TIDMSPD
RNS Number : 5703L
Sports Direct International Plc
20 July 2017
20 July 2017
Preliminary Results for the Year ended 30 April 2017
Group revenue up 11.7%; Group underlying EBITDA down 28.5%
53 weeks 52 weeks Change
to to (%)
30 April 24 April
2017 2016
GBPm GBPm
Group revenue 3,245.3 2,904.3 11.7
UK Sports Retail 2,136.4 2,009.3 6.3
International Sports
Retail 665.6 482.3 38.0
Premium Lifestyle 202.2 181.2 11.6
Brands 241.1 231.5 4.1
-320
Group gross margin 41.0 44.2 bps
Sports Retail gross -300
margin 41.6 44.6 bps
Underlying EBITDA
(pre share scheme
costs) (3) 272.7 381.4 -28.5
Underlying profit
before tax (PBT) (3) 113.7 275.2 -58.7
Reported profit before
tax 281.6 361.8 -22.2
Underlying earnings
per share (EPS) (3) 11.4p 35.5p -67.9
Reported earnings
per share 39.4p 46.8p -15.8
Net debt(5) 182.1 99.7
KEY HIGHLIGHTS
-- Group revenue increased by 11.7% ([1])
o UK Sports Retail revenue increased by 6.3% (1) Excluding
acquisitions and 53(rd) week, revenue increased by 2.6%
o UK Sports Retail like-for-like stores gross contribution was
up +0.3%([2])
-- International Sports Retail revenue increased by 38.0% ([1])
o Currency neutral, excluding acquisitions and 53(rd) week,
revenue increased by 5.9%
o International Sports Retail like-for-like stores gross
contribution was -0.8% ([2])
-- Group underlying EBITDA([3]) decreased by 28.5% to GBP272.7m
-- Underlying profit before tax decreased by 58.7% to GBP113.7m
largely due to currency movements and increased depreciation
charges. (3)
-- Underlying earnings per share decreased by 67.9% to 11.4p (3)
-- Underlying free cash generation of GBP173.7m (4)
(--) Net debt increased to GBP182.1m (GBP99.7m at 24 April 2016)
(5)
-- Invested GBP317.0m in property assets as we execute our
strategic priority to elevate our sports retail proposition
-- GBP79.9m exceptional profit on the disposal of the Dunlop brand
(1) Headline growth includes the full year impact of the Heatons
acquisition and the 53rd week
(2) Figure is on a currency neutral basis and with a consistent
year on year stock provision used
(3) Underlying EBITDA, underlying profit before taxation and
underlying EPS exclude realised foreign exchange gains/losses in
selling and administration costs exceptional costs, disposal of
subsidiaries and the profit/loss on sale of strategic investments.
Underlying EBITDA also excludes the Share Scheme charges.
(4) Underlying free cash generation is defined as operating cash
flow before working capital, made up of underlying EBITDA (before
Share Scheme costs) plus realised foreign exchange gains and
losses, less corporation tax paid
(5) Net debt is borrowings less cash and cash equivalents
held
Mike Ashley, Chief Executive, said:
"Sports Direct is on course to become the "Selfridges" of sport
by migrating to a new generation of stores to showcase the very
best products from our third party brand partners. We have invested
over GBP300m in property over the last year, and I am pleased to
report that early indications show that trading in our new flagship
stores is exceeding expectations.
We will continue to invest and make decisions for the long term,
whilst trying to conservatively manage the currency volatility that
is reflected in our full year results. As previously announced, the
devaluation of Sterling against the US dollar has led to a
significant impact on EBITDA and profits in FY17. We have put in
place hedging arrangements to minimise the short-term impact of
currency volatility, but like many UK retailers we remain exposed
to medium / long term currency fluctuations. Our results were also
impacted by provisions and depreciation charges.
I would like to thank all our people at Sports Direct for
ensuring that we continue to move forward together whilst elevating
our retail proposition."
Sports Direct International plc T: 0344 245 9200
Mike Ashley, Chief Executive
KBA PR T: 0207 734 9995
Keith Bishop
CHAIRMAN'S STATEMENT
OVERVIEW
FY17 has been a transitional year for the Company and for our
people, whom I would like to thank for their continued commitment
and loyalty. Management stated our strategic priorities in our H1
announcement as being our people; the elevation of the Group's
sports retail proposition towards our long-term aspiration to make
Sports Direct the "Selfridges" of sports; and, improving
stakeholder engagement.
FY17 Underlying EBITDA was down 28.5% to GBP272.7m, largely as a
result of the devaluation of GBP and subsequent deterioration in
the Group's gross margin, and the requirement to increase the
Group's inventory provisions and onerous lease provisions over the
period. Underlying PBT was down 58.7% to GBP113.7m, and was further
impacted by an increase in the depreciation charge as a result of a
change in capitalisation threshold, a reduction in the useful life
of certain assets, and the depreciation related to the Company's
strategic property investment to elevate the sports retail
business.
During the year, the Group generated free cash flow of
GBP173.7m, and undertook capital expenditure of GBP419.5m,
including GBP317.0m in freehold property acquisitions. Net Debt
increased from GBP99.7m to GBP182.1m, mitigated by management's
decision to divest some of its strategic investments during the
period, which resulted in net proceeds on disposal of investments
of GBP165.5m. The Group maintains substantial financial resources
and a strong balance sheet.
STRATEGY AND STRATEGIC PRIORITIES
The elevation of our retail proposition continues to be a key
objective. We have made good progress in laying the foundations for
this in the UK and elsewhere through the management of our property
portfolio. We continue to open more new generation and
flagship-style stores to enhance our offering to customers and
further improve our relationships with third party brands. In terms
of management's plans to change the Group's approach in
International Sports Retail, we have commenced developing more
tailored approaches to key local markets, and have begun initially
implementing this in selected countries.
Sports Direct and ASICS are excited to announce the formation of
a new strategic partnership in response to the ever changing
demands of the running consumer in today's Sporting Goods
marketplace. The two businesses have been in dialogue over the last
few months on how best to serve runners with a relaunch of ASICS
statement product offer within an ASICS managed space at Sports
Direct's premium flagship stores which they aim to bring to market
early Spring 2018. This is an important step in Sports Direct's
journey to being recognised as the 'Selfridges of Sport' and aims
to build upon the retail brand's most recent positioning as 'The
Home of Football' with a renewed focus on another innovative
performance sports category with great potential for growth.
OUR PEOPLE AND OUR PRACTICES
We have made positive progress across the business as we
continue to strive to ensure that all of our people are treated
with dignity and respect. Following publication of the Working
Practices Report in September 2016, the Board and senior management
have continued our comprehensive review of our arrangements for
staff, both in stores and at our Shirebrook campus. As part of this
work, we have launched a rolling initiative to capture staff
feedback called 'Your Company, Your Voice'. This enables all of our
people within the UK, along with agency workers in Shirebrook, to
raise any issues of concern or suggestions for improvements. All
contributions are carefully monitored so that early action can be
taken where appropriate. Details of other measures, including a new
staff Health & Safety Committee and a staff Wellbeing Service,
are included in our forthcoming Annual Report. A recent survey of
workers in Shirebrook, to which 3,300 people responded, showed that
an overwhelming majority of people in our warehouse currently feel
they are treated with respect. We have used the results of this
survey to identify any areas that require further attention.
However, we recognise there is no room for complacency and our work
remains ongoing. With this in mind, the Company's first UK Workers'
Representative, Alex Balacki, was elected by staff, and I have no
doubt that Alex's contribution will prove invaluable to the Board
as the Sports Direct family continues to move forward together.
BOARD & MANAGEMENT CHANGES
The Board appointed Mike Ashley as the Chief Executive,
following the departure of Dave Forsey in September 2016. I was
pleased to note that Mike's appointment was positively welcomed by
a number of shareholders. Our long-serving key staff members Karen
Byers and Sean Nevitt were promoted, to the roles of Global Head of
Operations and Global Head of Commercial respectively, alongside
Mike in the senior management team. In December, we were pleased to
appoint a new non-executive director, David Brayshaw. David brings
to the Board over 30 years' experience in investment and commercial
banking. In addition to the departure of Dave Forsey, FY17 saw the
departure of Matt Pearson as Acting Chief Financial Officer. As
announced by the Company this morning, we have now appointed Jon
Kempster as Chief Financial Officer ("CFO"). Jon will join the
Company as CFO and an Executive Director on the Board on 11
September 2017. Jon joins Sports Direct with a wealth of public
company experience in multinational organisations across multiple
sectors, and has a strong track record of delivering operational
performance transformation, corporate development and
restructuring, strategy implementation and investor relations.
Since period end, Claire Jenkins has stepped down as a
Non-Executive Director and Dave Singleton has announced that he
will not stand for re-election at the AGM in September 2017. We
were pleased to announce David Daly as a new Non-Executive
Director. Mr Daly will join the Board and the audit committee with
effect from 2 October 2017. David has 30 years' international
experience in the sporting goods industry working for Nike until
his retirement in 2015, most recently as Senior Director for Nike's
Club and Federation Business based in Amsterdam.
CORPORATE GOVERNANCE
We announced in January that a further 360 review of the
Company, to include working practices and corporate governance,
would be led by RPC (legal advisors to the Company). In FY17, this
process primarily focused on our people, as set out above. In terms
of stakeholder engagement, Mike Ashley and I have attended
collective meetings with stakeholders on set dates in the financial
calendar. Details of our current engagement policies are set out in
our Engagement Statement on the Group website. Meanwhile, an
independent third party, NJMD Corporate Services Ltd, has carried
out our tri-annual Board evaluation and we intend to review the
results in due course. In relation to my own position, I did not
receive support from a majority of independent shareholders who
voted at the 2016 AGM, and therefore I stood for re-election on 5
January 2017, when I was re-elected. I am grateful for the support
that I received and I hope that the progress we have made over the
last 12 months will be taken into account by shareholders prior to
the next shareholder vote at our AGM in 2017.
ACQUISITIONS AND DIVESTMENT
The Group identified a number of strategic acquisitions and
divestment opportunities. This included continuing to capitalise
upon international opportunities where they may arise. In our FY17
H1 statement, the Group announced it had acquired the remaining 49%
interest in Cacifo Comercio de Artigos de Desportos S.A., our
sports retail business in Portugal. We later announced the
acquisition of approximately 50 retail stores comprising Bob's
Stores and Eastern Mountain Sports in the US, which completed after
the year end. This acquisition will provide a footprint in US
retail and a platform from which to grow US online sales. We also
announced the divestment of the Dunlop brand to Sumitomo Rubber
Industries Ltd. This was in line with the elevation of sports
retail, as it facilitates greater bandwidth to develop our
relationships with third party brands, and focus on the other
distinctive brands within the Group.
LONG TERM INCENTIVES
The Group's Share Schemes are a key element to attract and
motivate employees. With the 2015 Share Scheme having lapsed in
FY16, the Board and management team have been working to develop a
new incentive scheme for the Group, and this remains the case. The
final tranche of the Share Awards relating to our 2011 Share Scheme
are due to vest in September this calendar year and will result in
c. 14 million shares vesting to c. 2,000 eligible participating
employees. As announced at FY17 H1, as a result of the continued
volatility in Sports Direct's share price, the Company has decided
to commit to delivering a minimum value for the Share Awards made
under the 2011 Share Scheme. The minimum value will be fixed at
GBP3 for each share awarded to participants and is designed to
reduce the impact of recent share price volatility on the financial
outcomes of our people. If eligible employees choose to postpone
vesting until 2018, the GBP3 minimum value will rise to GBP4.
CAPITAL MANAGEMENT
The Board has decided not to pay a dividend this year. We will
continue to keep this under review. The Board ensures that
sufficient capital is retained within the Group to meet its
strategic objectives. We continued to conduct our Share Buyback
Programme during the period, pursuant to the authority granted to
us at the 2016 AGM. During the period to 30 April 2017 the Company
has purchased 31,173,026 ordinary shares at a cost of
GBP108,689,056 (excluding purchasing costs) and representing 5.80%
of the issued share capital. The maximum number of shares held in
treasury by the Company during the period was 79,310,534
representing 12.38% of the issued share capital. No shares have
been disposed of by the Company. As at 18 July 2017 the Company has
purchased an additional 31,702,877 ordinary shares at a cost of
GBP93,482,879 (excluding purchasing costs) and representing 4.95%
of the issued share capital. No shares have been disposed of by the
Company to this date. The Group has invested GBP317.0m in FY17 in
property assets, consistent with our announced intentions to invest
in excess of c. GBP300m in property assets per annum over a 2 - 4
year period.
