B R I G H T E N I N G
U P T H E
F U T U R E
A N N U A L R E P O R T & A C C O U N T S 2015/16
a s w e s a i d , t h i s i s a c o l o u r f u l s t o r y ,
b u t o u r f a c t s a n d f i g u r e s
a r e b l a c k a n d w h i t e .
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained in this document, including any information as to the Group’s strategy, plans or future f inancial or operating performance,
constitutes ‘‘forward-looking statements’’. These forward-looking statements may be identif ied by the use of forward-looking terminology, including the terms
‘‘believes’’, ‘‘estimates’’, ‘‘anticipates’’, ‘‘projects’’, ‘‘expects’’, ‘‘intends’’, ‘‘aims’’, ‘‘plans’’, ‘‘predicts’’, ‘‘may’’, ‘‘will’’, ‘‘seeks’’ ‘‘could’’ ‘‘targets’’ ‘‘assumes’’ ‘‘positioned’’
or ‘‘should’’ or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or
intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and
include statements regarding the intentions, beliefs or current expectations of the Directors concerning, among other things, the Group’s results of operations,
f inancial condition, prospects, growth, strategies and the industries in which the Group operates.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not
occur in the future or are beyond the Group’s control. Forward-looking statements are not guarantees of future performance. Even if the Group’s actual results
of operations, f inancial condition and the development of the industries in which the Group operates are consistent with the forward-looking statements
contained in this document, those results or developments may not be indicative of results or developments in subsequent periods.
The forward-looking statements contained in this document speak only as of the date of this document. The Group and its Directors expressly disclaim any
obligation or undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise,
unless required to do so by applicable law, the AIM Rules for Companies or the Disclosure and Transparency Rules.
Con tents 1
C O N T E N T S
HIGHLIGHTS
CHAPTER 1 - STR ATEGIC REPORT
Chairman’s Statement
Chief Executive’s Strategic Report
Financial Review
Principal Risks and Uncertainties
Social Responsibility
CHAPTER 2 - CORPOR ATE GOVERNANCE
Board of Directors
Governance Framework
Audit Committee Report
Nomination Committee Report
Directors’ Remuneration Report
Directors’ Report
Statement of Directors’ Responsibilities
CHAPTER 3 - CONSOLIDATED FINANCIAL STATEMENTS
Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Consolidated Financial Statements
Company Balance Sheet
Company Statement of Changes in Equity
Notes to the Company Financial Statements
Company Information
2 - 3
8 - 9
10 - 15
16 - 17
18 - 19
20 - 21
24
25 - 27
29
30
31 - 35
36 - 37
39
42
43
44
45
46
47
48 - 75
76
76
78 - 80
81
Company Secretary:
Jonathan William Dargie
Registered Off ice:
Joules Building, The Point, Rockingham Road, Market Harborough, Leicestershire, LE16 7QU
Nominated Adviser:
Peel Hunt LLP, Moor House, 120 London Wall, London, EC2Y 5ET
Brokers:
Peel Hunt LLP, Moor House, 120 London Wall, London, EC2Y 5ET
Liberum Capital Limited, Ropemaker Place, Level 12, 25 Ropemaker Street, London, EC2Y 9LY
Auditor:
Deloitte LLP, 1 Woodborough Road, Nottingham, NG1 3FG
Registrars:
Equiniti Limited, Aspect House, Spencer Road, Lancing, BN99 6DA
Joules Group plc - Registered in England and Wales number: 10164829
2 Hi gh li ghts
H I G H L I G H T S
•
•
•
•
•
•
Revenue increased by 14.2% 1 to £131.3 million
Underlying 2 Profit Before Tax increased by 41.5% to
£7.5 million
Underlying EBITDA 3 increased by 28.6% to £13.5 million
Cash f low from operations £16.9 million
Active 4 customers increased by 33% to 824,000
Joules.com website re-launched: mobile conversion
rates up by 0.5 percentage points in the year
•
International revenue increased by 24.7% - now
representing 10.1% of Group revenue
•
Sales growth experienced in every channel and
product category
•
Successful admission to AIM on 26 May 2016
Reconciliation to statutory profit before tax:
1. On a comparable 52 week basis, FY15 was a
53 week period. Reported revenue growth 12.8%.
£MILLION
2. Underlying excludes exceptional and
non-recurring items, primarily related to the
costs of admission to AIM and the capital
Underlying profit before tax
IPO transaction costs
structure in place pre-admission.
Shareholder loan note interest
3. EBITDA is a non-GAAP measure, a reconciliation
is provided in the Financial Review pages 16 to 17.
4. Active customer is a customer registered on our
Exceptional asset impairment
Other non-recurring items
database who has transacted in the last 12 months.
Statutory profit / (loss) before tax
FY16
FY15
7.5
(2.7)
(5.6)
(0.3)
(0.1)
(1.2)
5.3
-
(4.6)
(0.5)
(0.1)
0.1
C H A P T E R
1S T R A T E G I C
R E P O R T
H i t t i n g t h e B r i g h t N o t e s
8 Chair man’s Statement
C H A I R M A N ’ S S T A T E M E N T
J O U L E S G R O U P P L C
INTRODUCTION
This is our f irst Annual Report as a public company and
This was a signif icant year for the business with
it is my great pleasure to welcome new shareholders to
the Company’s admission to the AIM market of the
Joules. As Chairman for the last three years I have seen
London Stock Exchange in May 2016 being a notable
Joules grow and develop into the established and much-
highlight. Joules has an authentic British heritage; a
loved premium lifestyle brand it is today and I am now
strong and distinctive brand; an enviable track record;
even more excited about our future prospects than
and signif icant growth opportunities ahead. We were
ever before.
delighted with the enthusiasm and shareholder support
shown during our Initial Public Offering (‘IPO’), and we
look forward to delivering value for all stakeholders over
the coming years.
Chairman’s Statement 9
OUR BUSINESS
FINANCIAL RESULTS & DIVIDEND
The Joules brand is at the heart of our business and
Group revenue of £131.3 million increased by 12.8%
encompasses values of ‘time-off’, heritage, countryside,
compared to the prior period (53 weeks to 31 May
Britishness, family and fun. These values resonate
2015: £116.4 million). Against the comparable 52 week
through all product designs, which are known and loved
prior period, Group revenue increased by 14.2%. This
for their distinctive colours, prints, details and quality.
ref lects strong growth in both the Retail and Wholesale
These designs successfully span across a broad range
segments. On a geographic basis, UK sales increased
of product categories, from Womenswear to Homeware,
11.6% to £118.1 million and International sales increased
demonstrating the brand’s relevance to multiple aspects
24.7% to £13.2 million. International now represents just
of our customers’ lives.
over 10% of Group revenue. Underlying PBT grew by
The growth of the business in recent years has been
underpinned by signif icant investment that has been
made in the Group’s infrastructure, including supply
chain, IT and international sales support off ices. We are
conf ident that this investment, along with the strength
and appeal of the Joules brand, provides a strong
foundation for sustainable, long term growth.
OUR TEAM
The skill, creativity and energy of our people continues
to be a key factor in driving the business forward and
expanding the Joules brand. I would like to take this
opportunity to thank everyone in the Joules team
across the world for their hard work and dedication
throug hout what has been such a transformational year
for the business.
The success of the business to date has been led by a
dynamic and highly talented management team who have
a deep understanding of the Joules customer as well as
strong commercial and product design expertise. This
is underpinned by outstanding enthusiasm, energy and
leadership skills.
With our IPO the leadership team was further
strengthened with the appointment of two new Non-
Executive Directors to our Board. These were David
Stead, who has more than 15 years’ experience as a
director of companies in the UK retail sector, and Jill
Little, who has vast relevant experience of the retail
industry including driving international expansion.
We are already benef iting from their experience and
knowledge and look forward to their contributions in
the years to come.
41.5% to £7.5 million, and Underlying EPS was 6.9 pence
per share (FY15: 4.8 pence). Statutory PBT was £(1.2)million
(FY15: £0.1 million), statutory basic (and diluted) EPS are
-2.0 pence per share (FY15: -0.5 pence per share). The
Chief Executive’s Strategic Report and Financial Review
that follow provide a more in-depth analysis of the
trading performance and f inancial results of the Group.
The Directors intend to pursue a progressive dividend
policy, subject to the availability of suff icient
distributable prof its and the need to retain suff icient
earnings for the future growth of the Group. It is
currently intended that, in the absence of unforeseen
circumstances, the f irst dividend following Admission
will be paid in respect of the f inancial year ending May
2017 (FY17).
THE FUTURE
It is too early to assess the specif ic macro economic
effects of the UK’s decision to leave the European Union,
though it has created an environment of increased
uncertainty. I believe that Joules is well placed to
meet these uncertainties through a combination of the
strength of its brand and products; its target customer
demographic; and, the historic investment that has been
made in infrastructure. The impact on the product cost
base, resulting from a weaker GBP, is mitigated through
foreign exchange hedging in place throughout FY17 and
the f irst half of the subsequent year.
We have a loyal and growing customer base, a committed
and enterprising team and a well-invested infrastructure.
These qualities give us conf idence of successfully
delivering the Board’s clear strategy for growing the
Joules brand in the UK and internationally.
NEIL MCCAUSLAND
Chairman
10 Chi ef Executive’s St rat egic Re p ort
C H I E F E X E C U T I V E ’ S S T R A T E G I C R E P O R T
B U S I N E S S M O D E L
I am pleased to present the Group’s f irst Strategic
OUR BUSINESS MODEL
Report to shareholders. This is an exciting time for
the Joules brand as we continue to expand both in
the UK and internationally, whilst ensuring our focus
is as resolute as ever on product quality, design and
delighting our customers.
THE JOULES BR AND
Joules operates a truly multi-channel business model,
which is ref lected in the Group’s balanced revenue
mix by channel. The Joules brand has two key channels
to market: retail (including stores, e-commerce and
the country shows and events circuit) and wholesale.
Other channels include product licensing, which given
the strength of the Joules brand, is likely to become
Joules is a premium lifestyle brand with an authentic
increasingly important over time.
heritage. The brand is distinctive for its values of ‘time-
off’, heritage, countryside, Britishness, family and fun.
Retail
Our brand and design-led ethos deliver unique product
designs, which remain central to Joules’ continued
success, growth and appeal. Key components of our
designs include unwavering focus on quality, colour and
surprising details that excite our customers. The brand
is also known and loved for its exclusive, in-house
designed proprietary prints, which include f lorals,
conversationals, ‘‘pops of colour’’ and screen prints.
The Group has a fast growing and diverse store
portfolio of 97 UK and Republic of Ireland stores
(including f ive concessions) plus three franchise
stores. Our stores have a diverse geographic footprint,
ref lecting the broad appeal of the brand. The Group
operates a fully transactional and feature rich website,
www.joules.com, through which Joules branded products
are sold to customers in the UK and internationally. The
Group also operates dedicated, local currency and local
language consumer websites for the US and Germany.
Wholesale
Joules branded products are sold through selected
wholesale partners, primarily in the UK, North America
and Germany, supporting the expansion of the brand. The
wholesale channel consists primarily of:
•
“House accounts’’— national multi-channel retailers,
such as John Lewis and Next Label, which Joules sells
to and manages directly; and
•
‘‘Field accounts’’— generally smaller retailers
including independents managed directly by Joules
or by Joules’ sales agents and, in the US, via
a distributor.
12 Chi ef Executive’s S trategic Rep o rt
C H I E F E X E C U T I V E ’ S S T R A T E G I C R E P O R T
S T R A T E G Y A N D K E Y P E R F O R M A N C E I N D I C A T O R S
OUR GROWTH STR ATEGY
We have a clear strategy for the long-term, sustainable development of Joules as a premium lifestyle brand, both in
the UK and internationally. This strategy is built on the following key pillars, and is continuously underpinned by a
f irm focus on product quality and design.
1. INCREASING CUSTOMER VALUE - we intend to continue to grow our customer database, increase the number of
active customers and develop the value of the average active customer.
2. UK AND REPUBLIC OF IRELAND (ROI) STORE ROLL-OUT - as part of our multi-channel approach, there remains
signif icant further growth potential for the brand in the UK and ROI. We are targeting a net 10 to 12 new stores per
year in the medium term.
3. INTERNATIONAL EXPANSION - the Joules brand and products resonate well in international markets and the new
markets provide an opportunity to further leverage the investment in our central creative and commercial teams.
Our medium term focus is on North America and Germany.
4. PRODUCT EXTENSION - as a premium lifestyle brand, the Joules product offer naturally extends to meet many of
the lifestyle needs of our customers. Joules has had success extending the product offer within existing categories
and into new categories and we will continue to expand into new areas that are appropriate for the development of
the Joules brand.
STRATEGIC PRI ORITIES
AND DEVELOPMENTS
1 . I NCREA SING CUSTOMER VALUE
•
•
•
Re-launched the Jo ul es. co m we bsite with ric h er co nt ent and
mobile optimisat io n .
Successfully up-weig hted dig ita l media sp e n d for new cu s tom e r acq u is itio n
Return Address: Joules Ltd, PO BOX 7614, Corby, NN17 9DX
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JOU755
*£20 OFF when you spend £100 - OFFER CODE: EGGS
and retention .
# R E C L A I M
Y O U R S U N D A Y
Increased avera ge cu sto mer f requ e ncy of t ra n sacti on and transacti on valu e .
W E L O V E
S U N D A Y
£20 of f
when y ou spend £100
*
O F F E R C O D E : E G G S
2. UK A ND ROI STORE ROLL-OUT
S E E T H E F U L L C O L L E C T I O N a t J O U L E S . C O M
JOU755.indd 1
02/09/2015 15:19
•
•
•
•
•
Opened 10 new st ores d urin g th e year a n d co nve r t ed one f ranch is e to an owned s tore .
Closed five stores, taking advantage of end of lease terms where we believe there is a better location.
Opened three ‘Re g io na l S ho p p in g C e ntre’ s to res - a new l ocat ion t yp e .
New store pay ba ck period s co nti n u e to be l e ss t h an 12 month s.
All, but one, stores open for more than 12 months delivered a positive contribution.
3. INTERNATIONAL EXPANSION
•
•
•
•
US showroom an d sal es of f ice in New Yo rk re located an d e nlarg ed.
Nordstom increased t he ra ng e of we ll in gt o n boot s a nd acces so ri e s s to cked and evolved
from online o nly to space in 8 0 s t o re s fo r A u t u mn/ Wi nt e r 16 .
Von Maur ex pa n ded ran ge w it hi n s evera l of t he i r 33 de p ar t m e nt st ores t o inclu d e
wom en’s n ig ht wea r and outer wea r fo r A u tu m n/ W inte r 1 6.
Launching kids apparel and accessories in 50 of Dillards’ 330 department stores for Autumn/Winter 16.
4. PRODUCT EXTENSION
•
•
•
Accessories grew by 27 % i n t he yea r a n d is now 13% of total s al e s .
Hom eware cate go r y grew by 33 % in th e year.
Baby Joul e grew by a n im pressi ve 4 2% in th e year foll owi ng an
increa sed foc us on this i mp o r ta nt cat e g o r y.
Chief Executive’s St rat egic Rep ort 13
KEY PERFORMANCE INDICATORS
Our KPIs have been selected based on their link to the successful delivery of our strategy,
they are monitored by the Board on a regular basis.
OUR FINANCIAL KPI s:
•
•
•
•
Revenue by channel - delivering balanced growth across
our core-sales channels
Group gross margin - maintaining overall product level
profitability whilst developing the different channels to market
EBITDA margin – how effectively we are leveraging our cost
base and infrastructure
Return on Capital employed (‘ROCE’) – how we are managing
working capital and growth capital investments
W H O L E S A L E
E C O M M E R C E
S T O R E S
FY15 was a
53 week period.
140
120
100
80
60
40
20
0
31.6
25.8
37.2
30.1
26.9
23.9
39.3
52.4
58.2
FY 14
FY 15
FY 16
R E V E N U E B Y C H A N N E L £ M
55 .0 %
56
55 .5
55
54 .5
54
53 .5
53
52 .5
52
53.3%
53.5%
11
10.5
10
9. 5
9
8.5
8
10.3%
9.5%
9.0%
35
30
25
20
15
10
5
0
31.9%
27.3%
23.9%
FY14
FY15
FY16
FY 14
FY 15
FY 16
FY 14
FY 15
FY 16
G R O U P G R O S S M A R G I N %
U N D E R LY I N G E B I T D A M A R G I N %
R O C E * %
ACT IVE CUSTOMER NU MBERS**
FY14
FY15
FY16
529,000
621,000
824,000
NUMBE R OF STORES
TOTAL SELLING SPACE (SQ FT)
FY14
FY15
FY16
80
91
97
FY 14
FY 15
FY 16
84,500
100,000
111,000
I NTERNATIONAL REVENUE % OF GROUP REVENUE
FY14
FY15
FY16
5 . 8 %
9.1%
10.1%
* Return on Capital employed (‘ROCE’) is calculated as Underlying Operating Prof it after Tax divided by Average
Capital employed (Capital employed def ined as Underlying Net Assets adjusted for excess cash balances)
** Active customer def ined as a customer who is registered on our database and has transacted within the last
12 months. Note, FY14 and FY15 restated following improvements in data cleansing.
14 Chi ef Executive’s S trategic Rep o rt
C H I E F E X E C U T I V E ’ S S T R A T E G I C R E P O R T
B U S I N E S S R E V I E W
A YEAR OF EXCELLENT PROGRESS
Joules has continued to make excellent progress over
the past year, including the signif icant milestone of
With traff ic from mobile and tablet devices now
the Group’s admission to the AIM market of the London
representing over 70% of the total, and with the mobile
Stock Exchange towards the end of the f inancial year.
and tablet conversion rate improving by 50 basis points
The success of our IPO ref lects 27 years of careful
in the year, the re-launched site has been instrumental
development of the Joules brand, our unique multi-
in supporting the growth of e-commerce revenues.
channel approach and our consistent focus on our
customer. These qualities remained central to our
performance in FY16 as the Group made further
progress against its strategic objectives and continued
to develop and expand as a premium lifestyle brand in
the core UK market and also internationally.
‘Click & Collect’ continues to prove popular with
our customers and towards the end of the year we
commenced the roll-out of ‘Order in Store’ which
provides customers in store with access to the entire
range of products across all of our categories.
STRONG MULTI-CHANNEL RETAIL GROWTH
Retail sales, which includes stores, E-commerce and
shows, continued to grow impressively by 12.8% during
the year (on a consistent 52 week basis) as we expanded
Joules’ retail coverage across the UK and ROI to 97
stores at the end of the period. This was supported
by 10 new store openings and the conversion of one
franchise store during the year. During the year we
closed f ive stores taking the opportunity of lease breaks
to exit where we believe we could perform better in a
different location. We relocated one store, in Harrogate,
and expanded our space in two others, increasing total
selling space to 111,000 square feet by the end of
the year.
FY16 saw us expand into a new store location type with
three Regional Shopping Centre locations – Milton Keynes,
Meadowhall and Birmingham Grand Central. These stores,
which have a larger selling space than average, have proved
very popular with our customers – both old and new - and
have served to further develop and strengthen our brand
as well as deliver attractive financial returns.
Joules is a truly multi-channel brand, with e-commerce
revenues representing nearly one third of retail revenue.
E-commerce continued to deliver very strong sales
growth of 17.3% against the prior year (on a consistent
52 week basis), this growth was supported by the
ongoing development of our website functionality
and the overall customer offer. We re-launched our
Joules.com e-commerce site in September 2015,
with improved functionality, richer content and
optimisation for mobile and tablet devices.
WHOLESALE EXPANSION IN THE UK AND OVERSEAS
Wholesale sales increased by 18.3% (on a consistent
52 week basis), ref lecting the growing appeal of the
Joules brand. Continued expansion in the UK was driven
primarily through national multi-channel retailers such
as John Lewis and Next Label as well as through smaller,
independent specialist partners that have a good f it with
the Joules brand.
Joules’ products with their unique prints, colour and
British character continue to resonate strongly with
customers in international markets, where our focus
remains on North America and Germany where we are
building brand awareness. During the year we invested
further in our infrastructure in the US, opening a new,
larger trade showroom and sales office in New York.
Our focused approach, on developing larger wholesale
accounts, continues to make good progress with increased
product range listings in Nordstrom and Von Maur for
Autumn/Winter 16 and the department store Dillards
launching Childrenswear from Autumn/Winter 16.
The growth of international wholesale (up 48.1% in
the year) helped drive a 24.7% increase in the Group’s
total international sales (including international retail).
Excluding the impact of non-recurring international
shows, total international revenues were up nearly 36%,
taking international sales as a proportion of total Group
sales to 10.1%.
Chie f Executive’s Strategic Re p ort 15
FURTHER DEVELOPMENT AS A LIFESTYLE BR AND
During the year we implemented the f irst phase of our
Joules delivered growth across every product category
company wide ERP replacement programme. We are
during the year, with particularly strong performances
in the process of migrating our existing ‘Sales & stock
in the core Womenswear category and the newer
management’ IT platform to the Microsoft Dynamics A X
Homeware, Accessories and ‘Baby Joule’ categories. Our
ERP platform. Phase one has seen the implementation
licensed products, although relatively small in scale,
of Microsoft Dynamics A X to support our US wholesale
continued to perform well.
business. The programme, which represents a signif icant
The popularity of the brand across multiple product
categories highlights the exciting growth potential for
Joules as it continues to grow as a true lifestyle brand.
