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Jessops initial public offering price range

Jessops initial public offering price range - Jessops floatation prices announced

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Industry News

Jessops have launched a global offer to institutional investors with the publication of its pathfinder prospectus. N M Rothschild & Sons Limited is sponsor, ABN AMRO Rothschild is global co-ordinator and bookrunner and Hoare Govett Limited is listing agent and corporate broker.

Summary of the Global Offer:

  • Indicative price range of 185p to 220p per share, which will give Jessops a market capitalisation of between £173 million to £189 million
  • The Global Offer will consist of sales by existing shareholders and a capital raising of approximately £100 million to repay existing debt and expenses
  • At the price range, the total number of shares in the Company at admission will be between 93.5 million shares and 85.7 million shares
  • Within this price range, it is expected that the Company will have a free float on admission of between 85% and 95%

Other Highlights:

  • Jessops estimates that it has achieved a turnover of £319 million for the year to 30 September 2004 (2003: £287 million) and an estimated EBITA (before exceptional items) of £19.5 million (2003: £17.1 million). Like for like sales are estimated to have increased by 6.1 per cent. over the same period.
  • Appointment of two independent non-executives:
    • Gavin Simonds as Chairman;
    • William Rollason as non-executive Director
  • Conditional trading expected to start on or around 29 October 2004

Derek Hine, Chief Executive of Jessops plc, said:

2004 was another strong year for Jessops and our estimated results show the continuing impact of the growing demand for digital photography products. With Mintel forecasting that the total photo imaging market will grow a further 23% to £2.7 billion over the next four years, we believe we are well positioned to maintain our momentum and our position as the UK's number one specialist photographic retailer. Flotation will help us achieve these aims and we look forward to 2005 and beyond with confidence.

Jessops is the UK 's number one specialist photographic retailer with 263 stores nationally and holds a leading position in the UK in the rapidly growing market for digital photo imaging products and accessories. In addition to its stores Jessops operates via the internet, through mail order and telesales and its business to business and wholesale operations. Jessops sells a comprehensive range of digital and analogue cameras, digital and analogue camcorders, binoculars, digital home print solutions, memory cards, film and photographic materials, as well as an extensive range of accessories for the photographic market including Jessops own brand products. Jessops provides developing and printing and digital imaging services in-store, via the internet and mail order.

Jessops operates in the UK in five product market segments. These segments are:

  • Cameras, both digital and analogue;
  • Photographic accessories (including cases, frames, albums, film, batteries and digital memory cards);
  • Developing and printing (D&P);
  • Camcorders; and
  • Other photographic hardware (including printers, scanners, enlargers, flash guns, binoculars, camera phones, tripods and specialist photographic pcs)

Jessops differentiates itself from its competitors through the combination of its national store portfolio, its broad product range, its customer service ethos and the in-depth product knowledge of its staff. Jessops' focus on building its reputation for good customer service and a broad product range has been central to the development of the Group.

Jessops enjoys a high level of brand awareness and a loyal following amongst keen amateur and semi-professional photographers as demonstrated by its receipt in 2003, for the eighth consecutive time, of Practical Photography's Retailer of the Year Award.

Jessops currently operates 263 stores across the UK with a total selling space of almost 220,000 sq ft. These stores are in five main formats: high street locations (239), World Camera Centres (4), out-of-town superstores (10), stores in regional shopping centres such as Bluewater in Kent (7) and Jessops photoexpress stores (3).

Jessops is the only national UK retailer offering a complete solution to its customers in the photographic market. Main suppliers include all of the leading names in the photographic industry such as Canon, Fuji , Kodak, Minolta, Nikon, Olympus , Panasonic, Pentax and Sony. The Directors believe that the Group's range of over 16,000 different products is the widest offered by any photographic retailer in the UK and includes digital and analogue cameras, digital and analogue camcorders, binoculars, film and photographic material, D&P, as well as accessories. Jessops' competitively priced products offer an attractive blend of branded and own brand items.

Competitive Strengths
The Directors believe that Jessops has a number of competitive strengths, which mean that it is well positioned to take advantage of market opportunities. These competitive strengths include:

  • Leadership and innovation in the high growth digital photographic market;
  • A distinctive, nationally recognised brand with broad appeal;
  • Knowledgeable, unbiased, customer focused staff;
  • Excellent supplier relationships; and
  • Strong and experienced management.

