Frasers Group PLC — Interim / Quarterly Report 2015

Dec 11, 2014

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RNS Number : 4503Z

Sports Direct International Plc

11 December 2014

11 December 2014

Interim Results for the 26 weeks to 26 October 2014

Sports Retail gross margin up 130 basis points; Group Underlying EBITDA up 10.8%

	FY15 H1	FY14 H1
	£m	£m
Group revenue	1,432.9	1,345.1	+6.5%
Sports Retail (1)	1,230.9	1,136.1	+8.3%
Premium Lifestyle	99.9	102.8	-2.8%
Brands	102.1	106.2	-3.9%
Group gross profit	630.2	579.8	+8.7%
Group gross margin	44.0%	43.1%	+90 bps
Sports Retail	44.5%	43.2%	+130 bps
Underlying EBITDA (pre share scheme costs) (2)	203.1	183.3	+10.8%
Underlying profit before tax (PBT) (3)	160.6	146.2	+9.8%
Reported profit before tax	149.7	143.1	+4.6%
Underlying earnings per share (3)	20.8p	19.0p	+9.5%
Reported earnings per share	19.4p	18.6p	+4.1%

Key highlights

·      Sports Retail gross margin increased by 130 basis points to 44.5%

·      Group underlying EBITDA increased by 10.8% to £203.1m

·      Underlying profit before tax up 9.8% to £160.6m

·      Underlying free cash generation of £161.5m (4)

·      Oxford Street store re-located in May 2014

·      Roll-out of large format city centre stores

·      29 new license agreements signed with contracted minimum royalties of $12m over the life of the agreements

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

·      Net debt decreased to £186.5m from £212.0m (27 April 2014) (5)

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

"The results for the six months were solid considering the adverse impact on performance during the period of England's early departure from the FIFA World Cup in Brazil and the unseasonably mild weather during Autumn reducing footfall.

"However, the continued growth in Group revenues and EBITDA is testament to the hard work of our colleagues and our continued focus on providing customers with exceptional quality and unbeatable value. We are delighted that their contribution will again be recognised under the 2011 Employee Bonus Share Scheme - 25% of which is expected to vest with eligible employees in September 2015.

"Trading since the period end has been in line with management expectations and while we retain the ability to invest in margin, inventory and Group marketing to deliver long-term sustainable growth, we remain confident of achieving at least our full year internal underlying EBITDA target of £360m, before the charge for the Employee Bonus Share Schemes."

(1) (2)	Includes Wholesale and Other revenue, previously only included in Group revenue 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 charges.
(3)	Underlying profit before taxation and underlying EPS also exclude profits/losses relating to the IAS 39 fair value adjustment on forward currency contracts in finance income/costs, but includes the Employee Bonus Share Scheme charges.
(4)	Underlying free cash generation is defined as operating cashflow before working capital, made up of underlying EBITDA before Employee Bonus Share Scheme costs, plus realised foreign exchange gains and losses, less corporation tax paid.
(5)	Net debt is borrowings less cash held
Sports Direct International plc Dave Forsey, Chief Executive Jeff Blue, Director, Strategic Development		T:  0845 129 9200
Powerscourt Rory Godson Victoria Palmer-Moore Greg Lawless		T:  0207 250 1446

Chairman's Statement

While the Group has not been immune to recent challenges in the retail sector and England's disappointing performance at the FIFA World Cup, the Group has achieved a 6.5% increase in revenue and a 10.8% increase in underlying EBITDA.

Developments and acquisitions

The Group has continued its expansion in Europe, opening a further eight stores. The re-branding of stores in Austria to the Sportsdirect.com fascia continues and we opened our first Sportsdirect.com store in the Baltics.

In the first half of the year the Group increased its investment in Debenhams with the purchase of an additional strategic stake in the business. We are currently trialling four concessions within Debenhams stores. The Group has also acquired interests in Tesco and the online retailer MySale during the period.

I am pleased also to announce that the Group has now established Sportsdirect Fitness.com, following the acquisition of 18 former LA Fitness gyms. We have commenced building work on a new 20,000 sq. ft. dry gym and an adjoining 40,000 sq. ft. retail space in Aintree which will be fully open by the end of 2014 and another two similar units in St Helens and Keighley are expected to be operational in early 2015.

Employee Bonus Share Schemes

The Group's Employee Bonus Share Scheme continues to underpin our results. We are certain of achieving the FY15 EBITDA target and I look forward to seeing the vesting of this scheme in 2015 and 2017.

I am also pleased to note that a new 2015 Bonus Share Scheme under which eligible employees and the Executive Directors would be able to participate subject to satisfactory personal performance and achievement of EBITDA targets for the years FY16 to FY19 was approved at a General Meeting on 2 July 2014.

The Board

In July, Charles McCreevy, Non-Executive Director of the Group, announced his intention not to stand for re-election at the Company's Annual General Meeting. Charles spent over three years at Sports Direct and his skills and experience have been invaluable in this time. On behalf of the Board I would like to thank Charles for his contribution to the business.

Our search for a new Finance Director and a replacement for Charles remains ongoing. We are undertaking a thorough process to ensure we appoint the most suitable candidate.

Overall

We continue to provide our customers with exceptional quality and unbeatable value, ever mindful of the financial challenges in the broader economy.  

I wish to thank all of our employees and other stakeholders for their continued support and the contribution they make to the Group's ongoing success.

