Fashion business comprising
Cecil Gee, Originals and Tessuti(cid:15)
The loss in the JD France business (including the Si(cid:91)e?
store in Paris which was opened in the year) increased
marginally to £0(cid:15)5 million (2012: loss of £0(cid:15)2 million) as this
business scales up(cid:15) The performance of our recently opened
stores makes us increasingly confident about the prospects for
JD in France though and we would hope to at least reach a
break even position in the current financial year although we
are fully aware that we need to improve our overall apparel
offer, particularly in the South of the country(cid:15)
The Sprinter business, which we acquired in June 2011,
had a good year with profits maintained at £4(cid:15)7 million
(2012: £4(cid:15)7 million for the 7 months post acquisition)(cid:15)
This is an excellent performance overall given the seasonally
loss making five month non like for like period at the start of
the year and the increase in the rate of VAT from 18(cid:6) to 21(cid:6)
which came into effect on 1 September 2012(cid:15) (cid:56)e remain
pleased with this acquisition and believe that the management
team that we have in Spain are well equipped to steer the
business through the very difficult economic period that the
country is currently facing(cid:15)
(cid:56)e opened our first JD stores in Spain in the year with
our limited openings to date already providing us with
considerable additional market knowledge which we are using
to refine our offer(cid:15) (cid:41)owever, we do not yet have any critical
mass and given the ongoing economic difficulties and
increased fiscal take then we will remain cautious in the short
term in our approach to opening new stores in Spain(cid:15)
Champion made a minimal contribution to operating profit
in the year (2012: £0(cid:15)1 million)(cid:15) (cid:41)owever, given that this
includes the absorption of £0(cid:15)8m of losses in the non like for like
period at the start of the year then the business performed well(cid:15)
(cid:56)hilst there are some short term operational changes which
we can make which will benefit the financial performance in
the shorter term we do not expect a more substantial
improvement until the wider economy in the Republic of Ireland
picks up more strongly(cid:15)
The Fashion Fascias(cid:8) total revenue (after elimination of
inter-group sales) increased by 5(cid:15)8(cid:6) during the period to
£160(cid:15)4 million (2012: £151(cid:15)6 million)(cid:15) Like for like sales in
the two core fascias declined by 4(cid:15)1(cid:6) (2012: (cid:12)2(cid:15)2(cid:6)) being
Bank -4(cid:15)9(cid:6) (2012: (cid:12)3(cid:15)9(cid:6)) and Scotts -0(cid:15)5(cid:6) (2012: -2(cid:15)9(cid:6))(cid:15)
Gross margin achieved in the Fashion Fascias declined from
48(cid:15)5(cid:6) to 47(cid:15)4(cid:6)(cid:15) This decline was caused by clearance activity
in the Cecil Gee business which was required to clear excess
Spring / Summer product(cid:15) These stores, along with the
Originals stores which were acquired in the year, are now
managed by the Tessuti management team(cid:15)
The Bank fascia sells largely branded fashion to both
males and females, predominantly for the teenage to
mid-twenties sector(cid:15) In the year the store portfolio grew from
80 stores to 85 stores, still based predominantly in the North
and the Midlands(cid:15) (cid:56)hilst the business made an operating loss
(before exceptional items) in the year of £0(cid:15)5 million
(2012: profit of £3(cid:15)1 million) we are encouraged by a number
of factors with footfall maintained, a good performance in
Menswear and a slight enhancement of margins(cid:15)
(cid:56)ith the right product, we believe that Bank is capable of
making a contribution to Group operating profits again(cid:15)
Our turnaround plan for Bank involves increased focus on the
female offer which is reflected in our recent recruitment of an
experienced (cid:41)ead of (cid:56)omen(cid:8)s although we will not see the
benefits of her product decision making until later in the
current financial year(cid:15) (cid:56)e will also look to utilise our stable of
owned and licensed brands and improve our footwear
offering(cid:15) There will also be some rationalisation of the central
overhead base(cid:15)
The Scotts fascia stores continue to offer branded fashion
authority to more affluent young males, largely in the
North and Midlands(cid:15) Three stores were closed in the period
with no new openings resulting in 32 stores at the year end
(2012: 35 stores)(cid:15) Operating profit (before exceptional items)
reduced by £0(cid:15)7 million to £0(cid:15)1 million (2012: £0(cid:15)8 million)
principally from a reduction in gross margin(cid:15) The fascia
continues to serve a useful purpose to the Group as an introducer
of brands and provides revenue for a legacy store portfolio(cid:15)
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FINANCIALS SUMMARY
Revenue
Total revenue increased by 18(cid:15)8(cid:6) (almost £200 million) in the
year to £1,258(cid:15)9 million (2012: £1,059(cid:15)5 million) of which
£121(cid:15)0 million of sales were generated from the full year of
the Blacks business (2012: £5(cid:15)9 million for the three week
period)(cid:15) A further £54(cid:15)8 million of revenue was generated
either in businesses acquired in the year or the annualisation
of the other businesses acquired in the year to January 2012(cid:15)
£20(cid:15)6 million of revenue was lost from the disposal of Canterbury(cid:15)
Gross margin
Total Gross Margin fell from 49(cid:15)2(cid:6) to 48(cid:15)7(cid:6) reflecting the
impact of the margin sacrifice in the second half of the year in
the Outdoor business(cid:15) The achieved margin in the Fashion
Fascias also fell by 1(cid:15)1(cid:6) to 47(cid:15)4(cid:6) (2012: 48(cid:15)5(cid:6)) with ongoing
clearance activity in the Premium Fashion businesses(cid:15) (cid:56)e are,
however, greatly encouraged by the fact the margins in the
Sports fascias were largely maintained at prior year levels(cid:15)
Our combined Premium Fashion offering made an operating
loss of £1(cid:15)5 million (2012: loss of £0(cid:15)6 million) principally
from losses in the Cecil Gee stores which we understood to be
loss making when we made our initial entry into the Premium
Fashion market in June 2011(cid:15) (cid:41)owever, following our
acquisition of the Tessuti business in the year we believe that
we have a management team that has sector specific
experience and is capable of delivering a successful Premium
Fashion proposition with a consistency of retail standards and
a geographically appropriate brand offering(cid:15) Dealing with the
legacy issues in the business, particularly property, will mean
that we are unlikely to deliver any meaningful profit from this
activity in the short term(cid:15)
OUTDOOR
Outdoor had an exceptionally difficult year resulting in it
delivering an operating loss (before exceptional items) of
£14(cid:15)9 million (2012: loss of £2(cid:15)2 million for the short
period post acquisition)(cid:15)
On our acquisition of the business from administration in
January 2012 we inherited a very limited and unbalanced
stock position, with a particularly severe lack of stocks in many
core high performing lines combined with an excessively large
and overrented store portfolio and a disproportionate central
cost base(cid:15) Our first priorities in turning around the business
were to deal with these issues(cid:15) Agreeing and receiving a
resumption of supply from key suppliers was a difficult and time
consuming process(cid:15) Consequently, it was three months before
we started to receive any substantial deliveries of new stocks(cid:15)
During this period, the business made very substantial losses(cid:15)
At acquisition we backed the incumbent management team,
who only came together in Autumn 2011, and gave them the
opportunity to turn the business round(cid:15) (cid:41)owever, it became
clear through the year that they did not have sufficient
experience or knowledge of the Outdoor market to take the
business forward(cid:15) This was reflected in the proposition which
they bought into for the key Autumn and (cid:56)inter seasons which
required significant margin sacrifice to clear through(cid:15)
(cid:56)e now have a new management team which includes both
external recruits and long serving members of the Group(cid:8)s
team(cid:15) (cid:56)e will not see its full impact until later in the year but
we believe that we now have the right team and strategy to
take the business forward(cid:15)
The initial strategy on retail fascia and property locations was
that we should retain only the Blacks fascia long term with a
portfolio of approximately 130 stores(cid:15) (cid:41)owever, during the
year we have increasingly realised that there is a place for
Millets as it has considerable support and goodwill amongst
its customers and it is a good outlet for our own brands
(Peter Storm and Eurohike)(cid:15)
This two fascia strategy, with differentiated management, will
enable us to segment the product more appropriately and so
we now believe that we will retain approximately 140 stores in
the longer term of which approximately 80 will be fascia(cid:8)ed as
Blacks and 60 will be fascia(cid:8)ed as Millets(cid:15) The Blacks stores will
primarily stock more technical products from the premium
brands at higher price points with Millets catering for a more
casual outdoor customer(cid:15)
During the year we closed 122 stores and opened one store
to give a store portfolio of 174 stores (2012: 295 stores)(cid:15)
A further five stores have closed since the year end(cid:15)
The negotiations with the landlords on either new leases or
temporary licences have also been protracted as we have
needed to negotiate rents which were sustainable in the longer
term(cid:15) This assessment has been made difficult because of the
need for a major proposition overhaul(cid:15) (cid:41)owever, this task is
now well progressed(cid:15) (cid:56)e have also refurbished seven stores to
date(cid:15) This has provided us with valuable additional knowledge
which we will apply in future refurbishments(cid:15) (cid:56)e are
encouraged by the performance of these stores in the
period since they reopened(cid:15)
Keeping the smaller scale Blacks and Millets business in their
pre-existing office and warehouse facility at Northampton was
not economically viable(cid:15) (cid:56)e have now closed the warehouse
and moved the distribution function in to the Group(cid:8)s new
facility at Kingsway(cid:15) An exceptional charge of £0(cid:15)9 million has
been recognised in the year for this restructuring of the
distribution operations(cid:15) (cid:56)e have also integrated several back
office functions into existing Group teams(cid:15) The migration of the
remaining activity from Northampton to Bury is proposed to
take place through Summer 2013 and so we would anticipate
a further charge for restructuring in the new financial year(cid:15)
(cid:56)e believe that the various issues which Blacks has faced in
the year were a legacy of the administration process and the
result of previous mismanagement and we would anticipate a
significant reduction in the operating loss in the current
financial year(cid:15) (cid:56)e will, of course, now be looking for the
support of suppliers in return for our efforts in elevating the
desirability of their brands in premium retail locations(cid:15)
(cid:56)ith this support, we believe that the decisive action we have
taken to date and the strategy which we have adopted will give
us the foundation of a business which is capable of delivering
sustained operating profits in the medium term(cid:15)
DISTRIBUTION
Our Distribution businesses contributed a small operating
profit of £0(cid:15)4 million (2012: £1(cid:15)1 million)(cid:15) This includes a
profit of £1(cid:15)9 million from Canterbury in the seven months
prior to its disposal (2012: £0(cid:15)4 million profit for the full year)
with the second half of the year traditionally loss making(cid:15)
A number of our remaining Distribution businesses have had
a difficult year reflecting the downstream effect of ongoing
challenging circumstances in the Retail sector generally(cid:15)
(cid:56)e continue to review the benefit of holding each of these
investments which must be capable of either delivering a
significant profit in its own right or give us some other tangible
strategic benefit(cid:15)
The Getthelabel(cid:15)com online and catalogue business within
Topgrade has now been trading for over three years(cid:15)
Overall we are pleased with the development of this business
with sales increasing in the year by 43(cid:6) and losses more
than halved to £0(cid:15)7 million (2012: £1(cid:15)5 million)(cid:15) (cid:56)e anticipate
further growth this year with a further reduction in the losses(cid:15)
Operating profits within the wholesale operation of Topgrade
decreased slightly by £0(cid:15)2 million to £0(cid:15)6 million
(2012: £0(cid:15)8 million)(cid:15) The performance of this element of
the business is naturally volatile as it is very dependent on
the timing and general availability of clearance package
from the major brands(cid:15)
Focus has had a difficult year with an operating loss of
£1(cid:15)0 million (2012: profit £1(cid:15)4 million) which is primarily from
losses which have arisen after the acquisition of the trade and
assets of the Fly 53 brand including 14 concessions in (cid:41)ouse
of Fraser stores(cid:15) As with other businesses which we have
acquired in similar distressed circumstances the business was
in a fractured state on acquisition with a poor mix of stocks
and an inappropriate cost structure(cid:15) (cid:56)e believe we have now
resolved the majority of these acquisition issues and would
anticipate at least a substantial reduction in these operating
losses in the new financial year(cid:15)
Although revenues in Kukri have grown by £4(cid:15)4 million to
£20(cid:15)5 million (2012: £16(cid:15)1 million) the business made an
operating loss of £0(cid:15)1 million (2012: profit £0(cid:15)5 million)(cid:15)
In the period after acquisition, Kukri has needed to make
substantial investment in new IT systems and other
infrastructure to have the potential to grow and ultimately
deliver a meaningful return on our investment(cid:15) (cid:56)e believe that
Kukri(cid:8)s current underperformance is short term and that the
brand is strong and can be leveraged in the future(cid:15)
Elsewhere in the distribution division, Deakins has
maintained its profitability and we are very pleased with the
initial performance of Source Lab(cid:15) (cid:41)owever, the disappointing
performance in Kooga has continued with losses increased to
£1(cid:15)0 million (2012: £0(cid:15)8 million)(cid:15)
24
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
25
WORKING CAPITAL AND FINANCING
A combination of funding for the Blacks business, ongoing
acquisition activity (including the acquisition of the Gio Goi
brand in the final week before the period end) and capital
expenditure incurred means that year end net cash decreased
by £14(cid:15)7 million to £45(cid:15)6 million (2012: £60(cid:15)3 million)(cid:15)
The revolving credit facility has been used through most of the
year and, consequently, the net financing charge increased by
£0(cid:15)5 million to £0(cid:15)9 million (2012: £0(cid:15)4 million)(cid:15)
The Group has a £75 million committed syndicated bank
facility secured until 12 October 2015(cid:15) This facility consists of
a £60 million revolving credit facility with a current margin of
1(cid:15)40(cid:6) over LIBOR together with a £15 million working
capital facility(cid:15) It is likely that we will increase these facilities in
the current year to enable us to continue to make acquisitions
when opportunities occur(cid:15)
Gross capital expenditure (excluding disposal costs) decreased
slightly by £2(cid:15)2 million to £43(cid:15)5 million (2012: £45(cid:15)7 million)(cid:15)
The majority of the expenditure on the Kingsway facility was
incurred in the prior year although a further £1(cid:15)4 million was
spent in the year (2012: £19(cid:15)4 million)(cid:15) (cid:41)owever, this
reduction was offset by increased investment in our overseas
businesses with total investment in the year of £9(cid:15)5 million in
France (2012: £4(cid:15)7 million) and £6(cid:15)8 million in Spain
(2012: £2(cid:15)1 million)(cid:15) Elsewhere, we also spent £3(cid:15)4 million
on the Blacks property portfolio and we have acquired a new
combined warehouse and head office building for Kukri at
a cost of £0(cid:15)7 million(cid:15)
Increased confidence in the potential for JD internationally
combined with ongoing investment in refurbishing the Blacks
portfolio and investment in the new core Oracle ERP system
means that capital expenditure will remain high this year(cid:15)
(cid:56)orking capital remains well controlled with suppliers
continuing to be paid to agreed terms and settlement
discounts taken whenever due(cid:15)
Operating profit
Operating profit (before exceptional items) decreased by
£15(cid:15)2 million to £61(cid:15)3 million (2012: £76(cid:15)5 million)
principally due to the full year loss in the Blacks business of
£14(cid:15)9 million (2012: loss of £2(cid:15)2 million for the three week
period)(cid:15) (cid:56)e expect these losses to be substantially reduced in
the new financial year(cid:15)
After exceptional items of £5(cid:15)3 million (2012: £9(cid:15)7 million),
Group operating profit decreased from £66(cid:15)8 million to
£56(cid:15)0 million(cid:15)
The exceptional items comprised:
Loss on disposal of fixed assets
Impairment of fixed assets in loss
making stores
Onerous store lease provision
Total property related exceptional costs
Reorganisation of warehouse operations (1)
Canterbury restructuring (2)
Blacks restructuring (3)
Total reorganisation and restructuring costs
Impairment of intangible assets (4)
Profit on disposal of Canterbury (5)
Gain following acquisition of Focus Brands (6)
Total other exceptional charges/(credits)
Total exceptional charge
2013
£m
0.2
0.9
2012
£m
1.2
1.5
1.3
(0.2)
2.4
0.2
0.2
0.9
1.3
2.5
3.0
1.6
3.5
8.1
2.3
(0.7)
-
2.7
-
(3.6)
1.6
(0.9)
5.3
9.7
(1) Reorganisation of the warehouse operations consisting of
provisions for onerous property leases and redundancy costs
(2) Redundancies and other one off costs incurred in the
closure of Canterbury European Fashionwear Limited and
Canterbury North America LLC
(3) Restructuring of the Blacks business following acquisition
for relocation of warehouse operations
(4) Current year charge relates to a partial impairment of the
goodwill arising on the acquisition of Bank Fashion(cid:15)
The charge in the prior year relates to the impairment of
intangible assets on Kooga goodwill and brand name
(£1(cid:15)9 million) and Cecil Gee fascia name (£0(cid:15)8 million)
(5) Profit on the disposal of the Canterbury group of businesses
to Pentland Group plc in September 2012 (see note 12)
(6) The gain on the disposal of the Focus joint venture arose in
the prior year from the remeasurement to fair value of the
Group(cid:8)s previously held investment in Focus Brands Limited
STORE PORTFOLIO
During the period, store numbers (excluding trading websites) have moved as follows:
SPORTS FASCIAS
(No. Stores)
Start of period
New stores
Transfers
Closures
End of period
(000 Sq Ft)
Start of period
New stores
Transfers
Closures
End of period
JD
UK & Ireland
332
17
4
(21)
332
JD
UK & Ireland
1,150
58
19
(47)
1,180
JD
France
(a)
5
6
-
-
11
JD
France
(a)
9
17
-
-
26
JD
Spain
-
4
1
-
5
JD
Spain
-
12
2
-
14
Size?
UK & Ireland
(b)
23
2
-
(2)
23
Size?
UK & Ireland
(b)
33
1
-
(5)
29
(a) Includes the Si(cid:91)e? store in Les (cid:41)alles, Paris
(b) Includes the Foot Patrol store in Berwick Street, London
Bank
80
7
-
(1)
(1)
85
Bank
238
18
-
(2)
(2)
252
Scotts
35
-
-
-
(3)
32
Scotts
72
-
-
-
(6)
66
FASHION FASCIAS
(No. Stores)
Start of period
New stores
Acquisitions
Transfers
Closures
End of period
(000 Sq Ft)
Start of period
New stores
Acquisitions
Transfers
Closures
End of period
OUTDOOR FASCIAS
Start of period
New stores
Closures
End of period
Chausport
74
5
-
(4)
75
Chausport
82
6
-
(4)
84
Originals
-
-
7
-
(2)
5
Originals
-
-
13
-
(3)
10
Champion
20
-
(3)
-
17
Champion
92
-
(17)
-
75
Cecil Gee
6
-
-
-
(2)
4
Cecil Gee
16
-
-
-
(2)
14
Sprinter
49
5
(1)
-
53
Sprinter
603
42
(2)
-
643
Tessuti
-
2
4
-
-
6
Tessuti
-
6
11
-
-
17
No.
Stores
295
1
(122)
174
Total
503
39
1
(27)
516
Total
1,969
136
2
(56)
2,051
Total
121
9
11
(1)
(8)
132
Total
326
24
24
(2)
(13)
359
000
Sq Ft
763
2
(281)
484
26
ANNUAL REPORT
& ACCOUNTS
2013
THE UNDISPUTED
ANNUAL REPORT
& ACCOUNTS
2013
27
DIVIDENDS AND EARNINGS PER SHARE
The Board proposes paying a final dividend of 22(cid:15)00p
(2012: 21(cid:15)20p) bringing the total dividend payable for the
year to 26(cid:15)30p (2012: 25(cid:15)30p) per ordinary share(cid:15)
The proposed final dividend will be paid on 5 August 2013
to all shareholders on the register at 10 May 2013(cid:15)
The total dividends payable for the year have therefore
increased by a further 4(cid:6) with a cumulative growth over the
last five years of 209(cid:6)(cid:15)
The adjusted earnings per ordinary share before exceptional
items were 88(cid:15)51p (2012: 105(cid:15)89p)(cid:15)
The basic earnings per ordinary share were 79(cid:15)71p
(2012: 96(cid:15)27p)(cid:15)
EMPLOYEES
The Board are extremely grateful for the contribution that all
our employees make through skills, energy and dedication(cid:15)
In difficult trading conditions and with radical turnaround plans
in place in certain of our businesses then we realise that we are
very reliant on this contribution(cid:15) Equally, the Board recognises
that the ongoing success of the core JD business comes from
the execution excellence delivered by the whole team(cid:15)
CURRENT TRADING AND OUTLOOK
(cid:56)e are pleased overall with the start that we have made to the
new year(cid:15) A very considerable amount of reorganisation in
both Outdoor Retail and our warehousing and distribution
operations is now behind us and this should benefit trading in
the balance of the year(cid:15) The like for like sales performance for
the nine weeks to 6 April 2013 continues to be encouraging in
the Sports Fascias(cid:15) This performance has been as follows:
Sport UK & Ireland
(excl Champion)
+1.9%
Fashion
(excl Premium)
-6.2%
Combined Core
UK & Ireland
+0.5%
The Group is exceptionally well positioned with its retail
proposition, financial resources and extensive management
experience to take advantage of opportunities both in the UK
and internationally(cid:15) (cid:56)hilst the Board recognises that recent
acquisition activity has impacted on short term returns,
it remains confident that the Group is well positioned to
deliver earnings growth and increased shareholder returns
over the longer term(cid:15)
A further update will be made in our Interim Management
Statement on 19 June 2013(cid:15)
Peter Cowgill
Executive Chairman
17 April 2013
NIKE AIR FORCE 1
ONLY AT JD
INSTORE. ONLINE. SOCIAL
INSTORE. ONLINE. SOCIAL
JDSPORTS.CO.UK
28
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
29
FINANCIAL AND RISK REVIEW
INTRODUCTION
Operating profit before exceptional items decreased by
£15(cid:15)2 million from £76(cid:15)5 million to £61(cid:15)3 million in the
year primarily from a loss in the first full year of the
Blacks business of £14(cid:15)9 million following our acquisition of
the trade and assets of its fascias from its administrators in
January 2012(cid:15) (cid:56)e expect that this level of loss will be reduced
in the current financial year(cid:15)
Importantly, the core JD business across UK and Republic of
Ireland increased its operating profit before exceptional items
by £4(cid:15)7 million following a strong trading performance in the
year which has continued to date in the current financial year(cid:15)
TAXATION
The effective rate of tax on profit has decreased by 1(cid:15)6(cid:6) to
25(cid:15)2(cid:6) primarily due to a decrease in the standard rate of
UK corporation tax(cid:15)
Excluding both exceptional items and prior year adjustments
from the tax charge, the effective core tax rate has decreased
from 27(cid:15)7(cid:6) to 26(cid:15)1(cid:6)(cid:15) This core effective tax rate continues
to be above the standard rate due to the depreciation of
non-current assets which do not qualify for tax relief and
overseas subsidiaries being subject to higher rates of
corporation tax than the UK rates(cid:15)
EARNINGS PER SHARE
Basic earnings per share have decreased by 17(cid:15)2(cid:6) from
96(cid:15)27p to 79(cid:15)71p(cid:15) The Directors consider the adjusted
earnings per share to be a more appropriate measure of the
Group(cid:8)s earnings performance since it excludes the post-tax
effect of exceptional items (other than the loss on disposal of
non-current assets)(cid:15) The adjusted earnings per share
decreased by 16(cid:15)4(cid:6) from 105(cid:15)89p to 88(cid:15)51p(cid:15)
DIVIDENDS
A final cash dividend of 22(cid:15)00p per share is proposed,
which if approved, would represent an increase of 3(cid:15)8(cid:6) on
the final dividend from the prior year(cid:15) Added to the interim
dividend of 4(cid:15)30p per share, this takes the full year dividend
to 26(cid:15)30p, which is an increase of 4(cid:15)0(cid:6) on the prior year(cid:15)
The full year dividend has therefore grown by 46(cid:6) in 3 years(cid:15)
NET CASH AND TREASURY FACILITIES
The year end net cash position has decreased
by £14(cid:15)7 million to £45(cid:15)6 million(cid:15) Capital expenditure
(including payments made for key money in France)
decreased slightly in the year by £2(cid:15)2 million to £43(cid:15)5 million(cid:15)
The capital expenditure in the year includes £9(cid:15)5 million in
France (2012: £4(cid:15)7 million) and £6(cid:15)8 million in Spain
(2012: £2(cid:15)1 million)(cid:15) A further £3(cid:15)4 million was spent
on the Blacks store portfolio in the year(cid:15)
In spite of the heavy level of capital expenditure and cost of
acquisitions, the Group generates significant amounts of cash
in its operations giving the Board the confidence to deliver a
further enhancement in dividends to shareholders(cid:15)
The working capital cycle means that the Group uses the
£60 million revolving credit facility and £15 million working
capital facility during the year although we continue to look for
opportunities to reduce the seasonal demand on these facilities(cid:15)
The existing facilities have been used to fund both the capital
expenditure and investment activity in the year with no other
Group facilities put in place(cid:15) The Board believes that the
current overall structure of revolving credit facility and overdraft
is the most flexible and efficient way of dealing with the short
term seasonal peaks in the working capital cycle(cid:15)
(cid:41)owever, it is likely that we will increase these facilities in the
current year to enable us to continue to make acquisitions
when opportunities occur(cid:15)
Interest rate hedging has not been put in place on the
current facility(cid:15) The Directors continue to be mindful of the
potential volatility in base rates, but at present do not consider
a long term interest rate hedge to be necessary given the
inherent short term nature of both the revolving credit facility
and working capital facility(cid:15) This position is reviewed regularly,
along with the level of facility required(cid:15)
Trade creditors continue to be paid to terms to maximise
settlement discounts with the period end creditor days
being 40 (2012: 39)(cid:15)
FOREIGN EXCHANGE EXPOSURES
The Group(cid:8)s principal foreign exchange exposure continues to
be on the sourcing of own brand merchandise from either the
Far East or Indian Sub-Continent which usually has to be paid
for in US Dollars(cid:15) A buying rate is set at the start of the buying
season (typically six to nine months before product is delivered
to stores)(cid:15) At this point, the Group aims to protect the
anticipated US Dollar requirement at rates at, or above, the
buying rate through appropriate foreign exchange instruments(cid:15)
The Group(cid:8)s forecast requirement for US Dollars in the period
to January 2014 is now (cid:5)121 million(cid:15) Cover is in place for
2013 for (cid:5)108 million meaning that the Group is currently
exposed on exchange rate movements for (cid:5)13 million of the
current year(cid:8)s estimated requirement(cid:15)
The Group is also exposed to the movement in the rate of the
Euro from the sale of its UK sourced stocks to its subsidiaries in
Europe(cid:15) (cid:41)owever, the Group has a natural hedge on this
exposure as the Euros received for that stock are then reinvested
back in those European subsidiaries to fund the development of
both new stores and refurbishments(cid:15)
RISK FACTORS
Any business undertaking will involve some risk with many risk
factors common to any business no matter what segment it
operates in(cid:15) The Directors acknowledge however that certain
risks and uncertainties are more specific to the Group and the
markets in which its businesses operate(cid:15) The principal risk
factors are assessed below:
RETAIL SPECIFIC
BRANDS
Risk and impact: The retail fascias offer a proposition
that has a mixture of third party and own brand product(cid:15)
These fascias are heavily dependent on the products and the
brands themselves being desirable to the customer if the
revenue streams are to grow(cid:15) Therefore, the Group needs all
of its third party and own brands, including brands licensed
exclusively to it, to maintain their design and marketing
prominence to sustain that desirability(cid:15)
Further, the Group is also subject to the distribution policies
operated by some third party brands(cid:15)
Example of mitigation: Ultimately, the Group seeks to
ensure it is not overly reliant on a small number of brands by
offering a stable of brands which is constantly evolving(cid:15)
This includes actively seeking additional brands which it can
either own or license exclusively(cid:15)
RETAIL PROPERTY FACTORS
Risk and impact: The retail landscape has seen significant
changes in recent years with a number of new developments
opened and a high volume of retail units becoming vacant(cid:15)
The Group can be exposed where it has committed itself to a
long lease in a location which, as a result of a more recent
retail development, is no longer as attractive to the customer
leading to reduced footfall and potentially lower sales volumes(cid:15)
Example of mitigation: (cid:56)herever possible, the Group will
seek either to take out new leases for a period not exceeding
10 years and to negotiate earlier lease breaks, thereby limiting
this potential exposure and affording the Group increased
flexibility to respond to such changes(cid:15)
(cid:56)hen the Group determines that the store performance is
unsatisfactory it approaches the landlords to agree a
surrender of the lease(cid:15) (cid:56)here this is not possible, the Group
would seek to assign the lease or sublet it to another retailer(cid:15)
In many cases, this necessitates the payment of an incentive
to the other retailer(cid:15)
The Group is mindful of current economic factors and the
adverse impact on the potential for disposal from the high
volume of vacant units already available as a consequence of
a number of retailers going out of business in recent years(cid:15)
(cid:41)owever, assigning the lease or finding a sub-tenant is not
without risk because if the other retailer fails then the liability to
pay the rent usually reverts to the head lessee(cid:15) The Group
monitors the financial condition of the assignees closely for
evidence that the possibility of a store returning is more than
remote and makes a provision for the return of stores if this
risk looks probable(cid:15) The Board reviews the list of assigned
leases regularly and is comfortable that appropriate provisions
have been made where there is a probable risk of the store
returning to the Group under privity of contract and, other than
as disclosed in note 25, they are not aware of any other stores
where there is a possible risk of these stores returning(cid:15)
WAREHOUSE OPERATIONS
Risk and impact: The Group(cid:8)s new warehouse in
Rochdale became operational during 2012(cid:15) The increased
centralisation of stock and the automation within the picking
process will bring significant operational and cost benefits but
there is an increased risk to store replenishment from both
equipment and system failure, together with the inherent risk of
having all the stock in one location(cid:15)
Example of mitigation: The Group has worked with its
insurers on a robust Business Continuity Plan which came into
effect once the new warehouse became operational
in mid 2012(cid:15) In addition, there is a full support contract with
our automation equipment providers which includes a 24/7
presence from a qualified engineer thereby enabling
immediate attention to any equipment issues(cid:15)
SEASONALITY
Risk and impact: The Group(cid:8)s core retail business is
highly seasonal(cid:15) (cid:41)istorically, the Group(cid:8)s most important
trading period in terms of sales, profitability and cash flow has
been the Christmas season(cid:15) Lower than expected performance
in this period may have an adverse impact on results for the
full year, which may cause excess inventories that are difficult
to liquidate(cid:15)
Example of mitigation: The business monitors stock levels
through sales forecasting to manage the peaks in demand
and to predict trading profiles(cid:15)
30
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
31
IT
Risk and impact: The Group relies on its IT systems
and networks and those of the banks and the credit card
companies to service its retail customers all year round(cid:15)
The principal legacy enterprise system has historically been
ideally suited to the operations of the business but it has
always been heavily reliant on a very limited number of key
development staff who have now left the business(cid:15) This risk
has been mitigated by improving documentation of the system
and recruiting external developers to support the system(cid:15)
(cid:41)owever, the Board are mindful that it is difficult to recruit
people with the relevant technical knowledge of the language
that the legacy system is written in(cid:15)
Example of mitigation: The Board has started a programme
to replace the legacy enterprise system(cid:15) (cid:41)owever, whilst a
move to a third party system will reduce the risks in the current
system there is significant execution risk during the migration
work which could take a number of years to complete(cid:15)
Further, the introduction of a third party system will bring
additional costs both in terms of the initial development
and ongoing support(cid:15)
Any long term interruption in the availability of the core
enterprise system would have a significant impact on the retail
businesses(cid:15) The Group manages this risk by the principal IT
servers being housed in a third party location which has a mirror
back up available should the primary servers or links fail(cid:15)
LOSS OF BUSINESS CAUSE D BY TERRORISM,
RIOTS OR NATURAL DISASTER
Risk and impact: Acts of terrorism, riots and natural
disasters can all adversely impact sales and inventories(cid:15)
Example of mitigation: The Group has insurance policies in
place to cover the risk of stock loss, property expenditure and
loss of trade in the event of a riot, terrorism or natural disaster(cid:15)
The standard cover for loss on trade is one year but some
stores have extended periods of cover where a rebuild would
take in excess of one year(cid:15) This insurance also extends to
situations where the Group(cid:8)s trading location may not be
directly affected but where we are prevented from trading by
a refusal of access(cid:15)
ALL BUSINESSES
ECONOMIC FACTORS
Risk and impact: As with other retailers and distributors into
retail businesses, the demand for the Group(cid:8)s products is
influenced by a number of economic factors, notably interest
rates, the availability of consumer credit, employment levels
and ultimately, disposable incomes(cid:15)
This is particularly relevant at the current time, where there are
significant cutbacks within national and local government and so
many consumers have had to cut back on non-essential spending(cid:15)
Example of mitigation: The Group seeks to manage this
risk by offering a highly desirable and competitively priced
product range, which is differentiated from that of the
Group(cid:8)s competitors(cid:15)
INDIRECT TAXATION
Risk and impact: The Board are mindful of the fact that
Governments across Europe are seeking to raise their tax
yields to deal with their nation(cid:8)s long term deficit(cid:15) One way that
a number of governments have done this is by increasing the
rate of Value Added Tax(cid:15) In regard to the Group(cid:8)s current
locations, there have been rises in the last 18 months in the
Republic of Ireland and Spain(cid:15) The Board is conscious of
potential future rises in Value Added Tax(cid:15)
(cid:56)hen Value Added Tax is raised part way through season then
the Group(cid:8)s businesses cannot pass the rise on as the price of
the product is already known by the consumers in the relevant
retail market(cid:15) It is not always possible to pass on rises in new
season product as to do so could make the product
unattractive to the consumer(cid:15) The Group(cid:8)s retail businesses are
mindful of the potential for (cid:65)ticket shock(cid:8) where customers are
introduced to price points that they have not been used to
seeing in a store(cid:15)
Example of mitigation: (cid:56)herever possible the Group(cid:8)s
businesses look to work with their respective suppliers on
ensuring that the cost of the product is maintained at a
level that makes it possible to achieve an appropriate margin(cid:15)
(cid:56)e are also investing additional time and effort in ensuring
that markdown activity is reduced through strong and
focused merchandising(cid:15)
In the Group(cid:8)s Distribution businesses the Board are mindful of
the fact that they are acting as supplier and so face the reverse
pressure from their Retail customers(cid:15)
RELIANCE ON NON-UK MANUFACTURE RS
PERSONNEL
Risk and impact: The majority of both third party branded
product and the Group(cid:8)s own branded product is sourced
outside of the UK(cid:15) The Group is therefore exposed to the risks
associated with international trade and transport as well as
different legal systems and operating standards(cid:15) (cid:56)hilst the
Group can manage the risk in the supply chain on its own and
licensed products, it has little control over the supply chain
within the third party brands(cid:15) As such, the Group is exposed to
events which may not be under its control(cid:15)
Example of mitigation: The Group works with its suppliers
to ensure that the products being sourced satisfy increasingly
stringent laws and regulations governing issues of (cid:41)ealth and
Safety, packaging and labelling and other social and
environmental factors(cid:15)
COSTS
Risk and impact: During the year the Group faced increased
costs in fuel and other energy with the cost of fuel in particular
increasing further in the current year(cid:15)
Example of mitigation: A number of measures have
been introduced in recent years to reduce the impact of
fuel and other energy cost rises:
• Appropriate software used to manage the distribution of
product to stores so that vehicles are fuller and fewer vehicle
journeys made
• The Group(cid:8)s new distribution facilities have been designed to
accommodate double deck trailers
• Annual fixed price contracts agreed on electricity
INTELLECTUAL PROPERTY
Risk and impact: The Group(cid:8)s trademarks and other
intellectual property rights are critical in maintaining the value
of the Group(cid:8)s own brands(cid:15) Ensuring that the Group(cid:8)s
businesses can use these brands exclusively is critical in
providing a point of differentiation to our customers and
without this exclusivity we believe that footfall into the stores,
visits to our websites and ultimately conversion of these visits
into revenues would all be reduced(cid:15)
Example of mitigation: The Group therefore works with
third party organisations to ensure that the Group(cid:8)s intellectual
property is registered in all relevant territories(cid:15) The Group also
actively works to prevent counterfeit product being passed
off as legitimate(cid:15)
Risk and impact: The success of the Group is partly
dependent upon the continued service of its key management
personnel and upon its ability to attract, motivate and retain
suitably qualified employees(cid:15)
Example of mitigation: To help achieve this continued service,
the Group has competitive reward packages for all of its staff(cid:15)
More specifically for the retail businesses, the Group also has
a long established and substantial training function which
seeks to develop training for all levels of retail employees and
thereby increase morale and improve staff retention(cid:15) This then
ensures that knowledge of the Group(cid:8)s differentiated product
offering is not lost, thereby enhancing customer service(cid:15)
TREASURY
Risk and impact: (cid:56)hilst the Group does not have any
borrowings from its core syndicated facility as at the year end
date, it does utilise the facility through the working capital cycle
with interest on any borrowings at variable rates linked to
LIBOR(cid:15) Further details of the Group(cid:8)s interest rate risk are
provided in note 23 on page 109(cid:15)
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures but
primarily with respect to the US dollar on the purchase of
stocks of own brand merchandise where an unhedged
strengthening of the US Dollar relative to Sterling would
increase the cost of this merchandise and potentially ultimately
lead to reduce margins(cid:15)
Example of mitigation: The foreign exchange risk is
managed through the use of appropriate foreign currency
contracts(cid:15) Further information is also provided in note
23 on page 109(cid:15)
ACQUISITIONS IN NEW GEOGRAPHICAL MARKETS
Risk and impact: The Group has expanded its international
presence significantly recently into a tough international
economic climate(cid:15)
Example of mitigation: (cid:56)herever possible, this expansion is
undertaken by way of acquisition of a local business where
there is a strong local management team who are familiar with
the market and country that they operate in(cid:15) (cid:56)e look to
incentivise this management team through an appropriate
reward structure which compensates them at an appropriate
level for the achievement of demanding yet realistic
performance targets(cid:15)
Brian Small
Group Finance Director
17 April 2013
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33
PROPERTY AND STORES REVIEW
UK
Our retail property strategy across all our various fascias,
including the recently acquired Outdoor stores, is to have
modern, efficient and attractively presented stores located in
prime locations with strong footfall(cid:15) (cid:56)e maintain our belief
that the vibrant presentation of our stores increases the
attractiveness and desirability of our product and provides our
stores with a real point of difference(cid:15) Consequently, we have
continued to invest heavily in the store portfolio both in terms
of new stores and major refurbishments of existing space(cid:15)
This has included initial investment in the Blacks property
portfolio with pleasing results to date(cid:15) After years of
underinvestment, the Outdoor portfolio will require
considerable investment over a sustained period of time
to bring the stores up to standard(cid:15)
27 new stores opened in the period (being 18 Sports Fascia
stores, eight Fashion Fascia stores and one Outdoor Fascia
store) with 16 stores refurbished (being nine Sports Fascia
stores and seven Outdoor Fascia stores)(cid:15) These refurbishments
included two locations where we upsi(cid:91)ed by taking either all or
part of a neighbouring unit(cid:15)
(cid:56)e have 10 vacant stores in the UK which are not sublet in any
way and we continue to look at options for sublets or utilising
this space within our existing fascias, even if only in the short
term, although we are mindful of the potential cannibalisation
impact this may have on other nearby stores(cid:15)
The 18 new Sports Fascia stores included nine stores in new
locations with the remainder being relocations in towns or
malls to either larger space or a position of greater footfall(cid:15)
During the year, we also converted one existing Bank store to
JD as we believed this would maximi(cid:91)e the performance of this
particular store(cid:15) 22 Sports Fascia stores were closed in the
period(cid:15) These closures included a number of secondary towns
where there is simply insufficient footfall to make a store
economically viable(cid:15) At the end of the period The Sports Fascias
had a total of 344 stores which included 22 Si(cid:91)e? stores(cid:15)
The eight new Fashion Fascia stores included six new Bank
stores(cid:15) These new stores included three towns where we have
opened up a temporary (cid:65)Pop Up(cid:8) store initially whilst we assess
the potential for the location(cid:15)
(cid:56)e believe this flexible approach will benefit the development
of Bank, particularly in areas where it is currently poorly
represented, as it enables us to open a store quickly and
economically, on initially a short term lease taking advantage
of the (cid:65)soft(cid:8) property market that exists in many locations(cid:15)
If the store develops sufficiently then we will consider taking
a longer lease and making further investment in the store(cid:15)
(cid:56)e also opened two new Tessuti stores in the year following
our acquisition of this business during the year(cid:15) No new
Scotts stores were opened in the year with three stores closed(cid:15)
At the end of the period we had 131 Fashion Fascia stores in
the UK being 84 Bank stores, 32 Scotts stores and 15 Premium
Fashion stores (combined Originals, Cecil Gee and Tessuti)(cid:15)
Tessuti will be our long term premium fashion fascia(cid:15)
After protracted discussions with landlords on the Blacks
property portfolio, we now believe that we are developing
a property portfolio which will be sustainable in the longer
term with stores in the right locations at the right rents(cid:15)
(cid:56)e have started to invest in this portfolio with one new store
and seven other stores refurbished in the period(cid:15) (cid:56)e have
trialled several different concepts in these initial refurbishments
and will apply the learnings to future investment(cid:15) (cid:56)e believe
that we will refurbish approximately 15 further stores in the
current year(cid:15) At the end of the period, after making 122
closures in the year we had 174 Outdoor Fascia stores(cid:15)
(cid:56)e would anticipate closing up to around 30 more stores
in the current year(cid:15)
(cid:56)e have approximately 50 stores with lease expiries in the
current financial year and any decision to extend an individual
lease will need to take into account the prospects for retail
occupancy in the town concerned, consumer footfall and the
terms on offer(cid:15)
REPUBLIC OF IRELAND
One new JD store in Limerick was opened in the period with
three existing Champion stores converted to the JD fascia(cid:15)
(cid:56)e also opened our first Bank store in the Republic of Ireland
in the period at Liffey Valley in Dublin(cid:15) (cid:56)e are encouraged by
the early performance of this store(cid:15)
At the end of the period, we had 29 stores in the Republic of
Ireland being 17 Champion stores, 10 JD stores, one Si(cid:91)e?
