Frasers Group PLC — Interim / Quarterly Report 2014

Dec 12, 2013

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RNS Number : 3405V

Sports Direct International Plc

12 December 2013

12th December 2013

Sports Direct International plc

Interim Results for the 26 weeks to 27 October 2013

Group Revenues up 23.5%; Group Underlying EBITDA up 12.3%

	FY14 H1	FY13 H1
	£m	£m
Group revenue	1,345.1	1,088.9	+23.5%
UK Sports Retail	903.3	796.9	+13.4%
International Sports Stores: Existing Business	118.5	90.6	+30.8%
International Sports Stores: Acquisitions	87.7	-	-
Premium Lifestyle	102.8	56.1	+83.2%
Brands	106.2	106.9	-0.7%
Group gross profit	579.8	448.6	+29.2%
Group gross margin	43.1%	41.2%	+190 bps
UK Sports Retail	43.8%	42.3%	+150 bps
Underlying EBITDA (pre share schemes costs) (1)	183.3	163.2	+12.3%
Underlying profit before tax (PBT) (1) (2)	146.2	125.1	+16.9%
Reported profit before tax	143.1	125.2	+14.3%
Underlying earnings per share (1) (2)	18.99p	16.05p	+18.3%
Reported earnings per share	18.59p	16.07p	+15.7%

Key highlights

Group

·      Strong Group performance - ahead of management's expectations

·      European expansion continues - acquisitions in Austria ("EAG") and the Baltic region ("SIG")

·      Group now active in 19 European countries

·      Group gross profit increased by 29.2% to £579.8m

·      Group gross margin increased by 190 basis points to 43.1%

·      Strong underlying free cash flow generation of £147m(3)

·      Continued investment in inventory and acquisitions while maintaining a strong balance sheet

Sports Retail

·      Online sales growth of 43.0%, now contributes 15.5% of total Sports Retail sales(4) (FY13 H1: 12.5%)

·      International Sports Stores sales growth of 30.8%, excluding acquisition of EAG and SIG

Premium Lifestyle

·      43 former Republic stores converted to the USC fascia

·      Point of sale successfully integrated and new ecommerce platforms launched

Brands

·      Everlast, Dunlop and Slazenger continue to drive growth in licensing income

·      42 new license agreements signed with annual minimum guarantees of $38m over the contract period

Dave Forsey, Chief Executive of Sports Direct International plc said:

"We have delivered another strong performance reflecting our continued focus on providing customers with exceptional quality and unbeatable value - reinforcing our position as the consumer champion.  The growth in Group revenues and EBITDA has been ahead of expectations and achieved against a tough comparative that included the UEFA European Championships and the London 2012 Olympics.

"The performance of Sports Retail is particularly pleasing with significant growth in the UK, Europe and online.  The Group's expansion in Europe has also continued with acquisitions in Austria and the Baltic states.  The integration of these acquisitions is progressing and we continue to look for further opportunities across Europe.

"While we retain the ability to invest in margin, inventory and Group marketing to deliver long-term sustainable growth, the Board is confident of achieving at least our full year internal underlying EBITDA target of £310m, before the charge for the Employee Bonus Share Scheme."

(1)	Underlying EBITDA, underlying profit before taxation and underlying EPS exclude realised foreign exchange gains/losses in selling and administration costs, exceptional costs and the profit/loss on sale of strategic investments. Underlying EBITDA also excludes the employee bonus share scheme charge.
(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, but include the employee bonus share scheme charge.
(3)	Defined as underlying EBITDA (pre share scheme costs) less taxes paid.
(4)	Excluding EAG, SIG and wholesale and other sales.
Sports Direct International plc Dave Forsey, Chief Executive Bob Mellors, Group Finance Director Jeff Blue, Director, Strategic Development		T:  0845 129 9229
FTI Consulting Jonathon Brill Alex Beagley Georgia Mann		T:  0207 831 3113

Chairman's Statement

During the first half of the year the Group has gone from strength to strength with growth across all key metrics.  The improvement is particularly pleasing when viewed against the previous first half comparative, which had the benefit of the London 2012 Olympics and the UEFA European Championships.

The Group's performance has remained impressive, both operationally and financially.  Our employee long term share-based incentive scheme continues to underpin these results.

Developments and acquisitions

The Group has continued its expansion in Europe, acquiring stakes in Sports EYBL and the Sports Experts Group, as well as SIG, which operate in Austria and Germany and the Baltic region, respectively.

In the first quarter we acquired Gelert, strengthening our Brands division.  To our Sports Retail division we added Yeomans Outdoors and Robinsons Country Leisure.  We also acquired the fashion retail chain Pulp including all six of its stores, this being integrated into to our Premium Lifestyle division.

Employee Bonus Share Schemes

The second vesting of the 2009 Employee Bonus Share Scheme took place in August 2013, with c. 1,800 employees benefitting from over 19 million shares.  This was life changing for many of our employees and I am certain was a large contributor to our overall success.  We have now met our FY12 and FY13 targets under the 2011 Employee Bonus Share Scheme and we are on track to realise the FY14 and FY15 targets.  If all of the other requisite conditions are achieved under the 2011 Scheme, vesting will take place during 2015 and 2017.

The Executive Bonus Share Scheme vested in August 2013 and those subject to the Scheme exercised their options and received one million shares each.  There is a further Executive Bonus Share Scheme which is due to vest during 2017.  The FY12 and FY13 targets under this Scheme have been reached, with further targets in FY14 and FY15 to be attained.

The Board is mindful that Mike Ashley, the Executive Deputy Chairman receives no remuneration at all for the immense contribution he makes to this Company.

Dividend

As a growth company, we continue to focus on identifying and investing in strategic opportunities that have the potential to generate attractive returns for our shareholders.  The Directors believe it appropriate to preserve the Group's financial flexibility to pursue such opportunities and are therefore not minded to recommend the resumption of a regular dividend distribution policy while evaluating attractive investment opportunities.

Group Finance Director

Bob Mellors, Group Finance Director, has notified the Board of his desire to retire at the end of December on health grounds.  Bob has committed to assist management with an orderly handover of his responsibilities when a successor is appointed.  On behalf of the Board I should like to thank Bob for his many years of invaluable service and dedication to Sports Direct and wish him well in his retirement.

Overall

I am delighted that we entered the FTSE 100 during this period.  This achievement is testament to the hard work and dedication of our senior management and employees over many years.

We continue to provide our customers with exceptional quality and unbeatable value, ever mindful of the financial challenges in the broader economy.  We look forward to building upon this success especially with the potential opportunities that the 2014 FIFA World Cup will bring.

I wish to thank our employees and other stakeholders for the contribution they make to the Group's success.

Keith Hellawell

Non-Executive Chairman

12 December 2013

Overview of Financial Performance

Basis of reporting

The financial statements for the Group for the 26 weeks ended 27 October 2013 are presented in accordance with International Accounting Standard (IAS) 34 - Interim Financial Reporting which has been adopted for use in the EU (IFRS).

