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RNS
JD Sports Fashion Plc  -  JD.   

Final Results

Released 07:00 11-Apr-2017

RNS Number : 1267C
JD Sports Fashion Plc
11 April 2017
 

11 April 2017                                                         

 

JD SPORTS FASHION PLC

PRELIMINARY RESULTS

FOR THE 52 WEEKS ENDED 28 JANUARY 2017

 

 

JD Sports Fashion Plc (the "Group"), a leading retailer of sports, fashion and outdoor brands, today announces its Preliminary Results for the 52 weeks ended 28 January 2017 (2016: 52 weeks ended 30 January 2016).

 

 

 

2017

2016

% Change

 

£000

£000

 

 

 

 

 

Revenue

2,378,694

1,821,652

+31%

 

 

 

 

Gross profit %

48.9%

48.5%

 

 

 

 

 

Operating profit (before exceptional items)*

246,212

158,902

+55%

Net interest expense

(1,425)

(1,775)

 

 

 

 

 

Profit before tax and exceptional items*

244,787

157,127

+56%

Exceptional items

(6,419)

(25,496)

 

 

 

 

 

Profit before tax

238,368

131,631

+81%

 

 

 

 

Basic earnings per ordinary share (a)

18.38p

10.03p

 

Adjusted earnings per ordinary share (a)*

19.04p

12.27p

 

 

 

 

 

Total dividend payable per ordinary share

1.55p

1.48p

 

 

 

 

 

Net cash at period end (b)

213,600

209,421

 

 

a)   The prior year has been restated to reflect the 5:1 share split which was approved by shareholders at a General Meeting on 24 November 2016

b)   Net cash consists of cash and cash equivalents together with interest-bearing loans and borrowings

c)   Throughout this release '*' indicates first instance of a term defined and explained in the Glossary at the end of these preliminary results

 

Group Highlights

 

·      Record result with headline profit before tax and exceptional items of £244.8 million (2016: £157.1 million) and profit before tax increasing by 81% to £238.4 million (2016: £131.6 million).

 

·      A third consecutive year of double digit store LFL* growth in Sports Fashion.

 

·      European development accelerated with a net increase of 54 stores (2016: 38 stores) for the JD fascia across Europe.

 

·      As part of our international strategy, a further two stores in Malaysia opened in the year with a further store opened in the new financial year. The first JD store in Australia is due to open shortly.

 

·      Blacks and Millets delivered a positive result for the first time and the acquisition of the market leading Go Outdoors business will further develop our overall Outdoors proposition.

 

·      Period end net cash of £213.6 million (2016: £209.4 million) with the significant investments in the year on both acquisitions, principally Go Outdoors, and capital expenditure funded by the inherently strong cash generative nature of our retail fascias.

 

·      Total capital expenditure of £88.0 million (2016: £83.5 million) which is expected to increase further in the new financial year as the international rollout of JD continues to gain momentum.

 

·      Sales, gross margin and operating profit / (loss) before exceptional items of the two business segments are tabulated below:

 

Period to 28 January 2017

 

 

Sports Fashion

£000

 

 

Outdoor

£000

 

 

Total

£000

 

 

 

 

 

 

Gross revenue

2,180,553

 

198,141

 

2,378,694

Intersegment revenue

-

 

-

 

-

 

 

 

 

 

 

Revenue

2,180,553

 

198,141

 

2,378,694

 

 

 

 

 

 

Gross margin %

49.4%

 

43.7%

 

48.9%

Operating profit before exceptional items

 

245,056

 

 

1,156

 

 

246,212

 

Period to 30 January 2016

 

 

Sports Fashion

£000

 

 

Outdoor

£000

 

 

Total

£000

 

 

 

 

 

 

Gross revenue

1,666,477

 

155,313

 

1,821,790

Intersegment revenue

(138)

 

-

 

(138)

 

 

 

 

 

 

Revenue

1,666,339

 

155,313

 

1,821,652

 

 

 

 

 

 

Gross margin %

49.0%

 

43.3%

 

48.5%

Operating profit / (loss) before exceptional items

 

162,864

 

 

(3,962)

 

 

158,902

 

·      Final dividend payable increased by 4.8% to 1.30p (2016 restated: 1.24p) bringing the total dividends payable for the year to 1.55p (2016 restated: 1.48p) per ordinary share, an increase of 4.7%.


Peter Cowgill, Executive Chairman, said:

 

"This has been another period of very significant progress for the Group with the headline profit before tax and exceptional items increased by 56% to £244.8 million (2016: £157.1 million). Over a three year period the result has improved by more than 190% which is an outstanding performance and provides the Group with a robust platform for further development.

 

"The foundation of this success remains our core Sports Fashion fascias where JD's continued strength in its core markets is increasingly being complemented by momentum in our international development, with a net increase of 54 JD stores across mainland Europe during the year.

 

"It is a great testament to the strength and quality of the people at every level in our businesses that we have been able to consistently deliver outstanding results over a number of years. Our continued strength is principally due to their talent, energy and commitment and I thank everybody involved across the Group for delivering these excellent results.

 

"Whilst we must recognise that there are external influences which may impact the latter part of the year, notably inflationary pressures arising from Brexit, the Board remains confident in the robustness of the JD proposition and believes that the Group is well positioned for further profitable growth."

 

Enquiries:

 

JD Sports Fashion Plc                                                                                                    Tel:  0161 767 1000

Peter Cowgill, Executive Chairman

Brian Small, Chief Financial Officer

 

MHP Communications                                                                                                    Tel:  0203 128 8100

Andrew Jaques

Barnaby Fry

Gina Bell

 
Executive Chairman's Statement

 

Introduction

 

This has been another period of very significant progress for the Group with the headline profit before tax and exceptional items increased by 56% to £244.8 million (2016: £157.1 million). Over a three year period the result has improved by more than 190% which is an outstanding performance and provides the Group with a robust platform for further development.

 

The foundation of this success remains our core* Sports Fashion fascias where JD's continued strength in its core markets is increasingly being complemented by momentum in our international development, with a net increase of 54 JD stores across mainland Europe during the year. We firmly believe that our approach of presenting a unique and often exclusive sports and fashion premium brand offer in a truly multichannel environment, where innovative digital technology is integrated into a vibrant retail theatre, continues to increase the attractiveness and desirability of our product ranges. These factors provide our stores with a real point of difference for both consumers and our branded supplier partners.

 

We are fully aware that athletic inspired footwear and apparel has been on trend throughout Europe for a number of seasons. However, whilst this tailwind has clearly had a positive influence, the key to our success in recent years has been the way that we have leveraged these favourable market conditions with our strengthening profitability, a payback for the investments we have made over a number of years to develop the JD retail concept and strengthen our core commercial practices. We continue to invest in these areas, particularly visual merchandising systems, in-store environment and creative marketing as we believe that it is JD's market leading standards in these areas that resonate with an increasing number of brands. Having flexibility in our brand line up is critical and enables us to maintain a trend appropriate assortment.

 

Although the UK's vote to leave the European Union means that there will be some uncertainties for the immediately foreseeable future, our international expansion will remain a clear strategic focus. There is an ongoing process to strengthen and build the management team and other core operational infrastructure to support an expansion over a wider geography.

