Final Results

RNS Number : 1855T

Sports Direct International Plc

16 July 2015

Sports Direct International plc

Preliminary Results for the Year ended 26 April 2015

Sports Retail gross margin up 170 basis points; Group Underlying EBITDA up 15.7%

	Year ended 26 April 2015	Year ended 27 April 2014	Change (%)
	£m	£m
Group revenue	2,833	2,706	4.7%
Sports Retail	2,399	2,274	5.5%
Premium Lifestyle	208	214	-3.0%
Brands	226	218	4.1%
Group gross margin	43.8%	42.7%	110 bps
Sports Retail gross margin	44.6%	42.9%	170 bps
Underlying EBITDA (pre share scheme costs)	383.2	331.1	15.7%
Underlying profit before tax (PBT)⁽¹⁾	300.3	249.3	20.5%
Reported profit before tax	313.4	239.5	30.9%
Underlying earnings per share (EPS)⁽¹⁾	38.9p	32.1p	21.2%
Reported earnings per share	40.6p	30.8p	31.8%
Net debt	59.7	212.0	(71.8%)

Key highlights

· Sports Retail gross margin increased by 170 bps to 44.6%

· Group underlying EBITDA increased by 15.7% to £383.2m⁽¹⁾

· Underlying profit before tax up 20.5% to £300.3m ⁽¹⁾

· Underlying free cash generation of £301.8m⁽²⁾

· Sports Retail like-for-like stores gross contribution increased by 7.4% (FY14: 10.5%)⁽³⁾

· Continued roll-out of large format city centre stores

· Successful UK launch of Click and Collect in FY15 H2

· Record EBITDA achieved v. 4th year Share Scheme target

· Net debt decreased to £59.7m⁽⁴⁾

Dave Forsey, Chief Executive, said:

"The Group has delivered another solid set of results in spite of challenging trading conditions including the adverse impact on performance during the period of England's early departure from the FIFA World Cup in Brazil and unseasonably mild weather during Autumn, reducing footfall.

"However, with our ongoing focus on providing customers with exceptional quality and unbeatable value, we have continued to grow Group revenues and EBITDA and have succeeded in surpassing our fourth and final EBITDA target under the 2011 Share Scheme. The first of these awards will vest with participants in September 2015 and the second in September 2017. We owe our continued success to the commitment and hard work of those participants and we are delighted that we are able to reward them in this way.

"Trading since the period end has been in line with management expectations and will continue to be driven by improvements in product range and availability, optimisation of both our in-store and web offerings, the introduction of Click and Collect in the UK and further investment in our store portfolio."

(1)	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 Share Scheme charges.
(2)	Underlying free cash generation is defined as operating cash flow before working capital, made up of underlying EBITDA (before Share Scheme costs) plus realised foreign exchange gains and losses, less corporation tax paid.
(3)	Excludes contribution in EAG and SIG as the prior year comparative is not a full year.
(4)	Net debt is borrowings less cash held
Sports Direct International plc Dave Forsey, Chief Executive Matt Pearson, Acting Chief Financial Officer		T: 0344 245 9200
Powerscourt Rory Godson Victoria Palmer-Moore Lisa Kavanagh		T: 0207 250 1446

CHAIRMAN'S STATEMENT

I am pleased to report the Group has once again achieved another solid result, delivering growth in both Group revenues and EBITDA.

EXPANSION

The construction of Phase Three of our Shirebrook campus expansion is now well underway. It consists of an additional warehouse and office facility, spanning a c.700,000 sq. ft. footprint. Occupancy of the first warehouse area is about to commence, with population of the remaining areas of the warehouse planned for later in 2015, on schedule. We have also commenced work on an additional retail unit and training centre at our Shirebrook campus, with completion anticipated for late 2015. The expansions will have a range of benefits for the Group, including an improved environment for staff training.

Our Oxford Street store has now been open for over 12 months and has been well-received by both customers and suppliers. The property, which was the former HMV Flagship store, allows us to trade over four floors, with c.50,000 sq. ft. of retail space. Our Glasgow City Centre store has undergone an extension of approximately 28,000 sq. ft., more than doubling its previous footprint and we have collaborated with Under Armour to offer our customers an exceptional shopping environment. We have also recently acquired the freehold of the c. 50,000 sq. ft. former Primark store in Leeds, which is expected to open this summer.

We are confident in the success of the format used in the stores, which we intend to roll out further.

Our fitness division now has 27 fully operational gyms across England. During the year the Group purchased 25 former LA Fitness gyms, and developed an additional two gyms with separate retail premises, ensuring that customers can purchase their everyday gym essentials on site.

STRATEGIC INVESTMENTS

Strategic investments are an integral part of the Board strategy to explore new opportunities to bring our product to market.

The Group enhanced its relationship with Debenhams during the year with the purchase of an additional strategic investment in the business, increasing our beneficial interest from 6.6% to 15.0% at the year end date of 26 April 2015, which has subsequently reduced since the year end to 10.5%. We are currently trialling four concessions within Debenhams stores.

SHARE SCHEMES

I am pleased to confirm that we have achieved the final Adjusted Underlying EBITDA target under the 2011 Share Scheme and Executive Share Scheme. We hope to reward participating employees under the 2011 Share Scheme for their loyalty and motivation by way of share awards. The first award under the 2011 Share Scheme is due to vest later in 2015, which will distribute c.5m shares to c.2,000 participating employees. The Group's Share Schemes are some of the most generous schemes in the country, and are key tools in motivation and retention.

To the extent that a significant number of participating employees elect to sell some or all of their shares, whilst the Company has no obligation to buy back the shares, the Board will consider a number of options open to it, including whether to: (i) implement an on-market buy back of shares pursuant to the authority given by shareholders at the Company's AGM in 2014; or (ii) fund the Company's Employee Benefit Trust so as to allow it to acquire shares in the market to replace those shares transferred to participating employees pursuant to the vesting.

As part of our strategy to closely align the interests of our team with those of our shareholders, the 2015 Share Scheme was approved by shareholders at a General Meeting in July 2014. The vesting of awards under the 2015 Share Scheme is conditional upon the achievement by the Group of four demanding EBITDA targets, which span between FY16 and FY19. The awards will vest in 2019 and 2021, subject to successful completion of all four targets, and other specific performance conditions. The Executive Deputy Chairman, Mike Ashley, withdrew from the scheme during FY15. Mike remains fully committed to the achievement of the Scheme's targets, but would like the focus to be on ensuring that the Scheme aligns with the wider Sports Direct team, and therefore chose to remove himself from the Scheme.

As we enter FY16 it is clear, and also understood by the market, that planned acquisitions in FY15 did not fully materialise. Following its recent review the Board now recommends to shareholders a revised FY16 Adjusted Underlying EBITDA target of £420m, rather than the existing target of £480m which is now considered to be unreasonably challenging. This compares to the Underlying EBITDA of £383m achieved in FY15. All other targets for the further three years of the Scheme remain the same. The Board will continue to review the robustness of the 2015 Share Scheme on an annual basis.

THE BOARD

During July 2014, it was announced that Charles McCreevy, a Non-Executive Director of the Group, would not be standing for re-election at the 2014 AGM. Charlie, who had spent over three years with the Group, had extensive all-round business knowledge, with particular relevance to Competition Regulations. I would like to thank him for his valuable contribution to the Board. We are in the process of appointing a replacement and hope to make an announcement within the near future.

I am delighted to welcome Matt Pearson to the Board in the position as Acting Chief Financial Officer. Matt joined the business over eight years ago and since then has gained an in depth knowledge of the finances of the Group. Matt has been leading our Group Finance Team for several years and is therefore perfectly placed to take on the additional responsibilities of this role.

