JD Sports Fashion Plc Final Results (5180C)

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Jd Sports Fashion Plc	LSE:JD.	London	Ordinary Share	GB00BM8Q5M07	ORD 0.05P

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.75	0.65%	115.40	115.35	115.50	116.55	113.50	114.65	5,974,328	13:06:23

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
Sport Gds Stores, Bike Shops	10.54B	538.8M	0.1040	11.13	5.94B

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RNS Number : 5180C

JD Sports Fashion Plc

17 April 2013

JD SPORTS FASHION PLC

PRELIMINARY RESULTS

FOR THE 53 WEEKS ENDED 2 FEBRUARY 2013

JD Sports Fashion Plc (the "Group"), the leading retailer and distributor of branded sportswear, fashionwear and outdoor clothing and equipment today announces its Preliminary Results for the 53 weeks ended 2 February 2013.

 
                                                         2013          2012   % Change 
                                                       GBP000        GBP000 
 
   Revenue                                          1,258,892     1,059,523     +18.8% 
 
   Gross profit %                                       48.7%         49.2% 
 
   Operating profit (before exceptional items)         61,323        76,461     -19.8% 
 
   Profit before tax and exceptional items             60,465        75,957     -20.4% 
 
   Profit before tax                                   55,117        67,442     -18.3% 
 
   Basic earnings per ordinary share                   79.71p        96.27p     -17.2% 
 
   Adjusted basic earnings per ordinary share 
   (see note 4)                                        88.51p       105.89p     -16.4% 
 
   Total dividend payable per ordinary share           26.30p        25.30p      +4.0% 
 
   Net cash at end of period (a)                       45,636        60,295

a) Net cash consists of cash and cash equivalents together with interest-bearing loans and borrowings.

Group Highlights

-- Ongoing robust performance in core Sports fascias which continue to provide investment platform for future profitability in JD in Europe. In the UK and Ireland, these fascias contributed an additional GBP4.7m of operating profits in the year (before exceptional items) and we are building an appropriate store base in Europe for future success there.

-- The good performance in the Sports fascias has continued in the current financial year with like for like sales growth in the UK and Ireland stores (excl Champion) of 1.9% in the 9 weeks to 6 April 2013.

-- GBP14.9 million of operating losses (before exceptional items) incurred in Outdoor fascias but performance improving now that new management team has been installed with stocks being better managed, store investment commenced and ongoing cost reduction programme to deliver benefits in the current financial year. Like for like sales in Outdoor in the current financial year have benefitted significantly both from the recent sustained cold weather and a sustained clearance programme from January through to March.

-- Sales, gross margin and operating profit before exceptional items of the four business segments are tabulated below:

 
 Period to 2 February       Sport     Fashion      Outdoor 
  2013                     Retail      Retail       Retail     Distribution       Total 
                           GBP000      GBP000       GBP000           GBP000      GBP000 
 
 Gross revenue            854,282     160,442      121,006          130,342   1,266,072 
 Intersegment revenue       (287)           -            -          (6,893)     (7,180) 
                        ---------  ----------  -----------  ---------------  ---------- 
 
 Revenue                  853,995     160,442      121,006          123,449   1,258,892 
                        ---------  ----------  -----------  ---------------  ---------- 
 
 Gross margin %             50.6%       47.4%        47.3%            36.8%       48.7% 
                        ---------  ----------  -----------  ---------------  ---------- 
 Operating profit 
  before exceptional 
  items                    77,791     (2,004)     (14,906)              442      61,323 
                        ---------  ----------  -----------  ---------------  ---------- 
 
 
 Period to 28 January       Sport   Fashion     Outdoor 
  2012                     Retail    Retail      Retail     Distribution       Total 
                           GBP000    GBP000      GBP000           GBP000      GBP000 
 
 Gross revenue            774,991   151,642       5,876          135,117   1,067,626 
 Intersegment revenue       (380)         -           -          (7,723)     (8,103) 
                        ---------  --------  ----------  ---------------  ---------- 
 