 

In November we acquired the Go Outdoors business for cash consideration of £112.3 million with the Group also assuming net debt of approximately £11.4 million. Go Outdoors had 58 stores across the UK at acquisition, the majority of which are in destination locations outside city centres, and was a compelling opportunity for a number of reasons:

 

·      It is active in a range of categories where the Group has either no presence or only a limited presence, including cycling

·      Its out of town destination format is complementary to the high street model of Blacks and Millets

·      Go Outdoors has considerable expertise in developing consumer engagement through its membership scheme and we believe that there are opportunities to enhance this further by drawing on JD's expertise in multichannel retail

 

The acquisition of Go Outdoors is currently under review by the Competition and Markets Authority which has issued the Group with an enforcement order which obliges us to operate the Go Outdoors business separately to our pre-existing Outdoors businesses until they have completed their review. We are complying and assisting fully with this process in order that it can be completed in the most timely and efficient manner.

 

 

Sports Fashion

 

Sports Fashion has had an exceptional year with operating profits (before exceptional items) increasing by 50% to £245.0 million (2016: £162.9 million). Like for like store sales growth in the period across our European fascias (excluding those businesses acquired in the year) was over 10% which was very pleasing given the strong like for like growth achieved in the previous three years. It would be unreasonable to expect like for like sales growth to be maintained at this level for a further year although we are confident of our ability to exploit the opportunities that continue to exist domestically and, increasingly, internationally.

 

 

There has been further progress in Europe during the period with new stores in all of our existing territories, including larger space flagship stores in Cologne and Brussels, complemented by two acquisitions:

 

·      In March we acquired the trade and store assets of the Aktiesport and Perry Sport retail fascias in the Netherlands from the trustee in bankruptcy of Unlimited Sports Group BV. Our initial focus has been to stabilise the distressed position by trading through a disjointed stock position, recommencing the supply chain, determining the optimal future store portfolio and rationalising an unsustainable operational infrastructure. Significant progress has been made in all of these areas, although it is very much an ongoing exercise and we would not expect these fascias, which are complementary rather than a competitor to the JD fascia, to make a significant contribution in the current financial year. We have begun to address the previous underinvestment in the store portfolio with a major refurbishment of the Perry Sport store on Kalverstraat in Amsterdam and a new store for Aktiesport in the Zuidplein Shopping Centre in Rotterdam.

·      In July we acquired 12 stores in Portugal which previously traded as The Athlete's Foot. These stores have now been converted to JD.

 

Elsewhere in Europe, our Chausport and Sprinter businesses have also both benefitted from the continuation of the favourable market trends and have traded positively in the period. We have also recently agreed a Memorandum of Understanding with Sonae - SGPS, SA. This sets out the basis for the creation of an Iberian Sports Retail Group combining the Group's existing businesses in Spain and Portugal with the Sport Zone business of Sonae, which is one of the largest sports retailers in the region.

 

Further afield, we expanded our presence in Malaysia during the period with two additional JD stores in Kuala Lumpur and a fourth store, also in Kuala Lumpur, opened after the year end. These are complemented by the acquisition from our joint venture partner (Stream Enterprises) of 20 small multi-brand stores trading as Sports Empire, Revolution and The Marathon Shop. We have also acquired 32 stores trading as Glue and Superglue in Australia. This business and its management will provide the platform to open JD in Australia with development works ongoing for the first store which will be at the Melbourne Central Shopping Centre. This store will open in Spring 2017 and we anticipate further openings elsewhere in Australia during the year.

 

We are pleased with the positive performance in our principal fashion businesses, in particular Tessuti, which is gaining momentum and regional presence following the acquisition of stores which traded as Infinities, Aspecto, ML Clothing and Xile. Mainline Menswear, which is an online retailer of premium fashion brands, has also performed exceptionally well with the Scotts business maintaining its profitability after strong growth in the previous year. We would anticipate further positive developments in our Fashion businesses in the current financial year as we build on our previous investments to create strong relationships with the major global premium brands.

 

The customers in our core JD fascia are extremely digitally aware with a high propensity to use social media in their purchasing decisions. Consequently, we continue to invest heavily in creating a technology rich multichannel environment which not only provides the customer with information about the product but also helps increase the desire to purchase. This digitally integrated approach gives positive benefits to our stores as well as our trading websites with online sales now representing 13.2% of total fascia sales (2016: 10.4%) in JD's principal UK and Ireland market.

 

The overall gross margin in Sports Fashion is slightly higher than the previous year reflecting continuing low markdown levels and the impact of the stronger Euro on JD's Euro denominated businesses where product is sourced and distributed from the UK. The weakening of sterling against the US Dollar after the Brexit vote will cause some headwinds on margin in 2017 but, working with our global brand partners, we believe we are in a reasonable position to mitigate against these.

 

 

Outdoor

 

The Outdoor fascias have made encouraging progress in the year delivering an operating profit for the first time with an overall segment operating profit before exceptional items of £1.2m (2016: loss of £4.0 million).

 

The result in the Blacks and Millets business has improved as we see the positive benefits from actions taken previously to simplify the operational leadership, improve the camping offer and reduce the level of markdowns. The smaller Tiso business, which operates largely in Scotland, has also delivered a positive result and having dealt with a number of legacy underperforming stores now has a better platform from which to develop. 

 

Go Outdoors, which we acquired towards the end of the year, has not had a material impact on the current year results. We are confident that this acquisition will enhance our overall Outdoor offer in the longer term although investment in core operational infrastructure, principally IT and Logistics, will be required to enable the business to reach its full potential. We also believe that there will be opportunities for the Go Outdoors business to leverage from the Group's strength and considerable experience in merchandising management.

 

Margins were improved over the full year with reduced levels of discounting although these were negated slightly by lower margins in the Go Outdoor business. We continually strive for further improvements in margins but the breadth of supply from the key Outdoor brands into the market and the wide availability of vertically sourced product from both specialist and non-specialist retailers means that Outdoor will inevitably remain a competitive sector.

 

 

Financial Summary

 

Revenue, gross margin and overheads

 

Total revenue increased by 31% in the year to £2,378.7 million (2016: £1,821.7 million). Like for like store sales for the 52 week period across all Group fascias, including those in Europe, increased by a further 10%, which was another exceptional performance given the growth seen in previous years.

 

Total gross margin in the year of 48.9% was slightly ahead of the prior year (2016: 48.5%). Both segments saw improved margins with Sports Fashion increased to 49.4% (2016: 49.0%) and Outdoor increased to 43.7% (2016: 43.3%).

 

Operating profits and results

 

Operating profit (before exceptional items) increased substantially by £87.3 million to £246.2 million (2016: £158.9 million) driven by a very strong performance in Sports Fashion with Outdoor delivering a profit for the first time. Operating profit (before exceptional items) has now increased by approximately 140% over the last two financial years (2015: £102.2 million).

 

There were exceptional items in the year of £6.4 million (2016: £25.5 million) from the impairment of certain intangible assets.

 

The exceptional items comprised:

 

 

2017

2016

 

 £m

 £m

 

 

 

Non-cash impairment of intangible assets  (1)

6.4

10.6

Termination of project to replace core IT systems (2)

-

14.9

 

 

 

Total exceptional charge

6.4

25.5

 

1.   The charge in the period to 28 January 2017 relates to the non-cash impairment of the fascia name balance arising in prior years on the acquisition of ActivInstinct Limited, the fascia name arising in the year on the acquisition of Aspecto Holdings Limited and Infinities Retail Group Holdings Limited and the impairment of the goodwill arising in the year on the acquisition of 2Squared Agency Limited. The charge in the period to 30 January 2016 relates to the non-cash impairment of the goodwill arising in prior years on the acquisition of ActivInstinct Limited, a partial impairment of the Blacks fascia name and the impairment of other goodwill and fascia name balances which were not significant.

2.   One off exceptional charge in the period to 30 January 2016 writing off costs incurred on a terminated IT project.

 

Group profit before tax in the year ultimately increased by 81% to £238.4 million (2016: £131.6 million).

