Interim Results
17th December 2008
Sports Direct International plc
("Sports Direct", "the Group" or "the Company")
Interim Results
For the 26 weeks to 26 October 2008
Group Highlights
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Group revenue up 2.9% to £687.7m (2008 H1: £668.1m) |
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Underlying EBITDA up 7.4% to £89.8m (2008 H1: £83.6m) (1) |
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Underlying profit before tax up 3.0% to £51.8m (2008 H1: £50.3m) (1) (2) |
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Underlying earnings per share up 19.5% to 5.76p (2008 H1: 4.82p) (1) (2) |
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Reported profit before tax up 360.8% to £97.7m (2008 H1: £21.2m) (3) |
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Net Foreign Exchange gain of £45.4m (2008 H1: £30.8m loss) |
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Group margin increased by 10 basis points to 43.4% (2008 H1: 43.3%) |
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Flexible business model proving robust in difficult trading environment: |
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- |
Strengthened relationships with third party brands |
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- |
Benefits of supply chain efficiencies |
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- |
Tight control on costs |
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- |
Prudent stock levels |
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Net Debt increased from £465.2m (at 27 April 2008) to £478.3m |
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Interim dividend 1.22p per share |
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(1) |
Underlying EBITDA, underlying profit before taxation and underlying EPS excludes realised foreign exchange in selling and administration costs, exceptional costs and the profit on sale of strategic investments |
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(2) |
Underlying profit before taxation and underlying EPS also exclude profits/losses relating to the IAS 39 fair value adjustment on forward currency contracts in financing income/costs |
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(3) |
Reported profit before tax includes the impact of foreign exchange, profit on sale of strategic investments and exceptional costs. There were no exceptional items in either the current or prior periods. |
Dave Forsey, Chief Executive said:
"These are a solid set of results in what was a very tough trading period. These results reflect the resilience of our flexible business model and the focused approach towards the core principles of retailing."
"With the economic situation and trading environment likely to remain extremely difficult, our back to basics strategy is working for us and we will continue to strengthen our position across all key areas such as product offer, supply chain efficiencies and cost control, and ensure that we are best placed for a market recovery when it happens. The Board remains comfortable with underlying EBITDA expectations of £135m for the full year 2009."
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Sports Direct International plc Dave Forsey, Chief Executive Bob Mellors, Group Finance Director |
T: 0870 333 9410 |
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Financial Dynamics Jonathon Brill |
T: 0207 831 3113 |
Chairman's Statement
Trading conditions have remained challenging, and the home nations' failure to qualify for Euro 2008 continued to impact the Group in the first half of FY2009. However, the Group remains strongly profitable.
The Board took steps during the 2008 financial year to mitigate the impact of these external factors and has made significant progress in doing so. The Group is well positioned with a flexible business model and strong relationships with our partner branded goods suppliers which helps us to provide our unique UK and international retail offering.
We are doing all the right things in the current marketplace as we pursue our back to basics strategy. We have a relentless approach to our cost base, stock is under control, and across our business (from the store portfolio, through the head office and distribution functions) we are running an efficient and tight business which is important in these difficult times. As part of that strategy we are reviewing the information that we give to the market with a view to adopting a more conventional approach in the future.
I would like to take this opportunity to thank all our colleagues for their continued support and hard work. We have a great business and with our proven strategy I believe we will emerge from the current tough operating environment in a position of strength.
Dividend
The Board has resolved to pay an interim dividend of 1.22p per share on 30 April 2009 to shareholders on the register on 3 April 2009, consistent with the final dividend for 2007-08 of 2.44p per share. Whilst the Board's recommendation in respect of a final dividend for the year will depend on performance in the second half, the Board currently intends that the total annual dividend for the 2009 financial year will be paid in the approximate proportions of one third for the interim dividend and two thirds for the final dividend.
Simon Bentley
Acting non-executive Chairman
17 December 2008
Chief Executive's Review
Overview of Financial Performance
In the 26 weeks ended 26 October 2008 ("2009 H1"), Group revenue was up 2.9% at £687.7m compared with revenues of £668.1m for the 26 weeks ended 28 October 2007 ("2008 H1").
UK retail revenues were down by 1.6% to £510.1m (2008 H1: £518.4m). Excluding the revenues from The Original Shoe Company ("OSC") in 2008 H1, which was sold during the last financial year, UK retail revenues grew 3.2%. International retail revenues increased by 34.5% to £51.8m (2008 H1:£38.5m), which excluding the impact of foreign currency exchange rates represented an increase of circa 17%. The brands division revenues were up 34.0% to £117.9m (2008 H1:£88.0m) including licensing, where revenues were up 17.1% to £12.3m.
Gross margins for the Group increased by 10 basis points to 43.4% (2008 H1: 43.3%). The retail division increased margin by 120 basis points to 44.7% (2008 H1: 43.5%). UK retail margin was 45.4% (2008 H1: 45.3%) and the international retail gross margin increased by 130 basis points to 43.6% (2008 H1: 42.3%). While revenue was higher, gross margin in the brands division fell by 480 basis points to 37.1% (2008 H1: 41.9%) predominantly due to a greater proportion of wholesale revenue within the businesses acquired in the previous period.
Underlying EBITDA for the period increased by 7.4% to £89.8m (2008 H1: £83.6m). Within this underlying EBITDA, UK retail increased by £2.4m to £73.1m (2008 H1: £70.7m), International retail increased by £2.1m to £7.5m (2008 H1: £5.4m) and the brands division increased by £1.7m to £9.2m (2008 H1: £7.5m). Underlying profit before tax increased by 3.0% to £51.8m (2008 H1: £50.3m).
Foreign exchange gains for the half year were £45.4m (2008 H1: £30.8m loss). This is net of a £43.1m realised exchange loss included in administration costs (2008 H1: £57.9m loss). The revaluation of forward exchange contracts required under IFRS is included in finance income and this unrealised profit amounted to £88.5m (2008 H1: £27.1m profit). These amounts are excluded from the definition of underlying profit used in the business and as reported here. No exceptional items have been incurred in 2009 H1.
Capital expenditure amounted to £18.1m (2008 H1: £120.0m). This included acquisitions of property, plant and equipment, including £3.9m (2008 H1: 85.7m) on new and refurbished stores (UK).
The banking facilities of the Company are agreed until 2011. We continue to operate well within our bank covenants.
Net debt increased during the period to £478.3m (27 April 2008: £465.2m). Review by Business Segment
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26 weeks ended 26 October 2008 (£'m) |
26 weeks ended 28 October 2007 (£'m) |
Change
% |
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Retail |
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Revenue: |
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UK retail |
510.1 |
518.4 |
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UK wholesale and other |
7.9 |
23.2 |
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International retail |
51.8 |
38.5 |
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Total retail revenue |
569.8 |
580.1 |
(1.8) |
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Cost of sales |
(314.9) |
(327.7) |
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Gross margin |
254.9 |
252.4 |
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Gross margin percentage |
44.7 |
% |
43.5 |
% |
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Brands |
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Revenue: |
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Wholesale |
105.6 |
77.5 |
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Licensing |
12.3 |
10.5 |
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Total brands revenue |
117.9 |
88.0 |
+34.0 |
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Cost of sales |
(74.2) |
(51.1) |
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Gross margin |
43.7 |
36.9 |
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Gross margin percentage |
37.1 |
% |
41.9 |
% |
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Business Review
Last year was an exceptionally difficult year primarily due to sustained adverse weather conditions in the UK. However this year has seen even greater challenges as the tightening of credit and employment risks have brought about a decline in consumer confidence on the high street and worldwide.
Against this uncertain economic climate, our strategy has been focused on concentrating on our core strengths, increasing efficiencies and controlling costs.
Retail division
Total retail revenue (including wholesale and other revenues) was down 1.8% to £569.8m (2008 H1: £580.1m). UK retail revenue, which contributes the majority of retail revenue, was down 1.6% to £510.1m (2008 H1: £518.4m). 2008 H1 included OSC revenues, which was sold during the last financial year. Excluding OSC revenues, UK retail grew 3.2%.
These half year results have been affected by the home nations' failure to qualify for the European Championships held in the summer of 2008.
Relationships with the major third party suppliers continue to develop strongly, especially utilising their office space at Shirebrook. Strategies are being aligned to grow both the product ranges and volumes whilst at the same time developing branded merchandising areas by category in store.
Against a backdrop of slowing consumer demand, UK retail performance has benefited from effective control of stock levels, well managed labour costs and tight control of operating expenses. These efficiencies have helped to absorb some of the rising costs such as energy, commercial rents and fuel.
UK wholesale and other revenue was down by 65.9% to £7.9m (2008 H1: £23.2m). 2008 H1 included £10.5m which had no gain or loss in respect of property transactions, which was not repeated in 2009 H1.
International retail revenue for the 26 weeks was up 34.5% to £51.8m (2008 H1: £38.5m). In the period we opened three new stores in Belgium, and our first two in Cyprus, in line with our plans for developing our international store portfolio.
We strengthened the total retail division margin from 43.5% to 44.7% driven primarily by an improvement in the international retail gross margin from 42.3% to 43.6%. 2009 H1 UK retail margin benefitted from improved supply and distribution chain management. 2009 H2 UK retail margin for us and other similar retailers will come under increasing pressure as imported cost inflation from the Far East combined with the stronger US dollar begin to impact, but we will seek to mitigate the effect of some or all of that by achieving further efficiencies.
Online revenue continues to grow in line with our expectations and we will look at opportunities to develop this revenue stream for the business. Order fulfilment and information technology solutions are fully in-house developed and supported from the Shirebrook headquarters.
On 5th February 2008 the Company announced a strategic alliance agreement with ITAT in China to supply merchandise under certain of our Group brands. During the period between February and May 2008 a bespoke product range for China under the brands DUNLOP and LONSDALE was designed and produced. We also had designed and manufactured specific merchandising units and fittings to fit a 2,500 sq ft "store in store" concept area. The standard of this work was exceptionally high and with our partner we began the task of rolling out the trial into around 120 Super Club ITAT sites during May 2008. The areas were complete after about four weeks and since then we have been analysing sales data and store traffic, and collecting feedback on the product range, pricing, and brand awareness.
This continuing analysis will of course give us valuable information on how to best formulate our next steps in this market. We continue to approach the project with the aim of minimising the inherent risks and to take advantage of the exciting opportunities. There will continue to be minimal impact on revenues and earnings in the current year.
As previously announced on 10 July 2008 we will report annually the percentage change in store contribution for UK retail, commencing with the year ending 26 April 2009 comparison to full year 2008, at our results presentation in July 2009.
