5th Sep 2007 12:30
Signet Group PLC05 September 2007 Signet Group plc (LSE and NYSE: SIG) Unaudited Half Year Results for 26 weeks ended 4 August 2007 5 September 2007 SIGNET REPORTS ADVANCE IN HALF YEAR RESULTS Group profit before tax: $109.0m up 3.2%Group like for like sales: up 3.2%Group sales: $1,601.8m up 9.2%Earnings per share: 4.1c up 5.1%Interim dividend per share: 0.96c up 7.5%1 (1) Sterling increase, see note 9 for translation assumption. Operational Highlights: • US: - Continued to significantly outperform $62 billion jewellery sector - 2.7% increase in like for like sales - Jared to begin national network television advertising for Christmas 2007 - Space increase of about 10% expected in 2007/08 - c.$200 million investment in fixed and working capital anticipated for new stores • UK: - 4.6% increase in like for like sales - Strong performance by watch category - c.$25 million capital expenditure on stores anticipated in 2007/08 Terry Burman, Group Chief Executive, commented: "Against the background of achallenging retail environment in their respective markets, both divisionsperformed well. The US division continued to gain market share, demonstrated byan increase of 7.6% in sales. The UK business outperformed the retail marketwith a like for like sales increase of 4.6%. Reflecting the wider economic environment, the trading outlook on both sides ofthe Atlantic remains uncertain and the important Christmas period will, asusual, significantly influence the outcome for the full year. Both businessescontinue to manage costs tightly while implementing proven strategies tostrengthen further their competitive positions." Enquiries: Terry Burman, Group Chief Executive +44 (0) 20 7317 9700 Walker Boyd, Group Finance Director +44 (0) 20 7317 9700 Susan Gilchrist, Brunswick +44 (0) 20 7404 5959 Pamela Small, Brunswick +44 (0) 20 7404 5959 Signet operated 1,925 speciality retail jewellery stores at 4 August 2007; theseincluded 1,350 stores in the US, where the Group trades as "Kay Jewelers","Jared The Galleria Of Jewelry" and under a number of regional names. At thatdate Signet operated 575 stores in the UK, where the Group trades as "H.Samuel","Ernest Jones" and "Leslie Davis". Further information on Signet is available atwww.signetgroupplc.com. See also www.kay.com, www.jared.com, www.hsamuel.co.ukand www.ernestjones.co.uk. Interim Management Report These results are presented in US dollars following the change in the functionalcurrency of the Company and the move to reporting in US dollars which tookeffect from 5 February 2007. GROUP In the 26 weeks to 4 August 2007 Group profit before tax rose by 3.2% to $109.0million (H1 2006/07: $105.6 million) and 3.8% at constant exchange rates (seenote 10). Like for like sales were up by 3.2% and total sales by 9.2% to$1,601.8 million (H1 2006/07: $1,467.2 million). At constant exchange rates theincrease in total sales was 6.7% (see note 9). The average US dollar exchangerate for the period was £1/$1.99 (H1 2006/07: £1/$1.81). Operating profit rose by 4.1% to $116.9 million (H1 2006/07: $112.3 million),and 5.3% at constant exchange rates (see note 10). Operating margin was 7.3% (H12006/07: 7.7%). Earnings per share advanced by 5.1% to 4.1c (H1 2006/07: 3.9c);the tax rate being 36.5%(H1 2006/07: 35.6%). The Board has approved an interimdividend of 0.96c per ordinary share (H1 2006/07: 0.4434p), an increase of 7.5%at the exchange rate on 3 September 2007 (See note 10 for details of payment insterling). Outlook Reflecting the wider economic environment, the trading outlook on both sides ofthe Atlantic remains uncertain and the important Christmas period will, asusual, significantly influence the outcome for the full year. Both businessescontinue to manage costs tightly while implementing proven strategies tostrengthen further their competitive positions. OPERATING REVIEW US Division (circa 75% of Group sales) The US business again significantly outperformed the $62 billion jewellerysector and gained further market share. In a more challenging retail environmentlike for like sales were up 2.7% and total sales rose by 7.6% to $1,216.9million (H1 2006/07: $1,131.1 million). The underlying growth in like for likesales is estimated to have been 2.0% after adjusting for the impact of weatherdisruption over Valentine's Day and the benefit from the timing of a promotionalevent at the beginning of the year. Operating profit was little changed at $126.3 million (H1 2006/07: $125.1million). As anticipated the gross margin rate was a little lower than last yeardue to commodity cost increases and changes in the sales mix which benefitedlike for like sales. Operating margin was 10.4% (H1 2006/07: 11.1%). The baddebt charge at 2.8% of total sales (H1 2006/07: 2.4%) was comfortably within thetight range of the past ten years. While the bridal market has proven to be resilient, the sales performance overValentine's Day was disrupted by adverse weather and Mother's Day wasdisappointing. White gold jewellery continued to perform well, as did Journeyand Circle ranges in the necklace category and loose diamonds. The average unitselling price in both the mall formats and Jared rose by about 5% as a result ofselective price increases and mix changes. There will be a further increase inKay advertising expenditure over the important