REG - Sports Direct Intl. - Half Yearly Report <Origin Href="QuoteRef">SPD.L</Origin> - Part 2
10/12/2015 07:11
- Part 2: For the preceding part double click ID:nRSJ5870Ia
467,637 504,656 382,621
Total liabilities 746,093 871,387 612,132
TOTAL EQUITY AND LIABILITIES 2,036,419 1,852,424 1,773,683
The accompanying notes form an integral part of this interim financial
report.
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE 26 WEEKS ENDED 25 OCTOBER
2015
26 weeks 26 weeks 52 weeks
ended ended ended
25 October 2015 26 October 2014 26 April
2015
Notes £'000 £'000 £'000
Cash inflow from operating activities 8 110,613 103,718 314,662
Income taxes paid (33,735) (33,902) (77,710)
Net cash inflow from operating activities 76,878 69,816 236,952
Cash flow from investing activities
Proceeds on disposal of property, plant and equipment 44,000 21,150 21,150
Proceeds on disposal of listed investments 56,367 - 51,695
Purchase of associate, net of cash acquired (9,218) (2,300) (50)
Purchase of subsidiaries, net of cash acquired - (172) (3,847)
Purchase of intangible assets (29) (3) (2,937)
Purchase of property, plant and equipment (92,230) (26,715) (97,342)
Purchase of listed investments (36,988) (33,162) (50,415)
Investment income received 2,050 1,277 2,883
Finance income received 326 335 987
Net cash outflow from investing activities (35,722) (39,590) (77,876)
Cash flow from financing activities
Finance costs paid (1,739) (4,712) (6,845)
Borrowings drawn down 117,182 51,336 126,989
Borrowings repaid (71,258) (118,730) (346,997)
Net cash outflow from financing activities 44,185 (72,106) (226,853)
Net increase / (decrease) in cash and cash equivalents including overdrafts 85,341 (41,880) (67,777)
Cash and cash equivalents including overdrafts at beginning of period 77,505 145,282 145,282
Cash and cash equivalents including overdrafts at the period end 162,846 103,402 77,505
The accompanying notes form an integral part of this interim financial
report.
The purchase of associates above mainly relates to the acquisition of a stake
in Four (Holdings) Limited.
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 26 WEEKS ENDED
25 OCTOBER 2015
Treasury shares Foreign currency translation Own share reserve Retained earnings Other reserves Total attributable to owners of the parent Non-controlling interests Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 27 April 2014 (56,234) 5,280 (13,251) 931,819 (46,522) 821,092 (3,538) 817,554
Share-based payments - - - 2,655 - 2,655 - 2,655
Transactions with owners - - - 2,655 - 2,655 - 2,655
Profit for the financial period - - - 114,629 - 114,629 665 115,294
Cashflow hedges - recognised in the period - - - - 26,860 26,860 - 26,860
- reclassification - - - - 23,623 23,623 - 23,623
Actuarial gains on defined benefit pension schemes - - - (1,304) - (1,304) - (1,304)
Fair value adjustment in respect of available for sale financial assets - - - (6,783) - (6,783) - (6,783)
Taxation on items taken to comprehensive income - - - (10,327) - (10,327) - (10,327)
Translation differences - group - 13,465 - - - 13,465 - 13,465
Total comprehensive income - 13,465 - 96,215 50,483 160,163 665 160,828
At 26 October 2014 (56,234) 18,745 (13,251) 1,030,689 3,961 983,910 (2,873) 981,037
Treasury shares Foreign currency translation Own share reserve Retained earnings Other reserves Total attributable to owners of the parent Non-controlling interests Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 26 April 2015 (56,234) 14,436 (13,251) 1,181,511 37,899 1,164,361 (2,810) 1,161,551
Share-based payments - - - 6,482 - 6,482 - 6,482
Vesting of Share-based payments - - 8,963 (8,963) - - - -
Current tax on share schemes - - - 5,407 - 5,407 - 5,407
Deferred Tax on share schemes - - - (3,818) - (3,818) - (3,818)
Purchase of own shares - - (29,438) - - (29,438) - (29,438)
Non-controlling Interest - acquisition (422) (422)
Transactions with owners - - (20,475) (892) - (21,367) (422) (21,789)
Profit for the financial period - - - 145,424 - 145,424 2,057 147,481
Dividends received - - - - - - - -
Cashflow hedges - recognised in the period - - - - (6,852) (6,852) - (6,852)
- reclassification - - - - (31,931) (31,931) - (31,931)
Actuarial losses on defined benefit pension schemes - - - 2,055 - 2,055 - 2,055
Fair value adjustment in respect of available for sale financial assets - - - 44,240 - 44,240 - 44,240
Taxation on items taken to comprehensive income - - - 7,693 - 7,693 - 7,693
Translation differences - group - (12,122) - - - (12,122) - (12,122)
Total comprehensive income - (12,122) - 199,412 (38,783) 148,507 2,057 150,564
At 25 October 2015 (56,234) 2,314 (33,726) 1,380,031 (884) 1,291,501 (1,175) 1,290,326
The Company holds 42,137,508 ordinary shares in Treasury. The foreign currency
translation reserve is used to record exchange differences arising from the
translation of the financial statements of foreign subsidiaries and
associates.
