Signet Reports Further Advance; Proposed Final Dividend up 21.5%.LONDON London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. -- Signet Group Signet Group plc is the world's largest speciality retail jeweller. The British based company is listed on the London Stock Exchange and the New York Stock Exchange. The group focuses on the middle mass jewellery market and has number one positions in both the US and UK speciality plc (LSE LSE - Language Sensitive Editor : SIG and NYSE NYSE See: New York Stock Exchange : SIG) today released preliminary results for the 52 weeks ended 29 January January: see month. 2005.
Reported At Constant
Basis Exchange Rates(1)
-- Group profit
before tax: GBP210.3m up 5% up 12%
-- Group sales: GBP1,614.4m up 1% up 8%
-- Group like for like sales up 5%
-- Earnings per share: 8.2p up 9% up 16%
-- Total dividend per share: 3.0p up 20%
(1) See note 10 for reconciliation.
Operational Highlights
-- US: - Increase in operating margin to 13.4%
- Increase in market share to 7.2% of speciality sector
- Kay Jewelers becomes leading speciality retail jewellery
brand by sales
-- UK: - Operating margin broadly maintained at 15.2%
- Diamonds now 28% of product mix
- 142 stores trading in new format
Terry Burman Bur·man adj. 1. Of or relating to the principal, Burmese-speaking ethnic group of Myanmar. 2. Of or relating to Myanmar; Burmese. n. pl. Bur·mans 1. , Group Chief Executive, commented: "The 12% increase in profit before tax at constant exchange rates further extends the Group's growth record and reflects the consistent success of our strategies on both sides of the Atlantic. Reported profit before tax increased by 5% despite being adversely affected by the weaker US dollar. The US business again out-performed its main competition and gained further market share with like for like sales up by 5.9%. The UK division saw like for like sales up by 3.0%, a good performance in an increasingly difficult market place. In the year to date, Group like for like sales growth has been in low single digits after taking account of the change in the timing of Easter Easter [A.S. Eastre, name of a spring goddess], chief Christian feast, commemorating the resurrection of Jesus after his crucifixion. In the West, Easter is celebrated on the Sunday following the full moon next after the vernal equinox (see calendar); thus, it . This reflects a US like for like increase a little ahead of the fourth quarter last year, partly offset by negative mid single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. like for like sales in the UK following a marked deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the general trading environment. Both businesses were up against particularly strong prior year comparatives." Signet operated 1,758 speciality retail jewellery stores at 29 January 2005; these included 1,156 stores in the US, where the Group trades as "Kay KAY Kick Ass Year KAY Kansas Association of Youth Jewelers", "Jared Jared (jâr`ĭd), in the Bible, father of Enoch. It is also spelled Jered. The Galleria Of Jewelry jewelry, personal adornments worn for ornament or utility, to show rank or wealth, or to follow superstitious custom or fashion. The most universal forms of jewelry are the necklace, bracelet, ring, pin, and earring. ", and under a number of regional names. At that date Signet operated 602 stores in the UK, where the Group trades as "H.Samuel Samuel, two books of the Bible, originally a single work, called First and Second Samuel in modern Bibles, and First and Second Kingdoms in the Septuagint. They are considered part of "Deuteronomistic history," in which the book of Deuteronomy functions as the ", "Ernest Jones
Alfred Ernest Jones (January 1, 1879 – February 11, 1958) Welsh neurologist, psychoanalyst and Sigmund Freud’s official biographer. ", and "Leslie Davis Leslie A. Davis was an American diplomat and wartime US consul to Harput, Ottoman Empire from 1914 to 1917, who witnessed the Armenian Genocide. Witnessing the Armenian Genocide ". Chairman's Statement Group Results In the year to 29 January 2005 the Group further extended its growth record. On a reported basis profit before tax rose by 5.3% to GBP GBP In currencies, this is the abbreviation for the British Pound. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 210.3 million (2003/04: GBP199.8 million restated, see note 10) reflecting an underlying increase of 12.1% at constant exchange rates. Like for like sales advanced by 5.0%. Total sales rose by 7.8% at constant exchange rates: reported sales were broadly unchanged at GBP1,614.4 million (2003/04: GBP1,604.9 million restated). The tax rate fell to 32.9% from 35.1%. Earnings per share were 8.2p (2003/04: 7.5p restated), up by 9.3% on a reported basis and 15.5% at constant exchange rates. These results reflect the continuing successful implementation of the Group's strategies on both sides of the Atlantic. However the full extent of the Group's progress has not been reflected in the reported results due to further weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. of the average US dollar
exchange rate from $1.68/GBP1 to $1.86/GBP1. This had a significant
adverse impact on the translation of the US division's sales and
operating profit Operating profit (or loss)Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. into sterling, thereby affecting Group profit before tax by some GBP12 million. The results also included a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. in the UK of GBP1.7 million. The US division had a very strong start to 2004/05 with an excellent performance during the Valentine's Day Valentine's Day: see Saint Valentine's Day. Valentine's Day Lovers' holiday celebrated on February 14, the feast day of St. Valentine, one of two 3rd-century Roman martyrs of the same name. St. period. Although the retail environment became less predictable as the year progressed, the business had a strong fourth quarter with like for like sales up by 4.7%. For the year as a whole the division again out-performed its main competition and gained further market share. 2004 saw the Group's nationwide Kay chain become the largest speciality retail jewellery brand by sales in the US. The UK division also had a particularly strong first quarter but faced a softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. trend in the trading environment during the rest of the year. Annual like for like sales increased by 3.0%; a good performance in an increasingly difficult market place. The Christmas Christmas [Christ's Mass], in the Christian calendar, feast of the nativity of Jesus, celebrated in Roman Catholic and Protestant Churches on Dec. 25. In liturgical importance it ranks after Easter, Pentecost, and Epiphany (Jan. 6). period proved to be particularly challenging and both H.Samuel and Ernest Jones did well to out-perform the general retail market. The Group continued to utilise its cash flow and strong balance sheet to invest in the growth of the business. GBP159.1 million was invested in fixed and working capital during the year. There was an acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. in new store space growth in the US and a major store refurbishment re·fur·bish tr.v. re·fur·bished, re·fur·bish·ing, re·fur·bish·es To make clean, bright, or fresh again; renovate. re·fur programme in the UK. Gearing (net debt to shareholders' funds) at 29 January 2005 was 11.3% (31 January 2004: 11.8% restated). Accounting Standards Developments A period of significant and rapid change in accounting is currently taking place with UK Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ('GAAP') being replaced by International Financial Reporting Standards International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). ('IFRS'), and both converging con·verge v. con·verged, con·verg·ing, con·verg·es v.intr. 1. a. To tend toward or approach an intersecting point: lines that converge. b. with US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . The process this year has resulted in a restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the revenue recognition of extended service agreements in the US and the replacement in 2005/06 of UK GAAP UK GAAP United Kingdom Generally Accepted Accounting Principles by IFRS IFRS International Financial Reporting Standard(s) IFRS Inter Frame Relay Service IFRS Indiana Facilities Registry System . Both are explained in more detail in the financial review. Dividend The Board is pleased to recommend a 21.5% increase in the final dividend to 2.625p per share (2003/04: 2.16p), the total for the year being 3.0p per share (2003/04: 2.501p). The dividend cover is 2.7 times (2003/04: 3.0 times). The Board will continue to review regularly its distribution policy taking into account earnings, cash flow, gearing and the needs of the business. See note 5 regarding dividends to US holders of ordinary shares and ADSs. Current Trading In the year to date Group like for like sales growth has been in low single digits after taking account of the change in the timing of Easter. This reflects a US like for like increase a little ahead of the fourth quarter last year partly offset by negative mid single digit like for like sales in the UK following a marked deterioration in the general trading environment. Both businesses were up against particularly strong prior year comparatives. Chief Executive's Review Group Group operating profit rose to GBP218.9 million from GBP210.2 million (restated), an increase of 11.3% at constant exchange rates or 4.1% on a reported basis. The operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: increased to 13.6% (2003/04: 13.1% restated), and the return on capital employed Return on capital employed (ROCE) Indicator of profitability of the firm's capital investments. Determined by dividing Earnings Before Interest and Taxes by (capital employed plus short-term loans minus intangible assets). ("ROCE ROCE See: Return on capital employed ") was 26.5% (2003/04: 25.9% restated). The Group's medium term objectives are to set leading performance standards in its sector of the jewellery market on both sides of the Atlantic, to increase new store space in the US and store productivity in the UK, and to be broadly cash flow neutral after funding the needs of the business and dividend payments. US Division In 2004/05 the business continued to build on its competitive strengths. It again out-performed its main competition and gained further market share. Operating profit rose by 17.1% at constant exchange rates and by 5.7% on a reported basis to GBP147.3 million (2003/04: