REG - Sports Direct Intl. - Interim Results FY18 H1 <Origin Href="QuoteRef">SPD.L</Origin> - Part 2
14/12/2017 07:05
- Part 2: For the preceding part double click ID:nRSN2999Za
• 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.
No material related party transactions have taken place in the first six months of the current financial year that have
materially affected the financial position or performance of the Group during that period and there have been no changes in
related party transactions described in the last annual report that could have a material effect on the financial position
or performance of the Group in the current period.
On behalf of the Board
Mike Ashley
Chief Executive
14 December 2017
INDEPENDENT REVIEW REPORT TO THE MEMBERS OF SPORTS DIRECT INTERNATIONAL PLC
FOR THE 26 WEEKS ENDED 29 OCTOBER 2017
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report
of Sports Direct International plc for the 26 weeks ended 29 October 2017 which comprises the Consolidated income
statement, the Consolidated statement of comprehensive income, the Consolidated statement of financial position, the
Consolidated cash flow statement, the Consolidated statement of changes in equity and the related notes. We have read the
other information contained in the half-yearly financial report which comprise the Key highlights, Chairman's statement,
the Overview of Financial Performance 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 29 October 2017 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
Statutory Auditor, Chartered Accountants
London
14 December 2017
UNAUDITED CONSOLIDATED INCOME STATEMENT FOR THE 26 WEEKS ENDED 29 OCTOBER 2017
26 weeks 26 weeks 53 weeks
ended ended ended
29 October 2017 23 October 2016 30 April
2017
Notes £m £m £m
Continuing operations:
Revenue 2 1,714.6 1,637.7 3,245.3
Cost of sales (1,053.6) (975.7) (1,914.7)
Gross profit 661.0 662.0 1,330.6
Selling, distribution and administrative expenses (556.0) (576.1) (1,255.6)
Other operating income 10.7 8.0 22.5
Exceptional items 3 (5.0) (13.9) (17.3)
Profit on disposal of properties 16.7 - -
Profit on disposal of subsidiary - - 79.9
Operating profit 2 127.4 80.0 160.1
Investment income 4 0.2 146.3 162.5
Investment costs 5 (32.7) (26.1) (51.2)
Finance income 6 0.3 - 18.8
Finance costs 7 (40.9) (60.0) (9.4)
Share of (loss)/profit of associated undertakings and joint ventures 9 (8.5) - 0.8
Profit before taxation 45.8 140.2 281.6
Taxation (17.1) (46.8) (49.9)
Profit for the period 2 28.7 93.4 231.7
Attributable to:
Equity holders of the Group 26.0 92.4 229.9
Non-controlling interests 2.7 1.0 1.8
Profit for the period 2 28.7 93.4 231.7
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 8 4.9 15.6 39.4
Diluted earnings per share 8 4.9 15.2 38.3
Underlying basic earnings per share 8 11.3 8.5 11.4
Diluted underlying basic earnings per share 8 11.2 8.2 11.1
The accompanying notes form an integral part of this interim financial report.
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 26 WEEKS ENDED 29 OCTOBER 2017
26 weeks 26 weeks 53 weeks
ended ended ended
29 October 2017 23 October 2016 30 April
2017
Notes £m £m £m
Profit for the period 2 28.7 93.4 231.7
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Actuarial losses on defined benefit pension schemes - (8.8) (8.8)
Taxation on items not reclassified - 1.7 1.7
Items that will be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations 24.1 70.8 50.3
Exchange differences on hedged contracts - recognised in the period (49.8) (91.5) (31.3)
Exchange differences on hedged contracts - reclassified and reported in sales (0.5) (5.9) 8.7
Exchange differences on hedged contracts - reclassified and reported in cost of sales (1.4) - (18.2)
Exchange differences on hedged contracts - taxation taken to reserves 8.8 14.2 7.7
Fair value adjustment in respect of available for sale financial assets - recognised in the period 7.0 26.7 23.7
Fair value adjustment in respect of available for sale financial assets - reclassified in the period - (129.2) (129.3)
Fair value adjustment in respect of available for sale financial assets - taxation (1.2) - (1.8)
Other comprehensive income for the period, net of tax (13.0) (122.0) (97.3)
Total comprehensive income for the period 15.7 (28.6) 134.4
Attributable to:
Equity holders of the Parent 13.0 (29.6) 132.6
Non-controlling interests 2.7 1.0 1.8
15.7 (28.6) 134.4
The accompanying notes form an integral part of this interim financial report.
