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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Joules Group Plc | LSE:JOUL | London | Ordinary Share | GB00BZ059357 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 9.22 | 9.40 | 9.60 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMJOUL
RNS Number : 1136M
Joules Group plc
26 July 2017
26 July 2017
Joules Group plc
('Joules' or the 'Group')
Annual Results for the 52 weeks ended 28 May 2017
Strong brand momentum continues across channels, markets and product categories
Highlights:
Hot Features
Premium
2017 2016 Change
52 weeks 52 weeks
Group Revenue GBP157.0 GBP131.3m 19.6%
* Constant currency 18.6%
Underlying(1) EBITDA GBP16.9m GBP13.5m 25.3%
Underlying Profit Before
Tax(2) GBP10.1m GBP7.5m 34.0%
Basic underlying EPS(3) 9.2p 6.9p 33.3%
-- Group revenue increased 19.6% to GBP157.0 million (18.6% constant currency)
-- Retail sales increased 19.4%
o E-commerce sales up 29.4% - 34.8% of total retail sales
o Store sales up 17.5% - supported by 11 net new store openings
-- Wholesale sales increased 20.3% (17.6% constant currency) - reflecting the growing appeal of the Joules brand in the UK and target international markets
-- Active(4) customers increased by 14% to 907,000 -- International revenue increased by 36.2% - now represents 11.5% of Group revenue -- Final dividend of 1.2 pence per share proposed
Colin Porter, Chief Executive Officer, commented:
"FY17 was another very exciting year for the Group as the Joules brand continued to expand and develop across distribution channels and product categories both in the UK and internationally.
The strong progress delivered during the year was again underpinned by the Group's steadfast focus on its growing and loyal customer base, product quality and delivering engaging experiences across all channels.
The Board remains confident that the Group's momentum will continue into FY18, despite the uncertain macro-economic outlook. This confidence is supported by the growth in our customer base, our exciting new store opening plans, a robust Autumn/Winter wholesale order-book both in the UK and internationally, and positive early feedback on our Spring/Summer 2018 ranges from wholesale customers."
This announcement contains inside information.
(1) Underlying excludes exceptional and non-recurring items, primarily related to the cost of admission to AIM and the capital structure in place prior to admission and the expense of share based compensation awards introduced following the IPO
(2) Reconciliation to Statutory profit before tax:
GBPmillion FY17 FY16 --------------------- ------ ------ Underlying profit before tax 10.1 7.5 --------------------- ------ ------ IPO transaction costs (0.3) (2.7) Shareholder loan note interest - (5.6) Exceptional asset impairment - (0.3) Share based (0.8) - compensation Other non-recurring items - (0.1) --------------------- ------ ------ Statutory profit before tax 8.9 (1.2) --------------------- ------ ------
(3) 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.
(4) Active customer is a customer registered on our database who has made a transaction in the last 12 months. Prior periods are restated to exclude customers registered via third party websites and for data cleansing enhancements.
Enquiries:
Joules Group plc Tel: +44 (0) 1858
435 255
Colin Porter, CEO
Marc Dench, CFO
Hudson Sandler (Financial Tel: +44 (0) 20
PR) 7796 4133
Alex Brennan
Lucy Wollam
Peel Hunt LLP, Nominated Tel: +44 (0) 20
Advisor 7418 8900
Dan Webster
Adrian Trimmings
George Sellar
Liberum Capital Limited Tel: +44 (0) 20
3100 2000
John Fishley
Joshua Hughes
Joules - 'a premium lifestyle brand with an authentic British heritage'
Established in Britain by Tom Joule nearly three decades ago, Joules is a premium lifestyle brand with an authentic heritage.
A true multi-channel lifestyle brand, Joules carefully designs clothing, footwear and accessories for women, men and children, as well as an expanding range of homewares, toiletries and eyewear collections, with personality to match those of its customers' colourful and uplifting outlooks, available through its own retail stores, online, rural shows and events and wholesale channels.
Quality, Britishness, family values, colour and humour make Joules stand out from the crowd. This approach, along with an unwavering attention to detail, and drive to surprise and delight its customers with unexpected product details, remains at the heart of everything Joules creates and has been central to the brand's success and expansion.
www.joules.com | www.joulesgroup.com
Joules Fast Facts
-- Joules is an international brand, available in the UK, USA, Germany, France and other European markets
-- Joules operates 108* stores in the UK and ROI across a range of location types, has a significant online business, and a well-established wholesale business with over 1,500 stockists worldwide including John Lewis, Next Label and Nordstrom
-- Joules' talented in-house print design team lovingly hand-draw all of the prints you see within its collections each season
-- Joules is proud of its British heritage and still has strong roots in Market Harborough, the site of its first shop and head office since day one
-- Colin Porter became CEO in September 2015, with Tom Joule focusing on the creative side of the business in his capacity as Chief Brand Officer
-- Joules won Mainstream Brand of the Year at the Drapers Awards 2016 and previously won the Drapers Best British Fashion Retailer of the Year at the 2015 awards
* Figures are stated as at 28 May 2017
CHAIRMAN'S STATEMENT
INTRODUCTION
I am delighted to update the Group's stakeholders on what has been another very good year for the Joules brand. This is the Group's first full financial year as a public company and we have continued to make great progress by further expanding Joules as a premium lifestyle brand across product categories, distribution channels and geographic markets.
The brand's strong momentum during the year, coupled with continued cost control and margin improvement, has enabled the Group to record strong growth in profit before tax for the period. We are very pleased with this result, which reflects the growing appeal of the Joules brand as well as the careful execution of our clear growth strategy.
STRATEGIC PROGRESS
Joules has a distinctive brand and unique product proposition. These qualities, supported by our first-class team across the Group, represent our strongest competitive advantages in what is a fast-changing and challenging retail environment.
We remain committed to our focused growth strategy to deliver the disciplined development and expansion of the Joules brand. At the same time we are challenging ourselves to explore new growth opportunities, find new ways to delight our customers and operate ever more efficiently. The Chief Executive's Strategic Report provides further details on our growth strategy and the progress made during the year.
The internet and new consumer technologies are changing the retail environment in exciting ways and creating new opportunities for brands and retailers. Joules now has more, and better, methods than ever before to engage and connect with its growing community of customers. At the same time, customers' expectations of brands are changing and the requirement to provide a seamless and satisfying experience across all channels at all times has never been more important. As a truly multi-channel brand with an innovative culture and very strong customer connection, I am confident that Joules will continue to grow, adapt and prosper in this dynamic market whilst always remaining true to its core values, and providing customers with the quality products and experiences we are known and loved for.
FINANCIAL RESULTS & DIVID
Group revenue of GBP157.0 million increased by 19.6% compared to the prior period (FY16: GBP131.3 m). Excluding the impact of currency, Group revenue grew by 18.6% in the period. This reflects strong growth in both the Retail and Wholesale segments. On a geographic basis, UK sales increased 17.8% to GBP139.0 million and International sales increased 36.2% to GBP18.0 million, now representing 11.5% of Group revenue.
Underlying profit before tax increased by 34.0% to GBP10.1 million, and basic underlying EPS was 9.2 pence per share (FY16: 6.9 pence).