GBP139.3 million restated). The five year annual compound growth was 12.2% at constant exchange rates. Like for like sales rose by 5.9% and total dollar sales by 10.3%. The mall mall: see shopping center. (World-Wide Web) mall - A collection of World-Wide Web documents featuring commercial products and services, usually served by one particualr Internet access provider. stores reported solid growth and Jared, the off-mall destination concept, performed particularly strongly. Over the last five years the US division's like for like sales have grown at an annual compound rate of 4.5% and total dollar sales by 11.0%. During the same period, the US division's share of the speciality jewellery market has increased from 5.1% to 7.2%. New store space rose by 8% during 2004/05 further leveraging both central overhead costs overhead costs see fixed costs. and marketing expenditure. In the last five years new store selling space has increased by some 60%, with the number of Kay stores up by over a third to 742. Over the same period the number of Jared stores has more than tripled to 93. Growth in new store space and further development of the division's competitive strengths in the critical areas of merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. , store operations and marketing have contributed significantly to the out-performance of the business and remain key elements of future strategy. Given the continuing consolidation in the speciality jewellery sector, there should be opportunities to gain further market share both organically and, if appropriate, by acquisition. The US division is now targeting organic space growth of 7% - 9% in future years (previously 6% - 8%). UK Division Against the background of an increasingly difficult trading environment UK operating profit advanced by 2.1% to GBP78.2 million (2003/04: GBP76.6 million), the compound five year annual growth rate being 15.8%. There was a restructuring charge of GBP1.7 million reflecting the relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. and consolidation of central administration functions to enhance efficiency that should generate future cost savings of about GBP0.6 million per annum Per annum Yearly. . Like for like sales rose by 3.0%, the compound annual growth rate during the last five years being 6.3%. The business continues to be strongly cash generative gen·er·a·tive adj. 1. Having the ability to originate, produce, or procreate. 2. Of or relating to the production of offspring. generative pertaining to reproduction. and enjoyed a ROCE of over 40% in 2004/05. The drive to increase diamond sales as a proportion of total sales showed further success and remains central to the future strategy of both H.Samuel and Ernest Jones. Diamonds now account for 28% of the division's product mix compared with 22% five years ago. The objective is to leverage both chains' strong market positions by increasing average transaction values which have risen by 42% in H.Samuel and by 29% in Ernest Jones in the last five years. Central to selling diamonds is the interaction between the customer and the salesperson. The roll-out of the new store format, which facilitates such interaction, was implemented as part of the store refurbishment cycle in 2004/05. The focus on customer service was also evident in the priority given to staff training. The significant changes taking place in the UK business are being supported by increased marketing expenditure. In implementing these initiatives the UK business is able to draw on the US division's best practices.
US Performance Review (68% of Group sales)
Details of the US division's performance are set out below:
Change Like for
Reported At constant like
exchange change
2004/05 2003/04(1) rates(2)
GBPm GBPm % % %
Sales 1,100.0 1,103.9 -0.4 +10.3 +5.9
Operating profit 147.3 139.3 +5.7 +17.1
Operating margin 13.4% 12.6%
ROCE 22.4% 21.3%
(1) Restated for amendment to FRS 5 by 'Application Note G -
Revenue Recognition'.
(2) See Note 10 for reconciliation.
The operating margin improved on last year, reflecting leverage of like for like sales growth partly offset by the adverse impact of immature immature /im·ma·ture/ (im?ah-chldbomacr´) unripe or not fully developed. im·ma·ture adj. Not fully grown or developed. immature unripe or not fully developed. store space. Gross margin was maintained at last year's level, as a range of supply chain initiatives and pricing actions counter-balanced adj. 1. brought into equipoise by means of a weight or force that offsets another. commodity cost increases. Commodity costs continue to rise and further initiatives are being implemented in the current year to help again offset the impact. The bad debt charge was towards the bottom of the range of the last five years at 2.9% of total sales (2003/04: 2.8%). The proportion of sales through the in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. credit card was 50.1% (2003/04: 49.3%). In the jewellery sector superior customer service and product knowledge are important competitive advantages readily identified by the consumer, and the division now has at least one certified See certification. diamontologist in every store. Also during 2004/05 all sales staff were coached using the "Ultimate Diamond Presentation" training course. Procedures for recruitment recruitment /re·cruit·ment/ (re-krldbomact´ment) 1. the gradual increase to a maximum in a reflex when a stimulus of unaltered intensity is prolonged. 2. were strengthened and staff retention was also improved. The multi-year initiative to enhance store systems saw the introduction of improved repair and special order services. In mall stores the upper end of the diamond selection was enhanced and the Leo Diamond The Leo Diamond is a higher-quality certified and branded diamond sold by various retail jewelers. It is exclusively hand-cut by Leo Schachter Diamonds LLC, a fourth generation family-owned company. range was successfully expanded. The gold category was reinvigorated re·in·vig·o·rate tr.v. re·in·vig·o·rat·ed, re·in·vig·o·rat·ing, re·in·vig·o·rates To give new life or energy to. re by the development of fashion gold merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the World Gold Council. In Jared sales of loose diamonds, the Leo Diamond range, luxury watches such as Rolex Rolex SA is a Swiss manufacturer of mostly mechanical wristwatches and accessories renowned for their dependability, prestige, and cost (from a few thousand to more than one hundred thousand U.S. dollars). Rolex watches are considered status symbols by many. , Tag Heuer TAG Heuer (pronounced: täg-hoi-er) is a Swiss watchmaker known for its mid - high range sports watches and chronographs. It is a division of leading luxury goods company LVMH. The company motto is "Swiss Avant-Garde Since 1860". and Raymond Weil Raymond Weil, Geneve, is a Swiss watch manufacturer based in Geneva, Switzerland. It was founded in 1976 by Raymond Weil, who before that time was a watch designer for other manufacturers. He has since retired from the day to day running of the company. all performed well. Cartier watches will be tested in certain Jared stores in 2005/06. Average unit selling prices in both the mall stores and Jared increased by some 10% reflecting not only consumer movement to higher value merchandise such as the Leo Diamond range, but also the changes in retail prices implemented during the year. The division's competitive advantage obtained by sourcing loose stones for about 55% of diamond merchandise proved to be particularly beneficial during a period of higher rough diamond costs. Strong marketing programmes again contributed to the sales growth out-performance. Kay television advertising impressions were increased by 11% over the Christmas period and national radio advertising was successfully introduced. Some 90% of Jared stores benefited from television advertising compared with around 75% in the prior year. The annual gross marketing spend amounted to 6.6% of sales (2003/04: 6.5%) and dollar marketing expenditure has doubled over the last five years. Kay, with turnover of $1,155.5 million, became the number one speciality jewellery brand by sales during 2004/05 having consistently out-performed its major competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. . Over the last five years the number of Kay stores has increased by almost 200 to a total of 742 and average sales per store have grown to $1.584 million from $1.355 million. Brand name recognition has risen very significantly since the introduction of the "Every kiss begins with Kay" advertising campaign in 2000/01. It is planned to increase Kay's representation in malls by between 20 and 30 new stores in 2005/06. In addition to mall locations, stores under the Kay brand are currently being opened in lifestyle centres and power strip malls strip mall n. A shopping complex containing a row of various stores, businesses, and restaurants that usually open onto a common parking lot. Noun 1. . Ten such stores were opened in 2004/05 and a similar number are planned in 2005/06. In the current year it is anticipated that four stores will be trialled in metropolitan areas. 321 mall stores currently trade under strong regional brand names. Sales in the year were over $450 million, reflecting average sales per store of $1.533 million. The regional stores could provide the potential to develop a second mall brand of sufficient size to justify the cost of national television advertising. This would require about 550 stores which could be achieved in the medium term by a mixture of store openings and acquisitions. In 2005/06 it is planned that 20 to 30 new stores will be opened under the regional brand names. Jared now has sales of just over $400 million and a portfolio of 93 stores, equivalent in space terms to about 400 mall stores. The Jared concept is the primary vehicle for US space growth and in 2004/05 a further 14 stores were opened. The chain is still relatively immature with some 70% of stores not yet having traded for five full years. Excluding the three prototype Prototype A first or original model of hardware or software. Prototyping involves the production of functionally useful and trustworthy systems through experimentation with evolving systems. stores the 25 Jared stores that have reached maturity achieved, in aggregate, the target level of sales and store contribution (set at the time of investment) in their fifth year of trading. During 2005/06 it is intended to increase the number of Jared openings to 15 - 20 per annum, from the 12 - 15 per annum opened in the last six years.