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 29 OCTOBER 2017
29 October 2017 23 October 2016 30 April
2017
Notes £m £m £m
ASSETS
Non-current assets
Property, plant and equipment 871.2 833.6 842.0
Investment properties 22.2 - 23.1
Intangible assets 180.3 216.4 185.7
Investments in associated undertakings and joint ventures 18.2 18.4 26.4
Available for sale financial assets 11 191.4 73.0 63.9
Deferred tax assets 53.1 72.0 33.7
1,336.4 1,213.4 1,174.8
Current assets
Inventories 10 795.7 716.3 629.2
Trade and other receivables 454.1 290.8 397.1
Derivative financial assets 6.8 51.5 43.0
Cash and cash equivalents 121.4 188.0 204.7
1,378.0 1,246.6 1,274.0
TOTAL ASSETS 2,714.4 2,460.0 2,448.8
EQUITY AND LIABILITIES
Share capital 64.1 64.1 64.1
Share premium 874.3 874.3 874.3
Treasury shares (230.4) (69.4) (329.5)
Permanent contribution to capital 0.1 0.1 0.1
Capital redemption reserve 8.0 8.0 8.0
Foreign currency translation reserve 101.2 97.6 77.1
Reverse combination reserve (987.3) (987.3) (987.3)
Own share reserve (69.0) (33.7) (33.7)
Hedging reserve (68.0) (75.2) (25.1)
Retained earnings 1,580.1 1,458.3 1,591.0
1,273.1 1,336.8 1,239.0
Non-controlling interests 0.8 (1.8) (0.7)
(1,8
Total equity 1,273.9 1,335.0 1,238.3
Non-current liabilities
Borrowings 11 7.4 259.8 317.3
Retirement benefit obligations 1.9 21.6 3.4
Deferred tax liabilities 13.5 20.4 18.7
Provisions 127.0 85.2 130.2
149.8 387.0 469.6
Current liabilities
Derivative financial liabilities 158.3 206.7 75.2
Trade and other payables 520.8 454.0 584.9
Borrowings (1) 11 585.7 0.1 69.5
Current tax liabilities 25.9 77.2 11.3
1,290.7 738.0 740.9
Total liabilities 1,440.5 1,125.0 1,210.5
TOTAL EQUITY AND LIABILITIES 2,714.4 2,460.0 2,448.8
(1) Borrowings in Current Liabilities reflects the Revolving Credit Facility (RCF) in place as at 29 October 2017 expiring
in September 2018. On 21 November 2017, the Group announced that it had refinanced into a replacement RCF for £907.5m for a
period of four years.
The accompanying notes form an integral part of this interim financial report.
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE 26 WEEKS ENDED 29 OCTOBER 2017
26 weeks 26 weeks 53 weeks
ended ended ended
29 October 2017 23 October 2016 30 April
2017
Notes £m £m £m
Cash inflow from operating activities 13 68.9 205.1 269.2
Income taxes paid (20.3) (34.4) (75.3)
Net cash inflow from operating activities 48.6 170.7 193.9
Cash flow from investing activities
Proceeds on disposal of property, plant and equipment 42.2 - 2.4
Proceeds on disposal of listed investments - 179.1 190.2
Proceeds on disposal of subsidiary - - 109.5
Purchase of associate, net of cash acquired (0.6) - (9.0)
Purchase of subsidiaries, net of cash acquired - - (8.1)
Purchase of non-controlling interests (11.3) - (5.5)
Purchase of property, plant and equipment (99.9) (287.0) (413.5)
Purchase of investment properties - - (6.0)
Purchase of listed investments (131.6) (18.6) (24.7)
Investment income received 0.8 0.6 0.5
Finance income received 0.3 - 0.5
Net cash outflow from investing activities (200.1) (125.9) (163.7)
Cash flow from financing activities
Finance costs paid (4.5) (3.9) (2.8)
Borrowings drawn down 577.7 90.0 328.0
Borrowings repaid (310.0) (163.6) (344.1)
Purchase of own shares (133.7) (13.1) (109.8)
Net cash inflow / (outflow) from financing activities 129.5 (90.6) (128.7)
Net decrease in cash and cash equivalents including overdrafts (22.0) (45.8) (98.5)
Cash and cash equivalents including overdrafts at beginning of period 135.2 233.7 233.7
Cash and cash equivalents including overdrafts at the period end 113.2 187.9 135.2
The accompanying notes form an integral part of this interim financial report.