Summary of results

	26 weeks ended 27 October 2013 (£'m)	26 weeks ended 28 October 2012 (£'m)	Change %
Revenue	1,345.1	1,088.9	+23.5
Underlying EBITDA (pre share scheme costs)	183.3	163.2	+12.3
Underlying Profit before Tax	146.2	125.1	+16.9
Reported Profit before Tax	143.1	125.2	+14.3
	Pence per Share	Pence per Share
Basic EPS (1)	18.59	16.07	+15.7
Underlying EPS (2)	18.99	16.05	+18.3

(1) and (2)  Based on 578.5 million and 568.8 million ordinary shares outstanding in FY14 H1 and FY13 H1, respectively

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.

Revenue and margin

	26 weeks ended 27 October 2013 (£'m)	26 weeks ended 28 October 2012 (£'m)		Change %
Retail
Revenue:
UK Sports Retail	903.3	796.9		+13.4
International Sports Stores (excl EAG and SIG)	118.5	90.6		+30.8
UK wholesale and other	26.6	38.4		-30.7
Total Sports Retail	1,048.4	925.9		+13.2
Premium Lifestyle	102.8	56.1		+83.2
Total retail revenue (exc. EAG and SIG)	1,151.2	982.0		+17.2
Total Retail Cost of sales (excl EAG and SIG)	(653.2)	(579.4)
Total Retail Gross margin (excl EAG and SIG)	498.0	402.6		+24.0
Gross margin percentage	43.3	%	41.0	%
EAG and SIG revenue	87.7		-
EAG and SIG gross margin	37.3		-
Total Retail gross margin	535.3		402.6		+33.0
Gross margin percentage	43.2	%	41.0%

Brands
Revenue:
Wholesale	90.8	92.3		-1.6
Licensing	15.4	14.6		+5.5
Total Brands revenue	106.2	106.9		-0.7
Cost of sales	(61.7)	(60.9)
Gross margin	44.5	46.0		-3.3
Gross margin percentage	41.9	%	43.0	%

Business Review

Overview

In the first half, we have delivered strong results ahead of management's expectations.  In the 26 weeks ended 27 October 2013 ("FY14 H1"), Group revenues were up 23.5% to £1,345.1m compared with £1,088.9m for the 26 weeks ended 28 October 2012 ("FY13 H1").  

UK Sports Retail was up 13.4% while International Sports Stores increased 30.8% excluding the acquisitions.  With the acquisition of the Sports EYBL and Sports Experts Group (EAG) based in Austria and SIG, a sports business based in the Baltic region, total International Sports Stores revenue increased by 127.6%.  Total Sports Retail division revenues have also been boosted by a 43.0% increase in online revenues.

Revenue in the Brands division decreased by 0.7% due to a decline in wholesale sales, although licensing revenue increased by 5.5% during the period.  The decline in wholesale sales was primarily attributable to a strategic decision to sell more of the Firetrap brand within our Sports Retail and Premium Lifestyle divisions with a corresponding reduction in the wholesale channel.

Gross margin for the Group increased 190 basis points to 43.1% (FY13 H1: 41.2%) primarily as a result of less strategic investment in gross margin compared to the summer of 2012.  The growth in revenue and profitability is also attributable to the success of the Employee Bonus Share Scheme.

Net debt increasedin the period by 18.8% to £183.3m (28 April 2013: £154.0m), which is 0.6 times LTM EBITDA(1) (FY13 H1: 0.6 times) due to the Group's investment in inventory and recent acquisitions (including the initial consideration and debt acquired).  The acquisition of EAG included 12 properties with a book value of £67.6m.

Sports Retail division

UK Sports Retail revenues increased 13.4% to £903.3m (FY13 H1: £796.9m).  This increase was supported by strong growth in online sales, up 43.0% to £158.0m, representing 15.5% of total Sports Retail sales (FY13 H1: 12.5%)(2).  We continue to invest in our customer offering, including product range and availability, to ensure this trend continues.  During the period, the Sports Retail division margin increased 220 basis points to 43.2% (FY13 H1: 41.0%).  UK Sports Retail margin increased to 43.8% (FY13 H1: 42.3%) while International Sports Stores gross margin decreased 40 basis points to 44.0% (FY13 H1: 44.4%).  Excluding recent acquisitions, International Sports Stores gross margin would have been 45.1%.

UK Sports Retail's operating costs increased by 19.1% in FY14 H1, compared to an increase of 13.4% in revenue and a 17.3% increase in gross profit.  As a result, we grew UK Sports Retail underlying EBITDA by 17.4% to £168.4m (FY13 H1: £143.5m).

Within Sports Retail our relationships with leading third party brands continue to be key to our strategy.  Some of these relationships are developing well while others are more challenging.  Over many years Sports Direct has successfully grown while the global sports brands have introduced their respective product segmentation strategies.  The most recent decision taken by adidas to restrict Chelsea "on field" replica kits to Sports Direct is impossible to understand.  We believe this will inevitably lead to a significant reduction in access to these kits and price inflation to consumers.  Sports Direct will pursue various strategic options in order to protect its leading global market position within the Football category.

During the period, the store at Shirebrook was extended, including enhanced concepts in the running, outdoor, football and womens categories.  Elements of these concepts will also be applied to the c. 50,000 sq. ft former HMV store on Oxford Street, which is due to open in spring 2014.  The Directors believe there is an opportunity to rollout this enhanced / large store format in selected major cities across the UK. 

At period end, the Group had 409 stores in the UK (excluding Northern Ireland), with a total of c. 4.2m sq. ft (FY13 H1: c. 4.0m sq. ft) and an average remaining lease expiry of c. 5.7 years (excluding Lillywhites Piccadilly).  These are divided between 342 core and 67 non-core stores(3).  We have a focused strategy to enhance our store portfolio based on our ability to move quickly where we identify attractive store opportunities.  We are still targeting a total of between 25 and 30 core store openings in the UK this year, having opened 17 new core stores in the period, including four that were relocations.  We had fewer store closures than expected in UK Sports Retail.  The earnings enhancement arising from ownership (as opposed to renting) the stores acquired from Mike Ashley in FY12 has been greater than originally estimated as the previous rents were revenue related.  The underlying EBITDA of the 32 acquired stores increased to c. £20m in FY13 (FY11: £13m).

The Group continues actively to manage its UK store portfolio including relocations to larger stores.  In FY13 UK Sports Retail opened 36 and closed 35 stores, with an average increase in store size of c. 60%.  Although sales density dropped, the relocated stores achieved a reduction in the average store cost to sales ratio, thereby increasing net contribution per sq. ft.

During the period the Group purchased 51% of the share capital of Yeoman's Outdoor Limited, a retailer of outdoor goods and 51% of Robinsons Country Leisure Limited, a leading UK supplier of equestrian goods.

Through the Group's shareholding in the Heatons chain, sports products are retailed within 14 stores in Northern Ireland and 26 stores in the Republic of Ireland.  The Group's share of Heatons operating result was a £0.7m profit (FY13 H1: £0.2m profit).

