TIDMJD.

RNS Number : 2267A

JD Sports Fashion Plc

22 September 2022

22 September 2022

JD SPORTS FASHION PLC

UNAUDITED INTERIM RESULTS

FOR THE 26 WEEKS TO 30 JULY 2022

JD Sports Fashion Plc (the 'Group'), the leading retailer of sports, fashion and outdoor brands, today announces its interim results for the 26 weeks ended 30 July 2022 (comparative figures are shown for the 26-week period ended 31 July 2021).

 
                                           IFRS 16         Proforma IAS 17* 
                                         2022      2021       2022      2021 
                                         GBPm      GBPm       GBPm      GBPm 
 Revenue                              4,418.1   3,885.8    4,418.1   3,885.8 
 
 Gross profit %                         48.5%     48.5%      48.5%     48.5% 
 
 Operating profit                       332.9     396.8      305.4     380.0 
 Net interest expense                  (34.6)    (32.2)      (2.5)     (3.4) 
                                     --------  --------  ---------  -------- 
 
 Profit before tax                      298.3     364.6      302.9     376.6 
                                     --------  --------  ---------  -------- 
 
 Basic earnings per ordinary 
  share (a)                             3.58p     4.44p      3.66p     4.67p 
 
 Total dividend payable per             0.13p         - 
  ordinary share 
 
 Alternative Performance Measures 
  (b) 
 
 EBITDA before exceptional 
  items                                 727.4     746.4      504.7     554.3 
 Depreciation / amortisation          (309.3)   (274.7)    (114.1)    (99.4) 
                                     --------  --------  ---------  -------- 
 
 Operating profit (before 
  exceptional items)                    418.1     471.7      390.6     454.9 
 Net interest expense                  (34.6)    (32.2)      (2.5)     (3.4) 
                                     --------  --------  ---------  -------- 
 
 Profit before tax and exceptional 
  items                                 383.5     439.5      388.1     451.5 
 Exceptional items (see note 
  3)                                   (85.2)    (74.9)     (85.2)    (74.9) 
                                     --------  --------  ---------  -------- 
 
 Profit before tax                      298.3     364.6      302.9     376.6 
                                     --------  --------  ---------  -------- 
 
 Adjusted earnings per ordinary 
  share (a)                             5.23p     5.83p      5.32p     6.07p 
 
 Net cash at period end (c)           1,013.1     995.1 
-----------------------------------  --------  --------  ---------  -------- 
 
 

a) The prior year has been restated to reflect the 5:1 share split which was approved by shareholders at a General Meeting on 26 November 2021

b) Further detail setting out the background to the Alternative Performance Measures and a reconciliation to statutory measures is provided after the Chief Financial Officer's Statement. In addition, throughout this release '*' indicates the first instance of other Alternative Performance Measures which are also explained after the Chief Financial Officer's and are reconciled to the statutory measures

   c)   Net cash consists of cash and cash equivalents less interest-bearing loans and borrowings 

Group Highlights

-- Result for the first half at the top end of the Board's expectations with profit before tax and exceptional items of GBP383.5 million (2021: GBP439.5 million) which includes:

o Continued robust performance in the sports fashion retail fascias in the UK and Republic of Ireland which delivered a profit before tax and exceptional items for the first half of GBP153.0 million (2021: GBP174.2 million)

o A return to profit in the sports fashion retail fascias in Europe which contributed to a profit before tax and exceptional items for the first half of GBP57.1 million (2021: loss of GBP7.2 million)

o A profit for the sports fashion retail fascias in North America of GBP130.4 million (2021: GBP245.5 million) with the performance in the period reflecting, as expected, the non-comparability of trading conditions in the United States as a result of the Federal fiscal stimulus in the prior year and the supply chain challenges of certain international brands which has led to reduced availability of key footwear styles, particularly in the first quarter

-- Total revenue growth in organic retail businesses* of 5% with this level of growth continuing in the second half to date including a return to growth in the United States

   --      International development of JD continues to progress positively: 

o 51 net new JD stores opened across Europe including a first store in Hungary with the first store in Greece due to open shortly

o 101 stores now trading as JD in the United States with a flagship store in Chicago due to open in the second half

o Four JD stores in Indonesia and two JD stores in Israel opened under Joint Venture arrangements in the period meaning that the core JD fascia now has a retail presence in 27 countries

o Further progress in Australia with three new stores opened in the period and a first store in Adelaide opened subsequently

-- Interim dividend of 0.13p per ordinary share proposed (2021: nil; 2020: nil; 2019: 0.06p restated to reflect the 5:1 share split approved in November 2021) with the return to more normalised trading justifying the return to a more normalised phasing of dividend payments

-- The Board maintains its view that the headline profit before tax and exceptional items for the year end 28 January 2023 will be in line with the record performance for the year ended 29 January 2022

   --      Key financial information of the two business segments is tabulated below: 

Period to 30 July 2022

 
                                        Sports Fashion   Outdoor   Unallocated     Total 
                                                  GBPm      GBPm          GBPm      GBPm 
 
 Revenue                                       4,143.4     274.7             -   4,418.1 
                                       ---------------  --------  ------------  -------- 
 
 Gross profit %                                  49.0%     42.2%             -     48.5% 
                                       ---------------  --------  ------------  -------- 
 
 Operating profit                                327.5       5.4             -     332.9 
 Net interest expense(1)                        (30.7)     (1.4)         (2.5)    (34.6) 
                                       ---------------  --------  ------------  -------- 
 
 Profit / (loss) before tax                      296.8       4.0         (2.5)     298.3 
                                       ---------------  --------  ------------  -------- 
 
 Alternative Performance Measures 
 
 Operating profit before exceptional 
  items                                          412.7       5.4             -     418.1 
 Net interest expense(1)                        (30.7)     (1.4)         (2.5)    (34.6) 
                                       ---------------  --------  ------------  -------- 
 
 Profit / (loss) before tax 
  and exceptional items                          382.0       4.0         (2.5)     383.5 
 Exceptional items                              (85.2)         -             -    (85.2) 
                                       ---------------  --------  ------------  -------- 
 
 Profit / (loss) before tax                      296.8       4.0         (2.5)     298.3 
                                       ---------------  --------  ------------  -------- 
 
 

(1) The Group considers that certain net funding costs are cross-divisional in nature and cannot be allocated between the segments on a meaningful basis.

Period to 31 July 2021

 
                                        Sports Fashion   Outdoor   Unallocated     Total 
                                                  GBPm      GBPm          GBPm      GBPm 
 
 Revenue                                       3,650.6     235.2             -   3,885.8 
                                       ---------------  --------  ------------  -------- 
 
 Gross profit %                                  48.8%     44.3%             -     48.5% 
 
 Operating profit                                384.9      11.9             -     396.8 
 Net interest expense                           (27.7)     (1.1)         (3.4)    (32.2) 
                                       ---------------  --------  ------------  -------- 
 
 Profit / (loss) before tax                      357.2      10.8         (3.4)     364.6 
 
 Alternative Performance Measures 
 
 Operating profit before exceptional 
  items                                          459.8      11.9             -     471.7 
 Net interest expense(1)                        (27.7)     (1.1)         (3.4)    (32.2) 
                                       ---------------  --------  ------------  -------- 
 
 Profit / (loss) before tax 
  and exceptional items                          432.1      10.8         (3.4)     439.5 
 Exceptional items                              (74.9)         -             -    (74.9) 
                                       ---------------  --------  ------------  -------- 
 
 Profit / (loss) before tax                      357.2      10.8         (3.4)     364.6 
                                       ---------------  --------  ------------  -------- 
 
 

Andrew Higginson, Non-Executive Chair, said:

"Whilst this has been a period of transition for the Board, it is reassuring that this has not impacted the financial performance of the Group which continues to deliver strong results with a profit before tax and exceptional items in the first half of GBP383.5 million (2021: GBP439.5 million). With this year expected to follow a more normalised trading pattern, this result is at the top end of our expectations for the first half demonstrating the ongoing resilience of our global proposition and the strength of our consumer engagement.

"The progress that the Group is making in its global markets is reflected by the fact that total sales in the Group's organic retail businesses were 5% ahead of the prior year. This performance is very encouraging, as notwithstanding the non-comparability of trading conditions in the United States, the Group has also faced numerous other challenges in the period including the well-publicised shortage of supply from a number of the international brands and the challenging global macro-economic situation.

"JD continues to be the partner of choice for many international brands who see our premium fascias as the natural home for their latest ranges and freshest new styles. Our relationship with these brands and our access to product is as strong as it ever has been.

"We are delighted to welcome Régis Schultz to the Group as Chief Executive Officer. Régis has now commenced in the role with his induction into the Group, including introductions with key business leads and international brand partners, at an advanced stage. We firmly believe that Régis has the right characteristics and experience to lead the Group on the next phase of its journey.

"We continue to be reassured by the ongoing resilience in the Group's performance with trade to date through the second half following a similar trend to the first half with total sales in the Group's organic retail businesses tracking around 8% ahead of the prior year after six weeks.

"Whilst the overall performance continues to be encouraging and the result for the half year was at the upper end of the Board's expectations, it must also be recognised that the most material trading periods lie ahead. Given the widespread macro-economic uncertainty, inflationary pressures and the potential for further disruption to the supply chain with industrial action a continuing risk in many markets, it is inevitable that we remain cautious about trading through the remainder of the second half. Despite this, the Board maintains its view, at this point, that the headline profit before tax and exceptional items for the year ending 28 January 2023 will be in line with the record performance for the year ended 29 January 2022."

Enquiries:

JD Sports Fashion Plc Tel: 0161 767 1000

Andrew Higginson, Non-Executive Chair

Régis Schultz, Chief Executive Officer

Kath Smith, Interim Chief Executive Officer

Neil Greenhalgh, Chief Financial Officer

Investec Bank Plc Tel: 0207 597 5075

David Flin

Peel Hunt LLP Tel: 0207 418 8869

Dan Webster

FGS Global Tel: 0207 251 3801

Rollo Head

Jenny Davey

James Thompson

Chair's Statement

Introduction

Whilst this has been a period of transition for the Board it is reassuring that this has not impacted the financial performance of the Group which continues to deliver strong results with a profit before tax and exceptional items in the first half of GBP383.5 million (2021: GBP439.5 million). With this year expected to follow a more normalised trading pattern, this result is at the top end of our expectations for the first half demonstrating the ongoing resilience of our global proposition and the strength of our consumer engagement.

As expected, the result is lower than the prior year principally reflecting the non-comparability of the result in North America with our businesses in the United States experiencing a significant one-off benefit last year from the fiscal stimulus made available by the Federal Government to boost the economy, as previously highlighted.

The progress that the Group is making in its global markets is reflected by the fact that total sales in the Group's organic retail businesses were 5% ahead of the prior year. This performance is very encouraging, as notwithstanding the non-comparability of trading conditions in the United States, the Group has also faced numerous other challenges in the period including the well-publicised shortage of supply from a number of the international brands and the challenging global macro-economic situation.

JD continues to be the partner of choice for many international brands who see our premium fascias as the natural home for their latest ranges and freshest new styles. Our relationship with these brands and our access to product is as strong as it ever has been. We continue to deepen our relationships with our brand partners to help create new, richer and more engaging experiences for consumers going forward.

The result also bears testimony to the skills, resilience and positive attitude of the colleagues in our businesses who have not let the leadership changes deviate their laser focus on the consumer and our proposition. I would also like to express my gratitude for the leadership provided by Helen Ashton, as Interim Chair, and Kath Smith, as Interim CEO, after Peter Cowgill left the Group.

Whilst I only joined the Board in July, it has been evident in my short time with the Group that JD has an extremely robust proposition that is capable of thriving across multiple geographies and can do so in testing financial environments. This confidence comes from seeing up close how JD consistently adheres to a number of core entrepreneurial principles:

-- A relentless commitment to be an authoritative and trustworthy source of style and fashion inspiration by understanding better than anyone what is relevant to the sports fashion focused and 'street' consumer

-- Creating sector-leading physical retail environments and leading-edge digital technologies which are scalable across multiple territories and are adaptable to dynamic consumer expectations

-- Providing inspiration to a demanding consumer who, regardless of wider global events or macro-economics, retain their dreams and aspirations and are reluctant to give up the things most important to them

-- Curating a highly differentiated product assortment which heroes the urban uniform and has breadth, newness and exclusivity at its heart

-- Utilising the extensive skills, knowledge and experience in our colleagues to transfer the JD DNA into new markets and deliver globally consistent standards

It is my responsibility as Chair to ensure that the Board is set up to make the governance infrastructure more professional whilst allowing the entrepreneurial flair to flourish. In doing so, JD will have the right foundations from which to progress positively and I look forward to working with our new CEO to take advantage of the ongoing development opportunities.

Board Developments

Recruitment of New CEO

We are delighted to welcome Régis Schultz to the Group as Chief Executive Officer. Régis has now commenced in the role with his induction into the Group at an advanced stage, including introductions with key business leads and international brand partners. We firmly believe that Régis has the right characteristics and experience to lead the Group through the next phase of its journey. In particular, we believe that his expertise of retailing in Asia and the Middle East combined with his ability to drive transformational change through digitalisation, perfectly complement the existing skills both in the Board and the wider senior leadership team.

Régis has joined the Group at the optimum time as it starts its build up to the crucial peak trading season at the end of the year. Régis will work closely with the operational teams in this period, enhancing his overall knowledge of the Group's operations whilst simultaneously also giving our teams the opportunity to learn from his international executional expertise. The knowledge that he gains in this period will be key in helping him shape his vision for the continued international development of our brands and the further enhancement of our already market-leading multichannel customer experience.

Kath Smith will shortly step back from her role as Interim CEO and will return to her former role as the Senior Independent Non-Executive Director. I thank her for her support during the transition period.

Other Board Updates

Suzi Williams, who joined the Board on 16 May 2022, has now taken up the role of Remuneration Committee Chair whilst I have been appointed as Chair of the Nominations Committee.

I am also taking the opportunity to review the mix of skills and experience on the Board and am assessing if there are any gaps. We will not hesitate to strengthen the Board further if we believe that new Board members could positively contribute to the global development and momentum of the Group.

Finally, I am pleased that we have been able to reach an amicable and constructive way forward with Peter Cowgill covering the next three years. Peter has hugely valuable experience, built over 18 years, which we do not want to lose and both Régis Schultz and I are delighted that we will be able to benefit from his unparalleled knowledge and experience over this period. The arrangement that we have agreed, which includes both a binding set of new and enhanced restrictive covenants for a two-year period and a consultancy agreement for an expected period of three years, will help ensure a seamless handover and best protects the Group's commercial interests.

Governance Update

Working with external advisors, the Group continues to make good progress on the initial short-term intensive programme of works to address the priority issues on governance and regulatory compliance matters. Further, after the completion of a Control, Risk and Compliance Target Operating Model review, the Board has now agreed a detailed plan and resource requirements assessment for a programme of works which will ensure compliance with the various regulatory obligations and greater conformity with the Corporate Governance Code. The Board firmly believes that the 15 to 18 month timeline, which it has adopted for this programme, is appropriate for JD as it will ensure that these changes have the opportunity to become fully embedded in the day-to-day operations and culture of the business without constraining the commercial flexibility and quick decision making that have been instrumental in our recent success.

Update on Footasylum Limited ('Footasylum')

The process to sell Footasylum and its associated subsidiaries to Aurelius Group formally completed on 5 August 2022 with consideration of GBP37.5 million received. The Competition and Markets Authority has subsequently confirmed that its investigation into the merger has been closed.

Dividends

Given the return to more normalised trading, the Board believes that it is appropriate to return to a more normalised phasing of dividend payments with approximately one-third of the anticipated annual dividend paid as an interim dividend after the first half. Accordingly, after careful consideration, the Board proposes paying an interim dividend of 0.13p (2021: nil). This dividend will be paid on 6 January 2023 to shareholders on the register at 9 December 2022. We continue to believe that it is in the longer term interests of all shareholders to keep dividend growth restrained so as to maximise the available funding for our ongoing growth opportunities.

Outlook

We continue to be reassured by the ongoing resilience in the Group's performance with trade to date through the second half following a similar trend to the first half with total sales in the Group's organic retail businesses tracking around 8% ahead of the prior year after six weeks. This includes an encouraging return to positive trading in the United States. Trade in the UK, principally online, initially softened in August and early September with customers understandably slower to transition into heavier weight Autumn product whilst the weather remained relatively warm and dry. However, the performance has improved again in the most recent weeks.

The Group also continues to take necessary action to mitigate the current cost pressures with ongoing initiatives including maximising productive hours in stores and our warehouse facilities, improving energy efficiency at all our sites and delivering savings on consumable items.

Whilst the overall performance continues to be encouraging and the result for the half year was at the upper end of the Board's expectations, it must also be recognised that the most material trading periods lie ahead. Given the widespread macro-economic uncertainty, inflationary pressures and the potential for further disruption to the supply chain with industrial action a continuing risk in many markets, it is inevitable that we remain cautious about trading through the remainder of the second half. Despite this, the Board maintains its view, at this point, that the headline profit before tax and exceptional items for the year end 28 January 2023 will be in line with the record performance for the year ended 29 January 2022.

We intend to provide an update on trading in early January after our key Christmas trading period.