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 26 WEEKS ENDED 29 OCTOBER 2017
Treasury shares Foreign currency translation Own share reserve Retained earnings Other reserves Total attributable to owners of the parent Non-controlling interests Total
£m £m £m £m £m £m £m £m
At 24 April 2016 (56.2) 26.8 (33.7) 1,482.3 (32.8) 1,386.4 (1.7) 1,384.7
Share-based payments - - - 0.7 - 0.7 - 0.7
Deferred Tax on share schemes - - - (2.2) - (2.2) - (2.2)
Purchase of own shares (13.2) - - - - (13.2) - (13.2)
Changes to non-controlling Interest - - - (5.3) - (5.3) (1.1) (6.4)
Transactions with owners (13.2) - - (6.8) - (20.0) (1.1) (21.1)
Other comprehensive income:
Profit for the financial period - - - 92.4 - 92.4 1.0 93.4
Cash flow hedges - recognised in the period - - - - (91.5) (91.5) - (91.5)
- reclassification - - - - (5.9) (5.9) - (5.9)
- taxation - - - - 14.2 14.2 - 14.2
Actuarial losses on defined benefit pension schemes - - - (8.8) - (8.8) - (8.8)
Taxation on items taken to comprehensive income - - - 1.7 - 1.7 - 1.7
Fair value adjustment in respect of available for sale financial assets - - - (102.5) - (102.5) - (102.5)
Translation differences - group - 70.8 - - - 70.8 - 70.8
Total comprehensive income - 70.8 - (17.2) (83.2) (29.6) 1.0 (28.6)
At 23 October 2016 (69.4) 97.6 (33.7) 1,458.3 (116.0) 1,336.8 (1.8) 1,335.0
Treasury shares Foreign currency translation Own share reserve Retained earnings Other reserves Total attributable to owners of the parent Non-controlling interests Total
£m £m £m £m £m £m £m £m
At 30 April 2017 (329.5) 77.1 (33.7) 1,591.0 (65.9) 1,239.0 (0.7) 1,238.3
Share-based payments - - 56.3 (56.3) - - - -
Current Tax on share schemes - - - 4.8 - 4.8 - 4.8
Deferred tax on share schemes - - - (2.2) - (2.2) - (2.2)
Purchase of own shares (94.3) - (39.4) - - (133.7) - (133.7)
FV of share buyback reversal 163.5 - - - - 163.5 - 163.5
Changes to non-controlling Interest - - - (10.1) - (10.1) (1.2) (11.3)
Transactions with owners 69.2 - 16.9 (63.8) - 22.3 (1.2) 21.1
Other comprehensive income:
Profit for the financial period - - - 26.0 - 26.0 2.7 28.7
Cash flow hedges - recognised in the period - - - - (49.8) (49.8) - (49.8)
- reclassification - - - - (1.9) (1.9) - (1.9)
- taxation - - - - 8.8 8.8 - 8.8
Fair value adjustment in respect of available for sale financial assets - - - 7.0 - 7.0 - 7.0
Taxation on items taken to comprehensive income - - - (1.2) - (1.2) - (1.2)
Market value of shares transferred to the EBT - - (52.2) - - (52.2) - (52.2)
Difference between cost and MV of shares transferred 29.9 - - 21.1 - 51.0 - 51.0
Translation differences - group - 24.1 - - - 24.1 - 24.1
Total comprehensive income 29.9 24.1 (52.2) 52.9 (42.9) 11.8 2.7 14.5
At 29 October 2017 (230.4) 101.2 (69.0) 1,580.1 (108.8) 1,273.1 0.8 1,273.9
The own shares, held by Sports Direct International plc Employee Benefit Trust, and treasury reserves represent the cost of
shares in Sports Direct International plc purchased in the market and to satisfy options under the Group's share scheme.
The Company holds 98,350,831 ordinary shares in Treasury (FY17 H1: 46,719,593, FY17: 79,310,534). At 29 October 2017, the
Sports Direct Employee Benefit Trust held 17,500,984 shares. During the period, 12,782,512 shares were transferred from
Treasury to the EBT in the Own Share Reserve with the transfer reflected at market value.
The foreign currency translation reserve is used to record exchange differences arising from the translation of the
financial statements of foreign subsidiaries and associates.
NOTES TO THE FINANCIAL INFORMATION FOR THE 26 WEEKS ENDED 29 OCTOBER 2017
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 2017 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 53 weeks ended 30 April 2017. 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 53 weeks ended 30 April 2017 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
Management have determined to present its segmental disclosures consistently with the presentation in the 2017 Annual
Report with the exception that the USC fascia has been included within UK Retail. This is due to management's assessment of
the operating characteristics of USC. Management consider operationally that the UK and EU Sports Retail divisions are run
as one business unit in terms of allocating resources and assessing performance. However, under IFRS 8 we have not at this
reporting date met the required criteria with enough certainty to move back to an aggregated reporting segment. We will
continually keep this under review at subsequent reporting dates. We continue to monitor the impacts of Brexit, and the
continued uncertainties this has brought relating to the political and economic environments, and market and currency
volatility in the countries we operate in. European countries have been identified as operating segments and have been
aggregated into a single operating segment as permitted under IFRS 8. The decision to aggregate these segments was based on
the fact that they each have similar economic characteristics, similar long term financial performance expectations, and
are similar in each of the following respects:
· The nature of the products
· The type or class of customer for the products; and
· The methods used to distribute the products
In accordance with paragraph 12 of IFRS 8 the Group's operating segments have been aggregated into the following reportable
segments:
1. UK Sports Retail - includes the results of the UK retail network of sports stores and USC stores and concessions,
along with related websites;
2. International Retail - includes the results of the International retail network of sports stores but excludes retail
activities in the US;
3. US Retail - includes the results of US based retail activities;
4. Premium Lifestyle - includes the results of the premium retail businesses such as Flannels, Cruise and van mildert;
and
5. Brands - includes the results of the Group's portfolio of internationally recognised brands such as Everlast,
Lonsdale and Slazenger.
