Source - RNS
RNS Number : 3385H
Shoe Zone PLC
07 June 2017
 

7 June 2017

Shoe Zone plc

 

Interim Results

 

Shoe Zone plc ("Shoe Zone", the "Company" or the "Group") the leading UK value footwear retailer, is pleased to announce its Interim Results for the six months to 1 April 2017.

 

Financial Highlights

 

·      Revenue of £72.9m (2016 H1: £74.6m) reflecting the continued rationalisation of the retail store estate

·      Product gross margin improved to 62.8% (2016 H1: 61.1%)

·      Underlying profit before tax of £1.3m (2016 H1: £1.7m)

·      Statutory Profit before tax of £0.3m (2016 H1: £1.9m)

·      Underlying Earnings per share of 2.16p (2016 H1: 2.79p)

·      Statutory Earnings per share of 0.50p (2016 H1: 3.05p)

·      Interim dividend raised to 3.4p per share (2016 H1: 3.3p per share)

 

Operational Highlights

 

·      Rent on renewals fell on average by 21.4%, equivalent to a full year saving of £176k

·      Rent as a % of turnover is steady at 14% (2016 H1: 14%)

·      Footwear orders placed directly with overseas factories increased to 83.4% (2016 H1: 72.2%)

·      Sales from non-footwear ranges increased by 24%

·      Shoe Zone products available across Europe via Amazon Marketplace

 

Nick Davis, Chief Executive of Shoe Zone plc, said:

 

"I am pleased with the Group's performance in the first half as we continued to actively manage the retail estate while driving profitable sales. The devaluation of sterling against the dollar has impacted the Group's statutory profits in the period however as we reach the annualised rebasing of this rate, we anticipate the ongoing impact will be significantly reduced."

 

 

"The Group has traded broadly in line with management's expectations since the period end and the Board continues to look to the future with confidence."

 

There will be a presentation for analysts at the offices of FTI Consulting, 200 Aldersgate, London, EC1A 4HD, at 9:30am on 7 June 2017.

 

For further information, please call:

 

Shoe Zone plc

Anthony Smith (Chairman)

Nick Davis (CEO)

Jonathan Fearn (CFO)

 

Tel: via FTI Consulting

Numis Securities Limited (Nominated Adviser & Broker)

Oliver Cardigan

Mark Lander

 

Tel: +44 (0)20 7260 1000

FTI Consulting (Financial PR)

Jonathon Brill

Alex Beagley

Eleanor Purdon

Tel: +44 (0)20 3727 1000

 

Chief Executive's Statement

 

Product

 

 


As at 1 April
2017

As at 2 April
2016

As at 1 October 2016

Big Box

3

-

2

Grade 1 (large - 400 styles) *

289

284

284

Grade 2 (medium - 350 styles)

106

112

110

Grade 3 (small - 300 styles)

106

122

114

TOTAL

504

518

510

 

* incl. 36 Grade 1+ (450 styles)

 

Multichannel

 

Multi-channel continues to show strong profitable growth, with year on year sales growth of 30% and represents a key component of the Shoe Zone customer experience.  During the first half of the year our customer offer has been widened through Amazon Marketplace so that customers can purchase Shoe Zone products from across Europe in addition to the UK and Ireland, where we have both bricks and mortar and online presence.

 

Unaudited consolidated income statement

 




26 weeks ended 1 April 2017


26 weeks ended 2 April 2016


52 weeks ended 1 October 2016




Underlying


Non-underlying


Statutory


Underlying


Non-underlying


Statutory


Total




£'000


£'000


£'000


£'000


£'000


£'000


£'000

Revenue  

3


72,862


-


72,862


74,593


-


74,593


159,834

Cost of sales



(62,532)


-


(62,532)


(64,699)


-


(64,699)


(132,022)

Gross profit



10,330


-


10,330


9,894


-


9,894


27,812

Administration expenses

4


(6,019)


(1,031)


(7,050)


(5,254)


168


(5,086)


(11,657)

Distribution costs



(2,827)


-


(2,827)


(2,850)


-


(2,850)


(5,769)

Profit from operations



1,484


(1,031)


453


1,790


168


1,958


10,386

Finance income



11


-


11


34


-


34


56

Finance expense



(155)


-


(155)


(83)


-


(83)


(190)

Profit before taxation



1,340


(1,031)


309


1,741


168


1,909


10,252

Taxation

6


(261)


201


(60)


(348)


(34)


(382)


(1,801)

Profit attributable to equity holders of the parent

7


1,079


(830)


249


1,393


134


1,527


8,451

 

Earnings per share - basic and diluted

7


2.16p




0.50p


2.79p




3.05p


16.90p

Unaudited consolidated statement of total comprehensive income



26 weeks
ended 1 April

2017


26 weeks
ended 2

 April

2016


52 weeks
ended 1 October

2016



£'000


£'000


£'000

Profit for the period


249


1,527


8,451

Items that will not be reclassified subsequently to the income statement







Remeasurement gains and losses on defined benefit pension scheme


5,064


(1,254)


