TIDMJD.
RNS Number : 6480Z
JD Sports Fashion Plc
17 May 2023
17 May 2023
JD SPORTS FASHION PLC
UNAUDITED PRELIMINARY RESULTS
FOR THE 52 WEEKSED 28 JANUARY 2023
JD Sports Fashion Plc (the 'Group'), the leading global Sports
Fashion retailer, today announces its Unaudited Preliminary Results
for the 52 weeks ended 28 January 2023 (2022: 52 weeks ended 29
January 2022).
Record result with clear strategy for future growth
2023 2022
(unaudited)
GBPm GBPm
Revenue 10,125.0 8,563.0
Gross profit % 47.8% 49.1%
Performance Highlights (a)
EBITDA before adjusted items* 1,696.9 1,606.8
Depreciation / amortisation (636.6) (593.1)
------------------ ------------
Operating profit (before adjusted items)* 1,060.3 1,013.7
Net interest expense (68.9) (66.5)
------------------ ------------
Profit before tax and adjusted items* 991.4 947.2
Adjusted items (see note 3)* (550.5) (292.5)
------------------ ------------
Profit before tax 440.9 654.7
Net cash at period end (b) 1,469.3 1,185.9
Statutory Measures
Operating profit 509.8 721.2
Net interest expense (68.9) (66.5)
------------------ ------------
Profit before tax 440.9 654.7
Basic earnings per ordinary share 2.76p 7.17p
Adjusted earnings per ordinary share* 13.39p 12.84p
Total dividend payable per ordinary
share 0.80p 0.35p
a) 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 use of other
alternative performance measures which are also explained after the
Chief Financial Officer's Statement and are reconciled to the
statutory measures
b) Net cash consists of cash and cash equivalents less interest-bearing loans and borrowings
Andrew Higginson, Chair, said:
"In July 2022 I had the great privilege of being appointed the
Chair of the JD Group. This followed the departure of Peter Cowgill
who had led the business so successfully for the previous 18 years.
I found a business that had a strong leadership team, committed
staff and a supportive majority shareholder in Pentland. The
business was in tune with its customers, respected by its branded
suppliers, was trading strongly and had a significant number of
opportunities for growth ahead of it.
"This has been another period of excellent progress for the
Group with a profit before tax and adjusted items* for the 52 week
period ended 28 January 2023 of GBP991.4 million (52 week period
ended 29 January 2022: GBP947.2 million). This is a record result
for the Group and I must pay tribute to the skills, resilience and
positive attitude of the colleagues in our businesses who have not
let the leadership changes distract from their focus on the
consumer and our offer. The total charge for the adjusted items*
was GBP550.5 million (2022: GBP292.5 million) which principally
relates to a non-cash movement in the present value of future put
and call options held with minority shareholders in certain
subsidiary businesses, impairments of intangible assets on
acquisitions in prior periods and losses incurred in divesting our
non-core branded fashion businesses. Consequently, the profit
before tax was GBP440.9 million (2022: GBP654.7 million).
"The progress that the Group is making in its global markets is
reflected by the fact that organic sales at constant exchange
rates* were 12% ahead of the prior period with a significant
strengthening in trade through the second half of the period,
particularly in North America, as the supply of product from a
number of the international brands normalised. We are pleased with
the positive progress that we are making in North America and it is
our intention to accelerate the rollout of JD in this important
market as we believe it will deliver long term sustainable
benefits.
"JD continues to be the partner of choice for many international
brands who see our premium fascias as the natural global home for
their latest ranges and freshest new styles. The announcement in
September 2022 that JD was Nike's first European retail partner for
its connected partnership, designed to enhance the shopping
experience of customers through access to an additional range of
Nike member-exclusive products and experiences, is proof that our
relationship with these brands and our access to product is
stronger than ever.
"The Group is reassured with trading to date in the new
financial period with growth in organic sales at constant exchange
rates* of more than 15% after 13 weeks. This performance is further
evidence that consumers worldwide are more attracted than ever to
JD's differentiated proposition with its attention-grabbing
in-store experience, breadth in the range of brands and
availability of key styles.
"Whilst we are encouraged by the resilient nature of the
consumer demand in the current period to date, we remain conscious
of the headwinds that prevail at this time including the general
global macro-economic and geopolitical situation. Against this
backdrop, assuming current exchange rates, we expect that the
Group's headline profit before tax and adjusted items* for the 53
week period ending 3 February 2024 will be in line with the current
average consensus expectations of GBP1.03 billion."
Group Highlights
-- Régis Schultz joined the Group as Chief Executive Officer
with a vision for a new and distinct chapter in the growth story of
JD presented to both the market and colleagues in February 2023.
Key objectives for the next five years include:
o Double digit revenue growth on average per annum
o Double digit market share in key regions
o Double digit operating margin
o Cash generation from operating activities of GBP1 billion per
annum with the priority for cash being reinvestment in growth
including increased capital expenditure of GBP500 million to GBP600
million per annum with 50% to 60% of annual spend focused on store
expansion in underpenetrated markets with 250 to 350 new JD stores
per annum
-- Record result for the 52 week period ended 28 January 2023
with profit before tax and adjusted items* of GBP991.4 million (52
week period ended 29 January 2022: GBP947.2 million) with the
global premium Sports Fashion retail fascias delivering a combined
profit before tax and adjusted items* of GBP827.6 million (2022:
GBP774.4 million)
-- Profit before tax of GBP440.9 million (2022: GBP654.7
million) includes a total charge for adjusted items* of GBP550.5
million (2022: GBP292.5 million) which principally relates to a
non-cash movement in the present value of future put and call
options held with minority shareholders in certain subsidiary
businesses and losses incurred in divesting our non-core branded
fashion businesses
-- Organic sales at constant exchange rates* 12% ahead of the
prior period with a significant strengthening in trade through the
second half of the period, particularly in North America, as the
supply of product from a number of the international brands
normalised
-- International development of JD continues to progress positively:
o 138 stores now trading as JD in North America with the new
stores in the period including a flagship store in Chicago
o 58 net new JD stores opened across Europe including first
stores in Hungary, Lithuania and Greece
o Seven JD stores in Indonesia and six JD stores in Israel
opened under Joint Venture arrangements in the period meaning that
the core JD fascia now has a retail presence in 28 countries with
the rollout of JD to be accelerated in line with the "JD Brand
First" strategy
-- Board and governance strengthened with the appointment of
additional Non-Executive Directors and the creation of a new
Disclosure Committee
-- Net cash balance at the end of the period, being the peak of
the cash cycle, of GBP1,469.3 million (2022: GBP1,185.9 million) to
power the ongoing development opportunities
-- An enhanced final dividend of 0.67p (2022: 0.35p) bringing
the total dividend payable for the period to 0.80p (2022: 0.35p)
per ordinary share which returns the dividend cover*, when measured
relative to the adjusted earnings per ordinary share*, to the
levels paid in the period prior to the COVID-19 pandemic (2019:
0.34p - restated)
-- The Group continues to make excellent progress on its
environmental and sustainable sourcing work programmes with
external recognition of this from the award of an A- grade by the
CDP for both Climate Change and Water Security and the
classification of the Group as 'low risk' by Sustainalytics, one of
the world's leading independent ESG research and analytics
businesses
-- Key financial information of the two business segments is tabulated below:
52 week period to 28 January 2023 (unaudited)
Sports Fashion Outdoor Unallocated Total
GBPm GBPm GBPm GBPm
Revenue 9,560.6 564.4 - 10,125.0
--------------- -------- ------------ ---------
Gross profit % 48.1% 42.2% - 47.8%
--------------- -------- ------------ ---------
Performance Highlights
Operating profit before adjusted
items* 1,043.5 16.8 - 1,060.3
Net interest expense(1) (66.1) (2.8) - (68.9)
--------------- -------- ------------ ---------
Profit before tax and adjusted
items* 977.4 14.0 - 991.4
Adjusted items* (510.7) (39.8) - (550.5)
--------------- -------- ------------ ---------
Profit / (loss) before tax 466.7 (25.8) - 440.9
Statutory Measures
Operating profit / (loss) 532.8 (23.0) - 509.8
Net interest expense(1) (66.1) (2.8) - (68.9)
--------------- -------- ------------ ---------
Profit / (loss) before tax 466.7 (25.8) - 440.9
(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.
52 week period to 29 January 2022
Sports Fashion Outdoor Unallocated Total
GBPm GBPm GBPm GBPm
Revenue 8,049.6 513.4 - 8,563.0
--------------- -------- ------------ --------
Gross profit % 49.5% 43.9% - 49.1%
Performance Highlights
Operating profit before adjusted
items* 985.5 28.2 - 1,013.7
Net interest expense(1) (57.2) (2.3) (7.0) (66.5)
--------------- -------- ------------ --------
Profit / (loss) before tax
and adjusted items* 928.3 25.9 (7.0) 947.2
Adjusted items* (292.5) - - (292.5)
--------------- -------- ------------ --------
Profit / (loss) before tax 635.8 25.9 (7.0) 654.7
Statutory Measures
Operating profit 693.0 28.2 - 721.2
Net interest expense(1) (57.2) (2.3) (7.0) (66.5)
--------------- -------- ------------ --------
Profit / (loss) before tax 635.8 25.9 (7.0) 654.7
(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.