CUSTOMER AND MARKETING
Joules has a loyal, fast growing and highly engaged
customer community. During the year we continued to
expand our customer database – that now stands at just
over two million customers - and developed new ways
to communicate and engage with this community online,
investment for the Group, is ongoing as we extend
the platform across our core UK wholesale and retail
channels with a plan to go live in FY18.
The creativity, skill and commitment of the Joules team
are key drivers of the brand’s growth and success. We
continue to invest in skills and people development in
all areas of the business including our customer facing
colleagues and team leaders across the business.
LOOKING AHEAD
in stores, across social media platforms and through
Group trading to date in the FY17 f inancial year has been
events. One innovative and successful example of digital
in line with our expectations and early feedback on our
customer engagement during the year was our ‘Design
Spring/Summer 17 ranges from our trade customers has
Your Own Welly’ App and competition. Customers were
been positive.
invited to go online and bring a Joules welly to life by
creating their own, bespoke bold and bright designs. We
received more than 45,000 entries to the competition,
including many new customers, helping to raise brand
awareness amongst existing and potential customers.
We have a strong brand, a loyal and growing customer
base, a committed and enterprising team and a
well-invested infrastructure. These qualities give me
conf idence for the future and for the delivery against
our strategic objectives as we grow the Joules brand in
We were delighted to win ‘Fashion Business of the Year’
the UK and internationally.
(in the £30-100m category) at the 2015 Drapers Awards,
with the judges acknowledging Joules’ “very impressive
COLIN PORTER
growth story while demonstrating conf idence in our
Chief Executive Officer
brand positioning, ethos and strategy”. This award was
f itting testament to the hard work of our team as well as
the brand’s strong values.
PLATFORM FOR LONG TERM GROWTH
The focus of the management team is on the long
term, sustainable development of the Joules brand,
as demonstrated by further investments made during
the year including in our new stores, a strengthened
e-commerce proposition and the infrastructure to
support our US wholesale business.
16 Fi nancial Review
F I N A N C I A L R E V I E W
J O U L E S G R O U P P L C
FINANCIAL REVIEW
Sales in International markets, which are predominantly
Wholesale, increased by 24.7% and now represent 10.1%
of Group revenues (FY15: 9.1%).
Joules Group plc was admitted to AIM on 26 May 2016
Retail - Stores
(the ‘IPO’), just prior to the end of the financial period.
To provide a meaningful comparison to the prior financial
period and for future reporting periods, the front section
of this Annual Report reports on both the underlying and
the statutory results.
PROFIT BEFORE TA X – UNDERLYING
Underlying prof it before tax (‘PBT’) was £7.5 million
Store revenue at £58.2 million increased by 13.1% on the
comparable 52 weeks. During the year we opened 10 new
stores, converted one franchise and closed five stores,
resulting in an increase in owned store numbers from
91 to 97. Total store selling space increased by 10.9% to
111,000 sq. ft. over the period. We had three franchises
at the end of FY16 (FY15: 4).
for the 52 weeks to 29 May 2016, an increase of 41.5%
Retail – E-commerce
on the prior period (53 weeks to 31 May 2015).
EARNINGS BEFORE INTEREST, TA X, DEPRECIATION &
AMORTISATION (‘EBITDA’)
E-commerce revenue at £30.1 million increased by 17.3%
on the comparable 52 weeks and was 32.1% of total Retail
revenue (FY15: 30.6%). E-commerce benefited from more
visitors and higher conversion following the re-launch
Underlying EBITDA increased by 28.6% to £13.5 million
of the content rich, mobile optimised website and the
(FY15: £10.5m). The underlying EBITDA margin increased
ongoing new customer acquisition activity.
by 1.3 percentage points from 9.0% to 10.3%.
UNDERLYING AND STATUTORY RESULTS
Wholesale revenue at £37.2 million increased by 18.3% on
During the period there were a number of costs that
the comparable 52 weeks. Good performances were delivered
were exceptional or non-recurring in nature. These
in both the UK and international markets and from both the
items relate primarily to the IPO and to the capital
‘house account’ and the ‘field account’ customer bases.
Wholesale
structure that was in place prior to the IPO. To provide
a meaning ful year-on-year comparison, for historic and
GROSS MARGIN
future periods, these items have been excluded from
the underlying results reported in the front section of
the Annual Report. A reconciliation between Underlying
and Statutory (GA AP) results is provided below.
REVENUE
Gross margin at 53.5% was 0.2 percentage points higher than
the prior year. Our commercial and buying activity enabled
us to offset the impact of the strengthening US Dollar and
maintain overall intake margins. Increasing international
Wholesale sales, in particular within the US where we have
a high mix of lower margin footwear sales and a significant
Group revenue increased by 12.8% to £131.3 million from
proportion of our business via a distributor, result in
£116.4 million in FY15, the prior year being a 53 week
downward pressure on Group gross margin which has been
period. Against a comparable 52 weeks, Group revenue
more than mitigated by the growth of the Retail segment
increased by 14.2%, with Retail revenue increasing by
and improved e-commerce distribution costs.
12.8% and Wholesale revenue increasing by 18.3%.
52 WEEKS ENDED 29 MAY 2016
53 WEEKS ENDED 31 MAY 2015
£MIL L ION
UNDERLYING
Revenue
Gross profit
Admin expenses
Operating profit
Net finance costs
Profit before tax
Operating profit
Depreciation & Amortisation
EBITDA
131.3
70.3
(62.3)
8.0
(0.5)
7.5
8.0
(5.5)
13.5
IPO
COSTS
-
-
(2.7)
(2.7)
-
(2.7)
(2.7)
-
(2.7)
NON -
NON -
RECURRING
REPORTED
UNDERLYING
RECURRING
REPO RTED
-
-
131.3
70.3
116.4
62.0
-
-
116.4
62.0
(0.4)
(65.4)
(56.4)
(0.6)
(57.0)
(0.4)
(5.6)
(6.0)
(0.4)
(0.4)
(0.0)
4.8
(6.0)
(1.2)
4.8
(5.9)
10.7
5.7
(0.4)
5.3
5.7
(4.8)
10.5
(0.6)
(4.6)
(5.2)
(0.6)
(0.5)
(0.1)
5.1
(5.0)
0.1
5.1
(5.3)
10.4
Fin ancial Review 17
ADMINISTR ATIVE EXPENSES - UNDERLYING
Underlying administrative expenses increased by 10.5% from
To facilitate meaning ful comparison of earnings per
£56.4 million to £62.3 million. Underlying operating expenses
share the weighted average number of shares in issue
were 47.4% of revenue (FY15: 48.5%). The Group strengthened
has been restated on a pro forma basis to ref lect the
several central functions during the year particularly in
post-IPO capital structure. The pro forma assumes that
design, commercial and support and increased investment
the number of shares in issue post-IPO were in issue
in new customer acquisition and internal photo-shoot
throughout. Earnings are adjusted for non-underlying
capability to support the retail and wholesale channels.
items detailed above and to ref lect the statutory tax rate.
Total rent cost, including service charges, for the period
was £9.3 million (FY15: £8.5m) with the increase due to new
£ MILLION
store openings and the relocation of our Shanghai sourcing
office and expanded New York showroom during the period.
PBT - Underlying
Statutory tax rate
Underlying depreciation and amortisation increased to
Tax
£5.5 million (FY15: £4.8m) following the completion of
Earnings - Underlying
several IT infrastructure projects in the current and prior
year, including the f irst phase of the Enterprise Resource
Shares - Pro forma (million)
EPS - Pence
Planning (ERP) programme.
FY 16
7.5
FY15
5.3
20.0%
20.8%
(1.5)
6.0
87.5
6.9
(1.1)
4.2
87.5
4.8
ADMINISTR ATIVE EXPENSES - NON-UNDERLYING
As detailed in the Admission Document, the Board is not
Non-underlying administrative expenses totalled
£3.1 million (FY15: £0.6m). This included IPO transaction
related costs of £2.7 million (FY15: £nil) and
recommending the payment of a dividend for FY16.
CASH FLOW AND CASH POSITION
non-recurring costs of £0.4 million (FY15: £0.6m).
Net cash f low from operating activities was £16.9 million
Non-recurring costs included costs related to the
(FY15: £6.0m) including a net working capital inf low of
pre-IPO ownership structure of £0.1 million (FY15: £0.1m)
£7.1 million due to improved inventory eff iciency and
and asset impairment of £0.3 million (FY15: £0.5m).
higher trade payables at the period end.
NET FINANCE COSTS - UNDERLYING
Underlying net f inance costs of £0.5 million (FY15: £0.4m)
related to interest and facility charges on the Group’s
revolving credit facility with Barclays Bank Plc.
NET FINANCE COSTS - NON-UNDERLYING
The Group ended the period with underlying net cash/
(debt) of £3.2 million (FY15: £(6.5)m) an improvement of
£8.7 million in the period. Gross cash was £9.3 million
(FY15: £2.1m) and underlying borrowings £6.1 million
(FY15: £8.6m), which includes borrowings under the
Group’s revolving credit facility and asset f inance loans.
Underlying borrowings excludes shareholder loan notes
Non-underlying net f inance costs totalled £5.6 million
that were settled during the year as part of the IPO
(FY15: £4.6m), consisting primarily of interest on
transaction (FY15: £(42.8)m).
shareholder loan notes of £4.7 million (FY15: £4.4m)
and amortisation of the loan note arrangement fee of
£0.9 million (FY15: £0.4m). The shareholder loan notes
were converted to equity immediately prior to the IPO
and the expense will not be ongoing.
The Group has access to a £25 million revolving credit
facility provided by Barclays Bank Plc to fund seasonal
working capital requirements. This facility matures in
May 2020.
INVENTORY
TA X ATION
The reported tax rate in the current and prior year is impacted
by the non-underlying items noted above. These included
a proportion of non-deductible costs and the impact from
the proportion of the shareholder loan note interest that
was deemed deductible on finalisation of the Advanced Thin
Capitalisation Agreement (‘ATCA’) with HMRC during the period.
The Group’s effective tax rate in future years is expected
to be broadly in line with the statutory rate.
EARNINGS PER SHARE AND DIVIDEND
Inventory at year end was £19.3 million (FY15: £17.7m).
The higher year-on-year inventory was a result of
receiving deliveries for Autumn/Winter 16 ranges earlier
than the prior year. Inventory management and stock
turn both improved in the year.
CAPITAL EXPENDITURE
Investment in property, plant, equipment and intangible
assets totalled £7.1 million in FY16 (FY15: £8.8m). Major
areas of expenditure in the year were new store openings
and relocations and spend on our core IT infrastructure,
Statutory basic (and diluted) earnings per share for the
including the re-launch of our e-commerce platform and
period are -2.0 pence per share. On an underlying, pro
the completion of phase one of our ERP implementation.
forma basis the FY16 basic earnings per share are 6.9
Phase two of the ERP implementation is ongoing, with a
pence (FY15: 4.8 pence).
plan to go live in FY18.
18 Pri nci pal Ris ks & Uncerta in tie s
P R I N C I P A L R I S K S & U N C E R T A I N T I E S
Set out below are the principal risks and uncertainties
there may be other risks to which the Group is exposed
that the Directors consider could impact the business.
and so the list is not intended to be exhaustive.
The Board continually reviews the potential risks facing
The Corporate Governance Report includes an
the Group and the controls in place to mitigate any
overview of our approach to risk management and
potential adverse impacts. The Board also recognises
internal control systems and processes.
that the nature and scope of risks can change and that
EXTERNAL RISKS
External risks ref lect those risks where we are unable to inf luence the likelihood of the risk arising and
therefore focus is on minimising the impact should the risk arise.
RISK AND IMPACT
Economy
MITIGATING FACTORS
The majority of the Group’s revenue is generated from
As a premium lifestyle brand with a geographically disperse
sales in the UK to UK customers. A deterioration in the
retail store portfolio, a strong e-commerce channel and
UK economy may adversely impact consumer conf idence
long standing wholesale customer accounts, the Directors
and spending on discretionary items. A reduction in
consider that the UK business would be less affected by
consumer expenditure could materially and adversely
a reduction in consumer expenditure than many other
affect the Group’s f inancial condition, operations and
clothing retailers.
business prospects.
In addition, the property portfolio has short lease terms,
The expected exit of the UK from the EU has increased
providing relative f lexibility to close or relocate stores
the likelihood and potential impact of this risk.
should it become necessary.
Competitor Actions
New competitors or existing clothing retailers or lifestyle
Joules differentiates from competitors through its strong
brands may target our segment of the market. Existing
brand and products that are known for their quality, details,
competitors may increase their level of discounting or
colour and prints. Our large customer database allows
promotions and/or expand their presence in new channels.
the Group to communicate effectively with customers,
These actions could adversely impact our sales and profits.
developing customer engagement and loyalty.
Foreign Exchange
The Group purchases the majority of its product stock from
The Group’s Treasury Policy sets out the parameters and
overseas and is therefore exposed to foreign currency risk,
procedures relating to foreign currency hedging. We
primarily the US Dollar.
currently seek to hedge a material proportion of forecasted
Without mitigation, input costs may f luctuate in the short
US Dollar requirement 12 months ahead through the use of
term, creating uncertainty as to profits and cash f lows.
forward contracts.
The anticipated exit of the UK from the EU has resulted in a
devaluation of GBP to the US Dollar and increased volatility.
This may be sustained or worsen going forward.
The Group’s US wholesale business generates US Dollar
income which provides a degree of natural hedging.
Regulatory and Political
New regulations or compliance requirements may be
The Group has processes in place to monitor and report to
introduced from time to time. These may have a material
the Board on new regulations and compliance requirements
impact on the cost base or operational complexity of the
that could have an impact on the business. The impact of
business. Non-compliance with the regulation could result
any new regulation is evaluated and ref lected in the Group’s
in financial penalties.
financial forecasts and planning.
The anticipated exit of the UK from the EU has increased
uncertainty in this area.
Prin cip al Risks & Uncer tain ties 19
INTERNAL RISKS
Internal risks ref lect those where we can inf luence the likelihood of the risk arising and the impact
if the risk should arise.
RISK AND IMPACT
Brand and Reputation
MITIGATING FACTORS
The strength of our brand and its reputation are very
Brand and reputation are monitored closely by senior
important to the success of the Group. Failure to protect
management and the Board. The Group’s public relations
and manage this could reduce the confidence and trust
are actively managed and customer feedback, both direct
that customers place in the business, which could have a
and indirect, is carefully monitored.
detrimental impact on sales, profits and business prospects.
We carefully consider each new trade customer with whom
Our brand may be undermined or damaged by our actions
we do business and monitor on an ongoing basis.
or those of our wholesale partners.
Product Sourcing
The Group’s products are predominantly manufactured
The Group has a policy and process for the selection of new
overseas. Failure to carry out sufficient due diligence, and
suppliers. This includes a review of compliance with laws
to act in the event of any negative findings, especially in
and regulations and that suppliers meet generally accepted
relation to ethical or quality related issues, could adversely
standards of good practice. In addition, suppliers are
impact our brand and reputation.
required to sign up to Joules’ code of conduct.
The Group operates a programme of ethical audits across
the product supply base supported by a third party agency.
Design
As with all clothing and lifestyle brands there is a risk that
Joules has a long established in-house creative and design
our offer will not satisfy the needs of our customers or
team who have a high level of awareness and understanding
that we fail to correctly identify trends that are important
of our target customer segment. A large proportion of our
to our customer base. These outcomes may result in lower
product range is anchored in classic products that are
sales, excess inventories and/or higher markdowns.
evolved season to season.
Early feedback from our trade customers can allow us
to further refine our product range ahead of significant
purchase commitments.
Key Management
Our performance is linked to the performance of our people
The Group’s remuneration policy, which includes a long
and in particular to the leadership of key individuals. The loss
term incentive scheme and performance-related pay, is
of a key individual whether at management level or within
designed to attract and retain key management. The Group
a specialist skill set could have a detrimental effect on our
operates learning and development initiatives to increase
operations and, in some cases, the creative vision for the brand.
the opportunities for internal succession.
ERP System
We are in the process of implementing a new IT platform,
The first phase of our implementation went live in November
Microsoft Dynamics AX, across the Group. With any
2015, supporting our US wholesale operations. A dedicated
project of this scale, there is a risk of a poorly managed
programme team with significant experience of our business
implementation or take up of new systems, which could
processes and ERP implementation has been established. The
result in business disruption.
programme team reports monthly to a steering committee
comprised of Group senior management.
IT Security and Systems Availability
Non availability of the Group’s IT systems, including the
A Business Continuity Plan exists to minimise the impact of a
website, for a prolonged period could result in business
loss of key systems and to recover the use of the system and
disruption, loss of sales and reputational damage.
associated data.
Malicious attacks, data breaches or viruses, could lead to
A regular assessment of vulnerability to malicious attacks
business interruption and reputational damage.
is performed and any weaknesses rectified. All Group
employees are made aware of the Group’s IT security policies
and we deploy a suite of tools (email filtering, antivirus etc)
to protect against such events.
Supply Chain
The disruption to any material element of the Group’s
The Business Continuity Plan includes an established procedure
supply chain, in particular the UK central distribution
in the event of the loss of the UK distribution centre. In addition
centre, could impact sales and impact on our ability to
the Group maintains insurance cover at an appropriate level to
supply our wholesale customers, stores and consumers.
protect against the impact of such an interruption.
20 So ci al Re spon sibilit y
S O C I A L R E S P O N S I B I L I T Y
R E S P O N S I B L Y J O U L E S
RESPONSIBLY JOULES
OUR JOULES FAMILY
At Joules, we have always prided ourselves on acting as
At Joules, we have a family of enthusiastic and creative
a responsible company in everything that we do. Over
people who are committed to delivering the best quality,
the last year we have formalised our activities under four
value and service for our customers and who live and
strands of our ‘Responsibly Joules’ framework:
breathe our values every day. We are committed to
Sourcing with Integrity - partnering with our suppliers
supporting them and helping them grow and thrive.
to create distinctive products made with care,
This year we launched several exciting initiatives,
consideration and respect
including providing all of our people with a paid
Our Joules Family - creating and nurturing a vibrant
and supportive team which our employees are proud to
belong to
Outdoors from Shire to Shore - championing the
environment from shire to shore
Charitably Joules - actively contributing to our local
communities and the lives of our customers
SOURCING WITH INTEGRITY
By working closely with all of our suppliers we ensure
volunteering leave day each year, implementing a Give As
You Earn (GAYE) scheme and matching funds raised by
our employees for our Charitably Joules charities. Since
the end of the f inancial year we launched a Save As You
Earn (SAYE) scheme, open to all eligible employees,
to encourage employee share ownership.
We operate a learning and development programme
across the business with a focus on:
•
•
Store managers: team motivation and management,
customer service and selling skills
Head off ice managers and team leaders: leadership,
that they not only meet our quality expectations but they
personal development and team management skills
also understand, meet and embrace our internal values.
This means that we have ethical standards in place which
our suppliers comply with; ensuring that their workforce,
working conditions, material selection and management
and production processes are not just legally compliant
but are also fair, responsible and sustainable.
We manage our supply chain in Asia through our own
sourcing and quality control team based in Shanghai.
This off ice sources, manages and implements quality
assurance measures in respect of all of our suppliers
in the region with approximately 60 per cent. sourced
direct from the manufacturer and the remainder through
a local sourcing agent that has worked with Joules for
many years.
New suppliers are evaluated against a range of pre-
def ined criteria including ethical and quality standards
and are required to sign our code of conduct. Ongoing
supplier audits are carried out by a third party.
In addition, Joules encourages and supports the technical
training and professional qualif ications of its employees
in specif ic functional areas and has a successful and
established history of graduate recruitment in the
creative, commercial and f inance areas.
Employee engagement and communications is achieved
through regular ‘Director brief ings’ to all head off ice
and warehouse employees, a weekly newsletter and the
Group intranet. We hold a store manager conference
twice per year and issue a weekly newsletter for all store
based employees. These communications aim to keep
employees up to date on Group initiatives and f inancial
performance. We encourage employee feedback through
formal and informal channels.
We are an equal opportunities employer and give full
and fair consideration to employment applications
regardless of race, gender and/or disability, having
regard to an applicant’s aptitudes and abilities. We also
strive to provide ongoing training, career development
and promotion opportunities for all employees. In the
unfortunate event that an employee should become
disabled we are committed to continuing their
employment and for arranging appropriate training.
Social Res pon sibilit y 21
OUTDOORS FROM SHIRE TO SHORE
Introducing our newest partnership - The Prince’s Trust
As a business we are committed to understanding our
We are supporting The Prince’s Trust’s Enterprise
impact on the environment and, where we can, taking
Programme in the Leicestershire area. This programme
active steps to reducing it. Some examples of recent
supports unemployed young people to turn their big
initiatives are:
Reducing energy consumption across our properties -
we have an ongoing programme to install LED lighting
across our properties and have completed the head
off ice and all new and refurbished stores. In addition,
we recently installed an environmentally friendly
biomass boiler to heat our distribution centre.