store and one Bank store(cid:15) (cid:56)e believe this is a satisfactory
footprint which we can exploit in the future, particularly when
economic conditions improve(cid:15)
FRANCE
(cid:56)e believe that the JD fascia is starting to develop some
momentum in France(cid:15) During the year we opened a further
five stores including four in malls around Paris where our
performance has been particularly encouraging to date(cid:15)
Elsewhere, we also opened a JD store in Rouen and we
opened our first Si(cid:91)e? store in France near the busy Les (cid:41)alles
shopping mall and Metro interchange in the centre of Paris(cid:15)
(cid:56)e will continue our development of the JD business in France
in the current year and at this stage we are planning for a
further five new stores as a minimum in the year(cid:15) (cid:56)e are
working with property agents in the country to identify
additional sites whether they be individual units or a package
of units from retailers looking to exit their stores(cid:15)
It is still our belief that the JD fascia is best suited to the major
metropolitan areas and Chausport is more suited to the
smaller regional towns and centres(cid:15) (cid:56)e have opened
five Chausport stores in the period of which four were in new
locations and we have also refurbished a further six stores(cid:15)
Investment in new stores and refurbishments for Chausport
will continue at a similar level in the current year(cid:15) Four smaller
Chausport stores were closed in the period(cid:15)
SPAIN
(cid:56)e opened our first JD stores in Spain in the period with
four new stores and the conversion of one pre-existing
Sprinter store(cid:15) Two of these initial stores are in malls around
Madrid with two stores also in Granada(cid:15) One further store has
opened to date in the current financial year and at this stage we
would anticipate opening approximately three further stores in
the current year(cid:15)
Sprinter(cid:8)s core store base is located primarily in out of town
retail parks in the provinces of Andalucia and Levante with a
minimal presence elsewhere in Spain(cid:15) In the period, we
opened a further five new stores of which three were in areas
where Sprinter is not currently well represented(cid:15) The performance
of these stores has reinforced our view on the potential of
Sprinter in the whole of Spain and consequently we will look to
maintain this momentum in store openings and at this stage
we would anticipate opening approximately 10 new stores in
the current financial year(cid:15)
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35
STORE PORTFOLIO
CORPORATE AND SOCIAL RESPONSIBILITY
The store portfolio at 2 February 2013 and 28 January 2012 can be analysed as follows:
UK
FASHION
No. STORE
2013 2012
84
BANK
32
SCOTTS
PREMIUM FASCIAS 15
TOTAL
131
80
35
6
121
000 SQ FT
2013 2012
238
249
72
66
16
41
326
356
UK
OUTDOOR
BLACKS
AND MILLETS
No. STORE
2013 2012
295
174
000 SQ FT
2013 2012
763
484
TOTAL
174
295
484
763
000 SQ FT
2013 2012
1115
1134
32
28
15
8
1,170 1,162
000 SQ FT
2013 2012
38
1
75
114
20
1
92
113
000 SQ FT
2013 2012
3
3
–
–
000 SQ FT
2013 2012
24
2
84
110
9
–
82
91
000 SQ FT
2013 2012
14
643
657
–
603
603
UK
SPORT
JD
SIZE?
FIRST SPORT
TOTAL
ROI
SPORT
JD
SIZE?
CHAMPION
TOTAL
ROI
FASHION
BANK
TOTAL
FRANCE
SPORT
JD
SIZE?
CHAUSPORT
TOTAL
SPAIN
SPORT
JD
SPRINTER
TOTAL
No. STORE
2013 2012
320
319
22
22
5
3
347
344
No. STORE
2013 2012
10
1
17
28
7
1
20
28
No. STORE
2013 2012
1
1
–
–
No. STORE
2013 2012
10
1
75
86
5
–
74
79
No. STORE
2013 2012
5
53
58
–
49
49
GROUP TOTAL
YEAR
TOTAL STORE COUNT
GROUP TOTAL
TOTAL 000 SQ FT
SQ FT TOTAL
2013
2012
SPORT
FASHION
132
OUTDOOR
174
SPORT
FASHION
121
OUTDOOR
295
516
503
822
919
SPORT
FASHION
359
OUTDOOR
484
SPORT
FASHION
326
OUTDOOR
763
2,051
1,969
2,894
3,058
The Group recognises that it has a responsibility to ensure its
business is carried out in a way that ensures high standards
of environmental and human behaviour(cid:15) (cid:56)ith the help and
co-operation of all employees, the Group endeavours to
comply with all relevant laws in order to meet that duty and
responsibility wherever it operates(cid:15) The major contributions
of the Group in this respect are detailed below(cid:15)
RETAIL BUSINESSES
EMPLOYMENT
The Group is a large equal opportunities employer and
a large training organisation with the Group(cid:8)s retail businesses
providing direct employment and career development to
thousands of people, both in the UK and internationally(cid:15)
The Group employs large numbers of school leavers and
university graduates and participates regularly in work
experience schemes with schools and colleges(cid:15) Retail personnel
across all levels within the Group(cid:8)s core UK, Republic of
Ireland and JD France and Spain fascias are encouraged to
take ownership of their own careers and to actively seek
development and progression(cid:15)
Training
The Group recognises that Training and Development for all
levels of personnel is vital to maximise performance levels and
also provides a mechanism for increasing morale and
retention(cid:15) This ensures that knowledge of the Group(cid:8)s
differentiated product offering is not lost, thereby enhancing
customer service(cid:15)
Training for the UK and Republic of Ireland stores is provided
by the Group(cid:8)s long established training function which is now
based at a purpose built facility in the recently opened
Kingsway warehouse(cid:15) This training function also designs
bespoke programmes for the managers and assistant
managers of the JD stores in mainland Europe to ensure that
they operate their stores to standards consistent with those in
the UK and Republic of Ireland(cid:15)
Training received by all retail personnel is quality controlled
and measured via the use of electronic assessments(cid:15)
These electronic assessments cover all progression levels
within the business(cid:15) (cid:56)ith 25 types of electronic assessments
available to complete across all retail fascias throughout the
year ending January 2013 over 100,000 electronic assessments
have been completed and passed by the retail team members
and Management within the Group(cid:15)
Training and Development is provided across a number of areas:
New Management Induction
Training Academy
Junior Management Development
Various Management Development
No. of
courses in
a year
19
3
60
22
Length
of
course
5 days
12 weeks
4 hours
1 day
Number of
attendees on
each course
20
22
10
10
Elsewhere, the training function will design and implement
bespoke training plans where appropriate(cid:15) This includes the
training plan which was devised in Spring 2013 for
175 members of the Blacks store management team to ensure
a smooth transition onto the Group till and store systems(cid:15)
Chausport and Sprinter operate their own training
programmes which are more suited to those particular fascias(cid:15)
Equal opportunities
The Group is committed to promoting policies which are
designed to ensure that employees and those who seek to
work for the Group are treated equally regardless of sex,
marital status, creed, colour, race or ethnic origin(cid:15)
The Group gives full and fair consideration to applications
for employment by people who are disabled, to continue
whenever possible the development of staff who become
disabled and to provide equal opportunities for the career
development of disabled employees(cid:15) It is also Group policy to
provide opportunities for the large number of people seeking
flexible or part time hours(cid:15)
Communication
The number and geographic dispersion of the Group(cid:8)s
operating locations make it difficult, but essential,
to communicate effectively with employees(cid:15)
Communication with retail staff is primarily achieved through
the management in the regional and area operational
structures(cid:15) In addition, formal communications informing
all employees of the financial performance of the Group are
issued on a regular basis by the Group(cid:8)s (cid:41)uman Resources
Department in the form of (cid:65)Team Briefs(cid:8)(cid:15) This department also
produces a booklet four times a year for distribution within the
Group(cid:8)s (cid:41)ead Office and (cid:56)arehouse called People 1st(cid:15)
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37
(cid:56)e have recently introduced a regular (cid:50) (cid:7) A forum in which
representatives of the Group have the opportunity to speak
directly with the Executive Chairman and ask him questions on
behalf of their respective departments(cid:15) The content of these
sessions is distributed widely(cid:15)
HEALTH AND SAFETY
(cid:56)e are committed to ensuring a safe environment for all of
our employees and customers and actively encourage a
positive (cid:41)ealth and Safety culture throughout the organisation(cid:15)
The Group recognises its responsibility for (cid:41)ealth and Safety
and there is accountability throughout the various
management levels within the business(cid:15) Our commitment to
(cid:41)ealth and Safety is best evidenced as follows:
• The (cid:41)ealth and Safety team has been strengthened in the
year to ensure that the procedures already developed in the
existing fascias are established within the recently
acquired companies
• (cid:56)e have continued to develop a comprehensive induction
and training programme which is regarded as an essential
part of our commitment to (cid:41)ealth and Safety(cid:15) Targeted safety
awareness campaigns are run regularly throughout the year
and a monthly newsletter ensures that the safety message is
communicated effectively throughout the Group
• Our (cid:41)ealth and Safety Committee meets three times a year
allowing every employee the opportunity to raise any safety
concerns through their nominated representative
• The (cid:41)ealth and Safety team has input into all our new and
refitted stores from the initial design through to opening(cid:15)
The team conducts its own audit programme to ensure the
highest safety standards during the construction phase of
all our shop-fit projects
• The (cid:41)ealth and Safety team regularly review the
management processes we have in place, with the aim of
maintaining our high standards, whilst adapting to business
and legislative changes
• Targets are set to enable measurement of performance(cid:15)
During the year we have seen positive improvements in these
areas demonstrating the further development of a positive
safety culture within the organisation including:
a) Reportable employee accident numbers have reduced by 20(cid:6)
b) Local authority and fire service enforcement action
decreased by 80%
c) Local authority and fire service inspection numbers
both decreased by 24%
ENVIRONMENTAL
The Group recognises the importance of protecting our
environment for future generations and is committed to
carrying out its activities with due consideration for the
environmental impact of its operations particularly with
regards to:
• Ensuring efficient use of energy and other materials
• Minimising waste by recycling wherever possible
• Ensuring compliance with relevant legislation and
codes of best practice
The Group Finance Director has overall responsibility at
a Board level for all environmental matters in the Group(cid:15)
The Board are committed to expanding on its reporting
of Key Performance Indicators in this area(cid:15)
Energy
It is the Group(cid:8)s aim to give customers an enjoyable retail
experience with goods presented in an environment that is
both well lit and has a pleasant ambient temperature(cid:15)
(cid:41)owever, the Group accepts that all the businesses within it
must be responsible in their energy usage and associated
carbon emissions(cid:15) This policy applies to the acquired
businesses where we work closely with the local management
after acquisition to identify gaps and implement group policies(cid:15)
The Group maintains a Carbon Management Programme
((cid:65)CMP(cid:8)) which is sponsored by the Group Finance Director and
is reviewed regularly(cid:15) The objectives of this programme are to:
• Understand the drivers and timing of usage by continued
investment in energy (cid:65)smart(cid:8) meters(cid:15) This has been achieved
in over 360 of the Group(cid:8)s sites in the UK and Republic of
Ireland with further rollout planned(cid:15) Combined with the
stores where accurate and timely usage data is already
received from mandatory half hourly meters, this means that
in excess of 93(cid:6) of the UK and Republic of Ireland electricity
consumption and 72(cid:6) of gas consumption is automatically
measured every 30 minutes
• Reduce usage in non-trading periods through additional
training and investment in small scale building management
systems where appropriate
• Enhance staff awareness through training at store level,
thereby ensuring that retail staff understand that they have
a key role in the CMP(cid:15) This training is expanding across our
acquired businesses through its inclusion in the Group(cid:8)s
standard training programme
• Pursue a multi-disciplined approach to the CMP to ensure
all business activities are aware of their impact on
energy consumption
Under the current rules of the statutory Carbon Reduction
Commitment Energy Efficiency scheme ((cid:65)CRC(cid:8)), the Group(cid:8)s
submission to the UK Environment Agency is aggregated with
that of Pentland Group Plc who are the Group(cid:8)s ultimate
parent company (see note 35)(cid:15) The Group continues to
work closely with Pentland Group Plc on ensuring an efficient
process with regards to the emissions trading scheme which
was introduced in April 2010, as part of the CRC(cid:15)
The Group is committed to using and subsequently reporting
on appropriate KPIs with regards to energy usage(cid:15) Accordingly,
the Group can report the following in respect of locations in
the UK and Republic of Ireland that have been present for the
full year for both years(cid:15) As this is a like for like comparison, the
2012 data has been updated to reflect store movements and
the transition of our distribution operations in the current year:
Energy Usage - Electricity (MWh)
Energy Usage - Natural Gas (MWh)
Total Energy Use (MWh)
Carbon Footprint (Tonnes CO2)
2013
48,185
1,820
50,005
26,211
2012
51,835
1,822
53,657
28,182
%
Change
-7%
-0%
-7%
-7%
The Group has pledged to reduce its combined energy usage
in its like for like businesses from these levels by 3(cid:6) year on
year on a basis until the end of the scheme(cid:15) This target, and
the associated operating standards that drive this target,
apply to all the Group(cid:8)s businesses(cid:15)
The Group has continued to invest in replacing inefficient air
conditioning systems in its businesses(cid:15) A further 9 stores now
have systems with market leading technologies which consume
less energy whilst providing an appropriate temperature for
staff and visitors(cid:15) This replacement programme is ongoing and
it is anticipated that a similar number of works will be carried
out in the current year both in the UK (cid:7) Europe(cid:15) In addition,
after trialling the use of LED lamps for retail lighting in the UK
last year, the Group has now adopted these lamps as standard
in our retail businesses across Europe(cid:15) These lamps reduce the
electricity required for retail lighting by 30(cid:6) compared to the
bulbs that they will be replacing(cid:15)
The Group is committed to investing in the necessary resources
to help achieve its targets on reducing carbon emissions, with
the following works planned for the year to 1 February 2014:
• Expand the CMP to widen the awareness campaign, through
better training, improved communication and reporting
across like for like and acquired businesses
• Retrofit LED lamps in existing retail outlets
• Further investment in building management systems to allow
remote monitoring and control of building services
The Group is also aware of the need to purchase energy
competitively from sustainable sources wherever possible(cid:15)
The Group has expanded its supply contract with Airtricity in
Northern Ireland and Republic of Ireland so that the supply of
electricity from renewable sources also now includes the Bank
and Champion Sports fascia stores(cid:15) The Company has also
agreed to continue its contract with British Gas in the UK
(except Northern Ireland) to supply electricity from renewable
sources(cid:15) This means that JD Sports Fashion Plc and the
majority of its businesses based in UK and Republic of Ireland
now get 100(cid:6) (2012: 100(cid:6)) of their electricity from
sustainable sources(cid:15) (cid:56)e will migrate acquired businesses to
these contracts as soon as we are able(cid:15)
Recycling
Recycling is split into a number of elements:
• (cid:56)herever possible, cardboard (the major packaging
constituent) is backhauled from stores to the Group(cid:8)s
distribution centres(cid:15) The cardboard is then baled and passed
to recycling businesses for reprocessing(cid:15) The relocation of
the Group(cid:8)s core UK warehouse facilities meant that there
was a need to clear the former sites and so there was a
one off increase in the recycling of cardboard in the year
to 651 tonnes (2012: 465 tonnes)(cid:15) (cid:56)e would not expect the
recycling to be maintained at this level in the current
financial year
• (cid:56)e have ensured that the new Kingsway facility has the facilities
to separate out a number of recyclable items in their working
processes including wood and metal(cid:15) During the year, we
also changed the operational processes such that soft plastics
are now extracted with this waste now baled and recycled
• Larger volumes of confidential paper waste is shredded on
collection by a recycling business(cid:15) This business provides a
(cid:65)Certificate of Environmental Accomplishment(cid:8) which states
that the shredded paper, which was collected in the year,
was the equivalent of 2,078 trees (2012: 566 trees)(cid:15)
This large increase is again a one off impact from the
relocation of the warehouse facilities as we took the
opportunity to review and reduce the amount of material
that had been archived previously
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• Our primary warehouse facility at Kingsway and the Group
(cid:41)ead Office operate a Dry Mixed Recycling ((cid:65)DMR(cid:8)) scheme
which allows us to recycle smaller quantities of cardboard,
office paper, plastics and metal containers easily through the
provision of DMR bins throughout these facilities
• Photocopier and printer toners (laser and ink) are collected
and recycled for charity by Environmental Business
Products Limited
• Food waste is separated where possible and reused in the
production of compost
(cid:56)e have established a new Key Performance Indicator in this
area and can report that in the period to 2 February 2013
we recycled 87(cid:6) of our DMR waste with the remainder being
used as an energy-from-waste (Ef(cid:56)) material(cid:15) (cid:56)e will continue
to expand our use of the DMR scheme, where possible, to all
our stores and businesses in the UK (cid:7) Ireland to divert as
much waste as possible away from landfill(cid:15)
(cid:56)e are pleased to report that we have achieved our aim
of making the Kingsway Distribution Facility a (cid:65)(cid:91)ero waste to
landfill(cid:8) facility(cid:15)
Plastic bags
Approximately 32(cid:6) of the bags issued by the Group like
for like businesses are high quality drawstring duffle bags,
which are generally reused by customers many times(cid:15)
(cid:41)owever, the Group is aware of the environmental impact
of plastic bags and has sought to minimise any impact
through the following measures:
• The bags are made from 33(cid:6) recycled material
• The bags contain an oxo-biodegradable additive, which means
that they degrade totally over a relatively short life span
The use of this material has also been adopted in an
additional 60(cid:6) of the Group(cid:8)s plastic bags handed out to
customers(cid:15) The Group uses paper-based bags rather than
plastic bags in its stores in the Republic of Ireland and we are
also fully compliant with the carrier bag charge scheme in
(cid:56)ales and, more recently, Northern Ireland which was
introduced on 1 April 2013(cid:15)
RETAIL AND DISTRIBUTION BUSINESSES
ETHICAL SOURCING
The Group seeks to provide its customers with high quality
and value merchandise from suppliers who can demonstrate
compliance with internationally accepted core labour and
ethical standards throughout their supply chain(cid:15) These
standards are based upon the provisions of the Ethical Trading
Initiative ((cid:65)ETI(cid:8)) Base Code and specifically cover areas such as
wages, working hours, (cid:41)ealth and Safety and the right to
freedom of association(cid:15)
The Group requires all of its suppliers, both existing and new,
to formally commit to implementing the provisions of the ETI
Base Code throughout their supply chains(cid:15) Prior to any orders
being placed, all new suppliers are required to complete the
Group(cid:8)s risk assessment form to indicate their degree of
compliance to the ETI Base Code(cid:15) All existing suppliers are
also required to conduct this assessment on an annual basis(cid:15)
These forms are reviewed by the Group(cid:8)s Compliance team and
any areas of concern with regard to potential non-compliance
are investigated when visiting the factories concerned(cid:15)
These reports are shared by the Group in a central base and
those travelling are encouraged to take all documentation
from the base with them when visiting the factories so that
follow up can be done on a continual basis(cid:15)
The Group has engaged Sercura to complete an audit and
compliance programme of the Group(cid:8)s current suppliers to
the ETI Base Code standard(cid:15) Sercura is a global quality and
compliance solutions provider which performs factory audits(cid:15)
In the year to 1 February 2014, 50(cid:6) of the current supplier
base will be visited and audited with the results reported to
the Group Sourcing and Supply Chain Manager(cid:15)
Due to the diverse nature and scope of the supply chain, it is
not always possible to visit all of the factories directly(cid:15)
(cid:56)here instances of non-compliance are identified from the
risk assessment forms and the supplier cannot be visited, they
are required to confirm what corrective actions are being
undertaken to resolve the issue(cid:15) These actions will be verified
directly by the Group(cid:8)s Compliance team as soon as practically
possible on a future visit(cid:15)
All suppliers are contractually obliged to comply with the
Group(cid:8)s Conditions of Supply which includes a specific policy
on (cid:65)Employment Standards for Suppliers(cid:8)(cid:15)
POLICY ON ACQUIRED BUSINESSES
The Group has acquired a number of retail and distribution
businesses in recent years, and acknowledges that the high
standards which the core retail businesses have historically
operated to need to be replicated in the wider global Group(cid:15)
After making an acquisition, staff from the core retail
businesses with the relevant knowledge and experience,
work with the management teams at these acquired
businesses(cid:15) The initial focus is to help the local management
analyse their position against these standards with action plans
developed as necessary(cid:15)
Our experience to date is that the businesses which we have
acquired generally operate to standards similar to those of
existing Group companies and so little action has been
necessary to bring them up to the required level(cid:15)
Standards of the existing Group companies, along with any
future acquisitions, will continue to be monitored, with action
taken to maintain Group standards as required(cid:15)
COMMUNITY ENGAGEMENT
The Group seeks to be involved in the community where it
can make an appropriate contribution from its resources
and skills base(cid:15)
JD Sports Fashion Plc is pleased to report a three year
commitment to The Christie (cid:41)ospital to help raise £500,000
for the teenage cancer unit(cid:15) The fundraising events to date
include Team JD running the BUPA Great Manchester Run in
May 2012 and recently the JD Sports Diamond Ball was held
which raised £147,000(cid:15) The total raised so far for The Christie
is £217,000(cid:15)
The funds raised through the partnership will enable
The Christie to build and develop the UK(cid:8)s premier young
oncology unit, helping to fund vital research into new
treatments, provide equipment, counseling, activities for the
young patients, support for their families who find themselves
in financial hardship and provide overnight accommodation
to parents(cid:15)
Other examples of community engagement include:
• JD Sports Fashion Plc sponsored the Once Upon A Smile
celebrity football team for £10,000 which play throughout
the year at tournaments to raise money for the charity(cid:15)
Once Upon A Smile was founded in 2011 and are a UK
based charity offering a source of support to families who
have suffered the loss of a child or parent (and have young
children) from a long term or terminal illness
• JD Sports Fashion Plc made a donation of £7,550 to the
charity (cid:65)Kids Company(cid:8)(cid:15) The Charity provides practical,
emotional and educational support to vulnerable
inner-city children and their services reach 17,000
children across London
• JD Sports Fashion Plc is sponsoring 60 children at the
Udavum Karangal orphanage in Coimbatore, India(cid:15) In the
year to January 2013 donations of £5,000 were made to
the orphanage as well as donations of T-Shirts, water bottles,
footballs and caps
• Sponsorship of a local cricket team for £4,800
• Donations by JD Sports Fashion Plc to The Marina Dalglish
Appeal of £3,800 to improve cancer treatment facilities
in Liverpool
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THE BOARD
DIRECTORS’ REPORT
The Directors present their annual report and the audited
financial statements of JD Sports Fashion Plc (the (cid:65)Company(cid:8))
and its subsidiaries (together referred to as the (cid:65)Group(cid:8))
for the 53 week period ended 2 February 2013(cid:15)
PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
The principal activity of the Group is the retail and distribution
of branded sportswear, fashionwear and outdoor clothing
and equipment(cid:15)
In accordance with the Companies Act 2006, a review of the
business providing a comprehensive analysis of the main
trends and factors likely to affect the development,
performance and position of the business, including
environmental, employee and social and community issues,
together with the Group(cid:8)s Key Performance Indicators and a
description of the principal risks and uncertainties facing the
business is detailed in the following sections of this
Annual Report:
• Summary of Key Performance Indicators (page 4)
• Executive Chairman(cid:8)s Statement (pages 19 to 26)
• Financial and Risk Review (pages 28 to 31)
• Property and Stores Review (page 32 to 34)
• Corporate and Social Responsibility (pages 35 to 39)
All the information set out in those sections is incorporated by
reference into, and is deemed to form part of, this report(cid:15)
The Corporate Governance Report (pages 48 to 51) and the
Directors(cid:8) Remuneration Report (pages 54 to 59) are
incorporated by reference into, and are deemed to form
part of, this report(cid:15)
BUSINESS STRATEGY AND OBJECTIVES
The Group is a leading retailer of branded sportswear,
fashionwear and outdoor clothing and equipment in the
UK and Europe(cid:15) (cid:56)e will sustain this position through ongoing
investment in the retail portfolio and the acquisition of brands
which we can develop and exploit to ensure our overall
product offering remains both unique and appealing to our
fashion conscious customers(cid:15)
The Group also intends to continue to enhance its international
retail presence through organic growth and acquisitions,
where suitable opportunities arise replicating the same
standards as in the UK whilst ensuring that the product offer
remains locally relevant(cid:15)
Our ultimate objective is to deliver longer term earnings
growth and sustained shareholder returns(cid:15)
In working towards our objectives, we aim to act in a
responsible manner in all our dealings with our key
stakeholders including our employees, customers
and suppliers(cid:15)
SHARE CAPITAL
As at 2 February 2013 the Company(cid:8)s authorised share
capital was £3,107,500 divided into 62,150,000 ordinary
shares of 5p each(cid:15) As at 2 February 2013 the Company(cid:8)s
issued share capital was £2,433,083 comprising
48,661,658 ordinary shares of 5p each(cid:15) There have been
no changes in the year(cid:15)
SHAREHOLDER AND VOTING RIGHTS
All members who hold ordinary shares are entitled to attend
and vote at the Company(cid:8)s Annual General Meeting(cid:15)
On a show of hands at a general meeting, every member
present in person or by proxy shall have one vote and, on a
poll, every member present in person or by proxy shall have
one vote for every ordinary share they hold(cid:15) Subject to relevant
statutory provisions and the Company(cid:8)s Articles of Association,
holders of ordinary shares are entitled to a dividend where
declared or paid out of profits available for such purposes(cid:15)
RESTRICTIONS ON TRANSFER OF SHARES
The restrictions on the transfer of shares in the Company
are as follows:
• The Board may, in absolute discretion, refuse to register any
transfer of shares which are not fully paid up (but not so as
to prevent dealings in listed shares from taking place),
or which is in favour of more than four persons jointly or
which is in relation to more than one class of share
• Certain restrictions may, from time to time, be imposed by
laws and regulations (for example, insider trading laws)
• Restrictions apply pursuant to the Listing Rules of the
Financial Services Authority whereby Directors and certain of
the Group(cid:8)s employees require prior approval to deal in the
Company(cid:8)s shares
The Company is not aware of any arrangement between its
shareholders that may result in restrictions on the transfer of
shares and/or voting rights(cid:15)
PETER COWGILL
Executive Chairman and Chairman
of the Nomination Committee - aged 60
Peter was appointed Executive Chairman in March 2004(cid:15)
(cid:41)e was previously Finance Director of the Group until his
resignation in June 2001(cid:15) Since then he has been a partner
in Cowgill (cid:41)olloway Chartered Accountants(cid:15) (cid:41)e is a
Non-Executive Director of a number of private companies
and Non-Executive Chairman of United Carpets Plc and
MBL Group Plc(cid:15)
BARRY BOWN
Chief Executive Officer - aged 51
Barry joined the Board in 2000 and has been with
JD Sports Fashion Plc since 1984(cid:15) (cid:41)e held the positions
of (cid:41)ead of Retail, (cid:41)ead of Buying and Merchandising
and Chief Operating Officer prior to his appointment
as Chief Executive in 2000(cid:15)
BRIAN SMALL
Group Finance Director - aged 56
Brian was appointed Finance Director in January 2004(cid:15)
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(cid:15)
(cid:41)e qualified as an accountant with Price (cid:56)aterhouse in 1981(cid:15)
COLIN ARCHER
Non-Executive Director, Chairman of the Audit
and Remuneration Committees and member of
the Nomination Committee - aged 71
Colin was appointed a Non-Executive Director in November
2001(cid:15) (cid:41)e has over 40 years experience in the banking and
financial arenas, having previously been an Assistant
Corporate Director with Barclays Bank Plc(cid:15) (cid:41)e is also a
member of the Chartered Institute of Bankers(cid:15)
ANDREW LESLIE
Non-Executive Director, member of the Audit,
Remuneration and Nomination Committees - aged 66
Andrew was appointed to the Board in May 2010(cid:15)
(cid:41)e has over 40 years of experience in the retail, footwear
and apparel sectors(cid:15) (cid:41)e was an Executive Board Director of
Pentland Brands Plc, from which he retired in 2008(cid:15) During his
career, Andrew also held a number of senior positions with
British Shoe Corporation, The Burton Group Plc and
Timpson Shoes Limited(cid:15)
MARTIN DAVIES
Non-Executive Director - aged 53
Martin was appointed to the Board in October 2012(cid:15)
(cid:41)e was previously Group Chief Executive of (cid:41)olidaybreak Plc
from 2010 until its sale to Cox and Kings Limited in 2011(cid:15)
(cid:41)e joined the Board of (cid:41)olidaybreak Plc in 2007 when it
acquired PGL where he had been Chief Executive(cid:15) (cid:41)e left
(cid:41)olidaybreak Plc in 2012(cid:15) Previously, he has had roles at
Allied Breweries, Kingfisher and (cid:56)oolworths(cid:15)
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AUTHORITY TO PURCHASE OWN SHARES
A resolution was passed at the 2012 Annual General Meeting
giving Directors authority to buy back ordinary shares up to
a maximum of 10(cid:6) of the total issued ordinary share capital
of the Company(cid:15) As at the date of this report no shares have
been purchased under this authority(cid:15)
DIRECTORS’ INTERESTS
The interests of the Directors who held office at 2 February 2013
and their connected persons in the Company(cid:8)s ordinary shares
are shown below:
DIRECTORS
The names and roles of the current Directors together
with brief biographical details are given on page 42(cid:15)
The Directors are responsible for the management of the
business of the Company and, subject to law and the
Company(cid:8)s Articles of Association ((cid:65)Articles(cid:8)), the Directors
may exercise all of the powers of the Company and may
delegate their power and discretion to committees(cid:15)
The number of directors at any one point in time shall not
be less than two(cid:15)
P Cowgill
B Bown
B Small
C Archer
Ordinary shares of 5p each
2 February
2013
410,263
5,676
23,950
22,621
462,510
28 January
2012
410,263
5,676
23,950
22,621
462,510
There has been no change in the interests of the Directors or
their connected persons between 2 February 2013 and the
date of this report(cid:15)
SUBSTANTIAL INTERESTS IN SHARE CAPI TAL
As at 2 February 2013 the Company has been advised of the
following significant holdings of voting rights in its ordinary
share capital pursuant to the Disclosure and Transparency
Rules of the Financial Services Authority ((cid:65)DTRs(cid:8)):
Pentland Group Plc
Sports World International Ltd
Aberforth Partners*
Number of ordinary
shares/voting
rights held
27,963,722
5,775,255
4,711,740
% of ordinary
share capital
57.47
11.87
9.68
(cid:11)Aberforth Partners LLP have a further non-voting holding of
1,906,104 ordinary shares(cid:15)
The Company has not been notified of any change in interests
pursuant to the DTRs between 2 February 2013 and the date
of this report(cid:15)
The Articles give the Directors power to appoint and replace
directors(cid:15) Any director so appointed shall hold office only until
the dissolution of the first AGM of the Company following
appointment unless they are re-elected during such meeting(cid:15)
The Articles require that, at each AGM of the Company, any
director who was elected or last re-elected at or before the
AGM held in the third calendar year before the then current
calendar year must retire by rotation and such further Directors
must retire by rotation so that in total not less than one third
of the Directors retire by rotation each year(cid:15) A retiring director
is eligible for re-election(cid:15)
(cid:41)owever in accordance with the UK Corporate Governance
Code the Board has determined that all Directors will stand
for re-election at the 2013 AGM(cid:15)
AMENDMENT OF THE COMPANY’S
ARTICLES OF ASSOCIATION
The Company(cid:8)s Articles of Association may only be amended
by a special resolution at a general meeting of shareholders(cid:15)
CHANGE OF CONTROL - SIGNIFICANT AGREEMENTS
In the event of a change of control of the Company,
the Company and the lenders of the £75 million bank
syndicated facility shall enter into an agreement to determine
how to continue the facility(cid:15) If no agreement is reached within
20 business days of the date of change in control, the lenders
may, by giving not less than 10 business days notice to the
Company, cancel the facility and declare all outstanding loans,
together with accrued interest and all other amounts accrued
immediately due and payable(cid:15)
CONTRACTUAL ARRANGEMENTS ESSENTIAL
TO THE BUSINESS OF THE GROUP
The Board considers that continuing supply from Nike and
adidas, being the main suppliers of third party branded
sporting products, to the Group(cid:8)s core sports fashion retail
operation is essential to the business of the Group(cid:15)
EMPLOYEES
The Group communicates with its employees through team