Christmas period. Jared willbegin to use national network television advertising for Christmas 2007, ratherthan purchase airtime on a local market basis. The annual marketing to salesratio is planned to be maintained at a broadly similar level to that of lastyear. The continued focus on staff training, further supply chain improvements,merchandising initiatives, increased marketing expenditure and the in-housecredit operation means the business is well positioned to compete. Consistent with the Group's five year $1 billion investment programme, it isexpected that in 2007/08 US net new store space will increase by about 10%.Capital expenditure in new and existing stores is planned to be circa $105million. Investment in working capital, that is inventory and receivables,associated with space growth of some $135 million is anticipated. The change in store numbers by format, together with the long term potential foreach is set out below: 3 February Expected net Long term 2007 openings potential 2007/08Kay Mall 772 14 850+ Off-mall 52 43 500+ Outlet centres 5 6 50-100 Metropolitan 3 - 30+ ----------- ----------- -----------Kay total 832 63 1,430+Regional brands 341 16 c.700Jared 135 19 c.300 ----------- ----------- ----------- Total 1,308 98 2,430+ ----------- ----------- ----------- UK Division (circa 25% of Group sales) Total sales increased by 4.2% at constant exchange rates (see note 10) to $384.9million(H1 2006/07: $336.1 million). Like for like sales were up by 4.6%(H.Samuel +3.2% and Ernest Jones +6.3%). Operating loss for the period was $0.6million (H1 2006/07: $6.2 million loss), the normal seasonal deficit beinglargely eliminated despite a slight fall in gross margin. Tight control of costsand inventory was maintained. The watch category performed particularly well and diamond participation in thedivision increased further. The focus on enhancing customer service continuesand staff training remains a priority. In partnership with a bank, a brandedin-store credit card is being introduced in both H.Samuel and Ernest Jones forthe Christmas season. 32 stores are expected to be refurbished or relocated this year. An enhancedformat is being used in H.Samuel and a range of design improvements are beingtested in Ernest Jones. Five new stores are planned to be opened. Total storecapital expenditure is anticipated to be some $25 million. At the year end, 352H.Samuel (3 February 2007: 375) and 204 Ernest Jones (3 February 2007: 206)stores are anticipated to be operating. Group central costs, financing items and taxation Group central costs were $8.8 million (H1 2006/07: $6.6 million), up $1.5million at constant exchange rates (see note 10) largely reflecting foreignexchange items and higher professional fees. Financing costs rose to $7.9million (H1 2006/07: $6.7 million), the increase being primarily due to theshare buy back programme announced in 2006/07. The tax charge was $39.8 million(H1 2006/07: $37.6 million). Net debt Net debt at 4 August 2007 was $354.8 million (29 July 2006: $229.0 million).Group gearing (that is the ratio of net debt to shareholders' funds) at 4 August2007 was 20.8% (29 July 2006: 14.7%). The seasonal increase in net debt sincethe start of the financial year has been larger than normal due to thecompletion of the 2006/07 share repurchase programme and faster vendor paymentsreflecting overall advantageous changes in terms (H1 2007/08: up $121.6 million;H1 2006/07: up $54.5 million). Additional store investment, predominantly in theUS, will result in fixed capital expenditure in the current year of about $170million (2006/07: $124.4 million). Risk factors, seasonality and related party transactions The principal risk factors are set out on pages 39 to 45 of the Group's AnnualReport & Accounts for the 53 weeks ended 3 February 2007, a copy of which isavailable in electronic form on the Group's website www.signetgroupplc.com. Inthe view of the directors there has been no material change in these factors inrespect of the remaining six months of the financial year. The Group's business is highly seasonal with a very significant proportion ofits sales and operating profit generated during its fourth quarter, whichincludes the Christmas season. The Group expects to continue to experience aseasonal fluctuation in sales and profit. There have been no additional related party transactions to those disclosed onpage 105 of the Group's Annual Report & Accounts for the 53 weeks ended 3February 2007. ********************* There will be an analysts' meeting today at 2.00 p.m. BST (9.00 a.m. EDT). Forall interested parties there will be a simultaneous audio and video webcastavailable on the Signet Group website (www.signetgroupplc.com) and a livetelephone conference call. The details for the conference call are: European dial-in: +44 (0)20 7806 1950 European 48 hr. replay: +44 (0)20 7806 1970 Access code: 3797548# US dial-in: +1 718 354 1387 US 48 hr. replay: +1 718 354 1112 Access code: 3797548# An on-demand webcast of the presentation is expected to be available from closeof business today at www.signetgroupplc.com and on the Thomson CCBN platform. The half year report will be posted to shareholders on or around 12 September2007. Copies of the half year report may be obtained from the Company Secretary,15 Golden Square, London W1F 9JG or downloaded