Andrew Higginson

Non-Executive Chair

22 September 2022

Chief Executive Officer's Statement

As expected and guided, the profit before tax and exceptional items of GBP383.5 million is lower than the record set in the previous year of GBP439.5 million. This is principally due to a reduction in profit before tax and exceptional items of GBP115.1 million across our combined businesses in North America, which benefitted significantly in the prior year from the temporary fiscal stimulus which the Federal Government made available to the lower earning demographic. This means that the rest of the Group's businesses actually increased their contribution in the period as compared to last year by GBP59.1 million which is a reflection of the continuing positive momentum in our global markets.

Sports Fashion

UK and Republic of Ireland

We are encouraged by another robust performance in the sports fashion retail fascias in the UK and Republic of Ireland which delivered a profit before tax and exceptional items for the first half of GBP153.0 million (2021: GBP174.2 million). It should be recognised that the stores only re-opened from the middle of April in the prior year with full business rates only payable from July.

We are reassured by the resilient nature of the consumer demand across all our fascias with total revenue growth in the JD fascia compared to the prior year of approximately 7% with this business in particular performing strongly through the summer months benefitting from the increased demand for international holidays.

The UK and Republic of Ireland is the most mature market for the JD and Size fascias with developments such as the new flagship store at the Metrocentre in Newcastle demonstrating our ongoing commitment to continue raising standards of excellence in multichannel retailing. It is our belief that the integration of innovative digital technology into a vibrant retail theatre increases the attractiveness and desirability of our premium product ranges. The UK and Republic of Ireland is also the market where the JD and Size fascias have the greatest density of stores relative to the population with 440 stores at the period end (2021: 428). We maintain our belief that the store base at its current scale contributes positively to our development as it raises brand awareness, provides consumers with an opportunity to physically see and try the product, and enables us to offer multiple delivery points.

Elsewhere, we are pleased with the performance in our fashion businesses including Tessuti, Giulio and Mainline Menswear. More recently, Tessuti has opened its new global flagship store in Liverpool. With more than 21,000 sqft of retail space, this store sets new standards in the retailing of premium fashion brands combining classic design with the latest digital technology.

Europe

We are also encouraged by the recovery that we have seen in our businesses in Europe with our combined businesses delivering a profit before tax and exceptional items for the first half of GBP57.1 million (2021: loss of GBP7.2 million). Clearly the stores being open for the full period has been very beneficial in driving an improved performance with total revenue growth in the JD fascia of more than 30% compared to the prior year.

The performance of JD in Europe is also benefitting from actions that we have taken to enhance our service proposition. This includes investing in local logistics capabilities with approximately 90% of product for JD stores in Western Europe now supplied by our warehouses in Southern Belgium and Northern France. Elsewhere, construction of the larger facility in Heerlen is ongoing with fulfilment from this facility expected to commence in the first half of 2024.

The operational challenges which we faced in Europe through the COVID-19 period were temporary in nature and have not changed our view on the long-term opportunity for JD across the continent. Accordingly, we remain committed to expanding our physical retail presence in Europe at pace with a net 51 new JD stores open in the period which includes nine new stores in Eastern Europe which have been opened by the MIG team and the conversion of 22 stores which formerly traded as Chausport in France. Working with the Cosmos team, the Group will open its first JD store in Greece imminently with a store at the Smart Park shopping mall in Athens. The JD team in Europe is also managing the joint venture in Israel with two stores opened in the period and three further stores anticipated to open through the second half.

Elsewhere, our other fascias, which includes our businesses focused on the Sporting Goods market, continue to progress with five additional new stores in the period across Iberia. The trial in the Netherlands which saw former Perry Sport stores being converted to the Sprinter fascia has now been extended with a further two stores converted in the period. The initial results from this trial, which allows us to present an enhanced offer in key active sports categories such as running and cycling, are encouraging and it is our intention to extend this trial into other stores in the second half.

North America

It is not possible to directly compare the performance of our businesses in North America year-on-year without taking into consideration the absence of Federal fiscal stimulus this year in the United States. Further, the performance in the first half was also negatively impacted, particularly in the first quarter, by the well-publicised international supply chain challenges which resulted in the reduced availability of certain key footwear styles. These supply chain challenges were felt most acutely in North America as footwear represents more than 80% of total sales which is the highest of any of our markets.

Whilst these factors have combined to negatively impact the performance as compared to the previous year, the profit before tax and exceptional items of GBP130.4 million (2021: GBP245.5 million) is in line with our expectations. It is also encouraging that gross margins have largely been maintained at the prior year levels with an overall gross margin across our businesses of 49.4% (2021: 49.7%). Ultimately, our progress in this market can also be measured by the fact that the profit before tax and exceptional items solely in the JD / Finish Line business of GBP63.1 million is significantly ahead of the GBP35.7 million result achieved in the same period in 2019, which is the most relevant comparable period prior to the COVID-19 pandemic.

The improvement in product availability in the second quarter is reflected in the trading which improved progressively through the period. This improvement in availability and trading has continued into the second half with our businesses trading positively through the first six weeks.

We are very pleased with the ongoing strategic developments across our businesses in North America which we believe will deliver sustainable long-term benefits. This includes the ongoing roll-out of the JD fascia which, at the end of the period, traded from 107 stores (2021: 66 stores), including six stores (2021: one store) in Canada. These new store developments for JD include a number of relocations where we have taken the opportunity to relocate an existing Finish Line store to a site which is either more appropriately sized or is in a location which attracts higher levels of footfall. The new stores for JD in the period include the opening of a first store in a street location with a store in the Bronx area of New York. JD will open its second flagship store in the United States later in the Autumn with a store on State Street in Chicago. Our businesses are also continuing to make progress on a number of projects which will enhance both our collective operational effectiveness and the consumer experience.

Asia Pacific

The Group continues to make progress in the Asia Pacific region with our businesses delivering a combined profit before tax and exceptional items for the first half of GBP29.3 million (2021: GBP13.6 million) representing a margin of 15.5% of sales (2021: 9.6%).

Our most significant market in this region continues to be Australia where, a further three new stores were opened in the first half, bringing the total to 43 stores at the end of the period (2021: 35 stores). A further two stores have opened subsequently which includes the Group's first store in Adelaide. We anticipate further openings in Australia through the second half as JD continues to gain momentum in the country. Further, after an encouraging start at the store in Auckland, our management team in Australia is also looking to expand the footprint of JD in New Zealand with two new stores expected to open in the second half.

Elsewhere, working with our joint venture partner, PT Erajaya Swasembada Tb, the Group has now opened four stores in Indonesia with further openings anticipated through the second half.

Gyms

After opening a further three gyms in the period, the Group had 77 sites in the UK at the end of the period with 66 sites trading as JD and a further 11 sites still bannered as X4L. It remains our expectation that the majority of these sites will be converted to JD and retained longer term. As would be expected, our gyms with their premium look and feel, including saunas, have a higher utility cost relative to sales as compared to our retail businesses with our management team very focused on driving through a number of initiatives which will reduce the electricity usage without impacting the members' experience. We are pleased with the early results from this exercise.

We are also encouraged by the early performance of our GymNation business in the United Arab Emirates with seven gyms currently open and a strong pipeline of future openings including Downtown Dubai and Sharjah.

During the period we broadened our leisure interests with the acquisition of 60% of Total Swimming Holdings Limited ('Swim!') for initial cash consideration of GBP11.1 million with additional consideration of up to GBP4.0 million payable if certain targets and performance criteria are achieved. Swim! was founded by former Olympic swimmers Steve Parry, Rebecca Adlington and Adrian Turner to make swimming more accessible and is the first multi-site operator of dedicated children's 'learn to swim' centres in the UK with seven sites operating at the end of the period.

Financial Performance

The challenges that we have faced in the period in North America should not detract from what has been an excellent period for our Sports Fashion businesses overall with these businesses delivering a profit before tax and exceptional items of GBP382.0 million (2021: GBP432.1 million).

This result was heavily influenced by a very positive performance from the retail fascias in the UK and Republic of Ireland which, again, was the most profitable territory with a profit before tax and exceptional items across the combined retail fascias of GBP153.0 million (2021: GBP174.2 million) with this result including additional costs of GBP20 million compared to last year consequent to the return to full business rates in the UK. There was also a pleasing recovery for our businesses in Europe which delivered a profit before tax and exceptional items of GBP57.1 million (2021: loss of GBP7.2 million). As expected, the retail fascias in North America could not match the record result of the previous year, although the combined profit before tax and exceptional items of GBP130.4 million (2021: GBP245.5 million), which represents a margin of 10.1% (2021: 18.1%), is still extremely encouraging given the context of the supply chain challenges in the period.

Overall gross margins within Sports Fashion at 49.0% are broadly consistent with the previous year (2021: 48.8%). Within this, the combined gross margin for the businesses in North America was 49.4% (2021: 49.7%). This is reassuring as it means that there is no indication that this market is returning to historic levels of promotional activity.

After recognising exceptional items in the period of GBP85.2 million (2021: GBP74.9 million) principally relating to a net increase of GBP40.2 million (2021: GBP59.1 million) in the fair value of the liabilities in respect of the Group's various future put options, the profit before tax in Sports Fashion was GBP296.8 million (2021: GBP357.2 million).

Outdoor

This has been another period of revenue growth in our Outdoor businesses with total revenues increasing by 16.8% compared to the prior year. Whilst people may have had more international travel options than the prior year, it is clear that spending time outdoors more locally remains popular for many people who recognise the physical and mental health benefits that it provides. In particular, our businesses are seeing a strong demand for activity-based categories such as Fishing and Cycling with the Group benefitting from its recent investments in these areas. Further, the demand for Outdoor Living categories to support people on their camping trips, has also remained at elevated levels. However, the exceptionally dry and warm weather throughout the UK through the Summer period has depressed the sale of higher price and higher margin apparel ranges, particularly waterproofs.

We continue to invest in all of our fascias with a new Go Outdoors store opened in Bury and the relocation of our stores in Swindon, Gateshead and Derby. We have also opened our first two Wheelbase cycling concessions in the Go Outdoors stores at Coventry and Stockton. In addition, we have enhanced our position as an authoritative nationwide retailer in the fishing and equestrian categories with Fishing Republic concessions now in more than 50 Go Outdoors stores and Naylors Equestrian concessions in seven stores.

Financial Performance

Whilst revenues have increased the activity-based categories that have grown deliver lower gross margins which is reflected in overall gross margins reducing by 2.1% to 42.2% (2021: 44.3%). Consequently, the profit before exceptional items reduced to GBP4.0 million (2021: GBP10.8 million). We firmly believe that this reduction in profit is a consequence of the unseasonal weather through the Summer and it is not a true reflection of the substantial progress that we are making in this sector. Consequently, we remain confident in our longer-term prospects and we continue to work on initiatives which enhance the resilience of our proposition.

There were no exceptional items in the period (2021: GBPnil) which means that the profit before tax in Outdoor was also GBP4.0 million (2021: GBP10.8 million).

Logistics Developments

UK and Republic of Ireland

Fitting out of the new 515,000 sqft facility in Derby, which will be used exclusively to fulfil online orders for JD in the UK is progressing, with fulfilment from the site expected to commence in Q1 of 2023. Approximately GBP33 million has been invested at this site to date with the full cost of this initial development expected to rise to approximately GBP70 million by the middle of 2023. There is additional space at the site for a further phase of works should that be necessary which we would expect to cost approximately a further GBP21 million, although we are not committed to this yet.

To bridge the capacity gap ahead of Derby opening, Clipper Logistics Plc will continue to provide a range of logistics operations, including warehousing and e-fulfilment, on a temporary basis from its site at Sherburn, Leeds until Summer 2023.

Western Europe

Construction of the 620,000 sqft facility in Heerlen, South-East Netherlands, is ongoing with this site scheduled to be handed over later this year for initial fitting out and operational use anticipated for mid-2024. We anticipate incurring up to EUR20 million of capex at this site in the period from handover to the end of the year with the total cost over the life of the project to bring the site into full operational use in 2024 estimated at EUR95 million.

In the meantime, we have expanded our base of smaller facilities in Southern Belgium and Northern France so that we can further increase the amount of product which is fulfilled to locations in Western Europe both for stores and online. Currently, approximately 90% of store deliveries and 15% of online orders are being fulfilled out of these facilities.

North America

Our Shoe Palace business in California is also now fully operational with its new 512,000 sqft facility in Morgan Hill, San Jose. This facility, which has the capacity to serve approximately 400 stores was designed to exceed the requirements under Title 24 of the California Building Standards Code with the rooftop solar photovoltaic panels generating electricity equivalent to 96% of the power required by the site. Having a facility of this scale on the West Coast is clearly a significant advantage as we work towards a more integrated logistics network in the United States.

People

It is a great testament to the strength and quality of the people at every level in our businesses that we have been able to consistently deliver outstanding results over a number of years. Our continued strength is principally due to their talent, energy and commitment and we thank everybody involved across the Group for their part in delivering these excellent results.

We firmly believe that the continued international development of our retail businesses provides significant personal development opportunities, both temporary and permanent, and is a major reason why people are attracted to, and stay with, our business. We remain committed to giving all our colleagues a quality work experience which is challenging yet rewarding.

Régis Schultz / Kath Smith

Chief Executive Officer / Interim Chief Executive Officer

22 September 2022

Chief Financial Officer's Statement

Financial Performance

Revenue and Gross Margin

This period was the first time since 2019 that all of our businesses have traded free from restrictions. Whilst this was a positive to revenues through the period in many countries, particularly in Europe, this was offset by lower revenues in the United States where the lack of fiscal stimulus to the economy meant a return to more normal trading with our businesses not having the same favourable conditions as the prior year.

Ultimately, total revenue for the Group for the first half increased to GBP4,418.1 million (2021: GBP3,885.8 million). Total revenues in the Group's organic retail businesses, being those businesses which were part of the Group throughout the previous financial year, were 5% ahead of the prior year.

Given that stores were temporarily closed in many markets in the prior year, it would not be meaningful to present like-for-like sales on a one-year basis. However, it is possible to consider like-for-like sales on a three year basis, to measure against the period before the emergence of the COVID-19 pandemic, with revenues increasing by more than 25% over this period.

Total gross margin for the first half has remained constant at 48.5% (2021: 48.5%). Encouragingly, gross margins have largely been maintained at the prior year levels across our businesses in North America with an overall gross margin of 49.4% (2021: 49.7%).

Profit Before Tax

Profit before tax and exceptional items was lower than the prior period at GBP383.5 million (2021: GBP439.5 million). However, this result is entirely consistent with the more normalised trading patterns that the Group would expect to see in the current year as the world emerges from the COVID-19 pandemic with up to 40% of annual profits generated in the first half of the year.

As expected, our businesses in North America saw a reduction in profit in the period, consequent to both the lack of fiscal stimulus and the shortage of supply from some of the major international brands, with these businesses delivering an aggregate profit before tax and exceptional items of GBP130.4 million (2021: GBP245.5 million). This implies that our other global businesses increased their profit before tax and exceptional items by 30.5% to GBP253.1 million (2021: GBP194.0 million) which is a reflection of the positive progress that the Group continues to make in its markets.

There were exceptional items in the period of GBP85.2 million (2021: GBP74.9 million) principally from the movement in the fair value of the liabilities in respect of future put and call options:

 
                                        2022    2021 
                                        GBPm    GBPm 
 
 Movement in fair value of put and 
  call options (1)                      40.2    59.1 
 Impairment of non-current assets       36.5       - 
  (2) 
 Impairment of assets held-for-sale      8.5       - 
  (3) 
 Restructuring of Spodis (4)               -    15.8 
 
 Total exceptional charge               85.2    74.9 
                                      ======  ====== 
 

1. Movement in the fair value of the liabilities in respect of the put and call options on Genesis Topco Inc GBP28.7 million (2021: GBP65.0 million), Iberian Sports Retail Group GBP16.8 million (2021: credit of GBP7.7 million), Other credit of GBP5.3 million (2021: charge of GBP1.8 million). The movement in the fair value of the put option liabilities is presented as exceptional as it is a significant item that is outside of the normal course of business.

2. The impairment constitutes a charge of GBP10.2 million in respect of the goodwill and fascia name arising in the prior year on the acquisition of Missy Empire, GBP12.7 million in respect of the partial impairment of the goodwill arising in the prior year on the acquisition of Hairburst and GBP13.6 million in respect of the partial impairment of the investment in the Joint Venture, Gym King. The impairment is presented as exceptional as it is a significant item that is outside of the normal course of business.

3. Impairment recognised in order to present the assets held-for-sale in respect of Footasylum Limited at the lower of carrying value and fair value less costs to sell in accordance with IFRS 5. This item is presented as exceptional as the divestment of Footasylum Limited is non-recurring.

4. The impact consequent to the restructuring of Spodis SA in the prior period including a charge of GBP5.5 million in relation to the impairment of tangible assets and business restructuring costs of GBP10.3 million. This item is presented as exceptional as it is related to a non-recurring restructuring project.

Group profit before tax ultimately decreased to GBP298.3 million (2021: GBP364.6 million).

Proforma Results Under IAS 17 'Leases'

On a proforma basis under IAS 17 'Leases', the headline profit before tax and exceptional items to 30 July 2022 for the Group would have been GBP4.6 million higher at GBP388.1 million (2021: GBP12.0 million higher at GBP451.5 million). After exceptional items totalling GBP85.2 million (2021: GBP74.9 million), the profit before tax on the same proforma basis would have been GBP302.9 million (2021: GBP376.6 million).

