LONDON, Sept. 3 Signet-results
LONDON, Sept. 3 /PRNewswire-FirstCall/ -- Signet Group plc
(LSE and NYSE: SIG), the world's largest speciality retail jeweller, today
announced unaudited half year results for the 26 weeks ended 2 August 2008.
Group profit before tax: $78.7mdown 27.8%
(excluding non-recurring relisting costs)
Group like for like sales: down 3.4%
Group sales: $1,591.4m down 0.6%
Diluted earnings per share: 2.6c down 35.0%
Interim dividend per share: 0.96c no change
Operational Highlights:
US: - Net space increase of about 4% expected in 2008/09
- Results of price increases continue to be encouraging
- On track to at least maintain gross merchandise margin rate
at last year's level
- Jared launches e-commerce capability
- Expanded ranges of exclusive merchandise
UK: - 2.3% increase in like for like sales
- Strong performance by prestige watch category
- Commenced roll-out of enhanced Ernest Jones store format
Terry Burman, Group Chief Executive, commented: "The Group's strong
balance sheet and superior operating metrics on both sides of the Atlantic
enables the business to continue to implement its proven strategy.
Appropriate adjustments in execution are being made to reflect the challenging
economic conditions with tight control of costs, inventory, gross merchandise
margin and investment in new space. As a result, the business will be well
positioned when the economy improves. However, in the short term, the
consumer environment in both the US and the UK remains very challenging. As
always, the results for the year will be significantly influenced by the
Group's performance during the important Christmas period."
Enquiries: Terry Burman, Group Chief Executive +1 212 889 4350
Walker Boyd, Group Finance Director +1 212 889 4350
Press: Jonathan Glass, Brunswick +44 (0) 20 7404 5959
Wendel Verbeek, Brunswick +44 (0) 20 7404 5959
John Dudzinsky, Taylor Rafferty +1 212 889 4350
Signet operated 1,973 speciality retail jewellery stores at 2 August 2008;
these included 1,414 stores in the US, where the Group trades as "Kay
Jewelers", "Jared The Galleria Of Jewelry" and under a number of regional
names. At that date Signet operated 559 stores in the UK, where the Group
trades as "H.Samuel", "Ernest Jones" and "Leslie Davis". Further information
on Signet is available at www.signetgroupplc.com. See also www.kay.com,
www.jared.com, www.hsamuel.co.uk and www.ernestjones.co.uk.
Interim Management Report
NEW YORK LISTING
On 19 August 2008 shareholders approved the proposal to facilitate the
move of the Group's primary listing to the New York Stock Exchange ("the
Proposal"). It is intended to establish concurrently a secondary listing on
the London Stock Exchange. Subject to the necessary Court and other
approvals, the Proposal is expected to become effective on 11 September 2008
with trading in Signet Jewelers Limited commencing on the New York Stock
Exchange ("NYSE") on that date.
GROUP
In the 26 weeks ended 2 August 2008, Group profit before tax excluding
non-recurring costs of $10.5 million related to the move of the primary
listing to the NYSE fell by 27.8% to $78.7 million (H1 2007/08: $109.0
million), see note 10. Like for like sales were down by 3.4% and total sales
were down by 0.6% to $1,591.4 million (H1 2007/08: $1,601.8 million). The
average US dollar exchange rate for the period was £1/$1.98 (H1 2007/08:
£1/$1.99). See note 10 for changes at constant exchange rates. The
components of the change in sales are set out below:
Change in sales US UK Group
% %%
Like for like sales(5.2) 2.3 (3.4)
Change in net new store space 4.4 (1.9) 2.9
Exchange translation - (0.5) (0.1)
Total sales growth as reported (0.8) (0.1) (0.6)
Operating profit excluding relisting costs fell by 22.8% to $90.3 million
(H1 2007/08: $116.9 million) and operating margin was 5.7% (H1: 2007/08:
7.3%). On a reported basis the operating profit was $79.8 million. The
factors influencing the lower operating margin are set out below:
Change in operating margin US UK Group
% %%
H1 2007/08 operating margin10.4 (0.2) 7.3
Gross merchandise margin movement 0.90.7 0.8
Expense (deleverage)/leverage (3.1) 0.7 (2.2)
Impact of new store space (0.3) - (0.2)
H1 2008/09 operating margin before
relisting costs7.91.2 5.7
Relisting costs - - (0.7)
H1 2008/09 operating margin 7.91.2 5.0
The tax rate was 35.8% (H1 2007/08: 36.5%) and profit for the financial
period was $43.8 million. Diluted earnings per share excluding listing costs
declined by 20.0% to 3.2c. On a reported basis diluted earnings per share
were 2.6c (H1 2007/08: 4.0c). The Board has approved an unchanged interim
dividend of 0.96c.
Outlook
The Group's strong balance sheet and superior operating metrics on both
sides of the Atlantic enables the business to continue to implement its proven
strategy. Appropriate adjustments in execution are being made to reflect the
challenging economic conditions with tight control of costs, inventory, gross
merchandise margin and investment in new space. As a result, the business
will be well positioned when the economy improves. However, in the short
term, the consumer environment in both the US and the UK remains very
challenging. As always, the results for the year will be significantly
influenced by the Group's performance during the important Christmas period.