 

 

Working Capital and Cash

 

The net cash balance at the end of the year was £213.6 million (2016: £209.4 million) with the expansionary investments, comprising both acquisitions and capital expenditure, funded by strong cash generation from the ongoing trading in our core retail fascias combined with an ongoing focus on robust stock management disciplines.

 

Cash consideration on acquisitions in the year, net of cash acquired, was £138.6m (2016: £nil). We will continue to make selected acquisitions and investments where they benefit our strategic development.

 

Gross capital expenditure (excluding disposal costs) increased by £4.5 million to £88.0 million (2016: £83.5 million). The primary focus of our capital expenditure remains our retail fascias with the spend in the year increasing by £12.3 million to £64.0 million (2016: £51.7 million). International expansion now accounts for more than 50% of this spend with capital expenditure in our retail fascias outside of our core UK and Ireland markets increased by £9.7 million to £35.7 million (2016: £26.0 million). Given our focus on international development and the increased number of territories that the Group operates in, we would anticipate a significant increase in the expenditure on our retail fascias in the new financial year.

 

Elsewhere, we have now commenced a project to expand our internal use of the existing Kingsway warehouse site. This will be completed later in this financial year with a total projected cost of approximately £20 million. Work will also commence shortly on the construction of a 352,000 sqft extension to the Kingsway facility with the site scheduled to be handed over in Spring 2018. The subsequent cost that the Group will incur for the initial phase of fitting out this site, including automation equipment, has been estimated at up to £42 million although the majority of this spend will be incurred in the financial year to 2 February 2019.

 

 

Store Portfolio

 

During the period, store numbers have moved as follows:

 

Sports Fashion Fascias                                                                               

 

 

(Store Nos.)

 

JD

UK & ROI

 

JD Europe

 

JD Asia

 

 

Size

Sub-Total

JD

& Size?

 

 

Chausport

 

 

Sprinter

 

 

SUR

 

 

Australia

 

 

Other

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

Period start

361

103

1

36

501

72

104

-

-

59

736

New stores

21

46

2

2

71

4

16

1

-

6

98

Transfers

-

1

-

1

2

-

-

(1)

-

(1)

-

Acquired

-

12

-

-

12

-

-

187

32

42

273

Closures

(13)

(5)

-

(2)

(20)

(1)

(1)

(23)

-

(12)

(57)

 

 

 

 

 

 

 

 

 

 

 

 

Period end

369

157

3

37

566

75

119

164

32

94

1,050

 

 

 

 

 

 

 

 

 

 

 

 

(000 Sq Ft)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period start

1,371

222

4

63

1,660

81

973

-

-

144

2,858

New stores

88

144

15

3

250

4

109

4

-

16

383

Extensions

20

2

-

-

22

-

-

-

-

-

22

Transfers

-

4

-

1

5

-

-

(4)

-

(1)

-

Acquired

-

21

-

-

21

-

-

949

130

121

1,221

Closures

(50)

(7)

-

(2)

(59)

(2)

(13)

(113)

-

(35)

(222)

 

 

 

 

 

 

 

 

 

 

 

 

Period end

1,429

386

19

65

1,899

83

1,069

836

130

245

4,262

 

In addition, there were eight JD branded Gyms at the period end after four openings in the year.

 

 

Outdoor Fascias

     

(Store Nos.)

 

Blacks

 

Millets

Ultimate Outdoors

 

Tiso

Go

 Outdoors

 

Total

 

 

 

 

 

 

 

Period start

60

99

7

16

-

182

New stores

3

7

-

-

-

10

Transfers

-

-

-

-

-

-

Acquired

-

-

-

-

58

58

Closures

(4)

(7)

-

(1)

-

(12)

 

 

 

 

 

 

Period end

59

99

7

15

58

238

 

 

 

 

 

 

(000 Sq Ft)

 

 

 

 

 

 

 

 

 

 

 

 

 

Period start

207

205

163

97

-

672

New stores

11

12

-

-

-

23

Transfers

1

(1)

-

-

-

-

Acquired

-

-

-

-

1,699

1,699

Closures

(15)

(17)

-

(3)

-

(35)

 

 

 

 

 

 

 

Period end

204

199

163

94

1,699

2,359

                                                                   

 

Dividends and Earnings per Share

 

The Board proposes paying a final dividend of 1.30p (2016 restated: 1.24p) bringing the total dividend payable for the year to 1.55p (2016 restated: 1.48p) per ordinary share, an increase of 4.7%. The proposed final dividend will be paid on 31 July 2017 to all shareholders on the register at 23 June 2017. We believe that this level of dividend strikes a fair balance for shareholders with appropriate capital retained to facilitate ongoing developments, particularly investment in the international Sports Fashion fascias, which will drive success for the Group, and therefore increased benefits to shareholders, over the longer term.

 

The adjusted earnings per ordinary share before exceptional items have increased by 55% to 19.04p (2016 restated: 12.27p).

 

The basic earnings per ordinary share have increased by 83% to 18.38p (2016 restated: 10.03p).

 

 

People

 

It is a great testament to the strength and quality of the people at every level in our businesses that we have been able to consistently deliver outstanding results over a number of years. Our continued strength is principally due to their talent, energy and commitment and I thank everybody involved across the Group for delivering these excellent results.

 

Given the importance of our people, we were greatly disappointed to be the subject of allegations made in late 2016 about working practices in our Kingsway warehouse, a sophisticated, efficient and fast growing facility which we are very proud of. As the wellbeing of all staff is a key priority for the Group and it is an area where we strive continually to improve performance, the Board appointed Deloitte to conduct an independent review of the allegations made. That review has now been completed and Deloitte's conclusion was that the allegations did not represent a balanced characterisation of working practices at Kingsway. As before, we remain committed to continually reviewing and implementing improvements in day to day procedures there.

 

 

Current Trading and Outlook

 

Whilst we must recognise that there are external influences which may impact the latter part of the year, notably inflationary pressures arising from Brexit, the Board remains confident in the robustness of the JD proposition and believes that the Group is well positioned for further profitable growth.

 

Given the significant shift in the timing of Easter this year, it is not relevant at this time to report any comparative current year trading figures.

 

Our next scheduled update will be the announcement of our Interim Results on 12 September 2017.

 

Peter Cowgill

Executive Chairman

11 April 2017

 

Consolidated Income Statement

For the 52 weeks ended 28 January 2017

 

 

 

 

 

Note

 

 

52 weeks to

28 January 2017

£000

 

 

52 weeks to

30 January 2016

£000

 

 

 

 

 

 

 

Revenue

 

 

 

2,378,694

 

1,821,652

Cost of sales

 

 

 

(1,215,053)

 

(937,431)

 

 

 

 

 

 

 

Gross profit

 

 

 

1,163,641

 

884,221

Selling and distribution expenses - normal

 

 

 

(812,972)

 

(648,333)

Administrative expenses - normal

 

 

 

(106,272)

 

(78,228)

Administrative expenses - exceptional

 

 

 

(6,419)

 

(25,496)

Other operating income

 

 

 

1,815

 

1,242

 

 

 

 

 

 

 

Operating profit

 

 

 

239,793

 

133,406

 

 

 

 

 

 

 

Before exceptional items

 

 

 

246,212

 

158,902

Exceptional items

 

2

 

(6,419)

 

(25,496)

 

 

 

 

 

 

 

Operating profit

 

 

 

239,793

 

133,406

Financial income

 

 

 

767

 

388

Financial expenses

 

 

 

(2,192)

 

(2,163)

 

 

 

 

 

 

 

Profit before tax

 

 

 

238,368

 

131,631

Income tax expense

 

 

 

(53,788)

 

(31,001)

 

 

 

 

 

 