The Board has proposed a final dividend of 1.2 pence per share, which if approved at the shareholder's AGM, will take the dividend for the full year to 1.8 pence per share (FY16: nil).
The Strategic Report and Financial Review that follow provide a more in-depth analysis of the trading performance and financial results of the Group.
OUR TEAM
Central to Joules' continued success is our fantastic team of highly skilled, creative and driven people across the business. I never cease to be proud of the shared commitment to the brand and our customers which runs through the entire team at Joules, from our head office to the stores, distribution centres and across international markets. I would like to take this opportunity to thank everyone in the Joules team across the world for their continued hard work and dedication during this outstanding year for the business.
THE FUTURE
We have seen good growth in the first few weeks of our new financial year and we have had positive early feedback on our Spring/Summer 2018 ranges from our wholesale customers.
The short to medium-term headwinds facing UK retailers are well documented. In particular the final outcome of the UK's decision to leave the European Union remains unclear and, as a consequence, the specific macro-economic effects remain difficult to predict. However, I believe that Joules is well placed to meet these uncertainties through a combination of the strength of its brand and products; its target customer demographic; and the substantial investment that has been made in the Group's infrastructure and supply chain.
We have a loyal and engaged customer base, a committed and enterprising team and a well-invested infrastructure. These qualities make us confident of successfully delivering the Board's clear strategy for growing the Joules brand in the UK and internationally.
CHIEF EXECUTIVE OFFICER'S STRATEGIC REPORT
FY17 was another very exciting year for Joules as the brand continued to expand across distribution channels and product categories both in the UK and internationally. The strong progress delivered during the year was again underpinned by our focus on our customers and our dedication to provide quality products and engaging experiences across all channels.
THE JOULES BRAND
Ever since Tom Joule established the Joules brand nearly three decades ago, Joules has been committed to surprising and delighting its growing community of customers with a sense of quirky Britishness. The Joules brand remains distinctive not only for its exciting use of colour, proprietary hand-drawn prints and unexpected details but also for its values that truly connect with our customers. We aim to be an uplifting part of our customers' lives whenever they are spending quality time doing the things they love with the people who matter.
The brand's continued expansion and success was recognised at the 2016 Drapers Awards where Joules won Mainstream Brand of Year against strong competition from other leading lifestyle brands. This award represents a strong stamp of approval from the fashion industry for our brand and our talented and enterprising team.
OUR BUSINESS MODEL - BORN TO BE MULTI-CHANNEL
Joules was established as a multi-channel brand. Our distribution model enables our customers to easily engage with the Joules brand and to discover our products, shop, pay and collect their purchases in the way that suits their lifestyle.
This multi-channel approach is reflected in the Group's revenue mix between our two key, complementary distribution channels: Retail (including stores, e-commerce and the country shows and events circuit) and Wholesale. The Group has a small but growing product licencing channel which, given the strength of the Joules brand, we are confident will become increasingly important over time.
These complementary routes to market underpin our focused growth strategy. Being truly multi-channel enables the Group to expand its product offering, enter new markets efficiently and exploit further growth opportunities within existing ones while always maintaining flexibility to meet and exceed our customers' changing needs.
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 key pillars described below and is underpinned by our distinctive brand, unique products and customer focus. These pillars of growth are delivered by our exceptional team of people, supported by a well-invested infrastructure and supply chain.
1. INCREASING CUSTOMER VALUE - we intend to continue to grow our customer database, increase the number of active customers and develop the value of the average active customer through providing consistent and relevant cross-channel communication
2. DRIVE TOTAL UK BRAND SALES - as a multi-channel brand, we seek to grow total UK brand sales within target customer segments by increasing the availability and accessibility of our products across existing and emerging distribution channels - making it easy for our customers to discover, research, purchase and receive our products. Our priorities are:
- STORE ROLL-OUT - there is significant further growth potential for the brand in the UK and ROI. We target a net 10 to 12 new stores per year in the medium-term as well as relocating a number of existing stores to larger sites that better reflect our brand and product range
- E-COMMERCE - e-commerce is a fast growing and rapidly evolving channel. With ongoing enhancements to our e-commerce platform, the customer proposition and our customer management capability, we aim to increase the mix of e-commerce sales as a proportion of our total retail sales
- WHOLESALE - we broaden the reach of the Joules brand through wholesale customers that are closely aligned with our brand values and product categories - including independents, department stores and online retailers. Our wholesale capabilities position us well for emerging channels such as online marketplaces and 'Fulfilled by' models
3. INTERNATIONAL EXPANSION - the Joules brand and products resonate well in international markets. We develop international markets via a wholesale model supported by e-commerce, leveraging our investment in central creative and design functions and our infrastructure. Our current priority markets are North America and Germany
4. PRODUCT EXTENSION - as a premium lifestyle brand, the Joules product offer naturally extends to meet many of the lifestyle needs of our customers. Joules has had success extending the product offer within existing categories and into new categories and we will continue to expand into new areas that are appropriate for the development of the Joules brand, both organically and through working with carefully selected licence partners
STRATEGIC PILLARS - PRIORITIES AND DEVELOPMENTS
CUSTOMER VALUE- Active
* Maintained average customer frequency and transaction customer
value whilst significantly growing the customer base numbers(1)
FY14: 509,000
FY15: 593,000
* Maintained customer acquisition cost levels FY16: 799,000
FY17: 907,000
* Increased targeted customer offers and
personalisation of the online proposition
* Increased the number of store based customer events
including VIP and new store opening events
* Appointed first Chief Customer Officer in September
2016
------------------------------------------------------------- ----------------
DRIVE TOTAL UK BRAND SALES Number
* New stores: opened 13 new stores and closed two of stores
stores in the year FY14: 80
FY15: 91
FY16: 97
* Portfolio management: relocated three stores and FY17: 108
expanded a further three stores
Total selling
space (Sq
* E-commerce revenue: represented 35% of total retail Ft)
sales FY14: 84,500
FY15: 100,000
FY16: 111,000
* E-commerce proposition: new payment options and site FY17: 135,000
personalisation deployed in the year - helping drive
improved conversion metrics
* Cross-channel: 'Order in Store' roll-out completed in
H1 enabling store staff to place a customer order via
a tablet device, facilitating access to our full
product range in all stores
* Wholesale: Next Label converted to a 'commission'
model. Continued strong growth in the independent
specialist retailer channel
------------------------------------------------------------- ----------------
INTERNATIONAL EXPANSION
* International revenue grew at 36.2% (29.6% constant International
currency) as % of
total revenue
FY14: 5.8%
* Launched childrenswear range in 55 Dillards FY15: 9.1%
department stores in the US FY16: 10.1%
FY17: 11.5%
* Extended number of doors and product categories with
Nordstrom
* Further strengthened the team based in our New York
showroom
* Gave notice to terminate arrangement with the 3(rd)
party distributor in the US - over 600 independent
stockists to be managed in-house from Spring/Summer
2018
- Germany field accounts increased
to over 400 stockists
------------------------------------------------------------- ----------------
PRODUCT EXTENSION
* Childrenswear category further developed with
specific ranges for baby and younger and older age
children
* Women's leather footwear launched with a range of
Chelsea boots
------------------------------------------------------------- ----------------
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:
Our financial KPIs have been selected to complement our strategic KPIs and reflect our objective to deliver sales growth across channels and profit growth at a faster rate than sales growth, whilst delivering a strong return on our capital investments. Our financial KPIs, and their rationale, are:
- Revenue by channel - delivering balanced growth across our core sales channels
- Group gross margin - maintaining overall product level profitability whilst developing international wholesale markets
- EBITDA margin - how effectively we are leveraging our cost base and infrastructure
- Return on Capital Employed ('ROCE') - how we are managing working capital and growth capital investments
Revenue by channel
Retail - Stores Retail - E-commerce Wholesale
FY14: GBP39.3m FY14: GBP23.9m FY14: GBP26.9m
FY15: GBP52.4m(2) FY15: GBP25.8m(2) FY15: GBP31.6m(2)
FY16: GBP58.2m FY16: GBP30.1m FY16: GBP37.2m
FY17: GBP68.3m FY17: GBP 38.9m FY17: GBP44.8m
------------------- -------------------- -------------------
Group gross margin EBITDA margin Return on Capital
FY14: 55.0% FY14: 9.5% - ROCE(3)
FY15: 53.3% FY15: 9.0% FY14: 23.9%
FY16: 53.5% FY16: 10.3% FY15: 27.3%
FY17: 55.4% FY17: 10.8% FY16: 31.9%
FY17: 32.2%
------------------- -------------- ------------------
(1) Active customer defined as a customer who is registered on our database and has transacted within the last 12 months. Prior periods are restated to exclude customers registered via third party websites and for data cleansing enhancements.