OPERATING REVIEW
US Division (circa 75% of Group sales)
In a very challenging retail environment, US like for like sales were down
5.2% and total sales decreased by 0.8% to $1,206.7 million (H1 2007/08:
$1,216.9 million). The underlying like for like sales performance in the
first and second quarters was stable after adjusting for the impact of more
favorable weather over Valentine's Day than in the prior year.
Operating profit was down 24.9% at $94.8 million (H1 2007/08: $126.3
million), primarily reflecting the deleverage of the cost base due to the
decline in same store sales (see table above). As anticipated, the gross
margin rate was up on last year due to price changes implemented during late
February and March, which more than offset commodity cost increases, adverse
changes in the sales mix and increased promotional cadence. The results of
the price increases continue to be encouraging and the division remains on
track to at least maintain its gross merchandise margin rate in 2008/09 at
last year's level. Operating margin was 7.9% (H1 2007/08: 10.4%).
While all major merchandising categories were down in the half on a same
store basis, the bridal category, which accounts for approximately 45% of
sales, performed better than average. Exclusive merchandise ranges continue
to be expanded and a number of new designs have tested very well. The average
unit selling price in both the mall formats and Jared rose by about 7%.
The bad debt charge at 3.9% of total sales (H1 2007/08: 2.8%), was above
the tight range of the past ten years. The increase in bad debt was
meaningfully offset by higher income from the receivables portfolio. Overall
the cost base, excluding the impact of new space, is expected to be similar to
last year despite an anticipated rise in the level of bad debts and
inflationary cost increases in occupancy costs, utilities, freight and staff
wage rates.
As part of the expense realignment programme, the annual gross marketing
to sales ratio is planned to be about 7% of sales, down from 7.5% in 2007/08
and more in line with historic levels. The reductions have been greatest in
lower returning media and formats. National television advertising for Kay
and Jared will be least impacted because they are the most effective. The
marketing to sales ratio is expected to remain considerably greater than the
jewellery sector average and to be the largest in the category. The Jared
website launched an e-commerce capability in August.
It is expected that in 2008/09 US net new store space will increase by
about 4%, including the closure of about 50 mall brand stores as leases
expire. Capital expenditure in new and existing stores is planned to be circa
$60 million (2007/08: $88 million). Investment in working capital, that is
inventory and receivables, associated with space growth of some $90 million is
anticipated (2007/08: $119 million).
The planned change in store numbers by format in 2008/09, together with
the long term potential for each is set out below:
3 FebruaryExpectedExpected PlannedLong term
2008 openingsclosures 2 February potential
2009
Kay
Mall 789 25(a)14 800850+
Off-mall 92 235 110500+
Outlet centres108- 18100+
Metropolitan 3-- 35-10
Kay total 894 56 19 931 1,460+
Regional brands 351341(a) 313700+
Jared 154 17- 171300+
Total 1,399 76(a)60(a)1,415 2,460+
(a) Includes 11 stores rebranded to Kay from regional brands.
UK Division (circa 25% of Group sales)
In the 26 weeks ended 2 August 2008 total sales were little changed at
$384.7 million (H1 2007/08: $384.9 million). Like for like sales were up by
2.3% (H.Samuel +2.4% and Ernest Jones +2.2%), a very encouraging performance
given the trading environment. Operating profit was $4.5 million (H1 2007/08:
$0.6 million loss), the normal seasonal deficit being eliminated. Tight
control of costs and inventory was maintained, with gross margin increasing by
70 basis points. The expectation is for both full year costs in sterling and
gross merchandising margin percentage to be similar to last year.
The watch category continued to perform well, particularly in Ernest
Jones, and diamond participation in H.Samuel increased further. The focus on
enhancing customer service remains a priority and progress in staff training
is increasingly evident. The average unit selling price in H.Samuel was up
13% and in Ernest Jones it rose by 16%, reflecting changes in sales mix and
increased prices.
About 53 stores are expected to be refurbished or relocated this year
(2007/08: 27), the majority in the enhanced Ernest Jones format. Five new
stores are planned to be opened (2007/08: one) with 14 closures (2007/08: 19).
Total store capital expenditure is anticipated to be some $42 million
(2007/08: $18.4 million) primarily reflecting a return to a more normal refit
cycle in Ernest Jones following a successful test of the new store format. At
the year end, 350 H.Samuel (2 February 2008: 359) and 205 Ernest Jones (2
February 2008: 204) stores are planned to be operating.
Group central costs, financing items and taxation
In the 26 weeks ended 2 August 2008 group central costs were $9.0 million
(H1 2007/08: $8.8 million), excluding $10.5 million of non-recurring costs
relating to the move of the primary listing to the NYSE. Financing costs rose
to $11.6 million (H1 2007/08: $7.9 million),the increase being primarily due
to the cash outflow in 2007/08 and a reduced pension credit. The tax charge
was $24.4 million (H1 2007/08: $39.8 million).