The change in store numbers by chain is shown in the following table:
Total Kay Regional Jared
----------------------------------
31 January 2004 1,103 717 307 79
Store openings 68 34 20 14
Store closures -
(15) (9) (6)
----------------------------------
29 January 2005 1,156 742 321 93
----------------------------------
In 2004/05 total fixed and working capital investment in the US business was $228.3 million (2003/04: $138.3 million) and new store space increased by a net 8% as planned.
Recent investment in the store portfolio is set out below:
2004/05 2003/04 2002/03 2001/02 2000/01
----------------------------------------
Store refurbishments and
relocations 76 56 71 91 99
New mall stores 44 47 36 41 40
New off-mall Kay stores 10 10 - - -
New Jared stores 14 12 12 12 15
Store fixed capital investment $53m $42m $38m $51m $60m
Store total investment(1) $140m $98m $92m $96m $107m
(1) Fixed and working capital investment in new space and
refurbishments / relocations.
In 2005/06 net new store space growth of 7% - 9% is planned reflecting the increased rate of Jared store openings, an acceleration in the expansion of stores under regional brand names, the continued growth of Kay stores and the closure of some 15 mall stores. Total US fixed capital expenditure is expected to be some $90 to $100 million in 2005/06 (2004/05: $77.6 million), including the refurbishment or relocation of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 90 stores. Total store investment, including working capital, is planned to be some $155 million in 2005/06.
UK Performance Review (32% of Group sales)
Details of the UK division's performance are set out below:
Change Like for
2004/05 2003/04 like change
GBPm GBPm % %
Sales: H.Samuel 286.5 285.8 -0.1 +1.9
Ernest Jones 223.4 209.4 +6.7 +4.5
Other 5.5 5.8
------------- ------------
Total 514.4 501.0 +2.7 +3.0
------------- ------------
Operating profit 78.2(1) 76.6 +2.1
Operating margin 15.2%(1) 15.3%
ROCE 44.7% 47.1%
(1)After charging a restructuring expense of GBP1.7 million.
The division's gross margin benefited from the effect of the lower dollar exchange rate on dollar denominated commodity costs. The operating margin at 15.2% was little changed after absorbing ab·sorb tr.v. ab·sorbed, ab·sorb·ing, ab·sorbs 1. To take (something) in through or as through pores or interstices. 2. To occupy the full attention, interest, or time of; engross. a restructuring charge of GBP1.7 million. Like for like sales were up by 1.9% in H.Samuel, while total sales were similar to last year due to nine net store closures and a significant increase in the number of temporary closures for refurbishment. H.Samuel's sales per store increased to GBP0.723 million (2003/04: GBP0.707 million). Ernest Jones had another strong performance with like for like sales up 4.5%, total sales increasing by 6.7% and sales per store reaching GBP1.15 million (2003/04: GBP1.101 million). Diamond jewellery assortments were enhanced during the year and continued to perform strongly, accounting for 20% of sales in H.Samuel and 38% in Ernest Jones. The Leo Diamond range was expanded in Ernest Jones and the Forever Diamond selection is now in all H.Samuel stores. White metal jewellery also proved popular. In H.Samuel the fashion watch range was increased whilst the gift and collectibles selection continued to be rationalised. The average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. in H.Samuel was GBP37 (2003/04: GBP35) and in Ernest Jones GBP141 (2003/04: GBP139). The focus on diamonds requires a higher level of customer service and greater product knowledge by the store staff. New training practices continued to be enhanced in 2004/05 involving a weekly programme of centrally prepared material, regular feedback from supervisors and emphasis on measurable outcomes. Particular benefit from improved staff training was gained in the diamond category. During the year a new incentive scheme, which drew on the Group's US experience, was tested and will be expanded further in 2005/06. Catalogues remain the main marketing tool, with design and distribution being strengthened during the period. The television advertising test was extended during Christmas 2004 with H.Samuel national coverage increasing to about 65% from around 40% in the prior year. Ernest Er´nest n. 1. See Earnest. Jones' coverage was doubled to some 60%. It is planned to continue the trial in 2005/06. Ernest Jones successfully launched a customer relationship marketing programme during 2004/05. Over the last five years marketing expenditure has increased at an annual compound rate of 20.0% and now represents 3.0% of sales in 2004/05 (2003/04: 2.5%). In 2004/05 total fixed and working capital investment in the UK business was GBP36.3 million (2003/04: GBP27.5 million), a significant increase reflecting the roll-out of the new store format. At the year end, 142 stores, mostly H.Samuel, traded in the new format, accounting for about 30% of the UK division's sales over the Christmas period. There were seven Ernest Jones and two H.Samuel new store openings. 11 H.Samuel stores were closed. At the year end there were 602 stores (398 H.Samuel and 204 Ernest Jones).
Recent investment in the store portfolio is set out below:
2004/05 2003/04 2002/03 2001/02 2000/01
----------------------------------------
Store refurbishments and
relocations 81 32 42 93 24
New H.Samuel stores 2 - 4 10 9
New Ernest Jones stores 7 5 8 9 3
Store fixed capital investment GBP23m GBP13m GBP14m GBP15m GBP6m
A similar pattern of store investment is planned for 2005/06 with total capital expenditure expected to be some GBP30 to GBP35 million in 2005/06 (2004/05: GBP28.8 million). This reflects the continued roll-out of the new store format with about 90 stores planned to be refurbished or relocated re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. during 2005/06, again predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. H.Samuel. Group Financial Review Operating Margin and ROCE Operating margin (operating profit to sales ratio) was 13.6% (2003/04: 13.1% restated) and ROCE was 26.5% (2003/04: 25.9% restated). Capital employed Capital Employed 1. The total amount of capital used for the acquisition of profits. 2. The value of all the assets employed in a business. 3. Fixed assets plus working capital. 4. Total assets less current liabilities. is based on the average of the monthly balance sheets and at 29 January 2005 included US in-house credit card debtors amounting to GBP319.0 million (31 January 2004: GBP292.9 million). Group Costs Group central costs amounted to GBP6.6 million (2003/04: GBP5.7 million), the increase reflecting costs associated with the new corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. standards in both the UK and the US as well as a net property provision of GBP0.4 million. In 2005/06 a further increase in Group costs is anticipated. Net Interest Payable Net interest payable and similar charges amounted to GBP8.6 million (2003/04: GBP10.4 million), the reduction being primarily due to exchange translation and an increase in the net interest credit on the UK defined benefit pension scheme. Taxation The charge of GBP69.1 million (2003/04: GBP70.2 million restated) represents an effective tax rate of 32.9% (2003/04: 35.1%). It is anticipated that the effective tax rate will be approximately 34.0% in 2005/06. Profit for the Financial Period Profit for the year increased by 9.0% to GBP141.2 million (2003/04: GBP129.6 million restated); at constant exchange rates the increase was 16.0%. Liquidity and Capital Resources Cash generated from operating activities amounted to GBP172.6 million (2003/04: GBP203.8 million), reflecting an increase in working capital investment, primarily associated with the new store expansion. It is anticipated that in 2005/06 there will be a further rise in working capital investment due to planned store openings. Net financing costs Net financing cost Also called the cost of carry or, simply carry, the difference between the cost of financing the purchase of an asset and the asset's cash yield. Positive carry means that the yield earned is greater than the financing cost; negative carry means that the of GBP9.8 million (2003/04: GBP11.0 million) and tax of GBP56.5 million (2003/04: GBP69.0 million) were paid. Cash flow before investing activities was GBP106.3 million (2003/04: GBP123.8 million). Group capital expenditure was GBP70.5 million (2003/04: GBP50.9 million, GBP47.7 million at constant exchange rates). The level of capital expenditure was some 1.7 times (2003/04: 1.3 times) the depreciation charge of GBP41.3 million (2003/04: GBP39.3 million). Capital expenditure in 2005/06 is expected to be GBP80 - GBP90 million, most of which will be store related. Dividends of GBP43.8 million (2003/04: GBP36.7 million) were paid in the year. Net Debt Net debt at 29 January 2005 was GBP83.5 million (31 January 2004: GBP79.9 million, GBP73.9 million restated at constant exchange rates). Group gearing at the year end was 11.3% (31 January 2004: 11.8% restated). Excluding the facility secured on the receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed , net cash was GBP49.3 million (31 January 2004: GBP58.0 million). Prior Year Adjustment - Extended Service Agreements Following an amendment to FRS FRS abbr. Fellow of the Royal Society FRS, n “flexed rotated side-bent,” an osteopathic abbreviation used to describe vertebral position in cases of spinal dysfunction. 5 "Reporting the substance of transactions" in the form of "Application Note G - Revenue Recognition", the Group, after discussions with its auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together , changed its accounting policy to spread the revenue arising from extended service agreements in the US over the anticipated period of claims. Previously the revenue from such agreements was recognised at the date of sale with provision being made for the estimated cost of future claims arising. As a consequence of this change in policy, previously reported 2003/04 results were restated at the time of the interim results announcement in September September: see month. 2004 and reflected a reduction in profit before tax of GBP7.2 million, but with no impact on cash flows. In view of the continuing trend towards conforming con·form v. con·formed, con·form·ing, con·forms v.intr. 1. To correspond in form or character; be similar. 2. interpretation of UK and IAS See iPlanet Application Server. 