Store portfolio
As of 26 October 2008, we operated 366 stores in the UK (excluding Northern Ireland), a total of circa 3.4m sq ft (2008 H1: circa 3.3m sq ft). These are divided between 281 core and 85 non-core stores. Through the Group's 42.5% shareholding in the Heatons chain, it has products in 7 stores in Northern Ireland and 18 stores in the Republic of Ireland.
In the UK we added a net 8 new core stores in the half year, with 14 new Sports Direct stores opened including 6 relocations. All new stores are operating under the Sportsdirect.com fascia. We closed 23 stores (excluding the 6 relocations) which were typically smaller non-core stores.
We have a clear, focused strategy to enhance our varied store portfolio. We are still targeting circa 20 new core stores in the UK this year, taking a selective approach to the best opportunities.
Internationally, as at 26 October 2008 we operated through 42 stores in Belgium, 14 in Slovenia, 4 in Holland, 2 in Cyprus and 1 in Luxembourg. We continue with our strategy to identify partners in new territories while continuing to expand our operations in the countries where we currently trade.
Brands division
Total brands revenue was up 34.0% to £117.9m (2008 H1: £88.0m). Within this, wholesale revenue was up 36.3% to £105.6m (2008 H1: £77.5m), driven by the full half year inclusion of prior year acquisitions such as Everlast.
Revenue from licensing was up 17.1% to £12.3m (2008 H1: £10.5m).
Gross margins decreased by 480 basis points to 37.1% (2008 H1: 41.9%), primarily as a result of a greater proportion of wholesale revenue, external margin pressure from customers notably in the US, and the clearance of stock in the acquired companies.
Operating costs have increased in the division primarily due to the inclusion of acquired companies for the full half year. Other costs were broadly in line with the prior period.
The Group continues to develop its brands through product development and marketing. Licensing income streams are enhanced from the development of the network of key licensee partners globally as the Group continues to identify suitable licensing partners as its priority.
Everlast, the most famous brand in boxing, was acquired by the Group in September 2007. The management team have increased profits in line with expectations including a 20% growth in licencing revenue. Marketing initiatives include agreements with both boxing ring and cage fighters and with Muhammad Ali in connection with the brand's 100 year anniversary.
Net Debt
Net debt has increased from £465.2m to £478.3m. The business has marketable securities with a value at 26 October 2008 of £30.5m. During the last financial year the Company spent over £200m on a share buyback programme, and invested over £100m on the acquisition of subsidiary companies, over £80m on freehold property and further sums in plant, fixtures and technology.
We have a strong relationship with our banks and have a committed working capital facility that is available until 30 April 2011. The Company continues to operate well within its bank covenants and the Board remains comfortable with the Company's available headroom.
Strategic Investments
The Group purchased 11.9m shares in JJB (5%) during the period, and took out contracts for difference on another 42.9m (17%) shares. As at 26 October 2008 the Group also held investments in Amer Sports Corp, Blacks Leisure Group and JD Sports Fashion. The value of the Group's investments has reduced from £65.7m to £30.5m during the period, mainly due to a £27.3m fair value adjustment charged through equity.
Our strategy for growth
We are focused on strengthening the Group's financial performance and profitability, building relationships with our partners and suppliers, and the continued roll out of our stores and brands in the UK and around the world.
Developing international distribution channels is a key part of the Group's growth strategy. We look at a number of potential markets with interest. We believe that the experience we gain in China can be adapted for other markets in the future. Our growth strategy will include acquisition, partnership, joint venture and licensing opportunities.
We believe that the business remains in a strong position with its flexible business model, international growth plans and strong portfolio of brands.
Principal risks and uncertainties for the remaining six months of the year
The Board believes that the principal risks and uncertainties for the remaining 6 months of the year are the possibility of a further deterioration of the economy both in the UK and worldwide and a further reduction in consumer confidence and retail spending, beyond that currently expected, which would impact on the performance of the business, and the financial risks identified on p12.
Outlook
Our trading performance since the end of October and through December in our key division, UK retail, has been in line with our expectations. This has been achieved predominantly by ensuring we continue to offer great value to our customers.
We believe our back to basics strategy will continue to deliver value for our shareholders. An emphasis on driving efficiency across the Group, tight cost control and maintaining prudent stock levels will leave us well positioned in this challenging trading environment.
Looking further forward into the New Year and the first few months of 2009, we expect the trading environment to remain extremely difficult. On the 23 October 2008, in our pre-close trading statement we advised that the Board believed that full year underlying EBITDA should be broadly in line with the then market expectations of £135m, and given current trading the Board believes that it will meet those expectations.
Dave Forsey
Chief Executive
17 December 2008
Financial Review
Basis of reporting
The financial statements for the Group for the 26 weeks ended 26 October 2008 are presented in accordance with International Financial Reporting Standards as adopted by the EU (IFRS).
Summary of results
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26 weeks ended 26 October 2008 (£'m) |
26 weeks ended 28 October 2007 (£'m) |
Change
% |
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Revenue |
687.7 |
668.1 |
+2.9 |
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Underlying EBITDA |
89.8 |
83.6 |
+7.4 |
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Underlying Profit before Tax |
51.8 |
50.3 |
+3.0 |
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Reported Profit before Tax |
97.7 |
21.2 |
+360.8 |
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Pence per Share |
Pence per Share |
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Basic EPS |
11.57 |
1.88 |
+515.4 |
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Underlying EPS |
5.76 |
4.82 |
+19.5 |
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Weighted Average number of Shares (million) |
568 |
691 |
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Underlying EBITDA for the period was £89.8 million, compared to £83.6 million in the corresponding period last year.
The Directors believe that underlying EBITDA, underlying profit before tax and underlying earnings per share provide the most useful information for shareholders on the underlying performance of the business, 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 of associated undertakings and joint ventures. Underlying EBITDA is calculated as EBITDA before exceptional items, profit on sale of strategic investments and realised profits/losses on foreign exchange.
Revenue and margin
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Revenue |
26 weeks ended 26 October 2008 (£'m) |
26 weeks ended 28 October 2007 (£'m) |
Change
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Retail |
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UK retail |
510.1 |
518.4 |
(1.6) |
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UK wholesale and other |
7.9 |
23.2 |
(65.9) |
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International retail |
51.8 |
38.5 |
+34.5 |
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Total retail revenue |
569.8 |
580.1 |
(1.8) |
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Brands |
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Wholesale |
105.6 |
77.5 |
+36.3 |
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Licensing |
12.3 |
10.5 |
+17.1 |
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Total brands revenue |
117.9 |
88.0 |
+34.0 |
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Total Group revenue increased by 2.9%.
Retail revenue fell by 1.8%. The UK accounted for 89.5% of total retail revenues with the balance in Continental European stores. UK wholesale and other revenue in the comparative period included £10.5m in relation to property transactions which had no gain or loss.
Retail gross margin in the UK increased slightly from 45.3% to 45.4%.
Our representation in both parts of Ireland is covered by Heatons, in which we have a 42.5% interest, the results of which are reported as an associate.
Brands revenue increased by 34.0%. This included the full half year effect of the acquisitions such as Everlast. Licensing income increased by 17.1%, with an increase in wholesale revenue of 36.3%.
Brands gross margin decreased from 41.9% to 37.1%.
Selling and distribution costs have always been closely monitored. Labour costs are geared to financial performance with flexible staffing schedules, and initiatives to drive costs from the business have been effective, including reductions in energy consumption.
Foreign exchange
The Group manages the impact of currency movements through the use of forward fixed rate currency purchase and sales contracts. The Group's policy is to hold or hedge some anticipated purchases in foreign currency.
The exchange loss of £43.1m included in administration costs has arisen from:
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(a) |
accepting dollars at the contracted rate; and |
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(b) |
the translation of dollars and dollar denominated assets and liabilities at the period end rate. |
The exchange gain of £88.5m (2008 H1:£27.1m) included in finance income substantially represents the reversal of the provision made (under IFRS) for the forward contracts at 27 April 2008, and the creation of an asset in recognition of the profit on outstanding future contracts at 26 October 2008.
The sterling exchange rate with the US dollar at 27 April 2008 was $1.986 and $1.592 at 26 October 2008.
The sterling exchange rate with the Euro at 27 April 2008 was €1.271 and €1.252 at 26 October 2008.
Finance income
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26 weeks ended 26 October 2008 |
26 weeks ended 28 October 2007 |
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(£'m) |
(£'m) |
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Bank interest receivable |
0.5 |
0.6 |
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Expected return on pension plan assets |
1.0 |
1.1 |
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Fair value adjustment to forward foreign exchange contracts |
88.5 |
27.1 |
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|
90.0 |
28.8 |
The profit on the fair valuing of forward foreign exchange contracts arises under IFRS as a result of marking to market at the period end those contracts held to hedge the Group's currency risk, and reversal of the provision made in the previous period.
Finance costs
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26 weeks ended
26 October 2008
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26 weeks ended
28 October 2007
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(£’m)
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(£’m)
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Interest on bank loans and overdrafts
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(13.7)
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(11.2)
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Interest on other loans
|
(0.8)
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(3.8)
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Interest on retirement benefit obligations
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(1.3)
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(1.1)
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(15.8)
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(16.1)
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Taxation
The effective tax rate on profit before tax for 2009 H1 was 32.5% (2008 H1: 38.5%) This rate reflects the reduction in the value of the deferred tax asset, depreciation on non-qualifying assets and the non-relievable losses in certain overseas subsidiaries.
Earnings
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26 weeks ended 26 October 2008 Pence per share |
26 weeks ended 28 October 2007 Pence per share |
Change
% |
|
Basic EPS |
11.57 |
1.88 |
+515.4 |
|
Underlying EPS |
5.76 |
4.82 |
+19.5 |
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Weighted Average number of shares |
568,452,369 |
691,176,000 |
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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.
The underlying EPS reflects the underlying performance of the business compared with the prior period 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 are as follows:
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26 weeks ended
26 October 2008
(£’m)
|
26 weeks ended
28 October 2007
(£’m) |
|
Profit after tax:
|
65.7
|
13.0
|
|
Post tax effect of
|
|
|
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Realised loss on forward foreign exchange contracts
|
31.0
|
40.5
|
|
Fair value adjustment to forward foreign exchange contracts
|
(63.7)
|
(19.0)
|
|
Profit on disposal of listed investments
|
(0.3)
|
(1.2)
|
|
Underlying profit after tax
|
32.7
|
33.3
|
Dividends
A final dividend of 2.44p per share (totalling £11.71m) in respect of the year ended 27 April 2008, was paid on 31 October 2008 to shareholders on the register at 3 October 2008.
The Board has resolved to pay on 30 April 2009 an interim dividend of 1.22p per share to shareholders on the register on 3 April 2009.
Capital expenditure
Expenditure, including acquisition of property, plant and equipment, amounted to £18.1m (2008 H1: £120.0m). This includes £3.9m (2008 H1: £85.7m) relating to freehold retail sites and other property.