The installation has been accredited by Ofgem and
accepted into the Renewable Heat Incentive scheme.
Energy Savings Opportunities Scheme (ESOS) - this year
we completed the initial audit of energy consumption
of our buildings, processes and transport as required by
the EU’s Energy Eff iciency Directive. This allows us to
identify major areas of energy utilisation and start to
monitor the impact of initiatives to reduce energy use.
Environmentally responsible packaging - our carrier
bags are made from a high grade of plastic that is more
reusable and are therefore more environmentally friendly
than most. As a result, our customers in England don’t
have to pay the 5p carrier bag tax.
ideas into a business reality. From training and mentoring
support to funding and resources, The Prince’s Trust
works with the budding entrepreneurs to help them
establish their own business. We are very excited to
support this programme both through f inancial support
and providing hands on expertise. We look forward to
helping these entrepreneurs realise their dreams.
Building classrooms at Nuzzlets
Nuzzlets is a fantastic grassroots charity that not only
provides a loving home for unwanted animals, but also
provides free access for people with disabilities, special
needs and life-threatening illnesses to visit the centre
for animal assisted therapy and education. Through our
fund-raising support this year, Nuzzlets have been able
to build two new mobile and woodland classrooms.
“Thanks to Joules’ support, our new classrooms
have become a reality and will be a huge asset to
us. We are very grateful for your ongoing support”
CHARITABLY JOULES
We focus our effort on four charities that we are
MARY CHAPMAN
Nuzzlets
passionate about and which ref lect our values -
Engaging our customers with the British Beekeepers
The Prince’s Trust, British Beekeepers Association,
Association
Nuzzlets and Farms for City Children.
We don’t just support our charity partners through
f inancial donations. In May, we held events in many of
our stores across the country, bringing bee keepers into
the store to meet our customers, demonstrate their
expertise and to show our customers why bees are so
vital to the countryside.
The Prince’s Trust
The British Beekeepers
Designing with Farms for City Children
Association
During the year we collaborated with Sir Quentin Blake,
one of Britain’s best loved illustrators, on a unique range
of childrenswear. A proportion of the proceeds from the
sale of these products went to Farms for City Children.
Nuzzlets
Farms For City Children
C H A P T E R
2C O R P O R A T E
G O V E R N A N C E
T i m e t o S h i n e
24 Co rpo rate Go vernanc e
B O A R D O F D I R E C T O R S
J O U L E S G R O U P P L C
NEIL MCCAUSLAND
Non-Executive Chairman
TOM JOULE
Founder & Chief Brand Officer
COLIN PORTER
Chief Executive Officer
Neil joined Joules in 2013. He also chairs Karen
Tom Joule founded Joules in 1989. Tom learnt his
Colin joined Joules in 2010 from Crombie, where
Millen, Create Fertility and Skin Ltd. Neil was the
trade selling branded country clothing at shows and
he was Joint Manag ing Director. Prior to this
Senior Independent Director of the Post Off ice
events around Britain. The Joules brand was born
Colin spent over 10 years at House of Fraser,
Limited for four years until September 2015,
after Tom’s entrepreneurial spirit led him to create
becoming Commercial Director on the main
where he chaired the remuneration committee
practical, stylish high-quality products to ref lect
board. Colin has also held a number of senior
and served on both the audit and nominations
the colourful personalities of those who love the
positions within the retail sector including at
committees. Prior to that he was a non-executive
outdoors. Between 2010 and 2015, Tom has featured
Etam, L aura Ashley and Arcadia.
Director of Nuff ield Health. Over the last 15 years
three times in Drapers 100 Most Inf luential People
he has chaired a number of companies, including
in Fashion Retail. In 2015, he was a finalist in the
six years as chairman of Kurt Geiger.
Fashion Entrepreneur of the Year category at the
Great British Entrepreneur Awards. In his current
role, Tom is focused on developing the Joules
brand, product and creative direction.
MARC DENCH
Chief Financial Officer
DAVID STEAD
JILL LITTLE
Senior Independent Non-Executive Director
Independent Non-Executive Director
Marc joined Joules in 2015 from Walgreens Boots
David joined the Board in April 2016. David is
Jill joined the Board in April 2016. Jill is currently the
Alliance, where he was Chief Financial Off icer of
currently on the board of Card Factory plc as
Senior Non-Executive Director of Shaftesbury plc and
its International Retail & Global Consumer Brands
an Independent Non-Executive Director and is
previously chaired their remuneration committee.
division. Marc has previously held a number
a member of the Council at the University of
Jill has spent the majority of her career in the retail
of senior f inancial and corporate development
Birmingham. He has over 15 years experience as
industry, firstly at Simpsons of Piccadilly and then
positions at Alliance Boots, Homeserve, Experian
a director of companies in the UK retail sector.
at the John Lewis Partnership (1975 to 2012). Jill
and Freeserve plc. Whilst at Freeserve, he was
David was the CFO of Dunelm Group plc for 12
became Merchandise Director on the board of John
involved in the successful IPO process and the
years from 2003 to 2015. Prior to this, David
Lewis, moving roles to become the Strategy and
subsequent merger with Wanadoo. Marc is a
served as Finance Director for Boots The Chemists
International Director where she was responsible for
chartered accountant and has an MBA from
and Boots Healthcare International between 1991
developing the long-term strategy and international
Sauder Business School.
and 2003. David is a chartered accountant, having
expansion of John Lewis. Thereafter Jill became
spent the early part of his career with KPMG.
Business Development Director of the John Lewis
Partnership. Jill is also Chairman of National Trust
Enterprises Ltd, National Trust Renewable Energy Ltd
and their advisory Commercial Group.
G O V E R N A N C E F R A M E W O R K
J O U L E S G R O U P P L C
Corpo rate Go vernan ce 25
CHAIRMAN’S INTRODUCTION
MATTERS RESERVED FOR THE BOARD
I have pleasure in introducing the Joules Group plc Corporate
Certain matters are reserved for approval by the Board.
Governance Statement, our first since our admittance to
These include:
trading on AIM on 26 May 2016. The Board is committed to
supporting high standards of corporate governance and,
for this reason, we have recently implemented appropriate
measures to comply, as far as is practicable, with the April
2016 UK Corporate Governance Code (the “Code”). In this
section of the Annual Report we set out our governance
framework and describe the work we have done to ensure
good corporate governance throughout Joules Group plc
and its subsidiaries (‘the Group’).
NEIL MCCAUSLAND
Non-Executive Chairman
BOARD SIZE AND COMPOSITION
Since admittance, the Board has comprised six Directors:
a Non-Executive Chairman, two further Non-Executive
Directors and three Executive Directors.
•
•
•
•
•
•
•
•
Strategy and business plans – including annual budget
Acquisitions and disposals of businesses (including
minority interests)
Share capital and dividends
Board membership and Committees and delegation
of authority
Remuneration and employment benefits
Corporate statutory reporting
Appointment of auditors
New debt facilities
• Major capital and revenue commitments
•
•
•
Corporate governance, policy approval, internal control
and risk management
Certain litigation matters in line with the Joules
litigation reporting policy
Corporate and social responsibilities
BOARD MEETINGS
ROLE OF THE BOARD
The Board has met four times since admittance to AIM. For
The Board is collectively responsible for the long term
all Board meetings an agenda is established and a Board
success of the Group. It provides entrepreneurial
pack is circulated at least 48 hours ahead of the meeting. As
leadership, sets Group strategy, upholds the Group’s
a minimum, the items covered include:
culture and values, reviews management performance and
ensures that the Group’s obligations to shareholders are
•
Financial performance review
• Management accounts and KPI’s
understood and met.
HOW THE BOARD OPERATES
The Executive Directors are responsible for business
operations and for ensuring that the necessary financial
•
•
•
•
•
Update on governance, finance, legal & risk matters
Updates on significant business initiatives
Proposals on any major items of capital expenditure
Health and Safety
Compliance with banking covenants and cash
and human resources are in place to carry out the Group’s
f low forecast
strategic aims. The Non-Executive Directors’ role is to
provide an independent view of the Group’s business and
to constructively challenge management and help develop
proposals on strategy. The Board as a whole review all
strategic issues and key strategic decisions on a regular
basis. Control over the performance of the Group is
maintained through evaluation of financial information; the
monitoring of performance against key budgetary targets;
and, by monitoring the return on strategic investments.
The Board receives reports from the Executive Directors
to enable it to be informed of and supervise the matters
within their remit. The Board considers at least annually
the Group’s strategic plan and, on a regular rolling basis,
the Board receives presentations from management on key
areas of the Group’s operations.
26 Co rpo rate Governance
G O V E R N A N C E F R A M E W O R K
C O N T I N U E D
BOARD MEETINGS
The following table shows Directors’ attendance at scheduled Board and Committee meetings since admission:
BOARD
AUDIT
REMUNERATION NOMINATION
NEIL MCCAUSLAND
TOM JOULE
COLIN PORTER
MARC DENCH
DAVID STEAD
JILL LITTLE
4/4
3/4
4/4
4/4
4/4
4/4
1/1
-
-
-
1/1
1/1
2/2
0/0
-
-
-
2/2
2/2
-
-
-
0/0
0/0
BOARD DECISIONS AND ACTIVITY DURING THE YEAR
BOARD EFFECTIVENESS
The Board has a schedule of regular business, financial and
The skills and experience of the Board are set out in
operational matters, and each Board Committee that has
their biographical details on page 24. The experience
met to date has compiled a schedule of work, to ensure
and knowledge of each of the Directors g ives them
that all areas for which the Board has responsibility are
the ability to constructively challenge strategy and to
addressed and reviewed during the course of the year. The
scrutinise performance.
Chairman, aided by the Company Secretary, is responsible
for ensuring that the Directors receive accurate and timely
SEPARATION OF DUTIES
information to enable the Board to discharge its duties.
The Company Secretary compiles the Board and Committee
papers which are circulated to Directors at least 48 hours
prior to meetings. The Company Secretary also ensures
that any feedback or suggestions for improvement on board
papers is fed back to management. The Company Secretary
provides minutes of each meeting and every Director is
aware of the right to have any concerns minuted and a
written statement circulated upon resignation.
BOARD COMMITTEES
The Board has delegated specific responsibilities to
the Audit, Remuneration and Nomination Committees.
Each Committee has written terms of reference setting
out its duties, authority and reporting responsibilities,
with copies available on the Company’s website
(www.joulesgroup.com) or on request from the Company
Secretary. The terms of reference of each Committee were
put in place at the time of the Company’s admission to AIM
and it is intended that they will be kept under review to
ensure they remain appropriate and ref lect any changes
in legislation, regulation or best practice. Each Committee
There is a clear division of responsibilities between the
Chairman and the Chief Executive Officer.
The Non-Executive Directors have responsibility for
determining the remuneration of Executive Directors and
have a prime role in appointing and, where necessary,
removing Executive Directors, and in succession planning.
INDUCTION OF NEW DIRECTORS
All the Directors were either directors of the Joules Group
prior to admission to AIM or were appointed on admission.
The new Directors took part in an induction process, prior
to joining the board, during which they undertook store
and office visits; met with key employees; and received
presentations from management on topics such as strategy,
finance and risk. It is intended that, in the future, on joining
the Board, new directors will undergo a programme which
will be tailored to the existing knowledge and experience of
the director concerned. The Chairman will be responsible
for this process.
TIME COMMITMENTS
comprises Non-Executive Directors of the Company.
All Directors have been advised of the time required to fulfil
The Company Secretary is the secretary of the Audit and
the role prior to appointment and were asked to confirm
Nomination Committees and the Group Legal Counsel is
that they could make the required commitment before they
secretary for the Remuneration Committee.
were appointed. This requirement is also included in their
letters of appointment.
Corpo rate Go vernance 27
The Board is satisfied that the Chairman and each of the
RISK MANAGEMENT AND INTERNAL CONTROLS
Non-Executive Directors is able to devote sufficient time to
the Company’s business. There has been no change in the
Chairman’s other time commitments since his appointment.
EVALUATION
The Board has ultimate responsibility for the Group’s
system of internal control and for reviewing its
effectiveness. However, any such system of internal control
can provide only reasonable, but not absolute, assurance
against material misstatement or loss. The Board considers
The Board has not conducted a formal board evaluation
that the internal controls in place are appropriate for the
since admission to AIM as it is too early in the Board’s
size, complexity and risk profile of the Group. The principal
operation to be meaningful. It is the Board’s intention that
elements of the Group’s internal control systems include:
the Chairman will meet regularly with the Non-Executive
Directors without the Executive Directors being present.
The Senior Independent Non-Executive Director will also
meet with his fellow Non-Executive Director, at least
annually, to appraise the Chairman’s performance and on
such other occasions as are deemed appropriate.
DEVELOPMENT
•
•
Day to day management of the activities of the Group
by the Executive Directors
A detailed annual budget is prepared including an
integrated profit and loss, balance sheet and cash f low.
The budget is approved by the Board
• Monthly reporting of performance against the budget
is prepared and reviewed by the Board
•
A schedule of delegated authority is maintained which
The Company Secretary ensures that all Directors are kept
defines levels of approval authority over such items as
abreast of changes in relevant legislation and regulations,
capital expenditure, commercial contracts, litigation
with the assistance of the Group’s advisers where
and treasury
appropriate. Executive Directors are subject to the Group’s
• Maintenance of a risk register which is reviewed at
performance development review process through which
least annually by the Board
their performance against objectives is reviewed and their
personal and professional development needs considered.
The Group continues to review its system of internal
control to ensure compliance with best practice, whilst also
having regard to its size and the resources available.
EXTERNAL APPOINTMENTS
In the appropriate circumstances, the Board may authorise
DIVERSITY
Executive Directors to take non-executive positions in
other companies and organisations provided the time
commitment does not conf lict with the Director’s duties to
the Company. The appointment to such positions is subject
to Board approval.
CONFLICTS OF INTEREST
At each meeting the Board considers Directors’ conflicts of
interest. The Company’s Articles of Association (‘Articles’)
provide for the Board to authorise any actual or potential
conflicts of interest.
INDEPENDENT PROFESSIONAL ADVICE
The Board does not have a formal board diversity policy but
plans to review this during the course of the next year.
RELATIONS WITH SHAREHOLDERS
The Group intends to maintain communication with
institutional shareholders through individual meetings
with Executive Directors, particularly following publication
of the Group’s interim and full year preliminary results.
Private shareholders are encouraged to attend the Annual
General Meeting at which the Group’s activities will be
considered and questions answered. General information
about the Group is also available on the Group’s website:
www.joulesgroup.com. This includes an overview of
Directors have access to independent professional advice
activities of the Group and details of all recent Group
at the Company’s expense. In addition, they have access to
announcements. The Non-Executive Directors are available
the advice and services of the Company Secretary who is
to discuss any matters stakeholders might wish to raise,
responsible for advice on corporate governance matters to
and the Chairman and Non-Executive Directors will attend
the Board.
meetings with investors and analysts as required. Investor
relations activity and a review of the share register are
DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE
standing items on the Board’s agenda.
The Company has purchased directors’ and officers’
liability insurance during the year as allowed by the
Company’s Articles.
ANNUAL GENERAL MEETING (‘AGM’)
The Company’s AGM will take place on 26 October 2016.
The Annual Report and Accounts and Notice of the AGM will
ELECTION OF DIRECTORS
be sent to shareholders at least 20 working days prior to
In accordance with the Company’s Articles all Directors
will offer themselves for election at each AGM.
this date.
AUDIT COMMITTEE REPORT
J O U L E S G R O U P P L C
Audit Comm itt ee Report 29
On behalf of the Board, I am pleased to present the Audit
services by the external auditor. The breakdown of fees
Committee report for the 52 weeks ended 29 May 2016.
between audit and non-audit services is provided in note 5 of
The Audit Committee has responsibility for, amongst other
things, the monitoring of the financial integrity of the
financial statements of the Group and the involvement of
the Group’s auditors in that process, together with providing
oversight and advice to the Board in relation to current
and potential future risk exposures of the Group, reviewing
and approving various formal reporting requirements and
promoting a risk awareness culture within the Group. The
Audit Committee also provides advice on whether the annual
the Group’s financial statements. The non-audit fees related to
tax advisory, Remuneration Committee advice and Reporting
Accountant work in relation to the Company’s admission
to AIM. The Audit Committee also assesses the auditor’s
performance. Having reviewed the auditor’s independence and
performance, the Audit Committee recommends that Deloitte
LLP be re-appointed as the Company’s auditor at the next AGM.
AUDIT PROCESS
report and accounts, taken as a whole, is fair, balanced and
The auditor prepares an audit plan that sets out the scope
understandable and provides the information necessary
of the audit, areas to be targeted and audit timetable for its
for shareholders to assess the Company’s position and
review of the full year financial statements. In future years
performance, business model and strategy.
this plan will be reviewed and agreed in advance by the Audit
MEMBERS OF THE AUDIT COMMITTEE
presented its findings to the Audit Committee for discussion.
Committee. Following the completion of its work, the auditor
The Committee consists of three Non-Executive Directors:
David Stead (Chair), Neil McCausland and Jill Little. The
INTERNAL AUDIT
Auditor (Deloitte LLP), the Chief Executive Officer and
At present the Group does not have an internal audit function.
Chief Financial Officer also attend Committee meetings by
In view of the size and nature of the Group’s business, the
invitation. The Committee has met once since the Group’s
Committee believes that management is able to derive assurance
admission to AIM.
The Board is satisfied that I, as Chairman of the Committee,
have recent and relevant financial experience. I am a
chartered accountant and I have served as Finance Director
in a number of companies including Dunelm Group plc.
as to the adequacy and effectiveness of internal controls and
risk management procedures without a formal internal audit
function. This will be kept under review as the business evolves.
RISK MANAGEMENT AND INTERNAL CONTROLS
I report formally to the Board, on all issues discussed
The Group has established a framework of risk management
by the Audit Committee and I present the Committee’s
and internal control systems, policies and procedures.
recommendations.
The Committee also takes time to meet with the external
auditors without any Executive Directors or senior
management present.
DUTIES
The Audit Committee is responsible for reviewing the risk
management and internal control framework and ensuring
that it operates effectively. The Committee has reviewed
the framework and is satisfied that the internal control
systems in place are currently operating effectively.
The duties of the Audit Committee are set out in its Terms
of Reference, which are available on the Group’s website
(www.joulesgroup.com) and are also available on request
from the Company Secretary.
The Committee meets a minimum of twice per year.
WHISTLEBLOWING
The Group has in place a whistleblowing policy which
sets out the formal process by which an employee of the
Group may, in confidence, raise concerns about possible
improprieties in financial reporting or other matters.
Whistleblowing is a standing item on the Committee’s
The main items of business considered by the Audit
agenda, and updates are provided at each meeting. During
Committee to date have included:
the year, there were no incidents for consideration.
Review of the financial statements and Annual Report
Consideration of the external audit report and
GOING CONCERN
•
•
•
•
•
•
management representation letter
Going concern review
Review of the risk management and internal control
systems
Review the need for the internal audit function
Review of whistleblowing reports
ROLE OF THE EXTERNAL AUDITOR
The Audit Committee monitors the relationship with
the external auditor, Deloitte LLP, to ensure that auditor
independence and objectivity are maintained. As part of its
review the Committee monitors the provision of non-audit
The Directors have prepared a detailed forecast with a
supporting business plan for the foreseeable future. The
forecast indicates that the Group will remain in compliance
with covenants throughout the forecast period. As such, the
Directors have a reasonable expectation that the Company
and the Group has adequate resources to continue in
operational existence for the foreseeable future. For this
reason, they continue to adopt the going concern basis in
preparing financial statements.
DAVID STEAD
Audit Committee Chairman
30 Nomination Committe e Rep ort
N O M I N A T I O N C O M M I T T E E R E P O R T
J O U L E S G R O U P P L C
On behalf of the board I am pleased to present the
The Committee is scheduled to meet once a year but it
Nomination Committee Report for the 52 weeks ended 29
will meet more frequently if required.
May 2016 (FY16).
MEMBERS OF THE NOMINATION COMMITTEE
The Nomination Committee consists of three
Non-Executive Directors; Neil McCausland (Chair),
David Stead and Jill Little.
DUTIES
In carrying out its duties, the Nomination Committee is
primarily responsible for:
•
•
•
•
•
•
Identifying and nominating candidates to fill Board
vacancies
Evaluating the structure and composition of the board
with regard to the balance of skills, knowledge and
experience and making recommendations accordingly
Drafting the job descriptions of all Board members
Reviewing the time requirements of Non-Executive
Directors
Giving full consideration to succession planning
Reviewing the leadership of the Group
The Committee reports to the Board on how it has
discharged its responsibilities. The Committee’s written
Terms of Reference are available on the Group’s website
(www.joulesgroup.com).