1. (computer) IAS - The first modern computer. It had main registers, processing circuits, information paths within the central processing unit, and used Von Neumann's fetch-execute cycle. GAAP methodologies to those of US GAAP, the Group has now decided to further update its accounting policy in respect of US extended service agreements to conform with that of US GAAP. Consequently it reassessed the level of incremental costs Costs which are additional costs to the Service appropriations that would not have been incurred absent support of the contingency operation. See also financial management. set against initial revenues and will now recognise revenues from such agreements in proportion to anticipated claims arising. Therefore the prior year adjustment to 2003/04 now amounts to a restatement in profit before tax of GBP12.1 million to GBP199.8 million. The effect on reserves brought forward at 31 January 2004 is a reduction of GBP52.7 million net of deferred tax, with shareholders' funds at that date restated to GBP674.9 million. Following the further update in accounting policy, the reduction in the profit before tax for the year 2004/05 is GBP4.0 million higher than the estimate of GBP5.8 million indicated at the time of the interim results in September 2004. There is no impact on like for like sales figures sales figures npl → cifras fpl de ventas or cash flows. International Financial Reporting Standards ("IFRS") Signet currently prepares its primary financial statements under UK Generally Accepted Accounting Principles ("UK GAAP"). For financial years commencing on or after 1 January 2005 the Group is required to report in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with International Accounting Standards ("IAS") and IFRS as adopted by the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community . Therefore Signet will in future prepare its results under IFRS, commencing with the 13 weeks to 30 April 2005. This announcement will contain comparative information for the year ended 29 January 2005 prepared under IFRS. IFRS may continue to be revised and be subject to new interpretations. Based on current expectations of the standards an overview of the changes from UK GAAP to IFRS for the Signet accounts for the year ended 29 January 2005 is set out below.
Overview of impact in 2004/05
UK GAAP IFRS
GBPm GBPm
Sales 1,614.4 1,606.1
Operating profit 218.9 215.5
Profit on ordinary activities before tax 210.3 203.9
Profit for the financial period 141.2 134.8
Earnings per share 8.2p 7.8p
Net assets 739.1 769.2
The most significant elements contributing to the change in
financial information are:
-- the inclusion of a charge for share-based payments,
-- the cessation of goodwill amortisation,
-- the timing of dividend recognition,
-- the disclosures relating to taxation,
-- the treatment of leases, and
-- revenue recognition.
These changes have no impact on the Group's historical or future net cash flow, the timing of cash received or the timing of payments. Transitional Arrangements The rules for the first time adoption of IFRS are set out in IFRS 1 "First-time Adoption of International Reporting Standards". In general, a company is required to determine its IFRS accounting policies and apply these retrospectively ret·ro·spec·tive adj. 1. Looking back on, contemplating, or directed to the past. 2. Looking or directed backward. 3. Applying to or influencing the past; retroactive. 4. to determine its opening balance sheet under IFRS. A number of exceptions from retrospective LAW, RETROSPECTIVE. A retrospective law is one that is to take effect, in point of time, before it was passed. 2. Whenever a law of this kind impairs the obligation of contracts, it is void. 3 Dall. 391. application are allowed to assist companies as they move to reporting under IFRS. Where Signet has taken advantage of the exemptions they are noted below. Changes in Accounting Policies IFRS 2 Share-based Payments In accordance with IFRS 2, Signet has recognised a charge to income in respect of the fair value of outstanding employee share options. The fair value has been calculated using the binomial binomial (bī'nō`mēəl), polynomial expression (see polynomial) containing two terms, for example, x+y. The binomial theorem, or binomial formula, gives the expansion of the nth power of a binomial (x+ options valuation model and is charged to income over the relevant option vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: period. The optional transitional arrangements, which allow companies to apply IFRS 2 fully retrospectively to all options granted but not fully vested vested adj. referring to having an absolute right or title, when previously the holder of the right or title only had an expectation. Examples: after 20 years of employment Larry Loyal's pension rights are now vested. (See: vest, vested remainder) at the relevant reporting date, have been used. The operating profit impact in 2004/05 is a charge of GBP3.9 million. IFRS 3 Business Combinations IFRS 3 requires goodwill to be carried at cost with impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. reviews both annually and when there are indications that the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. may not be recoverable. Under the transitional arrangements Signet will apply IFRS 3 prospectively from the transition date. As a result, all prior business combination accounting is frozen at the transition date of 31 January 2004, and the value of goodwill is frozen, subject to exchange rate movements, at GBP16.8 million with amortization previously reported under UK GAAP for 2004/05 of GBP1.0 million not charged for IFRS presentation. IAS 10 Proposed Dividend Under IAS 10 a dividend is not provided for until it is approved. As a result net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. are increased by the value of the proposed final dividend which is GBP45.5 million. IAS 12 Income Tax The application of IAS 12 requires the separate disclosure of deferred tax assets and liabilities on the Group's balance sheet. Opening balance sheet adjustment will be made to reclassify Verb 1. reclassify - classify anew, change the previous classification; "The zoologists had to reclassify the mollusks after they found new species" class, classify, sort out, assort, sort, separate - arrange or order by classes or categories; "How would you these assets and liabilities. IAS 17 Leasing IAS 17 requires that where operating leases Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. include clauses in respect of predetermined pre·de·ter·mine v. pre·de·ter·mined, pre·de·ter·min·ing, pre·de·ter·mines v.tr. 1. To determine, decide, or establish in advance: rent increases, those rents are charged to the profit and loss account on a straight line basis over the lease term. Furthermore, any construction period or other rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. holidays are included in the determination of the straight-line straight-line adj. 1. Lying in a straight line. 2. Relating to a device whose linkage produces or copies motion in straight lines. 3. expense period. Such lease terms are commonly found in the US and will result in an acceleration of lease charges for accounting purposes from the later to the earlier years of the lease term. In addition Standard Interpretations Committee ("SIC") 15 requires inducements to enter into a lease to be recognised over the lease term rather than over the period to the next rent review as under UK GAAP. These will result in an additional charge to the profit and loss account of GBP3.5 million and a decrease of GBP17.9 million in net assets before deferred tax. There will be no impact on cash flows. IAS 18 Revenue Recognition IAS 18 requires that revenue is only recognised when all significant risks of ownership have been transferred to the buyer. There is no impact on profit before tax for 2004/05 although net assets are reduced by GBP6.0 million before deferred tax. There are a number of other presentational changes that do not have an impact on the profit or net assets of the Group. Insurance income and voucher A receipt or release which provides evidence of payment or other discharge of a debt, often for purposes of reimbursement, or attests to the accuracy of the accounts. promotions in the US and only the commission element of warranty An assurance, promise, or guaranty by one party that a particular statement of fact is true and may be relied upon by the other party. Warranties are used in a variety of commercial situations. In many instances a business may voluntarily make a warranty. sales in the UK, will be recognised in sales. Interest receivable relating to US credit card receivables will be classified as other operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. . IAS 32 and 39 Financial Instruments The Group has taken the exemption exemption n. 1) in income taxation, a credit given for each dependent, blindness or other disability, and age over 65, which result in a downward calculation in tax levels. not to restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state comparatives for IAS 32 'Financial Instruments: Disclosure and Presentation' and IAS 39 'Financial Instruments: Recognition and Measurement'. As a result, the comparative information in the 2005/06 accounts will be presented on the existing UK GAAP basis. IAS 32 and IAS 39 will apply from the start of the financial year ending 28 January 2006. The Group intends to apply the hedge accounting Why is hedge accounting necessary? Many financial institutions and corporate businesses (entities) use derivative financial instruments to hedge their exposure to different risks (eg interest rate risk, foreign exchange risk, commodity risk, etc). provisions of IAS 39 as they relate to forward currency and commodity contracts to the extent practically and economically ec·o·nom·i·cal adj. 1. Prudent and thrifty in management; not wasteful or extravagant. See Synonyms at sparing. 2. Intended to save money, as by efficient operation or elimination of unnecessary features; economic: appropriate in order to minimise Verb 1. minimise - represent as less significant or important downplay, understate, minimize inform - impart knowledge of some fact, state or affairs, or event to; "I informed him of his rights" future volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the arising from its implementation.