International Sports Stores revenues increased 30.8% to £118.5m, excluding EAG and SIG revenue (FY13 H1: £90.6m), which in local currency represented an increase of 22.6%.  This was largely driven by an 18.7% increase in retail space through new store openings.  This performance also reflects the Group's previous investment in training and infrastructure, supporting the European expansion, and the ability of local management teams to leverage the stock control benefits of our UK-developed proprietary IT and operating systems.

We continue to strive towards our goal of expanding our international retail presence to all of the major economies present in the European Economic Area in the next three to five years.  The recent acquisitions in Austria and Germany have brought us closer to achieving this objective.  In the period, we remained on schedule with our international store opening programme having opened one store in Spain, two in Hungary and four in Poland, while closing one store in Belgium.  The acquisition of EAG was completed in July and integration has focused on the introduction of Sports Direct point of sale systems, the sell-through of legacy stock, and UK bestsellers have been introduced in all Sports Experts stores.

International Sports Stores' operating costs increased 31.7% excluding EAG and SIG costs, compared to a 30.8% increase in revenue.  During the period EAG and SIG combined reported sales and gross profit of £87.7m and £37.3m, respectively.  Excluding associates and acquisitions, International Sports Stores underlying EBITDA increased by 37.5% to £11.0m (FY13 H1: £8.0m).

Premium Lifestyle division

Our Premium Lifestyle division now includes USC, Cruise, Van Mildert, Flannels and the Republic chain, which was acquired in February 2013.  During the period, 43 former Republic stores were converted to the USC fascia, while a further 44 Republic stores were closed and the Republic warehouse and head office were transferred to USC facilities.  The majority of the inherited Republic stores remain on advantageous, flexible lease terms with the landlords.  In addition, new ecommerce platforms were launched, including Flannels.com and Cruisefashion.co.uk.

Sales in the period excluding the Republic brand were up by 16.9% to £65.6m (FY13 H1: £56.1m), due to increased USC and Flannels sales.  Gross margin, excluding Republic was 43.6% (FY13 H1: 43.0%).  Sales and gross margin including Republic were £102.8m and 43.0%, respectively.

Premium Lifestyle EBITDA decreased in FY14 H1 to a loss of £11.8m (FY13 H1: £1.8m loss) due to non-recurring restructuring costs of £6.3m and associated Republic trading losses of £6.4m (which are targeted to reverse in FY14 H2).  Excluding Republic, EBITDA would have increased to a £0.8m profit.

Brands division

Brands division total revenue decreased 0.7% to £106.2m (FY13 H1: £106.9m).  Wholesale revenues were down 1.6% to £90.8m (FY13 H1: £92.3m) due a strategic decision to sell more of the Firetrap brand within our Sports Retail and Premium Lifestyle divisions with a corresponding reduction in wholesale sales.

Brands gross margin decreased by 110 basis points to 41.9% (FY13 H1: 43.0%).  Wholesale gross margin decreased 200 basis points to 32.0% (2012 H1: 34.0%), due to the reduction in the higher margin Firetrap sales.  The wholesale market remains challenging and we are expecting margins to decrease slightly again in the second half of the year.

Licensing revenues in FY14 H1 were up 5.5% to £15.4m (FY13 H1: £14.6m).  Growth in licensing income was driven by the Americas, Middle East, Asia Pacific, while the UK and Europe remain challenging from a licensing perspective.  Our strategic focus remains on delivering further growth in licensing revenues, having signed 42 new contracts with contracted minimum royalties of $38m over the life of the contracts.

Brands operating costs decreased by 5.6% to £30.5m (FY13 H1: £32.3m) in the period, driven by a restructuring at Firetrap and consolidation of the UK wholesale businesses.

Underlying EBITDA in the division increased 2.2% to £14.0m (FY13 H1 £13.7m) due to increased licensing income and reduced operating costs.

Outlook

Following the out-performance in FY14 H1, trading has now reverted to management's original expectations.  The Board remains confident of achieving at least our full year internal underlying EBITDA target of £310m, before the charge for the Employee Bonus Share Scheme.  Looking to FY15, we are confident that our strategy will continue to deliver consistent growth, underpinned by the strength of our business model and the forthcoming FIFA World Cup in Brazil.

Dave Forsey

Chief Executive

12 December 2013

Bob Mellors

Group Finance Director

12 December 2013

(1)	LTM EBITDA is the last twelve months historic underlying EBITDA
(2)	Excluding the recent acquisitions of EAG and SIG and wholesale and other sales
(3)	Non-core stores include small acquired stores, temporary stores and Field & Trek stores

Reconciliation of reported to underlying results

	EBITDA		PBT
	FY14 H1	FY13 H1		FY14 H1	FY13 H1
	£m	£m		£m	£m
Operating profit	147.5	130.6
Depreciation	25.1	22.7
Amortisation	3.3	2.4
Share of profit/(loss) of associated undertakings	0.7	(0.3)
Bonus share scheme charge	6.0	11.1
Reported EBITDA/PBT	182.6	166.5		143.1	125.2
Realised FX loss/(profit)	0.7	(3.3)		0.7	(3.3)
IAS 39 foreign exchange fair value adjustment on forward currency contracts	-	-		2.3	3.6
Fair value adjustments within associates	-	-		-	(0.4)
Underlying	183.3	163.2		146.1	125.1

Underlying EBITDA by Business Segment

	FY14 H1		FY13 H1
	£m		£m
UK Sports Retail	168.4		143.5		+17.4%
International Sports Stores (excl EAG and EAG)	10.8		8.1		+33.3%
EAG and SIG	1.3		-		-
Premium Lifestyle	(11.9)		(1.8)		-
Brands	14.0		13.7		2.2%
Share of profit/(loss) of associated undertakings	0.7		(0.3)		-
Group Underlying EBITDA	183.3		163.2		+12.3%

Foreign exchange

A number of the forward foreign exchange contracts outstanding at 27 October 2013 qualify for hedge accounting and the fair value loss on these contracts of £16.5m has been recognised in Other Comprehensive Income.  At the period end the Group had £281m of US Dollar contracts, sufficient to cover all purchases in UK Sports Retail for the current financial year and part of the FY15 financial year.  These hedged contracts are at an average rate of $1.62.  The sterling exchange rate with the US dollar at 28 April 2013 was $1.547 and $1.610 at 27 October 2013.

Taxation

The effective tax rate on profit before tax for FY14 H1 was 25.0% (FY13 H1: 27.0%).  The difference between the prevailing corporate tax rate and the effective rate reflects depreciation on non-qualifying assets.

Strategic investments

During the period the Group continued to hold an 11.87% shareholding in JD Sports and Fashion plc.  The fair value of the Group's holding at 27 October 2013 was £65.5m (28 April 2013: £47.6m).  No shares were bought or sold in the year, the only movement being in the fair value of the shares held, which has been recognised directly in Other Comprehensive Income.