Enquiries:
JD Sports Fashion Plc Tel: 0161 767 1000
Andrew Higginson, Non-Executive Chair
Régis Schultz, Chief Executive Officer
Neil Greenhalgh, Chief Financial Officer
Alison Lees, Director of Investor Relations & Treasury
Investec Bank Plc Tel: 0207 597 5970
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
In July 2022 I had the great privilege of being appointed the
Chair of the JD Group. This followed the departure of Peter Cowgill
who had led the business so successfully for the previous 18 years.
I found a business that had a strong leadership team, committed
staff and a supportive majority shareholder in Pentland. The
business was in tune with its customers, respected by its branded
suppliers, was trading strongly and had a significant number of
opportunities for growth ahead of it. Before going any further, it
is important to thank Peter and his team for developing such a
great business.
The challenges that the business faced were also clear. There
was a significant "governance deficit" in a listed business of JD's
size. Starting with the combination of Chair and CEO roles, the
business had not raised standards of Governance to the expected
norms of a FTSE 100 business. The Non-Executive Directors, whilst
bringing much relevant experience, had a lack of Plc
experience.
In many ways, the business, which is highly profitable and with
significant net cash, was well controlled and conservatively
managed. However, it relied too heavily on a few key individuals
and on informal controls which were more appropriate for a smaller
business. The sort of formal Board oversight and detailed scrutiny
that would be normal in a business of this scale were not always
present.
When I joined the business, work had already begun on reforming
and improving the Governance framework. Helen Ashton, in her role
as Chair of the Audit and Risk Committee, deserves our particular
thanks; as does Kath Smith, Senior Independent Director, who
stepped in as acting CEO for a crucial four month period after
Peter's departure. We have made further strong progress on
Governance this year, against the additional challenge of a
mandatory rotation of auditors, although there is still plenty to
do to embed a change of culture around the new controls
framework.
The success of the business had afforded many opportunities to
grow. However, the strategy outside of the JD Brand had become a
little opaque and was in need of some clarification.
In September 2022, the arrival of our new CEO, R égis Schultz
led to a reappraisal of this strategy and a narrowing of the
business focus. We have subsequently disposed of a number of
Fashion businesses and are concentrating our resources on fewer
initiatives. There has also been a simplification in the
organisation of the business with the number of direct reports into
the CEO reduced from over 30.
We are now starting the next, and distinct chapter in the growth
story of JD. The business is in fine health, with a brand and
proposition that is clearly loved by consumers, and with the
financial resources to deliver further expansion in underpenetrated
and strategically important markets.
JD continues to be the partner of choice for many international
brands who see our premium fascias as the natural global home for
their latest ranges and freshest new styles. The announcement in
September 2022 that JD was Nike's first European retail partner for
its connected partnership, designed to enhance the shopping
experience of customers through access to an additional range of
Nike member-exclusive products and experiences, is proof that our
relationship with these brands and our access to product is
stronger than ever. The ambitious growth plans that we announced in
our Capital Markets Event on 2 February 2023 are underpinned by the
availability of additional product from these brands.
JD's success over a number of years has come from a relentless
focus on ensuring that, at all times, our fascias deliver a
compelling and differentiated proposition to the consumer with an
attention-grabbing theatre both in stores and online and a product
and brand mix that is emotionally engaging, exclusive and
continually evolving.
The challenge for the Board is to deliver a step change in the
governance framework and culture within the business, whilst
allowing the entrepreneurial flair to flourish. In doing so, JD
will have the right foundations from which to progress and support
our new CEO and his Executive team.
Financial Summary
This has been another period of excellent progress for the Group
with a profit before tax and adjusted items* for the 52 week period
ended 28 January 2023 of GBP991.4 million (52 week period ended 29
January 2022: GBP947.2 million). This is a record result for the
Group and I must pay tribute to the skills, resilience and positive
attitude of the colleagues in our businesses who have not let the
leadership changes distract from their focus on the consumer and
our offer. The total charge for the adjusted items* was GBP550.5
million (2022: GBP292.5 million) which principally relates to a
non-cash movement in the present value of future put and call
options held by minority shareholders in certain subsidiary
businesses, impairments of intangible assets on acquisitions in
prior periods and losses incurred in divesting our non-core branded
fashion businesses. Consequently, the profit before tax was
GBP440.9 million (2022: GBP654.7 million).
The progress that the Group is making in its global markets is
reflected by the fact that organic sales at constant exchange
rates* were 12% ahead of the prior period with a significant
strengthening in trade through the second half of the period,
particularly in North America, as the supply of product from a
number of the international brands normalised. We are pleased with
the positive progress that we are making in North America and it is
our intention to accelerate the rollout of JD in this important
market as we believe it will deliver long term sustainable
benefits.
Board Developments
Recruitment of New CEO
We were delighted to welcome Régis Schultz to the Group in
September 2022 as Chief Executive Officer. 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 global retailing, including in Asia
and the Middle East, combined with his ability to drive
transformational change through an omnichannel approach to retail,
perfectly complement the existing skills both in the Board and the
wider Senior Leadership team.
Since joining the Group, Régis has spent time with the local
teams in all of our principal markets to enhance his knowledge of
the Group's global operations. The knowledge that he gained in this
period was 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. His
vision for a new and distinct chapter in the growth story of JD was
subsequently presented to both the market and our colleagues in
February 2023 with four key themes:
-- JD Brand First : Our priority is the development of JD and we
intend to accelerate the store opening programme in most of our
markets including speeding up the conversion of the Finish Line
stores to JD in the United States. We will extend our footprint in
underpenetrated markets through both organic growth and acquisition
with franchising an opportunity in certain new markets. Whilst we
will be accelerating the rollout of the JD stores, there will be no
compromises to the disciplined process that we follow. All stores
will still be subject to rigorous financial assessment prior to
leases being committed and the fitting out of those stores to be
carried out to our usual high standards.
-- Importance of Complementary Concepts : JD's proposition is
capable of operating at scale in multiple markets. However, it is
important to recognise that JD is not necessarily the right banner
in all situations. For example, the market in the United States is
more segmented between malls and neighbourhoods than Europe and so
our neighbourhood community fascias of Shoe Palace and DTLR ensure
that the Group has a proposition for all consumers. Further, our
elevated Size? and Footpatrol banners are critical in providing
valuable market intelligence through seeding new trends and ranges
which can then be scaled through JD. We will strengthen the offers
in all of our complementary fascias and expand them where
appropriate in their markets.
-- Beyond Physical Retail : JD has expanded both its physical
and digital channels successfully in recent years but the two
channels are not as integrated as they could be. The technology
investments that we are making, including loyalty, will make our
proposition more omnichannel and give us a single view of the
customer. Further, we firmly believe that JD, as a brand, has a
deep relationship of trust with its consumers and that this
relationship can be extended into other categories to create a
lifestyle ecosystem of relevant products and services. We have
already started to do this through the rollout of JD Gyms but we
believe that this can be extended to other categories such as
gaming and music, potentially through third party partnerships.
-- People, Partners & Communities : We want to be the best
partner for the brands, the best partner for the communities where
we operate and provide our colleagues with the best opportunities
to develop their individual careers and to support them in
achieving their ambitions.
Other Board Updates
During the period, Neil Greenhalgh informed the Board that he
wished to step down from his role as Chief Financial Officer, a
role he has filled since November 2018. We have identified a
permanent successor for this important role with Dominic Platt who
is currently the Chief Financial Officer at BGL Group Limited and
has formerly held a number of senior finance roles at Darty Plc.
Neil will leave the Group later in the summer, and I would like to
thank him for the significant part that he has played in the
development of the Group over the last 19 years.
Since joining the Board, together with the Nominations
Committee, I have taken the opportunity to review the mix of skills
and experience on the Board. In this regard, we were pleased to
announce the appointment of Ian Dyson, currently Chair of Currys
Plc who joined the Board on 9 March 2023. In addition, Angela
Luger, formerly CEO of N Brown Group Plc and Darren Shapland,
currently Chair of Topps Tiles Plc will join the Board as of 1 June
2023. All of our new Non-Executive Directors have a strong track
record across consumer facing industries and bring much needed Plc
experience.
Elsewhere, Suzi Williams, who joined the Board on 16 May 2022,
has taken up the role of Remuneration Committee Chair and Helen
Ashton has been appointed Chair of our newly formed Disclosure
Committee whilst I have been appointed as Chair of the Nominations
Committee.
Finally, I am pleased that we were able to reach an amicable and
constructive way forward with Peter Cowgill as he has an
unparalleled knowledge, built over 18 years, which we did not want
to lose. The arrangement that we have agreed includes a binding set
of new and enhanced restrictive covenants for a two-year period to
September 2024 and a consultancy agreement for a three-year period
to September 2025.
Buy or Sell Notice re Iberian Sports Retail Group, S.L.