Net debt
Net debt at 2 August 2008 was $433.3 million (4 August 2007: $354.8
million). Group gearing (that is the ratio of net debt to shareholders'
funds) at 2 August 2008 was 24.9% (4 August 2007: 20.8%). The seasonal
increase in net debt since the start of the financial year was significantly
less than last year (H1 2008/09: up $58.7 million; H1 2007/08: up $121.6
million) reflecting tight management of working capital and lower tax
payments, which more than offset the lower level of profits. An increased
number of Ernest Jones refurbishments balanced by reduced store investment in
the US, is expected to result in fixed capital expenditure in the current year
of about $140 million, similar to the level in 2007/08. Cash outflow for
2008/09 is now expected to be neutral to $40 million compared with the
anticipated range of $40 million and $80 million projected at the time of the
announcement of the 2007/08 results.
Risk factors and related party transactions
The principal risk factors are set out on pages 44 to 50 of the Group's
Annual Report & Accounts for the 52 weeks ended 2 February 2008 and pages 6 to
8 of the circular to shareholders dated 24 July 2008 for the scheme of
arrangement shareholder meetings held on 19 August 2008, copies of which are
available in electronic format on the Group's website www.signetgroupplc.com.
In the view of the directors there has been no material change in these
factors in respect of the remaining six months of the financial year, except
that the Proposal has now been approved by shareholders.
There have been no additional related party transactions to those
disclosed on page 115 of the Group's Annual Report & Accounts.
Copies of the half year report may be downloaded as a pdf file from
www.signetgroupplc.com.
INVESTOR RELATIONS PROGRAMME
Second quarter results
A conference call will take place for all interested parties today at 9.00
a.m. (EDT) and 2.00 p.m. (BST). The call will be broadcast live on the Group's
website, www.signetgroupplc.com:
European dial-in:+44 (0)20 7138 0840
European 48 hr. replay: +44 (0)20 7806 1970 Access code: 9840702#
US dial-in: +1 718 354 1362
US 48 hr. replay:+1 718 354 1112 Access code: 9840702#
Goldman Sachs 15th Annual Global Retail Conference in New York
Signet will be presenting at the Goldman Sachs 15th Annual Global Retail
Conference in New York on Thursday 4 September at 11.10 a.m. The
presentation, which will also be webcast on www.signetgroupplc.com, will be
given by Terry Burman, Group Chief Executive, and Walker Boyd, Group Finance
Director.
Johnson Rice & Company 7th Annual Consumer Conference in New Orleans
Signet will be attending the Johnson Rice 7th Annual Consumer Conference
in New Orleans on Monday 27 October and Tuesday 28 October. Signet will be
represented by Tim Jackson, Investor Relations Director.
Third quarter sales
The third quarter sales performance for the 13 weeks ending 2 November
2008 is expected to be announced at 2.30 a.m. (EST) and 7.30 a.m. (GMT) on
Thursday 6 November.
Deutsche Bank Retail Round Table and Dinner in London
Signet will be taking part in the Deutsche Bank Retail Round Table and
Dinner in London on Thursday 6 November. The Group will be represented by
Walker Boyd, Group Finance Director and Tim Jackson, Investor Relations
Director.
This release includes statements which are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act 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,
seasonality of the Group's business, financial market risk and risks and
uncertainties relating to the Proposal (including, but not limited to, risks
and uncertainties relating to implementation of the Proposal, market price,
future sales, dilution and transferability of Signet Jewelers Limited common
shares, secondary listing, changes in tax treatment, takeover protections, and
more extensive US regulation of Signet Jewelers Limited).
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 Annual Report & Accounts for the year ended 2
February 2008 included as an exhibit to its Report on Form 6-K furnished with
the U.S. Securities and Exchange Commission on 1 May 2008, the 'Risk factors'
section of the scheme circular pertaining to the Proposal, and other filings
with and submissions to the SEC made by the Company. 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 therein may not be realised. The Company undertakes no
obligation to update or revise any forward-looking statements to reflect
subsequent events or circumstances, other than as required by applicable law,
rule or regulation.
SIGNET GROUP plc
Condensed consolidated income statement (unaudited)
for the 26 weeks ended 2 August 2008
13 weeks 13 weeks 26 weeks 26 weeks 52 weeks
endedendedendedended ended
2 August 4 August 2 August 4 August 2 February
20082008 2008 2008 2008
Notes$m $m $m$m $m
Sales 2,10 768.9 787.4 1,591.4 1,601.8 3,665.3
Cost of sales(710.9) (713.1) (1,481.6) (1,465.5) (3,264.8)
Gross profit 58.074.3 109.8 136.3 400.5
Administrative expenses (50.8) (37.5)(88.2)(72.8) (158.0)
Other operating income 28.826.1 58.2 53.4 108.8
Operating profit2,10 36.062.9 79.8 116.9 351.3
Finance income 31.3 2.7 3.6 6.1 11.0
Finance expense3 (7.7) (7.4)(15.2)(14.0)(28.8)
Profit before tax 10 29.658.2 68.2 109.0 333.5
Taxation 4 (10.5) (21.5)(24.4)(39.8) (118.3)
Profit for the financial
period19.136.7 43.8 69.2 215.2
Earnings per share
- basic1.2c2.2c 2.6c 4.1c 12.6c
- diluted 61.2c2.1c 2.6c 4.0c 12.6c
All of the above relate to continuing activities.
