P U T T I N G I T
I N P R I N T
A N N U A L R E P O R T & A C C O U N T S 2016/17
t h e c o l o u r f u l s t o r y c o n t i n u e s
P U T T I N G I T
I N P R I N T
A N N U A L R E P O R T & A C C O U N T S 2016/17
t h e c o l o u r f u l s t o r y c o n t i n u e s
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.
Note: The f inancial information contained in this document, including the f inancial information presented in a number of tables in this document, has been
rounded to the nearest whole number or the nearest decimal place. Therefore, the actual arithmetic total of the numbers in a column or row in a certain table
may not conform exactly to the total f igures given for that column or row. In addition, certain percentages presented in the tables in this document ref lect
calculations based upon the underlying information prior to rounding, and accordingly, may not conform exactly to the percentages that would be derived if the
relevant calculations were based upon the rounded numbers.
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 - 17
18 - 20
22 - 23
24 - 27
30
31 - 33
34 - 35
36
37 - 44
46 - 47
49
52 - 53
54
54
55
56
57
58 - 85
88
89
90 - 92
93
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
Broker:
Liberum Capital Limited, Ropemaker Place, Level 12, 25 Ropemaker Street, London, EC2Y 9LY
Corporate PR:
Hudson Sandler, 29 Cloth Fair, London, EC1A 7NN
Legal Advisors:
Eversheds LLP, 115 Colmore Row, Birmingham, B3 3AL
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. Website - w w w.joulesgroup.com.
2 Hi gh li ghts
Highlights 3
H I G H L I G H T S
•
•
•
•
•
•
•
Revenue increased by 19.6% to £157.0 million
(18.6% constant currency)
Underlying 1 Profit Before Tax increased by 34.0% to
£10.1 million
Underlying EBITDA 2 increased by 25.3% to £16.9 million
Underlying basic EPS increased by 33.3% to 9.2 pence
Gross margin increased by 190 basis points to 55.4%
Active 3 customers increased by 14% to 907,000
International revenue increased by 36.2%
(29.6% constant currency) - now representing
11.5% of Group revenue
•
Final dividend of 1.2 pence per share proposed
1. Underlying excludes exceptional and non-recurring items, primarily related to the cost
of admission to AIM and the capital structure in place prior to admission and the expense
of share based compensation awards introduced following the IPO.
2. EBITDA is a non-GAAP measure, a reconciliation is provided in the Financial Review.
3. Active customer is a customer on our database who has made a transaction
in the last 12 months. Prior periods are restated to exclude customers registered via
third party websites and for data cleansing enhancements.
Reconciliation to statutory profit before tax:
£MILLION
FY17
FY 16
Underlying profit before tax
IPO transaction costs
Shareholder loan note interest
Exceptional asset impairment
Share based compensation
Other non-recurring items
Statutory profit / (loss) before tax
10.1
(0.3)
-
-
(0.8)
-
8.9
7.5
(2.7)
(5.6)
(0.3)
-
(0.1)
(1.2)
4
O U R V A L U E S
T h e fo l l o w i n g v a l u e s a r e t h i n g s w e h a ve a l w a y s s t o o d fo r a n d
a r e t h i n g s w e ’ l l a l w a y s s t a n d fo r i n e ve r y t h i n g w e d o .
C O L O U R
F A M I LY
“ M a k i n g t h e o r d i n a r y e x t r a o r d i n a r y .
“ S u p p o r t i v e a n d l o y a l .
O u r u n i q u e u s e o f c o l o u r i s w h a t
J o u l e s s t a r t e d a s a fa m i l y
h a s m a d e J o u l e s s t a n d o u t f o r t h r e e
b u s i n e s s a n d h a s g r o w n i n t o a
d e c a d e s – a n d i s s t i l l w h a t m a k e s
t r u e fa m i l y l i f e s t y l e b r a n d .”
J o u l e s s t a n d o u t t o d a y .”
H U M O U R
Q U A L I T Y
“ R a i s i n g a s m i l e .
“ T r i e d a n d t r u s t e d .
B e i n g B r i t i s h , w e h a v e a u n i q u e
I t ’s h a r d t o d e f i n e t h e m e a n i n g
s e n s e o f h u m o u r a n d w e n e v e r
o f q u a l i t y, b u t w h e n y o u p i c k u p o n e
t a k e o u r s e l v e s t o o s e r i o u s l y .”
o f o u r g a r m e n t s , y o u’ l l k n o w.”
B R I T I S H
“ I t ’s w h o w e a r e .
We c e l e b r a t e B r i t i s h n e s s i n a m o d e r n
w a y, i n a w a y t h a t s h o w s r e a l
u n d e r s t a n d i n g o f o u r c u s t o m e r s , t h e i r
d r e a m s , c h a l l e n g e s a n d a s p i r a t i o n s .”
5
“ T h is colou r f u l pr i nt
wa s h a nd-pa i nted
i n watercolou r
a nd we used br ig ht
pops of colou r
to m a ke it
contempor a r y
a nd v ibr a nt .”
C H A P T E R
1S T R A T E G I C
R E P O R T
Sit t i ng P ret t y
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
I am delighted to update the Group’s stakeholders on
The brand’s strong momentum during the year, coupled
what has been another very good year for the Joules
with continued cost control and margin improvement,
brand. This is the Group’s f irst full f inancial year as a
has enabled the Group to record strong growth in prof it
public company and we have continued to make great
before tax for the Period. We are very pleased with
progress by further expanding Joules as a premium
this result, which ref lects the growing appeal of the
lifestyle brand across product categories, distribution
Joules brand as well as the careful execution of our clear
channels and geographic markets.
growth strategy.
Chairman’s Statement 9
STR ATEGIC PROGRESS
Joules has a distinctive brand and unique product
The Board has proposed a f inal dividend of 1.2 pence per
proposition. These qualities, supported by our
share, which if approved at the shareholder’s AGM, will
f irst-class team across the Group, represent our
take the dividend for the full year to 1.8 pence per share
strongest competitive advantages in what is a
(FY16: nil).
fast-changing and challenging retail environment.
The Strategic Report and Financial Review that follow
We remain committed to our focused growth strategy
provide a more in-depth analysis of the trading
to deliver the disciplined development and expansion of
performance and f inancial results of the Group.
the Joules brand. At the same time we are challenging
ourselves to explore new growth opportunities, f ind
OUR TEAM
new ways to delight our customers and operate ever
more eff iciently. The Chief Executive’s Strategic Report
provides further details on our growth strategy and the
progress made during the year.
Central to Joules’ continued success is our fantastic
team of highly skilled, creative and driven people
across the business. I never cease to be proud of the
shared commitment to the brand and our customers
The internet and new consumer technologies are
which runs through the entire team at Joules, from
changing the retail environment in exciting ways and
our head off ice to the stores, distribution centres and
creating new opportunities for brands and retailers.
across international markets. I would like to take this
Joules now has more, and better, methods than
opportunity to thank everyone in the Joules team across
ever before to engage and connect with its growing
the world for their continued hard work and dedication
community of customers. At the same time, customers’
during this outstanding year for the business.
expectations of brands are changing and the requirement
to provide a seamless and satisfying experience across
THE FUTURE
all channels at all times has never been more important.
As a truly multi-channel brand with an innovative culture
and very strong customer connection, I am conf ident
that Joules will continue to grow, adapt and prosper in
this dynamic market whilst always remaining true to its
core values, and providing customers with the quality
products and experiences we are known and loved for.
FINANCIAL RESULTS & DIVIDEND
Group revenue of £157.0 million increased by 19.6%
compared to the prior period (FY16: £131.3m).
Excluding the impact of currency, Group revenue grew
by 18.6% in the period. This ref lects strong growth
in both the Retail and Wholesale segments. On a
geographic basis, UK sales increased 17.8% to
£139.0 million and International sales increased 36.2% to
£18.0 million, now representing 11.5% of Group revenue.
Underlying prof it before tax increased by 34.0% to
£10.1 million, and basic underlying EPS was 9.2 pence
per share (FY16: 6.9 pence).
We have seen good growth in the f irst few weeks of
our new f inancial year and have received positive early
feedback on our Spring/Summer 2018 ranges from our
wholesale customers.
The short to medium-term headwinds facing UK retailers
are well documented. In particular, the f inal outcome of
the UK’s decision to leave the European Union remains
unclear and, as a consequence, the specif ic macro-
economic effects remain diff icult to predict. However,
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 substantial investment that has been made in the
Group’s infrastructure and supply chain.
We have a loyal and engaged customer base, a committed
and enterprising team and a well-invested infrastructure.
These qualities make us conf ident 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
CHIEF EXECUTIVE OFFICER’S STR ATEGIC REPORT
OUR BUSINESS MODEL – BORN TO BE MULTI-CHANNEL
FY17 was another very exciting year for Joules as
Joules was established as a multi-channel brand.
the brand continued to expand across distribution
Our distribution model enables our customers to easily
channels and product categories both in the UK and
engage with the Joules brand and to discover our
internationally. The strong progress delivered during
products, shop, pay and collect their purchases in the
the year was again underpinned by our focus on our
way that suits their lifestyle.
customers and our dedication to provide quality
products and engaging experiences across all channels.
THE JOULES BR AND
This multi-channel approach is ref lected in the Group’s
revenue mix between our two key, complementary
distribution channels: Retail (including stores,
e-commerce and the country shows and events circuit)
Ever since Tom Joule established the Joules brand
and Wholesale. The Group has a small but growing
nearly three decades ago, Joules has been committed
product licencing channel which, given the strength
to surprising and delighting its growing community of
of the Joules brand, we are conf ident will become
customers with a sense of quirky Britishness. The Joules
increasingly important over time.
brand remains distinctive not only for its exciting use of
colour, proprietary hand-drawn prints and unexpected
details but also for its values that truly connect with
our customers. We aim to be an uplifting part of our
customers’ lives whenever they are spending quality time
doing the things they love with the people who matter.
These complementary routes to market underpin our
focused growth strategy. Being truly multi-channel
enables the Group to expand its product offering,
enter new markets eff iciently and exploit further
growth opportunities within existing ones while
always maintaining f lexibility to meet and exceed our
The brand’s continued expansion and success was
customers’ changing needs.
recognised at the 2016 Drapers Awards where Joules
won Mainstream Brand of Year against strong
competition from other leading lifestyle brands. This
award represents a strong stamp of approval from the
fashion industry for our brand and our talented and
enterprising team.
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
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 key pillars described below and is underpinned by our distinctive
brand, unique products and customer focus. These pillars of growth are delivered by our exceptional team of people,
supported by a well-invested infrastructure and supply chain.
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 through providing consistent and relevant
cross-channel communication
2 DRIVE TOTAL UK BR AND SALES - as a multi-channel brand, we seek to grow total UK brand sales within target
customer segments by increasing the availability and accessibility of our products across existing and emerging
distribution channels - making it easy for our customers to discover, research, purchase and receive our products.
Our priorities are:
•
STORE ROLL-OUT - there is signif icant further growth potential for the brand in the UK and ROI. We target
a net 10 to 12 new stores per year in the medium-term as well as relocating a number of existing stores to larger
sites that better ref lect our brand and product range
•
E-COMMERCE – e-commerce is a fast growing and rapidly evolving channel. With ongoing enhancements to our
e-commerce platform, the customer proposition and our customer management capability, we aim to increase
the mix of e-commerce sales as a proportion of our total retail sales
• WHOLESALE – we broaden the reach of the Joules brand through wholesale customers that are closely
aligned with our brand values and product categories - including independents, department stores and online
retailers. Our wholesale capabilities position us well for emerging channels such as online marketplaces and
‘Fulf illed by’ models
3. INTERNATIONAL EXPANSION - the Joules brand and products resonate well in international markets. We develop
international markets via a wholesale model supported by e-commerce, leveraging our investment in central creative
and design functions and our infrastructure. Our current priority markets are 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, both organically and through working with carefully selected licence partners
STRATEGIC PILLARS - PRIORITIES AND DEVELOPMENTS
1. INCREASING CUSTOMER VALUE:
•
•
•
•
•
Maintained average customer frequency and transaction
value whilst signif icantly growing the customer base
Maintained customer acquisition cost levels
Increased targeted customer offers and personalisation
of the online proposition
Increased the number of store based customer events
including VIP and new store opening events
Appointed f irst Chief Customer Off icer in September 2016
Chief Executive’s St rat egic Rep ort 13
2. DRIVE TOTAL UK BR AND SALES:
•
•
•
•
New stores: opened 13 new stores and closed two stores
in the year
Portfolio management: relocated three stores and
expanded a further three stores
E-commerce revenue: represented 35% of total
retail sales
E-commerce proposition: new payment options and site
personalisation deployed in the year – helping drive
improved conversion metrics
•
Cross-channel: ‘Order in Store’ roll-out completed in
H1 enabling store staff to place a customer order via
a tablet device, facilitating access to our full product
range in all stores
• Wholesale: Next Label converted to a ‘commission’ model.
Continued strong growth in the independent specialist
retailer channel
3. INTERNATIONAL EXPANSION:
•
•
•
•
•
International revenue grew at 36.2%
(29.6% constant currency)
Launched Childrenswear range in 55 Dillards
department stores in the US
Extended number of doors and product categories
with Nordstrom
Further strengthened the team based in our
New York showroom
Gave notice to terminate arrangement with the
third party distributor in the US - over 600
independent stockists to be managed in-house
from Spring/Summer 2018
•
Germany f ield accounts increased to over
400 stockists
4. PRODUCT EXTENSION:
•
Childrenswear category further developed
with specif ic ranges for baby and younger
and older age children
• Women’s leather footwear launched with
a range of Chelsea boots
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
K E Y P E R F O R M A N C E I N D I C A T O R S
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.
STRATEGIC KP I s
NUMBE R OF STORES
INTERNATIONAL AS % OF TOTA L R EVE NUE
F Y14
F Y15
F Y16
F Y17
80
F Y14
5 . 8 %
91
F Y15
9.1%
97
F Y16
10.1%
108
F Y17
11.5%
TOTAL SEL LING SPACE (SQ FT)
ACTIVE CUSTOMER NUMBERS 1
F Y14
84,500
F Y14
509,000
F Y15
F Y16
F Y17
100,000
F Y15
593,000
111,000
F Y16
799,000
135,000
F Y17
907,000
Chie f Executive’s Strategic Re p ort 15
OUR FINANCIAL KPIs:
Our financial KPIs have been selected to complement our strategic KPIs and ref lect our objective to deliver sales growth
across channels and profit growth at a faster rate than sales growth, whilst delivering a strong return on our capital
investments. Our financial KPIs, and their rationale, are:
•
•
•
•
Revenue by channel - delivering balanced growth across our core sales channels
Group gross margin - maintaining overall product level profitability whilst developing international wholesale markets
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
FINANCI AL KPI s
RE VENUE BY C HANNEL 4 £M
GROUP GROSS MARGIN %
16 0
14 0
12 0
10 0
8 0
6 0
4 0
2 0
0
31.6
25.8
37.2
30.1
52.4
58.2
26.9
23.9
39.3
44.8
38.9
68.3
56.0
55.5
55.0
54.5
54.0
53.5
53.0
52.5
52.0
55.0%
55.4%
53.3%
53.5%
FY1 4
FY15 2
FY16
FY17
FY14
FY15
FY16
FY17
S T O R E S
E - C O M M E R C E
W H O L E S A L E
UNDERLYING E BITDA MARGIN %
ROCE 3 %
10.8%
10.3%
11. 0
10. 5
10. 0
9. 5
9. 0
8. 5
8. 0
9 .5 %
9.0%
35
30
25
20
15
10
5
0
31.9%
32.2%
27.3%
23.9%
FY1 4
FY15
FY16
FY17
FY14
FY15
FY16
FY1 7
FY14
FY15
FY16
FY17
1Active customer def ined as a customer who is registered on our database and has transacted within the last 12 months. Prior periods
are restated to exclude customers registered via third party websites and for data cleansing enhancements.
2FY15 was a 53 week period.
3Return 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).
4Revenue by channel excludes shows and licencing.