Strategic investments
At 26 October 2008, the Group held investments in Amer Sports Corp, Blacks Leisure, JD Sports Fashion and JJB Sports. Changes in the value of these investments are recognised directly in equity in accordance with IFRS.
|
|
26 October 2008
(£’m)
|
|
Total available-for-sale investments at 27 April 2008
|
65.7
|
|
Additions in the period
|
4.9
|
|
Disposal proceeds in the period
|
(13.3)
|
|
Profit on disposals in the period
|
0.5
|
|
Fair value adjustment in respect of available-for-sale financial assets*
|
(27.3)
|
|
Total available-for-sale investments at 26 October 2008
|
30.5
|
* The loss on the fair valuing of available for sale financial assets arises under IFRS as a result of marking to market at the period end.
The respective shareholdings at 26 October 2008 were as follows:
|
|
At 26 October 2008
|
||
|
|
Value £’m
|
Shares ‘m
|
Holding
|
|
Blacks Leisure Group
|
3.7
|
12.728
|
29.89%
|
|
JJB
|
3.6
|
11.944
|
5.00%
|
|
Amer Sports Corporation
|
5.1
|
1.066
|
1.48%
|
|
John David Group
|
16.7
|
6.475
|
13.42%
|
|
Other* market
|
1.4
|
|
|
|
Total
|
30.5
|
|
|
* Included within 'Other' above are contracts for difference relating to 42.9m shares in JJB, which were held at 26 October 2008 and represented 17% of share capital.
Employee Benefit Trust
The Group sold 8,000,000 ordinary shares to the Sports Direct Employee Benefit Trust, an employee share scheme. The Company now holds 64,000,000 shares in treasury and the total number of shares in issue is 576,452,369.
Cash flow and net debt
Net debt increased from £465.2m at 27 April 2008 to £478.3m at 26 October 2008. Taking into account the inclusion of marketable securities (available for sale financial assets) the net indebtedness at 26 October 2008 was £447.8m.
The analysis of debt at 26 October 2008 and at 27 April 2008 was as follows:
|
|
At 26 October 2008
|
At 27 April 2008
|
|
|
|
|
|
Cash and cash equivalents
|
43.3
|
25.4
|
|
Borrowings
|
(521.6)
|
(490.6)
|
|
Net debt
|
(478.3)
|
(465.2)
|
|
Market value of marketable securities
|
30.5
|
65.7
|
|
Net indebtedness
|
(447.8)
|
(399.5)
|
|
|
|
|
|
|
|
|
|
Reconciliation of movement in Net Debt
|
|
|
|
|
|
|
|
|
26 weeks ended
26 October 08 (£’m)
|
52 weeks ended
27 April 08 (£’m)
|
|
Net debt at start of period
|
(465.2)
|
(38.1)
|
|
Operating Activities
|
42.9
|
149.6
|
|
Working capital
|
(0.5)
|
(90.1)
|
|
Acquisitions
|
(0.9)
|
(105.3)
|
|
Net proceeds of listed investments
|
12.8
|
49.2
|
|
Capital Expenditure (including intangibles)
|
(18.7)
|
(131.8)
|
|
Interest & Taxation
|
(36.7)
|
(83.7)
|
|
Purchase of own shares
|
-
|
(201.5)
|
|
Other
|
(0.3)
|
(6.1)
|
|
Dividends paid
|
(11.7)
|
(7.4)
|
|
Net debt at end of period
|
(478.3)
|
(465.2)
|
Cash Flow
|
|
26 weeks ended
26 October 2008
(£’m)
|
26 weeks ended
27 April 2008
(£’m)
|
26 weeks ended
28 October 2007
(£’m)
|
|
|
|
|
|
|
Reported operating profit
|
20.5
|
105.6
|
4.0
|
|
Depreciation and amortisation
|
24.1
|
18.2
|
19.4
|
|
Other non-cash charges
|
(0.2)
|
1.9
|
0.5
|
|
Taxes paid
|
(21.7)
|
(15.1)
|
(22.5)
|
|
|
|
|
|
|
Free cash flow
|
22.7
|
110.6
|
1.4
|
|
|
|
|
|
|
Invested In:-
|
|
|
|
|
(Increase) / Decrease in working capital
|
(0.5)
|
1.8
|
(91.9)
|
|
Acquisitions
|
(0.9)
|
(7.8)
|
(96.8)
|
|
Net proceeds from / (Investment in ) investments
|
10.7
|
300.4
|
(254.9)
|
|
Cash inflow from other investing activities
|
0.7
|
2.2
|
1.7
|
|
Capital Expenditure (including intangibles)
|
(18.7)
|
(11.9)
|
(120.0)
|
|
Share buy back programme
|
-
|
(39.2)
|
(162.3)
|
|
Equity dividend paid
|
(11.7)
|
-
|
(7.4)
|
|
Finance costs and other financing activities
|
(15.1)
|
(24.3)
|
(21.9)
|
|
Net (Decrease) / Increase in cash and cash equivalents
|
(12.8)
|
331.8
|
(752.8)
|
|
|
|
|
|
Reconciliation of movement in equity
Total equity movement is as follows:
|
|
26 weeks ended
26 October 2008
(£’m)
|
|
Total equity at 27 April 2008
|
128.4
|
|
|
|
|
Profit after tax for the 26 weeks ended 26 October 2008
|
65.9
|
|
|
|
|
Items taken directly to equity:
|
|
|
Actuarial gain on pension fund
|
1.8
|
|
Fair value adjustment in respect of available-for-sale financial assets
|
(27.3)
|
|
Tax on items taken directly to equity
|
7.6
|
|
|
(17.9)
|
|
|
|
|
Minority interests eliminated on acquisitions
|
(0.5)
|
|
Foreign Exchange Reserves
|
25.0
|
|
|
|
|
Total equity at 26 October 2008
|
200.9
|
Pensions
The Group operates a number of closed defined benefit schemes in the Dunlop Slazenger Group of companies. The net deficit in these schemes decreased from £11.7m at 27 April 2008 to £10.0m at 26 October 2008.
Financial risks, systems and controls
The principal financial risks the Group faces are:
|
• |
Movement in interest rates on borrowings. The Group has not historically hedged this risk. |
|
|
|
|
• |
Movement in currency exchange rates. A significant amount of the Group's purchases are in US dollars. The Group hedges some of the risks of such movements by using forward purchases of foreign currency. Certain of the Group's assets are held overseas in local currency and UK assets and liabilities are revalued in accordance with currency movements. This currency risk is not hedged. |
|
|
|
|
• |
The possibility of a further deterioration of the economy both in the UK and worldwide and a further reduction in consumer confidence and retail spending, beyond that currently expected, which would impact on the performance of the business. |
Funding and liquidity for the Group's operations are provided through bank loans and overdraft facilities and shareholders' funds. The objective is to maintain sufficient funding and liquidity for the Group's requirements.
The Group maintains a system of controls to manage the business and to protect its assets. We continue to invest in people, systems and in IT to manage the Group's operations and its finance effectively and efficiently.
Bob Mellors
Finance Director
17 December 2008
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
|
• |
The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU; |
|
|
|
|
• |
The interim management report includes a fair review of the information required by: |
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events during the first 26 weeks of the financial year and their impact on the condensed set of financial statements; and a description of principal risks and uncertainties for the remaining 26 weeks of the year and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first 26 weeks of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
Amounts due to and from related parties are disclosed in note 20.
The directors of Sports Direct International plc are listed in the Group's 2008 Annual Report and Financial Statements.
By Order of the Board
Dave Forsey
Chief Executive
Bob Mellors
Finance Director
17 December 2008
INDEPENDENT REVIEW REPORT TO SPORTS DIRECT INTERNATIONAL PLC
FOR THE 26 WEEKS ENDED 26 OCTOBER 2008
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the 26 weeks ended 26 October 2008 which comprises the Consolidated income statement, the Consolidated statement of recognised income and expense, the Consolidated balance sheet, the Consolidated cash flow statement and the related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company 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 a 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 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 Services 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 to the Company 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'' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 26 weeks ended 26 October 2008 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 Services Authority.
Grant Thornton UK LLP
Chartered Accountants and Registered Auditor
London
17 December 2008
UNAUDITED CONSOLIDATED INCOME STATEMENT FOR THE 26 WEEKS ENDED 26 OCTOBER 2008
|
|
|
|
|
|
|
|
|
26 weeks
ended 26 October 2008 |
26 weeks
ended 28 October 2007 |
52 weeks
ended 27 April 2008 |
|
|
Notes
|
£’000
|
£’000
|
£’000
|
|
Continuing operations:
|
|
|
|
|
|
Revenue
|
2
|
687,745
|
668,112
|
1,259,510
|
|
Cost of sales
|
|
(389,160)
|
(378,855)
|
(709,809)
|
|
|
|
|
|
|
|
Gross profit
|
|
298,585
|
289,257
|
549,701
|
|
Selling, distribution and administrative expenses
|
|
(238,167)
|
(229,042)
|
(447,570)
|
|
(Loss)/profit on forward foreign exchange contracts
|
|
(43,065)
|
(57,924)
|
3,461
|
|
Other operating income
|
|
3,175
|
1,707
|
4,023
|
|
|
|
|
|
|
|
Operating profit
|
2
|
20,528
|
3,998
|
109,615
|
|
|
|
|
|
|
|
Profit on disposal of available-for-sale financial
assets
|
3
|
449
|
1,691
|
41,367
|
|
Dividend income from investments
|
3
|
363
|
512
|
2,507
|
|
Finance income
|
4
|
90,036
|
28,792
|
5,370
|
|
Finance costs
|
5
|
(15,758)
|
(16,136)
|
(45,006)
|
|
Share of profit of associated undertakings and joint ventures
|
|
2,049
|
2,355
|
5,020
|
|
|
|
|
|
|
|
Profit before taxation
|
|
97,667
|
21,212
|
118,873
|
|
Taxation
|
6
|
(31,789)
|
(8,172)
|
(41,126)
|
|
|
|
|
|
|
|
Profit for the period
|
2
|
65,878
|
13,040
|
77,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity holders of the Group
|
13
|
65,748
|
12,962
|
78,182
|
|
Minority interests
|
|
130
|
78
|
(435)
|
|
|
|
|
|
|
|
Profit for the period
|
2
|
65,878
|
13,040
|
77,747
|
|
|
|
|
|
|
|
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
|
7
|
11.57
|
1.88
|
12.23
|
|
Diluted earnings per share
|
7
|
11.57
|
1.88
|
12.23
|
|
|
|
|
|
|
The accompanying notes form an integral part of this financial report.
