TIDMJSP
RNS Number : 8588S
Jessops plc
27 May 2009
CORRECTION TO FRONT PAGE - THIS REPLACES THE RELEASE ISSUED AT 7AM
27 May 2009
Jessops plc Interim Results
Jessops plc, the UK's largest photographic retailer, today reports on its
results for the six months to 31 March and provides an update on its financial
position
* Like for like sales down 4.5% (2008: down 5.0%)
* Gross profit margin declined to 28.1% (2008: 30.8%)
* Loss before non-recurring items and tax GBP5.9m (2008: GBP2.9m)
* Net liabilities GBP29.9m (2008: net assets GBP22.3m)
* Restructuring programme ongoing
* Talks with lenders continuing but shareholders unlikely to realise any value
from their equity
David Adams, Executive Chairman, said:
"Since my arrival at Jessops in 2007, the team has worked very hard in extremely
challenging conditions to secure a successful future for the business. We have
reduced costs wherever possible, worked closely with suppliers and explored a
range of options to deliver a sustainable future for Jessops.
"In January we said that we were in discussions with our advisers and HSBC Bank
and that it was highly likely that this exercise would involve a fundamental
restructuring of our debt. These discussions continue. Regrettably however,
against the backdrop of the challenging retail environment and the historic
level of debt, the board believes that it is unlikely that any value will be
attributed to shareholders. Nevertheless we are still working with HSBC towards
a solvent solution for the business."
For further information please contact:
+----------------------------------+----------------+-------------------------+
| Jessops plc | | |
+----------------------------------+----------------+-------------------------+
| David Adams, Executive Chairman | | Tel: 020 7404 5959 |
+----------------------------------+----------------+-------------------------+
| | | |
+----------------------------------+----------------+-------------------------+
| Brunswick | | |
+----------------------------------+----------------+-------------------------+
| Jonathan Glass | | Tel: 020 7404 5959 |
+----------------------------------+----------------+-------------------------+
| David Litterick | | |
+----------------------------------+----------------+-------------------------+
| Claire Gore | | |
+----------------------------------+----------------+-------------------------+
Overview
As we said on 30 January 2009 in the announcement of our results for the year
ended 30 September 2008, the start to the new financial year was difficult,
which reflected the uncertain retail trading conditions.
In February of this year we undertook a restructuring programme in which we
closed a further 21 stores, reducing the store estate to 211 stores, and reduced
our Head Office staff by 50 people to 125.
We also identified that we needed to undertake a fundamental review of our store
staff scheduling and then increase our investment in the sales training that we
provide for our store colleagues. This will significantly increase our
efficiency by replacing full time colleagues with part time colleagues so that
our stores will be able to be fully staffed at our peak trading periods. It is,
however, likely that this will result in a number of redundancies across our
store estate. This programme commenced on 11 May and it is on track to be
completed by the end of July.
We are focussing on working capital controls and our stock at 29 March 2009 was
GBP19.4m (2008: GBP26.8m). We do not believe that our stocks can be reduced
significantly further but we will continue to ensure that our working capital is
as efficient as possible.
Current Trading and Outlook
Trading in the 8 weeks to 24 May 2009 has been encouraging with like for like
sales in this 8 week period fell by 3.6% (2008: 8.0%) and total sales fell by
8.6% (2008: 24.1%), reflecting the 21 store closures in February this year. This
has, however, been offset by the increase in gross margin rate during the
period, compared to both last year and to the six months ended 29 March 2009.
This year has already seen the launch of 2 new major DSLR's in the UK and the
remainder of the year will see a significant number of new product launches in
the UK market. This should help us to maintain gross profit levels on hardware.
The macro environment, however, remains challenging and as a result we expect to
make a loss before non-recurring charges and taxation for the year.
In our statement of 30 January 2009 we stated that we were actively engaging
with our advisers and our bankers HSBC Bank plc ("HSBC") to put the business on
a more stable footing for the future, including discussions on a fundamental
restructuring of our debt. These discussions were against the background of the
Emphasis of Matter in the Accounts for the year ended 30 September 2008. A
similar note is contained in these Interim Accounts. Our discussions with HSBC
are ongoing and we are working together towards a solvent solution. However, due
to the historic high level of debt, the Board believes that it is unlikely that
any value will be attributed to shareholders.
Results
Revenue was GBP124.0m (2008: GBP134.8m) a reduction of 8.0% reflecting the
closure of 21 stores in February this year. It should be noted that revenue for
the period was adversely effected by timing of Easter which in 2008 fell in
March and was included in the first six months trading. This has resulted in a
shift of some GBP1.6m of revenue from the first half of the year to the second
half.
Like for like sales in the same period were down 4.5% (2008: Down 5.0%).
Gross profit margin decreased in the period by over 2 percentage points to 28.1%
(2008: 30.8%) due to the promotional stance taken in the first 13 weeks of the
year, as set out in our announcement of 30 January 2009.
The operating loss before non-recurring items increased to GBP5.9m (2008:
GBP2.9m) but the loss before non-recurring items and tax fell to GBP8.6m (2008:
GBP9.9m). Although operating expenses before non-recurring items were reduced
by 8.5% to GBP40.7m (2008: GBP44.5m), reflecting the full year effects of the
savings we have been making, this was not sufficient to offset the reduction in
gross profit. The increase in the operating loss before non-recurring items was
offset by the lower financing cost reflecting the reduced cost of the new
financing package we put in place last September.
The Group incurred non-recurring costs of GBP4.4m before tax (2008: GBP1.2m
before tax) GBP1.2m of this were costs relating to the restructuring and
reductions in staffing levels announced in February 2009, an increase of GBP2.3m
in the provision against disposal of the Group's vacant properties, caused by
the closure of the further 21 stores and the ongoing deterioration in the retail
property market since we announced our full year results on 30 January 2009 and
GBP0.9 million net costs of store closures.
Total loss before tax for the period was GBP13.0m (2008: GBP11.2m) and total
loss per share was 12.7p (2008: 10.9p loss per share).
The Directors are not recommending payment of an interim dividend (2008: nil).
Net liabilities at 29 March 2009 were GBP29.9m (2007: net assets GBP22.3m; 30
September 2008: net liabilities GBP15.3m).
Review of Trading
In the first six months of the year DSLR revenue was up 3.9% at GBP35.7m (2008:
GBP34.4m) but DSC revenue was down 12.8% at GBP28.4m (2008: GBP32.6m). Overall
hardware sales were down 7.8% at GBP70.9m (2008: GBP76.9m). Our online sales
through www.jessops.com grew over 28.0% in the period which was the result of
our upgraded web technology. This was achieved on a flat margin year on year
which is particularly pleasing given the continued heavy discounting activities
of our online competitors. Our Photo operation has also grown year on year and
in the first six months of the year we printed 49 million digital images, a
growth of 7.5% of last year's 45.6 million digital images. This reflects the
investment we have made in our new relationship with CeWe, Europe's leading
photographic developer and printer. Our photo-book offering continues to grow
and we are now regularly selling over 1,000 photo-books per week. We see this as
a continuing source of incremental revenue in the future.