16 Chi ef Executive’s S tra tegic Rep 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 R E V I E W
RETAIL: MULTI-CHANNEL PROGRESS
WHOLESALE: UK AND INTERNATIONAL EXPANSION
Retail sales, which includes stores, e-commerce and
Wholesale revenue experienced further good growth,
shows, grew by an impressive 19.4% during the year
up by 20.3% (17.6% in constant currency) year on year to
(19.4% in constant currency). This ref lected good growth
£44.8 million (FY16: £37.2m), as the Joules brand continues
from both stores and e-commerce, which increased by
to resonate strongly with wholesale customers both in the
29.4% to now represent 34.8% of total retail revenue
UK as well as within our targeted international markets:
(FY16: 32.1%).
North America and Germany.
The Group’s store coverage across the UK and ROI
In the UK, wholesale expansion was driven through
continued to expand to 108 stores at the end of the period
both national multi-channel retailers such as John
(FY16: 97). We opened 13 stores and closed two, with 10
Lewis and Next Label as well as through smaller,
of the net new stores being opened during the first half
independent specialist retailers that have a good fit
of the year. This expansion was in line with our previous
with the Joules brand.
guidance of 10-12 net new stores for the year. During
the period we also relocated three stores and extended a
further three to provide larger sites that better ref lect the
Joules brand proposition, showcase our product range, and
enable multi-channel activities such as ‘Click & Collect’
and ‘Order in Store’.
Strong international wholesale growth helped to drive
international sales (including international retail) up 36.2%
(29.6% in constant currency) and they now represent 11.5%
of total Group revenue. This growth was underpinned
by our proprietary hand-drawn prints, colour and British
character as the Joules brand continues to resonate in
This activity resulted in total selling space increasing
international markets.
to 135,000 square feet (FY16: 111,000 square feet) at the
Period end. The new openings were spread across our
different store location types ref lecting the breadth of
appeal of the Joules brand:
In the US, we further expanded our presence in key
department stores, with Dillards launching childrenswear
for the Autumn/Winter 2016 season and Nordstrom
increasing Joules’ product range listings and the number
•
•
•
Lifestyle - Barnstaple;
of doors in response to customers’ appetite for the brand.
Local – Ashbourne, Ludlow, Woodbridge and Bishops
We continue to see exciting growth opportunities for the
Stortford;
brand in the US market and during the year we started the
High Street - Chelmsford and Stratford-upon-Avon;
process to bring the management of over 600 independent
• Metro – Leeds, Derby, Bromley and Plymouth;
stockist accounts in-house, following the termination of
•
Premium Outlet - Swindon and Bridgend.
our agreement with the third-party distributor that had
previously been serving this channel. This new way of
working will become effective from the Spring/Summer
2018 season and, under the management of our New York
based sales and marketing team, will provide us with
greater control over the long-term growth of the brand
within the US.
In Germany we continued to perform in line with
expectations and experienced good growth in the
independent retailer segment where we now have
over 400 stockists.
The average payback on new stores, opened for more
than one year, remained at less than 12 months, and all
continuing stores delivered a positive contribution.
The Group continued to develop its online offering
following the successful relaunch of the e-commerce
platform in September 2015. In the period we added
new functionality making it easier for our customers
to shop and pay and continue to increase the use of
personalisation. Traffic from mobile and tablet devices
continued to grow, representing over 75% of the total
number of visitors and we continued to see improved
conversion rates. ‘Click & Collect’ and ‘Order in Store’
– where we completed the roll-out to stores in the first
half of the year - continue to prove popular with our
customers and demonstrate the importance of our multi-
channel model and ability to deliver an integrated and
consistent experience across channels.
Chie f Executive’s Strategic Re p ort 17
DEVELOPMENT AS A LIFESTYLE BRAND
Joules delivered sales growth across product categories
One of Joules’ key competitive advantages is our very
with a particularly strong performance in the core
strong customer connection and their engagement with the
womenswear category – with our distinctive and colourful
Joules brand. During the year we appointed our first Chief
“Right as Rain” outerwear and “Warm Welcome” coats and
Customer Officer to help further develop our capability in
gilets all proving particularly popular with our customers.
this area and to increase brand awareness, customer loyalty
Further development of our footwear and childrenswear
and value across all channels.
categories also contributed to the strong growth.
We continued to progress the development of our
PLATFORM FOR LONG TERM GROWTH
childrenswear range from baby through to toddler,
The Group’s strategy and focus is aimed towards the long
younger and older girls and boys. Notable highlights in
term and sustainable development of the Joules brand. We
the year included our colourful ponchos, fun applique
continue to invest in our stores, infrastructure, systems
tops and beautifully designed dresses. Our childrenswear
and people to deliver this.
range is becoming increasingly popular with our
international customers.
During the year we invested in our US operations by
strengthening our US wholesale sales team, trade
Our footwear offer continued to expand with good growth
showroom and IT systems. This has supported the
from our very popular leather Chelsea boot range and an
development of new and existing department store
increased range of wellington boot styles and designs.
accounts during the year as well as facilitating the
Whilst licencing remains a small contributor to the Group,
we are focused on continuing to build the brand through
careful expansion with licensed partners for home -
transition of managing the independent stockist channel
in-house, which we are confident will support our long
term growth in the US market.
including bedding; toiletries; and eyewear. These product
Phase two of our company-wide ERP replacement
categories continue to perform well and highlight the
programme continued through the year, with migration
exciting licence income potential available to the brand
to the Microsoft Dynamics AX ERP platform scheduled
where we are able to identify opportunities that appeal to
for FY18. This represents a significant investment for the
our customers and align with Joules’ distinctive values.
Group and will bring benefits including enhanced stock
management across channels, process efficiencies and
CUSTOMER ENGAGEMENT
simplification of the IT environment.
Joules has a loyal and highly engaged customer community.
The creativity, skill and commitment of the Joules team
Active customers, defined as customers who have
are key to the brand’s continued success. We continue to
purchased in the last twelve months, increased 14% against
invest in skills and people development in all areas of the
the prior year to 907,000 supported by effective marketing
business including our customer facing colleagues and team
and CRM campaigns, and our total customer database now
leaders across the business.
stands at 2.5 million. One example of a customer campaign,
was our hugely successful ‘pass the parcel’ competition
which we ran on the Joules Facebook channel in December
2016. The campaign encouraged potential and existing
customers to unwrap a virtual present to potentially win a
prize including a weekend stay at The Watergate Bay Hotel
as well as Joules goodies. Customers were able to ‘pass the
parcel’ onto a friend through social media, attracting new
prospective customers to the brand.
Since the year-end we have completed the acquisition
of the freehold for a new head office premises. The new
site, which is located very close to our existing head
office in Market Harborough, includes an existing 30,000
square foot office building and development land to
support future growth. We expect to commence partial
occupation towards the end of FY18 following a period of
refurbishment. This investment will further strengthen
our brand values and culture and create a f lexible space
Another notable and successful multi-channel campaign
to support modern ways of working across our head office
was our ‘win a Joules caravan’ competition that ran from
teams. It is an important step to support the next phase
February to April 2017 and attracted approximately 135,000
of growth whilst solidifying our local roots and heritage.
new and existing customers to take part and enter a
prize draw to win a luxury caravan decorated externally
with Joules prints and kitted out inside from the Joules
COLIN PORTER
homeware and bedding range. The campaign, which
Chief Executive Officer
attracted a lot of social media engagement, was run on
Facebook, the Joules website and by pitching the caravan
at several of our country shows and events.
18 Financial Rev iew
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
PROFIT BEFORE TA X - UNDERLYING AND STATUTORY
Underlying prof it before tax (‘PBT’) was £10.1 million for
To provide a meaning ful year-on-year comparison these
the 52 weeks to 28 May 2017, an increase of 34.0% on the
items have been excluded from the underlying results
prior period. Statutory PBT including exceptional IPO
reported in the front section of the Annual Report.
transaction costs and share based compensation was
£8.9 million (FY16: £(1.2)m).
As detailed in the IPO Admission Document, executive
and employee share based compensation plans have been
EARNINGS BEFORE INTEREST, TA X, DEPRECIATION &
established with the f irst awards made in the current
AMORTISATION (‘EBITDA’)
f inancial period. Further detail on the plans is contained
Underlying EBITDA increased by 25.3% to £16.9 million
(FY16: £13.5m). The underlying EBITDA margin increased
by 50 basis points from 10.3% to 10.8%.
UNDERLYING AND STATUTORY RESULTS
During the prior period there were some costs that were
exceptional or non-recurring in nature. These items
related primarily to the IPO and to the capital structure
that was in place prior to the IPO.
within the Director’s Remuneration Report and the
Consolidated Financial Statements. In accordance with
IFRS 2, the expense related to the plans is accounted
for within administrative expenses. As the share plan
cycle matures over the three years following the IPO, the
related expense is treated as non-Underlying to provide
meaning ful year-on-year comparability.
A reconciliation between Underlying and Statutory
(GA AP) results is provided below.
52 WEEKS ENDED 28 MAY 2017
52 WEEKS ENDED 29 MAY 2016
SHARE BASED
IPO
COMPENSATION
IPO
NO N -
£MIL L ION
UNDERLYING
COSTS
INCLUDING NI
REPORTED
UNDERLYIN G
COSTS
REC URRING
REPOR TED
Revenue
Gross profit
157.0
87.1
-
-
-
-
157.0
87.1
131.3
70.3
Admin expenses
(76.7)
(0.3)
(0.8)
(77.9)
(62.3)
Operating profit
Net finance costs
Profit before tax
Operating profit
Depreciation & Amortisation
EBITDA
10.3
(0.2)
10.1
10.3
6.6
16.9
(0.3)
(0.8)
-
-
(0.3)
(0.8)
(0.3)
-
(0.8)
-
9.2
(0.2)
8.9
9.2
6.6
(0.3)
(0.8)
15.8
8.0
(0.5)
7.5
8.0
5.5
13.5
-
-
(2.7)
(2.7)
-
(2.7)
(2.7)
-
(2.7)
-
-
131.3
70.3
(0.4)
(65.4)
(0.4)
(5.6)
(6.0)
(0.4)
0.4
4.8
(6.0)
(1.2)
4.8
5.9
(0.0)
10.7
Fin an cial Rev iew 19
REVENUE
ADMINISTR ATIVE EXPENSES - UNDERLYING
Group revenue increased by 19.6% to £157.0 million from
Underlying administrative expenses increased by
£131.3 million in FY16 (up 18.6% on a constant currency
23.2% from £62.3 million to £76.7 million and were
basis), with Retail revenue increasing by 19.4% and
48.9% of revenue (FY16: 47.4%). During the year we
Wholesale revenue increasing by 20.3% (up 17.6% on a
increased investment in customer acquisition and
constant currency basis). Sales in International markets,
digital marketing, the results of which are ref lected in
which are predominantly Wholesale, increased by 36.2%
the e-commerce channel performance and our active
(29.6% on a constant currency basis) and now represent
customer numbers at the year end. Administration
11.5% of Group revenues (FY16: 10.1%).
expenses in the period included the full year impact
Retail - Stores
Store revenue at £68.3 million increased by 17.5%.
During the year we opened 13 new stores and closed two
of investments made to strengthen several head off ice
functions in the second-half of the prior year as well as
the f irst year of post-IPO cost base.
stores, resulting in an increase in store numbers from 97
The total rental expense, including service charges,
to 108. We also relocated three stores and extended a
for the period was £11.7 million (FY16: £9.3m) with the
further three. We had three franchises at the end of
increase due to new store openings, an increase in the
FY17 (FY16: 3).
Retail – E-commerce
E-commerce revenue at £38.9 million increased by 29.4%
UK distribution centre rent, following a rent review at the
start of FY17, the prior year relocation of our Shanghai
sourcing off ice and New York showroom expansion.
and was 34.8% of total Retail revenue (FY16: 32.1%).
Underlying depreciation and amortisation increased to
The E-commerce channel continued to benef it from
£6.6 million (FY16: £5.5m) following the completion of
more visitors and higher conversion following the prior
the f irst phase of the Enterprise Resource Planning (ERP)
year re-launch of the content rich, mobile optimised
programme in the prior period and the impact of our new
website, as well as from further customer facing website
store opening and relocation programme.
enhancements and ongoing new customer acquisition
and retention activity.
Wholesale
ADMINISTR ATIVE EXPENSES – NON-UNDERLYING
Non-underlying administrative expenses totalled
Wholesale revenue at £44.8 million increased by 20.3%
£1.1 million (FY16: £3.1m). This included IPO transaction
(17.6% on a constant currency basis). Good revenue
related costs of £0.3 million (FY16: £2.7m), share based
growth was seen in the UK and in international markets;
compensation expense of £0.8 million (FY16: £nil) and
and across the larger ‘house account’ and the smaller
non-recurring costs of £nil (FY16: £0.4m).
‘f ield account’ customer bases.
GROSS MARGIN
Share based compensation expense, accounted for in
accordance with IFRS 2, includes the anticipated expense
in relation to the first cycle of the Company’s new share
Gross margin at 55.4% was 190 basis points higher than
plan arrangements, including awards made under the Long
the prior year. Our commercial and buying activity;
Term Incentive Plan 2016, Deferred Bonus Plan and the all-
supported with volume growth, enabled us to offset the
employee Save as You Earn (SAYE) Scheme. These plans
impact of weaker Sterling, relative to the US Dollar, and
are detailed more fully in the Directors’ Remuneration
maintain overall intake margins. The revenue growth
Report and the Consolidated Financial Statements.
and gross margin improvement within our Retail segment
more than offset the dilutive impact of our growing
NET FINANCE COSTS - UNDERLYING
international wholesale business. Within the Retail
segment, gross margin benefited from our increased focus
on optimising full price sales and promotional activity.
Underlying net f inance costs of £0.2 million (FY16: £0.5m)
related to interest and facility charges on the Group’s
revolving credit facility with Barclays Bank Plc.
20 Fi nancial Rev iew
F I N A N C I A L R E V I E W
C O N T I N U E D
NET FINANCE COSTS - NON-UNDERLYING
Non-underlying net f inance costs totalled £nil
Following approval by shareholders at the AGM on
(FY16: £5.6m). The prior year f igures consisted
27 September 2017, the dividend is expected to be paid
primarily of interest on shareholder loan notes of £4.7
on 16 November 2017 to shareholders on the register at
million and amortisation of the loan note arrangement
27 October 2017.
fee of £0.9 million. The shareholder loan notes were
converted to equity immediately prior to the IPO.
CASH FLOW AND CASH POSITION
TA X ATION
Net cash f low from operating activities was £14.4 million
(FY16: £16.9m) including a net working capital outf low of
The tax charge for the period was £2.6 million
£0.9 million (FY16: inf low £7.1m).
(FY16: £0.6m). The effective tax rate was 28.8%.
This was higher than the applicable UK corporation
tax rate of 19.8% for the period due to the impact of
non-deductible expenses including IPO costs and
non-deductible amortisation and depreciation.
EARNINGS PER SHARE AND DIVIDEND
Statutory basic earnings per share for the period
were 7.3 pence per share (FY16: -2.0 pence per share).
Statutory diluted earnings per share for the period were
7.2 pence per share (FY16: -2.0 pence per share). On an
underlying, pro forma basis the FY17 basic earnings per
share were 9.2 pence (FY16: 6.9 pence).
To facilitate meaning ful comparison of earnings per share
the weighted average number of shares in issue has been
restated on a pro forma basis to ref lect the post-IPO
capital structure. The pro forma assumes that the number
of shares in issue post-IPO were in issue throughout.
Earnings are adjusted for the non-underlying items
detailed above and to ref lect the statutory tax rate.
FY16
7.5
£MILLION
PBT - Underlying
Statutory tax rate
Tax - Underlying
Earnings - Underlying
Shares - Pro forma (million)
Underlying Basis EPS - Pence
Shares - Pro forma Diluted (million)
Underlying Diluted EPS - Pence
FY17
10.1
19.8%
(2.0)
8.1
87.5
9.2
88.0
9.2
The Group ended the period with net cash of
£6.3 million (FY16: £3.2m) an improvement of
£3.1 million in the period. Gross cash was £7.0 million
(FY16: £9.3m) and borrowings were £0.6 million (FY16:
£6.1m), which includes borrowings under the Group’s
revolving credit facility and asset f inance loans.