CASUAL WORKERS

Much of the comment regarding the Group's use of zero hour contracts has been unfounded and inaccurate. We comply fully with all legal requirements which relate to casual workers, including sick pay, holiday pay, and freedom to gain other employment. Casual workers also participate in general incentive schemes.

DIVIDEND

The Board has decided not to propose a dividend in relation to FY15. The Board remains of the opinion that it is in the best interests of the Group and its shareholders to preserve financial flexibility, facilitating the pursuit of potential acquisitions and other growth opportunities. The payment of dividends remains under review in future years.

CONCLUSION

Despite ongoing challenging market conditions, and the weather, we yet again exceeded our targets in FY15. Such success, year on year, is a testament to the hard work and dedication of all our workforce for which the Board thank and congratulate them.

Dr. Keith Hellawell. QPM
Non-Executive Chairman

16 July 2015

chief executive's report and business review

Summary of Results

	Year ended 26 April 2015	Year ended 27 April 2014	Change
	(£m)	(£m)	%
Revenue	2,832.6	2,706.0	4.7
Underlying EBITDA	383.2	331.1	15.7
Underlying profit before tax	300.3	249.3	20.5
Reported profit before tax	313.4	239.5	30.9
	Pence per share	Pence per share
Underlying EPS	38.9	32.1	21.2
Reported EPS	40.6	30.8	31.8

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 Share Schemes.

Overview of financial performance

I am pleased to report that, despite the adverse impact on performance of England's early departure from last year's FIFA World Cup in Brazil and the unseasonably mild weather during Autumn reducing footfall, the Group has, yet again, succeeded in delivering another solid set of results.

The group has achieved another year of revenue and profit growth in a challenging retail environment, driven by continued expansion both in the UK and across Europe. During the year we have increased our store portfolio in the UK by 23 stores and have added a further nine stores to our European store portfolio. We have also continued to develop large city centre format stores.

We have also established a Fitness Division in the year, Sportsdirect Fitness.com, comprising 27 gyms including two combined gym and retail sites.

I am delighted to announce that the Group has now met the final target under the 2011 Share Scheme. The first award under this scheme is due to vest later in 2015 and will reward over c.2,000 participating employees for their hard work and dedication. The Group's continued success truly re-iterates how important the Share Schemes have been in motivating participants to work towards a shared goal.

Group

Group revenue increased by 4.7% to £2,832.6m in the year. This was primarily due to the Sports Retail division, where we grew revenues by 5.5%. Premium Lifestyle revenue fell by 3.0%, largely due to the closure of loss-making stores in the period.

Group gross margin in the year increased by 110 basis points from 42.7% to 43.8%. Sports Retail division gross margin increased by 170 basis points to 44.6% (FY14: 42.9%), while Brands division gross margin decreased to 40.3% (FY14: 43.1%).

Group operating costs increased 4.2% to £860.5m (FY14: £826.1m). We continue to balance revenues and gross margin, while maintaining a tight focus on operating costs and as a result grew Group underlying EBITDA (pre-scheme costs) for the year by 15.7% to £383.2m (FY14: £331.1m). Within this underlying EBITDA, we increased the Retail division EBITDA by 16.0% to £349.1m (FY14: £300.9m) while the Brands division EBITDA increased by 12.9% to £34.1m (FY14: £30.2m).

Excluded from underlying EBITDA is an £10.1m (FY14: £11.9m) charge in respect of the 2009 and 2011 Share Schemes. This charge has been taken centrally and, except in note 4 to the Annual Report, is not reflected in the divisional (Retail and Brands) numbers in this report.

For the year, Group underlying profit before tax increased 20.5% to £300.3m, primarily as a result of the £52.1m increase in EBITDA (pre-scheme costs). Underlying EPS for the year increased by 21.2% to 38.9p (FY14: 32.1p).

Net debt at 26 April 2015 was £59.7m (27 April 2014: £212.0m), which is 0.16 times reported EBITDA (27 April 2014: 0.66 times). Reported EBITDA includes realised foreign exchange gains/losses in selling and administration costs and the Share Scheme charges.

Review by business segment

	Year ended 26 April 2015 (£m)	Year ended 27 April 2014 (£m)	Change %
Retail
Revenue:
Sports Retail	2,398.6	2,274.4	5.5
Premium Lifestyle	207.6	214.1	-3.0
Total retail revenue	2,606.2	2,488.5	4.7

Cost of sales	(1,456.6)	(1,427.3)	2.1

Gross profit	1,149.6	1,061.2	8.3
Gross margin percentage	44.1	42.6	150 bps

	Year ended 26 April 2015 (£m)	Year ended 27 April 2014 (£m)	Change %
Brands
Revenue:
Wholesale	193.3	185.2	4.4
Licensing	33.1	32.3	2.5
Total brands revenue	226.4	217.5	4.1

Cost of sales	(135.2)	(123.8)	9.2

Gross profit	91.2	93.7	-2.7
Gross margin percentage	40.3	43.1	-280 bps

Sports Retail

Sports Retail revenue has grown in the period as we continue to invest in product range and availability, increasing the proportion of 'better' and 'best' Group branded products, optimise both our in-store and web offerings and further invest in our store portfolio.

Sports Retail sales grew 5.5% to £2,398.6m (FY14: £2,274.4m), driven largely by growth in the UK, offset by a weak Winter sports season across Europe and adverse foreign currency movements. Sports Retail gross margin for the year increased by 170 basis points to 44.6% (FY14: 42.9%).This increase is primarily attributable to on-going investment in our 'better and best' product ranges, further enhanced by efficiencies gained by our strong supply chain disciplines.

Sales in the second half of the year were up 2.6% to £1,167.6m (FY14 H2: £1,138.3m). Gross margins for the second half of the year improved to 44.6% (FY14 H2: 42.5%).

Sports Retail like-for-like gross contribution, which excludes online, increased by 7.4%⁽¹⁾, marking the sixth consecutive year of growth in this KPI (FY14: +10.5% / FY13: +10.6% / FY12: +0.7% / FY11: +6.8% / FY10: +3.7%). Sports Retail like-for-like contribution is defined as the percentage change in gross contribution in the successive 12-month period. A like-for-like store is one that has been trading for the full 12 months in both periods and has not been affected by a significant change, such as a major refurbishment. The number of stores included in this year's KPI is 432 (FY14: 339).

Sports Retail operating costs increased by 9.0% in the year to £715.2m (FY14: £656.3m) compared to a 5.5% increase in sales and a 9.7% increase in gross profit due to the full year impact of proportionally higher costs in our recently acquired European businesses. Operating costs in H2 increased by 4.6% to £361.4m (FY14 H2: £345.5m) compared to a 2.6% increase in sales and a 7.7% increase in gross profit.

Store wages were up 13.1% in the year to £239.2m (FY14: £211.4m) but as a percentage of sales increased only to 10.0% (FY14: 9.3%) due to the annualised effect of new store openings combined with the full year impact of proportionally higher costs in our recently acquired European businesses and reduced sales due to a difficult winter sports season in Europe. Sports Retail store premises costs increased by 9.5% to £211.0m (FY14: £192.7m), due to investment in new stores and the full year effect of comparatively higher costs in our new European businesses. Other operating costs were up 14.2% to £280.8m (FY14: £246.6m), increasing as a percentage of sales to 11.7% (FY14: 10.8%) due to costs in our recently established Fitness division.

The currency impact on operating costs of the change in the Euro: Sterling exchange in our European businesses was a gain of £15.7m (FY14: a cost of £5.6m).

Underlying EBITDA for Sports Retail was £356.8m (FY14: £321.3m), an increase of 11.0% for the year. This increase was driven by a £94.2m increase in gross profit due to the growth in store contribution and online sales, offset by the £59.0m increase in operating costs.