The comparative information for the period ended 23 October 2016 has been restated to include the results of USC in UK
Retail. Accordingly, the prior period has been restated to adjust £42.5m of sales, £17.1m of margin and £18.4m of
overheads.
Information regarding the Group's reportable segments for the period ended 29 October 2017, as well as a reconciliation of
reported profit for the period to underlying EBITDA, is presented below:
Segmental information for the 26 weeks ended 29 October 2017:
Retail Brands
UK Sports Retail International Sports Retail Premium Lifestyle US Retail Total Retail Total Eliminations Total
£m £m £m £m £m £m £m £m
Sales to external customers 1,142.2 343.5 67.8 63.9 1,617.4 97.2 - 1,714.6
Sales to other segments - - - - 8.6 (8.6) -
Revenue 1,142.2 343.5 67.8 63.9 1,617.4 105.8 (8.6) 1,714.6
Gross profit 453.9 140.1 21.8 7.0 622.8 38.2 - 661.0
Operating profit/(loss) before foreign exchange and exceptional items 116.2 (6.5) (0.3) (23.8) 85.6 15.0 - 100.6
Operating Profit 147.1 (6.8) (0.3) (23.8) 116.2 11.2 - 127.4
Investment income 0.2
Investment costs (32.7)
Finance income 0.3
Finance costs (40.9)
Share of profits of associated undertakings and joint ventures (8.5)
Profit before taxation 45.8
Taxation (17.1)
Profit for the period 28.7
Reconciliation of operating profit to underlying EBITDA for the 26 week period ending 29 October 2017:
UK Sports Retail International Lifestyle US Retail Brands Total
£m £m £m £m £m £m
Operating profit 147.1 (6.8) (0.3) (23.8) 11.2 127.4
Depreciation 37.8 21.9 1.0 0.8 0.6 62.1
Amortisation - 0.2 - - 1.7 1.9
Associates (8.5) - - - - (8.5)
Reported EBITDA 176.4 15.3 0.7 (23.0) 13.5 182.9
Exceptional items 1.8 - - - 3.2 5.0
Profit on disposal of properties (16.7) - - - - (16.7)
Realised FX Loss (16.0) 0.3 - - 0.6 (15.1)
Underlying EBITDA (pre-scheme costs) 145.5 15.6 0.7 (23.0) 17.3 156.1
Sales to other segments are priced at cost plus a 10% mark-up.
Segmental information for the 26 weeks ended 23 October 2016 (restated):
Retail
UK Sports Retail International Sports Stores Premium Lifestyle Total Retail Brands Total Eliminations Total
£m £m £m £m £m £m £m
Sales to external customers 1,153.7 330.2 40.9 1,524.8 112.9 - 1,637.7
Sales to other segments - - - - 22.3 (22.3) -
Revenue 1,153.7 330.2 40.9 1,524.8 135.2 (22.3) 1,637.7
Gross profit 470.4 131.1 16.3 617.8 44.2 - 662.0
Operating profit/(loss) before foreign exchange and exceptional items 94.6 (31.4) (2.1) 61.1 14.2 - 75.3
Operating Profit 113.8 (43.4) (1.8) 68.6 11.4 - 80.0
Investment income 146.3
Finance income (26.1)
Finance costs (60.0)
Share of profits of associated undertakings and joint -
Profit before taxation 140.2
Taxation (46.8)
Profit for the period 93.4
Reconciliation of operating profit to underlying EBITDA for the 26 week period ending 23 October 2016:
UK Sports Retail International Lifestyle Brands Total
£m £m £m £m £m
Operating profit 113.8 (43.4) (1.8) 11.4 80.0
Depreciation 41.7 19.4 1.5 1.0 63.6
Amortisation 0.4 1.4 1.5 1.9 5.2
Reported EBITDA 155.9 (22.6) 1.2 14.3 148.8
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