EXHIBIT 99.1
SIGNET GROUP PLC
UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS TO 2 AUGUST 1997 4 SEPTEMBER 1997
STRONG FIRST HALF PERFORMANCE
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OPERATING PROFIT UP 27%
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GROUP LIKE FOR LIKE SALES +7%
US +9%
UK +3%
GROUP OPERATING PROFIT (POUND)12.7M (1996: (POUND)10.0M) +27%
GROUP PRE TAX PROFIT (POUND)1.9M (1996: (POUND)6.0M LOSS) +(POUND)7.9M
GROUP NET DEBT (POUND)214.1M - REDUCED BY (POUND)92.0M
Commenting on the results, James McAdam, Chairman, said:
"Excellent progress has been made in the first half year, including a further
significant improvement in results, the voluntary refinancing of the Group's
borrowings, and a reorganisation of the Group's capital structure. As usual
performance over the critical Christmas trading season will determine the
outcome for the year as a whole."
Enquiries:
James McAdam, Chairman after 2.00pm 0171 495 2643
Walker Boyd, Group Finance Director after 2.00pm 0171 495 2643
Susan Gilchrist, Brunswick 0171 404 5959
GROUP
It is pleasing to report that for the six months to 2 August 1997 like for like
sales increased by 6.6% and operating profit advanced by 27.6% to (pound)12.7
million (1996: (pound)10.0m). At constant exchange rates the increase in
operating profit would have been 38.1%.
Interest charges for the period were reduced by 32.2% to (pound)10.8 million
(1996: (pound)15.9m). At constant exchange rates the reduction would have been
29.0%. The reduction reflects a lower level of average borrowings and benefits
from the new banking facility agreed on 27 February 1997.
Pre tax profit was (pound)1.9 million (1996: (pound)6.0m loss) an improvement of
(pound)7.9 million. The impact of exchange rate translation was not material.
UNITED STATES (63% OF GROUP TURNOVER)
Operating profit in the period increased by 16.4% to(pound)16.0 million
(1996:(pound)13.7m). At constant exchange rates the increase would have been
23.1%.
Sales were (pound)234.7 million (1996: (pound)235.4m, at constant exchange rates
(pound)222.5m) with underlying like for like sales increasing by 8.9%. Gross
margin showed a small decrease compared to the same period in 1996, but tight
control of costs was maintained and bad debt charges fell from 3.6% to 3.1% of
total US sales although concerns remain about the general credit environment in
the US.
The strong sales performance which was ahead of our main competition reflected
the benefits of more effective marketing and promotional programmes during the
period together with improvements made to merchandise ranges and assortment.
During the period eight stores were closed and three were opened. Some 20 stores
are planned to open prior to the Christmas season, including three superstores
each of approximately 5,500 sq/ft, bringing the total number of such stores to
seven.
UNITED KINGDOM (37% OF GROUP TURNOVER)
UK JEWELLERY
Like for like sales increased by 3.3%. Operating profit for the period was
(pound)0.2 million (1996: (pound)0.2m). Gross margin showed a further small
improvement and while cost increases were contained below the rate of inflation,
operating profit for the period was reduced by an estimated (pound)1.2 million
(1996: (pound)nil) due to the write-off of certain residual fixtures and
fittings and the temporary closure of stores being modernised.
H. Samuel sales were (pound)95.3million (1996: (pound)96.3m) and like for like
sales increased by 1.4%. The H. Samuel store modernisation programme is
proceeding according to plan. 51 stores had been modernised by the end of July
and a further 119 stores are planned to be modernised before the start of the
Christmas trading period. Sales from the modernised stores accounted for only
some 10% of H. Samuel's total sales in the period. Like for like sales from the
modernised stores increased by 6.8% in the period as against 0.8% like for like
increase for the rest of the chain. While the 6% differential is encouraging it
should be treated with caution at this early stage of the programme.
Ernest Jones sales were (pound)41.2 million (1996: (pound)37.9m). Like for like
sales increased by 7.9%, building on the excellent performance of the previous
year. Three new stores were opened in the first half year and a further four
stores are planned for the second half.
GROUP COSTS
As reported in note 3 to the Financial Statements, UK operating profit is stated
after charging Group costs of (pound)3.4 million (1996: (pound)3.9m).