as a pdf file fromwww.signetgroupplc.com . Investor Relations Programme Third Quarter Sales The third quarter sales for the 13 weeks ending 3 November 2007 are expected tobe announced on Thursday 8 November 2007 at 12.30 p.m. GMT. Las Vegas Store Tour, 29 November 2007 It is intended to host a tour of a Jared and a Kay store in Las Vegas, Nevada onthe morning of Thursday, November 29, 2007 for professional investors. The tourwill be hosted by Mark Light, Signet US CEO and Tim Jackson, Investor RelationsDirector. Cautionary Statements The Directors owe their duties to shareholders of Signet as a whole andundertake no duty of care to individual shareholders, other shareholders orpotential investors and the Company shall not be subject to any civil liabilityto persons resulting from reliance, by that person or another, on informationcontained in this interim management report unless a person dischargingmanagerial responsibilities within the Company knew such information was untrueor misleading and was published in bad faith or recklessly, or involved thedishonest concealment of material facts. Also the Company desires to take advantage of the "safe harbor" provisions ofthe United States Private Securities Litigation Reform Act of 1995 with respectto the forward-looking statements about its financial performance and objectivesin this Half Year Report. These statements, based upon management's beliefs aswell as on assumptions made by and data currently available to management,appear in a number of places throughout this release and include statementsregarding, among other things, our results of operation, financial condition,liquidity, prospects, growth, strategies and the industry in which the Groupoperates. Our use of the words "expects," "intends," "anticipates," "estimates,""may," "forecast," "objective," "plan" or "target," and other similarexpressions are intended to identify forward-looking statements. Theseforward-looking statements are not guarantees of future performance and aresubject to a number of risks and uncertainties, including but not limited togeneral economic conditions, the merchandising, pricing and inventory policiesfollowed by the Group, the reputation of the Group, the level of competition inthe jewellery sector, the price and availability of diamonds, gold and otherprecious metals, seasonality of the Group's business and financial market risk. For a discussion of these and other risks and uncertainties which could causeactual results to differ materially, see the "Risk and Other Factors" section ofthe Company's 2006/07 Annual Report on Form 20-F filed with the U.S. Securitiesand Exchange Commission on May 4, 2007 and other filings made by the Companywith the Commission. Actual results may differ materially from those anticipatedin such forward-looking statements even if experience or future changes make itclear that any projected results expressed or implied therein may not berealised. The Company undertakes no obligation to update or revise anyforward-looking statements to reflect subsequent events or circumstances. SIGNET GROUP plc Condensed consolidated income statement (unaudited)for the 26 weeks ended 4 August 2007 13 weeks ended 13 weeks ended 26 weeks ended 26 weeks ended 53 weeks ended 4 August 29 July 4 August 29 July 3 February 2007 2006 2007 2006 2007-------------------------------------------------------------------------------------------------------------------- Notes $m $m $m $m $m-------------------------------------------------------------------------------------------------------------------- Sales 2,10 787.4 732.9 1,601.8 1,467.2 3,559.2Cost of sales (713.1) (665.9) (1,465.5) (1,333.2) (3,092.4)--------------------------------------------------------------------------------------------------------------------Gross profit 74.3 67.0 136.3 134.0 466.8Administrative expenses (37.5) (34.4) (72.8) (68.2) (142.1)Other operating income 26.1 23.4 53.4 46.5 91.5--------------------------------------------------------------------------------------------------------------------Operating profit 2,10 62.9 56.0 116.9 112.3 416.2Finance income 3 2.7 5.5 6.1 7.6 18.8Finance expense 3 (7.4) (9.6) (14.0) (14.3) (34.2)--------------------------------------------------------------------------------------------------------------------Profit before tax 10 58.2 51.9 109.0 105.6 400.8Taxation 4 (21.5) (18.3) (39.8) (37.6) (134.8)--------------------------------------------------------------------------------------------------------------------Profit for the financial period 36.7 33.6 69.2 68.0 266.0--------------------------------------------------------------------------------------------------------------------Earnings per share - basic 6 2.2c 1.9c 4.1c 3.9c 15.4c - diluted 2.1c 1.9c 4.0c 3.9c 15.3c--------------------------------------------------------------------------------------------------------------------Earnings per ADS - basic 6 21.5c 19.2c 40.6c 39.0c 154.0c - diluted 21.4c 19.2c 40.4c 39.0c 153.4c-------------------------------------------------------------------------------------------------------------------- All of the above relate to continuing activities. Condensed consolidated balance sheet (unaudited)at 4 August 2007 4 August 29 July 3 February 2007 2006 