TIDMJD.
RNS Number : 2267A
JD Sports Fashion Plc
22 September 2022
22 September 2022
JD SPORTS FASHION PLC
UNAUDITED INTERIM RESULTS
FOR THE 26 WEEKS TO 30 JULY 2022
JD Sports Fashion Plc (the 'Group'), the leading retailer of
sports, fashion and outdoor brands, today announces its interim
results for the 26 weeks ended 30 July 2022 (comparative figures
are shown for the 26-week period ended 31 July 2021).
IFRS 16 Proforma IAS 17*
2022 2021 2022 2021
GBPm GBPm GBPm GBPm
Revenue 4,418.1 3,885.8 4,418.1 3,885.8
Gross profit % 48.5% 48.5% 48.5% 48.5%
Operating profit 332.9 396.8 305.4 380.0
Net interest expense (34.6) (32.2) (2.5) (3.4)
-------- -------- --------- --------
Profit before tax 298.3 364.6 302.9 376.6
-------- -------- --------- --------
Basic earnings per ordinary
share (a) 3.58p 4.44p 3.66p 4.67p
Total dividend payable per 0.13p -
ordinary share
Alternative Performance Measures
(b)
EBITDA before exceptional
items 727.4 746.4 504.7 554.3
Depreciation / amortisation (309.3) (274.7) (114.1) (99.4)
-------- -------- --------- --------
Operating profit (before
exceptional items) 418.1 471.7 390.6 454.9
Net interest expense (34.6) (32.2) (2.5) (3.4)
-------- -------- --------- --------
Profit before tax and exceptional
items 383.5 439.5 388.1 451.5
Exceptional items (see note
3) (85.2) (74.9) (85.2) (74.9)
-------- -------- --------- --------
Profit before tax 298.3 364.6 302.9 376.6
-------- -------- --------- --------
Adjusted earnings per ordinary
share (a) 5.23p 5.83p 5.32p 6.07p
Net cash at period end (c) 1,013.1 995.1
----------------------------------- -------- -------- --------- --------
a) The prior year has been restated to reflect the 5:1 share
split which was approved by shareholders at a General Meeting on 26
November 2021
b) Further detail setting out the background to the Alternative
Performance Measures and a reconciliation to statutory measures is
provided after the Chief Financial Officer's Statement. In
addition, throughout this release '*' indicates the first instance
of other Alternative Performance Measures which are also explained
after the Chief Financial Officer's and are reconciled to the
statutory measures
c) Net cash consists of cash and cash equivalents less interest-bearing loans and borrowings
Group Highlights
-- Result for the first half at the top end of the Board's
expectations with profit before tax and exceptional items of
GBP383.5 million (2021: GBP439.5 million) which includes:
o Continued robust performance in the sports fashion retail
fascias in the UK and Republic of Ireland which delivered a profit
before tax and exceptional items for the first half of GBP153.0
million (2021: GBP174.2 million)
o A return to profit in the sports fashion retail fascias in
Europe which contributed to a profit before tax and exceptional
items for the first half of GBP57.1 million (2021: loss of GBP7.2
million)
o A profit for the sports fashion retail fascias in North
America of GBP130.4 million (2021: GBP245.5 million) with the
performance in the period reflecting, as expected, the
non-comparability of trading conditions in the United States as a
result of the Federal fiscal stimulus in the prior year and the
supply chain challenges of certain international brands which has
led to reduced availability of key footwear styles, particularly in
the first quarter
-- Total revenue growth in organic retail businesses* of 5% with
this level of growth continuing in the second half to date
including a return to growth in the United States
-- International development of JD continues to progress positively:
o 51 net new JD stores opened across Europe including a first
store in Hungary with the first store in Greece due to open
shortly
o 101 stores now trading as JD in the United States with a
flagship store in Chicago due to open in the second half
o Four JD stores in Indonesia and two JD stores in Israel opened
under Joint Venture arrangements in the period meaning that the
core JD fascia now has a retail presence in 27 countries
o Further progress in Australia with three new stores opened in
the period and a first store in Adelaide opened subsequently
-- Interim dividend of 0.13p per ordinary share proposed (2021:
nil; 2020: nil; 2019: 0.06p restated to reflect the 5:1 share split
approved in November 2021) with the return to more normalised
trading justifying the return to a more normalised phasing of
dividend payments
-- The Board maintains its view that the headline profit before
tax and exceptional items for the year end 28 January 2023 will be
in line with the record performance for the year ended 29 January
2022
-- Key financial information of the two business segments is tabulated below:
Period to 30 July 2022
Sports Fashion Outdoor Unallocated Total
GBPm GBPm GBPm GBPm
Revenue 4,143.4 274.7 - 4,418.1
--------------- -------- ------------ --------
Gross profit % 49.0% 42.2% - 48.5%
--------------- -------- ------------ --------
Operating profit 327.5 5.4 - 332.9
Net interest expense(1) (30.7) (1.4) (2.5) (34.6)
--------------- -------- ------------ --------
Profit / (loss) before tax 296.8 4.0 (2.5) 298.3
--------------- -------- ------------ --------
Alternative Performance Measures
Operating profit before exceptional
items 412.7 5.4 - 418.1
Net interest expense(1) (30.7) (1.4) (2.5) (34.6)
--------------- -------- ------------ --------
Profit / (loss) before tax
and exceptional items 382.0 4.0 (2.5) 383.5
Exceptional items (85.2) - - (85.2)
--------------- -------- ------------ --------
Profit / (loss) before tax 296.8 4.0 (2.5) 298.3
--------------- -------- ------------ --------
(1) The Group considers that certain net funding costs are
cross-divisional in nature and cannot be allocated between the
segments on a meaningful basis.
Period to 31 July 2021
Sports Fashion Outdoor Unallocated Total
GBPm GBPm GBPm GBPm
Revenue 3,650.6 235.2 - 3,885.8
--------------- -------- ------------ --------
Gross profit % 48.8% 44.3% - 48.5%
Operating profit 384.9 11.9 - 396.8
Net interest expense (27.7) (1.1) (3.4) (32.2)
--------------- -------- ------------ --------
Profit / (loss) before tax 357.2 10.8 (3.4) 364.6
Alternative Performance Measures
Operating profit before exceptional
items 459.8 11.9 - 471.7
Net interest expense(1) (27.7) (1.1) (3.4) (32.2)
--------------- -------- ------------ --------
Profit / (loss) before tax
and exceptional items 432.1 10.8 (3.4) 439.5
Exceptional items (74.9) - - (74.9)
--------------- -------- ------------ --------
Profit / (loss) before tax 357.2 10.8 (3.4) 364.6
--------------- -------- ------------ --------
Andrew Higginson, Non-Executive Chair, said:
"Whilst this has been a period of transition for the Board, it
is reassuring that this has not impacted the financial performance
of the Group which continues to deliver strong results with a
profit before tax and exceptional items in the first half of
GBP383.5 million (2021: GBP439.5 million). With this year expected
to follow a more normalised trading pattern, this result is at the
top end of our expectations for the first half demonstrating the
ongoing resilience of our global proposition and the strength of
our consumer engagement.
"The progress that the Group is making in its global markets is
reflected by the fact that total sales in the Group's organic
retail businesses were 5% ahead of the prior year. This performance
is very encouraging, as notwithstanding the non-comparability of
trading conditions in the United States, the Group has also faced
numerous other challenges in the period including the
well-publicised shortage of supply from a number of the
international brands and the challenging global macro-economic
situation.
"JD continues to be the partner of choice for many international
brands who see our premium fascias as the natural home for their
latest ranges and freshest new styles. Our relationship with these
brands and our access to product is as strong as it ever has
been.
"We are delighted to welcome Régis Schultz to the Group as Chief
Executive Officer. Régis has now commenced in the role with his
induction into the Group, including introductions with key business
leads and international brand partners, at an advanced stage. We
firmly believe that Régis has the right characteristics and
experience to lead the Group on the next phase of its journey.
"We continue to be reassured by the ongoing resilience in the
Group's performance with trade to date through the second half
following a similar trend to the first half with total sales in the
Group's organic retail businesses tracking around 8% ahead of the
prior year after six weeks.
"Whilst the overall performance continues to be encouraging and
the result for the half year was at the upper end of the Board's
expectations, it must also be recognised that the most material
trading periods lie ahead. Given the widespread macro-economic
uncertainty, inflationary pressures and the potential for further
disruption to the supply chain with industrial action a continuing
risk in many markets, it is inevitable that we remain cautious
about trading through the remainder of the second half. Despite
this, the Board maintains its view, at this point, that the
headline profit before tax and exceptional items for the year
ending 28 January 2023 will be in line with the record performance
for the year ended 29 January 2022."
Enquiries:
JD Sports Fashion Plc Tel: 0161 767 1000
Andrew Higginson, Non-Executive Chair
Régis Schultz, Chief Executive Officer
Kath Smith, Interim Chief Executive Officer
Neil Greenhalgh, Chief Financial Officer
Investec Bank Plc Tel: 0207 597 5075
David Flin
Peel Hunt LLP Tel: 0207 418 8869
Dan Webster
FGS Global Tel: 0207 251 3801
Rollo Head
Jenny Davey
James Thompson
Chair's Statement
Introduction
Whilst this has been a period of transition for the Board it is
reassuring that this has not impacted the financial performance of
the Group which continues to deliver strong results with a profit
before tax and exceptional items in the first half of GBP383.5
million (2021: GBP439.5 million). With this year expected to follow
a more normalised trading pattern, this result is at the top end of
our expectations for the first half demonstrating the ongoing
resilience of our global proposition and the strength of our
consumer engagement.
As expected, the result is lower than the prior year principally
reflecting the non-comparability of the result in North America
with our businesses in the United States experiencing a significant
one-off benefit last year from the fiscal stimulus made available
by the Federal Government to boost the economy, as previously
highlighted.
The progress that the Group is making in its global markets is
reflected by the fact that total sales in the Group's organic
retail businesses were 5% ahead of the prior year. This performance
is very encouraging, as notwithstanding the non-comparability of
trading conditions in the United States, the Group has also faced
numerous other challenges in the period including the
well-publicised shortage of supply from a number of the
international brands and the challenging global macro-economic
situation.
JD continues to be the partner of choice for many international
brands who see our premium fascias as the natural home for their
latest ranges and freshest new styles. Our relationship with these
brands and our access to product is as strong as it ever has been.
We continue to deepen our relationships with our brand partners to
help create new, richer and more engaging experiences for consumers
going forward.
The result also bears testimony to the skills, resilience and
positive attitude of the colleagues in our businesses who have not
let the leadership changes deviate their laser focus on the
consumer and our proposition. I would also like to express my
gratitude for the leadership provided by Helen Ashton, as Interim
Chair, and Kath Smith, as Interim CEO, after Peter Cowgill left the
Group.
Whilst I only joined the Board in July, it has been evident in
my short time with the Group that JD has an extremely robust
proposition that is capable of thriving across multiple geographies
and can do so in testing financial environments. This confidence
comes from seeing up close how JD consistently adheres to a number
of core entrepreneurial principles:
-- A relentless commitment to be an authoritative and
trustworthy source of style and fashion inspiration by
understanding better than anyone what is relevant to the sports
fashion focused and 'street' consumer
-- Creating sector-leading physical retail environments and
leading-edge digital technologies which are scalable across
multiple territories and are adaptable to dynamic consumer
expectations
-- Providing inspiration to a demanding consumer who, regardless
of wider global events or macro-economics, retain their dreams and
aspirations and are reluctant to give up the things most important
to them
-- Curating a highly differentiated product assortment which
heroes the urban uniform and has breadth, newness and exclusivity
at its heart
-- Utilising the extensive skills, knowledge and experience in
our colleagues to transfer the JD DNA into new markets and deliver
globally consistent standards
It is my responsibility as Chair to ensure that the Board is set
up to make the governance infrastructure more professional whilst
allowing the entrepreneurial flair to flourish. In doing so, JD
will have the right foundations from which to progress positively
and I look forward to working with our new CEO to take advantage of
the ongoing development opportunities.
Board Developments
Recruitment of New CEO
We are delighted to welcome Régis Schultz to the Group as Chief
Executive Officer. Régis has now commenced in the role with his
induction into the Group at an advanced stage, including
introductions with key business leads and international brand
partners. We firmly believe that Régis has the right
characteristics and experience to lead the Group through the next
phase of its journey. In particular, we believe that his expertise
of retailing in Asia and the Middle East combined with his ability
to drive transformational change through digitalisation, perfectly
complement the existing skills both in the Board and the wider
senior leadership team.
Régis has joined the Group at the optimum time as it starts its
build up to the crucial peak trading season at the end of the year.
Régis will work closely with the operational teams in this period,
enhancing his overall knowledge of the Group's operations whilst
simultaneously also giving our teams the opportunity to learn from
his international executional expertise. The knowledge that he
gains in this period will be key in helping him shape his vision
for the continued international development of our brands and the
further enhancement of our already market-leading multichannel
customer experience.
Kath Smith will shortly step back from her role as Interim CEO
and will return to her former role as the Senior Independent
Non-Executive Director. I thank her for her support during the
transition period.
Other Board Updates
Suzi Williams, who joined the Board on 16 May 2022, has now
taken up the role of Remuneration Committee Chair whilst I have
been appointed as Chair of the Nominations Committee.
I am also taking the opportunity to review the mix of skills and
experience on the Board and am assessing if there are any gaps. We
will not hesitate to strengthen the Board further if we believe
that new Board members could positively contribute to the global
development and momentum of the Group.
Finally, I am pleased that we have been able to reach an
amicable and constructive way forward with Peter Cowgill covering
the next three years. Peter has hugely valuable experience, built
over 18 years, which we do not want to lose and both Régis Schultz
and I are delighted that we will be able to benefit from his
unparalleled knowledge and experience over this period. The
arrangement that we have agreed, which includes both a binding set
of new and enhanced restrictive covenants for a two-year period and
a consultancy agreement for an expected period of three years, will
help ensure a seamless handover and best protects the Group's
commercial interests.
Governance Update
Working with external advisors, the Group continues to make good
progress on the initial short-term intensive programme of works to
address the priority issues on governance and regulatory compliance
matters. Further, after the completion of a Control, Risk and
Compliance Target Operating Model review, the Board has now agreed
a detailed plan and resource requirements assessment for a
programme of works which will ensure compliance with the various
regulatory obligations and greater conformity with the Corporate
Governance Code. The Board firmly believes that the 15 to 18 month
timeline, which it has adopted for this programme, is appropriate
for JD as it will ensure that these changes have the opportunity to
become fully embedded in the day-to-day operations and culture of
the business without constraining the commercial flexibility and
quick decision making that have been instrumental in our recent
success.
Update on Footasylum Limited ('Footasylum')
The process to sell Footasylum and its associated subsidiaries
to Aurelius Group formally completed on 5 August 2022 with
consideration of GBP37.5 million received. The Competition and
Markets Authority has subsequently confirmed that its investigation
into the merger has been closed.
Dividends
Given the return to more normalised trading, the Board believes
that it is appropriate to return to a more normalised phasing of
dividend payments with approximately one-third of the anticipated
annual dividend paid as an interim dividend after the first half.
Accordingly, after careful consideration, the Board proposes paying
an interim dividend of 0.13p (2021: nil). This dividend will be
paid on 6 January 2023 to shareholders on the register at 9
December 2022. We continue to believe that it is in the longer term
interests of all shareholders to keep dividend growth restrained so
as to maximise the available funding for our ongoing growth
opportunities.
Outlook
We continue to be reassured by the ongoing resilience in the
Group's performance with trade to date through the second half
following a similar trend to the first half with total sales in the
Group's organic retail businesses tracking around 8% ahead of the
prior year after six weeks. This includes an encouraging return to
positive trading in the United States. Trade in the UK, principally
online, initially softened in August and early September with
customers understandably slower to transition into heavier weight
Autumn product whilst the weather remained relatively warm and dry.
However, the performance has improved again in the most recent
weeks.
The Group also continues to take necessary action to mitigate
the current cost pressures with ongoing initiatives including
maximising productive hours in stores and our warehouse facilities,
improving energy efficiency at all our sites and delivering savings
on consumable items.