(2) FY15 was a 53 week period
(3) Return 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
RETAIL: MULTI-CHANNEL PROGRESS
Retail sales, which includes stores, e-commerce and shows, grew by an impressive 19.4% during the year (19.4% in constant currency). This reflected good growth from both stores and e-commerce, which increased by 29.4% to now represent 34.8% of total retail revenue (FY16: 32.1%).
The Group's store coverage across the UK and ROI continued to expand to 108 stores at the end of the period (FY16: 97). We opened 13 stores and closed two, with 10 of the net new stores being opened during the first half of the year. This expansion was in line with our previous guidance of 10-12 net new stores for the year. During the period we also relocated three stores and extended a further three to provide larger sites that better reflect the Joules brand proposition, showcase our product range, and enable multi-channel activities such as 'Click & Collect' and 'Order in Store'.
This activity resulted in total selling space increasing to 135,000 square feet (FY16: 111,000 square feet) at the period end. The new openings were spread across our different store location types reflecting the breadth of appeal of the Joules brand:
- Lifestyle - Barnstaple; - Local - Ashbourne, Ludlow, Woodbridge and Bishops Stortford; - High Street - Chelmsford and Stratford-upon-Avon; - Metro - Leeds, Derby, Bromley and Plymouth; - Premium Outlet - Swindon and Bridgend.
The average payback on new stores, opened for more than one year, remained at less than 12 months, and all continuing stores delivered a positive contribution.
The Group continued to develop its online offering following the successful relaunch of the e-commerce platform in September 2015. In the period we added new functionality making it easier for our customers to shop and pay and continued to increase the use of personalisation. Traffic from mobile and tablet devices continued to grow, representing over 75% of the total number of visitors and we continued to see improved conversion rates. 'Click & Collect' and 'Order in Store' - where we completed the roll-out to stores in the first half of the year - continue to prove popular with our customers and demonstrate the importance of our multi-channel model and ability to deliver an integrated and consistent experience across channels.
WHOLESALE: UK AND INTERNATIONAL EXPANSION
Wholesale revenue experienced further good growth, up by 20.3% (17.6% in constant currency) year on year to GBP44.8 million (FY16: GBP37.2m), as the Joules brand continues to resonate strongly with wholesale customers both in the UK as well as within our targeted international markets: North America and Germany.
In the UK, wholesale expansion was driven through both national multi-channel retailers such as John Lewis and Next Label as well as through smaller, independent specialist retailers that have a good fit with the Joules brand.
Strong international wholesale growth helped to drive international sales (including international retail) up 36.2% and they now represent 11.5% of total Group revenue. This growth was underpinned by our proprietary hand-drawn prints, colour and British character as the Joules brand continues to resonate in international markets.
In the US, we further expanded our presence in key department stores, with Dillards launching childrenswear for the Autumn/Winter 2016 season and Nordstrom increasing Joules' product range listings and the number of doors in response to customers' appetite for the brand. We continue to see exciting growth opportunities for the brand in the US market and during the year we started the process to bring the management of over 600 independent stockist accounts in-house, following the termination of our agreement with the third-party distributor that had previously been serving this channel. This new way of working will become effective from the Spring/Summer 2018 season and, under the management of our New York based sales and marketing team, will provide us with greater control over the long-term growth of the brand within the US.
In Germany we continued to perform in line with expectations and experienced good growth in the independent retailer segment where we now have over 400 stockists.
DEVELOPMENT AS A LIFESTYLE BRAND
Joules delivered sales growth across product categories with a particularly strong performance in the core womenswear category - with our distinctive and colourful "Right As Rain" outerwear and "Warm Welcome" coats and gilets all proving particularly popular with our customers. Further development of our footwear and childrenswear categories also contributed to the strong growth.
We continued to progress the development of our childrenswear range from baby through to toddler, younger and older girls and boys. Notable highlights in the year included our colourful ponchos, fun applique tops and beautifully designed dresses. Our childrenswear range is becoming increasingly popular with our international customers.
Our footwear offer continued to expand with good growth from our very successful leather Chelsea boot range and an increased range of wellington boot styles and designs.
Whilst licencing remains a small contributor to the Group, we are focused on continuing to build the brand through careful expansion with licensed partners for home - including bedding, toiletries, and eyewear. These product categories continue to perform well and highlight the licence income potential available to the brand where we are able to identify opportunities that appeal to our customers and align with Joules' distinctive values.
CUSTOMER ENGAGEMENT
Joules has a loyal and highly engaged customer community. Active customers, defined as customers who have purchased in the last twelve months, increased 14% against the prior year to 907,000 supported by effective marketing and CRM campaigns, and our total customer database now stands at 2.5 million. One example of a customer campaign, was our hugely successful 'pass the parcel' competition which we ran on the Joules Facebook channel in December 2016. The campaign encouraged potential and existing customers to unwrap a virtual present to potentially win a prize including a weekend stay at The Watergate Bay Hotel as well as Joules goodies. Customers were able to 'pass the parcel' onto a friend through social media, attracting new prospective customers to the brand.
Another notable and successful multi-channel campaign was our 'win a Joules caravan' competition that ran from February to April 2017 and attracted approximately 135,000 new and existing customers to take part and enter a prize draw to win a luxury caravan decorated externally with Joules prints and kitted out inside from the Joules homeware and bedding range. The campaign, which attracted a lot of social media engagement, was run on Facebook, the Joules website and by pitching the caravan at several of our country shows and events.