2007------------------------------------------------------------------------------------------------------------ Notes $m $m $m------------------------------------------------------------------------------------------------------------ AssetsNon-current assetsIntangible assets 50.4 42.8 46.3Property, plant and equipment 491.0 463.9 484.8Other receivables 34.1 28.6 29.2Retirement benefit asset 6.5 - 3.7Deferred tax assets 29.0 31.2 29.0------------------------------------------------------------------------------------------------------------ 611.0 566.5 593.0------------------------------------------------------------------------------------------------------------Current assetsInventories 1,366.3 1,227.2 1,350.6Trade and other receivables 801.8 707.2 869.1Cash and cash equivalents 51.8 421.1 152.3------------------------------------------------------------------------------------------------------------ 2,219.9 2,355.5 2,372.0------------------------------------------------------------------------------------------------------------Total assets 2,830.9 2,922.0 2,965.0------------------------------------------------------------------------------------------------------------ LiabilitiesCurrent liabilitiesBorrowings due in less than one year (26.6) (270.1) (5.5)Trade and other payables (314.3) (340.9) (392.4)Deferred income (102.5) (92.1) (122.7)Current tax (81.3) (48.2) (101.7)------------------------------------------------------------------------------------------------------------ (524.7) (751.3) (622.3)------------------------------------------------------------------------------------------------------------Non-current liabilitiesBorrowings due in more than one year (380.0) (380.0) (380.0)Other payables (79.2) (68.3) (74.7)Deferred income (134.6) (120.7) (132.0)Provisions (10.2) (10.8) (10.0)Retirement benefit obligation - (28.3) ------------------------------------------------------------------------------------------------------------- (604.0) (608.1) (596.7)------------------------------------------------------------------------------------------------------------ Total liabilities (1,128.7) (1,359.4) (1,219.0)------------------------------------------------------------------------------------------------------------Net assets 1,702.2 1,562.6 1,746.0------------------------------------------------------------------------------------------------------------ EquityCapital and reserves attributable to equity shareholdersCalled up share capital 7 15.4 14.3 14.0Share premium 8 138.4 128.4 134.7Other reserves 8 235.2 234.8 235.1Retained earnings 8 1,313.2 1,185.1 1,362.2------------------------------------------------------------------------------------------------------------Total equity 1,702.2 1,562.6 1,746.0------------------------------------------------------------------------------------------------------------ Condensed consolidated cash flow statement (unaudited)for the 26 weeks ended 4 August 2007 13 weeks ended 13 weeks ended 26 weeks ended 26 weeks ended 53 weeks ended 4 August 29 July 4 August 29 July 3 February 2007 2006 2007 2006 2007---------------------------------------------------------------------------------------------------------------------- $m $m $m $m $m----------------------------------------------------------------------------------------------------------------------Cash flows from operating activities: Profit before tax 58.2 51.9 109.0 105.6 400.8Adjustments for:Finance income (2.7) (5.5) (6.1) (7.6) (18.8)Finance expense 7.4 9.6 14.0 14.3 34.2Depreciation of property, plant and equipment 25.8 22.3 49.8 44.0 92.1Amortisation of intangible assets 1.1 0.6 2.3 1.1 2.4Other non-cash movements 2.9 1.7 3.5 3.1 4.5Loss on disposal of property, plant and equipment - - - - 0.8----------------------------------------------------------------------------------------------------------------------Operating cash flows before movement in working capital 92.7 80.6 172.5 160.5 516.0Decrease/(increase) in inventories 43.6 18.2 (5.4) (10.5) (118.1)(Increase)/decrease in trade and other receivables (13.3) (12.7) 59.7 52.1 (101.5)(Decrease)/increase in payables and deferred income (13.1) (5.7) (81.2) (41.1) 46.1----------------------------------------------------------------------------------------------------------------------Cash generated from operations 109.9 80.4 145.6 161.0 342.5Interest paid (13.1) (5.3) (13.6) (10.0) (31.4)Taxation paid (35.8) (28.2) (75.3) (78.6) (130.1)----------------------------------------------------------------------------------------------------------------------Net cash from operating activities 61.0 46.9 56.7 72.4 181.0---------------------------------------------------------------------------------------------------------------------- Investing activities:Interest received 0.6 4.9 4.0 6.7 16.9Purchase of property, plant and equipment (27.8) (26.0) (51.9) (50.9) (116.9)Purchase of intangible assets (2.0) (1.9) (6.2) (3.1) (7.5)Proceeds from sale of property, plant and equipment - - - - 4.5----------------------------------------------------------------------------------------------------------------------Cash flows from investing activities (29.2) (23.0) (54.1) (47.3) (103.0)---------------------------------------------------------------------------------------------------------------------- Financing activities:Dividends paid (107.6) (90.7) (107.6) (90.7) (108.7)Proceeds