Reconciliation of UK GAAP sales and profit before tax to IFRS
sales and profit before tax for the 52 weeks ended 29 January 2005
Sales Profit before tax
GBPm GBPm
As reported in accordance with UK GAAP 1,614.4 210.3
Principal accounting adjustments
Share-based payments - (3.9)
Goodwill amortisation - 1.0
Leases - (3.5)
Principal presentational adjustments
US insurance income 10.4 -
Voucher promotions (12.0) -
UK warranty sales (6.7) -
---------------------------
Proposed reporting in accordance with
IFRS 1,606.1 203.9
---------------------------
Reconciliation of UK GAAP net assets to IFRS net assets as at 29
January 2005
Net assets
GBPm
As reported in accordance with UK GAAP 739.1
Principal adjustments
Share-based payments -
Goodwill amortisation 1.0
Leases (17.9)
Voucher promotions (6.0)
Deferred taxation 7.5
Dividend recognition 45.5
-----------
Proposed reporting in accordance with IFRS 769.2
-----------
Summary of Fourth Quarter Results (Unaudited)
13 weeks 13 weeks
ended ended Like
29 January 31 January for
2005 2004 like
restated(1) change
GBPm GBPm %
Sales
UK 215.9 212.0 +1.4
US 442.4 442.6 +4.7
---------------------------
658.3 654.6 +3.6
---------------------------
Operating profit
UK - Trading 67.4 64.7
- Group central
costs (1.8) (1.4)
---------------------------
65.6 63.3
US(2) 91.1 90.4
---------------------------
Total operating profit 156.7 153.7
Interest (1.0) (1.1)
---------------------------
Profit before tax 155.7 152.6
Taxation (50.6) (53.7)
---------------------------
Profit for the period 105.1 98.9
---------------------------
EPS - basic 6.0p 5.7p
- diluted 6.0p 5.7p
(1) Restated for the implementation of the amendment to FRS 5,
'Application Note G - Revenue Recognition'.
(2) After goodwill amortisation of GBP0.2 million (2003/04: GBP0.2
million).
The Board of Directors approved this statement of preliminary results on 6 April 2005. There will be an analysts' presentation at 2.00 p.m. BST (convention) BST - British Summer Time. The name for daylight-saving time in the UK GMT time zone. time today (9.00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy time). For all interested parties there will be a simultaneous audio webcast plus slides available at www.signetgroupplc.com and a live telephone conference call. The details for the conference call are: European dial-in: +44 (0) 20 7784 1018 Replay: +44 (0) 20 7984 7578 Pass code: 9614990 US dial-in: +1 718 354 1171 Replay: +1 718 354 1112 Pass code: 9614990 A video webcast of the presentation is expected to be available on the Group web site (www.signetgroupplc.com) from close of business on 6 April 2005. High resolution photographs are available to the media at www.newscast newscast Radio or television broadcast of news events. News gathering and broadcasting by the radio networks began in the mid-1930s and increased significantly during World War II. The television newscast began in 1948 with 15-minute programs that resembled movie newsreels. .co.uk +44 (0) 20 7608 1000. The next announcement is expected to be that for the first quarter 2005/06 sales figures, which is scheduled for release on 5 May 2005. This release includes statements which are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements, based upon management's beliefs as well as on assumptions made by and data currently available to management, appear in a number of places throughout this release and include statements regarding, among other things, our results of operation, financial condition, liquidity, prospects, growth, strategies and the industry in which the Group operates. Our use of the words "expects," "intends," "anticipates," "estimates," "may," "forecast," "objective," "plan" or "target," and other similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties, including but not limited to general economic conditions, the merchandising, pricing and inventory policies followed by the Group, the reputation of the Group, the level of competition in the jewellery sector, the price and availability of diamonds, gold and other precious metals Precious Metals Valuable metals such as gold, iridium, palladium, platinum, and silver. Notes: Investing in precious metals can be done either by purchasing the physical asset, or by purchasing futures contracts for the particular metal. , seasonality of the Group's business and financial market risk. For a discussion of these and other risks and uncertainties which could cause actual results to differ materially, see the "Risk and Other Factors" section of the Company's 2003/04 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission on April 22, 2004 and other filings made by the Company with the Commission. Actual results may differ materially from those anticipated in such forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. therein may not be realised. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or .
Consolidated profit and loss account
for the 52 weeks ended 29 January 2005
52 weeks 52 weeks
ended ended
29 January 31 January
2005 2004 as
restated(1) Notes
------------------------------------ --------- ----------- ------
GBPm GBPm
------------------------------------ -------- ----------- ------
Sales 1,614.4 1,604.9 2
------------------------------------ -------- ----------- -----
Operating profit 218.9 210.2 2
Net interest payable and similar
charges (8.6) (10.4)
------------------------------------ -------- ----------- ------
Profit on ordinary activities before
taxation 210.3 199.8
Tax on profit on ordinary activities (69.1) (70.2) 4
------------------------------------ -------- ----------- ------
Profit for the financial period 141.2 129.6
Dividends (52.0) (43.2) 5
------------------------------------ -------- ----------- ------
Retained profit attributable to
shareholders 89.2 86.4
------------------------------------ -------- ----------- ------
Earnings per share - basic 8.2p 7.5p 6
- diluted 8.1p 7.5p 6
------------------------------------ -------- ----------- ------
All of the above relates to continuing activities.
(1) Restated for the implementation of the amendment to FRS 5,
'Application Note G - Revenue Recognition' (see note 9).