 Revenue                  774,611   151,642       5,876          127,394   1,059,523 
                        ---------  --------  ----------  ---------------  ---------- 
 
 Gross margin %             50.8%     48.5%       46.2%            37.7%       49.2% 
                        ---------  --------  ----------  ---------------  ---------- 
 Operating profit 
  before exceptional 
  items                    74,301     3,303     (2,199)            1,056      76,461 
                        ---------  --------  ----------  ---------------  ----------

-- Like for like sales for the 53 week period in the UK and Ireland combined core retail fascias increased by 1.2%:

 
       Sport UK &                          Combined 
          Ireland           Fashion            Core 
  (excl Champion)    (excl Premium)    UK & Ireland 
 
            +2.5%             -4.1%           +1.2%

-- Final dividend payable increased by 3.8% to 22.00p (2012: 21.20p) bringing the total dividends payable for the year to 26.30p (2012: 25.30p) per ordinary share, an increase of 4.0%.

Peter Cowgill, Executive Chairman, said:

"The core Sports fascias in the UK continue to produce excellent results and provide the Group with a very solid foundation for ongoing profitability and cash generation.

"We are pleased overall with the start that we have made to the new year. A very considerable amount of reorganisation in both Outdoor Retail and our warehousing and distribution operations is now behind us and this should benefit trading in the balance of the year.

"The Group is exceptionally well positioned with its retail proposition, financial resources and extended management experience to take advantage of opportunities both in the UK and internationally. Whilst the Board recognises that recent acquisition activity has impacted on short term returns, it remains confident that the Group is well positioned to deliver earnings growth and increased shareholder returns over the longer term."

Enquiries:

JD Sports Fashion Plc Tel: 0161 767 1000

Peter Cowgill, Executive Chairman

Barry Bown, Chief Executive

Brian Small, Finance Director

MHP Communications Tel: 020 3128 8100

Andrew Jaques

Barnaby Fry

Ian Payne

Executive Chairman's Statement

Introduction

The year to January 2013 was one of substantial change for the Group and it is worth reflecting on the key changes:

-- We entered the Outdoor market in January 2012 with the purchase of the Blacks and Millets store portfolios from the administrators of Blacks Leisure Group Plc. Although initial results have been more disappointing than originally anticipated we now have a firm foothold in a different and growing lifestyle market in the UK. With our capacity for creating efficient and appealing environments already evidenced through the stores which we have refurbished, along with our capable support systems, we remain optimistic that these Outdoor fascias will prove to be a successful core retail operation.

-- We consolidated our warehousing into the new central distribution facility in Rochdale, eliminating the capacity constraints we previously had and reducing double handling of stock. The new warehouse has subsequently absorbed both the Christmas period and the transfer in the current year of the Outdoor business from its facility in Northampton although there are still improvements in efficiency to be achieved.

-- We have continued our expansion of the Sports Fascias in France and Spain and are expecting to continue to add stores in existing and new territories in 2013. Our product offer in Southern Europe can be improved but we now have a greater understanding of the key ingredients for success in Europe. We expect to move into other territories in Europe this year.

-- We have strengthened the Group's executive team in the last six months with the appointment of Dave Williams as Group Commercial Director and Pat Lee as Group Supply Chain and Change Director. We have also invested significantly in our Multichannel team.

-- We have committed to changing our legacy IT systems to Oracle. We have already successfully implemented Oracle Financials with the main retail system following through 2014 and 2015.

Although we have a number of short term challenges we believe we are developing our infrastructure appropriately to support the future anticipated growth of our businesses in all channels. This investment in infrastructure also ensures that we protect the core Sports fascias in the UK which continue to produce excellent results and provide the Group with a very solid foundation for ongoing profitability and future cash generation.

Strategic Developments

Retail remains the core focus for the Group and the strategic developments and acquisitions which we have made in the period reflect this focus.