In respect of cash and borrowings, the Board regularly monitors
the ratio of net debt to underlying EBITDA, the working capital
requirements, and forecasted cash flows. While no minimum or
maximum ratios are set, following careful assessment, the Board has
revised our objective of keeping the ratio of net debt to
underlying EBITDA, from 2.5x to 3x, in order to give the Group
greater flexibility. Net debt to underlying EBITDA is currently
0.6x.
OUR ACHIEVEMENTS AND OUR VALUES
Finally, I feel it appropriate that I should conclude by
recording the fact that 2017 sees the passing of ten years since
Sports Direct became a public company. During that time, we have
helped to change lives by paying our people around GBP320 million
in share bonuses and other rewards on top of their normal wages. We
have also contributed over GBP1.8 billion towards the UK economy in
taxation. Over the same period, we have created c. 4,800 new jobs
in the UK, as the Sports Direct family has grown. We have invested
millions in our stores, which is increasingly being recognised by
local councils for the rejuvenating effect that it has within
communities
I am also pleased to announce that Sports Direct has recently
joined the Retail Trust, the leading staff welfare charity, which
enjoys the patronage of Her Majesty the Queen. It is my firm belief
that Sports Direct is a company of which Britain can rightly feel
very proud.
Dr. Keith Hellawell. QPM
Non-Executive Chairman
20 July 2017
OUR IMPACT SINCE 2007
We became a listed public company in 2007. In the ten years
since we floated, the Group has greatly contributed to the British
economy. This includes:
-- c. GBP220 million paid in staff share bonuses*
-- c. GBP100 million paid in sales commission to retail staff
-- Created 4,800 new jobs in the UK, where we currently have 17,400 directly engaged staff.
-- Contributed c. GBP420 million in UK Corporation Tax
-- Contributed c. GBP1,300 million in VAT and Duty
-- Contributed c. GBP120 million in NI employer contributions
* Figure includes shares that become eligible to vest in
September 2017.
CHIEF EXECUTIVE'S REPORT AND BUSINESS REVIEW
PERFORMANCE
OVERVIEW
FY17 has been a transitional year. As anticipated, the Group has
delivered full year results that show a decline in our financial
performance on the prior year. This has been due to a number of
factors, chief among which were currency headwinds and strategic
challenges in our operations in continental Europe.
Group revenue increased by 11.7% to GBP3,245.3m in the year. UK
Sports Retail increased by 6.3% to GBP2,136.4m, which includes
Heaton's Northern Ireland sales. International Sports Retail
increased by 38.0% to GBP665.6m including Heaton's Republic of
Ireland. Premium Lifestyle revenue increased by 11.6%, with revenue
in Brands up 4.1%.
As expected, Group gross margin in the year decreased by 320
basis points from 44.2% to 41.0%. This was due to the impact of the
negative movement in the US dollar exchange rate against the pound
and to an increase in provisioning for stock obsolescence as we
identify higher risks in a fast changing market and supply chain.
UK Sports Retail margin decreased by 330 basis points from 44.5% to
41.2% while International Sports Retail decreased 160 basis points
from 44.8% to 43.2%. Premium Lifestyle's gross margin decreased by
450 basis points from 42.1% to 37.6%, which was also due to
discounting of slow moving stock.
Group operating costs increased by 16.9% to GBP1,058.7m (FY16:
GBP905.7m), largely as a result of the impact of increased onerous
lease provisions across Europe stemming from a review of poorly
performing stores where the US dollar exchange rate has reduced
margins. See Financial Review for reconciliation to selling,
distribution & administrative expenses.
As a result, Group underlying EBITDA (pre-Share Scheme costs)
for the year was down 28.5% to GBP272.7m (FY16: GBP381.4m). UK
Sports Retail underlying EBITDA was down 26.3% to GBP265.7m while
International Sports Retail EBITDA loss increased to GBP19.1m from
GBP4.9m. Premium Lifestyle EBITDA was a GBP0.3m loss from an EBITDA
loss last year of GBP5.1m and Brands division underlying EBITDA
decreased to GBP26.4m from GBP37.5m.
Excluded from underlying EBITDA is a GBP2.8m (FY16: GBP7.1m)
charge in respect of the 2011 Share Scheme. This charge has been
taken centrally and is not reflected in the divisional numbers in
this report.
The depreciation and amortisation charge has increased by 54.7%
to GBP147.9m (FY16: GBP95.6m) due to increased investment in our
store portfolio and revisions to accounting estimates of useful
economic lives of assets.
Group underlying profit before tax decreased 58.7% to GBP113.7m,
due to lower EBITDA and higher depreciation charges. Underlying EPS
for the year decreased by 67.9% to 11.4p (FY16: 35.5p).
The Group generated underlying free cash flow during the year of
GBP173.7m, down from GBP309.1m in the prior year, and net debt
increased by GBP82.5m to GBP182.1m at year end, mainly as a result
of acquisition of freehold and long leasehold properties and the
Group share buyback. These were mitigated by disposals of strategic
stakes and subsidiaries. Net debt currently stands at 0.6 times
reported EBITDA (24 April 2016: 0.31 times).
REVIEW BY BUSINESS SEGMENT
RETAIL REVENUE:
53 weeks Pro forma 52 weeks
ended 52 weeks ended
---------------------- -------------- ----------- --------------
30 April April 2017 24 April
2017 (GBP'm) (GBP'm) 2016 (GBP'm)
---------------------- -------------- ----------- --------------
Revenue
---------------------- -------------- ----------- --------------
UK Sports Retail 2,136.4 2,099.8 2,009.3
---------------------- -------------- ----------- --------------
International Sports
Retail 665.6 658.6 482.3
---------------------- -------------- ----------- --------------
Total Sports Retail
Revenue 2,802.0 2,758.4 2,491.6
---------------------- -------------- ----------- --------------
Cost of Sales
---------------------- -------------- ----------- --------------
UK Sports Retail (1,257.0) (1,237.2) (1,114.4)
---------------------- -------------- ----------- --------------
International Sports
Retail (378.3) (374.6) (266.3)
---------------------- -------------- ----------- --------------
Total Cost of Sales (1,635.3) (1,611.8) (1,380.7)
---------------------- -------------- ----------- --------------
Gross Profit
---------------------- -------------- ----------- --------------
UK Sports Retail 879.4 862.6 894.9
---------------------- -------------- ----------- --------------
International Sports
Retail 287.3 284.0 216.0
---------------------- -------------- ----------- --------------
Total Gross Profit 1,166.7 1,146.6 1,110.9
---------------------- -------------- ----------- --------------
Gross Margin %
---------------------- -------------- ----------- --------------
UK Sports Retail 41.2 41.1 44.5
---------------------- -------------- ----------- --------------
International Sports
Retail 43.2 43.1 44.8
---------------------- -------------- ----------- --------------
Total Retail Gross
Margin % 41.6 41.6 44.6
---------------------- -------------- ----------- --------------
PREMIUM REVENUE:
53 weeks Pro forma 52 weeks
ended 52 weeks ended
---------------- -------------- ----------- --------------
30 April April 2017 24 April
2017 (GBP'm) (GBP'm) 2016 (GBP'm)
---------------- -------------- ----------- --------------
Revenue 202.2 200.4 181.2
---------------- -------------- ----------- --------------
Cost of sales (126.1) (125.1) (105.0)
---------------- -------------- ----------- --------------
Gross Profit 76.1 75.3 76.2
---------------- -------------- ----------- --------------
Gross Margin % 37.6 37.6 42.1
---------------- -------------- ----------- --------------
BRANDS REVENUE:
53 weeks Pro forma 52 weeks
ended 52 weeks ended
---------------------- -------------- ----------- --------------
30 April April 2017 24 April
2017 (GBP'm) (GBP'm) 2016 (GBP'm)
---------------------- -------------- ----------- --------------
Wholesale 201.4 - 196.7
---------------------- -------------- ----------- --------------
Licensing 39.7 - 34.8
---------------------- -------------- ----------- --------------
Total Brands Revenue 241.1 - 231.5
---------------------- -------------- ----------- --------------
Cost of Sales (153.3) - (134.0)
---------------------- -------------- ----------- --------------
Gross Profit 87.8 - 97.5
---------------------- -------------- ----------- --------------
Gross Margin % 36.4% - 42.1%
---------------------- -------------- ----------- --------------
The 53(rd) week has no material impact on wholesale or licensing
sales.
UK SPORTS RETAIL
The UK Sports Retail segment includes all of the Group's sports
retail store operations in the UK and Northern Ireland, all of the
Group's Sports Online business, the Group's Fitness Division, and
the Group's Shirebrook campus operations. UK Sports Retail is the
main driver of the Group and accounts for 65.8% of Group
revenue.
Revenue grew 6.3% to GBP2,136.4m, which includes the full year
of Heatons Northern Ireland stores. Excluding the impact of Heatons
NI, UK Sports Retail revenue growth was 4.4%. Excluding the 53(rd)
week, UK Sports Retail revenue growth was 4.5%. Excluding both
Heatons NI and the 53(rd) week, revenue growth was 2.6%.
UK Sports Retail gross margin for the second half of the year
decreased to 42.0% (FY16 H2: 44.5%) largely due to the adverse
impact of the US dollar exchange rate and increased inventory and
other trade related provisions. The foreign currency effect on
margin for FY18 is expected to stabilise based on all forecast
purchases for FY18 being hedged at 1.31.
UK Sports Retail like-for-like gross contribution, increased by
+0.3% compared to the prior year.
Operating expenses increased by 10.3% excluding the impact of
Heatons NI, and 13.5% including the impact of Heatons in the year,
to GBP614.1m (FY16: GBP541.1m). Store wages were up 6.5% in the
year to GBP164.5m (FY16: GBP154.5m) and as a percentage of sales
rose to 10.5% (FY16: 10.1%). Overheads increased from integration
of new entities, additional legal charges and provisioning for bad
debts, onerous leases and dispute settlement.
Underlying EBITDA for UK Sports Retail was GBP265.7m (FY16:
GBP353.9m), a decrease of 24.9% for the year. However, early
indications are that trading in our new generation flagship stores
is exceeding expectations, leading to increased EBITDA in those
stores.
During the year we opened 15 new stores and closed 20.
Period end square-footage now stands at c.5.2m sq. ft.(1) (FY16:
c.5.1m).
30 April 24 April
2017 2016
------------------ --------- ---------
England 388 393
------------------ --------- ---------
Scotland 37 35
------------------ --------- ---------
Wales 27 30
------------------ --------- ---------
Northern Ireland 16 15
------------------ --------- ---------
Total 468 473
------------------ --------- ---------
Opened 15 31
------------------ --------- ---------
Closed 20 14
------------------ --------- ---------
Acquired - 15
------------------ --------- ---------
Area (sq. ft.) c.5.2m c.5.1m
------------------ --------- ---------
INTERNATIONAL SPORTS RETAIL
International Sports Retail segment includes all of the Group's
sports retail store management and operations outside of the UK,
including the Group's retail distribution centres in Belgium and
Austria. Revenue grew 38.0% to GBP665.6m, including the full year
of Heatons Republic of Ireland stores. Excluding the impact of
Heatons, International Sports Retail revenue growth was 7.4% on a
currency neutral basis.
International Sports Retail gross margin for the second half of
the year increased to 46.6% (FY16 H2: 44.2%) due to a favourable
EURO / USD exchange rate, hedged at 1.46. However, the margin for
FY18 will now be under pressure, as we are currently hedged at
1.11.
International Sports Retail like-for-like gross contribution,
decreased by -0.8% compared to the prior year.
Operating expenses increased by 29.4% excluding the impact of
Heatons ROI, and 37.4% including the impact of Heatons in the year,
to GBP306.8m (FY16: GBP223.3m). Store wages were flat in the year
at GBP117.1m (FY16: GBP117.1m) but as a percentage of sales reduced
to 17.6% (FY16: 24.3%). As a result of the ongoing strategic
review, provisions were made for onerous leases in poorly
performing stores of GBP39.7m.
During the period the Group impaired the brands acquired in the
Heatons subsidiary, due to the ongoing programme of re-branding to
SPORTSDIRECT.COM.
Period end square-footage now stands at c.3.9m sq. ft. (1)
(FY16: c.3.5m).
All of the following stores are operated by companies wholly
owned by the Group, except Estonia, Latvia and Lithuania where the
Group owns 60.0% and Malaysia where the Group owns 51%. During the
year, the Group increased its shareholding in the Portuguese entity
to 100%.
During the year we opened 21 new stores and closed 17. We also
own a 40% shareholding in the Sports Direct business in
Iceland.