Whilst the overall performance continues to be encouraging and
the result for the half year was at the upper end of the Board's
expectations, it must also be recognised that the most material
trading periods lie ahead. Given the widespread macro-economic
uncertainty, inflationary pressures and the potential for further
disruption to the supply chain with industrial action a continuing
risk in many markets, it is inevitable that we remain cautious
about trading through the remainder of the second half. Despite
this, the Board maintains its view, at this point, that the
headline profit before tax and exceptional items for the year end
28 January 2023 will be in line with the record performance for the
year ended 29 January 2022.
We intend to provide an update on trading in early January after
our key Christmas trading period.
Andrew Higginson
Non-Executive Chair
22 September 2022
Chief Executive Officer's Statement
As expected and guided, the profit before tax and exceptional
items of GBP383.5 million is lower than the record set in the
previous year of GBP439.5 million. This is principally due to a
reduction in profit before tax and exceptional items of GBP115.1
million across our combined businesses in North America, which
benefitted significantly in the prior year from the temporary
fiscal stimulus which the Federal Government made available to the
lower earning demographic. This means that the rest of the Group's
businesses actually increased their contribution in the period as
compared to last year by GBP59.1 million which is a reflection of
the continuing positive momentum in our global markets.
Sports Fashion
UK and Republic of Ireland
We are encouraged by another robust performance in the sports
fashion retail fascias in the UK and Republic of Ireland which
delivered a profit before tax and exceptional items for the first
half of GBP153.0 million (2021: GBP174.2 million). It should be
recognised that the stores only re-opened from the middle of April
in the prior year with full business rates only payable from
July.
We are reassured by the resilient nature of the consumer demand
across all our fascias with total revenue growth in the JD fascia
compared to the prior year of approximately 7% with this business
in particular performing strongly through the summer months
benefitting from the increased demand for international
holidays.
The UK and Republic of Ireland is the most mature market for the
JD and Size fascias with developments such as the new flagship
store at the Metrocentre in Newcastle demonstrating our ongoing
commitment to continue raising standards of excellence in
multichannel retailing. It is our belief that the integration of
innovative digital technology into a vibrant retail theatre
increases the attractiveness and desirability of our premium
product ranges. The UK and Republic of Ireland is also the market
where the JD and Size fascias have the greatest density of stores
relative to the population with 440 stores at the period end (2021:
428). We maintain our belief that the store base at its current
scale contributes positively to our development as it raises brand
awareness, provides consumers with an opportunity to physically see
and try the product, and enables us to offer multiple delivery
points.
Elsewhere, we are pleased with the performance in our fashion
businesses including Tessuti, Giulio and Mainline Menswear. More
recently, Tessuti has opened its new global flagship store in
Liverpool. With more than 21,000 sqft of retail space, this store
sets new standards in the retailing of premium fashion brands
combining classic design with the latest digital technology.
Europe
We are also encouraged by the recovery that we have seen in our
businesses in Europe with our combined businesses delivering a
profit before tax and exceptional items for the first half of
GBP57.1 million (2021: loss of GBP7.2 million). Clearly the stores
being open for the full period has been very beneficial in driving
an improved performance with total revenue growth in the JD fascia
of more than 30% compared to the prior year.
The performance of JD in Europe is also benefitting from actions
that we have taken to enhance our service proposition. This
includes investing in local logistics capabilities with
approximately 90% of product for JD stores in Western Europe now
supplied by our warehouses in Southern Belgium and Northern France.
Elsewhere, construction of the larger facility in Heerlen is
ongoing with fulfilment from this facility expected to commence in
the first half of 2024.
The operational challenges which we faced in Europe through the
COVID-19 period were temporary in nature and have not changed our
view on the long-term opportunity for JD across the continent.
Accordingly, we remain committed to expanding our physical retail
presence in Europe at pace with a net 51 new JD stores open in the
period which includes nine new stores in Eastern Europe which have
been opened by the MIG team and the conversion of 22 stores which
formerly traded as Chausport in France. Working with the Cosmos
team, the Group will open its first JD store in Greece imminently
with a store at the Smart Park shopping mall in Athens. The JD team
in Europe is also managing the joint venture in Israel with two
stores opened in the period and three further stores anticipated to
open through the second half.
Elsewhere, our other fascias, which includes our businesses
focused on the Sporting Goods market, continue to progress with
five additional new stores in the period across Iberia. The trial
in the Netherlands which saw former Perry Sport stores being
converted to the Sprinter fascia has now been extended with a
further two stores converted in the period. The initial results
from this trial, which allows us to present an enhanced offer in
key active sports categories such as running and cycling, are
encouraging and it is our intention to extend this trial into other
stores in the second half.
North America
It is not possible to directly compare the performance of our
businesses in North America year-on-year without taking into
consideration the absence of Federal fiscal stimulus this year in
the United States. Further, the performance in the first half was
also negatively impacted, particularly in the first quarter, by the
well-publicised international supply chain challenges which
resulted in the reduced availability of certain key footwear
styles. These supply chain challenges were felt most acutely in
North America as footwear represents more than 80% of total sales
which is the highest of any of our markets.
Whilst these factors have combined to negatively impact the
performance as compared to the previous year, the profit before tax
and exceptional items of GBP130.4 million (2021: GBP245.5 million)
is in line with our expectations. It is also encouraging that gross
margins have largely been maintained at the prior year levels with
an overall gross margin across our businesses of 49.4% (2021:
49.7%). Ultimately, our progress in this market can also be
measured by the fact that the profit before tax and exceptional
items solely in the JD / Finish Line business of GBP63.1 million is
significantly ahead of the GBP35.7 million result achieved in the
same period in 2019, which is the most relevant comparable period
prior to the COVID-19 pandemic.
The improvement in product availability in the second quarter is
reflected in the trading which improved progressively through the
period. This improvement in availability and trading has continued
into the second half with our businesses trading positively through
the first six weeks.
We are very pleased with the ongoing strategic developments
across our businesses in North America which we believe will
deliver sustainable long-term benefits. This includes the ongoing
roll-out of the JD fascia which, at the end of the period, traded
from 107 stores (2021: 66 stores), including six stores (2021: one
store) in Canada. These new store developments for JD include a
number of relocations where we have taken the opportunity to
relocate an existing Finish Line store to a site which is either
more appropriately sized or is in a location which attracts higher
levels of footfall. The new stores for JD in the period include the
opening of a first store in a street location with a store in the
Bronx area of New York. JD will open its second flagship store in
the United States later in the Autumn with a store on State Street
in Chicago. Our businesses are also continuing to make progress on
a number of projects which will enhance both our collective
operational effectiveness and the consumer experience.
Asia Pacific
The Group continues to make progress in the Asia Pacific region
with our businesses delivering a combined profit before tax and
exceptional items for the first half of GBP29.3 million (2021:
GBP13.6 million) representing a margin of 15.5% of sales (2021:
9.6%).
Our most significant market in this region continues to be
Australia where, a further three new stores were opened in the
first half, bringing the total to 43 stores at the end of the
period (2021: 35 stores). A further two stores have opened
subsequently which includes the Group's first store in Adelaide. We
anticipate further openings in Australia through the second half as
JD continues to gain momentum in the country. Further, after an
encouraging start at the store in Auckland, our management team in
Australia is also looking to expand the footprint of JD in New
Zealand with two new stores expected to open in the second
half.
Elsewhere, working with our joint venture partner, PT Erajaya
Swasembada Tb, the Group has now opened four stores in Indonesia
with further openings anticipated through the second half.
Gyms
After opening a further three gyms in the period, the Group had
77 sites in the UK at the end of the period with 66 sites trading
as JD and a further 11 sites still bannered as X4L. It remains our
expectation that the majority of these sites will be converted to
JD and retained longer term. As would be expected, our gyms with
their premium look and feel, including saunas, have a higher
utility cost relative to sales as compared to our retail businesses
with our management team very focused on driving through a number
of initiatives which will reduce the electricity usage without
impacting the members' experience. We are pleased with the early
results from this exercise.
We are also encouraged by the early performance of our GymNation
business in the United Arab Emirates with seven gyms currently open
and a strong pipeline of future openings including Downtown Dubai
and Sharjah.
During the period we broadened our leisure interests with the
acquisition of 60% of Total Swimming Holdings Limited ('Swim!') for
initial cash consideration of GBP11.1 million with additional
consideration of up to GBP4.0 million payable if certain targets
and performance criteria are achieved. Swim! was founded by former
Olympic swimmers Steve Parry, Rebecca Adlington and Adrian Turner
to make swimming more accessible and is the first multi-site
operator of dedicated children's 'learn to swim' centres in the UK
with seven sites operating at the end of the period.
Financial Performance
The challenges that we have faced in the period in North America
should not detract from what has been an excellent period for our
Sports Fashion businesses overall with these businesses delivering
a profit before tax and exceptional items of GBP382.0 million
(2021: GBP432.1 million).
This result was heavily influenced by a very positive
performance from the retail fascias in the UK and Republic of
Ireland which, again, was the most profitable territory with a
profit before tax and exceptional items across the combined retail
fascias of GBP153.0 million (2021: GBP174.2 million) with this
result including additional costs of GBP20 million compared to last
year consequent to the return to full business rates in the UK.
There was also a pleasing recovery for our businesses in Europe
which delivered a profit before tax and exceptional items of
GBP57.1 million (2021: loss of GBP7.2 million). As expected, the
retail fascias in North America could not match the record result
of the previous year, although the combined profit before tax and
exceptional items of GBP130.4 million (2021: GBP245.5 million),
which represents a margin of 10.1% (2021: 18.1%), is still
extremely encouraging given the context of the supply chain
challenges in the period.
Overall gross margins within Sports Fashion at 49.0% are broadly
consistent with the previous year (2021: 48.8%). Within this, the
combined gross margin for the businesses in North America was 49.4%
(2021: 49.7%). This is reassuring as it means that there is no
indication that this market is returning to historic levels of
promotional activity.
After recognising exceptional items in the period of GBP85.2
million (2021: GBP74.9 million) principally relating to a net
increase of GBP40.2 million (2021: GBP59.1 million) in the fair
value of the liabilities in respect of the Group's various future
put options, the profit before tax in Sports Fashion was GBP296.8
million (2021: GBP357.2 million).
Outdoor
This has been another period of revenue growth in our Outdoor
businesses with total revenues increasing by 16.8% compared to the
prior year. Whilst people may have had more international travel
options than the prior year, it is clear that spending time
outdoors more locally remains popular for many people who recognise
the physical and mental health benefits that it provides. In
particular, our businesses are seeing a strong demand for
activity-based categories such as Fishing and Cycling with the
Group benefitting from its recent investments in these areas.
Further, the demand for Outdoor Living categories to support people
on their camping trips, has also remained at elevated levels.
However, the exceptionally dry and warm weather throughout the UK
through the Summer period has depressed the sale of higher price
and higher margin apparel ranges, particularly waterproofs.
We continue to invest in all of our fascias with a new Go
Outdoors store opened in Bury and the relocation of our stores in
Swindon, Gateshead and Derby. We have also opened our first two
Wheelbase cycling concessions in the Go Outdoors stores at Coventry
and Stockton. In addition, we have enhanced our position as an
authoritative nationwide retailer in the fishing and equestrian
categories with Fishing Republic concessions now in more than 50 Go
Outdoors stores and Naylors Equestrian concessions in seven
stores.
Financial Performance
Whilst revenues have increased the activity-based categories
that have grown deliver lower gross margins which is reflected in
overall gross margins reducing by 2.1% to 42.2% (2021: 44.3%).
Consequently, the profit before exceptional items reduced to GBP4.0
million (2021: GBP10.8 million). We firmly believe that this
reduction in profit is a consequence of the unseasonal weather
through the Summer and it is not a true reflection of the
substantial progress that we are making in this sector.
Consequently, we remain confident in our longer-term prospects and
we continue to work on initiatives which enhance the resilience of
our proposition.
There were no exceptional items in the period (2021: GBPnil)
which means that the profit before tax in Outdoor was also GBP4.0
million (2021: GBP10.8 million).
Logistics Developments
UK and Republic of Ireland
Fitting out of the new 515,000 sqft facility in Derby, which
will be used exclusively to fulfil online orders for JD in the UK
is progressing, with fulfilment from the site expected to commence
in Q1 of 2023. Approximately GBP33 million has been invested at
this site to date with the full cost of this initial development
expected to rise to approximately GBP70 million by the middle of
2023. There is additional space at the site for a further phase of
works should that be necessary which we would expect to cost
approximately a further GBP21 million, although we are not
committed to this yet.
To bridge the capacity gap ahead of Derby opening, Clipper
Logistics Plc will continue to provide a range of logistics
operations, including warehousing and e-fulfilment, on a temporary
basis from its site at Sherburn, Leeds until Summer 2023.
Western Europe
Construction of the 620,000 sqft facility in Heerlen, South-East
Netherlands, is ongoing with this site scheduled to be handed over
later this year for initial fitting out and operational use
anticipated for mid-2024. We anticipate incurring up to EUR20
million of capex at this site in the period from handover to the
end of the year with the total cost over the life of the project to
bring the site into full operational use in 2024 estimated at EUR95
million.
In the meantime, we have expanded our base of smaller facilities
in Southern Belgium and Northern France so that we can further
increase the amount of product which is fulfilled to locations in
Western Europe both for stores and online. Currently, approximately
90% of store deliveries and 15% of online orders are being
fulfilled out of these facilities.
North America
Our Shoe Palace business in California is also now fully
operational with its new 512,000 sqft facility in Morgan Hill, San
Jose. This facility, which has the capacity to serve approximately
400 stores was designed to exceed the requirements under Title 24
of the California Building Standards Code with the rooftop solar
photovoltaic panels generating electricity equivalent to 96% of the
power required by the site. Having a facility of this scale on the
West Coast is clearly a significant advantage as we work towards a
more integrated logistics network in the United States.
People
It is a great testament to the strength and quality of the
people at every level in our businesses that we have been able to
consistently deliver outstanding results over a number of years.
Our continued strength is principally due to their talent, energy
and commitment and we thank everybody involved across the Group for
their part in delivering these excellent results.
We firmly believe that the continued international development
of our retail businesses provides significant personal development
opportunities, both temporary and permanent, and is a major reason
why people are attracted to, and stay with, our business. We remain
committed to giving all our colleagues a quality work experience
which is challenging yet rewarding.
Régis Schultz / Kath Smith
Chief Executive Officer / Interim Chief Executive Officer
22 September 2022
Chief Financial Officer's Statement
Financial Performance
Revenue and Gross Margin
This period was the first time since 2019 that all of our
businesses have traded free from restrictions. Whilst this was a
positive to revenues through the period in many countries,
particularly in Europe, this was offset by lower revenues in the
United States where the lack of fiscal stimulus to the economy
meant a return to more normal trading with our businesses not
having the same favourable conditions as the prior year.
Ultimately, total revenue for the Group for the first half
increased to GBP4,418.1 million (2021: GBP3,885.8 million). Total
revenues in the Group's organic retail businesses, being those
businesses which were part of the Group throughout the previous
financial year, were 5% ahead of the prior year.
Given that stores were temporarily closed in many markets in the
prior year, it would not be meaningful to present like-for-like
sales on a one-year basis. However, it is possible to consider
like-for-like sales on a three year basis, to measure against the
period before the emergence of the COVID-19 pandemic, with revenues
increasing by more than 25% over this period.
Total gross margin for the first half has remained constant at
48.5% (2021: 48.5%). Encouragingly, gross margins have largely been
maintained at the prior year levels across our businesses in North
America with an overall gross margin of 49.4% (2021: 49.7%).
Profit Before Tax
Profit before tax and exceptional items was lower than the prior
period at GBP383.5 million (2021: GBP439.5 million). However, this
result is entirely consistent with the more normalised trading
patterns that the Group would expect to see in the current year as
the world emerges from the COVID-19 pandemic with up to 40% of
annual profits generated in the first half of the year.
As expected, our businesses in North America saw a reduction in
profit in the period, consequent to both the lack of fiscal
stimulus and the shortage of supply from some of the major
international brands, with these businesses delivering an aggregate
profit before tax and exceptional items of GBP130.4 million (2021:
GBP245.5 million). This implies that our other global businesses
increased their profit before tax and exceptional items by 30.5% to
GBP253.1 million (2021: GBP194.0 million) which is a reflection of
the positive progress that the Group continues to make in its
markets.
