Source - RNS
RNS Number : 1304J
Joules Group plc
07 September 2016
 

 

 

7  September 2016

Joules Group Plc

("Joules", the "Group")

 

Annual Results for the 52 weeks ended 29 May 2016 

 

A transformational year for the Joules brand

 

Highlights:

 

2016

52 weeks

2015

53 weeks

Change

 

Group Revenue

£131.3m

£116.4m

12.8%

-     comparable 52 week basis1

 

 

14.2%

Underlying2 EBITDA

£13.5m

£10.5m

28.6%

Underlying Profit Before Tax3

£7.5m

£5.3m

41.5%

Basic underlying EPS4

6.9p

4.8p

42.9%

 

  • Group revenue increased 14.2% for the comparable 52 week period
  • Retail sales increased 12.8%1   
    • E-commerce sales up 17.3%1 supported by the re-launch of Joules.com in September 2015
    • Store sales up 13.1%1 supported by 10 new store openings
  • Wholesale sales increased 18.3%1 reflecting the growing appeal of the Joules brand in the UK and target international markets
  • International revenue now represents 10.1% of Group revenue
  • Joules active customer base increased by 33% to 824,000

 

Colin Porter, Chief Executive, commented:

"FY16 was a transformational year in the development and expansion of the Joules brand which included our successful admission to AIM in May. 

We have delivered strong growth across our Retail and Wholesale channels, significantly increasing profitability by effectively leveraging our operating cost base. Our active customer base and international sales have also grown impressively, all of which is great testament to the growing strength and appeal of Joules as a premium lifestyle brand.

Group trading to date in FY17 has been in line with expectations and early feedback on our Spring/Summer 17 ranges from our trade customers has been positive.  The Group has a clear growth strategy, underpinned by the consistent quality and design of our products and the skill and commitment of our enterprising team.

The Board remains confident in the brand's long term development in the UK and internationally."

1 On a comparable 52 week basis, FY15 was a 53 week period. 

2 Underlying excludes exceptional and non-recurring items, primarily related to the costs of admission to AIM and the capital structure in place prior to admission. 

3 Reconciliation to Statutory profit before tax:

£million

FY16

FY15

Underlying profit before tax

7.5         

5.3

IPO transaction costs

(2.7)

-

Shareholder loan note interest

(5.6)

(4.6)

Exceptional asset impairment

(0.3)

(0.5)

Other non-recurring items

(0.1)

(0.1)

Statutory profit before tax

(1.2)

0.1

 

4 Earnings Per Share is calculated as: underlying PBT (as described above) less tax at the statutory tax rate, on a pro forma basis i.e. assuming that the number of shares in issue immediately post-IPO were in issue through the entire period.

 

Enquiries:

Joules Group plc

Tel: +44 (0) 1858 435 255

Colin Porter, CEO

Marc Dench, CFO

 

 

Peel Hunt LLP, Nominated Advisor

Tel: +44 (0) 20 7418 8900

Dan Webster

Adrian Trimmings

George Sellar

 

 

Liberum Capital Limited

Tel: +44 (0) 20 3100 2000

John Fishley

Anna Hartropp

Joshua Hughes

 

 

Hudson Sandler (Financial PR)

Tel: +44 (0) 20 7796 4133

Alex Brennan

Lucy Wollam

 

 

About Joules

Joules is a British, premium lifestyle brand.  The Group designs and sells Joules branded clothing, footwear, accessories and homeware and operates a balanced multi-channel proposition which encompasses retail (stores and e-commerce), wholesale and other smaller channels such as country shows and events and licensing.

Joules has 97* UK and ROI stores, a customer database of approximately 2 million* customers, an established e-commerce platform and a fast growing international presence.  Joules is also a top selling wholesale brand in major UK retailers such as John Lewis and Next Label and, in 2015, won "Fashion Retail Business of the Year" in the £30-£100m turnover category at the Drapers Awards.

The Joules brand is at the heart of the business and encompasses values of "time-off", heritage, countryside, Britishness, family and fun.  These brand values are reflected in the product designs, which are recognisable for their distinctive colours, prints, detail and quality.

www.joules.com                                                                                www.joulesgroup.com

 

*As at 29 May 2016

 

 

 

CHAIRMAN'S STATEMENT

 

INTRODUCTION

This is our first Annual Report as a public company and it is my great pleasure to welcome new shareholders to Joules.  As Chairman for the last three years I have seen Joules grow and develop into the established and much-loved premium lifestyle brand it is today and I am now even more excited about our future prospects than ever before.

 

This was a significant year for the business with the Company's admission to the AIM market of the London Stock Exchange in May 2016 being a notable highlight.  Joules has an authentic British heritage; a strong and distinctive brand; an enviable track record; and significant growth opportunities ahead. We were delighted with the enthusiasm and shareholder support shown during our Initial Public Offering ('IPO'), and we look forward to delivering value for all stakeholders over the coming years.

 

OUR BUSINESS

The Joules brand is at the heart of our business and encompasses values of 'time-off', heritage, countryside, Britishness, family and fun. These values resonate through all product designs, which are known and loved for their distinctive colours, prints, details and quality. These designs successfully span across a broad range of product categories, from Womenswear to Homeware, demonstrating the brand's relevance to multiple aspects of our customers' lives.

 

The growth of the business in recent years has been underpinned by significant investment that has been made in the Group's infrastructure, including supply chain, IT and international sales support offices.  We are confident that this investment, along with the strength and appeal of the Joules brand, provides a strong foundation for sustainable, long term growth.

 

OUR TEAM

The skill, creativity and energy of our people continues to be a key factor in driving the business forward and expanding the Joules brand.  I would like to take this opportunity to thank everyone in the Joules team across the world for their hard work and dedication throughout what has been such a transformational year for the business.

 

The success of the business to date has been led by a dynamic and highly talented management team who have a deep understanding of the Joules customer as well as strong commercial and product design expertise.  This is underpinned by outstanding enthusiasm, energy and leadership skills.

 

With our IPO the leadership team was further strengthened with the appointment of two new Non-Executive Directors to our Board.  These were David Stead, who has more than 15 years' experience as a director of companies in the UK retail sector, and Jill Little, who has vast relevant experience of the retail industry including driving international expansion. We are already benefiting from their experience and knowledge and look forward to their contributions in the years to come.

 

FINANCIAL RESULTS & DIVIDEND

Group revenue of £131.3 million increased by 12.8% compared to the prior period (53 weeks to 31 May 2015: £116.4 million).  Against the comparable 52 week prior period, Group revenue increased by 14.2%.  This reflects strong growth in both the Retail and Wholesale segments.   On a geographic basis, UK sales increased 11.6% to £118.1 million and International sales increased 24.7% to £13.2 million.  International now represents just over 10% of Group revenue.  Underlying PBT grew by 41.5% to £7.5 million, and Underlying EPS was 6.9 pence per share (FY15: 4.8 pence).  Statutory PBT was £(1.2)million (FY15: £0.1 million), statutory basic (and diluted) EPS are -2.0 pence per share (FY15: -0.5 pence per share). The Chief Executive's Strategic Report and Financial Review that follow provide a more in-depth analysis of the trading performance and financial results of the Group.

 

The Directors intend to pursue a progressive dividend policy, subject to the availability of sufficient distributable profits and the need to retain sufficient earnings for the future growth of the Group.  It is currently intended that, in the absence of unforeseen circumstances, the first dividend following Admission will be paid in respect of the financial year ending May 2017 (FY17).