The Group's retail businesses performed strongly in a difficult economic environment. Our retail model, offering outstanding value to our customers, remains resilient, both in the UK and internationally. Throughout the year, we continued to focus on offering our customers the most comprehensive product range, the best availability and value while minimising operating costs as a percentage of gross sales.

Online revenue has increased by 14.4% from £335.4m to £383.8m in the year, driven largely by the successful launch of Click and Collect in the UK during the second half of the year, which now accounts for over 20% of all UK online orders. This performance is exceptional considering we charge £4.99 for this service. Online sales represented 16.5% of Sports Retail sales (FY14: 15.1%), excluding wholesale sales.

Our mobile site continues to drive sales and was recently ranked in the top four retailers in the FTSE 100 in terms of mobile website performance, according to a recent study released by The Search Agency ⁽²⁾. Mobile traffic now accounts for over 50% of all online visits. We have also re-designed our checkout, introducing a guest checkout option and streamlining the checkout process.

We have worked hard to improve the customer experience in Europe, widening the language and currency conversion options on our sites for non-English speaking countries and going forward plan to introduce dedicated websites for our European businesses and additional payment methods including Ideal, Giro and Sofort.

Following successful trials during the year, customers are now able to purchase and redeem gift cards online. We are also working towards the introduction of a fast pay check out system, allowing customers to purchase a large number of products in small number of clicks.

The division has continued to expand, with the development of Sportsdirect Fitness.com, comprising 25 standalone former LA Fitness gyms and an additional two new build combined retail and gym spaces. A further two gyms in St Helens and Dundee are planned for early autumn 2015. Membership continues to grow and we have already surpassed our full year targets.

We have continued to invest in employee training, with a key focus this year on our "Home Grown" Talent Management programme, Customer Service Training and Management Induction. During the year over 58,000 hours were invested into training and developing our employees. A great deal of this training took place at our Training Academy on our Shirebrook campus, which is the only training centre in the world supported by both Nike and Puma. We are committed to the continued development of our employees, always aiming to promote internally wherever possible, and during the year ran our first Graduate Recruitment Programme, 'Talent Bank', where graduates were placed in our Finance and Ecommerce teams for eight week summer placements and offered the opportunity to compete for a permanent role, with the best being rewarded.

Phase Three of the development of our National Distribution Centre in Shirebrook, the construction of an additional c.700,000 sq. ft. footprint warehouse and office facility, is now well underway, with completion scheduled for late 2015.

We have worked hard to enhance and invest in our store portfolio during the year, with a particular focus on larger city centre stores. During the year we re-located our Oxford Street store to the c.50,000,sq. ft. former HMV store and have completed a c.28,000 sq. ft. extension of our Glasgow store, which includes a store in store concept area with Under Armour. We have recently also acquired the freehold of the former Primark store in Leeds. Works are currently underway on this four floor, c. 50,000 sq. ft. store which is due to open this Summer.

During the year we opened 39 stores in the UK, closing 16 and have opened an additional 16 stores in Europe, closing seven. Twelve out of the sixteen UK closures were relocations into larger and better configured space. 428 of the UK store fascia are now branded SPORTSDIRECT.com, an increase of 27 from last year (FY14: 401).

Period end square-footage increased to c.4.75m sq. ft ⁽³⁾. (FY14: c.4.5m) in the UK and remained at c. 3.0m sq. ft. ⁽⁴⁾ (FY14: c.3.0m sq. ft.) across the rest of Europe.

UK Stores

Store Portfolio	As at 26 April 2015	As at 27 April 2014

Stores at Year End	440	417

Opened	39	32
Closed	16	11

SPORTSDIRECT.com fascia	428	401
Other	13	17
Area (sq. ft.)	c.4.75m ⁽³⁾	c.4.5m

In the 52 weeks to 26 April 2015, rent reviews have been agreed on 33 stores, of which 26 stores were agreed at nil increase. Of the remaining seven stores the average increase in rent was 13.87%, giving a total average increase over the 33 stores of 2.88% (0.57% annual equivalent). There are currently 52 rent reviews outstanding with a further 42 falling due in FY16. Our lease expiry profile over all leasehold stores (excluding Lillywhites Piccadilly) is now 4.6 years, including 37 stores with contractual expiries or break dates within the next 12 months. This significant amount of flexibility within our portfolio allows us to continue to monitor and adapt our format to the rapidly changing multi-channel environment.

In the current financial year, we are targeting to open between 30 and 40 stores, c.30% of which are expected to be relocations. We are also targeting to re-fit c.300,000 sq. ft. of retail space across the UK.

International Stores

Store Portfolio	26 April 2015	27 April 2014

Austria	46	52
Belgium	43	44
Estonia *	24	20
Latvia ^*	13	13
Lithuania ^*	12	12
Portugal	17	15
Slovenia	15	15
Poland	10	7
France	7	6
Czech Republic	6	4
Holland	6	6
Cyprus	6	5
Hungary	5	4
Slovakia	4	3
Germany	3	3
Luxembourg	2	2
Spain	1	1
Switzerland	1	-

Total	221	212
Note: Excluding Republic of Ireland & Iceland

*Includes only stores with SPORTLAND or SPORTSDIRECT.com fascias

All of the above stores are operated by companies wholly owned by the Group, except Portugal, where the Group owns 50.1% and Estonia, Latvia and Lithuania where the Group owns 60.0%. During the year we have expanded our European store portfolio by nine stores and have entered one new country. As a result we are now active in 20 countries across Europe including the Republic of Ireland and Iceland.

In Austria, we have continued to relocate and upgrade the former Sports Experts stores which had been previously re-branded to the SPORTSDIRECT.com fascia. Over the coming year we will re-brand key Mega stores to the Lillywhites fascia, replicating our UK city centre store format across the re-branded stores in collaboration with key international brands such as Salomon.

In the Baltic states we have already opened two stores in Estonia under the SPORTSDIRECT.com fascia and plan to open two further stores in Lithuania and one store in Latvia under the SPORTSDIRECT.com fascia. We have also continued to invest in re-locating and re-fitting the stores trading under the SPORTLAND fascia.

Our strategy remains to identify partners in new territories while continuing to expand our operations in the countries where we currently trade. For FY16, we are targeting to open between 20 and 30 new stores across seven countries.

The Group has a 50% shareholding in the Heatons chain which operates 15 Sports Direct stores in Northern Ireland and 27 sports stores in the Republic of Ireland. We also own a 40% shareholding in the Sports Direct business in Iceland.

Local management continue to work hard to ensure that all new and existing stores in Europe are committed to striving towards the operational efficiencies and standards that exist across our UK sports stores.

(1) Excluding EAG and SIG as the prior year comparative is not a full year

(2) The Search Agency UK's Mobile Experience Scorecard: FTSE 100 Companies -

http://go.thesearchagency.com/mobile-experience-scorecard-ftse-100-2015

(3) Due to differing methodologies, this implies a range between 4.5m sq. ft. - 5.0m sq. ft.

(4) Due to differing methodologies, this implies a range between 2.5m sq. ft. - 3.5m sq. ft.

Premium Lifestyle

Premium Lifestyle sales decreased 3.0% to £207.6m (FY14: £214.1m), due to the closure of loss-making stores in the year. Premium Lifestyle gross margin for the year decreased by 150 basis points to 38.8% (FY14: 40.3%) due to online clearance of legacy stock in the year.

Premium Lifestyle operating costs decreased by 17.3% to £88.2m (FY14: £106.7m) due to the continued rationalisation of the USC and Republic businesses and synergies gained by the consolidation of key head office functions in Flannels.com, Cruise and Van Mildert and the integration of the distribution function.