There were exceptional items in the period of GBP85.2 million
(2021: GBP74.9 million) principally from the movement in the fair
value of the liabilities in respect of future put and call
options:
2022 2021
GBPm GBPm
Movement in fair value of put and
call options (1) 40.2 59.1
Impairment of non-current assets 36.5 -
(2)
Impairment of assets held-for-sale 8.5 -
(3)
Restructuring of Spodis (4) - 15.8
Total exceptional charge 85.2 74.9
====== ======
1. Movement in the fair value of the liabilities in respect of
the put and call options on Genesis Topco Inc GBP28.7 million
(2021: GBP65.0 million), Iberian Sports Retail Group GBP16.8
million (2021: credit of GBP7.7 million), Other credit of GBP5.3
million (2021: charge of GBP1.8 million). The movement in the fair
value of the put option liabilities is presented as exceptional as
it is a significant item that is outside of the normal course of
business.
2. The impairment constitutes a charge of GBP10.2 million in
respect of the goodwill and fascia name arising in the prior year
on the acquisition of Missy Empire, GBP12.7 million in respect of
the partial impairment of the goodwill arising in the prior year on
the acquisition of Hairburst and GBP13.6 million in respect of the
partial impairment of the investment in the Joint Venture, Gym
King. The impairment is presented as exceptional as it is a
significant item that is outside of the normal course of
business.
3. Impairment recognised in order to present the assets
held-for-sale in respect of Footasylum Limited at the lower of
carrying value and fair value less costs to sell in accordance with
IFRS 5. This item is presented as exceptional as the divestment of
Footasylum Limited is non-recurring.
4. The impact consequent to the restructuring of Spodis SA in
the prior period including a charge of GBP5.5 million in relation
to the impairment of tangible assets and business restructuring
costs of GBP10.3 million. This item is presented as exceptional as
it is related to a non-recurring restructuring project.
Group profit before tax ultimately decreased to GBP298.3 million
(2021: GBP364.6 million).
Proforma Results Under IAS 17 'Leases'
On a proforma basis under IAS 17 'Leases', the headline profit
before tax and exceptional items to 30 July 2022 for the Group
would have been GBP4.6 million higher at GBP388.1 million (2021:
GBP12.0 million higher at GBP451.5 million). After exceptional
items totalling GBP85.2 million (2021: GBP74.9 million), the profit
before tax on the same proforma basis would have been GBP302.9
million (2021: GBP376.6 million).
Cash and Working Capital
The net cash balance at the end of the period was broadly
consistent with the prior year at GBP1,013.1 million (2021:
GBP995.1 million).
Our capacity to generate cash in our retail operations remains
as strong as ever. However, the net cash in the period has been
impacted by a general restocking of our businesses in North
America, as the supply from the international brands normalised
through the second quarter, and increased investment in capital
expenditure as we expand our geographical footprint, further
enhance the consumer proposition and upgrade our operational
infrastructure.
Net inventories across the Group at the end of the period were
GBP1,428.5 million (2021: GBP996.7 million). Within this,
inventories in our businesses in North America increased to
GBP379.7 million (2021: GBP207.7 million) as the flow of product
reverted to normal levels. Forward cover in our core Finish Line /
JD business at the end of the period of 13 weeks was higher than
the prior year (2021: nine weeks) but was broadly in line with the
cover in the core JD business in the UK / Europe of 12 weeks (2021:
12 weeks) with a continual focus on robust stock management
disciplines.
Gross capital expenditure* (excluding disposal costs) increased
to GBP156.6 million (2021: GBP83.5 million) with the primary focus
of our capital expenditure continuing to be our physical retail
fascias where spend in the period was GBP81.5 million (2021:
GBP42.0 million). Given that we expect substantial investment on
the new warehouses at Derby and Heerlen in the second half, we
would expect the overall spend through the second half to be higher
than that in the first half and would now anticipate that capital
expenditure for the full year will be in the range of GBP325
million to GBP375 million (52 weeks to 29 January 2022: GBP247.9
million).
Earnings per Ordinary Share
The basic earnings per ordinary share decreased by 19.4% to
3.58p (2021: 4.44p) consistent with the reduction in the Group
profit before tax.
The adjusted* earnings per ordinary share decreased to 5.23p
(2021: 5.83p).
Environmental and Sustainable Sourcing Update
The Group continues to make excellent progress with its
environmental and sustainable sourcing work programmes. We are
pleased that our efforts are increasingly being recognised
externally with Sustainalytics, one of the world's leading
independent ESG research and analytics businesses, recently giving
JD a risk score that placed it 17(th) in a list of 458 global
retail businesses.
Elsewhere, we continue to consolidate our efforts on
environmental and social efforts into three main pillars:
-- Reducing the impact of climate change
-- Sustainable sourcing
-- Circular economy and recycling
Progress to date this year on these pillars includes the
following:
-- In line with the commitment that we made in 2019, we are on
track to have 100% renewable energy use across our business in
Western Europe by the end of this year
-- 'Better Cotton' usage in our private label business now stands at 98.5%
-- We have implemented a new 'Environmental Performance
Evaluation' Policy and Standards with an objective to improve
environmental performance in the supply chain through an
eight-stage process which is designed to support our private label
suppliers in improving the environmental standards of their
operations
-- Our updated corporate website provides full disclosures and transparency on:
o Sustainable product mapping
o Audit standards, supplier mapping, and case studies
demonstrating progress towards the United Nations Sustainable
Development Goals
-- Our Head Office in Bury has joined our principal warehouse at
Kingsway, Rochdale in being recognised as a 'zero waste to
landfill' facility
Store Portfolio
During the period, store numbers have moved as follows:
Period New Stores Transfers Acquired Closures Period
Start End
Premium Sports
UK & Republic of
Ireland 436 10 - - (6) 440
Europe 377 32 22 - (3) 428
Asia Pacific 79 5 - - (2) 82
North America 931 14 - - (8) 937
1,823 61 22 - (19) 1,887
------- ----------- ---------- --------- --------- -------
Other Fascias
UK & Republic of
Ireland (i) 151 5 - 1 (11) 146
Europe 889 28 (22) - (36) 859
Asia Pacific 2 4 - - - 6
North America 289 - - - (1) 288
1,331 37 (22) 1 (48) 1,299
------- ----------- ---------- --------- --------- -------
Total Sports Fashion 3,154 98 - 1 (67) 3,186
------- ----------- ---------- --------- --------- -------
Total Outdoor 248 9 - - (7) 250
Total Group 3,402 107 - 1 (74) 3,436
------- ----------- ---------- --------- --------- -------
(i) Includes 62 stores trading as Footasylum (2021: 67 stores)
which were subsequently disposed on 5 August 2022
In addition, the Group now has six JD stores operating under
joint venture arrangements with partners in Indonesia and Israel as
follows:
Period New Stores Period
Start End
Indonesia - 4 4
Israel - 2 2
- 6 6
-------------------- ----------- -------
After opening a further three gyms in the period, the Group had
77 gym sites in the UK at the end of the period (66 sites trading
as JD and 11 sites still bannered as X4L). Further, following the
acquisition of Total Swimming Holdings in May 2022, the Group also
had seven Swim! sites in the UK (see Note 5).
Neil Greenhalgh
Chief Financial Officer
22 September 2022
Alternative Performance Measures (terms are listed in
alphabetical order)
The Directors measure the performance of the Group based on a
range of financial measures, including measures not recognised by
International Accounting Standards ('IAS') in conformity with the
requirements of the Companies Act 2006 and in accordance with
UK-adopted International Accounting Standards. These alternative
performance measures may not be directly comparable with other
companies' alternative performance measures and the Directors do
not intend these to be a substitute for, or superior to, IFRS
measures. The Directors believe that these alternative performance
measures assist in providing additional useful information on the
trading performance of the Group. Alternative Performance Measures
are also used to enhance the comparability of information between
reporting periods, by adjusting for exceptional items. Exceptional
items are disclosed separately when they are considered unusual in
nature and not reflective of the trading performance and
profitability of the Group. The separate reporting of exceptional
items, which are presented as exceptional within the relevant
category in the Consolidated Income Statement, helps provide an
indication of the Group's trading performance. An explanation as to
why items have been classified as Exceptional is given in Note
3.
Adjusted earnings per share
The calculation of basic earnings per share is detailed in Note
4. Adjusted basic earnings per ordinary share has been based on the
profit for the period attributable to equity holders of the parent
for each financial period but excluding the post-tax effect of
certain exceptional items. A reconciliation between basic earnings
per share and adjusted earnings per share is shown below:
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2022 2021 2022
Basic earnings per share 3.58p 4.44p 7.17p
Exceptional items 1.65p 1.45p 5.66p
Tax relating to exceptional items - (0.06p) 0.01p
----------- ----------- -------------
Adjusted earnings per share 5.23p 5.83p 12.84p
----------- ----------- -------------
EBITDA before exceptional items
Earnings before interest, tax, depreciation and
amortisation.
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2022 2021 2022
GBPm GBPm GBPm
Profit for the period 216.3 276.8 459.6
Addback:
Financial expenses 35.7 32.7 67.9
Income tax expense 82.0 87.8 195.1
Depreciation, amortisation and impairment
of non-current assets 309.3 274.7 593.1
Exceptional items (see note 3) 85.2 74.9 292.5
Deduct:
Financial income (1.1) (0.5) (1.4)
--------- --------- ------------
EBITDA before exceptional items 727.4 746.4 1,606.8
--------- --------- ------------
Gross capital expenditure
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2022 2021 2022
GBPm GBPm GBPm
Investment in software 11.0 4.5 14.9
Acquisition of property, plant and equipment 139.9 77.7 227.3
Acquisition of non-current other assets 5.7 1.3 5.7
----------- ----------- -------------
Total gross capital expenditure 156.6 83.5 247.9
----------- ----------- -------------
Alternative Performance Measures (continued)
LFL (Like-for-Like) sales
The percentage change in the year-on-year sales, removing the
impact of new store openings and closures in the current or
previous financial year . This metric enables the performance of
the retail stores to be measured on a consistent year-on-year basis
and is a common term used in the industry.
Net cash / (debt)
Net cash / (debt) consists of cash and cash equivalents together
with interest-bearing loans and borrowings. This measure is a good
indication of the strength of the Group's Balance Sheet position
and is widely used by credit rating agencies. A reconciliation of
net cash / (debt) is provided in the Analysis of Net Cash included
after the Condensed Consolidated Statement of Cashflows.
Operating profit before exceptional items
A reconciliation between operating profit and exceptional items
can be found in the Consolidated Income Statement.
Organic retail businesses
Being those retail businesses which were subsidiaries at 30
January 2021 and so have been consolidated throughout the whole of
the previous financial year and the period to date in the current
financial year.
Profit before tax and exceptional items
A reconciliation between profit before tax and profit before tax
and exceptional items is as follows:
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2022 2021 2022
GBPm GBPm GBPm
Profit before tax 298.3 364.6 654.7
Exceptional items 85.2 74.9 292.5
--------- --------- ------------
Profit before tax and exceptional items 383.5 439.5 947.2
--------- --------- ------------
Proforma IAS 17
The Group presents results on a proforma basis with rents
recognised under the provisions of IAS 17 'Leases' as opposed to
IFRS 16 'Leases' as this is consistent with the financial
information used to inform business decisions and investment
appraisals. Certain management incentives are also linked to the
results on this basis.
A reconciliation from the IFRS 16 headline profit before tax and
exceptional items to the proforma IAS 17 headline profit before tax
and exceptional items is as follows:
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2022 2021 2022
GBPm GBPm GBPm
Headline profit before tax and exceptional
items (IFRS 16) 383.5 439.5 947.2
Addback:
Depreciation and impairment of the Right-of-Use
assets under IFRS 16 195.2 175.3 361.3
Lease interest expense 32.1 28.8 59.5
Deduct:
Lease costs expensed to the income statement
under IAS 17 (222.7) (192.1) (410.1)
----------- ----------- ----------------
Headline profit before tax and exceptional
items (Proforma IAS 17) 388.1 451.5 957.9
----------- ----------- ----------------
Condensed Consolidated Income Statement
For the 26 weeks to 30 July 2022
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
Note 2022 2021 2022
GBPm GBPm GBPm
Revenue 4,418.1 3,885.8 8,563.0
Cost of sales (2,277.5) (2,000.6) (4,355.0)
----------- ----------- -------------
Gross profit 2,140.6 1,885.2 4,208.0
Selling and distribution expenses
- normal (1,496.5) (1,206.7) (2,808.1)
Administrative expenses - normal (241.8) (220.1) (413.4)
Administrative expenses - exceptional 3 (85.2) (74.9) (292.5)
Other operating income 15.8 13.3 27.2
----------- ----------- -------------
Operating profit 332.9 396.8 721.2
Before exceptional items 418.1 471.7 1,013.7
Exceptional items 3 (85.2) (74.9) (292.5)
--------------------------------------- ------- ----------- ----------- -------------
Operating profit 332.9 396.8 721.2
Financial income 1.1 0.5 1.4
Financial expenses (35.7) (32.7) (67.9)
----------- ----------- -------------
Profit before tax 298.3 364.6 654.7
Income tax expense (82.0) (87.8) (195.1)
----------- ----------- -------------
Profit for the period 216.3 276.8 459.6
----------- ----------- -------------
Attributable to equity holders
of the parent 184.5 228.7 369.7
Attributable to non-controlling
interest 31.8 48.1 89.9
Basic earnings per ordinary
share* 4 3.58p 4.44p 7.17p
----------- ----------- -------------
Diluted earnings per ordinary
share* 4 3.58p 4.44p 7.17p
----------- ----------- -------------
* Basic and diluted earnings per share have been restated for
the 26 weeks to 31 July 2021 following a share sub-division in the
year ended 29 January 2022. Further details can be found in Note
4.