On 30 October 2008 we opened a new store in the Westfield development in West
London. Trading in the first five months has been encouraging and the new store
is already one of our top ten stores.
As set out above we took further steps to address our cost base and we have
reduced our staffing levels at Head Office. In under two years we have reduced
the number of people working centrally from 375 to today's 125. We also closed a
further 21 stores in February this year.
David Adams
Executive Chairman
Condensed consolidated income statement
For the period ended 29 March 2009
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| | Note | Results | Non-recurring | Total | Results | Non-recurring | Period | | | Year |
| | | for the | items in the | Period | for the | items in the | ended | Results | Non-recurring | ended |
| | | period | period ended | ended | period | period ended | 30 March | for the | items in the | 30 |
| | | ended | 29 March 2009 | 29 March | ended | 30 March 2008 | 2008 | year ended | year ended | September |
| | | 29 March | (see note 2) | 2009 | 30 March | | | | 30 September | 2008 |
| | | 2009 | | | 2008 | | | 30 | 2008 | |
| | | before | | | before | | | September | | |
| | | non-recurring | | | non-recurring | | | 2008 | | |
| | | items | | | items | | | before | | |
| | | | | | | | | non-recurring | | |
| | | | | | | | | items | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| | | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| Revenue | | 124,011 | - | 124,011 | 134,803 | - | 134,803 | 250,136 | - | 250,136 |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| Cost of sales | | (89,191) | - | (89,191) | (93,246) | - | (93,246) | (170,047) | - | (170,047) |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| Gross profit / | | 34,820 | - | 34,820 | 41,557 | - | 41,557 | 80,089 | - | 80,089 |
| (loss) | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| Impairment of | | - | - | - | - | - | - | - | (26,900) | (26,900) |
| goodwill | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| Other Operating | | (40,774) | (4,423) | (45,197) | (44,462) | (1,245) | (45,707) | (85,439) | (3,821) | (89,260) |
| expenses | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| Operating loss | | (5,954) | (4,423) | (10,377) | (2,905) | (1,245) | (4,150) | (5,350) | (30,721) | (36,071) |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| Finance expense | 4 | (3,297) | - | (3,297) | (7,895) | - | (7,895) | (15,557) | - | (15,557) |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| Finance income | 4 | 619 | - | 619 | 895 | - | 895 | 1,795 | - | 1,795 |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| Loss before | | (8,632) | (4,423) | (13,055) | (9,905) | (1,245) | (11,150) | (19,112) | (30,721) | (49,833) |
| taxation | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| Taxation | 5 | - | - | - | (85) | - | (85) | (398) | - | (398) |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| Loss for the | | (8,632) | (4,423) | (13,055) | (9,990) | (1,245) | (11,235) | (19,510) | (30,721) | (50,231) |
| period | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| Loss per | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| ordinary share - | 13 | | | (12.7)p | | | (10.9)p | | | (48.8)p |
| basic | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| Loss per | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
| ordinary share - | 13 | | | (12.7)p | | | (10.9)p | | | (48.8)p |
| diluted | | | | | | | | | | |
+--------------------+------+---------------+---------------+-----------+---------------+---------------+----------+---------------+----------------+-----------+
All activities relate to continuing operations. All loss is attributable to
equity shareholders.
Condensed consolidated statement of recognised income and expense
For the period ended 29 March 2009
+----------------------------------------------------------------------+---+------------+------------+------------+
| | | Period | Period | Year ended |
| | | ended 29 | ended | 30 |
| | | March | 30 March | September |
| | | 2009 | 2008 | 2008 |
| | | | | |
+----------------------------------------------------------------------+---+------------+------------+------------+
| | | GBP000 | GBP000 | GBP000 |
+----------------------------------------------------------------------+---+------------+------------+------------+
| | | | | |
+----------------------------------------------------------------------+---+------------+------------+------------+
| | | | | |
+----------------------------------------------------------------------+---+------------+------------+------------+
| Actuarial (loss)/ gain recognised in the pension scheme | | (2,000) | 1,400 | 3,021 |
+----------------------------------------------------------------------+---+------------+------------+------------+
| Deferred tax on actuarial (gain) / loss in the pension scheme | | 392 | (392) | (846) |
+----------------------------------------------------------------------+---+------------+------------+------------+
| Impact of tax rate changes on deferred tax asset | | - | - | - |
+----------------------------------------------------------------------+---+------------+------------+------------+
| Foreign exchange translation differences | | - | - | 16 |
+----------------------------------------------------------------------+---+------------+------------+------------+
| | | | | |
+----------------------------------------------------------------------+---+------------+------------+------------+
| Net income and expense recognised directly in equity | | (1,608) | 1,008 | 2,191 |
+----------------------------------------------------------------------+---+------------+------------+------------+
| | | | | |
+----------------------------------------------------------------------+---+------------+------------+------------+
| Loss for period | | (13,055) | (11,235) | (50,231) |
+----------------------------------------------------------------------+---+------------+------------+------------+
| | | | | |
+----------------------------------------------------------------------+---+------------+------------+------------+
| | | | | |
+----------------------------------------------------------------------+---+------------+------------+------------+
| Total recognised income and expense for the period | | (14,663) | (10,227) | (48,040) |
+----------------------------------------------------------------------+---+------------+------------+------------+
| | | | | |
+----------------------------------------------------------------------+---+------------+------------+------------+
All recognised income and expense is attributable to equity shareholders.