The Group has access to a £25 million revolving credit
facility provided by Barclays Bank Plc to fund seasonal
working capital requirements. Subsequent to the
year-end, this facility was extended by 14 months and
now matures in July 2021.
INVENTORY
Inventory at year-end was £21.2 million (FY16: £19.3m). The
increase in inventory ref lecting the growth in the business.
CAPITAL EXPENDITURE
Investment in property, plant, equipment and intangible
assets totalled £10.7 million in FY17 (FY16: £7.1m).
Major areas of expenditure in the year were new store
openings and relocations and investment in our core
IT infrastructure including phase two of our ERP
implementation programme and ongoing enhancements
20.0%
to our customer facing website.
(1.5)
6.0
87.5
6.9
88.0
6.8
ACQUISITION OF FREEHOLD OFFICE
Subsequent to the year-end, in July 2017, the Group
completed the acquisition of freehold land and 30,000
square foot off ice building for £4.4 million including
fees and stamp duty. The off ice building is intended
for use as the Group’s head off ice following a period
of refurbishment. The acquisition was part f inanced
The Board is recommending a f inal dividend of 1.2 pence
through a new £3.5 million, f ive-year term loan facility
per share in respect of FY17 (FY16: nil pence per share).
arranged with Barclays Bank Plc.
This brings the total dividend for FY17 to 1.8 pence per
share (FY16: nil pence per share).
22 Pri ncipal Risks and Unc erta int ies
P R I N C I P A L R I S K S a n d U N C E R T A I N T I E S
J O U L E S G R O U P P L C
Set out below are the principal risks and uncertainties
The Board also recognises that the nature and scope
that the Directors consider could impact the business.
of risks can change and that there may be other risks
The Board continually reviews the potential risks facing
to which the Group is exposed and so the list is not
the Group and the controls in place to mitigate any
intended to be exhaustive.
potential adverse impacts.
EXTERNAL RISKS
The Corporate Governance Report includes an
overview of our approach to risk management
and internal control systems and processes.
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 sales
As a premium lifestyle brand with a geographically disperse
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 confidence
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 financial 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 the
providing relative f lexibility to close or relocate stores
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
The Group’s US wholesale business generates US Dollar
devaluation of GBP to the US Dollar and increased volatility.
income which provides a degree of natural hedging.
This may be sustained or worsen going forward.
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 23
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 that
team who have a high level of awareness and understanding
we fail to correctly identify trends that are important to
of our target customer segment. A large proportion of
our customer base. These outcomes may result in lower
our 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 at management level or within a specialist
designed to attract and retain key management. The Group
skill set could have a detrimental effect on our operations
operates learning and development initiatives to increase
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
Microsoft Dynamics AX, across the Group. With any
November 2015, supporting our US wholesale operations. A
project of this scale, there is a risk of a poorly managed
dedicated programme team with significant experience of
implementation or take up of new systems, which could
our business processes and ERP implementation has been
result in business disruption.
established. The 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
website, for a prolonged period could result in business
a loss of key systems and to recover the use of the system
disruption, loss of sales and reputational damage.
and associated data. A regular assessment of vulnerability
Malicious attacks, data breaches or viruses, could lead to
to malicious attacks is performed and any weaknesses
business interruption and reputational damage.
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
supply chain, in particular the UK central distribution
procedure in the event of the loss of the UK distribution
centre, could impact sales and impact on our ability to
centre. In addition the Group maintains insurance cover at
supply our wholesale customers, stores and consumers.
an appropriate level to protect against the impact of such
an interruption.
24 So cial Responsibility
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 Responsibly Joules framework is central to our
Our Responsibly Joules framework has four core
business and ref lects our intrinsic brand values. The
elements which align with the way we operate
framework sets out our core beliefs about the way we
as a business:
want our business to operate; fairly, responsibly and
sustainably. We believe it is not only the right thing to
do, but that it also drives value for our many stakeholders,
both internal and external, including our customers,
employees, investors, local communities and suppliers.
•
•
•
•
Charitably Joules
Sourcing with Integrity
Protecting our Environment from Shire to Shore
Our Joules Family
This year we established the Responsibly Joules Steering
CHARITABLY JOULES
Group, chaired by the Group CFO and comprising
directors from across the business. Each director
has responsibility for one element of our Responsibly
Joules framework and is supported by a team from
across the business. This approach is enabling us to
raise the prof ile of Responsibly Joules and increase
employee engagement.
We are proud that our stores sit at the heart of many
communities and believe that we have a responsibility
to play a positive role within those communities. We
continue to support local community causes, charities
and schools across the country with the local fundraising
programmes that matter to our customers.
We also have four charity partners with whom we have
ongoing relationships; The Princes Trust, The British
Bee Keepers Association, Nuzzlets and Farms for City
Children. All of these partners have a focus or purpose
that closely aligns with Joules core values increasing the
engagement with our employees and customers. This
year we have expanded the level of support that we have
been able to provide to these charity partners; both
f inancially and physically. Our achievements include:
• Working with our employees to raise and donate
over £70,000 for our Charitably Joules partners
•
Donating nearly £100,000 in gifts-in-kind to our
charity partners. This included providing Joules
wellies to all of the Farms for City Children farms
for adults and children to use as they are exploring
the muddy outdoors and providing the uniform for
the volunteers at Nuzzlets
•
Facilitating both store and head off ice staff in
volunteering with our charity partners, including
our founder, Tom Joule, who has spent time
mentoring young people with The Prince’s Trust
TH E
PRINCE’S
TRU ST
FARMS FOR CITY
CHILDREN
TH E
BRITISH BEEKEEPERS
ASSOCIATIO N
NUZZ LET S
Social Res pon sibility 25
SUPPORTING THE PRINCES TRUST (case study)
We support The Prince’s Trust Enterprise Programme in
Leicester and Kettering, helping to fund an ‘Introduction
to Business’ course for young people interested in
“ We are delighted to be partnering with Joules to
setting up their own business. Our funding also helps
transform young lives. It’s been great to see so many
provide mentors and business loans for those who take
teams at Joules driving our partnership across stores
their business dream forwards into reality.
This year we ran an employee auction and raff le to
raise money for The Prince’s Trust. The auction saw
employees from across the business offer auction ‘lots’
which ranged from a bespoke lunch menu for a week, to
a holiday home for a weekend. Employees were invited
and engaging customers. On behalf of everyone at
The Prince’s Trust and the young people you support
– the biggest thank you!”
to bid on lots with all proceeds going to The Prince’s
CATHERINE HUTCHINSON
Trust. Bidding was fast, furious and engaging and raised
Corporate Partnerships Manager
over £6,400. This money, in addition to other funds
donated by Joules in the last year, has helped to support
the 249 young people that have taken part in
the Enterprise programme in Leicester and
Northamptonshire since our partnership commenced.
26 So cial Responsibilit y
S O C I A L R E S P O N S I B I L I T Y
C O N T I N U E D
SOURCING WITH INTEGRITY
Our customers, employees and shareholders have
Our packaging focus
high expectations of us and our sourcing practices.
Consequently, we have stringent standards in place which
govern how we manage our supply chain and partners.
In England, the quality and high levels of recycled
content in our carrier bags means that we don’t have
to charge our customer the carrier bag tax. We are
These include standards on working and labour practices,
continuing to look at ways to further improve the
fair wages, health and safety, animal testing and material
environmental credentials of our packaging.
use and sourcing. All of our direct suppliers are required
to sign up to the Joules Code and conf irm that they are
Tracking energ y consumption
complying with these standards.
We recognise that simply communicating our standards
and expectations isn’t always enough, and we therefore
regularly audit our product manufacturers for compliance
with these requirements. All of our product suppliers
are audited for ethical and social compliance using
internationally recognised standards by a respected,
independent, third party compliance organisation.
We endeavour to continually review our product supply
chain to ensure our suppliers meet these requirements
and strive for best practice in every area.
PROTECTING OUR ENVIRONMENT,
FROM SHIRE TO SHORE
With our roots in the British countryside, the
environment is very important to us, and we are
committed to working to protect it by continually
considering the environmental impacts of our
operations and working to reduce them where we
can. This includes:
Managing our logistics
We utilise third party distribution partners to deliver
our product to our stores, wholesale customers and our
customers’ homes. In deciding who to partner with,
the environmental credentials of these partners are an
important factor. This includes considerations such as
their f ill rates, fuel eff iciency, use of electric vehicles
and long-term strategy and environmental targets.
Our UK logistics partners have strong commitments
in place to continuously improve their environmental
performance. We review their environmental
performance to ensure that they continue to meet
our expectations.
We continue to operate our biomass boiler which heats
our Distribution Centre, as well as installing energy
eff icient lighting into all new, relocated and refurbished
stores. We are working with our energy suppliers to
enhance the reporting and insight available to enable
us to identify opportunities to further reduce energy
consumption across our business activities.
Measurement
We continue to focus on improving the coverage, quality
and accuracy of the data to quantify the environmental
impacts across all areas of our operations. This data is
important to prioritise areas of focus as we continue to
grow both in the UK and internationally.
“J o u l e s h a v e s h o w n r e a l p a s s i o n a n d e n t h u s i a s m f o r
g i v i n g b a c k t o t h e i r l o c a l c o m m u n i t i e s t h r o u g h o u r
Te a m C h a l l e n g e p r o g r a m m e . T h e y h a v e a c h i e v e d
g r e a t t h i n g s a n d m a d e s u c h a d i f f e r e n c e t o t h e
p r o j e c t s t h e y h a v e s u p p o r t e d . T h e y a r e a g r e a t
e x a m p l e o f h o w b u s i n e s s v o l u n t e e r i n g c a n h a v e a
p o s i t i v e a n d l a s t i n g i m p a c t o n t h e c o m m u n i t y”
JULIETTE HEWITT
Leicestershire Cares
Social Res pon sibility 27
OUR JOULES FAMILY
It is our people that make our business the great success
We rolled out a series of ‘Listening Groups’ for employees
that it is today and we are committed to continuing to
across the business. The Listening Groups allow us to
offer them a working life and benef its programme that
gather views on all aspects of working at Joules.
builds our reputation as an employer of choice.
They cover many areas including culture, learning and
In the last year, we have continued to enhance our
development, and reward. Employees are given the
employee offering, expanding existing areas as well
chance to share with us how they think we’re doing and
as launching several new programmes:
what we are good at and what we could improve.
Building on the launch of our employee volunteering
Employee engagement and communications is achieved
policy, we saw 64 employees participating in
through regular ‘Directors brief ings’ to all head off ice
volunteering days during the last year. We were
and warehouse employees, a weekly newsletter and the
delighted that of these, over 30% were from senior
Group intranet. We hold a store manager conference
management positions within the business, showing
twice per year and issue a weekly newsletter for all store
the strength of our leadership commitment.
based employees. The communications aim to keep
We ran four team volunteering days through the year,
in partnership with Leicestershire Cares. Teams
from across the business spent a day supporting local
employees up to date on Group initiatives and f inancial
performance. We encourage employee feedback through
formal and informal channels.
communities doing everything from tree planting to
We are an equal opportunities employer and give full
clearing waterways of litter.
We launched a Save As You Earn (SAYE) scheme in the
year with nearly a third of eligible staff participating.
The Joules Leadership Development Programme was
launched during the year with over 250 employees
participating in the programme that has been delivered
from the top down, focusing on self-awareness,
inf luencing, motivation and team effectiveness to those
members who manage and inf luence teams.
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.
“A t r ip to t he f ish i ng
tow n of W h it st able
wa s t he stor y
beh i nd t h is pr i nt .
T he f lower s were
f i r st h a nd pa i nted
by ou r P r i nt Te a m
wh i lst sit t i ng i n a
cot t age ga rden by
t he be ach”
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 he B est of t he Bu nch
30 Co rpo rate Governance
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 founded Joules in 1989 selling practical, high
Colin joined Joules in 2010 from Crombie, where
Millen, Create Fertility and Skin Ltd. Neil was the
quality garments at shows and events around
he was Joint Manag ing Director. Prior to this
Senior Independent Director of the Post Off ice
the UK. Tom’s entrepreneurial spirit, and f lair
Colin spent over 10 years at House of Fraser,
Limited for four years until September 2015,
in giving products personality to match those of
becoming Commercial Director on the main
where he chaired the remuneration committee
Joules customers’ colorful and uplifting outlook,
board. Colin has also held a number of senior
and served on both the audit and nominations
has been central to the brands’ continued success
positions within the retail sector including at
committees. Prior to that he was a non-executive
and expansion. Now a global lifestyle brand, in
Etam, L aura Ashley and Arcadia.
Director of Nuff ield Health. Over the last 15 years
his current role, Tom is focused on connecting
he has chaired a number of companies, including
with the Joules customer and category product
six years as chairman of Kurt Geiger.
direction. Between 2010 and 2016 Tom has
featured four times in Drapers 100 Most Inf luential
people in Fashion Retail. In 2015 he was a f inalist
in the Fashion Entrepreneur of the Year category
at the Great British Entrepreneur Awards.
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 many 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. Since March of
this year, Jill has also joined the board of Nobia AB, as
a non-executive Director.
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 vernance 31
CHAIRMAN’S INTRODUCTION
I have pleasure in introducing the Joules Group plc
Directors are aware of their right to have any concerns
Corporate Governance Statement, our second since
recorded in the board minutes.
our admittance to trading on AIM on 26 May 2016. The
Board is committed to supporting high standards of
corporate governance and, for this reason, we have
continued to operate 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
For the f inancial year ended 28 May 2017, the Board has
continued to comprise of six Directors: a Non-Executive
Chairman, two further Non-Executive Directors and
three Executive Directors.
ROLE OF THE BOARD
The Board is collectively responsible for the long term
success of the Group. It provides entrepreneurial
leadership, sets Group strategy, upholds the Group’s
culture and values, reviews management performance
and ensures that the Group’s obligations to shareholders
are understood and met.
HOW THE BOARD OPER ATES
The Executive Directors are responsible for business
operations and for ensuring that the necessary
f inancial and human resources are in place to carry
out the Group’s 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
The Board is satisf ied that all directors are able to
allocate suff icient time to the company to discharge their
responsibilities effectively.
MATTERS RESERVED FOR THE BOARD
Certain matters are reserved for approval by the Board,
these include:
•
•
•
•
•
•
•
•
Strategy and business plans – including annual budget
Acquisitions and disposals of businesses (including
minority interests)
Changes in share capital and dividends
Board membership and Committees and delegation
of authority
Remuneration and employment benef its
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 social responsibilities
BOARD MEETINGS
The Board has met twelve times in the reporting period.
For all Board meetings an agenda is established and a
Board pack is circulated at least 48 hours ahead of the
meeting. As a minimum, the items covered include:
•
Financial performance review
• Management accounts and KPIs
•
•
•
•
•
Update on governance, f inance, legal & risk matters
Updates on signif icant business initiatives
Proposals on any major items of capital expenditure
Health and Safety
Compliance with banking covenants and cash
f low forecast
key strategic decisions on a regular basis. Control over
The Board receives reports from the Executive directors
the performance of the Group is maintained through
to enable it to be informed of and supervise the matters
evaluation of f inancial information; the monitoring of
within its remit. The Board considers at least annually
performance against key budgetary targets; and, by
the Group’s strategic plan and, on a regular rolling basis,
monitoring the return on strategic investments.
the Board receives presentations from management on
The chairman takes responsibility for ensuring that the
directors receive accurate, timely and clear information.
key areas of the Group’s operations.