Cash flow and net debt

The Group has three committed working capital facilities; a £300m facility with ten financial institutions, a £50m facility with Barclays Bank PLC and a £25m facility with Handelsbanken, all of which are available until 7 March 2015.  These facilities are not secured against any of the Group's fixed assets.

The Group also has a £50m working capital facility with Mike Ashley which can be drawn down on request.  This facility was agreed at market terms at its inception.  There was no draw down against this facility at the period end or at any point during the period.

The Group continues to operate well within its banking covenants and the Board remains comfortable with the Group's available headroom.

Net debt increased during the period to £183.3m (28 April 2013: £154.0m), which is 0.6 times 12 month rolling underlying EBITDA.  The increase in net debt is mainly attributable to International Sports Stores, with the recent acquisitions in Austria and the Baltics.  The acquisition of EAG in Austria included 12 properties with a book value of £67.6m.

Net capital expenditure amounted to £38.9m (FY13 H1: £26.9m), including £10.3m (FY13 H1: £1.6m) of freehold property.  The Group expects FY14 capital expenditure to be c. £60m.

The analysis of debt at 27 October 2013 and at 28 April 2013 is as follows:

	At 27 October 2013	At 28 April 2013
	£m	£m
Cash and cash equivalents (including short-term borrowings)	154.2	141.7
Long-term Borrowings	(337.5)	(295.7)
Net debt	(183.3)	(154.0)

Cash Flow

	26 weeks ended  27 October 2013 £m	52 weeks ended  28 April 2013 £m	26 weeks ended 28 October 2012 £m
Underlying EBITDA (pre share scheme costs)	183.3	287.9	163.2
Realised profit/loss on forward foreign exchange contracts	(0.7)	2.3	3.2
Taxes paid	(35.8)	(44.7)	(23.8)
Free cash flow	146.8	245.5	142.6
Invested In:
Working capital
Inventory	(49.3)	(102.0)	(106.5)
Receivables, Payables & Other	31.7	(29.2)	33.0
Acquisitions (including debt)	(124.1)	(47.0)	(33.8)
Net proceeds from investments	1.3	1.5	1.2
Capital expenditure	(31.8)	(49.8)	(26.9)
Purchase of own shares	-	(21.7)	(21.7)
Finance costs and other financing activities	(3.9)	(6.1)	(3.0)
Net increase in net debt	(29.3)	(8.8)	(15.1)

Employee Bonus Share Schemes

Management believes that the Employee Bonus Share Schemes have been instrumental in the strength of the Group's ongoing performance.

The 2011 Employee Bonus Share Scheme is a four year scheme based upon achieving underlying EBITDA (before the costs of the scheme) of £215m in FY12, £250m in FY13, £260m in FY14 and £300m in FY15 coupled with the individual employee's satisfactory personal performance.  The scheme requires that all targets are met before the shares vest.  Approximately 6m shares will vest in the summer of 2015 and another 21m shares (including the Executive Bonus Share Scheme) in the summer of 2017.

The remaining targets for Group underlying EBITDA (before the 2011 Employee Bonus Share Scheme costs) are:

-       FY14: £260m

-       FY15: £300m

The success of the scheme is demonstrated by ongoing improvements in operational and financial performance including various internal KPIs since the scheme's introduction.  These KPIs include energy consumption, pay versus turnover, stock loss and staff retention.

Dilution

Shareholders have previously approved an overall dilution limit for the Company's share plans of 15% of the issued ordinary share capital in any 10 year period.  As the Company operates its share schemes for the benefit of a broad base of employees, this overall dilution limit is considered appropriate to provide the Company with sufficient flexibility to continue to operate share schemes on the desired Company-wide basis.  The current maximum dilution that would arise from 100% vesting of all currently approved schemes is as follows:

·      1.3% for the 2009 and 2011 Executive Bonus Share Schemes which the Executive Directors (other than Mike Ashley) and select senior executives participate (well within the best practice limit of 5% in any 10 year period for discretionary executive plans); and

·      9.0% for the 2009 and 2011 Employee Bonus Share Schemes, assuming the 2011 Scheme vests and that there is no reduction in shares vesting as a result of employee departures.

Going concern

As highlighted, the Group finances its day to day working capital requirements using a £300m facility with 10 financial institutions, a £50m facility with Barclays and a £25m facility with Handelsbanken, all of which are due for renewal in March 2015.

The Group's earnings forecast, taking account of reasonable changes in trading performance and expected capital expenditure requirements, show that the Group continues to operate well within its existing bank facilities.

The Directors have thoroughly reviewed the Group's performance and position relating to historical results, current trading, forecast performance, cash reserves and financing arrangements.  Additionally, the Directors have also considered the Group's reliance upon its key stakeholders, including customers and suppliers and found no over reliance on any particular stakeholder.  The Directors are therefore confident that the Group will continue in operational existence for the foreseeable future.  On this basis, the Directors continue to adopt the going concern basis for the preparation of the interim financial statements.

Risks, systems and controls

The Board believes that the principal risks and uncertainties for the remaining six months of the current financial year are:

•	Disruption or other adverse events affecting the Group's relationship with any of its key brands or brand suppliers which could have an adverse effect on the Group's business.
•	The possibility of a deterioration of the economy both in the UK and worldwide and a reduction in consumer confidence and retail spending, which could 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 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 to ensure that the Group is financed effectively and efficiently.

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 the principal risks and uncertainties for the remaining 26 weeks of the year; and

b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first 26 weeks of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Amounts due to and from related parties are disclosed in note 7.

The directors of Sports Direct International plc are listed in the Group's 2013 Annual Report and Financial Statements.

On behalf of the Board

Dave Forsey

Chief Executive

Bob Mellors

Finance Director

12 December 2013

INDEPENDENT REVIEW REPORT TO THE MEMBERS OF SPORTS DIRECT INTERNATIONAL PLC

FOR THE 26 WEEKS ENDED 27 OCTOBER 2013

Introduction

We have reviewed the condensed set of financial statements in the half-yearly financial report of Sports Direct International plc for the 26 weeks ended 27 October 2013 which comprises the Consolidated income statement, the Consolidated statement of comprehensive income, the Consolidated balance sheet, the Consolidated cash flow statement, the Consolidated statement of changes in equity and the related notes.  We have read the other information (the Chairman's statement, the Overview of Financial Performance and the Group highlights) 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's members, as a body, in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity''.  Our review work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, and the company's members as a body, for our review work, for this report, or for the conclusion we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, ''Interim Financial Reporting,'' as adopted by the European Union.