The Underlying EBITDA loss for Premium Lifestyle decreased to £7.7m (FY14: £20.4m loss) as we began to see the benefit of the re-structuring of Republic in the prior year and rationalisation of the other businesses. We will see further benefits of this in the coming year.

Online revenue in the division increased in the year, driven largely improvements in stock availability and system improvements. We saw the benefit of the integration of the division's eCommerce platforms with the Group's IT systems and the launch of the Flannels.com and USC mobile platforms in the prior year. We also successfully launched Click and Collect in USC during the year and over 15% of all USC online orders are now delivered via Click and Collect.

We continue to strengthen our relationships with key third party suppliers.

At the year end, the Premium Lifestyle division traded from 103 stores under four main fascias:

Store Portfolio	As at 26 April 2015	As at 27 April 2014
USC	66	90
Cruise	10	10
Van Mildert	10	9
Flannels.com	8	8
Other	9	9
	103	126

Brands

The Group's brand portfolio includes a wide variety of world-famous sport, fashion and lifestyle brands. The Group's Retail division sells products under these Group brands in its stores, and the Brands division exploits the brands through its wholesale and licensing activities. The Brands division continues to sponsor a variety of prestigious events and retains a variety of globally-recognised, high-profile sportsmen and women as brand ambassadors.

Brands division total revenue increased by 4.1% to £226.4m (FY14: £217.5m). Wholesale revenues were up 4.4% to £193.3m (FY14: £185.2m), including growth in the challenging UK market. Trading in the US market was in line with expectations and continues to represent c. 40% of total wholesale sales.

Brands gross margin decreased by 280 basis points to 40.3% (FY14: 43.1%). Wholesale gross margins fell 310 basis points to 30.1% (FY14: 33.2%) largely due to a shift in the sales mix towards lower margin lines.

Licensing revenues in the year were up 2.5% to £33.1m (FY14: £32.3m). During the year we signed 58 new licence agreements, covering multiple brands, product categories and geographies, with minimum contracted values of $25.0m over the life of the agreements. At 26 April 2015, the Group has 401 license agreements worldwide⁽¹⁾, across 264 licensees, with contracted minimums of $305m over the remaining life of the agreements.

Longer term, we still regard licensing as the key driver of Brands division profitability and central to the overall growth of the Brands business. The key growth areas are expected to include Australasia and Asia Pacific with the acquisition of the Dunlop & Slazenger brands in the region during the year. This combined with growth in the Americas should compensate for a more challenging licensing landscape in the UK and Europe, as Sports Retail continues to expand in these territories.

Operating costs decreased by 9.7% to £57.0m (FY14: £63.1m) benefiting from the consolidation of our back office functions in the prior year. As a result of cost savings, underlying EBITDA increased by 12.9% to £34.1m (FY14: £30.2m).

We continue to focus on developing world-class products that are endorsed by leading athletes on the field of play and expect to spend between £10 and £20m on advertising and promotional costs in the coming year.

(1) Includes consolidation of agreements signed in prior years

Outlook

Trading since the year end has been in line with management's expectations, and underpins the 2015 Bonus Share Scheme's revised FY16 Underlying EBITDA target of £420m. The Group's performance continues to benefit from a number of factors including investment in product range and availability, with an increased emphasis on 'better' and 'best' Group branded products and the optimisation of our in-store and web offer, enhanced by the introduction of Click and Collect in the UK. We also continue to invest in our store portfolio, with the roll-out of further large format city centre stores.

Key Performance Indicators

The Board monitors the performance of the Group by reference to a number of key performance indicators (KPIs), which are discussed in this Chief Executive's Report and in the Financial Review. The most important of these KPIs are:

	52 weeks ended 26 April 2015	52 weeks ended 27 April 2014	52 weeks ended 28 April 2013

Financial KPIs
Group revenue	£2,832.6m	£2,706.0m	£2,185.6m
Underlying EBITDA ⁽¹⁾	£383.2m	£331.1m	£287.9m
Sports Retail gross margin	44.6%	42.9%	40.3%
Sports Retail like-for-like stores gross contribution ⁽²⁾	+7.4%	+10.5%	+10.6%
Online revenue as a percentage of total Sports Retail revenue ⁽³⁾	16.5%	15.1%	15.0%
Underlying earnings per share ⁽⁴⁾	38.9p	32.1p	26.9p
Non-financial KPIs
No. of Sports Retail stores ⁽⁵⁾	661	629	498
Workforce turnover	18.7%	19.2%	15.5%
Cardboard recycling	9,526 tonnes	9,230 tonnes	8,893 tonnes

⁽¹⁾ The method for calculating underlying EBITDA is set out in the Financial Review.

⁽²⁾ Sports Retail like-for-like contribution is defined as the percentage change in gross contribution in the successive 12 month period. A like-for-like store is one that has been trading for the full 12 months in both periods and has not been affected by a significant change, such as a major refurbishment. Excludes contribution in EAG and SIG as the prior year comparative is not a full year

⁽³⁾Excludes wholesale revenue

⁽⁴⁾The method for calculating underlying earnings per share is set out in the Financial Review

⁽⁵⁾ Excluding associates and stores in the Baltics states that trade under fascias other than SPORTLAND or SPORTSDIRECT.com

Workforce

The success of the Group has largely been created by our c.27,000 strong workforce, whose dedication and commitment has been sustained over many years. Their enthusiasm and 'one team' attitude has assisted the Group to succeed where many other retailers have failed. The Board are extremely grateful for the time that our workforce has taken to develop their skills and expertise. We promote staff training wherever possible to enable them to be the best that they can be.

The 2009 and 2011 Share Schemes have been fundamental tools in the motivation and incentivisation of participating employees. Under the 2009 Share Scheme, c.27m shares vested with those participants. Subject to satisfactory personal performance, a further c.21m shares are expected to vest under the 2011 Share Scheme.

The 2011 Share Scheme Adjusted Underlying EBITDA targets (before scheme costs) relate to performance between FY12 and FY15. All four targets have now been met, and subject to the individual employee's satisfactory personal performance, the shares are due to vest in 2015 and 2017. Under the 2011 Share Scheme participating employees are eligible for awards on a pro-rata basis depending on their length of service with the Group. Awards under the scheme are granted at either 100%, 75%, 50% or 25% of the participant's annual base pay. Subject to the service criteria being fulfilled,c.5m shares are due to vest in 2015 and c.16m shares are due to vest in 2017.

An additional three million shares are due to vest with our Executive Director and two members of senior management in 2017 under the Executive Share Scheme, subject to performance criteria being fulfilled. The Executive Share Scheme performance targets mirror those to be applied to awards under the 2011 Share Scheme.

As a result of the successes of previous schemes, the 2015 Share Scheme has been devised to encourage further outstanding employee performance for those who are invited to participate. The scheme will provide for the grant of nil-cost options over up to 25m shares. The vestings are dependent on stretching performance criteria spanning between FY16 and FY19. With original EBITDA targets (before scheme costs) of £480m for FY16, £570m for FY17, £650m for FY18 and £750m for FY19, the scheme has the potential to not only motivate participants, but also to create a further substantial increase in shareholder value.

The Group intends to propose an amendment to the FY16 Adjusted Underlying EBITDA target under the 2015 Share Scheme, which will be reduced from £480m to £420m. All other targets for the further three years of the scheme remain the same. This change will be put to shareholders as an ordinary resolution at the Company's AGM in September 2015.

Our strategy for growth

The Group's strategic focus is to continue to deliver sustainable long-term growth.

Within the UK Retail business this strategy includes proactive management of our store portfolio to further reduce costs and increase sales areas so that we can expand our product offering. This is illustrated by our recent store openings in Glasgow and Oxford Street, a model which we plan to replicate in other major markets.

