SHOE ZONE PLC — Interim / Quarterly Report 2014

Jun 24, 2014

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RNS Number : 3204K

Shoe Zone PLC

24 June 2014

24 June 2014

Shoe Zone plc

Interim Results

Shoe Zone plc ("Shoe Zone" or the "Company"), a leading UK specialist value footwear retailer, is pleased to announce its maiden Interim Results for the six months ended 5 April 2014.

Financial Highlights

·      Revenue of £82.9m (2013 H1: £98.9m)*

·      Profit before tax increased to £2.7m (2013 H1: £0.2m)

·      Earnings per share increased to 3.7p (2013 H1: 0.3p)

·      Strong cash conversion with net cash at 5 April 2014 of £7.8m (6 April 2013: £3.1m)

* This reduction in revenue reflects the planned closure of a number of temporary stores

Operational Highlights

·      Enhanced store portfolio with three openings, two relocations and nineteen refits

·      Successfully launched on Amazon  in November 2013 and is achieving good results

·      Admitted to AIM on 23rd May 2014 through placing of 22,500,000 shares at 160p

·      Welcomed blue-chip shareholders to the register

Anthony Smith, Chief Executive of Shoe Zone plc, said:

"I am pleased to report Shoe Zone's maiden set of Interim Results following our Admission to AIM on 23rd May 2014.  The Company has had a good first half with profits significantly ahead of the same period last year combined with a high level of cash conversion. 

Our strong market position ensures we are well placed to benefit from any growth in the UK footwear market and the Board continues to look to the future with confidence."

For further information please call:

Shoe Zone plc	Tel: +44 (0) 116 222 3000
Anthony Smith (CEO)
Charles Smith (COO) Nick Davis (CFO)

Numis Securities Limited (Nominated Adviser & Broker)	Tel: +44 (0) 20 7260 1000
Oliver Cardigan
Mark Lander
Huw Jeremy

FTI Consulting (Financial PR)	Tel: +44 (0) 20 3727 1000
Jonathon Brill
Alex Beagley Eleanor Purdon

Chief Executive's Statement

Introduction

Shoe Zone is a leading UK specialist value footwear retailer, offering low price and high quality footwear for the whole family.  The Company operates from a portfolio of 554 stores and employs approximately 4,100 employees across the UK and the Republic of Ireland.  Shoe Zone's online offering (www.shoezone.com), combined with its extensive store portfolio, enables its customers to shop via multiple channels.

Strategic goals

Shoe Zone's strategic focus is to continue to offer low price, high quality footwear for the entire family while increasing profitability in a growth market.  To achieve this goal, the Company continues to:

·      Strengthen the Shoe Zone brand, driving awareness and broadening its appeal to existing and new customers via our store portfolio and our online platform

·      Expand into new towns and cities in appropriate demographic areas

·      Roll out our low cost store refit programme

·      Relocate existing stores into bigger and better locations as leases come up for renewal

·      Make operational improvements to enhance margin and profitability

·      Invest in the growth of shoezone.com and other new sales channels

Property

Since the start of our financial year on 6 October 2013, we have opened three new stores, relocated and upgraded two stores to our larger format in better locations and refitted nineteen stores.  Management will continue to enhance the property portfolio with further store openings, relocations and refits in this financial year.

Online

Revenue contribution from online has achieved strong growth in the period and we anticipate this trend to continue.  We have successfully launched on Amazon in November 2013 and this is achieving good results in this initial launch phase. 

Financial Summary

In the six months to 5 April 2014, the Company generated revenues of £82.9m (2013 H1: 98.9m) and profit before tax of £2.7m (2013 H1: £0.2m), in line with management's expectations. This reduction in revenue reflects the planned closure of a number of temporary stores.  The Company has a historically high level of cash conversion and as at 5 April 2014, Shoe Zone had net cash of £7.8m with no bank debt.  Management continues to monitor costs and these remain tightly controlled.

Current trading

In the 10 weeks to 14 June 2014 since the half-year, our LFL's and margins have been in line with management's expectations.  Online performance remains strong and continues to be ahead of market growth projections.

The Board of Directors would like to welcome our new shareholders and to thank all of our teams at Shoe Zone who have worked incredibly hard to ensure we had a successful launch as a public company.