32 Cor porate Governa nc e
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 in the period under review:
BOARD
AUDIT
REMUNERATION NOMINATION
NEIL MCCAUSLAND
12/12
3/3
2/2
TOM JOULE
COLIN PORTER
MARC DENCH
DAVID STEAD
JILL LITTLE
12/12
12/12
12/12
12/12
11/12
-
-
-
3/3
3/3
-
-
-
2/2
2/2
1/1
-
-
-
1/1
1/1
BOARD DECISIONS AND ACTIVITY DURING THE YEAR
SEPARATION OF DUTIES
The Board has a schedule of regular business, financial and
There is a clear division of responsibilities between the
operational matters, and each Board Committee that has
Chairman and Chief Executive Officer. Neil McCausland,
met to date has compiled a schedule of work, to ensure
the Chairman, leads the Board and is responsible for its
that all areas for which the Board has responsibility are
effectiveness and governance. He sets the Board agenda
addressed and reviewed during the course of the year. The
and ensures that sufficient time is allocated to important
Chairman, aided by the Company Secretary, is responsible
matters, in particular, strategic issues. Colin Porter, the
for ensuring that the Directors receive accurate and timely
Chief Executive Officer is responsible for the day-to-day
information to enable the Board to discharge its duties.
management of Joules’ operations and for recommending
The Company Secretary compiles the Board and Committee
strategy to the Board. Colin is then responsible for
papers which are circulated to Directors at least 48 hours
implementing that strategy supported by the wider
prior to meetings. The Company Secretary also ensures
management team.
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.
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.
BOARD COMMITTEES
INDUCTION OF NEW DIRECTORS
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 on 26 May 2016 and they are kept under review to
ensure they remain appropriate and ref lect any changes in
legislation, regulation or best-practice. Each Committee
comprises Non-Executive Directors of the Company.
The Company Secretary is the secretary of the Audit and
Nomination Committees and the Group Legal Counsel is
secretary for the Remuneration Committee.
BOARD EFFECTIVENESS
The skills and experience of the Board are set out in
their biographical details on page 30. The experience
and knowledge of each of the Directors gives them
the ability to constructively challenge strategy and to
scrutinise performance.
No new directors were appointed during the year and there
were no resignations. It is intended that, in the future, on
joining the Board, new directors will undergo an induction
programme which will be tailored to the existing knowledge
and experience of the director concerned, including store and
office visits; meetings with key employees; and presentations
from management on topics such as strategy, finance and risk.
The Chairman will be responsible for this process.
TIME COMMITMENTS
The Board is satisfied that the Chairman and each of the
Non-Executive and Executive Directors continue to be
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 conducted a thorough and formal board
review during the year. This was led by the Chairman and
consisted of interviews; the completion of questionnaires;
and in-depth discussions between the Executive and Non-
Executive Directors.
Corpo rate G overnance 33
No major changes to the function and focus of the Board
The Board considers that the internal controls in place
arose from this evaluation, however, the findings will be
are appropriate for the size, complexity and risk profile
used as the basis of future discussions by the Board, and
of the Group.
the Nomination Committee, when considering short and
long term succession planning. The Chairman will continue
to 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
The Company Secretary ensures that all Directors are kept
abreast of changes in relevant legislation and regulations,
with the assistance of the Group’s advisers where
appropriate. Executive Directors are subject to the Group’s
performance development review process through which
their performance against objectives is reviewed and their
personal and professional development needs considered.
EXTERNAL APPOINTMENTS
In the appropriate circumstances, the Board may authorise
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’ conf licts of
interest. The Company’s Articles of Association (‘Articles’)
provide for the Board to authorise any actual or potential
conf licts of interest.
INDEPENDENT PROFESSIONAL ADVICE
Directors have access to independent professional advice
at the Company’s expense. In addition, they have access to
the advice and services of the Company Secretary who is
responsible for advice on corporate governance matters to
the Board.
DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE
The principal elements of the Group’s internal control
system include:
•
•
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
defines levels of approval authority over such items as
capital expenditure, commercial contracts, litigation
and treasury matters
• Maintenance of a risk register which is reviewed at
least annually by the Board
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.
BOARD DIVERSITY
The Board does not have a formal board diversity policy
but plans to continue to review the need for such a policy
annually taking into account the size of the Board and
skills required.
RELATIONS WITH SHAREHOLDERS
The Group maintains communication with institutional
shareholders through individual meetings with Executive
Directors, particularly following publication of the Group’s
interim and full year preliminary results. All 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 activities of the Group
and details of all recent Group announcements. The Non-
Executive Directors are available to discuss any matters
stakeholders might wish to raise, and the Chairman
and Non-Executive Directors will attend meetings with
investors and analysts as required. Investor relations
The Company has purchased directors’ and officers’ liability
activity and a review of the share register are standing
insurance during the year as allowed by the Company’s
items on the Board’s agenda and the chairman ensures
Articles.
ongoing, effective communication with shareholders.
ELECTION OF DIRECTORS
The Senior Independent Director is available to
shareholders if they have any concerns which fail to be
In accordance with the Code all Directors will offer
resolved through normal contact channels of the Chairman,
themselves for election at each AGM.
Chief Executive or other Executive Directors or when such
contact channels are inappropriate.
RISK MANAGEMENT AND INTERNAL CONTROLS
The Board has ultimate responsibility for the Group’s
ANNUAL GENERAL MEETING (‘AGM’)
system of internal control and for reviewing its
The Company’s AGM will take place on 27 September 2017.
effectiveness. However, any such system of internal control
The Annual Report and Accounts and Notice of the AGM
can provide only reasonable, but not absolute, assurance
will be sent to shareholders at least 20 working days prior
against material misstatement or loss.
to this date.
34 Audit Co mm itt ee Report
A U D I T 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 Audit
The main items of business considered by the Audit
Committee report for the 52 weeks ended 28 May 2017.
Committee during the year have included:
The Audit Committee has responsibility for, amongst
other things, the monitoring of the f inancial integrity
of the f inancial statements of the Group and the
involvement of the Group’s auditors in the external audit
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
•
•
•
•
•
•
•
Review of the f inancial statements and Annual Report
Consideration of the external audit report and
management representation letter
Going concern review
Review of the risk management and internal control
systems
Reviewing the need for an internal audit function
Review of whistleblowing reports
Review of the implications of forthcoming updates or
Committee also provides advice to the board as to
changes to accounting standards
whether the annual report and accounts, taken as a
whole, is fair, balanced and understandable and provides
ROLE OF THE EXTERNAL AUDITOR
the information necessary for shareholders to assess the
Company’s position and performance, business model
and strategy.
MEMBERS OF THE AUDIT COMMITTEE
The Audit Committee monitors the Company’s
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 services by the
The Committee consists of three Non-Executive
external auditor. The breakdown of fees between audit
Directors: David Stead (Chair), Neil McCausland
and non-audit services is provided in note 5 of the
and Jill Little. The Auditor (Deloitte LLP), the Chief
Group’s Consolidated Financial Statements. The non-
Executive Off icer and Chief Financial Off icer also attend
audit fees related to tax advisory and Remuneration
Committee meetings by invitation. The Committee has
Committee advice. The Committee also assesses the
met three times since 5 September 2016, being the date
auditor’s performance. Having reviewed the auditor’s
the Group’s last Annual Report was approved.
independence and performance, the Audit Committee
The Board is satisf ied that I, as Chairman of the
Committee, have recent and relevant f inancial
recommends that Deloitte LLP be re-appointed as the
Company’s auditor at the next AGM.
experience. I am a chartered accountant and I have
served as Finance Director in a number of companies
AUDIT PROCESS
including Dunelm Group plc. I report formally to
The auditor prepares an audit plan that sets out the
the Board, as appropriate, on issues discussed by
scope of the audit, key areas of audit focus, audit
the Audit Committee and I present the Committee’s
materiality and the audit timetable for audit work.
recommendations.
The Committee also takes time to meet with the external
auditors without any Executive Directors or senior
This plan is reviewed and agreed in advance by the
Audit Committee. Following the completion of its work,
the auditor presents its f indings to the Audit Committee
management present.
DUTIES
for discussion.
INTERNAL AUDIT
The duties of the Audit Committee are set out in its
Terms of Reference, which are available on the Company
website (w w w.joulesgroup.com) and are also available on
request from the Company Secretary.
The Committee meets a minimum of twice per year.
At present the Group does not have an internal audit
function. In view of the size and nature of the Group’s
business, the Committee believes that management
is able to derive assurance 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.
Audit Co mmittee Repor t 35
RISK MANAGEMENT AND INTERNAL CONTROLS
GOING CONCERN
The Group has a framework of risk management and
The Directors have prepared a detailed f inancial forecast
internal control systems, policies and procedures.
with a supporting business plan covering the medium
The Audit Committee is responsible for reviewing the
term future. The forecast indicates that the Group
risk management and internal control framework and
will remain in compliance with covenants throughout
ensuring that it operates effectively. The Committee
the forecast period. As such, the Directors have a
has reviewed the framework and is satisf ied that the
reasonable expectation that the Company and the Group
internal control systems in place are currently
have adequate resources to continue in operational
operating effectively.
existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in
WHISTLEBLOWING
preparing f inancial statements.
The Group has in place a whistleblowing policy which
sets out the formal process by which an employee of
the Group may, in conf idence, raise concerns about
possible improprieties in f inancial reporting or other
matters. Whistleblowing is a standing item on the
Committee’s agenda, and updates will be provided
at each meeting. During the period, there were no
incidents for consideration.
DAVID STEAD
Audit Committee Chairman
36 Nomination Co mmit tee Report
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
ACTIVITY DURING THE YEAR
Nomination Committee Report for the 52 weeks ended
28 May 2017 (FY17).
MEMBERS OF THE NOMINATION COMMITTEE
The Committee has met formally once during the year
and at this meeting, the f irst since admission to AIM,
members agreed the schedule of work for the upcoming
year. There was no necessity for changes to Board
The Nomination Committee consists of three Non-
appointments during the year and the Committee
Executive Directors; Neil McCausland (Chair), David
focussed its work on the following areas:
Stead and Jill Little. Executive Directors attend by
invitation.
DUTIES
•
The structure and composition of the Board and its
Committees. The Committee discussed the skills,
experience and diversity of the current Board
and committee members taking into account the
In carrying out its duties, the Nomination Committee is
current and future needs of the Group, its culture
primarily responsible for:
•
•
•
•
•
•
Identifying and nominating candidates to f ill
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 is scheduled to meet once a year but it
will meet more frequently if required.
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
(w w w.joulesgroup.com).
and strategic objectives. The Committee believes
that the Board has the necessary balance of skills,
knowledge and experience for its current needs.
The Committee believes that the Directors are able
to devote suff icient time to the Group, taking into
account their other Directorships
•
The structure of the Operating Board. The
Committee reviewed the current management
structure of the Group and options for the
future. In particular, the membership and work
of the Operating Board, which consists of senior
management of the Group and meets monthly to
review performance and progress against strategic
objectives and is responsible for the implementation
of the Group’s strategy
•
Succession planning. The Committee discussed
long term succession planning and emergency
cover, and the need to identify and develop talent
both within the Group and from the wider market.
In its discussions the Committee recognised
the importance of looking at a diverse range of
candidates when considering future appointments
TERMS OF REFERENCE
The committee will keep its terms of reference under
review with the main objective of ensuring that an
appropriate management framework and governance
structure is in place.
NEIL MCCAUSLAND
Nomination Committee Chairman
Dire ct ors’ Re mun erat ion Rep ort 37
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
The Company’s first long-term incentive awards were
Directors’ Remuneration Report for the 52 weeks ended
granted under the LTIP in July 2016 (‘LTIP 2016’) and
28 May 2017 (FY17). Although not subject to the reporting
therefore there was no LTIP awards due to vest in respect of
regulations of fully listed companies in the UK, the
the year ended 28 May 2017.
Remuneration Committee has taken account of these
regulations in the preparation of the FY17 Directors’
EXECUTIVE DIRECTOR SALARIES AND NON-EXECUTIVE
Remuneration Report as a matter of best practice.
DIRECTOR FEES
Therefore this report is presented as:
In line with the salary review timetable for all other
•
A Directors’ Remuneration Policy Report – setting
employees, the Executive Directors’ base salaries were
out the parameters within which the remuneration
reviewed in December 2016. The base salary for C N
arrangements for Directors operate; and
Porter and T S L Joule set at IPO, £345,000 and £335,000
•
An Annual Report on Remuneration – setting out the
respectively, is unchanged. The base salary for M S Dench
remuneration earned by Directors in respect of FY17
was increased from £220,000 to £250,000 with effect from
and how we intend to apply the policy for FY18
1 December 2016 taking into account his performance,
development in role and contribution since he joined the
OUR APPROACH TO REMUNERATION – KEY PRINCIPLES
business in 2015 and the competitiveness of his package
Our policy on executive remuneration adopted on
against the market and his previous employer.
admission to AIM is designed to:-
With effect from 29 May 2017, the Chairman’s fee was
•
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;
increased to £75,000, as agreed prior to the IPO. No other
changes have been made to Non-Executive Directors’ fees.
REMUNERATION FOR THE YEAR COMMENCING 29 MAY 2017
•
Promote the long-term success of the Group, in
A summary of the proposed application of our remuneration
line with our strategy and focus on profitability and
policy for FY18 is set out below:
growth; and
•
Provide appropriate alignment between the interests
of shareholders and executives. Alignment is further
enhanced through shareholding guidelines and the
deferral of a proportion of the annual bonus as shares
•
It is intended that Executive director’s base salaries will
be reviewed annually in December, at the same time as
the pay review for the wider workforce
•
The maximum annual bonus opportunity for FY18
will be 100% of salary for C N Porter, T S L Joule and,
FY17 was the first full year of operation of our Directors’
unchanged at 150% of salary for M S Dench. The annual
Remuneration Policy.
bonus is subject to the achievement of stretching profit
FY17 PERFORMANCE AND ANNUAL BONUS OUTCOME
•
The second awards under the LTIP (‘LTIP 2017’) will be
before tax (‘PBT’) performance targets
As detailed in the Strategic Report and Financial Review,
Joules has delivered strong results and made continued
progress against its stated strategic priorities. Growth
was delivered across the brand’s distribution channels and
geographic markets, ref lecting the growing appeal of the
Joules brand and the quality and design of our products,
both in the UK and internationally. Based on FY17
underlying PBT of £10.1 million the Executive Directors will
receive 96.3% of their maximum annual bonus opportunity.
Half the bonus earned being paid in cash and half as a share
award deferred over three years. Further details are set out
in the following pages.
granted following the announcement of the FY17 full
year results. The maximum LTIP opportunity for C N
Porter and T S L Joule is 100% of salary and, unchanged
at 150% of salary for M S Dench. These awards are
subject to stretching targets with 80% of the award
linked to an EPS target and 20% of the award linked to a
strategic target of international revenue
•
The 150% of salary annual bonus and LTIP award to M S
Dench is unchanged from FY17, however, the proportion
of the FY18 annual bonus earned that will be paid in
cash has been reduced to one third and the deferred
share award element has been increased from half to
two-thirds. This recognises his on-going contribution
to the group whilst providing a long term alignment
with the interests of shareholders.
38 Di re ct ors’ Rem un erat ion Repo rt
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
The Committee will continue to monitor our remuneration
DIRECTORS’ REMUNERATION POLICY REPORT
policy to ensure it remains aligned to the business strategy
and the delivery of shareholder value.
We remain committed to a responsible approach to
executive pay as I trust that this Remuneration Report
demonstrates and hope that we can rely on your continued
support at our AGM.
JILL LITTLE
Remuneration Committee Chairman
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.
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
& STRATEGIC LIN K
OPERATION
MAXI MUM OPPOR T UN IT Y
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.
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
•
•
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
•
•
•
BENEFITS
To provide market
competitive benefits
as part of the total
remuneration
package.
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.
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.
RETIREMENT
BENEFITS
To provide an
appropriate level of
retirement benefit
(or cash allowance
equivalent).
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.
The contribution level for FY18 is set at 5%
of salary (there is an overall limit of up to 10%
of salary).
Dire ct ors’ Re mun erat ion Rep or t 39
Variable Remuneration
E LEMENT, PURPOSE
& STRATEGIC LIN K
OPERATION
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.
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
ref lect 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. For
M S Dench, the proportion of the FY18 annual
bonus earned will be paid in cash and has been
reduced to one third and the deferred share
award element has been increased to two
thirds. Awards may include dividend equivalents
earned between grant and vesting date.
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.
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.