Keith Hellawell

Non-Executive Chairman

11 December 2014

Overview of Financial Performance

Summary of Results

	26 Weeks ended 26 October 2014	26 Weeks ended 27 October 2013	Change
	(£m)	(£m)	%
Revenue	1,432.9	1,345.1	+6.5
Underlying EBITDA	203.1	183.3	+10.8
Underlying profit before tax	160.6	146.2	+9.8
Reported profit before tax	149.7	143.1	+4.6
	Pence per share	Pence per share
Underlying EPS(1)	20.8	19.0	+9.5
Reported EPS(2)	19.4	18.6	+4.1

(1) and (2)  Based on 592.3 million and 578.5 million ordinary shares outstanding in FY15 H1 and FY14 H1, respectively

Basis of reporting

The financial statements for the Group for the 26 weeks ended 26 October 2014 are presented in accordance with International Accounting Standard (IAS) 34 - Interim Financial Reporting which has been adopted for use in the EU (IFRS).

The Directors believe that underlying EBITDA, underlying profit before tax and underlying earnings per share provide more useful information for shareholders on the underlying performance of the business than the reported numbers and are consistent with how business performance is measured internally. They are not recognised profit measures under IFRS and may not be directly comparable with "adjusted" profit measures used by other companies.

EBITDA is earnings before investment income, finance income and finance costs, tax, depreciation and amortisation and, therefore, includes the Group's share of profit from associated undertakings and joint ventures. Underlying EBITDA is calculated as EBITDA before the impact of foreign exchange, any exceptional or other non-trading items and costs relating to the Employee Bonus Share Schemes.

Revenue and margin

	26 weeks ended 26 October 2014 (£'m)	26 weeks ended 27 October 2013 (£'m)		Change %
Retail
Revenue:
Sports Retail	1,230.9	1,136.1		+8.3
Premium Lifestyle	99.9	102.8		(2.8)
Total retail revenue	1,330.8	1,238.9		+7.4
Total Retail Cost of sales	(744.3)	(703.6)		+5.8
Total Retail gross margin	586.5		535.3		+9.6
Gross margin percentage	44.1%		43.2%		+90bps

Brands
Revenue:
Wholesale	86.8	90.8		(4.4)
Licensing	15.3	15.4		(0.6)
Total Brands revenue	102.1	106.2		(3.9)
Cost of sales	(58.4)	(61.7)		(5.3)
Brands gross margin	43.7	44.5		(1.8)
Brands gross margin percentage	42.8%		41.9%		+90 bps

Business Review

Overview

In the 26 weeks ended 26 October 2014 ("FY15 H1"), Group revenues were up 6.5% to £1,432.9m compared with £1,345.1m for the 26 weeks ended 27 October 2013 ("FY14 H1").  

Sports Retail revenue increased 8.3%, benefiting from an 11.1% increase in online revenues.

Revenue in the Brands division decreased by 3.9% due to a decline in wholesale sales as we update our wholesale business model.

Gross margin for the Group increased 90 basis points to 44.0% (FY14 H1: 43.1%) as a result of the continued broadening of our product range and on-going investment in Group Brands.  The continued growth in revenue and profitability is also attributable to the success of the Employee Bonus Share Scheme.

Net debt decreasedin the period by 12.0% to £186.5m (27 April 2014: £212.0m), which is 0.5 times LTM EBITDA(1) (FY14 H1: 0.6 times).

Sports Retail division

Sports Retail revenues increased 8.3% to £1,230.9m (FY14 H1: £1,136.1m).  This increase was supported by further growth in online sales, up 11.1% to £176.4m. We remain focused on building a profitable online business which complements our existing store-based offering. Since the period end, 'click and collect' has been trialled in c. 400 Sports Direct stores in the UK. We continue to invest in our customer offering, including product range and availability, to ensure this growth trend continues.  During the period, the Sports Retail division gross margin increased 130 basis points to 44.5% (FY14 H1: 43.2%), benefiting from a higher proportion of 'better' and 'best' Group branded product.

Sports Retail's operating costs increased by 13.9% in FY15 H1, compared to an increase of 8.3% in revenue and an 11.6% increase in gross profit due to a full year impact and proportionally higher costs in our recently acquired European businesses.  As a result, we grew Sports Retail underlying EBITDA by 8.1% to £195.8m (FY14 H1: £181.2m).

At period end, the Group had 434 stores in the UK (excluding Northern Ireland), with a total of c. 4.5m sq. ft.(2) (FY14 H1: c. 4.2m sq. ft.) and an average remaining lease expiry of 5.0 years (excluding Lillywhites Piccadilly).  We continue to adopt a pro-active approach to managing our store portfolio, with the ability to move quickly, as opportunities arise. We are still targeting a total of between 30 and 40 store openings in the UK this year, having opened 18 new stores in the period, including five relocations. We have also opened four concessions currently being trialled within Debenhams stores in the period.

During the period we re-located our Oxford Street store to the c. 50,000 sq. ft. former HMV store and are currently undertaking works on a c. 30,000 sq. ft. extension of our Glasgow store, which is due to be completed in Spring 2015. We have also now commenced work on Phase 3 of our Shirebrook campus, which will see a 650,000 sq. ft. extension added to the existing warehouse and office facility, with completion expected in late 2015.

Across Europe we have closed four stores in Austria, opened two new stores in Poland and one store in each of Estonia, Portugal, France, Cyprus, Hungary and the Czech Republic. We have also commenced the integration of our Austrian business, with the conversion of 13 Sports Experts stores and five Eybl stores in Austria to the Sportsdirect.com fascia. During the period, we also increased our shareholding in the Icelandic joint venture from 25% to 40%.

Through the Group's shareholding in the Heatons chain, sports products are retailed within 15 stores in Northern Ireland and 26 stores in the Republic of Ireland.  The Group's share of Heatons operating result was a £1.5m profit (FY14 H1: £0.7m profit).