briefs and via the Company(cid:8)s intranet and notice boards(cid:15)
Views of employees are sought on matters of common
concern(cid:15) Priority is given to ensuring that employees are
aware of all significant matters affecting the Group(cid:8)s
performance and of significant organisational changes(cid:15)
The Group(cid:8)s employee remuneration strategy is set out in the
Remuneration Report on pages 54 to 59(cid:15)
The Group is committed to promote equal opportunities in
employment regardless of employees(cid:8) or potential employees(cid:8)
sex, marital status, creed, colour, race, ethnic origin or
disability(cid:15) Recruitment, promotion and the availability of
training are based on the suitability of any applicant for the
job and full and fair consideration is always given to disabled
persons in such circumstances(cid:15)
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(cid:15)
DONATIONS
During the financial year ended 2 February 2013 the Group
did not make any political donations (2012: £nil) and made
charitable donations of £46,000 (2012: £61,000)(cid:15) An analysis
of the major donations made in the year is shown in the
Corporate and Social Responsibility report on page 39(cid:15)
CREDITORS PAYMENT POLICY
For all trade creditors, it is the Group policy to:
• Agree 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 at the period end was 40 (2012: 39)(cid:15)
The Group does not follow any code or statement on
payment practice(cid:15)
AUDITOR
Our auditor, KPMG Audit Plc, has instigated an orderly wind
down of business(cid:15) The Board has decided to put KPMG LLP
forward to be appointed as auditor and resolution
concerning their appointment will be put to the
forthcoming AGM of the Company(cid:15)
DISCLOSURE OF INFORMATION TO THE AUDITOR
Each person who is a Director at the date of approval of this
report confirms that:
• So far as he is aware, there is no relevant audit information
of which the Company(cid:8)s auditor is unaware
• Each Director has taken all the steps that he ought to have
taken as a Director to make himself aware of any relevant
audit information and to establish that the Company(cid:8)s
auditor is aware of that information
GOING CONCERN
After making enquiries, the Directors have a reasonable
expectation that the Company, and the Group as a whole,
has adequate resources to continue in operational existence
for the foreseeable future(cid:15) For this reason, the financial
statements have been prepared on a going concern basis(cid:15)
ANNUAL GENERAL MEETING (AGM)
Notice of the Company(cid:8)s AGM to be held at 1pm on
27 June 2013 at Edinburgh (cid:41)ouse, (cid:41)ollinsbrook (cid:56)ay,
Pilsworth, Bury, Lancashire, BL9 8RR incorporating
explanatory notes of the resolutions to be proposed at the
meeting is enclosed, together with a form of proxy(cid:15)
By order of the Board
Jane Brisley
Company Secretary
17 April 2013
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CORPORATE GOVERNANCE REPORT
UK CORPORATE GOVERNANCE CODE
The Board is committed to high standards of corporate
governance(cid:15) This report sets out how the Company has
applied the main principles set out in the UK Corporate
Governance Code published by the Financial Reporting
Council in June 2010 ((cid:65)the Code(cid:8)) and the extent to which
the Company has complied with the provisions of the Code(cid:15)
THE BOARD
The Board consists of six directors: an Executive Chairman,
two other Executive Directors and three Non-Executive
Directors(cid:15) The name, position and brief profile of each
Director is set out on page 42(cid:15)
Composition of the Board is kept under review and
changes are made when appropriate and in the best
interests of the Group(cid:15) Martin Davies was appointed to the
Board as a Non-Executive Director on 1 October 2012(cid:15)
Chris Bird stood down as a Non-Executive Director with
effect from 30 September 2012(cid:15) The Board considers that
its composition during the year had the necessary balance
of Executive and Non-Executive Directors providing the
desired blend of skills, experience and judgement
appropriate for the needs of the Group(cid:8)s business and
overall effectiveness of the Board(cid:15) None of the Directors
have served for more than three years without having been
re-elected by shareholders(cid:15) Colin Archer is the senior
independent Non-Executive Director(cid:15)
The independence of the Non-Executive Directors is considered
by the Board on an annual basis(cid:15) All three Non-Executive
Directors are considered to be independent by the Board(cid:15)
Colin Archer has served on the Board for more than nine
years, having been appointed on 6 November 2001(cid:15)
The Board considers Mr Archer to be independent for the
purposes of the Code as, in the Board(cid:8)s view, he continues to
be independent in character and judgement notwithstanding
his length of service(cid:15) Andrew Leslie was appointed to the Board
in May 2010 and is considered to be independent by the
Board for the purposes of the Code(cid:15) Andrew Leslie was
formerly an executive director of Pentland, the Company(cid:8)s
largest shareholder(cid:15) Andrew Leslie does not represent the
interests of Pentland on the Board and retired from Pentland
in 2008(cid:15) The Board believes that all three Non-Executive
Directors have provided ample guidance to the Board and
perform an effective role in challenging the Executive Directors
when appropriate(cid:15)
From time to time the Executive Chairman meets with
the Non-Executive Directors without the other Directors
present to discuss Board performance and other matters
considered appropriate(cid:15)
The Board considers that all the Directors are able to devote
sufficient time to their duties as Directors of the Company(cid:15)
The brief biographical detail on page 42 includes details of
the Chairman(cid:8)s other directorships of listed companies(cid:15)
The Board is satisfied that these appointments do not conflict
with the Chairman(cid:8)s ability to carry out his role effectively for
the Group(cid:15)
Under the Company(cid:8)s Articles of Association, all Directors are
required to retire and offer themselves for re-election every
three years(cid:15) (cid:41)owever, in accordance with the Code,
all Directors will retire and offer themselves for re-election
at the 2013 AGM, with the exception of Martin Davies who,
having been appointed during the period, will offer himself
for election(cid:15)
Board operation
The Board is responsible for the direction, management and
performance of the Company(cid:15) The Board held nine scheduled
meetings during the year under review and ad hoc meetings
were held between scheduled meetings where required(cid:15)
Directors(cid:8) attendance at scheduled Board and Committee
meetings is set out in the table below(cid:15) The Board is responsible
for providing effective leadership and promoting the success
of the Group(cid:15) The Board has a formal schedule of matters
reserved specifically to it for decisions which include major
strategic matters, approval of financial statements, acquisitions
and disposals and significant capital projects(cid:15)
The Board delegates certain powers to committees as set
out below(cid:15)
Board papers are circulated to Directors prior to Board
meetings which include up-to-date financial information,
reports from the Executive Directors and papers on major
issues for consideration by the Board(cid:15) The Board has a
formal procedure for Directors to obtain independent
professional advice(cid:15)
All Board members have full access to the Company Secretary
who is a fully admitted solicitor and attends all Board and
Committee meetings(cid:15) The Company Secretary is responsible
for advising the Board on Corporate Governance matters(cid:15)
The appointment and removal of the Company Secretary is
a matter for the Board as a whole to determine(cid:15)
All newly appointed Directors receive a tailored induction when
they join the Board(cid:15) Relevant training can be arranged as and
when deemed appropriate(cid:15)
The Board has established a formal process for the annual
evaluation of the performance of the Board, its Committees
and individual Directors(cid:15) This has been conducted through the
completion by each Director of a questionnaire prepared by
the Company Secretary which encourages the Directors to give
his opinions on Board and Committee procedures, operation
and effectiveness as well as any other matter they wish to raise(cid:15)
The feedback from the evaluation process has been presented
to the Board by the Executive Chairman(cid:15) A separate
questionnaire was completed by the Directors (other than the
Executive Chairman) in relation to the performance of the
Executive Chairman with the Senior Independent Director
discussing the resulting feedback with the other Non-Executive
Directors, taking into account the views of the other Executive
Directors (excluding the Executive Chairman)(cid:15) Following due
consideration the Board determined that an internal
performance evaluation exercise was appropriate but will
consider on an annual basis the value and appropriateness
of an externally facilitated exercise(cid:15)
The division of responsibilities between the Executive Chairman
and Chief Executive Officer is in writing and has been agreed
by the Board(cid:15) The Chairman is responsible for overall Board
leadership, corporate strategy and communication with major
shareholders(cid:15) The Chief Executive Officer(cid:8)s responsibilities
are focused on the development of the Group(cid:8)s core
retail operations(cid:15)
The Company, through its majority shareholder Pentland
Group Plc, maintains appropriate Directors(cid:8) and Officers(cid:8)
liability insurance(cid:15)
Attendance at Board and Committee meetings
Number of
meetings in year
P Cowgill
B Bown
B Small
C Archer
C Bird 1
A Leslie 2
M Davies 3
Board
Meetings
Remuneration
Committee
Audit
Committee
Nomination
Committee
9
9
9
9
9
5
7
3
2
2*
-
2*
2
1
1
-
3
3*
-
3*
3
2
1
-
1
1
-
-
1
1
-
-
(cid:11) P Cowgill and B Small attended the Remuneration Committee
meetings and the Audit Committee meetings at the invitation of
the members of those committees(cid:15)
(1) C Bird served on the Board for part of the year,
having stood down on 30 September 2012
(2) A Leslie was appointed to the Remuneration, Audit and
Nomination Committees on 1 October 2012
(3) M Davies served on the Board for part of the year, having
been appointed on 1 October 2012
Conflicts of interest
The Company(cid:8)s Articles of Association permit the Board to
consider and, if it sees fit, to authorise situations where a
Director has an interest that conflicts, or possibly could conflict,
with the interests of the Company(cid:15) The Board considers that the
procedures it has in place for reporting and considering
conflicts of interest are effective(cid:15)
BOARD COMMITTEES
There are three principal Board Committees to which the
Board has delegated certain of its responsibilities(cid:15) The terms of
reference for all three Committees are available for inspection
on request and are available on the Company(cid:8)s corporate
website www(cid:15)jdplc(cid:15)com(cid:15)
Audit Committee
The Audit Committee currently comprises two independent
Non-Executive Directors, Colin Archer (Chairman) and
Andrew Leslie who was appointed to the Committee on
1 October 2012(cid:15) Chris Bird was a member of the Committee
until 30 September 2012(cid:15) The Committee(cid:8)s principal duties
are to review draft annual and interim financial statements
prior to being submitted to the Board, reviewing the
effectiveness of the Group(cid:8)s system of internal control and
risk management and to review the performance and cost
effectiveness of the external auditor(cid:15)
The Audit Committee met three times in the year with the
external auditor attending each meeting(cid:15) Details of attendance
at Audit Committee meetings are set out above(cid:15)
In the year the Audit Committee(cid:8)s activities included:
• Reviewing the Group(cid:8)s draft financial statements and interim
results statement prior to Board approval and reviewing the
external auditor(cid:8)s detailed reports thereon including
internal controls
• Reviewing regularly the potential impact on the Group(cid:8)s
financial statements of certain matters such as impairments
of fixed asset values and proposed International
Accounting Standards
• Reviewing the external auditor(cid:8)s plan for the audit of the
Group(cid:8)s financial statements, key risks of misstatement in the
financial statements, confirmations of auditor independence,
audit fee and terms of engagement of the auditor
• Reviewing the independence of the Group(cid:8)s external auditor
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The Audit Committee is also responsible for ensuring that
appropriate arrangements are in place for employees to be
able to raise matters of possible impropriety in confidence(cid:15)
These arrangements were reviewed during the year and
deemed by the Committee to be appropriate(cid:15)
A breakdown of the audit and non-audit related fees is set
out in note 3 to the Consolidated Financial Statements on
page 79(cid:15) Non-audit work was comprised mainly of tax and
project work in relation to the Company(cid:8)s acquisitions and was
undertaken by the external auditor due to their knowledge and
understanding of the Group(cid:8)s business and in the interests of
efficiency(cid:15) The Company has instructed other firms to provide
non-audit services from time to time in prior years and the
Audit Committee will keep the level of non-audit work
performed by the auditor under review(cid:15) The Audit Committee is
satisfied that the level and scope of non-audit services
performed by the external auditor does not impact
their independence(cid:15)
The Audit Committee keeps under review the relationship
between the Group and external auditor and, having
considered the external auditor(cid:8)s performance during their
period in office, recommends their reappointment(cid:15)
Remuneration Committee
The Remuneration Committee currently comprises two
independent Non-Executive Directors, Colin Archer (Chairman)
and Andrew Leslie who was appointed to the Committee on
1 October 2012(cid:15) Chris Bird was a member of the Committee
until 30 September 2012(cid:15)
The Committee(cid:8)s principal duties are to determine overall
Group remuneration policy, remuneration packages for
Executive Directors and senior management, the terms of
Executive Director service contracts, the terms of any
performance-related schemes operated by the Group and
awards thereunder(cid:15)
The Committee met twice during the year(cid:15) Details of
attendance at Remuneration Committee meetings are set
out in the table on page 49(cid:15)
Further details about Directors(cid:8) remuneration are set out in
the Directors(cid:8) Remuneration Report on pages 54 to 59(cid:15)
Nomination Committee
The Nomination Committee currently comprises the Executive
Chairman and two independent Non-Executive Directors,
Colin Archer and Andrew Leslie who was appointed to the
Committee on 1 October 2012(cid:15) Chris Bird was a member of
the Committee until 30 September 2012(cid:15)
The Committee(cid:8)s principal duties are to consider the si(cid:91)e,
structure and composition of the Board, ensure appropriate
succession plans are in place for the Board and senior
management and, where necessary, consider new
appointments to the Board and senior management(cid:15)
From time to time the full Board performs some of the duties
of the Nomination Committee(cid:15)
The Nomination Committee met once during the year in order
to consider Martin Davies(cid:8) proposed appointment as a
Non-Executive Director of the Company(cid:15) After considering a
number of potential candidates the Board identified Mr Davies
as a new non-executive director and did not engage an
external search consultancy or openly advertise in connection
with his appointment(cid:15)
The Company has recently strengthened its senior executive
team through the appointment of Dave (cid:56)illiams as
Group Commercial Director and Patricia Lee as Group Supply
Chain and Change Director(cid:15) Dave (cid:56)illiams, who joined the
Company in November 2012, has held a number of senior
finance roles including Finance Director at Focus (cid:56)ickes and
Chief Financial Officer at JJB(cid:15) Patricia Lee, who joined the
Company in April 2013, was previously (cid:56)arehouse and
Distribution Director at Next and Group Operations Director
at New Look(cid:15)
The Board(cid:8)s overriding aim is to make appointments based on
merit and against objective criteria(cid:15)
INTERNAL CONTROL
There is an ongoing process for identifying, evaluating
and managing the significant risks faced by the Group(cid:15)
This process has been in place for the year under review
and accords with the Turnbull guidance(cid:15)
The Board, in conjunction with the Audit Committee, has full
responsibility for the Group(cid:8)s system of internal controls and
monitoring their effectiveness(cid:15) (cid:41)owever, 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(cid:15)
The Board has established a well-defined organisation
structure with clear operating procedures, lines of
responsibility, delegated authority to executive management
and a comprehensive financial reporting process(cid:15)
Key features of the Group(cid:8)s system of internal control and risk
management are:
• Identification and monitoring of the business risks facing
the Group, with major risks identified and reported to the
Audit Committee and the Board
• Detailed appraisal and authorisation procedures for
capital investment
• Prompt preparation of comprehensive monthly management
accounts providing relevant, reliable and up-to-date
information(cid:15) These allow for comparison with budget and
previous year(cid:8)s results(cid:15) 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
investigation of suspected fraudulent activities
• Reconciliation and checking of all cash and stock balances
and investigation of any material differences
In addition, the Audit Committee receives comprehensive
reports from the external auditor in relation to the financial
statements and the Group(cid:8)s system of internal controls(cid:15)
The Group has a formal whistle blowing policy in place
enabling employees to raise concerns in relation to the
Group(cid:8)s activities on a confidential basis(cid:15)
The Board has reviewed the effectiveness of the Group(cid:8)s
system of internal controls and believes this to be effective(cid:15)
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(cid:15) 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(cid:15)
The integration of the recently acquired businesses into the
Group(cid:8)s system of internal controls is ongoing(cid:15)
During the year under review the Company had an internal
auditor who reported to the Audit Committee on a regular
basis(cid:15) The internal auditor is moving on to a role outside the
Group during the current financial year and the Board will
consider on an annual basis whether a replacement should be
sought given the increasing centralisation of the Group and
the continued effective role played by the Group(cid:8)s experienced
Loss Control team in limiting shrinkage, theft and fraud(cid:15) The
Loss Control Director reports to the Board on a quarterly basis(cid:15)
The responsibility for internal control procedures within joint
ventures rests with the senior management of those operations(cid:15)
The Company monitors its investment in such ventures and
exerts influence through board representation(cid:15)
SHAREHOLDER RELATIONS
The Executive Directors maintain an active dialogue with the
Company(cid:8)s major shareholders to enhance understanding of
their respective objectives(cid:15) The Executive Chairman provides
feedback to the Board on issues raised by major shareholders(cid:15)
This is supplemented by twice yearly formal feedback to the
Board on meetings between management, analysts and
investors which seeks to convey the financial market(cid:8)s
perception of the Group(cid:15)
The Senior Independent Non-Executive Director is available to
shareholders if they have concerns which have not been
resolved through dialogue with the Executive Directors, or for
which such contact is inappropriate(cid:15) Major shareholders may
meet with the Non-Executive Directors upon request(cid:15)
External brokers(cid:8) reports on the Group are circulated to the
Board for consideration(cid:15) In addition, the Non-Executive
Directors attend results presentations and analyst and
institutional investor meetings whenever possible(cid:15)
The AGM is 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(cid:15)
At the AGM the level of proxies lodged on each resolution
is announced to the meeting after the show of hands for
that resolution(cid:15)
COMPLIANCE WITH THE CODE
The Directors consider that during the year under review and
to the date of this report, the Company complied with the
Code except in relation to the following:
• Code provision C(cid:15)3(cid:15)1 and D(cid:15)2(cid:15)1: During the year under
review the Company did not comply with Code provisions
C(cid:15)3(cid:15)1 and D(cid:15)2(cid:15)1, which require there to be three
independent non-executive directors on the Audit Committee
and Remuneration Committee respectively(cid:15) Each such
Committee was comprised of two independent non-executive
directors(cid:15) The Board will keep Committee composition
under review
• Code provision B(cid:15)6(cid:15)2: The Board did not conduct an
externally facilitated evaluation exercise(cid:15) The Board will
consider on an annual basis whether an externally facilitated
exercise is appropriate and would provide value for money
This report was approved by the Board and signed on its
behalf by:
Jane Brisley
Company Secretary
17 April 2013
#DEFINEYOURSELF
BE YOUR STYLE
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DIRECTORS’ REMUNERATION REPORT
This Report sets out the remuneration policy operated by
the Group in respect of the Executive Directors, together with
disclosures on Directors(cid:8) remuneration required by The Large
and Medium-si(cid:91)ed Companies and Groups (Accounts and
Reports) Regulations 2008 ((cid:65)the Regulations(cid:8))(cid:15) It has been
prepared in accordance with the Companies Act 2006(cid:15)
The content of the Report under the section headed
(cid:65)Audited Information(cid:8) has been audited by the Group(cid:8)s
auditor, KPMG Audit Plc(cid:15)
The Board have reviewed the Group(cid:8)s compliance with the UK
Corporate Governance Code (June 2010) ((cid:65)the Code(cid:8)) on
remuneration related matters(cid:15) It is the opinion of the Board
that the Group complied with all remuneration related aspects
of the Code during the year except for Code provision D(cid:15)2(cid:15)1
relating to composition of the Remuneration Committee(cid:15)
Please refer to the section (cid:65)Compliance with the Code(cid:8) on
page 51 of this Annual Report(cid:15)
The Report will be subject to an advisory shareholder vote at
the Annual General Meeting ((cid:65)AGM(cid:8)) on 27 June 2013(cid:15)
UNAUDITED INFORMATION
REMUNERATION COMMITTEE
The Remuneration Committee (the (cid:65)Committee(cid:8)) comprises two
independent Non-Executive Directors, being Colin Archer and
Andrew Leslie(cid:15) Andrew Leslie was appointed to the Committee
on 1 October 2012(cid:15) Chris Bird was a member of the
Committee until 30 September 2012(cid:15) Colin Archer is
Chairman of the Committee(cid:15)
The Committee assists the Board in determining the Group(cid:8)s
policy on Executive Directors(cid:8) remuneration and determines the
specific remuneration packages for senior executives, including
the Executive Directors, on behalf of the Board(cid:15) Peter Cowgill,
the Executive Chairman, Barry Bown, the Chief Executive
Officer, and Brian Small, the Group Finance Director,
have assisted the Committee when requested with regards
to matters concerning key executives below Board level(cid:15)
The Committee can obtain independent advice at the
Company(cid:8)s expense where they consider it appropriate and
in order to perform their duties(cid:15)
The Committee is formally constituted with written Terms of
Reference, which are available on the Company(cid:8)s corporate
website www(cid:15)jdplc(cid:15)com(cid:15) The Committee is willing to engage
with any of the major shareholders or other representative
groups where appropriate concerning remuneration matters(cid:15)
The Committee is mindful of the Company(cid:8)s social, ethical and
environmental responsibilities and is satisfied that the current
remuneration arrangements and policies do not encourage
irresponsible behaviour(cid:15)
The Committee has met twice during the year under review
with each member attending all the meetings(cid:15) Details of
attendance at the Committee meetings are set out on page 49(cid:15)
REMUNERATION POLICY
The Group operates in a highly competitive retail and
distribution environment and the Committee seeks to ensure
that the level and form of remuneration is appropriate to
attract, retain and motivate Directors and senior managers
of the right calibre to ensure the success of the Company into
the future(cid:15)
(cid:56)hilst it is inevitable that policies and practice in respect of
remuneration will evolve over time, it is the Committee(cid:8)s belief
that the key principles described below, which applied in the
year to 2 February 2013, remain appropriate and will continue
for the financial year to 1 February 2014:
• The total remuneration which can be earned should be set
at a level which ensures the retention and motivation of key
executives of the necessary calibre required to execute the
business strategy and enhance shareholder value
• Remuneration should be aligned with the key corporate
metrics that drive earnings growth and increased
shareholder value with significant emphasis on performance
related pay measured over the longer term
• Incentive arrangements for key individuals should provide an
appropriate balance between fixed and performance related
elements and be capable of providing exceptional levels of
total payment if outstanding performance is achieved
COMPONENTS OF REMUNERATION
The main components of the current remuneration
package are:
Base salary
The policy of the Committee is to set base salaries for the
Executive Directors around the median or lower quartile when
compared to UK quoted retailers with similar corporate
attributes to those of the Group(cid:15) The following factors are
taken into account when determining base salary levels:
• Remuneration levels at comparable UK retail companies
• The need for salaries to be competitive
• The performance of the individual Executive Director and
their contribution to the business
• Experience and responsibilities
• Pay and employment conditions throughout the Group
The policy of the Committee is that the salaries of the Executive
Directors should be reviewed annually, although it reserves the
right to review salaries on a discretionary basis if it becomes
apparent that the Group is at risk of losing a key Board
member or other senior executive, or if it believes an
adjustment is required to reflect market rates or performance(cid:15)
The Committee did not exercise this discretion during the year
to 2 February 2013(cid:15)
The Committee recognised that in the current difficult and
volatile trading environment it is important that pay restraint is
exercised generally and that the Executive Directors should
lead on this issue(cid:15) Accordingly, the Committee have
determined that the salaries for the Executive Directors should
remain at their current level this year(cid:15) These salaries are set
out below:
Executive
Director
P Cowgill
B Bown
B Small
Previous
Salary
£000
718
318
240
New
Salary
£000
718
318
240
Percentage
Increase
0%
Position Against
Comparator Group
Upper Quartile
0%
0%
Lower Quartile
Lower Quartile
The Comparator Group for these purposes is the
FTSE 350 companies(cid:15)
Annual bonus
The Group offers Executive Directors the opportunity to earn
performance related bonuses through the achievement of
targets which the Committee sets at the beginning and then
reviews at the end of each financial year to ensure that they
remain fair and challenging and are appropriate to the current
market conditions and position of the Group(cid:15)
(cid:56)hilst the normal maximum bonus potential is 100(cid:6) of salary,
the Committee has the discretion to pay bonuses above that
level for exceptional performance(cid:15) This discretion was not
utilised in the year to 2 February 2013(cid:15) Following a review of
the targets and performance of the Group in the year to
2 February 2013 the Committee determined that a bonus be
paid equivalent to 50(cid:6) of the value paid out in the year to
28 January 2012(cid:15) This equated to an average of 36(cid:6) of
current base salary(cid:15)
Special retention scheme
At the 2011 AGM, the Board proposed a special retention
scheme (the (cid:65)Scheme(cid:8)) for the Executive Chairman designed to
ensure that he is retained until at least 31 March 2014 and
focused on driving shareholder value(cid:15) The Scheme was
approved by shareholders at the 2011 AGM(cid:15)
The Scheme provides for Mr Cowgill to receive a cash award
at a certain date in the future(cid:15) The final value of the Scheme is
subject to the Group achieving certain profits before tax and
exceptional items ((cid:65)Adjusted Profits(cid:8))(cid:15)
The Scheme is divided into three (cid:65)tranches(cid:8) relating to three
accounting periods of the Group being the years ending
28 January 2012, 2 February 2013 and 1 February 2014
((cid:65)Award Tranches(cid:8))(cid:15) Each Award Tranche has a maximum
value, which will be paid out if the Adjusted Profits target for
the relevant accounting period is met(cid:15) If the Adjusted Profits
target is not met for any particular accounting period, the
value of the relevant Award Tranche will be reduced pro-rata
according to the actual profits before tax and exceptional items
of the Group(cid:15) If the Adjusted Profits are less than an agreed
figure (the (cid:65)Minimum Adjusted Profits(cid:8)), the Award Tranche will
lapse and no cash payment will be made to Mr Cowgill(cid:15)
As an alternative, the Committee may choose to determine the
amount due under any Award Tranche by reference to the
performance of the Company against such comparator group
or other performance condition(s) or criteria as the Committee,
in its discretion, considers appropriate(cid:15)
Although the amount of cash to be awarded will be calculated
at three different times, the cash payments will not be made to
Mr Cowgill until after the Committee has met to confirm the
final amount due to him under the Scheme, which will be after
the announcement of the Company(cid:8)s results for the accounting
period ending 1 February 2014(cid:15)
If Mr Cowgill leaves his employment with the Company before
the start of any accounting period, he will not be entitled to
any part of the award for that accounting period or any
subsequent accounting period(cid:15) If Mr Cowgill leaves his
employment with the Company after the start of any
accounting period in circumstances where he is a (cid:65)good
leaver(cid:8), he will be entitled to a pro-rata amount of the Award
Tranche for the accounting period in which he leaves and full
payment in respect of any accounting period which has
finished(cid:15) The Committee may, at its discretion, decide to allow
the Award Tranche to vest in full in respect of the accounting
period in which Mr Cowgill leaves his employment with the
Company(cid:15) In either case, the cash payment will only be made
to Mr Cowgill on the usual date, unless the Committee decides
otherwise(cid:15) (cid:65)Good leaver(cid:8) grounds include ill-health or
retirement and are further defined in the Scheme agreement(cid:15)
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On a takeover or change of control (or similar sale of the
Company), Mr Cowgill will be entitled to a pro-rata amount
of the Award Tranche for the accounting period in which the
change of control event occurs and full payment of the
Award Tranche in respect of any accounting period which has
finished(cid:15) Again, the Committee may, at its discretion, decide
to allow the Award Tranche to vest in full in respect of the
accounting period current at the time of such takeover or
change of control (or similar sale of the Company)(cid:15)
The payment will be made on the usual date unless the
Committee decides otherwise(cid:15)
None of the benefits which may be received under the Scheme
will be pensionable(cid:15)
The Adjusted Profits target of £74m to achieve the maximum
award of £900,000 for the 52 weeks to 28 January 2012 was
met and so the first Award Tranche of £900,000 vested
a year ago(cid:15)
The Adjusted Profits target to achieve the maximum award of
£900,000 for the 53 weeks to 2 February 2013 was set at
£74m, with the Minimum Adjusted Profit to achieve 40(cid:6) of
such maximum award being set at £70m(cid:15) (cid:41)owever as these
targets were set prior to the acquisition of Blacks which is
targeted to deliver additional profits in the medium term, the
Committee retained a discretion to adjust the award for the
impact of this acquisition, as reported in the 2012 Annual
Report(cid:15) It was evident by mid-year that the Group(cid:8)s results for
the 53 week period to 2 February 2013 would be significantly
adversely affected by the acquisition in the short term(cid:15)
It remains the view of the Board that the Blacks acquisition will
be a good investment for the Group and offers diversification
for the future(cid:15) The Committee is satisfied that, excluding the
impact of the Blacks acquisition, the target of at least
£74 million in the year to 2 February 2013 would have been
satisfied(cid:15) In the light of this the Committee exercised its
discretion and awarded the second Award Tranche of
£900,000 in full(cid:15)
The Adjusted Profits target to achieve the maximum award
of £1,700,000 for the 52 weeks to 1 February 2014 has been
set at £75m, with the Minimum Adjusted Profit to achieve
40(cid:6) of such maximum award being set at £68m(cid:15)
Again, the Committee has reserved the right to adjust these
targets to take into account the short term impact of any
corporate activity which may take place in the year(cid:15)
Cash based long term incentive plan
In 2010, the Committee proposed the introduction of a cash
based Long Term Incentive Plan ((cid:65)2010 LTIP(cid:8)) in order to:
• Provide the Committee with the necessary mechanism with
which to retain the Executive Directors who are critical to
driving shareholder value
• Provide the Executive Directors with the opportunity to earn
competitive rewards which was previously severely restricted
by the absence of any long term incentive plan
• Align the Executive Directors(cid:8) interests more closely with
those of the shareholders
• Focus the Executive Directors on sustaining and improving
the long-term financial performance of the Company and
reward them appropriately for doing so
• Ensure a more appropriate balance in the Executive
Directors(cid:8) compensation between fixed and performance
related elements
The 2010 LTIP was subsequently approved by shareholders at
the 2010 Annual General Meeting and consists of one award
that will pay out in cash after three years, subject to continued
employment and meeting performance targets which would
drive the creation of shareholder value(cid:15) The Committee gave
considerable thought as to whether the awards should pay out
in cash or shares and decided that given the current
shareholder structure and the lack of a large free float, the
delivery mechanism should be in cash although all payments
would be non-pensionable(cid:15) The Company does not have any
share schemes(cid:15)
The structure of a new LTIP for the Executive Directors is under
consideration and will be put forward to shareholders for
approval in a General Meeting in due course(cid:15)
Other benefits
The Company makes contributions into individual personal
pension schemes for Barry Bown and Brian Small at a defined
percentage of salary, excluding bonus and other forms
of remuneration(cid:15)
Other benefits vary from director to director and include
entitlement to a 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(cid:8)s
salary(cid:15) Car benefits have been calculated in accordance with
(cid:41)M Revenue and Customs scale charges(cid:15)
The Executive Chairman does not receive any pension