Consolidated balance sheet
at 29 January 2005
29 January 31 January
2005 2004
as
restated(1) Notes
------------------------------------------ -------- ------------ -----
GBPm GBPm
------------------------------------------ -------- ------------ -----
Fixed assets:
Intangible assets 15.2 16.8
Tangible assets 226.8 202.8
------------------------------------------ -------- ------------ -----
242.0 219.6
------------------------------------------ -------- ------------ -----
Current assets:
Stocks 578.3 541.5
Debtors (2) 375.3 365.2
Cash at bank and in hand 102.4 128.0
------------------------------------------ -------- ------------ -----
1,056.0 1,034.7
Creditors: amounts falling due within one
year (351.6) (365.6)
------------------------------------------ -------- ------------ -----
Net current assets (2) 704.4 669.1
------------------------------------------ -------- ------------ -----
Total assets less current liabilities 946.4 888.7
Creditors: amounts falling due after more
than one year (200.2) (208.6)
Provisions for liabilities and charges:
Other provisions (5.8) (6.4)
Pension (liability)/asset (1.3) 1.2
------------------------------------------ -------- ------------ -----
Total net assets 739.1 674.9 2
------------------------------------------ -------- ------------ -----
Capital and reserves - equity:
Called up share capital 8.7 8.6
Share premium account 68.0 60.7
Revaluation reserve 4.3 3.1
Special reserves 155.9 142.2
Profit and loss account 502.2 460.3
------------------------------------------ -------- ------------ -----
Shareholders' funds 739.1 674.9 7
------------------------------------------ -------- ------------ -----
Consolidated statement of total recognised gains and losses
for the 52 weeks ended 29 January 2005
52 weeks 52 weeks
ended ended
29 January 31 January
2004 2005
as restated(1)
------------------------------------------- ------------ ------------
GBPm GBPm
------------------------------------------- ------------ ------------
Profit for the financial period 141.2 129.6
Translation differences (33.0) (91.0)
Actuarial (loss)/gain arising on pension
asset (net of deferred tax) (3.9) 6.4
------------------------------------------- ------------ ------------
Total recognised gains and losses 104.3 45.0
Prior year adjustments (note 9) (52.7) -
- amendment to FRS 5
- FRS 17 - (18.1)
------------------------------------------- ------------ ------------
Total recognised gains and losses 51.6 26.9
------------------------------------------- ------------ ------------
(1) Restated for the implementation of the amendment to FRS 5,
'Application Note G - Revenue Recognition' (see note 9).
(2) Debtors and net current assets include amounts recoverable after
more than one year of GBP4.3 million (2004: GBP26.9 million).
Consolidated cash flow statement
for the 52 weeks ended 29 January 2005
52 weeks 52 weeks Notes
ended ended
29 31
January January
2005 2004
--------------------------------------------- -------- --------- -----
GBP m GBP m
--------------------------------------------- -------- --------- -----
Net cash inflow from operating activities 172.6 203.8 8a
--------------------------------------------- -------- --------- -----
Returns on investments and servicing of
finance:
Interest received 1.8 0.9
Interest paid (11.6) (11.9)
--------------------------------------------- -------- --------- -----
Net cash outflow from returns on investments
and servicing of finance (9.8) (11.0)
--------------------------------------------- -------- --------- -----
Taxation paid (56.5) (69.0)
--------------------------------------------- -------- --------- -----
Capital expenditure:
Purchase of tangible fixed assets (70.5) (50.9)
Proceeds from sale of tangible fixed assets 0.2 0.2
--------------------------------------------- -------- --------- -----
Net cash outflow from capital expenditure (70.3) (50.7)
--------------------------------------------- -------- --------- -----
Equity dividends paid (43.8) (36.7)
--------------------------------------------- -------- --------- -----
Cash (outflow)/inflow before use of liquid
resources and financing (7.8) 36.4
--------------------------------------------- -------- --------- -----
Management of liquid resources:
Decrease/(increase) in bank deposits 24.5 (42.4)
--------------------------------------------- -------- --------- -----
Financing:
Proceeds from issue of shares 7.3 6.3
Purchase of own shares (9.5) -
Repayment of bank loans (8.1) (12.1)
--------------------------------------------- -------- --------- -----
Cash outflow from financing (10.3) (5.8)
--------------------------------------------- -------- --------- -----
Increase/(decrease) in cash in the period 6.4 (11.8)
--------------------------------------------- -------- --------- -----
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash in the period 6.4 (11.8)
Cash outflow from decrease in debt 8.1 12.1
Cash (inflow)/outflow from (decrease)/increase
in liquid resources (24.5) 42.4
--------------------------------------------- -------- --------- -----
Change in net debt resulting from cash flows (10.0) 42.7
Translation difference 6.4 17.5
--------------------------------------------- -------- --------- -----
Movement in net debt in the period (3.6) 60.2
Opening net debt (79.9) (140.1)
--------------------------------------------- -------- --------- -----
Closing net debt (83.5) (79.9) 8b
--------------------------------------------- -------- --------- -----
Notes
for the 52 weeks ended 29 January 2005
1. Basis of preparation
This financial information has been prepared in accordance with
applicable UK accounting standards and under the UK historical cost
convention as modified by the revaluation of freehold and long
leasehold properties. It is prepared on the basis of the accounting
policies as set out in the accounts for the 52 weeks ended 29 January
2005.
2. Segment information
2005 2004
---------------------------------------------------- -------- --------
GBP m GBP m
---------------------------------------------------- -------- --------
Sales by origin and destination(1):
UK 514.4 501.0
US 1,100.0 1,103.9
---------------------------------------------------- -------- --------
1,614.4 1,604.9
---------------------------------------------------- -------- --------
Operating profit(1):
UK - Trading 78.2 76.6
- Group central costs(2) (6.6) (5.7)
---------------------------------------------------- -------- --------
71.6 70.9
US 147.3 139.3
---------------------------------------------------- -------- --------
Total 218.9 210.2
---------------------------------------------------- -------- --------
2005 2004
---------------------------------------------------- -------- --------
GBP m GBP m
---------------------------------------------------- -------- --------
Net assets(1):
UK 222.9 209.9
US 599.7 544.9
Net debt (83.5) (79.9)
---------------------------------------------------- -------- --------
739.1 674.9
---------------------------------------------------- -------- --------
Notes:
The figures for the UK include the United Kingdom, Channel Islands and
Republic of Ireland.
The Group's results derive from one business segment - the retailing
of jewellery, watches and gifts.
(1) 2004 restated for the implementation of the amendment to FRS 5,
'Application Note G - Revenue Recognition' (see note 9).
(2) Group central costs for 2005 include a charge of GBP0.4 million
relating to a property provision.
Notes
for the 52 weeks ended 29 January 2005
3. Foreign currency translation
The exchange rates used for translation of US dollar transactions and
balances in these accounts are as follows:
2005 2004
---------------------------------------------------------- ----- -----
Profit and loss account (average rate) 1.86 1.68
Balance sheet (year end rate) 1.89 1.82
---------------------------------------------------------- ----- -----
The effect of translation on foreign currency borrowings less
deposits in the period was to decrease the Group's net borrowings by
GBP6.4 million (2004: GBP17.5 million decrease). The net effect of
exchange rate movements on foreign currency investments (excluding
goodwill) and foreign currency borrowings less deposits in the period
was a loss of GBP19.3 million (2004: GBP50.5 million loss). This
amount has been taken to reserves in accordance with SSAP 20.
4. Taxation
2005 2004(1)
-------------------------------------------------------- ----- -------
GBP m GBP m
-------------------------------------------------------- ----- -------
Taxes on profit:
UK corporation tax payable 19.8 26.2
US taxes 25.9 36.2
Deferred taxation:
UK 0.5 0.5
US 22.9 7.3
-------------------------------------------------------- ----- -------
69.1 70.2
-------------------------------------------------------- ----- -------
(1) Restated for the implementation of the amendment to FRS 5,
'Application Note G - Revenue Recognition' (see note 9).
5. Dividends
2005 2004
---------------------------------------------------------- ----- -----
GBP m GBP m
---------------------------------------------------------- ----- -----
Interim dividend paid of 0.375p per share (2004: 0.341p) 6.5 5.9
Final dividend proposed of 2.625p per share (2004: 2.160p) 45.5 37.3
---------------------------------------------------------- ----- -----
52.0 43.2
---------------------------------------------------------- ----- -----
The interim dividend was paid on 5 November 2004. Subject to
shareholder approval, the proposed final dividend is to be paid on 8
July 2005 to those shareholders on the register of members on 10 June
2005.
Under US tax legislation the rate of US federal income tax on
dividends received by individual US shareholders from qualified
foreign corporations is reduced to 15%. Dividends paid by the Group to
individual US holders of shares or ADSs should qualify for this
preferential tax treatment. The legislation only applies to
individuals subject to US federal income taxes and therefore the tax
position of UK shareholders is unaffected. Individual US holders are
urged to consult their tax advisers regarding the application of this
US legislation to their particular circumstances.