During the period we established a new fitness division, Sportsdirect Fitness.com, with the purchase of 18 gyms from LA Fitness. Works are also underway to build a 60,000 sq. ft. combined gym and sports retail concept in Aintree, which is expected to be fully open by the end of December 2014. Similar sites are also currently being developed in St Helens and Keighley which we anticipate opening early in 2015.

Premium Lifestyle division

Sales in the period were down by 2.8% to £99.9m (FY14 H1: £102.8m), largely due to the closure of loss-making USC and former Republic stores since the prior year. Gross margin reduced to 38.4% (FY14 H1: 43.0%), due to stock clearance activity in the period.

While supply from major third party brands remains challenging, brands acquired as part of the Republic transaction, e.g. Soulcal, continue to perform well at USC. Growth at Cruise, Flannels and Van Mildert also reflects the Group's buying disciplines and online expertise.

Operating costs reduced by 17.6% to £46.2m (FY14 H1: £56.1m) as we begin to benefit from the closure of 20 loss-making USC and former Republic stores since the prior year and the consolidation of back-office functions.

Premium Lifestyle EBITDA losses decreased in FY15 H1 to £7.8m (FY14 H1: £11.9m loss).

Brands division

Brands division total revenue decreased 3.9% to £102.1m (FY14 H1: £106.2m).  Wholesale revenues were down 4.4% to £86.8m (FY14 H1: £90.8m) as we continue to update our wholesale business model.

Brands gross margin increased by 90 basis points to 42.8% (FY14 H1: 41.9%).  Wholesale gross margins increased 70 basis points to 32.7% (FY14 H1: 32.0%), due to a reduction in stock clearance activity.

Licensing revenues in FY15 H1 were down 0.6% to £15.3m (FY14 H1: £15.4m). Our strategic focus remains on delivering further growth in licensing revenues, having signed 29 new license agreements in the first half of the year with contracted minimum royalties of $12m over the life of the contracts.

Brands operating costs decreased by 5.3% to £28.7m (FY14 H1: £30.3m) in the period, benefiting from the previous year's consolidation of UK wholesale businesses, while maintaining investment in key Group brands at similar levels to previous years.

Underlying EBITDA in the division increased 7.9% to £15.1m (FY14 H1 £14.0m) due to the reduction in operating costs.

Outlook

Trading since the period end has been in line with management's expectations.  The Group's performance continues to be driven by: (i) investment in product range and availability; (ii) optimisation of in-store and web product offer; and (iii) the growing proportion of 'better' and 'best' Group branded products in key categories.

The Board remains confident of achieving at least our full year internal underlying EBITDA target of £360m, before the Employee Bonus Share Scheme charges. Looking to FY16, we remain confident that our continued focus on providing customers with exceptional quality and unbeatable value will deliver another year of profitable growth.

Dave Forsey

Chief Executive

11 December 2014

(1)	LTM EBITDA is the last twelve months historic underlying EBITDA
(2)	Due to differing methodologies, this implies a range between 4.25m sq. ft. - 4.75m sq. ft.

Reconciliation of reported to underlying results

	EBITDA		PBT
	FY15 H1	FY14 H1	FY15 H1	FY14 H1
	£m	£m	£m	£m
Operating profit	168.8	147.5
Depreciation	29.0	25.1
Amortisation	3.9	3.3
Share of profit/(loss) of associated undertakings	1.7	0.7
Bonus share scheme charge	6.1	6.0
Reported EBITDA/PBT	209.5	182.6	149.7	143.1
Realised FX loss/(profit)	7.7	0.7	7.7	0.7
IAS 39 foreign exchange fair value adjustment on forward currency contracts	-	-	(6.0)	2.3
Fair value adjustment to derivative financial instruments	-	-	23.3	-
Exceptional items	(14.1)	-	(14.1)	-
Underlying	203.1	183.3	160.6	146.2

Fair value adjustment to derivative financial instruments represents the movement in fair value of equity options in the period.

Underlying EBITDA by Business Segment

	FY15 H1	FY14 H1
	£m	£m
Sports Retail	195.8	181.2	8.1%
Premium Lifestyle	(7.8)	(11.9)	(34.5%)
Brands	15.1	14.0	7.9%
Group Underlying EBITDA	203.1	183.3	10.8%

Foreign exchange

A number of the forward foreign exchange contracts outstanding at 26 October 2014 qualify for hedge accounting and the fair value gain on these contracts of £50.5m has been recognised in Other Comprehensive Income.  At period end, the Group had £675m of US Dollar contracts, sufficient to cover all purchases in UK Sports Retail until the end of the FY16 financial year.  These hedged contracts are at an average rate of $1.69.  The sterling exchange rate with the US dollar at 27 April 2014 was $1.680 and $1.609 at 26 October 2014.

Taxation

The effective tax rate on profit before tax for FY15 H1 was 23.0% (FY14 H1: 25.0%).  The difference between the prevailing corporate tax rate of 21% and the effective rate reflects depreciation on non-qualifying assets.

Strategic investments

The Group continued to hold an 11.8% shareholding in JD Sports and Fashion plc and on 2 October 2014 acquired a further 4.60% stake in Debenhams. Including the Group's stake in Highland Group Holdings Limited (House of Fraser), the fair value of the Group's holdings at 26 October 2014 was £142.9m (27 April 2014: £116.5m).  The movement in the fair value of the shares held has been recognised directly in Other Comprehensive Income.

The value of the investment in Highland Group Holdings Limited was £11.1m at the period end (FY14: £11.1m) and its valuation will vary depending on the performance of the Highland Group.

In June 2014, the Group acquired an interest in 7,251,065 shares in MySale Group plc, representing 4.8% of the issued share capital of MySale.

In September 2014, the Group entered into a derivative agreement referencing 23,000,000 shares in Tesco Plc, representing 0.3% of the issued share capital of Tesco.