contribution or car allowance(cid:15)
The Committee actively reviews the levels of benefit
received to ensure that they remain competitive in the
UK quoted environment(cid:15)
SERVICE CONTRACTS
Details of the contracts currently in place for Executive Directors
are as follows:
Date
Of
Contract
Notice
Period
(Months)
P Cowgill
B Bown
B Small
16 March 2004
20 February 2009
10 March 2004
12
12
12
Unexpired
Term
Rolling 12 months
Rolling 12 months
Rolling 12 months
The following table outlines the structure of the 2010 LTIP:
Performance To
Amount Payable:
P Cowgill
B Bown
B Small
Other Key Executives
2 February
2013
£000
500
437
313
2,750
4,000
The 2010 LTIP was payable in full in 2013 as the following
performance conditions relating to the performance of the
overall Group were both satisfied:
• Average headline earnings of £74 million over the three
year performance period from 31 January 2010 to
2 February 2013
• Absolute headline earnings of at least £74 million in the
year to 2 February 2013
Lower awards to a minimum of 40(cid:6) were to be paid on a
sliding scale if the performance on either of these criteria is in
the range of £70 million to £74 million(cid:15) If the performance
under either of these criteria is below £70 million then no
awards were to be payable(cid:15)
The Committee exercised its discretion to take account of
the impact of the Blacks acquisition in January 2012(cid:15)
The Committee is satisfied that, excluding the impact of the
Blacks acquisition, the target of at least £74 million in the year
to 2 February 2013 would have been satisfied(cid:15) Accordingly,
the LTIP award for the Executive Directors, and certain senior
executives, has vested in full and will be paid out in
April 2013(cid:15) In doing this, it was recognised that Blacks is
a longer term investment for the business(cid:15) In making this
decision the Committee noted that the LTIP scheme and
previous ones had been highly successful in retaining the
Group and Sports fascia senior management team and the
negative impact it would have on their morale if not paid(cid:15)
An amount of £759,000 has been recognised in the
Consolidated Income Statement for the period ended
2 February 2013 (2012: £1,333,000)(cid:15) This is less than
one-third of the potential amount chargeable for the year
reflecting the fact that certain people who previously qualified
for the LTIP were either no longer in employment with the
Group and others did not meet business unit specific
supplementary performance criteria(cid:15)
58
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
59
Each service contract includes provision for compensation
commitments in the event of early termination(cid:15) For each of
the Executive Directors, these commitments do not exceed
one year(cid:8)s salary and benefits(cid:15) The Committee consider these
levels of compensation for loss of office appropriate in light
of basic salary levels and prevailing market conditions(cid:15)
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(cid:15)
The service agreements and letters of appointment are
available for inspection by shareholders at the forthcoming
Annual General Meeting and during normal business hours
at the Company(cid:8)s registered office address(cid:15)
In accordance with the recommendations of the UK Corporate
Governance Code, all Directors will retire and offer themselves
for re-election at the 2013 AGM, except for Martin Davies
who, being appointed during the year under review, will offer
himself for election(cid:15)
NON-EXECUTIVE DIRECTORSHIPS
The Board recognises that Executive Directors may be invited
to become Non-Executive Directors of other businesses and
that the knowledge and experience which they gain in those
appointments could be of benefit to the Company(cid:15)
Prior approval of the Board is required before acceptance
of any new appointments(cid:15)
During the year to 2 February 2013, only Peter Cowgill held
Non-Executive positions through his role as Non-Executive
Chairman of United Carpets Group Plc and MBL Group Plc(cid:15)
(cid:41)e has retained earnings of £72,500 (2012: £72,000)
in respect of these offices(cid:15)
NON-EXECUTIVE DIRECTORS
The Non-Executive Directors have entered into letters of
appointment with the Company which are terminable by the
Non-Executive Director or the Company on not less than three
months(cid:8) notice(cid:15)
Non-Executive Director remuneration is determined by the
Board taking into account the scope and nature of their duties
and market rates(cid:15) The Non-Executive Directors do not
participate in the Company(cid:8)s incentive arrangements and no
pension contributions are made in respect of them(cid:15) Details of
their fees are set out in the audited information on page 59(cid:15)
TOTAL SHAREHOLDER RETURN
The following graph shows the Total Shareholder Return ((cid:8)TSR(cid:8))
of the Group in comparison to the FTSE All Share General
Retailers Index over the past (cid:109)ve years(cid:15) 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(cid:15)
TSR is calculated for each (cid:109)nancial year end relative to the
base date of 31 January 2008 by taking the percentage
change of the market price over the relevant period,
re-investing any dividends at the ex-dividend rate(cid:15)
300
250
200
150
100
50
0
2008
2009
2010
2011
2012
2013
JD Sports Fashion Plc
FTSE All Share General Retailers Index
AUDITED INFORMATION
INDIVIDUAL DIRECTORS’ EMOLUMENTS
Directors(cid:8) salaries and benefits charged in the period to 2 February 2013 are set out below together with comparatives for
the period to 28 January 2012(cid:15)
Salary
and Fees
£000
Benefits
excl
Pensions
£000
Annual
Performance
Related Bonus
£000
P Cowgill
B Bown
B Small
C Archer
C Bird
A Leslie
M Davies (1)
714
316
234
41
20
31
10
1,366
1
-
18
-
-
-
-
19
263
116
77
-
-
-
-
456
2013
Total
£000
978
432
329
41
20
31
10
1,841
2012
Total
£000
1,226
543
376
39
30
30
-
2,244
2013
Pension
Costs
£000
2012
Pension
Costs
£000
-
25
28
-
-
-
-
53
-
25
24
-
-
-
-
49
(1) Mr Davies joined the Board on 1 October 2012(cid:15)
The pension contributions represent amounts payable to defined contribution pension schemes(cid:15)
CASH BASED LONG TERM INCENTIVE PLAN
The following amounts have been provided in the period ended 2 February 2013 in respect of the Long Term Incentive Plan(cid:15)
The amounts recognised comprise one third of the 2010 LTIP based on Group performance in the final year of the three year
vesting period(cid:15)
P Cowgill
B Bown
B Small
2013
£000
167
146
104
417
2012
£000
167
146
104
417
This report has been prepared on behalf of the Board(cid:15)
Colin Archer
Chairman of the Remuneration Committee
17 April 2013
60
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
61
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE
ANNUAL REPORT AND THE FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF JD SPORTS FASHION PLC
RESPONSIBILITIES OF DIRECTORS
The Directors are responsible for preparing the Annual Report
and the Group and Parent Company financial statements in
accordance with applicable law and regulations(cid:15)
Under applicable law and regulations, the Directors are also
responsible for preparing a Directors(cid:8) Report, Directors(cid:8)
Remuneration Report and Corporate Governance Report that
complies with that law and those regulations(cid:15)
Company law requires the Directors to prepare Group and
Parent Company financial statements for each financial year(cid:15)
Under that law they are required to prepare the Group
financial statements in accordance with IFRSs as adopted by
the EU and applicable law and have elected to prepare the
Parent Company financial statements on the same basis(cid:15)
Under company law the Directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
Parent Company and of their profit or loss for that period(cid:15)
In preparing each of the Group and Parent Company
financial statements, the Directors are required to:
• Select suitable accounting policies and then apply them
consistently
• Make judgments and estimates that are reasonable
and prudent
• State whether they have been prepared in accordance with
IFRSs as adopted by the EU
• Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the
Parent Company will continue in business
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
Company(cid:8)s transactions and disclose with reasonable
accuracy at any time the financial position of the Parent
Company and enable them to ensure that its financial
statements comply with the Companies Act 2006(cid:15) 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(cid:15)
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Group(cid:8)s websites(cid:15) Legislation in the UK governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions(cid:15)
RESPONSIBILITY STATEMENT
Each of the Directors whose names and positions are set out
on page 42 confirms that, to the best of their knowledge:
• The Financial Statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole
• The Directors(cid:8) Report includes a fair review of the
development and performance of the business and the
position of the Company and the undertakings included in
the consolidation taken as a whole, together with a description
of the principal risks and uncertainties that they face
By order of the Board
Brian Small
Group Finance Director
17 April 2013
(cid:56)e have audited the financial statements of JD Sports Fashion
Plc for the 53 weeks ended 2 February 2013, which comprise
the Consolidated Income Statement, Consolidated and
Parent Company Statement of Comprehensive Income,
Consolidated and Parent Company Statement of
Financial Position, Consolidated and Parent Company
Statement of Cash Flows, Consolidated and Parent Company
Statement of Changes in Equity and the related notes set out
on pages 67 to 130(cid:15) The financial reporting framework that
has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted
by the EU and, as regards the Parent Company financial
statements, as applied in accordance with the provisions of
the Companies Act 2006(cid:15)
This report is made solely to the Company(cid:8)s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006(cid:15) Our audit work has been undertaken so
that we might state to the Company(cid:8)s members those matters
we are required to state to them in an auditor(cid:8)s report and for
no other purpose(cid:15) To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
Company and the Company(cid:8)s members, as a body, for our
audit work, for this report, or for the opinions we have formed(cid:15)
RESPECTIVE RESPONSIBILITIES OF DIRECTORS
AND AUDITOR
As explained more fully in the Statement of Directors(cid:8)
Responsibilities set out on page 60, the Directors are
responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view(cid:15)
Our responsibility is to audit, and express and opinion on,
the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland)(cid:15)
Those standards require us to comply with the Auditing
Practices Board(cid:8)s (APB(cid:8)s) Ethical Standards for Auditors(cid:15)
SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS
A description of the scope of an audit of financial
statements is provided on the APB(cid:8)s website at
www(cid:15)frc(cid:15)org(cid:15)uk/apb/scope/private(cid:15)cfm(cid:15)
OPINION ON FINANCIAL STATEMENTS
In our opinion:
• The financial statements give a true and fair view of the state
of the Group(cid:8)s and of the Parent Company(cid:8)s affairs as at
2 February 2013 and of the Group(cid:8)s and the Parent
Company(cid:8)s profit for the 53 week period then ended
• The Group financial statements have been properly
prepared in accordance with IFRSs as adopted by the EU
• The Parent Company financial statements have been
properly prepared in accordance with IFRSs as adopted
by the EU and as applied in accordance with the provisions
of the Companies Act 2006
• The financial statements have been prepared in accordance
with the requirements of the Companies Act 2006 and,
as regards the Group financial statements, Article 4 of
the IAS Regulation
OPINION ON OTHER MATTERS PRESCRIBED BY
THE COMPANIES ACT 2006
In our opinion:
• The part of the Directors(cid:8) Remuneration Report to be audited
has been properly prepared in accordance with the
Companies Act 2006
• The information given in the Directors(cid:8) Report for the
financial year for which the financial statements are
prepared is consistent with the financial statements
• Information given in the Corporate Governance Report with
respect to internal control and risk management systems in
relation to financial reporting processes and about share
capital structures is consistent with the financial statements
MATTERS ON WHICH WE ARE REQUIRED TO REPORT
BY EXCEPTION
(cid:56)e have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
• Adequate accounting records have not been kept by the
Parent Company, or returns adequate for our audit have
not been received from branches not visited by us or
• The Parent Company financial statements and the part of
the Directors(cid:8) Remuneration Report to be audited are not
in agreement with the accounting records and returns or
• Certain disclosures of Directors(cid:8) remuneration specified by
law are not made or
• (cid:56)e have not received all the information and explanations
we require for our audit or
• A Corporate Governance Statement has not been prepared
by the Group
Under the Listing Rules we are required to review:
• The Directors(cid:8) statement, set out on page 45, in relation to
going concern
• The part of the Corporate Governance Report relating to the
Company(cid:8)s compliance with the nine provisions of the UK
Corporate Governance Code specified for our review
• Certain elements of the report to shareholders by the Board
on Directors(cid:8) remuneration
Stuart Burdass (Senior Statutory Auditor)
For and on behalf of:
KPMG Audit Plc
Statutory Auditor
Chartered Accountants
St James(cid:8) Square
Manchester
M2 6DS
17 April 2013
62
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
63
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 53 weeks ended 2 February 2013
For the 53 weeks ended 2 February 2013
REVENUE
Cost of sales
GROSS PROFIT
Selling and distribution expenses - normal
Selling and distribution expenses - exceptional
Selling and distribution expenses
Administrative expenses - normal
Administrative expenses - exceptional
Administrative expenses
Other operating income
OPERATING PROFIT
Before exceptional items
Exceptional items
OPERATING PROFIT
Share of results of joint venture before exceptional items (net of income tax)
Share of exceptional items (net of income tax)
Share of results of joint venture
Financial income
Financial expenses
PROFIT BEFORE TAX
Income tax expense
PROFIT FOR THE PERIOD
Attributable to equity holders of the parent
Attributable to non-controlling interest
Basic earnings per ordinary share
Diluted earnings per ordinary share
53 weeks to
2 February
2013
£000
Note
(494,619)
(3,724)
(59,973)
(1,624)
4
4
4
17
17
17
7
8
3
9
10
10
53 weeks to
2 February
2013
£000
1,258,892
(645,404)
613,488
(498,343)
52 weeks to
28 January
2012
£000
(403,923)
(10,532)
(43,193)
847
(61,597)
2,427
55,975
61,323
(5,348)
55,975
-
-
-
645
(1,503)
55,117
(13,875)
41,242
38,786
2,456
79.71p
79.71p
52 weeks to
28 January
2012
£000
1,059,523
(538,676)
520,847
(414,455)
(42,346)
2,730
66,776
76,461
(9,685)
66,776
(102)
1,170
1,068
646
(1,048)
67,442
(18,093)
49,349
46,847
2,502
96.27p
96.27p
PROFIT FOR THE PERIOD
Other comprehensive income:
Exchange differences on translation of foreign operations
Recycling of foreign currency translation reserve on disposal of foreign operations
TOTAL OTHER COMPREHENSIVE INCOME FOR THE PERIOD
TOTAL COMPREHENSIVE INCOME AND EXPENSE FOR THE PERIOD
(NET OF INCOME TAX)
Attributable to equity holders of the parent
Attributable to non-controlling interest
GROUP
COMPANY
53 weeks to
2 February
2013
£000
41,242
52 weeks to
28 January
2012
£000
49,349
53 weeks to
2 February
2013
£000
47,874
(2,921)
(910)
(3,831)
37,411
34,767
2,644
(2,096)
-
(2,096)
47,253
44,751
2,502
-
-
-
47,874
47,874
-
52 weeks to
28 January
2012
£000
52,190
-
-
-
52,190
52,190
-
64
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
65
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 2 February 2013
For the 53 weeks ended 2 February 2013
ASSETS
Intangible assets
Property, plant and equipment
Investment property
Other assets
Investments
Deferred tax assets
TOTAL NON-CURRENT ASSETS
Inventories
Trade and other receivables
Cash and cash equivalents
TOTAL CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
Interest-bearing loans and borrowings
Trade and other payables
Provisions
Income tax liabilities
TOTAL CURRENT LIABILITIES
Interest-bearing loans and borrowings
Other payables
Provisions
Deferred tax liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
TOTAL ASSETS LESS TOTAL LIABILITIES
CAPITAL AND RESERVES
Issued ordinary share capital
Share premium
Retained earnings
Other reserves
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Non-controlling interest
TOTAL EQUITY
Note
13
14
15
16
18
26
19
20
21
22
24
25
22
24
25
26
27
GROUP
COMPANY
As at
2 February
2013
£000
As at
28 January 2012
(restated
- see note 1)
£000
As at
2 February
2013
£000
As at
28 January
2012
£000
96,024
129,101
-
20,568
-
-
245,693
146,569
56,761
53,484
256,814
502,507
(7,157)
(194,061)
(2,714)
(8,817)
(212,749)
(691)
(30,085)
(3,373)
(3,852)
(38,001)
(250,750)
251,757
2,433
11,659
230,572
(6,841)
237,823
13,934
251,757
97,290
118,909
-
16,975
-
-
233,174
133,243
54,147
67,024
254,414
487,588
(5,547)
(196,256)
(3,375)
(8,861)
(214,039)
(1,182)
(36,149)
(6,407)
(723)
(44,461)
(258,500)
229,088
2,433
11,659
207,503
(6,339)
215,256
13,832
229,088
31,908
71,924
3,614
4,399
45,375
519
157,739
56,125
156,105
20,046
232,276
390,015
-
(97,913)
(2,040)
(5,783)
(105,736)
-
(26,608)
(1,695)
-
(28,303)
(134,039)
255,976
2,433
11,659
242,461
(577)
255,976
-
255,976
28,186
71,103
2,970
3,558
42,475
307
148,599
52,579
123,953
28,762
205,294
353,893
-
(95,077)
(2,404)
(2,877)
(100,358)
-
(28,440)
(4,008)
-
(32,448)
(132,806)
221,087
2,433
11,659
206,995
-
221,087
-
221,087
These financial statements were approved by the Board of Directors on 17 April 2013 and were signed on its behalf by:
B Small
Director
Registered number: 1888425
GROUP
Balance at 29 January 2011
Profit for the period
Other comprehensive income:
Exchange differences on translation of foreign operations
Total other comprehensive income
Total comprehensive income for the period
Dividends to equity holders
Put options held by non-controlling interests
Non-controlling interest arising on acquisition
Disposal of non-controlling interest
Balance at 28 January 2012
Profit for the period
Other comprehensive income:
Exchange differences on translation of foreign operations
Recycling of foreign currency translation reserve on disposal of foreign operations
Total other comprehensive income
Total comprehensive income for the period
Dividends to equity holders
Put options held by non-controlling interests
Revaluation of Canterbury put option prior to disposal
On disposal of Canterbury
Non-controlling interest arising on acquisition
BALANCE AT 2 FEBRUARY 2013
Ordinary
share
capital
£000
2,433
-
Share
premium
£000
11,659
-
Retained
earnings
£000
171,916
46,847
-
-
-
-
-
-
-
2,433
-
-
-
-
-
-
-
-
-
-
2,433
-
-
-
-
-
-
-
11,659
-
-
-
-
-
-
-
-
-
-
11,659
-
-
46,847
(11,338)
-
-
78
207,503
38,786
-
-
-
38,786
(12,408)
-
-
(2,691)
(618)
230,572
Foreign
currency
translation
reserve
£000
(149)
-
Total equity
attributable
to equity
holders of
the parent
£000
184,090
46,847
Non-
controlling
interest
(restated -
see note 1)
£000
1,085
2,502
(2,096)
(2,096)
(2,096)
-
-
-
-
(2,245)
-
(3,109)
(910)
(4,019)
(4,019)
-
-
-
-
-
(6,264)
(2,096)
(2,096)
44,751
(11,338)
(2,325)
-
78
215,256
38,786
(3,109)
(910)
(4,019)
34,767
(12,408)
(1,744)
2,570
-
(618)
237,823
-
-
2,502
(140)
-
10,462
(77)
13,832
2,456
188
-
188
2,644
(338)
-
-
(2,570)
366
13,934
Total
equity
£000
185,175
49,349
(2,096)
(2,096)
47,253
(11,478)
(2,325)
10,462
1
229,088
41,242
(2,921)
(910)
(3,831)
37,411
(12,746)
(1,744)
2,570
(2,570)
(252)
251,757
Other
equity
£000
(1,769)
-
-
-
-
-
(2,325)
-
-
(4,094)
-
-
-
-
-
-
(1,744)
2,570
2,691
-
(577)
Put options at 2 February 2013 are held by the 40% non-controlling interest in Tessuti Group Limited and 15%
non-controlling interest in Source Lab Limited (see note 24). As at 28 January 2012 the put options were held by the 49%
non-controlling interest in Canterbury of New Zealand and 25% non-controlling interest in Canterbury International (Australia)
Pty Limited (see note 12).
COMPANY
Balance at 29 January 2011
Profit for the period
Total comprehensive income for the period
Dividends to equity holders
Balance at 28 January 2012
Profit for the period
Total comprehensive income for the period
Dividends to equity holders
Put options held by non-controlling interest in a subsidiary
BALANCE AT 2 FEBRUARY 2013
Ordinary
share
capital
£000
2,433
-
-
-
2,433
-
-
-
Share
premium
£000
11,659
-
-
-
11,659
-
-
-
2,433
11,659
Retained
earnings
£000
166,143
52,190
52,190
(11,338)
206,995
47,874
47,874
(12,408)
-
242,461
Other
equity
£000
-
-
-
-
-
-
-
-
(577)
(577)
Total
equity
£000
180,235
52,190
52,190
(11,338)
221,087
47,874
47,874
(12,408)
(577)
255,976
66
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& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
67
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the 53 weeks ended 2 February 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the period
Share of results of joint venture
Income tax expense
Financial expenses
Financial income
Depreciation and amortisation of non-current assets
Exchange differences on translation
Profit on disposal of Canterbury
Loss on disposal of non-current assets
Other exceptional items
Increase in inventories
Increase in trade and other receivables
(Decrease)/increase in trade and other payables
Interest paid
Income taxes paid
NET CASH FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
Proceeds from sale of non-current assets
Disposal costs of non-current assets
Acquisition of intangible assets
Acquisition of property, plant and equipment
Acquisition of investment property
Acquisition of non-current other assets
Acquisition of investments
Cash consideration of acquisitions
Cash acquired with acquisitions
Overdrafts acquired with acquisitions
Receipt of Canterbury intercompany debt
Cash in Canterbury on disposal
Dividend received from joint venture
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of interest-bearing loans and borrowings
Repayment of finance lease liabilities
Acquisition of non-controlling interest
Sale of subsidiary shares to non-controlling interest
Equity dividends paid
Dividends paid to non-controlling interest in subsidiaries
NET CASH USED IN FINANCING ACTIVITIES
NET DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
Foreign exchange gains on cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
GROUP
COMPANY
53 weeks to
2 February
2013
£000
52 weeks to
28 January
2012
£000
53 weeks to
2 February
2013
£000
52 weeks to
28 January
2012
£000
41,242
-
13,875
1,503
(645)
30,328
(10)
(691)
212
4,495
(23,551)
(12,393)
(5,902)
(1,503)
(12,232)
34,728
645
977
(143)
(5,540)
(38,178)
-
(5,350)
-
(5,875)
1,208
(175)
22,699
(5,888)
-
(35,620)
(245)
(593)
(40)
-
(12,408)
(338)
(13,624)
(14,516)
61,611
( 867)
46,228
49,349
(1,068)
18,093
1,048
(646)
24,353
(764)
-
1,148
8,751
(14,397)
(2,780)
11,952
(1,048)
(25,084)
68,907
646
171
(312)
(1,711)
(43,846)
-
(1,903)
-
(26,106)
4,019
(3,326)
-
-
7,217
(65,151)
(16,755)
(1,459)
-
2
(11,338)
(140)
(29,690)
(25,934)
87,545
-
61,611
47,874
-
21,901
1,019
(683)
17,125
158
600
255
-
(3,546)
(54,851)
(10,957)
(1,019)
(11,100)
6,776
683
55
(51)
(5,540)
(15,823)
(677)
(1,372)
(2,860)
-
-
-
22,699
-
-
(2,886)
-
-
(40)
-
(12,408)
-
(12,448)
(8,558)
28,762
(158)
20,046
52,190
-
18,259
637
(719)
14,488
-
-
631
(4,522)
(5,107)
(42,418)
10,995
(637)
(23,454)
20,343
719
5
(249)
(1,500)
(32,748)
-
(482)
(33,411)
(1,000)
-
-
-
-
7,217
(61,449)
-
-
-
2
(11,338)
-
(11,336)
(52,442)
81,204
-
28,762
Note
17
9
8
7
3
4
4
4
13
14
15
18
12
12
12
12
28
31
31
31
31
1. SIGNIFICANT ACCOUNTING POLICIES
JD Sports Fashion Plc, (the 'Company') is a company
incorporated and domiciled in the United Kingdom.
The financial statements for the 53 week period ended
2 February 2013 represent those of the Company and its
subsidiaries (together referred to as the 'Group'). The Parent
Company financial statements present information about the
Company as a separate entity and not about its Group.
The financial statements were authorised for issue by the Board
of Directors on 17 April 2013.
Basis of preparation
European Union law (‘EU LAW’) (IAS Regulation EC 1606/2002)
requires that the financial statements of the Group are
prepared and approved in accordance with International
Financial Reporting Standards as adopted by the EU (‘adopted
IFRSs’). The financial statements have been prepared on the
basis of the requirements of adopted IFRSs that are endorsed
by the EU and effective at 2 February 2013.
The Company has chosen to present its own results under
adopted IFRSs and by publishing the Company Financial
Statements here, with the Group Financial Statements, the
Company is taking advantage of the exemption in s408 of the
Companies Act 2006 not to present its individual income
statement and related notes.
The financial statements are presented in pounds sterling,
rounded to the nearest thousand.
The financial statements have been prepared under the
historical cost convention, as modified for financial assets and
liabilities (including derivative instruments) at fair value through
the Consolidated Income Statement and also put options held
by the non-controlling interests.
The preparation of financial statements in conformity with
adopted IFRSs requires management to make judgements,
estimates and assumptions that affect the application of
policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are
based on historical experience and various other factors that
are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgements about
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from
these estimates.
The judgements, estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is
revised and in any future periods affected.
The accounting policies set out below have unless otherwise
stated been applied consistently to all periods present in these
financial statements and have been applied consistently by all
Group entities.
The Group’s business activities, together with the factors likely
to affect its future development, performance and position are
set out in the Executive Chairman’s Statement and Financial
and Risk Review on pages 19 and 28 respectively. In addition,
details of financial instruments and exposures to interest rate,
foreign currency, credit and liquidity risks are outlined in note 23.
As at 2 February 2013, the Group had net cash balances of
£45,636,000 (2012: £60,295,000) with available committed
borrowing facilities of £75,000,000 of which £nil (2012: £nil)
has been drawn down (see note 22). With £75,000,000
available, the Directors believe that the Group is well placed to
manage its business risks successfully despite the current
uncertain economic outlook.
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group have adequate
resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the financial statements.
Adoption of new and revised standards
From the 29 January 2012, the Group has applied the
amendment to IAS 12 Deferred Tax: Recovery of Underlying
Assets. The Amendment introduces an exception to the current
measurement principles of deferred tax assets and liabilities
where investment properties are measured using the fair value
model in accordance with IAS 40 Investment Property. This has
had no significant impact on the consolidated results or
financial position of the Group.
A number of new standards, amendments to standards and
interpretations have been issued during the 53 week period
ended 2 February 2013 but are not yet effective, and therefore
have not yet been adopted by the Group.
Amendment to IFRS 1 'Presentation of Items of Other
Comprehensive Income (OCI)' is effective for accounting
periods beginning July 2012. The amendment requires an
entity to separate items included in OCI between those that
may be reclassified to profit and loss in the future from those
that would never be reclassified to profit and loss. This
standard is not expected to have a significant impact on the
consolidated results or financial position of the Group.
Annual improvement to IFRSs - 2009-2011 Cycle is applicable
from January 2013. If endorsed, the Group will apply as
appropriate where the key improvements relevant to the Group
relate to IFRS 1 Presentation of financial statements and IAS 34
Interim financial reporting.
IFRS 13 'Fair Value Measurement' is applicable from January
2013. The standard consolidates the existing fair value
measurement guidance in different IFRSs with a single
definition of fair value, a framework for measuring fair value
and disclosures about fair value measurements. This standard
is not expected to have a significant impact on the consolidated
results or financial position of the Group.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Adoption of new and revised standards (continued)
New standards on consolidation (and related standards),
which are effective for accounting periods beginning January
2014. The following standards replace the existing accounting
for subsidiaries and joint ventures, and make limited
amendments in relation to associates:
The Group continues to monitor the potential impact of other
new standards and interpretations which may be endorsed by
the European Union and require adoption by the Group in
future reporting periods.
The Group does not consider that any other standards,
amendments or interpretations issued by the IASB, but not
yet applicable, will have a significant impact on the
financial statements.
• IFRS 10 'Consolidated Financial Statements'
Prior period restatement
• IFRS 11 'Joint Arrangements'
• IFRS 12 'Disclosure of Interests in Other Entities'
• Amendments to IFRS 10, IFRS 11 and IFRS 12 (if endorsed)
• IAS 27 'Separate Financial Statements (2011 revised)'
• IAS 28 'Investments in Associates and Joint Ventures
(2011 revised)'
With the exception of future acquisition of subsidiaries and
joint ventures it is not anticipated that these standards will have
a significant Impact on the financial statements, as no change
to the current consolidation conclusions is expected to be
required. IFRS 10 indicates that control is the determining
factor in deciding whether an entity should be consolidated in
the Groups financial statements.
Amendments to IFRS 7 'Offsetting Financial Assets and
Financial Liabilities' is applicable from January 2013. This
amendment introduces new disclosure required for financial
assets and liabilities which have been offset in the statement of
financial position and/or are subject to master netting
arrangements or similar agreements, but is not anticipated to
have a significant impact on the financial statements.
Amendments to IAS 32 'Offsetting Financial Assets and
Financial Liabilities' is applicable from January 2014.
This amendment clarifies the application of the offsetting rules,
however this is not anticipated to have a significant impact on
the financial statements.
IFRS 9 'Financial Instruments' is applicable from 2015.
If endorsed, this standard will simplify the classification of
financial assets for measurement purposes, but is not
anticipated to have a significant impact on the
financial statements.
IFRS 17 'Leases' may be introduced with a proposed guide
date of 2015. If endorsed, this standard will significantly affect
the presentation of the Group financial statements with all
leases apart from short term leases being recognised as either
finance leases or 'other than finance' leases with a
corresponding liability being the present value of the
lease payments.
The comparative Consolidated Statement of Financial Position
and Consolidated Statement of Changes In Equity as at
28 January 2012 has been restated to reflect the completion
in the period to 2 February 2013 of the initial accounting in
respect of the acquisitions of JD Sprinter Holdings 2010
SL acquired in the period to 28 July 2012 and to reflect
the completion of the initial accounting in respect of
Blacks Outdoor Retail Limited acquired in the period to
28 January 2012.
Adjustments made to the provisional calculation of the fair
value of assets and liabilities acquired, as reported at 28
January 2012, in the period to 2 February 2013 have resulted
in the following changes:
For the acquisition of JD Sprinter Holdings 2010 SL the
measurement adjustments made to the fair values of the net
assets reduced total assets by £449,000, reduced total
liabilities by £289,000 and the resulting change on total equity
was £160,000. This adjustment has also decreased
non-controlling interest by £160,000.
For the acquisition of Blacks Outdoor Retail Limited the
measurement adjustments made to the fair values of the net
assets increased total assets by £204,000, increased total
liabilities by £204,000 and the resulting change on total equity
was £nil.
The impact of these adjustments on the net assets is shown in
note 11.
Basis of consolidation
I. Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists
when the Group has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that are
presently exercisable are taken into account.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases. Non-controlling
interests in the net assets of consolidated subsidiaries are
identified separately from the equity attributable to holders of
the parent. Non-controlling interests consist of the amount of
those interests at the date that control commences and the
attributable share of changes in equity subsequent to that date.
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
III. Depreciation
II. Joint ventures
Joint ventures are entities over which the Group has joint
control based on a contractual arrangement. The results and
assets and liabilities of joint ventures are incorporated in the
consolidated financial statements using the equity method of
accounting. Investments in joint ventures are carried in the
Consolidated Statement of Financial Position at cost and
adjusted for post-acquisition changes in the Group's share of
the net assets. Losses of the joint venture in excess of the
Group's interest in it are not recognised.
III. Transactions eliminated on consolidation
Intragroup balances, and any unrealised income and expenses
arising from intragroup transactions, are eliminated in
preparing the consolidated financial statements.
Property, plant and equipment
I. Owned assets
Items of property, plant and equipment are stated at cost less
accumulated depreciation and impairment losses. Where parts
of an item of property, plant and equipment have different
useful economic lives, they are accounted for as separate items.
II. Leased assets
Assets funded through finance leases and similar hire purchase
contracts are capitalised as property, plant and equipment
where the Group assumes substantially all of the risks and
rewards of ownership. Upon initial recognition, the leased
asset is measured at the lower of its fair value and the present
value of the minimum lease payments. Future instalments
under such leases, net of financing costs, are included within
interest-bearing loans and borrowings.
Rental payments are apportioned between the finance element,
which is included in finance costs, and the capital element
which reduces the outstanding obligation for future instalments
so as to give a constant charge on the outstanding obligation.
All other leases are accounted for as operating leases and the
rental costs, are charged to the Consolidated Income
Statement on a straight line basis over the life of the lease.
Contingent rental payments, where payment is conditional on
the Group's operating performance derived from the lease
item (e.g. turnover levels), are expensed in the period incurred.
Legal fees and other costs associated with the acquisition of a
leasehold interest are capitalised within non-current other
assets. These costs are amortised over the life of the lease.
Lease incentives are credited to the Consolidated Income
Statement on a straight line basis over the life of the lease.
Rental income from operating leases where the Group is the
lessor is recognised on a straight-line basis over the term of
the relevant lease.