(8,190)

Movement in deferred tax on pension schemes


(912)


226


1,474

Effect of change in deferred tax rate on opening liability


-


(103)


(362)

Cash flow hedges







Fair value movements in other comprehensive income


1,001


358


1,683

Cash flow hedges recognised in inventories


(1,140)


-


(1,667)

Tax on cash flow hedges


(24)


(64)


(3)

Effect of change in deferred tax rate on opening liability


-


6


6

Other comprehensive expense for the period


3,989


(831)


(7,059)

Total comprehensive income for the period

attributable to equity holders of the parent


4,238


696


1,392

Unaudited consolidated statement of financial position

 









Notes

26 weeks        ended 1
April
2017


26 weeks   ended 2
April
2016


52 weeks    ended 1
October
2016



£'000


£'000


£'000

Assets







Non-current assets







Property, plant and equipment


18,667


18,260


18,661

Deferred tax asset


540


-


1,441

Total non-current assets


19,207


18,260


20,102

Current assets







Inventories


27,294


25,485


30,075

Trade and other receivables


5,638


7,038


7,204

Derivative financial assets

5

225


672


651

Corporation tax asset


273


-


-

Cash and cash equivalents


4,613


8,140


15,046

Total current assets


38,043


41,335


52,976

Total assets


57,250


59,595


73,078

Current liabilities







Trade and other payables


(18,928)


(17,970)


(25,348)

Provisions for liabilities and charges


(751)


(991)


(922)

Corporation tax liability


-


(702)


(1,583)

Total current liabilities


(19,679)


(19,663)


(27,853)

Non-current liabilities







Trade and other payables


(3,002)


(2,664)


(2,316)

Provisions for liabilities and charges


(104)


(130)


(75)

Employee benefit liability


(7,851)


(6,336)


(13,058)

Deferred tax liability


-


(72)


-

Total non-current liabilities


(10,957)


(9,202)


(15,449)

Total liabilities


(30,636)


(28,865)


(43,302)

Net assets


26,614


30,730


29,776

Equity attributable to equity holders of the company







Called up share capital


500


500


500

Share premium reserve


2,662


2,662


2,662

Cash flow hedge reserve          


107


551


270

Retained earnings


23,345


27,017


26,344

Total equity and reserves


26,614


30,730


29,776

 

Unaudited consolidated statement of changes in equity


Share capital


Share premium


Cash flow hedge reserve


Retained earnings


Total


£'000


£'000


      £'000


£'000


£'000





At 3 October 2015

500


2,662


251


32,871


36,284

Profit for the period

-


-


-


1,527


1,527

Other comprehensive income/(expense)

-


-


300


(1,131)


(831)

Total comprehensive income for the period

-


-


300


396


696

Dividends paid during the year

-


-


-


(6,250)


(6,250)

Total contributions by and distributions to owners

-


-


-


(6,250)


(6,250)

At 2 April 2016

500


2,662


551


27,017


30,730











At 3 October 2015

500


2,662


251


32,871


36,284

Profit for the period

-


-


-


8,451


8,451

Other comprehensive income/(expense)

-


-


19


(7,078)


(7,059)

Total comprehensive income for the period

-


  -


19


1,373


1,392

Dividends paid during the year

             -


  -


  -


(7,900)


(7,900)

Total contributions by and distributions to owners

-


-


-


(7,900)


(7,900)

At 1 October 2016

500


2,662


270


26,344


29,776

Profit for the period

-


-


-


249


249

Other comprehensive income/(expense)

-


-


(163)


4,152


3,989

Total comprehensive income for the period

-


-


(163)


4,401


4,238

Dividends paid during the year

-


-


-


(7,400)


(7,400)

Total contributions by and distributions to owners

-


-


-


(7,400)


(7,400)

At 1 April 2017

500


2,662


107


23,345


26,614

 

Unaudited consolidated statement of cash flows

 



26 weeks

ended 1
April
2017


26 weeks 

ended 2
April
2016


52 weeks

ended 1
October
2016



£'000


£'000


£'000

Operating activities







Profit after taxation


249


1,526


8,451

Corporation tax


60


382


1,801

Finance income


(11)


(34)


(56)

Finance expense


155


83


190

Pension contributions paid


(298)


           (150)


(472)

Depreciation of property, plant and equipment


1,535


1,596


3,153

Loss on disposal of property, plant and equipment


88


56


309



1,778


3,459


13,376

Decrease in trade and other receivables


1,553


1,030


861

Decrease in foreign exchange contract


-


239


239

Decrease/ (increase) in inventories


3,007


3,687


(1,224)

(Decrease)/ increase in trade and other payables


(5,773)


(5,956)


821

Decrease in provisions


(142)


(44)


(168)



(1,355)


(1,044)


529








Cash generated from operations


423


2,415


13,905

Income taxes paid


(1,889)