Notes
for the 52 weeks ended 29 January 2005
(1) Earnings per share
2005 2004(1)
---------------------------------------------------- -------- --------
GBP m GBP m
---------------------------------------------------- -------- --------
Profit for the financial period 141.2 129.6
---------------------------------------------------- -------- --------
Basic weighted average number of shares in issue
(million) 1,731.6 1,718.4
Dilutive effect of share options (million) 6.0 12.5
---------------------------------------------------- -------- --------
Diluted weighted average number of shares (million) 1,737.6 1,730.9
---------------------------------------------------- -------- --------
Earnings per share - basic 8.2p 7.5p
Earnings per 0.5p - diluted 8.1p 7.5p
---------------------------------------------------- -------- --------
(1) Restated for the implementation of the amendment to FRS 5,
'Application Note G - Revenue Recognition' (see note 9).
(1) Consolidated shareholders' funds
Ordinary Share Revaluation Special Profit
share premium reserve reserves and
capital account loss
account Total
-------------- -------- -------- ----------- --------- -------- ------
GBP m GBP m GBP m GBP m GBP m GBP m
-------------- -------- -------- ----------- --------- -------- ------
Balance at 31
January 2004 8.6 60.7 3.1 142.2 513.0 727.6
Prior year
adjustment - - - - (52.7) (52.7)
-------------- -------- -------- ----------- --------- -------- -----
As restated 8.6 60.7 3.1 142.2 460.3 674.9
Retained
profit
attributable
to
shareholders - - - - 89.2 89.2
Shares issued
to
QUEST/ESOTs - 2.5 - - (2.5) -
Exercise of
share
options 0.1 4.8 - - 1.6 6.5
Purchase of
own shares - - - - (9.5) (9.5)
Transfer on
property
disposals - - 1.2 - - 1.2
Actuarial
loss
recognised - - - - (3.9) (3.9)
Translation
differences - - - 13.7 (33.0) (19.3)
Balance at 29
January 2005 8.7 68.0 4.3 155.9 502.2 739.1
-------------- -------- -------- ----------- --------- -------- -----
Notes
for the 52 weeks ended 29 January 2005
8. Notes to the consolidated cash flow statement
a Reconciliation of operating profit to operating cash flows
2005 2004(1)
--------------------------------------- --------------- --------------
GBPm GBPm
--------------------------------------- --------------- --------------
Operating profit 218.9 210.2
Depreciation and amortisation charges 42.3 40.4
Increase in stocks (52.3) (44.9)
Increase in debtors (44.5) (31.1)
Increase in creditors 8.8 30.3
Decrease in other provisions (0.6) (1.1)
--------------------------------------- --------------- --------------
Net cash inflow from operating
activities 172.6 203.8
--------------------------------------- --------------- --------------
(1) Restated for the implementation of the amendment to FRS 5,
'Application Note G - Revenue Recognition' (see note 9).
b Analysis of net debt
At 31 Cash Exchange Other At 29
Jan flow movement movements Jan
2004 2005
--------------------------- ------- ------ -------- ---------- -------
GBPm GBPm GBPm GBPm GBPm
--------------------------- ------- ------ -------- ---------- -------
Cash at bank and in hand 0.6 - - - 0.6
Bank overdrafts (51.1) 6.4 1.9 - (42.8)
--------------------------- ------- ------ -------- ---------- -------
(50.5) 6.4 1.9 - (42.2)
--------------------------- ------- ------ -------- ---------- -------
Debt due after more than
one year (146.2) - 5.5 7.9 (132.8)
Debt due within one year (10.6) 8.1 0.1 (7.9) (10.3)
Bank deposits 127.4 (24.5) (1.1) - 101.8
--------------------------- ------- ------ -------- ---------- -------
(29.4) (16.4) 4.5 - (41.3)
--------------------------- ------- ------ -------- ---------- -------
Total (79.9) (10.0) 6.4 - (83.5)
--------------------------- ------- ------ -------- ---------- -------
Notes
for the 52 weeks ended 29 January 2005
9. Prior year adjustments
Adoption of the amendment to FRS 5 - 'Application Note G - Revenue
Recognition'
The accounting policy in respect of extended service agreements in
the US was changed following an amendment to FRS 5 'Reporting The
Substance of Transactions' in the form of 'Application Note G -
Revenue Recognition'. The Group now spreads the revenue arising from
the sale of such agreements in proportion to the anticipated claims
arising. Previously the Group recognised the revenue from such plans
at the date of sale with provision being made for the estimated cost
of future claims arising.
As a result of the change the Group has restated prior years.
Therefore the previously reported 2003/04 results now reflect a
decrease in sales of GBP12.3 million and a reduction in profit before
tax of GBP12.1 million. Consequently, restated profit before tax for
the 52 weeks ended 31 January 2004 is GBP199.8 million. The effect on
brought forward reserves at 31 January 2004 is a reduction of GBP52.7
million net of deferred tax, with shareholders' funds at 31 January
2004 therefore restated to GBP674.9 million. There is no impact on
cash flow.
Adoption of FRS 17 - 'Retirement Benefits' in 2003/04
It was previously the Group's policy, in compliance with SSAP 24,
to spread the pension valuation surplus arising under its UK defined
benefit pension scheme (the "Group Scheme") over the average service
life of the employees. In compliance with this standard, a pension
scheme prepayment of GBP19.1 million was included in the balance sheet
at 1 February 2003 within debtors falling due after more than one
year. An associated deferred tax liability of GBP5.7 million was also
carried on the balance sheet at 1 February 2003.
The adoption of FRS 17 - 'Retirement Benefits' led to the
write-off of the GBP19.1 million pension asset previously recognised
under SSAP 24 and provision for the deficit of GBP6.7 million in the
Group Scheme as at 1 February 2003. This GBP6.7 million deficit has
been classified as a creditor falling due after more than one year.
The GBP5.7 million deferred tax liability associated with the SSAP 24
pension asset has been written back and a GBP2.0 million deferred tax
asset has been recognised in respect of the deficit provided for under
FRS 17 at 1 February 2003. The total net adjustment of GBP18.1 million
arising from the adoption of FRS 17 has been accounted for as a prior
year adjustment charged directly to shareholders' funds as at 1
February 2003.
Notes
for the 52 weeks ended 29 January 2005
10. Impact of constant exchange rates
The Group has historically used constant exchange rates to compare
period to period changes in certain financial data. This is referred
to as 'at constant exchange rates' throughout this release. The Group
considers this a useful measure for analysing and explaining changes
and trends in the Group's results. The impact of the recalculation of
sales, operating profit, profit before tax, earnings per share and net
debt at constant exchange rates, including a reconciliation to the
Group's GAAP results, in analysed below.
2004 as
2005 restated(1)
--------------------------- ---------------- ------------
GBPm GBPm
--------------------------- ---------------- ------------
Sales by origin and
destination:
UK 514.4 501.0
US 1,100.0 1,103.9
--------------------------- ---------------- ------------
1,614.4 1,604.9
--------------------------- ---------------- ------------
Operating profit:
UK - Trading 78.2 76.6
- Group central
costs (6.6) (5.7)
--------------------------- ---------------- ------------
71.6 70.9
US 147.3 139.3
--------------------------- ---------------- ------------
218.9 210.2
--------------------------- ---------------- ------------
Profit before tax 210.3 199.8
--------------------------- ---------------- ------------
Earnings per share 8.2p 7.5p
--------------------------- ---------------- ------------
Growth at Impact of 2004 at Growth at
actual exchange constant constant
exchange rate exchange exchange
rates movement rates rates
(non- (non-
GAAP) GAAP)
---------------------------------------- --------- --------- ---------
% GBPm GBPm %
---------------------------------------- --------- --------- ---------
Sales by origin and
destination:
UK 2.7 - 501.0 2.7
US (0.4) (106.8) 997.1 10.3
---------------------------------------- --------- --------- ---------
0.6 (106.8) 1,498.1 7.8
---------------------------------------- --------- --------- ---------
Operating profit:
UK - Trading 2.1 - 76.6 2.1
- Group central costs n/a - (5.7) n/a
---------------------------------------- --------- --------- ---------
1.0 - 70.9 1.0
US 5.7 (13.5) 125.8 17.1
---------------------------------------- --------- --------- ---------
4.1 (13.5) 196.7 11.3
---------------------------------------- --------- --------- ---------
Profit before tax 5.3 (12.2) 187.6 12.1
---------------------------------------- --------- --------- ---------
Earnings per share 9.3 (0.4)p 7.1p 15.5
---------------------------------------- --------- --------- ---------
29 31 Impact of At
January January exchange constant
2005 2004 rate exchange
movement rates
(non-
GAAP)
---------------------------------------- --------- --------- ---------
GBPm GBPm GBPm GBPm
---------------------------------------- --------- --------- ---------
Net debt (83.5) (79.9) 6.0 (73.9)
------------------------------- ----- ------ ------ ------
(1) Restated for the implementation in 2004/05 of the amendment to
FRS 5, 'Application Note G - Revenue Recognition' (see note 9).