from issue of shares 2.3 1.9 5.5 4.0 7.7Purchase of own shares - (5.6) (29.0) (5.6) (63.4)Increase/(decrease) in short-term borrowings 15.5 (48.3) 22.0 (7.7) 7.0Repayment of long-term borrowings - - - - (251.0)Receipt of new long-term borrowings - 380.0 - 380.0 380.0----------------------------------------------------------------------------------------------------------------------Cash flows from financing activities (89.8) 237.3 (109.1) 280.0 (28.4)---------------------------------------------------------------------------------------------------------------------- Reconciliation of movement in cash and cash equivalents:Cash and cash equivalents at beginning of period 105.0 140.3 152.3 92.9 92.9(Decrease)/increase in cash and cash equivalents (58.0) 261.2 (106.5) 305.1 49.6Exchange adjustments 4.8 19.6 6.0 23.1 9.8----------------------------------------------------------------------------------------------------------------------Closing cash and cash equivalents 51.8 421.1 51.8 421.1 152.3---------------------------------------------------------------------------------------------------------------------- Reconciliation of cash flows to movement in net debt:(1)Net debt at beginning of period (286.2) (169.5) (233.2) (174.5) (174.5)(Decrease)/increase in cash and cash equivalents (58.0) 261.2 (106.5) 305.1 49.6(Increase)/decrease in borrowings (15.5) (331.7) (22.0) (372.3) 136.0Exchange adjustments 4.9 11.0 6.9 12.7 27.7----------------------------------------------------------------------------------------------------------------------Closing net debt (354.8) (229.0) (354.8) (229.0) (233.2)---------------------------------------------------------------------------------------------------------------------- (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 4 August 2007 13 weeks ended 13 weeks ended 26 weeks ended 26 weeks ended 53 weeks ended 4 August 29 July 4 August 29 July 3 February 2007 2006 2007 2006 2007---------------------------------------------------------------------------------------------------------------------- $m $m $m $m $m----------------------------------------------------------------------------------------------------------------------Exchange differences on translation of foreign operations 13.5 12.0 18.8 27.0 57.3Effective portion of changes in value of cash flow hedges (8.4) 1.4 (5.1) 3.1 1.7Actuarial gain on retirement benefit scheme - - - - 30.5Tax on items recognised in equity 2.5 - 2.0 - (10.3)----------------------------------------------------------------------------------------------------------------------Net income recognised directly in equity 7.6 13.4 15.7 30.1 79.2Transfer to initial carrying value of inventory from cash flow hedges (0.1) (0.7) (1.7) (2.2) 1.5Profit for the financial period 36.7 33.6 69.2 68.0 266.0----------------------------------------------------------------------------------------------------------------------Total recognised income and expense attributable to shareholders 44.2 46.3 83.2 95.9 346.7---------------------------------------------------------------------------------------------------------------------- Notes to the condensed consolidated financial statements (unaudited)for the 26 weeks ended 4 August 2007 1. Basis of preparation These results are presented in US dollars following the change in the functional currency of the Company and the move to reporting in US dollars with effect from 5 February 2007. 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 53 week period ended 3 February 2007, which are 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 53 weeks ended 3 February 2007 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 ended 13 weeks ended 26 weeks ended 26 weeks ended 53 weeks ended 4 August 29 July 4 August 29 July 3 February 2007 2006 2007 2006 2007 ----------------------------------------------------------------------------------------------------------------- $m $m $m $m $m ----------------------------------------------------------------------------------------------------------------- Sales by origin and destination UK, Channel Islands & Republic of Ireland 202.8 176.3 384.9 336.1 907.1 US 584.6 556.6 1,216.9 1,131.1 2,652.1 ----------------------------------------------------------------------------------------------------------------- 787.4 732.9 1,601.8 1,467.2 3,559.2 ----------------------------------------------------------------------------------------------------------------- Operating (loss)/profit UK, Channel Islands & Republic of Ireland - Trading 1.3 (3.4) (0.6) (6.2) 103.4 - Group central costs (4.8) (3.0) (8.8) (6.6) (13.9) ----------------------------------------------------------------------------------------------------------------- (3.5) (6.4) (9.4) (12.8) 89.5 US 66.4 62.4 126.3 125.1 326.7 ----------------------------------------------------------------------------------------------------------------- 62.9 56.0 116.9 112.3 416.2 ----------------------------------------------------------------------------------------------------------------- The Group's results derive from one business segment - the retailing of jewellery, watches and associated services. 