UNAUDITED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
FOR THE 26 WEEKS ENDED 26 OCTOBER 2008
|
|
|
|
|
|
|
|
|
26 weeks
ended 26 October 2008 |
26 weeks
ended 28 October 2007 |
52 weeks
ended 27 April 2008 |
|
|
Notes
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
|
Exchange differences on translation of foreign operations
|
|
25,038
|
(32)
|
4,763
|
|
Actuarial gains on defined benefit pension schemes
|
17
|
1,789
|
292
|
1,683
|
|
Fair value adjustment in respect of available-for-sale financial assets
|
11
|
(27,331)
|
19,494
|
(20,571)
|
|
Taxation on items taken directly to equity
|
|
7,677
|
(5,848)
|
5,760
|
|
|
|
|
|
|
|
Income and expense recognised directly in equity
|
|
7,173
|
13,906
|
(8,365)
|
|
Profit for the period
|
2
|
65,878
|
13,040
|
77,747
|
|
|
|
|
|
|
|
Total income and expense recognised in the period
|
|
73,051
|
26,946
|
69,382
|
|
|
|
|
|
|
|
Equity holders of the Group
|
|
72,921
|
26,868
|
69,817
|
|
Minority interests
|
|
130
|
78
|
(435)
|
|
|
|
|
|
|
|
|
|
73,051
|
26,946
|
69,382
|
|
|
|
|
|
|
The accompanying notes form an integral part of this financial report.
UNAUDITED CONSOLIDATED BALANCE SHEET AS AT 26 OCTOBER 2008
|
|
|
26 October
2008 |
28 October
2007 |
27 April
2008 |
|
|
Notes
|
£’000
|
£’000
|
£’000
|
|
ASSETS
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Property, plant and equipment
|
9
|
319,475
|
317,446
|
322,792
|
|
Intangible assets
|
10
|
218,309
|
197,361
|
185,010
|
|
Investments in associated undertakings and joint ventures
|
|
30,386
|
23,058
|
28,452
|
|
Available-for-sale financial assets
|
11
|
30,498
|
364,518
|
65,714
|
|
Derivative financial assets
|
|
—
|
10,127
|
|
|
Deferred tax assets
|
|
4,978
|
31,925
|
29,110
|
|
|
|
|
|
|
|
|
|
603,646
|
944,435
|
631,078
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Inventories
|
|
212,609
|
227,800
|
218,763
|
|
Trade and other receivables
|
|
119,784
|
99,938
|
94,481
|
|
Derivative financial assets
|
18
|
40,818
|
—
|
—
|
|
Cash and cash equivalents
|
|
43,331
|
17,563
|
25,418
|
|
|
|
|
|
|
|
|
|
416,542
|
345,301
|
338,662
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
1,020,188
|
1,289,736
|
969,740
|
|
|
|
|
|
|
|
EQUITY AND LIABILITIES
|
|
|
|
|
|
Share capital
|
12
|
64,045
|
72,000
|
64,045
|
|
Share premium
|
14
|
874,300
|
874,300
|
874,300
|
|
Treasury shares
|
13
|
(85,088)
|
(162,348)
|
(201,483)
|
|
Permanent contribution to capital
|
14
|
50
|
50
|
50
|
|
Capital redemption reserve
|
14
|
8,005
|
50
|
8,005
|
|
Foreign currency translation reserve
|
13
|
28,964
|
(869)
|
3,926
|
|
Reverse combination reserve
|
14
|
(987,312)
|
(987,312)
|
(987,312)
|
|
Own share reserve
|
13
|
(6,094)
|
—-
|
—-
|
|
Retained earnings
|
13
|
301,218
|
337,192
|
363,636
|
|
|
|
|
|
|
|
|
|
198,088
|
133,063
|
125,167
|
|
Minority interests
|
15
|
2,804
|
2,723
|
3,242
|
|
|
|
|
|
|
|
Total equity
|
|
200,892
|
135,786
|
128,409
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Other payables
|
|
3,528
|
1,174
|
2,829
|
|
Borrowings
|
16
|
15,214
|
8,586
|
14,255
|
|
Derivative financial liabilities
|
18
|
—-
|
—-
|
14,744
|
|
Retirement benefit obligations
|
17
|
10,015
|
13,443
|
11,705
|
|
Deferred tax liabilities
|
|
29,673
|
43,291
|
26,422
|
|
Provisions
|
|
27,967
|
29,646
|
22,910
|
|
|
|
|
|
|
|
|
|
86,397
|
96,140
|
92,865
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Derivative financial liabilities
|
18
|
—-
|
25,469
|
32,894
|
|
Trade and other payables
|
|
207,643
|
212,596
|
207,598
|
|
Borrowings
|
16
|
506,385
|
804,850
|
476,400
|
|
Current tax liabilities
|
|
18,871
|
14,895
|
31,574
|
|
|
|
|
|
|
|
|
|
732,899
|
1,057,810
|
748,466
|
|
|
|
|
|
|
|
Total liabilities
|
|
819,296
|
1,153,950
|
841,331
|
|
|
|
|
|
|
|
TOTAL EQUITY AND LIABILITIES
|
|
1,020,188
|
1,289,736
|
969,740
|
The accompanying notes form an integral part of this financial report.
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE 26 WEEKS ENDED 26 OCTOBER 2008
|
|
|
|
|
|
|
|
|
26 weeks
ended 26 October 2008 |
26 weeks
ended 28 October 2007 |
52 weeks
ended 27 April 2008 |
|
|
Notes
|
|
|
£’000
|
|
|
|
|
|
|
|
Cash inflow/(outflow) from operating activities
|
19
|
44,000
|
(68,042)
|
59,519
|
|
Income taxes paid
|
|
(21,687)
|
(22,542)
|
(37,638)
|
|
|
|
|
|
|
|
Net cash inflow/(outflow) from operating activities
|
|
22,313
|
(90,584)
|
21,881
|
|
|
|
|
|
|
|
Cash flow from investing activities
|
|
|
|
|
|
Proceeds on disposal of property, plant and equipment
|
|
2,312
|
12,965
|
9,924
|
|
Proceeds on disposal of listed investments
|
|
13,221
|
66,524
|
595,921
|
|
Proceeds on disposal of subsidiary
|
|
—
|
—
|
5,000
|
|
Purchase of subsidiaries, net of cash acquired
|
|
(927)
|
(96,809)
|
(104,592)
|
|
Purchase of intangible assets
|
|
(650)
|
(518)
|
(657)
|
|
Purchase of property, plant and equipment
|
|
(18,082)
|
(120,007)
|
(131,776)
|
|
Purchase of listed investments
|
|
(4,887)
|
(334,410)
|
(565,392)
|
|
Investment income received
|
|
613
|
1,701
|
3,696
|
|
|
|
|
|
|
|
Net cash outflow from investing activities
|
|
(8,400)
|
(470,554)
|
(187,876)
|
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
|
Finance income received
|
|
524
|
550
|
3,104
|
|
Finance costs paid
|
|
(15,758)
|
(14,980)
|
(39,831)
|
|
Net increase in/(repayments of) borrowings
|
|
182
|
(7,420)
|
(9,403)
|
|
Equity dividend paid
|
8
|
(11,710)
|
(7,416)
|
(7,416)
|
|
Purchase of own shares
|
13
|
—
|
(162,348)
|
(201,483)
|
|
|
|
|
|
|
|
Net cash outflow from financing activities
|
|
(26,762)
|
(191,614)
|
(255,029)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents including overdrafts
|
|
(12,849)
|
(752,752)
|
(421,024)
|
|
Cash and cash equivalents including overdrafts at beginning of period
|
|
(446,053)
|
(25,029)
|
(25,029)
|
|
|
|
|
|
|
|
Cash and cash equivalents including overdrafts at the period end
|
|
(458,902)
|
(777,781)
|
(446,053)
|
|
|
|
|
|
|
The accompanying notes form an integral part of this financial report.
NOTES TO THE FINANCIAL INFORMATION FOR THE 26 WEEKS ENDED 26 OCTOBER 2008
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 2008 Annual Report and Financial Statements. The financial information has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority (DTR) and with International Accounting Standard (IAS) 34 - "Interim Financial Reporting" as endorsed by the European Union. This consolidated financial information for the period does not constitute statutory financial statements within the meaning of s240 of the Companies Act 1985.
The summary of results for the 52 weeks ended 27 April 2008 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 s237(2) or s237(3) of the Companies Act 1985.
Principal risks and uncertainties
The principal risks and uncertainties which could impact the Group's long-term performance remain those identified on page 58 of the Group's 2008 Annual Report and Financial Statements. The Chief Executive and Finance Director's Review in this half-yearly financial report includes a commentary of the principal risks and uncertainties affecting the Group for the remaining six months of the year.
2. Segmental analysis
Primary reporting format - business segments
For management purposes the Group is organised into, and reports its performance between, two business segments; Retail and Brands. The Retail business segment comprises the retail network of stores and the Brands business segment comprises the identification, acquisition, development and trading of a portfolio of internationally recognised sports and leisure brands.
Segment information about the business segments is presented below:
Segmental information for the 26 weeks ended 26 October 2008:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Retail
|
Brands
|
Eliminations
|
Total
|
||||||||||||||
|
|
UK retail
|
UK
wholesale & other |
UK total
|
International
retail |
Total
|
Wholesale
|
Licensing
|
Total
|
|
|
||||||||
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
||||||||
|
Sales to external customers
|
510,153
|
7,852
|
518,005
|
51,827
|
569,832
|
105,620
|
12,293
|
117,913
|
-
|
687,745
|
||||||||
|
Sales to other segments
|
-
|
2,274
|
2,274
|
-
|
2,274
|
4,611
|
-
|
4,611
|
(6,885)
|
-
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Revenue
|
510,153
|
10,126
|
520,279
|
51,827
|
572,106
|
110,231
|
12,293
|
122,524
|
(6,885)
|
687,745
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Gross profit
|
|
|
232,287
|
22,730
|
254,874
|
|
|
43,711
|
-
|
298,585
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating profit before foreign exchange and exceptional items
|
|
|
54,010
|
2,879
|
56,889
|
|
|
6,704
|
-
|
63,593
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating profit
|
|
|
|
|
|
|
|
|
|
20,528
|
||||||||
|
Investment income
|
|
|
|
|
|
|
|
|
|
812
|
||||||||
|
Finance income
|
|
|
|
|
|
|
|
|
|
90,036
|
||||||||
|
Finance costs
|
|
|
|
|
|
|
|
|
|
(15,758)
|
||||||||
|
Share of profits of associated undertakings and joint ventures
|
|
|
|
|
|
|
|
|
|
2,049
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Profit before taxation
|
|
|
|
|
|
|
|
|
|
97,667
|
||||||||
|
Taxation
|
|
|
|
|
|
|
|
|
|
(31,789)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Profit for the period
|
|
|
|
|
|
|
|
|
|
65,878
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Sales to other segments are priced at cost plus a 10% mark-up.