MAX IMUM OPPOR TU NI TY A ND
PER FORMA NC E METR IC S
The annual bonus opportunity is up to a
maximum of 150% of base salary. For FY18 the
maximum bonus opportunity for C N Porter and
T S L Joule is 100% of salary, and 150% of salary
for MS 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.
The FY18 bonus is based on a PBT target.
The maximum LTIP opportunity is 150% of base
salary. The maximum LTIP 2017 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, ref lecting
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 LTIP 2017 awards are subject to stretching
targets with 80% of award based on EPS and 20%
based on international revenue.
INFORMATION SUPPORTING THE POLICY TABLE
EXPLANATION OF PERFORMANCE MEASURES CHOSEN
The Committee considers EPS to be the key measure
Performance measures for the annual bonus and long-
term incentive are selected that ref lect the Group’s
of sustainable business performance and international
revenue growth to be a key strategic priority.
strategy. Stretching performance targets are set each
The Committee retains the discretion to adjust or set
year by the Committee, taking into account a number of
different performance measures or targets where it
different factors.
For FY18, 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 LTIP 2017 grant is adjusted
diluted Earnings Per Share (EPS) (80% of award weighting)
and international revenue (20% of award weighting).
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.
40 Di recto rs’ Remunerat 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
APPLICATION OF MALUS AND CLAWBACK
Until this guideline is met Executive Directors will be
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
required to retain half of any shares which vest under the
deferred bonus or LTIP (after sales to cover tax).
LEGACY REMUNERATION
error or misstatement of the financial results, gross
The Committee has the right to settle remuneration
misconduct or if information comes to light which, had it
arrangements that were put in place prior to this Policy
been known, would have affected a decision as to the extent
being created and in respect of remuneration awarded to
to which an award would have vested.
individuals prior to becoming an Executive Director (and
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).
which was not awarded in anticipation of becoming an
Executive Director).
NON-EXECUTIVE DIRECTORS’ REMUNERATION POLICY
The remuneration Policy for the Chairman and Non-
SHAREHOLDING GUIDELINES
Executive Directors is to pay fees necessary to attract the
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.
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
APPROACH TO RECRUITMENT REMUNERATION
The Committee will typically seek to align the
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 to pay more than is appropriate.
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 Committee will take into consideration relevant
The remuneration package for a newly appointed Chairman
factors, which may include the calibre of the individual,
or Non-Executive Director will normally be in line with
their existing remuneration package, and their specific
the structure set out in the Non-Executive Directors’
circumstance, including the jurisdiction from which they
Remuneration Policy.
are recruited.
Dire ct ors’ Re mun erat ion Rep or t 41
SERVICE CONTRACTS
PAYMENTS FOR LOSS OF OFFICE
Each of the Executive Directors have service contracts
Payments for loss of office will be in line with the
with the Group. The notice period of Executive Directors’
provisions of the Executive Directors’ service contracts and
service will not exceed 12 months. All Non-Executive
the rules of the share plans (as set out in the IPO Admission
Directors have initial fixed term agreements with the Group
document). Where a buy-out award is made then the leaver
for no more than three years. Details of the Directors’
provisions would be determined at the time of the award.
service contracts, are set out below:
In appropriate circumstances, payments may also be made
NAM E
COMMENCEMENT
NOTICE PERIOD
and under the terms of the SAYE plan. The Committee
in respect of accrued holiday, outplacement, legal fees
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.
Annual Report on Remuneration
SINGLE TOTAL FIGURE OF REMUNERATION
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 FY17.
FY17
EX ECUT IVE DIRECTOR S
T S L Joule
C N Porter
M S Dench
N ON-EXECUTI VE D IR E CTORS
N W McCausland
J C Little
D A Stead
Total
FY16
EX ECUT IVE DIRECTOR S
T S L Joule
C N Porter
M S Dench1
N ON-EXECUTI VE D IR E CTORS
N W McCausland
J C Little2
D A Stead2
Total
SALARIES
/FEES
£000
335.0
345.0
235.0
75.0
50.0
55.0
1,095.0
290.1
287.3
128.3
40.0
7.1
7.8
760.5
TAXABLE
BENEFITS
£000
35.5
22.6
12.0
-
-
-
70.1
35.3
20.4
5.1
-
-
-
ANNUAL BONUS
(INCLUDING
DEFERRED BONUS)
£000
TOTAL
REMUNERATION
£000
332.3
337.1
339.5
-
-
-
719.6
722.0
598.3
75.0
50.0
55.0
PENSION
£000
16.8
17.3
11.8
-
-
-
45.9
1,008.9
2,219.9
ADMISSION
AWARD & DEFERRED
BONUS1 £000
-
-
288.2
-
-
-
14.5
14.4
6.4
-
-
-
1. In FY16 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
is £68,231); and (ii) a deferred
share bonus with a face value at
grant of £220,000.
2. J S Little and D A Stead were
339.9
322.1
428.0
40.0
7.1
7.8
60.8
35.3
288.2
1,144.8
appointed as Non-Executive
Directors on 20 May 2016.
42 Di re ct ors’ Remunera tion 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
BASE SALARIES
The base salaries for the Executive Directors will normally
For FY18 the annual bonus opportunity for C N Porter and
be reviewed with effect from December.
EX ECUT IVE
DI REC TORS
T S L Joule
C N Porter
M S Dench
BASE SALARY AT 1
DECEMBER 2016
£335,000
£345,000
£250,000
BASE SALARY
APPLICABLE ON
ADMISSION
£335,000
£345,000
£220,000
T S L Joule will be 100% of salary and for M S Dench 150%
of salary. Annual bonus is 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). For M S Dench payment will be 33%
cash and 67% 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 the PBT target
will be disclosed when we report the performance out-turn
in the FY18 Directors’ Remuneration Report.
LONG-TERM INCENTIVES
There were no LTIP awards due to vest in respect of
the year ended 28 May 2017.
In FY17, the Committee granted LTIP awards as set out
in the table below.
LTIP 2016
DATE OF
GRANT
% OF SALARY
T S L Joule*
6 July 2016
100%
C N Porter
M S Dench
6 July 2016
100%
6 July 2016
150%
NUMBER
OF SHARES
194,767
200,581
191,860
*Note: Because T S L Joule’s existing shareholding in the business is greater than 30%,
it is intended that the LTIP 2016 awards will be cancelled and re-issued after the AGM
subject to approval of a separate resolution at the AGM in relation to Rule 9 of the
Takeover Code.
Vesting of the awards 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.
As noted above, the base salary for C N Porter and T S L
Joule set at IPO is unchanged. The base salary for M S
Dench was increased with effect from 1 December 2016
taking into account his performance, development in role
and contribution since he joined the business in 2015 and
the competitiveness of his package against the market and
his previous employer.
TAXABLE BENEFITS
The taxable benefits for the Executive Directors included
a company car or car allowance, private fuel and private
medical insurance.
ANNUAL BONUS
For FY17 the maximum annual bonus opportunity for the
Executive Directors was 100% of salary (and 150% of salary
for M S Dench) subject to the achievement of stretching
PBT performance targets. The following table set out the
bonuses earned by the Executive Directors for FY17 and
how this ref lects performance for the year.
PE RFOR MANCE
MEASU RE
TAR GET
PERFORMANCE
ACTUAL
PERFORMANCE
BONUS EARNED
(% OF SALARY)
PBT
£9.2m
£10.1m
96.3%
For FY17 the values of each Executive Directors’ annual
bonus paid in cash and deferred into shares for three
years were as follows:
EX ECUT IVE
DI REC TORS
T S L Joule*
C N Porter
M S Dench
CASH
PAYMENT
£000
166.1
168.5
169.7
TOTAL ANNUAL
BONUS SHOWN
IN SINGLE
FIGURE TABLE
ABOVE FO R FY17
£000
DEFERRED INTO
SHARES
£000
166.1
168.5
169.7
332.3
337.1
339.5
*Because T S L Joule’s existing shareholding in the business is greater than 30%, the
deferred share award to be granted to T S L Joule will be conditional on approval of a
separate resolution at the AGM in relation to Rule 9 of the Takeover Code.
Dire ct ors’ Re mun erat ion Rep ort 43
For FY18, the Committee intends to grant LTIP awards as
set out in the table below.
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.
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.
BENEFICIALLY
OWN ED AT 29
MAY 2016
NUMBER
BENEFICIALLY
OWN ED AT 28
MAY 2017
NUMBER
UNVESTED
OUTSTANDI NG
SHARE AWA RDS
AT 28 MAY 2 017
NUMBER 1
28,147,210
28,147,210
194,767
2,129,142
2,269,822
62,500
82,500
200,581
636,492
EXECUTIVE
DIRECTORS
T S L Joule
C N Porter
M S Dench
NON-EXECUTI V E
DIRECTORS
N W McCausland
625,375
625,375
J C Little
D A Stead
15,625
31,250
15,625
31,250
-
-
-
1ESOP, LTIP, Deferred share awards and SAYE.
LTI P 2017
T S L Joule*
C N Porter
M S Dench
% OF SALARY
100%
100%
150%
*Because T S L Joule’s existing shareholding in the business is greater than 30%, the LTIP
to be granted to T S L Joule will be conditional on approval of a separate resolution at the
AGM in relation to Rule 9 of the Takeover Code.
Vesting of the awards will be based upon the amount of the
adjusted diluted Earnings Per Share (EPS) and the level of
international revenue delivered in the final Financial Year
of the three year performance period (FY20).
•
•
EPS target (80% of award): Below the threshold vesting
target of 14p, none of the award will vest. 25% of the
award will vest if adjusted diluted EPS is 14p, with
100% vesting at 18p, and vesting determined on a
straight-line basis between these figures.
International revenue target (20% of award): Below
the threshold vesting target of £36 million, none of
the award will vest. 25% of the award will vest if
international revenue is £36 million, with 100% vesting
at £46 million. Vesting is 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 primary LTIP metric.
NON-EXECUTIVE DIRECTOR FEES
Details of Non-executive Directors’ fees for FY18 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
44 Di re ct ors’ Remunera tion 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
The interests of the Directors and their immediate families
OUTSTANDING DIRECTORS’ SHARE AWARDS
in the Group’s ordinary shares did not change between 28
May 2017 and the date these accounts were signed on 25
July 2017.
Each Executive Director holds awards under the Company’s
LTIP, Deferred Bonus Plan (DBP), SAYE Scheme and
Executive Share Option Plan (ESOP) as follows.
DI REC TOR
SHARE PLAN
DATE OF GRANT
SHARE PRICE
AT GRANT
EXERCISE PRICE
NUMBER OF
SHARES /
OPTIONS
AWARDED
PERFORMANCE
PERIOD
VESTING DAT E
T S L Joule
LTIP 2016
6 July 2016
C N Porter
LTIP 20161
6 July 2016
M S Dench
LTIP 20161
6 July 2016
DBP
ESOP
14 July 2016
26 May 2018
£1.72
£1.72
£1.72
£1.66
£1.60
£0.01
194,767
3 years to
6 July 2019
end of FY19
£0.01
200,581
3 years to
6 July 2019
£0.01
191,860
3 years to
6 July 2019
end of FY19
end of FY19
£0.01
£1.60
132,132
312,500
-
-
14 July 2019
26 May 2018
1C 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.
REMUNERATION COMMITTEE
The Chief Executive Officer and Chief Financial Officer
The members of the Committee are J C Little (Chair), N W
McCausland and D A Stead. The Group’s General Counsel
attends the meeting as secretary to the Committee.
occasionally attend meetings and provide information and
support as requested. Neither Executive Director is present
when their remuneration package is considered.
The Committee meets at least once a year and has
The duties of the Remuneration Committee are set out in
responsibility for:
• Maintaining the remuneration policy;
its Terms of Reference, which are available on the Group’s
website (www.joulesgroup.com) and are also available on
•
Reviewing and determining the remuneration packages
request from the Company Secretary.
of the Executive Directors;
This report was approved by the Board on 25 July 2017 and
• Monitoring the level and structure of the remuneration
signed on its behalf by:
of Senior Management; and
•
Production of the annual report on Directors’
remuneration.
J C LITTLE
Chairman of the Remuneration Committee
46 Di re ct ors’ 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
At 28 May 2017 the Company had been notified of the
of the Group, together with the f inancial statements and
following substantial shareholders comprising 3% or more
Auditors’ Report, for the 52 weeks ended 28 May 2017.
of the issued ordinary share capital of the Company:
The Governance Framework Section on pages 31 to 33
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:
NEIL MCCAUSLAND
TOM JOULE
COLIN PORTER
MARC DENCH
DAVID STEAD
JILL LITTLE
% of issued
share capital
TOM JOULE
32.17%
BLACKROCK INVESTMENT MANAGEMENT
11.43%
STANDARD LIFE INVESTMENTS
OLD MUTUAL GLOBAL INVESTORS
HARGREAVE HALE
9.49%
7.24%
6.61%
COLUMBIA THREADNEEDLE INVESTMENTS 3.69%
1798 VOLANTIS
A X A INVESTMENT MANAGERS
3.31%
3.01%
RESULTS AND DIVIDENDS
Results for the 52 weeks ended 28 May 2017 are set out
in the Consolidated Income Statement on page 54. The
Directors are recommending a f inal dividend of 1.2 pence
per share which, if approved, at the AGM will result in a
full year dividend of 1.8 pence per share for FY17.
ARTICLES OF ASSOCIATION
ACQUISITION OF THE COMPANY’S OWN SHARES
At the AGM held on 26 October 2016, 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
A copy of the full articles of association are available
of this report. Shareholders will be asked to renew these
on request from the Company Secretary and are also
authorities at the AGM as detailed in the next AGM Notice.
available on the Group’s website w w w.joulesgroup.com.
The Company held no treasury shares during the year.
Any amendments to the articles of association can be
made by a special resolution of the Shareholders.
DIRECTORS’ INTERESTS
SHARE CAPITAL AND SUBSTANTIAL SHAREHOLDERS
Details of the issued share capital, together with details
Details of the Directors’ benef icial interests are set out
in the Remuneration Report on pages 37 to 44.
of the movements during the year, are shown in Note 18 to
DIRECTORS’ INDEMNITIES AND DIRECTORS AND
the Consolidated Financial Statements. The Company has
OFFICERS’ LIABILITY INSUR ANCE
one class of ordinary share and each ordinary share carries
the right to one vote at general meetings of the Company.
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 47
FINANCIAL RISK MANAGEMENT
POLITICAL DONATIONS
Details of the Directors’ assessment of the principal risks and
No political donations were made during the period
uncertainties which could impact the business are outlined in
under review.
the Principal Risks & Uncertainties section on pages 22 and
23. The Board manages internal risk through the on-going
EMPLOYEE INVOLVEMENT
review of the Group’s risk register and the Board manages
external risk through the monitoring of the economic and
regulatory environment and market conditions.
GOING CONCERN
The Directors’ recognise that communication with
the Group’s employees is essential and the Group
places importance on the contributions and view of its
employees. Details of employee involvement are set out
in the Social Responsibility Report on pages 24 and 27.
The Company’s going concern statement can be found in
the Consolidated Financial Statements on page 59.
DISABLED EMPLOYEES
POST BALANCE SHEET EVENTS
Details of the Group’s policy in relation to disabled
employees is set out in the Social Responsibility Report
There have been no material post balance sheet events.
on pages 24 and 27.
ANNUAL GENER AL MEETING
DISCLOSURE OF INFORMATION TO THE AUDITORS
The Company’s AGM will be held on 27 September 2017.
In the case of each Director in off ice at the date the
FUTURE DEVELOPMENTS IN THE BUSINESS
OF THE COMPANY
Directors’ Report is approved, the following applies:
•
The Director knows of no information, which would
be relevant to the auditors for the purpose of their
The Strategic Report on pages 8 to 27 sets out the
audit report, of which the auditors are not aware;
likely future developments of the Company.
and
CHANGE OF CONTROL
So far as the Directors are aware, there are no
arrangements in place that the operation of which
at a later date may result in a change of control of
the Company.