 

THE FUTURE

It is too early to assess the specific macro economic effects of the UK's decision to leave the European Union, though it has created an environment of increased uncertainty.  I believe that Joules is well placed to meet these uncertainties through a combination of the strength of its brand and products; its target customer demographic; and the historic investment that has been made in infrastructure.   The impact on the product cost base, resulting from a weaker GBP, is mitigated through foreign exchange hedging in place throughout FY17 and the first quarter of the subsequent year.

 

We have a loyal and growing customer base, a committed and enterprising team and a well-invested infrastructure.  These qualities give us confidence of successfully delivering the Board's clear strategy for growing the Joules brand in the UK and internationally.

 

 

 

CHIEF EXECUTIVE OFFICER'S STRATEGIC REPORT

 

I am pleased to present the Group's first Strategic Report to shareholders.  This is an exciting time for the Joules brand as we continue to expand both in the UK and internationally, whilst ensuring our focus is as resolute as ever on product quality, design and delighting our customers.

 

THE JOULES BRAND

Joules is a premium lifestyle brand with an authentic heritage.  The brand is distinctive for its values of 'time-off', heritage, countryside, Britishness, family and fun.  Our brand and design-led ethos deliver unique product designs, which remain central to Joules' continued success, growth and appeal. Key components of our designs include unwavering focus on quality, colour and surprising details that excite our customers.  The brand is also known and loved for its exclusive, in-house designed proprietary prints, which include florals, conversationals, ''pops of colour'' and screen prints.

 

OUR BUSINESS MODEL

Joules operates a truly multi-channel business model, which is reflected in the Group's balanced revenue mix by channel.  The Joules brand has two key channels to market: retail (including stores, e-commerce and the country shows and events circuit) and wholesale.  Other channels include product licensing, which given the strength of the Joules brand, is likely to become increasingly important over time.

 

Retail

The Group has a fast growing and diverse store portfolio of 97 UK and Republic of Ireland stores (including five concessions) plus three franchise stores.   Our stores have a diverse geographic footprint, reflecting the broad appeal of the brand.  The Group operates a fully transactional and feature rich website, www.joules.com, through which Joules branded products are sold to customers in the UK and internationally.  The Group also operates dedicated, local currency and local language consumer websites for the US and Germany.

 

Wholesale

Joules branded products are sold through selected wholesale partners, primarily in the UK, North America and Germany, supporting the expansion of the brand. The wholesale channel consists primarily of:

  • "House accounts''- national multi-channel retailers, such as John Lewis and Next Label, which Joules sells to and manages directly; and
  • ''Field accounts''- generally smaller retailers including independents managed directly by Joules or by Joules' sales agents and, in the US also via a distributor.

 

OUR GROWTH STRATEGY

We have a clear strategy for the long-term, sustainable development of Joules as a premium lifestyle brand, both in the UK and internationally. This strategy is built on the following key pillars, and is continuously underpinned by a firm focus on product quality and design.

 

1.   INCREASING CUSTOMER VALUE - we intend to continue to grow our customer database, increase the number of active customers and develop the value of the average active customer.

2.   UK AND REPUBLIC OF IRELAND (ROI) STORE ROLL-OUT - as part of our multi-channel approach, there remains significant further growth potential for the brand in the UK and ROI.   We are targeting a net 10 to 12 new stores per year in the medium term.

3.   INTERNATIONAL EXPANSION -  the Joules brand and products resonate well in international markets and the new markets provide an opportunity to further leverage the investment in our central creative and commercial teams.  Our medium term focus is on North America and Germany.

4.   PRODUCT EXTENSION - as a premium lifestyle brand, the Joules product offer naturally extends to meet many of the lifestyle needs of our customers.  Joules has had success extending the product offer within existing categories and into new categories and we will continue to expand into new areas that are appropriate for the development of the Joules brand.

 

 

STRATEGIC PRIORITIES AND DEVELOPMENTS

KPI

Increasing customer value

·   Re-launched the Joules.com website with richer content and mobile optimisation

·   Successfully up-weighted digital media spend for new customer acquisition and retention

·   Increased average customer frequency of transaction and  transaction value

 

Active customer numbers1

FY14: 529,000

FY15: 621,000

FY16: 824,000

UK and ROI store roll-out

·   Opened 10 new stores during the year and converted one franchise to an owned store

·   Closed five stores, taking advantage of end of lease terms where we believe there is a better location

·   Opened three 'Regional Shopping Centre' stores - a new location type

·   New store payback periods continue to be less than 12 months

·   All, but one, stores open for more than 12 months delivered a positive contribution

Number of stores

FY14: 80

FY15: 91

FY16: 97

 

Total selling space (Sq Ft)

FY14:   84,500

FY15: 100,000

FY16: 111,000

International expansion

·   US showroom and sales office in New York relocated and enlarged

·   Nordstom increased the range of wellington boots and accessories stocked and evolved from online only to space in 80 stores for Autumn/Winter 16

·   Von Maur expanded range within several of their 33 department stores to include women's nightwear and outerwear for Autumn/Winter 16

·   Launching kids apparel and accessories in 50 of Dillards' 330 department stores for Autumn/Winter 16

 

International as % of total revenue

FY14:   5.8%

FY15:   9.1%

FY16: 10.1%

 

Product extension

·   Accessories grew by 27% in the year and is now 13% of total sales

·   Homeware category grew by 33% in the year

·   Baby Joule grew by an impressive  42% in the year following an increased focus on this important category

 

 

 

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.

 

Financial KPIs:

-     Revenue by channel - delivering balanced growth across our core-sales channels

-     Group gross margin - maintaining overall product level profitability whilst developing the different channels to market

-     EBITDA margin - how effectively we are leveraging our cost base and infrastructure

-     Return on Capital Employed ('ROCE') - how we are managing working capital and growth capital investments

 

Revenue growth by channel

Retail - Stores

FY14:  £39.3m

FY15:  £52.4m2

FY16:  £58.2m

Retail - E-commerce

FY14:  £23.9m

FY15:  £25.8m2

FY16: £ 30.1m

Wholesale

FY14: £26.9m

FY15: £31.6m2

FY16: £37.2m

 

Group gross margin

FY14: 55.0%

FY15: 53.3%

FY16: 53.5%

EBITDA margin

FY14:   9.5%

FY15:   9.0%

FY16: 10.3%

 ROCE3

FY14: 23.9%

FY15: 27.3%

FY16: 31.9%

 

1Active customer defined as a customer who is registered on our database and has transacted within the last 12 months.  Prior years restated following improvements in data cleansing processes during FY16. 

2FY15 was a 53 week period

3Return on Capital employed ('ROCE') is calculated as Underlying Operating Profit after Tax divided by Average Capital employed (Capital employed defined as Underlying Net Assets adjusted for excess cash balances

 

 

BUSINESS REVIEW

 

A year of excellent progress

Joules has continued to make excellent progress over the past year, including the significant milestone of the Group's admission to the AIM market of the London Stock Exchange towards the end of the financial year.  The success of our IPO reflects 27 years of careful development of the Joules brand, our unique multi-channel approach and our consistent focus on our customer.  These qualities remained central to our performance in FY16 as the Group made further progress against its strategic objectives and continued to develop and expand as a premium lifestyle brand in the core UK market and also internationally.