Our Responsibility

Our responsibility is to express a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity''. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 26 weeks ended 27 October 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Grant Thornton UK LLP

Chartered Accountants

London

12 December 2013

UNAUDITED CONSOLIDATED INCOME STATEMENT FOR THE 26 WEEKS ENDED 27 OCTOBER 2013

		26 weeks ended    27 October  2013	26 weeks ended    28 October  2012	52 weeks ended 28 April 2013
	Notes	£'000	£'000	£'000
Continuing operations:
Revenue	2	1,345,102	1,088,938	2,185,580
Cost of sales		(765,272)	(640,339)	(1,290,822)
Gross profit		579,830	448,599	894,758
Selling, distribution and administrative expenses		(439,067)	(321,171)	(689,578)
Other operating income		6,811	3,133	7,199
Exceptional items		-	-	625
Operating profit	2	147,574	130,561	213,004
Investment income		1,271	1,224	1,473
Finance income		1,446	1,393	3,066
Finance costs		(7,903)	(8,265)	(11,637)
Share of profit of associated undertakings and joint ventures		676	287	1,320
Profit before taxation		143,064	125,200	207,226
Taxation		(35,766)	(33,804)	(55,569)
Profit for the period	2	107,298	91,396	151,657
Attributable to:
Equity holders of the Group		107,559	91,409	151,596
Non-controlling interests		(261)	(13)	61
Profit for the period	2	107,298	91,396	151,657

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	3	18.59	16.07	26.64
Diluted earnings per share	3	17.37	14.73	24.42
Underlying basic earnings per share	3	18.99	16.05	26.85

The accompanying notes form an integral part of this interim financial report.

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE 26 WEEKS ENDED 27 OCTOBER 2013

		26 weeks ended 27 October 2013	26 weeks ended 28 October 2012	52 weeks ended 28 April 2013
	Notes	£'000	£'000	£'000
Profit for the period	2	107,298	91,396	151,657
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Actuarial gains/( losses) on defined benefit pension schemes		4,589	(3,508)	(2,818)
Income tax relating to items not reclassified		(1,087)	797	4,636
Items that will be classified subsequently to profit or loss
Exchange differences on translation of foreign operations		(14,768)	561	12,436
Fair value adjustment in respect of available for sale financial assets		17,903	(3,320)	1,011
Exchange differences on hedged contracts - recognised in the period		(7,593)	1,322	15,408
Exchange differences on hedged contracts - reclassification in the period		(8,907)	(785)	196
Other comprehensive income for the period, net of tax		(9,863)	(4,933)	30,869
Total comprehensive income for the period		97,435	86,463	182,526
Attributable to:
Equity holders of the Parent		97,696	86,476	182,465
Non-controlling interests		(261)	(13)	61
		97,435	86,463	182,526

The accompanying notes form an integral part of this interim financial report.

UNAUDITED CONSOLIDATED BALANCE SHEET AS AT 27 OCTOBER 2013

		27 October 2013	28 October 2012	28 April 2013
	Notes	£'000	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment		421,981	330,598	332,036
Intangible assets		264,781	231,131	240,420
Investments in associated undertakings and joint ventures		32,842	28,622	32,117
Available-for-sale financial assets		66,084	43,314	47,645
Deferred tax assets		28,839	35,511	47,952
		814,527	669,176	700,170
Current assets
Inventories		557,708	441,680	446,962
Trade and other receivables		134,696	118,444	96,111
Derivative financial assets		7,819	1,282	17,965
Cash and cash equivalents		164,505	97,503	147,375
		864,728	658,909	708,413
TOTAL ASSETS		1,679,255	1,328,085	1,408,583
EQUITY AND LIABILITIES
Share capital		64,060	64,060	64,060
Share premium		874,300	874,300	874,300
Treasury shares		(56,234)	(56,234)	(56,234)
Permanent contribution to capital		50	50	50
Capital redemption reserve		8,005	8,005	8,005
Foreign currency translation reserve		23,630	26,523	38,398
Reverse combination reserve		(987,312)	(987,312)	(987,312)
Own share reserve		(13,251)	(64,375)	(64,375)
Hedging reserve		(479)	954	16,021
Retained earnings		846,330	684,879	752,018
		759,099	550,850	644,931
Non-controlling interests		(12,312)	(328)	(254)
Total equity		746,787	550,522	644,677
Non-current liabilities
Borrowings	4	337,530	251,340	245,627
Retirement benefit obligations		15,899	21,693	19,940
Deferred tax liabilities		23,100	22,862	24,978
Provisions		35,108	55,060	41,072
		411,637	350,955	331,617
Current liabilities
Derivative financial liabilities		8,638	-	-
Trade and other payables		477,352	373,932	320,261
Borrowings	4	10,276	6,434	55,753
Current tax liabilities		24,565	46,242	56,275
		520,831	426,608	432,289
Total liabilities		932,468	773,563	763,906
TOTAL EQUITY AND LIABILITIES		1,679,255	1,328,085	1,408,583

The accompanying notes form an integral part of this interim financial report.

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE 26 WEEKS ENDED 27 OCTOBER 2013

		26 weeks ended 27 October 2013	26 weeks ended 28 October 2012	52 weeks ended 28 April 2013
	Notes	£'000	£'000	£'000
Cash inflow from operating activities	6	165,011	93,100	159,094
Income taxes paid		(35,827)	(23,843)	(44,673)
Net cash inflow from operating activities		129,184	69,257	114,421
Cash flow from investing activities
Proceeds on disposal of property, plant and equipment		-	1,463	79
Proceeds on disposal of intangible assets		-	-	625
Purchase of subsidiaries, net of cash acquired		(16,485)	(33,738)	(46,941)
Purchase of associate, net of cash acquired		-	(96)	(96)
Purchase of intangible assets		(162)	(134)	(2,282)
Purchase of property, plant and equipment		(31,610)	(28,278)	(48,247)
Investment income received		1,271	1,224	1,473
Finance income received		-	-	1,117
Net cash outflow from investing activities		(46,986)	(59,559)	(94,272)
Cash flow from financing activities
Finance income received		501	424	-
Finance costs paid		(4,409)	(3,435)	(7,196)
Borrowings drawn down		181,692	126,236	404,970
Borrowings repaid		(247,408)	(89,538)	(323,942)
Purchase of own shares		-	(21,742)	(21,742)
Net cash (outflow) / inflow from financing activities		(69,624)	11,945	52,090
Net increase in cash and cash equivalents including overdrafts		12,574	21,643	72,239
Cash and cash equivalents including overdrafts at beginning of period		141,674	69,435	69,435
Cash and cash equivalents including overdrafts at the period end		154,248	91,078	141,674

The accompanying notes form an integral part of this interim financial report.