•
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
BR ANCHES OUTSIDE THE UK
willingness to continue in off ice and a resolution seeking
The Group has branches in France, Germany and the
Republic of Ireland.
to re-appoint them will be proposed at the AGM.
This Directors’ report was approved by the Board of
Directors and authorised for issue on 25 July 2017.
JONATHAN DARGIE
Company Secretary
Statemen t of Directo rs’ Res po ns ibi li ties 49
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 preparing the Annual
The Directors are responsible for keeping adequate
Report and Accounts, including the f inancial statements,
accounting records that are suff icient to show and
in accordance with applicable law and regulations.
explain the Company’s transactions and disclose with
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
Financial Statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law).
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.
WEBSITE PUBLICATION
Under company law the Directors must not approve
The Directors are responsible for ensuring the Directors’
the f inancial statements unless they are satisf ied that
Report and f inancial statements are made available on
they give a true and fair view of the state of affairs of
a website. Financial statements are published on the
the Group and Company and of the prof it or loss of the
Company’s website (w w w.joulesgroup.com) in accordance
Group for that period. The Directors are also required
with legislation in the United Kingdom governing the
to prepare f inancial statements in accordance with
preparation and dissemination of f inancial statements,
the rules of the London Stock Exchange for companies
which may vary from legislation in other jurisdictions.
trading securities on the Alternative Investment Market.
The maintenance and integrity of the Company’s website
In preparing these f inancial statements, the Directors
are required to:
•
Select suitable accounting policies and then apply
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
is the responsibility of the Directors. The Directors’
responsibility also extends to the ongoing integrity of
the f inancial statements contained therein.
MARC DENCH
Chief Financial Officer
25 July 2017
“O u r P r i nt Te a m
c apt u red t he
Br it ish se a side
wonder f u l ly i n
t h is border pr i nt .
W h i lst add i ng a
few l it t le touches
of t hei r ow n.”
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
M a k i ng a Spl a sh
52 Au di to r’s Report
A U D I T O R ’ S R E P O R T
J O U L E S G R O U P P L C
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS
OF JOULES GROUP PLC
An audit involves obtaining evidence about the amounts
We have audited the f inancial statements of Joules Group
and disclosures in the f inancial statements suff icient to
plc (the ‘Company’) and its subsidiaries (the ‘Group’)
give reasonable assurance that the f inancial statements
for the 52 week period ended 28 May 2017 (‘period’)
are free from material misstatement, whether caused
which comprise the Consolidated Income Statement,
by fraud or error. This includes an assessment of:
the Consolidated Statement of Comprehensive Income,
whether the accounting policies are appropriate to the
the Consolidated Statement of Financial Position, the
Group’s and the parent company’s circumstances and
Consolidated Statement of Changes in Equity, the
have been consistently applied and adequately disclosed;
Consolidated Statement of Cash f lows and the related
the reasonableness of signif icant accounting estimates
notes 1 to 28, the Company Balance Sheet, the Company
made by the directors; and the overall presentation
Statement of Changes in Equity and the related notes
of the f inancial statements. In addition, we read all
29 to 36. The f inancial reporting framework that has
the f inancial and non-f inancial information in the
been applied in the preparation of the group f inancial
annual report to identify material inconsistencies with
statements is applicable law and International Financial
the audited f inancial statements and to identify any
Reporting Standards (IFRSs) as adopted by the European
information that is apparently materially incorrect
Union. The f inancial reporting framework that has
based on, or materially inconsistent with, the knowledge
been applied in the preparation of the parent company
acquired by us in the course of performing the
f inancial statements is United Kingdom Accounting
audit. If we become aware of any apparent material
Standards (United Kingdom Generally Accepted
misstatements or inconsistencies we consider the
Accounting Practice), including FRS101 ‘Reduced
implications for our report.
Disclosure Framework’ applicable in the UK and Republic
of Ireland.
OPINION ON FINANCIAL STATEMENTS
This report is made solely to the company’s members,
In our opinion:
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 report and for no other purpose. To the
fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company
and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
•
The f inancial statements give a true and fair view of
the state of the group’s and of the parent company’s
affairs as at 28 May 2017 and of the group’s prof it for
the period then ended
•
The group f inancial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union
•
The parent company f inancial statements have
been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice;
RESPECTIVE RESPONSIBILITIES OF DIRECTORS
and
AND AUDITOR
•
The f inancial statements for the group and parent
As explained more fully in the Directors’ Responsibilities
company have been prepared in accordance with the
Statement, the directors are responsible for the
requirements of the Companies Act 2006
preparation of the f inancial statements and for being
satisf ied that they give a true and fair view. Our
OPINION ON OTHER MATTER PRESCRIBED BY THE
responsibility is to audit and express an opinion on the
COMPANIES ACT 2006
f inancial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing
Practices Board’s Ethical Standards for Auditors.
In our opinion, based on the work undertaken in the
course of the audit:
•
The information given in the Strategic Report and
the Directors’ Report for the f inancial year for which
the f inancial statements are prepared is consistent
with the f inancial statements; and
Audito r’s Report 53
•
The Strategic Report and the Directors’ Report have
•
The parent company f inancial statements are not in
been prepared in accordance with applicable legal
agreement with the accounting records and returns;
requirements.
or
In the lig ht of the knowledge and understanding
of the company and it’s environment obtained in the
course of the audit, we have not identif ied any
material misstatements in the Strateg ic Report
and the Directors’ Report.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT
BY EXCEPTION
We have nothing to report in respect of the following
matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
•
Adequate accounting records have not been kept
by the parent company, or returns adequate for our
audit have not been received from branches not
visited by us; or
•
Certain disclosures of directors’ remuneration
specif ied by law are not made; or
• We have not received all the information and
explanations we require for our audit
ANDREW HALLS FCA
Senior statutory auditor
for and on behalf of Deloitte LLP
Statutory Auditor
Nottingham, UK
25 July 2017
54 Co nsol idat ed Fina nc ial St at ement s
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
Cos t of sales
GROSS PROFI T
Ot he r adminis trative expenses
S hare bas ed payments
Excep tion al administrative expenses
Tot al a dmin is trative expenses
OPERATI NG PROFIT
F ina nce cost s and similar charges
PROFIT/(L OSS) BE FORE TAX
In com e tax ex p ense
PROFIT/(L OSS) FOR THE PERIOD
Bas ic ear nin gs/(loss) per share (pence)
Dilu ted ear nin gs/(loss) per share (pence)
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 los s aris in g on changes in fair value of hedg ing
i ns trument s entered into for cash f low hedges
Exchange dif fe rence on translation of foreign operations
Gain s arisin g during the period on defe rred tax on
cas h f low h edg es
Gain s arisin g during the period on deferred tax on
s hare option s
52WKS ENDED
52WKS E ND E D
28 MAY 2017
29 MAY 2016
NOTE
£’000
£’000
2
5
5
27
5
6
7
26
26
NOTE
20
20
20
7
157,032
(69,981)
87,051
(76,729)
(829)
(341)
(77,899)
9,152
(241)
8,911
(2,568)
6,343
7.25
7.22
131,262
(61,003)
70,259
(62,296)
-
(3,128)
(65,424)
4,835
(6,015)
(1,180)
(613)
(1,793)
(2.04)
(2.04)
52WKS ENDED
52WKS E ND E D
28 MAY 2017
29 MAY 2016
£’000
6,343
(640)
11
112
177
£’000
(1,793)
(26)
(48)
15
-
TOTAL COMPREHENSIVE INCOME / (EXPENSE) FOR THE PERIOD
6,003
(1,852)
Con sol idated Fin an cial Statements 55
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
28 MAY 2017
29 MAY 2016
NOTE
£’000
£’000
NON-CUR RENT ASSETS
Prope r t y, plant and equipment
Intan g ibles
Deferred tax
T OTA L NON-CURRENT ASSE TS
CU RRENT A SSETS
Invento ries
Trade an d other receivables
Cu rrent cor poration tax receiva ble
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
Cu rrent cor poration tax paya ble
Bo rrow ings
Provis ion s
D erivative f in ancial instruments
TOTA L CURRENT LIABILITIE S
NON-CURRENT LIABILITIES
Bo rrow ings
TOTA L LIA BIL ITIES
NET ASSETS
EQU ITIES
Share capital
Hedg in g reser ve
Tran sl ation reser ve
Merge r reser ve
Retain ed ear nings
Share premium
TOTA L EQUITY
8
9
17
10
12
22
11
13
15
14
11
15
18
20
20
19
19
19
11,646
9,499
612
21,757
21,194
14,013
-
6,964
1,345
43,516
65,273
32,256
1,018
333
636
1,502
35,745
294
36,039
29,234
875
(139)
(61)
(125,807)
142,956
11,410
29,234
11,151
5,903
653
17,707
19,253
10,856
231
9,278
962
40,580
58,287
27,919
-
5,461
773
488
34,641
627
35,268
23,019
875
389
(72)
(125,807)
136,224
11,410
23,019
These financial statements of Joules Group plc (Company Registration Number 10164829) were approved by the Board of
Directors and authorised for issue on 25 July 2017 and were signed on behalf of the Board of Directors by -
MARC DENCH
Chief Financial Officer
25 July 2017
56 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
RES ER VE
R ESER V E
C APITAL
PR EMI UM
EAR N IN GS
£’000
£’000
£’000
£’000
£’000
£’000
TOTA L
EQUITY
£’000
Balance at 31 May 2015
(125,662)
Loss for the period
Other comprehensive
income for the period
-
-
Share buyback (note 18)
(145)
Share issue (note 18)
Share capital reduction (note 18)
Share issue (note 18)
-
-
-
Balance at 29 May 2016
(125,807)
Prof it for the period
Other comprehensive
income for the period
Gains arising during the
period on deferred tax on cash
f low hedges
Dividends Issued (note 28)
Shares issued (note 27)
Credit to equity for equity
settled share based payments
excl. NI (note 27)
Gains arising during the period
on deferred tax on share based
payments
-
-
-
-
-
-
-
400
-
(11)
-
-
-
-
389
-
(640)
112
-
-
-
-
(24)
91,510
-
(48)
-
-
-
-
(72)
-
11
-
-
-
-
-
-
-
-
37,009
(127,715)
71
875
-
-
-
-
-
-
-
-
-
-
-
-
-
11,410
11,410
-
-
-
-
-
-
-
10,302
(23,474)
(1,793)
(1,793)
-
-
-
(59)
(145)
37,009
127,715
-
-
11,481
136,224
23,019
6,343
6,343
-
-
(629)
112
(525)
(525)
-
-
737
737
177
177
Balance at 28 May 2017
(125,807)
(139)
(61)
875
11,410
142,956
29,234
Con sol idated Fin an cial Statements 57
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
Net cash in f low from operating activities
Prof it before interest and income taxes
Adjustme nts for:
Dep reciation
Amor tis ation
S hare bas ed payments
Impa irment of f ixed assets
F ina nce expen se
Ta x paid
In crease in inventor y
In crease in receivables
In crease in p ayables
Net cash f rom operating activities
Ca s h f low from investing activities
Pu rcha se of proper t y, plant and equipment and intang ible assets
8/9
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
Dividend paid
Net cash us ed in financing activities
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
18
18
21
28
21
22
NOTE
5 2W K S EN DED
28 MAY 2017
£’000
5 2W K S END ED
29 MAY 2016
£’000
9,152
4,835
8
9
27
4,920
1,688
829
-
(241)
(997)
(1,941)
(3,157)
4,108
14,361
(10,700)
(10,700)
-
-
(5,461)
(525)
(5,986)
(2,325)
9,278
11
6,964
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
58 Notes to the Consolida ted Fin anci al S tatem ent s
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, country shows and events and wholesale. The company’s
registered off ice is Joules Building, The Point, Rockingham Road, Market Harborough,
Leicestershire, LE16 7QU.
(IFRSs) Application of new and revised International Financial Reporting Standards (IFRSs)
Adoption of new and revised standards
There have been no new IFRSs adopted in the current year which have impacted the Group’s
f inancial statements.
At the date of authorisation of these f inancial statements, the following Standards and
Interpretations which have not been applied in these f inancial statements were in issue but
not yet effective (and in some cases had not yet been adopted by the EU):
IFRS 1 (amendments)
IFRS 2 (amendments)
IFRS 4 (amendments)
IFRS 9
IFRS 12 (amendments)
IFRS 17 (amendments)
IFRS 15
IFRS 16
IAS 7 (amendments)
IAS 12 (amendments)
IAS 28 (amendments)
IAS 40 (amendments)
Annual improvements
Share-based payment
Insurance contracts
Financial instruments
Annual improvements
Insurance contracts
Revenue from contracts with customers
Leases
Cash f low statements
Share-based payment
Annual improvements
Investment properties
The Directors do not expect that the adoption of the Standards and Interpretations listed
above will have a material impact on the f inancial statements of the Group in future periods,
except that
•
•
IFRS 9 will impact both the measurement and disclosures of Financial Instruments; and
IFRS 16 will have a material impact on the reported assets, liabilities and income
statement for the Group. Furthermore, extensive disclosures will be required by IFRS 16.
Beyond the information above, it is not practicable to provide a reasonable estimate of the
effect of these standards until a detailed review has been completed.
Note s to the Co nso lidat ed Fin an ci al St at em e nts 59
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 Group (its subsidiaries) to 28 May 2017 and 29 May 2016.
The historic f inancial 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 Group
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.
The preparation of f inancial 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 f inancial 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 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.
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 over the entity.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary
and ceases when the Company loses control of the subsidiary.
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.
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.
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.
60 Notes to the Consolida ted Fin anci al S tatem ent s
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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, typically 5-10 years
Fixtures and f ittings
- straight line over 3 – 5 years
Motor vehicles
- straight line over 4 years
Intangible assets
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
Note s to the Cons olidate d Financia l State m en ts 61
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
•
•
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.
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.
Impairment of tangible and intangible assets
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.
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
net prof it reported in the income statement because it excludes 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 balance sheet date.
62 Note s to the Cons olidat ed Fin an ci al St at em e nt s
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of
assets and liabilities in the 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 and deferred tax assets are recognised to the extent that it is probable
that taxable prof its will be available against which deductible temporary differences can
be utilised.
Deferred tax assets and liabilities are recognised for taxable temporary differences associated
with investments in subsidiaries and associates, and interests in joint ventures, following the
relevant accounting for utilising temporary differences.
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
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.
Foreign currencies
Transactions entered into by the Group entities in a currency other than the currency of
the primary economic environment in which they operate (their “functional currency”) are
recorded at the rates ruling when the transaction occur. Foreign currency monetary assets
and liabilities are translated at the rates ruling at the reporting date. Exchange differences
arising on the retranslation of unsettled monetary assets and liabilities are recognised
immediately in the consolidated statement of comprehensive income.
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.
Note s to the Cons olidate d Financia l State m ent s 63
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
Pensions
The Group operates a defined 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,
reducing revenue, when it is probable that the Group will be required to settle the obligation
under sales contracts. The returns provision is based on Management’s best estimates and the
actual returns could differ from these estimates.
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.
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.
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
64 Note s to the Conso lida te d Fin a nc ia l State m en ts
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
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
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’.
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.
Derivative financial instruments and cash f low hedges
The Group holds derivative f inancial instruments to hedge its foreign currency exposures.
These derivatives, classif ied as cash f low hedges, are initially recognised at fair value and
then re-measured at fair value at the end of each reporting date. Hedging instruments are
documented at inception and effectiveness is tested throughout their duration. Changes in the
value of cash f low hedges are recognised in other comprehensive income and any ineffective
portion is immediately recognised in the statement of comprehensive income. If the f irm
commitment or forecast transaction that is the subject of a cash f low hedge results in the
recognition of a non-f inancial asset or liability, then at the time the asset is recognised, the
associated gains or losses on the derivative that had been previously recognised on other
comprehensive income are included in the initial measurement of the asset or liability. For
hedges that do not result in the recognition of an asset or liability, amounts deferred in other
comprehensive income are recognised in the statement of comprehensive income in the same
period in which the hedged item affects net prof it.
Note s to the Co nso lidat ed Fin an ci al St at em e nts 65
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 27.
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.