('ISRG')
Following the receipt of a formal buy / sell notice from Balaiko
Firaja Invest, S.L. and Sonae Holdings, S.A. (together the
'Minority Parties'), who collectively hold 49.98% of Iberian Sports
Retail Group, S.L. ('ISRG'), the Group is now engaged in formal
discussions with the Minority Parties with regards to the future
ownership structure of ISRG, including its shareholding in the JD
businesses across Iberia. There are three possible outcomes from
this process although it is expected to be later in the summer
before there is clarity as to which outcome will be progressed by
the parties:
-- The Group acquires the 49.98% holding in ISRG currently held by the Minority Parties.
-- The Minority Parties acquire the Group's 50.02% holding in
ISRG and the Group simultaneously acquires the Minority Parties
interest in JD across Iberia. This would result in the divestment
of the Sprinter, Sport Zone, Deporvillage and Bodytone businesses
in Iberia together with the Sprinter, Aktiesport and Perry Sport
businesses in the Netherlands.
-- No change to existing shareholdings.
Governance and Assurance
Governance Update
As previously advised, a number of issues were identified in the
prior period around the Group's compliance with both its regulatory
obligations and the UK Corporate Governance Code. The Board
subsequently undertook a Control, Risk and Compliance Target
Operating Model review, the outcome of which was a programme of
works to deliver greater formalisation in governance systems, risk
management recording, the documentation and appraisal of internal
controls and the mechanisms for reporting relevant matters to the
regulatory authorities.
Working with external advisors, the Group continues to make good
progress on this programme and the Board reaffirms its commitment
to making the necessary resource available, internal and external,
to deliver this programme and ensure that these changes become
fully embedded in the day-to-day operations of the Group. In this
regard, additional resource has already been engaged in the key
areas of Assurance, Risk and Legal. The Board believes that it is
on track to deliver the first phase of this programme by early 2024
although there will be continuous evolution through longer term
initiatives even after the current initial project is
completed.
Update on Cyber Security
On 30 January 2023, the Group announced that it had been the
target of a cyber incident which resulted in the unauthorised
access to a system that contained customer data relating to some
online orders placed between November 2018 and October 2020. Whilst
the affected data was limited, the Group took the necessary
immediate steps to investigate and respond to the incident,
including working with leading cyber security experts. The Group
also engaged with the relevant authorities, including the UK's
Information Commissioner's Office ('ICO'), as appropriate.
The ICO have now formally advised that they will not be taking
any enforcement action in respect of this incident although they
have highlighted several areas where they believe JD needs to
demonstrate improvement. The Group is committed to addressing these
recommendations at pace. At this stage, no other regulatory body
has indicated that it intends to take any enforcement action
although the Group is aware that not all of the relevant regulators
have concluded their investigations. The Group will continue to
co-operate fully with the relevant global regulatory bodies,
including the ICO, on all appropriate matters.
This particular incident, whilst limited in extent and quickly
contained, has highlighted the need for the Group to enhance its
security control over the technology estate. In this regard, the
Group has appointed Boston Consulting Group who will work with
best-in-class suppliers to design key tactical and strategic
solutions for an efficient and better-integrated cyber vendor
ecosystem. We are confident that this multi-vendor approach is the
best solution to deliver outcomes at pace whilst ensuring value for
money. In addition, the Group has now appointed an interim Chief
Information Security Officer ('CISO') with the recruitment of both
a permanent CISO and a Chief Information Technology Officer
('CITO') ongoing.
Change of Auditor
KPMG LLP has acted as auditor to the Company since its flotation
in 1996. They have been in office in a period of tremendous growth
and rapid global expansion for the Group and I would like to thank
all the staff in the various offices around the world who have
worked on the Group's audit over the years. Subject to approval by
shareholders at the forthcoming Annual General Meeting, I am
pleased to report that Deloitte LLP will take over as auditor to
the Group for the results to 3 February 2024. On behalf of the
Board, I would like to formally welcome the team from Deloitte to
the Group and I look forward to working with them.
Dividends
The Board proposes paying a final dividend of 0.67p (2022:
0.35p) bringing the total dividend payable for the 52 week period
ended 28 January 2023 to 0.80p (52 week period ended 29 January
2022: 0.35p) per ordinary share. Whilst this is a significant
increase on the prior period, the Board believes that it is
appropriate as it returns the dividend cover*, when measured
relative to the adjusted earnings per ordinary share*, to the
levels paid in the period prior to the COVID-19 pandemic (2019:
0.34p - restated). Subject to shareholder approval at our AGM, the
proposed final dividend will be paid on 4 August 2023 to all
shareholders on the register at 7 July 2023. As we indicated in our
Capital Markets Event, we continue to believe that it is in the
longer term interests of all shareholders to prioritise the
available funding for our ongoing development opportunities
including investing in both stores and infrastructure as well as
potential acquisitions.
The adjusted earnings per ordinary share* has increased by 4.3%
to 13.39p (2022: 12.84p).
The basic earnings per ordinary share has decreased by 61.5% to
2.76p (2022: 7.17p).
Outlook
The Group is reassured with trading to date in the new financial
period with growth in organic sales at constant exchange rates* of
more than 15% after 13 weeks. This performance is further evidence
that consumers worldwide are more attracted than ever to JD's
differentiated proposition with its attention-grabbing in-store
experience, breadth in the range of brands and availability of key
styles.
Whilst we are encouraged by the resilient nature of the consumer
demand in the current period to date, we remain conscious of the
headwinds that prevail at this time including the general global
macro-economic and geopolitical situation. Against this backdrop,
assuming current exchange rates, we expect that the Group's
headline profit before tax and adjusted items* for the 53 week
period ending 3 February 2024 will be in line with the current
average consensus expectations of GBP1.03 billion.
Our next scheduled update will take place upon the announcement
of our Interim Results. We will confirm a date for these results in
due course.
Andrew Higginson
Chair
17 May 2023
Chief Executive Officer's Statement
I am very pleased to report that the Group continues to make
excellent progress with the Group headline profit before tax and
adjusted items* increasing by a further 5% to GBP991.4 million
(2022: GBP947.2 million). To further increase the Group's
profitability when the first half was impacted by the
well-publicised international supply chain challenges, which
resulted in the reduced availability of certain key footwear
styles, gives me great confidence in both the strength of our
market leading sports fashion proposition and the expertise of our
colleagues.
Since joining the Group in September 2022, I have undertaken a
full strategic review of the Group with the results of this
presented at a Capital Markets Event on 2 February 2023. I have
described this as a new and distinct chapter in the growth story of
JD and, like any new chapter, there will be some changes. I
concluded at an early stage that the branded fashion businesses
within our Sports Fashion segment, whilst attractive, were not
integral to the development of our core sports fashion proposition
and so we have subsequently divested a number of businesses in this
area. The costs of this exercise together with costs associated
with closing our South Korea business, other impairments on prior
period acquisitions and movements in the present value of put and
call options resulted in adjusted items* for the 52 week period
ending 28 January 2023 of GBP550.5 million (52 week period ending
29 January 2022: GBP292.5 million). Consequently, the Group profit
before tax decreased to GBP440.9 million (2022: GBP654.7
million).
The JD fascia has an outstanding reputation with both consumers
and our international brand partners and we are convinced that the
most significant opportunities lie in the continued international
development of this business. I also recognise the importance of
having complementary fascias which leverage the JD concept and so,
for example, we will also be investing in our seeder concepts of
Size? And Footpatrol and looking to strengthen our community
fascias of Shoe Palace and DTLR.
Sports Fashion
UK and Republic of Ireland
We are encouraged by another robust performance in the premium
Sports Fashion retail fascias in the UK and Republic of Ireland
which delivered a profit before tax and adjusted items (excluding
IP charges)* of GBP356.2 million (2022: GBP386.4 million). It
should be recognised that this period's result includes a full
annual charge for business rates whereas, in the prior period,
business rates were only fully payable from July when the UK
Government withdrew its COVID-19 related rates relief support
programme. This performance was underpinned by resilient consumer
demand with growth in organic sales at constant exchange rates *
compared to the prior period of 12% with this revenue growth
accelerating through the second half of the period.
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 and a relocation at Fosse
Park in Leicester, which is one of the biggest out of town retail
parks in the UK, demonstrating our ongoing commitment to continue
raising standards in the retail of premium sports fashion 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 444 stores at the period end (2022: 436). 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, our non-core branded fashion businesses including
Tessuti, Giulio and Mainline Menswear delivered a total profit
before tax and adjusted items* of GBP19.7 million (2022: GBP33.9
million) which included GBP7.0 million (2022: GBP19.6 million) from
the businesses which have now been divested (including
Footasylum).
Europe
We are also pleased by the recovery that we have seen in our
premium Sports Fashion businesses in Europe with our combined
businesses delivering a profit before tax and adjusted items
(excluding IP charges)* of GBP92.6 million (2022: GBP29.2 million).
Clearly the stores being open for the full period has been very
beneficial in driving an improved performance with growth in
organic sales at constant exchange rates * compared to the prior
period of 34%.
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 the Group
expanding its warehouse footprint in Southern Belgium and Northern
France. Longer term, the Group has now taken possession of the
620,000 sqft facility in Heerlen with initial fitting out of the
site ongoing. Fulfilment to stores from this facility is still
expected to commence in the first half of 2024.