SPORTS STORE PORTFOLIO(1)
30 April 2017 24 April 2016
--------------------- -------------- --------------
Belgium 39 41
--------------------- -------------- --------------
Austria 36 42
--------------------- -------------- --------------
Republic of Ireland 32 28
--------------------- -------------- --------------
Estonia(2) 26 25
--------------------- -------------- --------------
Malaysia 25 20
--------------------- -------------- --------------
Portugal 17 17
--------------------- -------------- --------------
Poland 16 15
--------------------- -------------- --------------
Latvia(2) 16 14
--------------------- -------------- --------------
Lithuania(2) 16 14
--------------------- -------------- --------------
Slovenia 15 15
--------------------- -------------- --------------
Hungary 11 13
--------------------- -------------- --------------
Czech Republic 10 7
--------------------- -------------- --------------
France 6 6
--------------------- -------------- --------------
Holland 6 6
--------------------- -------------- --------------
Cyprus 6 6
--------------------- -------------- --------------
Slovakia 6 5
--------------------- -------------- --------------
Germany 2 3
--------------------- -------------- --------------
Luxembourg 2 2
--------------------- -------------- --------------
Spain 2 2
--------------------- -------------- --------------
Switzerland - 0
--------------------- -------------- --------------
Total 289 281
--------------------- -------------- --------------
Opened 21 29
--------------------- -------------- --------------
Closed 17 16
--------------------- -------------- --------------
Converted 4 -
--------------------- -------------- --------------
Acquired - 42
--------------------- -------------- --------------
Area (sq. ft.)(3) c.3.9m c.3.5m
--------------------- -------------- --------------
(1) Excluding Iceland
(2) Includes only stores with SPORTSDIRECT.com and SPORTLAND
fascias
(3) Excluding Heatons fasica stores
PREMIUM LIFESTYLE
The Group's Premium Lifestyle division offers a broad range of
clothing, footwear and accessories from leading global,
contemporary and luxury retail brands. Premium Lifestyle sales
increased by 11.6% to GBP202.2m (FY16: GBP181.2m), mostly due to
increased web sales. The Premium Lifestyle gross margin for the
year decreased by 450 basis points to 37.6% (FY16: 42.1%), however
offset by the increase in the online business.
Premium Lifestyle operating costs decreased by 6.0% to GBP76.4m
(FY16: GBP81.3m) as a result of the previous rationalisation
undertaken.
We continue to strengthen our relationships with key third party
suppliers and have introduced several new brands in the period.
As a result, Underlying EBITDA improved to a loss of GBP0.3m
from a loss of GBP5.1m in FY16, as we continue to see the benefit
of rationalisation of the businesses. We expect to see further
benefits of this in future years.
At the year end, the Premium Lifestyle division traded from 73
stores under four main fascias:
30 April 2017 24 April 2016
------------- -------------- --------------
USC 45 50
------------- -------------- --------------
Cruise 10 10
------------- -------------- --------------
van mildert 5 9
------------- -------------- --------------
Flannels 13 9
------------- -------------- --------------
Other - 5
------------- -------------- --------------
Total 73 83
------------- -------------- --------------
GROUP BRANDS (wholesale & licensing)
The Brands portfolio includes a wide variety of world-famous
sport and lifestyle brands. The Group's Sports Retail division
sells products under these brands in its stores, and the Brands
division sells the brands through its wholesale and licensing
activities. The Brands division continues to sponsor a variety of
prestigious events and retains a variety of globally-recognised,
high-profile celebrities and sporting professionals as brand
ambassadors.
The Brands division's total revenue increased by 4.1% to
GBP241.1m (FY16: GBP231.5m). Wholesale revenues were up 2.4% to
GBP201.4m (FY16: GBP196.7m), with growth in European and US
wholesaling. Trading in the US market was in line with expectations
and now represents c.35% of total wholesale sales.
Brands' gross margin decreased by 570 basis points to 36.4%
(FY16: 42.1%). Wholesale gross margins decreased 800 basis points
to 23.9% (FY16: 31.9%) mainly due to the impact of accruals made in
relation to historic import costs.
On 3 April 2017, the division sold the Dunlop brand and related
wholesale and licensing companies. The divestment of the Dunlop
business is in line with Sports Direct's stated aspiration to
become the "Selfridges" of sports retail, including its renewed
focus on its core UK and International business and the development
of its relationships with third party brands.
Licensing revenues in the year were up 14.1% to GBP39.7m (FY16:
GBP34.8m). During the year we signed 20 new licence agreements and
renewed several existing licensees, covering multiple brands,
product categories and geographies, with minimum contracted values
of $20.1m over the life of the agreements.
Longer term, we still regard licensing as the key driver of the
Brands division's profitability and central to the overall growth
of the Brands business. The key growth areas are expected to
include Australasia and Asia Pacific.
Brands operating costs increased by 2.3% to GBP61.4m (FY16:
GBP60.0m) primarily due to bad debt provisions. Underlying EBITDA
decreased by 29.6% to GBP26.4m (FY16: GBP37.5m), mainly as a result
of the accruals made in relation to historic import costs.
KEY PERFORMANCE INDICATORS
The Board manages the Group's performance by reviewing a number
of Key Performance Indicators (KPIs). The table below represents a
summary of the Group's KPIs.
53 weeks Pro forma 52 weeks
ended 52 week ended
---------------------------- ------------ ------------ ------------ -------
30 April April 24 April Change
2017 2017 2016 %
---------------------------- ------------ ------------ ------------ -------
FINANCIAL KPIs
---------------------------- ------------ ------------ ------------ -------
Group revenue GBP3,245.3m GBP3,199.9m GBP2,904.3m +11.7
---------------------------- ------------ ------------ ------------ -------
Underlying EBITDA
(1) GBP272.7m GBP268.3m GBP381.4m -28.5
---------------------------- ------------ ------------ ------------ -------
Sports Retail
gross margin 41.6% 41.6% 44.6%
---------------------------- ------------ ------------ ------------ -------
Sports Retail
like-for-like
stores gross contribution
(2) +0.0% -0.8%
---------------------------- ------------ ------------ ------------ -------
Underlying earnings
per share (3) 11.4p 35.5p -67.9
---------------------------- ------------ ------------ ------------ -------
Reported earnings
per share 39.4p 46.8p -15.8
---------------------------- ------------ ------------ ------------ -------
(1) The method for calculating underlying EBITDA is set out in
the Financial Review.
(2) Sports Retail like-for-like contribution is defined as the
percentage change in gross contribution in the successive 12-month
Period on a currency neutral basis. A like-for-like store is one
that has been trading for the full 12 months in both periods and
has not been affected by a significant change, such as a major
refurbishment.
(3) The method for calculating underlying earnings per share is
set out in the Financial Review.
(4) Excluding associates and stores in the Baltic states that
trade under fascias other than SPORTLAND or SPORTSDIRECT.com. and
other niche fascias
OUTLOOK
We are pleased to confirm that early indications show that
trading in our new generation flagship stores is exceeding our
expectations. The table below shows two examples of these stores,
which we have called Store X and Store Y. Store X is our
highest-turnover new flagship, and Store Y is our lowest turnover
new flagship. Both are delivering greater EBITDA than an average
Sports Direct store.
STORE X (new generation flagship) - Sales area 35k sq. ft. -
EBITDA 2.1m
STORE Y (new generation flagship) - Sales area 31k sq. ft. -
EBITDA 1.0m
Sports Direct UK Average Store - Sales area 11k sq. ft. - EBITDA 0.5m
This should be balanced against the continued impact of the
devaluation of sterling against the dollar, with our GBP/ USD
requirements hedged at 1.31 for FY18 (compared with a historical
long-term average closer to approx. 1.6).
Taking all of these factors into account, our outlook is
optimistic and we aim to achieve growth in underlying EBITDA in the
region of approx. 5%-15% during FY18. However, we will continue to
be conservative in managing for the medium to long term, which may
result in short-term fluctuations in underlying EBITDA,
particularly given the continued uncertainty surrounding
Brexit.
Mike Ashley
Chief Executive
20 July 2017
OPERATIONAL REVIEW
PROGRESS ON OUR STRATEGIC PRIORITIES
The Group has and is facing a number of strategic challenges and
currency headwinds which continue to adversely impact the financial
performance of the business. We remain committed to our organic and
inorganic growth strategy and our long-term priority to elevate the
Company's sports retail proposition. To address our strategic
challenges, the Board and management team's medium to long term
strategic priorities are:
1. One Team, One Goal: to enhance our environment for the benefit of the Sports Direct Family;
2. Elevate the Group's sports retail proposition: working to
elevate the sports retail proposition over the medium to long term,
initially focusing on the UK, and tailoring our retail proposition
in Europe;
3. Improve stakeholder engagement: develop a plan to improve our
approach to and engagement with stakeholders.
Below we have outlined the progress on our key strategic
priorities over FY17.
1. ONE TEAM, ONE GOAL
We have continued to make good progress in protecting the
welfare of the people who work for the Group. Details of this will
be contained in a section headlined OUR PEOPLE in our forthcoming
2017 Annual Report and Accounts.
2. THE ELEVATION OF SPORTS RETAIL
The elevation of the sports retail proposition is vital to
continuing to strengthen our relationships with our key third party
brand partners, deliver benefits for our customers, and drive the
Group's long term profitability. It spans product, stores, online,
and marketing, and critical to its success is the Group's active
management of its store property portfolio. As highlighted at the
AGM / Open Day on 7 September 2016 and since, the Group is focused
on elevating its store portfolio through acquisitions and
relocations. To increase the Group's ability to secure strategic
retail locations that are commercially viable, our Property
division alongside senior management has the flexibility to invest
in freehold properties and development projects, which can span
vacant buildings, development land or re-development projects, and
multi-tenanted schemes or properties. To ensure an efficient
transition and reduce non-trading space, the Group seeks to align
store openings with existing lease expiries where possible. This
wide-ranging but controlled brief ensures the Group is able to
rollout our plans while efficiently transitioning the store
portfolio.
We have implemented a centralised "cloud approach" to managing
stock and other areas of the business, in order to facilitate
maximum flexibility in our operations across the Group.
ONLINE
Online, the Group benefits from its investment in a single web
platform which supports all of the Group's websites and e-commerce
sites, maximising the efficiency of the Group's investment in
elevating its online retail proposition, and the online customer
experience. During the period the Group's marketing and ecommerce
division significantly re-styled and elevated our fascias' and
brands' online presence in line with our new generation concept.
Adding to the Group's suite of ecommerce sites and websites, the
Group has launched an ecommerce app for Sports Direct, which is
also adapted for the Premium fascia, Flannels, and the Lifestyle
brand, Firetrap. The app is driven by the Group's centralised web
platform, and is compatible with both Android and iOS.
BRANDS AND MARKETING
Consistent with the elevation strategy, in Sports Retail, the
Group has re-aligned its marketing style towards clean, brand- and
category-led campaigns, in contrast to our previous focus on
offer-led campaigns. Our key third party brand partners are
supporting this elevation with greater marketing assets in-store
and online, and we have collaborated on the first major co-branded
campaigns which were launched in November 2016. These included a
premium style of Nike CR7 football boot available in Sports Direct
stores, and the adidas Ace 17 football boot. The period also saw
the completion of brand showroom suites in Shirebrook which have
been developed by Nike, adidas, Puma and Under Armour.
3. IMPROVING ENGAGEMENT WITH OUR STAKEHOLDERS
In our FY17 H1 Interim Results Release, we stated that we
recognised the need to improve communications with stakeholders.
During the year, we developed an approach to engagement which
outlined how the Company intended to engage with the financial
community and media, and this can be found in our Engagement
Statement on the Company's website. The Group intends to continue
in the spirit of being open, prudent and compliant in our approach
to engagement and communications.
Strategic acquisitions and investments
The Group's acquisition and investments strategy, parameters and
decision-making is performed by the Board, and delegated at a
certain materiality level to be performed by the Executive
Directors within the agreed strategy.
The Group is focused on opportunities that will deliver benefits
for our customers, broaden or enhance our commercial relationships
or retail channels, selectively grow our market share, and/or
further diversify our operations. Given the breadth of our
business, our strategic benefits can be varied and extensive, and
the Group employs an array of mechanisms to facilitate strategic
discussions with potential partners towards varied strategic goals.
While this year our focus was on our people and the elevation of
our sports retail proposition in our core UK business, the Group
did undertake a number of strategic investments and divestments for
the benefit of the Group and shareholders.