At 25 October 2015, the Sports Direct Employee Benefit Trust held 5,728,418
shares.
The credit for the share based payment charge does not equal the charge per
the income statement as it excludes amounts recognised in the balance sheet in
relation to the expected national insurance contributions for the shares.
On 7 September 2015 3,772,383 Shares sold by participants following exercise
of awards under the Company's 2011 Share Scheme were acquired by Appleby Trust
(Jersey) Limited as Trustee of the Sports Direct Employee Benefit Trust (the
"Trustee"), with the acquisition being funded by a loan advanced by the
Company. The Shares were acquired at a price of 781 pence per Share in an
off-market transaction. The Trustee has purchased these Shares in order to
help meet future obligations arising under the Company's share schemes.
NOTES TO THE FINANCIAL INFORMATION FOR THE 26 WEEKS ENDED 25 OCTOBER 2015
1. General information and basis of preparation
The results for the first half of the financial year have not been audited and
are prepared on the basis of the accounting policies set out in the Group's
2015 Annual Report and Financial Statements. The financial information in the
Group's Annual Report and Financial Statements is prepared in accordance with
International Financial Reporting Standards as adopted by the European Union
("IFRS").The Interim Results have been prepared in accordance with
International Accounting Standard (IAS) 34 - "Interim Financial Reporting" as
endorsed by the European Union and the Disclosure and Transparency Rules of
the Financial Conduct Authority (DTR). The principal accounting policies have
remained unchanged from the prior financial information for the 52 weeks ended
26 April 2015. This consolidated financial information for the period does not
constitute statutory financial statements within the meaning of s434 of the
Companies Act 2006.
The financial statements for the parent company for the financial period ended
26 April 2015 were prepared in accordance with applicable accounting standards
(being those accepted within the UK, i.e. UK GAAP) and under the historical
cost convention. Following the publication of FRS 100 'Application of
Financial Reporting Requirements' by the Financial Reporting Council the
Company is required to change its accounting framework for its financial year
ending 25 April 2016 and now has a choice between adopting full EU IFRS or FRS
102 (Reduced Disclosure Framework).
The company intends to report (on a non-consolidated basis only) under FRS102
Reduced Disclosure Framework. The Group financial statements are prepared in
accordance with EU IFRS and in future periods the Company will continue to
report on a consolidated basis under EU IFRS. Shareholder approval to adopt
FRS102 is not required, however shareholders holding 5% or more of the issued
share capital of the Company may object to the adoption of FRS102. If you have
any queries regarding the Company's adoption of FRS102 or would like to object
to the use of FRS102 in the Company only financial statements please contact
the Company Secretary in writing at the Company's registered office at Unit A,
Brook Park East, Shirebrook, NG20 8RY within 28 days of the date of
announcement of these Interim Results.
The summary of results for the 52 weeks ended 26 April 2015 is an extract from
the published Annual Report and Financial Statements which have been reported
on by the Group's auditors and delivered to the Registrar of Companies. The
audit report was unqualified and did not contain a statement under s498 (2) or
s498 (3) of the Companies Act 2006.
2. Segmental analysis
Operating segments
In accordance with paragraph 12 of IFRS 8 the Group's operating segments have
been aggregated into the following reportable segments:
1. Sports Retail - includes the results of the UK and International retail
network of sports stores along with related websites;
2. Premium Lifestyle - includes the results of the premium retail
businesses such as USC, Cruise and Flannels; and
3. Brands - includes the results of the Group's portfolio of
internationally recognised brands such as Everlast, Lonsdale, Dunlop and
Slazenger.