We firmly believe in the long-term opportunity for JD in Europe
and we remain committed to expanding our physical retail presence
in all markets at pace. A net 58 new JD stores opened in the period
across the continent which included the conversion of 23 stores
which formerly traded as Chausport in France. Working in
conjunction with the MIG team, there were 12 new stores in Eastern
Europe, including the first JD stores in Hungary and Lithuania.
Further, working with the Cosmos team, the Group opened its first
JD store in Greece in the period with a second store in Greece and
our first store in Cyprus also opened by this team in the new
financial period. The JD team in Europe is also managing the joint
venture in Israel with six stores opened in the period and one
further store opened to date in the new financial period.
Elsewhere, our other fascias, which include our businesses
focused on the Sporting Goods market, continue to adapt their
businesses as appropriate for their markets with a net 10 new
stores for the combined Sprinter and Sport Zone businesses in
Iberia and a net nine new Cosmos stores across Greece and Cyprus.
The MIG team in Eastern Europe opened their first Sizeer stores in
Bosnia, Croatia, Serbia and Slovenia although these were offset by
closures of both Sizeer stores and the lower price point 50 Style
stores in other markets, particularly Poland. There were also a net
12 closures for the Perry Sport and Aktiesport businesses in the
Netherlands. As with our premium Sports Fashion fascias, these
businesses benefitted from the stores being open for the full
period with the profit before tax and adjusted items* increasing to
GBP60.8 million (2022: GBP51.3 million).
Recently, I was delighted to announce that we had entered into
exclusive negotiations on the potential acquisition of the Courir
business in Europe. Based in Paris, this business has 313 stores
across six countries in Europe. Courir operates a differentiated
proposition to JD with its product mix, brand strategies and store
designs directed more towards female consumers. In this regard, it
perfectly complements JD and is capable of being rolled out
internationally alongside JD. We would anticipate that this
acquisition will formally close later in the year after a mandatory
consultation process with the Courir works council and an
anti-trust review. In addition, we have also been successful in our
bid to acquire nine stores in France which are currently trading as
Gap. These stores, which will all be converted to JD, will
significantly enhance our presence in key city centre locations,
particularly in Paris.
North America
This was very much a year of 'two halves' with the performance
in the first half, particularly the first quarter, negatively
impacted 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, particularly in the first half, as
footwear represents more than 80% of total sales which is the
highest proportion of any of our markets. However, we are very
encouraged by the fact that trading improved rapidly through the
second half as the availability recovered and so, over the full
period, there was growth in organic sales at constant exchange
rates* compared to the prior period of 5%. North America remains
our most significant market in premium Sports Fashion in terms of
revenues.
Given the trading challenges in the first half of the period, we
are very pleased that profitability has largely been maintained at
the prior period levels with our premium Sports Fashion businesses
delivering a profit before tax and adjusted items (excluding IP
charges)* of GBP317.1 million (2022: GBP322.2 million).
The roll-out of the JD fascia continues at pace with 138 stores
(2022: 89 stores) trading as JD at the end of the period, which
includes 10 stores (2022: two stores) in Canada. There are also two
stores (2022: one store) trading as Size? In Canada. The net 41 new
stores for JD in the United States in the period included 24
locations where Finish Line previously traded with 15 direct
conversions of the same space and a further nine stores relocated
to facilitate JD opening in a site which is either more
appropriately sized or is in a location which attracts higher
levels of footfall. In addition, JD opened its second flagship
store in the United States with a store on State Street in
Chicago.
Looking ahead, it is our intention to accelerate the roll out of
the JD fascia in North America with a target to deliver an
additional 500 to 600 JD stores over the next five years. These new
stores will come from both new stores and the conversion of the
remaining standalone Finish Line stores with 392 stores trading
under this banner as at 28 January 2023 (2022: 427 stores).
The Shoe Palace and DTLR businesses also continue to make
progress in their markets with seven new Shoe Palace stores and a
net two new DTLR stores opened in the period. These fascias
continue to perform an important complementary role with their
focus on consumers that are more neighbourhood based.
Elsewhere, it remains our intention to retain the Finish Line
name as a concession in the Macy's department stores with a product
offer which is more focused on families. As with our premium
businesses, there were short term trading challenges in the first
half of the period but the performance improved through the second
half. Ultimately, as with our premium fascias, the profitability
was largely maintained with these concessions delivering a profit
before tax and adjusted items* of GBP44.7 million (2022: GBP45.4
million). Whilst the terms of our contract with Macy's permit us to
close a number of concessions each year, our enhanced confidence in
this part of the business is reflected by the fact that the number
of concession that we operate has been maintained at 289 stores
with two openings and two closures.
Asia Pacific
The Group continues to make good progress in the Asia Pacific
region with our premium Sports Fashion businesses delivering a
profit before tax and adjusted items (excluding IP charges)* of
GBP61.7 million (2022: GBP36.6 million) with growth in organic
sales at constant exchange rates* compared to the prior period of
36%.
The principal reason for the strength of this performance is a
continued excellent performance in Australia where we have opened
an additional seven stores in the period bringing the total at the
end of the period to 47 stores (2022: 40 stores). Our management
team in Australia is also responsible for our operations in New
Zealand where we have made a very encouraging start with three
stores now trading (2022: one store).
Elsewhere, other markets, particularly Malaysia and Thailand
have seen a strong recovery with footfall progressively returning
to pre COVID-19 levels after three years of trading restrictions.
However, we have now decided to exit South Korea as a market with a
wind-down of our operations ongoing. This was a difficult decision
as we recognise that many people had invested a significant amount
of time to try and make JD a success in that market. However, the
onset of COVID-19 three years ago and the subsequent loss of
tourism into the country had a very detrimental impact on our
development and, whilst the challenges of COVID-19 continue to
ease, this market was slower to recover than other countries in the
region.
Elsewhere, working with our joint venture partner, PT Erajaya
Swasembada Tb, there were seven stores trading in Indonesia at the
end of the period with one further opening to date in the new
financial period.
Gyms
Our consumer surveys tell us that, whilst our consumers love the
JD stores and our retail experience, they also love the JD brand
itself. The JD Gyms are the first example of how this relationship
between the brand and its consumers can be extended beyond physical
retail into other relevant categories with our market-leading,
premium low-cost gyms proposition providing an environment and
motivating atmosphere in which all participants can achieve their
fitness goals.
After opening a further net five gyms in the period, the Group
had 79 sites in the UK at the end of the period with 75 sites
trading as JD and four sites still bannered as X4L, of which one
has subsequently closed in the new financial period. We have a
strong pipeline of opportunities for our gyms business and would
expect to open at least a similar number of new gyms in the UK in
the current financial period.
The Group also has a further eight gyms operating under the
Gymnation name in the United Arab Emirates. Given the lack of JD
physical retail presence in the Middle East then there are no plans
currently to convert these gyms to JD and the business will
continue to expand in its markets using the Gymnation name.
During the period we broadened our leisure interests with the
acquisition of 60% of Total Swimming Holdings Limited and its
subsidiaries, which includes Swim!, the first multi-site operator
of dedicated children's 'learn to swim' centres in the UK with 10
sites operating at the end of the period. Initial cash
consideration of GBP11.1 million has been paid with additional
consideration of up to GBP4.0 million potentially payable if
certain targets and future performance criteria are achieved. As at
the date of this report contingent consideration of GBP2.0 million
was considered potentially payable.
Financial Performance
This has been another excellent period for our Sports Fashion
businesses with these businesses delivering a profit before tax and
adjusted items* of GBP977.4 million (2022: GBP928.3 million).
This result was largely driven by the enduring strength of our
premium Sports Fashion fascias which delivered an aggregate profit
before tax and adjusted items* of GBP827.6 million (2022: GBP774.4
million) largely as a consequence of the post pandemic recovery
that we saw across our businesses in Europe.
Overall gross margin in Sports Fashion decreased slightly to
48.1% (2022: 49.5%) largely due to the return of some promotional
activity in North America as the supply chain normalised together
with some short term promotional activity in the Fashion fascias
which have now largely been divested.
After recognising aggregate adjusted items* in the period of
GBP510.7 million (2022: GBP292.5 million) relating to the loss on
disposal of the fashion businesses together with costs associated
with closing our South Korea business, other impairments on prior
period acquisitions and movements in the present value of put and
call options, the profit before tax in Sports Fashion was GBP466.7
million (2022: GBP635.8 million).
Outdoor
This has been another period of revenue growth in our Outdoor
businesses with growth in organic sales at constant exchange rates*
compared to the prior period of 4%. It is clear that, whilst
international travel has now fully reopened, spending time outdoors
remains popular with people appreciating the physical and mental
health benefits that it provides. In particular, our businesses saw
a strong demand throughout the period for activity-based categories
such as fishing, cycling and camping. However, the exceptionally
dry and warm weather in the UK through the key Summer period
depressed the sale of the higher margin apparel and footwear
ranges.