Condensed consolidated balance sheet (unaudited)
at 2 August 2008
2 August4 August 2 February
20082007 2008
Notes $m $m $m
Assets
Non-current assets
Intangible assets 53.450.4 52.6
Property, plant and equipment 511.4 491.0 502.4
Other receivables 41.134.1 34.8
Retirement benefit asset - 6.5 -
Deferred tax assets21.529.0 19.7
627.4 611.0 609.5
Current assets
Inventories 1,431.3 1,366.3 1,445.5
Trade and other receivables 834.1 801.8 927.5
Cash and cash equivalents 66.951.8 41.7
2,332.3 2,219.9 2,414.7
Total assets2,959.7 2,830.9 3,024.2
Liabilities
Current liabilities
Borrowings due in less than
one year(120.2) (26.6)(36.3)
Trade and other payables (313.9) (314.3) (357.5)
Deferred income (106.3) (102.5) (125.3)
Current tax (59.3) (81.3)(79.5)
(599.7) (524.7) (598.6)
Non-current liabilities
Borrowings due in more than
one year(380.0) (380.0) (380.0)
Other payables(92.1) (79.2)(85.3)
Deferred income (137.7) (134.6) (139.0)
Provisions (9.1) (10.2) (9.6)
Retirement benefit obligation (4.0) - (5.6)
(622.9) (604.0) (619.5)
Total liabilities (1,222.6) (1,128.7) (1,218.1)
Net assets 1,737.1 1,702.2 1,806.1
Equity
Capital and reserves attributable
to equity shareholders
Called up share capital15.415.4 15.4
Share premium 8 140.2 138.4 140.2
Other reserves 8 235.2 235.2 235.2
Retained earnings 8 1,346.3 1,313.2 1,415.3
Total equity1,737.1 1,702.2 1,806.1
Condensed consolidated cash flow statement (unaudited)
for the 26 weeks ended 2 August 2008
13 weeks 13 weeks 26 weeks 26 weeks 52 weeks
ended ended ended ended ended
2 August 4 August 2 August 4 August 2 February
2008 2007 2008 2007 2008
$m$m$m$m $m
Cash flows from operating
activities:
Profit before tax29.6 58.2 68.2 109.0 333.5
Adjustments for:
Finance income (1.3) (2.7) (3.6) (6.1)(11.0)
Finance expense 7.7 7.4 15.2 14.0 28.8
Depreciation of property,
plant and equipment25.5 25.8 52.6 49.8 109.4
Amortisation of intangible
assets 1.5 1.1 2.8 2.3 4.7
Share-based payment expense 1.9 2.0 3.7 4.0 0.4
Other non-cash movements 1.7 0.9 (2.2) (0.5) (1.5)
Loss on disposal of
property, plant and
equipment 0.4 - 0.6 - 1.4
Operating cash flows
before movement in
working capital 67.0 92.7 137.3 172.5 465.7
Decrease/(increase) in
inventories 58.1 43.6 9.4 (5.4)(96.8)
Decrease/(increase) in
trade and other
receivables 18.8 (13.3) 81.7 59.7 (60.7)
Decrease in payables
and deferred income(20.3)(13.1)(57.7)(81.2)(13.5)
Cash generated from
operations 123.6 109.9 170.7 145.6 294.7
Interest paid (14.3)(13.1)(15.3)(13.6)(29.8)
Taxation paid (17.1)(35.8)(42.9)(75.3) (128.5)
Net cash from operating
activities 92.2 61.0 112.5 56.7 136.4
Investing activities:
Interest received 0.8 0.6 2.5 4.0 6.3
Purchase of property,
plant and equipment(38.0)(27.8)(63.1)(51.9) (129.1)
Purchase of intangible
assets (2.3) (2.0) (3.6) (6.2)(11.3)
Proceeds from sale of property,
plant and equipment- - 1.0 - 1.0
Cash flows from investing
activities (39.5)(29.2)(63.2)(54.1) (133.1)
Financing activities:
Dividends paid (107.4) (107.6) (107.4) (107.6) (123.9)
Proceeds from issue of shares - 2.3 - 5.5 6.0
Purchase of own shares - - - (29.0)(29.0)
Increase in borrowings due
in less than one year 94.1 15.5 83.7 22.0 31.1
Cash flows from financing
activities (13.3)(89.8)(23.7) (109.1) (115.8)
Reconciliation of movement
in cash and cash equivalents:
Cash and cash equivalents
at beginning of period 29.2 105.0 41.7 152.3 152.3
Increase/(decrease) in
cash and cash equivalents 39.4 (58.0) 25.6(106.5) (112.5)
Exchange adjustments (1.7) 4.8 (0.4) 6.0 1.9
Closing cash and cash
equivalents 66.9 51.8 66.9 51.8 41.7
Reconciliation of cash flows
to movement in net debt:(1)
Net debt at beginning of
period(377.0) (286.2) (374.6) (233.2) (233.2)
Increase/(decrease) in
cash and cash equivalents 39.4 (58.0) 25.6(106.5) (112.5)
Increase in borrowings (94.1)(15.5)(83.7)(22.0)(31.1)
Exchange adjustments (1.6) 4.9 (0.6) 6.9 2.2
Closing net debt (433.3) (354.8) (433.3) (354.8) (374.6)
(1) Net debt represents cash and cash equivalents less borrowings due in
less than one year and borrowings due in more than one year.