 

Profit for the period

 

 

 

184,580

 

100,630

 

 

 

 

 

 

 

Attributable to equity holders of the parent

 

 

 

178,914

 

97,634

Attributable to non-controlling interest

 

 

 

5,666

 

2,996

 

 

 

 

 

 

 

 

Basic earnings per ordinary share

 

 

3

 

 

18.38p

 

 

10.03p

 

Diluted earnings per ordinary share

 

 

3

 

 

18.38p

 

 

10.03p

 

 

 

Consolidated Statement of Comprehensive Income

For the 52 weeks ended 28 January 2017

 

 

 

52 weeks to

28 January 2017

£000

 

52 weeks to

30 January 2016

£000

 

Profit for the period

 

 

184,580

 

 

100,630

 

Other comprehensive income:

Items that may be classified subsequently to the Consolidated Income Statement:

Exchange differences on translation of foreign operations

 

 

 

 

 

22,551

 

 

 

 

 

4,144

 

 

 

 

 

Total other comprehensive income for the period

 

22,551

 

4,144

 

 

 

 

 

Total comprehensive income and expense for the period

(net of income tax)

 

 

207,131

 

 

104,774

 

 

 

 

 

Attributable to equity holders of the parent

 

197,761

 

101,828

Attributable to non-controlling interest

 

9,370

 

2,946

 

 

 

 

Consolidated Statement of Financial Position

As at 28 January 2017

 

 

 

 

 

 

As at

28 January 2017

£000

 

As at 

30 January 2016

£000

Assets

 

 

 

 

 

 

Intangible assets

 

 

 

190,902

 

73,611

Property, plant and equipment

 

 

 

235,762

 

173,317

Other assets

 

 

 

38,103

 

33,191

Deferred tax assets

 

 

 

-

 

482

Total non-current assets

 

 

 

464,767

 

280,601

 

 

 

 

 

 

 

Inventories

 

 

 

348,007

 

238,324

Trade and other receivables

 

 

 

118,602

 

56,375

Cash and cash equivalents

 

 

 

247,560

 

215,996

Total current assets

 

 

 

714,169

 

510,695

 

 

 

 

 

 

 

Total assets

 

 

 

1,178,936

 

791,296

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Interest-bearing loans and borrowings

 

 

 

(31,431)

 

(6,301)

Trade and other payables

 

 

 

(469,062)

 

(324,964)

Provisions

 

 

 

(1,015)

 

(1,132)

Income tax liabilities

 

 

 

(33,648)

 

(15,757)

Total current liabilities

 

 

 

(535,156)

 

(348,154)

 

 

 

 

 

 

 

Interest-bearing loans and borrowings

 

 

 

(2,529)

 

(274)

Other payables

 

 

 

(53,179)

 

(40,834)

Provisions

 

 

 

(1,038)

 

(1,209)

Deferred tax liabilities

 

 

 

(8,192)

 

-

Total non-current liabilities

 

 

 

(64,938)

 

(42,317)

 

 

 

 

 

 

 

Total liabilities

 

 

 

(600,094)

 

(390,471)

 

 

 

 

 

 

 

Total assets less total liabilities

 

 

 

578,842

 

400,825

 

 

 

 

 

 

 

Capital and reserves

 

 

 

 

 

 

Issued ordinary share capital

 

 

 

2,433

 

2,433

Share premium

 

 

 

11,659

 

11,659

Retained earnings

 

 

 

543,268

 

378,898

Other reserves

 

 

 

(5,110)

 

(10,570)

 

 

 

 

 

 

 

Total equity attributable to equity holders of the parent

552,250

 

382,420

Non-controlling interest

 

 

 

26,592

 

18,405

 

 

 

 

 

 

 

Total equity

 

 

 

578,842

 

400,825

 

 

Consolidated Statement of Changes in Equity 

For the 52 weeks ended 28 January 2017

           

 

 

 

 

Ordinary

Share Capital

£000

 

 

 

 

Share

Premium

£000

 

 

 

 

Retained

Earnings

£000

 

 

 

 

Treasury Reserve

£000

 

 

 

 

Other

 Equity

£000

 

 

Foreign Currency Translation Reserve

£000

Total Equity Attributable to Equity Holders

 of The Parent

£000

 

 

 

 

 

 

 

 

Balance at 31 January 2015

2,433

11,659

297,161

-

(3,073)

(11,691)

296,489

 

 

 

 

 

 

 

 

Profit for the period

-

-

97,634

-

-

-

97,634

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

Exchange differences on translation of foreign operations

 

-

 

-

 

-

 

-

 

-

 

4,194

 

4,194

 

Total other comprehensive income

 

-

 

-

 

-

 

-

 

 

-

 

4,194

 

4,194

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

-

 

-

 

97,634

 

-

 

-

 

4,194

 

101,828

Dividends to equity holders

-

-

(13,820)

-

-

-

(13,820)

Acquisition of non-controlling interest

 

-

 

-

 

(2,077)

 

-

 

-

 

-

 

(2,077)

 

 

 

 

 

 

 

 

Balance at 30 January 2016

2,433

11,659

378,898

-

(3,073)

(7,497)

382,420

 

 

 

 

 

 

 

 

Profit for the period

-

-

178,914

-

-

-

178,914

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

Exchange differences on translation of foreign operations

 

-

 

-

 

-

 

-

 

-

 

18,847

 

18,847

 

Total other comprehensive income

 

-

 

-

 

-

 

-

 

-

 

18,847

 

18,847

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

-

 

-

 

178,914

 

-

 

 

-

 

18,847

 

197,761

Repurchase of share capital held as Treasury Shares

 

 

 

(15,926)

 

 

(15,926)

Dividends to equity holders

-

-

(14,501)

-

-

-

(14,501)

Put options held by non-controlling interest

-

 

-

 

(2,180)

 

-

 

2,539

 

-

 

359

Acquisition of non-controlling interest

 

-

 

-

 

2,052

 

-

 

-

 

-

 

2,052

Divestment of non-controlling interest

 

-

 

-

 

85

 

-

 

-

 

-

 

85

 

 

 

 

 

 

 

 

Balance at 28 January 2017

2,433

11,659

543,268

(15,926)

(534)

11,350

552,250

 

 

 

 

 

 

 

 

                   
 

 

Consolidated Statement of Changes in Equity (continued) 

For the 52 weeks ended 28 January 2017

 

 

Total Equity Attributable to Equity Holders

 of The Parent

£000

 

Non-Controlling Interest

£000

 

 

Total

Equity

£000

 

 

 

 

Balance at 31 January 2015

296,489

13,502

309,991

 

 

 

 

Profit for the period

97,634

2,996

100,630

 

 

 

 

Other comprehensive income:

 

 

 

Exchange differences on translation of foreign operations

 

4,194

 

(50)

 

4,144

 

Total other comprehensive income

 

4,194

 

(50)

 

4,144

 

 

 

 

Total comprehensive income for the period

 

101,828

 

2,946

 

104,774

Dividends to equity holders

(13,820)

(120)

(13,940)

Acquisition of non-controlling interest

 

(2,077)

 

2,077

 

-

 

 

 

 

Balance at 30 January 2016

382,420

18,405

400,825

 

 

 

 

Profit for the period

178,914

5,666

184,580

 

 

 

 

Other comprehensive income:

 

 

 

Exchange differences on translation of foreign operations

 

18,847

 

3,704

 

22,551

 

Total other comprehensive income

 

18,847

 

3,704

 

22,551

 

 

 

 

Total comprehensive income for the period

 

197,761

 

9,370

 

207,131

Repurchase of share capital held as Treasury Shares

 

(15,926)

 

-

 