Condensed Consolidated Statement of Comprehensive Income
For the 26 weeks to 30 July 2022
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2022 2021 2022
GBPm GBPm GBPm
Profit for the period 216.3 276.8 459.6
Other comprehensive income:
Items that may be classified subsequently
to the
Consolidated Income Statement:
Exchange differences on translation
of foreign operations 133.0 (33.3) (34.9)
Total other comprehensive income
for the period 133.0 (33.3) (34.9)
------------------------------------------- ----------- ----------- -------------
Total comprehensive income and expense
for the period (net of income tax) 349.3 243.5 424.7
------------------------------------------- ----------- ----------- -------------
Attributable to equity holders of
the parent 290.6 212.8 357.3
Attributable to non-controlling interest 58.7 30.7 67.4
------------------------------------------- ----------- ----------- -------------
Condensed Consolidated Statement of Financial Position
As at 30 July 2022
As at As at As at
30 July 2022 31 July 29 January
GBPm 2021 2022
GBPm GBPm
Assets
Intangible assets 1,614.8 1,208.5 1,473.6
Property, plant and equipment 776.0 627.3 688.5
Right-of-use assets 2,075.1 1,963.5 2,032.6
Other assets 62.0 56.8 57.0
Investments in associates and joint
ventures 42.1 59.0 56.2
Loans to associates and joint ventures 4.4 - -
Forward contract asset 3.9 - 2.5
Deferred tax assets 69.9 21.0 81.7
Total non-current assets 4,648.2 3,936.1 4,392.1
----------------------------------------- --------------- ---------- -------------
Inventories 1,428.5 996.7 989.4
Right of return assets 17.3 - 12.5
Trade and other receivables 314.7 214.7 202.9
Income tax receivables - - 0.6
Assets held-for-sale 165.7 - 157.1
Cash and cash equivalents 1,137.9 1,304.7 1,314.0
Total current assets 3,064.1 2,516.1 2,676.5
----------------------------------------- --------------- ---------- -------------
Total assets 7,712.3 6,452.2 7,068.6
----------------------------------------- --------------- ---------- -------------
Liabilities
Interest-bearing loans and borrowings (83.0) (275.3) (72.6)
Lease liabilities (395.8) (291.6) (379.0)
Trade and other payables (1,406.9) (1,243.7) (1,279.5)
Liabilities directly associated with
assets held-for-sale (139.2) - (142.6)
Provisions (13.0) (0.6) (13.2)
Income tax liabilities (4.3) (5.2) -
Total current liabilities (2,042.2) (1,816.4) (1,886.9)
----------------------------------------- --------------- ---------- -------------
Interest-bearing loans and borrowings (41.8) (34.3) (55.5)
Lease liabilities (1,903.4) (1,863.4) (1,863.9)
Other payables (916.4) (493.8) (775.4)
Provisions (22.7) (4.6) (19.9)
Deferred tax liabilities (124.6) (62.0) (127.4)
----------------------------------------- --------------- ---------- -------------
Total non-current liabilities (3,008.9) (2,458.1) (2,842.1)
----------------------------------------- --------------- ---------- -------------
Total liabilities (5,051.1) (4,274.5) (4,729.0)
----------------------------------------- --------------- ---------- -------------
Total assets less total liabilities 2,661.2 2,177.7 2,339.6
----------------------------------------- --------------- ---------- -------------
Condensed Consolidated Statement of Financial Position
(continued)
As at 30 July 2022
As at As at As at
30 July 31 July 29 January
2022 2021 2022
GBPm GBPm GBPm
Capital and reserves
Issued ordinary share capital 2.5 2.5 2.5
Share premium 467.5 467.5 467.5
Retained earnings 2,076.8 1,769.6 1,910.6
Other reserves (359.5) (418.2) (454.6)
-------------------------------------- ---------- ---------- -------------
Total equity attributable to equity
holders of the parent 2,187.3 1,821.4 1,926.0
Non-controlling interest 473.9 356.3 413.6
-------------------------------------- ---------- ---------- -------------
Total equity 2,661.2 2.177.7 2,339.6
-------------------------------------- ---------- ---------- -------------
Condensed Consolidated Statement of Changes in Equity
For the 26 weeks to 30 July 2022
Total Equity
Attributable
Share-based Foreign To Equity
Ordinary Payment Currency Holders
Share Share Retained Other Reserve Translation Of The Parent
Capital Premium Earnings Equity GBPm Reserve GBPm
GBPm GBPm GBPm GBPm GBPm
Balance at 29
January
2022 2.5 467.5 1,910.6 (414.5) 0.1 (40.2) 1,926.0
Profit for the
period - - 184.5 - - - 184.5
Other
comprehensive
income:
Exchange
differences
on translation of
foreign
operations - - - - - 106.1 106.1
Total other
comprehensive
income - - - - - 106.1 106.1
------------------- ----------- ---------- ----------- --------- -------------- -------------- ----------------
Total
comprehensive
income for the
period - - 184.5 - - 106.1 290.6
Dividends to
equity
holders - - (18.3) - - - (18.3)
Put options held
by
non-controlling
interest - - - (10.9) - - (10.9)
Share-based
payment
charge - - - - (0.1) - (0.1)
Non-controlling - - - - - - -
interest arising
on acquisition
Balance at 30 July
2022 2.5 467.5 2,076.8 (425.4) - 65.9 2,187.3
------------------- ----------- ---------- ----------- --------- -------------- -------------- ----------------
Total Equity
Attributable Non-
To Controlling Total
Equity Holders Interest Equity
Of The Parent GBPm GBPm
GBPm
Balance at 29 January 2022 1,926.0 413.6 2,339.6
Profit for the period 184.5 31.8 216.3
Other comprehensive income:
Exchange differences on translation
of foreign operations 106.1 26.9 133.0
Total other comprehensive income 106.1 26.9 133.0
------------------------------------- ---------------- -------------- ---------
Total comprehensive income for
the period 290.6 58.7 349.3
Dividends to equity holders (18.3) - (18.3)
Put options held by non-controlling
interest (10.9) - (10.9)
Share-based payment charge (0.1) - (0.1)
Non-controlling interest arising
on acquisition - 1.6 1.6
Balance at 30 July 2022 2,187.3 473.9 2,661.2
------------------------------------- ---------------- -------------- ---------
Condensed Consolidated Statement of Changes in Equity
(continued)
For the 26 weeks to 31 July 2021
Total Equity
Attributable
Foreign To Equity
Ordinary Currency Holders
Share Share Retained Other Translation Of The Parent
Capital Premium Earnings Equity Reserve GBPm
GBPm GBPm GBPm GBPm GBPm
Balance at 30 January
2021 2.4 11.7 1,560.8 (308.4) (27.8) 1,238.7
Profit for the period - - 228.7 - - 228.7
Other comprehensive
income:
Exchange differences
on translation of
foreign operations - - - - (15.9) (15.9)
Total other comprehensive
income - - - - (15.9) (15.9)
------------------------------- ----------- ---------- ----------- --------- -------------- ----------------
Total comprehensive
income for the period - - 228.7 - (15.9) 212.8
Dividends to equity
holders - - (14.9) - - (14.9)
Put options held
by non-controlling
interest - - - (66.1) - (66.1)
Share capital issued
[1] 0.1 455.8 - - - 455.9
Divestment of non-controlling
interest - - (5.0) - - (5.0)
Non-controlling - - - - - -
interest arising
on acquisition
Balance at 31 July
2021 2.5 467.5 1,769.6 (374.5) (43.7) 1,821.4
------------------------------- ----------- ---------- ----------- --------- -------------- ----------------
Total Equity
Attributable Non-
To Controlling Total
Equity Holders Interest Equity
Of The Parent GBPm GBPm
GBPm
Balance at 30 January 2021 1,238.7 257.7 1,496.4
Profit for the period 228.7 48.1 276.8
Other comprehensive income:
Exchange differences on translation
of foreign operations (15.9) (17.4) (33.3)
Total other comprehensive income (15.9) (17.4) (33.3)
---------------------------------------- ---------------- -------------- ---------
Total comprehensive income for the
period 212.8 30.7 243.5
Dividends to equity holders (14.9) (1.8) (16.7)
Put options held by non-controlling
interest (66.1) - (66.1)
Share capital issued 455.9 - 455.9
Divestment of non-controlling interest (5.0) 48.0 43.0
Non-controlling interest arising
on acquisition - 21.7 21.7
Balance at 31 July 2021 1,821.4 356.3 2,177.7
---------------------------------------- ---------------- -------------- ---------
Condensed Consolidated Statement of Cash Flows
For the 26 weeks ended 30 July 2022
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2022 2021 2022
GBPm GBPm GBPm
Cash flows from operating activities
Profit for the period 216.3 276.8 459.6
Income tax expense 82.0 87.8 195.1
Financial expenses 35.7 32.7 67.9
Financial income (1.1) (0.5) (1.4)
Depreciation and amortisation of
non-current assets 309.1 265.1 579.9
Forex losses / (gains) on monetary
assets and liabilities 9.5 (3.1) (2.1)
Impairment of other intangibles
and non-current assets (non-exceptional) 0.2 9.6 13.2
Loss on disposal of non-current
assets 2.2 1.5 3.5
Other exceptional items 3 48.7 69.4 287.0
Impairment of goodwill and fascia
names (exceptional) 3 22.9 - -
Impairment of non-current assets
(exceptional) 3 13.6 5.5 5.5
Share of profit of equity-accounted
investees, net of tax (0.8) (1.4) (3.2)
Increase in inventories (401.0) (79.2) (31.8)
Increase in trade and other receivables (103.4) (62.1) (69.3)
Increase in trade and other payables 43.2 3.5 75.0
Interest paid (3.6) (3.9) (8.4)
Lease interest (32.1) (28.8) (59.5)
Income taxes paid (71.6) (111.0) (244.1)
------------------------------------------- ---------- --------- ------------
Net cash from operating activities 169.8 461.9 1,266.9
------------------------------------------- ---------- --------- ------------
Cash flows from investing activities
Interest received 1.1 0.5 1.4
Proceeds from sale of non-current
assets 4.5 2.4 7.8
Investment in software (11.0) (4.5) (14.9)
Acquisition of property, plant and
equipment (139.9) (77.7) (227.3)
Acquisition of non-current other
assets (5.7) (1.3) (5.7)
Acquisition of other intangible
assets (76.2) - (5.2)
Draw down of brand licence liability 76.2 - -
Draw down of finance lease liabilities 4.1 1.5 5.4
Dividends received from equity-accounted
investees 3.0 - 6.9
Acquisition of subsidiaries, net
of cash acquired (11.6) (375.1) (616.5)
Net cash used in investing activities (155.5) (454.2) (848.1)
------------------------------------------- ---------- --------- ------------
Cash flows from financing activities
Repayment of interest-bearing loans
and borrowings (21.7) (207.5) (513.3)
Draw down of interest-bearing loans
and borrowings 12.5 176.3 303.7
Repayment of finance lease liabilities (2.8) (2.5) (6.1)
Repayment of lease liabilities (191.0) (163.2) (350.1)
Proceeds received from issue of
shares - 455.9 455.9
Divestment of non-controlling interests - 43.0 43.0
Equity dividends paid - - (14.9)
Dividends paid to non-controlling
interest in subsidiaries (0.2) (1.8) (1.8)
------------------------------------------- ---------- --------- ------------
Net cash (used in) / provided by
financing activities (203.2) 300.2 (83.6)
------------------------------------------- ---------- --------- ------------
Condensed Consolidated Statement of Cash Flows (continued)
For the 26 weeks ended 30 July 2022
26 weeks 26 weeks 52 weeks
to 30 July to to
2022 31 July 29 January
GBPm 2021 2022
GBPm GBPm
Net (decrease) / increase in cash
and cash equivalents (188.9) 307.9 335.2
Cash and cash equivalents at the
beginning of the period 1,280.4 948.7 948.7
Foreign exchange gains / (losses)
on cash and cash equivalents 4.6 2.4 (3.5)
------------------------------------- -------- -------- ----------
Cash and cash equivalents at the
end of the period 1,096.1 1,259.0 1,280.4
------------------------------------- -------- -------- ----------
Analysis of Net Cash
As at 30 July 2022
At On At
29 January acquisition Non-cash 30 July
2022 of subsidiaries Cash flow movements 2022
GBPm GBPm GBPm GBPm GBPm
Cash at bank and in hand 1,314.0 1.1 (181.8) 4.6 1,137.9
Overdrafts (33.6) - (8.2) - (41.8)
------------ ----------------------- ------------ ------------ ------------
Cash and cash equivalents 1,280.4 1.1 (190.0) 4.6 1,096.1
------------ ----------------------- ------------ ------------ ------------
Interest-bearing loans
and borrowings:
Bank loans (94.5) - 9.2 2.3 (83.0)
Net cash / (financial
debt) before lease liabilities 1,185.9 1.1 (180.8) 6.9 1,013.1
------------ ----------------------- ------------ ------------ ------------
Lease liabilities (2,242.9) (6.7) 189.7 (239.3) (2,299.2)
------------ ----------------------- ------------ ------------ ------------
Net cash / (debt) (1,057.0) (5.6) 8.9 (232.4) (1,286.1)
------------ ----------------------- ------------ ------------ ------------
1. Basis of Preparation
JD Sports Fashion Plc (the 'Company') is a company incorporated
and domiciled in the United Kingdom. The unaudited half year
financial report for the 26 week period to 30 July 2022 represents
that of the Company and its subsidiaries (together referred to as
the 'Group').
This half year financial report is an interim management report
as required by DTR 4.2.3 of the Disclosure and Transparency Rules
of the UK's Financial Conduct Authority and was authorised for
issue by the Board of Directors on 22 September 2022.
The condensed set of financial statements included in this half
year financial report has been prepared in accordance with IAS 34
'Interim Financial Reporting'. The annual financial statements of
the Group are prepared in accordance with International Accounting
Standards ('IAS') in conformity with the requirements of the
Companies Act 2006 and in accordance with UK-adopted International
Accounting Standards. The comparative figures for the 52 week
period to 29 January 2022 are not the Group's statutory accounts
for that financial year. Those accounts have been reported on by
the Group's Auditor and delivered to the Registrar of Companies.
The Report of the Auditor was (i) unqualified, (ii) did not include
a reference to any matters to which the Auditor drew attention by
way of emphasis without qualifying their report, and (iii) did not
contain a statement under section 498 of the Companies Act
2006.
The information contained in the half year financial report for
the 26 week period to 30 July 2022 and 31 July 2021 has been
reviewed and the independent review report for the 26 week period
to 30 July 2022 is set out in the half year financial report.
As required by the Disclosure and Transparency Rules of the UK's
Financial Conduct Authority, the half year financial report has
been prepared by applying the same accounting policies and
presentation that were applied in the preparation of the Company's
published consolidated financial statements for the 52 week period
to 29 January 2022.
Adoption of New and Revised Standards
The Group continues to monitor the potential impact of other new
standards and interpretations which have been or may be endorsed
and require adoption by the Group in future reporting periods. The
Group does not consider that any other standards, amendments or
interpretations issued by the IASB, but not yet applicable, will
have a significant impact on the financial statements.
Alternative Performance Measures
The Directors measure the performance of the Group based on a
range of financial measures, including measures not recognised by
International Accounting Standards ('IAS') in conformity with the
requirements of the Companies Act 2006. These alternative
performance measures may not be directly comparable with other
companies' alternative performance measures and the Directors do
not intend these to be a substitute for, or superior to, IFRS
measures. The Directors believe that these alternative performance
measures assist in providing additional useful information on the
trading performance of the Group.
Alternative Performance Measures are also used to enhance the
comparability of information between reporting periods, by
adjusting for exceptional items. Exceptional items are disclosed
separately when they are considered unusual in nature and not
reflective of the trading performance and profitability of the
Group. The separate reporting of exceptional items, which are
presented as exceptional within the relevant category in the
Consolidated Income Statement, helps provide an indication of the
Group's trading performance. An explanation as to why items have
been classified as Exceptional is given in Note 3.
1. Basis of Preparation (continued)
Use of Estimates and Judgements
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets
and liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making the judgements about
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these
estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements for the 52 week period to 29
January 2022 with the exception of the estimation uncertainty
relating to the determination of the fair value of assets and
liabilities on the acquisition of DTLR which was applicable to the
52 week period to 29 January 2022.
Other Accounting Estimates
Impairment of Goodwill
Goodwill arising on acquisition is allocated to groups of
cash-generating units ('Group CGUs'), that are expected to benefit
from the synergies of the business combination from which goodwill
arose, being portfolios of stores or individual businesses. The
cash-generating units used to monitor goodwill and test it for
impairment are therefore the store portfolios and individual
businesses rather than individual stores, as the cash flows of
individual stores are not considered to be independent. These
cash-generating units are referred to as Group CGUs. The
recoverable amounts of these Group CGUs are determined based on
value-in-use calculations.
Shoe Palace CGU GBP593.3 million (29 January 2022: GBP546.7
million)
The value-in-use calculation shows headroom of GBP60.3 million
(January 2022: GBP39.9 million). Marginal changes to the
assumptions could eliminate the headroom and cause the carrying
value of the Group CGU to exceed its recoverable amount. The
following further sensitivities were performed which were
considered to be reasonably possible changes in the key
assumptions:
-- -If the pre-tax discount rate increased by 1% with all other
assumptions remaining unchanged, this would result in an impairment
of GBP6.6 million representing 1.1% of the carrying value of the
Group CGU (January 2022: GBP19.2 million representing 3.5% of the
carrying value of the Group CGU).
-- Reducing the short-term and long-term growth rate by 1% with
all other assumptions remaining unchanged would result in an
impairment of GBP5.2 million representing 0.9% of the carrying
value of the Group CGU (January 2022: GBP18.1 million representing
3.3% of the carrying value of the Group CGU).
-- Reducing the forecast gross profit margin rate by 1% with all
other assumptions remaining unchanged would not result in an
impairment but would reduce the headroom to GBP24.8 million
representing 4.2% of the carrying value of the Group CGU (January
2022: GBP8.1 million representing 1.5% of the carrying value of the
Group CGU).
Deporvillage CGU GBP148.9 million (29 January 2022: GBP136.4
million)
Deporvillage was acquired on 3 August 2021. A value-in-use
calculation prepared for the period ended 30 July 2022 which shows
headroom of GBP1.5 million. Marginal changes to the assumptions
could eliminate the headroom and cause the carrying value of the
Group CGU to exceed its recoverable amount. The following further
sensitivities were performed which were considered to be reasonably
possible changes in the key assumptions:
-- If the pre-tax discount rate increased by 1% with all other
assumptions remaining unchanged, this would result in an impairment
of GBP16.4 million representing 11.0% of the carrying value of the
Group CGU.