Depreciation is charged to the Consolidated Income Statement
over the estimated useful life of each part of an item of
property, plant and equipment. The estimated useful
economic lives are as follows:
Freehold land
not depreciated
Long leasehold and
freehold properties
Improvements to short
leasehold properties
2% per annum on a straight line basis
life of lease on a straight line basis
Computer equipment
3 - 4 years on a straight line basis
Fixtures and fittings
Motor vehicles
5 - 7 years, or length of lease if
shorter, on a straight line basis
25% per annum on a reducing
balance basis
Investment property
Investment property, which is property held to earn rentals, is
stated at cost less accumulated depreciation and impairment
losses. Investment property is depreciated over a period of
50 years on a straight line basis, with the exception of freehold
land, which is not depreciated. The Group has elected not to
revalue investment property annually but to disclose the fair
value in the Consolidated Financial Statements.
The fair value is based on an external valuation prepared by
persons having the appropriate professional qualification
and experience.
Business combinations
All business combinations are accounted for by applying the
acquisition method.
Business combinations are accounted for using the acquisition
method as at the acquisition date, which is the date on which
control is transferred to the Group. Control is the power to
govern the financial and operating policies of an entity so as to
obtain benefits from its activities. In assessing control, the
Group takes into consideration potential voting rights that
currently are exercisable.
The consideration transferred does not include amounts related
to the settlement of pre-existing relationships. Such amounts
are generally recognised in the Consolidated Income Statement.
Costs related to the acquisition, other than those associated with
the issue of debt or equity securities, that the Group incurs in
connection with a business combination are expensed as incurred.
Any contingent consideration payable is recognised at fair
value at the acquisition date. If the contingent consideration is
classified as equity, it is not remeasured and settlement is
accounted for within equity. Otherwise, subsequent changes to
the fair value of the contingent consideration are recognised in
the Consolidated Income Statement.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
II. Other intangible assets
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net cash/interest-bearing loans and borrowings
Intangible assets
I. Goodwill
Goodwill represents amounts arising on acquisition
of subsidiaries.
For acquisitions on or after 31 January 2010, the Group
measures goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in
the acquiree; plus
• if the business combination is achieved in stages, the fair
value of the existing equity interest in the acquiree; less
• the net recognised amount of the identifiable assets acquired
and liabilities assumed
When the excess is negative, negative goodwill is recognised
immediately in the Consolidated Income Statement.
On disposal of a subsidiary, the attributable amount of goodwill is
included in the determination of the profit/loss on disposal.
In respect of business acquisitions that occurred from
1 February 2004 to 30 January 2010, goodwill represents
the difference between the cost of the acquisition and the net
fair value of the identifiable assets, liabilities and contingent
liabilities of the acquiree. When the excess was negative
(negative goodwill), it was recognised immediately in the
Consolidated Income Statement as an exceptional item.
Transaction costs, other than those associated with the issue
of debt or equity securities, that the Group incurred in
connection with business combinations were capitalised as
part of the cost of the acquisition.
In respect of acquisitions prior to 1 February 2004, goodwill is
included on the basis of its deemed cost, which represents the
amount recorded under previous GAAP. The classification and
accounting treatment of business combinations that occurred
prior to 1 February 2004 has not been reconsidered in
preparing the Group’s opening adopted IFRS balance sheet
at 1 February 2004.
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash-generating units
('CGUs') and is tested annually for impairment and whenever
there is an indication that the goodwill may be impaired.
The CGUs used are the store portfolios and distribution
companies acquired. The recoverable amount is compared
to the carrying amount of the CGU including goodwill.
The recoverable amount of a CGU is determined based
on value-in-use calculations.
Other intangible assets represent brand licences, brand names
and purchased fascia names.
Brand licences are stated at cost less accumulated amortisation
and impairment losses. Amortisation of brand licences is
charged to the Consolidated Income Statement over the term
to the licence expiry on a straight line basis.
Brand names acquired as part of a business combination are
stated at fair value as at the acquisition date less accumulated
amortisation and impairment losses. Brand names separately
acquired are stated at cost less accumulated amortisation and
impairment losses. The useful economic life of each purchased
brand name is considered to be finite. Amortisation of brand
names is charged to the Consolidated Income Statement over
their useful life on a straight line basis.
Separately identifiable fascia names acquired are stated at fair
value as at the acquisition date less accumulated impairment
losses. The useful economic life of each purchased fascia
name is considered separately. Where the Directors believe
that there is no foreseeable limit to the period over which the
asset is expected to generate a net cash flow, the specific fascia
name is not amortised but is subject to an impairment review
on an annual basis or more frequently if there is an indicator
that the fascia name is impaired.
Investments in subsidiary undertakings
and joint ventures
In the Company’s accounts all investments in subsidiary
undertakings and joint ventures are stated at cost less
provisions for impairment losses.
Changes in ownership interest without a loss of control
In accordance with IAS 27 'Consolidated and Separate
Financial Statements' (2008), upon a change in ownership
interest in a subsidiary without a loss of control, the carrying
amounts of the controlling and non-controlling interests are
adjusted to reflect the changes in their relative interests in the
subsidiary. Any difference between the amount by which the
non-controlling interests are adjusted and the fair value of the
consideration paid or received is recognised directly in equity
and attributed to the owners of the parent. Acquisitions or
disposals of non-controlling interests are therefore accounted
for as transactions with owners in their capacity as owners and
no goodwill is recognised as a result of such transactions.
Associated transaction costs are accounted for within equity.
Inventories
Inventories are stated at the lower of cost and net
realisable value. Cost is based on the weighted average
principle. Provisions are made for obsolescence,
mark downs and shrinkage.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group’s Statement of Financial Position when the Group
becomes a party to the contractual provisions of the
instrument. Financial assets are derecognised when the
contractual rights to the cash flows from the financial assets
expire or are transferred. Financial liabilities are derecognised
when the obligation specified in the contract is discharged,
cancelled or expires.
Trade receivables
Trade receivables are recognised at amortised cost less
impairment losses. A provision for the impairment of trade
receivables is established when there is objective evidence that
the Group will not be able to collect all amounts due according
to the original terms. Significant financial difficulties of the
debtor, probability that the debtor will enter bankruptcy or
financial reorganisation and default or delinquency in
payments are considered indicators that the trade receivable is
impaired. The movement in the provision is recognised in the
Consolidated Income Statement.
Non-current other assets
I. Key money
Monies paid in certain countries to give access to retail
locations are capitalised within non-current assets. Key money
is stated at historic cost less impairment losses. These assets
are not depreciated as past experience has shown that the key
money is fully recoverable on disposal of a retail location and
there is deemed to have an indefinite useful economic life but
will be impaired if evidence exists that the market value is less
than the historic cost. Gains/losses on key money from the
subsequent disposal of these retail locations are recognised in
the Consolidated Income Statement.
II. Deposits
Money paid in certain countries as deposits to store landlords
as protection against non-payment of rent, is capitalised within
non-current assets.
A provision for the impairment of these deposits is established
when there is objective evidence that the landlord will not
repay the deposit in full.
III. Legal fees
Legal fees and other costs associated with the acquisition of a
leasehold interest are capitalised within non-current other
assets and amortised over the life of the lease.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with an original maturity of three months or less. Bank
overdrafts are included as a component of cash and cash
equivalents for the purpose of the Consolidated Statement of
Cash Flows, as these are used as an integral part of the
Group’s cash management.
Net cash consists of cash and cash equivalents together with
other borrowings from bank loans and overdrafts, other loans,
loan notes, finance leases and similar hire purchase contracts.
Interest-bearing borrowings are recognised initially at fair
value less attributable transaction costs. Following the initial
recognition, interest-bearing borrowings are stated at
amortised cost with any difference between cost and
redemption value being recognised in the Consolidated
Income Statement over the period of the borrowings on an
effective interest basis.
Trade and other payables
Trade and other payables are non-interest-bearing and are
stated at their cost.
Foreign currency translation
Transactions denominated in foreign currencies are translated
into sterling at the exchange rate prevailing on the date of the
transaction. Monetary assets and liabilities denominated in
foreign currencies are translated into sterling at the rate of
exchange at the reporting date. Exchange differences in
monetary items are recognised in the Consolidated Income
Statement.
Non-monetary assets and liabilities that are measured in terms
of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction.
On consolidation, the assets and liabilities of the Group's
overseas operations are translated into sterling at the rate of
exchange at the reporting date. Income and expenses are
translated at the average exchange rate for the accounting
period. Foreign currency differences are recognised in Other
Comprehensive Income and are presented in the foreign
currency translation reserve.
Derivative financial instruments
The Group uses derivative financial instruments to hedge its
exposure to foreign exchange and interest rate risks arising
from operational, financing and investment activities. In
accordance with its treasury policy, the Group does not hold or
issue derivative financial instruments for trading purposes.
However, derivatives that do not qualify for hedge accounting
are accounted for as trading instruments.
Derivative financial instruments are recognised initially at fair
value and remeasured at each period end. The gain or loss on
remeasurement to fair value is recognised immediately in the
Consolidated Income Statement. However, where derivatives
qualify for hedge accounting, recognition of any resultant gain
or loss depends on the nature of the item being hedged.
Interest rate swaps are recognised at fair value in the
Consolidated Statement of Financial Position with movements
in fair value recognised in the Consolidated Income Statement
for the period. The fair value of interest rate swaps is the
estimated amount that the Group would receive or pay to
terminate the swap at the reporting date, taking into account
current interest rates and the respective risk profiles of the
swap counterparties.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Exceptional items
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Pensions
Items that are, in aggregate, material in size and/ or unusual
or infrequent in nature, are included within operating profit
and disclosed separately as exceptional items in the
Consolidated Income Statement.
The separate reporting of exceptional items, which are
presented as exceptional within the relevant category in the
Consolidated Income Statement, helps provide an indication of
the Group’s underlying business performance. The principal
items which will be included as exceptional items are:
• Loss/(profit) on the disposal of non-current assets
• Provision for rentals on onerous property leases
• Impairment of property, plant and equipment
• Impairment of non-current other assets
• Impairment of goodwill, brand names and fascia names
• Impairment of available for sale investments
• Impairment of investment property
• Profit/(loss) on disposal of subsidiary undertakings
• Negative goodwill
• Business restructuring and business closure related costs
• Dividends received from joint venture
• (Gains)/losses arising on changes in ownership interest
where control has been obtained
Financial income
Financial income comprises interest receivable on funds
invested. Financial income is recognised in the Consolidated
Income Statement on an effective interest method.
Financial expenses
Financial expenses comprise interest payable on interest-
bearing loans and borrowings. Financial expenses are
recognised in the Consolidated Income Statement on an
effective interest method.
Put options held by non-controlling interests
The Group recognises put options over non-controlling
interests in its subsidiary undertakings as a liability in the
Consolidated Statement of Financial Position at the present
value of the estimated exercise price of the put option.
Upon initial recognition, and for subsequent changes on
remeasurement of the liability, a corresponding entry is made
to other equity.
Hedging of monetary assets and liabilities
Where a derivative financial instrument is used to hedge the
foreign exchange exposure of a recognised monetary asset or
liability, no hedge accounting is applied and any gain or loss
on the hedging instrument is recognised in the Consolidated
Income Statement.
Provisions
A provision is recognised in the Consolidated Statement of
Financial Position when the Group has a present legal or
constructive obligation as a result of a past event, it is more
likely than not that an outflow of economic benefits will be
required to settle the obligation and the obligation can be
estimated reliably.
Within the onerous lease provision, management have
provided against the minimum contractual lease cost less
potential sublease income for vacant stores. For loss making
trading stores, provision is made to the extent that the lease is
deemed to be onerous.
Within the onerous contracts provision, management make
provisions where the expected benefits to be derived from a
contract are lower than the unavoidable cost of meeting the
obligations under that contract.
Revenue
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for
goods and services provided in the normal course of business,
net of discounts and sales related taxes.
In the case of goods sold through the retail stores and trading
websites, revenue is recognised when goods are sold and the
title has passed, less provision for returns. Accumulated
experience is used to estimate and provide for such returns at
the time of the sale. Retail sales are usually in cash, by debit
card or by credit card.
In the case of goods sold through the distribution businesses,
revenue is recognised when goods are sold and the title has
passed less a provision for credit notes. Distribution sales are
either settled by cash received in advance of the goods being
dispatched or made on agreed credit terms.
Income tax expense
Tax on the profit or loss for the year comprises current and
deferred tax.
I.
Current income tax
Current income tax expense is calculated using the tax rates
which have been enacted or substantively enacted by the
reporting date, adjusted for any tax paid in respect of
prior years.
II. Deferred tax
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes. The following temporary differences are
not provided for:
• Goodwill not deductible for tax purposes
• The initial recognition of assets or liabilities that affect neither
accounting nor taxable profit
• Differences relating to investments in subsidiaries to the extent
that they will probably not reverse in the foreseeable future
The amount of deferred tax provided is based on the expected
realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted by
the reporting date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced
to the extent that it is no longer probable that the related tax
benefit will be realised.
Impairment
The carrying amounts of the Group’s assets other than
inventories and deferred tax assets are reviewed annually to
determine whether there is any indication of impairment.
An impairment review is performed on individual
cash-generating units ('CGUs'). A CGU for the purposes of
property, plant and equipment impairment reviews is an
individual store or a collection of stores where the cash flows
are not independent. In respect of goodwill, the cash-
generating units used to monitor goodwill and test for
impairment are the store portfolios and distribution companies.
In respect of fascia names, the cash-generating units used to
monitor the fascia name and test for impairment are the
relevant store portfolios. In respect of brand licenses, the
cash-generating units used to monitor the brand licenses and
test for impairment are the relevant operating cash flows
relating to these licenses. In respect of brand names, an
estimation of future sales with a suitable royalty rate applied is
used to test for impairment. If any such impairment exists then
the asset’s recoverable amount is estimated. Impairment losses
are recognised in the Consolidated Income Statement.
Impairment losses in respect of goodwill are not reversed.
The Group operates defined contribution pension schemes, the
assets of which are held separately from those of the Group in
independently administered funds. Obligations for contributions
to the defined contribution schemes are recognised as an
expense in the Consolidated Income Statement when incurred.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with
adopted IFRSs requires management to make judgements,
estimates and assumptions that affect the application of policies
and reported amounts of assets and liabilities, income and
expenses. The estimates and associated assumptions are based
on historical experience and various other factors that are
believed to be reasonable under the circumstances, the results
of which form the basis of making the judgements about
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from
these estimates. The judgements, estimates and assumptions
which have a significant risk of causing a material adjustment
to the carrying amount of assets and liabilities are
discussed below:
I.
Impairment of goodwill
Goodwill arising on acquisition is allocated to the
cash-generating units that are expected to benefit from the
synergies of the business combination from which goodwill
arose. In the case of retail acquisitions, goodwill is allocated to
groups of cash-generating units, being portfolios of stores,
whereas for acquisition of distribution businesses, goodwill is
allocated to the individual distribution company acquired.
The cash-generating units used to monitor goodwill and test it
for impairment are therefore the store portfolios and
distribution companies.
The recoverable amount is the higher of the value in use and
the fair value less the costs to sell. The recoverable amounts of
these cash-generating units are determined based on value-in-
use calculations. The use of this method requires the estimation
of future cash flows expected to arise from the continuing
operation of the cash-generating unit and the choice of a
suitable discount rate in order to calculate the present value.
See note 13 for further disclosure on impairment of goodwill
and review of the key assumptions used.
II.
Impairment of property, plant and equipment
and non-current other assets
Property, plant and equipment and non-current other assets are
reviewed for impairment if events or changes in circumstances
indicate that the carrying amount of an asset or a cash-
generating unit is not recoverable. The recoverable amount is
the greater of the fair value less costs to sell and value-in-use.
Impairment losses recognised in prior periods are assessed at
each reporting period date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if
there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the
extent that the assets carrying amount does not exceed the
carrying amount that would be held (net of depreciation)
if no impairment had been realised.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
This would include sublet premises becoming vacant, the
liquidation of an assignee resulting in a property reverting to
the Group or closing an uneconomic store and subletting at
below contracted rent.
VII. Onerous contract provisions
The Group makes a provision for specific onerous contracts
where there is a shortfall between the anticipated revenues and
costs pertaining to those contracts. Significant assumptions and
judgements are used in making these estimates, and changes
in assumptions and future events could cause the value of these
provisions to change.
VIII. Value of put options held by
non-controlling interest
The Group recognises put options over non-controlling interests
in its subsidiary undertakings as a liability in the Consolidated
Statement of Financial Position at the present value of the
estimated exercise price of the put option. The present value of
the non-controlling interests' put options are estimated based
on expected earnings in Board-approved forecasts and the
choice of a suitable discount rate. Upon initial recognition, and
for subsequent changes on remeasurement of the liability, a
corresponding entry is made to other equity.
IX.
Estimation of useful economic lives of brand names
The Group amortises brand names over their useful economic
life. In determining the useful economic life of each brand
name, the Board considers the market position of the brands
acquired, the nature of the market that the brands operate in,
typical product life cycles of brands and the useful economic
lives of similar assets that are used in comparable ways.
X.
Determination of fair value of assets and
liabilities on acquisition
For each acquisition, the Group reviews the appropriateness
of the book values of the assets and liabilities acquired, taking
into account the application of Group accounting policies, to
determine if fair value adjustments are required. The key
judgements involved are the identification and valuation of
intangible assets which require the estimation of future cash
flows based on the Board's strategic plans for the intangible
asset, the useful economic life of the intangible asset and the
selection of a suitable discount rate.
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Critical accounting estimates and
judgements (continued)
III.
Impairment of other intangible assets with
definite lives
The Group is required to test whether other intangible assets
with a definite useful economic life have suffered any
impairment. The recoverable amount of brand names is based
on an estimation of future sales and the choice of a suitable
royalty and discount rate in order to calculate the present value,
when this method is deemed the most appropriate.
Alternatively the carrying value of the brand names has been
allocated to a cash-generating unit, along with the relevant
goodwill and fascia names, and tested in the value-in-use
calculation performed for that cash generating unit. The
recoverable amount of brand licences is determined based on
value-in-use calculations. The use of this method requires the
estimation of future cash flows expected to arise from the
continuing operation of the cash-generating unit until the
license expiry date and the choice of a suitable discount rate in
order to calculate the present value. Note 13 provides further
disclosure on impairment of other intangible assets with definite
lives, including review of the key assumptions used.
IV. Impairment of other intangible assets with
indefinite lives
The Group is required to test whether other intangible assets
with an indefinite useful economic life have suffered any
impairment. The recoverable amount of these assets is
determined based on value-in-use calculations. The use of this
method requires the estimation of future cash flows expected to
arise from the continuing operation of the cash-generating unit
and the choice of a suitable discount rate in order to calculate
the present value. Note 13 provides further detail of the
judgements made by the Board in determining that the lives of
acquired fascia names are indefinite and further disclosure on
impairment of other intangible assets with indefinite lives,
including review of the key assumptions used.
V.
Provisions to write inventories down to net
realisable value
The Group makes provisions for obsolescence, mark downs
and shrinkage based on historical experiences and
management estimates of future events.
VI. Onerous property lease provisions
The Group makes a provision for onerous property leases on
specific stores based on the anticipated future cash outflows
relating to the contractual lease cost less potential sublease
income. The estimation of sublease income is based on
historical experience and knowledge of the retail property
market in the area around each specific property. Significant
assumptions and judgements are used in making these
estimates and changes in assumptions and future events could
cause the value of these provisions to change.
2. SEGMENTAL ANALYSIS
IFRS 8 'Operating Segments' requires the Group's segments to
be identified on the basis of internal reports about components
of the Group that are regularly reviewed by the Chief
Operating Decision Maker to allocate resources to the
segments and to assess their performance. The Chief
Operating Decision Maker is considered to be the Executive
Chairman of JD Sports Fashion Plc.
Information reported to the Chief Operating Decision Maker is
focused on the nature of the businesses within the Group.
A new reportable segment was created in the prior year on
acquisition of the Blacks business which signalled an entry into
the outdoor retail segment for the Group. The Group’s
reportable segments under IFRS 8 are therefore as follows:
• Sport retail – includes the results of the sport retail trading
companies JD Sports Fashion Plc, John David Sports Fashion
(Ireland) Limited, Spodis SA, Champion Sports Ireland, JD
Sprinter Holdings 2010 SL and Duffer of St George Limited
• Fashion retail – includes the results of the fashion retail
trading companies Bank Fashion Limited, R.D. Scott Limited,
Premium Fashion Limited and Tessuti Group Limited
(including subsidiary companies)
• Outdoor retail – includes the results of the outdoor retail
trading company Blacks Outdoor Retail Limited
• Distribution businesses – includes the results of the
distribution companies Topgrade Sportswear Limited,
Nicholas Deakins Limited, Kooga Rugby Limited, Nanny
State Limited, Focus Brands Limited, Kukri Sports Limited
(including global subsidiary companies) and Source Lab
Limited. Canterbury Limited (including global subsidiary
companies) was also included until the point of disposal
(see note 12)
The Chief Operating Decision Maker receives and reviews
segmental operating profit. Certain central administrative costs
including Group Directors' salaries are included within the
Group’s core ‘Sport retail’ result. This is consistent with the
results as reported to the Chief Operating Decision Maker.
IFRS 8 requires disclosure of information regarding revenue
from major products and customers. The majority of the
Group's revenue is derived from the retail of a wide range of
apparel, footwear and accessories to the general public.
As such, the disclosure of revenues from major customers is not
appropriate. Disclosure of revenue from major product groups
is not provided at this time due to the cost involved to develop
a reliable product split on a same category basis across all
companies in the Group.
Intersegment transactions are undertaken in the ordinary
course of business on arms length terms.
The Board consider that certain items are cross divisional in
nature and cannot be allocated between the segments on a
meaningful basis. The share of results of joint venture was
presented as unallocated in the following tables, as this entity
had trading relationships with companies in all of the Group’s
segments. In the prior year, the exceptional credits pertaining to
the dividend received from joint venture (£2,691,000) and
gain on disposal of joint venture (£871,000) (see note 17)
are included within the unallocated segment. Net funding costs
and taxation are treated as unallocated reflecting the nature of
the Group’s syndicated borrowing facilities and its tax group.
A deferred tax liability of £3,852,000 (2012: restated liability
of £723,000) and an income tax liability of £8,817,000
(2012: £8,861,000) are included within the unallocated segment.
Each segment is shown net of intercompany transactions
and balances within that segment. The eliminations remove
intercompany transactions and balances between different
segments which primarily relate to the net down of long term
loans and short term working capital funding provided by
JD Sports Fashion Plc (within Sport retail) to other companies
in the Group, and intercompany trading between companies
in different segments.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SEGMENTAL ANALYSIS (CONTINUED)
Business segments
Information regarding the Group’s reportable operating segments for the 53 weeks to 2 February 2013 is shown below:
Income statement
Gross revenue
Intersegment revenue
Revenue
Operating profit/(loss) before exceptional items
Exceptional items
Operating profit/(loss)
Financial income
Financial expenses
Profit before tax
Income tax expense
Profit for the period
Sport retail
£000
854,282
Fashion retail
£000
160,442
Outdoor retail
£000
121,006
Distribution
£000
130,342
Total
£000
1,266,072
(287)
-
(6,893)
(7,180)
853,995
160,442
121,006
123,449
1,258,892
77,791
(1,662)
76,129
(2,004)
(3,314)
(5,318)
(14,906)
(608)
(15,514)
442
236
678
61,323
(5,348)
55,975
645
(1,503)
55,117
(13,875)
41,242
Total assets and liabilities
Total assets
Total liabilities
Total segment net assets/(liabilities)
Sport retail
£000
432,190
(161,092)
271,098
Fashion retail
£000
70,725
(67,769)
2,956
Outdoor retail
£000
50,112
(64,157)
(14,045)
Distribution
£000
48,947
(44,530)
4,417
Unallocated
£000
-
(12,669)
(12,669)
Eliminations
£000
(99,467)
99,467
-
Total
£000
502,507
(250,750)
251,757
2. SEGMENTAL ANALYSIS (CONTINUED)
Business segments (continued)
Other segment information
Capital expenditure:
Brand names purchased
Property, plant and equipment
Non-current other assets
Depreciation, amortisation and impairments:
Depreciation and amortisation of non-current assets
Impairment of intangible assets
Impairment of non-current assets
Sport retail
£000
Fashion retail
£000
Outdoor retail
£000
Distribution
£000
Total
£000
5,540
30,692
5,350
23,850
-
803
-
3,015
-
4,018
2,315
62
-
3,440
-
1,183
-
-
-
1,031
-
1,277
-
40
5,540
38,178
5,350
30,328
2,315
905
The comparative segmental results for the 52 weeks to 28 January 2012 are as follows:
Income statement
Gross revenue
Intersegment revenue
Revenue
Operating profit/(loss) before exceptional items
Exceptional items
Operating profit/(loss)
Share of results of joint venture
Financial income
Financial expenses
Profit before tax
Income tax expense
Profit for the period
Sport retail
£000
774,991
(380)
774,611
74,301
(4,654)
69,647
Fashion retail
£000
151,642
-
151,642
3,303
(1,538)
1,765
Outdoor retail
£000
5,876
5,876
(2,199)
(3,500)
(5,699)
Distribution
£000
135,117
(7,723)
127,394
1,056
(3,555)
(2,499)
Unallocated
£000
-
-
-
-
3,562
3,562
Total
£000
1,067,626
(8,103)
1,059,523
76,461
(9,685)
66,776
1,068
646
(1,048)
67,442
(18,093)
49,349
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SEGMENTAL ANALYSIS (CONTINUED)
Business segments (continued)
Total assets and liabilities
(restated - see note 1)
Total assets
Total liabilities
Total segment net assets/(liabilities)
Other segment information
Capital expenditure:
Brand names purchased
Property, plant and equipment
Non-current other assets
Depreciation, amortisation and impairments:
Depreciation and amortisation of non-current assets
Impairment of intangible assets
Impairment of non-current assets
Geographical information
Sport retail
£000
407,807
(169,320)
238,487
Fashion retail
£000
60,587
(53,852)
6,735
Outdoor retail
£000
38,713
(42,526)
(3,813)
Distribution
£000
68,485
(71,222)
(2,737)
Unallocated
£000
-
(9,584)
(9,584)
Eliminations
£000
(88,004)
88,004
-
Total
£000
487,588
(258,500)
229,088
Sport retail
£000
Fashion retail
£000
Outdoor retail
£000
Distribution
£000
Total
£000
1,500
37,656
1,903
18,990
-
202
-
4,090
-
3,618
838
1,282
-
-
-
-
-
-
211
2,100
-
1,745
1,877
102
1,711
43,846
1,903
24,353
2,715
1,586
The Group's operations are located in the UK, Republic of Ireland, France, Spain, Australia, New Zealand, Canada, Dubai,
Singapore and Hong Kong. The following table provides analysis of the Group's revenue by geographical market, irrespective of
the origin of the goods/services:
3. PROFIT BEFORE TAX
Profit before tax is stated after charging:
Auditor’s remuneration:
Audit of these financial statements
Amounts receivable by the Company's auditor and its associates in respect of:
Audit of financial statements of subsidiaries of the Company
Audit-related assurance services
Taxation compliance services
Other tax advisory services
All other services
Depreciation and amortisation of non-current assets:
Depreciation of property, plant and equipment
Depreciation of investment property - owned
Amortisation of intangible assets
Amortisation of non-current other assets - owned
Impairments of non-current assets:
Property, plant and equipment
Intangible assets (see note 13)
Other non-current assets
Rentals payable under non-cancellable operating leases for:
Land and buildings
Other - plant and equipment
Profit before tax is stated after crediting:
Rents receivable and other income from property
Sundry income
Foreign exchange gain recognised
53 weeks to
2 February
2013
£000
52 weeks to
28 January
2012
£000
123
453
42
23
67
60
26,993
-
2,798
537
714
2,315
191
117,404
2,760
945
1,482
2,633
120
393
45
20
140
55
21,427
3
2,451
472
1,597
2,715
(11)
92,586
2,243
578
1,952
1,438
Revenue
UK
Europe
Rest of world
53 weeks to
2 February 2013
£000
1,029,801
197,596
31,495
1,258,892
52 weeks to
28 January 2012
£000
863,771
157,668
38,084
1,059,523
In addition, fees of £46,000 (2012: £35,000) were incurred and paid by Pentland Group Plc (see note 35) in relation to the
non-coterminous audit of the Group for the purpose of inclusion in their consolidated financial statements.
Non-current other assets comprise key money, store deposits and legal fees associated with the acquisition of leasehold interests
(see note 16).
The revenue from any individual country, with the exception of the UK, is not more than 10% of the Group's total revenue.
The following is an analysis of the carrying amount of segmental non-current assets, excluding the deferred tax assets of £nil
(2012: £nil) by the geographical area in which the assets are located:
Non-current assets
UK
Europe
Rest of world
2013
£000
190,590
54,961
142
245,693
2012 (restated
- see note 1)
£000
173,973
58,641
560
233,174
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. EXCEPTIONAL ITEMS
5. REMUNERATION OF DIRECTORS
Loss on disposal of non-current assets (1)
Impairment of non-current assets (2)
Onerous lease provision (3)
Reorganisation of the warehouse operations (4)
Canterbury restructuring (5)
Blacks restructuring (6)
Selling and distribution expenses - exceptional
Profit on disposal of Canterbury (7)
Gain on acquisition (8)
Dividend received from joint venture (9)
Impairment of goodwill, brand names and fascia names (10)
Administrative expenses - exceptional
Note
25
17
17
53 weeks to
2 February
2013
£000
212
905
1,332
133
219
923
3,724
(691)
-
-
2,315
1,624
5,348
52 weeks to
28 January
2012
£000
1,148
1,586
(214)
3,000
1,512
3,500
10,532
-
(871)
(2,691)
2,715
(847)
9,685
(1) Relates to the excess of net book value of property, plant and equipment and non-current other assets disposed over
proceeds received
(2)
(3)
(4)
(5)
Relates to property, plant and equipment and non-current other assets in cash-generating units which are loss making,
where it is considered that this position cannot be recovered
Relates to the net movement in the provision for onerous property leases on trading and non-trading stores
(see note 25)
Relates to the reorganisation of the warehouse operations consisting of the provision of onerous property leases,
redundancy costs and dilapidations at the vacated premises
Relates to the restructuring and closure of the Canterbury North America LLC and Canterbury European Fashionwear
operations following the decision to wind down the separate businesses
(6) Relates to the restructuring of the Blacks business following acquisition for relocation of warehouse operations
(7) Profit on the disposal of Canterbury Limited and its subsidiaries (see note 12)
(8) Relates to the remeasurement in fair value of the Group's previously held investment in Focus Brands Limited
(9)
The dividend of £7,217,000 was received from Focus Brands Limited on 15 February 2011 prior to the Group's acquisition
of a further 31% of the issued share capital of Focus Brands Limited. The dividend received was eliminated against the
carrying value of the Group's equity accounted investment with the excess of £2,691,000 recognised in the Consolidated
Income Statement as an exceptional credit
(10) Relates to the impairment in the period to 2 February 2013 of the goodwill arising on the acquisition of Pink Soda Limited
(formerly Bank Stores Holdings Limited) and the impairment in the period to 28 January 2012 of the goodwill and brand
name arising on the acquisition of Kooga Rugby Limited and the fascia name arising on the acquisition of
Premium Fashion Limited (see note 13)
These selling and distribution expenses and administrative expenses are exceptional items as they are, in aggregate, material in
size and/or unusual or infrequent in nature.
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81
53 weeks to
2 February
2013
£000
102
3,056
53
3,211
52 weeks to
28 January
2012
£000
99
3,462
49
3,610
Directors' emoluments:
As Non-Executive Directors
As Executive Directors
Pension contributions
The remuneration of the Executive Directors includes provision for future retention payments totalling £900,000 (2012: £900,000)
and provision for future LTIP payments of £417,000 (2012: £417,000). Further information on Directors’ emoluments is shown in
the Directors' Remuneration Report on page 59.
6. STAFF NUMBERS AND COSTS
GROUP
The average number of persons employed by the Group (including Directors) during the period, analysed by category, was as follows:
GROUP
Sales and distribution
Administration
Full time equivalents
The aggregate payroll costs of these persons were as follows:
GROUP
Wages and salaries
Social security costs
Other pension costs (see note 30)
2013
15,885
778
16,663
10,430
53 weeks to
2 February
2013
£000
188,826
18,607
1,269
208,702
2012
16,791
591
17,382
9,021
52 weeks to
28 January
2012
£000
155,369
14,018
1,416
170,803
In the opinion of the Board, the key management as defined under revised IAS 24 'Related Party Disclosures' are the six Executive
and Non-Executive Directors (2012: six). Full disclosure of the Directors' remuneration is given in the Directors' Remuneration
Report on page 59.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. STAFF NUMBERS AND COSTS (CONTINUED)
COMPANY
The average number of persons employed by the Company (including Directors) during the period, analysed by category, was as follows:
COMPANY
Sales and distribution
Administration
Full time equivalents
The aggregate payroll costs of these persons were as follows:
COMPANY
Wages and salaries
Social security costs
Other pension costs
2013
8,438
293
8,731
5,229
53 weeks to
2 February
2013
£000
91,927
6,038
517
98,482
2012
8,412
258
8,670
5,114
52 weeks to
28 January
2012
£000
91,548
6,289
485
98,322
7. FINANCIAL INCOME
Bank interest
Other interest
8. FINANCIAL EXPENSES
On bank loans and overdrafts
Interest on obligations under finance leases
Other interest
9. INCOME TAX EXPENSE
Current tax
UK corporation tax at 24.3% (2012: 26.3%)
Adjustment relating to prior periods
Total current tax charge
Deferred tax
Deferred tax (origination and reversal of temporary differences)
Adjustment relating to prior periods
Total deferred tax charge /(credit) (see note 26)
Income tax expense
53 weeks to
2 February
2013
£000
620
25
645
53 weeks to
2 February
2013
£000
1,367
19
117
1,503
52 weeks to
28 January
2012
£000
572
74
646
52 weeks to
28 January
2012
£000
905
129
14
1,048
53 weeks to
2 February
2013
£000
52 weeks to
28 January
2012
£000
13,311
163
13,474
1,410
(1,009)
401
13,875
19,204
609
19,813
(1,825)
105
(1,720)
18,093
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85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. INCOME TAX EXPENSE (CONTINUED)
Reconciliation of income tax expense
Profit before tax multiplied by the standard rate of corporation tax in the UK of 24.3% (2012: 26.3%)
Effects of:
Expenses not deductible
Depreciation and impairment of non-qualifying non-current assets
(including brand names arising on consolidation)
Non taxable income
Loss on disposal of non-qualifying non-current assets
Effect of tax rates in foreign jurisdictions
Profit from joint venture - after tax result included
Non-qualifying impairment of goodwill on consolidation
Recognition of previously unrecognised tax losses
Reduction in tax rate
Change in unrecognised temporary differences
(Over)/under provided in prior periods
Income tax expense
10. EARNINGS PER ORDINARY SHARE
Basic and diluted earnings per ordinary share
53 weeks to
2 February
2013
£000
13,393
52 weeks to
28 January
2012
£000
17,737
172
784
(323)
(45)
233
-
605
(146)
83
(35)
(846)
13,875
288
1,175
-
154
182
(281)
549
(3,283)
(5)
863
714
18,093
The calculation of basic and diluted earnings per ordinary share at 2 February 2013 is based on the profit for the period
attributable to equity holders of the parent of £38,786,000 (2012: £46,847,000) and a weighted average number of ordinary
shares outstanding during the 53 weeks ended 2 February 2013 of 48,661,658 (2012: 48,661,658).