(15,926)

Dividends to equity holders

(14,501)

(656)

(15,157)

Put options held by non-controlling interest

 

359

 

-

 

359

Acquisition of non-controlling interest

 

2,052

 

(2,052)

 

-

Divestment of non-controlling interest

 

85

 

(85)

 

-

Non-controlling interest arising on acquisition

 

-

 

1,610

 

1,610

 

 

 

 

Balance at 28 January 2017

552,250

26,592

578,842

         

 

 

 

Consolidated Statement of Cash Flows

For the 52 weeks ended 28 January 2017

 

 

52 weeks to 

28 January 2017

£000

 

52 weeks to 

30 January 2016

£000

Cash flows from operating activities

 

 

 

 

Profit for the period

 

184,580

 

100,630

Income tax expense

 

53,788

 

31,001

Financial expenses

 

2,192

 

2,163

Financial income

 

(767)

 

(388)

Depreciation and amortisation of non-current assets

 

62,370

 

48,778

Forex (gains) / losses on monetary assets and liabilities

 

(5,371)

 

7,997

Loss on disposal of non-current assets

 

320

 

-

Termination of IT project

 

-

 

14,896

Impairment of intangible fixed assets

 

6,419

 

10,600

Increase in inventories

 

(21,240)

 

(13,304)

(Increase) / decrease in trade and other receivables

 

(4,594)

 

47

Increase in trade and other payables

 

43,895

 

55,738

Interest paid

 

(2,192)

 

(2,163)

Income taxes paid

 

(40,139)

 

(29,981)

Net cash from operating activities

 

279,261

 

226,014

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Interest received

 

767

 

388

Proceeds from sale of non-current assets

 

2,431

 

1,145

Investment in bespoke software development

 

(3,843)

 

(4,401)

Acquisition of property, plant and equipment

 

(77,229)

 

(72,765)

Acquisition of non-current other assets

 

(6,886)

 

(6,343)

Acquisition of subsidiaries, net of cash acquired

 

(138,568)

 

-

Net cash used in investing activities

 

(223,328)

 

(81,976)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Repayment of interest-bearing loans and borrowings

 

(3,133)

 

(191)

Repayment of finance lease liabilities

 

(148)

 

(30)

Draw down of finance lease liabilities

 

-

 

75

Repayment of syndicated bank facility

 

-

 

(31,000)

Subsidiary shares repurchased and held as Treasury Shares

 

(14,815)

 

-

Equity dividends paid

 

(14,501)

 

(13,820)

Dividends paid to non-controlling interest in subsidiaries

 

(656)

 

(120)

Net cash used in financing activities

 

(33,253)

 

(45,086)

 

Net increase in cash and cash equivalents

 

 

22,680

 

 

98,952

 

 

 

 

 

Cash and cash equivalents at the beginning of the period

 

209,859

 

115,697

Foreign exchange gains / (losses) on cash and cash equivalents

 

 

1,796

 

 

(4,790)

 

Cash and cash equivalents at the end of the period

 

 

234,335

 

 

209,859

 

 

 

Analysis of Net Cash

As at 28 January 2017

 

 

 

At 30

January

2016

£000

On acquisition of subsidiaries

£000

 

 

Cash

flow

£000

 

Non-

cash

movements

£000

 

At 28

 January

2017

£000

 

 

 

 

 

 

Cash at bank and in hand

215,996

10,669

19,099

1,796

247,560

Overdrafts

(6,137)

(6,125)

(963)

-

(13,225)

 

 

 

 

 

Cash and cash equivalents

209,859

4,544

18,136

1,796

234,335

 

 

 

 

 

 

Interest-bearing loans and borrowings:

 

 

 

 

 

Bank loans

(54)

(21,920)

2,858

-

(19,116)

Finance lease liabilities

(108)

(1,004)

148

-

(964)

Other loans

(276)

(654)

275

-

(655)

 

 

 

 

 

 

209,421

(19,034)

21,417

1,796

213,600

 

 

 

 

1.   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 allocate resources to the segments and to assess their performance. The Chief Operating Decision Maker is considered to be the Executive Chairman of JD Sports Fashion Plc.

 

Information reported to the Chief Operating Decision Maker is focused on the nature of the businesses within the Group. The Group's operating and reportable segments under IFRS 8 are therefore as follows:

           

·      Sports Fashion - includes the results of JD Sports Fashion Plc, John David Sports Fashion (Ireland) Limited, Spodis SA, Champion Sports Ireland, JD Sprinter Holdings 2010 SL (including subsidiary companies), JD Sports Fashion BV, Sports Unlimited Retail BV, JD Sports Fashion Germany GmbH, JD Sports Fashion SRL, JD Sports Fashion Belgium BVBA, JD Sports Fashion Sweden AB, JD Sports Fashion Denmark ApS, JD Sports Fashion SDN BHD, JD Sports Fashion Holdings Aus Pty (including subsidiary companies), Size GmbH, ActivInstinct Limited, JD Gyms Limited, Duffer of St George Limited, Topgrade Sportswear Limited, Kooga Rugby Limited, Focus Brands Limited (including subsidiary companies), Kukri Sports Limited (including global subsidiary companies), Source Lab Limited, R.D. Scott Limited, Tessuti Group Limited (including subsidiary companies), Nicholas Deakins Limited, Cloggs Online Limited, Clothingsites.co.uk Limited, Ark Fashion Limited, 2Squared Agency Limited, 2Squared Retail Limited and Mainline Menswear Limited .

·      Outdoor - includes the results of Blacks Outdoor Retail Limited, Tiso Group Limited (including subsidiary companies) and Go Outdoors Topco Limited (including subsidiary companies).

 

The Chief Operating Decision Maker receives and reviews segmental operating profit. Certain central administrative costs including Group Directors' salaries are included within the Group's core 'Sports Fashion' result. This is consistent with the results as reported to the Chief Operating Decision Maker.

 

IFRS 8 requires disclosure of information regarding revenue from major products and customers. The majority of the Group's revenue is derived from the retail of a wide range of apparel, footwear and accessories to the general public. As such, the disclosure of revenues from major customers is not appropriate. Disclosure of revenue from major product groups is not provided at this time due to the cost involved to develop a reliable product split on a same category basis across all companies in the Group.

 

Intersegment transactions are undertaken in the ordinary course of business on arm's length terms.

 

The Board consider that certain items are cross divisional in nature and cannot be allocated between the segments on a meaningful basis. Net funding costs and taxation are treated as unallocated reflecting the nature of the Group's syndicated borrowing facilities and its tax group. Drawdowns from the Group's syndicated borrowing facility of £nil (2016: £nil), a deferred tax liability of £8,192,000 (2016: asset of £482,000) and an income tax liability of £33,648,000 (2016: £15,757,000) are included within the unallocated segment.

 

Each segment is shown net of intercompany transactions and balances within that segment. The eliminations remove intercompany transactions and balances between different segments which primarily relate to the net down of long term loans and short term working capital funding provided by JD Sports Fashion Plc (within Sports Fashion) to other companies in the Group, and intercompany trading between companies in different segments.