Cash and Working Capital

The net cash balance at the end of the period was broadly consistent with the prior year at GBP1,013.1 million (2021: GBP995.1 million).

Our capacity to generate cash in our retail operations remains as strong as ever. However, the net cash in the period has been impacted by a general restocking of our businesses in North America, as the supply from the international brands normalised through the second quarter, and increased investment in capital expenditure as we expand our geographical footprint, further enhance the consumer proposition and upgrade our operational infrastructure.

Net inventories across the Group at the end of the period were GBP1,428.5 million (2021: GBP996.7 million). Within this, inventories in our businesses in North America increased to GBP379.7 million (2021: GBP207.7 million) as the flow of product reverted to normal levels. Forward cover in our core Finish Line / JD business at the end of the period of 13 weeks was higher than the prior year (2021: nine weeks) but was broadly in line with the cover in the core JD business in the UK / Europe of 12 weeks (2021: 12 weeks) with a continual focus on robust stock management disciplines.

Gross capital expenditure* (excluding disposal costs) increased to GBP156.6 million (2021: GBP83.5 million) with the primary focus of our capital expenditure continuing to be our physical retail fascias where spend in the period was GBP81.5 million (2021: GBP42.0 million). Given that we expect substantial investment on the new warehouses at Derby and Heerlen in the second half, we would expect the overall spend through the second half to be higher than that in the first half and would now anticipate that capital expenditure for the full year will be in the range of GBP325 million to GBP375 million (52 weeks to 29 January 2022: GBP247.9 million).

Earnings per Ordinary Share

The basic earnings per ordinary share decreased by 19.4% to 3.58p (2021: 4.44p) consistent with the reduction in the Group profit before tax.

The adjusted* earnings per ordinary share decreased to 5.23p (2021: 5.83p).

Environmental and Sustainable Sourcing Update

The Group continues to make excellent progress with its environmental and sustainable sourcing work programmes. We are pleased that our efforts are increasingly being recognised externally with Sustainalytics, one of the world's leading independent ESG research and analytics businesses, recently giving JD a risk score that placed it 17(th) in a list of 458 global retail businesses.

Elsewhere, we continue to consolidate our efforts on environmental and social efforts into three main pillars:

   --      Reducing the impact of climate change 
   --      Sustainable sourcing 
   --      Circular economy and recycling 

Progress to date this year on these pillars includes the following:

-- In line with the commitment that we made in 2019, we are on track to have 100% renewable energy use across our business in Western Europe by the end of this year

   --      'Better Cotton' usage in our private label business now stands at 98.5% 

-- We have implemented a new 'Environmental Performance Evaluation' Policy and Standards with an objective to improve environmental performance in the supply chain through an eight-stage process which is designed to support our private label suppliers in improving the environmental standards of their operations

   --      Our updated corporate website provides full disclosures and transparency on: 

o Sustainable product mapping

o Audit standards, supplier mapping, and case studies demonstrating progress towards the United Nations Sustainable Development Goals

-- Our Head Office in Bury has joined our principal warehouse at Kingsway, Rochdale in being recognised as a 'zero waste to landfill' facility

Store Portfolio

During the period, store numbers have moved as follows:

 
                         Period   New Stores   Transfers   Acquired   Closures   Period 
                          Start                                                     End 
 
 Premium Sports 
 UK & Republic of 
  Ireland                   436           10           -          -        (6)      440 
 Europe                     377           32          22          -        (3)      428 
 Asia Pacific                79            5           -          -        (2)       82 
 North America              931           14           -          -        (8)      937 
 
                          1,823           61          22          -       (19)    1,887 
                        -------  -----------  ----------  ---------  ---------  ------- 
 
 Other Fascias 
 UK & Republic of 
  Ireland (i)               151            5           -          1       (11)      146 
 Europe                     889           28        (22)          -       (36)      859 
 Asia Pacific                 2            4           -          -          -        6 
 North America              289            -           -          -        (1)      288 
 
                          1,331           37        (22)          1       (48)    1,299 
                        -------  -----------  ----------  ---------  ---------  ------- 
 
 
 Total Sports Fashion     3,154           98           -          1       (67)    3,186 
                        -------  -----------  ----------  ---------  ---------  ------- 
 
 
 Total Outdoor              248            9           -          -        (7)      250 
 
 
 Total Group              3,402          107           -          1       (74)    3,436 
                        -------  -----------  ----------  ---------  ---------  ------- 
 
 

(i) Includes 62 stores trading as Footasylum (2021: 67 stores) which were subsequently disposed on 5 August 2022

In addition, the Group now has six JD stores operating under joint venture arrangements with partners in Indonesia and Israel as follows:

 
               Period   New Stores   Period 
                Start                   End 
 
 Indonesia          -            4        4 
 Israel             -            2        2 
 
                    -            6        6 
 --------------------  -----------  ------- 
 

After opening a further three gyms in the period, the Group had 77 gym sites in the UK at the end of the period (66 sites trading as JD and 11 sites still bannered as X4L). Further, following the acquisition of Total Swimming Holdings in May 2022, the Group also had seven Swim! sites in the UK (see Note 5).

Neil Greenhalgh

Chief Financial Officer

22 September 2022

Alternative Performance Measures (terms are listed in alphabetical order)

The Directors measure the performance of the Group based on a range of financial measures, including measures not recognised by International Accounting Standards ('IAS') in conformity with the requirements of the Companies Act 2006 and in accordance with UK-adopted International Accounting Standards. These alternative performance measures may not be directly comparable with other companies' alternative performance measures and the Directors do not intend these to be a substitute for, or superior to, IFRS measures. The Directors believe that these alternative performance measures assist in providing additional useful information on the trading performance of the Group. Alternative Performance Measures are also used to enhance the comparability of information between reporting periods, by adjusting for exceptional items. Exceptional items are disclosed separately when they are considered unusual in nature and not reflective of the trading performance and profitability of the Group. The separate reporting of exceptional items, which are presented as exceptional within the relevant category in the Consolidated Income Statement, helps provide an indication of the Group's trading performance. An explanation as to why items have been classified as Exceptional is given in Note 3.

Adjusted earnings per share

The calculation of basic earnings per share is detailed in Note 4. Adjusted basic earnings per ordinary share has been based on the profit for the period attributable to equity holders of the parent for each financial period but excluding the post-tax effect of certain exceptional items. A reconciliation between basic earnings per share and adjusted earnings per share is shown below:

 
 
                                        26 weeks     26 weeks       52 weeks 
                                           to              to             to 
                                        30 July       31 July     29 January 
                                          2022           2021           2022 
 Basic earnings per share                  3.58p        4.44p          7.17p 
 Exceptional items                         1.65p        1.45p          5.66p 
 Tax relating to exceptional items             -      (0.06p)          0.01p 
                                     -----------  -----------  ------------- 
 
 Adjusted earnings per share               5.23p        5.83p         12.84p 
                                     -----------  -----------  ------------- 
 

EBITDA before exceptional items

Earnings before interest, tax, depreciation and amortisation.

 
                                              26 weeks   26 weeks      52 weeks 
                                                    to         to            to 
                                               30 July    31 July    29 January 
                                                  2022       2021          2022 
                                                  GBPm       GBPm          GBPm 
 
 Profit for the period                           216.3      276.8         459.6 
 Addback: 
 Financial expenses                               35.7       32.7          67.9 
 Income tax expense                               82.0       87.8         195.1 
 Depreciation, amortisation and impairment 
  of non-current assets                          309.3      274.7         593.1 
 Exceptional items (see note 3)                   85.2       74.9         292.5 
 Deduct: 
 Financial income                                (1.1)      (0.5)         (1.4) 
                                             ---------  ---------  ------------ 
 
 EBITDA before exceptional items                 727.4      746.4       1,606.8 
                                             ---------  ---------  ------------ 
 

Gross capital expenditure

 
 
                                                   26 weeks     26 weeks      52 weeks 
                                                         to           to         to 
                                                    30 July      31 July     29 January 
                                                       2022         2021        2022 
                                                       GBPm         GBPm        GBPm 
 
   Investment in software                              11.0          4.5           14.9 
 Acquisition of property, plant and equipment         139.9         77.7          227.3 
 Acquisition of non-current other assets                5.7          1.3            5.7 
                                                -----------  -----------  ------------- 
 
 Total gross capital expenditure                      156.6         83.5          247.9 
                                                -----------  -----------  ------------- 
 

Alternative Performance Measures (continued)

LFL (Like-for-Like) sales

The percentage change in the year-on-year sales, removing the impact of new store openings and closures in the current or previous financial year . This metric enables the performance of the retail stores to be measured on a consistent year-on-year basis and is a common term used in the industry.

Net cash / (debt)

Net cash / (debt) consists of cash and cash equivalents together with interest-bearing loans and borrowings. This measure is a good indication of the strength of the Group's Balance Sheet position and is widely used by credit rating agencies. A reconciliation of net cash / (debt) is provided in the Analysis of Net Cash included after the Condensed Consolidated Statement of Cashflows.

Operating profit before exceptional items

A reconciliation between operating profit and exceptional items can be found in the Consolidated Income Statement.

Organic retail businesses

Being those retail businesses which were subsidiaries at 30 January 2021 and so have been consolidated throughout the whole of the previous financial year and the period to date in the current financial year.

Profit before tax and exceptional items

A reconciliation between profit before tax and profit before tax and exceptional items is as follows:

 
                                            26 weeks   26 weeks      52 weeks 
                                                  to         to            to 
                                             30 July    31 July    29 January 
                                                2022       2021          2022 
                                                GBPm       GBPm          GBPm 
 
 Profit before tax                             298.3      364.6         654.7 
 Exceptional items                              85.2       74.9         292.5 
                                           ---------  ---------  ------------ 
 
 Profit before tax and exceptional items       383.5      439.5         947.2 
                                           ---------  ---------  ------------ 
 

Proforma IAS 17

The Group presents results on a proforma basis with rents recognised under the provisions of IAS 17 'Leases' as opposed to IFRS 16 'Leases' as this is consistent with the financial information used to inform business decisions and investment appraisals. Certain management incentives are also linked to the results on this basis.

A reconciliation from the IFRS 16 headline profit before tax and exceptional items to the proforma IAS 17 headline profit before tax and exceptional items is as follows:

 
 
                                                      26 weeks     26 weeks          52 weeks 
                                                            to           to                to 
                                                       30 July      31 July        29 January 
                                                          2022         2021              2022 
                                                          GBPm         GBPm              GBPm 
 Headline profit before tax and exceptional 
  items (IFRS 16)                                        383.5        439.5             947.2 
 Addback: 
 Depreciation and impairment of the Right-of-Use 
  assets under IFRS 16                                   195.2        175.3             361.3 
 Lease interest expense                                   32.1         28.8              59.5 
 Deduct: 
 Lease costs expensed to the income statement 
  under IAS 17                                         (222.7)      (192.1)           (410.1) 
                                                   -----------  -----------  ---------------- 
 
 Headline profit before tax and exceptional 
  items (Proforma IAS 17)                                388.1        451.5             957.9 
                                                   -----------  -----------  ---------------- 
 

Condensed Consolidated Income Statement

For the 26 weeks to 30 July 2022

 
 
                                                     26 weeks     26 weeks       52 weeks 
                                                           to           to             to 
                                                      30 July      31 July     29 January 
                                            Note         2022         2021           2022 
                                                         GBPm         GBPm           GBPm 
 
 Revenue                                              4,418.1      3,885.8        8,563.0 
 Cost of sales                                      (2,277.5)    (2,000.6)      (4,355.0) 
                                                  -----------  -----------  ------------- 
 
 Gross profit                                         2,140.6      1,885.2        4,208.0 
 Selling and distribution expenses 
  - normal                                          (1,496.5)    (1,206.7)      (2,808.1) 
 Administrative expenses - normal                     (241.8)      (220.1)        (413.4) 
 Administrative expenses - exceptional         3       (85.2)       (74.9)        (292.5) 
 Other operating income                                  15.8         13.3           27.2 
                                                  -----------  -----------  ------------- 
 
 Operating profit                                       332.9        396.8          721.2 
 
 Before exceptional items                               418.1        471.7        1,013.7 
 Exceptional items                             3       (85.2)       (74.9)        (292.5) 
---------------------------------------  -------  -----------  -----------  ------------- 
 
 Operating profit                                       332.9        396.8          721.2 
 Financial income                                         1.1          0.5            1.4 
 Financial expenses                                    (35.7)       (32.7)         (67.9) 
                                                  -----------  -----------  ------------- 
 
 Profit before tax                                      298.3        364.6          654.7 
 Income tax expense                                    (82.0)       (87.8)        (195.1) 
                                                  -----------  -----------  ------------- 
 
 Profit for the period                                  216.3        276.8          459.6 
                                                  -----------  -----------  ------------- 
 
 Attributable to equity holders 
  of the parent                                         184.5        228.7          369.7 
 Attributable to non-controlling 
  interest                                               31.8         48.1           89.9 
 
 
   Basic earnings per ordinary 
   share*                                      4        3.58p        4.44p          7.17p 
                                                  -----------  -----------  ------------- 
 
   Diluted earnings per ordinary 
   share*                                      4        3.58p        4.44p          7.17p 
                                                  -----------  -----------  ------------- 
 

* Basic and diluted earnings per share have been restated for the 26 weeks to 31 July 2021 following a share sub-division in the year ended 29 January 2022. Further details can be found in Note 4.

Condensed Consolidated Statement of Comprehensive Income

For the 26 weeks to 30 July 2022

 
 
                                                26 weeks     26 weeks       52 weeks 
                                                      to           to             to 
                                                 30 July      31 July     29 January 
                                                    2022         2021           2022 
                                                    GBPm         GBPm           GBPm 
 
   Profit for the period                           216.3        276.8          459.6 
 
 Other comprehensive income: 
 Items that may be classified subsequently 
  to the 
  Consolidated Income Statement: 
 Exchange differences on translation 
  of foreign operations                            133.0       (33.3)         (34.9) 
 
 Total other comprehensive income 
  for the period                                   133.0       (33.3)         (34.9) 
-------------------------------------------  -----------  -----------  ------------- 
 
 Total comprehensive income and expense 
  for the period (net of income tax)               349.3        243.5          424.7 
-------------------------------------------  -----------  -----------  ------------- 
 
 Attributable to equity holders of 
  the parent                                       290.6        212.8          357.3 
 Attributable to non-controlling interest           58.7         30.7           67.4 
-------------------------------------------  -----------  -----------  ------------- 
 

Condensed Consolidated Statement of Financial Position

As at 30 July 2022

 
 
                                                     As at       As at          As at 
                                              30 July 2022     31 July     29 January 
                                                      GBPm        2021           2022 
                                                                  GBPm           GBPm 
 Assets 
 Intangible assets                                 1,614.8     1,208.5        1,473.6 
 Property, plant and equipment                       776.0       627.3          688.5 
 Right-of-use assets                               2,075.1     1,963.5        2,032.6 
 Other assets                                         62.0        56.8           57.0 
 Investments in associates and joint 
  ventures                                            42.1        59.0           56.2 
 Loans to associates and joint ventures                4.4           -              - 
 Forward contract asset                                3.9           -            2.5 
 Deferred tax assets                                  69.9        21.0           81.7 
 Total non-current assets                          4,648.2     3,936.1        4,392.1 
-----------------------------------------  ---------------  ----------  ------------- 
 
 Inventories                                       1,428.5       996.7          989.4 
 Right of return assets                               17.3           -           12.5 
 Trade and other receivables                         314.7       214.7          202.9 
 Income tax receivables                                  -           -            0.6 
 Assets held-for-sale                                165.7           -          157.1 
 Cash and cash equivalents                         1,137.9     1,304.7        1,314.0 
 Total current assets                              3,064.1     2,516.1        2,676.5 
-----------------------------------------  ---------------  ----------  ------------- 
 
 Total assets                                      7,712.3     6,452.2        7,068.6 
-----------------------------------------  ---------------  ----------  ------------- 
 
 Liabilities 
 Interest-bearing loans and borrowings              (83.0)     (275.3)         (72.6) 
 Lease liabilities                                 (395.8)     (291.6)        (379.0) 
 Trade and other payables                        (1,406.9)   (1,243.7)      (1,279.5) 
 Liabilities directly associated with 
  assets held-for-sale                             (139.2)           -        (142.6) 
 Provisions                                         (13.0)       (0.6)         (13.2) 
 Income tax liabilities                              (4.3)       (5.2)              - 
 Total current liabilities                       (2,042.2)   (1,816.4)      (1,886.9) 
-----------------------------------------  ---------------  ----------  ------------- 
 
 Interest-bearing loans and borrowings              (41.8)      (34.3)         (55.5) 
 Lease liabilities                               (1,903.4)   (1,863.4)      (1,863.9) 
 Other payables                                    (916.4)     (493.8)        (775.4) 
 Provisions                                         (22.7)       (4.6)         (19.9) 
 Deferred tax liabilities                          (124.6)      (62.0)        (127.4) 
-----------------------------------------  ---------------  ----------  ------------- 
 Total non-current liabilities                   (3,008.9)   (2,458.1)      (2,842.1) 
-----------------------------------------  ---------------  ----------  ------------- 
 