Other segment items included in the income statement for the 26 weeks ended 26 October 2008:
|
|
|
|
|
|
|
Retail
|
Brands
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
|
Depreciation
|
21,541
|
1,053
|
22,594
|
|
Amortisation
|
195
|
1,355
|
1,550
|
|
|
|
|
|
Information regarding segment assets and liabilities as at 26 October 2008 and capital expenditure for the 26 weeks then ended:
|
|
|
|
|
|
|
|
Retail
|
Brands
|
Eliminations
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Investments in associated undertakings and joint ventures
|
23,188
|
7,198
|
-
|
30,386
|
|
Other assets
|
851,134
|
448,671
|
(310,003)
|
989,802
|
|
|
|
|
|
|
|
Total assets
|
874,322
|
455,869
|
(310,003)
|
1,020,188
|
|
|
|
|
|
|
|
Total liabilities
|
(719,139)
|
(410,160)
|
310,003
|
(819,296)
|
|
|
|
|
|
|
|
Tangible asset additions
|
17,714
|
368
|
-
|
18,082
|
|
Intangible asset additions
|
294
|
356
|
-
|
650
|
|
|
|
|
|
|
|
Total capital expenditure
|
18,008
|
724
|
-
|
18,732
|
|
|
|
|
|
|
Segmental information for the 26 weeks ended 28 October 2007:
|
|
Retail
|
Brands
|
|
Eliminations
|
Total
|
|||||
|
|
UK retail
|
UK
wholesale & other |
UK total
|
International
retail
|
Total
|
Wholesale
|
Licensing
|
Total
|
|
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Sales to external customers
|
518,397
|
23,248
|
541,645
|
38,514
|
580,159
|
77,530
|
10,423
|
87,953
|
—
|
668,112
|
|
Sales to other segments
|
—
|
1,418
|
1,418
|
—
|
1,418
|
3,818
|
—
|
3,818
|
(5,236)
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
518,397
|
24,666
|
543,063
|
38,514
|
581,577
|
81,348
|
10,423
|
91,771
|
(5,236)
|
668,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
236,018
|
16,351
|
252,369
|
|
|
36,888
|
—
|
289,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit before foreign exchange and exceptional items
|
|
|
54,281
|
1,643
|
55,924
|
|
|
5,998
|
—
|
61,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
|
|
|
|
|
|
|
3,998
|
|
Investment income
|
|
|
|
|
|
|
|
|
|
2,203
|
|
Finance income
|
|
|
|
|
|
|
|
|
|
28,792
|
|
Finance costs
|
|
|
|
|
|
|
|
|
|
(16,136)
|
|
Share of profits of associated undertakings and joint ventures
|
|
|
|
|
|
|
|
|
|
2,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
|
|
|
|
|
|
|
|
|
21,212
|
|
Taxation
|
|
|
|
|
|
|
|
|
|
(8,172)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period
|
|
|
|
|
|
|
|
|
|
13,040
|
Sales to other segments are priced at cost plus a 10% mark-up.
Other segment items included in the income statement for the 26 weeks ended 28 October 2007:
|
|
Retail
|
Brands
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
|
Depreciation
|
17,989
|
694
|
18,683
|
|
Amortisation
|
16
|
646
|
662
|
|
Impairment
|
—
|
665
|
665
|
|
|
|
|
|
Information regarding segment assets and liabilities as at 28 October 2007 and capital expenditure for the 26 weeks then ended:
|
|
|
|
|
|
|
|
Retail
|
Brands
|
Eliminations
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Investments in associated undertakings and joint ventures
|
15,604
|
7,454
|
—
|
23,058
|
|
Other assets
|
1,167,293
|
378,278
|
(289,020)
|
1,256,551
|
|
|
|
|
|
|
|
Total assets
|
1,182,897
|
385,732
|
(289,020)
|
1,279,609
|
|
|
|
|
|
|
|
Total liabilities
|
(1,080,335)
|
(352,508)
|
289,020
|
(1,143,823)
|
|
|
|
|
|
|
|
Tangible asset additions
|
120,282
|
3,928
|
—
|
124,210
|
|
Intangible asset additions
|
1,319
|
57,783
|
—
|
59,102
|
|
|
|
|
|
|
|
Total capital expenditure
|
121,601
|
61,711
|
—
|
183,312
|
|
|
|
|
|
|
Segmental information for the 52 weeks ended 27 April 2008:
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
Retail
|
Brands
|
Eliminations
|
Total
|
||||||||
|
|
UK retail
|
UK
wholesale & other |
UK total
|
International
retail |
Total
|
Wholesale
|
Licensing
|
Total
|
|
|
||
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
||
|
Sales to external customers
|
957,652
|
31,956¹
|
989,608
|
77,257
|
1,066,865
|
171,558
|
21,087
|
192,645
|
—
|
1,259,510
|
||
|
Sales to other segments
|
—
|
1,662
|
1,662
|
—
|
1,662
|
6,841
|
568
|
7,409
|
(9,071)
|
—
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Revenue
|
957,652
|
33,618
|
991,270
|
77,257
|
1,068,527
|
178,399
|
21,655
|
200,054
|
(9,071)
|
1,259,510
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Gross profit
|
|
|
439,741
|
32,382
|
472,123
|
|
|
77,578
|
—
|
549,701
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Operating profit before foreign exchange and exceptional items
|
|
|
93,169
|
2,035
|
95,204
|
|
|
10,950
|
—
|
106,154
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Operating profit
|
|
|
96,408
|
1,897
|
98,305
|
|
|
11,310
|
—
|
109,615
|
||
|
Profit on disposal of available-for sale financial assets
|
|
|
|
|
|
|
|
|
|
41,367
|
||
|
Investment income
|
|
|
|
|
|
|
|
|
|
2,507
|
||
|
Finance income
|
|
|
|
|
|
|
|
|
|
5,370
|
||
|
Finance costs
|
|
|
|
|
|
|
|
|
|
(45,006)
|
||
|
Share of profits of associated undertakings and joint ventures
|
|
|
|
|
|
|
|
|
|
5,020
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Profit before taxation
|
|
|
|
|
|
|
|
|
|
118,873
|
||
| Taxation |
(41,126)
|
|||||||||||
|
Profit for the period
|
|
|
|
|
|
|
|
|
|
77,747
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||
1 Includes £10.5 million in relation to property transactions income at nil margin.
Sales to other segments are priced at cost plus a 10% mark-up.
Other segment items included in the income statement for the 52 weeks ended 27 April 2008
|
|
|
|
|
|
|
Retail
|
Brands
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
|
Depreciation
|
33,869
|
1,714
|
35,583
|
|
Amortisation
|
210
|
1,813
|
2,023
|
|
Impairment
|
—
|
1,394
|
1,394
|
|
|
|
|
|
Information regarding segment assets and liabilities as at 27 April 2008 and capital expenditure for the 52 weeks then ended:
|
|
|
|
|
|
|
|
Retail
|
Brands
|
Eliminations
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Investments in associated undertakings and joint ventures
|
21,040
|
7,412
|
—
|
28,452
|
|
Other assets
|
837,708
|
391,916
|
(288,336)
|
941,288
|
|
|
|
|
|
|
|
Total assets
|
858,748
|
399,328
|
(288,336)
|
969,740
|
|
|
|
|
|
|
|
Total liabilities
|
(726,064)
|
(363,037)
|
247,770
|
(841,331)
|
|
|
|
|
|
|
|
Tangible asset additions
|
130,585
|
11,526
|
—
|
142,111
|
|
Intangible asset additions
|
1,660
|
58,232
|
—
|
59,892
|
|
|
|
|
|
|
|
Total capital expenditure
|
132,245
|
69,758
|
—
|
202,003
|
|
|
|
|
|
|
Secondary reporting format - geographic segments
The Group operates in two geographic segments; UK and Non-UK. These geographic segments are the basis on which the Group reports its secondary segment information, as presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmental information for the 26 weeks ended 26 October 2008:
|
|||||
|
|
UK
|
Non-UK
|
Unallocated
|
Eliminations
|
Total
|
|
|
|
|
|
|
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
|
|
Segmental revenue from external customers
|
554,744
|
133,001
|
—
|
—
|
687,745
|
|
|
|
|
|
|
|
|
Total capital expenditure
|
14,109
|
4,623
|
—
|
—
|
18,732
|
|
|
|
|
|
|
|
|
Segmental assets
|
1,043,888
|
286,303
|
—
|
(310,003)
|
1,020,188
|
|
|
|
|
|
|
|
|
Segmental information for the 26 weeks ended 28 October 2007:
|
|||||
|
|
UK
|
Non-UK
|
Unallocated
|
Eliminations
|
Total
|
|
|
|
|
|
|
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
|
|
Segmental revenue from external customers
|
574,481
|
99,007
|
—
|
(5,376)
|
668,112
|
|
|
|
|
|
|
|
|
Total capital expenditure
|
117,869
|
65,443
|
—
|
—
|
183,312
|
|
|
|
|
|
|
|
|
Segmental assets
|
1,380,054
|
188,575
|
—
|
(289,020)
|
1,279,609
|
|
|
|
|
|
|
|
|
|
|
||||
|
Segmental information for the 52 weeks ended 27 April 2008:
|
|
||||
|
|
UK
|
Non-UK
|
Unallocated
|
Eliminations
|
Total
|
|
|
|
|
|
|
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
|
|
Segmental revenue from external customers
|
1,047,717
|
220,864
|
—
|
(9,071)
|
1,259,510
|
|
|
|
|
|
|
|
|
Total capital expenditure
|
129,901
|
72,102
|
—
|
—
|
202,003
|
|
|
|
|
|
|
|
|
Segmental assets
|
1,027,686
|
230,390
|
—
|
(288,336)
|
969,740
|
|
|
|
|
|
|
|
3. Investment income
|
|
|
|
|
|
|
26 weeks
ended 26 October 2008 |
26 weeks
ended 28 October 2007 |
52 weeks
ended 27 April 2008 |
|
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
Profit on disposal of available-for-sale financial assets (Note 11) (1)
|
449
|
1,691
|
41,367
|
|
Dividend income from investments
|
363
|
512
|
2,507
|
|
|
|
|
|
4. Finance income
|
|
|
|
|
|
|
26 weeks
ended 26 October 2008 |
26 weeks
ended 28 October 2007 |
52 weeks
ended 27 April 2008 |
|
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
Bank interest receivable
|
521
|
550
|
3,068
|
|
Other interest receivable
|
3
|
-
|
36
|
|
Expected return on pension plan assets (Note 17)
|
1,056
|
1,121
|
2,266
|
|
Fair value adjustment to forward foreign exchange contracts (Note 18) (1)
|
88,456
|
27,121
|
-
|
|
|
|
|
|
|
|
90,036
|
28,792
|
5,370
|
|
|
|
|
|
(1)The fair value adjustment to forward foreign exchange contracts relates to favourable differences arising from the marking to market of forward foreign currency contracts at each period end.