We continue to invest in all of our fascias with the store
developments in the period including new Go Outdoors stores in Bury
and Launceston and the relocation of our stores in Swindon,
Gateshead and Derby. We have also extended our trial of Go Outdoors
on the High Street with the conversion of an additional 13 stores
which previously traded as either Blacks or Millets. In addition,
we have enhanced Go Outdoors' position as an authoritative
nationwide retailer in the key activity-based categories of
cycling, fishing and equestrian with two new Wheelbase cycling
concessions in the stores at Coventry and Stockton to complement
the Fishing Republic concessions which are now in more than 50
stores and the Naylors Equestrian concessions which are now 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 1.7% to 42.2% (2022: 43.9%).
Consequently, the profit before tax and adjusted items* reduced to
GBP14.0 million (2022: GBP25.9 million). We are confident that we
are still making progress in this sector but we accept that there
is still work to do on sharpening the proposition so that it is has
greater year round relevance and is less reliant on particular
weather events.
There were adjusted items* in the period relating to impairments
on prior period acquisitions which totalled GBP39.8 million (2022:
GBPnil) which means that the loss before tax in Outdoor was GBP25.8
million (2022: profit before tax of GBP25.9 million).
Logistics Developments
UK and Republic of Ireland
The proportion of online orders for UK customers that are being
fulfilled from the 515,000 sqft facility in Derby continues to
increase with this site expected to fulfil the majority of UK
online orders by the time of the peak period later in the year.
Approximately GBP65 million has been invested at this site to date,
of which GBP55 million was incurred this financial period, with the
full cost of this initial development expected to rise to
approximately GBP70 million by the middle of 2023.
As previously indicated, we expect to have exited the temporary
e-fulfilment facility at Sherburn, Leeds, which was operated by
Clipper Logistics Plc, by the end of Summer 2023.
Europe
Initial fitting out of the 620,000 sqft facility in Heerlen,
South-East Netherlands, has now commenced after the site was
formally handed over in March 2023. This was later than originally
anticipated and so the capex incurred to the end of January 2023
was only EUR5 million. At this stage, we would still expect that
the total cost over the life of the project to bring the site into
full operational use will be approximately EUR95 million with the
shipping of products to stores expected to commence in the first
half of 2024 to be followed by the fulfilment of online orders
later in that year.
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 locally for JD in
Western Europe. Currently, more than 60% of deliveries to JD stores
and 40% of online orders from JD customers in Western Europe are
being fulfilled out of these facilities with the rest processed
from the UK.
Elsewhere in Europe, the shipping of product to JD stores in
Eastern Europe and Greece is integrated into the infrastructures of
MIG and Cosmos respectively. The majority of JD online orders in
these markets are also fulfilled locally.
North America
Our businesses continue to make progress on a number of
infrastructure projects which will enhance both our collective
operational effectiveness and the consumer experience. This
includes a project to install automation equipment at Shoe Palace's
new 512,000 sqft warehouse facility in Morgan Hill, California. We
anticipate that this project will cost approximately $70 million
with a planned go live in early 2025.
People
In my relatively short time with the Group I have been able to
visit all of our principal locations and I have seen first-hand
that we have talent, energy and commitment at every level in our
businesses. I know the strength of engagement that we have with our
people and it is pleasing that this has been recognised externally
with JD voted as the best company for "Ability to Attract, Develop
and Retain Top Talent" in the 2022 study of Britain's Most Admired
Companies. In the same study, JD was also awarded the overall
sector prize for "Retailers - Broadline & Home".
I have now completed a full review of our organisational
structure with clear principles of responsibility and well defined
spans of control to help lay the foundation for our future success.
I have already begun to communicate these changes which include
structuring our operations by brand with global business unit
Managing Directors. In this regard, I can confirm that Michael
Armstrong, formerly the Group Buying Director, has been appointed
as the JD Global Managing Director. By definition, the width of the
product offer in JD means that Michael will continue to oversee all
key brand relationships. We are also supporting our global business
units through the creation of centres of excellence which will have
specific measurable KPIs that are closely aligned to our business
priorities. We will recruit additional resource where it is
necessary to help deliver our growth plans.
I am absolutely committed to giving all of our colleagues a
quality work experience which is challenging yet rewarding and I
look forward to working with all of our teams in writing the next
distinct chapter in the growth story of JD.
Régis Schultz
Chief Executive Officer
17 May 2023
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 COVID-19 related restrictions.
This was a positive to revenues in many countries, particularly in
Europe, although revenues in the United States were depressed in
the first half as a result of reduced availability of certain key
footwear styles.
Ultimately, total revenue for the Group for the 52 week period
ended 28 January 2023 increased to GBP10,125.0 million (52 week
period ended 29 January 2022: GBP8,563.0 million) with growth in
organic sales at constant exchange rates* compared to the prior
period of 12%.
Total gross margin for the period has reduced slightly to 47.8%
(2022: 49.1%) with the return to normalised stock levels in North
America through the second half of the period leading to the return
of some promotional activity consistent with expectations.
Encouragingly, gross margins are ahead of the levels prior to the
pandemic (2020: 47.0%) which is a fair reflection of the underlying
progress that the Group has made on managing the overall levels of
markdown and promotional activity across our global businesses.
Profit Before Tax
Profit before tax and adjusted items* was 5% higher than the
prior period at GBP991.4 million (2022: GBP947.2 million). This is
a record result for the Group with a particularly strong
performance through the second half of the period as the supply of
key footwear styles normalised. This represents 9.8% of revenues
(2022: 11.1%) which, whilst lower than last year, is more
representative of what the Group would expect to deliver in a
normalised trading environment free from government fiscal support
and other interventions. It is also consistent with the targets
that we set out in our recent Capital Markets Event.
As a result of the increase in the adjusted items* to GBP550.5
million (2022: GBP292.5 million), the Group profit before tax
decreased to GBP440.9 million (2022: GBP654.7 million).
We are particularly encouraged with the performance of our
premium Sports Fashion fascias in North America where,
notwithstanding the trading challenges in the first half of the
period, the profitability has largely been maintained at the prior
period levels with these businesses delivering a profit before tax
and adjusted items (excluding IP charges)* of GBP317.1 million
(2022: GBP322.2 million). After recognising intergroup recharges
for the use of the JD intellectual property of GBP23.7 million
(2022: GBP24.6 million) and adjusted items* of GBP303.9 million
(2022: GBP239.7 million), which principally relates to a non-cash
movement in the present value of future put and call options held
with the minority shareholders of Genesis Topco Inc which is the
intermediate holding company for our businesses in the United
States, the loss before tax in the premium Sports Fashion fascias
in North America was GBP10.5 million (2022: profit before tax
GBP57.9 million).
We are also particularly encouraged by the post-pandemic
recovery of our premium Sports Fashion fascias in Europe which
delivered a profit before tax and adjusted items (excluding IP
charges)* of GBP92.6 million (2022: GBP29.2 million). After
recognising intergroup recharges for the use of the JD intellectual
property of GBP51.6 million (2022: GBP20.6 million) and a credit
for adjusted items* of GBP0.3 million (2022: credit of GBP1.1
million), the profit before tax in the premium Sports Fashion
fascias in Europe was GBP41.3 million (2022: GBP9.7 million).
Total operating costs in the period before adjusted items* were
GBP3,812.9 million which represented 37.7% of revenue (2022:
GBP3,221.5 million being 37.6% of revenue) with the increase in
costs reflecting the end of the support programmes that various
governments put in place to support corporates through the COVID-19
pandemic.
There were adjusted items* in the period of GBP550.5 million
(2022: GBP292.5 million) relating to the loss incurred on the
divestment of our non-core UK fashion businesses, costs associated
with closing our South Korea business, movements in the present
value of put and call options and other impairments on prior period
acquisitions:
2023 2022
(unaudited)
GBPm GBPm
Impairments of intangible assets and investments 137.2 -
(1)
Items that are unusual in nature or outside of the
normal course of business:
Movement in present value of put and call options
(2) 296.2 292.7
Insurance settlement for DTLR (3) - (16.6)
Items as a result of acquisitions, divestments,
major business changes or restructuring:
Divestment and restructuring (4) 129.6 16.4
Deferred consideration release (5) (12.5) -
Administrative expenses - adjusted items * 550.5 292.5
============= =======
1. The impairment in the current period primarily relates to the
impairment of goodwill and fascia name arising on the acquisition
of Deporvillage (GBP24.7 million), Hairburst (GBP21.6 million),
Leisure Lakes (GBP21.1 million), Wheelbase (GBP18.7 million),
Bodytone (GBP12.4 million), Missy Empire (GBP10.2 million),
Livestock (GBP7.1 million), Wellgosh (GBP1.0 million), Oi Polloi
(GBP0.7 million) and Philip Browne (GBP0.1 million). In addition
there is an impairment charge for the investment in Gym King of
GBP19.6 million.
2. Movement in the present value of the liabilities in respect
of put and call options as re-measured at each reporting date
(GBP295.0 million), comprising Genesis Topco Inc charge of GBP280.8
million (2022: charge of GBP258.7 million), Iberian Sports Retail
Group charge of GBP19.6 million (2022: charge of GBP31.6 million),
Marketing Investment Group S.A: a charge of GBP0.5 million (2022:
charge of GBP1.7 million) and a credit of GBP5.9 million (2022:
charge of GBP0.7 million) in relation to the other put and call
options held by non-controlling interests. Also included is a
charge of GBP1.2 million relating to an element of put and call
option agreements that have been treated as a long term employee
benefit under IAS 19.