Condensed consolidated balance sheet
As at 29 March 2009
+--------------------------------------------------+-----------------------+------------+------------+------------+
| | Note | 29 March | 30 March | 30 |
| | | 2009 | 2008 | September |
| | | | | 2008 |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| | | GBP000 | GBP000 | GBP000 |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Non current assets | | | | |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Goodwill | | 20,788 | 47,688 | 20,788 |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Intangible assets | | 5,220 | 7,075 | 6,209 |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Property, plant and equipment | 7 | 24,528 | 32,358 | 28,718 |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Deferred tax | | 1,428 | 1,712 | 1,036 |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| | | 51,964 | 88,833 | 56,751 |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| | | | | |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Current Assets | | | | |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Inventories | | 19,411 | 26,801 | 26,143 |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Trade and other receivables | | 7,667 | 12,079 | 11,245 |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Cash and cash equivalents | | - | 3,170 | - |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| | | 27,078 | 42,050 | 37,388 |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| | | | | |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Current liabilities | | | | |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Bank overdrafts and borrowings | 9 | (1,204) | (52,260) | (8,206) |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Obligations under finance leases | 9 | (1,414) | (1,450) | (1,414) |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Trade and other payables | | (37,669) | (46,281) | (36,644) |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Provisions | 8 | (3,332) | - | (2,857) |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Current tax liabilities | | (442) | (483) | (442) |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| | | (44,061) | (100,474) | (49,563) |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| | | | | |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Net current (liabilities) / assets | | (16,983) | (58,424) | (12,175) |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| | | | | |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Non current liabilities | | | | |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Borrowings | 9 | (58,560) | - | (54,861) |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Obligations under finance leases | 9 | (585) | (1,995) | (1,313) |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Provisions | 8 | (605) | - | - |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Retirement benefits obligations | | (5,110) | (6,115) | (3,708) |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| | | (64,860) | (8,110) | (59,882) |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| | | | | |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Net assets | | (29,879) | 22,299 | (15,306) |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| | | | | |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Equity | | | | |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Issued capital | 14 | 2,571 | 2,571 | 2,571 |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Share premium | 14 | 89,161 | 89,161 | 89,161 |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Retained earnings | 14 | (121,611) | (69,417) | (107,038) |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Translation reserve | 14 | - | (16) | - |
+--------------------------------------------------+-----------------------+------------+------------+------------+
| Total equity attributable to equity shareholders | | (29,879) | 22,299 | (15,306) |
| of the parent | | | | |
+--------------------------------------------------+-----------------------+------------+------------+------------+
Condensed consolidated cash flow statement
For the period ended 29 March 2009
+---------------------------------------------------------------------+---+------------+------------+------------+
| | | Period | Period | Year ended |
| | | ended | ended | 30 |
| | | 29 March | 30 March | September |
| | | 2009 | 2008 | 2008 |
+---------------------------------------------------------------------+---+------------+------------+------------+
| | | GBP000 | GBP000 | GBP000 |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Cash flows from operating activities | | | | |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Loss before taxation | | (13,055) | (11,150) | (49,833) |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Adjusted for: | | | | |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Finance income | | (619) | (895) | (1,795) |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Financing expense | | 3,297 | 7,895 | 15,557 |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Depreciation and amortisation | | 4,467 | 4,996 | 10,076 |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Impairment of goodwill | | - | - | 26,900 |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Share-based payment expense | | 90 | 121 | 225 |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Exchange difference | | - | - | 14 |
+---------------------------------------------------------------------+---+------------+------------+------------+
| (Profit)/loss on disposal of property, plant and equipment | | 702 | 131 | 130 |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Pension contributions in excess of charge | | (546) | (396) | (1,157) |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Operating cash (outflow)/inflow before movement in working capital | (5,664) | 702 | 117 |
+-------------------------------------------------------------------------+------------+------------+------------+
| Decrease in stocks | | 6,732 | 11,164 | 11,824 |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Decrease in debtors | | 3,578 | 1,164 | 2,208 |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Increase/(decrease) in creditors | | 2,125 | (17,495) | (16,833) |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Cash absorbed by operations | | 6,771 | (4,465) | (2,684) |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Taxes paid | | - | (55) | (187) |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Interest paid | | (1,875) | (2,628) | - |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Net cash from operating activities | | 4,896 | (7,148) | (2,871) |
+---------------------------------------------------------------------+---+------------+------------+------------+
| | | | | |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Cash flows from investing activities | | | | |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Proceeds on disposal of property, plant and equipment | | 975 | 136 | - |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Acquisition of property, plant and equipment | | (905) | (212) | (1,103) |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Acquisition of intangible assets | | (60) | (386) | (300) |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Acquisition of business assets | | - | - | - |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Net cash from investing activities | | 10 | (462) | (1,403) |
+---------------------------------------------------------------------+---+------------+------------+------------+
| | | | | |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Cash flows from financing activities | | | | |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Repayment of borrowings | | - | (2,000) | (348) |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Payment of finance expenses | | 38 | - | (12,859) |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Movement of finance lease liabilities | | (728) | (299) | (1,018) |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Net cash from financing activities | | (690) | (2,299) | (14,225) |
+---------------------------------------------------------------------+---+------------+------------+------------+
| | | | | |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Net increase / (decrease) in cash and cash equivalents | | 4,216 | (9,909) | (18,499) |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Cash and cash equivalents at the beginning of the period | | (5,420) | 13,079 | 13,079 |
+---------------------------------------------------------------------+---+------------+------------+------------+
| Cash and cash equivalents at the end of the period | | (1,204) | 3,170 | (5,420) |
+---------------------------------------------------------------------+---+------------+------------+------------+
Notes to the condensed consolidated interim financial statements
+-------+-----------------------------------------------------------------------------------------------------------------+
| 1. | Basis of preparation and principal accounting policies |
| | Jessops Plc is a company domiciled in the UK. The condensed consolidated interim financial statements of the |
| | company as at and for the six months ended 29 March 2009 comprise the company and its subsidiaries (together |
| | referred to as the "Group"). |