Unaudited consolidated income statement

	Note		26 weeks ended 5 April 2014		26 weeks ended 6 April 2013		52 weeks ended 5 October 2013
			£'000		£'000		£'000
Revenue	3		82,914		98,878		193,882
Cost of sales			(71,560)		(86,308)		(166,101)
Gross profit			11,354		12,570		27,781
Administration expenses			(5,509)		(9,846)		(16,108)
Distribution costs			(2,605)		(3,195)		(6,028)
Profit/(loss) from operations			3,240		(471)		5,645
Finance income			20		809		36
Finance expense			(533)		(160)		(623)
Profit before taxation			2,727		178		5,058
Taxation	5		(901)		(37)		(1,601)
Profit attributable to equity holders of the parent	7		1,826		141		3,457

Earnings per share - basic and diluted	7		3.7p		0.3p		6.9p

Unaudited consolidated statement of total comprehensive income

		26 weeks ended 5 April 2014		26 weeks ended 6 April 2013		52 weeks ended 5 October 2013
		£'000		£'000		£'000
Profit for the period		1,826		141		3,457
Other comprehensive income/(expense)
Actuarial gain/(loss) on defined benefit pension scheme		10		(3,194)		3,288
Closure of Shoe Zone (Ireland) Limited pension scheme		-		432		-
Movement in deferred tax on pension schemes		(2)		635		(850)
Other comprehensive income/(expense) for the period		8		(2,127)		2,438
Total comprehensive income/(expense) for the period
attributable to equity holders of the parent		1,834		(1,986)		5,895

Unaudited consolidated statement of financial position

	Notes	5 April 2014		6 April 2013		5 October 2013
		£'000		£'000		£'000
Assets
Non-current assets
Deferred tax asset		-		633		-
Property, plant and equipment		22,835		26,290		24,960
Total non-current assets		22,835		26,923		24,960
Current assets
Inventories		26,515		29,026		29,959
Trade and other receivables		6,932		7,570		8,369
Derivative financial assets	4	-		593		-
Corporation tax asset		-		98		-
Cash and cash equivalents		7,829		3,129		6,552
Total current assets		41,276		40,416		44,880
Total assets		64,111		67,339		69,840
Current liabilities
Trade and other payables		(19,929)		(23,702)		(23,889)
Loan and borrowings	6	(1,919)		(3,009)		(1,668)
Provisions for liabilities and charges		(727)		(891)		(764)
Derivative financial liabilities	4	(987)		-		(528)
Corporation tax liability		(660)		-		(1,217)
Total current liabilities		(24,222)		(27,602)		(28,066)
Non-current liabilities
Trade and other payables		(4,161)		(4,691)		(4,773)
Provisions for liabilities and charges		(500)		(875)		(866)
Employee benefit liability		(2,485)		(9,004)		(2,744)
Deferred tax liability		(321)		-		(343)
Total non-current liabilities		(7,467)		(14,570)		(8,726)
Total liabilities		(31,689)		(42,172)		(36,792)
Net assets		32,422		25,167		33,048
Equity attributable to equity holders of the company
Called up share capital		5		6		6
Share premium reserve		3,203		3,153		3,153
Capital redemption reserve		4		3		3
Retained earnings		29,210		22,005		29,886
Total equity and reserves		32,422		25,167		33,048

Unaudited consolidated statement of changes in equity

	Share capital		Capital redemption reserve		Merger reserve		Retained earnings		Total
	£'000		£'000		£'000		£'000		£'000
At 5 October 2013	6		3		3,153		29,886		33,048
Profit for the period	-		-		-		1,826		1,826
Other comprehensive income	-		-		-		8		8
Total comprehensive income for the period	-		-		-		1,834		1,834
Shares purchases for cancellation	(1)		1		50		(2,510)		(2,460)
Total contributions by and distributions to owners	(1)		1		50		(2,510)		(2,460)
At 5 April 2014	5		4		3,203		29,210		32,422
At 29 September 2012	6		3		3,153		23,991		27,153
Profit for the period	-		-		-		141		141
Other comprehensive expense	-		-		-		(2,127)		(2,127)
Total comprehensive expense for the period	-		-		-		(1,986)		(1,986)
At 6 April 2013	6		3		3,153		22,005		25,167
At 29 September 2013	6		3		3,153		23,991		27,153
Profit for the period	-		-		-		3,457		3,457
Other comprehensive income	-		-		-		2,438		2,438
Total comprehensive income for the period	-		-		-		5,895		5,895
At 5 October 2013	6		3		3,153		29,886		33,048