We have continued the international development of our JD fascia through further expansion in France and the opening of our first stores in Spain. By 2 February 2013 we had 11 JD and Size? stores in France with one further store opening to date in the new financial period. We now feel that we are beginning to generate some momentum in France. We will maintain this momentum with further openings through 2013.

During the year we opened five JD stores in Spain including the conversion of a pre-existing Sprinter store. One further store has opened to date in the new financial year. Spain has proved a more difficult market than France for JD to date and improvements need to be made to both our product offer and price architecture there.

We made our initial entry into the Premium Fashion sector in 2011 through the acquisition of eight Cecil Gee stores. We have subsequently complemented this in the current year by making two further small acquisitions (Tessuti Group and Originals) in this sector. These acquisitions have given us additional critical mass together with management knowledge, both of which were needed to create a business in this sector which is capable of delivering future profitability, supported by the Group's resource. The combined business is now run by the management of Tessuti.

In recent years, the Group has steadily increased its stable of owned and licensed sporting and fashion inspired brands. This strategy has continued and in the year to January 2013 we acquired rights to the Henleys, Fly 53 and Gio Goi brands at a cost of GBP2.6 million, GBP0.4 million and GBP2.4 million respectively.

In Distribution, we have been pleased with the performance to date of the Source Lab business in which we acquired an 85% holding in May 2012 at a cost of GBP2.6 million. Source Lab's management have proven experience of developing ranges of sport related product and we believe we can use this experience to enhance the return from the Group's stable of brands and other Sports inspired businesses.

After the year end, we also acquired the intellectual property and other assets associated with the Cloggs online footwear business from its administrators for a cash consideration of GBP0.6m. Cloggs is an online niche retailer of premium branded footwear and so whilst its product offering is very complementary it also gives us opportunities to extend our customer base and the width of our offer.

We have also made significant investments in the year in two projects which will not only support our current retail businesses in future years but which will also have the capacity to deal with growth both organically and by acquisition whether that be in the UK or overseas. The first of these projects is our new centralised warehouse in Kingsway, Rochdale which became fully operational in Summer 2012 with substantially all stock for the UK and Ireland retail fascias now channelled through this facility. The second major project concerns the development of replacement of our legacy bespoke commercial systems with Oracle Retail. This project is in its early stages and we currently plan to bring the first of the Group's businesses on to this system in 2014. Thereafter, the retail businesses will be transferred in stages with all current retail businesses anticipated to be working on the new system by Autumn 2015.

Disposal of Canterbury

During the year we completed the disposal of the Canterbury business to Pentland Group Plc for a total consideration of GBP22.7 million which represented a full repayment of the net cash investment made by the Group into Canterbury since our acquisition of the initial interest in August 2009.

Sports Fascias

The Sports Fascias are JD, Size?, Chausport, Sprinter and Champion Sports.

The Sports Fascias' total revenue (after elimination of inter-group sales) increased by 10.2% during the period to GBP854.0 million (2012: GBP774.6 million) with like for like sales growth of 2.5% (2012: +0.3%) in the core UK and Ireland sports fascia stores (excl Champion). This represents a significant improvement on the +1.2% that we announced in the results for the first half of the year and is a very robust performance in the current economic climate. It is clear that our largely unique product offering combined with a well-executed retail environment is attractive to the consumer. Our challenge is to ensure that these basic principles are repeated in all of our retail fascias.

Gross margin achieved in the Sports Fascias decreased only marginally to 50.6% (2012: 50.8%) which includes a full year of the lower margin Sprinter and Champion businesses for the first time.

Operating profit (before exceptional items) of the Sports Fascias increased by GBP3.5 million to GBP77.8million (2012: GBP74.3 million). Most pleasing was the increase of GBP4.7m in the operating profit (before exceptional items) of the core JD businesses in the UK and Ireland (including Size?) to GBP72.9 million (2012: GBP68.2 million).