In October 2014 the Group acquired 56,381,164 shares in Debenhams plc for £33.2m, representing 4.6% of the issued share capital of Debenhams. This stake was sold in November 2014 and the Group entered into a derivative agreement referencing 74,185,742 Debenhams shares, equivalent to 6.1% of the issued share capital of Debenhams. Along with the existing derivative agreement entered into in January 2014, these investments represent a 12.7% interest in Debenhams' ordinary shares.

The fair value of equity derivative agreements is included within the derivative financial liabilities balance of £30.7m.

Cash flow and net debt

On 25 November 2014 the Group utilised the accordion option under its £688m working capital facility. As a result, the working capital facility has been increased from £688m to £738m. The facility is available until September 2018 and is not secured against any of the Group's fixed assets.

The Group also has a £250m working capital facility with Mike Ashley which can be drawn down on request.  This facility was agreed at market terms at its inception and is not secured against any fixed assets. At the period end no balance was due.

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

Net debt decreased during the period to £186.5m (27 April 2014: £212.0m), which is 0.5 times the last twelve months historic underlying EBITDA (FY14 H1: 0.6 times)

Capital expenditure amounted to £26.7m (FY14 H1: £31.8m), including £1.6m (FY14 H1: £10.3m) of freehold property.  The Group expects FY15 capital expenditure to be c. £90m, including expenditure on phase 3 of the Shirebrook campus.

The analysis of net debt at 26 October 2014 and at 27 April 2014 is as follows:

	At 26 October 2014	At 27 April 2014
	£m	£m
Cash and cash equivalents	106.1	151.0
Borrowings	(292.6)	(363.0)
Net debt	(186.5)	(212.0)

Cash Flow

	26 weeks ended  26 October 2014 £m	26 weeks ended  27 October 2013 £m
Underlying EBITDA (pre share scheme costs)	203.1	183.3
Realised profit on forward foreign exchange contracts	(7.7)	(0.6)
Taxes paid	(33.9)	(35.8)
Underlying free cash flow	161.5	146.9
Invested In:
Working capital
Inventory	(89.6)	(49.3)
Receivables, Payables & Other	(2.2)	31.8
Acquisitions (including debt)	(2.3)	(124.1)
Purchase of listed investments	(33.2)	-
Investment income received	1.3	1.3
Capital expenditure	(26.7)	(31.8)
Disposal of freehold property	21.1	-
Finance costs and other financing activities	(4.4)	(4.1)
Net  decrease/(increase) in net debt	25.5	(29.3)

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 5m shares will vest in the summer of 2015 and another 19m shares (including the Executive Bonus Share Scheme) in the summer of 2017.

The remaining target for Group underlying EBITDA (before Employee Bonus Share Scheme costs) is:

-       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.

Going concern

The Group finances its day to day working capital requirements using a £738m facility with 13 financial institutions that is due for renewal in September 2018.

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, 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 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 9.

With the exception of Charles McCreevy who did not stand for re-election at the Company's Annual General Meeting, the directors of Sports Direct International plc are listed in the Group's 2014 Annual Report and Financial Statements.

On behalf of the Board

Dave Forsey

Chief Executive

11 December 2014

INDEPENDENT REVIEW REPORT TO THE MEMBERS OF SPORTS DIRECT INTERNATIONAL PLC

FOR THE 26 WEEKS ENDED 26 OCTOBER 2014

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 26 October 2014 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 26 October 2014 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

Auditor

London

11 December 2014

UNAUDITED CONSOLIDATED INCOME STATEMENT FOR THE 26 WEEKS ENDED 26 OCTOBER 2014

		26 weeks ended    26 October  2014	26 weeks ended    27 October  2013	52 weeks ended 27 April 2014
	Notes	£'000	£'000	£'000
Continuing operations:
Revenue	2	1,432,898	1,345,102	2,705,958
Cost of sales		(802,681)	(765,272)	(1,551,036)
Gross profit		630,217	579,830	1,154,922
Selling, distribution and administrative expenses		(479,690)	(439,067)	(908,843)
Other operating income		4,134	6,811	8,583
Exceptional items	3	14,149	-	(5,531)
Operating profit	2	168,810	147,574	249,131
Investment income		1,263	1,271	7,017
Finance income		6,343	1,446	891
Finance costs	4	(28,327)	(7,903)	(19,853)
Share of profit of associated undertakings and joint ventures		1,643	676	2,266
Profit before taxation		149,732	143,064	239,452
Taxation		(34,438)	(35,766)	(59,839)
Profit for the period	2	115,294	107,298	179,613
Attributable to:
Equity holders of the Group		114,629	107,559	180,245
Non-controlling interests		665	(261)	(632)
Profit for the period	2	115,294	107,298	179,613

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	5	19.4	18.6	30.8
Diluted earnings per share	5	18.6	17.4	29.2
Underlying basic earnings per share	5	20.8	19.0	32.1

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

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE 26 WEEKS ENDED 26 OCTOBER 2014

		26 weeks ended 26 October 2014	26 weeks ended 27 October 2013	52 weeks ended 27 April 2014
	Notes	£'000	£'000	£'000
Profit for the period	2	115,294	107,298	179,613
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Actuarial (losses)/gains on defined benefit pension schemes		(1,304)	4,589	3,860
Taxation on items not reclassified		274	(1,087)	(698)
Items that will be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations		13,465	(14,768)	(33,118)
Exchange differences on hedged contracts - recognised in the period		26,860	(7,593)	(3,737)
Exchange differences on hedged contracts - reclassification in the period		23,623	(8,907)	(17,909)
Fair value adjustment in respect of available for sale financial assets		(6,783)	17,903	57,373
Taxation on items subsequently reclassified		(10,601)	-	(4,170)
Other comprehensive income for the period, net of tax		45,534	(9,863)	1,601
Total comprehensive income for the period		160,828	97,435	181,214
Attributable to:
Equity holders of the Parent		160,163	97,696	181,846
Non-controlling interests		665	(261)	(632)
		160,828	97,435	181,214