3. Insurance settlement proceeds in the prior period 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 in Note 5.
4. The divestment and restructuring charge relates to the
divestment of UK-based non-core fashion business assets (GBP106.7
million) and Footasylum (GBP14.8 million) plus the closure costs
associated with JD's announced withdrawal from the South Korean
market in the current period (GBP8.1 million) being business
restructuring costs of GBP2.1 million and a charge of GBP6.0
million in relation to the impairment of non-current assets. (2022:
The impact of 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 GBP10.9
million).
5. Acquisition related release of deferred consideration for
Leisure Lakes (GBP10.5 million) and Total Swimming Holdings Limited
(GBP2.0 million).
Cash and Working Capital
The strong performance in the period is reflected in the cash
generation with the net cash balance at the end of the period
increasing to GBP1,469.3 million (2022: GBP1,185.9 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
after the first quarter, and increased investment in capital
expenditure as we expand our geographical footprint further, to
enhance the consumer proposition and upgrade our operational
infrastructure.
Inventories, net of provisions, across the Group at the end of
the period were GBP1,466.4 million (2022: GBP989.4 million). Within
this, inventories, net of provisions, in our businesses in North
America increased to $581.7 million (2022: $262.9 million) as the
flow of product reverted to normal levels. Forward cover in the
core JD business in the UK / Europe at the end of the period was 10
weeks which was broadly consistent with the prior period (2022:
nine weeks) with a continual focus on robust stock management
disciplines.
Gross capital expenditure* (excluding disposal costs) increased
to GBP359.3 million (2022: GBP247.9 million) with the primary focus
of our capital expenditure continuing to be our physical retail
fascias* where spend in the period was GBP213.4 million (2022:
GBP124.0 million). The increased investment that the Group is
making in its logistics infrastructure is reflected in the fact
that spend on capital expenditure on logistics* increased to
GBP80.8 million (2022: GBP33.5 million). Consistent with the
messaging in our recent Capital Markets Event, our growth plans
over the next five years will be powered by an increase in the
spend on capital expenditure with an annual spend of up to GBP600
million per annum with 50% to 60% of this investment dedicated to
growing our store base in underpenetrated markets.
Earnings per Ordinary Share
The basic earnings per ordinary share decreased to 2.76p (2022:
7.17p) consistent with the reduction in the Group profit before
tax.
The adjusted* earnings per ordinary share increased to 13.39p
(2022: 12.84p).
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 in this area are receiving the external
recognition that we believe they deserve with Sustainalytics, one
of the world's leading independent ESG research and analytics
businesses, classifying JD as 'low risk' and placing it in the top
5% of a list of more than 500 global retail businesses.
Progress in the period on environmental and sustainable sourcing
can be consolidated into three main pillars:
Reducing the Impact of Climate Change
-- Endorsement of the Group's strategy for climate-related risk
assessment was verified via the award of 'A-' grades in December
2022 by the CDP for both Climate Change and Water Security which
are both three grades above our sector average
-- The Group achieved its target of 100% renewable energy use
for operationally controlled stores* across the UK, Republic of
Ireland and Western Europe by the end of the reporting period
-- The Group completed a number of projects to further reduce its future carbon emissions:
o Retrofitted low wattage LED lights across 25 stores and
gyms
o Installed solar panels at three Go Outdoors stores, the Go
Outdoors Distribution Centre in Middlewich, UK and the Shoe Palace
Distribution Centre in Morgan Hills, California
o Enhanced the control of the electrical systems at a further
140 sites through the installation of Building Management Systems
('BMS') with the electricity usage at more than 500 sites now
monitored and controlled via BMS systems
o Proof of concept completed on Voltage Optimisation
technology
o Alternative water systems deployed across 62 gyms
o Additional Electric Vehicle changepoints installed at key
office and warehouse locations
-- A key supply chain partner transitioned to a 100% renewable
energy tariff and installed solar panels at its manufacturing site,
reducing the carbon footprint of the famous JD duffle bag
Sustainable Sourcing
-- Regular engagement with our largest third-party brands,
monitoring their progress to attain global leadership for
sustainable product innovation
-- 'Better Cotton' usage in our private label business now stands at over 98%
-- All private label garment transit bags are now made using
post industrial waste making them 100% recycled and 100%
recyclable
-- Sustainability awareness extended through the #IAMSUSTAINABLE
online training courses which are now available in 11 countries
across the Group with region specific content and language to
maximise relevance and colleague engagement
Circular Economy and Recycling
-- Participation in Textiles 2030 has supported the delivery of
a multi-fascia collaboration on circular business models and
customer awareness initiatives. Our first module, Circularity In
Business, involved an extensive working group designing a Take Back
Scheme for tents within our Outdoor business where we look to
repair and return tents to the original customer for further use.
For previously returned stock we inspect and repair these tents
and, where possible, make them available as 'pre-loved' resale
items in selected stores. We have also successfully inspected and
repaired over 600 cycles, which have been resold via two dedicated
stores
-- For the third successive year we retained our 'Zero Waste to
Landfill' accreditation at our Kingsway warehouse. Further, our
Group Head Office in Bury, UK, and ISRG Head Office and Logistics
Centre in Alicante, Spain have also achieved this accreditation
-- Our store and Distribution Centre asset take back programme
enabled the recovery and reuse of over 14 tonnes of hangers and 236
tonnes of plastic totes
Store Portfolio (unaudited)
During the period, store numbers have moved as follows:
Period New Stores Transfers Net Disposed Closures Period
Start End
Premium Sports
Fashion
UK & Republic of
Ireland 436 16 4 - (12) 444
Europe 377 52 23 - (17) 435
Asia Pacific 79 15 - - (6) 88
North America 931 52 - - (28) 955
1,823 135 27 - (63) 1,922
------- ----------- ---------- ------------- --------- -------
Other Fascias
UK & Republic of
Ireland (1) 151 10 (4) (75) (12) 70
Europe 889 66 (23) - (82) 850
Asia Pacific 2 6 - - - 8
North America 289 2 - - (2) 289
1,331 84 (27) (75) (96) 1,217
------- ----------- ---------- ------------- --------- -------
Total Sports Fashion 3,154 219 - (75) (159) 3,139
------- ----------- ---------- ------------- --------- -------
Total Outdoor 248 11 - - (8) 251
Total Group 3,402 230 - (75) (167) 3,390
------- ----------- ---------- ------------- --------- -------
1) Net disposed in the period consists of:
a. Acquisition of one store trading as Philip Browne Menswear on 10 May 2022
b. Disposal of 62 stores trading as Footasylum on 5 August 2022
c. Disposal of five stores trading as Base Childrenswear on 16 December 2022
d. Disposal of five stores trading as Kids Cavern on 16 December 2022
e. Disposal of three stores trading as Pretty Green on 16 December 2022
f. Disposal of one store trading as Watch Shop on 16 December 2022
The 70 stores at the end of the period includes 62 stores which
were disposed shortly after the period end on 7 February 2023:
a. 38 stores trading as Tessuti (incl Xile Clothing)
b. 16 stores trading as Scotts
c. Five stores trading as Choice
d. Two stores trading as Giulio
e. One store trading as Cricket
In addition, the Group now has 13 JD stores operating under
joint venture arrangements with partners in Indonesia and Israel as
follows:
Period New Stores Period
Start End
Indonesia - 7 7
Israel - 6 6
- 13 13
-------------------- ----------- -------
After opening a total of six gyms in the period, the Group had a
total of 87 gyms at the end of the period across the UK and United
Arab Emirates ('UAE').
Period New Sites Transfers Period
Start End
Gyms
JD (UK) 63 5 7 75
X4L (UK) 11 - (7) 4
Gymnation (UAE) 7 1 - 8
------- ---------- ---------- -------
81 6 - 87
------- ---------- ---------- -------
Further, following the acquisition of Total Swimming Holdings in
May 2022, the Group now has 10 Swim! sites in the UK.
Neil Greenhalgh
Chief Financial Officer
17 May 2023
Alternative Performance Measures (terms 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 excluding adjusted items (see below). The
Group's operating and reportable segments under IFRS 8 are Sports
Fashion and Outdoor, however, more granular information is provided
within these Alternative Performance Measures which the Directors
believe will further enhance the readers understanding of the
Group.
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 adjusted items. A reconciliation between basic earnings per
share and adjusted earnings per share is shown below:
2023 2022
(unaudited)
Basic earnings per share 2.76p 7.17p
Adjusted items 10.67p 5.66p
Tax relating to adjusted items (0.04p) 0.01p
-------------- --------
Adjusted earnings per ordinary share 13.39p 12.84p
-------------- --------
Adjusted Items
For the financial period ended 28 January 2023, the Group has
used the term 'adjusted items' as opposed to 'exceptional items' as
used in previous financial periods and the definitions of adjusted
items have also been updated. These updates are intended to provide
greater clarity over what is classified as an adjusted item and, by
being more specific in terms of defining adjusted items, results in
the provision of more relevant information with greater
comparability between financial periods. This change has only
affected the presentation of the items within the Adjusted Items
note, the balances in the prior period remain unchanged.
