REG - Sports Direct Intl. - Interim Results for the 26 weeks to 26 October 14 <Origin Href="QuoteRef">SPD.L</Origin> - Part 1
RNS Number : 4503ZSports Direct International Plc11 December 201411 December 2014
Interim Results for the 26 weeks to 26 October 2014
Sports Retail gross margin up 130 basis points; Group Underlying EBITDA up 10.8%
Key highlights
Sports Retail gross margin increased by 130 basis points to 44.5%
Group underlying EBITDA increased by 10.8% to 203.1m
Underlying profit before tax up 9.8% to 160.6m
Underlying free cash generation of 161.5m (4)
Oxford Street store re-located in May 2014
Roll-out of large format city centre stores
29 new license agreements signed with contracted minimum royalties of $12m over the life of the agreements
Continued investment in inventory and strategic stakes while maintaining a strong balance sheet
Net debt decreased to 186.5m from 212.0m (27 April 2014) (5)
Dave Forsey, Chief Executive of Sports Direct International plc said:
"The results for the six months were solid considering the adverse impact on performance during the period of England's early departure from the FIFA World Cup in Brazil and the unseasonably mild weather during Autumn reducing footfall.
"However, the continued growth in Group revenues and EBITDA is testament to the hard work of our colleagues and our continued focus on providing customers with exceptional quality and unbeatable value. We are delighted that their contribution will again be recognised under the 2011 Employee Bonus Share Scheme - 25% of which is expected to vest with eligible employees in September 2015.
"Trading since the period end has been in line with management expectations and while we retain the ability to invest in margin, inventory and Group marketing to deliver long-term sustainable growth, we remain confident of achieving at least our full year internal underlying EBITDA target of 360m, before the charge for the Employee Bonus Share Schemes."
(1)
(2)
Includes Wholesale and Other revenue, previously only included in Group revenue
Underlying EBITDA, underlying profit before taxation and underlying EPS exclude realised foreign exchange gains/losses in selling and administration costs, exceptional costs and the profit/loss on sale of strategic investments. Underlying EBITDA also excludes the Employee Bonus Share Scheme charges.
(3)
Underlying profit before taxation and underlying EPS also exclude profits/losses relating to the IAS 39 fair value adjustment on forward currency contracts in finance income/costs, but includes the Employee Bonus Share Scheme charges.
(4)
Underlying free cash generation is defined as operating cashflow before working capital, made up of underlying EBITDA before Employee Bonus Share Scheme costs, plus realised foreign exchange gains and losses, less corporation tax paid.
(5)
Net debt is borrowings less cash held
Sports Direct International plc
Dave Forsey, Chief Executive
Jeff Blue, Director, Strategic Development
T: 0845 129 9200
Powerscourt
Rory Godson
Victoria Palmer-Moore
Greg Lawless
T: 0207 250 1446
Chairman's Statement
While the Group has not been immune to recent challenges in the retail sector and England's disappointing performance at the FIFA World Cup, the Group has achieved a 6.5% increase in revenue and a 10.8% increase in underlying EBITDA.
Developments and acquisitions
The Group has continued its expansion in Europe, opening a further eight stores. The re-branding of stores in Austria to the Sportsdirect.com fascia continues and we opened our first Sportsdirect.com store in the Baltics.
In the first half of the year the Group increased its investment in Debenhams with the purchase of an additional strategic stake in the business. We are currently trialling four concessions within Debenhams stores. The Group has also acquired interests in Tesco and the online retailer MySale during the period.
I am pleased also to announce that the Group has now established Sportsdirect Fitness.com, following the acquisition of 18 former LA Fitness gyms. We have commenced building work on a new 20,000 sq. ft. dry gym and an adjoining 40,000 sq. ft. retail space in Aintree which will be fully open by the end of 2014 and another two similar units in St Helens and Keighley are expected to be operational in early 2015.
Employee Bonus Share Schemes
The Group's Employee Bonus Share Scheme continues to underpin our results. We are certain of achieving the FY15 EBITDA target and I look forward to seeing the vesting of this scheme in 2015 and 2017.
I am also pleased to note that a new 2015 Bonus Share Scheme under which eligible employees and the Executive Directors would be able to participate subject to satisfactory personal performance and achievement of EBITDA targets for the years FY16 to FY19 was approved at a General Meeting on 2 July 2014.
The Board
In July, Charles McCreevy, Non-Executive Director of the Group, announced his intention not to stand for re-election at the Company's Annual General Meeting. Charles spent over three years at Sports Direct and his skills and experience have been invaluable in this time. On behalf of the Board I would like to thank Charles for his contribution to the business.
Our search for a new Finance Director and a replacement for Charles remains ongoing. We are undertaking a thorough process to ensure we appoint the most suitable candidate.
Overall
We continue to provide our customers with exceptional quality and unbeatable value, ever mindful of the financial challenges in the broader economy.
I wish to thank all of our employees and other stakeholders for their continued support and the contribution they make to the Group's ongoing success.
Keith Hellawell
Non-Executive Chairman
11 December 2014
Overview of Financial Performance
Summary of Results
26 Weeks ended
26 October 2014
26 Weeks ended
27 October 2013
Change
(m)
(m)
%
Revenue
1,432.9
1,345.1
+6.5
Underlying EBITDA
203.1
183.3
+10.8
Underlying profit before tax
160.6
146.2
+9.8
Reported profit before tax
149.7
143.1
+4.6
Pence per share
Pence per share
Underlying EPS(1)
20.8
19.0
+9.5
Reported EPS(2)
19.4
18.6
+4.1
(1) and (2) Based on 592.3 million and 578.5 million ordinary shares outstanding in FY15 H1 and FY14 H1, respectively
Basis of reporting
The financial statements for the Group for the 26 weeks ended 26 October 2014 are presented in accordance with International Accounting Standard (IAS) 34 - Interim Financial Reporting which has been adopted for use in the EU (IFRS).