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

UNAUDITED CONSOLIDATED BALANCE SHEET AS AT 26 OCTOBER 2014

		26 October 2014	27 October 2013	27 April 2014
	Notes	£'000	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment		406,251	421,981	412,361
Intangible assets		255,337	264,781	255,109
Investments in associated undertakings and joint ventures		45,692	32,842	41,763
Available-for-sale financial assets		142,883	66,084	116,504
Deferred tax assets		25,359	28,839	31,130
		875,522	814,527	856,867
Current assets
Inventories		655,081	557,708	565,479
Trade and other receivables		165,960	134,696	123,014
Derivative financial assets		49,758	7,819	4,355
Cash and cash equivalents		106,103	164,505	151,024
		976,902	864,728	843,872
TOTAL ASSETS		1,852,424	1,679,255	1,700,739
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		18,745	23,630	5,280
Reverse combination reserve		(987,312)	(987,312)	(987,312)
Own share reserve		(13,251)	(13,251)	(13,251)
Hedging reserve		44,858	(479)	(5,625)
Retained earnings		1,030,689	846,330	931,819
		983,910	759,099	821,092
Non-controlling interests		(2,873)	(12,312)	(3,538)
Total equity		981,037	746,787	817,554
Non-current liabilities
Borrowings	6	283,622	337,530	6,764
Retirement benefit obligations		15,497	15,899	15,350
Deferred tax liabilities		30,726	23,100	24,046
Provisions		36,886	35,108	37,780
		366,731	411,637	83,940
Current liabilities
Derivative financial liabilities		30,696	8,638	18,665
Trade and other payables		434,017	477,352	392,019
Borrowings	6	8,932	10,276	356,226
Current tax liabilities		31,011	24,565	32,335
		504,656	520,831	799,245
Total liabilities		871,387	932,468	883,185
TOTAL EQUITY AND LIABILITIES		1,852,424	1,679,255	1,700,739

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

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE 26 WEEKS ENDED 26 OCTOBER 2014

		26 weeks ended 26 October 2014	26 weeks ended 27 October 2013	52 weeks ended 27 April 2014
	Notes	£'000	£'000	£'000
Cash inflow from operating activities	8	103,718	165,011	222,785
Income taxes paid		(33,902)	(35,827)	(55,730)
Net cash inflow from operating activities		69,816	129,184	167,055
Cash flow from investing activities
Proceeds on disposal of property, plant and equipment		21,150	-	-
Proceeds on disposal of listed investments		-	-	49,394
Purchase of associate, net of cash acquired		(2,300)	-	(8,000)
Purchase of subsidiaries, net of cash acquired		(172)	(16,485)	(15,407)
Purchase of intangible assets		(3)	(162)	(1,827)
Purchase of property, plant and equipment		(26,715)	(31,610)	(67,304)
Purchase of listed investments		(33,162)	-	(55,467)
Investment income received		1,277	1,271	1,604
Finance income received		335	501	891
Net cash outflow from investing activities		(39,590)	(46,986)	(96,116)
Cash flow from financing activities
Finance costs paid		(4,712)	(4,409)	(8,111)
Borrowings drawn down		51,336	181,692	300,910
Borrowings repaid		(118,730)	(247,408)	(348,452)
Exercise of option over non-controlling interests			-	(11,678)
Net cash outflow from financing activities		(72,106)	(69,624)	(67,331)
Net (decrease) / increase in cash and cash equivalents including overdrafts		(41,880)	12,574	3,608
Cash and cash equivalents including overdrafts at beginning of period		145,282	141,674	141,674
Cash and cash equivalents including overdrafts at the period end		103,402	154,248	145,282

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

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 26 WEEKS ENDED 26 OCTOBER 2014

	Treasury shares	Foreign currency translation	Own share reserve	Retained earnings	Other reserves	Sub- total	Non-controlling interests	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 28 April 2013	(56,234)	38,398	(64,375)	752,018	(24,876)	644,931	(254)	644,677
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
	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 27 April 2014	(56,234)	5,280	(13,251)	931,819	(46,522)	821,092	(3,538)	817,554
Share-based payments	-	-	-	2,655	-	2,655	-	2,265
Transactions with owners	-	-	-	2,655	-	2,655	-	2,655
Profit for the financial period	-	-	-	114,629	-	114,629	665	115,294
Cashflow hedges  - recognised in the period	-	-	-	-	26,860	26,860	-	26,860
- reclassification	-	-	-	-	23,623	23,623	-	23,623
Actuarial gains on defined benefit pension schemes	-	-	-	(1,304)	-	(1,304)	-	(1,304)
Fair value adjustment in respect of available for sale financial assets	-	-	-	(6,783)	-	(6,783)	-	(6,783)
Taxation on items taken to comprehensive income	-	-	-	(10,327)	-	(10,327)	-	(10,327)
Translation differences - group	-	13,465	-	-	-	13,465	-	13,465
Total comprehensive income	-	13,465	-	96,215	50,483	160,163	665	160,828
At 26 October 2014	(56,234)	18,745	(13,251)	1,030,689	3,961	983,910	(2,873)	981,037

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.