Condensed consolidated statement of recognised income and expense
(unaudited)
for the 26 weeks ended 2 August 2008
13 weeks 13 weeks 26 weeks 26 weeks 52 weeks
endedendedendedended ended
2 August 4 August 2 August 4 August 2 February
2008 2007 2008 2007 2008
$m $m $m $m $m
Exchange differences on
translation
of foreign operations (2.7)13.5 - 18.8 (0.1)
Effective portion of changes
in value of cash flow hedges 5.7 (8.4) (4.0)(5.1)14.1
Transfer to initial carrying
value of inventory from cash
flow hedges (3.3)(0.1) (8.7)(1.7) (10.2)
Actuarial gain on retirement
benefit scheme -- --(15.0)
Tax on items recognised in
equity (0.7) 2.5 3.6 2.0 3.7
Net (expense)/income recognised
directly in equity (1.0) 7.5(9.1)14.0 (7.5)
Profit for the financial period 19.1 36.743.8 69.2215.2
Total recognised income and
expense attributable to
shareholders18.1 44.234.7 83.2207.7
Notes to the condensed consolidated financial statements (unaudited)
for the 26 weeks ended 2 August 2008
1. Basis of preparation
This condensed set of financial statements has been prepared in accordance
with the requirements of IAS 34 'Interim Financial Reporting' as adopted by
the EU.
As required by the Disclosure and Transparency Rules ("the DTR") of the
UK's Financial Services Authority ("the UK FSA"), the condensed set of
financial statements has been prepared applying the accounting policies and
presentation that were applied in the preparation of the Company's published
consolidated financial statements for the 52 week period ended 2 February
2008, which were prepared in accordance with IFRS as adopted by the EU.
These interim financial statements are unaudited and do not constitute
statutory accounts within the meaning of Section 240 of the Companies Act
1985. The comparative figures for the 52 weeks ended 2 February 2008 are not
the Company's statutory accounts for that period. Those accounts have been
reported on by the Company's auditors and have been delivered to the Registrar
of Companies. The report of the auditors was (i) unqualified, (ii) did not
include a reference to any matters to which the auditors drew attention by way
of emphasis without qualifying their report, and (iii) did not contain a
statement under section 237(2) or (3) of the Companies Act 1985.
2. Segment information
13 weeks 13 weeks 26 weeks 26 weeks 52 weeks
ended ended ended ended ended
2 August 4 August 2 August 4 August 2 February
2008 2007 2008 2007 2008
$m$m $m$m $m
Sales by origin and
destination
UK, Channel Islands &
Republic of Ireland193.3 202.8 384.7 384.9 959.6
US 575.6 584.6 1,206.7 1,216.9 2,705.7
768.9 787.4 1,591.4 1,601.8 3,665.3
Operating (loss)/profit
UK, Channel Islands &
Republic of Ireland
- Trading1.8 1.3 4.5 (0.6)105.1
- Group central costs:
- underlying (4.6) (4.8) (9.0) (8.8)(16.0)
- re-listing(10.5)- (10.5)- -
(13.3) (3.5)(15.0) (9.4) 89.1
US 49.3 66.4 94.8 126.3 262.2
36.0 62.9 79.8 116.9 351.3
The Group's results derive from one business segment - the retailing of
jewellery, watches and associated services.
3. Net financing costs
13 weeks 13 weeks 26 weeks 26 weeks 52 weeks
ended ended ended ended ended
2 August 4 August 2 August 4 August 2 February
2008 2007 2008 2007 2008
$m$m $m$m $m
Interest receivable 0.8 1.6 2.5 4.0 6.2
Defined benefit pension scheme:
- expected return on scheme
assets 4.2 4.4 8.6 8.6 18.3
- interest on pension
liabilities (3.7) (3.3) (7.5) (6.5)(13.5)
Finance income1.3 2.7 3.6 6.1 11.0
Finance expense (7.7) (7.4)(15.2)(14.0)(28.8)
(6.4) (4.7)(11.6) (7.9)(17.8)
Notes to the condensed consolidated financial statements (unaudited)
for the 26 weeks ended 2 August 2008
4. Taxation
The net taxation charges in the income statements for the 13 weeks and 26
weeks ended 2 August 2008 have been based on the anticipated effective
taxation rate for the 52 weeks ending 31 January 2009.
5. Translation differences
The exchange rates used for the translation of UK pound sterling
transactions and balances in these interim statements are as follows:
2 August4 August2 February
20082007 2008
Income statement (average rate)1.981.99 2.00
Balance sheet (closing rate) 1.972.04 1.97
The effect of restating the balance sheet at 4 August 2007 to the exchange
rates ruling at 2 August 2008 would be to increase net debt by $0.3 million to
$(355.1) million.