The contribution from Chausport decreased to GBP0.6 million (2012: GBP1.5 million). Although there was growth in like for like sales of 0.7% (2012: 2.2%), this growth did not generate sufficient margin to cover an increased investment in resource both in stores and centrally.

The loss in the JD France business (including the Size store in Paris which was opened in the year) increased marginally to GBP0.5 million (2012: loss of GBP0.2 million) as this business scales up. The performance of our recently opened stores makes us increasingly confident about the prospects for JD in France though and we would hope to at least reach a break even position in the current financial year although we are fully aware that we need to improve our overall apparel offer, particularly in the South of the country.

The Sprinter business, which we acquired in June 2011, had a good year with profits maintained at GBP4.7 million (2012: GBP4.7 million for the 7 months post acquisition). This is an excellent performance overall given the seasonally loss making five month non like for like period at the start of the year and the increase in the rate of VAT from 18% to 21% which came into effect on 1 September 2012. We remain pleased with this acquisition and believe that the management team that we have in Spain are well equipped to steer the business through the very difficult economic period that the country is currently facing.

We opened our first JD stores in Spain in the year with our limited openings to date already providing us with considerable additional market knowledge which we are using to refine our offer. However, we do not yet have any critical mass and given the ongoing economic difficulties and increased fiscal take then we will remain cautious in the short term in our approach to opening new stores in Spain.

Champion made a minimal contribution to Operating Profit in the year (2012: GBP0.1 million). However, given that this includes the absorption of GBP0.8m of losses in the non like for like period at the start of the year then the business performed well. Whilst there are some short term operational changes which we can make which will benefit the financial performance in the shorter term we do not expect a more substantial improvement until the wider economy in the Republic of Ireland picks up more strongly.

Fashion Fascias

The established Fashion Fascias of Bank and Scotts are now complemented by a Premium Fashion business comprising Cecil Gee, Originals and Tessuti.

The Fashion Fascias' total revenue (after elimination of inter-group sales) increased by 5.8% during the period to GBP160.4 million (2012: GBP151.6 million). Like for like sales in the two core fascias declined by 4.1% (2012: +2.2%) being Bank -4.9% (2012: +3.9%) and Scotts -0.5% (2012: -2.9%).

Gross margin achieved in the Fashion Fascias declined from 48.5% to 47.4%. This decline was caused by clearance activity in the Cecil Gee business which was required to clear excess Spring / Summer product. These stores, along with the Originals stores which were acquired in the year, are now managed by the Tessuti management team.

The Bank fascia sells largely branded fashion to both males and females, predominantly for the teenage to mid-twenties sector. In the year the store portfolio grew from 80 stores to 85 stores, still based predominantly in the North and the Midlands. Whilst the business made an operating loss (before exceptional items) in the year of GBP0.5 million (2012: profit of GBP3.1 million) we are encouraged by a number of factors with footfall maintained, a good performance in Menswear and a slight enhancement of margins. With the right product, we believe that Bank is capable of making a contribution to Group operating profits again.

Our turnaround plan for Bank involves increased focus on the female offer which is reflected in our recent recruitment of an experienced Head of Women's although we will not see the benefits of her product decision making until later in the current financial year. We will also look to utilise our stable of owned and licensed brands and improve our footwear offering. There will also be some rationalisation of the central overhead base.

The Scotts fascia stores continue to offer branded fashion authority to more affluent young males, largely in the North and Midlands. Three stores were closed in the period with no new openings resulting in 32 stores at the year end (2012: 35 stores). Operating profit (before exceptional items) reduced by GBP0.7 million to GBP0.1 million (2012: GBP0.8 million) principally from a reduction in gross margin. The fascia continues to serve a useful purpose to the Group as an introducer of brands and provides revenue for a legacy store portfolio.