One of Joules' key competitive advantages is our very strong customer connection and their engagement with the Joules brand. During the year we appointed our first Chief Customer Officer to help further develop our capability in this area and to increase brand awareness, customer loyalty and value across all channels.
PLATFORM FOR LONG TERM GROWTH
The Group's strategy and focus is aimed towards the long term and sustainable development of the Joules brand. We continue to invest in our stores, infrastructure, systems and people to deliver this.
During the year we invested in our US operations by strengthening our US wholesale sales team, trade showroom and IT systems. This has supported the development of new and existing department store accounts during the year as well as facilitating the transition of managing the independent stockist channel in-house, which we are confident will support our long term growth in the US market.
Phase two of our company-wide ERP replacement programme continued through the year, with migration to the Microsoft Dynamics AX ERP platform scheduled for FY18. This represents a significant investment for the Group and will bring benefits including enhanced stock management across channels, process efficiencies and simplification of the IT environment.
The creativity, skill and commitment of the Joules team are key to the brand's continued 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.
Since the year-end we have completed the acquisition of the freehold for a new head office premises. The new site, which is located very close to our existing head office in Market Harborough, includes an existing 30,000 square foot office building and development land to support future growth. We expect to commence partial occupation towards the end of FY18 following a period of refurbishment. This investment will further strengthen our brand values and culture and create a flexible space to support modern ways of working across our head office teams. It is an important step to support the next phase of growth whilst solidifying our local roots and heritage.
FINANCIAL REVIEW
PROFIT BEFORE TAX - UNDERLYING AND STATUTORY
Underlying profit before tax ('PBT') was GBP10.1 million for the 52 weeks to 28 May 2017, an increase of 34.0% on the prior period. Statutory PBT including exceptional IPO transaction costs and share based compensation was GBP8.9 million (FY16: GBP(1.2)m).
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION & AMORTISATION ('EBITDA')
Underlying EBITDA increased by 25.3% to GBP16.9 million (FY16: GBP13.5m). The underlying EBITDA margin increased by 50 basis points from 10.3% to 10.8%.
UNDERLYING AND STATUTORY RESULTS
During the prior period there were some costs that were exceptional or non-recurring in nature. These items related primarily to the IPO and to the capital structure that was in place prior to the IPO. To provide a meaningful year-on-year comparison these items have been excluded from the underlying results reported in the front section of the Annual Report.
As detailed in the IPO Admission Document, executive and employee share based compensation plans have been established with the first awards made in the current financial period. Further detail on the plans is contained within the Directors' Remuneration Report and the Consolidated Financial Statements. In accordance with IFRS 2, the expense related to the plans is accounted for within administrative expenses. As the share plan cycle matures over the three years following the IPO, the related expense is treated as non-Underlying to provide meaningful year-on-year comparability.
A reconciliation between Underlying and Statutory (GAAP) results is provided below
52 Weeks ended 28 May 52 Weeks ended 29 May
2017 2016
GBPmillion IPO Share Non-recurring Reported
Underlying costs based Reported Underlying IPO
compensation costs
Revenue 157.0 - - 157.0 131.3 - - 131.3
Gross
profit 87.1 - - 87.1 70.3 - - 70.3
Admin
expenses (76.7) (0.3) (0.8) (77.9) (62.3) (2.7) (0.4) (65.4)
Operating
profit 10.3 (0.3) (0.8) 9.2 8.0 (2.7) (0.4) 4.8
Net finance
costs (0.2) - - (0.2) (0.5) - (5.6) (6.0)
Profit
before
tax 10.1 (0.3) (0.8) 8.9 7.5 (2.7) (6.0) (1.2)
Operating
profit 10.3 (0.3) (0.8) 9.2 8.0 (2.7) (0.4) 4.8
Depreciation
&
Amortisation 6.6 - - 6.6 5.5 - 0.4 5.9
EBITDA 16.9 (0.3) (0.8) 15.8 13.5 (2.7) (0.0) 10.7
REVENUE
Group revenue increased by 19.6% to GBP157.0 million from GBP131.3 million in FY16 (up 18.6% on a constant currency basis), with Retail revenue increasing by 19.4% and Wholesale revenue increasing by 20.3% (up 17.6% on a constant currency basis). Sales in International markets, which are predominantly wholesale, increased by 36.2% (29.6% on a constant currency basis) and now represent 11.5% of Group revenues (FY16: 10.1%).
Retail - Stores
Store revenue at GBP68.3 million increased by 17.5%. During the year we opened 13 new stores and closed two stores, resulting in an increase in store numbers from 97 to 108. We also relocated three stores and extended a further three. We had three franchises at the end of FY17 (FY16: 3).
Retail - E-commerce
E-commerce revenue at GBP38.9 million increased by 29.4% and was 34.8% of total Retail revenue (FY16: 32.1%). The e-commerce channel continued to benefit from more visitors and higher conversion following the prior year re-launch of the content rich, mobile optimised website as well as from further customer facing website enhancements and ongoing new customer acquisition and retention activity.
Wholesale
Wholesale revenue at GBP44.8 million increased by 20.3% (17.6% on a constant currency basis). Good revenue growth was seen in the UK and in international markets; and across the larger 'house account' and the smaller 'field account' customer bases.
GROSS MARGIN
Gross margin at 55.4% was 190 basis points higher than the prior year. Our commercial and buying activity, supported with volume growth, enabled us to offset the impact of weaker Sterling, relative to the US Dollar, and maintain overall intake margins. The revenue growth and gross margin improvement within our Retail segment more than offset the dilutive impact of our growing international wholesale business. Within the Retail segment, gross margin benefited from our increased focus on optimising full price sales and promotional activity.
ADMINISTRATIVE EXPENSES - UNDERLYING
Underlying administrative expenses increased by 23.2% from GBP62.3 million to GBP76.7 million and were 48.9% of revenue (FY16: 47.4%). During the year we increased investment in customer acquisition and digital marketing, the results of which are reflected in the e-commerce channel performance and our active customer numbers at the year-end. Administration expenses in the period included the full year impact of investments made to strengthen several head office functions in the second-half of the prior year, as well as the first year of post IPO cost base.
The total rental expense, including service charges, for the period was GBP11.7 million (FY16: GBP9.3m) with the increase due to new store openings, an increase in the UK distribution centre rent, following a rent review at the start of FY17, the prior year relocation of our Shanghai sourcing office and New York showroom expansion.
Underlying depreciation and amortisation increased to GBP6.6 million (FY16: GBP5.5m) following the completion of the first phase of the Enterprise Resource Planning (ERP) programme in the prior period and the impact of our new store opening and relocation programme.
ADMINISTRATIVE EXPENSES - NON-UNDERLYING
Non-underlying administrative expenses totalled GBP1.1 million (FY16: GBP3.1m). This included IPO transaction related costs of GBP0.3 million (FY16: GBP2.7m), share based compensation expense of GBP0.8 million (FY16: GBPnil) and non-recurring costs of GBPnil (FY16: GBP0.4m).