Market Overview
Digital technology is changing the photographic market. When digital cameras were launched they were considered to be comparatively expensive and geared to the needs of the professional photographer. Technological improvements and the increased awareness and accessibility of digital technology is, however, contributing to the growth and popularity of digital cameras. The digital camera market has now moved from the early adopters to become more of a mass market product.

Mintel Consultancy (Mintel) estimates that the total size of the photo imaging retail market in which Jessops operates will be approximately £2.2 billion in 2004, and that this market should have grown by 25 per cent. from 2001 to 2004. Mintel estimates that 76 per cent. of this growth will be in the digital camera market and further, that the photographic market will continue to deliver strong growth, expanding to

£2.7 billion by 2008.
GfK Marketing Services UK (GfK) estimates that only 28.7 per cent. of UK households have a digital camera compared with 83.0 per cent. which have an analogue camera, suggesting significant market growth potential. GfK reports that Jessops has grown its share of the overall digital camera market to 18 per cent. (by value) gaining a higher proportion of this market than it has achieved in the analogue camera market.

The market for picture processing is also in a state of rapid change. The emergence of new digital camera technology has reduced the number of analogue cameras being actively used and consequently the number of films being processed.

Jessops has been at the forefront of in-store digital printing and has 163 mini-labs, capable of both analogue and digital printing, installed in stores across the country. Every Jessops store also has a digital kiosk which enables customers to download images from their digital cameras, with the photographs being developed either by the in-store mini-lab or a wholesale finisher to whom Jessops outsources D&P.

Jessops continues to explore ways of enhancing its D&P service as new technology becomes available. For example, the Group has recently concluded a trial of self service, while you wait kiosks. Following this trial, the Group has selected a kiosk which allows customers to print photo quality images at the rate of approximately one photograph every three seconds.

Retailers of photographic products in the UK are generally split between generalist electrical retailers and independent photographic specialists, of which Jessops is the largest. In addition, there are many other types of retailers selling film and D&P services.

The Directors believe that there is no single nationwide retailer who competes against the Group across the whole range of photographic products and services that Jessops offers. While Jessops faces competition within each of the five retail product segments in which it operates, the identity and nature of Jessops' competitors differ depending on the product segment being considered.

Growth Strategy
Jessops' strategy is to maintain and leverage its core strengths and develop new opportunities for growth, whilst consolidating its position as the number one specialist photographic retailer in the UK .

A range of initiatives will be used to achieve this strategy:

  • Maximising the digital technology opportunities;
  • Increasing the channels to market; and
  • Leveraging the Jessops brand to maximise the customer base.

Selected Financial Information
The table below sets out summary financial information for the Company for the periods indicated. The data has been extracted without material adjustment from the Company's financial statements prepared in accordance with UK GAAP.


FY ended 30 September



FY ended 30 September



FY ended 30 September



10 mths ended 1 August








Gross Profit (before exceptional items)





EBITA before exceptional items (whether included in cost of sales or operating expenses)





Exceptional items










Operating Profit










EBITA margin*





Number of stores at period end





* EBITA margin is calculated using EBITA (before exceptional items) and turnover figuresThe Directors believe that Jessops' consistently high level of conversion of earnings to cash flow has underpinned the Group's growth strategy and provides the Group with financial flexibility. Jessops generated £45.8 million of cash flow from operating activities in the three financial years to 30 September 2003 .

Current Trading and Prospects
Jessops estimates that it has achieved a turnover of £319 million in the 2004 financial year compared with

£287 million in 2003, and an estimated EBITA (before exceptional items) in the 2004 financial year of £19.5m compared with £17.1 million in 2003. Like-for-like sales are estimated to have increased by 6.1 per cent. over the same period.

The Directors believe that Jessops is well positioned to take advantage of its leading role in the UK specialist photographic market by promoting its brand through its retail network, the internet, mail order and telesales and business to business channels. The Company will also continue to benefit from embracing digital imaging technology.

The Directors believe that the financial and trading prospects of the Group in the current financial year ending 30 September 2005 are good and view the future with confidence.

Use of Proceeds
The net proceeds to be received by the Company from the Global Offer are estimated to be approximately £100 million. The Company will not receive any proceeds from the sale of existing shares by the existing shareholders.