Our combined Premium Fashion offering made an operating loss of GBP1.5 million (2012: loss of GBP0.6 million) principally from losses in the Cecil Gee stores which we understood to be loss making when we made our initial entry into the Premium Fashion market in June 2011. However, following our acquisition of the Tessuti business in the year we believe that we have a management team that has sector specific experience and is capable of delivering a successful Premium Fashion proposition with a consistency of retail standards and a geographically appropriate brand offering. Dealing with the legacy issues in the business, particularly property, will mean that we are unlikely to deliver any meaningful profit from this activity in the short term.

Outdoor

Outdoor had an exceptionally difficult year resulting in it delivering an operating loss (before exceptional items) of GBP14.9 million (2012: loss of GBP2.2 million for the short period post acquisition).

On our acquisition of the business from administration in January 2012 we inherited a very limited and unbalanced stock position, with a particularly severe lack of stocks in many core high performing lines combined with an excessively large and overrented store portfolio and a disproportionate central cost base. Our first priorities in turning around the business were to deal with these issues. Agreeing and receiving a resumption of supply from key suppliers was a difficult and time consuming process. Consequently, it was three months before we started to receive any substantial deliveries of new stocks. During this period, the business made very substantial losses.

At acquisition we backed the incumbent management team, who only came together in Autumn 2011, and gave them the opportunity to turn the business round. However, it became clear through the year that they did not have sufficient experience or knowledge of the Outdoor market to take the business forward. This was reflected in the proposition which they bought into for the key Autumn and Winter seasons which required significant margin sacrifice to clear through. We now have a new management team which includes both external recruits and long serving members of the Group's team. We will not see its full impact until later in the year but we believe that we now have the right team and strategy to take the business forward.

The initial strategy on retail fascia and property locations was that we should retain only the Blacks fascia long term with a portfolio of approximately 130 stores. However, during the year we have increasingly realised that there is a place for Millets as it has considerable support and goodwill amongst its customers and it is a good outlet for our own brands (Peter Storm and Eurohike). This two fascia strategy, with differentiated management, will enable us to segment the product more appropriately and so we now believe that we will retain approximately 140 stores in the longer term of which approximately 80 will be fascia'ed as Blacks and 60 will be fascia'ed as Millets. The Blacks stores will primarily stock more technical products from the premium brands at higher price points with Millets catering for a more casual outdoor customer.

During the year we closed 122 stores and opened one store to give a store portfolio of 174 stores (2012: 295 stores). A further five stores have closed since the year end. The negotiations with the landlords on either new leases or temporary licences have also been protracted as we have needed to negotiate rents which were sustainable in the longer term. This assessment has been made difficult because of the need for a major proposition overhaul. However, this task is now well progressed. We have also refurbished seven stores to date. This has provided us with valuable additional knowledge which we will apply in future refurbishments. We are encouraged by the performance of these stores in the period since they reopened.

Keeping the smaller scale Blacks and Millets business in their pre-existing office and warehouse facility at Northampton was not economically viable. We have now closed the warehouse and moved the distribution function in to the Group's new facility at Kingsway. An exceptional charge of GBP0.9 million has been recognised in the year for this restructuring of the distribution operations. We have also integrated several back office functions into existing Group teams. The migration of the remaining activity from Northampton to Bury is proposed to take place through Summer 2013 and so we would anticipate a further charge for restructuring in the new financial year.

We believe that the various issues which Blacks has faced in the year were a legacy of the administration process and the result of previous mismanagement and we would anticipate a significant reduction in the operating loss in the current financial year. We will, of course, now be looking for the support of suppliers in return for our efforts in elevating the desirability of their brands in premium retail locations. With this support, we believe that the decisive action we have taken to date and the strategy which we have adopted will give us the foundation of a business which is capable of delivering sustained operating profits in the medium term.