Information regarding the Group's reportable segments for the period ended 25
October 2015, as well as a reconciliation of reported profit for the period to
underlying EBITDA, is presented below:
Segmental information for the 26 weeks ended 25 October 2015:
Retail Brands
Sports Retail Premium Lifestyle Total Retail Total Eliminations Total
£'000 £'000 £'000 £'000 £'000 £'000
Sales to external customers 1,233,518 87,686 1,321,204 112,464 - 1,433,668
Sales to other segments - - - 15,796 (15,796) -
Revenue 1,233,518 87,686 1,321,204 128,260 (15,796) 1,433,668
Gross profit 562,311 36,190 598,501 45,016 - 643,517
Operating profit/(loss) before foreign exchange and exceptional items 157,113 (6,617) 150,496 14,512 - 165,008
Operating Profit 134,635 (20,381) 114,254 17,021 - 131,275
Investment income 54,808
Finance income 1,676
Finance costs (2,046)
Share of profits of associated undertakings and joint ventures 1,539
Profit before taxation 187,252
Taxation (39,771)
Profit for the period 147,481
Reconciliation of operating profit to underlying EBITDA for the 26 week period
ending 25 October 2015.
Total
£'000
Operating profit 131,275
Depreciation 37,669
Amortisation 3,036
Impairment 287
Share of profit of associated undertakings 1,539
Reported EBITDA 173,806
Charges for the Share Scheme 10,911
Exceptional items 24,059
Realised FX Loss 9,674
Underlying EBITDA (pre-scheme costs) 218,450
Sales to other segments are priced at cost plus a 10% mark-up.
Segmental information for the 26 weeks ended 26 October 2014:
Retail Brands
Sports Retail Premium Lifestyle Total Retail Total Eliminations Total
£'000 £'000 £'000 £'000 £'000 £'000
Sales to external customers 1,230,886 99,926 1,330,812 102,086 - 1,432,898
Sales to other segments 12 - 12 13,247 (13,259) -
Revenue 1,230,898 99,926 1,330,824 115,333 (13,259) 1,432,898
Gross profit 548,080 38,428 586,508 43,709 - 630,217
Operating profit before foreign exchange and exceptional items 160,577 (9,445) 151,132 11,245 - 162,377
Operating Profit 166,855 (9,508) 157,347 11,463 - 168,810
Investment income 1,263
Finance income 6,343
Finance costs (28,327)
Share of profits of associated undertakings 1,643
Profit before taxation 149,732
Taxation (34,438)
Profit for the period 115,294
Reconciliation of operating profit to underlying EBITDA for the 26 week period
ending 26 October 2014:
Total
£'000
Operating profit 168,810
Depreciation 29,060
Amortisation 3,953
Share of loss of associated undertakings 1,643
Reported EBITDA 203,466
Charges for the Share Schemes 6,057
Exceptional items (14,149)
Realised FX Gain 7,716
Underlying EBITDA 203,090
Sales to other segments are priced at cost plus a 10% mark-up.
Segmental information for the 52 weeks ended 26 April 2015:
This information is available in the 2015 annual report.
3. Exceptional items
26 weeks 26 weeks 52 weeks ended26 April 2015 (£'000)
ended25 October 2015 ended26 October 2014
(£'000) (£'000)
Profit on disposal of freehold property 12,197 14,149 10,288
Impairment, accelerated depreciation and amortisation (32,456) - (13,338)
Provision against receivables (3,800) - -
(24,059) 14,149 (3,050)
The profit on disposal of freehold property relates to the sale of a freehold
property for £44m, realising a profit of £12.2m.
The impairment mainly relates to goodwill in our Austrian business, reported
within our Sports Retail segment, due to recent trading being below
expectations.
4. Investment income
26 weeks 26 weeks 52 weeks ended26 April 2015 (£'000)
ended25 October 2015 ended26 October 2014
(£'000) (£'000)
Dividend income from investments 1,238 1,263 1,531
Gain on disposal of listed investments and derivative agreements 53,570 - 12,573
54,808 1,263 14,104
The gain on disposal of listed investments and derivative agreements mainly
relates to the profit on disposal of JD Sports shares in the period.
5. Finance costs
26 weeks 26 weeks 52 weeks ended26 April 2015 (£'000)
ended25 October 2015 ended26 October 2014
(£'000) (£'000)
Interest on bank loans and overdrafts 1,751 4,654 6,692
Interest on other loans and finance leases 156 233 153
Interest on retirement benefit obligations 139 178 642
Fair value adjustment to forward foreign exchange contracts (1) - 23,262 -
2,046 28,327 7,487
(1) The fair value adjustment to derivative financial instruments relates to
differences between the fair values of derivative financial instruments not
designated for hedge accounting from one period end to the next. The majority
of the fair value loss in the prior period relates to equity options.
6. Earnings per share
For diluted earnings per share, the weighted average number of shares,
592,409,163 (FY15 H1: 592,294,371), is adjusted to assume conversion of all
dilutive potential ordinary shares under the Group's share schemes, being
38,000,000 (FY15 H1: 24,200,000) to give the diluted weighted average number
of shares of 630,409,163 (FY15 H1: 616,494,371).