The Directors believe that underlying EBITDA, underlying profit before tax and underlying earnings per share provide more useful information for shareholders on the underlying performance of the business than the reported numbers and are consistent with how business performance is measured internally. They are not recognised profit measures under IFRS and may not be directly comparable with "adjusted" profit measures used by other companies.
EBITDA is earnings before investment income, finance income and finance costs, tax, depreciation and amortisation and, therefore, includes the Group's share of profit from associated undertakings and joint ventures. Underlying EBITDA is calculated as EBITDA before the impact of foreign exchange, any exceptional or other non-trading items and costs relating to the Employee Bonus Share Schemes.
Revenue and margin
26 weeks ended
26 October 2014
('m)
26 weeks ended
27 October 2013
('m)
Change
%
Retail
Revenue:
Sports Retail
1,230.9
1,136.1
+8.3
Premium Lifestyle
99.9
102.8
(2.8)
Total retail revenue
1,330.8
1,238.9
+7.4
Total Retail Cost of sales
(744.3)
(703.6)
+5.8
Total Retail gross margin
586.5
535.3
+9.6
Gross margin percentage
44.1%
43.2%
+90bps
Brands
Revenue:
Wholesale
86.8
90.8
(4.4)
Licensing
15.3
15.4
(0.6)
Total Brands revenue
102.1
106.2
(3.9)
Cost of sales
(58.4)
(61.7)
(5.3)
Brands gross margin
43.7
44.5
(1.8)
Brands gross margin percentage
42.8%
41.9%
+90 bps
Business Review
Overview
In the 26 weeks ended 26 October 2014 ("FY15 H1"), Group revenues were up 6.5% to 1,432.9m compared with 1,345.1m for the 26 weeks ended 27 October 2013 ("FY14 H1").
Sports Retail revenue increased 8.3%, benefiting from an 11.1% increase in online revenues.
Revenue in the Brands division decreased by 3.9% due to a decline in wholesale sales as we update our wholesale business model.
Gross margin for the Group increased 90 basis points to 44.0% (FY14 H1: 43.1%) as a result of the continued broadening of our product range and on-going investment in Group Brands. The continued growth in revenue and profitability is also attributable to the success of the Employee Bonus Share Scheme.
Net debt decreasedin the period by 12.0% to 186.5m (27 April 2014: 212.0m), which is 0.5 times LTM EBITDA(1) (FY14 H1: 0.6 times).
Sports Retail division
Sports Retail revenues increased 8.3% to 1,230.9m (FY14 H1: 1,136.1m). This increase was supported by further growth in online sales, up 11.1% to 176.4m. We remain focused on building a profitable online business which complements our existing store-based offering. Since the period end, 'click and collect' has been trialled in c. 400 Sports Direct stores in the UK. We continue to invest in our customer offering, including product range and availability, to ensure this growth trend continues. During the period, the Sports Retail division gross margin increased 130 basis points to 44.5% (FY14 H1: 43.2%), benefiting from a higher proportion of 'better' and 'best' Group branded product.
Sports Retail's operating costs increased by 13.9% in FY15 H1, compared to an increase of 8.3% in revenue and an 11.6% increase in gross profit due to a full year impact and proportionally higher costs in our recently acquired European businesses. As a result, we grew Sports Retail underlying EBITDA by 8.1% to 195.8m (FY14 H1: 181.2m).
At period end, the Group had 434 stores in the UK (excluding Northern Ireland), with a total of c. 4.5m sq. ft.(2) (FY14 H1: c. 4.2m sq. ft.) and an average remaining lease expiry of 5.0 years (excluding Lillywhites Piccadilly). We continue to adopt a pro-active approach to managing our store portfolio, with the ability to move quickly, as opportunities arise. We are still targeting a total of between 30 and 40 store openings in the UK this year, having opened 18 new stores in the period, including five relocations. We have also opened four concessions currently being trialled within Debenhams stores in the period.
During the period we re-located our Oxford Street store to the c. 50,000 sq. ft. former HMV store and are currently undertaking works on a c. 30,000 sq. ft. extension of our Glasgow store, which is due to be completed in Spring 2015. We have also now commenced work on Phase 3 of our Shirebrook campus, which will see a 650,000 sq. ft. extension added to the existing warehouse and office facility, with completion expected in late 2015.
Across Europe we have closed four stores in Austria, opened two new stores in Poland and one store in each of Estonia, Portugal, France, Cyprus, Hungary and the Czech Republic. We have also commenced the integration of our Austrian business, with the conversion of 13 Sports Experts stores and five Eybl stores in Austria to the Sportsdirect.com fascia. During the period, we also increased our shareholding in the Icelandic joint venture from 25% to 40%.
Through the Group's shareholding in the Heatons chain, sports products are retailed within 15 stores in Northern Ireland and 26 stores in the Republic of Ireland. The Group's share of Heatons operating result was a 1.5m profit (FY14 H1: 0.7m profit).
During the period we established a new fitness division, Sportsdirect Fitness.com, with the purchase of 18 gyms from LA Fitness. Works are also underway to build a 60,000 sq. ft. combined gym and sports retail concept in Aintree, which is expected to be fully open by the end of December 2014. Similar sites are also currently being developed in St Helens and Keighley which we anticipate opening early in 2015.
Premium Lifestyle division
Sales in the period were down by 2.8% to 99.9m (FY14 H1: 102.8m), largely due to the closure of loss-making USC and former Republic stores since the prior year. Gross margin reduced to 38.4% (FY14 H1: 43.0%), due to stock clearance activity in the period.
While supply from major third party brands remains challenging, brands acquired as part of the Republic transaction, e.g. Soulcal, continue to perform well at USC. Growth at Cruise, Flannels and Van Mildert also reflects the Group's buying disciplines and online expertise.
Operating costs reduced by 17.6% to 46.2m (FY14 H1: 56.1m) as we begin to benefit from the closure of 20 loss-making USC and former Republic stores since the prior year and the consolidation of back-office functions.