Distribution

Our Distribution businesses contributed a small operating profit of GBP0.4 million (2012: GBP1.1 million). This includes a profit of GBP1.9 million from Canterbury in the seven months prior to its disposal (2012: GBP0.4 million profit for the full year) with the second half of the year traditionally loss making. A number of our remaining Distribution businesses have had a difficult year reflecting the downstream effect of ongoing challenging circumstances in the Retail sector generally. We continue to review the benefit of holding each of these investments which must be capable of either delivering a significant profit in its own right or give us some other tangible strategic benefit.

The Getthelabel.com online and catalogue business within Topgrade has now been trading for over three years. Overall we are pleased with the development of this business with sales increasing in the year by 43% and losses more than halved to GBP0.7 million (2012: GBP1.5 million). We anticipate further growth this year with a further reduction in the losses. Operating profits within the wholesale operation of Topgrade decreased slightly by GBP0.2 million to GBP0.6 million (2012: GBP0.8 million). The performance of this element of the business is naturally volatile as it is very dependent on the timing and general availability of clearance packages from the major brands.

Focus has had a difficult year with an operating loss of GBP1.0 million (2012: profit GBP1.4 million) which is primarily from losses which have arisen after the acquisition of the trade and assets of the Fly 53 brand including 14 concessions in House of Fraser stores. As with other businesses which we have acquired in similar distressed circumstances the business was in a fractured state on acquisition with a poor mix of stocks and an inappropriate cost structure. We believe we have now resolved the majority of these acquisition issues and would anticipate at least a substantial reduction in these operating losses in the new financial year.

Although revenues in Kukri have grown by GBP4.4 million to GBP20.5 million (2012: GBP16.1 million) the business made an operating loss of GBP0.1 million (2012: profit GBP0.5 million). In the period after acquisition, Kukri has needed to make substantial investment in new IT systems and other infrastructure to have the potential to grow and ultimately deliver a meaningful return on our investment. We believe that Kukri's current underperformance is short term and that the brand is strong and can be leveraged in the future.

Elsewhere in the distribution division, Deakins has maintained its profitability and we are very pleased with the initial performance of Source Lab. However, the disappointing performance in Kooga has continued with losses increased to GBP1.0 million (2012: GBP0.8 million).

Financials Summary

Revenue

Total revenue increased by 18.8% (almost GBP200 million) in the year to GBP1,258.9 million (2012: GBP1,059.5 million) of which GBP121.0 million of sales were generated from the full year of the Blacks business (2012: GBP5.9 million for the three week period). A further GBP54.8 million of revenue was generated either in businesses acquired in the year or the annualisation of the other businesses acquired in the year to January 2012. GBP20.6 million of revenue was lost from the disposal of Canterbury.

Gross margin

Total Gross Margin fell from 49.2% to 48.7% reflecting the impact of the margin sacrifice in the second half of the year in the Outdoor business. The achieved margin in the Fashion Fascias also fell by 1.1% to 47.4% (2012: 48.5%) with ongoing clearance activity in the Premium Fashion businesses. We are, however, greatly encouraged by the fact the margins in the Sports fascias were largely maintained at prior year levels.

Operating profits

Operating profit (before exceptional items) decreased by GBP15.2 million to GBP61.3 million (2012: GBP76.5 million) principally due to the full year loss in the Blacks business of GBP14.9 million (2012: loss of GBP2.2 million for the three week period). We expect these losses to be substantially reduced in the new financial year.

After exceptional items of GBP5.3 million (2012: GBP9.7 million), Group operating profit decreased from GBP66.8 million to GBP56.0 million. These exceptional items comprised:

 
                                                 2013    2012 
                                                 GBPm    GBPm 
 
 Loss on disposal of fixed assets                 0.2     1.2 
 Impairment of fixed assets in loss making 
  stores                                          0.9     1.5 
 Onerous store lease provision                    1.3   (0.2) 
 
 Total property related exceptional costs         2.4     2.5 
                                               ------  ------ 
 