At 26 October 2014, the Sports Direct Employee Benefit Trust held 6,070,490 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 26 OCTOBER 2014

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 2014 Annual Report and Financial Statements. The financial information in the Group's Annual Report and Financial Statements is prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS").The Interim Results have been prepared in accordance with International Accounting Standard (IAS) 34 - "Interim Financial Reporting" as endorsed by the European Union and the Disclosure and Transparency Rules of the Financial Conduct Authority (DTR). The principal accounting policies have remained unchanged from the prior financial information for the 52 weeks ended 27 April 2014. 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 27 April 2014 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.     Sports Retail - includes the results of the UK and International retail network of sports stores along with related websites;

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

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

The basis of the reportable segments changed in the 2014 Annual Report, reflecting changes that have been made to internal reports used to assess performance and allocate resources across each operating segment. UK Sports Retail and International Sports Retail were previously reported as separate segments. These have now been aggregated to form the reportable segment: Sports Retail. The prior year disclosures have been restated to reflect this change. Information regarding the Group's reportable segments for the period ended 26 October 2014, as well as a reconciliation of reported profit for the period to underlying EBITDA, is presented below:

Segmental information for the 26 weeks ended 26 October 2014:

		Retail		Brands
	Sports Retail	Premium Lifestyle	Total Retail	Total	Eliminations	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Sales to external customers	1,230,886	99,926	1,330,812	102,086	-	1,432,898
Sales to other segments	12	-	12	13,247	(13,259)	-
Revenue	1,230,898	99,926	1,330,824	115,333	(13,259)	1,432,898
Gross profit	548,080	38,428	586,508	43,779	-	630,217
Operating profit/(loss) before foreign exchange and exceptional items	160,577	(9,445)	151,132	11,245	-	162,377
Operating Profit	166,855	(9,508)	157,347	11,463	-	168,810

Investment income										1,263
Finance income										6,343
Finance costs										(28,327)
Share of profits of associated undertakings and joint ventures										1,643
Profit before taxation										149,732
Taxation										(34,438)
Profit for the period										115,294

Reconciliation of operating profit to underlying EBITDA for the 26 week period ending 26 October 2014.

		Sports Retail	Premium Lifestyle	Brands	Total
		£'000	£'000	£'000	£'000
Operating profit/(loss)		166,855	(9,508)	11,463	168,810
Depreciation		26,791	1,300	969	29,060
Amortisation		757	344	2,852	3,953
Share of profit/(loss) of associated undertakings		1,593	-	50	1,643
Charges for the Bonus Share Schemes		6,057	-	-	6,057
Reported EBITDA		202,053	(7,864)	15,334	209,523
Exceptional items		(14,149)	-	-	(14,149)
Realised FX (Gain)/Loss		7,871	63	218	7,716
Underlying EBITDA		195,775	(7,801)	15,116	203,090

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

Other segment items included in the income statement for the 26 weeks ended 26 October 2014:

	Sports Retail	Premium Lifestyle	Brands	Total
		£'000	£'000	£'000
Depreciation	26,791	1,300	969	29,060
Amortisation and impairment	757	344	2,852	3,953

Information regarding segment assets and liabilities as at 26 October 2014: 

		Retail	Brands	Eliminations	Total
	Sports Retail	Premium Lifestyle
---	---	---	---	---	---
	£'000	£'000	£'000	£'000	£'000
---	---	---	---	---	---
Investments in associated undertakings and joint venture	46,055	-	(363)	-	45,692
Other assets	1,810,388	99,314	202,157	(305,127)	1,806,731
Total assets	1,856,443	99,314	201,794	(305,127)	1,852,424
Total liabilities	(942,320)	(133,674)	(100,520)	305,127	(871,387)

Segmental information for the 26 weeks ended 27 October 2013:

		Retail		Brands
	Sports Retail	Premium Lifestyle	Total Retail	Total	Eliminations	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Sales to external customers	1,136,044	102,843	1,238,887	106,215	-	1,345,102
Sales to other segments	8,455	-	8,455	14,737	(23,192)	-
Revenue	1,144,499	102,843	1,247,342	120,952	(23,192)	1,345,102
Gross profit	491,128	44,179	535,307	44,523	-	579,830
Operating profit/(loss) before foreign exchange and exceptional items	150,870	(13,668)	137,202	11,017	-	148,219
Operating Profit	150,327	(13,615)	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

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

	Sports Retail	Premium Lifestyle	Brands	Total
	£'000	£'000	£'000	£'000
Operating profit/(loss)	150,327	(13,615)	10,862	147,574
Depreciation	22,789	1,448	867	25,104
Impairment	133	-	-	133
Amortisation	468	344	2,319	3,131
Share of profit/(loss) of associated undertakings	899	-	(223)	676
Charges for the Bonus Share Schemes	6,018	-	-	6,018
Reported EBITDA	180,634	(11,823)	13,825	182,636
Realised FX Loss / (Gain)	543	(53)	155	645
Underlying EBITDA	181,177	(11,876)	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:

	Sports Retail	Premium Lifestyle	Brands	Total
	£'000	£'000	£'000	£'000
Depreciation	22,789	1,448	867	25,104
Amortisation and impairment	601	344	2,319	3,264

Information regarding segment assets and liabilities as at 27 October 2013: 

	Retail		Brands	Eliminations	Total
	Sports Retail	Premium Lifestyle
---	---	---	---	---	---
	£'000	£'000	£'000	£'000	£'000
---	---	---	---	---	---
Investments in associated undertakings and joint ventures	33,065	-	(223)	-	32,842
Other assets	1,545,079	30,234	182,616	(111,516)	1,646,413
Total assets	1,578,144	30,234	182,393	(111,516)	1,679,255
Total liabilities	(902,733)	(47,809)	(93,442)	111,516	(932,468)

Segmental information for the 52 weeks ended 27 April 2014:

This information is available in the 2014 annual report.