In our FY17 H1 statement, the Group announced it had acquired
the remaining 49% interest in Cacifo Comercio de Artigos de
Desportos S.A., our sports retail business in Portugal. We later
announced the acquisition of c. 50 retail stores comprising Bob's
Stores and Eastern Mountain Sports in the US, which completed after
the year end. This acquisition will provide a footprint in US
retail and a platform from which to grow US online sales. We also
announced the divestment of the Dunlop brand to Sumitomo Rubber
Industries Ltd. This was in line with the elevation of sports
retail, as it facilitates greater bandwidth to develop our
relationships with third party brands, and focus on the other
distinctive brands within the Group.
PROPERTY REVIEW
In the UK, we have been actively focusing on elevating our store
portfolio, typically through relocating smaller format stores to a
new generation of stores, with a priority on securing flagship
stores in strategic retail locations.
We have developed a UK & Ireland portfolio strategy that is
totally aligned with the aspirations of our major third party brand
partners. This is a 2-to-4 year initial strategy to move towards
the "Selfridges" of sport through elevating retail space and
improving the experience for both our consumers and third party
brands in order to set the landscape for the next 5 to 10 years on
a rolling basis.
The strategy will involve the rationalisation of stores
throughout the UK and will mean closing, some smaller stores and
relocating into one flagship store. The consolidation of the Group
portfolio within new generation stores will result in the number of
actual stores decreasing, but the total sales area increasing and
providing a more comprehensive offering, including speciality
sports / fashion brands.
The Group continues to develop and roll out the Flannels
concept, with the consolidation and conversion of the existing
fascias under the Premium Lifestyle umbrella. The flagship Flannels
store in Oxford Street is under development including the new
London offices, which will open in FY18.
In Ireland, the group continues to consolidate the retail
portfolio following the completion of the full acquisition of
Heatons through the conversion of single fascia Heatons stores. We
are currently building our Europe strategy as per each country,
which is in line with our UK strategy. We have made our first
flagship acquisition for Lithuania, which is also due to open in
FY18.
Store Portfolio - Sports Stores - UK excluding Northern
Ireland
The Group is currently operating 388 sports stores in England,
37 in Scotland and 27 in Wales. This represents a net reduction of
five stores in the period as a result of 15 openings and 20
closures. However total sales area in the period increased from
approximately 5.1m sq. ft. to approximately 5.2m sq. ft.
Of 11 new generation store openings in England, 4 of these
comprised flagship stores at Southampton, Southport, Solihull and
Sunderland, all of which are held by the group on a freehold or
long leasehold basis.
Across the remaining UK portfolio (ex. Northern Ireland), there
were a further two openings in Scotland, one of which was a
freehold acquisition that enabled Sports Direct to maintain
representation in Edinburgh and obtain a strategic retail
location.
Of the 20 closures across the UK (excluding Northern Ireland),
seven were as part of a relocation to new generation stores. All of
the flagship store openings comprised relocations that enabled the
group to elevate the retail offering with improved space in which
to showcase the best products from third party brands.
The total number of new generation stores at the end of the
period was in excess of 25, of which 13 were flagship stores.
Store Portfolio - Sports Direct forecasted UK openings for
FY18
The Group forecasts that there will be in the region of 12 - 18
new generation stores that will open in FY18. Approximately 50% of
these will be flagship stores.
In Ireland, there will be approximately 4 to 8 new stores
planned for FY18, which will be split between the Republic of
Ireland and Northern Ireland. Approximately 50% will be flagship
stores. These include our flagship store in Dublin city centre,
which was a freehold property acquisition that was purchased in
FY17 and opened at the beginning of FY18.
This will bring the total number of flagships to potentially in
excess of 20 during the next financial year. The Group forecasts a
total of 75 to 150 store flagship stores in the coming 5 to 10 year
period in the UK and Ireland. These estimates are subject to
identifying appropriate opportunities, hence the need for a
flexible approach.
Northern Ireland & Republic of Ireland - Store Portfolio
Analysis
With the acquisition of Heatons, the group acquired 15 stores in
Northern Ireland, 10 of which were dual-facia Heatons/Sports Direct
stores, with the remaining 5 comprising Sports Direct only.
The acquisition also included 42 stores in the Republic of
Ireland, 13 of which were single fascia Heatons stores and 29 of
which were dual-fascia Heatons/Sports Direct stores.
The strategy in Ireland for the period has been the conversion
of selected single and dual fascia Heatons to new generation Sports
Direct stores. Moving forward, we will be rolling out new
generation store format with a particular focus on flagship stores.
Our store in Dublin was the first of such stores at the start of
FY18, and it has been tremendously well-received by local customers
and third party brands.
Store Portfolio - Europe*, USA & Malaysia
The Group is currently operating sports store in 17 countries in
Europe (excl. Iceland associate).
-- 232 Sports Retail stores in the EU
-- Total square footage of all fascias in Europe is 3.5m for
FY17 (includes Eybl, Disport, SportsWorld, etc.)
-- 16 openings in 7 different countries in FY17 of which 1 was a
Flagship Store in Brussels Docks
-- 17 closures in 7 countries in FY17 focused on non-performing stores and/or markets where cannibalisation was present
-- 25 stores in Malaysia, including 5 openings in the year
-- 49 stores in the USA (the acquisition of which was completed after year end)
We are currently building our European strategy on a per country
basis, which is in line with our UK strategy. We have made our
first flagship acquisition for Lithuania, which is due to open in
FY18.
*excluding UK & ROI.
Store Portfolio - Premium Lifestyle
The Group continues to develop and roll out the Flannels
concept, with the consolidation and conversion of the existing
fascias under the Premium Lifestyle umbrella. The flagship Flannels
store in Oxford Street is under development including the new
London offices, which will open in Q1 2018.
The group operates 45 USC stores, 13 Flannels stores, 10 Cruise
stores and 5 van mildert stores - a total of 73 stores under
Premium Lifestyle.
A number of new Flannels stores have opened in conjunction with
flagship sports store openings, such as in Solihull and Southport
as part of the aim to create multi-fascia retailing destinations in
line with the "Selfridges" of sport concept.
Freehold / Long Leasehold Property Purchases
The property programme continued to gather pace over FY17 having
completed 23 freehold / long leasehold (LLH) acquisitions with a
combined purchase price of GBP317.0m.
The largest single transaction was the freehold on Oxford Street
for GBP108m which is currently being extensively refurbished to
provide a flagship store for Flannels and London headquarters.
The acquired properties provide a phased pipeline of stores over
the coming years to transition to the new generation concept. The
aspiration is to acquire up to 30 properties over the next
financial year with a combined expected investment value of
GBP200m-GBP300m.
Oxford Street Update - Since acquiring the property, we have
refined the plans inherited from the vendor in order to suit our
operation and maximise the property value. The contractor is
currently on site and the team is working towards opening the store
and office in 2018.
FINANCIAL REVIEW
The Financial Statements for the Group for the 53 weeks ended 30
April 2017 are presented in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU.
SUMMARY OF RESULTS
53 weeks 52 weeks
ended ended
-------------------------- -------------- --------------
30 April 24 April
2017 (GBP'm) 2016 (GBP'm)
-------------------------- -------------- --------------
Revenue 3,245.3 2,904.3
-------------------------- -------------- --------------
Underlying EBITDA 272.7 381.4
-------------------------- -------------- --------------
Underlying Profit Before
Tax 113.7 275.2
-------------------------- -------------- --------------
Reported Profit Before
Taxation 281.6 361.8
-------------------------- -------------- --------------
Pence per Pence per
share share
-------------------------- -------------- --------------
Reported EPS 39.4 46.8
-------------------------- -------------- --------------
Underlying EPS 11.4 35.5
-------------------------- -------------- --------------
The Directors believe that underlying EBITDA, underlying profit
before tax and underlying EPS provide more useful information for
shareholders on the underlying performance of the business than the
reported numbers and are consistent with how business performance
is measured internally. They are not recognised profit measures
under IFRS and may not be directly comparable with "adjusted"
profit measures used by other companies.
EBITDA is earnings before investment income, finance income and
finance costs, tax, depreciation, amortisation and impairment. It
includes the Group's share of profit from associated undertakings
and joint ventures. Underlying EBITDA is calculated as EBITDA
before the impact of foreign exchange, any exceptional or other
non-trading items and costs relating to the Share Schemes.
EBITDA AND PROFIT BEFORE TAX
EBITDA (GBP'm) PBT (GBP'm)
--------------------------------- --------------- ------------
Operating profit 160.1 -
--------------------------------- --------------- ------------
Depreciation, amortisation 147.9 -
and impairment
--------------------------------- --------------- ------------
Share of profit of associated 0.8 -
undertakings (excl. FV
adjustments)
--------------------------------- --------------- ------------
Reported 308.8 281.6
--------------------------------- --------------- ------------
Share Scheme 2.8 -
--------------------------------- --------------- ------------
Subsidiary disposal (79.9) (79.9)
--------------------------------- --------------- ------------
Exceptional items 17.3 17.3
--------------------------------- --------------- ------------
Net investment income - (110.7)
--------------------------------- --------------- ------------
Realised FX loss 23.7 23.7
--------------------------------- --------------- ------------
IAS 39 FX fair value adjustment
on forward currency contracts - (18.3)
--------------------------------- --------------- ------------
Underlying 272.7 113.7
--------------------------------- --------------- ------------
Underlying 53 week FY17 profit before tax excludes:
(i) exceptional items which decreased profit by GBP17.3m;
(ii) disposal of a subsidiary which increased profit by GBP79.9m;
(ii) investment income which increased profit by GBP110.7;
(iii) realised foreign exchange losses which decreased profit by GBP23.7m; and
(iv) IFRS revaluation of written options which increased profit by GBP18.3m.
53 weeks ended
30 April 2017
(GBP'm)
---------------------------------------- ---------------
Group Operating costs 1,058.7
---------------------------------------- ---------------
Depreciation, amortisation and
impairment 147.9
---------------------------------------- ---------------
Bonus Share Scheme 2.8
---------------------------------------- ---------------
Realised FX loss 23.7
---------------------------------------- ---------------
Other operating income 22.5
---------------------------------------- ---------------
Selling, distribution & administration
costs 1,255.6
---------------------------------------- ---------------
Group operating costs for the purposes of management
reporting:
(i) Excludes depreciation, amortisation and impairments, share
scheme charges and realised FX losses; and
(ii) Includes other operating income.
FOREIGN EXCHANGE
The Group manages the impact of currency movements through the
use of forward fixed rate currency purchase and sales contracts.
The Group's strategy is to hold or hedge up to five years of
anticipated Non-GBP denominated on-line sales and Non-GBP and
Non-EUR purchases.
Following the outcome of the EU referendum, we are aware of the
associated market volatility and in particular material changes to
sterling/US dollar and sterling/Euro exchange rates, and the lack
of transparency as to how those rates will move in the short to
medium term. These factors are likely to impact US Dollar purchases
in particular and therefore profitability - for which post year end
the Company became fully hedged for forecast purchases into the UK
in US dollars for FY18 at a rate of 1.31 and hedged in the Group's
European entities in US dollars at rates of 1.11-1.21.
There is also a potential exposure in relation to the Euro
forward sales contracts and written option arrangements that the
Group is party to although we would highlight that the contracted
rates on the forward contracts are largely in line with the
underlying Euro/sterling rates experienced during FY17.
As at 30 April 2017 the Group was party to the following
principal contracts - EUR777m of Euro forward sales contracts that
qualify for hedge accounting and EUR1,383m of options and forward
sales contracts that do not qualify for hedge accounting. The
contracted forward rates for these instruments are shown in the
notes to the financial statements.
The forward contracts will be covered by our forecast Euro
denominated online sales over the period of cover in place. Sales
that we make over and above the covered amount, and existing
surplus Euros within the business will mitigate the risk associated
with the written currency options.
If sterling depreciates by 10% against the Euro, a fair value
loss of GBP8.9m would be recognised in the income statement in
relation to these option contracts.
The realised exchange loss of GBP23.7m (FY16: GBP2.3m loss)
included in administration costs has arisen from:
a) accepting dollars and Euros at the contracted rate; and
b) the translation of dollar and Euro denominated assets and
liabilities at the period end rate or date of realisation.
The exchange gain of GBP18.2m (FY16: GBP6.8m loss) included in
finance income substantially represents the decrease in the
mark-to-market liability made (under IFRS) for the Group's written
option and unhedged forward contracts as at 30 April 2017. The
majority of the forward contracts outstanding at 30 April 2017
qualify for hedge accounting and the fair value loss on these
contracts has been debited to equity through the Consolidated
Statement of Comprehensive Income. The sterling exchange rate with
the US Dollar was $1.440 at 24 April 2016 and $1.294 at 30 April
2017. The sterling exchange rate with the Euro was EUR1.283 at 24
April 2016 and EUR1.188 at 30 April 2017.