6. Earnings per share
13 weeks 13 weeks 26 weeks 26 weeks 52 weeks
ended ended ended ended ended
2 August 4 August 2 August 4 August 2 February
2008 2007 2008 2007 2008
$m$m $m$m $m
Profit attributable to
shareholders 19.1 36.743.8 69.2 215.2
Weighted average number
of shares in issue
(million) 1,704.0 1,702.4 1,703.9 1,703.01,703.8
Dilutive effect of share
options (million) 0.8 7.7 1.0 9.43.3
Diluted weighted average
number of shares
(million) 1,704.8 1,710.1 1,704.9 1,712.41,707.1
Earnings per share
- basic1.2c 2.2c2.6c 4.1c 12.6c
- diluted 1.2c 2.1c2.6c 4.0c 12.6c
Earnings per ADS
- basic 11.3c 21.5c 25.7c40.6c 126.3c
- diluted 11.3c 21.4c 25.7c40.4c 126.1c
The number of ordinary and deferred shares in issue at 2 August 2008 was
1,705,541,827 and 50,000 respectively (4 August 2007: 1,705,339,904 ordinary
and 50,000 deferred shares, 2 February 2008: 1,705,510,466 ordinary and 50,000
deferred shares).
7. Seasonality
The Group's business is highly seasonal with a very significant proportion
of its sales and operating profit generated during its fourth quarter, which
includes the Christmas season. The Group expects to continue to experience a
seasonal fluctuation in sales and profit.
Notes to the condensed consolidated financial statements (unaudited)
for the 26 weeks ended 2 August 2008
8. Share premium and reserves
26 weeks ended 2 August 2008
Other reservesRetained earnings
Purchase
Capital Specialof trans- Retained Total
Share redempre-own Hedging tion re-
premium tion serves shares reserve reserve serves
$m $m$m $m$m$m$m $m
Balance at
2 February 2008 140.2 0.4 234.8 (10.8) 8.2 10.0 1,407.9 1,790.7
Recognised income
and expense:
- profit for the
financial
period-- - -- -43.8 43.8
- cashflow hedges
(net) -- - - (9.1) - - (9.1)
- translation
differences -- - -- - --
Dividends -- - -- - (107.4) (107.4)
Equity-settled
transactions -- - -- - 3.7 3.7
Balance at
2 August 2008 140.2 0.4 234.8 (10.8)(0.9) 10.0 1,348.0 1,721.7
9. Dividend
A dividend of 0.96 cent per share will be paid on 7 November 2008 to
shareholders on the register of members at the close of business on 26
September 2008. The US dollar to pound sterling rate used to convert the 0.96
cent dividend per share for payment to shareholders who elect to receive a
pound sterling dividend will be the rate as derived from Reuters at 4.00pm on
the record date of 26 September 2008. Shareholders wishing to change the
currency in which they receive the dividend should contact the Company's
registrars.
10. Impact of constant exchange rates and re-listing costs
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 re-calculation of sales, operating profit, and net
debt at constant exchange rates, including a reconciliation to the Group's
GAAP results, is analysed below.
26 weeks ended 2 August 2008
26 weeks 26 weeks Growth at Impact of At constant Growth at
endedendedactual exchangeexchange constant
2 August 4 August exchange rate rates exchange
2008 2007 rates movement (non-GAAP)rates
(non-GAAP)
$m $m% $m $m %
Sales by origin
and destination
UK, Channel Islands
& Republic of
Ireland 384.7384.9 (0.1)(1.9)383.0 0.4
US 1,206.7 1,216.9 (0.8) - 1,216.9(0.8)
1,591.4 1,601.8 (0.6)(1.9) 1,599.9(0.5)
Operating
(loss)/profit
UK, Channel Islands
& Republic of
Ireland
- Trading 4.5 (0.6) n/a- (0.6) n/a
- Group central
costs: -
underlying (9.0)(8.8)(2.3) - (8.8)(2.3)
- re-listing (10.5) - n/a- - n/a
(15.0)(9.4) (59.6) - (9.4) (59.6)
US 94.8126.3(24.9) - 126.3(24.9)
79.8116.9(31.7) - 116.9(31.7)
Notes to the condensed consolidated financial statements (unaudited)
for the 26 weeks ended 2 August 2008
10. Impact of constant exchange rates and re-listing costs (continued)
At 2 August 2008 2 August 4 AugustImpact of At constant
2008 2007 exchange exchange
rate movement rates
(non-GAAP)
$m$m$m $m
Net debt(433.3) (354.8) (0.3) (355.1)
The underlying performance of the business excluding the impact of re-
listing costs is detailed below.