Premium Lifestyle EBITDA losses decreased in FY15 H1 to 7.8m (FY14 H1: 11.9m loss).
Brands division
Brands division total revenue decreased 3.9% to 102.1m (FY14 H1: 106.2m). Wholesale revenues were down 4.4% to 86.8m (FY14 H1: 90.8m) as we continue to update our wholesale business model.
Brands gross margin increased by 90 basis points to 42.8% (FY14 H1: 41.9%). Wholesale gross margins increased 70 basis points to 32.7% (FY14 H1: 32.0%), due to a reduction in stock clearance activity.
Licensing revenues in FY15 H1 were down 0.6% to 15.3m (FY14 H1: 15.4m). Our strategic focus remains on delivering further growth in licensing revenues, having signed 29 new license agreements in the first half of the year with contracted minimum royalties of $12m over the life of the contracts.
Brands operating costs decreased by 5.3% to 28.7m (FY14 H1: 30.3m) in the period, benefiting from the previous year's consolidation of UK wholesale businesses, while maintaining investment in key Group brands at similar levels to previous years.
Underlying EBITDA in the division increased 7.9% to 15.1m (FY14 H1 14.0m) due to the reduction in operating costs.
Outlook
Trading since the period end has been in line with management's expectations. The Group's performance continues to be driven by: (i) investment in product range and availability; (ii) optimisation of in-store and web product offer; and (iii) the growing proportion of 'better' and 'best' Group branded products in key categories.
The Board remains confident of achieving at least our full year internal underlying EBITDA target of 360m, before the Employee Bonus Share Scheme charges. Looking to FY16, we remain confident that our continued focus on providing customers with exceptional quality and unbeatable value will deliver another year of profitable growth.
Dave Forsey
Chief Executive
11 December 2014
(1)
LTM EBITDA is the last twelve months historic underlying EBITDA
(2)
Due to differing methodologies, this implies a range between 4.25m sq. ft. - 4.75m sq. ft.
Reconciliation of reported to underlying results
EBITDA
PBT
FY15 H1
FY14 H1
FY15 H1
FY14 H1
m
m
m
m
Operating profit
168.8
147.5
Depreciation
29.0
25.1
Amortisation
3.9
3.3
Share of profit/(loss) of associated undertakings
1.7
0.7
Bonus share scheme charge
6.1
6.0
Reported EBITDA/PBT
209.5
182.6
149.7
143.1
Realised FX loss/(profit)
7.7
0.7
7.7
0.7
IAS 39 foreign exchange fair value adjustment on forward currency contracts
-
-
(6.0)
2.3
Fair value adjustment to derivative financial instruments
-
-
23.3
-
Exceptional items
(14.1)
-
(14.1)
-
Underlying
203.1
183.3
160.6
146.2
Fair value adjustment to derivative financial instruments represents the movement in fair value of equity options in the period.
Underlying EBITDA by Business Segment
FY15 H1
FY14 H1
m
m
Sports Retail
195.8
181.2
8.1%
Premium Lifestyle
(7.8)
(11.9)
(34.5%)
Brands
15.1
14.0
7.9%
Group Underlying EBITDA
203.1
183.3
10.8%
Foreign exchange
A number of the forward foreign exchange contracts outstanding at 26 October 2014 qualify for hedge accounting and the fair value gain on these contracts of 50.5m has been recognised in Other Comprehensive Income. At period end, the Group had 675m of US Dollar contracts, sufficient to cover all purchases in UK Sports Retail until the end of the FY16 financial year. These hedged contracts are at an average rate of $1.69. The sterling exchange rate with the US dollar at 27 April 2014 was $1.680 and $1.609 at 26 October 2014.
Taxation
The effective tax rate on profit before tax for FY15 H1 was 23.0% (FY14 H1: 25.0%). The difference between the prevailing corporate tax rate of 21% and the effective rate reflects depreciation on non-qualifying assets.
Strategic investments
The Group continued to hold an 11.8% shareholding in JD Sports and Fashion plc and on 2 October 2014 acquired a further 4.60% stake in Debenhams. Including the Group's stake in Highland Group Holdings Limited (House of Fraser), the fair value of the Group's holdings at 26 October 2014 was 142.9m (27 April 2014: 116.5m). The movement in the fair value of the shares held has been recognised directly in Other Comprehensive Income.
The value of the investment in Highland Group Holdings Limited was 11.1m at the period end (FY14: 11.1m) and its valuation will vary depending on the performance of the Highland Group.
In June 2014, the Group acquired an interest in 7,251,065 shares in MySale Group plc, representing 4.8% of the issued share capital of MySale.
In September 2014, the Group entered into a derivative agreement referencing 23,000,000 shares in Tesco Plc, representing 0.3% of the issued share capital of Tesco.
In October 2014 the Group acquired 56,381,164 shares in Debenhams plc for 33.2m, representing 4.6% of the issued share capital of Debenhams. This stake was sold in November 2014 and the Group entered into a derivative agreement referencing 74,185,742 Debenhams shares, equivalent to 6.1% of the issued share capital of Debenhams. Along with the existing derivative agreement entered into in January 2014, these investments represent a 12.7% interest in Debenhams' ordinary shares.
The fair value of equity derivative agreements is included within the derivative financial liabilities balance of 30.7m.
Cash flow and net debt
On 25 November 2014 the Group utilised the accordion option under its 688m working capital facility. As a result, the working capital facility has been increased from 688m to 738m. The facility is available until September 2018 and is not secured against any of the Group's fixed assets.
The Group also has a 250m working capital facility with Mike Ashley which can be drawn down on request. This facility was agreed at market terms at its inception and is not secured against any fixed assets. At the period end no balance was due.
The Group continues to operate well within its banking covenants and the Board remains comfortable with the Group's available headroom.