Given the potential impact of commodity prices on raw material
costs, the Group may hedge certain input costs, including cotton,
crude oil and electricity.
EXCEPTIONAL ITEMS
53 weeks 52 weeks
ended ended
------------------------------- -------------- --------------
30 April 24 April
2017 (GBP'm) 2016 (GBP'm)
------------------------------- -------------- --------------
Profit on sale of freehold
properties - 13.5
------------------------------- -------------- --------------
Provision against receivables
and other - (5.8)
------------------------------- -------------- --------------
Impairment (17.3) (58.5)
------------------------------- -------------- --------------
Total Exceptional Items (17.3) (50.8)
------------------------------- -------------- --------------
The impairment mainly relates to intangible values of own brands
which are no longer considered core brands.
In the prior year, the profit on disposal of freehold property
relates to the sale of a freehold property for GBP44m, realising a
profit of GBP13.5m.
TAXATION
The effective tax rate on profit before tax in FY17 was 17.7%
(FY16: 22.9%). This reflects the impact of items that qualify for
substantial shareholder relief as well as a one off write off of
deferred tax assets from losses incurred in Europe. Excluding these
items, the underlying effective rate is 29.0% (FY16: 21.3%), which
reflects the impact of the increase in freehold property and
related disallowable depreciation.
EARNINGS
53 weeks 52 weeks
ended ended
---------------------- ------------ ------------ -------
30 April 24 April Change
2017 2016 (%)
(pence per (pence per
share) share)
---------------------- ------------ ------------ -------
Reported EPS (Basic) 39.4 46.8 (15.8)
---------------------- ------------ ------------ -------
Underlying EPS 11.4 35.5 (67.9)
---------------------- ------------ ------------ -------
Weighted average
number of shares
(actual) 583,501,473 592,573,254 (1.5)
---------------------- ------------ ------------ -------
Basic earnings per share (EPS) is calculated by dividing the
earnings attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the actual
financial period. Shares held in Treasury and the Employee Benefit
Trust are excluded from this figure.
The underlying EPS reflects the underlying performance of the
business compared with the prior year and is calculated using the
weighted average number of shares. It is not a recognised profit
measure under IFRS and may not be directly comparable with
"adjusted" profit measures used by other companies.
The items adjusted for arriving at the underlying profit after
tax and minority interests is as follows:
53 weeks 52 weeks
ended ended
-------------------------------- -------------- --------------
30 April 24 April
2017 (GBP'm) 2016 (GBP'm)
-------------------------------- -------------- --------------
Profit after tax 229.9 277.4
-------------------------------- -------------- --------------
Post tax effect of adjustment
items:
-------------------------------- -------------- --------------
Profit on disposal of
listed investments (141.5) (104.5)
-------------------------------- -------------- --------------
Fair value adjustment
to forward foreign exchange
contracts (14.3) 5.2
-------------------------------- -------------- --------------
Fair value adjustment
to derivative financial
instruments 24.0 (8.4)
-------------------------------- -------------- --------------
Impairment of fixed assets - 4.4
-------------------------------- -------------- --------------
Realised loss/(gain) on
forward foreign exchange
contracts 18.5 1.8
-------------------------------- -------------- --------------
Profit on disposal of
freehold properties - (10.4)
-------------------------------- -------------- --------------
Impairment and accelerated
depreciation and amortisation 17.3 45.2
-------------------------------- -------------- --------------
Write off of deferred 12.5 -
tax assets
-------------------------------- -------------- --------------
Profit on disposal of (79.9) -
subsidiary
-------------------------------- -------------- --------------
Underlying profit after
tax 66.5 210.7
-------------------------------- -------------- --------------
DIVIDS
The Board has decided not to pay a dividend in relation to FY17.
The Board remains of the opinion that it is in the best interests
of the Group and its shareholders to preserve financial
flexibility, facilitating future investments and other growth
opportunities. The payment of dividends remains under review.
CAPITAL EXPITURE
During the period, capital expenditure amounted to GBP419.5m
(FY16: GBP207.0m), which includes GBP317.0m on properties
(including fixtures and fittings).
ACQUISITIONS
During FY17 the Group acquired 100% of BSL Ltd, Community Bug
Ltd and Vinecomb Investments Ltd. The net cash outflow for these
acquisitions was GBP8.1m. The Group also acquired the remaining 49%
of the Sports Direct business in Portugal for EUR5.0m.
DISPOSALS
During the period, the Group disposed of the Dunlop brand and
its related wholesale and licensing activities for a total
consideration of GBP109.5m, resulting in a gain on disposal of
GBP79.9m. This facilitates more bandwidth for management to develop
relationships with third party brands without the need to manage
the Dunlop brand on an international basis.
COMMERCIAL ARRANGEMENTS
In our FY17 H1 statement, we confirmed that MM Prop Consultancy
Ltd, a company owned and controlled by Michael Murray, continues to
provide property consultancy services to the group. MM Prop
Consultancy Ltd is primarily tasked with finding and negotiating
the acquisition of new sites for both our larger format stores and
our combined retail and gym units, but it also provides advice to
the Company's in-house property team in relation to existing sites
both in the UK and in Europe. MM Prop Consultancy Ltd fees are
linked directly to value creation, which is determined by the
Company's non-executive directors who independently review
performance bi-annually with a view to determining, at their
absolute and sole discretion, the quantum of the fee payable. Under
the terms of the agreement with MM Prop Consultancy Ltd no fees are
payable until at the earliest of 30 September 2018, so that the
Company's independent non-executive directors have a sufficient
amount of time to assess performance.
During FY17, the Company had arrangements in place with Barlin
Delivery Limited, a company owned by John Ashley (the brother of
Mike Ashley). This arrangement is no longer in place.
STRATEGIC INVESTMENTS
During the period the Group disposed of its remaining 9,920,000
shares in JD Sports Fashion plc and at the year-end held no
interest in the company. The total economic interest held in
Debenhams plc at the year-end was 16.8% representing the put option
and contract for differences. On 5 May 2016 the maturity date of 30
November 2016 of the Put Option put in place on 23 January 2015
referencing 128,927,113 ordinary shares of Debenhams was extended
by 12 months. The Group continues to hold an economic interest at
the year-end in Goals Soccer Centres plc of 3.84% and Iconix Brand
Group Inc. of 11.4%, and during the year acquired 11.2% of French
Connection Group plc and 7.9% of Finish Line Inc. The Group no
longer holds an economic interest in Dicks Sporting Goods Inc. The
Group continues to hold a direct interest in Findel plc
representing 29.90% of the issued share capital; MySale Group plc,
representing 4.8% of the issued share capital; and, House of Fraser
Limited representing 11.11% of the issued share capital.
These stakes allow us to develop a relationship and potential
commercial partnerships with the relevant party and assist in
building relationships with key suppliers and brands.
The fair value of equity derivative agreements are included
within the derivative financial assets balance of GBP43.0m and
derivative financial liabilities balance of GBP75.2m.
CASH FLOW AND NET DEBT
Net debt increased by GBP82.4m from GBP99.7m at 24 April 2016 to
GBP182.1m at 30 April 2017.
The analysis of debt at 30 April 2017 was as follows:
30 April 24 April
2017 (GBP'm) 2016 (GBP'm)
--------------------------- -------------- --------------
Cash and cash equivalents 204.7 234.2
--------------------------- -------------- --------------
Borrowings (386.8) (333.9)
--------------------------- -------------- --------------
Net debt (182.1) (99.7)
--------------------------- -------------- --------------
The Revolving Credit Facility of GBP788m is available until
September 2018 and is not secured against any of the Group's fixed
assets. The Group is currently making appropriate arrangements for
post-September 2018.
The Group continues to operate well within its banking covenants
and the Board remains comfortable with the Group's available
headroom.
CASH FLOW
Total movement is as follows:
30 April 24 April
2017 (GBP'm) 2016 (GBP'm)
------------------------------- -------------- --------------
Underlying EBITDA 272.7 381.4
------------------------------- -------------- --------------
Realised (loss)/profit
on forward foreign exchange
contracts (23.7) (2.4)
------------------------------- -------------- --------------
Taxes paid (75.3) (69.9)
------------------------------- -------------- --------------
Underlying free cash flow 173.7 309.1
------------------------------- -------------- --------------
Invested in:-
------------------------------- -------------- --------------
Movement in inventory 60.0 (155.4)
------------------------------- -------------- --------------
Working capital and other (38.3) (88.0)
------------------------------- -------------- --------------
Purchase of own shares (109.8) -
------------------------------- -------------- --------------
Acquisitions (including
debt) (22.6) (33.1)
------------------------------- -------------- --------------
Proceeds on disposal of 109.5 -
subsidiary
------------------------------- -------------- --------------
Net proceeds from investments 163.9 92.1
------------------------------- -------------- --------------
Net capital expenditure (417.1) (163.1)
------------------------------- -------------- --------------
Finance costs and other
financing activities (1.7) (1.5)
------------------------------- -------------- --------------
Increase in net debt (82.4) (39.9)
------------------------------- -------------- --------------
The change in working capital is partly to support the growth of
Sports Retail and the online business and partly due to the timing
of payments around year end.
PENSIONS
The Group operates a defined benefit scheme in Sport Eybl
Holding GmbH in Austria. During the year, the Group disposed of the
subsidiary that held the Dunlop Slazenger pension scheme. The Group
has no remaining contractual obligations in relation to the Pension
scheme following the disposal. The net deficit in these schemes
therefore decreased from GBP13.1m at 24 April 2016 to GBP3.4m at 30
April 2017.
CONSOLIDATED INCOME STATEMENT
For the 53 weeks ended 30 April 2017
53 weeks 52 weeks
ended ended
------------------------------- ----- ---------- ----------
Note 30 April 24 April
2017 2016
(GBPm) (GBPm)
------------------------------- ----- ---------- ----------
Revenue 1,2 3,245.3 2,904.3
------------------------------- ----- ---------- ----------
Cost of sales (1,914.7) (1,619.7)
------------------------------- ----- ---------- ----------
Gross profit 1,330.6 1,284.6
------------------------------- ----- ---------- ----------
Selling, distribution
and administrative expenses (1,255.6) (1,021.7)
------------------------------- ----- ---------- ----------
Other operating income 22.5 11.1
------------------------------- ----- ---------- ----------
Exceptional items 3 (17.3) (50.8)
------------------------------- ----- ---------- ----------
Profit on disposal of 79.9 -
subsidiary
------------------------------- ----- ---------- ----------
Operating profit 2 160.1 223.2
------------------------------- ----- ---------- ----------
Investment income 162.5 148.1
------------------------------- ----- ---------- ----------
Investment costs (51.2) -
------------------------------- ----- ---------- ----------
Finance income 18.8 3.4
------------------------------- ----- ---------- ----------
Finance costs (9.4) (15.3)
------------------------------- ----- ---------- ----------
Share of profit of associated
undertakings 0.8 2.4
------------------------------- ----- ---------- ----------
Profit before taxation 281.6 361.8
------------------------------- ----- ---------- ----------
Taxation 4 (49.9) (82.8)
------------------------------- ----- ---------- ----------
Profit for the period 231.7 279.0
------------------------------- ----- ---------- ----------
ATTRIBUTABLE TO:
Equity holders of the
Group 229.9 277.4
---------------------------- ------ ------
Non-controlling interests 1.8 1.6
---------------------------- ------ ------
Profit for the period 231.7 279.0
---------------------------- ------ ------
EARNINGS PER SHARE ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS
Pence per Pence
share per share
---------------------------- ---------- -----------
Basic earnings per share 5 39.4 46.8
---------------------------- ---------- -----------
Diluted earnings per share 5 38.3 45.5
---------------------------- ---------- -----------
Underlying basic earnings
per share 5 11.4 35.5
---------------------------- ---------- -----------
Diluted underlying basic
earnings per share 5 11.1 34.5
---------------------------- ---------- -----------
The consolidated income statement has been prepared on the basis
that all operations are continuing.