(1,040)


(2,041)

Net cash flows from operating activities


(1,466)


1,375


11,864

Investing activities







Purchase of property, plant and equipment


(1,578)


(1,356)


(3,195)

Sale of property, plant and equipment


-  


116


-

Interest received


11


34


56

Net cash used in investing activities


(1,567)


(1,206)


(3,139)

Financing activities







Dividends paid during the year


(7,400)


(6,250)


(7,900)

Net cash used in financing activities


(7,400)


(6,250)


(7,900)

Net (decrease)/increase in cash and cash equivalents


(10,433)


(6,081)


825

Cash and cash equivalents at beginning of period


15,046


14,221


14,221

Cash and cash equivalents at end of period


4,613


8,140


15,046

Notes to the financial statements for the 26 weeks ended 1 April 2017

1.    Basis of preparation

The consolidated interim financial statements of the Group for the 26 weeks ended 1 April 2017, which are unaudited, have been prepared in accordance with the same accounting policies, presentation and methods of computation  followed in the condensed set of financial statements as applied in the group's latest annual audited financial statements. A copy of those accounts has been delivered to the Registrar of Companies.

The financial information for the 26 weeks ended 1 April 2017, contained in this interim report, does not constitute the full statutory accounts for that period. The Independent Auditors' Report on the Annual Report and Financial Statements for 2016 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The consolidated interim financial statements have neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board.

The condensed consolidated interim financial statements have been prepared on a going concern basis and under the historical cost convention, as modified by the revaluation of derivative financial instruments to fair value.

The condensed consolidated interim financial statements are presented in sterling and have been rounded to the nearest thousand (£'000).

The preparation of financial information in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual events ultimately may differ from those estimates.

2.    Accounting policies

In preparing these interim financial statements, the significant judgements made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements reported in the latest annual audited financial statements for the 52 weeks ended 1 October 2016.

 

3.    Segmental information

The group complies with IFRS 8 'Operating Segments', which determines and presents operating segments based on information provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer. The Board considers that each store is an operating segment but there is only one reporting segment as the stores qualify for aggregation, as defined under IFRS 8.


1
April
2017


2
April
2016


1

October

2016


£'000


£'000


£'000

External revenue by location of customers:






United Kingdom

70,404


72,225


154,463

Republic of Ireland

2,458


2,368


5,371


72,862


74,593


159,834

There are no customers with turnover in excess of 10% of total turnover


1
April
2017


2
April
2016


1

October

2016


£'000


£'000


£'000

Non-current assets by location:






United Kingdom

18,667


18,260


18,661

Non-current assets held in the Republic of Ireland are not disclosed on the grounds of materiality.

4.    Non-underlying items

The adjustments made to the reported profit before tax to arrive at underlying profit are:



26 weeks ended



1 April 2017


2 April 2016



£'000


£'000

Impact of Foreign Exchange


893


122

Lease Exit Costs /  (Income)


138


(290)

Adjustments to profit before tax


1,031


(168)

In order to provide shareholders with a measure of the true underlying performance of the business the Group has made certain adjustments to the reported profit before tax for the interim reporting statement. These adjustments are made in accordance with the Groups accounting policies and are one off in nature or are considered to be materially distortive of the true underlying trading performance of the business for this reporting period.

1.     Impact of Foreign Exchange:  Following the Brexit decision last June the Group had an unhedged committed stock order programme which has resulted in significant currency losses in the period compared with the prior period. The Group has increased its hedge coverage against forecast purchases of stock and so this is considered to be a one off event.

2.     Lease Exit Costs:   The Group has continued to exit certain leases as it follows its stores reorganisation as previously reported. In the prior period these were achieved at a premium, whilst in the current period this has been at a net cost. The net movement on a comparative basis is considered to be of a one off nature and material to the understanding of the performance of the business.

 

5.    Derivative financial instruments  

At the balance sheet date, details of the forward foreign exchange contracts that the group has committed to are as follows:


1
April
2017


2
April
2016


1
October
2016


£'000


£'000


£'000

Derivative financial assets






Derivatives not designated as hedging instruments  

95


-


321

Derivatives designated as hedging instruments         

130


672


330


225


672


651

 

6.    Taxation

The taxation charge for the 26 weeks ended 1 April 2017 is based on the estimated effective tax rate for the full year of 19.5% (2016:20%).

Further changes to the UK Corporation tax rates were substantively enacted as part of the Finance Bill 2015-16 on 26 October 2015. These include a reduction to the main rate to 19% from 1 April 2017 and to 17% from 1 April 2020. Deferred tax has been calculated at 18% being the rate at which the timing differences are expected to reverse.

7.    Earnings per share


1
April
2017


2
April
2016


1
October
2016


£'000


£'000


£'000







Profit for the period and earnings used in basic and diluted earnings per share

249


1,527


8,451







Earnings per share - basic and diluted

0.50p


3.05p


16.90p

 


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