-- Reducing the short-term growth rate by 5% and the long-term
growth rate by 1% with all other assumptions remaining unchanged
would result in an impairment of GBP30.4 million representing 20.4%
of the carrying value of the Group CGU.
-- Reducing the forecast gross profit margin rate by 1% with all
other assumptions remaining unchanged would result in an impairment
of GBP17.7 million representing 11.9% of the carrying value of the
Group CGU.
As disclosed above, whilst the value-in-use calculations do not
currently calculate an impairment, the models are sensitive to
changes in the assumptions and will be updated as part of the
annual impairment review for the financial period ending 28 January
2023.
1. Basis of Preparation (continued)
Risks and Uncertainties
The Board has considered the risks and uncertainties for the
remaining 26 week period to 28 January 2023 and determined that the
risks presented in the Annual Report and Accounts 2022 noted below,
remain relevant:
-- Strategic risk
-- Supply chain
-- Intellectual property
-- Environmental
-- Social - human rights, labour standards and responsibility
-- Health and safety
-- Governance - anti-corruption, risk management, regulatory and compliance
-- Retail property factors
-- IT systems
-- Cyber security
-- COVID-19
-- Personnel
-- Treasury and financial
A major variable, and therefore risk, to the Group's financial
performance for the remainder of the financial period is the sales
and margin performance in the retail fascias, particularly in
December and January. Further comment on this and other risks and
uncertainties faced by the Group is provided in the Chair's
statement included within this half year financial report.
Going Concern
The financial statements are prepared on a going concern basis,
which the Directors believe to be appropriate for the following
reasons.
At 30 July 2022, the Group had net cash balances of GBP1,013.1
million (29 January 2022: GBP1,185.9 million) with available
committed UK borrowing facilities of GBP700 million (29 January
2022: GBP700 million) of which GBPnil (29 January 2022: GBPnil) has
been drawn down and US facilities of approximately $300 million of
which $nil was drawn down (29 January 2022: $nil). These facilities
are subject to certain covenants. With a UK facility of GBP700
million available up to 6 November 2026 and a US facility of
approximately $300 million available up until 24 September 2026,
the Directors believe that the Group is well placed to manage its
business risks successfully despite the current uncertain economic
outlook.
The Directors have prepared cash flow forecasts for the Group
covering a period of at least 12 months from the date of approval
of these financial statements, which indicate that the Group will
be able to operate within the level of its agreed facilities and
covenant compliance. The Directors have prepared severe but
plausible downside scenarios which cover the same period as the
base case, including specific consideration of a range of impacts
that could arise from geopolitical tensions and the actual and
potential impact on supply chains, inflationary cost pressures and
business interruption impacting the availability of stock from the
Group's key Sports Fashion suppliers, as well as the recovery from
the COVID-19 pandemic. These scenarios included applying
inflationary cost pressure assumptions and a 20% reduction in
sales. As part of this analysis, mitigating actions within the
Group's control, should these severe but plausible scenarios occur,
have also been considered. These forecast cash flows indicate that
there remains sufficient headroom for the Group to operate within
the committed facilities and to comply with all relevant banking
covenants during the forecast period.
The Directors have considered all of the factors noted above,
including the inherent uncertainty in forecasting the impact of
geopolitical tensions and COVID-19 pandemic, and are confident that
the Group has adequate resources to continue to meet all
liabilities as and when they fall due for a period of at least 12
months from the date of approval of these financial statements.
Accordingly, the financial statements have been prepared on a going
concern basis.
Other Accounting Policies
Government Support
Government support is recognised in the Consolidated Financial
Statements when it can be reliably measured, which the Group
considers to be on receipt.
During the year ended 29 January 2022, in accordance with IAS 20
'Government Grants', furlough income received by the Group's UK
subsidiaries of GBP24.4 million (26 week period ended 31 July 2021:
GBP24.4 million) and GBP7.5 million received by the Group's
international subsidiaries (26 week period ended 31 July 2021:
GBP5.5 million) was shown as a deduction from employed staff costs.
Further, GBP31.0 million of rates relief received by the Group's UK
subsidiaries has been shown as a deduction from selling and
distribution costs (26 week period ended 31 July 2021: GBP28.3
million).
During the period ended 30 July 2022, the Group repaid the
GBP24.4 million of furlough income that it received from the UK
Government in the year ended 29 January 2022. The repayment was
accrued for as at 29 January 2022 and was shown as an expense
within employed staff costs in that financial year.
2. Segmental Analysis
IFRS 8 'Operating Segments' requires the Group's segments to be
identified on the basis of internal reports about
components of the Group that are regularly reviewed by the Chief
Operating Decision Maker to allocate resources to the segments and
to assess their performance. The Chief Operating Decision Maker is
considered to be the Chair of JD Sports Fashion Plc.
Information reported to the Chief Operating Decision Maker is
focused on the nature of the businesses within the Group.
The Group's operating and reportable segments under IFRS 8 are
Sports Fashion and Outdoor. In accordance with IFRS 8.12, we have
aggregated several operating segments with similar economic
characteristics into a larger Sports Fashion operating segment and
concluded that, in doing so, the aggregation is still consistent
with the core principles of IFRS 8.
When aggregating the operating segments into the larger Sports
Fashion operating segment, we have primarily taken into
consideration:
- IFRS 8.12.a the nature of products or services;
- IFRS 8.12.c type or class of customer; and
- IFRS 8.12.d the methods used to distribute their products.
The entities included in the Sports Fashion operating segment
have similar characteristics as well-established, leading
retailers or wholesalers of footwear, apparel and accessories
from a mix of international sports fashion brands and private
labels. When determining what to include within the Sports Fashion
segment, we have considered that the fascias all target a similar
demographic in terms of both age range and an aspiration to achieve
a certain style, whether the product is to be used for lifestyle
wear or active sports participation. The entities typically have
similar economic characteristics in terms of sales metrics,
long-term average gross margins, levels of capital investment and
operating cash flows. The Outdoor segment differs from the Sports
Fashion segment in that Outdoor is focused on retailing specialist
apparel, footwear and technical products for outdoor pursuits.
Further, the Outdoor segment typically appeals to an older and/or
family-oriented demographic as compared with the younger and more
style-focused demographic targeted by the Sports Fashion
businesses.
The Chief Operating Decision Maker receives and reviews
segmental operating profit. Certain central administrative costs
including Group Directors' salaries are included within the Group's
Sports Fashion result. This is consistent with the results as
reported to the Chief Operating Decision Maker.
IFRS 8 requires disclosure of information regarding revenue from
major customers. The majority of the Group's revenue is derived
from the retail of a wide range of apparel, footwear and
accessories to the general public. As such, the disclosure of
revenues from major customers is not appropriate.
The Board considers that certain items are cross-divisional in
nature and cannot be allocated between the segments on a meaningful
basis. Certain net funding costs and taxation are treated as
unallocated, reflecting the nature of the Group's syndicated
borrowing facilities and its tax group. Drawdowns from the Group's
syndicated borrowing facility of GBPnil (2021: GBP176.3 million), a
deferred tax asset of GBP69.9 million (2021: GBP21.0 million), a
deferred tax liability of GBP124.6 million (2021: GBP62.0 million)
and an income tax liability of GBP4.3 million (2021: GBP5.2
million) are included within the unallocated segment.
Each segment is shown net of intercompany transactions and
balances within that segment. The eliminations remove
intercompany transactions and balances between different
segments which primarily relate to the net draw down of long-term
loans and short-term working capital funding provided by JD Sports
Fashion Plc (within Sports Fashion) to other companies in the
Group, and intercompany trading between companies in different
segments. Inter-segment transactions are undertaken in the ordinary
course of business on arm's length terms.
2. Segmental Analysis (continued)
Business Segments
Information regarding the Group's operating segments for the 26
weeks to 30 July 2022 is reported below:
Income statement
Sports
Fashion Outdoor Unallocated Total
GBPm GBPm GBPm GBPm
Revenue 4,143.4 274.7 - 4,418.1
Operating profit before
exceptional items 412.7 5.4 - 418.1
Exceptional items (85.2) - - (85.2)
--------- ---------- -------------- ---------
Operating profit 327.5 5.4 - 332.9
Financial income - - 1.1 1.1
Financial expenses (30.7) (1.4) (3.6) (35.7)
--------- ---------- -------------- ---------
Profit / (loss) before
tax 296.8 4.0 (2.5) 298.3
Income tax expense (82.0)
--------- ---------- -------------- ---------
Profit for the period 216.3
--------- ---------- -------------- ---------
Total assets and liabilities
Sports Fashion Outdoor Unallocated Eliminations Total
GBPm GBPm GBPm GBPm GBPm
Total assets 7,195.6 483.1 69.9 (36.3) 7,712.3
Total liabilities (4,690.9) (267.6) (128.9) 36.3 (5,051.1)
--------------- -------- ------------ ------------- ----------
Total segment
net assets / (liabilities) 2,504.7 215.5 (59.0) - 2,661.2
--------------- -------- ------------ ------------- ----------
2. Segmental Analysis (continued)
The comparative segmental results for the 26 weeks to 31 July
2021 are as follows:
Income statement
Sports
Fashion Outdoor Unallocated Total
GBPm GBPm GBPm GBPm
Revenue 3,650.6 235.2 - 3,885.8
Operating profit before
exceptional items 459.8 11.9 - 471.7
Exceptional items (74.9) - - (74.9)
--------- ---------- -------------- ---------
Operating profit 384.9 11.9 - 396.8
Financial income - - 0.5 0.5
Financial expenses (27.7) (1.1) (3.9) (32.7)
--------- ---------- -------------- ---------
Profit / (loss) before
tax 357.2 10.8 (3.4) 364.6
Income tax expense (87.8)
--------- ---------- -------------- ---------
Profit for the period 276.8
--------- ---------- -------------- ---------
Total assets and liabilities
Sports Fashion Outdoor Unallocated Eliminations Total
GBPm GBPm GBPm GBPm GBPm
Total assets 6,201.1 375.7 21.0 (145.6) 6,452.2
Total liabilities (3,824.8) (351.8) (243.5) 145.6 (4,274.5)
--------------- -------- ------------ ------------- ----------
Total segment
net assets / (liabilities) 2,376.3 23.9 (222.5) - 2,177.7
--------------- -------- ------------ ------------- ----------
2. Segmental Analysis (continued)
Geographical Information
The Group's operations are located in the UK, Australia,
Austria, Belgium, Bosnia and Herzegovina, Bulgaria, Canada,
Croatia, Cyprus, Czech Republic, Denmark, Dubai, Estonia, Finland,
France, Germany, Greece, Hong Kong, Hungary, India, Indonesia,
Israel, Italy, Latvia, Lithuania, Malaysia, the Netherlands, New
Zealand, Poland, Portugal, the Republic of Ireland ('ROI'),
Romania, Serbia, Singapore, Slovakia, Slovenia, South Korea, Spain
and the Canary Islands, Sweden, Thailand and the US.
Revenue analysis
The following table provides analysis of the Group's revenue by
geographical market, irrespective of the origin of the goods /
services:
26 weeks to 26 weeks
30 July to
2022 31 July
GBPm 2021
GBPm
UK & ROI 1,748.0 1,458.9
Europe 1,152.5 908.0
North America 1,300.4 1,357.3
Rest of
world 217.2 161.6
----------------- ------------ ---------
4,418.1 3,885.8
--------------- ------------ ---------
The revenue from any individual country, with the exception of
the UK and the US, is not more than 10% of the Group's total
revenue.
The following table provides analysis of the Group's revenue by
product type:
26 weeks to 26 weeks
30 July to
2022 31 July
GBPm 2021
GBPm
Footwear 2,397.3 2,255.2
Apparel 1,533.1 1,311.6
Accessories 270.0 176.7
Other 217.7 142.3
--------------- -------------- -----------
4,418.1 3,885.8
------------- -------------- -----------
The following is an analysis of the carrying amount of segmental
non-current assets by the geographical area in which the assets are
located. Taxation is treated as unallocated, reflecting the nature
of the Group's tax group.
26 weeks to 26 weeks
30 July to
2022 31 July
GBPm 2021
GBPm
UK & ROI 1,296.1 1,111.2
Europe 1,373.7 1,135.0
North America 1,758.8 1,553.2
Rest of world 149.7 115.7
Unallocated 69.9 21.0
------------------ ---------- -------------- -----------
4,648.2 3,936.1
----------- ----------------- -------------- -----------
3. Exceptional Items
The Group exercises judgement in assessing whether items should
be classified as exceptional. This assessment covers the nature of
the item, cause of occurrence and scale of impact of that item on
the reported performance. In determining whether an item should be
presented as exceptional, the Group considers items which are
significant because of either their size or their nature, and which
are non-recurring. In order for an item to be presented as
exceptional, it should typically meet at least one of the following
criteria:
- It is a significant item, which may cross more than one
accounting period.
- It has been directly incurred as a result of either an
acquisition or a divestment, or arises from a major business change
or restructuring programme.
- It is unusual in nature or outside the normal course of
business.
The separate reporting of items, which are presented as
exceptional within the relevant category in the Consolidated Income
Statement, helps provide an indication of the Group's trading
performance in the normal course of business.
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2022 2021 2022
GBPm GBPm GBPm
Movement in fair value of put and
call options (1) 40.2 59.1 292.7
Impairment of non-current assets 36.5 - -
(2)
Impairment of assets held-for-sale 8.5 - -
(3)
Restructuring of Spodis (4) - 15.8 16.4
Insurance settlement for DTLR (5) - - (16.6)
Administrative expenses - exceptional 85.2 74.9 292.5
----------------------------------------- ----------- ----------- -------------
(1) Movement in the fair value of the liabilities in respect of
the put and call options on Genesis Topco Inc GBP28.7 million
(2021: GBP65.0 million), Iberian Sports Retail Group GBP16.8
million (2021: credit of GBP7.7 million), Other credit of GBP5.3
million (2021: charge of GBP1.8 million). The movement in the fair
value of the put option liabilities is presented as exceptional as
it is a significant item that is outside of the normal course of
business.
(2) The impairment constitutes a charge of GBP10.2 million in
respect of the goodwill and fascia name arising in the prior year
on the acquisition of Missy Empire, GBP12.7 million in respect of
the partial impairment of the goodwill arising in the prior year on
the acquisition of Hairburst and GBP13.6 million in respect of the
partial impairment of the investment in the Joint Venture, Gym
King. The impairment is presented as exceptional as it is a
significant item that is outside of the normal course of
business.
(3) Impairment recognised in order to present the Footasylum
assets held-for-sale at the lower of carrying value and fair value
less costs to sell in accordance with IFRS 5. This item is
presented as exceptional as it is related to a non-recurring
divestment of a subsidiary.
(4) The impact consequent to the restructuring of Spodis SA in
the prior period including a charge of GBP5.5 million in relation
to the impairment of tangible assets and business restructuring
costs of GBP10.3 million (29 January 2022: GBP10.9 million). This
item is presented as exceptional as it is related to a
non-recurring restructuring project.
(5) Insurance settlement proceeds related to a pre-acquisition
claim for business interruption by DTLR Villa LLC. As the claim was
a contingent asset at the date of acquisition, this was not
recognised in the assets acquired in the fair value table noted in
Note 5. These insurance proceeds are presented as exceptional as
they are unusual in nature and are outside of the normal course of
business.
4. Earnings per Ordinary Share
Basic and Adjusted Earnings per Ordinary Share
On 3 February 2021, JD Sports Fashion Plc completed the placing
of new ordinary shares in the capital of the Company. A total of
58,393,989 new ordinary shares were issued, increasing the total
ordinary shares in issue to 1,031,627,149. The shares were placed
at an issue price of 795 pence per share with a par value of 25
pence leading to share capital of GBP0.1 million and share premium
of GBP455.8 million being recognised on issue (this is net of
GBP8.3 million of costs incurred).