Unaudited consolidated statement of cash flows

		5 April 2014		6 April 2013		5 October 2013
		£'000		£'000		£'000
Operating activities
Profit after taxation		1,826		141		3,457
Corporation tax		901		37		1,601
Finance income		(20)		(809)		(36)
Finance expense		533		160		623
Pension contributions paid		(300)		(300)		(600)
Depreciation of property, plant and equipment		2,265		3,721		6,497
Loss on disposal of property, plant and equipment		62		80		61
		5,267		3,030		11,603
Decrease in trade and other receivables		1,436		1,851		1,384
Decrease in inventories		3,444		4,390		3,457
Decrease in trade and other payables		(4,068)		(9,199)		(8,577)
Decrease in provisions		(403)		(2,279)		(2,416)
		409		(5,237)		(6,152)
Cash generated from operations		5,676		(2,207)		5,451
Income taxes paid		(1,481)		(2,015)		(2,774)
Net cash flows from operating activities		4,195		(4,222)		2,677
Investing activities
Purchase of property, plant and equipment		(973)		(1,474)		(2,827)
Sale of property, plant and equipment		725		297		321
Interest received		71		927		36
Net cash used in investing activities		(177)		(250)		(2,470)
Financing activities
Shares purchased for cancellation		(2,459)		-		-
Interest paid		(533)		(160)		(76)
Payment/(repayment) of loans		251		(924)		(2,264)
Net cash used in financing activities		(2,741)		(1,084)		(2,340)
Net increase/(decrease) in cash and cash equivalents		1,277		(5,556)		(2,133)
Cash and cash equivalents at beginning of period		6,552		8,685		8,685
Cash and cash equivalents at end of period		7,829		3,129		6,552

Notes to the financial statements for the 26 weeks ended 5 April 2014

1.    Basis of preparation

The consolidated interim financial statements of the Group for the 26 weeks ended 5 April 2014, which are unaudited, have been prepared in accordance with the accounting policies set out in the AIM admission documents dated 20 May 2014 for four periods ended 1 January 2011, 1 October 2011, 29 September 2012 and 5 October 2013.

The condensed consolidated interim financial statements have been prepared on a going concern basis and under the historical cost convention.

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

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

2.    Accounting policies

In preparing these interim financial statements, the significant judgements made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements reported in the AIM admission document for the year ended 5 October 2013.

3.    Segmental information

The group complies with IFRS 8 'Operating Segments', which determines and presents operating segments based on information provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer.

	5 April 2014		6 April 2013		5 October 2013
	£'000		£'000		£'000
External revenue by location of customers:
United Kingdom	80,246		95,952		187,562
Republic of Ireland	2,668		2,926		6,320
	82,914		98,878		193,882

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

	5 April 2014		6 April 2013		5 October 2013
	£'000		£'000		£'000
Non-current assets by location:
United Kingdom	22,835		26,290		24,960

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

4.    Derivative financial instruments

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

	5 April 2014		6 April 2013		5 October 2013
	£'000		£'000		£'000
Fair value of (liability)/asset recognised	(987)		593		(528)

5.    Taxation

The taxation charge for the 26 weeks ended 5 April 2014 and 26 weeks ended 6 April 2013 is based on an effective rate calculated using historic performance.

6.    Loans and borrowings

	5 April 2014		6 April 2013		5 October 2013
	£'000		£'000		£'000
Current
Related party loans	1,919		3,009		1,668
Total loans and borrowings	1,919		3,009		1,668

Book values approximate to fair values.

7.    Earnings per share

On the 24 April 2014, Shoe Zone PLC allotted 50,000,000 shares in anticipation of its listing on AIM. The earnings per share calculations for the period ended 5 April 2014, 6 April 2013 and 5 October 2013 have been restated to reflect this share restructuring.

	5 April 2014		6 April 2013		5 October 2013
	£'000		£'000		£'000
Profit for the period and earnings used in basic and diluted earnings per share	1,826		141		3,457

Earnings per share - basic and diluted	3.7p		0.3p		6.9p

Responsibility Statement

We confirm that to the best of our knowledge:

(a)   the condensed set of financial statements has been prepared in accordance with IAS 34;

(b)   the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first 26 weeks and description of principal risks and uncertainties for the remaining 26 weeks of the year); and

(c)   the interim management report includes a fair review of the information required by CTR 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board

A E P Smith                                                         N J Davis

Chief Executive Officer                                      Chief Financial Officer

Date: 23 June 2014

This information is provided by RNS

The company news service from the London Stock Exchange

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