ACTIVITY DURING THE YEAR
The Committee has not met since admission to AIM but
intends to do so before the end of the financial year ending
May 2017 when it will agree a schedule of work for the
year which will include considering long-term succession
planning at the senior management level. It will also review
its terms of reference and consider the management
framework and governance structure currently in place.
NEIL MCCAUSLAND
Chairman
Nomination Committee
Dire ct ors’ Re mun erat ion Rep or t 31
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T
J O U L E S G R O U P P L C
On behalf of the Board I am pleased to present the
of joining the Group in 2015 and that he has not had the
Directors’ Remuneration Report for the 52 weeks ended
opportunity to build a significant shareholding in the Group
29 May 2016 (FY16). Although not subject to the reporting
through participation in the pre-IPO equity arrangements.
regulations of fully listed companies in the UK, the
Delivering these awards in shares provides alignment with
Remuneration Committee has taken account of these
the interest of shareholders.
regulations in the preparation of the FY16 Directors’
Remuneration Report as a matter of best practice.
Therefore this report is presented as:
•
A Directors’ Remuneration Policy Report – setting
out the parameters within which the remuneration
arrangements for Directors operate; and
•
An Annual Report on Remuneration – setting out the
remuneration earned by Directors in respect of FY16
and how we intend to apply the policy for FY17.
REMUNERATION FOR THE YEAR COMMENCING 30 MAY 2016
A summary of the proposed application of our remuneration
policy for FY17 is set out below:
• With effect from Admission our Executive Directors’
base salaries were set at £345,000 for C N Porter,
£335,000 for T S L Joule and £220,000 for M S Dench.
It is intended that base salaries will be reviewed
annually in December, at the same time as the pay
review for the wider workforce.
OUR APPROACH TO REMUNERATION – KEY PRINCIPLES
•
The maximum annual bonus opportunity for FY17 will
In anticipation of admission to AIM (‘the IPO’), the Group
undertook a review of its remuneration policy for Directors
to ensure that it is appropriate for a listed company. Our
policy on executive remuneration is designed to:-
•
Include a competitive mix of base salary and short and
long term incentives, with an appropriate proportion
of the package determined by stretching targets linked
to the Group’s performance;
•
Promote the long-term success of the Group,
in line with our strategy and focus on profitability
and growth; and
•
Provide appropriate alignment between the interests
of shareholders and executives. Alignment is further
be 100% of salary for C N Porter and T S L Joule and
150% of salary for M S Dench. The annual bonus is
subject to the achievement of stretching profit before
tax (‘PBT’) performance targets.
•
The first awards under the Long Term Incentive Plan
(“LTIP”) that was adopted on Admission were granted
on 6 July 2016. The maximum LTIP opportunity for C
N Porter and T S L Joule was 100% of salary and 150%
of salary for M S Dench. These awards are subject to
stretching EPS targets.
The Committee will continue to monitor the remuneration
policy to ensure it remains aligned to the business strategy
and the delivery of shareholder value.
enhanced through shareholding guidelines and the
For the avoidance of doubt, the remuneration policy is not
deferral of a proportion of the annual bonus as shares.
being put to the vote at the upcoming AGM.
IPO ADMISSION AWARDS AND DEFERRED SHARE BONUS
AWARDED IN RESPECT OF FY16
The following awards have been granted to M S Dench, in
respect of FY16 to recognise his contribution to the Group
since he joined the business in 2015 and in the lead up to
the IPO.
•
An option over 312,500 shares with an exercise price of
£1.60 per share (equal to the Admission price). The face
value of the award at grant was £500,000. This award
will vest on the second anniversary of the date of grant
– subject to continued employment; and
•
A bonus of £220,000 that is deferred into shares
(vesting after a three year deferral period).
The Committee is also mindful that M S Dench forfeited
incentive awards in his previous employer as a consequence
JILL LITTLE
Chairman
Remuneration Committee
The following section sets out our Directors’ Remuneration
Policy (the “Policy”).
The aim of the Policy is to align the interests of Executive
Directors with the Group’s strategic vision and the long-
term creation of shareholder value. The Policy is intended
to remunerate Executive Directors competitively and
appropriately for effective delivery and allows them to share
in this success and the value delivered to shareholders.
32 Di recto rs’ Rem unerat ion Report
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T C O N T I N U E D
EXECUTIVE DIRECTORS’ REMUNERATION POLICY
The table below sets out the elements of Executive Directors’ compensation and how each element operates,
as well as the maximum opportunity of each element and any applicable performance measures.
Fixed Remuneration
ELEMENT, PURPOSE
& STRAT EGIC LINK
OPERATION
MAX IMUM OPPOR TU NI TY
BASIC SALARY
To provide a
competitive base
salary for the
market in which the
Group operates to
attract and retain
Executive Directors
of a suitable calibre.
BENEFITS
To provide market
competitive benef its
as part of the total
remuneration
package.
RETIREMENT
BENEFITS
To provide an
appropriate level of
retirement benef it
(or cash allowance
equivalent).
Variable Remuneration
ELEMENT, PURPOSE
& STRATEGIC LIN K
ANNUAL BONUS
Rewards performance
against targets
which support the
strategic direction of
the Group. Deferral
provides a retention
element through
share ownership
and direct alignment
to shareholders’
interests.
LONG-TERM
INCENTIVE (‘LTIP’)
To create alignment
between the interests
of Executive Directors
and shareholders
through the delivery
of performance
based awards in
Group shares
Usually reviewed annually taking
account of:
•
•
Group performance;
Role, experience and individual
performance;
Competitive salary levels and
market forces;
Pay and conditions elsewhere in
the Group.
•
•
Executive Directors currently receive
private medical insurance, company car
or allowance, staff discounts and the
right to participate in the Save As You
Earn (SAYE) scheme. Other benefits
may be provided based on individual
circumstances. For example, relocation
or travel expenses.
Executive Directors are eligible to
participate in the Group defined
contribution pension plan. In appropriate
circumstances (e.g. if contributions exceed
the annual or lifetime pension allowance
in the UK), Executive Directors may be
permitted to take the benefit as additional
salary instead of pension contributions.
Increases will normally be in line with the range of
salary increases awarded (in percentage terms) to other
Group employees. Increases above this level may be
awarded to take account of individual circumstances,
such as:
•
•
•
•
•
Promotion;
Change in scope or increase in responsibilities;
An individual’s development or performance in role;
Alignment with the market over time;
A change in the size or complexity of the business.
Whilst the Committee has not set a maximum level
of benefits that Executive Directors may receive the
value of benefits is set at a level which the Committee
considers appropriate, taking into account market
practice and individual circumstances.
The contribution level for FY17 is set at 5%
of salary (there is an overall limit of up to 10%
of salary).
OPERATION
MAX IMUM OPPOR TU NI TY A ND PER FOR MAN C E ME TR ICS
Awards are based on performance (typically
measured over one year). Pay-out levels are
determined by the Committee after the year
end. The Committee has discretion to amend
pay-outs should any formulaic output not
reflect their assessment of performance. A
proportion (normally 50%) of any bonus is
paid in cash with the balance paid in the form
of shares (subject to a de-minimis amount
of £10,000) usually deferred for three years.
Awards may include dividend equivalents
earned between grant and vesting date.
The annual bonus opportunity is a maximum of 150% of
base salary. For FY17 the maximum bonus opportunity
for C N Porter and T S L Joule is 100% of salary and
150% for M S Dench.
Performance measure: Targets are set annually and
aligned with key financial, strategic and/or individual
targets with the weightings between these measures
determined by the Committee each year considering the
Group’s priorities at the time.
FY17 bonus is based on a PBT target (with 50% of the
maximum being delivered for on-target performance).
Awards can be made over conditional
shares or nil cost options (or cash
equivalent). Vesting is subject to the
achievement of specified performance
conditions normally over three years.
Awards may include dividend equivalents
earned between grant and vesting date.
Awards may be structured as Qualifying
LTIP awards comprising of a HMRC tax-
qualifying option and an LTIP award, with
the vesting of the LTIP award scaled back
to take account of any gain made on the
exercise of the tax-qualifying option.
The maximum LTIP opportunity is 150% of base salary. For
FY17 the maximum LTIP award for C N Porter and T S L Joule
is 100% of salary and 150% of salary for M S Dench. Where an
award is structured as a Qualifying LTIP, the shares subject
to the tax-qualifying option element are excluded for the
purposes of this limit, reflecting the scale back.
Performance measure: Set to reflect longer term strategy
and business performance. Performance measures and their
weighting are reviewed annually to maintain appropriateness
and relevance. For threshold levels of performance 25% of
the award will vest rising to 100% for maximum performance.
Below threshold the award will not vest. The FY17 LTIP
awards are subject to EPS targets.
Dire ct ors’ Re mun erat ion Rep ort 33
Information supporting the policy table
EXPLANATION OF PERFORMANCE MEASURES CHOSEN
SHAREHOLDING GUIDELINES
Performance measures for the annual bonus and long-term
incentive are selected that reflect the Group’s strategy.
Stretching performance targets are set each year by the
Committee, taking into account a number of different factors.
For FY17, the annual bonus is based on PBT. Stretch targets
for the maximum awards under the bonus are set against
outperformance of internal company forecasts.
The performance measure for the 2016/17 LTIP grant is
adjusted diluted Earnings Per Share (EPS). The Committee
considers EPS to be the key measure of sustainable
business performance.
The Committee retains the discretion to adjust or set
different performance measures or targets where it
considers it appropriate to do so (for example, to ref lect
a change in strategy, a material acquisition and/or a
divestment of a Group business or change in prevailing
market conditions and to assess performance on a fair and
consistent basis from year to year). Awards and options may
be adjusted in the event of a variation of share capital in
accordance with the rules of the LTIP.
APPLICATION OF MALUS AND CLAWBACK
For up to three years following the payment of an annual
bonus award (and two years after the vesting of an LTIP
award), the Committee may require the repayment of
all or some of the award if there is corporate failure, a
material error or misstatement of the financial results,
gross misconduct or if information comes to light which,
had it been known, would have affected a decision as to the
extent to which an award would have vested.
The Committee also has the right to reduce, cancel or
impose further restrictions on unvested LTIP and deferred
bonus shares in similar circumstances (including material
failure of risk management).
To promote further alignment to shareholders interests
and share ownership, each Executive Director is required
to build and maintain a shareholding equal to two times the
value of their annual base salary. Until this guideline is met
Executive Directors will be required to retain half of any
shares which vest under the deferred bonus or LTIP (after
sales to cover tax).
LEGACY REMUNERATION
The Committee has the right to settle remuneration
arrangements that were put in place prior to this Policy being
created and in respect of remuneration awarded to individuals
prior to becoming an Executive Director (and which was not
awarded in anticipation of becoming an Executive Director).
APPROACH TO RECRUITMENT REMUNERATION
The Policy aims to facilitate the appointment of individuals
of sufficient calibre to lead the business and execute the
strategy effectively for the benefit of shareholders. When
appointing a new Executive Director the Committee seeks
to ensure that arrangements are in the best interests of
the Company and not pay more than is appropriate. The
Committee will take into consideration relevant factors,
which may include the calibre of the individual, their existing
remuneration package, and their specific circumstance,
including the jurisdiction from which they are recruited.
The Committee will typically seek to align the remuneration
package with the Group’s Remuneration Policy. The Committee
may make payments or awards to recognise or ‘buy-out’
remuneration packages forfeited on leaving a previous
employer. The Committee’s intention is that such awards would
be made on a ‘like-for-like’ basis as those forfeited.
The remuneration package for a newly appointed Chairman
or Non-Executive Director will normally be in line with
the structure set out in the Non-Executive Directors’
Remuneration Policy.
NON-EXECUTIVE DIRECTORS’ REMUNERATION POLICY
The Remuneration Policy for the Chairman and Non-Executive Directors is to pay fees necessary to attract the individual
of the calibre required, taking into consideration the size and complexity of the business and the time commitment of the
role, without paying more than is necessary. Details are set out in the table below:
APPROACH TO
SETTING FEES
BASIS OF FEES
OTHER
•
•
•
•
•
•
•
The fees of the Non-Executive Directors are agreed by the Chairman and CEO and the fees for
the Chairman are determined by the Board as a whole.
Fees are set taking into account the level of responsibility, relevant experience and specialist
knowledge of each Non-Executive Director and fees at companies of a similar size and
complexity.
Non-Executive Directors are paid a basic fee for membership of the Board with additional fees
being paid for chairmanship of Board Committees.
Additional fees may also be paid for other Board responsibilities or roles.
Fees are normally paid in cash.
Non-Executive Directors may be eligible to receive benefits such as travel and other expenses.
Neither the Chairman nor any of the Non-Executive Directors are eligible to participate in any
of the Group’s incentive arrangements.
34 Di recto rs’ Rem unerat ion Report
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T C O N T I N U E D
SERVICE CONTRACTS
PAYMENTS FOR LOSS OF OFFICE
Each of the Executive Directors have service contracts
with the Group. The notice period of Executive Directors’
service will not exceed 12 months. All Non-Executive
Directors have initial fixed term agreements with the Group
for no more than three years.
Payments for loss of office will be in line with the
provisions of the Executive Directors’ service contracts and
the rules of the share plans (as set out in the IPO Admission
document). Where a buy-out award is made then the leaver
provisions would be determined at the time of the award.
Details of the Directors’ service contracts, are set out here:
NAM E
COMMENCEMENT
NOTICE PERIOD
T S Joule
20 May 2016
C N Porter
20 May 2016
M S Dench
20 May 2016
N W McCausland
20 May 2016
J C Little
D A Stead
20 May 2016
20 May 2016
12 months
12 months
6 months
1 month
1 month
1 month
CONSULTATION WITH SHAREHOLDERS
The Committee will consider shareholder feedback received
on remuneration matters including issues raised at the AGM
as well as any additional comments received during any other
meeting with shareholders. The Committee will seek to engage
directly with major shareholders and their representative
bodies should any material changes be made to the Policy.
Unaudited Annual Report on Remuneration
SINGLE TOTAL FIGURE OF REMUNERATION
In appropriate circumstances, payments may also be made
in respect of accrued holiday, outplacement, legal fees
and under the terms of the SAYE plan. The Committee
reserves the right to make additional payments where such
payments are made in good faith in discharge of an existing
legal obligation (or by way of damages for breach of such
an obligation) or by way of settlement or compromise or
any claim arising in connection with the termination of
Director’s office or employment.
Where the Committee retains discretion it will be used to
provide f lexibility in certain situations, taking into account
the particular circumstances of the Director’s departure and
performance. There is no entitlement to any compensation
in the event of Non-Executive Directors’ contracts not being
renewed or the agreement terminating earlier.
The tables below detail the total remuneration earned by each Director in respect of FY16.
As Joules was admitted to AIM on 26 May 2016, there is no disclosure in this report for prior periods.
SALARIES
/FEES
£000
TAXABLE
BENEFITS
£000
PENSION
£000
TOTAL CASH
COMPENSATION
£000
ADMISSION
AWARD & DEFERRED
BONUS* £ 000
TOTAL
REMUNERATION
£000
FY1 6
EXCEC UT IVE DI RECTORS
T S L Joule
C N Porter
M S Dench
290.1
287.3
128.3
NON -E XCECUT I VE DIR ECTORS
N W McCausland
J C Little**
D A Stead**
Total
40.0
7.1
7.8
760.5
35.3
20.4
5.1
-
-
-
14.5
14.4
6.4
-
-
-
60.8
35.3
339.9
322.1
139.8
40.0
7.1
7.8
856.6
-
-
288.2
-
-
-
339.9
322.1
428.0
40.0
7.1
7.8
*As set out above to recognise his
contribution to the Group since
he joined in 2015 and in the lead
up to the IPO, M S Dench was
granted (i) an option over 312,500
shares with an exercise price
of £1.60 per share on Admission
(the face value of this award at
grant was £500,000 and the fair
value of the award included in the
table £68,231); and (ii) a deferred
share bonus with a face value at
grant of £220,000. There were no
other incentive awards vesting in
respect of FY16.
288.2
1,144.8
**Jill Little and David Stead were
appointed as Non-Executive
Directors on 20 May 2016.
BASE SALARIES
ANNUAL BONUS
The base salaries for the Executive Directors will normally
be reviewed with effect from December. The salaries
applicable from Admission are shown below:
EXC ECU TIV E D IR ECTORS
BASE SALARY AT ADMISSION
T S L Joule
C N Porter
M S Dench
£335,000
£345,000
£220,000
TAXABLE BENEFITS
Taxable benefits for the Executive Directors included
a company car or allowance, private fuel and private
medical insurance.
Other than the deferred share bonus, described above,
there was no annual bonus paid in respect of FY16.
For FY17 the annual bonus opportunity for the Executive
Directors will be 100% of salary (and 150% of salary for
M S Dench) subject to the achievement of stretching PBT
performance targets, with payment made 50% in cash and
50% deferred into shares (vesting after a further three
years). The Committee considers PBT to be the key short-
term financial measure. The actual targets are not disclosed
due to commercial confidentiality reasons but these will be
disclosed when we report the performance out-turn in the
FY17 Directors’ Remuneration Report.
Dire ct ors’ Rem uneration Repor t 35
LONG-TERM INCENTIVES
Other than the IPO Admission award described above, there
were no long-term incentive awards granted or vesting
during FY16. For FY17, the Committee granted LTIP awards
as set out in the table below.
STATEMENT OF DIRECTORS’ SHAREHOLDING AND SHARE
INTERESTS
The interests of the Directors and their immediate families
in the Group’s ordinary shares as at 29 May 2016 were as
follows.
SHARES
T S L Joule
C N Porter
M S Dench
DATE OF
GRANT
% OF
SALARY
NUMBER OF
SHARES
6 July 2016
6 July 2016
6 July 2016
100%
100%
150%
194,767
200,581
191,860
C N Porter and M S Dench also received tax qualifying
options of up to a maximum of £30,000, which were
granted under the Tax Qualifying LTIP, and subject to the
same performance conditions as the LTIP award. The tax
qualifying options have an exercise price of £1.72 per share
(being the market value on the date of grant). The vesting
of the LTIP award will be scaled back to take account of any
gain made under the tax qualifying option.
Vesting of the award will be based upon the amount of
the adjusted diluted Earnings Per Share (EPS) delivered
in the final Financial Year of the three year performance
period (FY19). Below the threshold vesting target of 11.5p,
none of this component of the award will vest. 25% of this
component will vest if adjusted diluted EPS is 11.5p, with
100% vesting at 14p, and vesting determined on a straight-
line basis between these figures.
EPS is the most suitable performance measure for the
Group supporting a focus on profitability and growth,
and has therefore been chosen as the LTIP metric.
NON-EXECUTIVE DIRECTOR FEES
Details of Non-Executive Directors’ fees for FY17 are
set out below:
•
•
•
Chairman’s fee: £75,000
Non-Executive Director fee: £50,000 for D A Stead and
£45,000 for J C Little
Additional fee for chair of a Board Committee: £5,000
PAYMENTS MADE TO FORMER DIRECTORS DURING
THE YEAR
No payments were made in the year to any former Director
of the Group.
PAYMENTS FOR LOSS OF OFFICE MADE DURING THE YEAR
No payments for loss of office were made in the year to any
Director of the Group.
EXECUTIVE DIRECTORS
T S L Joule
C N Porter
M S Dench
NON-EXECUTIVE DIRECTORS
N W McCausland
J C Little
D A Stead
29 MAY 2016
NUMBER
28,147,210
2,129,142
62,500
625,375
15,625
31,250
The interests of the Directors and their immediate families
in the Group’s ordinary shares did not change between 29
May 2016 and the date these accounts were signed on 5
September 2016.
REMUNERATION COMMITTEE
The members of the Committee are Jill Little (chair),
Neil McCausland and David Stead. The Group’s General
Counsel attends the meeting as secretary to the Committee.
The Committee meets at least once a year and has
responsibility for:
• Maintaining the remuneration policy;
•
Reviewing and determining the remuneration packages
of the Executive Directors;
• Monitoring the level and structure of the remuneration
•
of Senior Management; and
Production of the annual report on Directors’
remuneration.
The Chief Executive Officer and Chief Financial Officer
occasionally attend meetings and provide information and
support as requested. Neither Executive Director is present
when his remuneration package is considered.
The duties of the Remuneration Committee are set out in
its Terms of Reference, which are available on the Group’s
website (www.joulesgroup.com) and are also available on
request from the Company Secretary.
This report was approved by the Board on 25 August 2016
and signed on its behalf by:
JILL LITTLE
Chairman
Remuneration Committee
36 Di recto rs’ Report
D I R E C T O R S ’ R E P O R T
J O U L E S G R O U P P L C
The Directors present their Annual Report on the affairs
of the Group, together with the f inancial statements and
Auditors’ Report, for the 52 weeks ended 29 May 2016.
The Governance Framework Section on pages 25 to 27
TOM JOULE
also forms part of this Directors’ Report.
