SPORTS DIRECT INTERNATIONAL PLC Interim Results Presentation For the 26 weeks ended 26 October 2014 Thursday 11 th December 2014
Dave Forsey CHIEF EXECUTIVE
FY15 H1: Group Highlights Neustadt, Austria • Sports Retail gross margin increased by 130 bps to 44.5% • Group underlying EBITDA increased by 10.8% to £203.1m • Underlying profit before tax up 9.8% to £160.6m • Underlying free cash generation of £161.5m • Oxford Street store re-located in May 2014 Neustadt, Austria Roll-out of large format city centre stores • • 29 new license agreements signed with contracted minimum royalties of $12m over the life of the agreements • Continued investment in inventory and strategic stakes while maintaining a strong balance sheet Net debt decreased to £186.5m (£212.0m at 27 April 2014) • SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11 th December 2014 3
FINANCIAL REVIEW
FY15 H1: Group Revenue Bridge 1,500 -2.8% +11.1% -3.9% £1,433m 1,450 -£2.9m +7.9% +£17.6m -£4.1m 1,400 £1,345m 1,350 +£77.2m 1,300 Revenue (£m) 1,250 1,200 1,150 1,100 1,050 1,000 FY14 H1 Sports Retail Stores ¹ Sports Retail - online Premium Lifestyle Brands FY15 H1 • Sports Retail revenue growth of 8.3% • Group Revenue growth of 6.5% (1) Includes Wholesale and Other SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11 th December 2014 5
FY15 H1: Sports Retail Overview Sports Retail Revenue Sports Retail Gross Margin Online Stores and Other* 1,300 £1,231m 45.0 £1,136m 44.5 Gross Margin % 1,200 176 44.0 1,100 43.2 159 1,000 43.0 Gross Margin (% ) Revenue (£m) 42.9 900 41.4 42.0 40.9 800 41.0 1,055 700 977 40.0 40.3 40.3 600 39.0 H1'12 FY'12 H1'13 FY'13 H1'14 FY'14 H1'15 500 400 FY14 H1 FY15 H1 • Gross margin increase of 130 bps year on year due to • Online revenue growth of 11.1% higher proportion of ‘better’ and ‘best’ Group branded • Stores and other growth of 7.9% product SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11 th December 2014 6
FY15 H1: Sports Retail Operating Costs FY15 H1 FY14 H1 Change (£m) (£m) (%) Store Wages 120.4 103.7 16.1 Premises Costs 106.8 92.0 16.1 Other Retail Costs 126.7 114.9 10.3 Sports Retail Operating Costs 353.9 310.6 13.9 Sports Retail Underlying EBITDA pre associates 194.2 180.3 7.7 Associates (Heatons & others) 1.6 0.9 77.8 Sports Retail Underlying EBITDA 195.8 181.2 8.1 • Sports Retail operating costs impacted by the full year effect and proportionally higher costs in our acquired European businesses SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11 th December 2014 7
FY15 H1: Premium Lifestyle FY14 H1 • May 2013: acquired remaining 20% of Cruise 120 • July 2013: acquired 51% of Pulp, a six store retail fashion chain £102.8m £99.9m FY15 H1 100 • Continued rationalisation of USC business Van Mildert Van Mildert • Further growth in online sales across the division Cruise Cruise Flannels 80 FY15 H1 FY14 H1 Change Flannels (£m) (£m) (%) Revenue 60 Revenue 99.9 102.8 (2.8) Gross margin 38.4 44.2 (13.1) Gross margin % 38.4% 43.0% 40 USC/ USC/ Republic Republic Store Wages 9.9 13.9 (28.8) 20 Premises Costs 20.7 27.0 (23.3) Other Costs 15.6 15.2 2.6 0 Total Operating Costs 46.2 56.1 (17.6) FY14 H1 FY15 H1 Division Underlying EBITDA (7.8) (11.9) (34.5) • Gross margin impacted by clearance of surplus stock in Flannels, Cruise and Van Mildert SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11 th December 2014 8
FY15 H1: Brands Division 120 £106.2m £102.1m 100 15.4 15.3 80 Revenue (£m) 60 Licensing 90.8 86.8 40 Wholesale 20 0 FY14 H1 FY15 H1 • Revenue: down 3.9% – Licensing: down 0.6% – Wholesale: down 4.4% • Wholesale margin increased to 32.7% – Up 70 bps • Licensing: – FY15 H1: 29 deals completed with contracted minimum royalties of $12m over the life of the agreements SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11 th December 2014 9
FY15 H1: Brands Operating Costs FY15 H1 FY14 H1 Change (£m) (£m) (%) Wages 9.7 12.0 (19.2) Advertising & Promotion 7.6 6.4 +18.8 Other Brands Costs 11.4 11.9 (4.2) Total Brands Operating Costs 28.7 30.3 (5.3) Brands EBITDA 15.1 14.0 +7.9 SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11 th December 2014 10