Share based compensation expense, accounted for in accordance with IFRS 2, includes the anticipated expense in relation to the first cycle of the Company's new share plan arrangements, including awards made under the Long Term Incentive Plan 2016, Deferred Bonus Plan and the all-employee Save as You Earn (SAYE) Scheme. These plans are detailed more fully in the Directors' Remuneration Report and the Consolidated Financial Statements.
NET FINANCE COSTS - UNDERLYING
Underlying net finance costs of GBP0.2 million (FY16: GBP0.5m) 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 GBPnil (FY16: GBP5.6m). The prior year figures consisted primarily of interest on shareholder loan notes of GBP4.7 million and amortisation of the loan note arrangement fee of GBP0.9 million. The shareholder loan notes were converted to equity immediately prior to the IPO.
TAXATION
The tax charge for the period was GBP2.6 million (FY16: GBP0.6m). The effective tax rate was 28.8%. This was higher than the applicable UK corporation tax rate of 19.8% for the period, due to the impact of non-deductible expenses including IPO costs and non-deductible amortisation and depreciation.
EARNINGS PER SHARE AND DIVID
Statutory basic earnings per share for the period were 7.3 pence per share (FY16: -2.0 pence per share). Statutory diluted earnings per share for the period were 7.2 pence per share (FY16: -2.0 pence per share). On an underlying, pro forma basis the FY17 basic earnings per share were 9.2 pence (FY16: 6.9 pence).
To facilitate 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 the non-underlying items detailed above and to reflect the statutory tax rate.
GBPmillion FY17 FY16 PBT - Underlying 10.1 7.5 Statutory tax rate 19.8% 20.0% Tax - Underlying (2.0) (1.5) Earnings - Underlying 8.1 6.0 Shares - Pro forma (million) 87.5 87.5 Underlying Basis EPS - Pence 9.2 6.9 Shares Pro Forma - Diluted (million) 88.0 88.0 Underlying diluted EPS - Pence 9.2 6.8
The Board is recommending a final dividend of 1.2 pence per share in respect of FY17 (FY16: nil pence per share). This brings the total dividend for FY17 to 1.8 pence per share (FY16: nil pence per share). Following approval by the shareholders at the AGM on 27 September 2017, the dividend is expected to be paid on 16 November 2017 to shareholders on the register at 27 October 2017.
CASH FLOW AND CASH POSITION
Net cash flow from operating activities was GBP14.4 million (FY16: GBP16.9m) including a net working capital outflow of GBP0.9 million (FY16: inflow GBP7.1m).
The Group ended the period with net cash of GBP6.3 million (FY16: GBP3.2m) an improvement of GBP3.1 million in the period. Gross cash was GBP7.0 million (FY16: GBP9.3m) and borrowings GBP0.6 million (FY16: GBP6.1m), which includes borrowings under the Group's revolving credit facility and asset finance loans.
The Group has access to a GBP25 million revolving credit facility provided by Barclays Bank Plc to fund seasonal working capital requirements. Subsequent to the year-end, this facility was extended by 14 months and now matures in July 2021.
INVENTORY
Inventory at year-end was GBP21.2 million (FY16: GBP19.3m). The increase in inventory reflecting the growth in the business.
CAPITAL EXPITURE
Investment in property, plant, equipment and intangible assets totalled GBP10.7 million in FY17 (FY16: GBP7.1m). Major areas of expenditure in the year were new store openings and relocations and investment in our core IT infrastructure including phase two of our ERP implementation programme and ongoing enhancements to our customer facing website.
ACQUISITION OF FREEHOLD OFFICE
Subsequent to the year-end, in July 2017, the Group completed the acquisition of freehold land and 30,000 square foot office building for GBP4.4 million including fees and stamp duty. The office building is intended for use as the Group's head office following a period of refurbishment. The acquisition was part financed through a new GBP3.5 million, five-year term loan facility.
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.
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 the Group's As a premium lifestyle revenue is generated brand with a geographically from sales in the UK disperse retail store to UK customers. A deterioration portfolio, a strong e-commerce in the UK economy may channel and long standing adversely impact consumer wholesale customer accounts, confidence and spending the Directors consider on discretionary items. that the UK business A reduction in consumer would be less affected expenditure could materially by a reduction in consumer and adversely affect expenditure than many the Group's financial other clothing retailers. condition, operations In addition, the property and business prospects. portfolio has short lease The expected exit of terms, providing relative the UK from the EU has flexibility to close increased the likelihood or relocate stores should and potential impact it become necessary. of this risk. ---------------------------------- ---------------------------------- Competitor actions New competitors or existing Joules differentiates clothing retailers or from competitors through lifestyle brands may its strong brand and target our segment of products that are known the market. Existing for their quality, details, competitors may increase colour and prints. Our their level of discounting large customer database or promotions and/or allows the Group to communicate expand their presence effectively with customers, in new channels. These developing customer engagement actions could adversely and loyalty. impact our sales and profits. ---------------------------------- ---------------------------------- Foreign Exchange The Group purchases the The Group's Treasury majority of its product Policy sets out the parameters stock from overseas and and procedures relating is therefore exposed to foreign currency hedging. to foreign currency risk, We currently seek to primarily the US Dollar. hedge a material proportion Without mitigation, input of forecasted US Dollar costs may fluctuate in requirement 12-24 months the short term, creating ahead through the use uncertainty as to profits of forward contracts. and cash flows. The anticipated exit The Group's US wholesale of the UK from the EU business generates US has resulted in a devaluation Dollar income which provides of GBP to the US Dollar a degree of natural hedging. and increased volatility. This may be sustained or worsen going forward. ---------------------------------- ---------------------------------- Regulatory and Political New regulations or compliance The Group has processes requirements may be introduced in place to monitor and from time to time. These report to the Board on may have a material impact new regulations and compliance on the cost base or operational requirements that could complexity of the business. have an impact on the Non-compliance with the business. The impact regulation could result of any new regulation in financial penalties. is evaluated and reflected The anticipated exit in the Group's financial of the UK from the EU forecasts and planning. has increased uncertainty in this area. ---------------------------------- ----------------------------------
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 reputation are
brand and its reputation monitored closely by senior
are very important to management and the Board.
the success of the Group. The Group's public relations
Failure to protect and are actively managed and
manage this could reduce customer feedback, both
the confidence and trust direct and indirect, is
that customers place carefully monitored.
in the business, which We carefully consider each
could have a detrimental new trade customer with
impact on sales, profits whom we do business and
and business prospects. monitor on an ongoing basis.
Our brand may be undermined
or damaged by our actions
or those of our wholesale
partners.
-------------------------------- --------------------------------------
Product sourcing The Group has a policy
The Group's products and process for the selection
are predominantly manufactured of new suppliers. This
overseas. Failure to includes a review of compliance
carry out sufficient with laws and regulations
due diligence, and to and that suppliers meet
act in the event of generally accepted standards
any negative findings, of good practice. In addition,
especially in relation suppliers are required
to ethical or quality to sign up to Joules' code
related issues, could of conduct.
adversely impact our The Group operates a programme
brand and reputation. of ethical audits across
the product supply base
supported by a third party
agency.