The number of dilutive ordinary shares under the Group's share schemes has
been calculated on a weighted average basis to take account of any shares that
vested during the period.
Basic and diluted earnings per share
26 weeks 26 weeks 26 weeks 26 weeks 52 weeks 52 weeks
ended ended ended ended ended ended
25 October 25 October 26 October 26 October 26 April 26 April
2015 2015 2014 2014 2015 2015
Basic £'000 Diluted £'000 Basic £'000 Diluted £'000 Basic £'000 Diluted £'000
Profit for the period attributable to the equity holders of the Group 145,424 145,424 114,629 114,629 240,397 240,397
Number in thousands Number in thousands Number in thousands
Weighted average number of shares 592,409 630,409 592,294 616,494 592,294 616,494
Pence per share Pence per share Pence per share
Earnings per share 24.5 23.1 19.4 18.6 40.6 39.0
Underlying earnings per share
The underlying earnings per share reflects the underlying performance of the
business compared with the prior year and is calculated by dividing underlying
earnings by the weighted average number of shares. Underlying earnings is used
by management as a measure of profitability within the Group. Underlying
earnings is defined as profit for the period attributable to equity holders of
the parent for each financial period but excluding the post tax effect of
realised foreign exchange in selling and administration costs, the IAS 39 fair
value adjustment on derivative financial instruments in finance income/costs,
exceptional costs and the profit/loss on sale of strategic investments.
26 weeks 26 weeks 26 weeks 26 weeks 52 weeks 52 weeks
ended ended ended ended ended ended
25 October 25 October 26 October 26 October 26 April 26 April
2015 2015 2014 2014 2015 2015
Basic £'000 Diluted £'000 Basic £'000 Diluted £'000 Basic £'000 Diluted £'000
Profit for the period 145,424 145,424 114,629 114,629 240,397 240,397
Post tax adjustments to profit for the period for the following exceptional items:
Realised loss/(gain) on forward foreign exchange contracts 7,546 7,546 5,941 5,941 2,862 2,862
Fair value adjustment to forward foreign exchange contracts (1,053) (1,053) 13,286 13,286 (12,472) (12,472)
Profit on disposal of listed investments (48,892) (48,892) - - (2,832) (2,832)
Profit on disposal of freehold property (9,546) (9,546) (10,895) (10,895) (7,921) (7,921)
Impairment and accelerated depreciation and amortisation 287 287 - - - -
Impairment of goodwill 32,456 32,456 - - 10,270 10,270
Provision against receivables 2,964 2,964 - - - -
Underlying profit for the period 129,186 129,186 122,961 122,961 230,304 230,304
Number in thousands Number in thousands Number in thousands
Weighted average number of shares 592,409 630,409 592,294 616,494 592,294 616,494
Pence per share Pence per share Pence per share
Underlying earnings per share 21.8 20.5 20.8 19.9 38.9 37.4
7. Financial Instruments
(a) Financial assets and liabilities by category
The carrying values of financial assets and liabilities, which are principally
denominated in Sterling or US dollars, were as follows:
Loans andreceivables(£'000) Assets at fairvalue throughprofit and loss(£'000) Available for salefinancial assets(£'000) Non-financial assets(£'000) Total(£'000)
Assets at 25 October 2015
Property, plant and equipment - - - 443,375 443,375
Intangible assets - - - 216,554 216,554
Investments in associated undertakings and joint ventures - - - 48,121 48,121
Available-for-sale financial assets - - 212,743 - 212,743
Deferred tax assets - - - 43,748 43,748
Inventories - - - 633,058 633,058
Derivative financial assets - 62,849 - - 62,849
Trade and other receivables 68,530 - - 144,133 212,663
Cash and cash equivalents 163,308 - - - 163,308
231,838 62,849 212,743 1,528,989 2,036,419
Assets at 26 April 2015
Property, plant and equipment - - - 422,742 422,742
Intangible assets - - - 255,364 255,364
Investments in associated undertakings - - - 38,133 38,133
Available-for-sale financial assets - - 140,795 - 140,795
Deferred tax assets - - - 38,352 38,352
Inventories - - - 517,054 517,054
Derivative financial assets - 92,199 - - 92,199
Trade and other receivables 65,335 - - 125,391 190,726
Cash and cash equivalents 78,318 - - - 78,318
143,653 92,199 140,795 1,397,036 1,773,683
Assets at 26 October 2014
Property, plant and equipment - - - 406,251 406,251
Intangible assets - - - 255,337 255,337
Investments in associated undertakings and joint ventures - - - 45,692 45,692
Available-for-sale financial assets - - 142,883 - 142,883
Deferred tax assets - - - 25,359 25,359
Inventories - - - 655,081 655,081
Trade and other receivables - 49,758 - - 49,758