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 26 WEEKS ENDED 27 OCTOBER 2013

	Treasury shares	Foreign currency translation	Own share reserve	Retained earnings	Other reserves	Sub- total	Non-controlling interests	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 29 April 2012	(55,839)	25,962	(57,684)	600,431	(40,480)	472,390	(505)	471,885
Share-based payments	-	-	-	4,595	-	4,595	-	4,595
Vesting of share awards	-	-	14,656	(14,656)	-	-	-	-
Current tax on share schemes	-	-	-	3,667	-	3,667	-	3,667
Deferred tax on share schemes				5,464	-	5,464	-	5,464
Cost of shares acquired	(395)	-	-	-	-	(395)	-	(395)
Purchase of own shares	-	-	(21,347)	-	-	(21,347)	-	(21,347)
Non-controlling interest - acquisition	-	-	-	-	-	-	190	190
Transactions with owners	(395)	-	(6,691)	(930)	-	(8,016)	190	(7,826)
Profit for the financial period	-	-		91,409	-	91,409	(13)	91,396
Cashflow hedges    - recognised in the period	-	-	-	-	1,322	1,322	-	1,322
- reclassified in the period				-	(785)	(785)	-	(785)
Actuarial losses on defined benefit pension schemes	-	-	-	(3,508)	-	(3,508)	-	(3,508)
Fair value adjustment in respect of available for sale financial assets	-	-	-	(3,320)	-	(3,320)	-	(3,320)
Taxation on items taken to comprehensive income	-	-	-	797	-	797	-	797
Translation differences - group	-	1,705	-	-	-	1,705	-	1,705
Translation differences - associates	-	(1,144)	-	-	-	(1,144)	-	(1,144)
Total comprehensive income	-	561	-	85,378	537	86,476	(13)	86,463
At 28 October 2012	(56,234)	26,523	(64,375)	684,879	(39,943)	550,850	(328)	550,522
Share-based payments	-	-	-	(583)	-	(583)	-	(583)
Vesting of Share-based payments	-	-	-	(2,072)	-	(2,072)	-	(2,072)
Current Tax on share schemes	-	-	-	(86)	-	(86)	-	(86)
Deferred Tax on share schemes	-	-	-	833	-	833	-	833
Transactions with owners	-	-	-	(1,908)	-	(1,908)	(1,646)	(1,908)
Profit for the financial period	-	-	-	60,187	-	60,187	74	60,261
Cashflow hedges  - recognised in the period	-	-	-	-	14,086	14,086	-	14,086
- reclassification	-	-	-	-	981	981	-	981
Actuarial gains on defined benefit pension schemes	-	-	-	690	-	690	-	690
Fair value adjustment in respect of available for sale financial assets	-	-	-	4,331	-	4,331	-	4,331
Taxation on items taken to comprehensive income	-	-	-	3,839	-	3,839	-	3,839
Translation differences - group	-	9,430	-	-	-	9,430	-	9,430
Translation differences - associates	-	2,445	-	-	-	2,445	-	2,445
Total comprehensive income	-	11,875	-	69,047	15,067	95,989	74	96,063
At 28 April 2013	(56,234)	38,398	(64,375)	752,018	(24,876)	644,931	(254)	644,677
Share-based payments	-	-	-	1,000	-	1,000	-	1,000
Vesting of Share-based payments	-	-	51,124	(51,124)	-	-	-	-
Current Tax on share schemes	-	-	-	30,362	-	30,362	-	30,362
Deferred Tax on share schemes	-	-	-	(14,890)	-	(14,890)	-	(14,890)
Non-controlling interest - acquisition							(11,645)	(11,645)
Non-controlling interest - disposal	-	-	-	-	-	-	(152)	(152)
Transactions with owners	-	-	51,124	(34,652)	-	16,472	(11,797)	4,675
Profit for the financial period	-	-	-	107,559	-	107,559	(261)	107,298
Cashflow hedges  - recognised in the period	-	-	-	-	(7,593)	(7,593)	-	(7,593)
- reclassification	-	-	-	-	(8,907)	(8,907)	-	(8,907)
Actuarial gains on defined benefit pension schemes	-	-	-	4,589	-	4,589	-	4,589
Fair value adjustment in respect of available for sale financial assets	-	-	-	17,903	-	17,903	-	17,903
Taxation on items taken to comprehensive income	-	-	-	(1,087)	-	(1,087)	-	(1,087)
Translation differences - group	-	(14,768)	-	-	-	(14,768)	-	(14,768)
Total comprehensive income	-	(14,768)	-	128,964	(16,500)	97,696	(261)	97,435
At 27 October 2013	(56,234)	23,630	(13,251)	846,330	(41,376)	759,099	(12,312)	746,787

The Company holds 42,137,508 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.

On 6 August 2013, Appleby Trust (Jersey) Limited as a trustee of the Sports Direct Employee Benefit Trust ("the Trust") sold 17,000,000 ordinary shares in a secondary placing on the London Stock Exchange, with Goldman Sachs and Espirito Santo Investment Bank acting as joint bookrunners. These shares represent all the ordinary shares which the Sports Direct employees elected to sell on vesting of their awards under the 2009 Employee Bonus Share Scheme. A further 2,420,406 shares vested and were distributed to relevant staff.

On 2 October 2013 the 4,000,000 shares granted under the 2009 Executive Bonus Share Scheme vested. At 27 October 2013, the Trust held 6,170,490 shares.

The credit for the share based payment charge does not equal the charge per the income statement as it excludes amounts recognised in the balance sheet in relation to the expected national insurance contributions for the shares and a transfer of accrued national insurance contributions in respect of previous years' charges which had previously been recognised in equity. The amount transferred is not material to the interim financial statements.

NOTES TO THE FINANCIAL INFORMATION FOR THE 26 WEEKS ENDED 27 OCTOBER 2013

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 2013 Annual Report and Financial Statements. The financial information has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (DTR) and with International Accounting Standard (IAS) 34 - "Interim Financial Reporting" as endorsed by the European Union. The principal accounting policies have remained unchanged from the prior financial information for the 52 weeks ended 28 April 2013. This consolidated financial information for the period does not constitute statutory financial statements within the meaning of s434 of the Companies Act 2006.

The summary of results for the 52 weeks ended 28 April 2013 is an extract from the published Annual Report and Financial Statements which have been reported on by the Group's auditors and delivered to the Registrar of Companies. The audit report was unqualified and did not contain a statement under s498 (2) or s498 (3) of the Companies Act 2006.

2. Segmental analysis

Operating segments 

IFRS 8 - 'Operating Segments' requires the Group's segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker to assess performance and allocate resources across each operating segment.

The Chief Operating Decision Maker has been identified as the Executive Directors and the operating segments are identified as the store fascia or brand, in line with the internal reporting to the Executive Directors. Sales and gross profit for each operating segment, as well as underlying EBITDA , are the main measures used by the Executive Directors to assess performance.

In accordance with paragraph 12 of IFRS 8 the Group's operating segments have been aggregated into the following reportable segments:

1.     UK Sports Retail & other - includes the results of UK retail network of sports stores as well as its online sports results;

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

3.     International Sports Stores - includes the results of the Group's international retail network of stores; and

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

Segment information about the operating segments is presented below:

Segmental information for the 26 weeks ended 27 October 2013:

		Retail			Brands
	UK Sports Retail	Premium Lifestyle	International Sports Stores	Total Retail	Total	Eliminations	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Sales to external customers	929,874*	102,843	206,170	1,238,887	106,215	-	1,345,102
Sales to other segments	203	-	8,252	8,455	14,737	(23,192)	-
Revenue	930,077	102,843	214,422	1,247,342	120,952	(23,192)	1,345,102
Gross profit	400,397	44,179	90,731	535,307	44,523	-	579,830
Operating profit/(loss) before foreign exchange and exceptional items	145,322	(13,668)	5,548	137,202	11,017	-	148,219
Operating Profit	145,488	(13,615)	4,839	136,712	10,862		147,574

Investment income										1,271
Finance income										1,446
Finance costs										(7,903)
Share of profits of associated undertakings and joint ventures										676
Profit before taxation										143,064
Taxation										(35,766)
Profit for the period										107,298

*Including sales of  Wholesale & other' sales of £26.6m.