 

Strong multi-channel retail growth

Retail sales, which includes stores, E-commerce and shows, continued to grow impressively by 12.8% during the year (on a consistent 52 week basis) as we expanded Joules' retail coverage across the UK and ROI to 97 stores at the end of the period.  This was supported by 10 new store openings and the conversion of one franchise store during the year.   During the year we closed five stores taking the opportunity of lease breaks to exit where we believe we could perform better in a different location. We relocated one store, in Harrogate, and expanded our space in two others, increasing total selling space to 111,000 square feet by the end of the year.

 

FY16 saw us expand into a new store location type with three Regional Shopping Centre locations - Milton Keynes, Meadowhall and Birmingham Grand Central.  These stores, which have a larger selling space than average, have proved very popular with our customers - both old and new - and have served to further develop and strengthen our brand as well as deliver attractive financial returns.

 

Joules is a truly multi-channel brand, with e-commerce revenues representing nearly one third of retail revenue.  E-commerce continued to deliver very strong sales growth of 17.3% against the prior year (on a consistent 52 week basis), this growth was supported by the ongoing development of our website functionality and the overall customer offer.   We re-launched our Joules.com e-commerce site in September 2015, with improved functionality, richer content and optimisation for mobile devices.  

 

With traffic from mobile and tablet devices now representing over 70% of the total, and with the mobile conversion rate improving by 50 basis points in the year, the re-launched site has been instrumental in supporting the growth of e-commerce revenues.

 

'Click & Collect' continues to prove popular with our customers and towards the end of the year we commenced the roll-out of 'Order in Store' which provides customers in store with access to the entire range of products across all of our categories.

 

Wholesale expansion in the UK and overseas

Wholesale sales increased by 18.3% (on a consistent 52 week basis), reflecting the growing appeal of the Joules brand.   Continued expansion in the UK was driven primarily through national multi-channel retailers such as John Lewis and Next Label as well as through smaller, independent specialist partners that have a good fit with the Joules brand.

 

Joules' products with their unique prints, colour and British character continue to resonate strongly with customers in international markets, where our focus remains on North America and Germany where we are building brand awareness.  During the year we invested further in our infrastructure in the US, opening a new, larger trade showroom and sales office in New York.   Our focused approach, on developing larger wholesale accounts, continues to make good progress with increased product range listings in Nordstrom and Von Maur for Autumn/Winter 16 and the department store Dillards launching Childrenswear from Autumn/Winter 16.

 

The growth of international wholesale (up 48.1% in the year) helped drive a 24.7% increase in the Group's total international sales (including international retail).  Excluding the impact of non-recurring international shows, total international revenues were up nearly 36%, taking international sales as a proportion of total Group sales to 10.1%.

 

Further development as a lifestyle brand

Joules delivered growth across every product category during the year, with particularly strong performances in the core Womenswear category and the newer Homeware, Accessories and 'Baby Joule' categories.   Our licensed products, although relatively small in scale, continued to perform well.

 

The popularity of the brand across multiple product categories highlights the exciting growth potential for Joules as it continues to grow as a true lifestyle brand.

 

Customer and Marketing

Joules has a loyal, fast growing and highly engaged customer community. During the year we continued to expand our customer database - that now stands at just over two million customers - and developed new ways to communicate and engage with this community online, in stores, across social media platforms and through events.   One innovative and successful example of digital customer engagement during the year was our 'Design Your Own Welly' App and competition.   Customers were invited to go online and bring a Joules welly to life by creating their own, bespoke bold and bright designs.  We received more than 45,000 entries to the competition, including many new customers, helping to raise brand awareness amongst existing and potential customers.

 

We were delighted to win 'Fashion Business of the Year' (in the £30-100m category) at the 2015 Drapers Awards, with the judges acknowledging Joules' "very impressive growth story while demonstrating confidence in our brand positioning, ethos and strategy".  This award was fitting testament to the hard work of our team as well as the brand's strong values.

 

Platform for long term growth

The focus of the management team is on the long term, sustainable development of the Joules brand, as demonstrated by further investments made during the year including in our new stores, a strengthened e-commerce proposition and the infrastructure to support our US wholesale business.

 

During the year we implemented the first phase of our company wide ERP replacement programme.   We are in the process of migrating our existing 'Sales & stock management' IT platform to the Microsoft Dynamics AX ERP platform.   Phase one has seen the implementation of Microsoft Dynamics AX to support our US wholesale business.  The programme, which represents a significant investment for the Group, is ongoing as we extend the platform across our core UK wholesale and retail channels with a plan to go live in FY18.

 

The creativity, skill and commitment of the Joules team are key drivers of the brand's growth and success.  We continue to invest in skills and people development in all areas of the business including our customer facing colleagues and team leaders across the business.

 

Looking ahead

Group trading to date in the FY17 financial year has been in line with our expectations and early feedback on our Spring/Summer 17 ranges from our trade customers has been positive.

 

We have a strong brand, a loyal and growing customer base, a committed and enterprising team and a well-invested infrastructure.  These qualities give me confidence for the future and for the delivery against our strategic objectives as we grow the Joules brand in the UK and internationally.

FINANCIAL REVIEW

 

Joules Group plc was admitted to AIM on 26 May 2016 (the 'IPO'), just prior to the end of the financial period.  To provide a meaningful comparison to the prior financial period and for future reporting periods, the front section of this Annual Report reports on both the underlying the statutory results.

 

PROFIT BEFORE TAX - UNDERLYING

Underlying profit before tax ('PBT') was £7.5 million for the 52 weeks to 29 May 2016, an increase of 41.5% on the prior period (53 weeks to 31 May 2015).

 

EARNINGS BEFORE INTEREST, TAX, DEPRECIATION & AMORTISATION ('EBITDA')

Underlying EBITDA increased by 28.6% to £13.5 million (FY15: £10.5m).  The underlying EBITDA margin increased by 1.3 percentage points from 9.0% to 10.3%.

 

UNDERLYING AND STATUTORY RESULTS

During the period there were a number of costs that were exceptional or non-recurring in nature.   These items relate primarily to the IPO and to the capital structure that was in place prior to the IPO.   To provide a meaningful year-on-year comparison, for historic and future periods, these items have been excluded from the underlying results reported in the front section of the Annual Report.   A reconciliation between Underlying and Statutory (GAAP) results is provided below.

 

 

 

£million

 

Revenue

 

Gross profit

 

Admin expenses

 

Operating profit

 

Net finance costs

 

Profit before tax

 

 

Operating profit

 

Depreciation & Amortisation

          -

 

EBITDA

 

 

 

REVENUE

Group revenue increased by 12.8% to £131.3 million from £116.4 million in FY15, the prior year being a 53 week period.  Against a comparable 52 weeks, Group revenue increased by 14.2%, with Retail revenue increasing by 12.8% and Wholesale revenue increasing by 18.3%.   Sales in International markets, which are predominantly Wholesale, increased by 24.7% and now represent 10.1% of Group revenues (FY15: 9.1%).

 

Retail - Stores

Store revenue at £58.2 million increased by 13.1% on the comparable 52 weeks.  During the year we opened 10 new stores, converted one franchise and closed five stores, resulting in an increase in owned store numbers from 91 to 97.  Total store selling space increased by 10.9% to 111,000 sq. ft. over the period.  We had three franchises at the end of FY16 (FY15: 4).