26 weeks ended 2 August 2008
Impact
of Excluding
26 weeks 26 weeks Movementre- re- Movement
endedended including listing listing excluding
2 August 4 August re-listing costs costs re-listing
2008 2007 costs 20082008 costs
$m $m %$m $m %
Operating profit 79.8116.9 (31.7)10.590.3 (22.8)
Profit before tax 68.2109.0 (37.4)10.578.7 (27.8)
Diluted earnings per
share2.6c 4.0c (35.0)0.6c3.2c (20.0)
Responsibility statement of the directors in respect of the half year
report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting' as adopted by the
EU;
-- the interim management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first six months of
the current financial year and that have materially affected the
financial position or performance of the Company during that
period; and any changes in the related party transactions described
in the last annual report that could do so.
Terry Burman Group Chief Executive
Walker Boyd Group Finance Director
3 September 2008
Independent review report by KPMG Audit Plc to Signet Group plc
Introduction
We have been instructed by the Company to review the financial information
set out on pages 7 to 14 in the half year report for the 26 weeks ended 2
August 2008 which comprises a condensed consolidated income statement, a
condensed consolidated balance sheet, a condensed consolidated cash flow
statement, a condensed consolidated statement of recognised income and expense
and the related explanatory notes. We have read the other information
contained in the half year report and considered whether it contains any
apparent misstatements or material inconsistencies with the financial
information.
This report is made solely to the Company in accordance with the terms of
our engagement to assist the Company in meeting the requirements of the
Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services
Authority ("the UK FSA"). Our review has been undertaken so that we might
state to the Company those matters we are required to state to it in this
report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the Company for
our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half year report including the financial information contained
therein, is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the half year report in accordance
with the DTR of the UK FSA.
As disclosed in note 1, the annual financial statements of the Company are
prepared in accordance with IFRS as adopted by the EU. The financial
information included in this half year report has been prepared in accordance
with IAS 34 'Interim Financial Reporting' as adopted by the EU .
Our responsibility
Our responsibility is to express to the Company a conclusion on the
financial information in the half year report based on our review.
Scope of Review
We conducted our review in accordance with the International Standard on
Review Engagements (UK and Ireland) 2410 'Review of interim financial
information performed by the independent auditor of the entity' issued by the
Auditing Practices Board for use in the UK. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Review conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the financial information in the half year report for the 26
weeks ended 2 August 2008 is not prepared, in all material respects, in
accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.
KPMG Audit Plc
Chartered Accountants
London
UK
3 September 2008
EXHIBIT 1
Unaudited condensed consolidated income statements under US GAAP
13 weeks 13 weeks 26 weeks 26 weeks
endedended ended ended
2 August 4 August 2 August 4 August
2008 2007 2008 2007
$m $m $m$m
Sales768.9787.4 1,591.4 1,601.8
Cost of sales (519.8) (541.3)(1,064.6)(1,081.9)
Gross margin 249.1246.1526.8519.9
Selling, general and
administrative
expenses (240.4) (203.7) (502.1) (449.6)
Other operating
income, net 28.8 26.1 58.7 53.4
Operating income 37.5 68.5 83.4123.7
Interest income0.8 1.6 2.5 4.0
Interest expense (7.7)(7.4) (15.2) (14.0)
Income before income
taxes30.6 62.7 70.7113.7
Income taxes (10.9) (21.7) (25.3) (39.4)
Net income19.7 41.0 45.4 74.3
Earnings per share
- basic 1.2c 2.4c 2.7c 4.4c
- diluted 1.2c 2.4c 2.7c 4.4c
All of the above relate to continuing activities attributable to equity
shareholders.
Unaudited condensed consolidated balance sheets under US GAAP
2 August4 August 2 February
20082007 2008
$m $m$m
Assets
Current assets:
Cash and cash equivalents 66.951.8 41.7
Accounts receivable, net 760.8 723.0 848.2
Other receivables 27.035.7 40.5
Other current assets 46.343.1 38.8
Deferred tax assets - 1.6 -
Inventories 1,454.5 1,368.3 1,453.6
Total current assets2,355.5 2,223.5 2,422.8
Non-current assets:
Property, plant and equipment,
net of accumulated depreciation
of $695.4 million, $601.8
million and $642.8 million,
respectively.498.7 477.1 489.2
Goodwill 556.0 561.2 556.0
Other intangible assets, net 22.819.8 22.0
Other assets 41.134.1 34.8