-------------------------------- --------------------------------------
Design Joules has a long established
As with all clothing in-house creative and design
and lifestyle brands team who have a high level
there is a risk that of awareness and understanding
our offer will not satisfy of our target customer
the needs of our customers segment. A large proportion
or that we fail to correctly of our product range is
identify trends that anchored in classic products
are important to our that are evolved season
customer base. These to season.
outcomes may result Early feedback from our
in lower sales, excess trade customers can allow
inventories and/or higher us to further refine our
markdowns. product range ahead of
significant purchase commitments.
-------------------------------- --------------------------------------
Key management
Our performance is linked The Group's remuneration
to the performance of policy, which includes
our people and in particular a long term incentive scheme
to the leadership of and performance-related
key individuals. The pay, is designed to attract
loss of a key individual and retain key management.
whether at management The Group operates learning
level or within a specialist and development initiatives
skill set could have to increase the opportunities
a detrimental effect for internal succession.
on our operations and,
in some cases, the creative
vision for the brand.
-------------------------------- --------------------------------------
ERP system The first phase of our
We are in the process implementation went live
of implementing a new in November 2015, supporting
IT platform, Microsoft our US wholesale operations.
Dynamics AX, across A dedicated programme team
the Group. With any with significant experience
project of this scale, of our business processes
there is a risk of a and ERP implementation
poorly managed implementation has been established. The
or take up of new systems, programme team reports
which could result in monthly to a steering committee
business disruption. comprised of Group senior
management.
-------------------------------- --------------------------------------
IT security and systems A Business Continuity Plan
availability exists to minimise the
Non availability of impact of a loss of key
the Group's IT systems, systems and to recover
including the website, the use of the system and
for a prolonged period associated data.
could result in business A regular assessment of
disruption, loss of vulnerability to malicious
sales and reputational attacks is performed and
damage. any weaknesses rectified.
Malicious attacks, data All Group employees are
breaches or viruses, made aware of the Group's
could lead to business IT security policies and
interruption and reputational we deploy a suite of tools
damage. (email filtering, antivirus
etc) to protect against
such events.
-------------------------------- --------------------------------------
Supply chain
The disruption to any The Business Continuity
material element of Plan includes an established
the Group's supply chain, procedure in the event
in particular the UK of the loss of the UK distribution
central distribution centre. In addition the
centre, could impact Group maintains insurance
sales and impact on cover at an appropriate
our ability to supply level to protect against
our wholesale customers, the impact of such an interruption.
stores and consumers.
-------------------------------- --------------------------------------
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
JOULES GROUP PLC
52 weeks 52 weeks
ended ended
28 May 29 May
2017 2016
GBP'000 GBP'000
REVENUE 157,032 131,262
Cost of sales (69,981) (61,003)
GROSS PROFIT 87,051 70,259
Other administrative
expenses (76,729) (62,296)
Share based payments (829) -
Exceptional administrative
expenses (341) (3,128)
Total administrative
expenses (77,899) (65,424)
OPERATING PROFIT 9,152 4,835
Finance costs and
similar charges (241) (6,015)
PROFIT/(LOSS) BEFORE
TAX 8,911 (1,180)
Income tax expense (2,568) (613)
PROFIT/(LOSS) FOR
THE PERIOD 6,343 (1,793)
Basic earnings/(loss)
per share (pence) 7.25 (2.04)
Diluted earnings/(loss)
per share (pence) 7.22 (2.04)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
JOULES GROUP PLC
52 weeks 52 weeks
ended ended
28 29
May May
2017 2016
GBP'000 GBP'000
Profit/(loss) for the period 6,343 (1,793)
Items that may be reclassified
subsequently to profit or loss:
Net loss arising on changes
in fair value of hedging
instruments entered into
for cash flow hedges (640) (26)
Exchange difference on translation
of foreign operations 11 (48)
Gains arising during the
period on deferred tax on
cash flow hedges 112 15
Gains arising during the
period on deferred tax on
share options 177 -
TOTAL COMPREHENSIVE INCOME/
(EXPENSE) FOR THE PERIOD 6,003 (1,852)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
JOULES GROUP PLC
28 May 29 May
2017 2016
GBP'000 GBP'000
NON-CURRENT ASSETS
Property, plant
and equipment 11,646 11,151
Intangibles 9,499 5,903
Deferred tax 612 653
TOTAL NON-CURRENT
ASSETS 21,757 17,707
CURRENT ASSETS
Inventories 21,194 19,253
Trade and other
receivables 14,013 10,856
Current corporation
tax receivable - 231
Cash and cash equivalents 6,964 9,278
Derivative financial
instruments 1,345 962
TOTAL CURRENT ASSETS 43,516 40,580
TOTAL ASSETS 65,273 58,287
CURRENT LIABILITIES
Trade and other
payables 32,256 27,919
Current corporation
tax payable 1,018 -
Borrowings 333 5,461
Provisions 636 773
Derivative financial
instruments 1,502 488
TOTAL CURRENT LIABILITIES 35,745 34,641
NON-CURRENT LIABILITIES
Borrowings 294 627
TOTAL LIABILITIES 36,039 35,268
NET ASSETS 29,234 23,019
EQUITIES
Share capital 875 875
Hedging reserve (139) 389
Translation reserve (61) (72)
Merger reserve (125,807) (125,807)
Retained earnings 142,956 136,224
Share premium 11,410 11,410
TOTAL EQUITY 29,234 23,019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
JOULES GROUP PLC
Merger Hedging Translation Share Share Retained Total
reserve reserve reserve capital premium earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
31 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 Profit for the period - - - - - 6,343 6,343 Other comprehensive income for the period - (640) 11 - - - (629) Gains arising during the period on deferred tax on cash flow hedges - 112 - - - - 112 Dividends Issued - - - - - (525) (525) Shares issued - - - - - - - Credit to equity for equity-settled share based payments - - - - - 737 737 Gains arising during the period on deferred tax on share based payments - - - - - 177 177 Balance at 28 May 2017 (125,807) (139) (61) 875 11,410 142,956 29,234
CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
JOULES GROUP PLC
52 weeks 52 weeks
ended ended
28 May 29 May
2017 2016
GBP'000 GBP'000
Net cash inflow from operating
activities
Profit before interest and
income taxes 9,152 4,835
Adjustments for:
Depreciation 4,920 4,516
Amortisation 1,688 1,011
Share based payments 829 -
Impairment of fixed assets - 380
Finance expense (241) (461)
Tax paid (997) (500)
Increase in inventory (1,941) (1,601)
Increase in receivables (3,157) (700)
Increase in payables 4,108 9,389
Net cash from operating activities 14,361 16,869
Cash flow from investing
activities
Purchase of property, plant,
and equipment and intangible
assets (10,700) (7,087)
Net cash used in investing
activities (10,700) (7,087)
Cash flow from financing
activities
Proceeds from new share capital
subscribed - 11,481
Redemption of shares - (145)
Repayment of borrowings (5,461) (13,913)
Dividend paid (525) -
Net cash used in financing
activities (5,986) (2,577)
Net (decrease)/increase in
cash and cash equivalents (2,325) 7,205
Cash and cash equivalents
at beginning of period 9,278 2,121
Effect of foreign exchange
rate changes 11 (48)
Cash and cash equivalents
at end of period 6,964 9,278
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION OF PRELIMINARY ANNOUNCEMENT
The preliminary consolidated financial information for the 52 weeks ended 28 May 2017 was approved by the Directors on 25 July 2017.