Following an ordinary resolution on 30 November 2021, a share
split occurred whereby five ordinary shares were issued for each
ordinary share. In accordance with IAS 33, the number of shares
outstanding before the event has been adjusted for the
proportionate change as if the event had occurred at the beginning
of the earliest period presented.
The calculation of basic earnings per ordinary share at 30 July
2022 is based on the profit for the period attributable to equity
holders of the parent of GBP184.5 million (26 weeks to 31 July
2021: GBP228.7 million; 52 weeks to 29 January 2022: GBP369.7
million) and a weighted average number of ordinary shares
outstanding during the 26 week period ended 30 July 2022 of
5,158,135,745 (26 weeks to 31 July 2021 of 5,158,135,745 restated;
52 weeks to 29 January 2022 of 5,158,135,745).
Adjusted basic earnings per ordinary share have been based on
the profit for the period attributable to equity holders of the
parent for each financial period but excluding the post-tax effect
of certain exceptional items. The Directors consider that this
gives a more meaningful measure of the underlying performance of
the Group.
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2022 2021 2022
Number Number Number
millions millions millions
Issued ordinary shares at beginning
of period (restated) 5,158.1 4,866.2 4,866.2
Ordinary shares issued on 3 February
2021 (restated) - 291.9 291.9
----------- ----------- -------------
Issued ordinary shares at end of
period 5,158.1 5,158.1 5,158.1
----------- ----------- -------------
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
Note 2022 2021 2022
GBPm GBPm GBPm
Profit for the period attributable
to equity holders of the parent 184.5 228.7 369.7
Exceptional items 3 85.2 74.9 292.5
Tax relating to exceptional items (0.1) (3.0) 0.3
Profit for the period attributable
to equity holders of the parent
excluding exceptional items 269.6 300.6 662.5
------------ ------------ ------------
Basic earnings per ordinary share
(restated) 3.58p 4.44p 7.17p
------------ ----------- -------------
Adjusted earnings per ordinary
share (restated) 5.23p 5.83p 12.84p
----------------- ----------- -------
4. Earnings per Ordinary Share (continued)
Diluted Earnings per Ordinary Share
Diluted earnings per ordinary share is 3.58p (31 July 2021:
4.44p restated, 29 January 2022: 7.17p). Diluted adjusted earnings
per share is 5.23p (31 July 2021: 5.83p restated, 29 January 2022:
12.84p).
The calculation of diluted earnings per ordinary share at 30
July 2022 is based on the profit for the period attributable to
equity holders of the parent of GBP184.5 million (26 weeks to 31
July 2021: GBP228.7 million; 52 weeks to 29 January
2022: GBP369.7 million) and a weighted average number of
ordinary shares outstanding during the period after adjusting for
the effects of all dilutive potential ordinary shares calculated as
follows:
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2022 2021 2022
Number Number Number
millions millions millions
Issued ordinary shares at end
of period (restated) 5,158.2 5,158.1 5,158.1
Shares granted on 20 October 2021
under the JD Sports Fashion Plc
LTIP 2021 - - 0.1
Issued ordinary shares at end
of period 5,158.2 5,158.1 5,158.2
----------- ----------- -------------
5. Acquisitions
Current Period Acquisitions - Non-Significant Acquisitions
Total Swimming Holdings Ltd
On 27 May 2022, JD Sports Fashion Plc completed, via its
existing subsidiary JD Sports Gyms Limited, the acquisition of 60%
of the issued share capital of Total Swimming Holdings Limited for
an initial cash consideration of GBP11.1 million. Total Swimming
Holdings was founded by former Olympic swimmers Steve Parry,
Rebecca Adlington and Adrian Turner to make swimming more
accessible and includes Swim!, the first multi-site operator of
dedicated children's 'learn to swim' centres in the UK. The
acquisition provides a broadening of the Group's leisure interests,
which now includes gyms and pools. Additional deferred contingent
consideration of up to GBP4.0 million is payable if certain targets
and performance criteria are achieved. The fair value of the
contingent consideration as at the acquisition date and as at 30
July 2022 was determined to be GBP3.5 million.
Put and call options, to enable future exit opportunities for
the management team, have also been agreed and become exercisable
from 2026 onwards. We assessed the substance of the put option
agreement, taking into account the management leaver terms, and
concluded that an element of the future option payment is linked to
continued future service and will be expensed on a straight-line
basis over the service period. A valuation of the remaining put
option liability has been performed using an earnings multiple, a
suitable discount rate and approved forecasts, and the initial
liability of GBP4.2 million has been recognised with the
corresponding entry to Other Equity in accordance with the present
value method of accounting. These options are required to be fair
valued at each accounting period date.
Included within the provisional fair value of the net
identifiable assets on acquisition is an intangible asset of GBP5.5
million representing the fascia names acquired on acquisition and
GBP1.1 million representing the customer relationships. The Board
believes that the excess of consideration paid over net assets on
acquisition of GBP12.4 million is best considered as goodwill on
acquisition representing the market position of the business, the
assembled workforce and the potential future growth opportunities
from opening new sites under the Swim! concept.
Included in the 26 week period ended 30 July 2022 is revenue of
GBP3.2 million and a profit before tax of GBP0.3 million in respect
of Total Swimming Holdings.
Other Acquisitions
During the period, the Group made one other small acquisition
which was not material.
5. Acquisitions (continued)
Current Period Acquisitions - Non-Significant Acquisitions
(continued)
The aggregate impact of the non-significant acquisitions in the
current period is as follows, with further detail provided in the
narrative on the previous page:
Fair values
acquired
GBPm
Acquiree's net assets at acquisition date:
Intangible assets 6.6
Property, plant & equipment 5.1
Right-of-use assets 6.7
Inventories 0.4
Cash and cash equivalents 1.1
Trade and other receivables 3.3
Trade and other payables (7.1)
Bank loans and overdrafts (3.8)
Deferred tax liability (1.6)
Lease liabilities (6.7)
Provisions (0.5)
--------------------------------------------
Net identifiable assets 3.5
-------------------------------------------- --------------
Non-controlling interest (various) (1.4)
-------------------------------------------- --------------
Goodwill on acquisition 12.5
-------------------------------------------- --------------
Consideration - satisfied in cash 11.1
Consideration - deferred 3.5
-------------------------------------------- --------------
Total consideration 14.6
-------------------------------------------- --------------
Full Year Impact of Acquisitions
Had the acquisitions of the entities acquired been effected at
30 January 2022, the revenue and profit before tax of the Group for
the 26 week period to 30 July 2022 would have been GBP4.4 billion
and GBP297.6 million respectively.
Acquisition Costs
Acquisition related costs amounting to GBP0.1 million have been
excluded from the consideration transferred and have been
recognised as an expense in the year, within administrative
expenses in the Consolidated Income Statement.
5. Acquisitions (continued)
Prior Period Acquisitions - Significant
DTLR Villa LLC
Initial acquisition
On 17 March 2021, JD Sports Fashion Plc ('JD') acquired 100% of
the issued share capital of DTLR Villa LLC, via a wholly owned
intermediate holding company in the US. Total cash consideration
was GBP305.2 million, split between GBP117.9 million debt funding
and GBP187.3 million equity funding. DTLR is based in Baltimore,
Maryland and is a hyperlocal athletic footwear and apparel
streetwear retailer operating from 247 stores across 19 states on
acquisition. The acquisition of DTLR, with its differentiated
consumer proposition, will enhance the Group's neighbourhood
presence in the North and East of the US.
The existing DTLR management team has also reinvested a portion
of its proceeds back into DTLR in exchange for a new minority stake
of 1.5%. Put and call options, to enable future exit opportunities
for the management team, have also been agreed and become
exercisable after a minimum period of three years. A valuation of
these put options has been performed using an earnings multiple, a
suitable discount rate and approved forecasts, and the initial
liability of GBP4.2 million was recognised with the corresponding
entry to Other Equity in accordance with the present value method
of accounting. These options are required to be fair valued at each
accounting period date.
Included within the fair value of the net identifiable assets on
acquisition is an intangible asset of GBP101.6 million representing
the DTLR fascia name and an intangible asset of GBP3.8 million
representing the customer relationships arising from the loyalty
scheme in place. The Board believes that the excess of
consideration paid over net assets on acquisition of GBP212.0
million is best considered as goodwill on acquisition representing
future operating synergies.
The goodwill calculation is summarised on the next page. As at
the date of this report, the period in which measurement
adjustments could be made has now closed on this acquisition and no
further fair value measurement adjustments have been made.
Subsequent intra-group transfer
On 2 July 2021, JD completed the transfer of the intermediate
Parent Company and DTLR to Genesis Topco Inc ('Genesis'), which is
an existing 80.0% subsidiary based in the US and Parent Company of
the sub-group which contains Finish Line Inc. and the Shoe Palace
Corporation. It was always the intention for DTLR to be part of the
Genesis sub-group, but the requirement for speed and certainty of
execution on the original transaction meant that it was more
appropriate for the Group to initially acquire DTLR directly. This
transfer to Genesis now brings all of the Group's businesses in the
US into one sub-group, which will enhance the future operational
collaboration between them. However, as the parent to Genesis, JD
will continue to make strategic decisions regarding the Company's
future. The consideration payable by Genesis to JD in relation to
the transfer was the same as the total consideration paid by JD on
the original acquisition.
By virtue of the fact that JD only owns 80% of Genesis, JD
effectively disposed of a proportion of its investment in DTLR to
the four Mersho Brothers ('the Mershos') who, with their 20%
aggregate shareholding in Genesis, are jointly a related party of
JD. In order to maintain their shareholding in Genesis at the
current level, the Mershos invested their pro-rata element of the
equity consideration of $52.0 million into Genesis. This transfer
took place on an arm's length basis and reflects the net assets
acquired as at the original acquisition date of 17 March 2021.
5. Acquisitions (continued)
Prior Period Acquisitions - Significant (continued)
DTLR Villa LLC (continued)
Book value Measurement Fair value
GBPm adjustments at
GBPm 17 March 2021
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets 43.7 62.9 106.6
Property, plant & equipment 53.7 (4.4) 49.3
Other non-current assets 0.5 (0.2) 0.3
Right-of-use assets - 139.9 139.9
Inventories 40.3 - 40.3
Cash and cash equivalents 95.2 - 95.2
Trade and other receivables 7.6 (3.3) 4.3
Income tax asset 0.4 - 0.4
Trade and other payables (37.6) (0.9) (38.5)
Bank loans and overdrafts (140.2) - (140.2)
Deferred tax liability (3.3) (21.2) (24.5)
Lease liabilities (11.8) (128.1) (139.9)
Net identifiable assets 48.5 44.7 93.2
------------- -------------- ----------------
Goodwill on acquisition 212.0
------------- -------------- ----------------
Total consideration 305.2
------------- -------------- ----------------
Included in the 52 week period ended 29 January 2022 was revenue
of GBP382.8 million and a profit before tax of GBP63.9 million in
respect of DTLR.
5. Acquisitions (continued)
Prior Period Acquisitions - Significant (continued)
Marketing Investment Group S.A.
On 30 April 2021, JD Sports Fashion Plc acquired 60% of the
issued share capital of Marketing Investment Group S.A. ('MIG') for
total consideration of GBP66.0 million. Total consideration
comprised cash consideration of GBP63.6 million and GBP2.4 million
of deferred consideration that is subject to customary closing
conditions and expected to be paid in 2022.
MIG operated 410 stores on acquisition along with the associated
trading websites in nine countries in Central and Eastern Europe.
The acquisition of MIG provided the platform to develop the JD
fascia in Central and Eastern Europe. The MIG team has been
instrumental in the opening of the first JD stores in Eastern
Europe with stores in Poland, Romania and Hungary. We would
anticipate further openings for the JD fascia across Eastern Europe
although events in Ukraine do drive some caution.
Put and call options to enable future exit opportunities for the
40% shareholders have also been agreed and become
exercisable after the year ending January 2025. A valuation of
these put options has been performed using an earnings multiple, a
suitable discount rate and approved forecasts, and the initial
liability of GBP50.2 million was recognised with the corresponding
entry to Other Equity in accordance with the present value method
of accounting. These options are required to be fair valued at each
accounting period date.
Included within the fair value of the net identifiable assets on
acquisition is an intangible asset of GBP25.1 million representing
the Sizeer fascia name and an intangible asset of GBP4.1 million
representing the 50 Style fascia name. The Board believes that the
excess of consideration paid over net assets on acquisition of
GBP41.4 million is best considered as goodwill on acquisition
representing future operating synergies. As at the date of this
report, the period in which measurement adjustments could be made
has now closed on this acquisition and no further fair value
measurement adjustments have been made. The goodwill calculation is
summarised below:
Book value Measurement Fair value
GBPm adjustments at
GBPm 30 April 2021
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets 2.6 29.2 31.8
Property, plant & equipment 16.6 - 16.6
Other non-current assets 1.1 - 1.1
Right-of-use assets - 66.2 66.2
Inventories 69.1 (1.9) 67.2
Cash and cash equivalents 6.5 - 6.5
Trade and other receivables 4.9 1.1 6.0
Income tax asset 0.1 - 0.1
Trade and other payables (58.6) 1.7 (56.9)
Bank loans and overdrafts (27.0) - (27.0)
Deferred tax asset / (liability) 1.0 (5.5) (4.5)
Lease liabilities - (66.2) (66.2)
Net identifiable assets 16.3 24.6 40.9
------------- -------------- ----------------
Non-controlling interest (40%) (6.5) (9.8) (16.3)
Goodwill on acquisition 41.4
------------- -------------- ----------------
Consideration - satisfied in cash 63.6
Consideration - deferred 2.4
------------- -------------- ----------------
Total consideration 66.0
------------- -------------- ----------------
Included in the 52 week period ended 29 January 2022 was revenue
of GBP175.0 million and a profit before tax of GBP6.0 million in
respect of MIG.
5. Acquisitions (continued)
Prior Period Acquisitions - Significant (continued)
Deporvillage S.L.
On 25 June 2021, Iberian Sports Retail Group S.L. ('ISRG'), the
Group's existing intermediate holding company in Spain, exchanged
contracts on the conditional acquisition of Deporvillage S.L.
('Deporvillage'), which is based in Manresa, Catalonia. ISRG is a
leading operator in the sporting goods market across Iberia through
its Sprinter and Sport Zone fascias with the acquisition of
Deporvillage, an online retailer of specialist sports equipment
with country specific websites in six European countries, giving
additional depth and expertise in the key categories of cycling,
running and outdoor. The transaction was subject to certain
conditions, principally relating to anti-trust clearance, with
formal completion taking place on 3 August 2021. Total maximum cash
consideration for the acquisition of an initial 80% holding was
GBP119.6 million of which a maximum of GBP34.5 million was deferred
and contingent on achieving certain future performance criteria. As
at the date of the acquisition and the January 2022 year-end, the
fair value of the contingent consideration was determined to be
GBP19.0 million. This was subsequently paid in July 2022.
Put and call options to enable future exit opportunities for the
20% shareholders have also been agreed and become exercisable from
2024 onwards. A valuation of these put options has been performed
using an earnings multiple, a suitable discount rate and approved
forecasts, and the initial liability of GBP11.2 million was
recognised with the corresponding entry to Other Equity in
accordance with the present value method of accounting. These
options are required to be fair valued at each accounting period
date.
Included within the fair value of the net identifiable assets on
acquisition is an intangible asset of GBP38.8 million representing
the Deporvillage online fascia name and an intangible asset of
GBP8.7 million representing the fair value of the customer base.
The Board believes that the excess of consideration paid over net
assets on acquisition of GBP70.4 million is best considered as
goodwill on acquisition representing future operating synergies. As
at the date of this report, the period in which measurement
adjustments could be made has now closed on this acquisition and no
further fair value measurement adjustments have been made. The
goodwill calculation is summarised below:
Book value Measurement Fair value
GBPm adjustments at
GBPm 3 August 2021
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets 0.9 48.4 49.3
Property, plant & equipment 0.3 - 0.3
Right-of-use assets - 1.1 1.1
Inventories 28.6 - 28.6
Cash and cash equivalents 2.4 - 2.4
Trade and other receivables 4.7 - 4.7
Trade and other payables (29.3) - (29.3)
Bank loans and overdrafts (1.3) - (1.3)
Income tax liability (1.0) - (1.0)
Deferred tax asset / (liability) 0.6 (12.1) (11.5)
Lease liabilities - (1.1) (1.1)
Net identifiable assets 5.9 36.3 42.2
------------- -------------- ----------------
Non-controlling interest (20%) (1.2) (7.3) (8.5)
Goodwill on acquisition 70.4
------------- -------------- ----------------
Consideration - satisfied in cash 85.1
Consideration - deferred (settled 19.0
in cash - July 2022)
------------- -------------- ----------------
Total consideration 104.1
------------- -------------- ----------------
Included in the 52 week period ended 29 January 2022 was revenue
of GBP67.8 million and a profit before tax of GBP2.5 million in
respect of Deporvillage.