The net proceeds received by the Company from the Global Offer and advances under a new bank facility will be used to pay expenses of the Global Offer, to repay existing debt in full, which comprises the long term loan notes, deep discounted bonds and the amount outstanding under Jessops' existing bank facilities.

Dividend Policy
The Directors intend to adopt a progressive dividend policy that will reflect the long-term earnings potential of the Group, whilst maintaining an appropriate level of dividend cover. The Directors intend to follow a policy which, in the absence of unforeseen circumstances and assuming that there are sufficient distributable reserves available at the time, targets paying approximately 20 per cent. of the annual reported Group net income (before goodwill amortisation) in the form of dividends to holders of ordinary shares.

Ownership Structure
Immediately following admission, it is expected that, within the price range, between 85 per cent. and 95 per cent. of ordinary shares will be held by the public.

Lock-up Arrangements
Each of the selling shareholders who will hold ordinary shares after admission has undertaken with N M Rothschild & Sons Limited and ABN AMRO Rothschild to be bound by certain contractual lock-up arrangements in relation to the ordinary shares held by them following the Global Offer whereby restrictions are imposed on the ability of those shareholders to sell or transfer any of their ordinary shares during a period after admission without the prior consent of N M Rothschild & Sons Limited and ABN AMRO Rothschild (subject to certain exceptions). The Directors and board members of Group companies will be restricted during a period of the later of 365 days from admission or the announcement of the Company's 2005 financial year's results. Investor shareholders, the retiring Chairman, Tim Brookes, other senior management shareholders and certain employee shareholders will be restricted for a period of 180 days from admission.

In addition, the Company has in the Underwriting Agreement undertaken with N M Rothschild & Sons Limited and ABN AMRO Rothschild that during a period of 180 days from Admission without the prior consent of N M Rothschild & Sons Limited and ABN AMRO Rothschild it will not offer, issue, lend, sell or contract to sell ordinary shares (subject to certain exceptions).

Board of Directors
At the time of admission, it is expected that the board will comprise two executive Directors and two non-executive Directors :

Gavin Simonds, non-executive Chairman , aged 49, plans to join the Group in connection with the Global Offer. Gavin is a former Director of Kleinwort Benson and Joint Managing Director of InterContinental Hotels and is Chairman of The Club Company, The Peacock Group and Red Funnel Group.

Derek Hine, Chief Executive , aged 52, joined the Group as Managing Director in July 1998. Derek is a former Managing Director of Birkby plc, and Managing Director of In Shops plc, a former Retail Director of RHM Retail and a former Operations Director of Dixons Financial Services Limited.

John Crabtree BA (Hons), ACMA, Finance Director , aged 53, joined the Group as Finance Director in January 1997. John qualified as a Chartered Management Accountant with Birmid Qualcast in 1977 and is a former Finance Director of WH Smith Retail Limited and executive with Do It All Limited and Pentos Retailing Limited.

William Rollason MA (Hons) ACA, non-executive Director , aged 43, plans to join the Group in connection with the Global Offer. William, a qualified accountant, is chief executive of Kleeneze plc and is a former Group Finance Director of National Express Group PLC, Associate Director of Carlton Communications PLC. He is also a former non-executive Director of Fastrack Group plc.

It is the Board's intention to appoint an additional non-executive Director as soon as practicable after admission.

It is expected that immediately prior to admission, the previous non-executive Chairman and Directors Tim Brookes, Dominic Collier and Simon Tuttle will each resign from the Board to be replaced by the new Chairman and non-executive Directors .

Financial Advisers
N M Rothschild & Sons Limited has been appointed as sponsor to the Global Offer and ABN AMRO Rothschild has been appointed as global co-ordinator and bookrunner. Hoare Govett Limited will be listing agent and corporate broker.

Expected Timetable

Commencement of investor roadshow

19 October 2004

Conditional dealings expected to commence

on or around 29 October 2004

Admission and unconditional dealings in the Ordinary Shares commence

early November 2004

Each of the dates in the above timetable is subject to change.

For further information please contact:

James Longfield / Rachel Hirst / Vanessa Orr

020 7357 9477

Hogarth Partnership (for Jessops)




Avi Goldberg / Paul Simpson

020 7280 5000

N M Rothschild & Sons Limited




Richard Heald / Claire Suddens-Spiers

020 7678 1700

ABN AMRO Rothschild




Tom Reid / Sara Coghill

020 7678 8000

Hoare Govett Limited


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