 Total liabilities                               (5,051.1)   (4,274.5)      (4,729.0) 
-----------------------------------------  ---------------  ----------  ------------- 
 
   Total assets less total liabilities             2,661.2     2,177.7        2,339.6 
-----------------------------------------  ---------------  ----------  ------------- 
 
 

Condensed Consolidated Statement of Financial Position (continued)

As at 30 July 2022

 
                                             As at       As at          As at 
                                           30 July     31 July     29 January 
                                              2022        2021           2022 
                                              GBPm        GBPm           GBPm 
 Capital and reserves 
 Issued ordinary share capital                 2.5         2.5            2.5 
 Share premium                               467.5       467.5          467.5 
 Retained earnings                         2,076.8     1,769.6        1,910.6 
 Other reserves                            (359.5)     (418.2)        (454.6) 
--------------------------------------  ----------  ----------  ------------- 
 
 Total equity attributable to equity 
  holders of the parent                    2,187.3     1,821.4        1,926.0 
 Non-controlling interest                    473.9       356.3          413.6 
--------------------------------------  ----------  ----------  ------------- 
 
 Total equity                              2,661.2     2.177.7        2,339.6 
--------------------------------------  ----------  ----------  ------------- 
 

Condensed Consolidated Statement of Changes in Equity

For the 26 weeks to 30 July 2022

 
 
                                                                                                          Total Equity 
                                                                                                          Attributable 
                                                                         Share-based         Foreign         To Equity 
                        Ordinary                                             Payment        Currency           Holders 
                           Share       Share     Retained      Other         Reserve     Translation     Of The Parent 
                         Capital     Premium     Earnings     Equity            GBPm         Reserve              GBPm 
                            GBPm        GBPm         GBPm       GBPm                            GBPm 
 
 Balance at 29 
  January 
  2022                       2.5       467.5      1,910.6    (414.5)             0.1          (40.2)           1,926.0 
 
 Profit for the 
  period                       -           -        184.5          -               -               -             184.5 
 
 Other 
 comprehensive 
 income: 
 Exchange 
  differences 
  on translation of 
  foreign 
  operations                   -           -            -          -               -           106.1             106.1 
 
 Total other 
  comprehensive 
  income                       -           -            -          -         -             106.1                 106.1 
-------------------  -----------  ----------  -----------  ---------  --------------  --------------  ---------------- 
 
 Total 
  comprehensive 
  income for the 
  period                       -           -        184.5          -               -           106.1             290.6 
 Dividends to 
  equity 
  holders                      -           -       (18.3)          -               -               -            (18.3) 
 Put options held 
  by 
  non-controlling 
  interest                     -           -            -     (10.9)               -               -            (10.9) 
 Share-based 
  payment 
  charge                       -           -            -          -           (0.1)               -             (0.1) 
 Non-controlling               -           -            -          -               -               -                 - 
  interest arising 
  on acquisition 
 
 Balance at 30 July 
  2022                       2.5       467.5      2,076.8    (425.4)               -            65.9           2,187.3 
-------------------  -----------  ----------  -----------  ---------  --------------  --------------  ---------------- 
 
 
                                           Total Equity 
                                           Attributable            Non- 
                                                     To     Controlling        Total 
                                         Equity Holders        Interest       Equity 
                                          Of The Parent            GBPm         GBPm 
                                                   GBPm 
 
 Balance at 29 January 2022                     1,926.0           413.6    2,339.6 
 
 Profit for the period                            184.5            31.8      216.3 
 
 Other comprehensive income: 
 Exchange differences on translation 
  of foreign operations                           106.1            26.9      133.0 
 
 Total other comprehensive income                 106.1            26.9      133.0 
-------------------------------------  ----------------  --------------  --------- 
 
 Total comprehensive income for 
  the period                                      290.6            58.7      349.3 
 Dividends to equity holders                     (18.3)               -     (18.3) 
 Put options held by non-controlling 
  interest                                       (10.9)               -     (10.9) 
 Share-based payment charge                       (0.1)               -      (0.1) 
 Non-controlling interest arising 
  on acquisition                                      -             1.6        1.6 
 
 Balance at 30 July 2022                        2,187.3           473.9    2,661.2 
-------------------------------------  ----------------  --------------  --------- 
 

Condensed Consolidated Statement of Changes in Equity (continued)

For the 26 weeks to 31 July 2021

 
 
                                                                                                      Total Equity 
                                                                                                      Attributable 
                                                                                         Foreign         To Equity 
                                    Ordinary                                            Currency           Holders 
                                       Share       Share     Retained      Other     Translation     Of The Parent 
                                     Capital     Premium     Earnings     Equity         Reserve              GBPm 
                                        GBPm        GBPm         GBPm       GBPm            GBPm 
 
 Balance at 30 January 
  2021                                   2.4        11.7      1,560.8    (308.4)          (27.8)           1,238.7 
 
 Profit for the period                     -           -        228.7          -               -             228.7 
 Other comprehensive 
  income: 
 Exchange differences 
  on translation of 
  foreign operations                       -           -            -          -          (15.9)            (15.9) 
 
 Total other comprehensive 
  income                                   -           -            -          -      (15.9)                (15.9) 
-------------------------------  -----------  ----------  -----------  ---------  --------------  ---------------- 
 
 Total comprehensive 
  income for the period                    -           -        228.7          -          (15.9)             212.8 
 Dividends to equity 
  holders                                  -           -       (14.9)          -               -            (14.9) 
 Put options held 
  by non-controlling 
  interest                                 -           -            -     (66.1)               -            (66.1) 
 Share capital issued 
  [1]                                    0.1       455.8            -          -               -             455.9 
 Divestment of non-controlling 
  interest                                 -           -        (5.0)          -               -             (5.0) 
 Non-controlling                           -           -            -          -               -          - 
  interest arising 
  on acquisition 
 
 Balance at 31 July 
  2021                                   2.5       467.5      1,769.6    (374.5)          (43.7)           1,821.4 
-------------------------------  -----------  ----------  -----------  ---------  --------------  ---------------- 
 
 
                                              Total Equity 
                                              Attributable            Non- 
                                                        To     Controlling      Total 
                                            Equity Holders        Interest     Equity 
                                             Of The Parent            GBPm       GBPm 
                                                      GBPm 
 
 Balance at 30 January 2021                        1,238.7           257.7    1,496.4 
 
 Profit for the period                               228.7            48.1      276.8 
 Other comprehensive income: 
 Exchange differences on translation 
  of foreign operations                             (15.9)          (17.4)     (33.3) 
 
 Total other comprehensive income                   (15.9)          (17.4)     (33.3) 
----------------------------------------  ----------------  --------------  --------- 
 
 Total comprehensive income for the 
  period                                             212.8            30.7      243.5 
 Dividends to equity holders                        (14.9)           (1.8)     (16.7) 
 Put options held by non-controlling 
  interest                                          (66.1)               -     (66.1) 
 Share capital issued                                455.9               -      455.9 
 Divestment of non-controlling interest              (5.0)            48.0       43.0 
 Non-controlling interest arising 
  on acquisition                                         -            21.7       21.7 
 
 Balance at 31 July 2021                           1,821.4           356.3    2,177.7 
----------------------------------------  ----------------  --------------  --------- 
 

Condensed Consolidated Statement of Cash Flows

For the 26 weeks ended 30 July 2022

 
                                                   26 weeks   26 weeks      52 weeks 
                                                         to         to            to 
                                                    30 July    31 July    29 January 
                                                       2022       2021          2022 
                                                       GBPm       GBPm          GBPm 
 Cash flows from operating activities 
 Profit for the period                                216.3      276.8         459.6 
 Income tax expense                                    82.0       87.8         195.1 
 Financial expenses                                    35.7       32.7          67.9 
 Financial income                                     (1.1)      (0.5)         (1.4) 
 Depreciation and amortisation of 
  non-current assets                                  309.1      265.1         579.9 
 Forex losses / (gains) on monetary 
  assets and liabilities                                9.5      (3.1)         (2.1) 
 Impairment of other intangibles 
  and non-current assets (non-exceptional)              0.2        9.6          13.2 
 Loss on disposal of non-current 
  assets                                                2.2        1.5           3.5 
 Other exceptional items                      3        48.7       69.4         287.0 
 Impairment of goodwill and fascia 
  names (exceptional)                         3        22.9          -             - 
 Impairment of non-current assets 
  (exceptional)                               3        13.6        5.5           5.5 
 Share of profit of equity-accounted 
  investees, net of tax                               (0.8)      (1.4)         (3.2) 
 Increase in inventories                            (401.0)     (79.2)        (31.8) 
 Increase in trade and other receivables            (103.4)     (62.1)        (69.3) 
 Increase in trade and other payables                  43.2        3.5          75.0 
 Interest paid                                        (3.6)      (3.9)         (8.4) 
 Lease interest                                      (32.1)     (28.8)        (59.5) 
 Income taxes paid                                   (71.6)    (111.0)       (244.1) 
-------------------------------------------      ----------  ---------  ------------ 
 
   Net cash from operating activities                 169.8      461.9       1,266.9 
-------------------------------------------      ----------  ---------  ------------ 
 
 Cash flows from investing activities 
 Interest received                                      1.1        0.5           1.4 
 Proceeds from sale of non-current 
  assets                                                4.5        2.4           7.8 
 Investment in software                              (11.0)      (4.5)        (14.9) 
 Acquisition of property, plant and 
  equipment                                         (139.9)     (77.7)       (227.3) 
 Acquisition of non-current other 
  assets                                              (5.7)      (1.3)         (5.7) 
 Acquisition of other intangible 
  assets                                             (76.2)          -         (5.2) 
 Draw down of brand licence liability                  76.2          -             - 
 Draw down of finance lease liabilities                 4.1        1.5           5.4 
 Dividends received from equity-accounted 
  investees                                             3.0          -           6.9 
 Acquisition of subsidiaries, net 
  of cash acquired                                   (11.6)    (375.1)       (616.5) 
 
   Net cash used in investing activities            (155.5)    (454.2)       (848.1) 
-------------------------------------------      ----------  ---------  ------------ 
 
 Cash flows from financing activities 
 Repayment of interest-bearing loans 
  and borrowings                                     (21.7)    (207.5)       (513.3) 
 Draw down of interest-bearing loans 
  and borrowings                                       12.5      176.3         303.7 
 Repayment of finance lease liabilities               (2.8)      (2.5)         (6.1) 
 Repayment of lease liabilities                     (191.0)    (163.2)       (350.1) 
 Proceeds received from issue of 
  shares                                                  -      455.9         455.9 
 Divestment of non-controlling interests                  -       43.0          43.0 
 Equity dividends paid                                    -          -        (14.9) 
 Dividends paid to non-controlling 
  interest in subsidiaries                            (0.2)      (1.8)         (1.8) 
-------------------------------------------      ----------  ---------  ------------ 
 
   Net cash (used in) / provided by 
   financing activities                             (203.2)      300.2        (83.6) 
-------------------------------------------      ----------  ---------  ------------ 
 
 
 

Condensed Consolidated Statement of Cash Flows (continued)

For the 26 weeks ended 30 July 2022

 
        26 weeks     26 weeks        52 weeks 
      to 30 July           to              to 
            2022      31 July      29 January 
            GBPm         2021            2022 
                         GBPm            GBPm 
 
 
 Net (decrease) / increase in cash 
  and cash equivalents                  (188.9)     307.9       335.2 
 
   Cash and cash equivalents at the 
   beginning of the period              1,280.4     948.7       948.7 
 Foreign exchange gains / (losses) 
  on cash and cash equivalents              4.6       2.4       (3.5) 
-------------------------------------  --------  --------  ---------- 
 
     Cash and cash equivalents at the 
                    end of the period   1,096.1   1,259.0     1,280.4 
-------------------------------------  --------  --------  ---------- 
 

Analysis of Net Cash

As at 30 July 2022

 
                                              At                       On                                        At 
                                      29 January              acquisition                    Non-cash       30 July 
                                            2022          of subsidiaries     Cash flow     movements          2022 
                                            GBPm                     GBPm          GBPm          GBPm          GBPm 
 
 Cash at bank and in hand                1,314.0                      1.1       (181.8)           4.6       1,137.9 
 Overdrafts                               (33.6)                        -         (8.2)             -        (41.8) 
                                    ------------  -----------------------  ------------  ------------  ------------ 
 
   Cash and cash equivalents             1,280.4                      1.1       (190.0)           4.6       1,096.1 
                                    ------------  -----------------------  ------------  ------------  ------------ 
 
 Interest-bearing loans 
  and borrowings: 
    Bank loans                            (94.5)                        -           9.2           2.3        (83.0) 
 
   Net cash / (financial 
   debt) before lease liabilities        1,185.9                      1.1       (180.8)           6.9       1,013.1 
                                    ------------  -----------------------  ------------  ------------  ------------ 
 
   Lease liabilities                   (2,242.9)                    (6.7)         189.7       (239.3)     (2,299.2) 
                                    ------------  -----------------------  ------------  ------------  ------------ 
 
   Net cash / (debt)                   (1,057.0)                    (5.6)           8.9       (232.4)     (1,286.1) 
                                    ------------  -----------------------  ------------  ------------  ------------ 
 
   1.    Basis of Preparation 

JD Sports Fashion Plc (the 'Company') is a company incorporated and domiciled in the United Kingdom. The unaudited half year financial report for the 26 week period to 30 July 2022 represents that of the Company and its subsidiaries (together referred to as the 'Group').

This half year financial report is an interim management report as required by DTR 4.2.3 of the Disclosure and Transparency Rules of the UK's Financial Conduct Authority and was authorised for issue by the Board of Directors on 22 September 2022.

The condensed set of financial statements included in this half year financial report has been prepared in accordance with IAS 34 'Interim Financial Reporting'. The annual financial statements of the Group are prepared in accordance with International Accounting Standards ('IAS') in conformity with the requirements of the Companies Act 2006 and in accordance with UK-adopted International Accounting Standards. The comparative figures for the 52 week period to 29 January 2022 are not the Group's statutory accounts for that financial year. Those accounts have been reported on by the Group's Auditor and delivered to the Registrar of Companies. The Report of the Auditor was (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 of the Companies Act 2006.

The information contained in the half year financial report for the 26 week period to 30 July 2022 and 31 July 2021 has been reviewed and the independent review report for the 26 week period to 30 July 2022 is set out in the half year financial report.

As required by the Disclosure and Transparency Rules of the UK's Financial Conduct Authority, the half year financial report has been prepared by applying the same accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the 52 week period to 29 January 2022.

Adoption of New and Revised Standards

The Group continues to monitor the potential impact of other new standards and interpretations which have been or may be endorsed and require adoption by the Group in future reporting periods. The Group does not consider that any other standards, amendments or interpretations issued by the IASB, but not yet applicable, will have a significant impact on the financial statements.

Alternative Performance Measures

The Directors measure the performance of the Group based on a range of financial measures, including measures not recognised by International Accounting Standards ('IAS') in conformity with the requirements of the Companies Act 2006. These alternative performance measures may not be directly comparable with other companies' alternative performance measures and the Directors do not intend these to be a substitute for, or superior to, IFRS measures. The Directors believe that these alternative performance measures assist in providing additional useful information on the trading performance of the Group.

Alternative Performance Measures are also used to enhance the comparability of information between reporting periods, by adjusting for exceptional items. Exceptional items are disclosed separately when they are considered unusual in nature and not reflective of the trading performance and profitability of the Group. The separate reporting of exceptional items, which are presented as exceptional within the relevant category in the Consolidated Income Statement, helps provide an indication of the Group's trading performance. An explanation as to why items have been classified as Exceptional is given in Note 3.

1. Basis of Preparation (continued)

Use of Estimates and Judgements

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the 52 week period to 29 January 2022 with the exception of the estimation uncertainty relating to the determination of the fair value of assets and liabilities on the acquisition of DTLR which was applicable to the 52 week period to 29 January 2022.

Other Accounting Estimates

Impairment of Goodwill

Goodwill arising on acquisition is allocated to groups of cash-generating units ('Group CGUs'), that are expected to benefit from the synergies of the business combination from which goodwill arose, being portfolios of stores or individual businesses. The cash-generating units used to monitor goodwill and test it for impairment are therefore the store portfolios and individual businesses rather than individual stores, as the cash flows of individual stores are not considered to be independent. These cash-generating units are referred to as Group CGUs. The recoverable amounts of these Group CGUs are determined based on value-in-use calculations.

Shoe Palace CGU GBP593.3 million (29 January 2022: GBP546.7 million)

The value-in-use calculation shows headroom of GBP60.3 million (January 2022: GBP39.9 million). Marginal changes to the assumptions could eliminate the headroom and cause the carrying value of the Group CGU to exceed its recoverable amount. The following further sensitivities were performed which were considered to be reasonably possible changes in the key assumptions:

-- -If the pre-tax discount rate increased by 1% with all other assumptions remaining unchanged, this would result in an impairment of GBP6.6 million representing 1.1% of the carrying value of the Group CGU (January 2022: GBP19.2 million representing 3.5% of the carrying value of the Group CGU).