Net debt decreased during the period to 186.5m (27 April 2014: 212.0m), which is 0.5 times the last twelve months historic underlying EBITDA (FY14 H1: 0.6 times)
Capital expenditure amounted to 26.7m (FY14 H1: 31.8m), including 1.6m (FY14 H1: 10.3m) of freehold property. The Group expects FY15 capital expenditure to be c. 90m, including expenditure on phase 3 of the Shirebrook campus.
The analysis of net debt at 26 October 2014 and at 27 April 2014 is as follows:
At 26 October 2014
At 27 April 2014
m
m
Cash and cash equivalents
106.1
151.0
Borrowings
(292.6)
(363.0)
Net debt
(186.5)
(212.0)
Cash Flow
26 weeks ended
26 October 2014
m
26 weeks ended
27 October 2013
m
Underlying EBITDA (pre share scheme costs)
203.1
183.3
Realised profit on forward foreign exchange contracts
(7.7)
(0.6)
Taxes paid
(33.9)
(35.8)
Underlying free cash flow
161.5
146.9
Invested In:
Working capital
Inventory
(89.6)
(49.3)
Receivables, Payables & Other
(2.2)
31.8
Acquisitions (including debt)
(2.3)
(124.1)
Purchase of listed investments
(33.2)
-
Investment income received
1.3
1.3
Capital expenditure
(26.7)
(31.8)
Disposal of freehold property
21.1
-
Finance costs and other financing activities
(4.4)
(4.1)
Net decrease/(increase) in net debt
25.5
(29.3)
Employee Bonus Share Schemes
Management believes that the Employee Bonus Share Schemes have been instrumental in the strength of the Group's ongoing performance.
The 2011 Employee Bonus Share Scheme is a four year scheme based upon achieving underlying EBITDA (before the costs of the scheme) of 215m in FY12, 250m in FY13, 260m in FY14 and 300m in FY15 coupled with the individual employee's satisfactory personal performance. The scheme requires that all targets are met before the shares vest. Approximately 5m shares will vest in the summer of 2015 and another 19m shares (including the Executive Bonus Share Scheme) in the summer of 2017.
The remaining target for Group underlying EBITDA (before Employee Bonus Share Scheme costs) is:
- FY15: 300m
The success of the scheme is demonstrated by ongoing improvements in operational and financial performance including various internal KPIs since the scheme's introduction. These KPIs include energy consumption, pay versus turnover, stock loss and staff retention.
Going concern
The Group finances its day to day working capital requirements using a 738m facility with 13 financial institutions that is due for renewal in September 2018.
The Group's earnings forecast, taking account of reasonable changes in trading performance and expected capital expenditure requirements, show that the Group continues to operate well within its existing bank facilities.
The Directors have thoroughly reviewed the Group's performance and position relating to historical results, current trading, forecast performance, cash reserves and financing arrangements. Additionally, the Directors have also considered the Group's reliance upon its key stakeholders, including customers and suppliers and found no over reliance on any particular stakeholder. The Directors are therefore confident that the Group will continue in operational existence for the foreseeable future. On this basis, the Directors continue to adopt the going concern basis for the preparation of the interim financial statements.
Risks, systems and controls
The Board believes that the principal risks and uncertainties for the remaining six months of the current financial year are:
Disruption or other adverse events affecting the Group's relationship with any of its key brands or brand suppliers which could have an adverse effect on the Group's business.
The possibility of a deterioration of the economy both in the UK and worldwide and a reduction in consumer confidence and retail spending, which could impact on the performance of the business.
Funding and liquidity for the Group's operations are provided through bank loans, overdraft facilities and shareholders' funds.
The Group maintains a system of controls to manage the business and to protect its assets. We continue to invest in people, systems and IT to manage the Group's operations and to ensure that the Group is financed effectively and efficiently.
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU;
The interim management report includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events during the first 26 weeks of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining 26 weeks of the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first 26 weeks of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
Amounts due to and from related parties are disclosed in note 9.
With the exception of Charles McCreevy who did not stand for re-election at the Company's Annual General Meeting, the directors of Sports Direct International plc are listed in the Group's 2014 Annual Report and Financial Statements.
On behalf of the Board
Dave Forsey
Chief Executive
11 December 2014
INDEPENDENT REVIEW REPORT TO THE MEMBERS OF SPORTS DIRECT INTERNATIONAL PLC
FOR THE 26 WEEKS ENDED 26 OCTOBER 2014
Introduction
We have reviewed the condensed set of financial statements in the half-yearly financial report of Sports Direct International plc for the 26 weeks ended 26 October 2014 which comprises the Consolidated income statement, the Consolidated statement of comprehensive income, the Consolidated balance sheet, the Consolidated cash flow statement, the Consolidated statement of changes in equity and the related notes. We have read the other information (the Chairman's statement, the Overview of Financial Performance and the Group highlights) contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company's members, as a body, in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity''. Our review work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, and the company's members as a body, for our review work, for this report, or for the conclusion we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, ''Interim Financial Reporting,'' as adopted by the European Union.
Our Responsibility
Our responsibility is to express a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity''. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 26 weeks ended 26 October 2014 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Grant Thornton UK LLP
Auditor
London
11 December 2014
UNAUDITED CONSOLIDATED INCOME STATEMENT FOR THE 26 WEEKS ENDED 26 OCTOBER 2014
26 weeks
ended
26 October2014
26 weeks
ended
27 October2013
52 weeks
ended
27April
2014
Notes
'000
'000
'000
Continuing operations:
Revenue
2
1,432,898
1,345,102
2,705,958
Cost of sales
(802,681)
(765,272)
(1,551,036)
Gross profit
630,217
579,830
1,154,922
Selling, distribution and administrative expenses
(479,690)
(439,067)
(908,843)
Other operating income
4,134
6,811
8,583
Exceptional items
3
14,149
-
(5,531)
Operating profit
2
168,810
147,574
249,131
Investment income
1,263
1,271
7,017
Finance income
6,343
1,446
891
Finance costs
4
(28,327)
(7,903)
(19,853)
Share of profit of associated undertakings and joint ventures
1,643
676
2,266
Profit before taxation
149,732
143,064
239,452
Taxation
(34,438)
(35,766)
(59,839)
Profit for the period
2
115,294
107,298
179,613
Attributable to:
Equity holders of the Group
114,629
107,559
180,245
Non-controlling interests
665
(261)
(632)
Profit for the period
2
115,294
107,298
179,613
Earnings per share from total and continuing operations attributable to the equity shareholders
Pence per share
Pence per share
Pence per share
Basic earnings per share
5
19.4
18.6
30.8
Diluted earnings per share
5
18.6
17.4
29.2
Underlying basic earnings per share
5
20.8
19.0
32.1
The accompanying notes form an integral part of this interim financial report.