NET DEBT
Net debt at 2 August 1997 was (pound)214.1 million (1996: (pound)306.1m) a
reduction of (pound)92.0 million. At constant exchange rates, the reduction was
(pound)75.2 million. The reduction reflects the improved operating performance
of the Group together with a lower proportion of credit sales in the US. Capital
expenditure in the second half of 1997 is likely to exceed that incurred in the
comparable period last year.
CAPITAL REORGANISATION
The capital restructuring became effective on 21 July 1997. The capital
reduction to eliminate the deficit on the Company's distributable reserves was
approved by the High Court on 3 September 1997 and is expected to become
effective within the next few days.
No interim dividend will be paid in respect of the half year to 2 August 1997.
OUTLOOK
Consumer confidence on both sides of the Atlantic remains generally strong.
Results for the first half year have been encouraging, but the outcome for the
year will be dependent on the all important Christmas trading period.
SIGNET GROUP PLC
UNAUDITED INTERIM CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE 26 WEEKS ENDED 2 AUGUST 1997 UK GAAP
Notes 26 WEEKS 26 weeks 52 weeks
ENDED ended ended
2 AUGUST 1997 3 August 1996 1 February
(POUND)000 (pound)000 1997
(pound)000
SALES 1,3 371,232 369,615 901,952
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OPERATING PROFIT/(LOSS) 3 12,725 9,969 76,505
Net interest payable and similar charges (10,791) (15,923) (31,439)
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PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 1,934 (5,954) 45,066
Tax on profit/(loss) on ordinary activities 4 (503) 1,790 (11,211)
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PROFIT/(LOSS) FOR THE FINANCIAL PERIOD 1,431 (4,164) 33,855
Dividends 5 - - -
Appropriation from/(to) preference shareholders 7,below 154,531 (17,313) (26,398)
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Retained profit/(loss) attributable to ordinary below 155,962 (21,477) 7,457
shareholders
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EARNINGS/(LOSS) PER ORDINARY SHARE - BASIC below 39.8 P (7.3) p 2.5 p
- ------------------------------------------------------------------------------------------------------------------------
- ADJUSTED below 0.1 P (0.2) p 2.0 p
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All of the above relates to continuing activities.
Note: FRS 4 has required the full finance cost of the Company's preference
(non-equity) shares to be shown in its previous financial statements as
appropriated from profits, even though the Company did not have sufficient
distributable reserves to pay a dividend at that time. Since the Company stopped
paying dividends in 1992 such appropriations have been made each year in the
profit and loss account and have been reversed in both the Company and
consolidated balance sheets each year. The cancellation of the accrued
preference dividends as part of the capital restructuring, approved by
shareholders on 21 July 1997, results in a reversal of such appropriations and a
net credit totalling (pound)161,502,000 in the profit and loss account as
described in note 7 to these financial statements. However, as set out in Note 8
there is a corresponding charge to reserves and there is, therefore, no net
impact on either shareholders' funds or on reserves available for distribution.
The calculation of basic earnings per share has been based on the retained
profit or loss attributable to ordinary shareholders and the weighted average
number of ordinary shares in issue. Basic earnings per share is, in the above
circumstances, a technical calculation resulting from the FRS4 treatment
discussed above and reflects both the profit for the period and the
corresponding credit arising from the reversal of appropriations, but does not
reflect the corresponding charge to reserves.
Adjusted earnings per share has been based on profit/(loss) after taxation for
the financial period and the number of ordinary shares in issue following the
capital restructuring which became effective on 21 July 1997.
Fully diluted earnings per share do not differ materially from basic earnings
per share.