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 28 May 2017 as defined in section 434 of the Companies Act 2006.
The Annual Report and Group Financial Statements for the 52 weeks ended 28 May 2017 are the second for Joules Group plc and were approved by the Board of Directors on 25 July 2017. 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 28 May 2017 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.
There are no discontinued operations in the period.
Segment Review and Results
52 WEEKSED 28 MAY 2017 Retail Wholesale Other Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 111,884 44,749 399 157,032
Cost of sales (42,389) (27,592) - (69,981)
--------- ---------- --------- ---------
GROSS PROFIT 69,495 17,157 399 87,051
Administration expenses (39,171) (8,246) (22,704) (70,121)
--------- ---------- --------- ---------
SEGMENT RESULT 30,324 8,911 (22,305) 16,930
--------- ---------- --------- ---------
RECONCILIATION OF SEGMENT RESULT TO PROFIT BEFORE TAX
Segment result 30,324 8,911 (22,305) 16,930
Depreciation and amortisation (3,901) (364) (2,344) (6,609)
Share based payments (incl. NI) (829)
Exceptional costs (341)
Net finance expense (241)
PROFIT BEFORE TAX 8,911
---------
52 WEEKSED 29 MAY 2016 Retail Wholesale Other Total
GBP'000 GBP'000 GBP'000 GBP'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) (16,625) (56,769)
--------- ---------- --------- ---------
SEGMENT RESULT 22,925 6,811 (16,246) 13,490
--------- ---------- --------- ---------
RECONCILIATION OF SEGMENT RESULT TO PROFIT BEFORE TAX
Segment result 22,925 6,811 (16,246) 13,490
Depreciation and amortisation (3,306) (258) (1,963) (5,527)
Exceptional costs (3,128)
Net finance expense (6,015)
LOSS BEFORE TAX (1,180)
---------
3. GEOGRAPHICAL INFORMATION
The Group's revenue from external customers by geographical location is 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 International Total
GBP'000 GBP'000 GBP'000
52 weeks ended 28 May 2017 139,030 18,002 157,032
52 weeks ended 29 May 2016 118,041 13,222 131,262
4. PROFIT FOR THE YEAR
Profit (before tax) for the year is stated after charging:
52 Weeks 52 Weeks
ended ended
28 29
May May
2017 2016
GBP'000 GBP'000
Cost of inventories recognised
as expense 61,851 51,376
Staff costs 29,683 24,953
Property rent and service charges 11,658 9,267
Transportation, carriage and
packaging 8,354 6,905
Depreciation of property, plant
and equipment 4,920 4,516
Amortisation of internally-generated
intangible assets included in
other operating expenses 1,688 1,011
Impairment of property, plant
and equipment - 380
Impairment loss recognised on
trade receivables 240 16
Net foreign exchange (gains)/
losses (247) 304
Gain on disposal of property,
plant and equipment - (15)
Write down of inventory in the
period 126 196
Other expenses 29,607 27,518
147,880 126,427
========= =========
Other expenses include GBP341,000 for 52 weeks May 2017 (2016: GBP3,128,000) 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 a clear presentation of the financial performance of the group.
Auditors' remuneration 52 weeks 52 weeks
ended ended
28 May 29 May
2017 2016
GBP'000 GBP'000
The analysis of auditors' remuneration
is as follows:
Audit of these financial statements 6 4
Audit of financial statements
of subsidiaries of the Company 74 40
Total audit fees 80 44
Other services pursuant to legislation:
Tax compliance 27 66
Tax advice 32 74
Services relating
to IPO - 803
Audit related assurance
services 13 5
Remuneration and share
plan advisory 54 -
Total non-audit fees 126 948
5. INTEREST PAYABLE AND SIMILAR CHARGES
52 weeks 52 weeks
ended ended
28 May 29 May
2017 2016
GBP'000 GBP'000
Bank loan interest 176 378
Asset loan interest 65 83
Shareholder loan note
interest - 4,676
Amortisation of debt
costs - 878
241 6,015
During the prior period the Shareholder loan note debt was settled and all remaining unamortised debt costs were expensed as a part of the IPO. Amortisation of debt costs relates to fees incurred in 2013 with regard to the Shareholder loan notes, as these fees related to a debt facility they were amortised over the expected life of the facility.
6. INCOME TAX
52 weeks 52 weeks
ended ended
a) Analysis of charge 28 May 29 May
in the period 2017 2016
GBP'000 GBP'000
Current tax
UK corporation tax based
on the profit/(loss)
for the period 2,568 869
Adjustment in respect
of prior periods (347) (438)
Overseas tax 16 17
Total current tax charge 2,237 448
Deferred taxation
Adjustment in respect
of prior periods 366 225
Origination and reversal
of timing differences (50) (142)
Effect of adjustment
in tax rate 15 82
Total deferred taxation
charge 331 165
Tax charge for the period 2,568 613
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 53 weeks
ended ended
28 May 29
2017 May
GBP'000 2016
GBP'000
Deferred taxation
Gains arising during the period on
deferred tax on cash flow hedges 112 15
Gains arising during the period on
deferred tax on share options 177 -
Total income tax gain recognised in
other comprehensive income 289 15
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 52 weeks
ended ended
28 May 29 May
2017 2016
GBP'000 GBP'000
Profit/(loss) before taxation 8,911 (1,180)
19.8% 20.0%
UK corporation tax at the
standard rate 1,767 (236)
Effects of:
Expenses not deductible
for tax
purposes and other permanent
differences 399 73
IPO expenses not deductible
for tax purposes 60 739
Depreciation and amortisation
on non-qualifying assets 287 151
Difference in overseas
tax rate 21 17
Effect of adjustment in
tax rate 15 82
Adjustment in respect of
prior period 19 (213)
Tax expense for the period 2,568 613
The Finance Act 2015 included provisions to reduce the rate of UK corporation tax to 19% with effect from 1 April 2017. The Finance Act 2016 included provisions to further reduce the rate of UK corporation tax to 17% with effect from 1 April 2020. Deferred taxation is measured at tax rates that are expected to apply in the periods in which temporary timing differences are expected to reverse based on tax rates and laws that have been enacted or substantively enacted at the balance sheet date. Accordingly the rate used to calculate deferred tax assets and liabilities is the effective rate at the date the deferred tax is expected to be realised.
7 & 8. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Property, Plant and Intangibles
Equipment
Leasehold
improve-ments Fixtures Motor IT Systems
GBP'000 and fittings vehicles Total GBP'000 Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 31 May 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
Additions - 5,415 - 5,415 5,284 5,284
Disposals - - - - - -
At 28 May 2017 100 28,195 126 28,421 13,037 13,037
Accumulated
depreciation/amortisation
At 31 May 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
Charge for the
period 8 4,906 6 4,920 1,688 1,688
Disposals - - - - - -
Impairment - - - - - -
At 28 May 2017 77 16,581 117 16,775 3,538 3,538
Net book value
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
At 28 May 2017 23 11,614 9 11,646 9,499 9,499
Property, Plant and Equipment and Intangibles
During the prior period the Directors conducted a detailed review of the Group's fixed assets. As a result of this review GBP9,703,000 (GBP9,029,000 of Property, Plant and Equipment and GBP674,000 of Intangibles) of nil book value items which were no longer in existence or use as at the balance sheet date were identified, these were recorded as a disposal in that period.