5. Acquisitions (continued)
Prior Period Acquisitions - Significant (continued)
Cosmos Sport S.A.
On 21 October 2021, the Group acquired 80% of the issued share
capital of Cosmos Sport S.A. ('Cosmos') for cash
consideration of GBP65.0 million. At acquisition Cosmos operated
58 stores in Greece and three in Cyprus under a variety of retail
banners and associated trading websites. The two main fascias are
Cosmos, which is the core fascia of the business and has an
elevated sporting goods and lifestyle proposition, and Sneaker 10,
which has a more premium footwear offer.
Put and call options to enable future exit opportunities for the
20% shareholders have also been agreed and become
exercisable from 2025 onwards. A valuation of these put options
has been performed using an earnings multiple, a suitable discount
rate and approved forecasts, and the initial liability of GBP10.0
million was recognised with the corresponding entry to Other Equity
in accordance with the present value method of accounting. These
options are required to be fair valued at each accounting period
date.
Included within the fair value of the net identifiable assets on
acquisition is an intangible asset of GBP9.1 million representing
the Cosmos fascia name and an intangible asset of GBP4.2 million
representing the Sneaker 10 fascia name. The Board believes that
the excess of consideration paid over net assets on acquisition of
GBP39.5 million is best considered as goodwill on acquisition
representing future operating synergies. The goodwill calculation
is summarised below:
Provisional
Book value Measurement fair value
GBPm adjustments at
GBPm 21 October
2021
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets - 13.3 13.3
Property, plant & equipment 14.0 - 14.0
Other non-current assets 1.0 - 1.0
Right-of-use assets - 38.2 38.2
Inventories 24.3 - 24.3
Cash and cash equivalents 13.2 - 13.2
Trade and other receivables 5.7 - 5.7
Income tax asset 0.3 - 0.3
Trade and other payables (27.9) - (27.9)
Bank loans and overdrafts (8.5) - (8.5)
Deferred tax liability (0.3) (3.2) (3.5)
Lease liabilities - (38.2) (38.2)
Net identifiable assets 21.8 10.1 31.9
------------- -------------- --------------
Non-controlling interest (20%) (4.4) (2.0) (6.4)
Goodwill on acquisition 39.5
------------- -------------- --------------
Total consideration 65.0
------------- -------------- --------------
Included in the 52 week period ended 29 January 2022 was revenue
of GBP26.0 million and a profit before tax of GBP0.9 million in
respect of Cosmos.
5. Acquisitions (continued)
Prior Period Acquisitions - Other Acquisitions
The aggregate impact of the other acquisitions in the prior
period is as follows with further details provided in the narrative
on the following pages..
Fair values
acquired
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets 34.4
Property, plant & equipment 8.5
Other non-current assets 0.2
Right-of-use assets 26.3
Inventories 31.6
Cash and cash equivalents 35.3
Trade and other receivables 9.6
Trade and other payables (24.5)
Bank loans and overdrafts (6.2)
Income tax liabilities (4.4)
Deferred tax liabilities (6.6)
Lease liabilities (26.3)
Net identifiable assets 77.9
--------------
Non-controlling interest (various) (11.6)
Goodwill on acquisition 126.7
--------------
Total consideration (including GBP18.7
million deferred) 193.0
--------------
Included in the 52 week period ended 29 January 2022 was revenue
of GBP61.9 million and a profit before tax of GBP4.4 million in
respect of these acquisitions.
80s Casual Classics Limited
On 2 March 2021, JD Sports Fashion Plc acquired 70% of the
issued share capital of 80s Casual Classics Limited ('80s CC') for
cash consideration of GBP15.4 million. 80s CC is predominantly an
online retailer of retro and original clothing from brands such as
adidas and Sergio Tacchini, inspired by the British subculture of
the '70s, '80s and '90s. The acquisition included put and call
options over the remaining 30% of shares, exercisable in annual
tranches after a minimum period of three years.
Included within the fair value of the net identifiable assets on
acquisition is an intangible asset of GBP1.0 million representing
the 80s CC fascia name. The Board believes that the excess of
consideration paid over net assets on acquisition of GBP9.0 million
is best considered as goodwill representing future operating
synergies. As at the date of this report, the period in which
measurement adjustments could be made has now closed on this
acquisition and no further fair value measurement adjustments have
been made.
Included in the 52 week period ended 29 January 2022 was revenue
of GBP13.0 million and a profit before tax of GBP3.9 million in
respect of 80s Casual Classics.
5. Acquisitions (continued)
Prior Period Acquisitions - Other Acquisitions (continued)
Uggbugg Fashion Limited
On 18 June 2021, JD Sports Fashion Plc acquired 51% of the
issued share capital of Uggbugg Fashion Limited, including a wholly
owned subsidiary, Missy Empire Limited (together 'Missy Empire'),
for initial cash consideration of GBP11.7 million. Additional
consideration of up to GBP2.2 million was payable if certain
performance criteria were achieved. The fair value of the
contingent consideration as at the acquisition date and as at 29
January 2022 was determined to be GBPnil.
Included within the fair value of the net identifiable assets on
acquisition is an intangible asset of GBP0.9 million representing
the Missy Empire fascia name. The Board believed that the excess of
consideration paid over net assets on acquisition of GBP9.6 million
was best considered as goodwill on acquisition representing future
operating synergies. The net book value of these intangible assets
has been fully impaired during the period ended 30 July 2022 (see
Note 3).
Put and call options over 9% of the remaining 49% shareholding
have also been agreed and become exercisable after the year ending
January 2025. A valuation of these put options has been performed
using an earnings multiple, a suitable discount rate and approved
forecasts, and the initial liability of GBP1.4 million has been
recognised with the corresponding entry to Other Equity in
accordance with the present value method of accounting. These
options are required to be fair valued at each accounting period
date.
Included in the 52 week period ended 29 January 2022 was revenue
of GBP6.2 million and a break even result in respect of Missy
Empire.
The Watch Shop Holdings Limited and Watch Shop Logistics Ltd
On 18 June 2021, JD Sports Fashion Plc acquired 100% of the
issued share capital of The Watch Shop Holdings Limited and Watch
Shop Logistics Ltd (together 'WatchShop') via a wholly owned
intermediate holding company. Total cash consideration paid was
GBP26.2 million. Contingent consideration is payable subject to
certain criteria being met. The fair value of the contingent
consideration as at the acquisition date and as at 29 January 2022
was determined to be GBPnil.
WatchShop is an online retailer of designer fashion watches from
brands such as Armani, Michael Kors and Hugo Boss. Included within
the fair value of the net identifiable assets on acquisition is an
intangible asset of GBP2.5 million representing the WatchShop
fascia name. The Board believes that the excess of consideration
paid over net assets on acquisition of GBP10.6 million is best
considered as goodwill on acquisition representing future operating
synergies.
Included in the 52 week period ended 29 January 2022 was revenue
of GBP19.2 million and a loss before tax of GBP0.7 million in
respect of WatchShop.
Bodytone International Sport S.L.
On 3 August 2021, ISRG, the Group's existing intermediate
holding company in Spain, acquired 50.1% of the issued share
capital of Bodytone International Sport S.L. ('Bodytone') for
initial cash consideration of GBP8.9 million. Additional
consideration of up to GBP3.1 million is payable if certain
performance criteria are achieved and the fair value of this
contingent consideration as at the acquisition date and as at 29
January 2022 was determined to be GBP2.9 million.
Based in Murcia in Spain, Bodytone manufactures and distributes
professional fitness equipment with a presence in over 40 countries
worldwide. ISRG believes that the acquisition of Bodytone will
enhance its product categories and improve its specialised sporting
goods offer. Included within the fair value of the net identifiable
assets on acquisition is an intangible asset of GBP4.9 million
representing the Bodytone name. The Board believes that the excess
of consideration paid over net assets on acquisition of GBP8.8
million is best considered as goodwill on acquisition representing
future operating synergies.
Put and call options over the remaining 49.9% shareholding have
also been agreed and become exercisable in tranches from 2024
onwards. A valuation of these put options has been performed using
an earnings multiple, a suitable discount rate and approved
forecasts, and the initial liability of GBP11.3 million has been
recognised with the corresponding entry to Other Equity in
accordance with the present value method of accounting. These
options are required to be fair valued at each accounting period
date.
Included in the 52 week period ended 29 January 2022 was revenue
of GBP7.5 million and a profit before tax of GBP1.0 million in
respect of Bodytone.
5. Acquisitions (continued)
Prior Period Acquisitions - Other Acquisitions (continued)
Hairburst Holding Group Limited
On 17 September 2021, JD Sports Fashion Plc acquired 75% of the
issued share capital of Hairburst Holding Group Limited, including
three wholly owned subsidiaries (together 'Hairburst') for cash
consideration of GBP26.2 million.
Hairburst retails own label haircare products and vitamins via a
direct to consumer website and as a wholesaler both in the UK and
internationally. Included within the fair value of the net
identifiable assets on acquisition is an intangible asset of GBP6.6
million representing the Hairburst name. The Board believed that
the excess of consideration paid over net assets on acquisition of
GBP18.1 million was best considered as goodwill on acquisition
representing future operating synergies. An impairment of GBP12.7
million in respect of the goodwill has been recognised during the
period ended 30 July 2022 (see Note 3).
Put and call options over the remaining 25% shareholding have
also been agreed and become exercisable in tranches from 2025
onwards. A valuation of these put options has been performed using
an earnings multiple, a suitable discount rate and approved
forecasts, and the initial liability of GBP8.4 million has been
recognised with the corresponding entry to Other Equity in
accordance with the present value method of accounting. These
options are required to be fair valued at each accounting period
date.
Included in the 52 week period ended 29 January 2022 was revenue
of GBP6.3 million and a profit before tax of GBP0.1 million in
respect of Hairburst.
Wheelbase Lakeland Limited
On 3 June 2021, JD Sports Fashion Plc exchanged contracts on the
conditional acquisition of 77.5% of the issued share capital of
Wheelbase Lakeland Limited ('Wheelbase'). Completion of the
acquisition was subject to obtaining consent for the change in
control from the Financial Conduct Authority. This was obtained,
the acquisition subsequently completed on 30 September 2021 and the
cash consideration paid was GBP22.2 million.
Operating from three stores on acquisition and a trading
website, Wheelbase is firmly established as one of the premier
cycling retailers in the UK, and the product offering centres on
premium cycles and accessories from key brands such as Cube,
Cannondale, Trek and Specialized. Included within the fair value of
the net identifiable assets on acquisition is an intangible asset
of GBP1.4 million representing the Wheelbase fascia name. The Board
believes that the excess of consideration paid over net assets on
acquisition of GBP18.7 million is best considered as goodwill on
acquisition representing future operating synergies.
Put and call options over the remaining 22.5% shareholding have
also been agreed and become exercisable in tranches from 2025
onwards. A valuation of these put options has been performed using
an earnings multiple, a suitable discount rate and approved
forecasts, and the initial liability of GBP4.0 million has been
recognised with the corresponding entry to Other Equity in
accordance with the present value method of accounting. These
options are required to be fair valued at each accounting period
date.
Included in the 52 week period ended 29 January 2022 was revenue
of GBP4.0 million and a profit before tax of GBP0.2 million in
respect of Wheelbase.
XLR8 Sports Limited
On 19 November 2021, JD Sports Fashion Plc acquired 100% of XLR8
Sports Limited trading as Leisure Lakes Bikes ('Leisure Lakes') for
initial cash consideration of GBP25.6 million plus additional
consideration up to a maximum of GBP15.0 million if certain
performance criteria are achieved. The fair value of this
contingent consideration as at the acquisition date and as at 29
January 2022 was determined to be GBP11.2 million.
Operating from 10 stores and a trading website, Leisure Lakes is
considered to be one of the leading omnichannel retailers of
bicycles and bicycle parts, equipment, clothing and accessories,
and is a key partner for most of the major brands including Trek,
Cube and Specialized. Included within the fair value of the net
identifiable assets on acquisition is an intangible asset of GBP2.5
million representing the Leisure Lakes fascia name. The Board
believes that the excess of consideration paid over net assets on
acquisition of GBP25.9 million is best considered as goodwill on
acquisition representing future operating synergies.
Included in the 52 week period ended 29 January 2022 was revenue
of GBP4.4 million and a loss before tax of GBP0.3 million in
respect of Leisure Lakes.
5. Acquisitions (continued)
Prior period acquisitions - Other Acquisitions (continued)
GymNation
On 24 December 2021, the Group's existing subsidiary JD Sports
Gyms Limited ('JD Gyms') acquired 100% of GymNation Limited and its
100% owned subsidiary GymNation LLC (together 'GymNation') for cash
consideration of $42.2 million and contingent consideration of $6.1
million. Contingent consideration is cash-settled and is linked to
GymNation's future performance. It is initially measured at fair
value and is subsequently remeasured to fair value at each
reporting date until the contingency is settled. The fair value of
contingent consideration recognised at 29 January 2022 was $6.6
million (GBP4.9 million). The maximum amount of the future payment
is GBP75 million.
On 20 July 2022, a restructure of the GymNation sub-group was
completed resulting in the incorporation of GymNation Holding
Limited. GymNation Holding Limited has acquired 100% of the shares
in GymNation LLC using monies loaned from JD Gyms and GymNation
founder management. As a result, the contingent consideration
recognised as at 29 January 2022 was replaced with a put and call
option liability and JD Gyms has diluted its share in GymNation and
now holds a 78.2% share of GymNation Holding Limited, with founder
management holding 21.8%. The put and call options, to enable
future exit opportunities for the management team, become
exercisable from 2025 onwards. We assessed the substance of the put
option agreement, taking into account the management leaver terms,
and concluded that an element of the future option payment is
linked to continued future service and will be expensed on a
straight-line basis over the service period. A valuation of the
remaining put option liability has been performed using an earnings
multiple, a suitable discount rate and approved forecasts, and the
initial liability of GBP6.4 million has been recognised with the
corresponding entry to Other Equity in accordance with the present
value method of accounting. These options are required to be fair
valued at each accounting period date.
GymNation is a chain of seven gyms in the UAE (six in Dubai and
one in Abu Dhabi). Included within the fair value of the net
identifiable assets on acquisition is an intangible asset of GBP7.9
million representing the GymNation fascia name. The Board believes
that the excess of consideration paid over net assets on
acquisition of GBP21.8 million is best considered as goodwill on
acquisition representing future operating synergies.
Included in the 52 week period ended 29 January 2022 was revenue
of GBP1.3 million and a profit before tax of GBP0.2 million in
respect of GymNation.
Other Acquisitions
During the period, the Group made one other small acquisition.
This transaction was not material.
Full Year Impact of Acquisitions
Had the acquisitions of the entities listed above been effected
at 31 January 2021, the revenue and profit before tax of the Group
for the 52 week period to 29 January 2022 would have been GBP8.9
billion and GBP666.1 million respectively.
Acquisition Costs
Acquisition-related costs amounting to GBP7.9 million have been
excluded from the consideration transferred and have been
recognised as an expense in the year, within administrative
expenses in the Consolidated Income Statement.
