Sports Direct International Plc Interim Results FY19 H1 For 26 weeks - PowerPoint PPT Presentation

Sports Direct International Plc Interim Results FY19 H1 For 26 weeks ended 28 October 2018 13 December 2018

FORWARD LOOKING INFORMATION This presentation may contain forward-looking statements, beliefs or opinions, including statements with respect to management's current views and expectations of future events, and the Company’s future financial condition and results of operations. No representation is made that any of these statements, beliefs or opinions will come to pass. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these statements, beliefs or opinions. Forward-looking statements speak only as at the date of this presentation and the Company expressly disclaims any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this presentation. No statement in this presentation is intended to be a profit forecast. As a result, you are cautioned not to place any undue reliance on such forward-looking statements, beliefs or opinions. 2

SPORTS DIRECT at a glance Resilient UK Retail performance in a difficult market – FY19 H1 sales of £1.3bn • 486 stores in the UK under the Sportsdirect.com fascia • 38 stores under the Flannels and other Premium fascia with 59 House of Fraser stores acquired • Powerful online presence, multi-language, multi-currency, multi-platform • Depth of product offering – good, better and best product • European stores portfolio – FY19 H1 sales of £300m • 252 stores across mainland Europe • Rest of World Retail – FY19 H1 sales of £100m • 80 stores in the US and in Asia Pacific • Strong relationships with leading Sports and Premium brands • Our world famous own brands, examples being Everlast, Slazenger, Karrimor, sold to wholesale customers and licensed • worldwide Strong balance sheet to build on our success and to execute our elevation strategy • 3

GROUP HIGHLIGHTS

FY19 H1: GROUP HIGHLIGHTS FY19 H1 FY18 H1 ∆ pcp (£m) (£m) • Excluding acquisitions, and on a currency Group revenue 1,791.8 1,714.6 4.5% neutral basis, revenue increased by 0.2% Group gross margin 41.5% 38.6% 290 bps • Excluding acquisitions and on a currency Underlying EBITDA (pre HoF) 180.3 156.1 15.5% neutral basis, underlying EBITDA was up 14.6% House of Fraser (31.5 ) - - Underlying EBITDA (incl. HoF) 148.8 156.1 (4.7%) • Free cash flow of £69.0m (pre capex) vs £46.2m in prior period Underlying PBT 64.4 88.0 (26.8%) • Capital expenditure of £98.2m, including Underlying EPS 7.3p 11.3p (35.4%) £39.8m of property assets • Net debt of £505.5m from £397.1m at 29 Reported PBT 74.4 45.8 62.4% April 2018 (FY18 H1: £471.7m) Reported EPS 8.7p 4.9p 77.6% • Substantial financial resource, bank facility total £913.5m, with £847.5m extended to November 2022 1. Free cash flow is defined as operating cash flow after working capital, made up of underlying EBITDA plus realised foreign exchange gains and losses, less corporation tax paid and movements in working capital, but pre-capex. 2. Underlying EBITDA, underlying profit before taxation and underlying EPS exclude realised foreign exchange gains/losses in selling and administration costs, exceptional costs, disposal of subsidiaries and the profit/loss on sale of strategic investments. 5

FY19 H1: SUMMARY UNDERLYING EBITDA TO PROFIT RECONCILIATION £m FY19 H1 FY18 H1 Change (%) 148.8 156.1 -4.7% Underlying EBITDA (71.6) (63.9) Depreciation & amortisation (12.8) (4.2) Net interest 64.4 88.0 -26.8% Underlying profit before tax 17.6 15.1 Exchange gains and losses (5.9) (36.3) IFRS 9 foreign exchange fair value adjustments - 16.7 Profit on sale of properties - (5.0) Impairments of brands & goodwill (1.7) (32.7) Investment costs 74.4 45.8 +62.4% Reported profit before tax 6

FINANCIAL REVIEW

FY19 H1: GROUP REVENUE BRIDGE Excluding acquisitions, Group revenue increased by 0.2% on a currency neutral basis • 8