3. Exceptional items

	26 weeks    ended 26 October 2014    (£'000)	26 weeks     ended 27 October 2013         (£'000)	52 weeks ended 27 April 2014 (£'000)
Profit on disposal of freehold property	14,149	-	-
Impairment of tangible assets	-	-	(5,531)
	14,149	-	(5,531)

On 20 June 2014 the Group sold a Freehold Property for £21.2m and then entered into an agreement to lease the property back from the buyer.

4. Finance costs

	26 weeks    ended 26 October 2014    (£'000)	26 weeks     ended 27 October 2013         (£'000)	52 weeks ended 27 April 2014 (£'000)
Interest on bank loans and overdrafts	4,654	4,409	7,513
Interest on other loans and finance leases	233	-	600
Interest on retirement benefit obligations	178	1,210	547
Fair value adjustment to derivative financial instruments (1)	23,262	2,284	11,193
	28,327	7,903	19,853

(1)   The fair value adjustment to derivative financial instruments relates to differences between the fair values of derivative financial instruments not designated for hedge accounting from one period end to the next. The majority of the fair value loss in the current period relates to equity options.

1. Earnings per share

For diluted earnings per share, the weighted average number of shares, 592,294,371 (FY14 H1: 578,454,000), is adjusted to assume conversion of all dilutive potential ordinary shares under the Group's bonus share schemes, being 24,200,000 (FY14 H1: 40,736,000) to give the diluted weighted average number of shares of 616,494,371 (FY14 H1: 619,190,000).

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 any shares that vested during the period.

Basic and diluted earnings per share

	26 weeks ended 26 October 2014	26 weeks ended 26 October 2014	26 weeks ended 27 October 2013	26 weeks ended 27 October 2013	52 weeks ended 27 April 2014	52 weeks ended 27 April 2014
Basic £'000	Diluted £'000	Basic £'000	Diluted £'000	Basic £'000	Diluted £'000
Profit for the period attributable to the equity holders of the Group	114,629	114,629	107,559	107,559	180,245	180,245
	Number in thousands		Number in thousands		Number in thousands
Weighted average number of shares	592,294	616,494	578,454	619,190	585,514	618,190
	Pence per share		Pence per share		Pence per share
Earnings per share	19.4	18.6	18.6	17.4	30.8	29.2

Underlying earnings per share

The underlying earnings per share reflects the underlying performance of the business compared with the prior year and is calculated by dividing underlying earnings by the weighted average number of shares. 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 derivative financial instruments 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 26 October 2014	26 weeks ended 26 October 2014	26 weeks ended 27 October 2013	26 weeks ended 27 October 2013	52 weeks ended 27 April 2014	52 weeks ended 27 April 2014
	Basic £'000	Diluted £'000	Basic £'000	Diluted £'000	Basic £'000	Diluted £'000
Profit for the period	114,629	114,629	107,559	107,559	180,245	180,245
Post tax adjustments to profit for the period for the following exceptional items:
Realised loss/(gain) on forward foreign exchange contracts	5,941	5,941	477	477	(1,373)	(1,373)
Fair value adjustment to forward foreign exchange contracts	13,286	13,286	1,690	1,690	8,395	8,395
Profit on disposal of listed investments	-	-	-	-	(4,060)	(4,060)
Profit on disposal of freehold property	(10,895)	(10,895)	-	-	-	-
Impairment of fixed assets	-	-	-	-	4,148	4,148
Impairment of goodwill	-	-	133	133	284	284
Underlying profit for the period	122,961	122,961	109,859	109,859	187,639	187,639
	Number in thousands		Number in thousands		Number in thousands
Weighted average number of shares	592,294	616,494	578,454	619,190	585,514	618,190
	Pence per share		Pence per share		Pence per share
Earnings per share	20.8	19.9	19.0	17.7	32.1	30.3

6. Borrowings

	26 October 2014	27 October 2013	27 April 2014
	£'000	£'000	£'000
Non-current:
Bank and other loans	283,622	337,530	6,764
Obligations under finance leases	-	-	-
	283,622	337,530	6,764
Current:
Bank overdrafts	2,700	10,257	5,742
Bank and other loans	6,232	-	350,484
Obligations under finance leases	-	19	-
	8,932	10,276	356,226
Total borrowings:
Bank overdrafts	2,700	10,257	5,742
Bank and other loans	289,854	337,530	357,248
Obligations under finance leases	-	19	-
	292,554	347,806	362,990

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

	26 October 2014	27 October 2013	27 April 2014
Borrowings - Sterling	221,427	250,602	240,731
Borrowings - Other	68,427	86,928	116,517
	289,854	337,530	357,248

7. Financial Instruments

(a) Financial assets and liabilities by category

The carrying values of financial assets and liabilities, which are principally denominated in Sterling or US dollars, were as follows:

	Loans and receivables (£'000)	Assets at fair value through profit and loss (£'000)	Available for sale financial assets (£'000)	Non-financial assets (£'000)	Total (£'000)
Assets at 26 October 2014
Property, plant and equipment	-	-	-	406,251	406,251
Intangible assets	-	-	-	255,337	255,337
Investments in associated undertakings and joint ventures	-	-	-	45,692	45,692
Available-for-sale financial assets	-	-	142,883	-	142,883
Deferred tax assets	-	-	-	25,359	25,359
Inventories	-	-	-	655,081	655,081
Derivative financial assets	-	49,758	-	-	49,758
Trade and other receivables	56,012	-	-	109,948	165,960
Cash and cash equivalents	106,103	-	-	-	106,103
	162,115	49,758	142,883	1,497,668	1,852,424
Assets at 27 April 2014
Property, plant and equipment	-	-	-	412,361	412,361
Intangible assets	-	-	-	255,109	255,109
Investments in associated undertakings and joint ventures	-	-	-	41,763	41,763
Available-for-sale financial assets	-	-	116,504	-	116,504
Deferred tax assets	-	-	-	31,130	31,130
Inventories	-	-	-	565,479	565,479
Trade and other receivables	60,851	-	-	62,163	123,014
Derivative financial assets	-	4,355	-	-	4,355
Cash and cash equivalents	151,024	-	-	-	151,024
	211,875	4,355	116,504	1,368,005	1,700,739
Assets at 27 October 2013
Property, plant and equipment	-	-	-	421,981	421,981
Intangible assets	-	-	-	264,781	264,781
Investments in associated undertakings and joint ventures	-	-	-	32,842	32,842
Available-for-sale financial assets	-	-	66,084	-	66,084
Deferred tax assets	-	-	-	28,839	28,839
Inventories	-	-	-	557,708	557,708
Trade and other receivables	69,279	-	-	65,417	134,696
Derivative financial assets	-	7,819	-	-	7,819
Cash and cash equivalents	164,505	-	-	-	164,505
	233,784	7,819	66,084	1,371,568	1,679,255

