REG - JD Sports Fashion - Investment in Joint Venture in South Korea <Origin Href="QuoteRef">JD.L</Origin>

JD Sports FashionAnnouncement

15/09/2017 07:02

RNS Number : 8243Q
JD Sports Fashion Plc
15 September 2017
15 September 2017
JD Sports Fashion Plc
Investment in Joint Venture in South Korea
JD Sports Fashion Plc ('JD'), the leading retailer of sports, fashion and outdoor brands, announces that, on 14 September 2017, it entered into a joint venture agreement ('JV') with Shoemarker Inc ('SMK'), a South Korean retailer of footwear, in relation to J&S Partners Inc, a company owned by SMK, which currently trades as the multibranded Hot-T fascia ('Hot-T').
JD has acquired an initial 15% of Hot-T for a cash consideration of approximately 5.5 million. As part of the JV, JD has a call option, exercisable at JD's discretion, to acquire a further 35% share of Hot-T following the finalisation of Hot-T's accounts for its financial year ending 31 December 2017. It is JD's current intention to exercise this option and to re-fascia the Hot-T stores as JD. The exercise of this option would result in the consolidation of the results and net assets of Hot-T into JD's accounts. The business will continue to be operationally run by its existing management team.
Additionally, a limited number of put and call options ('Options') have been entered into by JD and SMK as part of the JV. The value of these Options will be based on the fair value of Hot-T at the time they are exercised and to the extent the exercise of any of these Options are not at the sole discretion of the Company, the fair values have been capped with the consideration payable by either JV partner for the holding of the other partner capped below 25% of JD's Gross Assets.
Information about SMK and Hot-T
SMK operates two retail businesses, Shoemarker (a multi branded footwear retailer in the sporting goods sector of the market) with 114 stores in South Korea and Hot-T (a multibranded footwear retailer in the athletic specialty sector of the market) with 23 stores in South Korea and its own website.
The revenue that relates to Hot-T within the SMK business for the year to 31 December 2016 was KRW 25.5 billion (approximately 17.2 million), with a store EBITDA of KRW 3.0 billion (approximately 2.0 million), gross assets of KRW 42.6 billion (approximately 28.8 million), an operating profit (before exceptional items) of KRW 0.6 billion (approximately 0.4 million) and a loss before tax after exceptional charges, principally relating to one off stock write offs, of KRW 6.2 billion (approximately 4.2 million).
Peter Cowgill, Executive Chairman, commented:
"We are delighted to be entering into this JV which gives JD the opportunity to enter a new market of over 50 million people with a proven operator. This JV will further strengthen JD's global presence."
Enquiries:
JD Sports Fashion Plc Tel: 0161 767 1000
Peter Cowgill, Executive Chairman
Brian Small, Chief Financial Officer
Neil Greenhalgh, Group Financial Controller
MHP Communications Tel: 0203 128 8100
Andrew Jaques
Barnaby Fry
Gina Bell
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulations (EU) No. 596/2014 ("MAR") and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

This information is provided by RNS
The company news service from the London Stock Exchange
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