 

Retail - E-commerce

E-commerce revenue at £30.1 million increased by 17.3% on the comparable 52 weeks and was 32.1% of total Retail revenue (FY15: 30.6%).   E-commerce benefited from more visitors and higher conversion following the re-launch of the content rich, mobile optimised website and the ongoing new customer acquisition activity.

 

Wholesale

Wholesale revenue at £37.2 million increased by 18.3% on the comparable 52 weeks.  Good performances were delivered in both the UK and international markets and from both the larger 'house account' and the smaller 'field account' customer bases.

 

GROSS MARGIN

Gross margin at 53.5% was 0.2 percentage points higher than the prior year.    Our commercial and buying activity enabled us to offset the impact of the strengthening US Dollar and maintain overall intake margins.   Increasing international Wholesale sales, in particular within the US where we have a high mix of lower margin footwear sales and a significant proportion of our business via a distributor, result in downward pressure on Group gross margin which has been more than mitigated by the growth of the Retail segment and improved e-commerce distribution costs.

 

ADMINISTRATIVE EXPENSES - UNDERLYING

Underlying administrative expenses increased by 10.5% from £56.4 million to £62.3 million.  Underlying operating expenses were 47.4% of revenue (FY15: 48.5%).  The Group strengthened several central functions during the year particularly in design, commercial and support and increased investment in new customer acquisition and internal photo-shoot capability to support the retail and wholesale channels.

 

Total rent cost, including service charges, for the period was £9.3 million (FY15: £8.5m) with the increase due to new store openings and the relocation of our Shanghai sourcing office and expanded New York showroom during the period.

 

Underlying depreciation & amortisation increased to £5.5 million (FY15: £4.8m) following the completion of several IT infrastructure projects in the current and prior year, including the first phase of the Enterprise Resource Planning (ERP) programme.

 

Administrative expenses - non-underlying

Non-underlying administrative expenses totalled £3.1 million (FY15: £0.6m).   This included IPO transaction related costs of £2.7 million (FY15: £nil) and non-recurring costs of £0.4 million (FY15: £0.6m).  Non-recurring costs included costs related to the pre-IPO ownership structure £0.1 million (FY15: £0.1m) and asset impairment £0.3 million (FY15: £0.5m).

 

NET FINANCE COSTS - UNDERLYING

Underlying net finance costs of £0.5 million (FY15: £0.4m) related to interest and facility charges on the Group's revolving credit facility with Barclays Bank Plc.

 

Net finance costs - non-underlying

Non-underlying net finance costs totalled £5.6 million (FY15: £4.6m), consisting primarily of interest on shareholder loan notes at £4.7 million (FY15: £4.4m) and amortisation of the loan note arrangement fee of £0.9 million (FY15: £0.4m).  The shareholder loan notes were converted to equity immediately prior to the IPO and the expense will not be ongoing. 

 

TAXATION

The reported tax rate in the current and prior year is impacted by the non-underlying items noted above.  These included a proportion of non-deductible costs and the impact from the proportion of the shareholder loan note interest that was deemed deductible on finalisation of the Advanced Thin Capitalisation Agreement ('ATCA') with HMRC during the period.

 

The Group's effective tax rate in future years is expected to be broadly in line with the statutory rate.

 

EARNINGS PER SHARE AND DIVIDEND

Statutory basic (and diluted) earnings per share for the period are -2.0 pence per share.  On an underlying, pro forma basis the FY16 basic earnings per share are 6.9 pence (FY15: 4.8 pence).

 

To facilitate meaningful comparison of earnings per share the weighted average number of shares in issue has been restated on a pro forma basis to reflect 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 non-underlying items detailed above and to reflect the statutory tax rate.

 

£million

FY16

FY15

PBT - Underlying

 7.5

 5.3

Statutory tax rate

20.0%

20.8%

Tax

 (1.5)

 (1.1)

Earnings - Underlying

 6.0

 4.2

 

 

 

Shares - Pro forma (million)

 87.5

 87.5

EPS - Pence

 6.9

 4.8

 

 

As detailed in the Admission Document, The Board is not recommending the payment of a dividend for FY16.

 

CASH FLOW AND CASH POSITION

Net cash flow from operating activities was £16.9 million (FY15: £6.0m) including a net working capital inflow of £7.1 million due to improved inventory efficiency and higher trade payables at the period end.

 

The Group ended the period with underlying net cash/(debt) of £3.2 million (FY15: £(6.5)m) an improvement of £8.7 million in the period.   Gross cash was £9.3 million (FY15: £2.1m) and underlying borrowings £6.1 million (FY15: £8.6m), which includes borrowings under the Group's revolving credit facility and asset finance loans.  Underlying borrowings excludes shareholder loan notes that were settled during the year as part of the IPO transaction (FY15: £(42.8)m).

 

The Group has access to a £25 million revolving credit facility provided by Barclays Bank Plc to fund seasonal working capital requirements.  This facility matures in May 2020.

 

INVENTORY

Inventory at year end was £19.3 million (FY15: £17.7m).  The higher year-on-year inventory was a result of receiving deliveries for Autumn/Winter 16 ranges earlier than the prior year.  Inventory management and stock turn both improved in the year.

 

CAPITAL EXPENDITURE

Investment in property, plant, equipment and intangible assets totalled £7.1 million in FY16 (FY15: £8.8m).  Major areas of expenditure in the year were new store openings and relocations and spend on our core IT infrastructure, including the re-launch of our E-commerce platform and the completion of phase one of our ERP implementation.  Phase two of the ERP implementation is ongoing, with a plan to go live in FY18.

 

PRINCIPAL RISKS AND UNCERTAINTIES

Set out below are the principal risks and uncertainties that the Directors consider could impact the business.  The Board continually reviews the potential risks facing the Group and the controls in place to mitigate any potential adverse impacts. The Board also recognises that the nature and scope of risks can change and that there may be other risks to which the Group is exposed and so the list is not intended to be exhaustive.

The Corporate Governance Report includes an overview of our approach to risk management and internal control systems and processes.

 

EXTERNAL RISKS

External risks reflect those risks where we are unable to influence the likelihood of the risk arising and therefore focus is on minimising the impact should the risk arise.

 

Risk and impact

Mitigating factors

Economy

The majority of Group's revenue is generated from sales in the UK to UK customers.  A deterioration in the UK economy may adversely impact consumer confidence and spending on discretionary items.   A reduction in consumer expenditure could materially and adversely affect the Group's financial condition, operations and business prospects.

The expected exit of the UK from the EU has increased the likelihood and potential impact of this risk.

 

As a premium lifestyle brand with a geographically disperse retail store portfolio, a strong e-commerce channel and long standing wholesale customer accounts, the Directors consider that the UK business would be less affected by a reduction in consumer expenditure than many other clothing retailers. 

In addition, the property portfolio has short lease terms, providing relative flexibility to close or relocate stores should it become necessary.

Competitor actions

New competitors or existing clothing retailers or lifestyle brands may target our segment of the market.   Existing competitors may increase their level of discounting or promotions and/or expand their presence in new channels.   These actions could adversely impact our sales and profits.

 

Joules differentiates from competitors through its strong brand and products that are known for their quality, details, colour and prints.   Our large customer database allows the Group to communicate effectively with customers, developing customer engagement and loyalty.

Foreign Exchange

The Group purchases the majority of its product stock from overseas and is therefore exposed to foreign currency risk, primarily the US Dollar.

Without mitigation, input costs may fluctuate in the short term, creating uncertainty as to profits and cash flows.