Derivative financial assets 56,012 - - 109,948 165,960
Cash and cash equivalents 106,103 - - - 103,103
162,115 49,758 142,883 1,497,668 1,852,424
Loans and payables(£'000) Liabilities at fair value through profit and loss(£'000) Non-financial liabilities(£'000) Total(£'000)
Liabilities at 25 October 2015
Non-current borrowings 182,812 - - 182,812
Retirement benefit obligations - - 11,718 11,718
Deferred tax liabilities - - 38,092 38,092
Provisions - - 45,834 45,834
Derivative financial liabilities - 7,081 - 7,081
Trade and other payables 200,275 - 221,918 422,193
Current borrowings 814 - - 814
Current tax liabilities - - 37,549 37,549
383,901 7,081- 355,111 746,093
Liabilities at 26 April 2015
Non-current borrowings 136,849 - - 136,849
Retirement benefit obligations - - 14,869 14,869
Deferred tax liabilities - - 40,088 40,088
Provisions - - 37,705 37,705
Derivative financial liabilities - 5,629 - 5,629
Trade and other payables 170,090 - 170,846 340,936
Current borrowings 1,204 - - 1,204
Current tax liabilities - - 34,852 34,852
308,143 5,629 298,360 612,132
Liabilities at 26 October 2014
Non-current borrowings 283,622 - - 283,622
Retirement benefit obligations - - 15,497 15,497
Deferred tax liabilities - - 30,726 30,726
Provisions - - 36,886 36,886
Derivative financial liabilities - 30,696 - 30,696
Trade and other payables 268,612 - 165,405 434,017
Current borrowings 8,932 - - 8,932
Current tax liabilities - - 31,011 31,011
561,166 30,696 279,525 871,387
Carrying values do not materially differ from fair value.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:
• Level 1: quoted (unadjusted) prices in active markets for identical assets
or liabilities;
• Level 2: other techniques for which all inputs which have a significant
effect on the recorded fair value are observable, either directly or
indirectly; and
• Level 3: techniques which use inputs which have a significant effect on the
recorded fair value that are not based on observable market data.
As at 25 October 2015, the only financial instruments held at fair value were
Derivative financial assets and liabilities, which are classified as Level 2,
and Available-for-sale financial assets, which are classified as Level 1
except for Highland Group Holdings, which is classified as Level 3. Highland
Group Holdings is held at management's estimate of fair value based on
publicly available data, there has been no movement in fair value during the
period.
The value of equity and foreign exchange derivatives is calculated using a
proprietary option pricing model. The model output is the result of a number
of inputs including, amongst other things, the terms of the option (strike
price, time to expiry, etc.), the prevailing share price, interest rates,
foreign exchange rates, the volatility of the underlying stock, and dividends
paid by the underlying company.
The Group has entered into a number of put options referencing listed company
shares. To the extent that the market price of these shares is less than an
agreed price on expiry of the put option, the Group has the right to elect
whether to settle the put option by acquiring ordinary shares or, by paying
the cash settlement value of the put option. Sports Direct is required to
transfer cash collateral to cover its obligations under the Put Option. The
amount of collateral required during the life of the Put Option can increase
or decrease by reference to the underlying market price of the shares.
8. Cash inflows from operating activities
26 weeks 26 weeks 52 weeks
ended ended ended
25 October 26 October 27 April
2015 2014 2015
£'000 £'000 £'000
Profit before taxation 187,252 149,732 313,446
Net finance costs 370 21,984 (802)
Other Investment income (54,808) (1,263) (14,104)
Share of profit of associated undertakings and joint ventures (1,539) (1,643) (2,959)
Operating profit 131,275 168,810 295,581
Depreciation 37,669 29,060 62,924
Amortisation charge 3,036 3,953 12,725
Impairment 32,743 - 5,314
Profit on disposal of intangibles 9 496 107
Profit on disposal of property, plant and equipment (12,239) - -
Defined benefit pension plan current service cost 14 11 21
Defined benefit pension plan employer contributions (675) (1,360) (2,718)
Share based payments 10,911 6,057 10,105
Operating cash inflow before changes in working capital 202,743 207,027 384,059
Increase in receivables (21,703) (42,634) (66,368)
(Increase in inventories (116,004) (89,603) 49,320
Increase / (decrease) in payables 45,577 28,928 (52,349)
Cash inflows from operating activities 110,613 103,718
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