 

 

Business Segments

 

Information regarding the Group's reportable operating segments for the 52 weeks to 28 January 2017 is shown below:

 

Income statement

 

 

 

 

 

 

 

 

Sports Fashion

£000

 

Outdoor

£000

 

Total

£000

 

 

 

 

 

 

Gross revenue

 

 

2,180,553

198,141

2,378,694

Intersegment revenue

 

 

-

-

-

Revenue

 

 

2,180,553

198,141

2,378,694

 

Operating profit before exceptional items

 

 

 

 

245,056

 

 

1,156

 

 

246,212

Exceptional items

 

 

(6,419)

-

(6,419)

 

 

 

 

 

 

Operating profit

 

 

238,637

1,156

239,793

Financial income

 

 

 

 

767

Financial expenses

 

 

 

 

(2,192)

 

 

 

 

 

 

Profit before tax

 

 

 

 

238,368

Income tax expense

 

 

 

 

(53,788)

 

 

 

 

 

 

Profit for the period

 

 

 

 

184,580

 

 

 

Total assets and liabilities

 

Sports Fashion

£000

Outdoor

£000

Unallocated

£000

Eliminations

£000

Total

£000

 

 

 

 

 

 

Total assets

994,547

255,949

-

(71,560)

1,178,936

Total liabilities

(463,364)

(166,450)

(41,840)

71,560

(600,094)

Total segment net assets / (liabilities)

 

531,183

 

89,499

 

(41,840)

 

-

 

578,842

             

  

 

Other segment information

 

 

 

 

Sports Fashion

£000

Outdoor

£000

Total

£000

Capital expenditure:

 

 

 

Software development

3,843

-

3,843

Property, plant and equipment

72,741

4,488

77,229

Non-current other assets

6,886

-

6,886

 

 

 

 

Depreciation, amortisation and impairments:

 

 

 

Depreciation and amortisation of non-current assets

57,353

5,017

62,370

Impairment of intangible assets

6,419

-

6,419

Impairment of non-current assets

(698)

705

7

 

 

 

 

The comparative segmental results for the 52 weeks to 30 January 2016 are as follows:

 

Income statement

 

 

 

 

 

 

 

 

Sports Fashion

£000

 

Outdoor

£000

 

Total

£000

 

 

 

 

 

 

Gross revenue

 

 

1,666,477

155,313

1,821,790

Intersegment revenue

 

 

(138)

-

(138)

Revenue

 

 

1,666,339

155,313

1,821,652

 

Operating profit / (loss) before exceptional items

 

 

 

 

162,864

 

 

(3,962)

 

 

158,902

Exceptional items

 

 

(21,634)

(3,862)

(25,496)

 

 

 

 

 

 

Operating profit / (loss)

 

 

141,230

(7,824)

133,406

Financial income

 

 

 

 

388

Financial expenses

 

 

 

 

(2,163)

 

 

 

 

 

 

Profit before tax

 

 

 

 

131,631

Income tax expense

 

 

 

 

(31,001)

 

 

 

 

 

 

Profit for the period

 

 

 

 

100,630

             

 

 

 

Total assets and liabilities

 

Sports Fashion

£000

Outdoor

£000

Unallocated

£000

Eliminations

£000

Total

£000

 

 

 

 

 

 

Total assets

792,411

82,016

482

(83,613)

791,296

Total liabilities

(336,736)

(121,591)

(15,757)

83,613

(390,471)

Total segment net assets / (liabilities)

 

455,675

 

(39,575)

 

(15,275)

 

-

 

400,825

             

 

 

Other segment information

 

 

 

 

Sports Fashion

£000

Outdoor

£000

Total

£000

Capital expenditure:

 

 

 

Software development

4,401

-

4,401

Property, plant and equipment

69,025

3,740

72,765

Non-current other assets

6,343

-

6,343

 

 

 

 

Depreciation, amortisation and impairments:

 

 

 

Depreciation and amortisation of non-current assets

45,326

3,452

48,778

Impairment of intangible assets

6,739

3,861

10,600

Termination of IT project

14,896

-

14,896

Impairment of non-current assets

843

584

1,427

 

 

Geographical Information

 

The Group's operations are located in the UK, Republic of Ireland, France, Spain, Germany, the Netherlands, Italy, Portugal, Sweden, Denmark, Belgium, Malaysia, Australia, New Zealand, Canada, Dubai, Singapore and Hong Kong.

           

The following table provides analysis of the Group's revenue by geographical market, irrespective of the origin of the goods / services:

 

 

2017

£000

 

2016

£000

 

 

 

 

 

UK

 

1,655,537

 

1,407,866

Europe

 

656,858

 

391,954

Rest of world

 

66,299

 

21,832

 

 

 

 

 

 

 

2,378,694

 

1,821,652

 

The revenue from any individual country, with the exception of the UK, is not more than 10% of the Group's total revenue.

 

The following is an analysis of the carrying amount of segmental non-current assets by the geographical area in which the assets are located:

 

 

2017

£000

 

2016

£000

 

 

 

 

 

UK

 

284,655

 

183,623

Europe

 

163,316

 

96,437

Rest of world

 

16,796

 

541

 

 

 

 

 

 

 

464,767

 

280,601

 

 

2.   Exceptional items

 

 

 

 

 

52 weeks to

28 January

2017

£000

 

52 weeks to 

30 January

2016                      £000

 

 

 

 

 

Impairment of goodwill, brand names and fascia names (1)

 

6,419

 

10,600

Termination of project to replace core IT systems (2)

 

-

 

14,896

Administrative expenses - exceptional

 

6,419

 

25,496

 

 

 

 

 

 

 

 

 

 

Total Exceptional Items

 

6,419

 

25,496

 

 

1.   The charge in the period to 28 January 2017 relates to the non-cash impairment of the fascia name balance arising in prior years on the acquisition of ActivInstinct Limited, the fascia name arising in the year on the acquisition of Aspecto Holdings Limited and Infinities Retail Group Holdings Limited and the impairment of the goodwill arising in the year on the acquisition of 2Squared Agency Limited. The charge in the period to 30 January 2016 relates to the non-cash impairment in the period of the goodwill arising in prior years on the acquisition of ActivInstinct Limited, a partial impairment of the Blacks fascia name and the impairment of other goodwill and fascia name balances which were not significant.

2.   One off exceptional charge in the period to 30 January 2016 writing off costs incurred on a terminated IT project.

 

These selling and distribution expenses and administrative expenses are exceptional items as they are, in aggregate, material in size and/or unusual or infrequent in nature.

 

 

3.   Earnings per ordinary share

 

Basic and diluted earnings per ordinary share

 

The calculation of basic and diluted earnings per ordinary share at 28 January 2017 is based on the profit for the period attributable to equity holders of the parent of £178,914,000 (2016: £97,634,000) and a weighted average number of ordinary shares outstanding during the 52 week period ended 28 January 2017 of 973,233,160 (2016 restated: 973,233,160).

 

An Ordinary Resolution was passed at the Annual General Meeting, effective 24 November 2016, resulting in a share split whereby five Ordinary shares were issued for each Ordinary share. In accordance with IAS 33, the number of shares outstanding before the event has been adjusted for the proportionate change as if the event had occurred at the beginning of the earliest period presented.

 

 

52 weeks to

28 January

2017

 

     52 weeks to 

30 January

 2016

 

 

 

(restated)

Issued ordinary shares at beginning and end of period

973,233,160

 

973,233,160

 

 

Adjusted basic and diluted earnings per ordinary share

 

Adjusted basic and diluted earnings per ordinary share have been based on the profit for the period attributable to equity holders of the parent for each financial period but excluding the post-tax effect of certain exceptional items. The Directors consider that this gives a more meaningful measure of the underlying performance of the Group.