11. Accounts
The financial information set out above does not constitute the
Company's statutory accounts for the 52 weeks ended 29 January 2005 or
the 52 weeks ended 31 January 2004, but is derived from those
accounts. Statutory accounts for the 52 weeks ended 31 January 2004
have been delivered to the Registrar of Companies, whereas those for
the 52 weeks ended 29 January 2005 will be delivered following the
Company's annual general meeting. The auditors have reported under
Section 235 of the Companies Act 1985 on those accounts for each of
those periods; their reports were unqualified and did not contain a
statement under Section 237 (2) or (3) of that Act.
Notes
for the 52 weeks ended 29 January 2005
12. Reconciliation of UK GAAP to US GAAP
Estimated effect on profit for the financial period of differences
between UK GAAP and US GAAP
52 weeks 52 weeks
ended ended
29 31
January January
2005 2004
as
restated
----------------------------------------------------------------------
GBPm GBPm
----------------------------------------------------------------------
Profit for the financial period in
accordance with UK GAAP(1) 141.2 129.6
US GAAP adjustments:
Goodwill amortisation 1.0 1.1
Sale and leaseback transactions 1.0 0.8
Pensions (0.9) (1.9)
Leases (3.5) (3.5)
Stock compensation (3.9) 0.7
----------------------------------------------------------------------
US GAAP adjustments before taxation (6.3) (2.8)
Taxation 2.6 0.6
----------------------------------------------------------------------
US GAAP adjustments after taxation (3.7) (2.2)
----------------------------------------------------------------------
Retained profit attributable to shareholders in
accordance with US GAAP 137.5 127.4
----------------------------------------------------------------------
Earnings per ADS in
accordance with US GAAP - basic 79.4p 74.1p
- diluted 79.1p 73.6p
Weighted average number
of ADS outstanding (million) - basic 173.2 171.8
- diluted 173.8 173.1
Estimated effect on shareholders' funds of differences between UK
GAAP and US GAAP
29 January 2005 31 January 2004
as restated
------------------------------------- --------------- ----------------
GBPm GBPm
------------------------------------- --------------- ----------------
Shareholders' funds in accordance
with UK GAAP(1) 739.1 674.9
US GAAP adjustments:
Goodwill in respect of acquisitions
(gross) 476.8 490.5
Adjustment to goodwill (56.1) (58.2)
Accumulated goodwill amortisation (145.0) (149.9)
Sale and leaseback transactions (7.9) (8.9)
Pensions 28.2 21.5
Depreciation of properties (2.5) (2.5)
Leases (17.9) (14.9)
Revaluation of properties (4.3) (3.1)
Dividends 45.0 37.3
------------------------------------- --------------- ----------------
US GAAP adjustments before taxation 316.3 311.8
Taxation 0.6 1.8
------------------------------------- --------------- ----------------
US GAAP adjustments after taxation 316.9 313.6
------------------------------------- --------------- ----------------
Shareholders' funds in accordance
with US GAAP 1,056.0 988.5
------------------------------------- --------------- ----------------
(1) 2004 UK GAAP restated for the implementation of the amendment
to FRS 5, 'Application Note G - Revenue Recognition' (see note 9).
Notes
for the 52 weeks ended 29 January 2005
12. Reconciliation of UK GAAP to US GAAP (continued)
Prior year adjustments
The Group has identified two errors in its US GAAP reconciliation
relating to revenue recognition attributable to extended service
agreements in the US and lease accounting for predetermined rent
increases which are commonly found in the US. The US GAAP
reconciliation for prior years has been restated as the cumulative
effect on shareholders' funds of these changes if taken in 2004/05
would have been material. The impact on retained profit attributable
to shareholders, earnings per ADS and shareholders' funds is as
follows:
Impact on profit attributable to shareholders 52 weeks ended
31 January 2004
--------------------------------------------------- ------------------
GBPm
--------------------------------------------------- ------------------
Retained profit attributable to shareholders in
accordance with US GAAP
- as previously reported 135.0
Revenue recognition - net of tax (5.4)
Lease accounting - net of tax (2.2)
--------------------------------------------------- ------------------
As restated 127.4
--------------------------------------------------- ------------------
Impact on earnings per ADS - basic
------------------------------------------------------- --------------
p
------------------------------------------------------- --------------
As previously reported 78.6
Effect of restatement (4.5)
------------------------------------------------------- --------------
As restated 74.1
------------------------------------------------------- --------------
Impact on earnings per ADS - diluted
---------------------------------------------------------------- -----
p
---------------------------------------------------------------- -----
As previously reported 78.0
Effect of restatement (4.4)
---------------------------------------------------------------- -----
As restated 73.6
---------------------------------------------------------------- -----
Impact on shareholders' funds
------------------------------------------------------------- --------
GBPm
------------------------------------------------------------- --------
As previously reported 1,034.8
Effect of restatement (46.3)
------------------------------------------------------------- --------
As restated 988.5
------------------------------------------------------------- --------
Notes
for the 52 weeks ended 29 January 2005
12. Reconciliation of UK GAAP to US GAAP (continued)
Revenue recognition
The Group has corrected its accounting policy to spread the
revenue arising from extended service agreements in the US in
proportion to anticipated claims arising. Previously the revenue from
such agreements was recognised immediately on a proportion of
contracts where analysis of past experience showed no claim or cost
arose, and deferred the balance of revenue over the estimated period
of future claims. As a consequence of this change and the change in
accounting policy for UK GAAP (see note 9), the previously reported
2003/04 US GAAP adjustment is restated as follows:
52 weeks ended
31 January 2004
-------------------------------------------- -------------------------
GBP m
-------------------------------------------- -------------------------
UK GAAP prior period adjustment (12.1)
US GAAP adjustment - as previously reported 3.5
-------------------------------------------- -------------------------
(8.6)
Tax 3.2
-------------------------------------------- -------------------------
US GAAP prior period adjustment (5.4)
-------------------------------------------- -------------------------
Impact on profit and loss account US GAAP differences
------------------------------------------------------ ---------------
GBP m
------------------------------------------------------ ---------------
As previously reported - before tax (3.5)
Adjustment required - before tax 3.5
------------------------------------------------------ ---------------
As restated - before tax -
------------------------------------------------------ ---------------
The policies applied under UK and US GAAP are now consistent and
no future GAAP differences are expected to arise. There is no impact
on cash flow.
Lease accounting
Following the letter by the Securities and Exchange Commission of
7 February 2005 to the American Institute of Certified Public
Accountants, the Group has reviewed its lease accounting policy and
corrected it for predetermined rent increases and any construction
period or other rental holidays. For operating leases that include
clauses in respect of predetermined rent increases, it is required
that those rents are charged to the profit and loss account on a
straight line basis over the lease term. Also inducements to enter
into a lease are required to be recognised over the lease term.
Previously, predetermined lease increases were recognised when they
fell due and lease inducements were recognised over the period to the
next rent review. As a result, the previously reported 2003/04 US GAAP
adjustment is restated to reflect a reduction in US GAAP retained
earnings attributable to shareholders of (pound)2.2 million
((pound)3.5 million before tax). There is no impact on cash flow.
52 weeks ended
Impact on profit and loss account US GAAP differences 31 January 2004
----------------------------------------------------- ----------------
GBPm
----------------------------------------------------- ----------------
As previously reported - before tax -
Adjustment required - before tax (3.5)
----------------------------------------------------- ----------------
As restated - before tax (3.5)
----------------------------------------------------- ----------------
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion