SPORTS DIRECT INTERNATIONAL PLC Preliminary Results Presentation For the 52 weeks ended 26 April 2015 Thursday 16 July 2015
Dave Forsey CHIEF EXECUTIVE
FY15: Group highlights of a record year…. • Sports Retail gross margin increased by 170 bps to 44.6% • Group underlying EBITDA increased by 15.7% to £383.2m • Underlying profit before tax up 20.5% to £300.3m • Underlying free cash generation of £301.8m • Sports Retail like-for-like stores gross contribution increased Aintree Aintree by 7.4% (FY14: 10.5%) * • Continued roll-out of large format city centre stores • Successful UK launch of Click and Collect in FY15 H2 Record EBITDA achieved v. 4 th year Share Scheme target • • Strategic investments working • Net debt decreased to £59.7m (£212.0m at 27 April 2014) …..despite some headwinds. Glasgow * Excludes contribution in EAG and SIG as prior year comparative is not a full year SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 16 th July 2015 3
FINANCIAL REVIEW
FY15: Group Revenue Bridge +4.1% £2,833m -3.0% +14.4% +3.9% Revenue (£m) £2,706m • Sports Retail revenue growth of 5.5% • Group revenue growth of 4.7% SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 16 th July 2015 5
FY15: Sports Retail Overview Sports Retail Revenue Sports Retail Gross Margin 45.0 44.6 44.5 44.5 44.0 Online Stores and other 43.5 2,600 42.9 Gross Margin (% ) 43.0 43.2 £2,399m 42.5 2,400 42.0 £2,274m 41.5 £384m 2,200 41.0 40.3 40.3 £335m 40.9 40.5 2,000 40.0 FY'12 H1'13 FY'13 H1'14 FY'14 H1'15 FY'15 Revenue (£m) • Gross margin increase of 170 bps year on year, primarily due 1,800 to higher proportion of ‘better’ and ‘best’ Group branded products 1,600 Sports Retail Like-for-Like Contribution Growth £2,015m 1,400 £1,939m 12.0% 10.6% 10.5% 1,200 10.0% 7.4% 8.0% 1,000 6.8% 6.0% 800 3.7% 4.0% FY14 FY15 2.0% 0.7% • Online revenue growth of 14.4% 0.0% • Stores and other growth of 3.9% FY10 FY11 FY12 FY13 FY14 FY15 • FY15 like-for-like Sports Retail stores only gross contribution: +7.4% (2014: +10.5%) * * A like-for-like store is one that has been trading for the full 12 months in both periods and has not been affected by a significant change, e.g, major refurbishment. Excludes contribution in EAG and SIG as the prior year comparative is not a full year SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 16 th July 2015 6
FY15: Sports Retail Operating Costs FY15 FY14 Change (£m) (£m) (%) Store Wages 239 211 13.1 Premises Costs 211 193 9.5 Other Retail costs 281 246 14.2 Currency impact* (16) 6 - Sports Retail Operating Costs 715 656 9.0 Sports Retail Underlying EBITDA pre associates 354 319 10.9 Associates (Heatons & others) 3 2 50.0 Sports Retail Underlying EBITDA 357 321 11.0 • Sports Retail operating costs impacted by the full year effect of proportionally higher costs in our acquired European businesses and costs in our recently established Fitness division * Due to the translation of Euro denominated costs in our European businesses into Sterling SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 16 th July 2015 7
FY15: Premium Lifestyle 250 £214.1m FY14 £207.6m • May 2013: acquired remaining 20% of Cruise Van Mildert Van Mildert • July 2013: acquired 51% of Pulp, a six store retail fashion chain 200 FY15 Premium • Continued rationalisation of USC/Republic business Premium • Consolidation of key head office functions across the division • Further growth in online sales 150 Revenue FY15 FY14 Change (£m) (£m) (%) 100 Revenue 207.6 214.1 (3.0) USC/ Republic USC/ Republic Gross margin 80.5 86.3 (6.7) 50 Gross margin % 38.8% 40.3% Store Wages (20.8) (25.6) (18.8) 0 Premises Costs (39.3) (50.0) (21.4) FY14 FY15 Other Costs (28.1) (31.1) (9.6) Total Operating Costs (88.2) (106.7) (17.3) Division Underlying EBITDA (7.7) (20.4) (62.3) • Gross margin impacted by clearance of surplus stock in our Premium businesses SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 16 th July 2015 8
FY15: Brands Division 250 £217.5m £226.4m 33.1 32.3 200 Revenue (£m) 150 Licensing 185.2 193.3 100 Wholesale 50 0 FY14 FY15 • Revenue: up 4.1% – Licensing: up 2.5% – Wholesale: up 4.4% • Wholesale margin: 30.1% – Down 310 bps • Licensing: – FY15: 58 deals completed / contractual minimum royalties of $25m over the life of the contracts SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 16 th July 2015 9
FY15: Brands Operating Costs FY15 FY14 Change (£m) (£m) (%) Wages 21.2 22.9 (7.4) Advertising & promotion 12.7 15.0 (15.3) Other Brands Costs 23.1 25.2 (8.3) Total Brands Operating Costs 57.0 63.1 (9.7) Brands Underlying EBITDA 34.1 30.2 12.9 SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 16 th July 2015 10
FY15: Underlying EBITDA Bridge -15.1% +62.3% +12.9% -£10.1 380 +11.1% (£10.1m) UNDERLYING EBITDA (£M) £12.7m £3.8m 360 £35.6m 340 £383.2m £373.1m 320 £331.1m 300 280 FY14 pre Share Sports Retail Premium Lifestyle Brands FY15 pre Share Share Schemes' FY15 Schemes' non-cash Schemes' non-cash non-cash charges charges charges • Group underlying EBITDA (pre Share Scheme charges) increased by 15.7% SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 16 th July 2015 11
FY15 : PBT / PAT / EPS FY15 FY14 Change (£m) (£m) (% ) 15.7 Underlying EBITDA (pre share scheme) 383.2 331.1 Share scheme charge (10.1) (11.9) (15.1) Depreciation (excl. impairment) (67.8) (63.7) 6.4 Interest (6.5) (7.8) (16.7) Investment Income 1.5 1.6 (6.2) Underlying PBT 300.3 249.3 20.5 Underlying Taxation (69.1) (62.3) 10.9 Non-controlling interests (0.9) 0.6 - Underlying Profit after Tax 230.3 187.6 +22.8 Number of shares (000s) (1) 592,294 585,514 Underlying Basic Earnings per Share 38.9p 32.1p +21.2 (1) The weighted average number of shares includes the full year impact of the vesting of 23.5 million shares in August 2013 and October 2013 under the 2009 Share Scheme and the Executive Share Scheme respectively. SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 16 th July 2015 12
FY15: Depreciation & Amortisation FY15 FY14 Change (£m) (£m) (% ) Sports Retail - Stores, warehouse and amortisation of goodwill 50.5 49.7 1.6 Sports Retail - Change in estimated useful life – fixtures & fittings 3.6 2.2 63.6 Sports Retail - Change in estimated useful life – warehouse 4.3 - - 12.5 Total Sports Retail 58.4 51.9 Premium Lifestyle 3.2 5.4 (40.7) Brands 6.2 6.8 (8.8) Total 67.8 64.1 5.8 FY14: The useful life of fixtures and fittings was reduced from 7 years to 6 years FY15: The useful life of fixtures and fittings was reduced from 6 years to 5 years, and the depreciation policy was changed from reducing balance to straight line The useful life of our Shirebrook warehouse has been reduced from 15 to 10 years straight line SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 16 th July 2015 13
FY15: Taxation FY15 FY14 (£m) (£m) Reported PBT 313.4 239.5 Standard rate of corporation tax (1) 65.8 55.1 Non-qualifying depreciation 3.5 4.9 Other differences 2.8 (0.2) Effective tax 72.1 59.8 Actual effective tax rate 23.0% 25.0% The effective rate for FY16 is expected to be in the region of 22%. (1) The standard rate of corporation tax was 21% in FY15 (FY14: 23%) SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 16 th July 2015 14
FY15: Cash Flow FY15 FY14 (£m) (£m) EBITDA (pre scheme costs) 383.2 331.1 Realised (loss)/profit on fx contracts (3.7) 1.8 Taxes paid (77.7) (55.7) Underlying free cash flow 301.8 277.2 Working capital Inventory 57.0 (54.8) Debtors / Creditors, other (121.8) (55.3) Acquisitions (including debt) (1) (2) (3.8) (144.2) Net (purchase of) / proceeds from investments (3) 4.1 (4.6) Purchase of properties (inc. warehouses) (24.0) (20.8) Proceeds from the sale of freehold properties (inc. warehouses) 21.2 - Other Capital expenditure (76.3) (48.3) Finance costs and other financing activities (5.9) (7.2) Decrease/ (Increase) in net debt 152.3 (58.0) (1) Acquisitions in FY14 included EAG, SIG, Yeomans and Gelert (2) The purchase of EAG included 12 properties with a book value of £67.6 million (3) Includes the purchase and sale of Debenhams shares SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 16 th July 2015 15
FY15: Capital Expenditure FY15 FY14 (£m) (£m) Freehold acquisitions 5.3 13.4 Warehouse and Shirebrook store expansion 37.4 5.2 New stores (leasehold)* 25.1 16.1 Maintenance capex 15.2 11.9 Other 10.3 11.0 Sports Retail 93.6 57.6 Premium Lifestyle 2.3 7.0 Brands 4.4 4.5 100.3 69.1 Proceeds on disposal of Fixed Assets (21.2) - Net Capital Expenditure 79.1 69.1 • FY16: target capital expenditure: c.£100m including completion of Phase 3 of the Shirebrook warehouse * Includes gyms SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 16 th July 2015 16
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