The Group also intends to invest in store refurbishment and merchandising in order to provide our customers with an enhanced customer experience. The on-going collaboration with Under Armour in the UK and European brands such as Salomon for our in-store concepts, including the new Oxford Street store, is a further example of this strategy.

Our international expansion strategy remains focused on Europe. This includes identifying and working with strong local partners, which can assist the Group to expand in new territories, while we continue to expand our operations in those countries where we currently trade. We believe there is a significant opportunity to introduce the key elements of our successful business model across Europe. This strategy includes the introduction of our sourcing, buying and operational expertise in new markets, whilst also leveraging our Group brand portfolio.

Online remains a significant growth opportunity for the Group. The launch of UK Click and Collect in the year in both Sports Direct and USC has driven a significant increase in online sales, and we now plan to continue to roll this out across the other Group websites. Further opportunities to grow this business include the launch of a loyalty scheme for customers including annual fixed price delivery options and the development of dedicated websites and improved payment options across Europe. We also plan to introduce a fast pay check out system which will streamline the checkout process.

In order to re-enforce the heritage and authenticity of its brands, the Brands division will continue to develop core wholesale product for international brands such as Dunlop, Slazenger and Everlast. Going forward, the Brands division will focus on further expansion of its licensing activities in North America, Australasia and Asia Pacific, leveraging the global appeal of our leading brands. This will increase the global presence and international appeal of our Group brands.

We believe that acquisitions and strategic investments in related businesses are beneficial to the Group and we will continue to evaluate such opportunities as they arise. The Group maintains significant financial and strategic flexibility in order to ensure that it is able to pursue such opportunities from a position of strength.

Dave Forsey

Chief Executive

16 July 2015

FINANCIAL REVIEW

The financial statements for the Group for the year ended 26 April 2015 are presented in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

EBITDA and Profit Before Tax

	EBITDA	PBT
	£m	£m

Operating profit	295.6

Depreciation, amortisation and impairment	67.8
Share of profit of associated undertakings (excl. FV adjustments)	3.0

Reported	366.4	313.4

Share scheme	10.1	-
Exceptional items	3.0	3.0
Profit on disposal of investments	-	(12.6)
Realised FX loss	3.7	3.7
IAS 39 FX fair value adjustment to forward currency contracts	-	(7.2)

Underlying	383.2	300.3

Underlying 52-week FY15 profit before tax excludes:

(i) exceptional items which decreased profit by £3.0m;

(ii) profit on disposal of investments which increased profit by £12.6m;

(iii) realised foreign exchange losses which decreased profit by £3.7m; and

(iv) IFRS revaluation of foreign currency contracts which increased profit by £7.2m.

Foreign exchange

The Group manages the impact of currency movements through the use of forward fixed rate currency contracts. The Group's policy is to hold or hedge between zero and five years of anticipated purchases in foreign currency.

The realised exchange loss of £3.7m (FY14: £1.8m gain) included in administration costs has arisen from:

a) accepting Dollars and Euros at the contracted rate; and

b) the translation of Dollar and Euro denominated assets and liabilities at the period end rate or date of realisation.

The exchange gain of £7.3m (FY14: £11.2m loss) included in finance income / costs substantially represents the reduction in the mark-to-market liability made (under IFRS) for the Group's unhedged forward contracts as at 26 April 2015. A number of the forward contracts outstanding at 26 April 2015 qualify for hedge accounting and the fair value gain on these contracts has been credited to equity through the Consolidated Statement of Comprehensive Income. The Group has sufficient USD/GBP contracts to cover all purchases in UK Retail for FY16. The Sterling exchange rate with the US dollar was $1.680 at 27 April 2014 and $1.502 at 26 April 2015.

Given the potential impact of commodity prices on raw material costs, the Group may hedge certain input costs, including cotton, crude oil and electricity.

Finance costs

	Year ended 26 April 2015	Year ended 27 April 2014
	(£m)	(£m)
Interest on bank loans and overdrafts	(6.7)	(7.5)
Interest on other loans	(0.2)	(0.6)
Interest on retirement benefit obligations	(0.6)	(0.6)
Fair value adjustment to forward foreign exchange contracts	-	(11.2)
	(7.5)	(19.9)

The decrease in interest payable is a result of the decreased use of the revolving credit facility and repayment of debt inherited from acquired companies.

The prior year loss on the fair value of forward foreign exchange contracts arose under IFRS as a result of marking to market at the period end those contracts that do not qualify for hedge accounting.

Exceptional items

	Year ended 26 April 2015	Year ended 27 April 2014
	(£m)	(£m)
Profit on sale of freehold properties	10.3	-
Impairment and accelerated depreciation and amortisation	(13.3)	(5.5)
	(3.0)	(5.5)

The impairment and accelerated depreciation and amortisation relates to a change in the estimated useful life of certain tangible and intangible assets and impairment against goodwill in the year.

The profit on sale of freehold property includes the sale of a freehold warehouse for £21.2m, realising a profit of £11.3m.

Taxation

The effective tax rate on profit before tax in FY15 was 23.0% (FY14: 25.0%). This rate reflects depreciation on non-qualifying assets and overseas earnings being taxed at a higher rate.

Earnings

	Year ended 26 April 2015	Year ended 27 April 2014	Change
	pence per share	pence per share	%
Reported EPS (Basic)	40.6	30.8	31.8
Underlying EPS	38.9	32.1	21.2
Weighted average number of shares (actual)	592,294,371	585,513,537

Basic earnings per share (EPS) is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the actual financial period. Shares held in Treasury and the Employee Benefit Trust are excluded from this figure.

The underlying EPS reflects the underlying performance of the business compared with the prior year and is calculated using the weighted average number of shares. It is not a recognised profit measure under IFRS and may not be directly comparable with "adjusted" profit measures used by other companies.

The items adjusted for arriving at the underlying profit after tax and minority interests is as follows:

	Year ended 26 April 2015	Year ended 27 April 2014
	(£m)	(£m)
Profit after tax	240.4	180.2
Post tax effect of adjustment items:
Profit on disposal of listed investments	(2.8)	(4.0)
Impairment of goodwill	-	0.3
Fair value adjustment to forward foreign exchange contracts	(12.5)	8.4
Realised loss/(gain) on forward foreign exchange contracts	2.9	(1.4)
Profit on disposal of freehold properties	(7.9)	-
Impairment and accelerated depreciation and amortisation	10.2	4.1
Underlying profit after tax	230.3	187.6

Dividends

The Board has decided not to propose a dividend in relation to FY15. The board feels that it remains in the best interests of the Group to preserve financial flexibility, facilitating the pursuit of potential acquisitions and other growth opportunities. The payment of dividends remains under review in future years.

Capital expenditure

During the year, capital expenditure amounted to £100.3m (FY14: £69.1m), which includes expenditure on licences within intangible assets and construction of our Shirebrook warehouse.

Acquisitions

The Group made a number of small acquisitions during the year including the purchase of twenty-five former LA Fitness gyms.

Strategic investments

During the year the Group disposed of c. 1.5m shares in JD Sports Fashion plc but at the year end continued to hold an 11.09% stake in JD Sports. The fair value of the Group's holdings at 26 April 2015 was £140.8m (27 April 2014: £104.9m). The movement in the fair value of the shares held has been recognised directly in Other Comprehensive Income.

In June 2014, the Group acquired an interest in c.7 million 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 c. 56 million 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 c. 74 million Debenhams shares, equivalent to 6.1% of the issued share capital of Debenhams.