-- Reducing the short-term and long-term growth rate by 1% with all other assumptions remaining unchanged would result in an impairment of GBP5.2 million representing 0.9% of the carrying value of the Group CGU (January 2022: GBP18.1 million representing 3.3% of the carrying value of the Group CGU).

-- Reducing the forecast gross profit margin rate by 1% with all other assumptions remaining unchanged would not result in an impairment but would reduce the headroom to GBP24.8 million representing 4.2% of the carrying value of the Group CGU (January 2022: GBP8.1 million representing 1.5% of the carrying value of the Group CGU).

Deporvillage CGU GBP148.9 million (29 January 2022: GBP136.4 million)

Deporvillage was acquired on 3 August 2021. A value-in-use calculation prepared for the period ended 30 July 2022 which shows headroom of GBP1.5 million. Marginal changes to the assumptions could eliminate the headroom and cause the carrying value of the Group CGU to exceed its recoverable amount. The following further sensitivities were performed which were considered to be reasonably possible changes in the key assumptions:

-- If the pre-tax discount rate increased by 1% with all other assumptions remaining unchanged, this would result in an impairment of GBP16.4 million representing 11.0% of the carrying value of the Group CGU.

-- Reducing the short-term growth rate by 5% and the long-term growth rate by 1% with all other assumptions remaining unchanged would result in an impairment of GBP30.4 million representing 20.4% of the carrying value of the Group CGU.

-- Reducing the forecast gross profit margin rate by 1% with all other assumptions remaining unchanged would result in an impairment of GBP17.7 million representing 11.9% of the carrying value of the Group CGU.

As disclosed above, whilst the value-in-use calculations do not currently calculate an impairment, the models are sensitive to changes in the assumptions and will be updated as part of the annual impairment review for the financial period ending 28 January 2023.

   1.   Basis of Preparation (continued) 

Risks and Uncertainties

The Board has considered the risks and uncertainties for the remaining 26 week period to 28 January 2023 and determined that the risks presented in the Annual Report and Accounts 2022 noted below, remain relevant:

   --       Strategic risk 
   --       Supply chain 
   --       Intellectual property 
   --       Environmental 
   --       Social - human rights, labour standards and responsibility 
   --       Health and safety 
   --       Governance - anti-corruption, risk management, regulatory and compliance 
   --       Retail property factors 
   --       IT systems 
   --       Cyber security 
   --       COVID-19 
   --       Personnel 
   --       Treasury and financial 

A major variable, and therefore risk, to the Group's financial performance for the remainder of the financial period is the sales and margin performance in the retail fascias, particularly in December and January. Further comment on this and other risks and uncertainties faced by the Group is provided in the Chair's statement included within this half year financial report.

Going Concern

The financial statements are prepared on a going concern basis, which the Directors believe to be appropriate for the following reasons.

At 30 July 2022, the Group had net cash balances of GBP1,013.1 million (29 January 2022: GBP1,185.9 million) with available committed UK borrowing facilities of GBP700 million (29 January 2022: GBP700 million) of which GBPnil (29 January 2022: GBPnil) has been drawn down and US facilities of approximately $300 million of which $nil was drawn down (29 January 2022: $nil). These facilities are subject to certain covenants. With a UK facility of GBP700 million available up to 6 November 2026 and a US facility of approximately $300 million available up until 24 September 2026, the Directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.

The Directors have prepared cash flow forecasts for the Group covering a period of at least 12 months from the date of approval of these financial statements, which indicate that the Group will be able to operate within the level of its agreed facilities and covenant compliance. The Directors have prepared severe but plausible downside scenarios which cover the same period as the base case, including specific consideration of a range of impacts that could arise from geopolitical tensions and the actual and potential impact on supply chains, inflationary cost pressures and business interruption impacting the availability of stock from the Group's key Sports Fashion suppliers, as well as the recovery from the COVID-19 pandemic. These scenarios included applying inflationary cost pressure assumptions and a 20% reduction in sales. As part of this analysis, mitigating actions within the Group's control, should these severe but plausible scenarios occur, have also been considered. These forecast cash flows indicate that there remains sufficient headroom for the Group to operate within the committed facilities and to comply with all relevant banking covenants during the forecast period.

The Directors have considered all of the factors noted above, including the inherent uncertainty in forecasting the impact of geopolitical tensions and COVID-19 pandemic, and are confident that the Group has adequate resources to continue to meet all liabilities as and when they fall due for a period of at least 12 months from the date of approval of these financial statements. Accordingly, the financial statements have been prepared on a going concern basis.

Other Accounting Policies

Government Support

Government support is recognised in the Consolidated Financial Statements when it can be reliably measured, which the Group considers to be on receipt.

During the year ended 29 January 2022, in accordance with IAS 20 'Government Grants', furlough income received by the Group's UK subsidiaries of GBP24.4 million (26 week period ended 31 July 2021: GBP24.4 million) and GBP7.5 million received by the Group's international subsidiaries (26 week period ended 31 July 2021: GBP5.5 million) was shown as a deduction from employed staff costs. Further, GBP31.0 million of rates relief received by the Group's UK subsidiaries has been shown as a deduction from selling and distribution costs (26 week period ended 31 July 2021: GBP28.3 million).

During the period ended 30 July 2022, the Group repaid the GBP24.4 million of furlough income that it received from the UK Government in the year ended 29 January 2022. The repayment was accrued for as at 29 January 2022 and was shown as an expense within employed staff costs in that financial year.

   2.   Segmental Analysis 

IFRS 8 'Operating Segments' requires the Group's segments to be identified on the basis of internal reports about

components of the Group that are regularly reviewed by the Chief Operating Decision Maker to allocate resources to the segments and to assess their performance. The Chief Operating Decision Maker is considered to be the Chair of JD Sports Fashion Plc.

Information reported to the Chief Operating Decision Maker is focused on the nature of the businesses within the Group.

The Group's operating and reportable segments under IFRS 8 are Sports Fashion and Outdoor. In accordance with IFRS 8.12, we have aggregated several operating segments with similar economic characteristics into a larger Sports Fashion operating segment and concluded that, in doing so, the aggregation is still consistent with the core principles of IFRS 8.

When aggregating the operating segments into the larger Sports Fashion operating segment, we have primarily taken into consideration:

- IFRS 8.12.a the nature of products or services;

- IFRS 8.12.c type or class of customer; and

- IFRS 8.12.d the methods used to distribute their products.

The entities included in the Sports Fashion operating segment have similar characteristics as well-established, leading

retailers or wholesalers of footwear, apparel and accessories from a mix of international sports fashion brands and private labels. When determining what to include within the Sports Fashion segment, we have considered that the fascias all target a similar demographic in terms of both age range and an aspiration to achieve a certain style, whether the product is to be used for lifestyle wear or active sports participation. The entities typically have similar economic characteristics in terms of sales metrics, long-term average gross margins, levels of capital investment and operating cash flows. The Outdoor segment differs from the Sports Fashion segment in that Outdoor is focused on retailing specialist apparel, footwear and technical products for outdoor pursuits. Further, the Outdoor segment typically appeals to an older and/or family-oriented demographic as compared with the younger and more style-focused demographic targeted by the Sports Fashion businesses.

The Chief Operating Decision Maker receives and reviews segmental operating profit. Certain central administrative costs including Group Directors' salaries are included within the Group's Sports Fashion result. This is consistent with the results as reported to the Chief Operating Decision Maker.

IFRS 8 requires disclosure of information regarding revenue from major customers. The majority of the Group's revenue is derived from the retail of a wide range of apparel, footwear and accessories to the general public. As such, the disclosure of revenues from major customers is not appropriate.

The Board considers that certain items are cross-divisional in nature and cannot be allocated between the segments on a meaningful basis. Certain net funding costs and taxation are treated as unallocated, reflecting the nature of the Group's syndicated borrowing facilities and its tax group. Drawdowns from the Group's syndicated borrowing facility of GBPnil (2021: GBP176.3 million), a deferred tax asset of GBP69.9 million (2021: GBP21.0 million), a deferred tax liability of GBP124.6 million (2021: GBP62.0 million) and an income tax liability of GBP4.3 million (2021: GBP5.2 million) are included within the unallocated segment.

Each segment is shown net of intercompany transactions and balances within that segment. The eliminations remove

intercompany transactions and balances between different segments which primarily relate to the net draw down of long-term loans and short-term working capital funding provided by JD Sports Fashion Plc (within Sports Fashion) to other companies in the Group, and intercompany trading between companies in different segments. Inter-segment transactions are undertaken in the ordinary course of business on arm's length terms.

   2.         Segmental Analysis (continued) 

Business Segments

Information regarding the Group's operating segments for the 26 weeks to 30 July 2022 is reported below:

 
 
   Income statement 
                                Sports 
                               Fashion     Outdoor     Unallocated      Total 
                                  GBPm        GBPm            GBPm       GBPm 
 
 Revenue                       4,143.4       274.7               -    4,418.1 
 
   Operating profit before 
   exceptional items             412.7         5.4               -      418.1 
 Exceptional items              (85.2)           -               -     (85.2) 
                             ---------  ----------  --------------  --------- 
 
 Operating profit                327.5         5.4               -      332.9 
 Financial income                    -           -             1.1        1.1 
 Financial expenses             (30.7)       (1.4)           (3.6)     (35.7) 
                             ---------  ----------  --------------  --------- 
 
 Profit / (loss) before 
  tax                            296.8         4.0           (2.5)      298.3 
 Income tax expense                                                    (82.0) 
                             ---------  ----------  --------------  --------- 
 
 Profit for the period                                                  216.3 
                             ---------  ----------  --------------  --------- 
 
 

Total assets and liabilities

 
                                 Sports Fashion   Outdoor   Unallocated   Eliminations       Total 
                                           GBPm      GBPm          GBPm           GBPm        GBPm 
 
 Total assets                           7,195.6     483.1          69.9         (36.3)     7,712.3 
 Total liabilities                    (4,690.9)   (267.6)       (128.9)           36.3   (5,051.1) 
                                ---------------  --------  ------------  -------------  ---------- 
 
   Total segment 
   net assets / (liabilities)           2,504.7     215.5        (59.0)              -     2,661.2 
                                ---------------  --------  ------------  -------------  ---------- 
 
   2.         Segmental Analysis (continued) 

The comparative segmental results for the 26 weeks to 31 July 2021 are as follows:

 
 
   Income statement 
                                Sports 
                               Fashion     Outdoor     Unallocated      Total 
                                  GBPm        GBPm            GBPm       GBPm 
 
 Revenue                       3,650.6       235.2               -    3,885.8 
 
   Operating profit before 
   exceptional items             459.8        11.9               -      471.7 
 Exceptional items              (74.9)           -               -     (74.9) 
                             ---------  ----------  --------------  --------- 
 
 Operating profit                384.9        11.9               -      396.8 
 Financial income                    -           -             0.5        0.5 
 Financial expenses             (27.7)       (1.1)           (3.9)     (32.7) 
                             ---------  ----------  --------------  --------- 
 
 Profit / (loss) before 
  tax                            357.2        10.8           (3.4)      364.6 
 Income tax expense                                                    (87.8) 
                             ---------  ----------  --------------  --------- 
 
 Profit for the period                                                  276.8 
                             ---------  ----------  --------------  --------- 
 
 

Total assets and liabilities

 
                                 Sports Fashion   Outdoor   Unallocated   Eliminations       Total 
                                           GBPm      GBPm          GBPm           GBPm        GBPm 
 
 Total assets                           6,201.1     375.7          21.0        (145.6)     6,452.2 
 Total liabilities                    (3,824.8)   (351.8)       (243.5)          145.6   (4,274.5) 
                                ---------------  --------  ------------  -------------  ---------- 
 
   Total segment 
   net assets / (liabilities)           2,376.3      23.9       (222.5)              -     2,177.7 
                                ---------------  --------  ------------  -------------  ---------- 
 
   2.         Segmental Analysis (continued) 

Geographical Information

The Group's operations are located in the UK, Australia, Austria, Belgium, Bosnia and Herzegovina, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Dubai, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Israel, Italy, Latvia, Lithuania, Malaysia, the Netherlands, New Zealand, Poland, Portugal, the Republic of Ireland ('ROI'), Romania, Serbia, Singapore, Slovakia, Slovenia, South Korea, Spain and the Canary Islands, Sweden, Thailand and the US.

Revenue analysis

The following table provides analysis of the Group's revenue by geographical market, irrespective of the origin of the goods / services:

 
                    26 weeks to   26 weeks 
                        30 July         to 
                           2022    31 July 
                           GBPm       2021 
                                      GBPm 
 
 UK & ROI               1,748.0    1,458.9 
 Europe                 1,152.5      908.0 
 North America          1,300.4    1,357.3 
 Rest of 
  world                   217.2      161.6 
-----------------  ------------  --------- 
 
                        4,418.1    3,885.8 
  ---------------  ------------  --------- 
 

The revenue from any individual country, with the exception of the UK and the US, is not more than 10% of the Group's total revenue.

The following table provides analysis of the Group's revenue by product type:

 
 
                    26 weeks to     26 weeks 
                        30 July           to 
                           2022      31 July 
                           GBPm         2021 
                                        GBPm 
 
 Footwear               2,397.3      2,255.2 
 Apparel                1,533.1      1,311.6 
 Accessories              270.0        176.7 
 Other                    217.7        142.3 
---------------  --------------  ----------- 
 
                        4,418.1      3,885.8 
  -------------  --------------  ----------- 
 

The following is an analysis of the carrying amount of segmental non-current assets by the geographical area in which the assets are located. Taxation is treated as unallocated, reflecting the nature of the Group's tax group.

 
 
                                    26 weeks to     26 weeks 
                                        30 July           to 
                                           2022      31 July 
                                           GBPm         2021 
                                                        GBPm 
 
 UK & ROI                               1,296.1      1,111.2 
 Europe                                 1,373.7      1,135.0 
 North America                          1,758.8      1,553.2 
 Rest of world                            149.7        115.7 
 Unallocated                               69.9         21.0 
------------------   ----------  --------------  ----------- 
 
                                        4,648.2      3,936.1 
 -----------  -----------------  --------------  ----------- 
 
 
   3.   Exceptional Items 

The Group exercises judgement in assessing whether items should be classified as exceptional. This assessment covers the nature of the item, cause of occurrence and scale of impact of that item on the reported performance. In determining whether an item should be presented as exceptional, the Group considers items which are significant because of either their size or their nature, and which are non-recurring. In order for an item to be presented as exceptional, it should typically meet at least one of the following criteria:

- It is a significant item, which may cross more than one accounting period.

- It has been directly incurred as a result of either an acquisition or a divestment, or arises from a major business change or restructuring programme.

- It is unusual in nature or outside the normal course of business.

The separate reporting of items, which are presented as exceptional within the relevant category in the Consolidated Income Statement, helps provide an indication of the Group's trading performance in the normal course of business.

 
 
                                              26 weeks     26 weeks       52 weeks 
                                                    to           to             to 
                                               30 July      31 July     29 January 
                                                  2022         2021           2022 
                                                  GBPm         GBPm           GBPm 
 
 Movement in fair value of put and 
  call options (1)                                40.2         59.1          292.7 
 Impairment of non-current assets                 36.5            -              - 
  (2) 
 Impairment of assets held-for-sale                8.5            -              - 
  (3) 
 Restructuring of Spodis (4)                         -         15.8           16.4 
 Insurance settlement for DTLR (5)                   -            -         (16.6) 
 
   Administrative expenses - exceptional          85.2         74.9          292.5 
-----------------------------------------  -----------  -----------  ------------- 
 

(1) Movement in the fair value of the liabilities in respect of the put and call options on Genesis Topco Inc GBP28.7 million (2021: GBP65.0 million), Iberian Sports Retail Group GBP16.8 million (2021: credit of GBP7.7 million), Other credit of GBP5.3 million (2021: charge of GBP1.8 million). The movement in the fair value of the put option liabilities is presented as exceptional as it is a significant item that is outside of the normal course of business.

(2) The impairment constitutes a charge of GBP10.2 million in respect of the goodwill and fascia name arising in the prior year on the acquisition of Missy Empire, GBP12.7 million in respect of the partial impairment of the goodwill arising in the prior year on the acquisition of Hairburst and GBP13.6 million in respect of the partial impairment of the investment in the Joint Venture, Gym King. The impairment is presented as exceptional as it is a significant item that is outside of the normal course of business.

(3) Impairment recognised in order to present the Footasylum assets held-for-sale at the lower of carrying value and fair value less costs to sell in accordance with IFRS 5. This item is presented as exceptional as it is related to a non-recurring divestment of a subsidiary.

(4) The impact consequent to the restructuring of Spodis SA in the prior period including a charge of GBP5.5 million in relation to the impairment of tangible assets and business restructuring costs of GBP10.3 million (29 January 2022: GBP10.9 million). This item is presented as exceptional as it is related to a non-recurring restructuring project.

(5) Insurance settlement proceeds related to a pre-acquisition claim for business interruption by DTLR Villa LLC. As the claim was a contingent asset at the date of acquisition, this was not recognised in the assets acquired in the fair value table noted in Note 5. These insurance proceeds are presented as exceptional as they are unusual in nature and are outside of the normal course of business.