Retirement benefit asset - 6.5 -
Deferred tax assets74.858.6 74.6
Total assets3,548.9 3,380.8 3,599.4
Liabilities and Shareholders'
equity:
Current liabilities:
Loans and overdrafts 120.226.6 36.3
Accounts payable 82.585.7 89.3
Accrued expenses and other
current liabilities 231.4 228.8 268.2
Deferred revenue 106.3 102.5 125.3
Deferred tax liabilities 53.127.8 47.9
Income taxes payable 59.381.3 79.5
Total current liabilities 652.8 552.7 646.5
Non-current liabilities:
Long-term debt380.0 380.0 380.0
Other liabilities 112.6 105.4 96.4
Deferred revenue 137.7 134.6 149.7
Retirement benefit obligation 4.0 - 5.6
Total liabilities 1,287.1 1,172.7 1,278.2
Shareholders' equity:
Common stock of 0.9c par value:
authorised 5,929.9 million
shares, 1,705.5 million shares
issued and outstanding
(4 August 2007: 1,705.3 million
shares issued and shares
outstanding; 2008: 1,705.5
million shares issued
and outstanding) 15.315.3 15.3
Deferred stock, £1 par value:
authorised 50,000, issued and
outstanding 50,000 shares 0.1 0.1 0.1
Additional paid-in capital163.5 157.7 162.5
Other reserves235.2 235.2 235.2
Retained earnings 1,856.4 1,791.7 1,918.4
Treasury stock - 1.7 million
shares, 2.0 million shares
and 1.7 million
shares, respectively (10.8) (11.4)(10.8)
Accumulated other
comprehensive income 2.119.5 0.5
Total liabilities and
shareholders' equity 3,548.9 3,380.8 3,599.4
Unaudited condensed consolidated statements of cash flows under US GAAP
13 weeks13 weeks 26 weeks 26 weeks
ended ended ended ended
2 August4 August 2 August 4 August
20082007 2008 2007
$m $m $m $m
Cash flows from operating
activities:
Net income19.741.0 45.4 74.3
Adjustments to reconcile
net income to cash flows
provided by operations:
Depreciation of property,
plant and equipment25.525.8 52.6 49.8
Amortisation of other
intangible assets 1.5 1.12.82.3
Pension expense 0.3(0.4) 0.5 (0.8)
Stock-based payments
expense 0.4(2.9) 0.7 (1.2)
Deferred taxation - - (1.5) -
Other non-cash movements 1.4 0.6 (2.8) (1.3)
Loss on disposal of property,
plant and equipment 0.4 -0.1 -
Changes in operating
assets and liabilities:
Decrease/(increase) in
inventories 58.143.69.4 (5.4)
Decrease in trade
receivables 24.011.6 86.0 69.7
(Increase)/decrease in
other receivables(5.9) (9.4) (7.0) 0.5
Decrease/(increase) in
other current assets 0.7 (15.5) 2.7 (10.5)
Decrease in accounts payable (21.6) (19.7) (12.8) (31.4)
Decrease in accrued expense
and other liabilities(5.4) (0.1) (45.0) (49.4)
Decrease in income taxes
payable (6.1) (14.1) (16.1) (35.9)
Net cash provided by operating
activities 93.061.6 115.0 60.7
Investing activities:
Purchase of property, plant
and equipment (38.0) (27.8) (63.1) (51.9)
Purchase of other intangible
assets (2.3) (2.0) (3.6) (6.2)
Proceeds from sale of property,
plant and equipment - -1.0 -
Net cash flows used in investing
activities (40.3) (29.8) (65.7) (58.1)
Financing activities:
Dividends paid (107.4) (107.6)(107.4)(107.6)
Proceeds from issue of stock - 2.3 -5.5
Purchase of own stock- - - (29.0)
Proceeds from short-term
borrowings 94.115.5 83.7 22.0
Net cash flows used in
financing activities(13.3) (89.8) (23.7)(109.1)
Cash and cash equivalents
at beginning of period 29.2 105.0 41.7 152.3
Increase/(decrease) in cash
and cash equivalents 39.4 (58.0) 25.6 (106.5)
Effect of exchange rate changes
on cash and cash equivalents (1.7)4.8 (0.4) 6.0
Cash and cash equivalents at
end of period66.951.8 66.9 51.8
Reconciliation of net income and shareholders' funds from IFRS to US GAAP
Effect on profit for the financial period of differences between IFRS and
US GAAP
13 weeks13 weeks 26 weeks 26 weeks
ended ended ended ended
2 August4 August 2 August 4 August
20082007 2008 2007
$m $m $m $m
Profit for the financial period
in accordance with IFRS 19.136.7 43.8 69.2
Pensions (0.8) (0.7) (1.6) (1.3)
Sale and leaseback transactions0.3 0.40.60.8
Share-based payment1.5 4.83.05.2
Profit on disposal of
revalued asset - -0.5 -
Taxation on reconciling items (0.4) (0.2) (0.9) 0.4
Retained profit attributable
to shareholders in accordance
with US GAAP 19.741.0 45.4 74.3
Effect on shareholders' funds of differences between IFRS and US GAAP
2 August 4 August2 February
2008 2007 2008
$m $m $m
Shareholders' funds in accordance
with IFRS 1,737.1 1,702.2 1,806.1
Goodwill in respect of
acquisitions (gross)876.1 884.4 876.1
Accumulated goodwill amortisation (350.7) (354.0) (350.7)
Sale and leaseback transactions (10.2) (12.0)(10.7)
Depreciation of properties(4.5) (5.1) (4.7)
Revaluation of properties (8.2) (8.8) (8.5)
Share-based payment (1.2) (4.0) (1.5)
Commodity derivatives 23.2 2.0 8.1
Taxation on reconciling items 0.2 3.4 7.0
US GAAP adjustments 524.7 505.9 515.1
Shareholders' funds in accordance
with US GAAP 2,261.8 2,208.1 2,321.2
A narrative description of the reconciling items is disclosed in the
annual report for the 52 weeks ended 2 February 2008.
SOURCE Signet Group plc