On 23 January 2015 the Group terminated an existing Debenhams derivative agreement entered into in January 2014 and at the same time, entered into a new derivative agreement referencing c. 128 million ordinary shares of Debenhams (representing 10.5% of the issued share capital of Debenhams).

As at 26 April 2015 the Group had an interest in 15.0% interest in Debenhams' ordinary shares.

These stakes allow us to develop a relationship and develop commercial partnerships with the relevant retailers and assist in building relationships with key suppliers and brands.

The fair value of equity derivative agreements is included within the derivative financial assets balance of £92.2m.

Cash flow and net debt

Net debt decreased by £152.3m from £212.0m at 27 April 2014 to £59.7m at 26 April 2015.

The analysis of debt at 26 April 2015 was as follows:

	At 26 April 2015	At 27 April 2014
	(£m)	(£m)
Cash and cash equivalents	78.3	151.0
Borrowings	(138.0)	(363.0)

Net debt	(59.7)	(212.0)

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 year 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.

Cash flow

Total movement is as follows:

	At 26 April 2015	At 27 April 2014
	(£m)	(£m)
Underlying 52 week EBITDA	383.2	331.1
Realised (loss)/profit on forward foreign exchange contracts	(3.7)	1.8
Taxes paid	(77.7)	(55.7)
Underlying free cash flow	301.8	277.2

Invested in:-

Working capital and other	(64.8)	(110.1)
Purchase of own shares	-	-
Acquisitions (including debt)	(3.8)	(144.2)
Net proceeds from/(purchase of) investments	4.1	(4.6)
Net capital expenditure	(79.1)	(69.1)
Finance costs and other financing activities	(5.9)	(7.2)

Decrease / (increase) in net debt

152.3

(58.0)

The increase in working capital is partly to support the growth of Sports Retail and the online business and partly due to the timing of payments around year end.

Pensions

The Group operates a number of closed defined benefit schemes in the Dunlop Slazenger companies. The net deficit in these schemes decreased from £15.4m at 27 April 2014 to £14.9m at 26 April 2015.

Matt Pearson

Acting Chief Financial Officer

16 July 2015

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 26 APRIL 2015

		Year ended 26 April 2015	Year ended 27 April 2014
	Notes	£'000	£'000

Revenue	2	2,832,560	2,705,958
Cost of sales		(1,591,748)	(1,551,036)

Gross profit		1,240,812	1,154,922
Selling, distribution and administrative expenses		(950,526)	(908,843)
Other operating income		8,345	8,583
Exceptional items	3	(3,050)	(5,531)

Operating profit	2	295,581	249,131
Other investment income		14,104	7,017
Finance income		8,289	891
Finance costs		(7,487)	(19,853)
Share of profit of associated undertakings and joint ventures		2,959	2,266

Profit before taxation		313,446	239,452
Taxation	4	(72,093)	(59,839)

Profit for the period	2	241,353	179,613


Attributable to:
Equity holders of the Group		240,397	180,245
Non-controlling interest		956	(632)

Profit for the period	2	241,353	179,613

Earnings per share attributable to the equity shareholders


		Pence per share	Pence per share

Basic earnings per share	5	40.6	30.8
Diluted earnings per share	5	39.0	29.2
Underlying basic earnings per share	5	38.9	32.1

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 26 APRIL 2015


		Year ended 26 April 2015	Year ended 27 April 2014
	Notes	£'000	£'000

Profit for the period	2	241,353	179,613

Other comprehensive income

Items that will not be reclassified subsequently to profit or loss
Actuarial (losses) / gains on defined benefit pension schemes		(2,493)	3,860
Taxation on items recognised in other comprehensive income		524	(698)

Items that will be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations		9,156	(33,118)
Exchange differences on hedged contracts - recognised in the period		77,181	(3,737)
Exchange differences on hedged contracts - reclassified and reported in net profit		7,240	(17,909)
Fair value adjustment in respect of available-for-sale financial assets		21,893	57,373
Taxation on items recognised in other comprehensive income		(17,728)	(4,170)
Other comprehensive income for the period, net of tax		95,773	1,601


Total comprehensive income for the period		337,126	181,214

Attributable to:
Equity holders of the Group		336,170	181,846
Non-controlling interest		956	(632)

		337,126	181,214

CONSOLIDATED BALANCE SHEET AS AT 26 APRIL 2015


		26 April 2015	27 April 2014
	Notes	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment		422,742	412,361
Intangible assets		255,364	255,109
Investments in associated undertakings and joint ventures		38,133	41,763
Available-for-sale financial assets		140,795	116,504
Deferred tax assets		38,352	31,130

		895,386	856,867

Current assets
Inventories		517,054	565,479
Trade and other receivables		190,726	123,014
Derivative financial assets		92,199	4,355
Cash and cash equivalents		78,318	151,024

		878,297	843,872

TOTAL ASSETS		1,773,683	1,700,739

EQUITY AND LIABILITIES
Share capital		64,060	64,060
Share premium		874,300	874,300
Treasury shares reserve		(56,234)	(56,234)
Permanent contribution to capital		50	50
Capital redemption reserve		8,005	8,005
Foreign currency translation reserve		14,436	5,280
Reverse combination reserve		(987,312)	(987,312)
Own share reserve		(13,251)	(13,251)
Hedging reserve		78,796	(5,625)
Retained earnings		1,181,511	931,819

		1,164,361	821,092
Non-controlling interests		(2,810)	(3,538)

Total equity		1,161,551	817,554

Non-current liabilities
Borrowings	6	136,849	6,764
Retirement benefit obligations		14,869	15,350
Deferred tax liabilities		40,088	24,046
Provisions		37,705	37,780

		229,511	83,940

Current liabilities
Derivative financial liabilities		5,629	18,665
Trade and other payables		340,936	392,019
Borrowings	6	1,204	356,226
Current tax liabilities		34,852	32,335

		382,621	799,245

Total liabilities		612,132	883,185

TOTAL EQUITY AND LIABILITIES		1,773,683	1,700,739

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 26 APRIL 2015

		Year ended 26 April 2015	Year ended 27 April 2014
	Notes	£'000	£'000

Cash inflow from operating activities	7	314,362	222,785
Income taxes paid		(77,710)	(55,730)

Net cash inflow from operating activities		236,952	167,055

Cash flow from investing activities
Proceeds on disposal of property, plant and equipment		21,150	-
Proceeds on disposal of listed investments		51,695	49,394
Purchase of associate, net of cash acquired		(50)	(8,000)
Purchase of subsidiaries, net of cash acquired		(3,847)	(15,407)
Purchase of intangible assets		(2,937)	(1,827)
Purchase of property, plant and equipment		(97,342)	(67,304)
Purchase of listed investments		(50,415)	(55,467)
Investment income received		2,883	1,604
Finance income received		987	891

Net cash outflow from investing activities		(77,876)	(96,116)

Cash flow from financing activities
Finance costs paid		(6,845)	(8,111)
Borrowings drawn down		126,989	300,910
Borrowings repaid		(346,997)	(348,452)
Exercise of option over non-controlling interests		-	(11,678)

Net cash outflow from financing activities		(226,853)	(67,331)


Net increase in cash and cash equivalents including overdrafts		(67,777)	3,608
Cash and cash equivalents including overdrafts at beginning of period		145,282	141,674