	Loans and payables (£'000)	Liabilities at fair value through profit and loss (£'000)	Non-financial liabilities (£'000)	Total (£'000)
Liabilities at 26 October 2014
Non-current borrowings	283,622	-	-	283,622
Retirement benefit obligations	-	-	15,497	15,497
Deferred tax liabilities	-	-	30,726	30,726
Provisions	-	-	36,886	36,886
Derivative financial liabilities	-	30,696	-	30,696
Trade and other payables	268,612	-	165,405	434,017
Current borrowings	8,932	-	-	8,932
Current tax liabilities	-	-	31,011	31,011
	561,166	30,696	279,525	871,387
Liabilities at 27 April 2014
Non-current borrowings	6,764	-	-	6,764
Retirement benefit obligations	-	-	15,350	15,350
Deferred tax liabilities	-	-	24,046	24,046
Provisions	-	-	37,780	37,780
Derivative financial liabilities	-	18,665	-	18,665
Trade and other payables	239,463	-	152,556	392,019
Current borrowings	356,226	-	-	356,226
Current tax liabilities	-	-	32,335	32,335
	602,453	18,665	262,067	883,185
Liabilities at 27 October 2013
Non-current borrowings	337,530	-	-	337,530
Retirement benefit obligations	-	-	15,899	15,899
Deferred tax liabilities	-	-	23,100	23,100
Provisions	-	-	35,108	35,108
Derivative financial liabilities	-	8,638	-	8,638
Trade and other payables	248,449	-	228,903	477,352
Current borrowings	10,276	-	-	10,276
Current tax liabilities	-	-	24,565	24,565
	596,255	8,638	327,575	932,468

Carrying values do not materially differ from fair value.

Fair value hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and

• Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

As at 26 October 2014, the only financial instruments held at fair value were Derivative financial assets and liabilities, which are classified as Level 2, and Available-for-sale financial assets, which are classified as Level 1 except for Highland Group Holdings, which is classified as Level 3. Highland Group Holdings is held at management's estimate of fair value based on publicly available data.

The Group has entered into a number of put options referencing listed company shares. To the extent that the market price of these shares is less than an agreed price on expiry of the put option, the Group has the right to elect whether to settle the put option by acquiring ordinary shares or, by paying the cash settlement value of the put option. Sports Direct is required to transfer cash collateral to cover its obligations under the Put Option. The amount of collateral required during the life of the Put Option can increase or decrease by reference to the underlying market price of the shares. 

8. Cash inflows from operating activities

	26 weeks ended 26 October 2014	26 weeks ended 27 October 2013	52 weeks ended 27 April 2014
	£'000	£'000	£'000
Profit before taxation	149,732	143,064	239,452
Net finance costs	21,984	6,457	18,962
Other Investment income	(1,263)	(1,271)	(7,017)
Share of profit of associated undertakings and joint ventures	(1,643)	(676)	(2,266)
Operating profit	168,810	147,574	249,131
Depreciation	29,060	25,104	56,963
Amortisation charge	3,953	3,264	6,832
Loss on disposal of intangibles	-	-	5,815
Profit on disposal of intangibles	496	-	-
Defined benefit pension plan current service cost	11	6	22
Defined benefit pension plan employer contributions	(1,360)	(1,354)	(2,708)
Share based payments	6,057	6,018	11,927
Operating cash inflow before changes in working capital	207,027	180,612	327,982
Increase in receivables	(42,634)	(27,054)	(18,241)
Increase in inventories	(89,603)	(49,254)	(52,521)
Increase / (decrease) in payables	28,928	60,707	(34,435)
Cash inflows from operating activities	103,718	165,011	222,785

Included within the movement in debtors are amounts held as collateral against equity derivatives.

9. Related party transactions

The Group has taken advantage of the exemptions contained within IAS 24 - "Related Party Disclosures" from the requirement to disclose transactions between Group companies as these have been eliminated on consolidation.

The Group entered into the following material transactions with related parties:

26 weeks ended  26 October 2014 Related party	Relationship	Sales	Purchases	Trade and other receivables	Trade and other payables
		£'000	£'000	£'000	£'000
Heatons	Associate	16,560	-	5,648	-
Brasher Leisure Limited	Associate	5,887	-	3,441	-
Rangers Retail Limited	Associate	2,487	-	398	-
Newcastle United Football Club	Connected persons	1,174	-	519	-
MST	Associate	337	-	4,939	-

The Group has a £250m working capital facility with Mike Ashley which can be drawn down on request.  This facility was agreed at market terms at its inception. This facility is not secured against any fixed assets.  On 6th October 2014 the Group made a drawdown of £40 million against this facility which was repaid in full on 20th October 2014. At the period end no balance was due.

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	-

This information is provided by RNS

The company news service from the London Stock Exchange

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