DIRECTORS
The Directors of the Company during the period under
review, and subsequently to the date of this report, were:
BLACKROCK
STANDARD LIFE
LLOYDS DEVELOPMENT CAPITAL
OLD MUTUAL GLOBAL INVESTORS
VOLANTIS CAPITAL
% of issued
share capital
32.20%
14.61%
8.80%
7.14%
5.69%
4.14%
• NEIL MCCAUSLAND
• TOM JOULE
• COLIN PORTER
• MARC DENCH
• DAVID STEAD
• JILL LITTLE
RESULTS AND DIVIDENDS
Results for the 52 weeks ended 29 May 2016 are set out
in the Consolidated Income Statement on page 43. As set
out in the IPO Admission Document, the Directors are
not recommending a dividend for FY16.
COLUMBIA THREADNEEDLE INVESTMENTS 3.66%
ACQUISITION OF THE COMPANY’S OWN SHARES
Conditional on Admission, the Company was authorised
in accordance with section 701 of the Act to make
market purchases (within the meaning of section
693(4) of the Act) of up to 8,749,979 Ordinary Shares
(being approximately 10 per cent of the Share Capital)
on such terms and in such manner as the Directors of
the Company may from time to time determine. This
authority was not used during the year or up to the date
of this report. Shareholders will be asked to renew these
authorities at the AGM as detailed in the AGM Notice.
The Company held no treasury shares during the year.
ARTICLES OF ASSOCIATION
A copy of the full Articles of Association are
DIRECTORS’ INTERESTS
available on request from the Company Secretary
and are also available on the Group’s corporate
website w w w.joulesgroup.com. Any amendments
to the articles of association can be made by a
special resolution of the Shareholders.
SHARE CAPITAL AND SUBSTANTIAL SHAREHOLDERS
Details of the issued share capital, together with details of
the movements during the year, are shown in Note 20 to
the Consolidated Financial Statements. The Company has
one class of ordinary share and each ordinary share carries
the right to one vote at general meetings of the Company.
At 19 August 2016 the Company had been notif ied of the
following substantial shareholders comprising 3% or more
of the issued ordinary share capital of the Company:
Details of the Directors’ benef icial interests are set out
in the Remuneration Report on pages 31 to 35.
DIRECTORS’ INDEMNITIES AND DIRECTORS AND
OFFICERS’ LIABILITY INSUR ANCE
The Company has purchased directors’ and off icers’
liability insurance during the year as allowed by the
Company’s articles.
Dire ct ors’ Re port 37
FINANCIAL RISK MANAGEMENT
EMPLOYEE INVOLVEMENT
Details of the Directors’ assessment of the principal risks
The Directors’ recognise that communication with
and uncertainties which could impact the business are
the Group’s employees is essential and the Group
outlined in the Principal Risks & Uncertainties section on
places importance on the contributions and view of its
pages 18 and 19. The Board manages internal risk through the
employees. Details of employee involvement are set out
on-going review of the Group’s risk register and the Board
in the Social Responsibility Report on pages 20 and 21.
manages external risk through monitoring of the economic
and regulatory environment and market conditions.
DISABLED EMPLOYEES
GOING CONCERN
Details of the Group’s policy in relation to disabled
employees is set out in the Social Responsibility Report
The Company’s going concern statement can be found
on pages 20 and 21.
in the Consolidated Financial Statements on page 50.
POST BALANCE SHEET EVENTS
DISCLOSURE OF INFORMATION TO THE AUDITORS
In the case of each Director in off ice at the date the
There have been no material post balance sheet events.
Directors’ Report is approved, the following applies:
ANNUAL GENER AL MEETING
The Company’s first AGM will be held on 26 October 2016.
FUTURE DEVELOPMENTS IN THE BUSINESS
OF THE COMPANY
The Strategic Report on pages 8 to 21 sets out the
likely future developments of the Company.
CHANGE OF CONTROL
So far as the Directors are aware, there are no
arrangements the operation of which may at a later
date result in a change of control of the Company.
•
The Director knows of no information, which would
be relevant to the auditors for the purpose of their
audit report, of which the auditors are not aware;
and
•
The Director has taken all steps that he/she ought to
have taken as a director to make him/herself aware
of any such information and to establish that the
auditors are aware of it.
AUDITOR
The Auditor, Deloitte LLP, has indicated their
willingness to continue in off ice and a resolution seeking
to re-appoint them will be proposed at the AGM.
BR ANCHES OUTSIDE THE UK
The Group has branches in France, Germany and the
JONATHAN DARGIE
Company Secretary
Republic of Ireland.
POLITICAL DONATIONS
No political donations were made during the
period under review.
Statemen t of Directo rs’ Res po ns ibi li ties 39
S T A T E M E N T O F D I R E C T O R S ’ R E S P O N S I B I L I T I E S
J O U L E S G R O U P P L C
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for keeping adequate
The Directors are responsible for preparing the Annual
Report and the f inancial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare f inancial
statements for each f inancial year. Under that law
the Directors have elected to prepare the Group’s
Consolidated Financial Statements in accordance with
International Financial Reporting Standards (“IFRS”)
as adopted by the European Union, and the Company
accounting records that are suff icient to show and
explain the Company’s transactions and disclose with
reasonable accuracy at any time the f inancial position of
the Group and Company and enable them to ensure that
the f inancial statements comply with the requirements
of the Companies Act 2006. They are also responsible for
safeguarding the assets of the Group and Company and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Financial Statements in accordance with United Kingdom
WEBSITE PUBLICATION
Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law).
Under company law the Directors must not approve
the f inancial statements unless they are satisf ied that
they give a true and fair view of the state of affairs of
the Group and Company and of the prof it or loss of the
Group for that period. The Directors are also required
to prepare f inancial statements in accordance with
the rules of the London Stock Exchange for companies
trading securities on the Alternative Investment Market.
In preparing these f inancial statements, the Directors
are required to:
The Directors are responsible for ensuring the Directors’
Report and f inancial statements are made available on
a website. Financial statements are published on the
Company’s website (w w w.joulesgroup.com) in accordance
with legislation in the United Kingdom governing the
preparation and dissemination of f inancial statements,
which may vary from legislation in other jurisdictions.
The maintenance and integrity of the Company’s website
is the responsibility of the Directors. The Directors’
responsibility also extends to the ongoing integrity of
the f inancial statements contained therein.
•
Select suitable accounting policies and then apply
MARC DENCH
Chief Financial Officer
5 September 2016
them consistently
• Make judgements and accounting estimates that are
reasonable and prudent
•
State whether they have been prepared in
accordance with applicable accounting standards,
subject to any material departures disclosed and
explained in the f inancial statements; and
•
Prepare the f inancial statements on a going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
C H A P T E R
3
F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D
N o G r e y A r e a s
42 Au di to r’s Report
A U D I T O R ’ S R E P O R T
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
In addition, we read all the financial and non-financial
OF JOULES GROUP PLC
We have audited the financial statements of Joules Group
plc (the ‘Company’) and its subsidiaries (the ‘Group’)
for the 52 week period ended 29 May 2016 (‘period’)
which comprise the Consolidated Income Statement,
the Consolidated Statement of Comprehensive Income,
the Consolidated Statement of Financial Position, the
Consolidated Statement of Changes in Equity, the
Consolidated Cash Flow Statement and the related notes
1 to 30, the Company Balance Sheet, the Company
information in the annual report to identify material
inconsistencies with the audited financial statements and
to identify any information that is apparently materially
incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing
the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the
implications for our report.
OPINION ON FINANCIAL STATEMENTS
Statement of Changes in Equity and the related notes
In our opinion:
1 to 7. The financial reporting framework that has been
•
The financial statements give a true and fair view of
applied in the preparation of the group financial statements
the state of the group’s and of the parent company’s
is applicable law and International Financial Reporting
affairs as at 29 May 2016 and of the group’s loss for the
Standards (IFRSs) as adopted by the European Union. The
period then ended;
financial reporting framework that has been applied in the
•
The group financial statements have been properly
preparation of the parent company financial statements is
prepared in accordance with IFRSs as adopted by the
United Kingdom Accounting Standards (United Kingdom
European Union;
Generally Accepted Accounting Practice), including FRS101
•
The parent company financial statements have been
‘Reduced Disclosure Framework’ applicable in the UK and
properly prepared in accordance with United Kingdom
Republic of Ireland.
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members those
matters we are required to state to them in an auditor’s
Generally Accepted Accounting Practice; and
•
Have been prepared in accordance with the
requirements of the Companies Act 2006.
OPINION ON OTHER MATTER PRESCRIBED BY
THE COMPANIES ACT 2006
report and for no other purpose. To the fullest extent
In our opinion the information given in the Strategic Report
permitted by law, we do not accept or assume responsibility
and the Directors’ Report for the financial period for which
to anyone other than the company and the company’s
the financial statements are prepared is consistent with the
members as a body, for our audit work, for this report, or
financial statements.
for the opinions we have formed.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT
RESPECTIVE RESPONSIBILITIES OF DIRECTORS
BY EXCEPTION
AND AUDITOR
As explained more fully in the Directors’ Responsibilities
We have nothing to report in respect of the following
matters where the Companies Act 2006 requires us to
Statement, the directors are responsible for the preparation
report to you if, in our opinion:
of the financial statements and for being satisfied that
they give a true and fair view. Our responsibility is to
audit and express an opinion on the financial statements in
•
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
accordance with applicable law and International Standards
us; or
on Auditing (UK and Ireland). Those standards require
us to comply with the Auditing Practices Board’s Ethical
Standards for Auditors.
SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS
•
•
The parent company financial statements are not in
agreement with the accounting records and returns; or
Certain disclosures of directors’ remuneration
specified by law are not made; or
• We have not received all the information and
An audit involves obtaining evidence about the amounts
explanations we require for our audit.
and disclosures in the financial statements sufficient to
give reasonable assurance that the financial statements
MARK DOLEMAN FCA
are free from material misstatement, whether caused by
Senior statutory auditor
fraud or error. This includes an assessment of: whether the
accounting policies are appropriate to the Group’s and the
parent company’s circumstances and have been consistently
applied and adequately disclosed; the reasonableness of
significant accounting estimates made by the directors; and
the overall presentation of the financial statements.
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Nottingham, UK
5 September 2016
Con sol idated Financial St at em ent s 43
C O N S O L I D A T E D I N C O M E S T A T E M E N T
J O U L E S G R O U P P L C
REVEN UE
Co s t of s ales
GROSS PROFIT
A dm inis trative expenses
Exce ptio nal administrative expenses
Tota l admin istrative expenses
OPERATING PROFIT
Fin an ce incom e & similar incomes
Fin an ce co sts and similar charges
No n -recurrin g f inance costs
PROF IT/( L OSS) BEFORE TAX
Income tax exp ense
PROF IT/( L OSS) FOR THE PE RIOD
Bas ic earnin gs/(loss) per share (pence)
D iluted earnin gs/(loss) per sh are (pence)
52WKS ENDED
53WKS E ND E D
29 MAY 2016
31 MAY 2015
NOTE
£’000
£’000
2
5
6
7
7
8
29
29
131,262
(61,003)
70,259
(62,296)
(3,128)
(65,424)
4,835
-
(461)
(5,554)
(1,180)
(613)
(1,793)
(2.04)
(2.04)
116,421
(54,386)
62,035
(56,458)
(500)
(56,958)
5,077
190
(416)
(4,762)
89
(529)
(440)
(0.50)
(0.50)
44 Co nsol idated Financ ia l S ta tem en ts
C O N S O L I D A T E D S T A T E M E N T
O F C O M P R E H E N S I V E I N C O M E
J O U L E S G R O U P P L C
Profit/( l oss) for the period
Ite ms that may be reclassified subsequently to profit or loss:
Net gain/(lo ss) arising on changes in fair value of hedg ing
i n stru ments entered into for cash f low hedges
Exch ange dif ference on translation of foreign operations
Inco me tax relating to items that will be rec lassif ied
s ubs equently to prof it and loss
TOTAL COMPREHENSIVE (EXPENSE) / INCOME FOR THE PERIOD
NOTE
22
22
8
52WKS ENDED
53WKS E ND E D
29 MAY 2016
31 MAY 2015
£’000
(1,793)
(26)
(48)
15
(1,852)
£’000
(440)
2,221
(31)
(444)
1,306
Con sol idated Fin an cial Statements 45
C O N S O L I D A T E D S T A T E M E N T
O F F I N A N C I A L P O S I T I O N
J O U L E S G R O U P P L C
NON-CUR RENT ASSETS
Prop er t y, plant and equipment
Int ang ibles
D efe rred tax
TOTA L NON-CURRENT ASSETS
CUR RENT ASSETS
Invento ries
Trade an d other receivables
Cu rrent cor poration tax receivable
Cas h a nd cash equivalents
D erivative f in ancial instruments
TOTA L CURRENT ASSETS
TOTA L ASSETS
CUR RENT LIABILITIES
Trade an d other payables
Bo rrow ings
Provis ion s
TOTA L CURRENT LIABIL ITIES
NON-CURRENT LIABILITIE S
Bo rrow ings
TOTA L LIA BIL ITIES
NET ASSETS/(LIABILITIE S)
EQU ITIES
Share capital
Hedg in g res er ve
Tran sl ation reser ve
Merge r reser ve
Retain ed ear nings
Share premium
TOTA L EQUITY
29 MAY 2016
31 MAY 2015
NOTE
£’000
£’000
10
11
19
12
14
24
13
15
17
16
17
20
22
22
21
21
21
11,151
5,903
653
17,707
19,253
10,856
231
9,278
474
40,092
57,799
27,919
5,461
773
34,153
627
34,780
23,019
875
389
(72)
(125,807)
136,224
11,410
23,019
11,458
4,416
803
16,677
17,652
10,156
179
2,121
500
30,608
47,285
18,716
7,629
587
26,932
43,827
70,759
(23,474)
91,510
400
(24)
(125,662)
10,302
-
(23,474)
These financial statements of Joules Group plc (Company Registration Number 10164829)
were approved by the Board of Directors and authorised for issue on 5 September 2016 and were
signed on behalf of the Board of Directors by -
MARC DENCH
Chief Financial Officer
5 September 2016
46 Co nsol idat ed Fina nc ial St at ement s
C O N S O L I D A T E D S T A T E M E N T
O F C H A N G E S I N E Q U I T Y
J O U L E S G R O U P P L C
MERGER
HEDG IN G
TRANSLATION
SHAR E
SHAR E
R ETAIN ED
RESERVE
RESER VE
R ESER V E
C APITA L
PR EMIUM
EAR N ING S
£’000
£’000
£’000
£’000
£’000
£’000
TOTA L
EQUITY
£’000
Balance at 25 May 2014
(125,662)
(1,377)
Loss for the period
Other comprehensive
income for the period
-
-
Balance at 30 May 2015
(125,662)
Loss for the period
Other comprehensive
income for the period
-
-
Share buyback (note 20)
(145)
Share issue (note 20)
Share capital reduction (note 20)
Share issue (note 20)
-
-
-
-
1,777
400
-
(11)
-
-
-
-
7
-
(31)
(24)
-
(48)
-
-
-
-
Balance at 29 May 2016
(125,807)
389
(72)
91,510
-
-
91,510
-
-
-
37,009
(127,715)
71
875
-
-
-
-
-
-
-
-
-
10,742
(24,780)
(440)
(440)
-
1,746
10,302
(23,474)
(1,793)
(1,793)
-
-
-
127,715
(59)
(145)
37,009
-
11,410
11,410
-
11,481
136,224
23,019
Con sol idated Fin an cial Statements 47
C O N S O L I D A T E D C A S H F L O W S T A T E M E N T
J O U L E S G R O U P P L C
NOTE
5 2W K S EN DED
29 MAY 2016
£’000
5 3W K S E NDE D
31 MAY 2015
£’000
10
11
Net cash in f low from operating activities
Prof it before interest and income taxes
Adjustme nts for:
Dep reciation
Amor tis ation
Impa irment of f ixed assets
Prof it on sale of f ixed assets
F ina nce in com e
F ina nce expen se
Ta x paid
( In creas e) /decrease in inventor y
( In creas e) /decrease in receivables
In crease/(dec rease) in payables
Net cash f rom operating activities
Ca s h f low from investing activities
Pu rcha se of proper t y, plant and equipment
10/11
S ale of proper t y, plant, equipment and intang ible assets
Net cash us ed in investing activities
Ca s h f low from financing activities
Proceeds from new share capital subscribed
Redem ption of shares
Rep ayment of borrowings
Proceeds from borrowings
Net cash (use d in)/generated from financing activ it ie s
Net (decreas e)/increase in cash and cash equival ents
Cas h an d cas h equivalents at beg inning of period
Ef fect of foreign exchange rate changes
Ca s h and cas h equivalents at end of period
20
20
23
23
23
24
4,835
4,516
1,011
380
-
-
(461)
(500)
(1,601)
(700)
9,389
16,869
(7,087)
-
(7,087)
11,481
(145)
(13,913)
-
(2,577)
7,205
2,121
(48)
9,278
5,077
4,242
554
500
-
190
(416)
(1,069)
(4,285)
(2,082)
3,330
6,041
(8,792)
-
(8,792)
-
-
(393)
1,049
656
(2,095)
4,247
(31)
2,121
48 Notes to the Consolidat ed Fin anci al St at em e nts
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
J O U L E S G R O U P P L C
1.
SIGNIFICANT ACCOUNTING POLICIES
Statement of Compliance
The f inancial information has been prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union. The particular accounting
policies adopted and applied are described below.
The Group f inancial statements comprise the f inancial information of the parent undertaking
and its subsidiary undertakings.
The principal activity of the group is the design and sale of lifestyle clothing, related accessories
and a homeware range, through the multi-channel business structure embracing retail stores,
e-commerce, county shows and events and wholesale. The company’s registered office is Joules
Building, The Point, Rockingham Road, Market Harborough, Leicestershire, LE16 7QU.
(IFRSs) Application of new and revised International Financial Reporting Standards (IFRSs)
New and revised IFRSs in issue but not yet effective
The Group has not applied the following new and revised IFRSs that have been issued but
are not yet effective:
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (September 2014
amendments)
IFRS 7 Financial Instruments: Disclosures (September 2014 amendments)
IFRS 9 Financial Instruments (July 2014 amendments)
IFRS 10 Consolidated Financial Statements (December 2014 amendment)
IFRS 11 Joint Arrangements (May 2014 amendments)
IFRS 12 Disclosure of Interests in Other Entities (December 2014 amendments)
IFRS 14 Regulatory Deferral Accounts (January 2014)
IFRS 15 Revenue from Contracts with Customers (May 2014 and September 2015 amendments)
IFRS 16 Leases (January 2016 amendments)
IAS 1 Presentation of Financial Statements (December 2014 amendments)
IAS 7 Statement of Cash Flows (January 2016 amendments)
IAS 12 Income Taxes (January 2016 amendments)
IAS 16 Property, Plant and Equipment (May and June 2014 amendments)
IAS 19 Employee Benef its (September 2014 amendments)
IAS 27 Separate Financial Statements (August 2014 amendments)
IAS 28 Investments in Associates and Joint Ventures (December 2014 amendments)
IAS 34 Interim Financial Reporting (September 2014)
IAS 38 Intangible Assets (May 2014 amendments)
The effect of these standards is not expected to be material to the f inancial statements, with
the potential exception of IFRS 16 Leases, however it is not practicable to provide an estimate
of the effect of these standards until a detailed review has been completed.
Note s to the Cons olidate d Financia l State m ent s 49
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Basis of Preparation
The historical f inancial information incorporates the f inancial statements of the group and
entities controlled by the G roup (its subsidiaries) to 31 May 2015 and 29 May 2016.
The historic financial information has been prepared in accordance with International Financial
Reporting Standards as adopted by the European Union. These are presented in pounds sterling
because that is the currency of the primary economic environment in which the G roup operates.
Foreign operations are included in accordance with the policies set out below.
The annual f inancial statements have been prepared on the historical cost basis, except
for certain f inancial assets and liabilities which are carried at fair value or amortised cost
as appropriate.
In addition, for f inancial reporting purposes, fair value measurements are categorised into
Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are
observable and the signif icance of the inputs to the fair value measurement, which are
described as follows:
•
•
•
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
The preparation of financial statements in conformity with International Financial Reporting
Standards adopted by the European Union requires the use of estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reported period. Although these estimates are based on management’s best
knowledge of current events and actions, actual results ultimately may differ from those estimates.
The principal accounting policies adopted are set out below.
Basis of Consolidation
The consolidated f inancial statements incorporate the f inancial statements of the Company
and entities (including structured entities) controlled by the Company and its subsidiaries.
Control is achieved when the Company:
•
•
•
has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power
over the investee when the voting rights are suff icient to give it the practical ability to direct
the relevant activities of the investee unilaterally.
The Company considers all relevant facts and circumstances in assessing whether or not the
Company’s voting rights in an investee are suff icient to give it power, including:
•
•
•
•
the size of the Company’s holding of voting rights relative to the size and dispersion of
holdings of the other vote holders;
potential voting rights held by the Company, other vote holders or other parties;
rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the Company has, or does not
have, the current ability to direct the relevant activities at the time that decisions need to
be made, including voting patterns at previous shareholders’ meetings.