The anticipated exit of the UK from the EU has resulted in a devaluation of GBP to the US Dollar and increased volatility.  This may be sustained or worsen going forward.

 

The Group's Treasury Policy sets out the parameters and procedures relating to foreign currency hedging.  We currently seek to hedge a material proportion of forecasted US Dollar requirement 12 months ahead through the use of forward contracts.

 

The Group's US wholesale business generates US Dollar income which provides a degree of natural hedging.

 

Regulatory and Political

New regulations or compliance requirements may be introduced from time to time.  These may have material impact on the cost base or operational complexity of the business.    Non-compliance with the regulation could result in financial penalties.

The anticipated exit of the UK from the EU has increased uncertainty in this area.

 

The Group has processes in place to monitor and report to the Board on new regulations and compliance requirements that could have an impact on the business.  The impact of any new regulation is evaluated and reflected in the Group's financial forecasts and planning.

 

 

INTERNAL RISKS

Internal risks reflect those where we can influence the likelihood of the risk arising and the impact if the risk should arise.

 

Risk and Impact

Mitigating factors

Brand and reputation

The strength of our brand and its reputation are very important to the success of the Group.  Failure to protect and manage this could reduce the confidence and trust that customers place in the business, which could have a detrimental impact on sales, profits and business prospects.

Our brand may be undermined or damaged by our actions or those of our wholesale partners.

 

Brand and reputation are monitored closely by senior management and the Board.  The Group's public relations are actively managed and customer feedback, both direct and indirect, is carefully monitored.

We carefully consider each new trade customer with whom we do business and monitor on an ongoing basis.

Product sourcing

The Group's products are predominantly manufactured overseas.  Failure to carry out sufficient due diligence, and to act in the event of any negative findings, especially in relation to ethical or quality related issues, could adversely impact our brand and reputation.

 

The Group has a policy and process for the selection of new suppliers.  This includes a review of compliance with laws and regulations and that suppliers meet generally accepted standards of good practice.  In addition, suppliers are 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 our offer will not satisfy the needs of our customers or that we fail to correctly identify trends that are important to our customer base.  These outcomes may result in lower sales, excess inventories and/or higher markdowns.

Joules has a long established in-house creative and design team who have a high level of awareness and understanding of our target customer segment.   A large proportion of our product range is anchored in classic products that are 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 and in particular to the leadership of key individuals.  The loss of a key individual whether at management level or within a specialist skill set could have a detrimental effect on our operations and, in some cases, the creative vision for the brand.

 

The Group's remuneration policy, which includes a long term incentive scheme and performance-related pay, is designed to attract and retain key management.  The Group operates learning and development initiatives to increase the opportunities for internal succession.

ERP system

We are in the process of implementing a new IT platform, Microsoft Dynamics AX, across the Group.   With any project of this scale, there is a risk of a poorly managed implementation or take up of new systems, which could result in business disruption.

The first phase of our implementation went live in November 2015, supporting our US wholesale operations.  A dedicated programme team with significant experience of our business processes and ERP implementation has been 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 website, for a prolonged period could result in business disruption, loss of sales and reputational damage.

Malicious attacks, data breaches or viruses, could lead to business interruption and reputational damage.

A Business Continuity Plan exists to minimise the impact of a loss of key systems and to recover the use of the system and associated data.

A regular assessment of vulnerability to malicious attacks is performed and any weaknesses rectified.   All Group employees are made aware of the Group's IT security policies and we deploy a suite of tools (email filtering, antivirus etc) to protect against such events.  

Supply chain

The disruption to any material element of the Group's supply chain, in particular the UK central distribution centre,  could impact sales and impact on our ability to supply our wholesale customers, stores and consumers.

 

The Business Continuity Plan includes an established procedure in the event of the loss of the UK distribution centre.  In addition the Group maintains insurance cover at an appropriate level to protect against the impact of such an interruption.

 

 

JOULES GROUP PLC

 

CONSOLIDATED INCOME STATEMENT (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

52 weeks ended 29 May

2016

£'000

53 weeks

ended 31

May

2015

£'000

 

 

 

 

 

 

REVENUE

 

 

 

131,262

116,421

 

 

 

 

 

 

Cost of sales

 

 

 

(61,003)

(54,386)

 

 

 

 

 

 

GROSS PROFIT

 

 

 

70,259

62,035

 

 

 

 

 

 

Administrative expenses

 

 

 

(62,296)

(56,458)

Exceptional administrative expenses

 

 

 

(3,128)

(500)

 

 

 

 

 

 

Total administrative expenses

 

 

 

(65,424)

(56,958)

 

 

 

 

 

 

OPERATING PROFIT

 

 

 

4,835

5,077

 

 

 

 

 

 

 

 

 

 

 

 

Finance income and similar incomes

 

 

 

-

190

Finance costs and similar charges

 

 

 

(461)

(416)

Non-recurring finance costs

 

 

 

(5,554)

(4,762)

 

 

 

 

 

 

PROFIT/(LOSS) BEFORE TAX

 

 

 

(1,180)

89

 

Income tax expense

 

 

 

 

(613)

 

(529)

 

 

 

 

 

 

PROFIT/(LOSS) FOR THE PERIOD

 

 

 

(1,793)

(440)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings/(loss) per share (pence)

 

 

 

(2.04)

(0.50)

 

 

 

 

 

 

Diluted earnings/(loss) per share (pence)

 

 

 

(2.04)

(0.50)

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

52 weeks

ended 29

May

2016

£'000

 

 

53 weeks

ended 31

May

2015

£'000

 

Profit/(loss) for the period

 

 

 

 

(1,793)

 

(440)

 

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss:

 

 

 

 

 

Net gain/(loss) arising on changes in fair value of hedging instruments entered into for cash flow hedges

 

 

 

 

 

(26)

 


2,221

Exchange difference on translation of foreign operations

 

 

 

 

(48)

 

(31)

Income tax relating to items that will be reclassified subsequently to profit and loss

 

 

 

 

15

 

(444)

 

 

 

 

 

 

TOTAL COMPREHENSIVE (EXPENSE)/ INCOME FOR THE PERIOD

 

 

 

(1,852)

 

1,306

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)

 

 

 

 

29 May 2016

£'000

31 May

2015

£'000

NON-CURRENT ASSETS

 

 

 

 

Property, plant and equipment

 

 

11,151

11,458

Intangibles

 

 

5,903

4,416

Deferred tax

 

 

653

803

 

 

 

 

 

TOTAL NON-CURRENT ASSETS

 

 

17,707

16,677

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

Inventories

 

 

19,253

17,652

Trade and other receivables

 

 

10,856

10,156

Current corporation tax receivable

 

 

231

179

Cash and cash equivalents

 

 

9,278

2,121

Derivative financial instruments

 

 

474

500

 

 

 

 

 

TOTAL CURRENT ASSETS

 

 

40,092

30,608

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

57,799

47,285

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

Trade and other payables

 

 

27,919

18,716

Borrowings

 

 

5,461

7,629

Provisions

 

 

773

587

 

 

 

 

 

TOTAL CURRENT LIABILITIES

 

 

34,153

26,932

 

 

 

 

 

NON-CURRENT LIABILITIES

 

 

 

 

Borrowings

 

 

627

43,827

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

34,780

70,759

 

 

 

 

 

NET ASSETS/(LIABILITIES)

 

 

23,019

(23,474)

 

 

 

 

 

 

 

 

 

 

EQUITIES

 