| | The Group financial statements as at and for the year ended 30 September 2008 prepared in accordance with IFRSs |
| | as adopted by the EU and with those parts of the Companies Act 1985 applicable to companies reporting under |
| | IFRS, are available upon request from the company's registered office at Jessop House, 98 Scudamore Road, |
| | Leicester, LE3 1TZ or from the website at www.jessops.com. |
| | The prior year comparatives are derived from audited financial information for Jessops Plc as set out in the |
| | Annual Report for the year ended 30 September 2008 and the unaudited financial information in the interim |
| | financial statements for the period ended 30 March 2008. The comparative figures for the financial year ended |
| | 30 September 2008 are not the Company's statutory accounts for that financial year. Those accounts have been |
| | reported on by the Company's auditors and delivered to the registrar of companies. The auditors' report on |
| | those accounts was not qualified and did not contain statements under section 237(2) or (3) of the Companies |
| | Act 1985. The auditors report included a reference in respect of the existence of a material uncertainty which |
| | may cast significant doubt on the Company's and Group's ability to continue as a going concern. The auditors |
| | drew attention to this matter by way of emphasis without qualifying their report. |
| | The condensed set of interim financial statements for the period ended 29 March 2009 is unaudited but has been |
| | reviewed by the auditors. The Independent Review Report is set out on page 22. |
| | The condensed consolidated interim financial statements are prepared on a going concern basis which the |
| | directors believe to be appropriate for the reasons set out below. |
| | The Group meets its day to day working capital requirements and medium term funding requirements through |
| | banking facilities that mature in December 2011. Some of the facilities are made available subject to a number |
| | of covenant tests. As at the 29 March 2009 the Group was not in breach of these covenants as covenant tests had |
| | been deferred. The covenants are next tested at the end of June and quarterly thereafter. In the absence of |
| | ongoing covenant waivers from the bank the Directors believe that the covenants will be breached for the |
| | immediately foreseeable future. The balance of the facilities consists primarily of an overdraft which is |
| | repayable on demand. The Directors consider that in effect the entire facilities may shortly become repayable |
| | on demand at the option of the lenders. |
| | The Directors have prepared trading and cash flow forecasts for a period in excess of one year from the date of |
| | approval of these interim financial statements which project that the total facilities are not exceeded over |
| | the duration of the forecasts. The forecasts prepared make assumptions in respect of future trading conditions |
| | and in particular the trend in like for like revenue in the remainder of financial year 2009 not being |
| | materially worse than that experienced for the six months to 31 March 2009 and then a forecast year-on-year |
| | improvement in underlying retail conditions in the UK during 2010, achieving operational improvements, cost |
| | reductions and cash outflow deferral in respect of property lease payments. In addition to this the nature of |
| | the Group's business is such that there can be variation in the timing of cash inflows as trading patterns |
| | develop, in particular the quantum and timing of Summer and Christmas trading activity. The forecasts take into |
| | account the aforementioned factors to an extent which the Directors consider to be reasonable, based on the |
| | information that is available to them at the time of approval of these condensed consolidated interim financial |
| | statements. |
| | In discussions with the Group, the existing lenders have indicated that it is their current intention (a) not |
| | to seek early repayment of the bank loans, (b) to continue to make available the undrawn element of the |
| | facilities and (c) to consider on an ongoing basis any appropriate, alternative options for the structure of |
| | the facilities provided to the business. The existing lenders have also indicated that they will not increase |
| | the total amount made available to the Group under the existing facilities. |
| | In the event that additional funds are required in excess of the existing facilities as a result of the Group |
| | not substantially achieving its forecasts the Directors would have to supplement, renew or replace those |
| | facilities with facilities that are appropriate to the Group's ongoing requirements. The potential source and |
| | cost of such supplementary, new or replacement facilities is a matter which the Directors are keeping under |
| | review although they regard the likelihood of securing such facilities to be low. |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
Notes to the condensed consolidated interim financial statements continued
+-------+-----------------------------------------------------------------------------------------------------------------+
| 1. | Basis of preparation and principal accounting policies continued |
| | As regards the future structure of the facilities provided to the Group by the existing lenders a number of |
| | options are being considered including a comprehensive restructuring of the Group. The Director's are working |
| | with the Group's existing lenders towards a satisfactory solution, however, depending on the precise nature of |
| | any such proposal the Group may or may not be able to continue to trade as a going concern. |
| | These conditions indicate the existence of material uncertainties which may cast significant doubt on the |
| | Group's ability to continue as a going concern and therefore the Group may be unable to continue to realise |
| | assets and discharge liabilities in the normal course of business. These condensed consolidated interim |
| | financial statements do not include any adjustments that would result from the going concern basis of |
| | preparation being inappropriate. |
| | Statement of compliance |
| | The condensed set of interim financial statements has been prepared in accordance with IAS 34 Interim Financial |
| | Reporting as adopted by the EU. They do not include all of the information required for full annual financial |
| | statements, and should be read in conjunction with the consolidated financial statements of the Group as at and |
| | for the year ended 30 September 2008. |
| | These condensed consolidated interim financial statements were approved by the Board of Directors on 27 May |
| | 2009. |
| | Significant accounting policies |
| | As required by the Disclosure and Transparency Rules of the Financial Services Authority, the condensed set of |
| | financial statements has been prepared applying the accounting policies and presentation that were applied in |
| | the preparation of the Group's latest annual audited financial statements for the year ended 30 September 2008. |
| | Estimates and judgements |
| | The preparation of the condensed interim financial statements requires management to make judgements, estimates |
| | and assumptions that affect the application of accounting policies and the reported amounts of assets and |
| | liabilities, income and expense. Actual results may differ from these estimates. |
| | In preparing these condensed consolidated interim financial statements, the significant judgements made by |
| | management in applying the Group's accounting policies and the key sources of estimation uncertainty were the |
| | same as those that applied to the consolidated financial statements as at and for the year ended 30 September |
| | 2008. |
| | During the period ended 29 March 2009 management has reassessed its estimates in respect of the recoverable |
| | amount of goodwill by assessing the recoverable amount of each cash generating unit and deemed no further |
| | impairment is required. In reaching this conclusion, a pre-tax discount rate of 16.8% (for the year ended 30 |
| | September 2008: 16.8%; for the period ended 30 March 2008: 15.7%) was applied which reflects the current market |
| | assessment of the time value of money and the risks specific to the assets concerned. |
| | During the period, tangible and intangible assets have been reviewed for Impairment, determined with reference |
| | to the higher of fair value less costs to sell and value in use. As noted above, significant judgements and |
| | assumptions are made in calculating these cashflows, such as discount rates, long term growth rates and the |
| | impact of risk. Changes in assumptions could change the outcomes of the impairment review. |
| | |
| | In addition, management's assumptions in respect of the time and cost involved in disposing of the Group's |
| | closed properties is key to establishing the expense charged to the income statement. This represents an area |
| | of estimation uncertainty. |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
Notes to the condensed consolidated interim financial statements continued
+-------+-----------------------------------------------------------------------------------------------------------------+
| 1. | Basis of preparation and principal accounting policies continued |