5. Finance costs
|
|
|
|
|
|
|
26 weeks
ended 26 October 2008 |
26 weeks
ended 28 October 2007 |
52 weeks
ended 27 April 2008 |
|
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
Interest on bank loans and overdrafts
|
13,661
|
11,190
|
32,955
|
|
Interest on other loans and finance leases
|
843
|
3,790
|
4,559
|
|
Interest on retirement benefit obligations (Note 17)
|
1,254
|
1,156
|
2,317
|
|
Fair value adjustment to forward foreign exchange contracts (Note 18) (1)
|
-
|
-
|
5,175
|
|
|
|
|
|
|
|
15,758
|
16,136
|
45,006
|
|
|
|
|
|
(1)The fair value adjustment to forward foreign exchange contracts relates to adverse differences arising from the marking to market of forward foreign currency contracts at each period end.
6. Taxation
The tax charge on profit before tax, excluding the impact of exceptional items, has been calculated using an estimated effective annual rate of 32.5% (2007: 38.5%). This leaves an estimated tax charge of £31.8m for the 26 weeks ended 26 October 2008 (£8.2m for the 26 weeks ended 28 October 2007).
7. Earnings per share
Share awards granted in April 2007 were non-dilutive as at 26 October 2008 as the prospect of the performance conditions attached to these awards being satisfied is considered to be remote. As a result share awards are not taken into account when determining the weighted average number of ordinary shares in issue during the period and therefore the basic and diluted earnings per share are the same.
Basic and diluted earnings per share
|
|
|
|
|
|
|
|
|
|
26 weeks
ended 26 October 2008 |
26 weeks
ended 26 October 2008 |
26 weeks
ended 28 October 2007 |
26 weeks
ended 28 October 2007 |
52 weeks
ended 27 April 2008 |
52 weeks
ended 27 April 2008 |
|
Basic
£’000
|
Diluted
£’000
|
Basic
£’000
|
Diluted
£’000
|
Basic
£’000
|
Diluted
£’000
|
|
|
|
|
|
|
|
|
|
|
Profit for the period
|
65,748
|
65,748
|
12,962
|
12,962
|
78,182
|
78,182
|
|
|
|
|
|
|
||
|
|
Number in thousands
|
Number in thousands
|
Number in thousands
|
|||
|
|
|
|
|
|
|
|
|
Weighted average number of shares
|
568,452
|
568,452
|
691,176
|
691,176
|
639,010
|
639,010
|
|
|
|
|
|
|
|
|
|
|
Pence per share
|
Pence per share
|
Pence per share
|
|||
|
|
|
|
|
|
|
|
|
Earnings per share
|
11.57
|
11.57
|
1.88
|
1.88
|
12.23
|
12.23
|
|
|
|
|
|
|
|
|
Underlying earnings per share
The underlying earnings per share reflects the underlying performance of the business compared with the prior year and is calculated by dividing underlying earnings by the weighted average number of shares.Underlying earnings is used by management as a measure of profitability within the Group.Underlying earnings is defined as profit for the period attributable to equity holders of the parent for each financial period but excluding the post tax effect of exceptional 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.
Underlying earnings per share (continued)
|
|
26 weeks
ended 26 October 2008 |
26 weeks
ended 26 October 2008 |
26 weeks
ended 28 October 2007 |
26 weeks
ended 28 October 2007 |
52 weeks
ended 27 April 2008 |
52 weeks
ended 27 April 2008 |
|
|
Basic
£’000
|
Diluted
£’000
|
Basic
£’000
|
Diluted
£’000
|
Basic
£’000
|
Diluted
£’000
|
|
|
|
|
|
|
|
|
|
Profit for the period
|
65,748
|
65,748
|
12,962
|
12,962
|
78,182
|
78,182
|
|
|
|
|
|
|
|
|
|
Post tax adjustments to profit for the period for the following exceptional items:
|
|
|
|
|
|
|
|
Realised loss/(gain) on forward foreign exchange contracts
|
31,007
|
31,007
|
40,547
|
40,547
|
(2,423)
|
(2,423)
|
|
Fair value adjustment to forward foreign exchange contracts
|
(63,688)
|
(63,688)
|
(18,985)
|
(18,985)
|
3,623
|
3,623
|
|
Profit on disposal of listed investments net of interest
|
(323)
|
(323)
|
(1,184)
|
(1,184)
|
(24,648)
|
(24,648)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit for the period
|
32,744
|
32,744
|
33,340
|
33.340
|
54,734
|
54,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
Number in thousands
|
Number in thousands
|
Number in thousands
|
|||
|
|
|
|
|
|
|
|
|
Weighted average number of shares
|
568,452
|
568,452
|
691,176
|
691,176
|
639,010
|
639,010
|
|
|
|
|
|
|
||
|
|
Pence per share
|
Pence per share
|
Pence per share
|
|||
|
|
|
|
|
|
|
|
|
Earnings per share
|
5.76
|
5.76
|
4.82
|
4.82
|
8.57
|
8.57
|
|
|
|
|
|
|
|
|
8. Dividends
An interim dividend of 2.06p per share in respect of 2007-08 was paid on 31 July 2008 to shareholders on the register as at 28 March 2008. A final dividend of 2.44p per share was paid on 31 October 2008 to shareholders on the register as at 3 October 2008.
9. Property, plant and equipment
|
|
|
|
|
|
|
|
|
Freehold
land and buildings |
Long
leasehold property |
Short
leasehold property |
Plant and
equipment |
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Cost
|
|
|
|
|
|
|
At 27 April 2008
|
117,235
|
10,940
|
100,970
|
271,574
|
500,719
|
|
Exchange differences
|
113
|
95
|
1,803
|
3,065
|
5,076
|
|
Additions
|
3,949
|
27
|
3,734
|
10,372
|
18,082
|
|
Eliminated on disposals
|
(470)
|
(2)
|
(2,167)
|
(3,469)
|
(6,108)
|
|
|
|
|
|
|
|
|
At 26 October 2008
|
120,827
|
11,060
|
104,340
|
281,542
|
517,769
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
At 27 April 2008
|
(8,014)
|
(3,641)
|
(33,617)
|
(132,655)
|
(177,927)
|
|
Exchange differences
|
(49)
|
—
|
(374)
|
(1,146)
|
(1,569)
|
|
Charge for the period
|
(1,645)
|
(155)
|
(3,868)
|
(16,926)
|
(22,594)
|
|
Eliminated on disposals
|
35
|
—
|
1,228
|
2,533
|
3,796
|
|
|
|
|
|
|
|
|
At 26 October 2008
|
(9,673)
|
(3,796)
|
(36,631)
|
(148,194)
|
(198,294)
|
|
|
|
|
|
|
|
|
Net book amount
|
|
|
|
|
|
|
At 26 October 2008
|
111,154
|
7,264
|
67,709
|
133,348
|
319,475
|
|
|
|
|
|
|
|
|
At 27 April 2008
|
109,221
|
7,299
|
67,353
|
138,919
|
322,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance leased assets included in the above
net book amounts
|
|
|
|
|
|
|
At 26 October 2008
|
—
|
—
|
—
|
563
|
563
|
|
|
|
|
|
|
|
|
At 27 April 2008
|
—
|
—
|
—
|
581
|
581
|
|
|
|
|
|
|
|
10. Intangible assets
|
|
|
|
|
|
|
|
Goodwill
|
Trade marks
and licences |
Brands
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Cost
|
|
|
|
|
|
At 27 April 2008
|
104,099
|
21,934
|
66,946
|
192,979
|
|
Exchange differences
|
12,606
|
733
|
14,312
|
27,651
|
|
Arising on business combinations
|
358
|
—
|
—
|
358
|
|
Adjustments to fair value
|
6,402
|
—
|
—
|
6,402
|
|
Other additions
|
—
|
650
|
—
|
650
|
|
Disposals
|
—
|
(592)
|
—
|
(592)
|
|
|
|
|
|
|
|
At 26 October 2008
|
123,465
|
22,725
|
81,258
|
227,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
Trade marks
and licences |
Brands
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Amortisation and impairment
|
|
|
|
|
|
At 27 April 2008
|
(1,394)
|
(5,175)
|
(1,400)
|
(7,969)
|
|
Exchange differences
|
—
|
(26)
|
—
|
(26)
|
|
Amortisation charge
|
—
|
(1,550)
|
—
|
(1,550)
|
|
Disposals
|
—
|
406
|
—
|
406
|
|
|
|
|
|
|
|
At 26 October 2008
|
(1,394)
|
(6,345)
|
(1,400)
|
(9,139)
|
|
|
|
|
|
|
|
Net book amount
|
|
|
|
|
|
At 26 October 2008
|
122,071
|
16,380
|
79,858
|
218,309
|
|
|
|
|
|
|
|
At 27 April 2008
|
102,705
|
16,759
|
65,546
|
185,010
|
|
|
|
|
|
|
Amortisation and impairments are both charged to selling, distribution and administrative expenses in the Consolidated Income Statement.
Adjustments to fair value includes a £6.4m increase due to an adjustment to the deferred taxation liability in respect of the acquisition of Everlast which took place on 20 September 2007.
The carrying value of those goodwill and brands that are considered to have an indefinite life are allocated to cash-generating units as follows:
|
|
Goodwill
|
Brands
|
|
|
£’000
|
£’000
|
|
|
|
|
|
Retail
|
18,488
|
834
|
|
Brands
|
103,583
|
79,024
|
|
|
|
|
|
|
122,071
|
79,858
|
|
|
|
|
The Group tests the carrying amount of goodwill and assets with an indefinite life annually for impairment or more frequently if there are indications that their carrying value might be impaired. The carrying amounts of other intangible assets are reviewed for impairment if there is an indication of impairment.
Impairment is calculated by comparing the carrying amounts to the value in use derived from discounted cash flow projections for the cash generating units to which the intangible assets are allocated.
11. Available-for-sale financial assets
|
|
26 October
2008 |
28 October
2007 |
27 April
2008 |
|
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
Available-for-sale financial assets
|
30,498
|
364,518
|
65,714
|
|
|
|
|
|
The fair value of the listed available-for-sale investments is based on bid quoted market prices at the balance sheet date.