 

 

 

Share capital

 

 

875

91,510

Hedging reserve

 

 

389

400

Translation reserve

 

 

(72)

(24)

Merger reserve

 

 

(125,807)

(125,662)

Retained earnings

 

 

136,224

10,302

Share premium

 

 

11,410

-

 

 

 

 

 

TOTAL EQUITY

 

 

23,019

(23,474)

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

 

 

 


Merger reserve

£'000


Hedging reserve

£'000

 

Translation reserve

£'000

 

Share capital

£'000


Share premium

£'000


Retained earnings

£'000


Total

 equity

£'000

 

 

 

 

 

 

 

 

Balance at 25 May 2014

(125,662)

(1,377)

7

91,510

-

10,742

(24,780)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

-

(440)

(440)

Other comprehensive income for the period

 

-

 

1,777

 

(31)

 

-

 

-

 

-

 

1,746

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 May 2015

(125,662)

400

(24)

91,510

-

10,302

(23,474)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

-

(1,793)

(1,793)

Other comprehensive income for the period

 

-

 

(11)

 

(48)

 

-

 

-

 

-

 

(59)

Share buyback

(145)

-

-

-

-

-

(145)

Share issue

-

-

-

37,009

-

-

37,009

Share capital reduction

-

-

-

(127,715)

-

127,715

-

Share issue

-

-

-

71

11,410

-

11,481

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 29 May 2016

(125,807)

389

(72)

875

11,410

136,224

23,019

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

 

 

 

 

 

52 weeks ended 29 May

2016

£'000

53 weeks

ended 31

May

2015

£'000

Net cash inflow from operating activities

 

 

 

 

 

Profit before interest and income taxes

 

 

 

4,835

5,077

Adjustments for:

 

 

 

 

 

Depreciation

 

 

 

4,516

4,242

Amortisation

 

 

 

1,011

554

Impairment of fixed assets

 

 

 

380

500

Profit on sale of fixed assets

 

 

 

-

-

Finance income

 

 

 

-

190

Finance expense

 

 

 

(461)

(416)

Tax paid

 

 

 

(500)

(1,069)

(Increase)/decrease in inventory

 

 

 

(1,601)

(4,285)

(Increase)/decrease in receivables

 

 

 

(700)

(2,082)

Increase/(decrease) in payables

 

 

 

9,389

3,330

 

 

 

 

 

 

Net cash from operating activities

 

 

 

16,869

6,041

 

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

 

Purchase of property, plant and equipment

 

 

 

(7,087)

(8,792)

Sale of property, plant, equipment and intangible assets

 

 

 

-

-

 

 

 

 

 

 

Net cash used in investing activities

 

 

 

(7,087)

(8,792)

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

 

Proceeds from new share capital subscribed

 

 

 

11,481

-

Redemption of shares

 

 

 

(145)

-

Repayment of borrowings

 

 

 

(13,913)

(393)

Proceeds from borrowings

 

 

 

-

1,049

 

 

 

 

 

 

Net cash (used in)/generated from financing activities

 

 

 

 

(2,577)


656

 

 

 

 

 

 

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

 

 

 

7,205

 

(2,095)

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

 

 

2,121

 

4,247

 

 

 

 

 

 

Effect of foreign exchange rate changes

 

 

 

(48)

(31)

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

 

 

 

9,278

 

2,121

 

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

1.       BASIS OF PREPARATION OF PRELIMINARY ANNOUCEMENT

The preliminary consolidated financial information for the 52 weeks ended 29 May 2016 was approved by the Directors on 5 September 2016.

This preliminary consolidated financial information has been prepared in accordance with the principles of International Financial Reporting Standards ('IFRS') and has been prepared on a going concern basis. The preliminary consolidated financial information does not constitute statutory consolidated financial statements for the 52 weeks ended 29 May 2016 as defined in section 434 of the Companies Act 2006.

The Annual Report and Group Financial Statements for the 52 weeks ended 29 May 2016 were the first for Joules Group plc and they were approved by the Board of Directors on 5 September 2016. The report of the auditor on those Group Financial Statements was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. The Annual Report and Group Financial Statements for the 52 weeks ended 29 May 2016 will be filed with the Registrar in due course.

 

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 financial statements on the basis of going concern.

2.       SEGMENT REPORTING

The Group has three reportable segments; Retail, Wholesale and Other. For each of the three segments, the Group's chief operating decision maker (the "Board") reviews internal management reports on a monthly basis. Each segment can be summarised as follows:

  • Retail: Retail includes sales and costs relevant to Stores, E-commerce, Shows and Franchises.
  • Wholesale: Wholesale includes sales and costs relevant to the sale of products to other retail businesses or distributors for onward sale to their customer.
  • Other: Other includes income from licencing, central costs and items that are not distinguishable into categories above.

 

The accounting policies of the reportable segments are the same as described in note 1. Information regarding the results of each reportable segment is included below. Segment results before exceptional items are used to measure performance as management believes that such information is the most relevant in evaluating the performance of certain segments relative to other entities that operate within these industries.

 

Segment Review and Results

52 WEEKS ENDED 29 MAY 2016

Retail

Wholesale

Other

Total

 

£'000

£'000

£'000

£'000

Revenue

93,687

37,196

379

131,262

Cost of sales

(36,616)

(24,387)

-

(61,003)

GROSS PROFIT

57,071

12,809

379

70,259

Administration expenses

(34,146)

(5,998)

(16,348)

(56,492)

SEGMENT RESULT

22,925

6,811

(15,969)

13,767

RECONCILIATION OF SEGMENT RESULT TO PROFIT BEFORE TAX

 

 

 

 

Segment result

22,925

6,811

(15,969)

13,767

Depreciation and amortisation

(3,306)

(258)

(1,963)

(5,527)

Central administrative expenses

 

 

 

(277)

Exceptional costs

 

 

 

(3,128)

Net finance expense

 

 

 

(6,015)

Interest receivable and similar income

 

 

 

-

LOSS BEFORE TAX

 

 

 

(1,180)

 

 

53 WEEKS ENDED 31 MAY 2015

Retail

Wholesale

Other

Total

 

£'000

£'000

£'000

£'000

Revenue

84,413

31,633

375

116,421

Cost of sales

(35,009)

(19,377)

-

(54,386)

GROSS PROFIT

49,404

12,256

375

62,035

Administration expenses

(31,865)

(4,762)

(14,698)

(51,325)

SEGMENT RESULT

17,539

7,494

(14,323)

10,710

RECONCILIATION OF SEGMENT RESULT TO PROFIT BEFORE TAX

 

 

 

 

Segment result

17,539

7,494

(14,323)

10,710

Depreciation and amortisation

(2,956)

(161)

(1,679)

(4,796)

Central administrative expenses

 

 

 

(337)

Exceptional costs

 

 

 

(500)

Net finance expense

 

 

 

(5,178)

Interest receivable and similar income

 

 

 

190

PROFIT BEFORE TAX

 

 

 

89

 

There are no discontinued operations in the period.

 

GEOGRAPHICAL INFORMATION

The Group's revenue from external customers by geographical location are as detailed below. Predominantly all non-current assets (excluding financial instruments, deferred tax assets and other financial assets) are situated in the UK, therefore separate geographical disclosure of non-current assets is not considered necessary.