50 Notes to the Consolida ted Fin anci a l St at e me n ts
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Basis of Consolidation (continued)
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary
and ceases when the Company loses control of the subsidiary. Specif ically, income and
expenses of a subsidiary acquired or disposed of during the year are included in the
consolidated statement of prof it or loss and other comprehensive income from the date the
Company gains control until the date when the Company ceases to control the subsidiary.
Prof it or loss and each component of other comprehensive income are attributed to the
owners of the Company and to the non-controlling interests. Total comprehensive income of
subsidiaries is attributed to the owners of the Company and to the non-controlling interests
even if this results in the non-controlling interests having a def icit balance.
When necessary, adjustments are made to the f inancial statements of subsidiaries to bring
their accounting policies into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash f lows relating to
transactions between members of the Group are eliminated in full on consolidation.
Merger reserve
Business combinations are dealt with under IFRS 3, IFRS 3 however does not apply to group
reconstructions. Joules Group plc, a company incorporated in England and Wales entered
into an agreement to acquire the entire issued share capital of Joules Investments Holdings
Limited, however as the majority of shareholders before and after the transaction remained
the same the transaction is therefore a group reconstruction.
There is currently no specif ic guidance on accounting for group reconstructions such as
this transaction under IFRSs. In the absence of specif ic guidance, entities should select an
appropriate accounting policy and IFRS permits the consideration of pronouncements of
other standard-setting bodies. This group reconstruction as scoped out of IFRS 3 has
therefore been accounted for using reverse acquisition accounting principles in accordance
with UK GA AP. Reverse acquisition accounting is a technique used in preparing consolidated
accounts resulting in the following practical effects;
•
The net assets of the two companies are combined using existing book values, with
adjustments made as necessary to ensure that the same accounting policies are applied to
the calculation of the net assets of both companies;
•
•
No amount is recognised as consideration for goodwill or negative goodwill;
The consolidated prof it and loss account includes the prof its of each company for the
entire period, regardless of the date of the reconstruction, and the comparative amounts
in the consolidated f inancial statements are restated to the aggregate of the amounts
recorded by the two companies;
•
The retained earnings reserve includes the cumulative results of each company,
regardless of the date of the reconstruction, and the comparative amounts in the
statement of f inancial position are restated to the aggregate of the retained earnings
reserves recorded by the two companies; and
•
A merger reserve is created being the premium on equity consideration used in the
acquisition of subsidiary Joules Investments Holdings Limited, by Joules Group plc in 2016
plus cumulative retained earnings of each company as at the combination date.
Going concern
The Directors have prepared a detailed forecast with a supporting business plan for
the foreseeable future. The forecast indicates that the Group will remain in compliance
with covenants throughout the forecast period. As such, the Directors have a reasonable
expectation the Company and Group will have adequate resources to continue in operational
existence for the foreseeable future. As such, they continue to prepare the f inancial
statements on the basis of going concern.
Note s to the Co nso lidat ed Fin an ci al St at em e nts 51
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is
reduced for estimated customer returns, rebates and other similar allowances.
Sale of goods
Revenue from the sale of goods is recognised when the goods are delivered and titles have
passed, at which time all the following conditions are satisf ied:
•
•
•
•
•
the Group has transferred to the buyer the signif icant risks and rewards of ownership of
the goods;
the Group retains neither continuing managerial involvement to the degree usually
associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benef its associated with the transaction will f low to the
Group; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for
administrative purposes, are stated in the statement of f inancial position at their fair
value, being the deemed cost at the date of revaluation, less any subsequent accumulated
depreciation and subsequent accumulated impairment losses.
Certain items of property, plant and equipment are stated at deemed cost less accumulated
depreciation and accumulated impairment losses. Other items are stated at historical cost less
accumulated depreciation and accumulated impairment losses. All assets are depreciated on
the straight-line basis over their estimated useful lives.
Depreciation is provided at the following annual rates in order to write off each asset over its
estimated useful life or, if held under a f inance lease term, whichever is the shorter.
Leasehold improvements - straight line over the lease period
Fixtures and f ittings
- straight line over 3 – 5 years
Motor vehicles
- straight line over 4 years
52 Note s to the Cons olidat ed Fin an ci al St at em e nt s
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Intangible A ssets
IT Projects
Software and IT represent computer systems and processes used by the Group in order to
generate future economic value through normal business operations. The underlying assets
are amortised over the period from which the Group expects to benef it, which is typically
between three to eight years.
Intangible assets acquired separately
Intangible assets with f inite useful lives that are acquired separately are carried at cost less
accumulated amortisation and accumulated impairment losses. Amortisation is recognised
on a straight-line basis over their estimated useful lives. The estimated useful life and
amortisation method are reviewed at the end of each reporting period, with the effect of
any changes in estimate being accounted for on a prospective basis. Intangible assets with
indef inite useful lives that are acquired separately are carried at cost less accumulated
impairment losses.
Research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Internally-generated intangible assets
An internally-generated intangible asset arising from development (or from the development
phase of an internal project) is recognised if, and only if, all of the following have been
demonstrated:
•
•
•
•
•
•
the technical feasibility of completing the intangible asset so that it will be available for
use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benef its;
the availability of adequate technical, f inancial and other resources to complete the
development and to use or sell the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during
its development.
The amount initially recognised for internally-generated intangible assets is the sum of the
expenditure incurred from the date when the intangible asset f irst meets the recognition
criteria listed above. Where no internally-generated intangible asset can be recognised,
development expenditure is recognised in prof it or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost
less accumulated amortisation and accumulated impairment losses, on the same basis as
intangible assets that are acquired separately.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately from goodwill
are initially recognised at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are
reported at cost less accumulated amortisation and accumulated impairment losses, on the
same basis as intangible assets that are acquired separately.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benef its are
expected from use or disposal.
Gains or losses arising from derecognition of an intangible asset, measured as the difference
between the net disposal proceeds and the carrying amount of the asset, and are recognised
in prof it or loss when the asset is derecognised.
Note s to the Co nso lidat ed Fin an ci al St at em e nts 53
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment of tangible and intangible assets other than goodwill
At each statement of f inancial position date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that those assets
have suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss (if any). Where it is
not possible to estimate the recoverable amount of an individual asset, the Group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash f lows are discounted to their present value using a
pre-tax discount rate that ref lects current market assessments of the time value of money and
the risks specif ic to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than
its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in prof it or loss, unless the
relevant asset is carried at a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-
generating unit) is increased to the revised estimate of its recoverable amount, but so that
the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset (cash-generating unit)
in prior years. A reversal of an impairment loss is recognised immediately in prof it or loss,
unless the relevant asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.
Inventories
Inventories are valued at the lower of cost and net realisable value, after making due
allowance for any obsolete or slow moving items.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable prof it for the year. Taxable prof it differs from
‘prof it before tax’ as reported in the consolidated statement of prof it or loss and other
comprehensive income because of items of income or expense that are taxable or deductible
in other years and items that are never taxable or deductible.
The Group’s current tax is calculated using tax rates that have been enacted or substantively
enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets
and liabilities in the consolidated f inancial statements and the corresponding tax bases used
in the computation of taxable prof it. Deferred tax liabilities are generally recognised for all
taxable temporary differences. Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that taxable prof its will be available
against which those deductible temporary differences can be utilised.
Such deferred tax assets and liabilities are not recognised if the temporary difference arises
from the initial recognition (other than in a business combination) of assets and liabilities in
a transaction that affects neither the taxable prof it nor the accounting prof it. In addition,
deferred tax liabilities are not recognised if the temporary difference arises from the initial
recognition of goodwill.
54 Note s to the Conso lida te d Fin a nc ia l State m en ts
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Taxation (continued)
Deferred tax liabilities are recognised for taxable temporary differences associated with
investments in subsidiaries and associates, and interests in joint ventures, except where the
Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with such investments and interests are
only recognised to the extent that it is probable that there will be suff icient taxable prof its
against which to utilise the benef its of the temporary differences and they are expected to
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period
and reduced to the extent that it is no longer probable that suff icient taxable prof its will be
available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in
the period in which the liability is settled or the asset realised, based on tax rates (and tax
laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets ref lects the tax consequences that
would follow from the manner in which the Group expects, at the end of the reporting period,
to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognised in prof it or loss, except when they relate to items that
are recognised in other comprehensive income or directly in equity, in which case, the current
and deferred tax are also recognised in other comprehensive income or directly in equity
respectively. Where current tax or deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the business combination.
Foreign currencies
In preparing the f inancial statements of each individual Group entity, transactions in
currencies other than the entity’s functional currency (foreign currencies) are recognised at
the rates of exchange prevailing at the dates of the transactions.
At the end of each reporting period, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at that date. Non-monetary items carried at fair value
that are denominated in foreign currencies are retranslated at the rates prevailing at the
date when the fair value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in prof it or loss in the period in
which they arise, except for:
•
exchange differences on foreign currency borrowings relating to assets under construction
•
•
for future productive use, which are included in the cost of those assets when they are
regarded as an adjustment to interest costs on those foreign currency borrowings;
exchange differences on transactions entered into in order to hedge certain foreign
currency risks (see below for hedging accounting policies); and
exchange differences on monetary items receivable from or payable to a foreign operation
for which settlement is neither planned nor likely to occur (therefore forming part of
the net investment in the foreign operation), which are recognised initially in other
comprehensive income and reclassif ied from equity to prof it or loss on repayment of the
monetary items.
For the purposes of presenting these consolidated f inancial statements, the assets and
liabilities of the Group’s foreign operations are translated into GBP using exchange rates
prevailing at the end of each reporting period. Income and expense items are translated
at the average exchange rates for the period, unless exchange rates f luctuate signif icantly
during that period, in which case the exchange rates at the dates of the transactions are
used. Exchange differences arising, if any, are recognised in other comprehensive income and
accumulated in equity (and attributed to non-controlling interests as appropriate).
Note s to the Cons olidate d Financia l State m ent s 55
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign currencies (continued)
On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a
foreign operation, a disposal involving loss of control over a subsidiary that includes a foreign
operation, or a partial disposal of an interest in a joint arrangement or an associate that
includes a foreign operation of which the retained interest becomes a f inancial asset), all of
the exchange differences accumulated in equity in respect of that operation attributable to
the owners of the Company are reclassif ied to prof it or loss.
Hire purchase and leasing commitments (Leasing)
Leases are classif ied as f inance leases whenever the terms of the lease transfer substantially
all the risks and rewards of ownership to the lessee. All other leases are classif ied as
operating leases.
The Group as lessee
Assets held under f inance leases are initially recognised as assets of the Group at their fair
value at the inception of the lease or, if lower, at the present value of the minimum lease
payments. The corresponding liability to the lessor is included in the consolidated statement
of f inancial position as a f inance lease obligation.
Lease payments are apportioned between f inance expenses and reduction of the lease
obligation so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance expenses are recognised immediately in prof it or loss, unless they are directly
attributable to qualifying assets, in which case they are capitalised in accordance with the
Group’s general policy on borrowing costs. Contingent rentals are recognised as expenses in
the periods in which they are incurred.
Operating lease payments are recognised as an expense on a straight-line basis over the
lease term, except where another systematic basis is more representative of the time pattern
in which economic benef its from the leased asset are consumed. Contingent rentals arising
under operating leases are recognised as an expense in the period in which they are incurred.
Pensions
The Group operates a def ined contribution pension scheme. Contributions payable for the
period are recognised as an expense when employees have rendered service entitling them to
the contributions.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as
a result of a past event, it is probable that the Group will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the end of the reporting period, taking into account the risks
and uncertainties surrounding the obligation. When a provision is measured using the cash
f lows estimated to settle the present obligation, its carrying amount is the present value of
those cash f lows (when the effect of the time value of money is material).
When some or all of the economic benef its required to settle a provision are expected to be
recovered from a third party, a receivable is recognised as an asset if it is virtually certain that
reimbursement will be received and the amount of the receivable can be measured reliably.
Returns provision
Present obligations arising under sales returns are recognised and measured as provisions when
it is probable that the Group will be required to settle the obligation under sales contracts.
Lease dilapidation
The Group recognises present obligations arising from lease contracts where it is required to
restore the stores to their pre lease condition upon the expiry of leases.
56 Note s to the Conso lida te d Fin a nc ia l State m en ts
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial instruments
Financial assets and f inancial liabilities are recognised when a group entity becomes a party
to the contractual provisions of the instruments.
Financial assets and f inancial liabilities are initially measured at fair value. Transaction costs
that are directly attributable to the acquisition or issue of f inancial assets and f inancial
liabilities (other than f inancial assets and f inancial liabilities at fair value through prof it
or loss) are added to or deducted from the fair value of the f inancial assets or f inancial
liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the
acquisition of f inancial assets or f inancial liabilities at fair value through prof it or loss are
recognised immediately in prof it or loss.
Financial Assets
Trade and other receivables
Trade and other receivables originated by the company are stated at amortised cost as
reduced by appropriate allowances for doubtful debts.
Cash and cash equivalents
Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at
the statement of f inancial position and include overdrafts where these are used on a day to
day basis to manage cash.
Loans and receivables
Trade receivables, loans and other receivables that have f ixed or determinable payments
that are not quoted in an active market are classif ied as ‘loans and receivables’. Loans and
receivables are measured at amortised cost using the effective interest method, less any
impairment. Interest income is recognised by applying the effective interest rate, except for
short-term receivables when the recognition of interest would be immaterial.
Financial Liabilities and Equity Instruments
Financial liabilities
Financial liabilities and equity instruments are classif ied according to the substance of the
contractual arrangements entered into and are classif ied as either f inancial liabilities ‘at
FVTPL’ or ‘other f inancial liabilities’.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the
company after deducting all of its liabilities. Equity instruments issued by the company are
recorded at the proceeds received, net of direct issue costs.
Financial liabilities at Fair Value Through the Profit and Loss account ‘FVTPL’
Financial liabilities are classif ied as at FVTPL where the f inancial liability is either held for
trading or it is designated as at FVTPL.
Other financial liabilities
Other f inancial liabilities, including loans payable, are initially measured at fair value, net of
transaction costs. Other f inancial liabilities are subsequently measured at amortised cost.
Loans payable
Interest-bearing loans are initially recorded on the day that the loans are advanced at the net
proceeds received.
At subsequent reporting dates, interest-bearing borrowings are measured at amortised cost.
Finance charges, including premiums payable on settlement or redemption and direct issue
costs, are accounted for on the accrual basis in the statement of comprehensive income using
the effective interest rate method and are added to the carrying amount of the instrument to
the extent that they are not settled in the period in which they arise.
Trade payables
Trade payables are stated at amortised cost.
Note s to the Cons olidate d Financia l State m ent s 57
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Derivative financial instruments
The Group enters into a variety of derivative f inancial instruments to manage its exposure to
foreign exchange rate risks, through the use of foreign exchange forward contracts.
Derivatives are initially recognised at fair value at the date the derivative contracts are
entered into and are subsequently re-measured to their fair value at the end of each reporting
period. The resulting gain or loss is recognised in prof it or loss immediately unless the
derivative is designated and effective as a hedging instrument, in which event the timing of
the recognition in prof it or loss depends on the nature of the hedge relationship.
Hedge Accounting
The Group designates certain hedging instruments, which include derivatives, embedded
derivatives and non-derivatives in respect of foreign currency risk, as either fair value hedges,
cash f low hedges, or hedges of net investments in foreign operations. Hedges of foreign
exchange risk on f irm commitments are accounted for as cash f low hedges.
At the inception of the hedge relationship, the entity documents the relationship between the
hedging instrument and the hedged item, along with its risk management objectives and its
strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents
whether the hedging instrument is highly effective in offsetting changes in fair values or cash
f lows of the hedged item attributable to the hedged risk.
Cash f low hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify
as cash f low hedges are recognised in other comprehensive income and accumulated under
the heading of cash f low hedging reserve. The gain or loss relating to the ineffective portion is
recognised immediately in profit or loss, and is included in the ‘other gains and losses’ line item.
Amounts previously recognised in other comprehensive income and accumulated in equity
are reclassif ied to prof it or loss in the periods when the hedged item affects prof it or loss, in
the same line as the recognised hedged item. However, when the hedged forecast transaction
results in the recognition of a non-f inancial asset or a non-f inancial liability, the gains and
losses previously recognised in other comprehensive income and accumulated in equity
are transferred from equity and included in the initial measurement of the cost of the non-
f inancial asset or non-f inancial liability.
Hedge accounting is discontinued when the Group revokes the hedging relationship, when the
hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for
hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated
in equity at that time remains in equity and is recognised when the forecast transaction is
ultimately recognised in profit or loss. When a forecast transaction is no longer expected to
occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.
58 Notes to the Consolida ted Fin anci al S tatem ent s
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Share-based payments
Equity-settled share-based payments to employees are measured at the fair value of the
equity instruments at the grant date. The fair value excludes the effect of non-market-based
vesting conditions. Details regarding the determination of the fair value of equity-settled
share-based transactions are set out in note 30.
The fair value determined at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based on the Group’s estimate of
equity instruments that will eventually vest. At each balance sheet date, the Group revises its
estimate of the number of equity instruments expected to vest as a result of the effect of
non-market-based vesting conditions. The impact of the revision of the original estimates,
if any, is recognised in prof it or loss such that the cumulative expense ref lects the revised
estimate, with a corresponding adjustment to equity reserves.
For cash-settled share-based payments, a liability is recognised for the goods or services
acquired, measured initially at the fair value of the liability. At each balance sheet date
until the liability is settled, and at the date of settlement, the fair value of the liability is
remeasured, with any changes in fair value recognised in prof it or loss for the year.
Critical accounting judgements and key sources of estimation uncertainty
Drawing up the f inancial statements in accordance with IFRS requires management to make
the necessary estimates and assessments. Estimates are based on past experience and other
reasonable assessment criteria. There remains a probability, however, that the estimates and
assessments will bring about an adjustment in the value of the assets and liabilities in future
f inancial years.
The directors have made signif icant accounting estimates and judgements in applying the
Group’s accounting policies in the following areas:
Impairment: Stores are identif ied for further impairment testing primarily on the basis of
current performance, with growth assumptions based on directors’ knowledge and experience.
The directors have used forecast models and an appropriate pre-tax weighted average cost of
capital in its property, plant and equipment impairment calculations.
Inventory valuation: The directors have used their knowledge and experience of the
retail industry in determining the level and rates of provisioning required to calculate the
appropriate inventory carrying values. Inventory is carried in the f inancial statements at
the lower of cost and net realisable value. Sales in the retail industry vary with changes
in consumer demand. As a result there is a risk that the cost of inventory exceeds its net
realisable value. Management calculate the inventory provision on the basis of the ageing
prof ile of what is in stock. Adjustments are made where appropriate based on directors’
knowledge and experience to calculate the appropriate inventory carrying values.
2.
REVENUE
The revenue and profit before taxation are attributable to the one principal activity of the Group.
Sale of goods
Finance income and similar incomes
5 2W K S EN DED
29 MAY 2016
£’000
5 3W K S E NDE D
31 MAY 2015
£’000
131,262
-
131,262
116,421
190
116,611
Note s to the Co nso lidat ed Fin an ci al St at em e nts 59
3.
SEGMENT REPORTING
The Group has three reportable segments; Retail, Wholesale and Other. For each of the
three segments, the Group’s chief operating decision maker (the “Board”) reviews internal
management reports on a monthly basis. Each segment can be summarised as follows:
•
Retail: Retail includes sales and costs relevant to Stores, E-commerce, Shows and
Franchises.
• Wholesale: Wholesale includes sales and costs relevant to the sale of products to other
retail businesses or distributors for onward sale to their customer.
•
Other: Other includes income from licencing, central costs and items that are not
distinguishable into categories above.
The accounting policies of the reportable segments are the same as described in note 1.
Information regarding the results of each reportable segment is included below. Segment
results before exceptional items are used to measure performance as management believes
that such information is the most relevant in evaluating the performance of certain segments
relative to other entities that operate within these industries.
Segment Revenue and Results
52 WEEKS ENDED 29 MAY 20 16
Revenue
Cost of sales
Gross profit
Administration expenses
Segment result
Reconciliation of segment result to profit before tax
Segment result
Depreciation and amortisation
Central administrative expenses
Exceptional costs
Net finance expense
Interest receivable and similar income
Loss before tax
53 WEEKS ENDED 31 MAY 20 15
Revenue
Cost of sales
Gross profit
Administration expenses
Segment result
Reconciliation of segment result to profit before tax
Segment result
Depreciation and amortisation
Central administrative expenses
Exceptional costs
Net finance expense
Interest receivable and similar income
Profit before tax
R ETAIL
£ ’00 0
WHOLESALE
£ ’00 0
OT HER
£ ’00 0
TOTA L
£’000
93,687
37,196
(36,616)
(24,387)
57,071
12,809
379
-
379
131,262
(61,003)
70,259
(34,146)
(5,998)
(16,348)
(56,492)
22,925
6,811
(15,969)
13,767
22,925
(3,306)
6,811
(15,969)
13,767
(258)
(1,963)
(5,527)
(277)
(3,128)
(6,015)
-
(1,180)
R ETAIL
£ ’00 0
WHO LESALE
£ ’00 0
OT HER
£ ’00 0
TOTA L
£’000
84,413
31,633
(35,009)
(19,377)
49,404
12,256
375
-
375
116,421
(54,386)
62,035
(31,865)
(4,762)
(14,698)
(51,325)
17,539
7,494
(14,323)
10,710
17,539
(2,956)
7,494
(14,323)
10,710
(161)
(1,679)
(4,796)
(337)
(500)
(5,178)
190
89
60 Notes to the Consolida ted Fin anci al S tatem ent s
3.