The following table shows the aggregate movement in the Group's financial assets during the period:
|
|
26 October
2008 |
28 October
2007 |
27 April
2008 |
|
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
At beginning of period
|
65,714
|
75,447
|
75,447
|
|
Additions
|
4,887
|
334,410
|
565,392
|
|
Disposals
|
(12,772)
|
(64,833)
|
(554,554)
|
|
Revaluation through equity
|
(27,331)
|
19,494
|
(20,571)
|
|
|
|
|
|
|
At end of period
|
30,498
|
364,518
|
65,714
|
|
|
|
|
|
The financial assets at 26 October 2008 relate to strategic investments held of between 1.5% and 29.9% of share capital. The Directors do not consider that they have significant influence over the financial and operating policies of the investees as they:
|
·
|
have no representation on the Board of Directors;
|
|
·
|
have no participation in policy-making processes, including participation in decisions about dividends or other distributions;
|
|
·
|
have no material transactions with the investees, and;
|
|
·
|
do not interchange any managerial personnel.
|
The Group has one investment in excess of 20% of ordinary share capital, that being 29.9% (27 April 2008: 29.3%) of the ordinary share capital of Blacks Leisure Group plc, a company incorporated in England. The aggregate of its share capital and reserves and result for the periods ended 1 March 2008, 1 September 2008 and 3 March 2007 respectively were as follows:
|
|
1 March
2008
|
1 September
2008
|
3 March
2007 |
|
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
Aggregate share capital and reserves
|
84,526
|
90,620
|
91,888
|
|
|
|
|
|
|
|
|
|
|
|
Loss after taxation
|
(6,051)
|
(648)
|
(12,624)
|
|
|
|
|
|
12. Share capital
|
|
|
|
|
26 October
2008 |
|
|
£’000
|
|
|
|
|
Authorised
|
|
|
999,500,010 ordinary shares of 10p each
|
99,950
|
|
499,990 redeemable preference shares of 10p each
|
50
|
|
|
|
|
|
100,000
|
|
|
|
|
Allotted, called up and fully paid
|
|
|
640,452,369 ordinary shares of 10p each
|
64,045
|
|
|
|
13. Reserves
|
|
Treasury shares
|
Foreign currency translation
|
Own share reserve
|
Retained earnings
|
Other reserves
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
|
|
|
At 27 April 2008
|
(201,483)
|
3,926
|
-
|
363,636
|
(40,912)
|
125,167
|
|
Income recognised directly in equity
|
-
|
-
|
-
|
(17,865)
|
-
|
(17,865)
|
|
Profit for the financial period
|
-
|
-
|
-
|
65,748
|
-
|
65,748
|
|
Treasury shares cancelled
|
105,759
|
-
|
-
|
(105,759)
|
-
|
-
|
|
Market value of shares transferred to EBT
|
6,094
|
-
|
(6,094)
|
-
|
-
|
-
|
|
Difference between original cost and market value of shares transferred to EBT
|
4,542
|
-
|
-
|
(4,542)
|
-
|
-
|
|
Translation differences - group
|
-
|
24,903
|
-
|
-
|
-
|
24,903
|
|
Translation differences - associates
|
-
|
135
|
-
|
-
|
-
|
135
|
|
|
|
|
|
|
|
|
|
At 26 October 2008
|
(85,088)
|
28,964
|
(6,094)
|
301,218
|
(40,912)
|
198,088
|
|
|
|
|
|
|
|
|
Between 12 October 2007 and 14 March 2008 the group cancelled 79,547,631 shares purchased in the market under the share re-purchase programme.
On 16 September 2008 the Group sold 8,000,000 ordinary shares of 10 pence each from Treasury to the newly formed Sports Direct Employee Benefit Trust, an employee share scheme within the meaning of Section 1166 of the Companies Act 2006, at the market value of 76.17 pence per share. The difference between the market value and the average original purchase price of 132.95 pence per share has been transferred to retained earnings.
Following the above transaction the Company now holds 64,000,000 ordinary shares in Treasury.
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries and associates.
14. Other reserves
|
|
Share capital
|
Share premium
|
Permanent contribution to capital
|
Capital redemption reserve
|
Reverse combination reserve
|
Other reserves
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
|
|
|
At 27 April 2008 and 26 October 2008
|
64,045
|
874,300
|
50
|
8,005
|
(987,312)
|
(40,912)
|
|
|
|
|
|
|
|
|
The share premium account is used to record the excess proceeds over nominal value on the issue of shares.
15. Minority interests
|
|
|
|
|
£’000
|
|
|
|
|
At 27 April 2008
|
3,242
|
|
Share of profit for the period
|
130
|
|
Acquisitions
|
(568)
|
|
|
|
|
At 26 October 2008
|
2,804
|
|
|
|
16. Borrowings
|
|
|
|
|
|
|
26 October
2008 |
28 October
2007 |
27 April
2008 |
|
|
£’000
|
£’000
|
£’000
|
|
Non-current:
|
|
|
|
|
Bank and other loans
|
14,646
|
8,502
|
13,641
|
|
Obligations under finance leases
|
568
|
84
|
614
|
|
|
|
|
|
|
|
15,214
|
8,586
|
14,255
|
|
|
|
|
|
|
Current:
|
|
|
|
|
Bank overdrafts
|
502,233
|
795,344
|
471,471
|
|
Bank and other loans
|
4,029
|
9,158
|
4,704
|
|
Obligations under finance leases
|
123
|
348
|
225
|
|
|
|
|
|
|
|
506,385
|
804,850
|
476,400
|
|
|
|
|
|
|
Total borrowings:
|
|
|
|
|
Bank overdrafts
|
502,233
|
795,344
|
471,471
|
|
Bank and other loans
|
18,675
|
17,660
|
18,345
|
|
Obligations under finance leases
|
691
|
432
|
839
|
|
|
|
|
|
|
|
521,599
|
813,436
|
490,655
|
|
|
|
|
|
The maturity of the Group's bank and other loan borrowings other than overdrafts is as follows:
|
|
26 October
2008 |
28 October
2007 |
27 April
2008 |
|
|
£’000
|
£’000
|
£’000
|
|
Borrowings are repayable as follows:
|
|
|
|
|
Within one year
|
4,152
|
9,506
|
8,197
|
|
Between one and two years
|
14,733
|
8,212
|
8,576
|
|
Between two and five years
|
121
|
127
|
900
|
|
After five years
|
360
|
247
|
1,511
|
|
|
|
|
|
|
|
19,366
|
18,092
|
19,184
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings — Sterling
|
4,021
|
1,529
|
4,665
|
|
Borrowings — Other
|
15,345
|
16,563
|
14,519
|
|
|
|
|
|
|
|
19,366
|
18,092
|
19,184
|
|
|
|
|
|
Loans are all on commercial variable rates of interest ranging between 0.6% and 2.5% over the base rate of the country within which the borrowing entity resides.
On 26 February 2007, four members of the Group, SportsDirect.com Retail Limited, Lillywhites Limited, Dunlop Slazenger Group Limited and Smith & Brooks Holdings Limited (the "Borrowers") entered into a committed working capital facility agreement with The Governor and Company of the Bank of Scotland (the "Working Capital Facility").The Working Capital Facility is available to any of the Borrowers and may be drawn to an aggregate limit of £500.0 million. It is capable of being utilised by way of cash advances, letters of credit, guarantees, bonds and/or currency borrowings. The Working Capital Facility is available until 30 April 2011.Each Borrower is required to observe certain covenants, including undertakings relating to delivery of financial statements, and certain negative covenants, including in relation to creation of security and disposal of assets. The Working Capital Facility is secured by a debenture from each of the Borrowers and a composite guarantee from each of the non-dormant subsidiaries of SportsDirect.com Retail Limited.
An agreement is in place with Kaupthing Singer and Friedlander (KSF) whereby they provide a credit facility which is secured against the market value of certain available for sale financial assets held by the Group. The credit facility limit is determined by taking a specific percentage of the market value of each individual security. On 8 October 2008 KSF appointed administrators, but the directors do not believe that this will have a material impact on the agreement that was in place prior to this event. As at 26 October 2008 the market value of the available for sale financial assets held by KSF was £25,549,000 and the outstanding debt was £19,529,000.
17. Retirement benefit obligations
The Group's defined benefit pension obligations relate to Dunlop Slazenger Group Holdings Limited ("DSGHL"), which was acquired on 28 January 2004. DSGHL operates a number of plans worldwide, the largest of which is of the funded defined benefit type.The Scheme is closed to new members.
The amounts for the current and previous three periods following the acquisition of DSGHL are as follows:
|
|
|
|
|
|
|
|
|
26 October 2008
|
27 April
2008 |
29 April
2007 |
30 April
2006 |
24 April
2005 |
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
|
|
Total fair value of plan assets
|
27,267
|
32,706
|
36,419
|
32,829
|
28,720
|
|
Present value of plan liabilities
|
(37,282)
|
(44,411)
|
(50,451)
|
(48,008)
|
(44,945)
|
|
|
|
|
|
|
|
|
Net plan obligations
|
(10,015)
|
(11,705)
|
(14,032)
|
(15,179)
|
(16,225)
|
|
|
|
|
|
|
|
|
Experience adjustments on plan liabilities
|
7,917
|
4,652
|
(1,620)
|
(1,354)
|
(2,156)
|
|
Experience adjustments on plan assets
|
(6,128)
|
(2,969)
|
1,164
|
257
|
3,382
|
The cumulative amount of actuarial gains and losses recognised in the statement of recognised income and expense as at 26 October 2008 was an actuarial gain of £3,145,000 (27 April 2008: actuarial loss of £1,356,000).
There were no unrecognised actuarial gains or losses or past service costs as at 26 October 2008 or 27 April 2008.
Amounts recognised in the income statement are as follows:
|
|
|
|
|
|
26 weeks
ended 26 October 2008 |
52 weeks
ended 27 April 2008 |
|
|
£’000
|
£’000
|
|
|
|
|
|
Current service cost
|
8
|
69
|
|
Interest on retirement benefit obligations
|
1,254
|
2,317
|
|
Expected return on plan assets
|
(1,056)
|
(2,266)
|
|
|
|
|
|
|
206
|
120
|
|
|
|
|
The current service cost is included within cost of sales. The interest on retirement benefit obligations and the expected return on plan assets are included within finance costs and finance income respectively.
Amounts recognised in the statement of recognised income and expense are as follows:
|
|
|
|
|
|
26 weeks
ended 26 October 2008 |
52 weeks
ended 27 April 2008 |
|
|
£’000
|
£’000
|
|
|
|
|
|
Actual less expected return on assets
|
(6,128)
|
(2,969)
|
|
Actuarial gains relating to plan liabilities
|
7,917
|
4,652
|
|
|
|
|
|
|
1,789
|
1,683
|
|
|
|
|
The actual return on plan assets for the 26 weeks ended 26 October 2008 was a loss of £5,072,000.