Issued ordinary shares at beginning and end of period
53 weeks to
2 February
2013
48,661,658
52 weeks to
28 January
2012
48,661,658
Adjusted basic and diluted earnings per ordinary share
Adjusted basic and diluted earnings per ordinary share have been based on the profit for the period attributable to equity holders
of the parent for each financial period but excluding the post-tax effect of certain exceptional items. The Directors consider that this
gives a more meaningful measure of the underlying performance of the Group.
Profit for the period attributable to equity holders of the parent
Exceptional items excluding loss on disposal of non-current assets
Tax relating to exceptional items
Share of exceptional items of joint venture (net of income tax)
Profit for the period attributable to equity holders of the parent excluding exceptional items
Adjusted basic and diluted earnings per ordinary share
Note
4
17
53 weeks to
2 February
2013
£000
38,786
5,136
(850)
-
43,072
88.51p
52 weeks to
28 January
2012
£000
46,847
8,537
(2,689)
(1,170)
51,525
105.89p
11. ACQUISITIONS
Current period acquisitions
Originals
On 14 March 2012, the Group acquired, via its subsidiary R.D. Scott Limited, the trade and assets of seven stores trading as
Originals and the head office along with the Originals name and inventory from the Administrators of Retailchic Limited for a total
cash consideration of £100,000. Subsequent to the period end, the trade and assets of the Originals stores have been transferred
to Tessuti Limited, another subsidiary of the Group.
Included in the 53 week period to 2 February 2013 is revenue of £1,793,000 and a loss before tax of £302,000 in
respect of Originals.
Acquisition of Source Lab Limited
On 9 May 2012, the Group acquired 85% of the issued share capital of Source Lab Limited for a cash consideration of
£2,550,000. Source Lab Limited, which was established in 2005, design, source and distribute football related apparel under
license from some of the biggest clubs in Europe including Manchester United, Chelsea, Arsenal and Barcelona.
The provisional goodwill calculation is summarised below:
Acquiree’s net assets at the acquisition date:
Property, plant and equipment
Inventories
Trade and other receivables
Cash and cash equivalents
Interest-bearing loans and borrowings
Trade and other payables
Deferred tax liabilities
Net identifiable assets
Non-controlling interest (15%)
Goodwill on acquisition
Consideration paid - satisfied in cash
Book value
£000
Measurement
adjustments
£000
Provisional fair
value at
2 February
2013
£000
9
23
1,370
162
(170)
(839)
-
555
(83)
-
229
(68)
-
-
(222)
(1)
(62)
9
9
252
1,302
162
(170)
(1,061)
(1)
493
(74)
2,131
2,550
The fair value of trade and other receivables is £1,302,000 and includes trade receivables with a fair value of £1,274,000.
The gross contractual amount for trade receivables is £1,274,000, of which £nil is expected to be uncollectable.
The Board believes that the excess of consideration paid over net identifiable assets is best considered as goodwill on acquisition
representing employee expertise and anticipated future operating synergies.
The goodwill calculation is provisional at 2 February 2013 to allow further measurement adjustments to be made if necessary,
during the remaining measurement period to reflect any new information obtained about facts and circumstances that existed at
the acquisition date that would have affected the measurement of the amounts recognised as of that date. The goodwill arises on
consolidation and is therefore not tax deductible.
Included in the 53 week period to 2 February 2013 is revenue of £5,161,000 and a profit before tax of £480,000 in respect of
Source Lab Limited. Included within revenue is £229,000 of revenue to other Group companies which has therefore been
eliminated on consolidation.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. ACQUISITIONS (CONTINUED)
Acquisition of Tessuti Group Limited
On 18 May 2012, the Group, via its new 60% owned subsidiary Tessuti Group Limited, acquired the trading businesses that make
up the Tessuti group for a total consideration of £4,819,000. On acquisition, Tessuti group operated four premium fashion retail
stores in the North West of England, along with two trading websites.
The provisional goodwill calculation is summarised below:
Acquiree's net assets at the acquisition date:
Intangible assets
Property, plant and equipment
Inventories
Trade and other receivables
Cash and cash equivalents
Interest-bearing loans and borrowings
Trade and other payables
Deferred tax liabilities
Net identifiable assets
Non-controlling interest
Goodwill on acquisition
Consideration paid - satisfied in cash
Deferred consideration - non-controlling interest loan notes
Consideration paid - satisfied in shares
Total consideration
Book value
£000
Measurement
adjustments
£000
Provisional fair
value at
2 February
2013
£000
-
1,898
660
303
1,044
(508)
(736)
(100)
2,561
783
852
-
-
-
-
-
-
(213)
639
(256)
852
1,898
660
303
1,044
(508)
(736)
(313)
3,200
527
1,092
3,225
1,570
24
4,819
The Group’s non-controlling interest arising on acquisition of £527,000 includes indirect ownership within the
Tessuti Group of companies.
The fair value of trade and other receivables is £303,000 and includes trade receivables with a fair value of £26,000.
The gross contractual amount for trade receivables is £26,000, of which £nil is expected to be uncollectable.
The intangible asset acquired represents the fair value of the ‘Tessuti’ fascia name. It is the intention of the Group to trade under
the Tessuti fascia for the foreseeable future. The Board believes that the excess of consideration paid over net identifiable assets is
best considered as goodwill on acquisition, representing employee expertise and anticipated future operating synergies.
The goodwill calculation is provisional at 2 February 2013 to allow further measurement adjustments to be made if necessary,
during the remaining measurement period to reflect any new information obtained about facts and circumstances that existed at
the acquisition date that would have affected the measurement of the amounts recognised as of that date. The goodwill arises on
consolidation and is therefore not tax deductible.
Included in the 53 week period to 2 February 2013 is revenue of £4,821,000 and a profit before tax of £163,000 in respect of
Tessuti Group Limited.
Full year impact of acquisitions
Had the acquisitions of Originals, Source Lab Limited and Tessuti Group Limited been effected at 29 January 2012, the revenue
and profit before tax of the Group for the 53 week period to 2 February 2013 would have been £1,262,598,000 and
£55,093,000 respectively.
Acquisition costs
Acquisition-related costs amounting to £155,000 (Originals: £13,000; Source Lab Limited: £66,000; and Tessuti Group Limited:
£76,000) have been excluded from the consideration transferred and have been recognised as an expense in the year, within
administrative expenses in the Consolidated Income Statement.
11. ACQUISITIONS (CONTINUED)
Prior period acquisitions
Acquisition of Kukri Sports Limited
On 7 February 2011, the Group acquired 80% of the issued
share capital of Kukri Sports Limited for a cash consideration of
£1. Kukri Sports Limited has a number of subsidiaries around
the world, which source and provide bespoke sports teamwear
to schools, universities and sports clubs. In addition, Kukri
Sports Limited is sole kit supplier to a number of professional
sports teams and international associations.
No measurement adjustments have been made to the fair
values in the 53 week period to 2 February 2013.
Acquisition of additional shares in
Focus Brands Limited
On 16 February 2011, the Group acquired a further 31% of
the issued share capital of Focus Brands Limited for a cash
consideration of £1,000,000, with potential further deferred
consideration of £250,000 depending on performance.
The Group’s original share of 49% was acquired on 3
December 2007. Focus Brands Limited was originally
incorporated in order to acquire Focus Group Holdings Limited
and its subsidiary companies and was an entity jointly
controlled by the Group and the former shareholders of Focus
Group Holdings Limited. The additional shares purchased take
the Group’s holding in Focus Brands Limited to 80%, thereby
giving the Group control. Focus Brands Limited is now a
subsidiary of the Group rather than a jointly-controlled entity.
The increase in Group ownership has resulted in a gain of
£871,000 being recognised as an exceptional credit in the
Consolidated Income Statement upon remeasurement of the
Group’s previously held equity interest to fair value.
No measurement adjustments have been made to the fair
values in the 53 week period to 2 February 2013.
Acquisition of Champion Sports (Holdings)
On 4 April 2011, the Group (via its subsidiaries The John
David Group Limited and JD Sports Limited) acquired 100% of
the issued share capital of Champion Sports (Holdings) for a
cash consideration of £6 (€7) and have also advanced
£15,066,000 (€17,100,000) to allow it to settle all of its
indebtedness save for a potential maximum £2,203,000
(€2,500,000) of leasing finance.
Champion was founded in 1992 and is one of the leading
retailers of sports apparel and footwear in the Republic of
Ireland. On acquisition, Champion had 22 stores in premium
locations in the Republic of Ireland and one store in Northern
Ireland. In the period since acquisition two stores in the
Republic of Ireland and the store in Northern Ireland have
been closed with a further 3 stores in the Republic of Ireland
transferred to John David Sports Fashion (Ireland) Limited.
No measurement adjustments have been made to the fair
values in the 53 week period to 2 February 2013.
Acquisition of JD Sprinter Holdings 2010 SL
On 17 June 2011, the Group, via its new 50.1% owned
subsidiary JD Sprinter Holdings 2010 SL (‘JD Sprinter’),
acquired 100% of the trading businesses that make up the
Sprinter group of companies in Spain. The remaining 49.9% of
the shares in JD Sprinter are owned equally between the
Segarra family, who founded Sprinter, and the Bernad family,
who have been investors in Sprinter for 15 years. JD have
made an investment of £17,536,000 (€20,000,000) into JD
Sprinter by way of subscription for its new shares and the
Segarra and Bernad families have put the Sprinter companies
into JD Sprinter as consideration for their new shares.
Sprinter was founded in 1981 and is one of the
leading sports retailers in Spain selling footwear, apparel,
accessories and equipment for a wide range of sports as well
as some lifestyle casual wear including childrenswear. This offer
includes both international sports brands and successful own
brands. Sprinter is based in Elche in South East Spain and on
acquisition had 47 stores primarily based in Andalucia
and Levante.
During the 12 month period since acquisition, certain
measurement adjustments have been made to the fair
values of the net assets of JD Sprinter Holdings 2010 SL
as at the acquisition date in accordance with IFRS 3
‘Business Combinations’.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. ACQUISITIONS (CONTINUED)
Acquisition of JD Sprinter Holdings 2010 SL (continued)
The goodwill calculation is summarised below:
Acquiree's net assets at the acquisition date:
Intangible assets
Property, plant and equipment
Non-current other assets
Inventories
Trade and other receivables
Cash and cash equivalents
Interest-bearing loans and borrowings
Trade and other payables
Provisions
Deferred tax asset/ (liabilities)
Net identifiable assets
Non-controlling interest (49.9%)
Goodwill on acquisition
Consideration paid - satisfied in cash
Consideration paid - share of cash invested in JD Sprinter
Total consideration
The total non-controlling interest arising on the acquisition of JD Sprinter comprises:
Non-controlling interest in net identifiable assets of Sprinter trading companies
Non-controlling interest in net identifiable assets of JD Sprinter company
Total non-controlling interest
Provisional fair
value at
28 January
2012
£000
Measurement
adjustments
£000
Fair value at
2 February
2013
£000
5,058
9,053
1,035
15,426
383
1,832
(3,326)
(19,957)
(355)
(1,329)
7,820
(3,902)
6,590
3,508
7,000
10,508
3,902
7,000
10,902
-
(609)
-
-
-
-
-
-
-
289
(320)
160
160
-
-
-
(160)
-
(160)
5,058
8,444
1,035
15,426
383
1,832
(3,326)
(19,957)
(355)
(1,040)
7,500
(3,742)
6,750
3,508
7,000
10,508
3,742
7,000
10,742
11. ACQUISITIONS (CONTINUED)
Blacks Outdoor Retail Limited
On 9 January 2012, the Group acquired, via its subsidiary Blacks Outdoor Retail Limited, the trade and assets of Blacks Leisure
Group Plc and certain of its subsidiaries from its Administrators for a total cash consideration of £20,000,000.
Blacks is a long established retailer of specialist outdoor footwear, apparel and equipment and has two fascias (Blacks and Millets)
and was trading from 296 stores at the point of its administration. Since acquisition, 123 loss making stores have been closed. In
addition to selling third party brands such as North Face and Berghaus, Blacks has two strong own brands in Eurohike and Peter Storm.
During the 12 month period since acquisition, certain measurement adjustments have been made to the fair values of the net
assets of Blacks Outdoor Retail Limited as at the acquisition date in accordance with IFRS 3 ‘Business Combinations’.
The goodwill calculation is summarised below:
Acquiree’s net assets at acquisition date:
Intangible Assets
Non-current other assets
Property, plant and equipment
Inventories
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Deferred tax liabilities
Net identifiable assets
Goodwill on acquisition
Consideration paid - satisfied in cash
Provisional fair
value at
28 January
2012
£000
Measurement
adjustments
£000
Fair value at
2 February
2013
£000
11,500
1,650
3,000
6,692
60
5,349
(13,022)
(413)
14,816
5,184
20,000
-
-
-
2,888
-
-
(204)
-
2,684
(2,684)
-
11,500
1,650
3,000
9,580
60
5,349
(13,226)
(413)
17,500
2,500
20,000
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. DISPOSALS
Current year disposals
12. DISPOSALS (CONTINUED)
Prior year disposals
Disposal of 100% of the issued ordinary share capital of Canterbury Limited (and it's subsidiary undertakings)
Disposal of 15% of issued ordinary share capital of Premium Fashion Limited
On 13 September 2012 the Group disposed of its 100% shareholding in Canterbury Limited to Pentland Group Plc for a total
cash payment of £22,698,521 and acquired the ONETrueSaxon Brand. The total cash payment received comprised £1 for the
entire share capital of Canterbury Limited and £22,698,520 which repaid the total intercompany receivable balance owing to
the Company from the Canterbury Group at the date of disposal.
The assets and liabilities related to Canterbury Limited (and its subsidiary undertakings) form a disposal group.
However, Canterbury has not been treated as a discontinued operation at 2 February 2013, as its teamwear and leisurewear
offering did not represent a major line of business.
Financial information related to the disposal is set out below:
On 18 June 2011, the Group acquired, via its subsidiary Premium Fashion Limited, the trade and assets of 8 stores trading
as Cecil Gee along with the Cecil Gee name and inventory from Moss Bros Group Plc for a cash consideration of £1,598,000.
On 2 December 2011 15% of the issued share capital was disposed of to Benba Investments Limited, Chape Investments Limited
and Ginda Investments Limited by issuing 1,500 new shares (500 to each new shareholder) in exchange for a cash consideration
of £1,500.
On 25 July 2012 the Group reacquired the 15% share capital for cash consideration of £40,000. As the Group already had
control of Premium Fashion Limited, the increase in Group ownership has been accounted for as an equity transaction.
Consideration received
Less: carrying value of net assets disposed of
Plus: share of translation reserve recycled
Less: non-controlling interest disposed of
Less: transaction costs
Profit on disposal
Net cash flow on disposal:
Consideration received
Less: cash and cash equivalents disposed of
Net cash inflow from disposal
Put and call options
£000
22,699
(19,748)
910
(2,570)
(600)
691
22,699
(5,888)
16,811
The Group (via its subsidiary Canterbury Limited) was party to a put and call option agreement between Canterbury Limited
and the vendors of Canterbury of New Zealand, whereby Canterbury Limited may acquire or be required to acquire the
non-controlling interest of 49% of the issued share capital of Canterbury of New Zealand Limited.
In addition, the Group (via its subsidiary Canterbury Limited) was party to a put and call option between Canterbury Limited and
the non-controlling interest in Canterbury International (Australia) Pty Limited, whereby Canterbury Limited may acquire or be
required to acquire 25% of the issued ordinary share capital of Canterbury International (Australia) Pty Limited.
At the date of disposal of Canterbury Limited, a gross liability of £5,261,000 recognised for the put options on Canterbury
of New Zealand and Canterbury International (Australia) Pty Limited measured in accordance with IAS 32 has been replaced
with the fair value under IAS 39 of that derivative liability. This liability is included in the net assets disposed of.
Subsequent to the disposal an amount of £2,691,000 which represents the cumulative amounts previously recognised on the
re-measurement under IAS 32 of the put options was transferred from other equity to retained earnings.
13. INTANGIBLE ASSETS
GROUP
Cost or valuation
At 29 January 2011
Acquisitions
Exchange differences
At 28 January 2012
Acquisitions
Divestment of subsidiaries
Exchange differences
At 2 February 2013
Amortisation and impairment
At 29 January 2011
Charge for the period
Impairments
At 28 January 2012
Charge for the period
Impairments
Divestment of subsidiaries
At 2 February 2013
Net book value
At 2 February 2013
At 28 January 2012
At 29 January 2011
Goodwill
£000
Brand licences
£000
Brand names
£000
Fascia name
£000
42,341
24,047
(1,006)
65,382
3,328
-
(813)
67,897
9,869
-
1,537
11,406
-
2,315
-
13,721
54,176
53,976
32,472
11,779
-
-
11,779
-
-
-
11,779
1,208
1,111
-
2,319
1,112
-
-
3,431
8,348
9,460
10,571
11,227
5,431
-
16,658
5,540
(6,884)
-
15,314
1,436
1,340
340
3,116
1,686
-
(2,016)
2,786
5,481
16,396
(727)
21,150
852
-
(192)
21,810
-
-
838
838
-
-
-
838
Total
£000
70,828
45,874
(1,733)
114,969
9,720
(6,884)
(1,005)
116,800
12,513
2,451
2,715
17,679
2,798
2,315
(2,016)
20,776
12,528
13,542
9,791
20,972
20,312
5,481
96,024
97,290
58,315
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93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. INTANGIBLE ASSETS (CONTINUED)
Impairment
The impairment in the period relates to a partial impairment of the goodwill on the acquisition of the entire issued share capital
of Pink Soda Limited (formerly Bank Stores Holdings Limited) in 2007. The goodwill recognised on the acquisition was
£14,154,000 however following a difficult trading period in the Bank stores, where revenues on certain key brands declined;
£2,315,000 of the goodwill has been impaired being the amount unsupported in the impairment review performed on the
Bank cash-generating unit. The Board believes that the remaining goodwill of £11,839,000 is justified after having performed
relevant sensitivity analysis.
The impairment in the prior period relates to the goodwill and brand name totalling £1,877,000 on the acquisition of the entire
issued share capital of Kooga Rugby Limited in 2009 and the Cecil Gee fascia name of £838,000 arising on the acquisition
of the trade and assets of Cecil Gee from Moss Bros in June 2011.
Divestment of subsidiaries
The divestment in the period of £4,868,000 relates to the carrying value of the Canterbury brand name recognised
on acquisition of Canterbury Limited in 2009. The Group disposed its 100% shareholding in Canterbury Limited on
13 September 2012 (see note 12).
Intangibles assets with definite lives
Brand licences
Brand licences are being amortised on a straight line basis over the licence period. Amortisation of these intangibles is included
within cost of sales in the Consolidated Income Statement. Brand licenses are tested annually for impairment by comparing the
recoverable amount to their carrying value.
The recoverable amount of brand licences is determined based on value-in-use calculations. The use of this method requires the
estimation of future cash flows expected to arise from the continuing operation of the relevant cash-generating unit and the choice
of a suitable discount rate in order to calculate the present value.
The Group's brand licenses and the key assumptions used in the value-in-use calculations, is as follows:
Basic information
Impairment model assumptions used
GROUP
Segment
Terms
Net
Book
Value
2013
£000
Net
Book
Value
2012
£000
Short
term
growth
rate (1)
%
Cost
£000
Long
term
growth
rate (2)
% Margin rate
Fila
Sport
10 year license from January 2011 for
exclusive use of the brand in the UK and
Republic of Ireland
7,500
5,938
6,688
2.0%
2.0%
Sergio
Tacchini
Sport
Sub-licence to use the brand in the UK
until 2019
4,279
11,779
2,410
8,348
2,772
9,460
3.5%
2.0%
Gross margins over the remaining license
period are assumed to be broadly consistent
with approved budget levels for the period
ending January 14
Gross margins over the remaining license
period are assumed to be broadly consistent
with approved budget levels for the period
ending January 14
Pre-tax
discount
rate (3)
2013
%
Pre-tax
discount
rate (3)
2012
%
13.9%
12.2%
13.9%
12.2%
(1) The short term growth rate is the approved compound annual growth rate in sales for the first two year period following
the January 2014 financial year currently underway
(2) The long term growth rate is the rate used thereafter until the end of the license period
(3) The discount rate applied is pre-tax and reflects current market assessments of the time value of money and risks specific
to the assets, for which future cash flow estimates have not been adjusted. These discount rates are considered to be
equivalent to the rate a market participant would use
13. INTANGIBLE ASSETS (CONTINUED)
Brand names
Brand names are all amortised over a period of 10 years and the amortisation charge is included within administrative expenses
in the Consolidated Income Statement. Brand names are tested annually for impairment by comparing the recoverable amount to
their carrying value.
The recoverable amount of brand names is determined based on a ‘royalty relief’ method of valuation, when this method is
deemed the most appropriate, which takes projected future sales, applies a royalty rate to them and discounts the projected future
post-tax royalties to arrive at a net present value. Alternatively the carrying value of the brand names has been allocated to a
cash-generating unit, along with the relevant goodwill and fascia names, and tested in the value-in-use calculation performed for
that cash generating unit (see below).
The Group's brand names and the key assumptions used in ‘royalty relief’ method of valuation, is as follows:
Basic information
Segment
GROUP
Royalty relief model used to test the following brands:
Peter Werth
Sonneti
Duffer of St George
Henleys
One True Saxon
Fly 53
Gio Goi
Sport
Sport
Sport
Sport
Sport
Sport
Sport
Date of
acquisition
26 May 2011
26 April 2010
24 November 2009
4 May 2012
13 September 2012
2 February 2013
31 January 2013
Brands included within the indefinite life intangible asset models (as below):
17 March 2011
Fenchurch
9 January 2012
Peter Storm
9 January 2012
Eurohike
7 February 2011
Kukri
Nanny State
4 August 2010
Brands with nil net book value at period end:
Chilli Pepper
Kooga
Canterbury
Sport
Outdoor
Outdoor
Distribution
Distribution
18 June 2010
3 July 2009
4 August 2009
Sport
Distribution
Distribution
Net
Book
Value
2013
£000
333
1,140
1,332
2,435
48
415
2,400
889
2,021
674
576
265
Cost
£000
400
1,520
2,042
2,632
50
458
2,400
1,100
2,250
750
720
350
Impairment model assumptions used
Net Book
Value
2012
£000
Short term
growth
rate (1)
%
Long term
growth
rate (2)
%
Pre-tax
discount
rate (3)
2013
%
Pre-tax
discount
rate (3)
2012
%
2.0%
2.0%
5.0%
9.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
13.9%
13.9%
13.9%
14.5%
14.5%
14.5%
14.5%
12.2%
12.2%
12.2%
-
-
-
-
373
1,292
1,558
-
-
-
-
999
2,250
750
648
298
190
452
-
15,314
-
-
-
12,528
162
-
5,212
13,542
(1) The short term growth rate is the approved annual growth rate in sales for the first two year period following the January 2014
financial year currently underway
(2) The long term growth rate is the rate used thereafter until the end of the useful life remaining
(3) The discount rate applied is pre-tax and reflects current market assessments of the time value of money and risks specific to
the assets, for which future cash flow estimates have not been adjusted. These discount rates are considered to be equivalent to
the rate a market participant would use
94
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& ACCOUNTS
2013
95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. INTANGIBLE ASSETS (CONTINUED)
Goodwill
Intangibles assets with indefinite lives
Fascia name
Fascia names are not being amortised as management
consider these assets to have indefinite useful economic life.
Factors considered by the Board in determining that the useful
life of the fascia names are indefinite for all fascia names, with
the exception of 'Cecil Gee' include:
• The strength of the respective fascia names in the relevant
sector and geographic region where the fascia is located
• The history of the fascia names and that of similar assets in
the UK (in relation to Blacks, Millets, Bank and Tessuti),
Republic of Ireland (Champion) and Spain (Sprinter)
retail sectors
• The commitment of the Group to continue to operate these
stores separately for the foreseeable future, including the
ongoing investment in new stores and refurbishments
The 'Cecil Gee' fascia name was fully impaired in the prior period.
Goodwill represents amounts arising on acquisition of
subsidiaries. Goodwill is stated at cost less any accumulated
impairment losses.
Goodwill and fascia names are allocated to the
Group’s cash-generating units ('CGUs') and tested
annually for impairment.
The CGUs used are either the store portfolios or distribution
businesses acquired. The recoverable amount is compared
to the carrying amount of the CGU including goodwill and
fascia names.
The recoverable amount of a CGU is determined based on
value-in-use calculations. The carrying amount of goodwill and
fascia name by CGU, along with the key assumptions used in
the value-in-use calculation is set out on page 95 (opposite).
13. INTANGIBLE ASSETS (CONTINUED)
Goodwill (continued)
Basic financial information
Impairment model assumptions used
Goodwill
2013
£000
924
Fascia
name
2013
£000
-
Total
intangible
2013
£000
924
Goodwill
2012
£000
924
Fascia name
2012
£000
-
Total
intangible
2012
£000
924
Short
term
growth
rate (1)
%
1.0%
14,976
-
14,976
14,976
-
14,976
1.0%
Long
term
growth
rate (2)
% Margin rate
1.0% Gross margins are assumed to be
broadly consistent with recent
historic and approved budget levels
1.0% Gross margins are assumed to be
broadly consistent with recent
historic and approved budget levels
Pre-tax
discount
rate (3)
2013
%
Pre-tax
discount
rate (3)
2012
%
10.5% 12.2%
10.5% 12.2%
11,202
2,000
13,202
11,765
Segment
Sport
Allsports
store portfolio
First Sport
store portfolio
Sport
Champion
store portfolio
Sport
2,000
13,765
2.0%
2.0% Gross margins are assumed to
improve by 3.3% in the first five
year period from the recent margin
rate achieved to reflect
implementation of enhanced group
terms and to reflect continuing
focused strategy regarding stock and
merchandising
14.4% 16.1%
4,331
10,754
2.0%
2.0% Gross margins are assumed to
improve steadily over the first five
year period to 1.2% above the
current margin rate to reflect
continuing focused strategy
regarding stock and merchandising
20.7% 16.4%
5,481
19,635
1.0%
0.2% Gross margins are assumed to
improve by 1.3% in the first five
year period from the recent margin
rate achieved to reflect increase
proportion of own brand sales
budget
13.3% 12.2%
Sprinter
store portfolio
Sport
6,173
4,139
10,312
6,423
Fashion
11,839
5,481
17,320
14,154
Bank
store portfolio
(4)
Tessuti
store portfolio
Blacks/Millets
store portfolio
(5)
Nicholas
Deakins
Limited
Kukri Sports
Limited (6)
Source
Lab
Limited
Focus
Brands
Limited
Topgrade
Sportswear
Limited
Fashion
1,092
852
1,944
Originals
store portfolio
Fashion
105
-
105
-
-
-
-
-
2.0%
-
2.0%
1.0% Gross margins are assumed to be
broadly consistent with recent
historic and approved budget levels
1.0% Gross margins are assumed to be
14.5%
broadly consistent with recent
historic and approved budget levels
14.5%
-
-
Outdoor
2,500
8,500
11,000
2,500
8,500
11,000
2.0%
2.0% Gross margins are assumed to
Distribution
864
-
864
864
Distribution
1,653
-
1,653
1,653
Distribution
2,131
-
2,131
-
Distribution
700
Distribution
17
-
-
700
700
17
17
-
-
-
-
-
864
1.0%
1,653
1.0%
-
2.0%
700
1.0%
17
54,176
20,972
75,148
53,976
20,312
74,288
improve by 5.0% in the first five
year period from the recent margin
achieved to reflect focused strategy
regarding stock and merchandising
1.0% Gross margins are assumed to be
broadly consistent with recent
historic and approved budget levels
1.0% Gross margins are assumed to be
broadly consistent with recent
historic and approved budget levels
1.0% Gross margins are assumed to be
broadly consistent with recent
historic and approved budget levels
1.0% Gross margins are assumed to be
broadly consistent with recent
historic and approved budget levels
Not material for Group
14.3% 12.2%
13.3% 12.2%
16.0% 12.2%
14.5%
-
13.3% 12.2%
96
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2013
97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. INTANGIBLE ASSETS (CONTINUED)
COMPANY
Cost or valuation
At 29 January 2011
Acquisitions
At 28 January 2012
Acquisitions
At 2 February 2013
Amortisation and impairment
At 29 January 2011
Charge for the period
At 28 January 2012
Charge for the period
At 2 February 2013
Net book value
At 2 February 2013
At 28 January 2012
At 29 January 2011
Goodwill
£000
19,945
-
19,945
-
19,945
4,045
-
4,045
-
4,045
15,900
15,900
15,900
Brand
licences
£000
11,779
-
11,779
-
11,779
1,208
1,111
2,319
1,112
3,431
8,348
9,460
10,571
Brand
names
£000
1,710
1,500
3,210
5,540
8,750
85
299
384
706
1,090
7,660
2,826
1,625
Total
£000
33,434
1,500
34,934
5,540
40,474
5,338
1,410
6,748
1,818
8,566
31,908
28,186
28,096
For the Bank, Blacks and Champion goodwill and fascia name
cash-generating units, changes in key assumptions could cause
the carrying value of the unit to exceed its recoverable amount.
The Board has considered the possibility of each of these
businesses achieving less revenue and gross profit than
forecast. Whilst the reduction in revenue would be partially
offset by a reduction in revenue related costs, the Board would
also take actions to mitigate the loss of gross profit by reducing
other costs.
Bank
Should the business have 0.0% sales growth beyond year five
rather than the 0.2% assumed and be unable to reduce selling
and distribution and administrative costs, the reduction in
value-in-use would lead to a further impairment of £685,000.
All other assumptions remain unchanged.
Should the business not achieve the assumed gross margin
rate % growth in the first five year period of 1.3% by 0.5%
and be unable to reduce selling and distribution and
administrative costs, the reduction in value-in-use would
lead to a further impairment of £6,976,000. All other
assumptions remain unchanged.
Blacks
Should the business not achieve the assumed gross margin
rate % growth in the first five year period of 5.0% by 0.5%
and be unable to reduce selling and distribution and
administrative costs, the reduction in value-in-use would lead
to an impairment of £1,968,000. All other assumptions
remain unchanged.
Champion
Should the business not achieve the assumed gross margin
rate % growth in the first five year period of 3.3% by 3.0% and
have 0.0% sales growth beyond year five whilst being unable
to reduce selling and distribution and administrative costs, the
reduction in value-in-use would lead to an impairment of
£1,075,000. All other assumptions remain unchanged.
13. INTANGIBLE ASSETS (CONTINUED)
Goodwill (continued)
(1) The short term growth rate is the compound annual growth
rate for the four year period following the January 2014
financial year currently underway
(2) The long term growth rate is the rate used thereafter, which
is an estimate of the growth based on past experience
within the Group taking account of economic growth
forecast for the relevant industries
(3) The discount rate applied is pre-tax and reflects the current
market assessments of the time value of money and any
specific risk premiums relevant to the individual CGU's.
These discount rates are considered to be equivalent to the
rates a market participant would use
(4) The impairment model prepared for Bank, in addition to
covering the goodwill and fascia names, has also been
used to support the net book value of the Nanny State and
Fenchurch brand names, which are predominantly sold
through the Bank store portfolio
(5) The impairment model prepared for Blacks and Millets,
in addition to covering the goodwill and fascia names,
has also been used to support the net book value of
the Peter Storm and Eurohike brand names, which are
exclusively sold through the Blacks and Millets store portfolio
(6) The impairment model prepared for Kukri, in addition to
supporting the goodwill, has also been used to support the
net book value of the Kukri brand name
The cash flow projections used in the value-in-use calculations
are all based on actual operating results, together with
financial forecasts and strategy plans approved by the Board
covering a five year period. These forecasts and plans are
based on both past performance and expectations for future
market development.
Sensitivity analysis
A sensitivity analysis has been performed on the base case
assumptions of sales growth and discounts rates used for
assessing the goodwill.
With regards to the assessment of value-in-use of all
cash-generating units, with the exceptions of those listed below,
the Board believe that there are no reasonably possible
changes in any of the key assumptions, which would cause
the carrying value of the unit to exceed its recoverable amount.
98
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& ACCOUNTS
2013
99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. PROPERTY, PLANT AND EQUIPMENT
14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
GROUP
Cost
At 29 January 2011
Additions
Disposals
Transfer from Investment property
On acquisition of subsidiaries
Exchange differences
At 28 January 2012
Additions
Disposals
Transfers
On acquisition of subsidiaries
Divestment of subsidiaries
Exchange differences
At 2 February 2013
Depreciation and impairment
At 29 January 2011
Charge for period
Disposals
Impairments
Exchange differences
At 28 January 2012
Charge for period
Disposals
Impairments
Divestment of subsidiaries
Exchange differences
At 2 February 2013
Net book value
At 2 February 2013
At 28 January 2012
At 29 January 2011
Freehold land,
long leasehold &
freehold properties
£000
Improvements to
short leasehold
properties
£000
Computer
equipment
£000
Fixtures
and fittings
£000
Motor
vehicles
£000
Assets in the
course of
construction
£000
942
-
-
2,997
-
-
3,939
677
-
-
973
-
-
5,589
-
27
-
-
-
27
33
-
-
-
-
60
5,529
3,912
942
17,204
1,959
(720)
-
-
124
18,567
1,039
(979)
90
268
(572)
(43)
18,370
9,363
1,398
(584)
21
62
10,260
1,403
(883)
11
(311)
(18)
10,462
7,908
8,307
7,841
13,767
4,761
(3,094)
-
1,409
25
16,868
9,899
(329)
-
81
(431)
(128)
25,960
10,396
2,421
(3,040)
106
80
9,963
3,125
(235)
-
(232)
(72)
12,549
136,177
18,180
(9,031)
-
16,860
(490)
161,696
26,444
(10,033)
18,672
575
(402)
(2,218)
194,734
70,403
17,418
(8,243)
1,470
123
81,171
22,294
(9,710)
703
(279)
(1,289)
92,890
13,411
6,905
3,371
101,844
80,525
65,774
187
184
(243)
-
415
4
547
119
(191)
-
8
(52)
(4)
427
(5)
163
(115)
-
6
49
138
(127)
-
(41)
(1)
18
409
498
192
Total
£000
168,277
43,846
(13,088)
2,997
18,684
(337)
220,379
38,178
(11,532)
-
1,905
(1,457)
(2,393)
245,080
90,157
21,427
(11,982)
1,597
271
101,470
26,993
(10,955)
714
(863)
(1,380)
115,979
-
18,762
-
-
-
-
18,762
-
-
(18,762)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,762
-
129,101
118,909
78,120
The carrying amount of the group's property, plant and equipment includes an amount of £1,479,000 (2012: £2,165,000) in
respect of assets held under finance leases, comprising fixtures and fittings of £1,427,000 (2012: £2,080,000) and motor
vehicles of £52,000 (2012: £85,000). The depreciation charge on those assets for the current period was £672,000
(2012: £567,000), comprising fixtures and fittings of £643,000 (2012: £nil) and motor vehicles of £29,000 (2012: £35,000).