The Group exercises judgement in assessing whether items should
be classified as adjusted items. 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 adjusted, the Group considers items which are
significant because of either their size or their nature. In order
for an item to be presented as adjusted, it should typically meet
at least one of the following criteria:
-- Impairments of intangible assets and investments recognised on acquisition.
-- It is unusual in nature or outside the normal course of
business (for example, the movement in the present value of put and
call options).
-- Items directly incurred as a result of either an acquisition
or a divestment, or arising from a major business change or
restructuring programme.
The separate reporting of items, which are presented as adjusted
items within the relevant category in the Consolidated Income
Statement, helps provide an indication of the Group's trading
performance. An explanation as to why individual items have been
classified as adjusted is given in Note 3.
Dividend Cover
Being the number of times that the full period dividend is
covered by the adjusted earnings per ordinary share.
2023 2022 2021 2020 2019
(unaudited)
Adjusted earnings per ordinary
share (pence) 13.39 12.84 6.44 6.85 5.69
Full period dividend per
share (pence) 0.80 0.35 0.29 0.06 0.34
Dividend cover 16.74 36.69 22.21 114.17 16.74
Alternative Performance Measures (continued)
EBITDA Before Adjusted Items
Earnings before interest, tax, depreciation, amortisation and
adjusted items.
2023 2022
(unaudited) GBPm
GBPm
Profit for the period 226.7 459.6
Addback:
Financial expenses 77.3 67.9
Income tax expense 214.2 195.1
Depreciation, amortisation and impairment
of non-current assets 636.6 593.1
Adjusted items (see note 3) 550.5 292.5
Deduct:
Financial income (8.4) (1.4)
-------------- --------
EBITDA before adjusted items 1,696.9 1,606.8
-------------- --------
Energy Use from Operationally Controlled Stores
Operationally controlled sites are defined as stores for which
the Group management team is able to make changes or decisions to
energy supply and services without breaching existing contracts or
requiring landlord consent.
Gross Capital Expenditure
2023 2022
(unaudited) GBPm
GBPm
Investment in software 19.9 14.9
Acquisition of property, plant and equipment 326.6 227.3
Acquisition of non-current other assets 12.8 5.7
-------------- ------
Total gross capital expenditure 359.3 247.9
-------------- ------
An alternative presentation of this is as
follows:
2023 2022
(unaudited) GBPm
GBPm
Investment in physical retail fascias 213.4 124.0
Investment in logistics infrastructure 80.8 33.5
Investment in technology and other 65.1 90.4
--------------- -------
Total gross capital expenditure 359.3 247.9
--------------- -------
Like-for-Like (LFL) 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 period . 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 on page 32.
Operating Costs Before Adjusted Items
2023 2022
(unaudited) GBPm
GBPm
Selling and distribution expenses 3,315.6 2,808.1
Administrative expenses - normal 497.3 413.4
Total operating costs before adjusted items 3,812.9 3,221.5
-------------- --------
Alternative Performance Measures (continued)
Operating Profit Before Adjusted Items
A reconciliation between operating profit and adjusted items can
be found in the Consolidated Income Statement.
Organic Revenue Growth at Constant Exchange Rates
One of the key measures of performance is the growth in revenues
between reporting periods. Historically, the Group has considered
the growth in revenues on a Like for Like basis which removes the
impact of new store openings and closures in the current or
previous financial period. However, revenues in the 52 week periods
to 30 January 2021 and 29 January 2022 were impacted by COVID-19
related trading restrictions, particularly in stores. Consequently,
the consideration of revenues on a like for like basis has lacked
context and so the Group has, instead, considered the revenue
performance on a basis which aggregates stores and websites.
Acquisitions and disposals, including the annualisation impact of
acquisitions or disposals in the previous period, are excluded to
ensure that the growth which is reported reflects the same period
of ownership in both reporting periods.
Organic sales growth at constant exchange rates for each
operating segment is calculated as follows for the 52 week period
ended 28 January 2023 (unaudited):
Revenue Revenue Acquisitions, Organic Revenue Organic
2022 2022 Disposals Growth 2023 Growth
& Annualisations %
Actual Re-translated Actual Actual Actual
(1) (2) (3) (4)
GBPm GBPm GBPm GBPm GBPm %
Sports Fashion
(Reportable Segment)
Premium Retail Fascias
UK & ROI 2,318.1 2,318.3 - 279.2 2,597.5 +12%
Europe 1,024.3 1,024.2 10.7 350.9 1,385.8 +34%
Asia Pacific 300.8 312.7 6.1 112.1 430.9 +36%
North America 2,341.9 2,624.2 93.4 128.0 2,845.6 +5%
Other Retail Fascias
UK & ROI 649.4 649.4 (158.6) 29.6 520.4 +5%
Europe 916.2 914.0 185.5 80.2 1,179.7 +9%
Asia Pacific 0.4 0.4 0.4 1.4 2.2 +350%
North America 249.9 280.1 - 0.6 280.7 +0%
Non-Retail Businesses 248.6 249.3 46.0 22.5 317.8 +9%
-------- -------------- ------------------ -------- --------- --------
Total Sports Fashion 8,049.6 8,372.6 183.5 1,004.5 9,560.6 +12%
-------- -------------- ------------------ -------- --------- --------
Outdoor (Reportable
Segment)
Total Outdoor 513.4 513.4 28.1 22.9 564.4 +4%
TOTAL GROUP 8,563.0 8,886.0 211.6 1,027.4 10,125.0 +12%
-------- -------------- ------------------ -------- --------- --------
1) Being revenues in the 52 week period to 29 January 2022
re-translated at the average exchange rate in the 52 week period to
28 January 2023
2) Being the net impact of acquisitions and disposals made in
the period and the annualisation of acquisitions made in the prior
period
3) Being revenue growth for the same period of ownership in both periods
4) Being organic revenue growth in the 52 week period to 28
January 2023 as a % of the revenues for the 52 week period to 29
January 2022 (as re-translated for current period exchange
rates)
Alternative Performance Measures (continued)
The comparison table for the 52 week period to 29 January 2022
is presented below:
Revenue Revenue Acquisitions, Organic Revenue Organic
2021 2021 Disposals Growth 2022 Growth
& Annualisations %
Actual Re-translated Actual Actual Actual
(1) (2) (3) (4)
GBPm GBPm GBPm GBPm GBPm %
Sports Fashion
(Reportable Segment)
Premium Retail Fascias
UK & ROI 1,810.1 1,803.7 - 514.4 2,318.1 +29%
Europe 792.2 759.7 0.1 264.5 1,024.3 +35%
Asia Pacific 259.6 255.6 6.1 39.1 300.8 +15%
North America 1,534.7 1,438.3 736.7 166.9 2,341.9 +12%
Other Retail Fascias
UK & ROI 467.6 467.3 104.9 77.2 649.4 +17%
Europe 544.4 521.8 268.6 125.8 916.2 +24%
Asia Pacific - - 0.4 - 0.4 -
North America 235.7 221.0 - 28.9 249.9 +13%
Non-Retail Businesses 163.7 163.7 12.3 72.6 248.6 +44%
-------- -------------- ------------------ -------- -------- --------
Total Sports Fashion 5,808.0 5,631.1 1,129.1 1,289.4 8,049.6 +23%
-------- -------------- ------------------ -------- -------- --------
Outdoor (Reportable
Segment)
Total Outdoor 359.3 359.3 9.1 145.0 513.4 +40%
TOTAL GROUP 6,167.3 5,990.4 1,138.2 1,434.4 8,563.0 +24%
-------- -------------- ------------------ -------- -------- --------
1) Being revenues in the 52 week period to 30 January 2021
re-translated at the average exchange rate in the 52 week period to
29 January 2022
2) Being the net impact of acquisitions and disposals made in
the period and the annualisation of acquisitions made in the prior
period
3) Being revenue growth for the same period of ownership in both periods
4) Being organic revenue growth in the 52 week period to 29
January 2022 as a % of the revenues for the 52 week period to 30
January 2021 (as re-translated for current period exchange
rates).