3. Net financing costs 13 weeks ended 13 weeks ended 26 weeks ended 26 weeks ended 53 weeks ended 4 August 29 July 4 August 29 July 3 February 2007 2006 2007 2006 2007 ----------------------------------------------------------------------------------------------------------------- $m $m $m $m $m ----------------------------------------------------------------------------------------------------------------- Interest receivable 1.6 5.0 4.0 6.7 16.6 Defined benefit pension scheme: - expected return on scheme assets 4.4 3.7 8.6 7.0 14.8 - interest on pension liabilities (3.3) (3.2) (6.5) (6.1) (12.6) ----------------------------------------------------------------------------------------------------------------- Finance income 2.7 5.5 6.1 7.6 18.8 Finance expense (7.4) (9.6) (14.0) (14.3) (34.2) ----------------------------------------------------------------------------------------------------------------- (4.7) (4.1) (7.9) (6.7) (15.4) ----------------------------------------------------------------------------------------------------------------- Notes to the condensed consolidated financial statements (unaudited)for the 26 weeks ended 4 August 2007 4. Taxation The net taxation charges in the income statements for the 13 weeks and 26 weeks ended 4 August 2007 have been based on the anticipated effective taxation rate for the 52 weeks ending 2 February 2008. 5. Translation differences The exchange rates used for the translation of UK pound sterling transactions and balances in these interim statements are as follows: 4 August 29 July 3 February 2007 2006 2007 ------------------------------------------------------------------------------------ Income statement (average rate) 1.99 1.81 1.88 Balance sheet (closing rate) 2.04 1.86 1.97 ------------------------------------------------------------------------------------ The effect of restating the balance sheet at 29 July 2006 to the exchange rates ruling at 4 August 2007 would be to decrease net debt by $15.2 million to $(213.8) million. Restating the income statement would decrease the pre-tax profit for the 26 weeks ended 29 July 2006 by $(0.6) million to $105.0 million. 6. Earnings per share 13 weeks ended 13 weeks ended 26 weeks ended 26 weeks ended 53 weeks ended 4 August 29 July 4 August 29 July 3 February 2007 2006 2007 2006 2007 ----------------------------------------------------------------------------------------------------------------- $m $m $m $m $m ----------------------------------------------------------------------------------------------------------------- Profit attributable to shareholders 36.7 33.6 69.2 68.0 266.0 ----------------------------------------------------------------------------------------------------------------- Weighted average number of shares in issue (million) 1,702.4 1,740.3 1,703.0 1,739.8 1,727.6 Dilutive effect of share options (million) 7.7 1.7 9.4 2.4 6.8 ----------------------------------------------------------------------------------------------------------------- Diluted weighted average number of shares (million) 1,710.1 1,742.0 1,712.4 1,742.2 1,734.4 ----------------------------------------------------------------------------------------------------------------- Earnings per share - basic 2.2c 1.9c 4.1c 3.9c 15.4c - diluted 2.1c 1.9c 4.0c 3.9c 15.3c ----------------------------------------------------------------------------------------------------------------- Earnings per ADS - basic 21.5c 19.2c 40.6c 39.0c 154.0c - diluted 21.4c 19.2c 40.4c 39.0c 153.4c ----------------------------------------------------------------------------------------------------------------- Notes to the condensed consolidated financial statements (unaudited)for the 26 weeks ended 4 August 2007 7. Share capital 4 August 29 July 3 February 2007 2006 2007 ------------------------------------------------------------------------------------ $m $m $m ------------------------------------------------------------------------------------ Authorised: 5,929,874,019 ordinary shares of 0.5p each - 48.6 48.6 5,929,874,019 ordinary shares of 0.9c each 53.4 - - 50,000 deferred shares of £1 each 0.1 - - ------------------------------------------------------------------------------------ Number of shares $m ------------------------------------------------------------------------------------ Alloted, called up and fully paid: Ordinary shares of 0.5p each: At 3 February 2007 1,713,553,809 14.0 Change in functional currency - 1.4 Capital reduction on 5 February 2007 (1,713,553,809) (15.4) ------------------------------------------------------------------------------------ nil nil Ordinary shares of 0.9c each: Issued on 5 February 2007 1,713,553,809 15.4 Share buyback (12,205,000) (0.1) Shares issued on exercise of share options 3,991,095 - ------------------------------------------------------------------------------------ At 4 August 2007 total allotted, called up and fully paid 1,705,339,904 15.3 Deferred shares of £1 each on issue and at 4 August 2007 50,000 0.1 ------------------------------------------------------------------------------------ Total share capital 1,705,389,904 15.4 ------------------------------------------------------------------------------------ On 5 February 2007, the Company redenominated its share capital into US dollars by way of a reduction in capital and subsequent issue and allotment of new US dollar ordinary shares, which had been approved by shareholders on 12 December 2006 and received Court approval on 31 January 2007. The