UNAUDITED CONSOLIDATED BALANCE SHEET
as at 2 August 1997
UK GAAP
Notes 2 AUGUST 1997 3 August 1996 1 February 1997
(POUND)000 (pound)000 (pound)000
FIXED ASSETS 123,623 138,285 128,938
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CURRENT ASSETS
Stocks 309,614 327,094 326,953
Debtors (see note a. below) 192,187 210,371 220,771
Short term investments 900 900 900
Cash at bank and in hand 39,293 133,477 163,033
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541,994 671,842 711,657
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR (137,819) (406,323) (409,032)
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Bank loans and overdrafts (see note b. below) (23,640) (311,031) (279,530)
Other (114,179) (95,292) (129,502)
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NET CURRENT ASSETS (NOTES A. AND B. BELOW) 404,175 265,519 302,625
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TOTAL ASSETS LESS CURRENT LIABILITIES 527,798 403,804 431,563
CREDITORS: amounts falling due after more
than one year (229,752) (128,569) (123,748)
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Bank loans and overdrafts (229,742) (128,558) (123,739)
Other (10) (11) (9)
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PROVISIONS FOR LIABILITIES AND CHARGES
Deferred taxation (60) (2,053) -
Other provisions (5,342) (6,786) (7,070)
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TOTAL NET ASSETS 292,644 266,396 300,745
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CAPITAL AND RESERVES
Called up share capital 73,189 66,282 66,281
Reserves 219,455 200,114 234,464
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SHAREHOLDERS' FUNDS 8 292,644 266,396 300,745
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FRS 4 requires the analysis of total shareholders' funds between non-equity
shareholders' funds and those relating to equity shareholders, as defined by FRS
4. Before the capital restructuring became effective on 21 July 1997,
shareholders' funds included non-equity interests made up of net issue proceeds
and total unpaid preference dividends relating to the Company's four classes of
preference shares. Non-equity shareholders' funds at 2 August 1997 amounted to
nil (3 August 1996:(pound)470,018,000, 1 February 1997:(pound)479,103,000).
a. Debtors and net current assets include amounts recoverable after more than
one year of (pound)19,117,000 (3 August 1996: (pound)19,117,000, 1 February
1997:(pound)19,126,000).
b. As at 3 August 1996 and 1 February 1997, the Group's borrowing facilities
were subject to renewal at 30 June 1997, and in accordance with the Companies
Act 1985, these borrowings are shown as due within one year.
UNAUDITED CONSOLIDATED CASHFLOW STATEMENT
For the 26 weeks ended 2 August 1997
UK GAAP
26 WEEKS 26 weeks 52 weeks
ENDED ended ended
2 AUGUST 1997 3 August 1996 1 February 1997
(POUND)000 (pound)000 (pound)000
CASH FLOW FROM OPERATING ACTIVITIES 48,540 32,243 109,397
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NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND (15,703) (15,777) (28,137)
SERVICING OF FINANCE
TAXATION (3,375) 457 (1,754)
NET CASH OUTFLOW FOR CAPITAL EXPENDITURE AND FINANCIAL (8,733) (17,265) (23,823)
INVESTMENT
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CASH INFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING 20,729 (342) 55,683
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MANAGEMENT OF LIQUID RESOURCES - decrease/(increase) in 125,626 18,260 (12,882)
bank deposits
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CASH OUTFLOW FROM FINANCING (132,877) (3,350) (34,158)
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INCREASE IN CASH IN THE PERIOD 13,478 14,568 8,643
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RECONCILIATION OF NET CASHFLOW TO MOVEMENT IN NET DEBT
INCREASE IN CASH IN THE PERIOD 13,478 14,568 8,643
Cash outflow from decrease in debt 132,877 3,350 34,158
Cash outflow/(inflow) from increase/(decrease) in (125,626) (18,260) 12,882
liquid resources
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CHANGE IN NET DEBT RESULTING FROM CASHFLOWS 20,729 (342) 55,683
Translation difference 5,418 2,441 12,292
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MOVEMENT IN NET DEBT IN THE PERIOD 26,147 2,099 67,975
OPENING NET DEBT (240,236) (308,211) (308,211)
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CLOSING NET DEBT (214,089) (306,112) (240,236)
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RECONCILIATION OF OPERATING PROFIT TO OPERATING CASHFLOWS
OPERATING PROFIT 12,725 9,969 76,505
Depreciation charges 12,398 13,776 24,619
(Profit)/loss on sale of tangible fixed assets (242) (335) (359)
Property revaluation - - 3,559
Realisation of ESOT investment - (1,112) (1,112)
Decrease in stocks 13,151 11,404 2,940
Decrease/(increase) in debtors 24,795 16,364 (4,150)
(Decrease)/increase in creditors (13,193) (17,705) 7,874
Decrease in other provisions (1,094) (118) (479)
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NET CASH INFLOW FROM OPERATING ACTIVITIES 48,540 32,243 109,397
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NOTES TO UNAUDITED INTERIM FINANCIAL RESULTS
For the 26 weeks to 2 August 1997
UK GAAP
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1. SALES
Sales represent net sales to customers outside the Group, exclusive of value
added and sales tax.