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 26 WEEKS ENDED 26 OCTOBER 2014
26 weeks
ended
26 October2014
26 weeks
ended
27 October2013
52weeks
ended
27April
2014
Notes
'000
'000
'000
Profit for the period
2
115,294
107,298
179,613
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Actuarial (losses)/gains on defined benefit pension schemes
(1,304)
4,589
3,860
Taxation on items not reclassified
274
(1,087)
(698)
Items that will be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
13,465
(14,768)
(33,118)
Exchange differences on hedged contracts - recognised in the period
26,860
(7,593)
(3,737)
Exchange differences on hedged contracts - reclassification in the period
23,623
(8,907)
(17,909)
Fair value adjustment in respect of available for sale financial assets
(6,783)
17,903
57,373
Taxation on items subsequently reclassified
(10,601)
-
(4,170)
Other comprehensive income for the period, net of tax
45,534
(9,863)
1,601
Total comprehensive income for the period
160,828
97,435
181,214
Attributable to:
Equity holders of the Parent
160,163
97,696
181,846
Non-controlling interests
665
(261)
(632)
160,828
97,435
181,214
The accompanying notes form an integral part of this interim financial report.
UNAUDITED CONSOLIDATED BALANCE SHEET AS AT 26 OCTOBER 2014
26October
201427October
201327April
2014
Notes
'000
'000
'000
ASSETS
Non-current assets
Property, plant and equipment
406,251
421,981
412,361
Intangible assets
255,337
264,781
255,109
Investments in associated undertakings and joint ventures
45,692
32,842
41,763
Available-for-sale financial assets
142,883
66,084
116,504
Deferred tax assets
25,359
28,839
31,130
875,522
814,527
856,867
Current assets
Inventories
655,081
557,708
565,479
Trade and other receivables
165,960
134,696
123,014
Derivative financial assets
49,758
7,819
4,355
Cash and cash equivalents
106,103
164,505
151,024
976,902
864,728
843,872
TOTAL ASSETS
1,852,424
1,679,255
1,700,739
EQUITY AND LIABILITIES
Share capital
64,060
64,060
64,060
Share premium
874,300
874,300
874,300
Treasury shares
(56,234)
(56,234)
(56,234)
Permanent contribution to capital
50
50
50
Capital redemption reserve
8,005
8,005
8,005
Foreign currency translation reserve
18,745
23,630
5,280
Reverse combination reserve
(987,312)
(987,312)
(987,312)
Own share reserve
(13,251)
(13,251)
(13,251)
Hedging reserve
44,858
(479)
(5,625)
Retained earnings
1,030,689
846,330
931,819
983,910
759,099
821,092
Non-controlling interests
(2,873)
(12,312)
(3,538)
Total equity
981,037
746,787
817,554
Non-current liabilities
Borrowings
6
283,622
337,530
6,764
Retirement benefit obligations
15,497
15,899
15,350
Deferred tax liabilities
30,726
23,100
24,046
Provisions
36,886
35,108
37,780
366,731
411,637
83,940
Current liabilities
Derivative financial liabilities
30,696
8,638
18,665
Trade and other payables
434,017
477,352
392,019
Borrowings
6
8,932
10,276
356,226
Current tax liabilities
31,011
24,565
32,335
504,656
520,831
799,245
Total liabilities
871,387
932,468
883,185
TOTAL EQUITY AND LIABILITIES
1,852,424
1,679,255
1,700,739
The accompanying notes form an integral part of this interim financial report.
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE 26 WEEKS ENDED 26 OCTOBER 2014
26 weeks
ended
26 October 201426 weeks
ended
27 October 201352 weeks
ended
27April
2014
Notes
'000
'000
'000
Cash inflow from operating activities
8
103,718
165,011
222,785
Income taxes paid
(33,902)
(35,827)
(55,730)
Net cash inflow from operating activities
69,816
129,184
167,055
Cash flow from investing activities
Proceeds on disposal of property, plant and equipment
21,150
-
-
Proceeds on disposal of listed investments
-
-
49,394
Purchase of associate, net of cash acquired
(2,300)
-
(8,000)
Purchase of subsidiaries, net of cash acquired
(172)
(16,485)
(15,407)
Purchase of intangible assets
(3)
(162)
(1,827)
Purchase of property, plant and equipment
(26,715)
(31,610)
(67,304)
Purchase of listed investments
(33,162)
-
(55,467)
Investment income received
1,277
1,271
1,604
Finance income received
335
501
891
Net cash outflow from investing activities
(39,590)
(46,986)
(96,116)
Cash flow from financing activities
Finance costs paid
(4,712)
(4,409)
(8,111)
Borrowings drawn down
51,336
181,692
300,910
Borrowings repaid
(118,730)
(247,408)
(348,452)
Exercise of option over non-controlling interests
-
(11,678)
Net cash outflow from financing activities
(72,106)
(69,624)
(67,331)
Net (decrease) / increase in cash and cash equivalents including
overdrafts
(41,880)
12,574
3,608
Cash and cash equivalents including overdrafts at beginning of period
145,282
141,674
141,674
Cash and cash equivalents including overdrafts at the period end
103,402
154,248
145,282
The accompanying notes form an integral part of this interim financial report.