SEGMENT REPORTING (Continued)
There are no discontinued operations in the period.
GEOGRAPHICAL INFORMATION
The Group’s revenue from external customers by geographical location are as detailed below.
Predominantly all non-current assets (excluding f inancial instruments, deferred tax assets and
other f inancial assets) are situated in the UK, therefore separate geographical disclosure of non-
current assets is not considered necessary.
52 weeks ended 29 May 2016
53 weeks ended 31 May 2015
UK
£ ’00 0
IN T ER N AT IONA L
£ ’00 0
SUPPOR T
£ ’00 0
118,041
105,819
13,222
10,602
-
-
TOTA L
£’000
131,262
116,421
4.
INFORMATION REGARDING DIRECTORS AND EMPLOYEES
Staff costs during the period
Wages and salaries
Social security costs
Other pension costs
Average number of persons employed
Head office
Stores and Shows
Warehousing
Directors’ remuneration
5 2W K S EN DED
29 MAY 2016
£’000
5 3W K S E ND E D
31 MAY 2015
£’000
19,918
1,884
227
22,029
17,721
1,502
236
19,459
N UMBER
NUMBER
353
998
88
1,439
317
932
79
1,328
5 2W K S EN DED
29 MAY 2016
£’000
5 3W K S END ED
31 MAY 2015
£’000
1,145
867
N UMBER
N UMBE R
The number of directors to whom retirement benefits are accruing are as follows:
Defined contribution scheme
3
3
Highest paid director
Emoluments
5 2W K S EN DED
29 MAY 2016
£’000
5 3W K S END ED
31 MAY 2015
£’000
428
326
Note s to the Cons olidate d Financia l State m en ts 61
5.
EXPENSES BY NATURE
Cost of inventories
Transportation, carriage and packing
Employees remuneration and benefits and third party labour costs
Depreciation and amortisation
Exceptional impairment
Other expenses
5 2W K S EN DED
29 MAY 2016
£’000
5 3W K S E NDE D
31 MAY 2015
£’000
51,572
6,905
25,597
5,527
380
36,446
126,427
46,842
5,450
22,984
4,796
500
30,772
111,344
Other expenses and exceptional impairment include £3,128,000 for May 2016 (May 2015: £500,000) of
exceptional items which have been disclosed separately on the face of the income statement in order
to summarise the underlying results. Neither ‘underlying profit or loss’ nor ‘exceptional items’ are
defined by IFRS however the directors believe that the disclosures presented in this manner provide
clear presentation of the financial performance of the Group.
Other expenses include £3,162,000 of costs and offsetting income, which net to £nil, that were
incurred as part of the listing of Joules Group plc on AIM. These costs were recharged to the
exiting shareholders as the listing related to the disposal of their shares. The net amount of
£nil has been classif ied as Exceptional.
The analysis of auditor’s remuneration is as follows:
Fees payable to the company’s auditor for the audit of the Group’s annual accounts
Total audit fees
Other services pursuant to legislation:
Tax compliance
Tax advice
Services relating to IPO
Other
Total non-audit fees
5 2W K S EN DED
29 MAY 2016
£’000
5 3W K S END ED
31 MAY 2015
£’000
44
44
66
74
803
5
948
40
40
15
99
-
6
120
62 Note s to the Cons olidat ed Fin an ci al St at em e nt s
6.
OPERATING PROFIT
OPERATING PROFIT IS STATED AFTER CHAR GI NG/(CR EDIT IN G) :
Hire of plant and machinery
Other operating leases
Depreciation, amortisation and impairment of fixed assets
(Profit)/loss on disposal of fixed assets
7.
INTEREST PAYABLE AND SIMILAR CHARGES
Bank loan interest
Shareholder loan note interest
Amortisation of debt costs
5 2W K S EN DED
29 MAY 2016
£’000
5 3W K S E NDE D
31 MAY 2015
£’000
444
8,570
5,907
-
597
7,928
5,296
-
5 2W K S EN DED
29 MAY 2016
£’000
5 3W K S E NDE D
31 MAY 2015
£’000
461
4,676
878
6,015
416
4,399
363
5,178
Amortisation of debt costs relate to fees incurred in 2013 with regard to the Shareholder loan notes,
as these fees related to a debt facility they were amortised over the expected life of the facility.
During the period, the Shareholder loan note debt was settled and all remaining unamortised debt
costs were expensed.
8.
INCOME TAX
a) Analysis of charge in the period
Current tax
UK corporation tax based on the profit/(loss) for the period
Adjustment in respect of prior periods
Overseas tax
Total current tax charge
Deferred taxation (note 19)
Adjustment in respect of prior periods
Origination and reversal of timing differences
Effect of adjustment in tax rate
Total deferred taxation charge/(credit)
Tax charge for the period (note 8b)
In addition to the amount charged to the income statement, the
following amounts relating to tax have been recognised in other
comprehensive income.
5 2W K S EN DED
29 MAY 2016
£’000
5 3W K S E NDE D
31 MAY 2015
£’000
869
(438)
17
448
225
(142)
82
165
613
1,083
(561)
21
543
330
(358)
14
(14)
529
5 2W K S EN DED
29 MAY 2016
£’000
5 3W K S E ND E D
31 MAY 2015
£’000
Deferred taxation (note 19)
Gains/(losses) arising during the period on deferred tax on cash f low hedges
Total income tax gain / (loss) recognised in other comprehensive income
15
15
(444)
(444)
Note s to the Cons olidate d Financia l State m ent s 63
8.
INCOME TAX (continued)
b) Factors affecting the tax charge for the period
There are reconciling items between the expected tax charge and the actual which are shown below:
Profit / (loss) before taxation
UK corporation tax at the standard rate
Effects of:
Expenses/(credits) not deductible for tax purposes and
other permanent differences
Difference in overseas tax rate
Effect of adjustment in tax rate
Losses not recognised due to uncertainty
Adjustment in respect of prior period
Tax expense for the period (note 8a)
5 2W K S EN DED
29 MAY 2016
£’000
5 3W K S E NDE D
31 MAY 2015
£’000
(1,180)
20.0%
(236)
940
17
82
23
(213)
613
89
20.8%
19
553
11
14
163
(231)
529
The 2013 budget issued on 20 March 2013 announced that the main rate of corporation tax would be
reduced to 21% from 1 April 2014 and to 20% from 1 April 2015. The UK corporation tax at the standard
rate for the year is therefore 20.0% (2015: 20.8%).
In July 2015 the UK government announced its intention to reduce the standard corporation tax rate
to 18% by 2020. The measure to reduce the rate to 19% for the f inancial year beginning 1 April 2017
and to 18% for the f inancial year beginning 1 April 2020 were substantively enacted on 26 October
2015 and have been ref lected in the calculation of deferred tax in the May 2016 numbers.
9.
SUBSIDIARIES
As at the period-end the Group had the following subsidiaries, those marked with * being indirect holdings:
SUBSIDIARY NAME
NATUR E OF BUSIN ESS
PLACE OF
INCORPORATION
AND OPERATION
PROPORTION
OF OWNERSHIP
INTEREST
PR OPORTI ON
OF VOTING
POWER H EL D
Joules Investments Holdings Limited
Holding company
England and Wales
Joules Limited*
Retailer
England and Wales
Joules Hong Kong Limited*
Overseas trading entity
Hong Kong
Wickmere No 1 Limited*
Dormant company
England and Wales
Wickmere No 2 Limited*
Dormant company
England and Wales
Joules Clothing Shanghai Company Limited*
Overseas office
China
Joules USA Inc.*
Overseas trading entity
USA
Joules Clothing Limited*
Dormant company
England and Wales
Joules (Market Harborough) Limited*
Dormant company
England and Wales
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
100%
100%
100%
100%
On 26 May 2016, the company acquired 100% of the issued share capital of Joules Investments
Holdings Limited. All the other entities detailed above have been in existence for the whole
of the reporting period.
On 30th August 2016 the dormant entities; Wickmere No 1 Limited; Wickmere No 2 Limited;
Joules Clothing Limited; and Joules (Market Harborough) Limited were struck off.
64 Note s to the Conso lida te d Fin a nc ia l State m en ts
10 and 11.
PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
PROPERTY, PLANT AND EQUIPMENT
INTANGIBLES
LEASEHOLD
IMPROVEMENTS
£’00 0
FIXT UR ES
AN D FITT IN G S
£ ’00 0
MOTO R
VEHIC L ES
£ ’00 0
TOTA L
£ ’00 0
IT S Y STEMS
£ ’00 0
COST
At 25 May 2014
Additions
At 31 May 2015
At 1 June 2015
Additions
Disposals
At 29 May 2016
ACCUMULATED DEPRECIATION/
AMORTISATION
At 25 May 2014
Charge for the period
Impairment
At 31 May 2015
At 1 June 2015
Charge for the period
Disposals
Impairment
At 29 May 2016
NET BOOK VALUE
At 25 May 2014
At 31 May 2015
At 29 May 2016
155
-
155
155
-
(55)
100
111
8
-
119
119
5
(55)
-
69
44
36
31
21,370
5,391
26,761
26,761
4,589
(8,570)
22,780
10,658
4,203
500
15,361
15,361
4,504
514
16
530
530
-
(404)
126
477
31
-
508
508
7
22,039
5,407
27,446
27,446
4,589
(9,029)
23,006
11,246
4,242
500
15,988
15,988
4,516
(8,570)
(404)
(9,029)
380
11,675
10,712
11,400
11,105
-
111
37
22
15
380
11,855
10,793
11,458
11,151
Property, Plant and Equipment and Intangibles
During the period the Directors conducted a detailed review of the Group’s f ixed assets, as
a result of this review £9,044,000 (£8,370,000 of Property, Plant and Equipment; £674,000 of
Intangibles) of nil book value items which were no longer in existence or use as at the balance
sheet date were identif ied, these have been recorded as a disposal above.
TOTA L
£’000
2,544
3,385
5,929
5,929
2,498
(674)
7,753
959
554
-
1,513
1,513
1,011
(674)
-
2,544
3,385
5,929
5,929
2,498
(674)
7,753
959
554
-
1,513
1,513
1,011
(674)
-
1,850
1,850
1,585
4,416
5,903
1,585
4,416
5,903
12.
INVENTORIES
Goods for resale
Goods in transit
Note s to the Co nso lidat ed Fin an ci al St at em e nts 65
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
14,594
4,659
19,253
15,767
1,885
17,652
There is no material difference between the balance sheet value of stocks and their replacement cost.
The cost of inventories recognised as an expense during the year in respect of continuing operations
in the 52 weeks ended 29 May 2016 was £51,572,000 (53 weeks ended 31 May 2015: £46,842,000).
The cost of inventories recognised as an expense includes £196,000 for the 52 weeks ended 29 May
2016 (53 weeks ended 31 May 2015: £342,000) in respect of write-downs of inventory to net realisable
value. During the period £33,000 (53 weeks ended 31 May 2015: £349,000) of stock previously provided
for was sold and the provision was therefore released.
Product is purchased on a seasonal basis with the intention of selling that stock within 12 months
of the balance sheet date. Any aged stock is appropriately provided.
13.
OTHER FINANCIAL ASSETS/(LIABILITIES)
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
Derivatives designated and effective as hedging instruments carried at fair value:
Forward foreign currency contracts
474
500
Forward contracts and options
The Group enters into forward foreign exchange contracts and options to manage the risk associated with
anticipated sale and purchase transactions which are denominated in foreign currencies.
As at 29 May 2016, the Group has 65 (May 2015: 35) forward foreign exchange contracts outstanding.
Derivative financial instruments are carried at fair value.
The following table details the USD foreign currency contracts outstanding as at the balance sheet date.
(a) Average exchange £/$ rate
2 9 MAY 2 01 6
3 1 MAY 2015
3 months or less
3 to 6 months
6 to 12 months
Over 12 months
(b) Contract value
3 months or less
3 to 6 months
6 to 12 months
Over 12 months
(c) Foreign currency
3 months or less
3 to 6 months
6 to 12 months
Over 12 months
1.5394
1.4764
1.4430
-
1.5597
1.5281
1.5354
-
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
8,960
13,524
19,908
-
3,751
8,837
18,466
-
42,392
31,054
2 9 MAY 2 01 6
$ ’00 0
3 1 MAY 2015
$’000
13,500
20,000
29,150
-
5,731
13,478
28,216
-
62,650
47,425
66 Notes to the Consolidat ed Fin anci al St at em e nts
13.
OTHER FINANCIAL ASSETS/(LIABILITIES) (Continued)
(d) Fair value
3 months or less
3 to 6 months
6 to 12 months
Over 12 months
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
300
149
25
-
474
180
63
257
-
500
The Company also holds two Euro to GBP forward options with a notional value of £3,000,000
and fair value of £36,454 for 3 to 6 months and £41,521 for 6 to 12 months.
14.
TRADE AND OTHER RECEIVABLES
Trade receivables – gross
Allowance for doubtful debts
Trade receivables – net
Other receivables
Prepayments
Total trade and other receivables
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
2,915
(165)
2,750
824
7,282
10,856
2,601
(149)
2,452
706
6,998
10,156
All of the other receivables and prepayment balances above are deemed to be current; the
disclosures below relate only to the trade receivables balance. The Directors review the
recoverability of trade receivables on a regular basis and calculate the allowance for doubtful
debts on both a specific, customer by customer basis and a general basis.
The Group has no significant concentration of credit risk, with exposure spread over a large number
of counterparties and customers. Accordingly the directors believe that there is no further credit
provision risk required in excess of the allowance for doubtful debts.
Included within the Group’s trade receivables (gross) balance are debtors with a carrying value
of £1,020,000 (2015: £766,000) which are past due at the reporting date for which the Group has
not provided as there has not been a significant change in credit quality and the amounts are still
considered recoverable.
Ageing of past due trade receivables
1-30 days
31-60 days
60-90 days
90+ days
Total past due trade receivables
Current
Total trade receivables
Movement in the allowance for doubtful debts
Balance at beginning of period
Bad debt write (back)/off
Movement in doubtful debt estimate
Balance at end of period
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
706
357
97
25
1,185
1,730
2,915
149
119
(103)
165
534
295
86
-
915
1,686
2,601
38
276
(165)
149
Note s to the Cons olidate d Financia l State m ent s 67
15.
TRADE AND OTHER PAYABLES
Trade payables
Other taxation and social security
Other payables
Accruals and deferred income
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
15,353
1,069
1,159
10,338
27,919
9,337
792
1,717
6,870
18,716
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and
ongoing costs.
The directors consider that the carrying amount of trade payables approximate to their fair value.
16.
PROVISIONS
Returns provision
Dilapidations
At 31 May 2015
Additional provision during the period
Reversal of provision during the period
Utilisation of provision
At 29 May 2016
Returns provision
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
506
267
773
DIL APIDAT ION S
£ ’00 0
R ETU RN S
PR OV IS ION
£ ’00 0
415
-
(52)
(96)
267
172
544
-
(210)
506
172
415
587
TOTA L
£’000
587
544
(52)
(306)
773
Present obligations arising under sales returns are recognised and measured as provisions
when it is probable that the Group will be required to settle the obligation under sales
contracts. Returns provisions in existence at the balance sheet date are expected to be utilised
within 12 months, the provision is recalculated at each balance sheet date taking into account
recent sales and anticipated levels of returns.
Lease dilapidation
The Group recognises present obligations arising from lease contracts where it is required to
restore the stores to their pre-lease condition upon the expiry of leases. Lease dilapidations
provisions are expected to be utilised between 0-3 years in line with the expiry of the leases.
68 Note s to the Conso lida te d Fin a nc ia l State m en ts
17.
BORROWINGS
Bank loans
Asset loans
Shareholder loan notes
Financing costs capitalised
Borrowings are repayable as follows:
Bank loans
Within one year
Asset loans
Within one year
Between one and two years
Between two and five years
Shareholder loan notes
Between two and five years
After five years
Financing costs capitalised
Total borrowings
Between one and two years
Between two and five years
After five years
Financing costs capitalised
On demand or within one year
Summary of borrowing arrangements
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
5,009
1,079
-
-
7,068
1,566
43,699
(877)
6,088
51,456
5,009
7,068
452
333
294
561
490
515
1,079
1,566
-
-
-
-
-
333
294
-
-
627
5,461
6,088
17,480
26,219
43,699
(877)
42,822
490
17,995
26,219
(877)
43,827
7,629
51,456
The Bank Loan is a Revolving Credit Facility in which amounts drawn down are generally
repayable within three months. The facility matures in May 2020. The asset loans are secured
against the assets to which they relate. Interest is paid at varying rates above base rate.
The shareholder loan notes were issued in November 2013 and were repayable in equal amounts
representing 20% of the outstanding balance annually from 31 October 2018 for a period of
5 years. Interest accrued annually at 11% and was added to the principal amount outstanding.
The loan notes were settled in full on 26th May 2016 as a part of the IPO on admission to AIM.
The weighted average interest rates paid during the period were as follows:
Asset loans
Shareholder loan notes
Bank loans
5 2 W K S EN DED
2 9 MAY 2 01 6
%
5 3 W K S E NDE D
3 1 MAY 2015
%
7.4
11.0
3.0
8.9
11.0
3.0
Note s to the Cons olidate d Financia l State m en ts 69
18.
FINANCIAL COMMITMENTS
Operating Lease Commitments
At the balance sheet date, the Group had outstanding commitments for
future minimum lease payments under non-cancellable operating leases,
which fall due as follows:
LAND & BUILDINGS
Leases expiring:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
OTHER
Leases expiring:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
19.
DEFERRED TAXATION
The following is the analysis of deferred tax assets/(liabilities)
presented in the consolidated statement of f inancial position:
Difference between depreciation and capital allowances
Balance brought forward
(Charge)/credit to income statement
Balance at end of period
Other short term timing differences
Balance brought forward
(Charge)/credit to income statement
(Charge)/credit to other comprehensive income
Balance at end of period
Total deferred tax asset at end of period
Movement
Balance brought forward
(Charge)/credit to income statement (note 8)
(Charge)/credit to other comprehensive income (note 8)
Balance at end of period
There is no unprovided deferred tax in either the current or prior period for the Group
(May 2015: £nil). The deferred tax asset recognised in the current period is expected
to be utilised against future taxable prof its.
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
8,040
27,881
17,550
53,471
7,996
26,497
16,975
51,468
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
333
359
-
692
299
495
-
794
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
535
169
704
268
(334)
15
(51)
653
803
(165)
15
653
572
(37)
535
661
51
(444)
268
803
1,233
14
(444)
803
70 Note s to the Cons olidat ed Fin an ci al St at em e nt s
20.
CALLED UP SHARE CAPITAL
Allotted and issued
87,499,796 Ordinary shares of £0.01 each
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
875
91,510
The company was incorporated on 1 May 2016. The acquisition of Joules Investments Holdings
Limited by Joules Group plc on 26 May 2016 has been accounted for using reverse acquisition
accounting principles. The effect of using reverse acquisition accounting principles on share
capital is that the capital that existed as at the point Joules Group plc legally acquired Joules
Investments Holdings Limited is accounted for as if it had been in existence as at the comparative
period end (31 May 2015) and as at the opening balance sheet date (25 May 2014).
The comparative period share capital therefore comprises the following transactions:
The company was incorporated on 1 May 2016, upon incorporation the company issued 1 Ordinary
B share of £827.22 at par.
On 26 May 2016 the shareholders of Joules Investments Holdings Limited transferred their shares
to Joules Group plc in exchange for new shares issued by Joules Group plc, the new shares issued
by Joules Group plc mirrored the shares transferred by the previous shareholders of Joules
Investments Holdings Limited.
The share capital issued as part of this share for share exchange consisted of 138,188 shares of
varying classes with a nominal value of £91,508,871. The varying classes were then converted
to a single class of ordinary share in Joules Group plc. The company then had a share capital
of 57,193,545 ordinary £1.60 shares, with a nominal value £91,509,672.
The movements in the 52 week period to 29 May 2016, which are not accounted for using the
reverse acquisition accounting principles, are as follows:
As part of this share for share exchange certain shareholders of Joules Investments Holdings
Limited ultimately received cash for their shareholding in Joules Investments Holdings Limited,
rather than receiving shares in Joules Group plc, these shares equated to 90,980 ordinary £1.60
shares with a par value, and settlement value of £145,568. This is adjusted through the merger
reserve as it is considered part of the consideration paid by Joules Group plc to acquire Joules
Investments Holdings Limited.
On 26 May 2016 Joules Group plc issued 23,130,400 ordinary £1.60 shares, with a total nominal
value of £37,008,644. The shares were issued in order to settle the existing loan notes which had
a book and fair value of £37,008,644, excluding accrued interest.