Cash and cash equivalents including overdrafts at the period end		77,505	145,282

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 26 APRIL 2015

	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

Vesting of share - based payments	-	-	51,124	(51,124)	-	-	-	-
Current tax on share schemes	-	-	-	25,500	-	25,500	-	25,500
Deferred tax on share schemes	-	-	-	(11,215)	-	(11,215)	-	(11,215)
Non-controlling interests - acquisitions	-	-	-	-	-	-	(10,513)	(10,513)
Exercise of option over non-controlling interest	-	-	-	(19,970)	-	(19,970)	7,861	(12,109)
Transactions with owners	-	-	51,124	(56,809)	-	(5,685)	(2,652)	(8,337)
Profit for the financial period	-	-	-	180,245	-	180,245	(632)	179,613
Other comprehensive income
Cash flow hedges
- recognised in the period	-	-	-	-	(3,737)	(3,737)	-	(3,737)
- reclassified and reported in net profit	-	-	-	-	(17,909)	(17,909)	-	(17,909)
Actuarial losses on defined benefit pension schemes	-	-	-	3,860	-	3,860	-	3,860
Fair value adjustment in respect of available-for-sale financial assets	-	-	-	57,373	-	57,373	-	57,373
Taxation				(4,868)		(4,868)		(4,868)
Translation differences - Group	-	(32,498)	-	-	-	(32,498)	-	(32,498)
Translation differences - associates	-	(620)	-	-	-	(620)	-	(620)
Total comprehensive income for the period	-	(33,118)	-	236,610	(21,646)	181,846	(632)	181,214

At 27 April 2014	(56,234)	5,280	(13,251)	931,819	(46,522)	821,092	(3,538)	817,554

Credit to equity for Share-based payment	-	-	-	5,833	-	5,833	-	5,833
Deferred tax on share schemes	-	-	-	1,266	-	1,266	-	1,266
Non-controlling interests - acquisitions	-	-	-	-	-	-	384	384
Transactions with owners	-	-	-	7,099	-	7,099	384	7,483
Profit for the financial period	-	-	-	240,397	-	240,397	956	241,353
Dividends received	-	-	-	-	-	-	(612)	(612)
Other comprehensive income
Cash flow hedges
- recognised in the period	-	-	-	-	77,181	77,181	-	77,181
- reclassified and reported in net profit	-	-	-	-	7,240	7,240	-	7,240
Actuarial losses on defined benefit pension schemes	-	-	-	(2,493)	-	(2,493)	-	(2,493)
Fair value adjustment in respect of available-for-sale financial assets	-	-	-	21,893	-	21,893	-	21,893
Taxation				(17,204)		(17,204)		(17,204)
Translation differences - Group	-	13,783	-	-	-	13,783	-	13,783
Translation differences - associates	-	(4,627)	-	-	-	(4,627)	-	(4,627)
Total comprehensive income for the period	-	9,156	-	242,593	84,421	336,170	344	336,514

At 26 April 2015	(56,234)	14,436	(13,251)	1,181,511	37,899	1,164,361	(2,810)	1,161,551

1. Accounting policies

The financial information, which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated cash flow statement, consolidated statement of changes in equity and related notes, does not constitute full accounts within the meaning of s435 (1) and (2) of the Companies Act 2006. The auditors have reported on the Group's statutory accounts for the each of the years ended 26 April 2015 and 27 April 2014 which do not contain any statement under s498 of the Companies Act 2006 and are unqualified. The statutory accounts for the year ended 27 April 2014 have been delivered to the Registrar of Companies and the statutory accounts for the year ended 26 April 2015 will be filed with the registrar in due course.

The consolidated financial statements have been prepared in accordance with IFRS as adopted for use in the European Union (including International Accounting Standards ("IAS") and International Financial Reporting Standards Interpretations Committee ("IFRSiC") interpretations) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS as adopted for use in the European Union. The consolidated financial statements have been prepared under the historical cost convention, as modified to include fair valuation of certain financial assets and derivative financial instruments.

2. Segmental analysis

IFRS 8 - 'Operating Segments' requires the Group's segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker to 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:

• Sports Retail - includes the results of the UK and International retail network of sports stores along with related websites;

• Premium Lifestyle - includes the results of the premium retail businesses such as Republic, Cruise and USC; and

• Brands - includes the results of the Group's portfolio of internationally recognised brands such as Everlast, Lonsdale and Dunlop.

Information regarding the Group's reportable segments for the year ended 26 April 2015, as well as a reconciliation of reported profit for the period to underlying EBITDA, is presented below:

Segmental information for the year ended 26 April 2015:


	Retail			Brands	Eliminations	Total
	Sports Retail	Premium Lifestyle	Retail Total	Total
	£'000	£'000	£'000	£'000	£'000	£'000

Sales to external customers	2,398,547	207,623	2,606,170	226,390	-	2,832,560
Sales to other segments	-	-	-	25,480	(25,480)	-
Revenue	2,398,547	207,623	2,606,170	251,870	(25,480)	2,832,560

Gross profit	1,069,088	80,523	1,149,611	91,201	-	1,240,812
Operating profit before foreign exchange and exceptional items	285,534	(11,170)	274,364	27,984	`	302,348
Operating profit	283,347	(11,278)	272,069	23,512	-	295,581
Investment income						14,104
Finance income						8,289
Finance costs						(7,487)
Share of profits of associated undertakings and joint ventures						2,959
Profit before taxation						313,446
Taxation						(72,093)
Profit for the period						241,353

Sales to other segments are priced at cost plus a 10% mark-up.

Other segment items included in the income statement for the year ended 26 April 2015:


	Retail			Brands	Total
	Sports Retail	Premium Lifestyle	Total	Brands	Total
	£'000	£'000	£'000	£'000	£'000
Depreciation	57,855	2,543	60,398	2,026	62,424
Amortisation	548	687	1,235	4,122	5,357

Information regarding segment assets and liabilities as at 26 April 2015 and capital expenditure for the year then ended:

		Retail	Brands	Eliminations	Total
	Sports Retail	Premium Lifestyle
	£'000	£'000	£'000	£'000	£'000
Investments in associated undertakings and joint venture	38,133	-	-	-	38,133
Other assets	1,688,779	24,446	190,772	(168,447)	1,735,550
Total assets	1,726,912	24,446	190,772	(168,447)	1,773,683
Total liabilities	(646,836)	(60,255)	(73,488)	168,447	(612,132)
Tangible asset additions	93,429	2,321	1,592	-	97,342
Intangible asset additions	108	-	2,829	-	2,937
Total capital expenditure	93,537	2,321	4,421	-	100,279

Segmental information for the year ended 27 April 2014:


	Retail			Brands	Eliminations	Total
	Sports Retail	Premium Lifestyle	Retail Total	Total
	£'000	£'000	£'000	£'000	£'000	£'000

Sales to external customers	2,274,365	214,066	2,488,431	217,527	-	2,705,958
Sales to other segments	203	-	203	29,938	(30,141)	-
Revenue	2,274,568	214,066	2,488,634	247,465	(30,141)	2,705,958

Gross profit	974,952	86,263	1,061,215	93,707	-	1,154,922
Operating profit before foreign exchange and exceptional items	254,736	(25,729)	229,007	23,825	-	252,832
Operating profit	251,762	(25,588)	226,174	22,957	-	249,131
Investment income						7,017
Finance income						891
Finance costs						(19,853)
Share of profits of associated undertakings and joint ventures						2,266
Profit before taxation						239,452
Taxation						(59,839)
Profit for the period						179,613

Sales to other segments are priced at cost plus a 10% mark-up.