The accompanying accounting policies and notes form part of
these Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 53 weeks ended 30 April 2017
53 weeks 52 weeks
ended ended
----------------------------------------- ------------- -------------
Note 30 April 24 April
2017 (GBPm) 2016 (GBPm)
---------------------------------- ----- ------------- -------------
Profit for the period 2 231.7 279.0
---------------------------------- ----- ------------- -------------
OTHER COMPREHENSIVE INCOME
-----------------------------------------------------------------------
ITEMS THAT WILL NOT BE RECLASSIFIED SUBSEQUENTLY
TO PROFIT OR LOSS
-----------------------------------------------------------------------
Actuarial losses on defined (8.8) -
benefit pension schemes
---------------------------------- ----- ------------- -------------
Taxation on items recognised 1.7 -
in other comprehensive
income
---------------------------------- ----- ------------- -------------
ITEMS THAT WILL BE RECLASSIFIED SUBSEQUENTLY
TO PROFIT OR LOSS
-----------------------------------------------------------------------
Exchange differences on
translation of foreign
operations 50.3 12.4
---------------------------------- ----- ------------- -------------
Exchange differences on
hedged contracts - recognised
in the period (31.3) (5.7)
---------------------------------- ----- ------------- -------------
Exchange differences on
hedged contracts - reclassified
and reported in sales 8.7 0.1
---------------------------------- ----- ------------- -------------
Exchange differences on
hedged contracts - reclassified
and reported in cost of
sales (18.2) (63.8)
---------------------------------- ----- ------------- -------------
Exchange differences on
hedged contracts - taxation
taken to reserves 7.7 16.4
---------------------------------- ----- ------------- -------------
Fair value adjustment in
respect of available-for-sale
financial assets - recognised
in the period 23.7 115.3
---------------------------------- ----- ------------- -------------
Fair value adjustment in
respect of available-for-sale
financial assets - reclassified
in the period (129.3) (106.2)
---------------------------------- ----- ------------- -------------
Fair value adjustment in
respect of available-for-sale
financial assets - taxation (1.8) (1.8)
---------------------------------- ----- ------------- -------------
Other comprehensive cost
for the period, net of
tax (97.3) (33.3)
---------------------------------- ----- ------------- -------------
Total comprehensive income
for the period 134.4 245.7
---------------------------------- ----- ------------- -------------
ATTRIBUTABLE TO:
-----------------------------------------------------------------------
Equity holders of the Group 132.6 244.1
---------------------------------- ----- ------------- -------------
Non-controlling interest 1.8 1.6
---------------------------------- ----- ------------- -------------
134.4 245.7
----------------------------------------- ------------- -------------
The accompanying accounting policies and notes form part of
these Financial Statements.
CONSOLIDATED BALANCE SHEET
At 30 April 2017
Note 30 April 24 April
2017 (GBPm) 2016 (GBPm)
---------------------------------- ----- ------------- -------------
ASSETS - NON-CURRENT
-----------------------------------------------------------------------
Property, plant and equipment 842.0 585.9
---------------------------------- ----- ------------- -------------
Investment properties 23.1 -
---------------------------------- ----- ------------- -------------
Intangible assets 185.7 208.6
---------------------------------- ----- ------------- -------------
Investments in associated
undertakings 26.4 16.6
---------------------------------- ----- ------------- -------------
Available-for-sale financial
assets 63.9 193.4
---------------------------------- ----- ------------- -------------
Deferred tax assets 33.7 43.9
---------------------------------- ----- ------------- -------------
1,174.8 1,048.4
----------------------------------------- ------------- -------------
ASSETS - CURRENT
-----------------------------------------------------------------------
Inventories 629.2 702.2
---------------------------------- ----- ------------- -------------
Trade and other receivables 397.1 292.6
---------------------------------- ----- ------------- -------------
Derivative financial assets 43.0 82.5
---------------------------------- ----- ------------- -------------
Cash and cash equivalents 204.7 234.2
---------------------------------- ----- ------------- -------------
1,274.0 1,311.5
----------------------------------------- ------------- -------------
TOTAL ASSETS 2,448.8 2,359.9
---------------------------------- ----- ------------- -------------
EQUITY AND LIABILITIES
-----------------------------------------------------------------------
Share capital 64.1 64.1
---------------------------------- ----- ------------- -------------
Share premium 874.3 874.3
---------------------------------- ----- ------------- -------------
Treasury shares reserve (329.5) (56.2)
---------------------------------- ----- ------------- -------------
Permanent contribution
to capital 0.1 0.1
---------------------------------- ----- ------------- -------------
Capital redemption reserve 8.0 8.0
---------------------------------- ----- ------------- -------------
Foreign currency translation
reserve 77.1 26.8
---------------------------------- ----- ------------- -------------
Reverse combination reserve (987.3) (987.3)
---------------------------------- ----- ------------- -------------
Own share reserve (33.7) (33.7)
---------------------------------- ----- ------------- -------------
Hedging reserve (25.1) 8.0
---------------------------------- ----- ------------- -------------
Retained earnings 1,591.0 1,482.3
---------------------------------- ----- ------------- -------------
Issued capital and reserves
attributable to owners
of the parent 1,239.0 1,386.4
---------------------------------- ----- ------------- -------------
Non-controlling interests (0.7) (1.7)
---------------------------------- ----- ------------- -------------
Total equity 1,238.3 1,384.7
---------------------------------- ----- ------------- -------------
LIABILITIES - NON-CURRENT
-----------------------------------------------------------------------
Borrowings 6 317.3 333.1
---------------------------------- ----- ------------- -------------
Retirement benefit obligations 3.4 13.1
---------------------------------- ----- ------------- -------------
Deferred tax liabilities 18.7 21.6
---------------------------------- ----- ------------- -------------
Provisions 130.2 66.7
---------------------------------- ----- ------------- -------------
469.6 434.5
----------------------------------------- ------------- -------------
LIABILITIES - CURRENT
-----------------------------------------------------------------------
Derivative financial liabilities 75.2 61.7
---------------------------------- ----- ------------- -------------
Trade and other payables 584.9 426.7
---------------------------------- ----- ------------- -------------
Borrowings 6 69.5 0.8
---------------------------------- ----- ------------- -------------
Current tax liabilities 11.3 51.5
---------------------------------- ----- ------------- -------------
740.9 540.7
----------------------------------------- ------------- -------------
Total liabilities 1,210.5 975.2
---------------------------------- ----- ------------- -------------
Total equity and liabilities 2,448.8 2,359.9
---------------------------------- ----- ------------- -------------
CONSOLIDATED CASH FLOW STATEMENT
For the 53 weeks ended 30 April 2017
53 weeks 52 weeks
ended ended
-------------------------------- ----- ------------- -------------
Note 30 April 24 April
2017 (GBPm) 2016 (GBPm)
-------------------------------- ----- ------------- -------------
Cash inflow from operating
activities 7 269.2 135.6
-------------------------------- ----- ------------- -------------
Income taxes paid (75.3) (69.9)
-------------------------------- ----- ------------- -------------
Net cash inflow from operating
activities 193.9 65.7
-------------------------------- ----- ------------- -------------
CASH FLOW FROM INVESTING ACTIVITIES
---------------------------------------------------------------------
Proceeds on disposal of
property, plant and equipment 2.4 44.0
-------------------------------- ----- ------------- -------------
Proceeds on disposal of
listed investments 190.2 181.3
-------------------------------- ----- ------------- -------------
Proceeds on disposal of 109.5 -
subsidiary
-------------------------------- ----- ------------- -------------
Purchase of associate,
net of cash acquired (9.0) (9.1)
-------------------------------- ----- ------------- -------------
Purchase of subsidiaries,
net of cash acquired (8.1) (24.0)
-------------------------------- ----- ------------- -------------
Exercise of option over (5.5) -
non-controlling interests
-------------------------------- ----- ------------- -------------
Purchase of property,
plant and equipment (413.5) (207.0)
-------------------------------- ----- ------------- -------------
Purchase of investment (6.0) -
properties
-------------------------------- ----- ------------- -------------
Purchase of intangible
assets - (0.1)
-------------------------------- ----- ------------- -------------
Purchase of listed investments (24.7) (89.2)
-------------------------------- ----- ------------- -------------
Investment income received 0.5 2.8
-------------------------------- ----- ------------- -------------
Finance income received 0.5 3.4
-------------------------------- ----- ------------- -------------
Net cash outflow from
investing activities (163.7) (97.9)
-------------------------------- ----- ------------- -------------
CASH FLOW FROM FINANCING ACTIVITIES
---------------------------------------------------------------------
Finance costs paid (2.6) (7.7)
-------------------------------- ----- ------------- -------------
Borrowings drawn down 328.0 267.4
-------------------------------- ----- ------------- -------------
Borrowings repaid (344.1) (71.3)
-------------------------------- ----- ------------- -------------
Purchase of own shares (109.8) -
-------------------------------- ----- ------------- -------------
Net cash outflow from
financing activities (128.7) 188.4
-------------------------------- ----- ------------- -------------
Net increase / (decrease)
in cash and cash equivalents
including overdrafts (98.5) 156.2
-------------------------------- ----- ------------- -------------
Cash and cash equivalents
including overdrafts at
beginning of period 233.7 77.5
-------------------------------- ----- ------------- -------------
Cash and cash equivalents
including overdrafts at
the period end 135.2 233.7
-------------------------------- ----- ------------- -------------
The accompanying accounting policies and notes form part of
these Financial Statements.
CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
For the 53 weeks ended 30 April 2017
Treasury Foreign Own Retained Other Total Non-controlling Total
shares currency share earnings reserves attributable interests (GBPm)
(GBPm) translation reserve (GBPm) (GBPm) to owners (GBPm)
(GBPm) (GBPm) of
parent
(GBPm)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
At 26 April
2015 (56.2) 14.4 (13.3) 1,181.5 38.0 1,164.4 (2.8) 1,161.6
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Credit to equity
for share-based
payment - - - 4.2 - 4.2 - 4.2
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Vesting of
share based
payments - - 9.0 (9.0) - - - -
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Current tax
on share scheme - - - 3.2 - 3.2 - 3.2
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Purchase of
own shares - (29.4) - - (29.4) - (29.4)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Non-controlling
interests -
acquisitions - - - - - - (0.4) (0.4)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Transactions
with owners - - (20.4) (1.6) - (22.0) (0.4) (22.4)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Profit for
the financial
period - - - 277.4 - 277.4 1.5 278.9
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
OTHER COMPREHENSIVE INCOME
------------------------------------------------------------------------------------------------------------------------
Cash flow hedges
- recognised
in the period - - - - (5.7) (5.7) - (5.7)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Cash flow hedges
- reclassified
and reported
in sales - - - - 0.1 0.1 - 0.1
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Cash flow hedges
- reclassified
and reported
in cost of
sales - - - - (63.8) (63.8) - (63.8)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Cash flow hedges
- taxation - - - - 16.3 16.3 - 16.3
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Cash flow hedges
-- prior year
taxation
reclassified - - - 17.7 (17.7) - - -
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Actuarial losses - - - - - - - -
on defined
benefit pension
schemes
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Fair value
adjustment
in respect
of
available-for-sale
financial
assets-
reclassified - - - (106.2) (106.2) - - (106.2)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Fair value
adjustment
in respect
of
available-for-sale
financial
assets- recognised - - - 115.3 - 115.3 - 115.3
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Taxation - - - (1.8) - (1.8) - (1.8)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Translation
differences
- Group - 12.4 - - - 12.4 - 12.4
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Total comprehensive
income for
the period - 12.4 - 302.4 (70.8) 244.0 1.5 245.5
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
At 24 April
2016 (56.2) 26.8 (33.7) 1,482.3 (32.8) 1,386.4 (1.7) 1,384.7
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Credit to equity
for share-based
payment - - - 1.9 - 1.9 - 1.9
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Deferred tax
on share schemes - - - (1.3) - (1.3) - (1.3)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Purchase of
own shares (109.8) - - - - (109.8) - (109.8)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Fair valuation
of share buyback (163.5) - - - - (163.5) - (163.5)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Non-controlling
interests -
acquisitions - - - (7.3) - (7.3) (0.8) (8.1)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Transactions
with owners (273.3) - - (6.7) - (280.0) (0.8) (280.8)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Profit for
the financial
period - - - 229.9 - 229.9 1.8 231.7
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
OTHER COMPREHENSIVE INCOME
------------------------------------------------------------------------------------------------------------------------
Cash flow hedges
- recognised
in the period - - - - (31.3) (31.3) - (31.3)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Cash flow hedges
- reclassified
and reported
in sales - - - - 8.7 8.7 - 8.7
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Cash flow hedges
- reclassified
and reported
in cost of
sales - - - - (18.2) (18.2) - (18.2)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Cash flow hedges
- taxation - - - - 7.7 7.7 - 7.7
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Actuarial losses
on defined
benefit pension
schemes - - - (8.8) - (8.8) - (8.8)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Fair value
adjustment
in respect
of
available-for-sale
financial assets
- recognised - - - 23.7 - 23.7 - 23.7
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Fair value
adjustment
in respect
of
available-for-sale
financial assets
-- reclassified - - - (129.3) - (129.3) - (129.3)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Taxation - - - (0.1) - (0.1) - (0.1)
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Translation
differences
- Group - 50.3 - - - 50.3 - 50.3
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
Total comprehensive
income for
the period - 50.3 - 115.4 (33.1) 132.6 1.8 134.4
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
At 30 April
2017 (329.5) 77.1 (33.7) 1,591.0 (65.9) 1,239.0 (0.7) 1,238.3
-------------------- --------- ------------ -------- --------- --------- ------------- ---------------- --------
1. ACCOUNTING POLICIES
The financial information, which comprises the consolidated
income statement, consolidated statement of comprehensive income,
consolidated balance sheet, consolidated cash flow statement,
consolidated statement of changes in equity and related notes, does
not constitute full accounts within the meaning of s435 (1) and (2)
of the Companies Act 2006. The auditors have reported on the
Group's statutory accounts for the each of the years ended 30 April
2017 and 24 April 2016 which do not contain any statement under
s498 of the Companies Act 2006 and are unqualified. The statutory
accounts for the year ended 24 April 2016 have been delivered to
the Registrar of Companies and the statutory accounts for the year
ended 30 April 2017 will be filed with the registrar in due
course.