66 Notes to the Consolidat ed Fin anci al St at em e nts
2. REVENUE
The revenue and prof it before taxation are attributable to the one principal activity
of the Group.
Sale of goods
5 2W K S EN DED
28 MAY 2017
£’000
5 2W K S END ED
29 MAY 2016
£’000
157,032
157,032
131,262
131,262
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.
There are no discontinued operations in the period.
52 WEEKS ENDED 28 MAY 20 17
Revenue
Cost of sales
GROSS PROFIT
Administration expenses
SEGMENT RESULT
RECONCILIATION OF SEGMENT RESULT TO PROFIT BEFORE TAX
Segment result
Depreciation and amortisation
Share based payments (incl NI)
Exceptional costs
Net finance expense
PROFIT BEFORE TAX
R ETAIL
£ ’00 0
WHOLESALE
£ ’00 0
OT HER
£ ’00 0
TOTA L
£’000
111,884
44,749
399
157,032
(42,389)
(27,592)
-
(69,981)
69,495
17,157
399
87,051
(39,171)
(8,246)
(22,704)
(70,121)
30,324
8,911
(22,305)
16,930
30,324
8,911
(22,305)
16,930
(3,901)
(364)
(2,344)
(6,609)
(828)
(341)
(241)
8,911
Note s to the Cons olidate d Financia l State m ent s 67
3. SEGMENT REPORTING (continued)
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
Exceptional costs
Net finance expense
LOSS BEFORE TAX
Geographical Information
R ETAIL
£ ’00 0
WHO LES ALE
£ ’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)
(16,625)
(56,769)
22,925
6,811
(16,246)
13,490
22,925
(3,306)
6,811
(16,246)
13,490
(258)
(1,963)
(5,527)
(3,128)
(6,015)
(1,180)
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 28 May 2017
52 weeks ended 29 May 2016
4. INFORMATION REGARDING DIRECTORS AND EMPLOYEES
Staff costs during the period
Wages and salaries
Social security costs
Other pension costs
Equity-settled share-based payment charges (incl. NI)
Prior year wages and salaries adjusted to include warehouse salary costs.
UK
£ ’00 0
IN TER N AT IONA L
£ ’00 0
139,030
118,041
18,002
13,222
TOTA L
£’000
157,032
131,262
5 2W K S EN DED
28 MAY 2017
£’000
26,321
2,393
232
829
29,775
22,8411,885227-24,95352WKS ENDED29 MAY 2016 £’000 68 Note s to the Conso lida te d Fin a nc ia l State m en ts
4. INFORMATION REGARDING DIRECTORS AND EMPLOYEES (continued)
Average number of persons employed
Head office
Stores and Shows
Warehousing
Directors’ remuneration
The tables below detail the total remuneration earned by each Director.
N UMBER
N UMBE R
416
1,010
120
1,546
52WEEK S END ED
28 M AY 20 17
Executive Directors
T S L Joule
C N Porter
M S Dench
Non-Executive Directors
N W McCausland
J C Little
D A Stead
Total
52WEEK S END ED
29 M AY 20 16
Executive Directors
T S L Joule
C N Porter
M S Dench
Non-Executive Directors
N W McCausland
J C Little
D A Stead
Total
SALARIES
/FEES
£000
TAXABLE
BENEFITS
£000
PENSION
£000
CASH BONUS
£000
BONUS DEFERRED
INTO SHARES
£000
TOTAL
REMUNERATION
£0 00
335.0
345.0
235.0
75.0
50.0
55.0
35.5
22.6
12.0
-
-
-
16.8
17.3
11.8
-
-
-
166.2
168.6
169.8
-
-
-
166.2
168.6
169.8
-
-
-
719.6
722.0
598.3
75.0
50.0
55.0
1,095.0
70.1
45.9
504.5
504.5
2,219.9
SALARIES
/FEES
£000
TAXABLE
BENEFITS
£000
PENSION
£000
CASH BONUS
£000
BONUS DEFERRED
INTO SHARES
£000
TOTAL
REMUNERATION
£0 00
290.1
287.3
128.3
40.0
7.1
7.8
760.5
35.3
20.4
5.1
-
-
-
14.5
14.4
6.4
-
-
-
-
-
-
-
-
-
-
-
288.2
-
-
-
339.9
322.1
428.0
40.0
7.1
7.8
60.8
35.3
1,008.9
288.2
1,144.8
The number of directors to whom retirement benef its have accrued during the period was 3 (2016: 3).
353998881,439
Note s to the Cons olidate d Financia l State m en ts 69
5. PROFIT FOR THE YEAR
Prof it (before tax) is stated after charging:
Cost of inventories recognised as expense
Staff costs (see note 4)
Transportation, carriage and packaging
Property, rent and service charges
Depreciation of property, plant and equipment
Amortisation of internally-generated intangible assets included
in other operating expenses
Impairment of property, plant and equipment
Impairment loss recognised on trade receivables
Net foreign exchange (gains)/losses
Gain on disposal of property, plant and equipment
Write down of inventory in the period
Other expenses
Total
5 2W K S EN DED
28 MAY 2017
£’000
5 2W K S END ED
29 MAY 2016
£’000
61,851
29,775
8,354
11,658
4,920
1,688
-
240
(247)
-
126
51,376
24,953
6,905
9,267
4,516
1,011
380
16
304
(15)
196
29,515
147,880
27,518
126,427
Other expenses include £341,000 for May 2017 (May 2016: £3,128,000) of exceptional items
which have been disclosed separately on the face of the income statement in order to
summarise the underlying results. The exceptional costs in the period of £341,000 relate to
IPO transaction costs (2016: £2,748,000 of IPO related transaction costs and £380,000 of
other non-recurring costs, including asset impairment). Neither ‘underlying prof it or loss’
nor ‘exceptional items’ are def ined by IFRS, however, the Directors believe that the
disclosures presented in this manner provide a clear presentation of the f inancial
performance of the group.
70 Note s to the Cons olidat ed Fin an ci al St at em e nt s
5. PROFIT FOR THE YEAR (continued)
Auditors’ remuneration
The analysis of auditors’ remuneration is as follows:
Audit of these financial statements
Audit of financial statements of subsidiaries of the Company
Total audit fees
Other services pursuant to legislation:
Tax compliance
Tax advice
Services relating to IPO
Remuneration and share plan advisory
Audit related assurance services
Total non-audit fees
6. INTEREST PAYABLE AND SIMILAR CHARGES
Bank loan interest
Finance loan interest
Shareholder loan note interest
Amortisation of debt costs
5 2W K S EN DED
28 MAY 2017
£’000
5 2W K S END ED
29 MAY 2016
£’000
6
74
80
27
32
-
54
13
126
4
40
44
66
74
803
-
5
948
5 2W K S EN DED
28 MAY 2017
£’000
5 2W K S E NDE D
29 MAY 2016
£’000
176
65
-
-
241
378
83
4,676
878
6,015
During the prior period the Shareholder loan note debt was settled and all remaining
unamortised debt costs were expensed. Amortisation of debt costs relates 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.
Note s to the Co nso lidat ed Fin an ci al St at em e nts 71
7. 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 17)
Adjustment in respect of prior periods
Origination and reversal of timing differences
Effect of adjustment in tax rate
Total deferred taxation charge
Tax charge for the period (note 7b)
In addition to the amount charged to the income statement, the following amounts
relating to tax have been recognised in other comprehensive income.
Deferred taxation (note 17)
Gains arising during the period on deferred tax on cash f low hedges
Gains arising during the period on deferred tax on share options
Total income tax gain recognised in other comprehensive income
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 not deductible for tax purposes and other permanent differences
IPO expenses not deductible for tax purposes
Depreciation and amortisation on non-qualifying assets
Difference in overseas tax rate
Effect of adjustment in tax rate
Adjustment in respect of prior period
Tax expense for the period (note 7a)
5 2W K S EN DED
28 MAY 2017
£’000
5 2W K S END ED
29 MAY 2016
£’000
2,563
(347)
21
2,237
366
(50)
15
331
2,568
869
(438)
17
448
225
(142)
82
165
613
5 2W K S EN DED
28 MAY 2017
£’000
5 2W K S E ND E D
29 MAY 2016
£’000
112
177
289
15
-
15
5 2W K S EN DED
28 MAY 2017
£’000
5 2W K S E ND E D
29 MAY 2016
£’000
8,911
19.8%
1,767
399
60
287
21
15
19
2,568
(1,180)
20.0%
(236)
73
739
151
17
82
(213)
613
72 Note s to the Cons olidat ed Fin an ci al St at em e nt s
7. INCOME TAX (continued)
The Finance Act 2015 included provisions to reduce the rate of UK corporation tax to 19%
with effect from 1 April 2017. The Finance Act 2016 included provisions to further reduce the
rate of UK corporation tax to 17% with effect from 1 April 2020. Deferred taxation is measured
at tax rates that are expected to apply in the periods in which temporary timing differences
are expected to reverse based on tax rates and laws that have been enacted or substantively
enacted at the balance sheet date. Accordingly the rate used to calculate deferred tax assets
and liabilities is the effective rate at the date the deferred tax is expected to be realised.
The UK corporation tax at the standard rate for the year is therefore 19.8% (2016: 20.0%).
8 & 9. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
PROPER TY, PLA N T A N D EQUIPMEN T
IN TA NG IBLES
LEASEHOLD
IMPROVEMENTS
£’0 00
FIXT UR ES
AN D FITT IN G S
£ ’00 0
MOTO R
VEHIC L ES
£ ’00 0
TOTA L
£ ’00 0
IT SY ST EMS
£ ’00 0
COST
At 31 May 2015
Additions
Disposals
At 29 May 2016
Additions
Disposals
At 28 May 2017
ACCUMULATED DEPRECIATION/
AMORTISATION
At 31 May 2015
Charge for the period
Disposals
Impairment
At 29 May 2016
Charge for the period
Disposals
Impairment
AT 28 MAY 2017
NET BOOK VALUE
At 31 May 2015
At 29 May 2016
At 28 May 2017
155
-
(55)
100
-
-
100
119
5
(55)
-
69
8
-
-
77
36
31
23
26,761
4,589
(8,570)
22,780
5,415
-
530
-
(404)
126
-
-
27,446
4,589
(9,029)
23,006
5,415
-
TOTA L
£’000
5,929
2,498
5,929
2,498
(674)
(674)
7,753
5,284
-
7,753
5,284
-
28,195
126
28,421
13,037
13,037
15,361
4,504
508
7
15,988
4,516
(8,570)
(404)
(9,029)
380
11,675
4,906
-
-
-
111
6
-
-
380
11,855
4,920
-
-
1,513
1,011
(674)
-
1,850
1,688
-
-
1,513
1,011
(674)
-
1,850
1,688
-
-
16,581
117
16,775
3,538
3,538
11,400
11,105
11,614
22
15
9
11,458
11,151
11,646
4,416
5,903
9,499
4,416
5,903
9,499
Property, Plant and Equipment and Intangibles
During the prior period the Directors conducted a detailed review of the Group’s f ixed assets, as
a result of this review £9,703,000 (£9,029,000 of Property, Plant and Equipment and £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 were recorded as a disposal in that period.
10. INVENTORIES
Goods for resale
Goods in transit
Note s to the Co nso lidat ed Fin an ci al St at em e nts 73
2 8 MAY 2 01 7
£ ’00 0
2 9 MAY 2016
£’000
18,768
2,426
21,194
14,594
4,659
19,253
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 28 May 2017 was £61,851,000 (2016: £51,376,000).
The cost of inventories recognised as an expense includes £126,000 for 52 weeks ended 28 May
2017 (2016: £196,000) in respect of write-downs of inventory to net realisable value. During the
period £39,000 (2016: £33,000) 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 for.
11. DERIVATIVE FINANCIAL INSTRUMENTS
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 28 May 2017, the Group has 136 (2016: 65) forward foreign exchange contracts outstanding. Derivative
financial instruments are carried at fair value, further detailed in note 24.
Prior year derivatives have been restated to separately disclose the financial derivative gross asset and gross
liability as they are not permitted to be settled net.
The following table details the USD foreign currency contracts outstanding as at the balance sheet date.
AVERAGE
EXCHANGE R ATE
FOR EIGN
C UR REN C Y
N OTIO NA L VALUE
FA IR VA LUE
201 7
£/$
201 6
£/$
2 01 7
$ ’00 0
2 01 6
$ ’00 0
2 01 7
£ ’00 0
2 01 6
£ ’00 0
2 01 7
£ ’00 0
2016
£’000
OUTSTANDIN G
CONTRACT S
Buy U.S. Dollars
Less than 3 months
1.3125
1.5394
25,500
13,500
18,985
8,960
3 to 6 months
1.2819
1.4764
13,500
20,000
10,485
13,524
920
24
6 months and above
1.2734
1.4430
90,700
29,150
71,225
19,908
(1,101)
1.2822
1.4778
129,700
62,650
100,695
42,392
(157)
300
149
25
475
The Company does not hold Euro to GBP forward options (2016: 2 Euro to GBP forward options).
The US Dollar spot rate at 28 May 2017 was $1.2791/£1.
The fair value of cash flow hedges of the Group as at 28 May 2017 was an asset of £1,345,000
(2016: £962,000) and a liability of £1,502,000 (2016: £488,000) resulting in a net liability of £157,000
(2016: net asset £474,000), further detailed in note 24.
74 Note s to the Conso lida te d Fin a nc ia l State m en ts
12. TRADE AND OTHER RECEIVABLES
Trade receivables – gross
Allowance for doubtful debts
Trade receivables – net
Other receivables
Prepayments
2 8 MAY 2 01 7
£ ’00 0
2 9 MAY 2016
£’000
2,852
(405)
2,447
1,984
9,582
2,915
(165)
2,750
824
7,282
Total trade and other receivables
14,013
10,856
Movement in the allowance for doubtful debts
Balance at beginning of period
Bad debt write off
Movement in doubtful debt estimate
Balance at end of period
2 8 MAY 2 01 7
£ ’00 0
2 9 MAY 2016
£’000
(165)
80
(320)
(405)
(149)
119
(135)
(165)
AGEING OF PAST DUE
TRADE RECEIVABLES
GR OSS
£’00 0
PR OV ISION
£ ’00 0
2 8 MAY 2 01 7
Current
0-30 days overdue
31-60 days overdue
>60 days overdue
Total trade receivables
1,574
629
283
366
2,852
-
(90)
(169)
(146)
(405)
N ET
£ ’00 0
1,574
539
114
220
2,447
All of the other receivables and prepayment balances above are deemed to be current; the
disclosures above 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 specif ic, customer by customer basis and a general basis.
The Group has no signif icant 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 £873,000 (2016: £1,020,000) which are past due at the reporting date for which the Group
has not provided as there has not been a signif icant change in credit quality and the amounts
are still considered recoverable.
29 MAY 20161,7307063571222,915GROSS£’0001,730679301402,750NET£’000-(27)(56)(82)(165)PROVISION£’000 Note s to the Cons olidate d Financia l State m ent s 75
13. TRADE AND OTHER PAYABLES
Trade payables
Other taxation and social security
Other payables
Accruals and deferred income
2 8 MAY 2 01 7
£ ’00 0
14,074
1,931
1,888
14,363
32,256
Trade creditors and accruals principally comprise amounts outstanding for trade purchases
and ongoing costs.
The Directors consider that the fair value of trade and other payables is not materially different
from the carrying value.
14. PROVISIONS
Returns provision
Dilapidations
At 29 May 2016
Additional provision during the period
Utilisation of provision
At 28 May 2017
Returns provision
2 8 MAY 2 01 7
£ ’00 0
2 9 MAY 2016
£’000
405
231
636
DIL APIDAT ION S
£ ’00 0
R ETU RN S
PR OV IS ION
£ ’00 0
267
60
(96)
231
506
206
(307)
405
506
267
773
TOTA L
£’000
773
266
(403)
636
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 leased properties 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.