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 26 WEEKS ENDED26 OCTOBER 2014
Treasury
shares
Foreign
currency translation
Own
share reserve
Retained earnings
Other reserves
Sub-
total
Non-controlling interests
Total
'000
'000
'000
'000
'000
'000
'000
'000
At 28 April 2013
(56,234)
38,398
(64,375)
752,018
(24,876)
644,931
(254)
644,677
Share-based payments
-
-
-
1,000
-
1,000
-
1,000
Vesting of Share-based payments
-
-
51,124
(51,124)
-
-
-
-
Current Tax on share schemes
-
-
-
30,362
-
30,362
-
30,362
Deferred Tax on share schemes
-
-
-
(14,890)
-
(14,890)
-
(14,890)
Non-controlling interest - acquisition
-
-
-
-
-
-
(11,645)
(11,645)
Non-controlling interest - disposal
-
-
-
-
-
-
(152)
(152)
Transactions with owners
-
-
51,124
(34,652)
-
16,472
(11,797)
4,675
Profit for the financial period
-
-
-
107,559
-
107,559
(261)
107,298
Cashflow hedges
- recognised in the period
-
-
-
-
(7,593)
(7,593)
-
(7,593)
- reclassification
-
-
-
-
(8,907)
(8,907)
-
(8,907)
Actuarial gains on defined benefit pension schemes
-
-
-
4,589
-
4,589
-
4,589
Fair value adjustment in respect of available for sale financial assets
-
-
-
17,903
-
17,903
-
17,903
Taxation on items taken to comprehensive income
-
-
-
(1,087)
-
(1,087)
-
(1,087)
Translation differences - group
-
(14,768)
-
-
-
(14,768)
-
(14,768)
Total comprehensive income
-
(14,768)
-
128,964
(16,500)
97,696
(261)
97,435
At 27 October 2013
(56,234)
23,630
(13,251)
846,330
(41,376)
759,099
(12,312)
746,787
Treasury
shares
Foreign
currency translation
Own
share reserve
Retained earnings
Other reserves
Sub-
total
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
-
2,265
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
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 26 October 2014, the Sports Direct Employee Benefit Trust held 6,070,490 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 and a transfer of accrued national insurance contributions in respect of previous years' charges which had previously been recognised in equity. The amount transferred is not material to the interim financial statements.
NOTES TO THE FINANCIAL INFORMATION FOR THE 26 WEEKS ENDED 26 OCTOBER 2014
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 2014 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 27 April 2014. This consolidated financial information for the period does not constitute statutory financial statements within the meaning of s434 of the Companies Act 2006.
The summary of results for the 52 weeks ended 27 April 2014 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
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 assess performance and allocate resources across each operating segment.
The Chief Operating Decision Maker has been identified as the Executive Directors and the operating segments are identified as the store fascia or brand, in line with the internal reporting to the Executive Directors.
Sales and gross profit for each operating segment, as well as underlying EBITDA, are the main measures used by the Executive Directors to assess performance.
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 Cruise, Flannels, USC and Van Mildert; and
3. Brands - includes the results of the Group's portfolio of internationally recognised brands such as Everlast, Lonsdale, Dunlop and Slazenger.
The basis of the reportable segments changed in the 2014 Annual Report, reflecting changes that have been made to internal reports used to assess performance and allocate resources across each operating segment. UK Sports Retail and International Sports Retail were previously reported as separate segments. These have now been aggregated to form the reportable segment: Sports Retail. The prior year disclosures have been restated to reflect this change. Information regarding the Group's reportable segments for the period ended 26 October 2014, as well as a reconciliation of reported profit for the period to underlying EBITDA, is presented below:
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
43,779
-
630,217
Operating profit/(loss) 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 and joint ventures
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.
Sports Retail
Premium Lifestyle
Brands
Total
'000
'000
'000
'000
Operating profit/(loss)
166,855
(9,508)
11,463
168,810
Depreciation
26,791
1,300
969
29,060
Amortisation
757
344
2,852
3,953
Share of profit/(loss) of associated undertakings
1,593
-
50
1,643
Charges for the Bonus Share Schemes
6,057
-
-
6,057
Reported EBITDA
202,053
(7,864)
15,334
209,523
Exceptional items
(14,149)
-
-
(14,149)
Realised FX (Gain)/Loss
7,871
63
218
7,716
Underlying EBITDA
195,775
(7,801)
15,116
203,090
Sales to other segments are priced at cost plus a 10% mark-up.
Other segment items included in the income statement for the 26 weeks ended 26 October 2014:
Sports Retail
Premium Lifestyle
Brands
Total
'000
'000
'000
Depreciation
26,791
1,300
969
29,060
Amortisation and impairment
757
344
2,852
3,953
Information regarding segment assets and liabilities as at 26 October 2014:
Retail
Brands
Eliminations
Total
Sports
Retail
Premium Lifestyle
'000
'000
'000
'000
'000
Investments in associated undertakings and joint
venture
46,055
-
(363)
-
45,692
Other assets
1,810,388
99,314
202,157
(305,127)
1,806,731
Total assets
1,856,443
99,314
201,794
(305,127)
1,852,424
Total liabilities
(942,320)
(133,674)
(100,520)
305,127
(871,387)
Segmental information for the 26 weeks ended 27 October 2013:
Retail
Brands
Sports Retail
Premium Lifestyle
Total Retail
Total
Eliminations
Total
'000
'000
'000
'000
'000
'000
Sales to external customers
1,136,044
102,843
1,238,887
106,215
-
1,345,102
Sales to other segments
8,455
-
8,455
14,737
(23,192)
-
Revenue
1,144,499
102,843
1,247,342
120,952
(23,192)
1,345,102
Gross profit
491,128
44,179
535,307
44,523
-
579,830
Operating profit/(loss) before foreign exchange and exceptional items
150,870
(13,668)
137,202
11,017
-
148,219
Operating Profit
150,327
(13,615)
136,712
10,862
147,574
Investment income
1,271
Finance income
1,446
Finance costs
(7,903)
Share of profits of associated undertakings and joint ventures
676
Profit before taxation
143,064
Taxation
(35,766)
Profit for the period
107,298
Reconciliation of operating profit to underlying EBITDA for the 26 week period ending 27 October 2013:
Sports Retail
Premium Lifestyle
Brands
Total
'000
'000
'000
'000
Operating profit/(loss)
150,327
(13,615)
10,862
147,574
Depreciation
22,789
1,448
867
25,104
Impairment
133
-
-
133
Amortisation
468
344
2,319
3,131
Share of profit/(loss) of associated undertakings
899
-
(223)
676
Charges for the Bonus Share Schemes
6,018
-
-
6,018
Reported EBITDA
180,634
(11,823)
13,825
182,636
Realised FX Loss / (Gain)
543
(53)
155
645
Underlying EBITDA
181,177
(11,876)
13,980
183,281
Sales to other segments are priced at cost plus a 10% mark-up.