The movements in the fair value of plan assets are as follows:
|
.
|
|
|
|
|
26 weeks
ended 26 October 2008 |
52 weeks
ended 27 April 2008 |
|
|
£’000
|
£’000
|
|
|
|
|
|
At the start of the period
|
32,706
|
36,419
|
|
Expected return
|
1,056
|
2,266
|
|
Actuarial loss
|
(6,128)
|
(2,969)
|
|
Employer contributions
|
615
|
1,111
|
|
Employee contributions
|
14
|
56
|
|
Benefits paid out
|
(996)
|
(4,177)
|
|
|
|
|
|
At the end of the period
|
27,267
|
32,706
|
|
|
|
|
The Group expects to contribute £1,263,000 to its defined benefit pension plans for the 52 weeks ending 26 April 2009.
The principal assumptions underlying the actuarial assessments of the present value of the plan liabilities are:
|
|
|
|
|
|
26 October
2008 |
27 April
2008 |
|
|
%
|
%
|
|
|
|
|
|
Inflation rate
|
3.0
|
3.5
|
|
Future salary increases
|
n/a
|
n/a
|
|
Future pension increases
|
2.9
|
3.4
|
|
Discount rate
|
7.5
|
6.5
|
The movements in the present value of the plan liabilities are as follows:
|
|
|
|
|
|
26 weeks
ended 26 October 2008 |
52 weeks
ended 27 April 2008 |
|
|
£’000
|
£’000
|
|
|
|
|
|
At the start of the period
|
(44,411)
|
(50,451)
|
|
Current service cost
|
(8)
|
(69)
|
|
Interest cost
|
(1,254)
|
(2,317)
|
|
Actuarial gains
|
7,917
|
4,652
|
|
Employee contributions
|
(14)
|
(56)
|
|
Benefits paid out
|
996
|
4,177
|
|
Exchange loss
|
(508)
|
(347)
|
|
|
|
|
|
At the end of the period
|
(37,282)
|
(44,411)
|
|
|
|
|
The net movements in the net present value of the plan liabilities were as follows:
|
|
|
|
|
|
26 weeks
ended 26 October 2008 |
52 weeks
ended 27 April 2008 |
|
|
£’000
|
£’000
|
|
|
|
|
|
Net liability at the start of the period
|
(11,705)
|
(14,032)
|
|
Movement in fair value of plan assets
|
(5,439)
|
(3,713)
|
|
Movements in the present value of the plan liabilities
|
7,129
|
6,040
|
|
|
|
|
|
Net liability at the end of the period
|
(10,015)
|
(11,705)
|
|
|
|
|
18. Financial instruments
(a) Derivatives: foreign currency forward purchase contracts
The most significant exposure to foreign exchange fluctuations relates to purchases made in foreign currencies, principally the US dollar. The Group's policy is to reduce substantially the risk associated with purchases denominated in foreign currencies by using forward fixed rate currency purchase contracts, taking into account any foreign currency cash flows. The foreign exchange contracts do not meet the criteria for treatment as an effective hedge and accordingly any gain or loss is recognised immediately in the income statement.
The carrying values of forward foreign currency purchase contracts were as follows:
|
|
|
|
|
|
|
26 October
2008 |
28 October
2007 |
27 April
2008 |
|
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
Fair value of derivative financial instruments — assets/(liabilities)
|
40,818
|
(15,342)
|
(47,638)
|
|
|
|
|
|
In the financial information provided for the 26 weeks to 28 October 2007 the derivative financial instruments were presented as being entirely current liabilities. Following the adoption of IFRS 7 the financial instruments have now been split into their current and non-current elements for both the current and prior periods.
The sterling principal amounts of forward foreign currency purchase contracts and contracted forward rates were as follows:
|
|
|
|
|
|
|
26 October
2008 |
28 October
2007 |
27 April
2008 |
|
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
US dollar purchases
|
600,000
|
1,583,119
|
1,081,668
|
|
Contracted rates
|
1.86 – 1.89
|
1.86 – 2.05
|
1.86 – 2.00
|
|
|
|
|
|
|
US dollar sales
|
(397,000)
|
(492,732)
|
(397,000)
|
|
Contracted rates
|
1.92 – 1.94
|
1.92 – 2.05
|
1.92 – 1.98
|
|
|
|
|
|
|
Euro sales
|
(183,746)
|
(35,707)
|
(259,716)
|
|
Contracted rates
|
1.32 – 1.40
|
1.40 – 1.40
|
1.25 – 1.40
|
|
|
|
|
|
|
|
|
|
|
Forward foreign currency purchase and sale contracts generally have a maturity at inception of approximately 12 months.
(b) Sensitivity analysis
Foreign currency sensitivity analysis
The Group's principal foreign currency exposures are to US dollars and the Euro. The table below illustrates the hypothetical sensitivity of the Group's reported profit and equity to a 5% increase and decrease in the US dollar/Sterling and Euro/Sterling exchange rates at the year end date, assuming all other variables remain unchanged. The figures have been calculated by comparing the fair values of outstanding foreign currency contracts at the current exchange rate to those if exchange rates moved as illustrated.
Positive figures represent an increase in profit or equity:
|
|
Income statement
|
Equity
|
|||||
|
|
26 October
2008 |
28 October
2007 |
27 April
2008 |
26 October
2008 |
28 October
2007 |
27 April
2008 |
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
|
Sterling strengthens by 5%
|
|
|
|
|
|
|
|
|
US dollar
|
(9,667)
|
(51,876)
|
(32,603)
|
(9,667)
|
(51,876)
|
(32,603)
|
|
|
Euro
|
8,750
|
1,700
|
12,367
|
8,750
|
1,700
|
12,367
|
|
|
|
|
|
|
|
|
|
|
|
Sterling weakens by 5%
|
|
|
|
|
|
|
|
|
US dollar
|
10,150
|
54,469
|
34,233
|
10,150
|
54,469
|
34,233
|
|
|
Euro
|
(9,187)
|
(1,785)
|
(12,986)
|
(9,187)
|
(1,785)
|
(12,986)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19. Cash inflows from operating activities
|
|
26 weeks
ended 26 October 2008 |
26 weeks
ended 28 October 2007 |
52 weeks
ended 27 April 2008 |
|
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
Profit before taxation
|
97,667
|
21,212
|
118,873
|
|
Net finance (income)/costs
|
(74,278)
|
(12,656)
|
39,636
|
|
Profit on disposal of available-for sale assets
|
(449)
|
—
|
(41,367)
|
|
Investment income
|
(363)
|
(2,203)
|
(2,507)
|
|
Share of profit of associated undertakings and joint ventures
|
(2,049)
|
(2,355)
|
(5,020)
|
|
|
|
|
|
|
Operating profit
|
20,528
|
3,998
|
109,615
|
|
Depreciation
|
22,594
|
18,722
|
35,583
|
|
Amortisation charge
|
1,550
|
662
|
2,023
|
|
Impairment of Goodwill
|
—
|
665
|
1,394
|
|
Loss on disposal of property, plant and equipment
|
—
|
275
|
—
|
|
Loss on disposal of intangibles
|
187
|
—
|
155
|
|
Loss on disposal of subsidiary undertakings
|
—
|
—
|
1,883
|
|
Defined benefit pension plan current service cost
|
206
|
58
|
69
|
|
Defined benefit pension plan employer contributions
|
(615)
|
(488)
|
(1,110)
|
|
|
|
|
|
|
Operating cash inflow before changes in working capital
|
44,450
|
23,892
|
149,612
|
|
(Increase)/decrease in receivables
|
(23,883)
|
(576)
|
6,395
|
|
Decrease in inventories
|
6,154
|
11,355
|
23,511
|
|
Increase/(decrease) in payables
|
17,279
|
(102,713)
|
(119,999)
|
|
|
|
|
|
|
Cash inflows/(outflows) from operating activities
|
44,000
|
(68,042)
|
59,519
|
|
|
|
|
|
20. Related party transactions
The Group has taken advantage of the exemptions contained within IAS 24 - "Related Party Disclosures" from the requirement to disclose transactions between Group companies as these have been eliminated on consolidation.
The Group entered into the following material transactions with related parties:
|
26 weeks ended 26 October 2008
Related party
|
Relationship
|
Sales
|
Purchases
|
Trade and
other
receivables |
Trade and
other
payables |
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
|
|
Heatons
|
Associate
|
5,984
|
—
|
2,026
|
—
|
|
No Fear International Limited
|
Joint venture
|
—
|
—
|
—
|
(1,698)
|
|
M J W Ashley
|
Director
|
—
|
—
|
—
|
(599)
|
|
PBF International Limited
|
Joint venture
|
—
|
—
|
795
|
—
|
No interest was charged on M J W Ashley's director's account with the Group.
M J W Ashley leases certain properties to various companies in the Group which are operated as retail and distribution premises. A commercial rent is charged in respect of these leases.
Compensation paid to key management of the Group was £517,705, including pension contributions of £7,228.
|
26 weeks ended 28 October 2007
Related party
|
Relationship
|
Sales
|
Purchases
|
Trade and
other
receivables |
Trade and
other
payables |
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
|
|
Pan World Brands Limited
|
Common control
|
—
|
—
|
441
|
—
|
|
Heatons
|
Associate
|
8,514
|
—
|
2,978
|
—
|
|
No Fear International Limited
|
Joint venture
|
—
|
—
|
17
|
(1,037)
|
|
M J W Ashley
|
Director
|
—
|
—
|
—
|
(526)
|
|
PBF International Limited
|
Joint venture
|
194
|
(261)
|
1,407
|
(91)
|
|
Sopotnik Trade
|
Associate
|
22
|
—
|
118
|
(31)
|
No interest was charged on M J W Ashley's director's account with the Group.
M J W Ashley leases certain properties to various companies in the Group which are operated as retail and distribution premises. A commercial rent is charged in respect of these leases.
On 10 July 2007 Group sold an Antigua A109 S Grand Helicopter to Mike Ashley for €4,806,175 (£3,235,547) plus VAT. The helicopter had been purchased by the company for €4,600,000.
During the period M J W Ashley loaned the Group £250m on arms length commercial terms and this amount was repaid in full on 26 October 2007.
Compensation paid to key management of the Group was £481,528, including pension contributions of £4,616.
21. Contingent assets and liabilities
As a matter of course the Group undertakes action in numerous parts of the world to protect its trade mark registrations and in connection with the Group's licensees. Such actions are usually resolved in the ordinary course of business. The Group is, however, party to a dispute and has provided for an amount representing the financial estimation of the potential loss if the outcome was not to be in its favour. The Group believes that to provide further information would be seriously prejudicial to the case.
22. Post balance sheet events
No material post balance sheet events have occurred after 26 October 2008 to the date of this Interim Report.
This information is provided by RNS
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