 

 

 

UK

£'000

International

£'000

Support

£'000

Total

£'000

52 weeks ended 29 May 2016

118,041

13,222

-

131,262

53 Weeks ended 31 May 2015

105,819

10,602

-

116,421

 

3.       EXPENSES BY NATURE

 

 

 

 

52 weeks ended 29 May

2016

£'000

53 weeks

ended 31

May

2015

£'000

 

 

 

 

 

 

Cost of inventories

 

 

 

51,572

46,842

Transportation, carriage and packing

 

 

 

6,905

5,450

Employees remuneration and benefits

and third party labour costs

 

 

 

 

25,597

 

22,984

Depreciation and amortisation

 

 

 

5,527

4,796

Exceptional impairment

 

 

 

380

500

Other expenses

 

 

 

36,446

30,772

 

 

 

 

 

 

 

 

 

 

126,427

111,344

 

 

 

 

 

 

Other expenses and exceptional impairment include £3,128,000 for May 2016 (May 2015: £500,000) of exceptional items which have been disclosed separately on the face of the income statement in order to summarise the underlying results. Neither 'underlying profit or loss' nor 'exceptional items' are defined by IFRS however the directors believe that the disclosures presented in this manner provide clear presentation of the financial performance of the Group.

Other expenses include £3,162,000 of costs and offsetting income, which net to £nil, that were incurred as part of the listing of Joules Group plc on AIM. These costs were recharged to the exiting shareholders as the listing related to the disposal of their shares. The net amount of £nil has been classified as Exceptional.

 

 

 

 

 

52 weeks ended 29 May

2016

£'000

53 weeks

ended 31

May

2015

£'000

 

 

 

 

 

 

The analysis of auditor's remuneration is as follows:

 

 

 

Fees payable to the company's auditor for the audit of the Group's annual accounts

 

 

44

 

40

 

 

 

 

 

 

Total audit fees

 

 

 

44

40

 

 

 

 

 

 

Other services pursuant to legislation:

Tax compliance

 

 

 

66

15

Tax advice

 

 

 

74

99

Services relating to IPO

 

 

 

803

-

Other

 

 

 

5

6

 

 

 

 

 

 

Total non-audit fees

 

 

 

948

120

 

 

 

 

 

 

4.         OPERATING PROFIT

Operating profit is stated after charging/(crediting):

 

 

52 weeks ended 29 May

2016

£'000

53 weeks

ended 31

May

2015

£'000

 

 

 

 

 

Hire of plant and machinery

 

 

444

597

Other operating leases

 

 

8,570

7,928

Depreciation, amortisation and impairment of fixed assets

 

 

 

5,907

 

5,296

(Profit)/loss on disposal of fixed assets

 

 

 

-

 

-

 

 

 

 

 

5.       INTEREST PAYABLE AND SIMILAR CHARGES

 

 

52 weeks ended 29 May

2016

£'000

53 weeks

ended 31

May

2015

£'000

 

 

 

 

Bank loan interest

 

461

416

Shareholder loan note interest

 

4,676

4,399

Amortisation of debt costs

 

878

363

 

 

 

 

 

 

6,015

5,178

 

 

 

 

Amortisation of debt costs relate to fees incurred in 2013 with regard to the Shareholder loan notes, as these fees related to a debt facility they were amortised over the expected life of the facility.  During the period the Shareholder loan note debt was settled and all remaining unamortised debt costs were expensed.

 

6.       INCOME TAX

 

 

a)   Analysis of charge in the period

 

 

52 weeks ended 29 May

2016

£'000

53 weeks

ended 31

May

2015

£'000

Current tax

 

 

 

 

UK corporation tax based on the profit/(loss)

for the period

 

 

 

869

 

1,083

Adjustment in respect of prior periods

 

 

(438)

(561)

Overseas tax

 

 

17

21

 

 

 

 

 

Total current tax charge

 

 

448

543

 

 

 

 

 

Deferred taxation

Adjustment in respect of prior periods

 

 

 

225

 

330

Origination and reversal of timing differences

 

 

(142)

 

(358)

Effect of adjustment in tax rate

 

 

82

14

 

 

 

 

 

Total deferred taxation charge/(credit)

 

 

165

(14)

 

 

 

 

 

Tax charge for the period (note 6b)

 

 

613

529

 

 

 

 

 

 

In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised in other comprehensive income.

 

 

 

 

52 weeks ended 29 May

2016

£'000

53 weeks

ended 31

May

2015

£'000

Deferred taxation

 

 

 

Gains/(Losses) arising during the period on deferred tax on cash flow hedges

 

 

15

 

(444)

 

 

 

 

Total income tax gain/(loss) recognised in other comprehensive income

 

 

15

 

(444)

 

 

 

 

 

 

6.       INCOME TAX (Continued)

b)      Factors affecting the tax charge for the period       

There are reconciling items between the expected tax charge and the actual which are shown below:

 

 

 

52 weeks ended 29 May

2016

£'000

53 weeks

ended 31

May

2015

£'000

 

 

 

 

Profit / (loss) before taxation

 

(1,180)

89

 

 

 

 

UK corporation tax at the standard rate

 

20.0%

 

(236)

20.8%

 

19

Effects of:

 

 

 

Expenses/(credits) not deductible for tax

purposes and other permanent differences

 

 

940

 

553

Difference in overseas tax rate

 

17

11

Effect of adjustment in tax rate

 

82

14

Losses not recognised due to uncertainty

 

23

163

Adjustment in respect of prior period

 

(213)

(231)

 

 

 

 

Tax expense for the period (note 6a)

 

613

529

 

 

 

 

 

The 2013 budget issued on 20 March 2013 announced that the main rate of corporation tax would be reduced to 21% from 1 April 2014 and to 20% from 1 April 2015. The UK corporation tax at the standard rate for the year is therefore 20.0% (2015: 20.8%).

In July 2015 the UK government announced its intention to reduce the standard corporation tax rate to 18% by 2020. The measure to reduce the rate to 19% for the financial year beginning 1 April 2017 and to 18% for the financial year beginning 1 April 2020 were substantively enacted on 26 October 2015 and have been reflected in the calculation of deferred tax in the May 2016 numbers.

 

 

7 & 8.     PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

 

 

Property, Plant and Equipment

 

Intangible

 

 

 

 

 

 

 

 

 

 

Leasehold improve-ments

£'000

 

Fixtures and fittings

£'000

 

Motor vehicles

£'000

 

 

Total

£'000

 

 

IT Systems

£'000

 

 

 Total

£'000

Cost

 

 

 

 

 

 

At 25 May 2014

155

21,370

514

22,039

2,544

2,544

Additions

-

5,391

16

5,407

3,385

3,385

 

 

 

 

 

 

 

At 31 May 2015

155

26,761

530

27,446

5,929

5,929

 

 

 

 

 

 

 

At 1 June 2015

155

26,761

530

27,446

5,929

5,929

Additions

-

4,589

-

4,589

2,498

2,498

Disposals

(55)

(8,570)

(404)

(9,029)

(674)

(674)

 

 

 

 

 

 

 

At 29 May 2016

100

22,780

126

23,006

7,753

7,753

 

 

 

 

 

 

 

Accumulated

depreciation/amortisation

 

 

 

 

 

 

At 25 May 2014

111

10,658

477

11,246

959

959

Charge for the period

8

4,203

31

4,242

554

554

Impairment

-

500

-

500

-

-

 

 

 

 

 

 

 

At 31 May 2015

119

15,361

508

15,988

1,513

1,513

 

 

 

 

 

 

 

At 1 June 2015

119

15,361

508

15,988

1,513

1,513

Charge for the period

5

4,504

7

4,516

1,011

1,011

Disposals

(55)

(8,570)

(404)

(9,029)

(674)

(674)

Impairment

-

380

-

380

-

-

 

 

 

 

 

 

 

At 29 May 2016

69

11,675

111

11,855

1,850

1,850

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

 

 

 

 

 

At 25 May 2014

44

10,712

37

10,793

1,585

1,585

 

 

 

 

 

 

 

At 31 May 2015

36

11,400

22

11,458

4,416

4,416

 

 

 

 

 

 

 

At 29 May 2016

31

11,105

15

11,151

5,903

5,903

                       

 

 

Property, Plant and Equipment and Intangibles

During the period the Directors conducted a detailed review of the Group's fixed assets, as a result of this review £9,044,000 (£8,370,000 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 identified, these have been recorded as a disposal above.