 

 

 

 

 

 

Note

52 weeks to

28 January

2017

£000

 

     52 weeks to 

30 January

2016

                 £000

 

 

 

 

(restated)

 

Profit for the period attributable to equity holders of the parent

 

 

178,914

 

 

97,634

Exceptional items excluding loss on disposal of non-current assets

 

2

 

6,419

 

 

25,496

Tax relating to exceptional items

 

-

 

(3,737)

Profit for the period attributable to equity holders of the parent excluding exceptional items

 

 

185,333

 

 

119,393

 

 

 

 

 

Adjusted basic and diluted earnings per ordinary share

 

19.04p

 

 12.27p

  

 

4.   Acquisitions

 

Current period acquisitions

 

Sports Unlimited Retail BV

On 20 March 2016, the Group acquired, via its newly incorporated subsidiary Sports Unlimited Retail BV, the trading assets and trade of the Aktiesport and Perry Sport fascias from the Trustee of Unlimited Sports Group BV which was declared bankrupt by the court of Amsterdam on 23 February 2016. On acquisition there were 187 stores and two trading websites.

 

The Board believes that the cash consideration of €26.5 million represents the current best estimates of the fair value of the net assets acquired. The provisional goodwill calculation is summarised below:

 

 

 

 

 

Book value

£000

 

 

Measurement

adjustments

£000

 

Provisional fair  value at 28 January 2017

£000

Acquiree's net assets at acquisition date:

 

 

 

Property, plant & equipment

3,929

-

3,929

Inventories

23,330

5,242

28,572

Cash

58

-

58

Trade and other payables

(8,364)

(2,135)

(10,499)

Provisions

-

(3,107)

(3,107)

 

Net identifiable assets

 

18,953

 

-

 

18,953

 

 

 

 

Goodwill on acquisition

 

 

-

 

Consideration paid - satisfied in cash

 

 

 

18,953

 

Included in the 52 week period ended 28 January 2017 is revenue of £81,317,000 and a loss before tax of £7,904,000 in respect of Sports Unlimited Retail BV.

 

 

JD Sports Fashion SDN BHD

On 28 April 2016, the Group acquired via its 50% subsidiary in Malaysia, JD Sports Fashion SDN BHD, 20 multi-brand Sports Fashion stores and a trading website which trade as Sports Empire, Revolution and The Marathon Shop from Runners World SDN BHD. JD Sports Fashion SDN BHD is an entity controlled by the Group and therefore the results and financial position of the entity are consolidated into the financial statements of the Group. The cash consideration payable on this transaction was MYR 20.7 million.

 

The Board believes that the cash consideration of MYR 20.7 million represents the current best estimates of the fair value of the net assets acquired. The provisional goodwill calculation is summarised below:

 

 

 

 

 

Book value

£000

 

 

Measurement

adjustments

£000

 

Provisional fair  value at 28 January 2017

£000

Acquiree's net assets at acquisition date:

 

 

 

Intangible assets

823

260

1,083

Property, plant & equipment

356

-

356

Other non-current assets

249

-

249

Inventories

2,018

-

2,018

Deferred tax liabilities

-

(260)

(260)

 

Net identifiable assets

 

3,446

 

-

 

3,446

 

 

 

 

Goodwill on acquisition

 

 

-

 

Consideration paid - satisfied in cash

 

 

 

3,446

 

Included in the 52 week period ended 28 January 2017 is revenue of £10,176,000 and profit before tax of £486,000 in respect of JD Sports Fashion SDN BHD.

 

 

Sportiberica Sociedade de Artigos de Desporto, S. A.

On 1 July 2016, the Group acquired, both directly and via its 50.1% owned subsidiary JD Sprinter Holdings 2010 SL, an aggregate of 80% of the issued share capital of Sportiberica Sociedade de Artigos de Desporto S.A ("Sportiberica") for cash consideration of €4.2 million with additional consideration of up to €0.5 million payable if certain criteria are met. At acquisition, management believed that the criteria would be met for the maximum consideration to be payable and therefore management believes that the fair value of the total consideration at this time is €4.7 million.

 

The Board believes that the excess of cash consideration paid over net identifiable assets on acquisition of £1,422,000 is best considered as goodwill on acquisition representing anticipated future operating synergies. The provisional goodwill calculation is summarised below:

 

 

 

 

 

Book value

£000

 

 

Measurement

adjustments

£000

 

Provisional fair  value at 28 January 2017

£000

Acquiree's net assets at acquisition date:

 

 

 

Property, plant & equipment

183

-

183

Other non-current assets

42

-

42

Inventories

2,821

-

2,821

Cash

679

-

679

Trade and other receivables

866

-

866

Income tax assets

36

-

36

Trade and other payables

(1,540)

-

(1,540)

Interest bearing loans and borrowings

(705)

-

(705)

 

Net identifiable assets

 

2,382

 

-

 

2,382

 

 

 

 

Non - controlling interest

(476)

-

(476)

 

 

 

 

Goodwill on acquisition

 

 

1,422

 

 

 

 

Consideration paid - satisfied in cash

 

 

2,971

Contingent consideration

 

 

357

 

Total Consideration

 

 

 

3,328

 

Included in the 52 week period ended 28 January 2017 is revenue of £6,411,000 and a loss before tax of £1,288,000 In respect of Sportiberica.

 

 

 

Next Athleisure Pty Limited

On 26 August 2016, the Group acquired, via its newly incorporated subsidiary JD Sports Fashion Holdings Australia Pty, 80% of the issued ordinary share capital of Next Athleisure Pty Limited for consideration of $6.6 million AUD and has also advanced $2.4 million AUD to allow it to settle an element of its indebtedness. Next Athleisure Pty Limited operates 32 stores and a trading website in Australia under the Glue and Superglue retail banners.

 

The Board believes that the cash consideration of $6.6 million represents the current best estimates of the fair value of net assets acquired. The provisional goodwill calculation is summarised below:

 

 

 

 

 

 

 

 

 

 

Book value

£000

 

 

Measurement

adjustments

£000

 

Provisional fair  value at 28 January 2017

£000

Acquiree's net assets at acquisition date:

 

 

 

Intangible assets

4,821

2,810

7,631

Property, plant & equipment

5,150

599

5,749

Other non-current assets

2

-

2

Inventories

9,428

851

10,279

Cash

471

137

608

Trade and other receivables

2,683

108

2,791

Income tax assets

159

11

170

Deferred tax liabilities

1,510

(2,092)

(582)

Trade and other payables

(11,903)

(1,093)

(12,996)

Interest bearing loans and borrowings

(7,998)

(821)

(8,819)

 

Net identifiable assets

 

4,323

 

510

 

4,833

 

 

 

 

Non - controlling interest

(865)

(102)

(967)

Goodwill on acquisition

 

 

-

 

 

 

 

Consideration paid - satisfied in cash

 

 

3,420

Consideration as loan owed to NCI

 

 

446

 

Total Consideration

 

 

 

3,866

 

 

Included in the 52 week period ended 28 January 2017 is revenue of £32,017,000 and a loss before tax of £91,000 in respect of Next Athleisure Pty Limited.

 

 

 

Go Outdoors Topco Limited

On 27 November 2016, the Group acquired 100% of the issued ordinary share capital of Go Outdoors Topco Limited ('Go Outdoors') for consideration of £112,305,000 with the Group assuming net debt of £11,359,000 as part of the transaction. Go Outdoors is a nationwide omnichannel retailer catering for the outdoor enthusiast and specialist alike with 58 stores across the UK at acquisition, the majority of which are situated in out of town retail parks.

 

Included within the fair value of net identifiable assets on acquisition are intangible assets of £66,729,000; £59,076,000 representing the 'GO Outdoors' fascia name and £7,653,000 of brands.