29 MAY 2016£’00015,3531,0691,15910,33827,919 76 Notes to the Consolidat ed Fin ancia l State m en t s
15. BORROWINGS
Bank loans
Finance loans
Borrowings are repayable as follows:
Bank loans
Within one year
Finance loans
Within one year
Between one and two years
Between two and five years
Total borrowings
Between one and two years
Between two and five years
After five years
Financing costs capitalised
On demand or within one year
2 8 MAY 2 01 7
£ ’00 0
-
627
627
-
333
210
84
627
210
84
-
-
294
333
627
Summary of borrowing arrangements
The bank loan is a Revolving Credit Facility in which amounts drawn down are generally
repayable within three months. The facility matures in July 2021 following an amendment
and extension that was completed after the year end in July 2017. The f inance loans are secured
against the assets to which they relate. Interest is paid at varying rates above base rate.
The weighted average interest rates paid during the period were as follows:
Finance loans
Bank loans
5 2 W K S EN DED
2 8 MAY 2 01 7
%
5 2 W K S END ED
2 9 MAY 2016
%
7.7
2.1
7.4
3.0
29 MAY 2016£’0005,0091,0796,0885,0094523332941,079333294--6275,4616,088 Note s to the Cons olidate d Financia l State m ent s 77
16. 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
2 8 MAY 2 01 7
£ ’00 0
2 9 MAY 2016
£’000
10,394
34,669
20,061
65,124
8,040
27,881
17,550
53,471
2 8 MAY 2 01 7
£ ’00 0
2 9 MAY 2016
£’000
483
772
151
1,406
333
359
-
692
17. 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
Credit/(charge) to income statement
Credit due to cash f low hedges
Credit due to share options
Balance at end of period
Total deferred tax asset at end of period
Movement
Balance brought forward
Charge to income statement (note 7)
Credit to other comprehensive income (note 7)
Balance at end of period
There is no unprovided deferred tax in the current period for the Group (2016: £nil).
The deferred tax asset recognised in the current period is expected to be utilised against
future taxable prof its.
2 8 MAY 2 01 7
£ ’00 0
2 9 MAY 2016
£’000
704
(444)
260
(51)
113
112
177
351
612
653
(331)
289
612
535
169
704
268
(334)
15
-
(51)
653
803
(165)
15
653
78 Note s to the Conso lida te d Fin a nc ia l State m en ts
18. CALLED UP SHARE CAPITAL
Allotted and issued
2 8 MAY 2 01 7
£ ’00 0
2 9 MAY 2016
£’000
87,500,690 Ordinary shares of £0.01 each (2016: 87,499,796)
875
875
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 and reserves of the Group 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 date of the company’s f irst accounting period end
(31 May 2015) and as at the opening balance sheet date of the period end (25 May 2014).
Share capital and reserves of the company are therefore a result of 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 shareholdings 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 loan notes which existed at
the time and 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 79
19. OTHER RESERVES
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
Balance at 28 May 2017
Retained earnings
£ ’00 0
11,410
11,410
The movement on retained earnings is as set out in the consolidated statement of changes in
equity. Retained earnings represent cumulative prof its 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 52 weeks ended 29 May 2016 period arose
due to certain shareholders of Joules Investment 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 Holding Limited.
20. HEDGING AND TRANSLATION RESERVE
GROUP
Balance as at 29 May 2016
Other comprehensive income for the period
Losses arising during the period on deferred tax on cash f low hedges
Balance as at 28 May 2017
Hedging reserve
HEDG IN G
R ESER V E
£ ’00 0
T RA N SLATI ON
R ES ER VE
£’000
389
(640)
112
(139)
(72)
11
-
(61)
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 prof it
or loss only when the hedge transaction impacts the prof it or loss or is included as a basis
adjustment to the non-f inancial 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.
80 Note s to the Cons olidat ed Fin an ci al St at em e nt s
21. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
(Decrease)/increase in cash in the period
Effect of foreign exchange rate changes
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
Non cash settlement of loan notes
Net funds/(debt) at start of the year
Net funds at end of year
22. CASH AND CASH EQUIVALENTS
Cash and cash at bank
23. ANALYSIS OF NET CASH/(DEBT)
Cash at bank and in hand
Bank loans
Finance loans
Total
2 8 MAY 2 01 7
£ ’00 0
(2,325)
11
5,461
3,147
-
-
-
3,190
6,337
2 8 MAY 2 01 7
£ ’00 0
6,964
2 9 MAY 2 01 6
£ ’00 0
N ON - C A SH C HA NG ES
£ 00 0
C AS H FLOW
£ ’00 0
2 8 MAY 2017
£’000
9,278
(5,009)
(1,079)
3,190
-
-
-
-
(2,314)
5,009
452
3,147
6,964
-
(627)
6,337
29 MAY 2016£’00029 MAY 2016£’0007,205(48)13,91321,070(4,676)(878)37,009(49,335)3,1909,278 24. FINANCIAL INSTRUMENTS
FAIR VALUES
Categories of financial instruments
Carrying value of financial assets:
Cash and cash equivalents
Trade and other receivables
Cash f low hedges
Total financial assets
Carrying value of financial liabilities:
Trade creditors
Other payables
Borrowings
Cash f low hedges
Total financial liabilities
Note s to the Cons olidate d Financia l State m en ts 81
NOTE
2 8 MAY 2 01 7
£ ’00 0
2 9 MAY 2016
£’000
22
12
11
13
13
15
11
6,964
14,013
20,977
1,345
22,322
(14,074)
(18,182)
(627)
9,278
10,856
20,134
962
21,096
-
(15,353)
(12,566)
(6,088)
(32,883)
(34,007)
(1,502)
(488)
(34,385)
(34,495)
Interest rate sensitivity analysis
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 28 May 2017 would decrease/
increase by £41,000 (2016: £57,000).
This has been calculated by applying the amended interest rate to the weighted average rate
of borrowings for the period to 28 May 2017, 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
28 May 2017 would increase/decrease by £82,000 and £101,000 respectively (2016: £369,000 and
£451,000). 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 15. 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 12 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.
82 Notes to the Consolidat ed Fin anci al St at em e nts
24. FINANCIAL INSTRUMENTS (continued)
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 12
represents the Directors’ best estimate of the maximum exposure to credit risk at period-end.
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 £4,667,000 (2016: £4,116,000) of assets and £984,000 (2016:
£1,903,000) 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 £613,681 (2016: £1,300,565) and £1,114,357 (2016: £903,916) respectively,
relating to foreign entities. The Group mitigates a signif icant amount of the exchange rate risk
via purchases of forward foreign currency contracts.
25. RELATED PARTY TRANSACTIONS
Transactions between the company and its subsidiaries, which are related parties, have been
eliminated on consolidation.
The remuneration of the Directors, who are the key management personnel of the Group, is
disclosed in note 4 and the Directors’ Remuneration Report. In addition, Directors and key
management participate in share schemes, further details of which can be found in note 27.
The Directors control 31,171,782 shares (2016: 31,011,102 shares) in Joules Group plc, which
represents 35.6% (2016: 35.4%) of the issued share capital.
26. 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.
Note s to the Cons olidate d Financia l State m ent s 83
26. EARNINGS PER SHARE (continued)
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.
Basic earnings/(loss) per share (pence)
Diluted earnings/(loss) per share (pence)
The calculation of basic and diluted earnings per share is based on the following data:
Earnings
5 2 W EEK S
EN DED 2 8 MAY
2 01 7
7.25
7.22
5 2 W EEK S
EN DED 2 8 MAY
2 01 7 £’0 00
Earnings/(loss) for the purpose of basic and diluted earnings per share
6,343
Number of shares
5 2 W EEK S
EN DED 2 8 MAY
2 01 7
Weighted number of ordinary shares for the purpose of basic earnings per share
87,500,690
Potentially dilutive share awards
294,295
Weighted number of ordinary shares for the purpose of diluted earnings per share
87,794,985
27. SHARE BASED PAYMENTS
Summary of movement in awards:
Number of shares
Oustanding at 29 May 2016
Granted during the year
Lapsed during the year
Exercised during the year
Outstanding at 28 May 2017
Exercisable at 28 May 2017
ESOP
446,875
LT IP
-
SAY E
TOTA L
-
446,875
268,164
1,896,938
377,757
2,542,859
-
-
-
-
(37,110)
(894)
(37,110)
(894)
715,039
1,896,938
339,753
2,951,730
-
-
-
All share options were valued using the Black-Scholes model. 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.
52 WEEKS ENDED 29 MAY 201652 WEEKS ENDED 29 MAY 2016 £’00052 WEEKS ENDED 29 MAY 2016(2.04)(2.04)(1,793)87,499,7962,43187,502,227 Note s to the Co nso lidat ed Fin an ci al St at em e nts 85
27. SHARE BASED PAYMENTS (continued)
The fair value of the total shares issued during the period, and measured as at issue date is
£5,314,000.
The inputs into the model were as follows:
Weighted average share price
Weighted average exercise price
No. of employees
Shares under option
Expected volatility
Expected life (Years)
Risk-free rate
Possibility of ceasing employment before vesting
Expectations of meeting performance criteria
Expected dividend yields
ES OP
1.83
1.32
10
LT IP
1.77
Nil - 0.01
80
SAYE
1.67
1.34
202
715,039
1,896,938
377,577
28.0%
3-10
0.06%
28.0%
2.8-3
0.08%
0%
0%-10%
100%
60%-100%
1.9%
1.9%
28.0%
3
0.08%
10%
100%
1.9%
The Group recognised a total expense of £829,000 during the year (2016: Nil) relating to
equity-settled share based payments, including employer’s National Insurance contributions of
£92,000 (2016: Nil).
Executive Share Option Plan (“ESOP”)
The Group operated a share option scheme during the period for certain employees under
the Executive Share Option Plan (“ESOP”). The different options vest between two years and
three years and have an exercise life between three and ten years from grant date. All option
schemes are subject to continued employment over the vesting period.
Long Term Incentive Plan (“LTIP”)
The Board approved Long Term Incentive Plan 2016 (‘LTIP 2016’) allows the grant of options
to executive directors and senior management of the Group in the form of nil-cost options
over ordinary shares in Joules Group plc. The options are exercisable three years after the
date of grant subject to achieving certain stretching targets. For the Executive directors
and members of the operating board, the target is based on an EPS target in the f inal year of
the plan, ending May 2019. For other senior management awards the target is based on the
cumulative PBT over the three years to May 2019. The calculation includes an assumption that
10% of senior managers on the scheme would cease employment before vesting.
Save As You Earn Scheme (“SAYE”)
Under the terms of the SAYE scheme, the Board grants options to purchase ordinary shares
in the company to employees who enter into the HMRC-approved SAYE scheme for a term
of three years. Options are granted at up to 20% discount to the market price of the shares
on the day proceeding the date of offer and are exercisable for a period of six months after
completion of the SAYE contract.
28. DIVIDENDS
In the period an interim dividend of 0.60 pence per share was paid with a total value of
£525,001. No dividends were declared or paid in the prior period. The directors are proposing
a f inal dividend of 1.20 pence per share with a total value of £1,050,008. This dividend has not
been accrued in the consolidated statement of f inancial position and will be put for approval
at the AGM on 27 September 2017. This would bring total dividends for the period to 1.8 pence
per share with a total value of £1,575,009.
88 Notes to the Company Fina nc ia l St at e me n ts
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
NON-CUR RENT ASSETS
Invest ments
CU RRENT A SSETS
Ot he r debt ors
Cas h at ban k and in hand
T OTA L CURRENT ASSETS
T OTA L ASSETS
LIA BILI TIES
CU RRENT L IA BILITIES
Ot he r payables
NET A SSETS
CA PITAL A ND RESERVES
Called up s hare capital
S hare premium
Lo ss for th e period
Prof it and los s account
SHA REHOLDERS’ FUNDS
28 MAY 2017
29 MAY 2016
NOTE
£’000
£’000
30
31
32
33
34
139,980
139,980
5
11
16
1
-
1
139,996
139,981
(906)
-
139,090
139,981
875
11,410
(366)
127,171
139,090
875
11,410
(19)
127,698
139,981
The parent company loss for the period was £(366,000), (2016: loss of £(19,000)).
These financial statements of Joules Group plc (Company Registration Number 10164829)
were approved by the Board of Directors and authorised for issue on 25 July 2017 and were signed
on behalf of the Board of Directors by -
MARC DENCH
Chief Financial Officer
25 July 2017
Note s to the Co mpan y Financial St at em e nts 89
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
NOTE
33
33
33
33
33/34
Upon incorporation
Share issue
Share issue
Share issue
Capital reduction
Share issue
Loss for the period
Balance at 29 May 2016
Dividend paid
35
Loss for the year and total
comprehensive income
Balance at 28 May 2017
SHAR E
C APITAL
£ ’00 0
-
1
91,509
37,009
(127,715)
71
-
875
-
-
SHAR E
PR EMI UM
£ ’00 0
R ETAIN ED
EAR N IN GS
£ ’00 0
TOTA L
EQUI TY
£’000
-
1
91,509
37,009
-
11,481
(19)
-
-
-
-
127,715
-
(19)
127,696
139,981
(525)
(366)
(525)
(366)
-
-
-
-
-
11,410
-
11,410
-
-
875
11,410
126,805
139,090
90 Notes to the Company Fina nc ia l S tatem ent s
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
29. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The Company was incorporated on 1 May 2016, the f irst period of account was therefore, the 29
days ending 29 May 2016. These separate f inancial statements of Joules Group plc were 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:
•
•
•
•
•
income statement
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 £(366,000) (2016: loss of £(19,000)).
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.
30. INVESTMENTS
Cost and Net Book Value
At 29 May 2016
At 28 May 2017
£ ’00 0
139,980
139,980
On 26 May 2016 Joules Group plc acquired the entire share capital of Joules Investments
Holdings Limited.
Note s to the Company Financ ial State m ent s 91
30. INVESTMENTS (continued)
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 the table below. All subsidiaries
have been in existence for the whole of the reporting period.
Subsidiaries
As at the period-end the Group has the following subsidiaries, those marked with * being indirect holdings:
SUBSIDIARY NAME
NATURE OF BUSINESS
PLACE OF
INCORPORATION
AND OPERATION
REGISTERED ADDRESS
PROPORTION
OF OWNERSHIP
INTEREST
PROPORTION
OF VOTING
POWER HELD
Joules Investments
Holding company
England and
Joules Building, 16 The Point, Rockingham
100%
100%
Holdings Limited
Wales
Road, Market Harborough, LE16 7QU
Joules Limited*
Retailer
England and
Joules Building, 16 The Point, Rockingham
100%
100%
Wales
Road, Market Harborough, LE16 7QU
Joules Hong Kong
Overseas trading
Hong Kong
18/F, United Centre, 95 Queensway,
100%
100%
Limited*
entity
Admiralty, Hong Kong
Joules Clothing Shanghai
Overseas office
China
Room 1401-1404, No.432 West Huaihai
100%
100%
Company Limited*
Road, Changning district, Shanghai, China
Joules USA Inc.*
Overseas trading
USA
entity
103 Foulk Road, Suite 202,
Wilmington, DE19803, USA
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.
31. OTHER DEBTORS
Prepayments and accrued income
2 8 MAY 2 01 7
£ ’00 0
2 9 MAY 2016
£’000
5
5
1
1
92 Note s to the Compa ny F ina nc ia l St at em e nt s
32. OTHER PAYABLES
Trade creditors
Payables due to subsidiary
Taxation and social security
Accruals
2 8 MAY 2 01 7
£ ’00 0
2 9 MAY 2016
£’000
11
862
5
28
906
-
-
-
-
-
The payables due to subsidiary relates to administrative expenses incurred by Joules Limited on behalf
of Joules Group Plc. The terms of this intercompany payable is at nil interest, payable on demand.
33. CALLED UP SHARE CAPITAL
Allotted and issued
2 8 MAY 2 01 7
£ ’00 0
87,500,690 Ordinary shares of £0.01 each (2016: 87,499,796)
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.
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 other reserves.
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.
34. 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
Balance at 28 May 2017
35. DIVIDEND
£ ’00 0
11,410
11,410
Details of the dividend paid is shown in note 28 of the consolidated f inancial statements.
36. 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 25 of the Consolidated Financial Statements.
87529 MAY 2016£’000 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 In format ion 93
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