FY15 H1: Underlying EBITDA Bridge 210 +7.9% +10.8% +1.7% +34.5% +8.1% 200 £4.1m (£6.1m) £1.1m UNDERLYING EBITDA (£M) £14.6m 190 180 £203.1m 170 £197.0m £183.3m 160 150 140 FY14 H1 pre Share Sports Retail Premium Lifestyle Brands FY15 H1 pre Share Share Schemes' FY15 H1 Scheme charges Schemes' non-cash non-cash charges charges Group underlying EBITDA (pre Share Scheme charges) increased by 10.8% • • Sports Retail growth includes the acquisition of EAG and SIG (acquired in June 2013 and August 2013, respectively) SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11 th December 2014 11
FY15 H1: PBT / PAT / EPS FY15 H1 FY14 H1 Change (£m) (£m) (% ) Underlying EBITDA (pre Share Scheme charges) 203.1 183.3 +10.8 Bonus Share Scheme charges (6.1) (6.0) +1.7 Depreciation (33.0) (28.4) +16.2 Interest (4.7) (4.1) +14.6 Investment Income 1.3 1.3 - Underlying PBT 160.6 146.2 +9.8 Underlying Taxation (36.9) (36.4) +1.7 Non-controlling Interests (0.7) 0.1 nm Underlying Profit for the period 123.0 109.9 +11.9 Number of shares (000s) (1) 592,294 578,454 Underlying EPS 20.8p 19.0p +9.5 (1) The weighted average number of shares includes the impact of the vesting of 24 million shares in August and October 2013 under the 2009 Employee Bonus Share Scheme and the Executive Bonus Share Scheme, respectively SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11 th December 2014 12
FY15 H1: Depreciation & Amortisation FY15 H1 FY14 H1 Change (£m) (£m) (% ) Sports Retail - Stores, warehouse and amortisation of goodwill 25.1 20.9 +20.1 Sports Retail – Change in estimated useful life – fixtures & fittings 2.5 2.5 - Total Sports Retail 27.6 23.4 +17.9 Premium Lifestyle 1.6 1.8 -11.1 Brands 3.8 3.2 +18.8 Total 33.0 28.4 +16.2 FY13: The useful life of fixtures and fittings was reduced from 8 years to 7 years FY14: The useful life of fixtures and fittings was reduced from 7 years to 6 years FY15: The useful life of fixtures and fittings has been reduced from 6 years to 5 years, and the depreciation policy has been changed from reducing balance to straight line SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11 th December 2014 13
FY15 H1: Taxation FY15 H1 FY14 H1 (£m) (£m) Reported PBT 149.7 143.1 Standard rate of corporation tax (1) 31.4 32.9 Non-qualifying depreciation 1.9 2.9 Other differences 1.1 - Effective tax 34.4 35.8 Actual effective tax rate 23.0% 25.0% (1) The standard rate of corporation tax was 21% in FY15 H1 (FY14 H1: 23%) SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11 th December 2014 14
FY15 H1: Cash Flow FY15 H1 FY14 H1 (£m) (£m) EBITDA (pre scheme costs) 203.1 183.3 Realised (loss) / profit on FX contracts (7.7) (0.6) Taxes paid (33.9) (35.8) Underlying free cash flow 161.5 146.9 Working capital Inventory (89.6) (49.3) Debtors / Creditors, Other (2.2) 31.8 Acquisitions (including debt) (1) (2) (2.3) (124.1) Net (purchase of) / proceeds from investments (3) (33.2) - Investment income received 1.3 1.3 Capital expenditure (26.7) (31.8) Proceeds from sale of freehold properties inc. warehouses 21.1 - Finance costs paid (4.4) (4.1) Decrease / (Increase) in net debt 25.5 (29.3) (1) Acquisitions in FY14 include EAG, SIG, Yeomans and Gelert (2) The purchase of EAG included 12 properties with a book value of £67.6 million (3) Listed investment acquired in FY15 H1 relates to Debenhams SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11 th December 2014 15
FY15 H1: Capital Expenditure FY15 H1 FY14 H1 (£m) (£m) Freehold acquisitions 0.7 9.2 Warehouse and Shirebrook store expansion 3.4 4.4 New stores (leasehold) 9.5 8.0 Maintenance capex 5.2 3.4 Other 4.2 3.1 Sports Retail 23.0 28.1 Premium Lifestyle 1.6 1.9 Brands 2.1 1.8 26.7 31.8 Proceeds on disposal of Fixed Assets (21.1) - Net Capital Expenditure 5.6 31.8 • FY15: target capital expenditure: c.£90m including commencement of Phase 3 of the Shirebrook extension SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11 th December 2014 16
FY15 H1: Net Debt Bridge -100 -50 0 NET DEBT (£M) 50 186.5 100 212.0 195.4 (92.8) 150 (33.2) (4.4) (26.7) 21.1 200 (33.9) 250 Net Debt EBITDA Working Purchase of Capital Sale of Interest Tax Net Debt 27/04/2014 capital & investment Expenditure freehold 26/10/2014 other property • Investment in working capital, particularly product range and stock availability SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11 th December 2014 17
OPERATIONAL REVIEW
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