| | The Group's defined benefit scheme pension liability, which is assessed each period by actuaries is based on |
| | key assumptions including return on plan assets, discount rates, mortality rates, inflation, future salary and |
| | pension costs. These assumptions, individually or collectively, may be different to actual outcomes. This |
| | represents an area of estimation uncertainty. |
| | The Directors have made judgements regarding the probability that their future taxable profits will be |
| | available against which the unused tax losses and unused tax credits can be utilized. Based on this assessment |
| | the Group has not recognised deferred tax assets in respect of unused tax losses, property, plant and equipment |
| | and other short term timing differences but has recognised a deferred tax asset in respect of the pension |
| | scheme. |
| | Principal Risks and Uncertainties |
| | Jessops operates in a very competitive retail environment and there is an on-going risk that sales may be lost |
| | to rival businesses. The general economic environment and market condition for the products and services are |
| | also risks common to all retailers. The Directors believe that one of the key differentiators of the Jessops |
| | business model is customer service and they seek to build on this to set the Group apart from its competitors. |
| | The Strategic Review held during 2007 and the restructuring program carried out in the period to 29 March 2009 |
| | addressed the fundamental issues facing the Group and the strategy derived has re-positioned Jessops as a true |
| | multi-channel retailer, with a strong presence in the digital printing services market in addition to continued |
| | leadership in digital cameras. This will be supported by market leading customer service. |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
| 2. | Non-recurring items |
| | The restructuring program focused on the closure of 21 stores and the reduction of costs in our Support Centre. |
| | This exercise was completed during the period and resulted in store closure costs of GBP3,290,000, costs of |
| | restructuring of GBP772,000 and redundancy costs of GBP361,000 being charged in the period to 29 March 2009. |
| | The store closure cost is a net value after accounting for the profit on disposal of freehold property, the |
| | asset write off for closed stores, the provision for onerous leases and for the cost of surrendering leases. |
| | The provision for onerous leases includes costs for the balance of the 81 stores that were closed during the |
| | Strategic Review of 2007 and for which the Group has an ongoing liability. |
| | The costs of restructure relate to costs that have been incurred by the Group to facilitate the implementation |
| | of the store closure and the Support Centre redundancy program. |
| | The non-recurring costs for the year ended 30 September 2008 are outlined in detail in note 3 in the Group |
| | financial statements for that period. The GBP1,245,000 non-recurring costs in the six months to 30 March 2008 |
| | comprise store closure costs of GBP720,000 and redundancy costs of GBP525,000. |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
+----------------------------+---------+---------+----------+-----------+---------+
| | | | | Operating | Total |
| | | | | expenses | |
+----------------------------+---------+---------+----------+-----------+---------+
| | | | | GBP'000 | GBP'000 |
+----------------------------+---------+---------+----------+-----------+---------+
| Restructuring costs | | | | 772 | 772 |
+----------------------------+---------+---------+----------+-----------+---------+
| Redundancy costs | | | | 361 | 361 |
+----------------------------+---------+---------+----------+-----------+---------+
| Store closure costs | | | | 3,290 | 3,290 |
+----------------------------+---------+---------+----------+-----------+---------+
| | | | | | |
+----------------------------+---------+---------+----------+-----------+---------+
| Total non-recurring items | | | | 4,423 | 4,423 |
| before tax | | | | | |
+----------------------------+---------+---------+----------+-----------+---------+
+-------+-----------------------------------------------------------------------------------------------------------------+
| 3. | Segmental reporting |
| | The Group has one main business segment, which is retail, and one main geographical segment, which is the |
| | United Kingdom. The business segment reporting format reflects the Group's management and internal reporting |
| | structure. |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
| Notes to the condensed consolidated interim financial statements continued |
+-------------------------------------------------------------------------------------------------------------------------+
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
| 4. | Financial income and expense - recognised in profit and loss |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
+--------------------------------------+---------+----------------+----------------+----------------+
| | | 29 March 2009 | 30 March 2008 | 30 September |
| | | | | 2008 |
+--------------------------------------+---------+----------------+----------------+----------------+
| | | GBP000 | GBP000 | GBP000 |
+--------------------------------------+---------+----------------+----------------+----------------+
| Finance income: | | | | |
+--------------------------------------+---------+----------------+----------------+----------------+
| Expected return on pension scheme | | (600) | (825) | (1,631) |
| assets | | | | |
+--------------------------------------+---------+----------------+----------------+----------------+
| Interest income on bank deposits | | (19) | (70) | (78) |
+--------------------------------------+---------+----------------+----------------+----------------+
| Net gain on derecognition of | | - | | (86) |
| financial liability | | | | |
+--------------------------------------+---------+----------------+----------------+----------------+
| Finance income | | (619) | (895) | (1,795) |
+--------------------------------------+---------+----------------+----------------+----------------+
| | | | | |
+--------------------------------------+---------+----------------+----------------+----------------+
| Finance expenses: | | | | |
+--------------------------------------+---------+----------------+----------------+----------------+
| Amortisation of finance fees | | - | 3,826 | - |
+--------------------------------------+---------+----------------+----------------+----------------+
| Total finance fees | | - | 3,826 | - |
+--------------------------------------+---------+----------------+----------------+----------------+
| Interest expense on financial | | 2,497 | 3,219 | 13,883 |
| liabilities measured at amortised | | | | |
| cost | | | | |
+--------------------------------------+---------+----------------+----------------+----------------+
| Interest on pension scheme | | 800 | 850 | 1,674 |
| liabilities | | | | |
+--------------------------------------+---------+----------------+----------------+----------------+
| Finance expenses | | 3,297 | 7,895 | 15,557 |
+--------------------------------------+---------+----------------+----------------+----------------+
| | | | | |
+--------------------------------------+---------+----------------+----------------+----------------+
| Net finance costs | | 2,678 | 7,000 | 13,762 |
+--------------------------------------+---------+----------------+----------------+----------------+
In accordance with IAS39 'Financial Instruments' the finance costs associated
with the HSBC facilities (see note 9) form part of the overall effective
interest rate.
+-------+-----------------------------------------------------------------------------------------------------------------+
| 5. | Income tax expense |
| | The Group's consolidated effective tax rate in respect of continuing operations for the six months ended 29 |
| | March 2009 was Nil% (for the year ended 30 September 2008: credit of 0.8 %; for the period ended 30 March 2008: |
| | charge of 0.8%) |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
| 6. | Write down of Inventory |
| | During the period ended 29 March 2009, the Group released a writedown of finished goods inventory of |
| | GBP1,693,000 (period ended 30 March: GBPNil) on disposal of the related inventory. |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
| 7. | Property, plant and equipment |
| | During the period ended 29 March 2009 the Group acquired assets with a cost of GBP905,000 (period ended 30 |
| | March 2008: GBP212,000). |
| | Assets with a carrying value of GBP399,000 were disposed during the period ended 29 March 2009 (period ended 30 |
| | March 2008: GBP227,000) resulting in a profit on disposal of GBP577,000 (period ended 30 March 2008: loss of |
| | GBP165,000). An impairment charge of GBP983,000 was recognised against assets held in stores which have been |
| | closed in the period, GBP296,000 against other fixed assets. This is shown as part of Non-recurring items (note |
| | 2). |
| | As at 29 March 2009, the Group had commitments to purchase property, plant and equipment of GBP395,000 (March |
| | 2008: GBPNil). |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
Notes to the condensed consolidated interim financial statements continued