9. BORROWINGS
28 May 29 May
2017 2016
GBP'000 GBP'000
Bank loans - 5,009
Finance loans 627 1,079
627 6,088
Borrowings are
repayable
as follows:
Bank loans
Within one year - 5,009
Finance loans
Within one year 333 452
Between one and
two years 210 333
Between two and
five years 84 294
627 1,079
Total borrowings
Between one and
two years 210 333
Between two and
five years 84 294
After five years - -
Financing costs - -
capitalised
294 627
On demand or within
one year 333 5,461
627 6,088
Summary of borrowing arrangements
The bank loan is a Revolving Credit Facility in which amounts drawn down are generally repayable within three months. The facility matures in July 2021 following an amendment and extension that was completed after the year end in July 2017. The finance loans are secured against the assets to which they relate. Interest is paid at varying rates above base rate.
The weighted average interest rates paid during the period were as follows:
52 weeks 52 weeks
ended ended
28 May 29 May
2017 2016
% %
Finance loans 7.7 7.4
Bank loans 2.1 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 28 May 29 May
2017 2016
GBP'000 GBP'000
Leases expiring:
Not later than 1 year 10,394 8,040
Later than 1 year and
not later than 5 years 34,669 27,881
Later than 5 years 20,061 17,550
65,124 53,471
Other 28 May 29 May
2017 2016
GBP'000 GBP'000
Leases expiring:
Not later than 1 year 483 333
Later than 1 year and
not later than 5 years 772 359
Later than 5 years 151 -
1,406 692
11. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
28 May 29
2017 May
GBP'000 2016
GBP'000
(Decrease)/ increase in cash in the
period (2,325) 7,205
Effect of foreign exchange rate changes 11 (48)
Cash flow from movement in debt 5,461 13,913
Change in net debt resulting from cash
flows 3,147 21,070
Non cash interest on loan notes - (4,676)
Non cash movement on amortised deal
fees of loan notes - (878)
Non cash settlement on loan notes - 37,009
Net funds / (debt) at start of the year 3,190 (49,335)
Net funds at end of year 6,337 3,190
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 31,171,782 shares (2016: 31,011,102 shares) in Joules Group plc, which represents 35.6% (2016: 35.4%) of the issued share capital. In addition Directors and key management participate in share schemes.
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 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 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 52 weeks
ended ended
28 May 29 May
2017 2016
Basic earnings/(loss)
per share (pence) 7.25 (2.04)
Diluted earnings/(loss)
per share (pence) 7.22 (2.04)
The calculation of basic and diluted earnings per share is based on the following data:
Earnings
52 weeks 52 weeks
ended ended
28 May 29 May
2017 2016
GBP'000 GBP'000
Earnings/(loss) for
the purpose of basic
and diluted earnings
per share 6,343 (1,793)
Number of shares
52 weeks 52 weeks
ended ended
29 May 29 May
2016 2016
Weighted number
of ordinary shares
for the purpose
of basic earnings
per share 87,500,690 87,499,796
Potentially dilutive
share awards 294,295 2,431
Weighted number
of ordinary shares
for the purpose
of diluted earnings
per share 87,794,985 87,502,227
14. SHARE BASED PAYMENTS
Summary of movement
in awards
Number of shares ESOP LTIP SAYE TOTAL
Outstanding at 29
May 2016 446,875 - - 446,875
Granted during the
year 268,164 1,896,938 377,757 2,542,859
Lapsed during the
year - - (37,110) (37,110)
Exercised during
the year - - (894) (894)
Outstanding at 28
May 2017 715,039 1,896,938 339,753 2,951,730
Exercisable at 28
May 2017 - - - -
All share options were valued using the
Black-Scholes model. Expected volatility
was determined by management, using comparator
volatility as a basis. The expected life
of the options was determined based on management's
best estimate. The expected dividend yield
was based on the anticipated dividend policy
of the Company over the expected life of
the options. The risk free rate of return
input into the model was a zero coupon government
bond with a life in line with the expected
life of the options.
The fair value of the total shares issued
during the period, and measured as at issue
date is GBP5,314,000.
The inputs into the model were as follows:
ESOP LTIP SAYE
Weighted average
share price 1.83 1.77 1.67
Weighted average Nil
exercise price 1.32 - 0.01 1.34
No. of employees 10 80 202
Shares under option 715,039 1,896,938 377,577
Expected volatility 28.0% 28.0% 28.0%
2.8
Expected life (Years) 3-10 - 3 3
Risk-free rate 0.06% 0.08% 0.08%
Possibility of ceasing
employment before
vesting 0% 0%-10% 10%
Expectations of
meeting performance
criteria 100% 60%-100% 100%
Expected dividend
yields 1.9% 1.9% 1.9%
The group recognised a total expense of
GBP829,000 during the year (2016: Nil) relating
to equity-settled share-based payments,
including employer's National Insurance
Contributions of GBP92,000 (2016: Nil).
Executive Share Option Plan ("ESOP")
The Group operated a share option scheme during the period for certain employees under the Executive Share Option Plan ("ESOP"). The different options vest between two years and three years and have an exercise life between three and ten years from grant date. All option schemes are subject to continued employment over the vesting period.
Long Term Incentive Plan ("LTIP")
The Board approved Long Term Incentive Plan 2016 ("LTIP 2016") allows the grant of options to executive directors and senior management of the Group in the form of nil-cost options over ordinary shares in Joules Group plc. The options are exercisable three years after the date of grant subject to achieving certain stretching targets. For the Executive directors and members of the operating board, the target is based on an EPS target in the final year of the plan, ending May 2019. For other senior management awards the target is based on the cumulative PBT over the three years to May 2019. The calculation includes an assumption that 10% of senior managers on the scheme would cease employment before vesting.
Save As You Earn Scheme ("SAYE")
Under the terms of the SAYE scheme, the Board grants options to purchase ordinary shares in the company to employees who enter into the HMRC-approved SAYE scheme for a term of three years. Options are granted at up to 20% discount to the market price of the shares on the day proceeding the date of offer and are exercisable for a period of six months after completion of the SAYE contract.
15. DIVIDENDS
In the period an interim dividend of 0.60 pence per share was paid with a total value of GBP525,001. No dividends were declared or paid in the prior period. The Directors are proposing a final dividend of 1.20 pence per share with a total value of GBP1,050,008. This dividend has not been accrued in the consolidated statement of financial position and will be put for approval at the AGM on 27 September 2017. This would bring total dividends for the period to 1.80 pence per share with a total value of GBP1,575,009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EQLBLDDFEBBB
(END) Dow Jones Newswires
July 26, 2017 02:01 ET (06:01 GMT)
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