 

 

9.       BORROWINGS

 

 

 

 

 

 

29 May

2016

£'000

 

31 May

2015

£'000

Bank loans

 

 

 

 

5,009

7,068

Asset loans

 

 

 

 

1,079

1,566

Shareholder loan notes

 

 

 

 

-

43,699

Financing costs capitalised

 

 

 

 

-

(877)

 

 

 

 

 

 

 

 

 

 

 

 

6,088

51,456

 

 

 

 

 

 

 

Borrowings are repayable

as follows:

 

 

 

 

 

 

Bank loans

 

 

 

 

 

 

Within one year

 

 

 

 

5,009

7,068

 

 

 

 

 

 

 

Asset loans

 

 

 

 

 

 

Within one year

 

 

 

 

452

561

Between one and two years

 

 

 

 

333

490

Between two and five years

 

 

 

 

294

515

 

 

 

 

 

 

 

 

 

 

 

 

1,079

1,566

 

 

 

 

 

 

 

Shareholder loan notes

 

 

 

 

 

 

Between two and five years

 

 

 

 

-

17,480

After five years

 

 

 

 

-

26,219

 

 

 

 

 

 

 

 

 

 

 

 

-

43,699

Financing costs capitalised

 

 

 

 

-

(877)

 

 

 

 

 

 

 

 

 

 

 

 

-

42,822

 

 

 

 

 

 

 

 

Total borrowings

 

 

 

 

 

 

Between one and two years

 

 

 

 

333

490

Between two and five years

 

 

 

 

294

17,995

After five years

 

 

 

 

-

26,219

Financing costs capitalised

 

 

 

 

-

(877)

 

 

 

 

 

 

 

 

 

 

 

 

627

43,827

On demand or within one year

 

 

 

 

 

5,461

 

7,629

 

 

 

 

 

 

 

 

 

 

 

 

6,088

51,456

 

 

 

 

 

 

 

 

 

9.       BORROWINGS (Continued)

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 May 2020. The asset loans are secured against the assets to which they relate. Interest is paid at varying rates above base rate.

The shareholder loan notes were issued in November 2013 and were repayable in equal amounts representing 20% of the outstanding balance annually from 31 October 2018 for a period of 5 years. Interest accrued annually at 11% and was added to the principal amount outstanding. The loan notes were settled in full on 26th May 2016 as a part of the IPO on admission to AIM.

The weighted average interest rates paid during the period were as follows:

 

 

 

 

 

52 weeks ended

29 May

2016

%

53 weeks

ended

31 May

2015

%

Asset loans

 

 

 

7.4

8.9

Shareholder loan notes

 

 

 

11.0

11.0

Bank loans

 

 

 

3.0

3.0

 

 

 

 

 

 

10.     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

 

 

 

 

 

 

 

29 May

2016

£'000

 

31 May

2015

£'000

Leases expiring:

 

 

 

 

 

 

Not later than 1 year

 

 

 

 

8,040

7,996

Later than 1 year and not later than 5 years

 

 

 

 

 

27,881


26,497

Later than 5 years

 

 

 

 

17,550

16,975

 

 

 

 

 

 

 

 

 

 

 

 

53,471

51,468

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

29 May

2016

£'000

31 May

2015

£'000

Leases expiring:

 

 

 

 

 

 

Not later than 1 year

 

 

 

 

333

299

Later than 1 year and not later than 5 years

 

 

 

 

 

359

 

495

 Later than 5 years

 

 

 

 

-

-

 

 

 

 

 

 

 

 

 

 

 

 

692

794

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                       

 

11.       RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT

 

 

 

 

 

29 May 2016

£'000

31 May

2015

£'000

 

 

 

 

 

 

Increase/(decrease) in cash in the period

 

 

 

7,157

(2,126)

Cash flow from movement in debt

 

 

 

13,913

(656)

 

 

 

 

 

 

Change in net debt resulting from cash flows

 

 

 

21,070

(2,782)

 

Non cash interest on loan notes

 

 

 

(4,676)

(4,399)

Non cash movement on amortised deal fees of loan notes

 

 

 

 

(878)

 

(363)

Non cash settlement on loan notes

 

 

 

37,009

-

 

 

 

 

 

 

Net debt at start of the year

 

 

 

(49,335)

(41,791)

 

 

 

 

 

 

Net debt at end of year

 

 

 

3,190

(49,335)

 

 

 

 

 

 

 

12.     RELATED PARTY TRANSACTIONS

Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation.

The Directors and key management control 31,011,102 shares in Joules Group plc, which represents 35.44% of the issued share capital.

 

13.     EARNINGS PER SHARE

Basic and diluted earnings per share are calculated by dividing profit or loss attributable to ordinary equity holders by the weighted average number of ordinary shares in issue during the period.

The acquisition of Joules Investments Holdings Limited by Joules Group plc on 26 May 2016 has been accounted for using reverse acquisition accounting principles. The effect of using reverse acquisition accounting principles on share capital is that the capital that existed as at the point Joules Group plc legally acquired Joules Investments Holdings Limited is accounted for as if it had been in existence as at the comparative period end (31 May 2015) and as at the opening balance sheet date (25 May 2014).

The weighted average number of shares in issue for the current and prior year has therefore been stated to reflect 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.

 

 

 

52 weeks ended 29 May

2016

53 weeks

ended 31

May

2015

 

Basic earnings/(loss) per share (pence)

 

(2.04)

(0.50)

 

 

 

 

 

Diluted earnings/(loss) per share (pence)

 

(2.04)

(0.50)

 

 

 

 

 

 

13.     EARNINGS PER SHARE (Continued)

The calculation of basic and diluted earnings per share is based on the following data:

 

Earnings

 

 

 

52 weeks ended 29 May

2016

£'000

53 weeks

ended 31

May

2015

£'000

Earnings for the purpose of basic and diluted earnings per share, being the net loss

 

 

 

(1,793)

 

(440)

 

 

 

 

 

Earnings for the purpose of basic earnings per share

 

 

 

(1,793)

 

(440)

 

 

 

 

 

 

 

Number of shares

 

 

 

52 weeks ended 29 May

2016

53 weeks

ended 31

May

2015

Weighted number of ordinary shares for the purpose of basic earnings per share

 

 

 

 

87,499,796

 

 

87,499,796

Potentially dilutive share awards

 

 

446,875

446,875

 

 

 

 

 

Weighted number of ordinary shares for the purpose of diluted earnings per share

 

 

 

 

87,946,671

 

 

87,946,671

 

 

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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