Reconciliation of operating profit to underlying EBITDA for the 26 week period ending 27 October 2013.

	UK Sports Retail	Premium Lifestyle	International Sports Stores	Brands	Total
	£'000	£'000	£'000	£'000	£'000
Operating profit/(loss)	145,488	(13,615)	4,839	10,862	147,574
Depreciation	16,582	1,448	6,207	867	25,104
Impairment	-	-	133	-	133
Amortisation	28	344	440	2,319	3,131
Share of profit/(loss) of associated undertakings	427	-	472	(223)	676
Reported EBITDA	162,525	(11,823)	12,091	13,825	176,618
Charges for the Bonus Share Schemes	6,018	-	-	-	6,018
Realised FX (Gain)/ Loss	(166)	(53)	709	155	645
Underlying EBITDA	168,377	(11,876)	12,800	13,980	183,281

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 27 October 2013:

	Retail	Brands	Total
	£'000	£'000	£'000
Depreciation	24,237	867	25,104
Amortisation and impairment	945	2,319	3,264

Segmental information for the 26 weeks ended 28 October 2012:

Retail                                                            Brands

	UK Sports Retail	Premium Lifestyle	International Sports Stores	Total Retail	Total	Eliminations	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Sales to external customers	835,370*	56,084	90,611	982,065	106,873	-	1,088,938
Sales to other segments	-	-	3,971	3,971	15,952	(19,923)	-
Revenue	835,370	56,084	94,582	986,036	122,825	(19,923)	1,088,938
Gross profit	338,284	24,106	40,217	402,607	45,992	-	448,599
Operating profit/(loss) before foreign exchange and exceptional items	115,239	(2,667)	4,824	117,396	10,261	-	127,657
Operating Profit	118,110	(2,597)	4,382	119,895	10,666	-	130,561

Investment income										1,224
Finance income										1,393
Finance costs										(8,265)
Share of profits of associated undertakings and joint ventures										287
Profit before taxation										125,200
Taxation										(33,804)
Profit for the period										91,396

*including sales of 'Wholesale & other' of £38.4m

Reconciliation of operating profit to underlying EBITDA for the 26 week period ending 28 October 2012.

	UK Sports Retail	Premium Lifestyle	International Retail	Brands	Total
	£'000	£'000	£'000	£'000	£'000
Operating profit/(loss)	118,110	(2,597)	4,382	10,666	130,561
Depreciation	17,217	904	3,416	1,115	22,652
Amortisation	29	-	127	2,243	2,399
Share of loss of associated undertakings	(10)	-	(173)	47	(136)
Reported EBITDA	135,346	(1,693)	7,752	14,071	155,476
Charges for the Bonus Share Schemes	11,023	-	-	-	11,023
Realised FX (Gain)/ Loss	(2,871)	(70)	19	(405)	(3,327)
Underlying EBITDA	143,498	(1,763)	7,771	13,666	163,172

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 2012:

	Retail	Brands	Total
	£'000	£'000	£'000
Depreciation	21,537	1,115	22,652
Amortisation	156	2,243	2,399

Segmental information for the 52 weeks ended 28 April 2013:

This information is available in the 2013 annual report.

3. Earnings per share

For diluted earnings per share, the weighted average number of shares, 578,454,000 (FY13 H1: 568,835,000), is adjusted to assume conversion of all dilutive potential ordinary shares under the Group's bonus share schemes, being 40,736,000 (FY13 H1: 51,853,000) to give the diluted weighted average number of shares of 619,190,000 (FY13 H1: 620,687,000).

The number of dilutive ordinary shares under the Group's bonus share schemes has been calculated on a weighted average basis to take account of those shares that vested during the period.

Basic and diluted earnings per share

	26 weeks ended 27 October 2013	26 weeks ended 27 October 2013	26 weeks ended 28 October 2012	26 weeks ended 28 October 2012	52 weeks ended 28 April 2013	52 weeks ended 28 April 2013
Basic £'000	Diluted £'000	Basic £'000	Diluted £'000	Basic £'000	Diluted £'000
Profit for the period attributable to the equity holders of the Group	107,559	107,559	91,409	91,409	151,596	151,596
	Number in thousands		Number in thousands		Number in thousands
Weighted average number of shares	578,454	619,190	568,835	620,687	568,972	620,825
	Pence per share		Pence per share		Pence per share
Earnings per share	18.59	17.37	16.07	14.73	26.64	24.42

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 realised foreign exchange in selling and administration costs, the IAS 39 fair value adjustment on forward currency contracts in finance income/costs, exceptional costs and the profit/loss on sale of strategic investments.

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.

	26 weeks ended 27 October 2013	26 weeks ended 27 October 2013	26 weeks ended 28 October 2012	26 weeks ended 28 October 2012	52 weeks ended 29 April 2013	52 weeks ended 29 April 2013
	Basic £'000	Diluted £'000	Basic £'000	Diluted £'000	Basic £'000	Diluted £'000
Profit for the period	107,559	107,559	91,409	91,409	151,596	151,596
Post tax adjustments to profit for the period for the following exceptional items:
Realised loss/(gain) on forward foreign exchange contracts	477	477	(2,429)	(2,429)	(1,763)	(1,763)
Fair value adjustment to forward foreign exchange contracts	1,690	1,690	2,636	2,636	1,476	1,476
Profit on sale of intangible assets	-	-	-	-	(463)	(463)
Fair value adjustments within associated undertakings	-	-	(309)	(309)	(273)	(273)
Impairment of goodwill	133	133	-	-	2,217	2,217
Underlying profit for the period	109,859	109,859	91,307	91,307	152,790	152,790
	Number in thousands		Number in thousands		Number in thousands
Weighted average number of shares	578,454	619,190	568,835	620,687	568,972	620,825
	Pence per share		Pence per share		Pence per share
Earnings per share	18.99	17.74	16.05	14.71	26.85	24.61

4. Borrowings

	27 October 2013	28 October 2012	28 April 2013
	£'000	£'000	£'000
Non-current:
Bank and other loans	337,530	251,340	245,625
Obligations under finance leases	-	-	2
	337,530	251,340	245,627
Current:
Bank overdrafts	10,257	6,425	5,701
Bank and other loans	-	-	50,052
Obligations under finance leases	19	9	-
	10,276	6,434	55,753
Total borrowings:
Bank overdrafts	10,257	6,425	5,701
Bank and other loans	337,530	251,340	295,677
Obligations under finance leases	19	9	2
	347,806	257,774	301,380

The analysis of the Group's bank and other loan borrowings other than overdrafts is as follows:

	27 October 2013	28 October 2012	28 April 2013
Borrowings - Sterling	250,602	226,981	250,203
Borrowings - Other	86,928	24,368	45,476
	337,530	251,349	295,679

5. Acquisitions

Details of principal acquisitions for the 26 weeks ended 27 October 2013 are set out below.