Assets in the course of construction of £18,762,000 relating to the new warehouse development of Kingsway, Rochdale has
transferred to fixtures and fittings in the period.
Impairment charges of £714,000 (2012: £1,597,000) relate to all classes of property, plant and equipment in
cash-generating units which are loss making and where it is considered that the position cannot be recovered as a result
of a continuing deterioration in the performance in the particular store. The cash-generating units represent individual stores,
or a collection of stores where the cash flows are not independent, with the loss based on the specific revenue streams and costs
attributable to those cash-generating units. Assets in impaired stores are written down to their recoverable amount which is
calculated as the greater of the fair value less costs to sell and value-in-use.
COMPANY
Cost
At 29 January 2011
Additions
Disposals
At 28 January 2012
Additions
Disposals
Transfers
At 2 February 2013
Depreciation and impairment
At 29 January 2011
Charge for period
Disposals
Impairments
At 28 January 2012
Charge for period
Disposals
Impairments
At 2 February 2013
Net book value
At 2 February 2013
At 28 January 2012
At 29 January 2011
Land
£000
-
942
-
942
-
-
-
942
-
-
-
-
-
-
-
-
-
942
942
-
Improvements to
short leasehold
properties
£000
Computer
equipment
£000
Fixtures and
fittings
£000
Motor
vehicles
£000
12,989
1,116
(525)
13,580
546
(806)
-
13,320
7,893
950
(435)
7
8,415
969
(715)
-
8,669
4,651
5,165
5,096
12,163
3,501
(2,253)
13,411
7,726
(185)
-
20,952
9,680
1,556
(2,226)
2
9,012
1,948
(165)
-
10,795
10,157
4,399
2,483
103,426
8,427
(6,307)
105,546
7,526
(6,822)
18,762
125,012
59,623
10,050
(5,907)
51
63,817
11,808
(6,696)
-
68,929
56,083
41,729
43,803
234
-
(21)
213
25
(33)
-
205
77
42
(13)
1
107
31
(24)
-
114
91
106
157
Assets in
the course of
construction
£000
-
18,762
-
18,762
-
-
(18,762)
-
-
-
-
-
-
-
-
-
-
-
18,762
-
Total
£000
128,812
32,748
(9,106)
152,454
15,823
(7,846)
-
160,431
77,273
12,598
(8,581)
61
81,351
14,756
(7,600)
-
88,507
71,924
71,103
51,539
100
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& ACCOUNTS
2013
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& ACCOUNTS
2013
101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. INVESTMENT PROPERTY
GROUP
Cost
At 29 January 2011
Transfer to Property, Plant and Equipment
At 28 January 2012
Additions
At 2 February 2013
Depreciation and impairment
At 29 January 2011
Charge for period
Transfer to Property, Plant and Equipment
At 28 January 2012
Charge for period
At 2 February 2013
Net book value
At 2 February 2013
At 28 January 2012
At 29 January 2011
£000
4,160
(4,160)
-
-
-
1,160
3
(1,163)
-
-
-
-
-
3,000
The Investment Property brought forward relates to a property leased to Focus Brands Limited. The addition in the period relates to
a freehold property acquired by JD Sports Fashion Plc, which is leased to Kukri Sports Limited.
Both of these properties are owner-occupied from the perspective of the Group as both Focus Brands Limited and Kukri Sports
Limited are subsidiaries of the Group. These properties however remain Investment Properties from the Company perspective as
at 2 February 2013.
Based on an external valuation, the fair value of the investment properties as at 2 February 2013 was £3,427,000
(2012: £2,800,000).
Management do not consider either of the investment properties to be impaired as the future rental income supports the carrying value.
COMPANY
Cost
At 29 January 2011 and 28 January 2012
Additions
At 2 February 2013
Depreciation and impairment
At 29 January 2011
Charge for period
At 28 January 2012
Charge for period
At 2 February 2013
Net book value
At 2 February 2013
At 28 January 2012
At 29 January 2011
£000
4,160
677
4,837
1,160
30
1,190
33
1,223
3,614
2,970
3,000
16. NON-CURRENT OTHER ASSETS
GROUP
Key Money
£000
Deposits
£000
Legal Fees
£000
COMPANY
Legal Fees
£000
Total
£000
Cost
At 29 January 2011
Additions
Disposals
On acquisition of subsidiaries
Exchange differences
At 28 January 2012
Additions
Disposals
Exchange differences
At 2 February 2013
Depreciation and impairment
At 29 January 2011
Charge for period
Disposals
Impairments
Exchange differences
At 28 January 2012
Charge for period
Disposals
Impairments
Exchange differences
At 2 February 2013
Net book value
At 2 February 2013
At 28 January 2012
At 29 January 2011
9,197
1,118
(38)
-
(34)
10,243
3,273
(252)
(539)
12,725
778
-
-
(15)
(37)
726
-
-
191
(95)
822
779
329
(62)
1,035
(51)
2,030
667
(213)
(90)
2,394
-
-
-
-
-
-
-
-
-
-
-
11,903
9,517
8,419
2,394
2,030
779
7,362
456
(425)
1,650
11
9,054
1,410
(146)
(12)
10,306
3,513
472
(367)
4
4
3,626
537
(123)
-
(5)
4,035
6,271
5,428
3,849
17,338
1,903
(525)
2,685
(74)
21,327
5,350
(611)
(641)
25,425
4,291
472
(367)
(11)
(33)
4,352
537
(123)
191
(100)
4,857
20,568
16,975
13,047
6,679
482
(330)
-
-
6,831
1,372
(123)
-
8,080
3,089
450
(268)
2
-
3,273
518
(110)
-
-
3,681
4,399
3,558
3,590
Key money represents monies paid in certain countries to give access to retail locations.
Deposits represent money paid in certain countries to store landlords as protection against non-payment of rent.
Legal fees represents legal fees and other costs associated with the acquisition of leasehold interests.
102
ANNUAL REPORT
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2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17. INTEREST IN JOINT VENTURE
On 3 December 2007, the Group acquired 49% of the issued share capital of Focus Brands Limited for an initial cash
consideration of £49,000 together with associated fees of £456,000. Focus Brands Limited was a jointly controlled entity set up
for the purposes of acquiring Focus Group Holdings Limited and its subsidiary companies ('Focus Group'). The Focus Group is
involved in the design, sourcing and distribution of branded and own brand footwear, apparel and accessories. Focus Brands
Limited was jointly controlled with the former shareholders of Focus Group Holdings Limited.
On 16 February 2011, the Group acquired a further 31% of the issued share capital of Focus Brands Limited for a cash
consideration of £1,000,000, with potential further deferred consideration of £250,000 depending on performance. As a result
there was no further deferred consideration payable on the original transaction. The additional shares purchased since the
reporting date took the Group's holding in Focus Brands Limited to 80%, thereby giving the Group control. Focus Brands Limited
has since been a subsidiary of the Group rather than a jointly-controlled entity.
The results and assets and liabilities of the Focus Group were incorporated in the consolidated financial statements using the
equity method of accounting as a joint venture in the prior period up to 16 February 2011.
The Group's share of the revenue generated by the joint venture in the period was £nil (2012: £841,000).
The amount included in the Consolidated Income Statement in relation to the joint venture is as follows:
Share of result before tax
Tax
Share of result after tax
53 weeks to 2 February 2013
Before
Exceptionals
£000
-
-
-
Exceptionals
£000
-
-
-
After
Exceptionals
£000
-
-
-
52 weeks to 28 January 2012
Before
Exceptionals
£000
(143)
41
(102)
Exceptionals
£000
1,166
4
1,170
After
Exceptionals
£000
1,023
45
1,068
The exceptional items in the 52 week period to 28 January 2012 related to a further reversal of the impairment of the investment
held by Focus Brands Limited in Focus Group Holdings Limited, following an additional repayment of original purchase
consideration by the vendors of Focus Group Holdings Limited.
18. INVESTMENTS
COMPANY
Cost
At 29 January 2011
Additions
At 28 January 2012
Additions
At 2 February 2013
Impairment
At 29 January 2011 and 28 January 2012
Impairments
At 2 February 2013
Net book value
At 2 February 2013
At 28 January 2012
At 29 January 2011
ANNUAL REPORT
& ACCOUNTS
2013
103
£000
14,534
33,411
47,945
2,900
50,845
5,470
-
5,470
45,375
42,475
9,064
The additions to investments in the current year comprise the following. Unless otherwise stated the investment is 100% owned.
COMPANY
JD Spain Sport Fashion 2010 SL (c65% owned)
Premium Fashion Limited
Source Lab Limited (85% owned)
Tessuti Group Limited (60% owned)
Total additions
A list of principal subsidiaries is shown in note 36.
2013
£000
250
40
2,550
60
2,900
104
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
105
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. INVENTORIES
Finished goods and goods for resale
GROUP
COMPANY
2012
(restated
- see note 1)
£000
133,243
2013
£000
146,569
2013
£000
56,125
2012
£000
52,579
The cost of inventories recognised as expenses and included in cost of sales for the 53 weeks ended 2 February 2013 was
£645,404,000 (2012: £538,676,000).
20. TRADE AND OTHER RECEIVABLES
Current assets
Trade receivables
Other receivables
Prepayments and accrued income
Amounts owed by other Group companies
The ageing of trade receivables is detailed below:
GROUP
Not past due
Past due 0-30 days
Past due 30-60 days
Past 60 days
COMPANY
Not past due
Past due 0 - 30 days
Past due 30-60 days
Past 60 days
GROUP
COMPANY
2013
£000
12,386
6,413
37,962
-
56,761
Net
£000
7,358
1,508
902
2,618
12,386
Net
£000
907
356
430
404
2,097
2012
£000
17,730
3,804
32,613
-
54,147
Gross
£000
10,062
2,267
1,397
5,024
18,750
Gross
£000
264
198
239
767
1,468
2013
£000
2,097
2,645
22,150
129,213
156,105
2012
£000
1,368
507
15,250
106,828
123,953
2012
Provision
£000
(40)
(16)
(91)
(873)
(1,020)
2012
Provision
£000
-
-
-
(100)
(100)
Net
£000
10,022
2,251
1,306
4,151
17,730
Net
£000
264
198
239
667
1,368
2013
Gross
£000
Provision
£000
7,620
1,508
904
2,991
13,023
Gross
£000
907
356
430
504
2,197
(262)
-
(2)
(373)
(637)
2013
Provision
£000
-
-
-
(100)
(100)
20. TRADE AND RECEIVABLES (CONTINUED)
Analysis of gross trade receivables is shown below:
Not past due or impaired
Past due but not impaired
Impaired
The aging of the impaired trade receivables is detailed below:
Not past due
Past due 0 - 30 days
Past due 30-60 days
Past 60 days
GROUP
COMPANY
2013
£000
7,256
4,208
1,559
13,023
2012
£000
9,979
7,316
1,455
18,750
2013
£000
896
580
721
2,197
GROUP
COMPANY
2013
£000
364
-
345
850
1,559
2012
£000
83
237
146
989
1,455
2013
£000
11
-
342
368
721
2012
£000
212
632
624
1,468
2012
£000
52
121
147
304
624
The Board consider that the carrying amount of trade and other receivables approximate their fair value. Concentrations of credit
risk with respect to trade receivables are limited due to the majority of the Group’s customer base being wide and unrelated.
Therefore, no further credit risk provision is required in excess of the normal provision for impairment losses, which has been
calculated following individual assessments of credit quality based on historic default rates and knowledge of debt or insolvency
or other credit risk.
Movement on this provision is shown below:
At 29 January 2011
Created
Released
Utilised
At 28 January 2012
Created
Released
Utilised
Divestments
Exchange differences
At 2 February 2013
The other classes within trade and other receivables do not contain impaired assets.
GROUP
£000
862
760
(77)
(525)
1,020
435
(29)
(139)
(639)
(11)
637
COMPANY
£000
222
100
-
(222)
100
-
-
-
-
-
100
106
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
107
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
21. CASH AND CASH EQUIVALENTS
Bank balances and cash floats
22. INTEREST-BEARING LOANS AND BORROWINGS
GROUP
COMPANY
2013
£000
53,484
2012
£000
67,024
2013
£000
20,046
2012
£000
28,762
22. INTEREST-BEARING LOANS AND BORROWINGS (CONTINUED)
The maturity of the bank loans and overdrafts is as follows:
Within one year
Between one and five years
GROUP
COMPANY
2013
£000
7,036
288
7,324
2012
£000
4,937
765
5,702
2013
£000
-
-
-
2012
£000
-
-
-
GROUP
COMPANY
Other loans
Current liabilities
Finance lease liabilities
Bank loans and overdrafts
Other loans
Non-current liabilities
Finance lease liabilities
Bank loans and overdrafts
Other loans
2013
£000
49
7,036
72
7,157
7
288
396
691
2012
£000
610
4,937
-
5,547
50
765
367
1,182
2013
£000
2012
£000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The following provides information about the contractual terms of the Group and Company’s interest-bearing loans and
borrowings. For more information about the Group and Company’s exposure to interest rate risk, see note 23.
Bank facilities
As at 2 February 2013, the Group has a syndicated committed £75,000,000 bank facility which expires on 11 October 2015.
Under this facility, a maximum of 10 drawdowns can be outstanding at any time with drawdowns made for a period of one, two,
three or six months with interest payable at a rate of LIBOR plus a margin of 1.40% (2012: 1.25%). The arrangement fee is 0.6%.
The commitment fee on the undrawn element of the facility is 45% of the applicable margin rate. This facility encompasses cross
guarantees between the Company, Bank Fashion Limited, RD Scott Limited, Topgrade Sportswear Limited, Nicholas Deakins Limited
and Focus International Limited.
At 2 February 2013, there were no amounts drawn down on this facility (2012: no amounts were drawn down on this facility).
Bank loans and overdrafts
The following Group companies have overdraft facilities which are repayable on demand:
• Spodis SA €5,000,000 (2012: €5,000,000)
• Sprinter Megacentros Del Deporte SLU €4,500,000 (2012: €4,500,000)
• Champion Sports Ireland €3,000,000 (2012: €3,000,000)
• Kukri Sports Limited and Kukri GB Limited £170,000 (2012: £170,000)
• Source Lab Limited £350,000
As at 2 February 2013, these facilities were drawn down by £7,256,000 (2012: £1,648,000). Further information on guarantees
provided by the Company is disclosed in note 33.
Included within bank loans and overdrafts are term loans of £68,000 (2012: £289,000) within Spodis SA which have been taken
out to fund the refurbishment of specific stores. The interest rates range from 5.10% to 6.50% and are secured on the fixtures in
those particular stores.
The acquisition of Tessuti Group Limited included a freehold property with a mortgage balance remaining of £508,000 at the
time of acquisition. The loan is repayable over 10 years and attracts interest at 2.99% over base. At 2 February 2013,
82 months is remaining.
The Group had a loan payable to Herald Island Limited at 28 January 2012, the non-controlling interest in Canterbury of
New Zealand Limited. The loan attracted interest at 3.0% above the Group’s cost of funds and was repayable on exercise of
the put and call option. This liability has been discharged on the disposal of the Canterbury Group (see note 12).
The maturity of other loans is as follows:
Within one year
Between one and five years
Finance lease liabilities
GROUP
COMPANY
2013
£000
72
396
468
2012
£000
-
367
367
2013
£000
-
-
-
2012
£000
-
-
-
As at 2 February 2013, the Group’s liabilities under finance leases are analysed as follows:
GROUP
Amounts payable under finance leases:
Within one year
Later than one year and not later than five years
After five years
Minimum lease payments
2012
£000
2013
£000
Present value of
minimum lease payments
2012
£000
2013
£000
51
8
-
59
646
55
-
701
49
7
-
56
610
50
-
660
Assets held under finance leases consists of store fit outs (included within fixtures and fittings) and motor vehicles. The fair value of
the Group's lease obligations approximate to their present value. The Group's obligations under finance leases are secured by the
lessors' rights over the leased assets.
108
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
109
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
23. FINANCIAL INSTRUMENTS
Financial assets
The Group’s financial assets are all categorised as loans and receivables. Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are not quoted in an active market. The Group’s loans and receivables comprise
‘Trade and other receivables’ and ‘Cash and cash equivalents’ in the Consolidated Statement of Financial Position.
Cash and cash equivalents comprise short-term cash deposits with major United Kingdom and European clearing banks earning
floating rates of interest based upon bank base rates or rates linked to LIBOR and EURIBOR. The currency profile of cash and cash
equivalents is shown below:
23. FINANCIAL INSTRUMENTS (CONTINUED)
Foreign currency risk
Risk management
The Group’s operations expose it to a variety of financial risks
that include the effects of changes in exchange rates, interest
rates, credit risk and its liquidity position. The Group manages
these risks through the use of derivative instruments, which are
reviewed on a regular basis. Derivative instruments are not
entered into for speculative purposes. There are no
concentrations of risk in the period to 2 February 2013.
GROUP
COMPANY
Interest rate risk
Bank balances and cash floats
Sterling
Euros
US Dollars
Australian Dollars
New Zealand Dollars
Other
Financial liabilities
2013
£000
53,484
18,552
31,481
2,316
162
87
886
53,484
2012
£000
67,024
31,846
29,117
3,591
1,075
1,262
133
67,024
2013
£000
20,046
4,608
12,525
2,211
49
-
653
20,046
The Group’s financial liabilities are all categorised as other financial liabilities. Other financial liabilities are measured at
amortised cost. The Group’s other financial liabilities comprise ‘Interest-bearing loans and borrowings’ and ‘Trade and
other payables’.
The currency profile of interest-bearing loans and borrowings is shown below:
Interest-bearing loans and borrowings
Sterling
Euros
US Dollars
New Zealand Dollars
Canadian Dollars
GROUP
COMPANY
2013
£000
7,848
469
7,344
25
-
10
7,848
2012
£000
6,729
150
6,159
-
404
16
6,729
2013
£000
-
-
-
-
-
-
-
2012
£000
28,762
21,706
4,701
2,265
90
-
-
28,762
2012
£000
-
-
-
-
-
-
-
The Group finances its operations by a mixture of retained
profits and bank borrowings. The Group’s borrowings are at
floating rates, partially hedged by floating rate interest on
deposits, reflecting the seasonality of its cash flow. Interest rate
risk therefore arises from bank borrowings. Interest rate
hedging has not been put in place on the current facility.
The Directors continue to be mindful of the potential volatility in
base rates, but at present do not consider a long term interest
rate hedge to be necessary given the inherent short term nature
of both the revolving credit facility and working capital facility.
This position is reviewed regularly, along with the level of
facility required.
The Group has potential bank floating rate financial liabilities
on the £75,000,000 committed bank facility, together with
overdraft facilities in subsidiary companies (see note 22). At 2
February 2013 £nil was drawdown from the committed bank
facility (2012: £nil). When drawdowns are made, the Group is
exposed to cash flow interest risk with interest paid at a rate of
LIBOR plus a margin of 1.40% (2012: 1.25%).
As at 2 February 2013 the Group has liabilities of £56,000
(2012: £660,000), in respect of finance lease or similar hire
purchase contracts.
A change of 1.0% in the average interest rates during the year,
applied to the Group's floating interest rate loans and
borrowings as at the reporting date, would change profit
before tax by £60,000 (2012: £37,000) and would change
equity by £60,000 (2012: £37,000). The calculation is based
on any floating interest rate loans and borrowings drawn down
at the period end date, being the Spodis SA and Sprinter
Megacentros Del Deporte SLU overdrafts. Calculations are
performed on the same basis as the prior year and assume
that all other variables remain unchanged.
The Group is exposed to foreign currency risk on sales and
purchases that are denominated in a currency other than
pound sterling. The currencies giving rise to this risk are the
Euro and US Dollar with sales made in Euros and purchases
made in both Euros and US Dollars (principal exposure).
To protect its foreign currency position, the Group sets a buying
rate in each country for the purchase of goods in US Dollars at
the start of the buying season (typically six to nine months
before the product actually starts to appear in the stores) and
then enters into a number of local currency/US Dollar contracts
whereby the minimum exchange rate on the purchase of
dollars is guaranteed.
As at 2 February 2013, options have been entered into to
protect approximately 89% of the US Dollar requirement for
the period to January 2014. The balance of the US Dollar
requirement for the period will be satisfied at spot rates.
Hedge accounting is not applied.
As at 2 February 2013, the fair value of these instruments was
an asset of £441,000 (2012: asset of £30,000) which has
been included within current assets (2012: current assets).
A gain of £411,000 (2012: gain of £1,018,000) has been
recognised in the Consolidated Income Statement for the
change in fair value of these instruments.
110
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
23. FINANCIAL INSTRUMENTS (CONTINUED)
Foreign currency risk (continued)
A 10.0% strengthening of sterling relative to the following currencies as at the reporting date would have reduced profit before tax
and equity as follows:
Euros
US Dollars
Australian Dollars
New Zealand Dollars
Other
Profit before tax
Equity
2013
£000
1,770
61
11
6
15
1,863
2012
£000
515
(13)
13
4
(61)
458
2013
£000
3,363
(2)
(10)
4
(75)
3,280
2012
£000
4,675
(240)
(177)
271
(100)
4,429
A 10.0% weakening of sterling relative to the following currencies as at the reporting date would have increased profit before tax
and equity as follows:
Euros
US Dollars
Australian Dollars
New Zealand Dollars
Other
Profit before tax
Equity
2013
£000
2,163
74
13
7
19
2,276
2012
£000
630
(4)
16
1
(74)
569
2013
£000
5,464
(2)
(7)
8
(88)
5,375
2012
£000
5,714
(293)
(216)
332
(122)
5,415
Calculations are performed on the same basis as the prior year and the method assumes that all other variables remain unchanged.
Credit risk
Credit risk arises from the possibility of customers and counterparties failing to meet their obligations to the Group. Investments of
cash surpluses, borrowings and derivative instruments are made through major United Kingdom and European clearing banks,
which must meet minimum credit ratings as required by the Board.
All customers who wish to trade on credit terms are subject to credit verification procedures. Receivable balances are monitored
on an ongoing basis and provision is made for impairment where amounts are not thought to be recoverable (see note 20).
At the reporting date there were no significant concentrations of credit risk and receivables which are not impaired are believed
to be recoverable.
The Group considers its maximum exposure to credit risk to be equivalent to total trade and other receivables of £56,761,000
(2012: £54,147,000) and cash and cash equivalents of £53,484,000 (2012: £67,024,000).
The Company has provided guarantees on working capital and other banking facilities entered into by Spodis SA, Sprinter
Megacentros Del Deporte SLU and Champion Sports Ireland of €5,000,000, €8,750,000 and up to maximum of €3,000,000
respectively. As at 2 February 2013, these facilities were drawn down by £7,256,000 (2012: £1,648,000).
The Company has also provided a guarantee on the finance lease facility in relation to the acquisition of Champion Sports Ireland
up to a maximum of €2,500,000. In addition, the syndicated committed £75,000,000 bank facility, which was in place as at
2 February 2013, encompassed cross guarantees between the Company, R.D. Scott Limited, Bank Fashion Limited,
Topgrade Sportswear Limited, Nicholas Deakins Limited and Focus International Limited to the extent to which any of these
companies were overdrawn. As at 2 February 2013, these facilities were drawn down by £nil (2012: £nil).
23. FINANCIAL INSTRUMENTS (CONTINUED)
Liquidity risk
The Group manages its cash and borrowing requirement to minimise net interest expense, whilst ensuring that the Group has
sufficient liquid resources to meet the operating needs of the business. The forecast cash and borrowing profile of the Group is
monitored on an ongoing basis, to ensure that adequate headroom remains under committed borrowing facilities. The Board
review 13 week and annual cash flow forecasts each month.
Information about the maturity of the Group's financial liabilities is disclosed in note 22.
As at 2 February 2013, there are committed facilities with a maturity profile as follows:
Expiring in more than two years but no more than three years
Expiring in more than three years but no more than four years
2013
£000
75,000
-
75,000
2012
£000
-
75,000
75,000
The commitment fee on these facilities is 0.45% (2012: 0.45%).
Fair values
The fair values together with the carrying amounts shown in the Consolidated Statement of Financial Position as at
2 February 2013 are as follows:
Trade and other receivables
Cash and cash equivalents
Interest-bearing loans and borrowings - current
Interest-bearing loans and borrowings - non-current
Trade and other payables - current
Trade and other payables - non-current
Unrecognised gains/(losses)
GROUP
COMPANY
Note
20
21
22
22
24
24
Carrying amount
2013
£000
56,761
53,484
(7,157)
(691)
(194,061)
(30,085)
(121,749)
Fair value
2013
£000
56,761
53,484
(7,157)
(429)
(194,061)
(18,680)
(110,082)
11,667
Carrying amount
2013
£000
156,105
20,046
-
-
(97,913)
(26,608)
51,630
Fair value
2013
£000
156,105
20,046
-
-
(97,913)
(16,521)
61,717
10,087
112
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
113
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
23. FINANCIAL INSTRUMENTS (CONTINUED)
Fair values (continued)
The comparatives at 28 January 2012 are as follows:
Trade and other receivables
Cash and cash equivalents
Interest-bearing loans and borrowings - current
Interest-bearing loans and borrowings - non-current
Trade and other payables - current
Trade and other payables - non-current
Unrecognised gains/(losses)
GROUP
COMPANY
Note
20
21
22
22
24
24
Carrying amount
2012
£000
54,147
67,024
(5,547)
(1,182)
(196,256)
(36,149)
(117,963)
Fair value
2012
£000
54,147
67,024
(5,547)
(768)
(196,256)
(23,494)
(104,894)
13,069
Carrying amount
2012
£000
123,953
28,762
-
-
(95,077)
(28,440)
29,198
Fair value
2012
£000
123,953
28,762
-
-
(95,077)
(18,484)
39,154
9,956
In the opinion of the Board, the fair value of the Group's current financial assets and liabilities as at 2 February 2013 and
28 January 2012 are not considered to be materially different to that of the book value. On this basis, the carrying amounts have
not been adjusted for the fair values. In respect of the Group's non- current financial assets and liabilities as at 2 February 2013
and 28 January 2012, the fair value has been determined with reference to the time value of money.
Estimation of fair values
For trade and other receivables/payables (as adjusted for the fair value of foreign exchange contracts), the notional amount is
deemed to reflect the fair value.
Fair value hierarchy
As at 2 February 2013, the Group held the following financial instruments carried at fair value on the Statement of Financial Position:
• Foreign exchange forward contracts - non-hedged
• Put options held by non-controlling interests
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by
valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable,
either directly or indirectly
Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on
observable market data
23. FINANCIAL INSTRUMENTS (CONTINUED)
At 2 February 2013
Financial assets at fair value through profit or loss
Foreign exchange forward contracts – non-hedged
Other financial liabilities
Put options held by non-controlling interests
At 28 January 2012
Financial assets at fair value through profit or loss
Foreign exchange forward contracts – non-hedged
Other financial liabilities
Put options held by non-controlling interests
24. TRADE AND OTHER PAYABLES
Current liabilities
Trade payables
Other payables and accrued expenses
Other tax and social security costs
Non-current liabilities
Other payables and accrued expenses
Amounts payable to other Group companies
Carrying
amount
£000
441
(577)
Carrying
amount
£000
30
(4,094)
Level 1
£000
-
-
Level 2
£000
441
-
Level 1
£000
Level 2
£000
-
-
30
-
Level 3
£000
-
(577)
Level 3
£000
-
(4,094)
GROUP
COMPANY
2012
(restated
- see note 1)
£000
93,305
80,012
22,939
196,256
36,149
-
36,149
2013
£000
97,084
70,101
26,876
194,061
30,085
-
30,085
2013
£000
47,447
45,692
4,774
97,913
20,026
6,582
26,608
2012
£000
48,109
36,899
10,069
95,077
21,858
6,582
28,440
Put options held by non-controlling interests
The Group has a number of options to buy the remaining shares in partly-owned subsidiaries from the non-controlling interest.
The present value of these options has been estimated as at 2 February 2013 and is included within non-current other payables
and accrued expenses.
Put options held by non-controlling interests
At 28 January 2012
Increase in the present value of the existing option liability
Revaluation to fair value of the existing option liability
Fair value recognised on acquisition
On disposal
At 2 February 2013
Canterbury
Group
£000
Source Lab
Limited
£000
Tessuti Group
Limited
£000
4,094
1,167
(2,570)
-
(2,691)
-
-
-
-
216
-
216
-
-
-
361
-
361
Total
£000
4,094
1,167
(2,570)
577
(2,691)
577
114
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
115
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
24. TRADE AND OTHER PAYABLES (CONTINUED)
Source Lab Limited
On 9 May 2012, the Group acquired 85% of the issued
ordinary share capital of Source Lab Limited. The transaction
included the agreement of a put and call option between JD
Sports Fashion Plc and the vendor of Source Lab Limited,
whereby JD Sports Fashion Plc may acquire or be required to
acquire (in stages) the remaining 15% of the issued share
capital of Source Lab Limited.
This option is exercisable by either party after the third
anniversary of the completion of the initial transaction, during
the 30 day period commencing on the date on which the
statutory accounts of Source Lab Limited for the relevant
financial year have been approved by the board of directors.
On exercise of the call option, all of the remaining 15% of the
issued share capital of Source Lab Limited has to be acquired
by JD Sports Fashion Plc. The put option is exercisable once in
each 12 month period and at any one time, the number of
shares that JD Sports Fashion Plc will be required to acquire is
5% of the issued share capital of Source Lab Limited. The
option price is calculated based on a multiple of the audited
profit before distributions, interest, amortisation and
exceptional items but after taxation for the relevant financial
year prior to the exercise date. The option price shall not
exceed £12,450,000.
On acquisition, the present value of the non-controlling
interest’s put option has been calculated based on expected
earnings in Board-approved forecasts and a discount rate of
14.5% which is pre-tax and reflects the current market
assessments of the time value of money and the specific risks
applicable to the liability. A liability of £216,000 was
recognised, with a corresponding debit to other equity.
There is no significant change to the present value of the
liability between acquisition date and the period end date and
therefore the liability of £216,000 remains at 2 February 2013.
Tessuti Group Limited
(formerly Aghoco 1096 Limited)
On 18 May 2012, the Group, via its new 60% owned
subsidiary Tessuti Group Limited, acquired the trading
businesses that make up the Tessuti Group. The transaction
included the agreement of a put and call option between JD
Sports Fashion Plc and the non-controlling interest in Tessuti
Group Limited, whereby JD Sports Fashion Plc may acquire or
be required to acquire (in stages) the remaining 40% of the
issued share capital of Tessuti Group Limited.
This option is exercisable by either party after the fifth
anniversary of the completion of the initial transaction, during
the 30 day period commencing on the date on which the
statutory accounts of Tessuti Group Limited for the relevant
financial year have been approved by the board of directors
(exercise period). On exercise of the call option, all of the
remaining 40% of the issued share capital of Tessuti Group
Limited have to be acquired by JD Sports Fashion Plc. The put
option is exercisable once in each exercise period, with the
number of shares that JD Sports Fashion Plc required to
acquire being set by the vendor at either 40% of the issued
share capital of Tessuti Group Limited or at 5% increments up
to this level. The option price is calculated based on a multiple
of the audited consolidated profit before distributions, interest,
amortisation and exceptional items but after taxation for Tessuti
Group Limited (which includes its subsidiary undertakings) for
the relevant financial year prior to the exercise date. The option
price shall not exceed £12,000,000.
On acquisition, the present value of the non-controlling
interest’s put option has been calculated based on expected
earnings in Board-approved forecasts and a discount rate of
14.5% which is pre-tax and reflects the current market
assessments of the time value of money and the specific risks
applicable to the liability. A liability of £361,000 was
recognised, with a corresponding debit to other equity.
There is no significant change to the present value of the
liability between acquisition date and the period end date
and therefore the liability of £361,000 remains at
2 February 2013.
Canterbury of New Zealand/Canterbury International
(Australia) Pty Limited
The Group (via its subsidiary Canterbury Limited) was party to
a put and call option agreement between Canterbury Limited
and the vendors of Canterbury of New Zealand, whereby
Canterbury Limited may acquire or be required to acquire the
non-controlling interest of 49% of the issued share capital of
Canterbury of New Zealand Limited.
In addition, the Group (via its subsidiary Canterbury Limited)
was party to a put and call option between Canterbury Limited
and the non-controlling interest in Canterbury International
(Australia) Pty Limited, whereby Canterbury Limited may
acquire or be required to acquire 25% of the issued ordinary
share capital of Canterbury International (Australia) Pty Limited.
At the date of disposal of Canterbury Limited, a gross liability
of £5,261,000 recognised for the put options on Canterbury of
New Zealand and Canterbury International (Australia) Pty
Limited measured in accordance with IAS 32 has been
replaced with the fair value under IAS 39 of that derivative
liability. This liability is included in the net assets disposed of.
25. PROVISIONS
The provisions for onerous property leases represent anticipated minimum contractual lease costs less potential sublease income
for vacant properties. For loss making stores, provision is made to the extent that the lease is deemed to be onerous. The
provisions are discounted where the effect is material. The pre-tax discount rate used is 13.3% (2012: 12.2%) which reflects the
current market assessments of the time value of money and the specific risks applicable to the liability.