   4.   Earnings per Ordinary Share 

Basic and Adjusted Earnings per Ordinary Share

On 3 February 2021, JD Sports Fashion Plc completed the placing of new ordinary shares in the capital of the Company. A total of 58,393,989 new ordinary shares were issued, increasing the total ordinary shares in issue to 1,031,627,149. The shares were placed at an issue price of 795 pence per share with a par value of 25 pence leading to share capital of GBP0.1 million and share premium of GBP455.8 million being recognised on issue (this is net of GBP8.3 million of costs incurred).

Following an ordinary resolution on 30 November 2021, a share split occurred whereby five ordinary shares were issued for each ordinary share. In accordance with IAS 33, the number of shares outstanding before the event has been adjusted for the proportionate change as if the event had occurred at the beginning of the earliest period presented.

The calculation of basic earnings per ordinary share at 30 July 2022 is based on the profit for the period attributable to equity holders of the parent of GBP184.5 million (26 weeks to 31 July 2021: GBP228.7 million; 52 weeks to 29 January 2022: GBP369.7 million) and a weighted average number of ordinary shares outstanding during the 26 week period ended 30 July 2022 of 5,158,135,745 (26 weeks to 31 July 2021 of 5,158,135,745 restated; 52 weeks to 29 January 2022 of 5,158,135,745).

Adjusted basic earnings per ordinary share have been based on the profit for the period attributable to equity holders of the parent for each financial period but excluding the post-tax effect of certain exceptional items. The Directors consider that this gives a more meaningful measure of the underlying performance of the Group.

 
 
                                             26 weeks     26 weeks       52 weeks 
                                                to              to             to 
                                             30 July       31 July     29 January 
                                               2022           2021           2022 
                                              Number        Number         Number 
                                             millions     millions       millions 
 Issued ordinary shares at beginning 
  of period (restated)                        5,158.1      4,866.2        4,866.2 
 Ordinary shares issued on 3 February 
  2021 (restated)                                   -        291.9          291.9 
                                          -----------  -----------  ------------- 
 
 Issued ordinary shares at end of 
  period                                      5,158.1      5,158.1        5,158.1 
                                          -----------  -----------  ------------- 
 
 
                                                     26 weeks      26 weeks       52 weeks 
                                                           to            to             to 
                                                      30 July       31 July     29 January 
                                           Note          2022          2021           2022 
                                                         GBPm          GBPm           GBPm 
 
   Profit for the period attributable 
   to equity holders of the parent                      184.5         228.7          369.7 
 Exceptional items                            3          85.2          74.9          292.5 
 Tax relating to exceptional items                      (0.1)         (3.0)            0.3 
 Profit for the period attributable 
  to equity holders of the parent 
  excluding exceptional items                           269.6         300.6          662.5 
                                                 ------------  ------------   ------------ 
 
 Basic earnings per ordinary share 
  (restated)                                            3.58p         4.44p          7.17p 
                                                 ------------   -----------  ------------- 
 
 
 
 Adjusted earnings per ordinary 
  share (restated)                             5.23p        5.83p   12.84p 
                                   -----------------  -----------  ------- 
 
   4.   Earnings per Ordinary Share (continued) 

Diluted Earnings per Ordinary Share

Diluted earnings per ordinary share is 3.58p (31 July 2021: 4.44p restated, 29 January 2022: 7.17p). Diluted adjusted earnings per share is 5.23p (31 July 2021: 5.83p restated, 29 January 2022: 12.84p).

The calculation of diluted earnings per ordinary share at 30 July 2022 is based on the profit for the period attributable to equity holders of the parent of GBP184.5 million (26 weeks to 31 July 2021: GBP228.7 million; 52 weeks to 29 January

2022: GBP369.7 million) and a weighted average number of ordinary shares outstanding during the period after adjusting for the effects of all dilutive potential ordinary shares calculated as follows:

 
 
                                          26 weeks     26 weeks       52 weeks 
                                             to              to             to 
                                          30 July       31 July     29 January 
                                            2022           2021           2022 
                                           Number        Number         Number 
                                          millions     millions       millions 
 Issued ordinary shares at end 
  of period (restated)                     5,158.2      5,158.1        5,158.1 
 Shares granted on 20 October 2021 
  under the JD Sports Fashion Plc 
  LTIP 2021                                      -            -            0.1 
 
 Issued ordinary shares at end 
  of period                                5,158.2      5,158.1        5,158.2 
                                       -----------  -----------  ------------- 
 
   5.   Acquisitions 

Current Period Acquisitions - Non-Significant Acquisitions

Total Swimming Holdings Ltd

On 27 May 2022, JD Sports Fashion Plc completed, via its existing subsidiary JD Sports Gyms Limited, the acquisition of 60% of the issued share capital of Total Swimming Holdings Limited for an initial cash consideration of GBP11.1 million. Total Swimming Holdings was founded by former Olympic swimmers Steve Parry, Rebecca Adlington and Adrian Turner to make swimming more accessible and includes Swim!, the first multi-site operator of dedicated children's 'learn to swim' centres in the UK. The acquisition provides a broadening of the Group's leisure interests, which now includes gyms and pools. Additional deferred contingent consideration of up to GBP4.0 million is payable if certain targets and performance criteria are achieved. The fair value of the contingent consideration as at the acquisition date and as at 30 July 2022 was determined to be GBP3.5 million.

Put and call options, to enable future exit opportunities for the management team, have also been agreed and become exercisable from 2026 onwards. We assessed the substance of the put option agreement, taking into account the management leaver terms, and concluded that an element of the future option payment is linked to continued future service and will be expensed on a straight-line basis over the service period. A valuation of the remaining put option liability has been performed using an earnings multiple, a suitable discount rate and approved forecasts, and the initial liability of GBP4.2 million has been recognised with the corresponding entry to Other Equity in accordance with the present value method of accounting. These options are required to be fair valued at each accounting period date.

Included within the provisional fair value of the net identifiable assets on acquisition is an intangible asset of GBP5.5 million representing the fascia names acquired on acquisition and GBP1.1 million representing the customer relationships. The Board believes that the excess of consideration paid over net assets on acquisition of GBP12.4 million is best considered as goodwill on acquisition representing the market position of the business, the assembled workforce and the potential future growth opportunities from opening new sites under the Swim! concept.

Included in the 26 week period ended 30 July 2022 is revenue of GBP3.2 million and a profit before tax of GBP0.3 million in respect of Total Swimming Holdings.

Other Acquisitions

During the period, the Group made one other small acquisition which was not material.

   5.   Acquisitions (continued) 

Current Period Acquisitions - Non-Significant Acquisitions (continued)

The aggregate impact of the non-significant acquisitions in the current period is as follows, with further detail provided in the narrative on the previous page:

 
 
                                                 Fair values 
                                                    acquired 
                                                        GBPm 
 Acquiree's net assets at acquisition date: 
 Intangible assets                                       6.6 
 Property, plant & equipment                             5.1 
 Right-of-use assets                                     6.7 
 Inventories                                             0.4 
 Cash and cash equivalents                               1.1 
 Trade and other receivables                             3.3 
 Trade and other payables                              (7.1) 
 Bank loans and overdrafts                             (3.8) 
 Deferred tax liability                                (1.6) 
 Lease liabilities                                     (6.7) 
 Provisions                                            (0.5) 
-------------------------------------------- 
 
   Net identifiable assets                               3.5 
--------------------------------------------  -------------- 
 
   Non-controlling interest (various)                  (1.4) 
--------------------------------------------  -------------- 
 
   Goodwill on acquisition                              12.5 
--------------------------------------------  -------------- 
 
   Consideration - satisfied in cash                    11.1 
 Consideration - deferred                                3.5 
--------------------------------------------  -------------- 
 
   Total consideration                                  14.6 
--------------------------------------------  -------------- 
 

Full Year Impact of Acquisitions

Had the acquisitions of the entities acquired been effected at 30 January 2022, the revenue and profit before tax of the Group for the 26 week period to 30 July 2022 would have been GBP4.4 billion and GBP297.6 million respectively.

Acquisition Costs

Acquisition related costs amounting to GBP0.1 million have been excluded from the consideration transferred and have been recognised as an expense in the year, within administrative expenses in the Consolidated Income Statement.

   5.   Acquisitions (continued) 

Prior Period Acquisitions - Significant

DTLR Villa LLC

Initial acquisition

On 17 March 2021, JD Sports Fashion Plc ('JD') acquired 100% of the issued share capital of DTLR Villa LLC, via a wholly owned intermediate holding company in the US. Total cash consideration was GBP305.2 million, split between GBP117.9 million debt funding and GBP187.3 million equity funding. DTLR is based in Baltimore, Maryland and is a hyperlocal athletic footwear and apparel streetwear retailer operating from 247 stores across 19 states on acquisition. The acquisition of DTLR, with its differentiated consumer proposition, will enhance the Group's neighbourhood presence in the North and East of the US.

The existing DTLR management team has also reinvested a portion of its proceeds back into DTLR in exchange for a new minority stake of 1.5%. Put and call options, to enable future exit opportunities for the management team, have also been agreed and become exercisable after a minimum period of three years. A valuation of these put options has been performed using an earnings multiple, a suitable discount rate and approved forecasts, and the initial liability of GBP4.2 million was recognised with the corresponding entry to Other Equity in accordance with the present value method of accounting. These options are required to be fair valued at each accounting period date.

Included within the fair value of the net identifiable assets on acquisition is an intangible asset of GBP101.6 million representing the DTLR fascia name and an intangible asset of GBP3.8 million representing the customer relationships arising from the loyalty scheme in place. The Board believes that the excess of consideration paid over net assets on acquisition of GBP212.0 million is best considered as goodwill on acquisition representing future operating synergies.

The goodwill calculation is summarised on the next page. As at the date of this report, the period in which measurement adjustments could be made has now closed on this acquisition and no further fair value measurement adjustments have been made.

Subsequent intra-group transfer

On 2 July 2021, JD completed the transfer of the intermediate Parent Company and DTLR to Genesis Topco Inc ('Genesis'), which is an existing 80.0% subsidiary based in the US and Parent Company of the sub-group which contains Finish Line Inc. and the Shoe Palace Corporation. It was always the intention for DTLR to be part of the Genesis sub-group, but the requirement for speed and certainty of execution on the original transaction meant that it was more appropriate for the Group to initially acquire DTLR directly. This transfer to Genesis now brings all of the Group's businesses in the US into one sub-group, which will enhance the future operational collaboration between them. However, as the parent to Genesis, JD will continue to make strategic decisions regarding the Company's future. The consideration payable by Genesis to JD in relation to the transfer was the same as the total consideration paid by JD on the original acquisition.

By virtue of the fact that JD only owns 80% of Genesis, JD effectively disposed of a proportion of its investment in DTLR to the four Mersho Brothers ('the Mershos') who, with their 20% aggregate shareholding in Genesis, are jointly a related party of JD. In order to maintain their shareholding in Genesis at the current level, the Mershos invested their pro-rata element of the equity consideration of $52.0 million into Genesis. This transfer took place on an arm's length basis and reflects the net assets acquired as at the original acquisition date of 17 March 2021.

   5.   Acquisitions (continued) 

Prior Period Acquisitions - Significant (continued)

DTLR Villa LLC (continued)

 
 
                                           Book value     Measurement        Fair value 
                                                 GBPm     adjustments                at 
                                                                 GBPm     17 March 2021 
                                                                                   GBPm 
 Acquiree's net assets at acquisition 
  date: 
 Intangible assets                               43.7            62.9             106.6 
 Property, plant & equipment                     53.7           (4.4)              49.3 
 Other non-current assets                         0.5           (0.2)               0.3 
 Right-of-use assets                                -           139.9             139.9 
 Inventories                                     40.3               -              40.3 
 Cash and cash equivalents                       95.2               -              95.2 
 Trade and other receivables                      7.6           (3.3)               4.3 
 Income tax asset                                 0.4               -               0.4 
 Trade and other payables                      (37.6)           (0.9)            (38.5) 
 Bank loans and overdrafts                    (140.2)               -           (140.2) 
 Deferred tax liability                         (3.3)          (21.2)            (24.5) 
 Lease liabilities                             (11.8)         (128.1)           (139.9) 
 
   Net identifiable assets                       48.5            44.7              93.2 
                                        -------------  --------------  ---------------- 
 
 Goodwill on acquisition                                                          212.0 
                                        -------------  --------------  ---------------- 
 
   Total consideration                                                            305.2 
                                        -------------  --------------  ---------------- 
 

Included in the 52 week period ended 29 January 2022 was revenue of GBP382.8 million and a profit before tax of GBP63.9 million in respect of DTLR.

   5.   Acquisitions (continued) 

Prior Period Acquisitions - Significant (continued)

Marketing Investment Group S.A.

On 30 April 2021, JD Sports Fashion Plc acquired 60% of the issued share capital of Marketing Investment Group S.A. ('MIG') for total consideration of GBP66.0 million. Total consideration comprised cash consideration of GBP63.6 million and GBP2.4 million of deferred consideration that is subject to customary closing conditions and expected to be paid in 2022.

MIG operated 410 stores on acquisition along with the associated trading websites in nine countries in Central and Eastern Europe. The acquisition of MIG provided the platform to develop the JD fascia in Central and Eastern Europe. The MIG team has been instrumental in the opening of the first JD stores in Eastern Europe with stores in Poland, Romania and Hungary. We would anticipate further openings for the JD fascia across Eastern Europe although events in Ukraine do drive some caution.

Put and call options to enable future exit opportunities for the 40% shareholders have also been agreed and become

exercisable after the year ending January 2025. A valuation of these put options has been performed using an earnings multiple, a suitable discount rate and approved forecasts, and the initial liability of GBP50.2 million was recognised with the corresponding entry to Other Equity in accordance with the present value method of accounting. These options are required to be fair valued at each accounting period date.

Included within the fair value of the net identifiable assets on acquisition is an intangible asset of GBP25.1 million representing the Sizeer fascia name and an intangible asset of GBP4.1 million representing the 50 Style fascia name. The Board believes that the excess of consideration paid over net assets on acquisition of GBP41.4 million is best considered as goodwill on acquisition representing future operating synergies. As at the date of this report, the period in which measurement adjustments could be made has now closed on this acquisition and no further fair value measurement adjustments have been made. The goodwill calculation is summarised below:

 
 
                                           Book value     Measurement        Fair value 
                                                 GBPm     adjustments                at 
                                                                 GBPm     30 April 2021 
                                                                                   GBPm 
 Acquiree's net assets at acquisition 
  date: 
 Intangible assets                                2.6            29.2              31.8 
 Property, plant & equipment                     16.6               -              16.6 
 Other non-current assets                         1.1               -               1.1 
 Right-of-use assets                                -            66.2              66.2 
 Inventories                                     69.1           (1.9)              67.2 
 Cash and cash equivalents                        6.5               -               6.5 
 Trade and other receivables                      4.9             1.1               6.0 
 Income tax asset                                 0.1               -               0.1 
 Trade and other payables                      (58.6)             1.7            (56.9) 
 Bank loans and overdrafts                     (27.0)               -            (27.0) 
 Deferred tax asset / (liability)                 1.0           (5.5)             (4.5) 
 Lease liabilities                                  -          (66.2)            (66.2) 
 
   Net identifiable assets                       16.3            24.6              40.9 
                                        -------------  --------------  ---------------- 
 
   Non-controlling interest (40%)               (6.5)           (9.8)            (16.3) 
 
 Goodwill on acquisition                                                           41.4 
                                        -------------  --------------  ---------------- 
 
  Consideration - satisfied in cash                                                63.6 
   Consideration - deferred                                                         2.4 
                                        -------------  --------------  ---------------- 
 Total consideration                                                               66.0 
                                        -------------  --------------  ---------------- 
 

Included in the 52 week period ended 29 January 2022 was revenue of GBP175.0 million and a profit before tax of GBP6.0 million in respect of MIG.

5. Acquisitions (continued)

Prior Period Acquisitions - Significant (continued)

Deporvillage S.L.

On 25 June 2021, Iberian Sports Retail Group S.L. ('ISRG'), the Group's existing intermediate holding company in Spain, exchanged contracts on the conditional acquisition of Deporvillage S.L. ('Deporvillage'), which is based in Manresa, Catalonia. ISRG is a leading operator in the sporting goods market across Iberia through its Sprinter and Sport Zone fascias with the acquisition of Deporvillage, an online retailer of specialist sports equipment with country specific websites in six European countries, giving additional depth and expertise in the key categories of cycling, running and outdoor. The transaction was subject to certain conditions, principally relating to anti-trust clearance, with formal completion taking place on 3 August 2021. Total maximum cash consideration for the acquisition of an initial 80% holding was GBP119.6 million of which a maximum of GBP34.5 million was deferred and contingent on achieving certain future performance criteria. As at the date of the acquisition and the January 2022 year-end, the fair value of the contingent consideration was determined to be GBP19.0 million. This was subsequently paid in July 2022.

Put and call options to enable future exit opportunities for the 20% shareholders have also been agreed and become exercisable from 2024 onwards. A valuation of these put options has been performed using an earnings multiple, a suitable discount rate and approved forecasts, and the initial liability of GBP11.2 million was recognised with the corresponding entry to Other Equity in accordance with the present value method of accounting. These options are required to be fair valued at each accounting period date.