+-------+-----------------------------------------------------------------------------------------------------------------+
| 8. | Provisions |
| | The provisions shown below relate to the future costs of estimated rent, rates, lease premiums and |
| | dilapidations up to the anticipated point of disposal of the properties and they have been calculated to |
| | reflect the deterioration in the retail property market. |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
+---------------------------------------------+------------+------------+
| | 29 March | 30 |
| | | September |
+---------------------------------------------+------------+------------+
| | 2009 | 2008 |
+---------------------------------------------+------------+------------+
| | | |
+---------------------------------------------+------------+------------+
| | GBP000 | GBP000 |
+---------------------------------------------+------------+------------+
| Balance at beginning of period | (2,857) | (3,235) |
+---------------------------------------------+------------+------------+
| Provisions used in year | 1,314 | 3,515 |
+---------------------------------------------+------------+------------+
| P&L charge in year | (2,394) | (3,137) |
+---------------------------------------------+------------+------------+
| Balance at end of period | (3,937) | (2,857) |
+---------------------------------------------+------------+------------+
+---------------------------------------------+------------+------------+
| | | |
+---------------------------------------------+------------+------------+
| | GBP000 | GBP000 |
+---------------------------------------------+------------+------------+
| Due within 1 year | (3,332) | (2,857) |
+---------------------------------------------+------------+------------+
| Due after 1 year | (605) | - |
+---------------------------------------------+------------+------------+
| Balance at end of period | (3,937) | (2,857) |
+---------------------------------------------+------------+------------+
Notes to the condensed consolidated interim financial statements continued
+-------+-----------------------------------------------------------------------------------------------------------------+
| 9. | Bank overdrafts and loans |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
+------------------------------------------+----+----------------+----------------+----------------+
| | | 29 March 2009 | 30 March 2008 | 30 September |
| | | | | 2008 |
+------------------------------------------+----+----------------+----------------+----------------+
| | | GBP000 | GBP000 | GBP000 |
+------------------------------------------+----+----------------+----------------+----------------+
| Current: | | | | |
+------------------------------------------+----+----------------+----------------+----------------+
| Bank overdraft | | 1,204 | - | 5,420 |
+------------------------------------------+----+----------------+----------------+----------------+
| Bank loans | | - | 52,260 | 2,786 |
+------------------------------------------+----+----------------+----------------+----------------+
| | | 1,204 | 52,260 | 8,206 |
+------------------------------------------+----+----------------+----------------+----------------+
| Obligations under HP and finance lease | | 1,414 | 1,450 | 1,414 |
+------------------------------------------+----+----------------+----------------+----------------+
| | | 2,618 | 53,710 | 9,620 |
+------------------------------------------+----+----------------+----------------+----------------+
| Non current: | | | | |
+------------------------------------------+----+----------------+----------------+----------------+
| Bank loans | | 58,560 | - | 54,861 |
+------------------------------------------+----+----------------+----------------+----------------+
| Obligations under HP and finance lease | | 585 | 1,995 | 1,313 |
+------------------------------------------+----+----------------+----------------+----------------+
| | | 59,145 | 1,995 | 56,174 |
+------------------------------------------+----+----------------+----------------+----------------+
| Total bank overdraft and loans | | 61,763 | 55,705 | 65,794 |
+------------------------------------------+----+----------------+----------------+----------------+
The maturity profile of the Group's non-current bank loans is as follows:
+------------------------------------------+----+----------------+----------------+----------------+
| | | 29 March 2009 | 30 March 2008 | 30 September |
| | | | | 2008 |
+------------------------------------------+----+----------------+----------------+----------------+
| | | GBP000 | | GBP000 |
+------------------------------------------+----+----------------+----------------+----------------+
| | | | | |
+------------------------------------------+----+----------------+----------------+----------------+
| Expiring between 1 and 2 years | | 7,000 | - | 4,190 |
+------------------------------------------+----+----------------+----------------+----------------+
| Expiring between 2 and 5 years | | 51,560 | - | 50,671 |
+------------------------------------------+----+----------------+----------------+----------------+
| | | 58,560 | - | 54,861 |
+------------------------------------------+----+----------------+----------------+----------------+
The bank facilities are secured by fixed and floating charges over the Group's
assets.
The Group also has access to an overdraft facility the level of which varies
dependant on the working capital needs of the business. Interest is charged at
2.25% over LIBOR on amounts drawn down under this facility. The facility is
repayable on demand.
On 30 August 2007 the Group entered into a GBP60,000,000 loan facility split
into Facility A for GBP20,000,000 and Facility B for GBP40,000,000.The
facilities were due to expire on 31 December 2008.
On 26 September 2008 the Group renegotiated the unexpired portion of these
facilities such that they are repayable on 31 December 2011.
Loan repayments of GBP3,000,000 and GBP4,000,000 falling due on 31 May 2009 and
2010 respectively have been waived by the bank, and are now repayable in
September 2010. A further GBP5,000,000 is due for repayment in May 2011.
Interest rate margins payable above LIBOR have also been varied. A comparison of
the margin rates is shown below:
Notes to the condensed consolidated interim financial statements continued
+-------+-----------------------------------------------------------------------------------------------------------------+
| 9. | Bank overdrafts and loans continued |
+-------+-----------------------------------------------------------------------------------------------------------------+
+----------------------+-----------+------------+
| | Original | Agreement |
| | Agreement | Extension |
| | 30 August | 26 |
| | | September |
| | 2007 | 2008 |
+----------------------+-----------+------------+
| | % | % |
+----------------------+-----------+------------+
| Facility A | 3.00 | 2.50 |
+----------------------+-----------+------------+
| | | |
+----------------------+-----------+------------+
| Facility B - Cash | 2.00 | 2.00 |
+----------------------+-----------+------------+
| - | 3.25 | 2.00 |
| Deferred | | |
| | | |
| interest | | |
+----------------------+-----------+------------+
| | 5.25 | 4.00 |
+----------------------+-----------+------------+
The deferred interest is rolled up and is payable on the 31 December 2011.
On renegotiation of the borrowing facilities in September 2008 the terms of the
facility were substantially modified. This is on the basis that the present
value of the cash flows under the new facility, discounted using the original
effective interest rate, were at least 10% different to the discounted present
value of the remaining cash flows of the facility being replaced. Accordingly
the transaction has been accounted for as an extinguishment of the old facility,
resulting in a gain of GBP86,000 being recorded within finance income in the
income statement (note 4). The GBP86,000 represents the difference between the
book value of the old facility and the fair value of the new facility.
The GBP7,000,000 deferred refinancing fee arising in respect of the old facility
has been reduced to GBP5,000,000, with payment now deferred until 31 December
2011. The reduction of the deferred refinancing fee was a factor considered by
the Directors in assessing the fair value of the new facilities and has been
included in the calculation of the gain disclosed above.
The assessment of the fair value of the new facilities at GBP57,000,000 is a
source of estimation uncertainty. In the absence of readily observable market
data, the directors have considered the underlying effective interest rate for
reasonableness. A reduction in the fair value of the loan would have resulted in
a higher gain on derecognition on extinguishment of the previous facility and a
higher interest rate expense (measured on an effective interest method) over the
remaining term of the debt.
Two warrants over un - issued ordinary shares representing 10% of Jessops issued
share capital were issued in reference to the original facility agreement of 30
August 2007. It was agreed that on signing the extension to the agreement on 26
September 2008 to issue warrants over a further 5% over the issued share capital
of the Company to HSBC Bank plc. HSBC Bank Plc now hold warrants over 15% of the
issued share capital.