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2. BASIS OF PREPARATION
The foregoing does not constitute statutory accounts within the meaning Section
240 of the Companies Act 1985. The comparative figures for the 52 weeks
ended 1 February 1997 are an abridged statement of the Group's full
statutory accounts for that period which have been delivered to the
Registrar of Companies and on which the Company's auditors made a report
under s235 of the Companies Act 1985 which was unqualified and did not
contain a statement under s237(2) or s237(3) of that Act.
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3. SEGMENTAL INFORMATION
26 WEEKS ENDED 26 weeks ended 52 weeks ended
2 AUGUST 1997 3 August 1996 1 February 1997
SALES BY OPERATING Sales by Operating Sales by Operating
ORIGIN AND PROFIT/(LOSS) origin and profit/(loss) origin and profit/(loss)
DESTINATION destination destination
(POUND)000 (POUND)000 (pound)000 (pound)000 (pound)000 (pound)000
UK and Republic of Ireland 136,494 (3,235) 134,206 (3,746) 343,495 22,725
US 234,738 15,960 235,409 13,715 558,457 53,780
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371,232 12,725 369,615 9,969 901,952 76,505
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Group and other costs of (pound)3,391,000(1996 equivalent period:
(pound)3,918,000, 52 weeks ended 1 February 1997: (pound)11,357,000) are
incurred in the UK and have therefore been charged against the operating
profit of the UK and Republic of Ireland. Group costs for the 52 weeks ended
1 February 1997 included a charge of (pound)1,607,000 relating to the
revaluation of freehold and long leasehold properties, net of other property
gains and depreciation adjustments. Also included was a charge relating to
the increase in the provision for disposal of a Group warehouse.
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4. TAXATION
The net taxation charge in the profit and loss account for the 26 weeks
to 2 August 1997 has been based on the anticipated effective taxation rate for
the 52 weeks ending 31 January 1998.
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5. DIVIDENDS
Following the capital restructuring becoming effective on 21 July 1997, all
arrears and accruals of preference share dividends have been cancelled (see
note 7).
No interim dividend will be paid on the ordinary shares (1996:nil).
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NOTES TO UNAUDITED INTERIM FINANCIAL RESULTS
For the 26 weeks to 2 August 1997
UK GAAP
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6. TRANSLATION DIFFERENCES
The exchange rates used for the translation of US dollar transactions and
balances in these interim statements are as follows:
2 AUGUST 1997 3 August 1996 1 February 1997
Profit and loss account (average rate) 1.64 1.55 1.59
Balance sheet (closing rate) 1.63 1.54 1.60
The effect of restating the balance sheet at 3 August 1996 to the exchange rates
ruling for the six months ended 2 August 1997 would be to decrease net debt by
(pound)16.8 million to (pound)289.3 million. Restating the profit and loss
account would not materially effect the pre-tax loss for the 26 weeks ended 3
August 1996.
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7. CAPITAL REORGANISATION
At an Extraordinary General Meeting and class meetings held on 26 June 1997,
shareholders approved proposals for a capital restructuring and capital
reduction. The capital restructuring involved the conversion of the ordinary
shares of 10p each and all classes of the Company's preference shares into
ordinary shares of 0.5p each and the cancellation of all accumulated arrears
and accruals of dividends on preference shares. The capital restructuring
became effective on 21 July 1997 and dealings in the new ordinary shares on
the London Stock Exchange and trading in new ordinary American Depository
Shares (representing new ordinary shares) on the US Nasdaq Stock Market
commenced on that date.
The cancellation of the accumulated arrears and accruals of dividends on
preference shares has been credited in the profit and loss account as
follows:
26 WEEKS 26 weeks 52 weeks
ENDED ended ended
2 AUGUST 3 August 1 February
1997 1996 1997
(POUND)000 (pound)000 (pound)000
Appropriation to preference shareholders in the period (3,840) (17,313) (26,398)
Appropriation from preference shareholders arising from
cancellation of dividend arrears and accruals 165,342 - -
------------- -------------- --------------
161,502 (17,313) (26,398)
Costs of share capital reorganisation (6,971) - -
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154,531 (17,313) (26,398)
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The increase in unpaid preference dividends in the period is stated net of
(pound)6,264,000 exchange gain (1996 equivalent period: (pound)621,000 gain, 52
weeks ended 1 February 1997: (pound)5,012,000 gain).
The capital reduction is intended to permit the consideration of payment of
dividends out of future profits. The capital reduction has been approved by the
High Court and is expected to become effective during September 1997.