Included within the fair value of the net identifiable assets on acquisition is an intangible asset of GBP38.8 million representing the Deporvillage online fascia name and an intangible asset of GBP8.7 million representing the fair value of the customer base. The Board believes that the excess of consideration paid over net assets on acquisition of GBP70.4 million is best considered as goodwill on acquisition representing future operating synergies. As at the date of this report, the period in which measurement adjustments could be made has now closed on this acquisition and no further fair value measurement adjustments have been made. The goodwill calculation is summarised below:

 
 
 
                                           Book value     Measurement        Fair value 
                                                 GBPm     adjustments                at 
                                                                 GBPm     3 August 2021 
                                                                                   GBPm 
 Acquiree's net assets at acquisition 
  date: 
 Intangible assets                                0.9            48.4              49.3 
 Property, plant & equipment                      0.3               -               0.3 
 Right-of-use assets                                -             1.1               1.1 
 Inventories                                     28.6               -              28.6 
 Cash and cash equivalents                        2.4               -               2.4 
 Trade and other receivables                      4.7               -               4.7 
 Trade and other payables                      (29.3)               -            (29.3) 
 Bank loans and overdrafts                      (1.3)               -             (1.3) 
 Income tax liability                           (1.0)               -             (1.0) 
 Deferred tax asset / (liability)                 0.6          (12.1)            (11.5) 
 Lease liabilities                                  -           (1.1)             (1.1) 
 
   Net identifiable assets                        5.9            36.3              42.2 
                                        -------------  --------------  ---------------- 
 
   Non-controlling interest (20%)               (1.2)           (7.3)             (8.5) 
 
 Goodwill on acquisition                                                           70.4 
                                        -------------  --------------  ---------------- 
 
  Consideration - satisfied in cash                                                85.1 
   Consideration - deferred (settled                                               19.0 
    in cash - July 2022) 
                                        -------------  --------------  ---------------- 
 Total consideration                                                              104.1 
                                        -------------  --------------  ---------------- 
 

Included in the 52 week period ended 29 January 2022 was revenue of GBP67.8 million and a profit before tax of GBP2.5 million in respect of Deporvillage.

5. Acquisitions (continued)

Prior Period Acquisitions - Significant (continued)

Cosmos Sport S.A.

On 21 October 2021, the Group acquired 80% of the issued share capital of Cosmos Sport S.A. ('Cosmos') for cash

consideration of GBP65.0 million. At acquisition Cosmos operated 58 stores in Greece and three in Cyprus under a variety of retail banners and associated trading websites. The two main fascias are Cosmos, which is the core fascia of the business and has an elevated sporting goods and lifestyle proposition, and Sneaker 10, which has a more premium footwear offer.

Put and call options to enable future exit opportunities for the 20% shareholders have also been agreed and become

exercisable from 2025 onwards. A valuation of these put options has been performed using an earnings multiple, a suitable discount rate and approved forecasts, and the initial liability of GBP10.0 million was recognised with the corresponding entry to Other Equity in accordance with the present value method of accounting. These options are required to be fair valued at each accounting period date.

Included within the fair value of the net identifiable assets on acquisition is an intangible asset of GBP9.1 million representing the Cosmos fascia name and an intangible asset of GBP4.2 million representing the Sneaker 10 fascia name. The Board believes that the excess of consideration paid over net assets on acquisition of GBP39.5 million is best considered as goodwill on acquisition representing future operating synergies. The goodwill calculation is summarised below:

 
 
                                                                          Provisional 
                                           Book value     Measurement      fair value 
                                                 GBPm     adjustments              at 
                                                                 GBPm      21 October 
                                                                                 2021 
                                                                                 GBPm 
 Acquiree's net assets at acquisition 
  date: 
 Intangible assets                                  -            13.3            13.3 
 Property, plant & equipment                     14.0               -            14.0 
 Other non-current assets                         1.0               -             1.0 
 Right-of-use assets                                -            38.2            38.2 
 Inventories                                     24.3               -            24.3 
 Cash and cash equivalents                       13.2               -            13.2 
 Trade and other receivables                      5.7               -             5.7 
 Income tax asset                                 0.3               -             0.3 
 Trade and other payables                      (27.9)               -          (27.9) 
 Bank loans and overdrafts                      (8.5)               -           (8.5) 
 Deferred tax liability                         (0.3)           (3.2)           (3.5) 
 Lease liabilities                                  -          (38.2)          (38.2) 
 
   Net identifiable assets                       21.8            10.1            31.9 
                                        -------------  --------------  -------------- 
 
   Non-controlling interest (20%)               (4.4)           (2.0)           (6.4) 
 
 Goodwill on acquisition                                                         39.5 
                                        -------------  --------------  -------------- 
 
   Total consideration                                                           65.0 
                                        -------------  --------------  -------------- 
 

Included in the 52 week period ended 29 January 2022 was revenue of GBP26.0 million and a profit before tax of GBP0.9 million in respect of Cosmos.

5. Acquisitions (continued)

Prior Period Acquisitions - Other Acquisitions

The aggregate impact of the other acquisitions in the prior period is as follows with further details provided in the narrative on the following pages..

 
 
                                                 Fair values 
                                                    acquired 
                                                        GBPm 
 Acquiree's net assets at acquisition 
  date: 
 Intangible assets                                      34.4 
 Property, plant & equipment                             8.5 
 Other non-current assets                                0.2 
 Right-of-use assets                                    26.3 
 Inventories                                            31.6 
 Cash and cash equivalents                              35.3 
 Trade and other receivables                             9.6 
 Trade and other payables                             (24.5) 
 Bank loans and overdrafts                             (6.2) 
 Income tax liabilities                                (4.4) 
 Deferred tax liabilities                              (6.6) 
 Lease liabilities                                    (26.3) 
 
   Net identifiable assets                              77.9 
                                              -------------- 
 
   Non-controlling interest (various)                 (11.6) 
 
 Goodwill on acquisition                               126.7 
                                              -------------- 
 
   Total consideration (including GBP18.7 
   million deferred)                                   193.0 
                                              -------------- 
 

Included in the 52 week period ended 29 January 2022 was revenue of GBP61.9 million and a profit before tax of GBP4.4 million in respect of these acquisitions.

80s Casual Classics Limited

On 2 March 2021, JD Sports Fashion Plc acquired 70% of the issued share capital of 80s Casual Classics Limited ('80s CC') for cash consideration of GBP15.4 million. 80s CC is predominantly an online retailer of retro and original clothing from brands such as adidas and Sergio Tacchini, inspired by the British subculture of the '70s, '80s and '90s. The acquisition included put and call options over the remaining 30% of shares, exercisable in annual tranches after a minimum period of three years.

Included within the fair value of the net identifiable assets on acquisition is an intangible asset of GBP1.0 million representing the 80s CC fascia name. The Board believes that the excess of consideration paid over net assets on acquisition of GBP9.0 million is best considered as goodwill representing future operating synergies. As at the date of this report, the period in which measurement adjustments could be made has now closed on this acquisition and no further fair value measurement adjustments have been made.

Included in the 52 week period ended 29 January 2022 was revenue of GBP13.0 million and a profit before tax of GBP3.9 million in respect of 80s Casual Classics.

5. Acquisitions (continued)

Prior Period Acquisitions - Other Acquisitions (continued)

Uggbugg Fashion Limited

On 18 June 2021, JD Sports Fashion Plc acquired 51% of the issued share capital of Uggbugg Fashion Limited, including a wholly owned subsidiary, Missy Empire Limited (together 'Missy Empire'), for initial cash consideration of GBP11.7 million. Additional consideration of up to GBP2.2 million was payable if certain performance criteria were achieved. The fair value of the contingent consideration as at the acquisition date and as at 29 January 2022 was determined to be GBPnil.

Included within the fair value of the net identifiable assets on acquisition is an intangible asset of GBP0.9 million representing the Missy Empire fascia name. The Board believed that the excess of consideration paid over net assets on acquisition of GBP9.6 million was best considered as goodwill on acquisition representing future operating synergies. The net book value of these intangible assets has been fully impaired during the period ended 30 July 2022 (see Note 3).

Put and call options over 9% of the remaining 49% shareholding have also been agreed and become exercisable after the year ending January 2025. A valuation of these put options has been performed using an earnings multiple, a suitable discount rate and approved forecasts, and the initial liability of GBP1.4 million has been recognised with the corresponding entry to Other Equity in accordance with the present value method of accounting. These options are required to be fair valued at each accounting period date.

Included in the 52 week period ended 29 January 2022 was revenue of GBP6.2 million and a break even result in respect of Missy Empire.

The Watch Shop Holdings Limited and Watch Shop Logistics Ltd

On 18 June 2021, JD Sports Fashion Plc acquired 100% of the issued share capital of The Watch Shop Holdings Limited and Watch Shop Logistics Ltd (together 'WatchShop') via a wholly owned intermediate holding company. Total cash consideration paid was GBP26.2 million. Contingent consideration is payable subject to certain criteria being met. The fair value of the contingent consideration as at the acquisition date and as at 29 January 2022 was determined to be GBPnil.

WatchShop is an online retailer of designer fashion watches from brands such as Armani, Michael Kors and Hugo Boss. Included within the fair value of the net identifiable assets on acquisition is an intangible asset of GBP2.5 million representing the WatchShop fascia name. The Board believes that the excess of consideration paid over net assets on acquisition of GBP10.6 million is best considered as goodwill on acquisition representing future operating synergies.

Included in the 52 week period ended 29 January 2022 was revenue of GBP19.2 million and a loss before tax of GBP0.7 million in respect of WatchShop.

Bodytone International Sport S.L.

On 3 August 2021, ISRG, the Group's existing intermediate holding company in Spain, acquired 50.1% of the issued share capital of Bodytone International Sport S.L. ('Bodytone') for initial cash consideration of GBP8.9 million. Additional consideration of up to GBP3.1 million is payable if certain performance criteria are achieved and the fair value of this contingent consideration as at the acquisition date and as at 29 January 2022 was determined to be GBP2.9 million.

Based in Murcia in Spain, Bodytone manufactures and distributes professional fitness equipment with a presence in over 40 countries worldwide. ISRG believes that the acquisition of Bodytone will enhance its product categories and improve its specialised sporting goods offer. Included within the fair value of the net identifiable assets on acquisition is an intangible asset of GBP4.9 million representing the Bodytone name. The Board believes that the excess of consideration paid over net assets on acquisition of GBP8.8 million is best considered as goodwill on acquisition representing future operating synergies.

Put and call options over the remaining 49.9% shareholding have also been agreed and become exercisable in tranches from 2024 onwards. A valuation of these put options has been performed using an earnings multiple, a suitable discount rate and approved forecasts, and the initial liability of GBP11.3 million has been recognised with the corresponding entry to Other Equity in accordance with the present value method of accounting. These options are required to be fair valued at each accounting period date.

Included in the 52 week period ended 29 January 2022 was revenue of GBP7.5 million and a profit before tax of GBP1.0 million in respect of Bodytone.

5. Acquisitions (continued)

Prior Period Acquisitions - Other Acquisitions (continued)

Hairburst Holding Group Limited

On 17 September 2021, JD Sports Fashion Plc acquired 75% of the issued share capital of Hairburst Holding Group Limited, including three wholly owned subsidiaries (together 'Hairburst') for cash consideration of GBP26.2 million.

Hairburst retails own label haircare products and vitamins via a direct to consumer website and as a wholesaler both in the UK and internationally. Included within the fair value of the net identifiable assets on acquisition is an intangible asset of GBP6.6 million representing the Hairburst name. The Board believed that the excess of consideration paid over net assets on acquisition of GBP18.1 million was best considered as goodwill on acquisition representing future operating synergies. An impairment of GBP12.7 million in respect of the goodwill has been recognised during the period ended 30 July 2022 (see Note 3).

Put and call options over the remaining 25% shareholding have also been agreed and become exercisable in tranches from 2025 onwards. A valuation of these put options has been performed using an earnings multiple, a suitable discount rate and approved forecasts, and the initial liability of GBP8.4 million has been recognised with the corresponding entry to Other Equity in accordance with the present value method of accounting. These options are required to be fair valued at each accounting period date.

Included in the 52 week period ended 29 January 2022 was revenue of GBP6.3 million and a profit before tax of GBP0.1 million in respect of Hairburst.

Wheelbase Lakeland Limited

On 3 June 2021, JD Sports Fashion Plc exchanged contracts on the conditional acquisition of 77.5% of the issued share capital of Wheelbase Lakeland Limited ('Wheelbase'). Completion of the acquisition was subject to obtaining consent for the change in control from the Financial Conduct Authority. This was obtained, the acquisition subsequently completed on 30 September 2021 and the cash consideration paid was GBP22.2 million.

Operating from three stores on acquisition and a trading website, Wheelbase is firmly established as one of the premier cycling retailers in the UK, and the product offering centres on premium cycles and accessories from key brands such as Cube, Cannondale, Trek and Specialized. Included within the fair value of the net identifiable assets on acquisition is an intangible asset of GBP1.4 million representing the Wheelbase fascia name. The Board believes that the excess of consideration paid over net assets on acquisition of GBP18.7 million is best considered as goodwill on acquisition representing future operating synergies.

Put and call options over the remaining 22.5% shareholding have also been agreed and become exercisable in tranches from 2025 onwards. A valuation of these put options has been performed using an earnings multiple, a suitable discount rate and approved forecasts, and the initial liability of GBP4.0 million has been recognised with the corresponding entry to Other Equity in accordance with the present value method of accounting. These options are required to be fair valued at each accounting period date.

Included in the 52 week period ended 29 January 2022 was revenue of GBP4.0 million and a profit before tax of GBP0.2 million in respect of Wheelbase.

XLR8 Sports Limited

On 19 November 2021, JD Sports Fashion Plc acquired 100% of XLR8 Sports Limited trading as Leisure Lakes Bikes ('Leisure Lakes') for initial cash consideration of GBP25.6 million plus additional consideration up to a maximum of GBP15.0 million if certain performance criteria are achieved. The fair value of this contingent consideration as at the acquisition date and as at 29 January 2022 was determined to be GBP11.2 million.

Operating from 10 stores and a trading website, Leisure Lakes is considered to be one of the leading omnichannel retailers of bicycles and bicycle parts, equipment, clothing and accessories, and is a key partner for most of the major brands including Trek, Cube and Specialized. Included within the fair value of the net identifiable assets on acquisition is an intangible asset of GBP2.5 million representing the Leisure Lakes fascia name. The Board believes that the excess of consideration paid over net assets on acquisition of GBP25.9 million is best considered as goodwill on acquisition representing future operating synergies.

Included in the 52 week period ended 29 January 2022 was revenue of GBP4.4 million and a loss before tax of GBP0.3 million in respect of Leisure Lakes.

5. Acquisitions (continued)

Prior period acquisitions - Other Acquisitions (continued)

GymNation

On 24 December 2021, the Group's existing subsidiary JD Sports Gyms Limited ('JD Gyms') acquired 100% of GymNation Limited and its 100% owned subsidiary GymNation LLC (together 'GymNation') for cash consideration of $42.2 million and contingent consideration of $6.1 million. Contingent consideration is cash-settled and is linked to GymNation's future performance. It is initially measured at fair value and is subsequently remeasured to fair value at each reporting date until the contingency is settled. The fair value of contingent consideration recognised at 29 January 2022 was $6.6 million (GBP4.9 million). The maximum amount of the future payment is GBP75 million.

On 20 July 2022, a restructure of the GymNation sub-group was completed resulting in the incorporation of GymNation Holding Limited. GymNation Holding Limited has acquired 100% of the shares in GymNation LLC using monies loaned from JD Gyms and GymNation founder management. As a result, the contingent consideration recognised as at 29 January 2022 was replaced with a put and call option liability and JD Gyms has diluted its share in GymNation and now holds a 78.2% share of GymNation Holding Limited, with founder management holding 21.8%. The put and call options, to enable future exit opportunities for the management team, become exercisable from 2025 onwards. We assessed the substance of the put option agreement, taking into account the management leaver terms, and concluded that an element of the future option payment is linked to continued future service and will be expensed on a straight-line basis over the service period. A valuation of the remaining put option liability has been performed using an earnings multiple, a suitable discount rate and approved forecasts, and the initial liability of GBP6.4 million has been recognised with the corresponding entry to Other Equity in accordance with the present value method of accounting. These options are required to be fair valued at each accounting period date.

GymNation is a chain of seven gyms in the UAE (six in Dubai and one in Abu Dhabi). Included within the fair value of the net identifiable assets on acquisition is an intangible asset of GBP7.9 million representing the GymNation fascia name. The Board believes that the excess of consideration paid over net assets on acquisition of GBP21.8 million is best considered as goodwill on acquisition representing future operating synergies.

Included in the 52 week period ended 29 January 2022 was revenue of GBP1.3 million and a profit before tax of GBP0.2 million in respect of GymNation.

Other Acquisitions

During the period, the Group made one other small acquisition. This transaction was not material.

Full Year Impact of Acquisitions

Had the acquisitions of the entities listed above been effected at 31 January 2021, the revenue and profit before tax of the Group for the 52 week period to 29 January 2022 would have been GBP8.9 billion and GBP666.1 million respectively.

Acquisition Costs

Acquisition-related costs amounting to GBP7.9 million have been excluded from the consideration transferred and have been recognised as an expense in the year, within administrative expenses in the Consolidated Income Statement.