The fair value of the service received in connection with the warrants formed
part of the overall fees payable in relation to the facilities provided.
Consequently the fair value of the warrants was estimated directly, rather than
by reference to the fair value of the services provided. The directors consider
that the warrants, in respect of which there are no vesting conditions, relate
to the provision of the facility itself and the fair value has therefore been
expensed immediately. The fair value charge in the year ended 30 September 2008
was GBP76,000.
Notes to the condensed consolidated interim financial statements continued
+-------+-----------------------------------------------------------------------------------------------------------------+
| 10. | Dividends |
| | The directors do not propose an interim dividend for the period ended 29 March 2009 (for the period ended 30 |
| | March 2008: GBPnil). |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
| 11. | Pension Scheme Obligations |
| | The net liability for defined benefit obligations has increased from GBP3,708,000 at 30 September 2008 to |
| | GBP5,110,000 at 29 March 2009. The increase of GBP1,402,000 comprises contributions of GBP900,000, a charge to |
| | the income statement of GBP254,000 and a net actuarial loss of GBP2,000,000. The actuarial loss has arisen in |
| | part due to changes in the principal assumptions used in the valuation of the Scheme's assets and liabilities |
| | over those used at 30 September 2008. The assumptions subject to change are the discount rate of 6.7% |
| | (September 2008: 6.8%), inflation rate of 3.3% (September 2008: 3.5%) and the rate of increase in pensions |
| | payment of 3.3% (September 2008: 3.5%) |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
| 12. | Related party transactions |
| | There have been no related party transactions that have taken place in the first six months of the current |
| | financial year that have materially affected the financial position performance of the group during that period |
| | and there have been no changes in the related party transactions described in the last annual report that could |
| | do so. |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
Notes to the condensed consolidated interim financial statements continued
+-------+-----------------------------------------------------------------------------------------------------------------+
| 13. | Loss per share |
| | Basic loss per share is calculated by dividing the loss for the period attributable to equity shareholders by |
| | the weighted average number of ordinary shares in issue during the period. |
| | For diluted loss per share, the weighted average number of ordinary shares in issue is adjusted to assume |
| | conversion of all dilutive potential ordinary shares. These represent share options granted to employees where |
| | the exercise price is less than the average market price of the Company's ordinary shares during the period. |
| | The share options have no dilutive effect on any periods covered by these condensed financial statements. |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
Weighted average numbers of shares:
+--------------------------------------------------+----------+------------+------------+
| | | Period | Year ended |
| | Period | ended | 30 |
| | ended | 30 March | September |
| | 29 March | 2008 | 2008 |
| | 2009 | | |
+--------------------------------------------------+----------+------------+------------+
| | '000 | '000 | '000 |
+--------------------------------------------------+----------+------------+------------+
| | | | |
+--------------------------------------------------+----------+------------+------------+
| Weighted average number of shares in issue | 102,871 | 102,871 | 102,871 |
| during the period | | | |
+--------------------------------------------------+----------+------------+------------+
In addition to basic loss per ordinary share, an additional adjusted loss per
share has been provided below which excludes non-recurring costs (net of tax).
The loss used for the basic and additional calculations, together with the
resultant basic loss per share, is shown below:
+--------------------------------------------------+----------+------------+------------+
| | | Period | Year ended |
| | Period | ended | 30 |
| | ended | 30 March | September |
| | 29 March | 2008 | 2008 |
| | 2009 | | |
| | | | |
+--------------------------------------------------+----------+------------+------------+
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------------------------+----------+------------+------------+
| | | | |
+--------------------------------------------------+----------+------------+------------+
| Loss for the period | (13,055) | (11,235) | (50,231) |
+--------------------------------------------------+----------+------------+------------+
| Non-recurring costs net of tax | 4,423 | 1,245 | 30,721 |
+--------------------------------------------------+----------+------------+------------+
| Finance fees post tax | - | 3,796 | - |
+--------------------------------------------------+----------+------------+------------+
| | | | |
+--------------------------------------------------+----------+------------+------------+
| Loss for the period excluding non-recurring | (8,632) | (6,194) | (19,510) |
| costs and finance fees | | | |
+--------------------------------------------------+----------+------------+------------+
| | | | |
+--------------------------------------------------+----------+------------+------------+
| Loss per ordinary share - basic and diluted | (12.67)p | (10.9)p | (48.8)p |
+--------------------------------------------------+----------+------------+------------+
| Adjusted loss per ordinary share - basic and | (8.39)p | (6.0)p | (18.9)p |
| diluted | | | |
+--------------------------------------------------+----------+------------+------------+
| | | | |
+--------------------------------------------------+----------+------------+------------+
Notes to the condensed consolidated interim financial statements continued
+-------+-----------------------------------------------------------------------------------------------------------------+
| 14. | Analysis of movement in reserves |
+-------+-----------------------------------------------------------------------------------------------------------------+
+------------------------------------------+--------------+----------+------------+------------+------------+
| | Share | Share | Retained | Exchange | Total |
+------------------------------------------+--------------+----------+------------+------------+------------+
| | Capital | premium | earnings | Gains | Equity |
+------------------------------------------+--------------+----------+------------+------------+------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------------------------+--------------+----------+------------+------------+------------+
| | | | | | |
+------------------------------------------+--------------+----------+------------+------------+------------+
| As at 1 October 2007 | 2,571 | 89,161 | (59,311) | (16) | 32,405 |
+------------------------------------------+--------------+----------+------------+------------+------------+
| Loss for the period | - | - | (11,235) | - | (11,235) |
+------------------------------------------+--------------+----------+------------+------------+------------+
| Employee share option scheme | - | - | 121 | - | 121 |
+------------------------------------------+--------------+----------+------------+------------+------------+
| Actuarial gain (net of tax) | - | - | 1,008 | - | 1,008 |
+------------------------------------------+--------------+----------+------------+------------+------------+
| | | | | | |
+------------------------------------------+--------------+----------+------------+------------+------------+
| As at 30 March 2008 | 2,571 | 89,161 | (69,417) | (16) | 22,229 |
+------------------------------------------+--------------+----------+------------+------------+------------+
| Loss for the period | - | - | (38,996) | - | (38,996) |
+------------------------------------------+--------------+----------+------------+------------+------------+
| Employee share option scheme | - | - | 104 | - | 104 |
+------------------------------------------+--------------+----------+------------+------------+------------+
| Fair value of warrants issued | - | - | 75 | - | 75 |
+------------------------------------------+--------------+----------+------------+------------+------------+
| Purchase of own shares | - | - | 29 | - | 29 |
+------------------------------------------+--------------+----------+------------+------------+------------+
| Actuarial (loss) / gain (net of tax) | - | - | 1,167 | - | 1,167 |
+------------------------------------------+--------------+----------+------------+------------+------------+
| Currency translation difference | - | - | - | 16 | 16 |
+------------------------------------------+--------------+----------+------------+------------+------------+
| | | | | | |