6. Assets Held-For-Sale
Transaction History
On 18 February 2019, JD Sports Fashion Plc acquired 19,579,964
Footasylum Plc shares at prices between 50 pence and 75 pence per
share, representing 18.7% of the issued ordinary share capital. On
18 March 2019, in conjunction with the Board of Footasylum Plc, JD
Sports Fashion Plc announced the terms of an offer to be made for
the remaining 81.3% of the ordinary share capital of Footasylum at
a price of 82.5 pence per ordinary share. This offer was declared
unconditional in all respects on 12 April 2019 with acceptances
received for a total of 78,176,481 shares representing a further
74.8% of the issued ordinary share capital. On 26 April 2019, the
first bulk transfer was made to acquire an additional 80.5 million
shares (in addition to the 19.5 million already owned). The formal
process to acquire the remaining Footasylum shares (incl. the
dissenting shareholders) was completed on 4 June 2019. Footasylum
was delisted on 16 May 2019 and converted from an unlisted Plc to a
private company on 19 September 2019.
Hold Separate Order and Consolidation
On 17 May 2019, JD Sports Fashion Plc received a 'hold separate'
enforcement order from the Competition and Markets Authority
('CMA') regarding the Footasylum acquisition. In accordance with
IFRS 10 'Consolidated Financial Statements', an investor controls
an investee when it is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to
affect those returns through its power over the investee. Whilst
this transaction was being reviewed by the CMA, the Directors of JD
Sports Fashion Plc assessed whether the Group had control over
Footasylum and could therefore consolidate the results of
Footasylum. In making their judgement, the Directors considered
that there was a simultaneous exchange and completion on the
transaction and completion was not conditional on the outcome of
the CMA review. The risks and rewards ultimately rested with JD
Sports Fashion Plc as legal owner and there would be no pass
through to the former shareholders. This evidences that the Group
had exposure, or rights, to variable returns from its involvement
with the investee. Further, the Group had the power of veto over
strategic decision making. After careful consideration, the
Directors concluded that the consolidation of Footasylum into the
Group financial statements from the date of acquisition was
appropriate and was disclosed as a judgement in the acquisition
note in the financial statements for the period ended 1 February
2020.
Held-For-Sale
On 4 November 2021, the final ruling from the CMA was that it
had again prohibited the Group's acquisition of Footasylum. The
final CMA undertakings were issued on 14 January 2022, which was
effectively the start date for the Footasylum sale process. As at
29 January 2022, Footasylum was classified as held-for-sale as:
- the carrying amount of Footasylum was expected to be recovered
through the sale transaction;
- it was available for sale in its present condition;
- the Group had committed to sell Footasylum and this sale plan
has been initiated;
- Footasylum was being actively marketed at a price that is
reasonable in relation to its fair value; and
- there was an expectation that the sale process would be
completed within six months of the classification as held-
for-sale.
On 29 July 2022, JD Sports Fashion Plc exchanged contracts to
sell Footasylum and its associated subsidiaries to Aurelius Group
('Aurelius') for GBP37.5 million. The transaction subsequently
completed on 5 August 2022. As the transaction legally completed
after the 30 July 2022 period end date, the assets and liabilities
of Footasylum continued to be classified as held-for-sale as at 30
July 2022.
Assets and Liabilities of Footasylum Held-For-Sale
As at 30 July 2022, Footasylum was stated at the lower of its
carrying value (excluding cash and cash equivalents) and fair value
less costs to sell in accordance with IFRS 5. Cash and cash
equivalents as at 30 July 2022 of GBP6.0 million (29 January 2022:
GBP27.2 million) have been presented within the Group's cash and
cash equivalents.
6. Assets Held-For-Sale (continued)
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2022 2021 2022
GBPm GBPm GBPm
Intangible assets 6.7 - 4.7
Property, plant and equipment 26.9 - 25.2
Deferred tax assets 0.2 - 0.2
Right-of-use assets 71.0 - 78.5
Inventories 36.5 - 27.0
Trade and other receivables 27.9 - 21.5
Impairment recognised in accordance (3.5) - -
with IFRS 5
Assets held-for-sale 165.7 - 157.1
----------- ----------- -------------
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2022 2021 2022
GBPm GBPm GBPm
Trade and other payables (63.4) - (57.5)
Lease liabilities (74.8) - (82.0)
Income tax liability (1.0) - (2.9)
Deferred tax liability - - (0.2)
Liabilities held-for-sale (139.2) - (142.6)
----------- ----------- -------------
Discontinued Operations
The presentation of an operation as a discontinued operation is
limited to a component of an entity that either has been disposed
of or is classified as held-for-sale, and:
- represents a separate major line of business or geographic
area of operations;
- is part of a single co-ordinated plan to dispose of a separate
major line of business or geographic area of
operations, or is a subsidiary acquired exclusively with a view
to resale.
Whilst the disposal of Footasylum is significant for the Group,
it is subject to a single plan and can be distinguished
operationally and for financial reporting purposes, the disposal
of Footasylum should not be classified as a discontinued operation.
This is because the Group has other subsidiaries and operations
within the Sports Fashion segment in the UK, therefore Footasylum
does not represent a separate major line of business or geographic
area for the Group. However, the Group is required to disclose the
impact of the disposal.
7. Provisions
A provision is recognised in the Consolidated Statement of
Financial Position when the Group has a present legal or
constructive obligation as a result of a past event, it is more
likely than not that an outflow of economic benefits will be
required to settle the obligation and the obligation can be
estimated reliably.
Property Provision
Within property provisions, management has provided for expected
dilapidations on stores and warehouses. This provision covers
expected dilapidation costs for any lease considered onerous, any
related to stores recently closed, stores which are planned to
close or are at risk of closure and those under contract but not
currently in use. Management maintain all properties to a high
standard and carry out repairs whenever necessary during their
tenure. Therefore, if there is no risk of closure any provision
would be minimal and management do not consider it necessary to
hold dilapidation provisions for these properties.
Other Provisions
Included in other provisions is GBP2.0 million in respect of the
CMA's ongoing investigation into the sale of the Rangers FC branded
replica football shirts. This provision represents management's
best estimate of the liability payable in respect of this matter,
including associated legal costs, based on the information
available to it at the date of approving these financial statements
which includes consideration of the provisional Statement of
Objections which the CMA issued on 7 June 2022. The CMA's findings
are, at this stage, only provisional and the Group continues to
review them with its advisors. The CMA will consider any
representations that are made before issuing its final findings and
accordingly the amount to be settled could be materially different
to the amount provided. The CMA has not yet confirmed when it will
release its final decision on this matter but the Group currently
expects this to occur within 12 months of the date of approval of
these financial statements along with any related outflows.
The remaining balance in other provisions is made up of various
other trade provisions and legal costs. The provisions are
estimated based on accumulated experience, supplier communication
and management approved forecasts.
Onerous Contract Provision
Within the onerous contracts provision, management has provided
against the minimum contractual cost for the remaining term on a
non-cancellable logistics services contract for the Azambuja
warehouse in Portugal within the SportZone division. The provision
will be unwound over the remaining eight year period ending 30
September 2030.
Property Other provisions Onerous contracts
provision GBPm GBPm Total
GBPm GBPm
Balance at 31 July 2021 - - 5.2 5.2
------------------------------ ------------ ------------------- -------------------- --------
Provisions reclassified
from accruals 11.2 14.2 - 25.4
Provisions released during
the period (2.0) (6.7) - (8.7)
Provisions created during
the period 9.4 5.0 - 14.4
Provisions utilised during
the period (0.4) (2.7) (0.3) (3.4)
Foreign exchange variances - - 0.2 0.2
------------------------------ ------------ ------------------- -------------------- --------
Balance at 29 January
2022 18.2 9.8 5.1 33.1
------------------------------ ------------ ------------------- -------------------- --------
Provisions reclassified
from accruals 0.7 - - 0.7
Provisions released during
the period (0.2) - - (0.2)
Provisions created during
the period 2.4 0.1 - 2.5
Provisions utilised during
the period - (0.7) (0.3) (1.0)
Provisions acquired on
acquisition 0.5 - - 0.5
Foreign exchange variances 0.1 0.1 (0.1) 0.1
------------------------------
Balance at 30 July 2022 21.7 9.3 4.7 35.7
------------------------------ ------------ ------------------- -------------------- --------
7. Provisions (continued)
Provisions have been analysed between current and non-current as
follows:
26 weeks 26 weeks 52 weeks
to to to
30 July 31 July 29 January
2022 2021 2022
GBPm GBPm GBPm
Current 13.0 0.6 13.2
Non-current (due within 10 years) 22.7 4.6 19.9
Total provisions 35.7 5.2 33.1
----------- ----------- -------------
8. Contingent Liabilities
It is inevitable that commercial claims and disputes may arise
from time to time during the course of the Group's business. If the
risk of a financial outflow arising from one of these disputes is
more than remote but not probable or cannot be measured reliably
then the Group will disclose this matter as a contingent liability.
If the risk of a financial outflow is considered probable and can
be measured reliably then the Group would make a provision for this
matter.
Further, the activities of the Group are overseen by a number of
regulators around the world and, whilst the Group strives to ensure
full compliance with all its regulatory obligations, periodic
reviews are inevitable which may result in a financial penalty. If
the risk of a financial penalty arising from one of these reviews
is more than remote but not probable or cannot be measured reliably
then the Group will disclose this matter as a contingent liability.
If the risk of a financial penalty is considered probable and can
be measured reliably then the Group would make a provision for this
matter.
CMA Investigation
On 23 September 2021, the CMA launched an investigation under
section 25 of the Competition Act 1998 ('CA98') into suspected
breaches of competition law by Leicester City Football Club Limited
and JD Sports Fashion Plc, together with their affiliates. The
Group continues to co-operate fully with the CMA.
The CMA has not reached a view as to whether there is sufficient
evidence of an infringement of competition law for it to issue a
statement of objections or, ultimately, an infringement decision,
to any party under investigation. Therefore, at this stage, it is
not possible to determine with sufficient certainty that a
liability will ultimately arise. Indeed, not all cases result in
the CMA issuing a statement of objections or an infringement
decision. The CMA has indicated that it will publish a further
update in September 2022.
9. Related Party Transactions and Balances
Transactions and balances with related parties during the period
are shown below. Transactions were undertaken in the ordinary
course of business on an arm's length basis. Outstanding balances
are unsecured (unless otherwise stated) and will be settled in
cash.
Transactions with Related Parties Who Are Not Members of the
Group
Pentland Group Limited
During the period, Pentland Group Limited owned 51.9% (2021:
51.9%) of the issued ordinary share capital of JD Sports Fashion
Plc. The Group made purchases of inventory from Pentland Group
Limited in the period and the Group also sold inventory to Pentland
Group Limited. The Group also paid royalty costs to Pentland Group
Limited for the use of a brand.
9. Related Party Transactions and Balances (continued)
During the period, the Group entered into the following
transactions with Pentland Group Limited:
Transactions Transactions Transactions
with related with related with related
parties parties parties
26 weeks 26 weeks 52 weeks
to 30 July to 31 July to 29 January
2022 2021 2022
GBPm GBPm GBPm
Sale of inventory 0.5 0.3 1.3
Purchase of inventory (14.2) (20.0) (48.7)
Royalty costs (8.1) (5.1) (6.2)
Other costs (0.7) (0.6) (0.9)
-------------- --------------- ---------------
At the end of the period, the following balances were
outstanding with Pentland Group Limited:
Amounts Amounts Amounts owed
owed to / owed to / to / by related
by related by related parties
parties parties 52 weeks
26 weeks 26 weeks to 29 January
to 30 July to 31 July 2022
2022 2021 GBPm
GBPm GBPm
Trade receivables - - 0.2
Trade payables (5.4) (7.8) (2.5)
------------ ------------- -----------------
Transactions with Associates and Joint Ventures
During the period, the Group entered into the following
transactions with its associates and joint ventures:
Transactions Transactions Transactions
with related with related with related
parties parties parties
26 weeks 26 weeks 52 weeks
to 30 July to 31 July to 29 January
2022 2021 2022
GBPm GBPm GBPm
Sale of inventory 0.2 - -
Purchase of inventory (5.1) (4.2) (12.5)
Dividends and distributions received 3.0 0.6 6.9
--------------- -------------- ---------------
At the end of the period, the Group had the following balances
outstanding with its associates and joint ventures:
Amounts Amounts Amounts owed
owed to / owed to / to / by related
by related by related parties
parties parties 52 weeks
26 weeks 26 weeks to 29 January
to 30 July to 31 July 2022
2022 2021 GBPm
GBPm GBPm
Trade receivables 0.2 - 0.2
Trade payables (0.4) (0.2) (0.3)
------------ ------------- -----------------
9. Related Party Transactions and Balances (continued)
Transactions with Directors
Other than the remuneration of Directors, there have been no
other transactions with Directors in the period (26 week period
ended 31 July 2021: GBPnil). GBP25,000 of invoices from Cowgill
Holloway Business Recovery LLP in respect of professional fees were
accrued in the financial year ended 29 January 2022 and paid post
year-end. Peter Cowgill was a Director of JD Sports Fashion Plc
until his departure on 25 May 2022. Peter was also indirectly a
member of Cowgill Holloway Business Recovery LLP through his
membership of Cowgill Holloway LLP. Peter Cowgill did not
participate in any profit share arrangement relating to either
Cowgill Holloway LLP or Cowgill Holloway Business Recovery LLP. In
addition, Cowgill Holloway LLP (including member firms of Cowgill
Holloway LLP) has acted on behalf of certain vendors where the
Group has ultimately completed an acquisition. Where this has
occurred, there have been no monetary payments between the Group
and Cowgill Holloway LLP (including its member firms).
10. Subsequent Events
Footasylum
On 4 November 2021, the final ruling from the CMA was that it
had again prohibited the Group's acquisition of Footasylum. The
final CMA undertakings were issued on 14 January 2022, which was
effectively the start date for the Footasylum sale process. On 29
July 2022, JD Sports Fashion Plc exchanged contracts to sell
Footasylum and its associated subsidiaries to Aurelius Group for
GBP37.5 million. The transaction subsequently completed on 5 August
2022. See Note 6 for further details.
Appointment of New Chief Executive Officer
On 2 August 2022, Régis Schultz was appointed as the Company's
new Chief Executive Officer, following an extensive executive
global search process. Régis joined on 5 September 2022 and Kath
Smith has commenced a full handover of her duties to Régis. After a
short transitionary period, Kath will then resume her former role
as Senior Independent Director on the Board.
JD Sports Fashion Korea Inc
On 6 September 2022, JD Sports Fashion Plc ('JD') acquired 50%
of the shares in its existing subsidiary, JD Sports Fashion Korea
Inc ('JD Korea') for cash consideration of 26.1 billion KRW
(GBP16.4 million). JD now owns 100% of the share capital of JD
Korea. In accordance with IFRS 10, JD had previously assessed and
concluded that it controlled JD Korea. As the acquisition of the
50% on 6 September 2022 does not result in a change of control,
this will be accounted for as an equity transaction.
Agreements with former Executive Chairman
On 21 September 2022, the Company reached an agreement with its
former Executive Chairman with respect to his departure from the
business. Included in this agreement are two new arrangements which
are considered to be Related Party Transactions under IAS24
'Related Party Disclosures'.
The first is a binding set of new and enhanced restrictive
covenants for a two-year period, replacing the very limited
provisions in the previous contract for which the former Executive
Chairman will receive GBP3.5 million over two years.
The second is a consultancy agreement for an expected period of
three years with GBP2 million to be paid which is to be phased over
the life of the agreement.
11. Half Year Report
The half year report will be available to download from
www.jdplc.com from mid-October 2022. Paper based copies will be
available on application to the Company Secretary, JD Sports
Fashion Plc, Hollinsbrook Way, Pilsworth, Bury, Lancashire, BL9
8RR.
Disclaimer
This announcement contains certain forward-looking statements
with respect to the financial condition, results, operations and
businesses of JD Sports Fashion Plc. These statements and forecasts
involve risk and uncertainty because they relate to events and
depend on circumstances that will occur in the future. There are a
number of factors that could cause actual results or developments
to differ materially from those expressed or implied by these
forward-looking statements and forecasts.
[1] On 3 February 2021, JD Sports Fashion Plc completed the
placing of new ordinary shares in the capital of the Company. A
total of 58,393,989 new ordinary shares were placed at an issue
price of 795 pence per share, raising proceeds of GBP455.9 million
(net of GBP8.3 million share issue costs).
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END
IR BFLLLLKLFBBE
(END) Dow Jones Newswires
September 22, 2022 02:01 ET (06:01 GMT)
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