Other segment items included in the income statement for the 26 weeks ended 27 October 2013:
Sports Retail
Premium Lifestyle
Brands
Total
'000
'000
'000
'000
Depreciation
22,789
1,448
867
25,104
Amortisation and impairment
601
344
2,319
3,264
Information regarding segment assets and liabilities as at 27October 2013:
Retail
Brands
Eliminations
Total
Sports
Retail
Premium Lifestyle
'000
'000
'000
'000
'000
Investments in associated undertakings and joint ventures
33,065
-
(223)
-
32,842
Other assets
1,545,079
30,234
182,616
(111,516)
1,646,413
Total assets
1,578,144
30,234
182,393
(111,516)
1,679,255
Total liabilities
(902,733)
(47,809)
(93,442)
111,516
(932,468)
Segmental information for the 52 weeks ended 27April 2014:
This information is available in the 2014 annual report.
3. Exceptional items
26 weeks ended
26 October 2014 ('000)
26 weeks ended
27 October 2013 ('000)
52 weeks ended
27 April 2014 ('000)
Profit on disposal of freehold property
14,149
-
-
Impairment of tangible assets
-
-
(5,531)
14,149
-
(5,531)
On 20 June 2014 the Group sold a Freehold Property for 21.2m and then entered into an agreement to lease the property back from the buyer.
4. Finance costs
26 weeks ended
26 October 2014 ('000)
26 weeks ended
27 October 2013 ('000)
52 weeks ended
27 April 2014 ('000)
Interest on bank loans and overdrafts
4,654
4,409
7,513
Interest on other loans and finance leases
233
-
600
Interest on retirement benefit obligations
178
1,210
547
Fair value adjustment to derivative financial instruments (1)
23,262
2,284
11,193
28,327
7,903
19,853
(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 current period relates to equity options.
5. Earnings per share
For diluted earnings per share, the weighted average number of shares, 592,294,371 (FY14 H1: 578,454,000), is adjusted to assume conversion of all dilutive potential ordinary shares under the Group's bonus share schemes, being 24,200,000 (FY14 H1: 40,736,000) to give the diluted weighted average number of shares of 616,494,371 (FY14 H1: 619,190,000).
The number of dilutive ordinary shares under the Group's bonus 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
26weeks
ended
26October
201426weeks
ended
26October
201426weeks
ended
27October
201326weeks
ended
27October
201352weeks
ended
27April
201452weeks
ended
27April
2014Basic
'000
Diluted
'000
Basic
'000
Diluted
'000
Basic
'000
Diluted
'000
Profit for the period attributable to the equity holders of the Group
114,629
114,629
107,559
107,559
180,245
180,245
Number in thousands
Number in thousands
Number in thousands
Weighted average number of shares
592,294
616,494
578,454
619,190
585,514
618,190
Pence per share
Pence per share
Pence per share
Earnings per share
19.4
18.6
18.6
17.4
30.8
29.2
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.
The Directors believe that the underlying earnings before exceptional items and underlying earnings per share measures provide additional useful information for shareholders on the underlying performance of the business, and are consistent with how business performance is measured internally. Underlying earnings is not a recognised profit measure under IFRS and may not be directly comparable with "adjusted" profit measures used by other companies.