The consolidated financial statements have been prepared in
accordance with IFRS as adopted for use in the European Union
(including International Accounting Standards ("IAS") and
International Financial Reporting Standards Interpretations
Committee ("IFRSiC") interpretations) and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS as
adopted for use in the European Union. The consolidated financial
statements have been prepared under the historical cost convention,
as modified to include fair valuation of certain financial assets
and derivative financial instruments.
2. SEGMENTAL ANALYSIS
Management have determined to present its segmental disclosures
in a different way to that previously reported. Following our
recent interaction with the Conduct Committee of the FRC in
relation to this matter, and recognising the potential impact of
Brexit on the economic characteristics of the countries we trade in
through our European retail operations, and reconsidering the
prolonged challenges this business is facing and the impact on long
term financial performance expectations this will have, we have now
presented our International Sports Retail segment separately from
UK Sports Retail. We continue to monitor the impacts of Brexit, and
the continued uncertainties this has brought relating to the
political and economic environments, and market and currency
volatility in the countries we operate in. European countries have
been identified as operating segments and have been aggregated into
a single operating segment as permitted under IFRS 8. The decision
to aggregate these segments was based on the fact that they each
have similar economic characteristics, similar long term financial
performance expectations, and are similar in each of the following
respects:
-- The nature of the products
-- The type or class of customer for the products; and
-- The methods used to distribute the products
In accordance with paragraph 12 of IFRS 8 the Group's operating
segments have been aggregated into the following reportable
segments:
1. UK Sports Retail - includes the results of the UK retail
network of sports stores along with related websites;
2. International Retail - includes the results of the
International retail network of sports stores;
3. Premium Lifestyle - includes the results of the premium and
lifestyle retail businesses such as USC, Cruise and Flannels;
and
4. Brands - includes the results of the Group's portfolio of
internationally recognised brands such as Everlast, Lonsdale and
Slazenger.
The comparative information for the period ended 24 April 2016
has been restated.
Information regarding the Group's reportable segments for the 53
weeks ended 30 April 2017, as well as a reconciliation of reported
profit for the period to underlying EBITDA, is presented below.
Segmental information for the 53 weeks ended 30 April 2017:
Retail Brands Eliminations Total
(GBPm) (GBPm) (GBPm) (GBPm)
------------------ ------------------------------------------------- -------- ------------- --------
UK Sports International Premium Total
Retail Sports Lifestyle
Retail
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Sales
to external
customers 2,136.4 665.6 202.2 3,004.2 241.1 - 3,245.3
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Sales
to other
segments - - - - 30.1 (30.1) -
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Revenue 2,136.4 665.6 202.2 3,004.2 271.2 (30.1) 3,245.3
------------------ ========== ============== =========== ======== ======== ============= ========
Gross
profit 879.4 287.3 76.1 1,242.8 87.8 - 1,330.6
------------------ ========== ============== =========== ======== ======== ============= ========
Operating
profit/(loss)
before
foreign
exchange
and exceptional
items 166.6 (61.9) (4.0) 100.7 20.5 - 121.2
------------------ ========== ============== =========== ======== ======== ============= ========
Operating
profit/(loss) 157.4 (69.2) (4.2) 84.0 76.1 - 160.1
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Net investment
income 111.3
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Finance
income 18.8
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Finance
costs (9.4)
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Share
of profits
of associated
undertakings 0.8
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Profit
before
taxation 281.6
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Taxation (49.9)
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Profit
for the
period 231.7
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Sales to other segments are priced at cost plus a 10%
mark-up.
Other segment items included in the income statement for the 53
weeks ended 30 April 2017:
Retail Brands Total
(GBPm) (GBPm) (GBPm)
-------------- ----------------------------------------------- -------- --------
UK Sports International Premium Total
Retail Sports Lifestyle
Retail
-------------- ---------- -------------- ----------- ------ -------- --------
Depreciation 94.8 41.2 2.4 138.4 2.2 140.6
-------------- ---------- -------------- ----------- ------ -------- --------
Amortisation 1.2 1.1 1.3 3.6 3.7 7.3
-------------- ---------- -------------- ----------- ------ -------- --------
Information regarding segment assets and liabilities as at 30
April 2017 and capital expenditure for the 53 weeks then ended:
UK Sports International Premium Brands Eliminations Total
Retail Sports Lifestyle (GBPm) (GBPm) (GBPm)
(GBPm) Retail (GBPm)
(GBPm)
------------------- ---------- -------------- ----------- -------- ------------- ----------
Investments
in associated
undertakings 25.8 0.6 - - - 26.4
------------------- ---------- -------------- ----------- -------- ------------- ----------
Other assets 2,194.5 374.1 19.1 357.6 (522.9) 2,422.4
------------------- ---------- -------------- ----------- -------- ------------- ----------
Total assets 2,220.3 374.7 19.1 357.6 (522.9) 2,448.8
------------------- ---------- -------------- ----------- -------- ------------- ----------
Total liabilities (1,008.6) (538.6) (64.5) (121.7) 522.9 (1,210.5)
------------------- ---------- -------------- ----------- -------- ------------- ----------
Tangible
asset additions 399.5 14.6 3.0 2.4 - 419.5
------------------- ---------- -------------- ----------- -------- ------------- ----------
Intangible
asset additions 2.3 - - 5.1 - 7.4
------------------- ---------- -------------- ----------- -------- ------------- ----------
Total capital
expenditure 401.8 14.6 3.0 7.5 - 426.9
------------------- ---------- -------------- ----------- -------- ------------- ----------
Segmental information for the 52 weeks ended 24 April 2016:
Brands Eliminations Total
(GBPm) (GBP'm) (GBPm)
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
UK Sports International Premium Total Total
Retail Sports Lifestyle
Retail
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Sales
to external
customers 2,009.3 482.3 181.2 2,672.8 231.5 - 2,904.3
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Sales
to other
segments - - - - 40.5 (40.5) -
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Revenue 2,009.3 482.3 181.2 2,672.8 272.0 (40.5) 2,904.3
------------------ ========== ============== =========== ======== ======== ============= ========
Gross
profit 894.9 216.0 76.2 1,187.1 97.5 - 1,284.6
------------------ ========== ============== =========== ======== ======== ============= ========
Operating
profit
/(loss)
before
foreign
exchange
and exceptional
items 282.3 (28.6) (9.7) 244.0 32.3 - 276.3
------------------ ========== ============== =========== ======== ======== ============= ========
Operating
profit
/(loss) 274.9 (52.4) (23.2) 199.3 23.9 - 223.2
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Other
investment
income 148.1
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Finance
income 3.4
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Finance
costs (15.3)
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Share
of profits
of associated
undertakings 2.4
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Profit
before
taxation 361.8
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Taxation (82.8)
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Profit
for the
period 279.0
------------------ ---------- -------------- ----------- -------- -------- ------------- --------
Other segment items included in the income statement for the 52
weeks ended 24 April 2016:
Retail Brands Total
(GBPm) (GBPm) (GBPm)
-------------- ----------------------------------------------- -------- --------
UK Sports International Premium Total
Retail Sports Lifestyle
Retail
-------------- ---------- -------------- ----------- ------ -------- --------
Depreciation 65.4 17.4 4.0 86.8 2.4 89.2
-------------- ---------- -------------- ----------- ------ -------- --------
Amortisation 0.8 2.2 0.7 3.7 2.7 6.4
-------------- ---------- -------------- ----------- ------ -------- --------
Information regarding segment assets and liabilities as at 24
April 2016 and capital expenditure for the 52 weeks then ended:
UK Sports International Premium Brands Eliminations Total
Retail Sports Lifestyle (GBPm) (GBPm) (GBPm)
(GBPm) Retail (GBPm)
(GBPm)
------------------- ---------- -------------- ----------- -------- ------------- --------
Investments
in associated
undertakings
and joint
ventures 16.4 0.2 - - - 16.6
------------------- ---------- -------------- ----------- -------- ------------- --------
Other assets 2,102.5 268.6 24.3 222.8 (275.0) 2,343.2
------------------- ---------- -------------- ----------- -------- ------------- --------
Total assets 2,119.0 268.8 24.3 222.8 (275.0) 2,359.9
------------------- ---------- -------------- ----------- -------- ------------- --------
Total liabilities (795.7) (314.7) (64.4) (75.4) 275.0 (975.2)
------------------- ---------- -------------- ----------- -------- ------------- --------
Tangible
asset additions 188.2 86.6 1.2 0.4 - 276.4
------------------- ---------- -------------- ----------- -------- ------------- --------
Intangible
asset additions 0.1 3.9 - - - 4.0
------------------- ---------- -------------- ----------- -------- ------------- --------
Total capital
expenditure 188.3 90.5 1.2 0.4 - 280.4
------------------- ---------- -------------- ----------- -------- ------------- --------
GEOGRAPHIC INFORMATION
Segmental information for the 53 weeks ended 30 April 2017:
UK Non-UK Eliminations Total
(GBPm) (GBPm) (GBPm) (GBPm)
----------------------- -------- -------- ------------- --------
Segmental revenue
from external
customers 2,408.6 836.7 - 3,245.3
----------------------- -------- -------- ------------- --------
Total capital
expenditure 410.1 16.8 - 426.9
----------------------- -------- -------- ------------- --------
Non-current segmental
assets* 738.9 338.3 - 1,077.2
----------------------- -------- -------- ------------- --------
Total segmental
assets 2,350.4 573.6 (475.2) 2,448.8
----------------------- -------- -------- ------------- --------
*Excludes deferred tax and financial instruments.
Segmental information for the 52 weeks ended 24 April 2016:
UK Non-UK Eliminations Total
(GBPm) (GBPm) (GBPm) (GBPm)
----------------------- -------- -------- ------------- --------
Segmental revenue
from external
customers 2,281.1 623.2 - 2,904.3
----------------------- -------- -------- ------------- --------
Total capital
expenditure 189.6 90.7 - 280.3
----------------------- -------- -------- ------------- --------
Non-current segmental
assets* 464.7 346.4 - 811.1
----------------------- -------- -------- ------------- --------
Total segmental
assets 2,151.3 439.1 (230.5) 2,359.9
----------------------- -------- -------- ------------- --------
*Excludes deferred tax and financial instruments.