 Reorganisation of warehouse operations 
  (1)                                             0.2     3.0 
 Canterbury restructuring (2)                     0.2     1.6 
 Blacks restructuring (3)                         0.9     3.5 
                                               ------  ------ 
 
 Total reorganisation and restructuring 
  costs                                           1.3     8.1 
                                               ------  ------ 
 
 Impairment of intangible assets (4)              2.3     2.7 
 Profit on disposal of Canterbury (5)           (0.7)       - 
 Gain following acquisition of Focus Brands 
  (6)                                               -   (3.6) 
 
 Total other exceptional charges / (credits)      1.6   (0.9) 
                                               ------  ------ 
 
 
 Total exceptional charge                         5.3     9.7 
                                               ======  ======

(1) Reorganisation of the warehouse operations consisting of provisions for onerous property leases and redundancy costs.

(2) Redundancies and other one off costs incurred in the closure of Canterbury European Fashionwear Limited and Canterbury North America LLC.

(3) Restructuring of the Blacks business following acquisition for relocation of warehouse operations.

(4) Current year charge relates to a partial impairment of the goodwill arising on the acquisition of Bank Fashion. The charge in the prior year relates to the impairment of intangible assets on Kooga goodwill and brand name (GBP1.9 million) and Cecil Gee fascia name (GBP0.8 million).

(5) Profit on the disposal of the Canterbury group of businesses to Pentland Group plc in September 2012 (see note 6).

(6) The gain on the disposal of the Focus joint venture arose in the prior year from the remeasurement to fair value of the Group's previously held investment in Focus Brands Limited.

Working capital and financing

A combination of funding for the Blacks business, ongoing acquisition activity (including the acquisition of the Gio Goi brand in the final week before the period end) and capital expenditure incurred means that year end net cash decreased by GBP14.7 million to GBP45.6 million (2012: GBP60.3 million). The revolving credit facility has been used through most of the year and, consequently, the net financing charge increased by GBP0.5 million to GBP0.9 million (2012: GBP0.4 million).

The Group has a GBP75 million committed syndicated bank facility secured until 12 October 2015. This facility consists of a GBP60 million revolving credit facility with a current margin of 1.40% over LIBOR together with a GBP15 million working capital facility. It is likely that we will increase these facilities in the current year to enable us to continue to make acquisitions when opportunities occur.

Gross capital expenditure (excluding disposal costs) decreased slightly by GBP2.2 million to GBP43.5 million (2012: GBP45.7 million). The majority of the expenditure on the Kingsway facility was incurred in the prior year although a further GBP1.4 million was spent in the year (2012: GBP19.4 million). However, this reduction was offset by increased investment in our overseas businesses with total investment in the year of GBP9.5 million in France (2012: GBP4.7 million) and GBP6.8 million in Spain (2012: GBP2.1 million). Elsewhere, we also spent GBP3.4 million on the Blacks property portfolio and we have acquired a new combined warehouse and head office building for Kukri at a cost of GBP0.7 million.

Increased confidence in the potential for JD internationally combined with ongoing investment in refurbishing the Blacks portfolio and investment in the new core Oracle ERP system means that capital expenditure will remain high this year.

Working capital remains well controlled with suppliers continuing to be paid to agreed terms and settlement discounts taken whenever due.

Store Portfolio

During the period, store numbers (excluding trading websites) have moved as follows:

Sports Fascias

 
 
                           JD     JD France        JD           Size 
  (No. Stores)           UK &           (a)     Spain           UK &     Chausport     Champion     Sprinter     Total 
                      Ireland                                Ireland 
                                                                 (b) 
 
 Start of 
  period                  332             5         -             23            74           20           49       503 
 New stores                17             6         4              2             5            -            5        39 
 Transfers                  4             -         1              -             -          (3)          (1)         1 
 Closures                (21)             -         -            (2)           (4)            -            -      (27) 
                -------------  ------------  --------  -------------  ------------  -----------  -----------  -------- 
 