   6.   Assets Held-For-Sale 

Transaction History

On 18 February 2019, JD Sports Fashion Plc acquired 19,579,964 Footasylum Plc shares at prices between 50 pence and 75 pence per share, representing 18.7% of the issued ordinary share capital. On 18 March 2019, in conjunction with the Board of Footasylum Plc, JD Sports Fashion Plc announced the terms of an offer to be made for the remaining 81.3% of the ordinary share capital of Footasylum at a price of 82.5 pence per ordinary share. This offer was declared unconditional in all respects on 12 April 2019 with acceptances received for a total of 78,176,481 shares representing a further 74.8% of the issued ordinary share capital. On 26 April 2019, the first bulk transfer was made to acquire an additional 80.5 million shares (in addition to the 19.5 million already owned). The formal process to acquire the remaining Footasylum shares (incl. the dissenting shareholders) was completed on 4 June 2019. Footasylum was delisted on 16 May 2019 and converted from an unlisted Plc to a private company on 19 September 2019.

Hold Separate Order and Consolidation

On 17 May 2019, JD Sports Fashion Plc received a 'hold separate' enforcement order from the Competition and Markets Authority ('CMA') regarding the Footasylum acquisition. In accordance with IFRS 10 'Consolidated Financial Statements', an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Whilst this transaction was being reviewed by the CMA, the Directors of JD Sports Fashion Plc assessed whether the Group had control over Footasylum and could therefore consolidate the results of Footasylum. In making their judgement, the Directors considered that there was a simultaneous exchange and completion on the transaction and completion was not conditional on the outcome of the CMA review. The risks and rewards ultimately rested with JD Sports Fashion Plc as legal owner and there would be no pass through to the former shareholders. This evidences that the Group had exposure, or rights, to variable returns from its involvement with the investee. Further, the Group had the power of veto over strategic decision making. After careful consideration, the Directors concluded that the consolidation of Footasylum into the Group financial statements from the date of acquisition was appropriate and was disclosed as a judgement in the acquisition note in the financial statements for the period ended 1 February 2020.

Held-For-Sale

On 4 November 2021, the final ruling from the CMA was that it had again prohibited the Group's acquisition of Footasylum. The final CMA undertakings were issued on 14 January 2022, which was effectively the start date for the Footasylum sale process. As at 29 January 2022, Footasylum was classified as held-for-sale as:

- the carrying amount of Footasylum was expected to be recovered through the sale transaction;

- it was available for sale in its present condition;

- the Group had committed to sell Footasylum and this sale plan has been initiated;

- Footasylum was being actively marketed at a price that is reasonable in relation to its fair value; and

- there was an expectation that the sale process would be completed within six months of the classification as held-

for-sale.

On 29 July 2022, JD Sports Fashion Plc exchanged contracts to sell Footasylum and its associated subsidiaries to Aurelius Group ('Aurelius') for GBP37.5 million. The transaction subsequently completed on 5 August 2022. As the transaction legally completed after the 30 July 2022 period end date, the assets and liabilities of Footasylum continued to be classified as held-for-sale as at 30 July 2022.

Assets and Liabilities of Footasylum Held-For-Sale

As at 30 July 2022, Footasylum was stated at the lower of its carrying value (excluding cash and cash equivalents) and fair value less costs to sell in accordance with IFRS 5. Cash and cash equivalents as at 30 July 2022 of GBP6.0 million (29 January 2022: GBP27.2 million) have been presented within the Group's cash and cash equivalents.

   6.   Assets Held-For-Sale (continued) 
 
 
                                            26 weeks     26 weeks       52 weeks 
                                               to              to             to 
                                            30 July       31 July     29 January 
                                              2022           2021           2022 
                                              GBPm           GBPm           GBPm 
 Intangible assets                               6.7            -            4.7 
 Property, plant and equipment                  26.9            -           25.2 
 Deferred tax assets                             0.2            -            0.2 
 Right-of-use assets                            71.0            -           78.5 
 Inventories                                    36.5            -           27.0 
 Trade and other receivables                    27.9            -           21.5 
 Impairment recognised in accordance           (3.5)            -              - 
  with IFRS 5 
 
 Assets held-for-sale                          165.7            -          157.1 
                                         -----------  -----------  ------------- 
 
 
 
                                  26 weeks     26 weeks       52 weeks 
                                     to              to             to 
                                  30 July       31 July     29 January 
                                    2022           2021           2022 
                                    GBPm           GBPm           GBPm 
 Trade and other payables           (63.4)            -         (57.5) 
 Lease liabilities                  (74.8)            -         (82.0) 
 Income tax liability                (1.0)            -          (2.9) 
 Deferred tax liability                  -            -          (0.2) 
 
 Liabilities held-for-sale         (139.2)            -        (142.6) 
                               -----------  -----------  ------------- 
 

Discontinued Operations

The presentation of an operation as a discontinued operation is limited to a component of an entity that either has been disposed of or is classified as held-for-sale, and:

- represents a separate major line of business or geographic area of operations;

- is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of

operations, or is a subsidiary acquired exclusively with a view to resale.

Whilst the disposal of Footasylum is significant for the Group, it is subject to a single plan and can be distinguished

operationally and for financial reporting purposes, the disposal of Footasylum should not be classified as a discontinued operation. This is because the Group has other subsidiaries and operations within the Sports Fashion segment in the UK, therefore Footasylum does not represent a separate major line of business or geographic area for the Group. However, the Group is required to disclose the impact of the disposal.

   7.   Provisions 

A provision is recognised in the Consolidated Statement of Financial Position when the Group has a present legal or

constructive obligation as a result of a past event, it is more likely than not that an outflow of economic benefits will be

required to settle the obligation and the obligation can be estimated reliably.

Property Provision

Within property provisions, management has provided for expected dilapidations on stores and warehouses. This provision covers expected dilapidation costs for any lease considered onerous, any related to stores recently closed, stores which are planned to close or are at risk of closure and those under contract but not currently in use. Management maintain all properties to a high standard and carry out repairs whenever necessary during their tenure. Therefore, if there is no risk of closure any provision would be minimal and management do not consider it necessary to hold dilapidation provisions for these properties.

Other Provisions

Included in other provisions is GBP2.0 million in respect of the CMA's ongoing investigation into the sale of the Rangers FC branded replica football shirts. This provision represents management's best estimate of the liability payable in respect of this matter, including associated legal costs, based on the information available to it at the date of approving these financial statements which includes consideration of the provisional Statement of Objections which the CMA issued on 7 June 2022. The CMA's findings are, at this stage, only provisional and the Group continues to review them with its advisors. The CMA will consider any representations that are made before issuing its final findings and accordingly the amount to be settled could be materially different to the amount provided. The CMA has not yet confirmed when it will release its final decision on this matter but the Group currently expects this to occur within 12 months of the date of approval of these financial statements along with any related outflows.

The remaining balance in other provisions is made up of various other trade provisions and legal costs. The provisions are estimated based on accumulated experience, supplier communication and management approved forecasts.

Onerous Contract Provision

Within the onerous contracts provision, management has provided against the minimum contractual cost for the remaining term on a non-cancellable logistics services contract for the Azambuja warehouse in Portugal within the SportZone division. The provision will be unwound over the remaining eight year period ending 30 September 2030.

 
 
                                   Property      Other provisions     Onerous contracts 
                                   provision                 GBPm                  GBPm     Total 
                                     GBPm                                                    GBPm 
 Balance at 31 July 2021                   -                    -                   5.2       5.2 
------------------------------  ------------  -------------------  --------------------  -------- 
 
   Provisions reclassified 
   from accruals                        11.2                 14.2                     -      25.4 
 Provisions released during 
  the period                           (2.0)                (6.7)                     -     (8.7) 
 Provisions created during 
  the period                             9.4                  5.0                     -      14.4 
 Provisions utilised during 
  the period                           (0.4)                (2.7)                 (0.3)     (3.4) 
 Foreign exchange variances                -                    -                   0.2       0.2 
------------------------------  ------------  -------------------  --------------------  -------- 
 
   Balance at 29 January 
   2022                                 18.2                  9.8                   5.1      33.1 
------------------------------  ------------  -------------------  --------------------  -------- 
 
   Provisions reclassified 
   from accruals                         0.7                    -                     -       0.7 
 Provisions released during 
  the period                           (0.2)                    -                     -     (0.2) 
 Provisions created during 
  the period                             2.4                  0.1                     -       2.5 
 Provisions utilised during 
  the period                               -                (0.7)                 (0.3)     (1.0) 
 Provisions acquired on 
  acquisition                            0.5                    -                     -       0.5 
 Foreign exchange variances              0.1                  0.1                 (0.1)       0.1 
------------------------------ 
 
 Balance at 30 July 2022                21.7                  9.3                   4.7      35.7 
------------------------------  ------------  -------------------  --------------------  -------- 
 
   7.   Provisions (continued) 

Provisions have been analysed between current and non-current as follows:

 
 
                                          26 weeks     26 weeks       52 weeks 
                                             to              to             to 
                                          30 July       31 July     29 January 
                                            2022           2021           2022 
                                            GBPm           GBPm           GBPm 
 Current                                      13.0          0.6           13.2 
 Non-current (due within 10 years)            22.7          4.6           19.9 
 
 Total provisions                             35.7          5.2           33.1 
                                       -----------  -----------  ------------- 
 
   8.   Contingent Liabilities 

It is inevitable that commercial claims and disputes may arise from time to time during the course of the Group's business. If the risk of a financial outflow arising from one of these disputes is more than remote but not probable or cannot be measured reliably then the Group will disclose this matter as a contingent liability. If the risk of a financial outflow is considered probable and can be measured reliably then the Group would make a provision for this matter.

Further, the activities of the Group are overseen by a number of regulators around the world and, whilst the Group strives to ensure full compliance with all its regulatory obligations, periodic reviews are inevitable which may result in a financial penalty. If the risk of a financial penalty arising from one of these reviews is more than remote but not probable or cannot be measured reliably then the Group will disclose this matter as a contingent liability. If the risk of a financial penalty is considered probable and can be measured reliably then the Group would make a provision for this matter.

CMA Investigation

On 23 September 2021, the CMA launched an investigation under section 25 of the Competition Act 1998 ('CA98') into suspected breaches of competition law by Leicester City Football Club Limited and JD Sports Fashion Plc, together with their affiliates. The Group continues to co-operate fully with the CMA.

The CMA has not reached a view as to whether there is sufficient evidence of an infringement of competition law for it to issue a statement of objections or, ultimately, an infringement decision, to any party under investigation. Therefore, at this stage, it is not possible to determine with sufficient certainty that a liability will ultimately arise. Indeed, not all cases result in the CMA issuing a statement of objections or an infringement decision. The CMA has indicated that it will publish a further update in September 2022.

   9.   Related Party Transactions and Balances 

Transactions and balances with related parties during the period are shown below. Transactions were undertaken in the ordinary course of business on an arm's length basis. Outstanding balances are unsecured (unless otherwise stated) and will be settled in cash.

Transactions with Related Parties Who Are Not Members of the Group

Pentland Group Limited

During the period, Pentland Group Limited owned 51.9% (2021: 51.9%) of the issued ordinary share capital of JD Sports Fashion Plc. The Group made purchases of inventory from Pentland Group Limited in the period and the Group also sold inventory to Pentland Group Limited. The Group also paid royalty costs to Pentland Group Limited for the use of a brand.

   9.   Related Party Transactions and Balances (continued) 

During the period, the Group entered into the following transactions with Pentland Group Limited:

 
                           Transactions     Transactions     Transactions 
                           with related     with related     with related 
                                parties          parties          parties 
                               26 weeks         26 weeks         52 weeks 
                             to 30 July       to 31 July    to 29 January 
                                   2022             2021             2022 
                                   GBPm             GBPm             GBPm 
 
 Sale of inventory                  0.5              0.3              1.3 
 Purchase of inventory           (14.2)           (20.0)           (48.7) 
 Royalty costs                    (8.1)            (5.1)            (6.2) 
 Other costs                      (0.7)            (0.6)            (0.9) 
                         --------------  ---------------  --------------- 
 

At the end of the period, the following balances were outstanding with Pentland Group Limited:

 
                          Amounts        Amounts       Amounts owed 
                        owed to /      owed to /    to / by related 
                       by related     by related            parties 
                          parties        parties           52 weeks 
                         26 weeks       26 weeks      to 29 January 
                       to 30 July     to 31 July               2022 
                             2022           2021               GBPm 
                             GBPm           GBPm 
 
 Trade receivables              -              -                0.2 
 Trade payables             (5.4)          (7.8)              (2.5) 
                     ------------  -------------  ----------------- 
 

Transactions with Associates and Joint Ventures

During the period, the Group entered into the following transactions with its associates and joint ventures:

 
                                           Transactions    Transactions     Transactions 
                                           with related    with related     with related 
                                                parties         parties          parties 
                                               26 weeks        26 weeks         52 weeks 
                                             to 30 July      to 31 July    to 29 January 
                                                   2022            2021             2022 
                                                   GBPm            GBPm             GBPm 
 
 Sale of inventory                                  0.2               -                - 
 Purchase of inventory                            (5.1)           (4.2)           (12.5) 
 Dividends and distributions received               3.0             0.6              6.9 
                                        ---------------  --------------  --------------- 
 

At the end of the period, the Group had the following balances outstanding with its associates and joint ventures:

 
                          Amounts        Amounts       Amounts owed 
                        owed to /      owed to /    to / by related 
                       by related     by related            parties 
                          parties        parties           52 weeks 
                         26 weeks       26 weeks      to 29 January 
                       to 30 July     to 31 July               2022 
                             2022           2021               GBPm 
                             GBPm           GBPm 
 
 Trade receivables            0.2              -                0.2 
 Trade payables             (0.4)          (0.2)              (0.3) 
                     ------------  -------------  ----------------- 
 
   9.    Related Party Transactions and Balances (continued) 

Transactions with Directors

Other than the remuneration of Directors, there have been no other transactions with Directors in the period (26 week period ended 31 July 2021: GBPnil). GBP25,000 of invoices from Cowgill Holloway Business Recovery LLP in respect of professional fees were accrued in the financial year ended 29 January 2022 and paid post year-end. Peter Cowgill was a Director of JD Sports Fashion Plc until his departure on 25 May 2022. Peter was also indirectly a member of Cowgill Holloway Business Recovery LLP through his membership of Cowgill Holloway LLP. Peter Cowgill did not participate in any profit share arrangement relating to either Cowgill Holloway LLP or Cowgill Holloway Business Recovery LLP. In addition, Cowgill Holloway LLP (including member firms of Cowgill Holloway LLP) has acted on behalf of certain vendors where the Group has ultimately completed an acquisition. Where this has occurred, there have been no monetary payments between the Group and Cowgill Holloway LLP (including its member firms).

10. Subsequent Events

Footasylum

On 4 November 2021, the final ruling from the CMA was that it had again prohibited the Group's acquisition of Footasylum. The final CMA undertakings were issued on 14 January 2022, which was effectively the start date for the Footasylum sale process. On 29 July 2022, JD Sports Fashion Plc exchanged contracts to sell Footasylum and its associated subsidiaries to Aurelius Group for GBP37.5 million. The transaction subsequently completed on 5 August 2022. See Note 6 for further details.

Appointment of New Chief Executive Officer

On 2 August 2022, Régis Schultz was appointed as the Company's new Chief Executive Officer, following an extensive executive global search process. Régis joined on 5 September 2022 and Kath Smith has commenced a full handover of her duties to Régis. After a short transitionary period, Kath will then resume her former role as Senior Independent Director on the Board.

JD Sports Fashion Korea Inc

On 6 September 2022, JD Sports Fashion Plc ('JD') acquired 50% of the shares in its existing subsidiary, JD Sports Fashion Korea Inc ('JD Korea') for cash consideration of 26.1 billion KRW (GBP16.4 million). JD now owns 100% of the share capital of JD Korea. In accordance with IFRS 10, JD had previously assessed and concluded that it controlled JD Korea. As the acquisition of the 50% on 6 September 2022 does not result in a change of control, this will be accounted for as an equity transaction.

Agreements with former Executive Chairman

On 21 September 2022, the Company reached an agreement with its former Executive Chairman with respect to his departure from the business. Included in this agreement are two new arrangements which are considered to be Related Party Transactions under IAS24 'Related Party Disclosures'.

The first is a binding set of new and enhanced restrictive covenants for a two-year period, replacing the very limited provisions in the previous contract for which the former Executive Chairman will receive GBP3.5 million over two years.

The second is a consultancy agreement for an expected period of three years with GBP2 million to be paid which is to be phased over the life of the agreement.

11. Half Year Report

The half year report will be available to download from www.jdplc.com from mid-October 2022. Paper based copies will be available on application to the Company Secretary, JD Sports Fashion Plc, Hollinsbrook Way, Pilsworth, Bury, Lancashire, BL9 8RR.

Disclaimer

This announcement contains certain forward-looking statements with respect to the financial condition, results, operations and businesses of JD Sports Fashion Plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts.

[1] On 3 February 2021, JD Sports Fashion Plc completed the placing of new ordinary shares in the capital of the Company. A total of 58,393,989 new ordinary shares were placed at an issue price of 795 pence per share, raising proceeds of GBP455.9 million (net of GBP8.3 million share issue costs).

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