On 26 May 2016 Joules Group plc (when legally still ‘Joules Group Limited’) entered into a capital
reduction, converting the 80,323,945 ordinary £1.60 shares into 80,323,945 ordinary £0.01 shares.
The reduction in share capital of £127,715,102 was transferred to retained earnings.
On 26 May 2016 in an initial public offering Joules Group plc issued 7,175,851 ordinary £0.01
shares at a price of £1.60, resulting in an increase in share capital of £71,758 and share premium
of £11,409,603.
All ordinary shares carry equal rights.
Note s to the Co nso lidat ed Fin an ci al St at em e nts 71
21.
OTHER RESERVES
Share premium
The share premium reserve contains the premium arising on the issue of equity shares, net of
issue expenses.
The share premium reserve contains the premium arising on the issue of equity shares, net of
issue expenses incurred by the company. On 26 May 2016 in an initial public offering Joules Group
plc issued 7,175,851 ordinary £0.01 shares at a price of £1.60, resulting in share premium
of £11,409,603.
Balance at 29 May 2016.
Retained earnings
£ ’00 0
11,410
The movement on retained earnings is as set out in the consolidated statement of changes
in equity. Retained earnings represent cumulative profits or losses, net of dividends and
other adjustments.
Merger reserve
The movement on the merger reserve is as set out in the consolidated statement of changes
in equity.
The effect of reverse acquisition accounting on the merger reserve is that the share capital,
share premium and other distributable reserves that existed in Joules Group plc (the company)
as at the point Joules Group plc legally acquired Joules Investments Holdings Limited is
accounted for as if it had been in existence as at the comparative period end (31 May 2015) and
as at the opening balance sheet date (25 May 2014). The corresponding entry being the merger
reserve so the overall net assets as at the comparative dates are not affected.
The movement on the merger reserve during the period arose due to c ertain shareholders of
Joules Investments Holdings Limited transferring their shares to Joules Group plc in exchange
for cash, with a settlement value, of £145,568. This is adjusted through the merger reserve as it
is considered part of the consideration paid by Joules Group plc to acquire Joules Investments
Holdings Limited.
72 Note s to the Cons olidat ed Fin an ci al St at em e nt s
22.
HEDGING AND TRANSLATION RESERVE
Balance as at 31 May 2015
Gains/(losses) recognised in other comprehensive income
Income tax relating to gains/(losses) recognised in other comprehensive income
Balance as at 29 May 2016
Hedging reserve
The reserve represents the cumulative gains and losses on hedging instruments in cash f low
hedges. The cumulative deferred gain or loss on the hedging instrument is recognised in profit
or loss only when the hedge transaction impacts the profit or loss or is included as a basis
adjustment to the non-financial hedged item, consistent with the applicable accounting policy.
Translation reserve
Exchange differences relating to the translation of the net asset of the Group’s foreign
operations which relate to subsidiaries only, from their functional currency into the Group’s
presentational currency being Sterling, are recognised directly to the translation reserve.
HEDG IN G
R ESER V E
£ ’00 0
T RA N SLATI ON
R ES ER VE
£’000
400
(26)
15
389
(24)
(48)
-
(72)
23.
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
Increase/(decrease) in cash in the period
Cash f low from movement in debt
Change in net debt resulting from cash f lows
Non cash interest on loan notes
Non cash movement on amortised deal fees of loan notes
Non cash settlement on loan notes
Net debt at start of the year
Net debt at end of year
24.
CASH AND CASH EQUIVALENTS
Cash and cash at bank
7,157
13,913
21,070
(4,676)
(878)
37,009
(49,335)
3,190
(2,126)
(656)
(2,782)
(4,399)
(363)
-
(41,791)
(49,335)
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
9,278
2,121
25.
ANALYSIS OF NET DEBT
AT 31 MAY 2 01 5
£ ’00 0
N ON - C A SH C HA NG ES
£ 00 0
C ASH FLOW
£ ’00 0
AT 2 9 MAY 2016
£ ’000
Cash at bank and in hand
Bank loans
Asset loan
Loan notes
Total
2,121
(7,068)
(1,566)
(42,822)
(49,335)
-
-
-
31,455
31,455
7,157
2,059
487
11,367
21,070
9,278
(5,009)
(1,079)
-
3,190
Note s to the Co nso lidat ed Fin an ci al St at em e nts 73
26.
FINANCIAL INSTRUMENTS
Categories of financial instruments
Carrying value of financial assets:
Cash and cash equivalents
Trade and other receivables
Loans and receivables at amortised cost
Derivative financial instruments
Financial assets at fair value through profit and loss
Total financial assets
Carrying value of financial liabilities:
Trade creditors
Other payables
Borrowings
Financial liabilities at fair value through profit and loss
Derivative instruments in designated hedge accounting relationships
Total financial liabilities
Interest rate sensitivity analysis
2 9 MAY 2 01 6
£ ’00 0
3 1 MAY 2015
£’000
9,278
10,856
20,134
-
474
20,608
-
20,608
(15,353)
(12,566)
(6,088)
(34,007)
-
2,121
10,156
12,277
-
500
12,777
-
12,777
(9,337)
(9,379)
(51,456)
(70,172)
-
(34,007)
(70,172)
-
-
(34,007)
(70,172)
If interest rates on all borrowings had been 1% higher/lower and all other variables were held
constant, the Group’s prof it for the period ended 52 weeks to 29 May 2016 would decrease/increase
by £57,000 (May 2015: £82,000).
This has been calculated by applying the amended interest rate to the weighted average rate of
borrowings for the period to 29 May 2016, other than borrowings which are held at a f ixed interest
rate as those borrowings are not sensitive to external variables, such as movement in interest rates.
Foreign currency sensitivity analysis
The Group is mainly exposed to f luctuations in the US $, which is used for stock purchases.
If the US $ exchange rate, on average through the period, weakened/strengthened by 10 percent
and all other variables were held constant, the Group’s prof it for the period ended 52 weeks to
29 May 2016 would increase/decrease by £369,000 and £451,000 respectively (2015: £244,000 and
£200,000). This has been calculated by applying the amended currency rate to the US $ value
of f inancial assets and f inancial liabilities held at the period end, an amended rate has not been
applied to US $ purchases in the period as they have been effectively hedged against currency
f luctuations via forward contracts.
Maturity of financial liabilities
The maturity of borrowings is included in note 17. All other f inancial liabilities are expected to
mature within six months of the year-end.
Carrying value of financial assets
The Directors have assessed that, on the basis of the net assets of the owing companies, the
intercompany receivables are fully recoverable. As noted in note 14 the Directors do not believe
any of the trade receivables to be impaired. A signif icant decrease in the net assets and trade
of the owing company or a decline in the f inancial position of customers would trigger an
impairment review.
Credit risk
In the opinion of the Directors, the only f inancial instrument that is subject to credit risk is
the trade receivables. The Directors believe that the bad debt provision as disclosed in note 14
represents the Directors’ best estimate of the maximum exposure to credit risk at period-end.
74 Note s to the Conso lida te d Fin a nc ia l State m en ts
26.
FINANCIAL INSTRUMENTS (continued)
Fair value of financial instruments
Financial Instruments are measured in accordance with the accounting policy set out in note 1.
All Financial Instruments are considered to be Level 3 with the exception of foreign currency
forward contracts and options which are considered Level 2. In the opinion of the Directors, the
fair value of the f inancial assets and liabilities are equal to their book values.
Liquidity risk management
The Directors believe that the receivables are not impaired and that the owing companies have
suff icient net assets to repay the balances. Therefore the Directors believe that liquidity risk is
minimal.
Capital risk management
The Directors maintain detailed cash forecasts which are frequently revised to actuals to ensure
that the Group has suff icient liquid resources to meet its requirements.
Foreign currency financial assets and liabilities
Included within the above table are £4,116,000 (2015: £1,507,000) of assets and £1,903,458 (2015:
£588,000) of liabilities relating to the overseas subsidiaries which have been translated in the
consolidation at the period-end rate. These balances are subject to movements in exchange rates,
as shown in the statement of changes in equity. The Directors do not believe the risk is signif icant
enough to warrant hedging against the investments in overseas companies.
Also included within the above table are foreign currency denominated external trade payables
and receivables of £1,300,565 (2015: £3,339,000) and £903,916 (2015: £496,000) respectively. The
Group mitigates a signif icant amount of the exchange rate risk via purchases of forward foreign
currency contracts.
27.
RELATED PARTY TRANSACTIONS
Transactions between the company and its subsidiaries, which are related parties, have been
eliminated on consolidation.
The Directors and key management control 31,011,102 shares in Joules Group plc, which
represents 35.44% of the issued share capital. Key management and directors remuneration is
disclosed in note 4. In addition directors and key management participate in a share scheme,
further details of which can be found in note 30.
28.
CONTROLLING PARTY
In the opinion of the Directors there is no ultimate controlling party.
29.
EARNINGS PER SHARE
Basic and diluted earnings per share are calculated by dividing prof it or loss attributable to
ordinary equity holders by the weighted average number of ordinary shares in issue during the
period.
The acquisition of Joules Investments Holdings Limited by Joules Group plc on 26 May 2016 has
been accounted for using reverse acquisition accounting principles. The effect of using reverse
acquisition accounting principles on share capital is that the capital that existed as at the point
Joules Group plc legally acquired Joules Investments Holdings Limited is accounted for as if it had
been in existence as at the comparative period end (31 May 2015) and as at the opening balance
sheet date (25 May 2014).
The weighted average number of shares in issue for the current and prior year has therefore been
stated to ref lect the post IPO share capital structure, this adjustment assumes the total shares
issued during the IPO were in issue throughout the whole of the current and previous period
presented.
For the calculation of diluted earnings per share, the weighted average number of shares
in issue is further adjusted to assume conversion of all potentially dilutive ordinary shares.
The Company has one category of potentially dilutive ordinary shares, being management shares
not yet vested.
Note s to the Cons olidate d Financia l State m ent s 75
29.
EARNINGS PER SHARE (continued)
Basic earnings/(loss) per share (pence)
Diluted earnings/(loss) per share (pence)
5 2 W EEKS
EN DED 2 9 MAY
2 01 6
5 3 WEE KS
EN DED 3 1 MAY
2015
(2.04)
(2.04)
(0.50)
(0.50)
The calculation of basic and diluted earnings per share is based on the following data:
Earnings
Earnings for the purpose of basic and diluted earnings per share, being the net loss
Earnings for the purpose of basic earnings per share
Number of shares
5 2 W EEKS
EN DED 2 9 MAY
2 01 6 £ ’0 00
5 3 WE EK S
EN DED 3 1 MAY
2 01 5 £’ 000
(1,793)
(1,793)
(440)
(440)
5 2 W EEKS
EN DED 2 9 MAY
2 01 6
5 3 WEE KS
EN DED 31 MAY
2015
Weighted number of ordinary shares for the purpose of basic earnings per share
87,499,796
87,499,796
Potentially dilutive share awards
446,875
446,875
Weighted number of ordinary shares for the purpose of diluted earnings per share
87,946,671
87,946,671
30.
SHARE BASED PAYMENTS
Equity-settled share option scheme
The Group operated a share option scheme during the period for certain employees under the
Executive Share Option Plan. All the options vest after 2 years and have a maximum exercise
life of 10 years from grant date. All option schemes are subject to continued employment over
the vesting period.
The fair value of the shares were determined by using the Black Scholes Model. The options
were granted at the time of the IPO admission and inputs into the option pricing model,
including share price on the date of grant, expected volatility and expected dividends were
determined post listing therefore taking into account the AIM listed status of the Company.
Expected volatility was determined by management, using comparator volatility as a basis.
The expected life of the options was determined based on management’s best estimate.
The expected dividend yield was based on the anticipated dividend policy of the Company
over the expected life of the options. The risk free rate of return input into the model was
a zero coupon government bonds with a life in line with the expected life of the options.
The fair value of the total shares issued during the period, and measured as at issue date is £203,486.
No charge has been recognised in the income statement and no liability recognised in the
statement of f inancial position in respect of these options for the 3 days they were
in existence during the period.
Details of the share options outstanding as at the balance sheet dates as are follows:
5 2 W EEKS EN DED 29 MAY 20 1 6
5 3 W EEKS EN DED 31 MAY 2015
N UMBER OF
S HAR E
OPT ION S
WEIG HT ED
AV ERAG E
EXER CI SE PR IC E
( £)
N UMBER OF
S HAR E
OPT ION S
WEIG HTE D
AVER AGE
EXER C ISE PRI CE
(£)
Outstanding at the beginning of the period
Granted during the period
Lapsed during the period
Exercised during the period
Outstanding at the end of the period
Exercisable at the end of the period
-
446,875
-
-
446,875
-
-
1.60
-
-
1.60
-
-
-
-
-
-
-
-
-
-
-
-
-
76 Comp any Balance Sheet and Co m pan y St at em e nt o f Changes in Equ ity
C O M P A N Y B A L A N C E S H E E T
J O U L E S G R O U P P L C
FIXED ASSETS
Investments
CURRENT ASSETS
Debtors
NET CURRENT ASSETS AND NET ASSETS
CAPITAL AND RESERVES
Called up share capital
Share premium
Profit and loss account
SHAREHOLDERS’ FUNDS
29 MAY 2016
NOTE
£’000
2
3
4
5
139,980
1
139,981
875
11,410
127,696
139,981
These financial statements of Joules Group plc (Company Registration Number 10164829)
were approved by the Board of Directors and authorised for issue on 5 September 2016 and were
signed on behalf of the Board of Directors by -
MARC DENCH
Chief Financial Officer
5 September 2016
C O M P A N Y S T A T E M E N T O F C H A N G E S I N E Q U I T Y
J O U L E S G R O U P P L C
Upon incorporation
Share issue (note 4)
Share issue (note 4)
Share issue (note 4)
Capital reduction (note 4)
Share issue (note 4)
Loss for the period
Balance at 29 May 2016
SHAR E
C APITA L
£ ’00 0
-
1
91,509
37,009
(127,715)
71
-
875
SHAR E
PR EMIUM
£ ’00 0
R ETAIN ED
EAR N IN GS
£ ’00 0
-
-
-
-
11,410
-
11,410
-
-
-
127,715
-
(19)
TOTA L
EQUI TY
£’000
-
1
91,509
37,009
-
11,481
(19)
127,696
139,981
78 Note s to the Compan y Fina nc ia l S tate m en ts
N O T E S T O T H E C O M P A N Y
F I N A N C I A L S T A T E M E N T S
J O U L E S G R O U P P L C
1.
SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
The Company was incorporated on 1 May 2016, the f irst period of account is therefore the
29 days ending 29 May 2016. These separate f inancial statements of Joules Group plc have been
prepared in accordance with Financial Reporting Standard 101, Reduced Disclosure Framework
(FRS 101).
The Company’s f inancial statements are presented in GBP.
In preparing these f inancial statements the company has taken advantage of all disclosure
exemptions conferred by FRS 101. Therefore these f inancial statements do not include:
•
•
•
•
a statement of cash f lows;
the effect of future accounting standards not yet adopted;
the disclosure of the remuneration of key management personnel; and
disclosure of related party transactions with wholly owned fellow group companies
In addition, and in accordance with FRS 101 further disclosure exemptions have been adopted
because equivalent disclosures are included in the consolidated f inancial statements of
Joules Group plc. These f inancial statements do not include certain disclosures in respect of:
•
•
•
share based payments;
business combinations;
f inancial instruments (other than certain disclosures required as a result of recording
f inancial instruments at fair value);
•
fair value measurement (other than certain disclosures required as a result of recording
f inancial instruments at fair value).
As permitted by section 408 of the Companies Act 2006, the prof it and loss account is not
presented. The loss for the year amounted to £19,400.
The f inancial statements have been prepared under the historical cost convention.
The principal accounting policies adopted are the same as those set out in note 1 to the
consolidated f inancial statements except as set out below.
Investments
Fixed asset investments are stated at cost less provisions for diminution in value.
Going Concern
Going concern for the company has been considered along with the group by the directors. The
consideration is set out in note 1 of the consolidated f inancial statements.
Note s to the Co mpan y Financial St at em e nts 79
2.
INVESTMENTS
Cost and Net Book Value
At 29 May 2016
£ ’00 0
139,980
On 26 May 2016 Joules Group plc acquired the entire share capital in Joules Investments
Holdings Limited.
Joules Group plc acquired Joules Investments Holdings Limited as set out below:
•
On 26 May 2016 certain shareholders of Joules Investments Holdings Limited transferred
their shares to Joules Group plc in exchange for 57,193,545 ordinary £1.60 shares,
with a nominal value £91,509,672.
•
On 26 May 2016 certain shareholders of Joules Investments Holdings Limited
transferred their shares to Joules Group plc in exchange for cash, with a settlement
value, of £145,568.
•
On 26 May 2016 Joules Group plc issued 23,130,400 ordinary £1.60 shares, with a total
nominal value of £37,008,644. The shares were issued in order to settle the existing loan
notes which had a book and fair value of £37,008,644. In substance this forms part of the
cost of the investment in Joules Investments Holdings Limited, free of shareholder loan
note debt.
•
On 26 May 2016 Joules Group plc used the funds generated from the initial public offering
to settle the shareholder loan note debt in Joules Group plc of £11,316,364. In substance
this is part of the cost of the investment in Joules Investments Holdings Limited, free of
shareholder loan note debt.
The company subsidiaries, as at the period end are shown in note 9 of the consolidated
f inancial statements. All subsidiaries have been in existence for the whole of the
reporting period.
3.
DEBTORS
Other debtors
4.
CALLED UP SHARE CAPITAL
Allotted and issued
87,499,796 Ordinary shares of £0.01 each
2 9 MAY 2 01 6
£ ’00 0
1
2 9 MAY 2 01 6
£ ’00 0
875
The company was incorporated on 1 May 2016, upon incorporation the company issued
1 Ordinary B share of £827.22 at par.
On 26 May 2016 the shareholders of Joules Investments Holdings Limited transferred their
shares to Joules Group plc in exchange for new shares issued by Joules Group plc, the
new shares issued by Joules Group plc mirrored the shares transferred by the previous
shareholders of Joules Investments Holdings Limited.
The share capital issued as part of this share for share exchange consisted of 138,188 shares
of varying classes with a nominal value of £91,508,871. The varying classes were then converted
to a single class of ordinary share in Joules Group plc. The Company then had
a share capital of 57,193,545 ordinary £1.60 shares, with a nominal value £91,509,672.
80 Note s to the Compa ny F ina nc ia l St at em e nt s
4.
CALLED UP SHARE CAPITAL (Continued)
On 26 May 2016 Joules Group plc issued 23,130,400 ordinary £1.60 shares, with a total nominal
value of £37,008,644. The shares were issued in order to settle the existing loan notes which
had a book and fair value of £37,008,644.
On 26 May 2016 Joules Group plc (when legally still Joules Group Limited) entered into a
capital reduction, converting the 80,323,945 ordinary £1.60 shares into 80,323,945 ordinary
£0.01 shares. The reduction in share capital of £127,715,102 was transferred to retained earnings.
On 26 May 2016 in an initial public offering Joules Group plc issued 7,175,851 ordinary
£0.01 shares at a price of £1.60, resulting in an increase in share capital of £71,758 and
share premium of £11,409,603.
All ordinary shares carry equal rights.
5.
SHARE PREMIUM
The share premium reserve contains the premium arising on the issue of equity shares,
net of issue expenses incurred by the company. On 26 May 2016 in an initial public offering
Joules Group plc issued 7,175,851 ordinary £0.01 shares at a price of £1.60, resulting in share
premium of £11,409,603.
Balance at 29 May 2016
6.
SHARE BASED PAYMENTS
£ ’00 0
11,410
Details of the share options in existence are shown in note 30 of the consolidated
f inancial statements.
7.
RELATED PARTY TRANSACTIONS
The Company has taken advantage of the disclosure of related party transactions with wholly
owned fellow group companies. Related party transactions with key management personnel
(including Directors) are shown in note 27 of the Consolidated Financial Statements.
C O M P A N Y I N F O R M A T I O N
J O U L E S G R O U P P L C
Comp an y Information 81
JOULES GROUP plc
NOMINATED ADVISER & BROKER
Registered in England and Wales number: 10164829
Peel Hunt LLP, Moor House,
COMPANY SECRETARY
Jonathan William Dargie
REGISTERED OFFICE
Joules Building, The Point,
Rockingham Road, Market Harborough,
Leicestershire, LE16 7QU
WEBSITE
w w w.joulesgroup.com
120 London Wall,
London, EC2Y 5ET
BROKER
Liberum Capital Limited
Ropemaker Place, Level 12,
25 Ropemaker Street,
London, EC2Y 9LY
CORPOR ATE PR
Hudson Sandler
29 Cloth Fair,
London, EC1A 7NN
LEGAL ADVISORS TO THE COMPANY
Eversheds LLP,
115 Colmore Row,
Birmingham, B3 3AL
AUDITOR
Deloitte LLP,
1 Woodborough Road,
Nottingham, NG1 3FG
REGISTR ARS
Equiniti Limited, Aspect House,
Spencer Road,
Lancing, BN99 6DA