GROUP
Balance at 28 January 2012
Provisions created during the period
Provisions released during the period
Provisions utilised during the period
Exchange differences
Balance at 2 February 2013
Provisions have been analysed between current and non-current as follows:
GROUP
Current
Non-current
COMPANY
Balance at 28 January 2012
Provisions created during the period
Provisions released during the period
Provisions utilised during the period
Balance at 2 February 2013
Provisions have been analysed between current and non-current as follows:
COMPANY
Current
Non-current
Onerous
property leases
£000
9,782
2,481
(1,149)
(4,985)
(42)
6,087
2012
£000
3,375
6,407
9,782
Onerous
property leases
£000
6,412
689
-
(3,366)
3,735
2012
£000
2,404
4,008
6,412
2013
£000
2,714
3,373
6,087
2013
£000
2,040
1,695
3,735
116
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
117
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
26. DEFERRED TAX ASSETS AND LIABILITIES
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
GROUP
Property, plant and equipment
Chargeable gains held over/rolled over
General accruals
Tax losses
Tax (assets)/liabilities
Assets
2013
£000
-
-
-
(914)
(914)
Assets
2012
£000
-
-
-
(4,977)
(4,977)
Liabilities
2013
£000
1,095
273
3,398
-
4,766
Liabilities
2012
(restated
- see note 1)
£000
547
297
4,856
-
5,700
Net
2012
(restated
- see note 1)
£000
547
297
4,856
(4,977)
723
Net
2013
£000
1,095
273
3,398
(914)
3,852
Deferred tax assets on losses of £4,500,000 (2012: £4,629,000) within Kooga Rugby Limited; £5,210,000 (2012: £5,204,000)
within Champion Sports Ireland and £2,621,000 (2012: £3,300,000) within Kukri Sports Limited (and its subsidiaries) have not
been recognised as there is uncertainty over the utilisation of these losses.
Movement in deferred tax during the period
GROUP
Balance at 29 January 2011
Recognised in income
Recognised on acquisition
Balance at 28 January 2012 (restated - see note 1)
Recognised in income
Recognised on acquisition
Recognised on disposal
Balance at 2 February 2013
Property, plant
and equipment
£000
(626)
235
938
547
(28)
390
186
1,095
Chargeable
gains
held over/
rolled over
£000
320
(23)
-
297
(24)
-
-
273
General
accruals
£000
890
1,594
2,372
4,856
(2,376)
213
705
3,398
Tax losses
£000
(709)
(3,526)
(742)
(4,977)
2,829
-
1,234
(914)
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
COMPANY
Property, plant and equipment
Chargeable gains held over/rolled over
General accruals
Tax (assets)/liabilities
Assets
2013
£000
-
-
(1,180)
(1,180)
Assets
2012
£000
-
-
(959)
(959)
Liabilities
2013
£000
388
273
-
661
Liabilities
2012
£000
355
297
-
652
Net
2013
£000
388
273
(1,180)
(519)
Total
£000
(125)
(1,720)
2,568
723
401
603
2,125
3,852
Net
2012
£000
355
297
(959)
(307)
26. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
Movement in deferred tax during the period
COMPANY
Balance at 29 January 2011
Recognised in income
Balance at 28 January 2012
Recognised in income
Balance at 2 February 2013
Property, plant
and equipment
£000
(331)
686
355
33
388
Chargeable
gains
held over/
rolled over
£000
320
(23)
297
(24)
273
General
accruals
£000
(1,071)
112
(959)
(221)
(1,180)
Total
£000
(1,082)
775
(307)
(212)
(519)
At 2 February 2013, the Group has no recognised deferred income tax liability (2012: £nil) in respect of taxes that would be
payable on the unremitted earnings of certain subsidiaries. As at 2 February 2013, the unrecognised gross temporary differences
in respect of reserves of overseas subsidiaries is £12,983,000 (2012: £13,950,000). No deferred income tax liability has been
recognised in respect of this temporary timing difference due to the foreign profits exemption, the availability of double tax relief
and the ability to control the remittance of earnings.
There are no income tax consequences attached to the payment of dividends by the Group to its shareholders.
A reduction in the UK corporation tax rate from 26% to 25% (effective from 1 April 2012) was substantively enacted on
5 July 2011, and further reductions to 24% (effective from 1 April 2012) and 23% (effective from 1 April 2013) were substantively
enacted on 26 March 2012 and 3 July 2012 respectively. This will reduce the company's future current tax charge accordingly.
The deferred tax liability at 2 February 2013 has been calculated based on the rate of 23% substantively enacted at the balance
sheet date.
The March 2013 Budget announced that the rate will further reduce to 20% by 2015 in addition to the planned reduction to
21% by 2014 previously announced in the December 2012 Autumn Statement. It has not yet been possible to quantify the full
anticipated effect of the announced further 3% rate reduction, although this will further reduce the company's future current tax
charge and reduce the company's deferred tax liability accordingly.
118
ANNUAL REPORT
& ACCOUNTS
2013
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& ACCOUNTS
2013
119
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
27. CAPITAL
Issued ordinary share capital
GROUP AND COMPANY
At 28 January 2012 and 2 February 2013
Number of
ordinary shares
thousands
48,662
Ordinary
share capital
£000
2,433
The total number of authorised ordinary shares was 62,150,000 (2012: 62,150,000) with a par value of 5p per share
(2012: 5p per share). All issued shares are fully paid.
The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued share capital,
share premium and retained earnings.
It is the Board’s policy to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustain future development of the business. The processes for managing the Group's capital levels are that the Board regularly
monitors the net cash/debt in the business, the working capital requirements and forecasts cash flows. Based on this analysis, the
Board determines the appropriate return to equity holders while ensuring sufficient capital is retained in the business to meet its
strategic objectives.
The Board consider the capital of the Group as the net cash/debt at the year end (see note 31) and the Board review the gearing
position of the Group which as at 2 February 2013 was less than zero (2012: less than zero). There were no changes to the
Group’s approach to capital management during the period.
Full disclosure on the rights attached to shares is provided in the Directors' Report on page 43.
28. DIVIDENDS
After the reporting date the following dividends were proposed by the Directors. The dividends were not provided for at the
reporting date.
22.00p per ordinary share (2012: 21.20p)
Dividends on issued ordinary share capital
Final dividend of 21.20p (2012: 19.20p) per qualifying ordinary share paid in respect of prior period,
but not recognised as a liability in that period
Interim dividend of 4.30p (2012: 4.10p) per qualifying ordinary share paid in respect of current period
53 weeks to
2 February
2013
£000
10,706
52 weeks to
28 January
2012
£000
10,316
53 weeks to
2 February
2013
£000
10,316
2,092
12,408
52 weeks to
28 January
2012
£000
9,343
1,995
11,338
29. COMMITMENTS
Group
(i) Capital commitments
As at 2 February 2013, the Company had entered into contracts to purchase property, plant and equipment as follows:
GROUP
Contracted
2013
£000
7,966
2012
£000
5,672
Included in the commitments at 28 January 2012 was £700,000 for the purchase of property, plant and equipment for the new
warehouse which became fully operational in Summer 2012.
(ii) Operating lease commitments
The Group leases various retail outlets, offices, warehouses, plant and equipment under non-cancellable operating lease
agreements. The leases have varying terms, escalation clauses and renewal rights.
Undiscounted total future minimum rentals payable under non-cancellable operating leases are as follows:
GROUP
Within one year
Later than one year and not later than five years
After five years
Land and
buildings
2013
£000
96,120
288,973
248,055
633,148
Plant and
equipment
2013
£000
1,109
1,257
104
2,470
Land and
buildings
2012
£000
95,406
293,790
281,191
670,387
Plant and
equipment
2012
£000
1,297
1,134
-
2,431
The future minimum rentals payable on land and buildings represent the base rents that are due on each property.
Certain properties have rents which are partly dependent on turnover levels in the individual store concerned.
(iii) Sublease receipts
The Group subleases various retail outlets under non-cancellable operating lease agreements. The leases have varying terms,
escalation clauses and renewal rights. The total future minimum operating sublease receipts expected to be received at
2 February 2013 are as follows:
GROUP
Within one year
Later than one year and not later than five years
After five years
2013
£000
594
1,749
1,618
3,961
2012
£000
352
533
320
1,205
120
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
121
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
29. COMMITMENTS (CONTINUED)
Company
(i) Capital commitments
As at 2 February 2013, the Company had entered into contracts to purchase property, plant and equipment as follows:
COMPANY
Contracted
2013
£000
2,378
2012
£000
2,534
Included in the commitments at 28 January 2012 was £700,000 for the purchase of property, plant and equipment for the new
warehouse which became fully operational in Summer 2012.
(ii) Operating lease commitments
The Company leases various retail outlets, offices, warehouses, plant and equipment under non-cancellable operating lease
agreements. The leases have varying terms, escalation clauses and renewal rights.
Undiscounted total future minimum rentals payable under non-cancellable operating leases are as follows:
COMPANY
Within one year
Later than one year and not later than five years
After five years
(iii) Sublease receipts
Land and
buildings
2013
£000
59,122
181,558
164,288
404,968
Plant and
equipment
2013
£000
695
774
104
1,573
Land and
buildings
2012
£000
59,265
186,423
180,895
426,583
Plant and
equipment
2012
£000
990
875
-
1,865
The Company subleases various retail outlets under non-cancellable operating lease agreements. The leases have varying terms,
escalation clauses and renewal rights. The total future minimum operating sublease receipts expected to be received at
2 February 2013 are as follows:
COMPANY
Within one year
Later than one year and not later than five years
After five years
2013
£000
482
1,322
1,343
3,147
2012
£000
534
1,429
1,661
3,624
30. PENSION SCHEMES
The Group only operates defined contribution pension schemes. The pension charge for the period represents contributions
payable by the Group of £1,216,000 (2012: £1,367,000) in respect of employees, and £53,000 (2012: £49,000)
in respect of Directors. The amount owed to the schemes at the period end was £239,000 (2012: £181,000).
31. ANALYSIS OF NET CASH
GROUP
Cash at bank and in hand
Overdrafts
Cash and cash equivalents
Interest-bearing loans and borrowings:
Bank loans
Finance lease liabilities
Other loans
COMPANY
Cash at bank and in hand
Cash and cash equivalents
At 28 January
2012
£000
67,024
(5,413)
61,611
On acquisition of
subsidiaries
£000
1,208
(175)
1,033
On disposal of
subsidiaries
£000
(5,888)
-
(5,888)
(289)
(660)
(367)
60,295
-
-
(508)
525
-
-
367
(5,521)
At 28 January
2012
£000
28,762
28,762
Cash flow
£000
(7,827)
(1,834)
(9,661)
205
593
40
(8,823)
Cash flow
£000
(8,558)
(8,558)
Non-cash
movements
£000
(1,033)
166
(867)
At 2 February
2013
£000
53,484
(7,256)
46,228
16
11
-
(840)
(68)
(56)
(468)
45,636
Non-cash
movements
£000
(158)
(158)
At 2 February
2013
£000
20,046
20,046
122
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
123
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
32. RELATED PARTY TRANSACTIONS AND BALANCES
32. RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED)
COMPANY
Focus Brands Limited
Purchase of inventory
Rental income
Income from
related parties
2013
£000
Expenditure with
related parties
2013
£000
Income from
related parties
30 January to
15 February
2011
£000
Expenditure with
related parties
30 January to
15 February
2011
£000
-
-
-
-
-
17
(395)
-
At the end of the period, the Company had the following balances outstanding with related parties who are not members of the Group:
COMPANY
Pentland Group Plc
Trade receivables/(payables)
Amounts owed by
related parties
2013
£000
Amounts owed to
related parties
2013
£000
Amounts owed by
related parties
2012
£000
Amounts owed to
related parties
2012
£000
380
(1,175)
58
(1,429)
Pentland Group Plc owns 57.5% (2012: 57.5%) of the issued ordinary share capital of JD Sports Fashion Plc.
The Group and Company made purchases of inventory from Pentland Group Plc in the period and the Group also
sold inventory to Pentland Group Plc. In the current period, the Company disposed its 100% shareholding in Canterbury Limited
to Pentland Group Plc for £22,699,000 (see note 12). The other income represents marketing contributions received, whilst the
Group also paid royalty costs to Pentland Group Plc for the use of a brand.
Focus Brands Limited was an entity jointly controlled by JD Sports Fashion Plc and the former shareholders of
Focus Group Holdings Limited. JD Sports Fashion Plc owned 49% of the issued share capital of Focus Brands Limited
up until 16 February 2011 when it acquired a further 31% (see note 17). Focus Brands Limited became a subsidiary of the Group
from this date rather than a jointly- controlled entity. The Company and its subsidiaries made purchases from the Focus Group,
the Company rents a property to this entity and the Company receives royalty income in relation to Peter Werth, Fly 53 and
Sonneti brand names, as well as the Sergio Tacchini licence (see note 13).
Transactions and balances with related parties during the period are shown below. Transactions were undertaken in the ordinary
course of business on an arms length basis. Outstanding balances are unsecured (unless otherwise stated) and will be settled in cash.
Transactions with related parties who are not members of the Group
During the period, the Group entered into the following transactions with related parties who are not members of the Group:
GROUP
Pentland Group Plc
Sale of inventory
Purchase of inventory
Royalty costs
Proceeds from disposal of Canterbury Limited
Other income
GROUP
Focus Brands Limited
Purchase of inventory
Interest income
Royalty income
Income from
related parties
2013
£000
Expenditure with
related parties
2013
£000
Income from
related parties
2012
£000
Expenditure with
related parties
2012
£000
478
-
-
22,699
-
-
(25,610)
(190)
-
-
7
-
-
-
203
-
(13,672)
(282)
-
-
Income from
related parties
2013
£000
Expenditure with
related parties
2013
£000
Income from
related parties
30 January to
15 February
2011
£000
Expenditure with
related parties
30 January to
15 February
2011
£000
-
-
-
-
-
-
-
17
49
(1,489)
-
-
At the end of the period, the following balances were outstanding with related parties who are not members of the Group:
GROUP
Pentland Group Plc
Trade receivables/(payables)
Amounts owed by
related parties
2013
£000
Amounts owed to
related parties
2013
£000
Amounts owed
by related parties
2012
£000
Amounts owed
to related parties
2012
£000
321
(1,790)
58
(1,773)
During the period, the Company entered into the following transactions with related parties who are not members of the Group:
COMPANY
Pentland Group Plc
Purchase of inventory
Receipt of Canterbury intercompany debt
Other income
Income from
related parties
2013
£000
Expenditure with
related parties
2013
£000
Income from
related parties
2012
£000
Expenditure with
related parties
2012
£000
-
22,699
369
(14,126)
-
-
-
-
216
(8,792)
-
-
124
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
125
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
32. RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED)
Transactions with related parties who are members of the Group
During the period, the Company entered into the following transactions with related parties who are members of the Group:
COMPANY
Canterbury of New Zealand Limited (UK)
Purchase of inventory
Canterbury European Fashionwear Limited
Purchase of inventory
JD Sports Fashion (France) SAS
Interest income
Spodis SA
Interest income
Duffer of St George Limited
Interest income
John David Sports Fashion (Ireland) Limited
Sale of inventory
Other income
Kooga Rugby Limited
Purchase of inventory
Nanny State Limited
Interest income
Nicholas Deakins Limited
Sale/(purchase) of inventory
R.D. Scott Limited
Rental income
Concession fee
Topgrade Sportswear Limited
Sale/(purchase) of inventory
Interest income
Focus International Limited
Purchase of inventory
Rental income
Royalty income
Kukri Sports Limited
Purchase of inventory
Interest income
Champion Sports Ireland
Purchase of inventory
JD Spain Sport Fashion 2010 SL
Purchase of inventory
Source Lab Limited
Purchase of inventory
Tessuti Group Limited
Interest income
Income from
related parties
2013
£000
Expenditure with
related parties
2013
£000
Income from
related parties
2012
£000
Expenditure with
related parties
2012
£000
-
-
134
146
36
9,388
1,173
-
23
287
152
-
8
126
-
199
486
-
63
-
-
-
26
(95)
(7)
-
-
-
-
-
(2)
-
(1,058)
(155)
-
-
(2,589)
-
-
(11)
-
(626)
(5)
(208)
-
-
-
148
-
44
7,259
728
-
22
379
266
-
-
110
-
183
242
-
44
-
-
-
-
(252)
-
-
-
-
-
-
(71)
-
(858)
(162)
(5)
-
(3,562)
-
-
(37)
-
-
-
-
-
32. RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED)
At the end of the period, the Company had the following balances outstanding with related parties who are members of the Group:
COMPANY
Athleisure Limited
Long term loan
Pink Soda Limited
Long term loan
Bank Fashion Limited
Debenture loan (interest bearing)
Long term loan
Working capital loan
Trade receivables/(payables)
Income tax group relief
Canterbury Limited
Secured loan
Working capital loan
Income tax Group relief
Canterbury of New Zealand Limited (UK)
Working capital loan
Trade payables
Canterbury European Fashionwear Limited
Income tax Group relief
Allsports.co.uk Limited
Long term loan
JD Sports Fashion (France) SAS
Long term loan
Spodis SA
Long term loan
Other intercompany balances
Duffer of St George Limited
Secured loan
Income tax Group relief
John David Sports Fashion (Ireland) Limited
Trade receivables
Other intercompany balances
Kooga Rugby Limited
Long term loan (net of provision)
Working capital loan
Trade payables
Income tax Group relief
Amounts owed by
related parties
2013
£000
Amounts owed to
related parties
2013
£000
Amounts owed by
related parties
2012
£000
Amounts owed to
related parties
2012
£000
6,638
-
5,000
10,681
2,694
-
-
-
-
-
-
-
-
-
4,212
11,552
4,710
690
-
802
4,259
1,499
3,580
-
-
-
-
-
-
-
(43)
(806)
-
-
-
-
-
-
(6,582)
-
-
-
-
(4)
-
-
-
-
(25)
(181)
6,638
10,681
-
-
-
57
-
6,500
3,322
13,506
-
-
-
4,251
4,167
3,009
899
-
457
3,660
1,499
3,101
-
-
-
-
-
-
-
(2)
-
-
-
(85)
-
(9)
(202)
(6,582)
-
-
-
-
-
-
-
-
-
(10)
(271)
126
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
127
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
32. RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED)
32. RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED)
At the end of the period, the Company had the following balances outstanding with related parties who are members of the Group:
At the end of the period, the Company had the following balances outstanding with related parties who are members of the Group:
COMPANY
Nanny State Limited
Secured loan
Working capital loan
Income tax Group relief
Nicholas Deakins Limited
Trade receivables/(payables)
Other intercompany balances
R.D. Scott Limited
Debenture loan (interest bearing)
Long term loan
Working capital loan
Trade receivables/(payables)
Income tax Group relief
Topgrade Sportswear Limited
Working capital loan
Trade receivables/(payables)
Other intercompany balances
Income tax Group relief
Premium Fashion Limited
Debenture loan (interest bearing)
Long term loan
Working capital loan
Income tax Group relief
Champion Sports Ireland
Working capital loan
Other intercompany balances
Trade receivables
Marathon Sports Limited
Income tax Group relief
JD Sprinter Holdings 2010 SL
Trade receivables
JD Spain Sport Fashion 2010 SL
Trade receivables
Focus Brands Limited
Working capital loan
Amounts owed by
related parties
2013
£000
Amounts owed to
related parties
2013
£000
Amounts owed by
related parties
2012
£000
Amounts owed to
related parties
2012
£000
-
117
-
72
38
5,000
-
547
-
-
8,314
726
16
-
5,000
-
-
-
600
77
385
-
23
473
3,302
-
-
(7)
(42)
-
-
-
-
(108)
(471)
-
-
-
(140)
-
-
(724)
(609)
-
-
(745)
(43)
-
-
-
494
631
-
95
71
-
5,047
-
64
-
8,188
92
-
-
-
1,598
574
-
-
-
106
-
10
-
3,302
-
-
(31)
(30)
-
-
-
-
(60)
-
-
(3)
-
(112)
-
-
-
(369)
-
-
-
-
-
-
-
COMPANY
Focus International Limited
Other intercompany balances
Trade receivables/(payables)
Kukri Sports Limited
Long term loan
Long term loan (interest bearing)
Trade receivables/(payables)
Working capital loan
Other intercompany balances
Kukri GB Limited
Working capital loan
Trade receivables
Income tax Group relief
Kukri (Asia) Limited
Income tax Group relief
Kukri Sports Ireland Limited
Other intercompany balances
Frank Harrison Limited
Income tax Group relief
Blacks Outdoor Retail Limited
Working capital loan
Long term loan
Trade receivables
Income tax Group relief
Source Lab Limited
Trade receivables/(payables)
Tessuti Limited
Other intercompany balances
Blue Retail Limited
Other intercompany balances
Tessuti Group Limited
Long term loan
Long term loan (interest bearing)
Other intercompany balances
Amounts owed by
related parties
2013
£000
Amounts owed to
related parties
2013
£000
Amounts owed by
related parties
2012
£000
Amounts owed to
related parties
2012
£000
95
360
-
2,687
60
122
206
2,477
310
-
-
103
-
27,587
20,000
-
-
125
511
2
2,355
836
24
-
(68)
-
-
-
-
-
-
-
(242)
(81)
-
(26)
-
-
-
(5,283)
(8)
-
-
-
-
-
29
142
180
2,444
-
490
-
-
184
-
-
-
-
3,820
20,000
57
-
-
-
-
-
-
-
-
(1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,474)
-
-
-
-
-
-
128
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
129
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
33. CONTINGENT LIABILITIES
34. SUBSEQUENT EVENTS
The Company has provided the following guarantees:
Acquisition of Cloggs Online Limited
• Guarantee on the working capital facilities in Spodis SA
of €5,000,000 (2012: €5,000,000)
• Guarantee of €1,100,000 on bonds and guarantees
in Spodis SA
• Guarantee on the working capital and other banking
facilities in relation to the Sprinter Megacentros Del Deporte
SLU of €8,750,000
• Guarantee on the finance lease facility in relation to the
acquisition of Champion Sports Ireland, up to a maximum of
€2,500,000 (2012: €2,500,000). At 2 February 2013, the
related liability remaining is €27,000
• Guarantee on the working capital facilities in Champion
Sports Ireland up to a maximum of €3,000,000
(2012: €3,000,000)
• Guarantee to Pentland Group Plc on the outstanding legal
settlement and associated legal costs that Canterbury
International (Australia) Pty Limited had with the Australian
Rugby Union at the point of disposal of Canterbury in excess
of AUD$175,000
In the period ending 28 January 2012, the Company had
provided the following guarantees, which expired on disposal
of the Canterbury Group:
• Guarantee capped at £788,000 in relation to the acquisition
of Canterbury of New Zealand Limited under a kit supply
and sponsorship agreement with the Scottish Rugby Union
Plc, which was entered into in January 2010
• Guarantee on the working capital facilities in Canterbury
International (Australia) Pty Limited of AUD$3,000,000
On 13 February 2013, the Group acquired, via its new 88% owned subsidiary Cloggs Online Limited, the trade and assets of
Cloggs (UK) Limited from its Administrators for a total cash consideration of £600,000.
The provisional goodwill calculation is summarised below:
Acquiree's net assets at acquisition date:
Intangible Assets
Property, plant and equipment
Inventories
Trade and other receivables
Trade and other payables
Net identifiable assets
Non-controlling interest (12%)
Goodwill on acquisition
Consideration paid - satisfied in cash
Book value
£000
Measurements
adjustment
£000
Provisional fair
value at
2 February
2013
£000
105
60
347
88
-
600
(72)
495
20
253
(48)
(720)
-
-
600
80
600
40
(720)
600
(72)
72
600
35. ULTIMATE PARENT COMPANY
The Company is a subsidiary undertaking of Pentland Group Plc which is also the ultimate parent company.
Pentland Group Plc is incorporated in England and Wales.
The largest group in which the results of the Company are consolidated is that headed by Pentland Group Plc.
The results of Pentland Group Plc may be obtained from Companies House, Crown Way, Cardiff, CF14 3UZ.
The Company has taken advantage of the exemption in s408 of the Companies Act 2006 not to present its individual income
statement and related notes. The total recognised income and expense for the parent included in these consolidated financial
statements is £47,874,000 (2012: £52,190,000). The Consolidated Financial Statements of JD Sports Fashion Plc are available to
the public and may be obtained from The Company Secretary, JD Sports Fashion Plc, Hollinsbrook Way, Pilsworth, Bury, BL9 8RR
or online at www.jdplc.com.
32. RELATED PARTY TRANSACTIONS AND
BALANCES (CONTINUED)
Long term loans represent historic intercompany balances and
initial investment in subsidiary undertakings to enable them to
purchase other businesses. These loans do not attract interest,
with the exception firstly of the loans to Spodis SA and
JD Sports Fashion (France) SAS, where interest is charged at
the official French government interest rate. This interest rate is
variable and is reviewed quarterly. These loans are repayable
on demand.
In addition an element of the long term loans to Tessuti Group
Limited and Kukri Sports Limited attract interest at the UK base
rate plus a margin of 4.5% and 2.0% respectively. These loans
are repayable on demand.
Debenture loans represent formal loans agreements put in
place between the Company and its subsidiaries Bank Fashion
Limited, RD Scott Limited and Premium Fashion Limited.
These loans attract interest at the UK base rate plus a margin
of 2.0% and are repayable on demand.
Working capital loans represent short term financing provided
by the Company to its subsidiaries. These loans do not attract
interest, with the exception of the loan to Topgrade Sportswear
Limited and Kukri Sports Limited which are not wholly owned
subsidiaries. The loan to Topgrade Sportswear Limited attracts
interest at the UK base rate plus a margin of 1.0%. The loan to
Kukri Sports Limited attracts interest at the UK base rate plus a
margin of 2.0%. These loans are repayable on demand.
The secured loans from the Company to Duffer of St George
Limited and Nanny State Limited are secured upon the
intellectual property in these companies. The loan to Duffer of
St George Limited and Nanny State Limited accrue interest at
the UK base rate plus a margin of 4.0%. These loans are
repayable on demand.
The secured loans and working capital loans from the
Company to Canterbury Limited and Canterbury of
New Zealand Limited (UK) were fully repaid as part of
the consideration received on disposal of the Canterbury
business (see note 12).
Other intercompany balances relates to recharges.
Trade receivables/payables relate to the sale and purchase of
stock between the Company and its subsidiaries on arms
length terms.
There have been no transactions in the year (2012: £nil) and
there are no balances outstanding (2012: £nil) with the other
subsidiary undertakings of the Company, as listed in note 36.
Other than the remuneration of Directors as shown in note 5
and in the Directors' Remuneration Report on page 59 there
have been no other transactions with Directors in the year
(2012: nil)
130
ANNUAL REPORT
& ACCOUNTS
2013
ANNUAL REPORT
& ACCOUNTS
2013
131
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
36. PRINCIPAL SUBSIDIARY UNDERTAKINGS
The following companies were the principal subsidiary undertakings of JD Sports Fashion Plc at 2 February 2013.
Name of subsidiary
John David Sports Fashion (Ireland) Limited
Athleisure Limited
R.D. Scott Limited
Pink Soda Limited
Varsity Kit Limited*
Bank Fashion Limited*
Topgrade Sportswear Holdings Limited
Topgrade Sportswear Limited*
Nicholas Deakins Limited
JD Sports Fashion (France) SAS
Spodis SA*
Kooga Rugby Limited
Duffer of St George Limited
Premium Fashion Limited
Nanny State Limited
Focus Brands Limited
Focus International Limited*
Kukri Sports Limited
Kukri GB Limited*
Kukri (Asia) Limited*
Kukri NZ Limited*
Kukri Sports Ireland Limited*
Kukri Australia Pty Limited*
Kukri Sports Canada Inc*
Frank Harrison Limited*
Kukri Sports Middle East JLT*
Kukri Pte Limited*
Champion Sports Group Limited*
PCPONE*
JD Champion Ireland Limited*
Champion Sports Ireland*
Marathon Sports Limited*
Champion Sports (Holdings)*
JD Sprinter Holdings 2010 SL
JD Spain Sport Fashion 2010 SL*
Sprinter Megacentros Del Deporte SLU*
Blacks Outdoor Retail Limited
Source Lab Limited
Tessuti Group Limited
Tessuti Limited *
Prima Designer Limited *
Place of
registration
Nature of business
and operation
Ownership
interest
Voting rights
interest
Ireland
UK
UK
UK
UK
UK
UK
UK
UK
France
France
UK
UK
UK
UK
UK
UK
UK
UK
Hong Kong
New Zealand
Ireland
Australia
Canada
UK
Middle East
Singapore
Ireland
Ireland
Ireland
Ireland
UK
Ireland
Spain
Spain
Spain
UK
UK
UK
UK
UK
Retailer of sports inspired footwear and apparel
Intermediate holding company
Retailer of fashion clothing and footwear
Intermediate holding company
Intermediate holding company
Retailer of fashion clothing and footwear
Intermediate holding company
Distributor and multichannel retailer of sports and fashion
clothing and footwear
Distributor of fashion footwear
Intermediate holding company
Retailer of sports footwear and accessories
Distributor of rugby clothing and accessories
Licensor of a fashion brand
Retailer of fashion clothing and footwear
Distributor of fashion footwear and apparel
Intermediate holding company
Distributor of sports clothing and footwear
Intermediate holding company
Distributor and retailer of sports clothing and accessories
Distributor of sports clothing and accessories
Distributor of sports clothing and accessories
Distributor of sports clothing and accessories
Distributor of sports clothing and accessories
Distributor of sports clothing and accessories
Distributor and retailer of school clothing
Distributor of sports clothing and accessories
Distributor of sports clothing and accessories
Intermediate holding company
Intermediate holding company
Retailer of sports and leisure goods
Retailer of sports and leisure goods
Retailer of sports and leisure goods
Intermediate holding company
Intermediate holding company
Retailer of sports and leisure goods
Retailer of sports and leisure goods
Retailer of outdoor footwear, apparel and equipment
Design and distributor of sportswear
Intermediate holding company
Retailer of fashion clothing and footwear
Retailer of fashion clothing and footwear
100%
100%
100%
100%
100%
100%
80%
80%
100%
100%
100%
100%
100%
100%
100%
80%
80%
80%
80%
80%
60%
80%
66%
60%
72%
80%
80%
100%
100%
100%
100%
100%
100%
50.1%
65.1%
50.1%
100%
85%
60%
60%
60%
100%
100%
100%
100%
100%
100%
80%
80%
100%
100%
100%
100%
100%
100%
100%
80%
80%
80%
80%
80%
60%
80%
66%
60%
72%
80%
80%
100%
100%
100%
100%
100%
100%
50.1%
65.1%
50.1%
100%
85%
60%
60%
60%
*Indirect holding of the Company
A full list of subsidiary undertakings of JD Sports Fashion Plc can be obtained from Companies House.
FIVE YEAR RECORD
CONSOLIDATED INCOME STATEMENT
Revenue
Cost of sales
Gross profit
Selling and distribution expenses - normal
Selling and distribution expenses - exceptional
Selling and distribution expenses
Administrative expenses - normal
Administrative expenses - exceptional
Administrative expenses
Other operating income
Operating profit
Before exceptional items
Exceptional items
Operating profit before financing and share
of result of joint venture
Share of results of joint venture before exceptional items (net of income tax)
Share of exceptional items (net of income tax)
Share of results of joint venture
Financial income
Financial expenses
Profit before tax
Income tax expense
Profit for the period
Attributable to equity holders of the parent
Attributable to non-controlling interest
Basic earnings per ordinary share
Adjusted basic earnings per ordinary share (i)
Dividends per ordinary share (ii)
52 weeks to
31 January
2009
£000
670,855
(340,309)
330,546
(256,315)
(8,201)
(264,516)
(20,867)
(8,122)
(28,989)
1,109
38,150
54,473
(16,323)
38,150
(166)
914
748
529
(1,210)
38,217
(13,707)
24,510
24,379
131
50.49p
72.33p
12.00p
52 weeks to
30 January
2010
£000
769,785
(390,248)
379,537
(288,462)
(6,458)
(294,920)
(26,051)
1,472
(24,579)
2,270
62,308
67,294
(4,986)
62,308
539
(1,012)
(473)
385
(827)
61,393
(18,647)
42,746
42,900
(154)
88.16p
93.64p
18.00p
52 weeks to
29 January
2011
£000
883,669
(446,657)
437,012
(326,296)
(3,277)
(329,573)
(32,966)
(1,007)
(33,973)
2,177
75,643
79,927
(4,284)
75,643
1,475
1,348
2,823
618
(455)
78,629
(22,762)
55,867
55,884
(17)
114.84p
116.86p
23.00p
52 weeks to
28 January
2012
£000
1,059,523
(538,676)
520,847
(403,923)
(10,532)
(414,455)
(43,193)
847
(42,346)
2,730
66,776
76,461
(9,685)
66,776
(102)
1,170
1,068
646
(1,048)
67,442
(18,093)
49,349
46,847
2,502
96.27p
105.89p
25.30p
53 weeks to
2 February
2013
£000
1,258,892
(645,404)
613,488
(494,619)
(3,724)
(498,343)
(59,973)
(1,624)
(61,597)
2,427
55,975
61,323
(5,348)
55,975
-
-
-
645
(1,503)
55,117
(13,875)
41,242
38,786
2,456
79.71p
88.51p
26.30p
(i) Adjusted basic earnings per ordinary share is based on earnings excluding the post-tax effect of certain exceptional items
(see note 10).
(ii) Represents dividends declared for the year. Under IFRS dividends are only accrued when approved.
132
ANNUAL REPORT
& ACCOUNTS
2013
FINANCIAL CALENDAR
Final Results Announced
Final Dividend Record Date
Financial Statements Published
Annual General Meeting
Final Dividend Payable
Interim Results Announced
Period End (52 Weeks)
Final Results Announced
17 April 2013
10 May 2013
May 2013
27 June 2013
5 August 2013
September 2013
01 February 2014
April 2014
SHAREHOLDER INFORMATION
Registered office
JD Sports Fashion Plc
Hollinsbrook Way
Pilsworth
Bury
Lancashire BL9 8RR
Company number
Registered in England
and Wales,
Number 1888425
Financial advisers
and stockbrokers
Investec
2 Gresham Street
London EC2V 7QP
Financial public relations
MHP Communications
60 Great Portland Street
London W1W 7RT
Principal bankers
Barclays Bank Plc
43 High Street
Sutton
Surrey SM1 1DR
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Solicitors
DLA Piper UK LLP
Princes Exchange
Princes Square
Leeds LS1 4BY
Addleshaw Goddard LLP
100 Barbirolli Square
Manchester M2 3AB
Auditor
KPMG Audit Plc
St James’ Square
Manchester M2 6DS
The Board wishes to express its thanks to the marketing and finance departments for the in-house production of this
Annual Report and Accounts.