NOTES TO UNAUDITED INTERIM FINANCIAL RESULTS
For the 26 weeks to 2 August 1997
UK GAPP
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8. CHANGES IN SHAREHOLDERS' EQUITY
Ordinary Preference Deferred Share Revaluation Special Profit Total
share share share premium reserve reserve and loss
capital capital capital account account
(pound)000 (pound)000(pound)000 (pound)000 (pound)000(pound)000 (pound)000(pound)000
Balance at 1 February 1997 29,306 36,975 0 175,129 1,784 80,433 (22,882) 300,745
Retained profit 155,962 155,962
Reversal of appropriation of
preference share dividends (161,502) (161,502)
Conversion of preference shares 6,908 (36,975) 36,975 (6,908) 0
Conversion of ordinary shares (27,841) 27,841 0
Transfer on disposal of fixed (67) 67 0
assets
Translation differences (7,721) 5,160 (2,561)
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Balance at 2 August 1997 8,373 0 64,816 168,221 1,717 72,712 (23,195) 292,644
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RECONCILIATION TO US GAAP
Unaudited interim results for the 26 weeks to 2 August 1997
- --------------------------------------------------------------------------------
Details of the estimated effect on the Company's consolidated net income and
shareholders' equity of the differences between UK GAAP and US GAAP are as
follows:
ESTIMATED EFFECT ON NET INCOME OF DIFFERENCES BETWEEN UK AND US GAAP
26 WEEKS 26 weeks 52 weeks
ENDED ended ended
2 AUGUST 3 August 1 February
1997 1996 1997
(POUND)000 (pound)000 (pound)000
Net income/(loss) in accordance with UK GAAP 1,431 (4,164) 33,855
US GAAP adjustments:
Goodwill amortisation and write off (6,043) (6,306) (12,370)
Amortisation of favourable lease terms - (142) (500)
Sale and leaseback transactions 894 1,018 720
Elimination of revaluation reserve surplus 67 - -
Warranty sales 681 1,963 4,204
Property depreciation (40) (40) (81)
Net periodic pension costs 2,059 1,171 4,326
Lease cost adjustment 519 800 282
Costs of capital reorganisation (6,971) - -
ESOT adjustment - (1,112) (1,112)
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US GAAP adjustments before taxation (8,834) (2,648) (4,531)
Taxation (1,384) (1,674) (3,230)
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US GAAP adjustments after taxation (10,218) (4,322) (7,761)
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Net income/(loss) in accordance with US GAAP (8,787) (8,486) 26,094
Additional finance costs of non-equity shares (3,840) (17,313) (26,398)
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Net loss attributable to ordinary shareholders in accordance (12,627) (25,799) (304)
with US GAAP
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Loss per ADS in accordance with US GAAP (primary): (9.7) P (26.4) p (0.3) p
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Supplementary(loss) / profit per ADS (assuming new capital
structure in place for all periods): (1.6) P (1.5) p 4.7 p
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ESTIMATED CUMULATIVE EFFECT ON SHAREHOLDERS' EQUITY OF DIFFERENCES BETWEEN
UK AND US GAAP
2 AUGUST 3 August 1 February
1997 1996 1997
(POUND)000 (pound)000 (pound)000
Shareholders' equity in accordance with UK GAAP 292,644 266,396 300,745
US GAAP adjustments:
Goodwill in respect of acquisitions (gross) 532,667 555,580 540,385
Consideration adjustment to goodwill (44,620) (47,228) (45,457)
Accumulated goodwill amortisation (108,633) (99,289) (103,902)
Favourable lease terms (valuation) 10,677 10,677 10,677
Accumulated amortisation of favourable lease terms (10,677) (10,319) (10,677)
Sale and leaseback transactions (12,897) (13,493) (13,791)
Warranty sales (4,741) (8,085) (5,525)
Pensions - (5,214) (2,059)
Property depreciation (2,963) (2,882) (2,923)
Elimination of revaluation surplus (1,717) (1,084) (1,784)
Preference shares excluded from shareholders' equity - (91,611) (94,274)
Lease cost adjustment (8,649) (8,650) (9,168)
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US GAAP adjustments before taxation 348,447 278,402 261,502
Taxation 8,769 11,857 10,189
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US GAAP adjustments after taxation 357,216 290,259 271,691
Shareholders' equity in accordance with US GAAP 649,860 556,655 572,436
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