26weeks
ended
26October
201426weeks
ended
26October
201426weeks
ended
27October
201326weeks
ended
27October
201352weeks
ended
27April
201452weeks
ended
27April
2014
Basic
'000
Diluted
'000
Basic
'000
Diluted
'000
Basic
'000
Diluted
'000
Profit for the period
114,629
114,629
107,559
107,559
180,245
180,245
Post tax adjustments to profit for the period for the following exceptional items:
Realised loss/(gain) on forward foreign exchange contracts
5,941
5,941
477
477
(1,373)
(1,373)
Fair value adjustment to forward foreign exchange contracts
13,286
13,286
1,690
1,690
8,395
8,395
Profit on disposal of listed investments
-
-
-
-
(4,060)
(4,060)
Profit on disposal of freehold property
(10,895)
(10,895)
-
-
-
-
Impairment of fixed assets
-
-
-
-
4,148
4,148
Impairment of goodwill
-
-
133
133
284
284
Underlying profit for the period
122,961
122,961
109,859
109,859
187,639
187,639
Number in thousands
Number in thousands
Number in thousands
Weighted average number of shares
592,294
616,494
578,454
619,190
585,514
618,190
Pence per share
Pence per share
Pence per share
Earnings per share
20.8
19.9
19.0
17.7
32.1
30.3
6. Borrowings
26October
201427October
201327April
2014
'000
'000
'000
Non-current:
Bank and other loans
283,622
337,530
6,764
Obligations under finance leases
-
-
-
283,622
337,530
6,764
Current:
Bank overdrafts
2,700
10,257
5,742
Bank and other loans
6,232
-
350,484
Obligations under finance leases
-
19
-
8,932
10,276
356,226
Total borrowings:
Bank overdrafts
2,700
10,257
5,742
Bank and other loans
289,854
337,530
357,248
Obligations under finance leases
-
19
-
292,554
347,806
362,990
The analysis of the Group's bank and other loan borrowings other than overdrafts is as follows:
26October
201427October
201327April
2014Borrowings - Sterling
221,427
250,602
240,731
Borrowings - Other
68,427
86,928
116,517
289,854
337,530
357,248
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 and
receivables
('000)
Assets at fair
value through
profit and loss
('000)
Available for sale
financial assets
('000)
Non-financial assets
('000)
Total
('000)
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
Derivative financial assets
-
49,758
-
-
49,758
Trade and other receivables
56,012
-
-
109,948
165,960
Cash and cash equivalents
106,103
-
-
-
106,103
162,115
49,758
142,883
1,497,668
1,852,424
Assets at 27 April 2014
Property, plant and equipment
-
-
-
412,361
412,361
Intangible assets
-
-
-
255,109
255,109
Investments in associated undertakings and joint ventures
-
-
-
41,763
41,763
Available-for-sale financial assets
-
-
116,504
-
116,504
Deferred tax assets
-
-
-
31,130
31,130
Inventories
-
-
-
565,479
565,479
Trade and other receivables
60,851
-
-
62,163
123,014
Derivative financial assets
-
4,355
-
-
4,355
Cash and cash equivalents
151,024
-
-
-
151,024
211,875
4,355
116,504
1,368,005
1,700,739
Assets at 27 October 2013
Property, plant and equipment
-
-
-
421,981
421,981
Intangible assets
-
-
-
264,781
264,781
Investments in associated undertakings and joint ventures
-
-
-
32,842
32,842
Available-for-sale financial assets
-
-
66,084
-
66,084
Deferred tax assets
-
-
-
28,839
28,839
Inventories
-
-
-
557,708
557,708
Trade and other receivables
69,279
-
-
65,417
134,696
Derivative financial assets
-
7,819
-
-
7,819
Cash and cash equivalents
164,505
-
-
-
164,505
233,784
7,819
66,084
1,371,568
1,679,255
Loans and payables
('000)
Liabilities at fair value through profit and loss
('000)
Non-financial liabilities
('000)
Total
('000)
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
Liabilities at 27 April 2014
Non-current borrowings
6,764
-
-
6,764
Retirement benefit obligations
-
-
15,350
15,350
Deferred tax liabilities
-
-
24,046
24,046
Provisions
-
-
37,780
37,780
Derivative financial liabilities
-
18,665
-
18,665
Trade and other payables
239,463
-
152,556
392,019
Current borrowings
356,226
-
-
356,226
Current tax liabilities
-
-
32,335
32,335
602,453
18,665
262,067
883,185
Liabilities at 27 October 2013
Non-current borrowings
337,530
-
-
337,530
Retirement benefit obligations
-
-
15,899
15,899
Deferred tax liabilities
-
-
23,100
23,100
Provisions
-
-
35,108
35,108
Derivative financial liabilities
-
8,638
-
8,638
Trade and other payables
248,449
-
228,903
477,352
Current borrowings
10,276
-
-
10,276
Current tax liabilities
-
-
24,565
24,565
596,255
8,638
327,575
932,468
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 26 October 2014, 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.
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
ended
26October
201426 weeks
ended
27October
201352 weeks
ended
27April
2014
'000
'000
'000
Profit before taxation
149,732
143,064
239,452
Net finance costs
21,984
6,457
18,962
Other Investment income
(1,263)
(1,271)
(7,017)
Share of profit of associated undertakings and joint ventures
(1,643)
(676)
(2,266)
Operating profit
168,810
147,574
249,131
Depreciation
29,060
25,104
56,963
Amortisation charge
3,953
3,264
6,832
Loss on disposal of intangibles
-
-
5,815
Profit on disposal of intangibles
496
-
-
Defined benefit pension plan current service cost
11
6
22
Defined benefit pension plan employer contributions
(1,360)
(1,354)
(2,708)
Share based payments
6,057
6,018
11,927
Operating cash inflow before changes in working capital
207,027
180,612
327,982
Increase in receivables
(42,634)
(27,054)
(18,241)
Increase in inventories
(89,603)
(49,254)
(52,521)
Increase / (decrease) in payables
28,928
60,707
(34,435)
Cash inflows from operating activities
103,718
165,011
222,785
Included within the movement in debtors are amounts held as collateral against equity derivatives.
9. Related party transactions
The Group has taken advantage of the exemptions contained within IAS 24 - "Related Party Disclosures" from the requirement to disclose transactions between Group companies as these have been eliminated on consolidation.
The Group entered into the following material transactions with related parties:
26 weeks ended 26 October 2014
Related party
Relationship
Sales
Purchases
Tradeand
other
receivablesTradeand
other
payables
'000
'000
'000
'000
Heatons
Associate
16,560
-
5,648
-
Brasher Leisure Limited
Associate
5,887
-
3,441
-
Rangers Retail Limited
Associate
2,487
-
398
-
Newcastle United Football Club
Connected persons
1,174
-
519
-
MST
Associate
337
-
4,939
-
The Group has a 250m working capital facility with Mike Ashley which can be drawn down on request. This facility was agreed at market terms at its inception. This facility is not secured against any fixed assets. On 6th October 2014 the Group made a drawdown of 40 million against this facility which was repaid in full on 20th October 2014. At the period end no balance was due.
26 weeks ended 27 October 2013
Related party
Relationship
Sales
Purchases
Tradeand
other
receivablesTradeand
other
payables
'000
'000
'000
'000
Heatons
Associate
15,609
-
5,643
-
Brasher Leisure Limited
Associate
4,910
-
2,309
-
This information is provided by RNSThe company news service from the London Stock ExchangeENDIR GGGMUPUPCPPU
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