 

The Board believes that the excess of cash consideration paid over net identifiable assets on acquisition of £44,434,000 is best considered as goodwill on acquisition representing the strategic benefit of a larger Outdoor operation in the Group. The provisional goodwill calculation is summarised below:

 

 

 

 

Book value

£000

 

 

Measurement

adjustments

£000

 

Provisional fair  value at 28 January 2017

£000

Acquiree's net assets at acquisition date:

 

 

 

Intangible assets

319

66,410

66,729

Property, plant & equipment

28,495

(2,518)

25,977

Inventories

40,354

-

40,354

Cash

8,821

-

8,821

Trade and other receivables

7,251

-

7,251

Income tax liabilities

(897)

-

(897)

Deferred tax liabilities

(48)

(11,323)

(11,371)

Trade and other payables

(48,240)

(573)

(48,813)

Interest bearing loans and borrowings

(20,180)

-

(20,180)

 

Net identifiable assets

 

15,875

 

51,996

 

67,871

 

 

 

 

Goodwill on acquisition

 

 

44,434

 

Consideration paid - satisfied in cash

 

 

 

112,305

 

 

Included in the 52 week period ended 28 January 2017 is revenue of £34,183,000 and a loss before tax of £93,000 in respect of Go Outdoors.

 

Aspecto Holdings Limited

On 18 July 2016, the Group, via its new 100% subsidiary Napco 104 Limited acquired 100% of the entire issued share capital of Aspecto Holdings Limited for cash consideration of £1. As at 28 January 2017, the Group had also advanced £900,000 of working capital. The Board believes that the cash consideration of £1 represents the current best estimates of the fair value of the net assets acquired.

 

On 21 August 2016, the trade and assets (with the exception of certain assets and liabilities) were hived up into Tessuti Limited, a 100% owned subsidiary of JD Sports Fashion Plc.

 

 

Infinites Retail Group Limited

On 12 September 2016, the Group, via its new 100% subsidiary Ensco 1157 Limited acquired 100% of the entire issued share capital of Infinities Retail Group Limited for cash consideration of £1. As at 28 January 2017, the Group had also advanced £1,020,000 of working capital. The Board believes that the cash consideration of £1 represents the current best estimates of the fair value of the net assets acquired.

 

On 31 October 2016, the trade and assets (with the exception of certain assets and liabilities) were hived up into Tessuti Limited, a 100% owned subsidiary of JD Sports Fashion Plc.

 

Clothingsites.co.uk Limited

On 26 September 2016, the Group, via its new 100% subsidiary Ensco 1173 Limited acquired 100% of the entire issued share capital of Clothingsites.co.uk Limited for an initial cash consideration of £1. As at 28 January 2017, the Group had also advanced £1,100,000 of working capital. Clothingsites.co.uk Limited currently operates two trading websites, Woodhouse Clothing and Brown Bag Clothing. The Board believes that the excess of cash consideration paid over net identifiable assets on acquisition of £2,443,000 represents the fair value of the 'Woodhouse Clothing' and 'Brown Bag' online fascia names.

 

Included in the 52 week period ended 28 January 2017 is revenue of £3,811,000 and a loss before tax of £329,000 in respect of Clothingsites.co.uk Limited.

 

2Squared Agency and 2Squared Retail Limited

On 30 November 2016, the Group acquired 69% of the issued share capital of 2Squared Agency Limited and 51% of the issued share capital of 2Squared Retail Limited for cash consideration of £512,000. As at 28 January 2017, the Group had also advanced £3,020,000 of working capital to settle outstanding debt. The Board believed that the excess of cash consideration paid over the net identifiable assets on acquisition of £959,000 was best considered as goodwill representing future operating synergies. The goodwill was subsequently impaired during the financial period ended 28 January 2017.

 

Included in the 52 week period ended 28 January 2017 is revenue of £1,519,000 and a loss before tax of £99,000 in respect of 2Squared.

 

Other Acquisitions

During the period, the Group has made several small acquisitions, including increasing its shareholding to 100% in three subsidiaries which were previously non-wholly owned. These transactions were not material.

 

Full Year Impact of Acquisitions

Had the acquisitions of the entities listed above been effected at 31 January 2016, the revenue and profit before tax of the Group for the 52 week period to 28 January 2017 would have been £2,634,888,000 and £236,454,000 respectively.

 

Acquisition Costs

Acquisition related costs amounting to £1,684,000 (Sports Unlimited Retail BV: £139,000; JD Sports Fashion SDN BHD: £68,000 and SportIberica Sociedade de Artigos de Desporto S.A: £34,000, Next Athleisure Pty Limited: £307,000, Go Outdoors Topco Limited: £1,086,000, Aspecto Holdings Limited: £10,000, Infinities Retail Group Limited: £10,000, Clothingsites.co.uk: £10,000 and 2Squared: £20,000) have been excluded from the consideration transferred and have been recognised as an expense in the year, within administrative expenses in the Consolidated Income Statement.

 

Prior Period Acquisitions

During the prior period, the Group increased its shareholding in three non-wholly owned subsidiaries. These transactions were not material.

 

 

5.   Subsequent Events

 

Memorandum of Understanding with Sonae - SGPS, SA

On 9 March 2017, JD Sports Fashion Plc, announced that it had agreed a Memorandum of Understanding ('MoU') with Sonae - SGPS, SA ('Sonae') which sets out the basis for a potential combination of the JD Group's existing businesses in Spain and Portugal, JD Sprinter Holdings ('JD Sprinter'), with the Sport Zone business of Sonae which is one of the largest sports retailers in the region.

 

This MoU establishes the key parameters for the creation of an Iberian Sports Retail Group that, subject to contract and subsequent clearance by the relevant Competition Authorities, will have as shareholders the JD Group, Sonae and the family shareholders of JD Sprinter, with shareholdings of approximately 50%, 30% and 20%, respectively.

 

 

6.   Accounts

The financial information set out above does not constitute the Group's statutory accounts for the 52 weeks ended 28 January 2017 or 52 weeks ended 30 January 2016 but is derived from those accounts. Statutory accounts for the 52 weeks ended 30 January 2016 have been delivered to the Registrar of Companies, and those for the 52 weeks to 28 January 2017 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Copies of full accounts will be sent to shareholders in due course. Additional copies will be available from JD Sports Fashion Plc, Hollinsbrook Way, Pilsworth, Bury, Lancashire, BL9 8RR or online at www.jdplc.com.

 

 

Glossary (terms are listed in alphabetical order)

 

Not all of the figures and ratios used are readily available from the unaudited preliminary results included in the announcement. The Directors believe that these non-GAAP measures are both useful and necessary to better understand the Group's results. Where required, a reconciliation to the statutory amounts is set out below.

 

Adjusted earnings per share

The calculation of basic and diluted earnings per share is detailed in Note 3. Adjusted basic and diluted earnings per ordinary share have been based on the profit for the period attributable to equity holders of the parent for each financial period but excluding the post-tax effect of certain exceptional items. A reconciliation between basic earnings per share and adjusted earnings per share is shown below:

 

 

2017

2016

(restated)

 

 

 

Basic earnings per share

18.38p

10.03p

Exceptional items excluding loss on disposal of non-current assets

0.66p

2.62p

Tax relating to exceptional items

            -

(0.38)p

 

 

 

Adjusted earnings per share

19.04p

12.27p

 

Core

The Group's core Sports Fashion fascia is JD and the Group's core market is the UK and Republic of Ireland.

 

LFL (Like for Like) sales 

The percentage change in the year-on-year sales, removing the impact of new store openings and closures in the current or previous financial year.

 

Operating profit before exceptional items

A reconciliation between operating profit and exceptional items can be found in the Consolidated Income Statement.

 

Profit before tax and exceptional items

A reconciliation between profit before tax and profit before tax and exceptional items is as follows:

 

           

 

2017

2016

 

£000

£000

Profit before tax

238,368

131,631

Exceptional items

6,419

25,496

 

 

 

Profit before tax and exceptional items

244,787

157,127

 


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