Material non-current segmental assets - by non-UK country
USA Belgium Austria Estonia Ireland
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
------ -------- -------- -------- -------- --------
FY17 164.2 32.6 64.0 15.2 58.2
------ -------- -------- -------- -------- --------
FY16 149.4 9.3 62.6 18.3 74.0
------ -------- -------- -------- -------- --------
The following table reconciles the reported operating profit to
the underlying EBITDA as it is one of the main measures used by the
Chief Operating Decision Maker when reviewing performance:
Reconciliation of operating profit to underlying EBITDA for the
53 week period ended 30 April 2017:
UK International Premium Brands Total
Sports Sports Lifestyle (GBPm) (GBPm)
Retail Retail (GBPm)
(GBPm) (GBPm)
------------------ -------- -------------- ----------- -------- --------
Operating
profit / (loss) 157.4 (69.2) (4.2) 76.1 160.1
------------------ -------- -------------- ----------- -------- --------
Depreciation 94.8 41.2 2.4 2.2 140.6
------------------ -------- -------------- ----------- -------- --------
Amortisation 1.2 1.1 1.3 3.7 7.3
------------------ -------- -------------- ----------- -------- --------
Share of profit
of associated
undertakings 0.4 0.4 - - 0.8
------------------ -------- -------------- ----------- -------- --------
Reported EBITDA 253.8 (26.5) (0.5) 82.0 308.8
------------------ -------- -------------- ----------- -------- --------
Charges for
the share
scheme 2.8 - - - 2.8
------------------ -------- -------------- ----------- -------- --------
Disposal of
subsidiary - - - (79.9) (79.9)
------------------ -------- -------------- ----------- -------- --------
Exceptional
items 2.9 4.5 0.2 9.7 17.3
------------------ -------- -------------- ----------- -------- --------
Realised FX
gain / (loss) 6.2 2.9 - 14.6 23.7
------------------ -------- -------------- ----------- -------- --------
Underlying
EBITDA 265.7 (19.1) (0.3) 26.4 272.7
------------------ -------- -------------- ----------- -------- --------
Reconciliation of operating profit to underlying EBITDA for the
52 week period ended 24 April 2016:
UK International Premium Brands Total
Sports Sports Lifestyle
Retail Retail
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
------------------ -------- -------------- ----------- -------- --------
Operating
profit / (loss) 274.7 (52.2) (23.2) 23.9 223.2
------------------ -------- -------------- ----------- -------- --------
Depreciation 65.4 17.4 4.0 2.4 89.2
------------------ -------- -------------- ----------- -------- --------
Amortisation 0.8 2.2 0.6 2.8 6.4
------------------ -------- -------------- ----------- -------- --------
Share of (loss)
/ profit of
associated
undertakings (0.1) 2.5 - - 2.4
------------------ -------- -------------- ----------- -------- --------
Reported EBITDA 340.8 (30.1) (18.6) 29.1 321.2
------------------ -------- -------------- ----------- -------- --------
Charges for
the share
scheme 7.1 - - - 7.1
------------------ -------- -------------- ----------- -------- --------
Exceptional
items 1.9 25.2 13.7 10.0 50.8
------------------ -------- -------------- ----------- -------- --------
Realised FX
(loss) / gain 4.1 - (0.2) (1.6) 2.3
------------------ -------- -------------- ----------- -------- --------
Underlying
EBITDA 353.9 (4.9) (5.1) 37.5 381.4
------------------ -------- -------------- ----------- -------- --------
3. EXCEPTIONAL ITEMS
53 weeks 52 weeks
ended ended
------------------------------- --------- ---------
30 April 24 April
2017 2016
(GBPm) (GBPm)
------------------------------- --------- ---------
Profit on sale of freehold
property - 13.5
------------------------------- --------- ---------
Impairment (17.3) (58.5)
------------------------------- --------- ---------
Provision against receivables - (5.8)
------------------------------- --------- ---------
(17.3) (50.8)
------------------------------- --------- ---------
The impairment mainly relates to a review of the business and
the valuation of own brands and goodwill that are no longer
considered core brands, in line with the Elevation of Retail
management strategy.
4. TAXATION
The effective rate of 17.7% reflected income that is not
deductible for tax purposes in the period. Non-taxable income
includes disposal of subsidiaries and investments that qualify for
Substantial Shareholder Relief. Prior period adjustments include
income that is now considered to qualify for substantial
shareholder relief, and a reduction in deferred tax assets for
overseas losses no longer considered recoverable. Expenses not
deductible for tax purposes include non-qualifying depreciation and
goodwill impairments.
5. EARNINGS PER SHARE FROM TOTAL AND CONTINUING OPERATIONS
ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders of the parent by the weighted
average number of ordinary shares outstanding during the year.
For diluted earnings per share, the weighted average number of
shares, 583,501,473 (2016: 592,573,254), is adjusted to assume
conversion of all dilutive potential ordinary shares under the
Group's Share Schemes, being 16,667,000 (2016: 17,667,000), to give
the diluted weighted average number of shares of 600,168,473 (2016:
610,240,254).
BASIC AND DILUTED EARNINGS PER SHARE
53 weeks ended 52 weeks ended
------------------- ---------------------- ----------------------
30 April 30 April 24 April 24 April
2017 2017 2016 2016
Basic Diluted Basic Diluted
(GBPm) (GBPm) (GBPm) (GBPm)
------------------- ---------- ---------- ---------- ----------
Profit for
the period 229.9 229.9 277.4 277.4
------------------- ---------- ---------- ---------- ----------
Number in thousands Number in thousands
------------------- ---------------------- ----------------------
Weighted average
number of shares 583,501 600,168 592,573 610,240
------------------- ---------- ---------- ---------- ----------
Pence per share Pence per share
------------------- ---------------------- ----------------------
Earnings per
share 39.4 38.3 46.8 45.5
------------------- ---------- ---------- ---------- ----------
UNDERLYING EARNINGS PER SHARE
The underlying earnings per share reflects the underlying
performance of the business compared with the prior year and is
calculated by dividing underlying earnings by the weighted average
number of shares for the period. Underlying earnings is used by
management as a measure of profitability within the Group.
Underlying earnings is defined as profit for the period
attributable to equity holders of the parent for each financial
period but excluding the post-tax effect of certain non-trading
items. Tax has been calculated with reference to the effective rate
of tax for the Group.
The Directors believe that the underlying earnings before
exceptional items and underlying earnings per share measures
provide additional useful information for shareholders on the
underlying performance of the business, and are consistent with how
business performance is measured internally. Underlying earnings is
not a recognised profit measure under IFRS and may not be directly
comparable with "adjusted" profit measures used by other
companies.
53 weeks ended 52 weeks ended
------------------------ ---------------------- ----------------------
30 April 30 April 24 April 24 April
2017 2017 2016 2016
Basic Diluted Basic Diluted
(GBPm) (GBPm) (GBPm) (GBPm)
------------------------ ---------- ---------- ---------- ----------
Profit for the
period 229.9 229.9 277.4 277.4
------------------------ ---------- ---------- ---------- ----------
Post tax adjustments to profit for the period
for the following non-trading items:
------------------------------------------------------------------------
Realised loss
on forward exchange
contracts 18.5 18.5 1.8 1.8
------------------------ ---------- ---------- ---------- ----------
Fair value adjustment
to forward foreign
exchange contracts (14.3) (14.3) 5.2 5.2
------------------------ ---------- ---------- ---------- ----------
Fair value adjustment
to derivative
financial instruments 24.0 24.0 (8.4) (8.4)
------------------------ ---------- ---------- ---------- ----------
Profit on disposal
of listed investments (141.5) (141.5) (104.5) (104.5)
------------------------ ---------- ---------- ---------- ----------
Impairment of
fixed assets - - 4.4 4.4
------------------------ ---------- ---------- ---------- ----------
Profit on disposal
of property - - (10.4) (10.4)
------------------------ ---------- ---------- ---------- ----------
Profit on disposal
of subsidiary (79.9) (79.9)
------------------------ ---------- ---------- ---------- ----------
Impairment 17.3 17.3 45.1 45.1
------------------------ ---------- ---------- ---------- ----------
Write off of
deferred tax
assets 12.5 12.5 - -
------------------------ ---------- ---------- ---------- ----------
Underlying profit
for the period 66.5 66.5 210.6 210.6
------------------------ ---------- ---------- ---------- ----------
Number in thousands Number in thousands
------------------------ ---------------------- ----------------------
Weighted average
number of shares 583,501 600,168 592,573 610,240
------------------------ ---------- ---------- ---------- ----------
Pence per share Pence per share
------------------------ ---------------------- ----------------------
Underlying earnings
per share 11.4 11.1 35.5 34.5
------------------------ ---------- ---------- ---------- ----------
6. BORROWINGS
30 April 24 April
2017 2016
(GBPm) (GBPm)
---------------------- --------- ---------
NON-CURRENT:
---------------------- --------- ---------
Bank and other loans 317.3 333.1
---------------------- --------- ---------
CURRENT:
---------------------- --------- ---------
Bank overdrafts 69.5 0.5
---------------------- --------- ---------
Bank and other loans - 0.3
---------------------- --------- ---------
69.5 0.8
---------------------- --------- ---------
TOTAL BORROWINGS:
---------------------- --------- ---------
Bank overdrafts 69.5 0.5
---------------------- --------- ---------
Bank and other loans 317.3 333.4
---------------------- --------- ---------
386.8 333.9
---------------------- --------- ---------
An analysis of the Group's total borrowings other than bank
overdrafts is as follows:
30 April 24 April
2017 2016
(GBPm) (GBPm)
----------------------- --------- ---------
Borrowings - Sterling 310.0 320.0
----------------------- --------- ---------
Borrowings - Other 7.3 13.4
----------------------- --------- ---------
317.3 333.4
----------------------- --------- ---------
Loans are currently at a rate of interest of 1.15% over the
interbank rate of the country within which the borrowing entity
resides.
The Group's Working Capital Facility is at GBP788m (FY16:
GBP788m). The facility is available until September 2018 and is not
secured against any of the Group's fixed assets. The overdraft is
part of a Group cash pooling arrangement. The Group continues to
operate comfortably within its banking facilities and
covenants.
The carrying amounts and fair value of the borrowings are not
materially different.
Net debt at 30 April 2017 was GBP182.1m (24 April 2016:
GBP99.7m).
7. CASH INFLOW FROM OPERATING ACTIVITIES
53 weeks 52 weeks
ended ended
---------------------------------- --------- ---------
30 April 24 April
2017 2016
(GBPm) (GBPm)
---------------------------------- --------- ---------
Profit before taxation 281.6 361.8
---------------------------------- --------- ---------
Net finance (income)/costs (9.4) 11.9
---------------------------------- --------- ---------
Investment income (111.3) (148.1)
---------------------------------- --------- ---------
Share of profits of associated
undertakings (0.8) (2.4)
---------------------------------- --------- ---------
Operating profit 160.1 223.2
---------------------------------- --------- ---------
Depreciation 140.6 89.2
---------------------------------- --------- ---------
Amortisation 7.3 6.4
---------------------------------- --------- ---------
Impairment 17.3 58.5
---------------------------------- --------- ---------
Profit on disposal of property,
plant & equipment 1.8 (13.5)
---------------------------------- --------- ---------
Profit on disposal of subsidiary (79.9) -
---------------------------------- --------- ---------
Defined benefit pension plan
employer contributions (2.4) (2.7)
---------------------------------- --------- ---------
Share-based payments 2.8 7.1
---------------------------------- --------- ---------
Operating cash inflow before
changes in working capital 247.6 368.2
---------------------------------- --------- ---------
Increase in receivables (118.0) (97.0)
---------------------------------- --------- ---------
Decrease / (increase) in
inventories 60.0 (155.4)
---------------------------------- --------- ---------
Increase in payables 79.6 19.8
---------------------------------- --------- ---------
Cash inflows from operating
activities 269.2 135.6
---------------------------------- --------- ---------
8. POST BALANCE SHEET EVENTS
On 21 April 2017, the Group announced that it has approval to
acquire certain assets of Eastern Outfitters LLC, comprising the
businesses of Bob's Stores and Eastern Mountain Sports pursuant to
a s.363 sale process, following the filing by Eastern Outfitters
LLC (the parent company of Bob's Stores and Eastern Mountain
Stores) under Chapter 11 in the US. The businesses to be acquired
include (following closures) approximately 50 retail stores in the
US under the Bob's Stores and Eastern Mountain Stores fascias
selling predominantly sports and casual wear, and outdoor and
camping equipment and clothing. The acquisition subsequently
completed on 18 May 2017.
The Company announced on 28 April 2017 that it has instructed
Citigroup Global Markets Limited in relation to an irrevocable
non-discretionary share buyback programme to purchase the Company's
shares during the closed period commencing on 30 April 2017 and
ending on 20 July 2017. In line with IAS32 the Company recognised
the full redemption amount of GBP163.5m which is considered to be
immaterially different to the present value at year end. If the
contract expires without full delivery, the amount of the financial
liability attributable to the undelivered shares is reclassified to
equity reversing the original recognition. As at 18 July 2017,
GBP94.1m of shares have been repurchased under the closed period
share buyback program.
On 13 July 2017 the Group announced that it has acquired 44m
shares in GAME Digital plc, equivalent to a 25.75% of the share
capital of the Group.
The Group acquired material strategic stakes directly and/or
indirectly through derivative financial instruments and/or physical
share purchases - as at 19 July 2017 the Group holds the following
material stakes:
-- Debenhams plc 18.22%;
-- Iconix Brand Group plc 13.25%
-- Finish Line Inc 37.05%
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ZMGMNFLFGNZZ
(END) Dow Jones Newswires
July 20, 2017 02:00 ET (06:00 GMT)
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