 End of period            332            11         5             23            75           17           53       516 
                -------------  ------------  --------  -------------  ------------  -----------  -----------  -------- 
 
 (000 Sq 
  Ft) 
 
 Start of 
  period                1,150             9         -             33            82           92          603     1,969 
 New stores                58            17        12              1             6            -           42       136 
 Transfers                 19             -         2              -             -         (17)          (2)         2 
 Closures                (47)             -         -            (5)           (4)            -            -      (56) 
 
 End of period          1,180            26        14             29            84           75          643     2,051 
                -------------  ------------  --------  -------------  ------------  -----------  -----------  --------

(a) Includes the Size store in Les Halles, Paris

(b) Includes the Foot Patrol store in Berwick Street, London

Fashion Fascias

 
 
 (No. Stores)     Bank   Scotts   Originals   Cecil Gee   Tessuti   Total 
 
 Start of 
  period            80       35           -           6         -     121 
 New stores          7        -           -           -         2       9 
 Acquisitions        -        -           7           -         4      11 
 Transfers         (1)        -           -           -         -     (1) 
 Closures          (1)      (3)         (2)         (2)         -     (8) 
                 -----  -------  ----------  ----------  --------  ------ 
 
 End of period      85       32           5           4         6     132 
                 -----  -------  ----------  ----------  --------  ------ 
 
 (000 Sq 
  Ft) 
 
 Start of 
  period           238       72           -          16         -     326 
 New stores         18        -           -           -         6      24 
 Acquisitions        -        -          13           -        11      24 
 Transfers         (2)        -           -           -         -     (2) 
 Closures          (2)      (6)         (3)         (2)         -    (13) 
 
 End of period     252       66          10          14        17     359 
                 -----  -------  ----------  ----------  --------  ------

Outdoor Fascias

 
 
                       No.       000 
                    Stores     Sq Ft 
 
 Start of 
  period               295       763 
 New stores              1         2 
 Closures            (122)     (281) 
                 ---------  -------- 
 
 End of period         174       484 
                 ---------  --------

Dividends and Earnings per Share

The Board proposes paying a final dividend of 22.00p (2012: 21.20p) bringing the total dividend payable for the year to 26.30p (2012: 25.30p) per ordinary share. The proposed final dividend will be paid on 5 August 2013 to all shareholders on the register at 10 May 2013. The total dividends payable for the year have therefore increased by a further 4% with a cumulative growth over the last five years of 209%.

The adjusted earnings per ordinary share before exceptional items were 88.51p (2012: 105.89p).

The basic earnings per ordinary share were 79.71p (2012: 96.27p).

Employees

The Board are extremely grateful for the contribution that all our employees make through skills, energy and dedication. In difficult trading conditions and with radical turnaround plans in place in certain of our businesses then we realise that we are very reliant on this contribution. Equally, the Board recognises that the ongoing success of the core JD business comes from the execution excellence delivered by the whole team.

Current Trading and Outlook

We are pleased overall with the start that we have made to the new year. A very considerable amount of reorganisation in both Outdoor Retail and our warehousing and distribution operations is now behind us and this should benefit trading in the balance of the year. The like for like sales performance for the nine weeks to 6 April 2013 continues to be encouraging in the Sports Fascias. This performance has been as follows:

 
     Sport UK &                       Combined 
  Ireland (excl           Fashion    Core UK & 
      Champion)    (excl Premium)      Ireland 
 
          +1.9%             -6.2%        +0.5%

The Group is exceptionally well positioned with its retail proposition, financial resources and extensive management experience to take advantage of opportunities both in the UK and internationally. Whilst the Board recognises that recent acquisition activity has impacted on short term returns, it remains confident that the Group is well positioned to deliver earnings growth and increased shareholder returns over the longer term.

A further update will be made in our Interim Management Statement on 19 June 2013.

Peter Cowgill

Executive Chairman

17 April 2013

Consolidated Income Statement