Other segment items included in the income statement for the year ended 27 April 2014:


	Retail			Brands	Total
	Sports Retail	Premium Lifestyle	Total	Brands	Total
	£'000	£'000	£'000	£'000	£'000
Depreciation	50,549	4,689	55,238	1,725	56,963
Amortisation	1,348	687	2,035	4,797	6,832
Impairment	-	-	-	284	284

Information regarding segment assets and liabilities as at 27 April 2014 and capital expenditure for the year then ended:

		Retail	Brands	Eliminations	Total
	Sports Retail	Premium Lifestyle
	£'000	£'000	£'000	£'000	£'000
Investments in associated undertakings and joint venture	42,176	-	(413)	-	41,763
Other assets	1,609,024	96,601	183,103	(229,752)	1,658,976
Total assets	1,651,200	96,601	182,690	(229,752)	1,700,739
Total liabilities	(893,269)	(123,554)	(96,114)	229,752	(883,185)
Tangible asset additions	57,365	6,978	2,961	-	67,304
Intangible asset additions	259	-	1,568	-	1,827
Total capital expenditure	57,624	6,978	4,529	-	69,131

Geographic information

Segmental information for the Year ended 26 April 2015:
	UK	Non-UK	Eliminations	Total
	£'000	£'000	£'000	£'000
Segmental revenue from external customers	2,252,360	580,200	-	2,832,560
Total capital expenditure	81,793	18,486	-	100,279
Segmental assets	1,564,864	377,266	(168,447)	1,773,683

Segmental information for the Year ended 27 April 2014:
	UK	Non-UK	Eliminations	Total
	£'000	£'000	£'000	£'000
Segmental revenue from external customers	2,063,724	642,234	-	2,705,958
Total capital expenditure	51,525	17,606	-	69,131
Segmental assets	1,526,405	404,086	(229,752)	1,700,739

The following table reconciles the reported operating profit to the underlying EBITDA as it is one of the main measures used by the chief operating decision maker when reviewing performance:

Reconciliation of operating profit to underlying EBITDA for the Year ending 26 April 2015.

	Sports Retail	Premium Lifestyle	Brands	Total
	£'000	£'000	£'000	£'000

Operating profit	283,347	(11,278)	23,512	295,581

Depreciation	57,855	2,543	2,026	62,424
Amortisation	548	687	4,122	5,357
Share of profit/(loss) of associated undertakings	3,009	-	(50)	2,959

Reported	344,759	(8,048)	29,610	366,321

Charges for the Share Schemes	10,110	-	-	10,110
Exceptional items	(3,395)	-	6,445	3,050
Realised FX Loss/(Gain)	5,332	358	(1,973)	3,717

Underlying EBITDA	356,806	(7,690)	34,082	383,198

Reconciliation of operating profit to underlying EBITDA for the Year ending 27 April 2014.

	Sports Retail	Premium Lifestyle	Brands	Total
	£'000	£'000	£'000	£'000

Operating profit	251,762	(25,588)	22,957	249,131

Depreciation	50,549	4,689	1,725	56,963
Impairment	-	-	284	284
Amortisation	1,348	687	4,797	6,832
Share of profit/(loss) of associated undertakings	2,679	-	(413)	2,266

Reported	306,338	(20,212)	29,350	315,476

Charges for the Share Schemes	11,927	-	-	11,927
Exceptional items	5,531	-	-	5,531
Realised FX (Gain)/ Loss	(2,557)	(141)	868	(1,830)

Underlying EBITDA	321,239	(20,353)	30,218	331,104

3. Exceptional items

	Year ended 26 April 2015	Year ended 27 April 2014
	£'000	£'000

Profit on sale of freehold property	10,288	-
Impairment and accelerated depreciation and amortisation	(13,338)	(5,531)

	(3,050)	(5,531)
	-	-

The impairment and accelerated depreciation and amortisation relates to a change in the estimated useful life of certain tangible and intangible assets and impairment against goodwill in the year.

4. Taxation

The effective tax rate on profit before tax for FY15 was 23.0% (FY14: 25.0%). This rate reflects depreciation on non-qualifying assets and overseas earnings being taxed at a higher rate.

5. Earnings per share from total and continuing operations attributable to the equity shareholders

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders of the parent by the weighted average number of ordinary shares outstanding during the year.

For diluted earnings per share, the weighted average number of shares, 592,294,371 (2014: 585,513,537), is adjusted to assume conversion of all dilutive potential ordinary shares under the Group's share schemes, being 24,200,000 (2014: 32,676,278), to give the diluted weighted average number of shares of 616,494,371 (2014: 618,189,815).

Basic and diluted earnings per share


	Year ended 26 April 2015	Year ended 26 April 2015	Year ended 27 April 2014	Year ended 27 April 2014
	Basic £'000	Diluted £'000	Basic £'000	Diluted £'000

Profit for the period	240,397	240,397	180,245	180,245

	Number in thousands		Number in thousands

Weighted average number of shares	592,294	616,494	585,514	618,190

	Pence per share		Pence per share

Earnings per share	40.6	39.0	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 for the period. 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 certain non-trading items.

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.

	Year ended 26 April 2015	Year ended 26 April 2015	Year ended 27 April 2014	Year ended 27 April 2014
	Basic £'000	Diluted £'000	Basic £'000	Diluted £'000

Profit for the period	240,397	240,397	180,245	180,245

Post tax adjustments to profit for the period for the following non-trading items:
Realised loss / (gain) on forward exchange contracts	2,862	2,862	(1,373)	(1,373)
Fair value adjustment to derivative financial instruments	(12,472)	(12,472)	8,395	8,395
(Profit on disposal of listed investments	(2,832)	(2,832)	(4,060)	(4,060)
Profit on sale of intangible assets	-	-	-	-
Profit on disposal of property	(7,921)	(7,921)

Impairment and accelerated depreciation and amortisation	10,270	10,270	4,432	4,432

Underlying profit for the period	230,304	230,304	187,639	187,639


	Number in thousands		Number in thousands

Weighted average number of shares	592,294	616,494	585,514	618,190

	Pence per share		Pence per share

Earnings per share	38.9	37.4	32.1	30.3

6. Borrowings


	26 April 2015	27 April 2014
	£'000	£'000
Non-current:
Bank and other loans	136,849	6,764

	136,849	6,764

Current:
Bank overdrafts	813	5,742
Bank and other loans	391	350,484

	1,204	356,226

Total borrowings:
Bank overdrafts	813	5,742
Bank and other loans	137,240	357,248

	138,053	362,990

An analysis of the Group's total borrowings other than bank overdrafts is as follows:


	26 April 2015	27 April 2014
	£'000	£'000

Borrowings - Sterling	95,808	240,731
Borrowings - Other	41,432	116,517

	137,240	357,248

Loans are all at rates of interest ranging between 1.15% and 2.0% over the interbank rate of the country within which the borrowing entity resides.

On 28 May 2014 the company refinanced the above facilities and entered into a new committed, unsecured revolving facility agreement with thirteen financial institutions, with Barclays Bank plc acting as Agent. This revolving facility can be drawn to an aggregate limit of £738 million and is available until 27 September 2018.

The Group continues to operate comfortably within its banking facilities and covenants.

The carrying amounts and fair value of the borrowings are not materially different.

Net debt at 26 April 2015 was £59.7m (27 April 2014: £212.0m).

7. Cash inflow from operating activities


	Year ended 26 April 2015	Year ended 27 April 2014
	£'000	£'000

Profit before taxation	313,446	239,452
Net finance (income) / costs	(802)	18,962
Other investment income	(14,104)	(7,017)
Share of profits of associated undertakings and joint ventures	(2,959)	(2,266)

Operating profit	295,581	249,131
Depreciation	62,924	56,963
Amortisation	12,725	6,832
Impairment	5,314	5,815
Loss on disposal of intangibles	107	-
Defined benefit pension plan current service cost	21	22
Defined benefit pension plan employer contributions	(2,718)	(2,708)
Share-based payments	10,105	11,927

Operating cash inflow before changes in working capital	384,059	327,982
Increase in receivables	(66,368)	(18,241)
Decrease / (Increase) in inventories	49,320	(52,521)
Decrease in payables	(52,349)	(34,435)

Cash inflow from operating activities	314,362	222,785