nominal value of each US dollar denominated ordinary share is 0.9 cent and shareholders received one new US dollar denominated ordinary share for each sterling ordinary share held. The new shares have the same rights and restrictions as the previously issued ordinary shares and the existing share certificates remain valid. Additionally, to comply with the Companies Act 1985, £50,000 of share capital is required to be denominated in pounds sterling, to which end 50,000 deferred shares of £1 each were allotted and issued and credited to the Company Secretary of the Company on 5 February 2007. These shares have limited and deferred rights. Notes to the condensed consolidated financial statements (unaudited)for the 26 weeks ended 4 August 2007 8. Share premium and reserves 26 weeks ended 4 August 2007 Other reserves Retained earnings--------------------------------------------------------------- --------------------------------------------- Share Capital Special Purchase of Hedging Translation Retained premium redemption reserves own shares reserve reserve reserves Total----------------------------------------------------------------------------------------------------------------------- $m $m $m $m $m $m $m $m----------------------------------------------------------------------------------------------------------------------- Balance at 3 February 2007 134.7 0.3 234.8 (13.3) 5.1 10.1 1,360.3 1,732.0 Change in functional currency (1.4) - - - - - - (1.4)----------------------------------------------------------------------------------------------------------------------- 133.3 0.3 234.8 (13.3) 5.1 10.1 1,360.3 1,730.6 Recognised income and expense: - profit for the financial period - - - - - - 69.2 69.2 - cashflow hedges (net) - - - - (4.8) - - (4.8) - translation differences - - - - - 18.8 - 18.8 Dividends - - - - - - (107.6) (107.6) Equity-settled transactions - - - - - - 4.0 4.0 Share options exercised 5.1 - - 1.9 - - (1.5) 5.5 Purchase of own shares - 0.1 - - - - (29.0) (28.9)----------------------------------------------------------------------------------------------------------------------- Balance at 4 August 2007 138.4 0.4 234.8 (11.4) 0.3 28.9 1,295.4 1,686.8----------------------------------------------------------------------------------------------------------------------- 26 weeks ended 4 August 2007 Other reserves Retained earnings--------------------------------------------------------------- --------------------------------------------- Share Capital Special Purchase of Hedging Translation Retained premium redemption reserves own shares reserve reserve reserves Total----------------------------------------------------------------------------------------------------------------------- $m $m $m $m $m $m $m $m----------------------------------------------------------------------------------------------------------------------- Balance at 28 January 2006 124.8 - 234.8 (15.4) 2.8 (47.2) 1,241.5 1,541.3 Recognised income and expense: - profit for the financial period - - - - - - 68.0 68.0 - cashflow hedges (net) - - - - 0.9 - - 0.9 - translation differences - - - - - 27.0 - 27.0 Dividends - - - - - - (90.7) (90.7) Equity-settled transactions - - - - - - 3.4 3.4 Share options exercised 3.6 - - 0.4 - - - 4.0 Purchase of own shares - - - - - - (5.6) (5.6)----------------------------------------------------------------------------------------------------------------------- Balance at 29 July 2006 128.4 - 234.8 (15.0) 3.7 (20.2) 1,216.6 1,548.3----------------------------------------------------------------------------------------------------------------------- 53 weeks ended 3 February 2007 Other reserves Retained earnings--------------------------------------------------------------- --------------------------------------------- Share Capital Special Purchase of Hedging Translation Retained premium redemption reserves own shares reserve reserve reserves Total----------------------------------------------------------------------------------------------------------------------- $m $m $m $m $m $m $m $m----------------------------------------------------------------------------------------------------------------------- Balance at 28 January 2006 124.8 - 234.8 (15.4) 2.8 (47.2) 1,241.5 1,541.3 Recognised income and expense: - profit for the financial period - - - - - - 266.0 266.0 - cashflow hedges (net) - - - - 2.3 - - 2.3 - translation differences - - - - - 57.3 - 57.3 - actuarial gain - - - - - - 21.1 21.1 Dividends - - - - - - (108.7) (108.7) Equity-settled transactions - - - - - - 8.1 8.1 Share options exercised 8.6 - - 2.1 - - (3.0) 7.7 Purchase of own shares - 0.3 - - - - (63.4) (63.1) Shares issued to ESOTs 1.3 - - - - - (1.3) ------------------------------------------------------------------------------------------------------------------------ Balance at 3 February 2007 134.7 0.3 234.8 (13.3) 5.1 10.1 1,360.3 1,732.0----------------------------------------------------------------------------------------------------------------------- Notes to the condensed consolidated financial statements (unaudited)for the 26 weeks ended 4 August 2007 9. Dividend The increase in dividend per share is derived using the US dollar to pound sterling rate from Reuters at 4.00pm on 3 September 2007. A dividend of 0.96 cent per share will be paid on 9 November 2007 to shareholders on the register of members at the close of business on 28 September 2007. 