+------------------------------------------+--------------+----------+------------+------------+------------+
| As at 30 September 2008 | 2,571 | 89,161 | (107,038) | - | (15,306) |
+------------------------------------------+--------------+----------+------------+------------+------------+
| Loss for the period | - | - | (13,055) | - | (13,055) |
+------------------------------------------+--------------+----------+------------+------------+------------+
| Employee share option scheme | - | - | 90 | - | 90 |
+------------------------------------------+--------------+----------+------------+------------+------------+
| Actuarial loss (net of tax) | - | - | (1,608) | - | (1,608) |
+------------------------------------------+--------------+----------+------------+------------+------------+
| | | | | | |
+------------------------------------------+--------------+----------+------------+------------+------------+
| | | | | | |
+------------------------------------------+--------------+----------+------------+------------+------------+
| As at 29 March 2009 | 2,571 | 89,161 | (121,611) | - | (29,879) |
+------------------------------------------+--------------+----------+------------+------------+------------+
Notes to the condensed consolidated interim financial statements continued
+-------+-----------------------------------------------------------------------------------------------------------------+
| 15. | Analysis of movement in net debt |
+-------+-----------------------------------------------------------------------------------------------------------------+
+------------------------------------------------------+------------+------------+------------+------------+------------+
| | | At 1 | Cash flow | Other non | At 29 |
| | | October | | cash | March 2009 |
| | | 2008 | | changes | |
+------------------------------------------------------+------------+------------+------------+------------+------------+
| | | | | | |
+------------------------------------------------------+------------+------------+------------+------------+------------+
| Cash at bank and in hand | | - | | | |
+------------------------------------------------------+------------+------------+------------+------------+------------+
| Bank overdraft | | (5,420) | 4,216 | - | (1,204) |
+------------------------------------------------------+------------+------------+------------+------------+------------+
| | | (5,420) | 4,216 | - | (1,204) |
+------------------------------------------------------+------------+------------+------------+------------+------------+
| | | | | | |
+------------------------------------------------------+------------+------------+------------+------------+------------+
| Debt due within one year | | (2,786) | - | 2,786 | - |
+------------------------------------------------------+------------+------------+------------+------------+------------+
| Debt due after one year | | (54,861) | (372) | (3,327) | (58,560) |
+------------------------------------------------------+------------+------------+------------+------------+------------+
| Amounts due under HP and finance leases | | (2,727) | 728 | - | (1,999) |
+------------------------------------------------------+------------+------------+------------+------------+------------+
| Net debt | | (65,794) | 4,572 | (541) | (61,763) |
+------------------------------------------------------+------------+------------+------------+------------+------------+
Notes to the condensed consolidated interim financial statements continued
+-------+-----------------------------------------------------------------------------------------------------------------+
| 16. | Announcement |
| | The half yearly financial report was approved by the Board on 27 May 2009 and copies will be available from the |
| | registered office at Jessop House, 98 Scudamore Road, Leicester, LE3 1TZ or from the website at |
| | www.jessops.com. |
| | |
+-------+-----------------------------------------------------------------------------------------------------------------+
Principal Risks and Uncertainties
Jessops plc operates in a very competitive retail environment and there is an
ongoing risk that sales may be lost to rival businesses. The risks to achieving
the Group's objectives remain those disclosed on page 20 in the Group Report and
Accounts for the year ended 30 September 2008. Furthermore, the Current Trading
and Outlook section of the interim statement provides commentary by the
Executive Chairman concerning the remainder of the financial year.
The funding of the Group continues to represent a risk and this is more fully
explained in note 1 to the condensed interim financial statements.
Responsibility statement of the directors in respect of the half-yearly
financial report
We confirm that to the best of our knowledge:
* the condensed set of financial statements has been prepared in accordance with
IAS 34 Interim Financial Reporting as adopted by the EU;
* the interim management report includes a fair review of the information required
by:
+-----+--------------------------------------------------------------------------------------------------------------+
| (a) | DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have |
| | occurred during the first six months of the financial year and their impact on the condensed set of |
| | financial statements; and a description of the principal risks and uncertainties for the remaining six |
| | months of the year; and |
+-----+--------------------------------------------------------------------------------------------------------------+
| (b) | DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place |
| | in the first six months of the current financial year and that have materially affected the financial |
| | position or performance of the entity during that period; and any changes in the related party transactions |
| | described in the last annual report that could do so. |
+-----+--------------------------------------------------------------------------------------------------------------+
On behalf of the Board
David Adams, Executive Chairman
27 May 2009
Independent review report to Jessops plc
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 29 March
2009 which comprises the condensed consolidated income statement, condensed
consolidated statement of recognised income and expense, condensed consolidated
balance sheet, condensed consolidated cash flow statement and the related
explanatory notes. We have read the other information contained in the
half-yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed
set of financial statements.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Disclosure
and Transparency Rules ("the DTR") of the UK's Financial Services Authority
("the UK FSA"). Our review has been undertaken so that we might state to the
company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company for our review work, for
this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the DTR of the UK FSA.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the EU. The condensed set of
financial statements included in this half-yearly financial report has been
prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the
EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 29 March 2009 is not prepared, in all material
respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK
FSA.
Emphasis of Matter
In forming our review conclusion on the condensed set of financial statements in
the half-yearly financial report, which is not qualified, we have considered the
adequacy of the disclosure made in note 1 concerning the Group's ability to
continue as a going concern. This ability is dependent on three main factors.
First it must continue to operate within available banking facilities, which is
dependent on the Group achieving net cash flows substantially in line with, or
favourable to, projections. Secondly, the Group is dependent on the lenders not
exercising any right to demand immediate repayment of borrowings under those
facilities should they become repayable on demand, and continuing to make the
full amount of those facilities, including undrawn amounts, available until
their maturity. Thirdly, any proposal to comprehensively restructure the group
and the facilities available to it may, depending on the precise nature of any
such restructuring, mean that the group is not able to continue to trade as a
going concern.
These matters, along with other matters, explained in note 1 to the condensed
consolidated interim financial statements, indicate the existence of a material
uncertainty which may cast significant doubt on the Group's ability to continue
as a going concern. The condensed consolidated interim financial statements do
not include the adjustments that would result if the Group were unable to
continue as a going concern.
Wayne Cox
KPMG Audit Plc
Chartered Accountants
St Nicholas Row
31 Park Row
Nottingham
NG1 6FQ
27 May 2009
This information is provided by RNS
The company news service from the London Stock Exchange
END
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