(i) 21 June 2013	Acquired the trading assets of Gelert out of administration for a cash consideration of £4.7m. The primary business activity was the wholesale and retail of outdoor sporting equipment, and clothing and was acquired to complement existing business activities.
(ii) 28 June 2013	Acquired 51% of the ordinary share capital of the Sports Eybl and Sports Experts Group (EAG), a retailer with 58 stores, based in Austria for consideration of €10.5m. The primary business activity was the sale of sporting equipment and clothing, and was acquired in order to enter new territories as part of the Group's European expansion plan.
(iii) 12 August 2013	Acquired 51% of the ordinary share capital of SIG, based in the Baltic region, for cash consideration of €7.0m. The primary business activity was the sale of sporting equipment, and clothing and was acquired in order to enter new territories as part of the Group's European expansion plan.

The aggregate fair value of consideration paid, assets and liabilities acquired and resulting goodwill in respect of the above acquisitions is detailed below.

	EAG	SIG	Other	Total
	£'000	£'000	£'000	£'000
---	---	---	---	---
Cash consideration	9,060	5,989	7,506	22,555
Less: fair value of net liabilities/(assets) acquired	8,807	3,499	(5,857)	6,449
Goodwill	17,867	9,488	1,649	29,004

Due to the proximity of the acquisitions to the period end, these figures are provisional.           

The goodwill is attributable to the premium paid to strengthen the Group's existing business segments of UK Sports Retail, Lifestyle and Other, International Retail and Brands, which is in line with the Group's strategy. Costs of £1.2m relating to the above acquisitions were expensed through the income statement during the period.

None of the acquisitions included in 'other' above are considered to be individually material.

EAG

The asset values at acquisition are detailed below:

	Carrying values at acquisition	Provisional fair value adjustment	Fair value of net assets acquired
	£'000	£'000	£'000
---	---	---	---
Property, plant and equipment	80,601	-	80,601
Intangible assets	9,117	(5,825)	3,292
Investments	535	-	535
Inventories	42,634	-	42,634
Trade and other receivables	7,268	-	7,268
Cash and cash equivalents	5,450	-	5,450
Borrowings	(93,912)	-	(93,912)
Trade and other payables	(63,136)	-	(63,136)
Non-controlling interests	5,607	2,854	8,461
	(5,836)	(2,971)	(8,807)

The fair value adjustment noted above relates to the consolidated goodwill within the books of EAG on acquisition.

Cash flows arising from the acquisitions are as follows:  

	27 October 2013
	£'000
---	---
Cash consideration	9,060
Cash acquired	(5,450)
Net cash outflow in the cash flow statement	3,610

SIG

The asset values at acquisition are detailed below:

	Carrying values at acquisition	Provisional fair value adjustment	Fair value of net assets acquired
	£'000	£'000	£'000
---	---	---	---
Property, plant and equipment	2,056	-	2,056
Intangible assets	155	-	155
Inventories	14,456	-	14,456
Trade and other receivables	2,928	-	2,928
Cash and cash equivalents	530	-	530
Borrowings	(13,444)	-	(13,444)
Trade and other payables	(12,513)	-	(12,513)
Non-controlling interests	2,333	-	2,333
	(3,499)	-	(3,499)

Cash flows arising from the acquisitions are as follows:  

	27 October 2013
	£'000
---	---
Cash consideration	5,989
Cash acquired	(530)
Net cash outflow in the cash flow statement	5,459

Other acquisitions

The asset values at acquisition are detailed below:

	Carrying values at acquisition	Provisional fair value adjustment	Fair value of net assets acquired
	£'000	£'000	£'000
---	---	---	---
Property, plant and equipment	826	-	826
Intangible assets	1,500	-	1,500
Inventories	4,402	-	4,402
Trade and other receivables	1,335	-	1,335
Cash and cash equivalents	90	-	90
Borrowings	(230)	-	(230)
Trade and other payables	(2,917)	-	(2,917)
Non-controlling interests	851	-	851
	5,857	-	5,857

Cash flows arising from the acquisitions are as follows:  

	27 October 2013
	£'000
---	---
Cash consideration	7,506
Cash acquired	(90)
Net cash outflow in the cash flow statement	7,416

Since the date of acquisition the following balances have been included within the Group's financial statements for the period in respect of the above acquired entities:

	EAG	SIG	Other	Total
	£'000	£'000	£'000	£'000
Revenue	73,272	14,436	6,239	93.947
Operating profit / (loss)	(2,686)	543	(1,117)	(3,260)
(Loss) / profit before tax	(3,581)	409	(1,117)	(4,289)

Had the above acquisitions been included from the start of the period, £1,393,174,000 of revenue, £145,308,000 of operating profit and £141,198,000 of profit after tax would have been shown in the Group's financial statements.

There were no contingent liabilities acquired as a result of the above transactions.

6. Cash inflows from operating activities

	26 weeks ended 27 October 2013	26 weeks ended 28 October 2012	52 weeks ended 28 April 2013
	£'000	£'000	£'000
Profit before taxation	143,064	125,200	207,226
Net finance costs	6,457	6,872	8,571
Other Investment income	(1,271)	(1,224)	(1,473)
Share of profit of associated undertakings and joint ventures	(676)	(287)	(1,320)
Operating profit	147,574	130,561	213,004
Depreciation	25,104	22,652	47,920
Amortisation charge	3,264	2,399	4,676
Loss on disposal of intangibles	-	-	2,217
Profit on disposal of intangibles	-	-	(625)
Defined benefit pension plan current service cost	6	(13)	14
Defined benefit pension plan employer contributions	(1,354)	(1,354)	(2,708)
Share based payments	6,018	11,023	22,183
Operating cash inflow before changes in working capital	180,612	165,268	286,681
Increase in receivables	(27,054)	(30,795)	(6,579)
Increase in inventories	(49,254)	(106,465)	(102,026)
Increase / (decrease) in payables	60,707	65,092	(18,982)
Cash inflows from operating activities	165,011	93,100	159,094

7. 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  27 October 2013 Related party	Relationship	Sales	Purchases	Trade and other receivables	Trade and other payables
		£'000	£'000	£'000	£'000
Heatons	Associate	15,609	-	5,643	-
Brasher Leisure Limited	Associate	4,910	-	2,309	-

26 weeks ended  28 October 2012 Related party	Relationship	Sales	Purchases	Trade and other receivables	Trade and other payables
		£'000	£'000	£'000	£'000
Heatons	Associate	13,949	-	2,257	-
Brasher Leisure Limited	Associate	4,632	-	810	-

This information is provided by RNS

The company news service from the London Stock Exchange

END

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