FY19 H1: UNDERLYING EBITDA BRIDGE 9

FY19 H1: UK SPORTS OVERVIEW REVENUE & GROSS MARGIN (1) OPERATING COSTS & UNDERLYING EBITDA Change £m FY19 H1 FY18 H1 (%) 83.6 93.6 -10.7% Store wages 95.3 95.9 -0.6% Premises costs 141.4 110.7 +27.7% Other costs 320.3 300.2 +6.7% Total operating costs 148.3 154.0 -3.7% Underlying EBITDA Associates (0.6) (8.5) 147.7 145.5 +1.5% Underlying EBITDA (1) Gross margin is Retail margin excluding wholesale, fitness and 10 other

FY19 H1: PREMIUM LIFESTYLE OVERVIEW REVENUE & GROSS MARGIN OPERATING COSTS & UNDERLYING EBITDA Change £m FY19 H1 FY18 H1 (%) 5.9 3.7 +59.5% Store wages 8.1 6.4 +26.6% Premises costs 13.5 10.7 +26.2% Other costs 27.5 20.8 +32.2% Total operating costs 2.5 0.7 +257.1% Underlying EBITDA 11

FY19 H1: HOUSE OF FRASER REVENUE & GROSS MARGIN OPERATING COSTS & UNDERLYING EBITDA £m FY19 H1 Store wages 23.5 Premises costs 26.3 Other costs 16.8 Total operating costs 66.6 Underlying EBITDA (31.5) *Gross Transaction Value (GTV) is the total sales excluding 12 VAT and after deducting returns and discounts

FY19 H1: EUROPEAN SPORTS OVERVIEW REVENUE & GROSS MARGIN OPERATING COSTS & UNDERLYING EBITDA Change £m FY19 H1 FY18 H1 (%) 45.8 52.0 -11.9 Store wages 34.0 36.2 -6.1 Premises costs 37.1 31.7 +17.0 Other costs 116.9 119.9 -2.5% Total operating costs 19.2 13.5 +42.2% Underlying EBITDA 13

FY19 H1: REST OF WORLD OVERVIEW REVENUE & GROSS MARGIN OPERATING COSTS & UNDERLYING EBITDA Change £m FY19 H1 FY18 H1 (%) 17.8 16.0 +11.3 Store wages 9.9 8.3 +19.3 Premises costs 17.4 10.4 +67.3 Other costs 45.1 34.7 +30.0% Total operating costs (4.9) (20.9) +76.6% Underlying EBITDA FY17 H1 includes Malaysia only • Bobs & EMS acquired May 17, FY18 margin includes • 14 revaluation to inventory

FY19 H1: WHOLESALE & LICENSING OVERVIEW REVENUE OPERATING COSTS & UNDERLYING EBITDA Change £m FY19 H1 FY18 H1 (%) 6.1 6.6 -7.6 Wages 2.8 4.0 -30.0 Advertising & promotion Other costs 8.7 10.2 -14.7 Total operating costs 17.6 20.8 -15.4% 15.8 17.3 -8.7% Underlying EBITDA 15

FY19 H1: NET DEBT BRIDGE 16

FY19 H1: CASH FLOW £m FY19 H1 FY18 H1 148.8 156.1 Underlying EBITDA 17.6 15.1 Exchange gains & losses (17.7) (20.3) Taxes paid (93.0) (144.0) Working capital - Inventory 13.3 39.3 - Debtors/Creditors & other 69.0 46.2 Free cash flow (90.0) (11.9) Acquisitions (including debt) (47.1) (131.6) Purchase of strategic investments 52.7 - Proceeds on disposal of investments 3.1 0.8 Investment income (39.8) (80.0) Purchase of properties - 42.2 Proceeds from sale of freehold properties (58.4) (19.9) Other capital expenditure - (133.7) Purchase of own shares 10.5 2.5 Revaluation of cash balances in other currencies (8.4) (4.3) Finance costs and other financing activities (108.4) (289.7) Increase in Net debt 17

Thank You 18