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 28 September 2007. Shareholders wishing to change the currency in which they receive the dividend should contact the Company's registrars. 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 re-calculation of sales, operating profit, profit before tax and net debt at constant exchange rates, including a reconciliation to the Group's GAAP results, is analysed below. 26 weeks ended 4 August 2007 26 weeks 26 weeks Growth at Impact of At constant Growth at ended ended actual exchange exchange constant 4 August 29 July exchange rate rates exchange rates 2007 2006 rates movement (non-GAAP) (non-GAAP) ----------------------------------------------------------------------------------------------------------------- $m $m % $m $m % ----------------------------------------------------------------------------------------------------------------- Sales by origin and destination UK, Channel Islands & Republic of Ireland 384.9 336.1 14.5 33.4 369.5 4.2 US 1,216.9 1,131.1 7.6 - 1,131.1 7.6 ----------------------------------------------------------------------------------------------------------------- 1,601.8 1,467.2 9.2 33.4 1,500.6 6.7 ----------------------------------------------------------------------------------------------------------------- Operating (loss)/profit UK, Channel Islands Republic of Ireland - Trading (0.6) (6.2) n/a (0.6) (6.8) n/a - Group central costs (8.8) (6.6) n/a (0.7) (7.3) n/a ----------------------------------------------------------------------------------------------------------------- (9.4) (12.8) n/a (1.3) (14.1) n/a US 126.3 125.1 1.0 - 125.1 1.0 ----------------------------------------------------------------------------------------------------------------- 116.9 112.3 4.1 (1.3) 111.0 5.3 ----------------------------------------------------------------------------------------------------------------- Profit before tax 109.0 105.6 3.2 (0.6) 105.0 3.8 ----------------------------------------------------------------------------------------------------------------- At 4 August 2007 Impact of At constant 4 August 29 July exchange exchange rates 2007 2006 rate movement (non-GAAP) --------------------------------------------------------------------------------------------------------- $m $m $m $m --------------------------------------------------------------------------------------------------------- Net debt (354.8) (229.0) 15.2 (213.8) --------------------------------------------------------------------------------------------------------- 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 entity 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 5 September 2007 Independent review report by KPMG Audit Plc to Signet Group plc Introduction We have been instructed by the Company to review the condensed set of financialstatements in the half year report for the 26 weeks ended 4 August 2007 whichcomprises the condensed consolidated income statement, the condensedconsolidated balance sheet, the condensed consolidated cash flow statement, thecondensed consolidated statement of recognised income and expense and therelated explanatory notes. We have read the other information contained in thehalf year report and considered whether it contains any apparent misstatementsor material inconsistencies with the information in the condensed set offinancial statements. This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the Disclosureand 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 theCompany those matters we are required to state to it in this report and for noother purpose. To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the Company for our review work, forthis report, or for the conclusions we have reached. Directors' responsibilities The half year report is the responsibility of, and has been approved by, thedirectors. The directors are responsible for preparing the half year report inaccordance with the DTR of the UK FSA. As disclosed in note 1, the annual financial statements of the Company areprepared in accordance with IFRS as adopted by the EU. The condensed set offinancial statements included in this half year report has been prepared inaccordance 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 condensedset of financial statements in the half year report based on our review. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4'Review of interim financial information' issued by the Auditing Practices Boardfor use in the UK. A review consists principally of making enquiries ofmanagement and applying analytical procedures to the interim financialinformation and underlying financial data and, based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance withInternational Standards on Auditing (UK and Ireland) and therefore provides alower level of assurance than an audit. Accordingly, we do not express an auditopinion on the interim financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the condensed set of financial statements in the half yearreport as presented for the 26 weeks ended 4 August 2007. KPMG Audit PlcChartered AccountantsLondonUK 5 September 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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