Profit Before Tax and Adjusted Items
A reconciliation between profit before tax and profit before tax
and adjusted items is as follows:
2023 2022
(unaudited)
GBPm GBPm
Profit before tax 440.9 654.7
Adjusted items 550.5 292.5
-------------- ------
Profit before tax and adjusted items 991.4 947.2
-------------- ------
Alternative Performance Measures (continued)
The profit before tax and adjusted items for each operating
segment is calculated as follows:
52 Weeks to 28 January 2023 (unaudited)
Profit before tax and
adjusted items
Excluding Total Adjusted Profit
IP (1) IP (1) items before
tax
GBPm GBPm GBPm GBPm GBPm
Sports Fashion
(Reportable Segment)
Premium Retail Fascias
UK & ROI 356.2 83.6 439.8 (129.4) 310.4
Europe 92.6 (51.6) 41.0 0.3 41.3
Asia Pacific 61.7 (8.3) 53.4 (8.2) 45.2
North America 317.1 (23.7) 293.4 (303.9) (10.5)
---------- --------- ------ --------- --------
Sub-total Premium
Retail Fascias 827.6 - 827.6 (441.2) 386.4
---------- --------- ------ --------- --------
Other Retail Fascias
UK & ROI - Continuing 12.7 - 12.7 (3.7) 9.0
UK & ROI - Divested
(2) 7.0 - 7.0 (16.2) (9.2)
Europe 60.8 - 60.8 (38.7) 22.1
Asia Pacific 0.2 - 0.2 - 0.2
North America 44.7 - 44.7 - 44.7
---------- --------- ------ --------- --------
Sub-total Other Retail
Fascias 125.4 - 125.4 (58.6) 66.8
---------- --------- ------ --------- --------
Other Businesses 24.4 - 24.4 (10.9) 13.5
---------- --------- ------ --------- --------
Total Sports Fashion 977.4 - 977.4 (510.7) 466.7
---------- --------- ------ --------- --------
Outdoor (Reportable
Segment)
Total Outdoor 14.0 - 14.0 (39.8) (25.8)
Unallocated
Net Interest Expense - - - - -
991.4 - 991.4 (550.5) 440.9
---------- --------- ------ --------- --------
1) Being the intergroup charge for the use of the JD
intellectual property which is legally owned by JD Sports Fashion
Plc in the UK. This results in net income in the premium Sports
Fashion retail fascias in the United Kingdom and Republic of
Ireland which is offset by a charge in the international premium
Sports Fashion retail fascias. The Group reports the performance of
its operating segments excluding the impact of this intergroup
charge as this provides an indication of the operating segments'
underlying trading performance.
2) Being:
a. Divested 5 August 2022: Footasylum Limited
b. Divested 16 December 2022: Base Childrenswear Limited (80%
equity interest), Dantra Limited (75% equity interest), PG2019
Limited (100% equity interest), Prevu Studio Limited (100% equity
interest), Nicholas Deakins Limited (100% equity interest), Uggbugg
Fashion Limited - including its subsidiary Missy Empire Limited
(51% equity interest), Clothingsites Holdings Limited - including
its subsidiaries Clothingsites.co.uk Limited and Old Brown Bag
Clothing Limited (100% equity interest) and WHCO Limited -
including its subsidiaries: The Watch Shop Holdings Limited and
Watch Shop Logistics Limited (100% equity interest)
c. Divested 6 February 2023: Rascal Clothing Limited (75% equity
interest) following the exercise of a pre-emption right by one of
the founders
d. Divested 7 February 2023: Tessuti Limited (87.5% equity
interest) - including its subsidiaries Choice Limited and Giulio
Limited, R.D.Scott Limited (100% equity interest) and Catchbest
Limited (80% equity interest) to Frasers Group Plc as per the terms
of the transaction agreed on 16 December 2022
e. Divested 2 March 2023: Topgrade Sportswear Holdings Limited
(80% equity interest) to Frasers Group Plc as per the terms of the
transaction agreed on 16 December 2022
Alternative Performance Measures (continued)
52 Weeks to 29 January 2022
Profit before tax and
adjusted items
Excluding Total Adjusted Profit
IP (1) IP (1) items before
tax
GBPm GBPm GBPm GBPm GBPm
Sports Fashion
(Reportable Segment)
Premium Retail Fascias
UK & ROI 386.4 50.9 437.3 - 437.3
Europe 29.2 (20.6) 8.6 1.1 9.7
Asia Pacific 36.6 (5.7) 30.9 - 30.9
North America 322.2 (24.6) 297.6 (239.7) 57.9
Sub-total Premium
Retail Fascias 774.4 - 774.4 (238.6) 535.8
---------- --------- ------ --------- --------
Other Retail Fascias
UK & ROI - Continuing 14.3 - 14.3 0.1 14.4
UK & ROI - Divested
(2) 19.6 - 19.6 (2.6) 17.0
Europe 51.3 - 51.3 (51.2) 0.1
Asia Pacific - - - - -
North America 45.4 - 45.4 - 45.4
Sub-total Other Retail
Fascias 130.6 - 130.6 (53.7) 76.9
---------- --------- ------ --------- --------
Other Businesses 23.3 - 23.3 (0.2) 23.1
---------- --------- ------ --------- --------
Total Sports Fashion 928.3 - 928.3 (292.5) 635.8
---------- --------- ------ --------- --------
Outdoor (Reportable
Segment)
Total Outdoor 25.9 - 25.9 - 25.9
Unallocated
Net Interest Expense (7.0) - (7.0) - (7.0)
947.2 - 947.2 (292.5) 654.7
---------- --------- ------ --------- --------
1) Being the intergroup charge for the use of the JD
intellectual property which is legally owned by JD Sports Fashion
Plc in the UK. This results in net income in the premium Sports
Fashion retail fascias in the United Kingdom and Republic of
Ireland which is offset by a charge in the international premium
Sports Fashion retail fascias. The Group reports the performance of
its operating segments excluding the impact of this intergroup
charge as this provides an indication of the operating segments'
underlying trading performance.
2) Being:
a. Divested 5 August 2022: Footasylum Limited
b. Divested 16 December 2022: Base Childrenswear Limited (80%
equity interest), Dantra Limited (75% equity interest), PG2019
Limited (100% equity interest), Prevu Studio Limited (100% equity
interest), Nicholas Deakins Limited (100% equity interest), Uggbugg
Fashion Limited - including its subsidiary Missy Empire Limited
(51% equity interest), Clothingsites Holdings Limited - including
its subsidiaries Clothingsites.co.uk Limited and Old Brown Bag
Clothing Limited (100% equity interest) and WHCO Limited -
including its subsidiaries: The Watch Shop Holdings Limited Watch
Shop Logistics Limited (100% equity interest)
c. Divested 6 February 2023: Rascal Clothing Limited (75% equity
interest) following the exercise of a pre-emption right by one of
the founders
d. Divested 7 February 2023: Tessuti Limited (87.5% equity
interest) - including its subsidiaries Choice Limited and Giulio
Limited, R.D.Scott Limited (100% equity interest) and Catchbest
Limited (80% equity interest) to Frasers Group Plc as per the terms
of the transaction agreed on 16 December 2022
e. Divested 2 March 2023: Topgrade Sportswear Holdings Limited
(80% equity interest) to Frasers Group Plc as per the terms of the
transaction agreed on 16 December 2022
Consolidated Income Statement
For the 52 weeks ended 28 January 2023
52 weeks to 52 weeks to
28 January 29 January 2022
2023
Note (unaudited)
GBPm GBPm
Revenue 10,125.0 8,563.0
Cost of sales (5,285.3) (4,355.0)
--------------- --- ------------------
Gross profit 4,839.7 4,208.0
Selling and distribution expenses (3,315.6) (2,808.1)
Administrative expenses - normal (497.3) (413.4)
Administrative expenses - adjusted (550.5) (292.5)
Other operating income 33.5 27.2
Operating profit 509.8 721.2
Before adjusted items 1,060.3 1,013.7
Adjusted items 3 (550.5) (292.5)
------------------
Operating profit 509.8 721.2
Financial income 8.4 1.4
Financial expenses (77.3) (67.9)
--------------- --- ------------------
Profit before tax 440.9 654.7
Income tax expense (214.2) (195.1)
Profit for the period 226.7 459.6
--------------- --- ------------------
Attributable to equity holders
of the parent 142.5 369.7
Attributable to non-controlling
interests 84.2 89.9
Basic earnings per ordinary share 4 2.76p 7.17p
--------------- --- ------------------
Diluted earnings per ordinary
share 4 2.76p 7.17p
--------------- --- ------------------
Consolidated Statement of Comprehensive Income
For the 52 weeks ended 28 January 2023
52 weeks to
28 January
2023 52 weeks to
29 January
(unaudited) 2022
GBPm GBPm
Profit for the period 226.7 459.6
Other comprehensive income:
Items that may be classified subsequently
to the Consolidated Income Statement:
Exchange differences on translation of
foreign operations 129.9 (34.9)
Total other comprehensive income for
the period 129.9 (34.9)
-------------- --- ------------
Total comprehensive income and expense
for the period
(net of income tax) 356.6 424.7
-------------- --- ------------
Attributable to equity holders of the
parent 238.4 357.3
Attributable to non-controlling interests 118.2 67.4
-------------- --- ------------
Consolidated Statement of Financial Position
As at 28 January 2023
As at As at
28 January 29 January
2023 2022
(unaudited)
GBPm GBPm
Assets
Intangible assets 1,459.4 1,473.6
Property, plant and equipment 875.6 688.5
Right-of-use assets 2,137.0 2,032.6
Investments in associates and joint
ventures 38.8 56.2
Other assets 56.9 57.0
Loans to associates and joint ventures 7.6 -
Forward contract asset 0.8 2.5
Deferred tax assets 12.9 81.7
Total non-current assets 4,589.0 4,392.1
-------------- --- ----------------
Inventories 1,466.4 989.4
Right of return assets 15.2 12.5
Trade and other receivables 248.6 202.9
Income tax receivables - 0.6
Assets held-for-sale 123.0 157.1
Cash and cash equivalents 1,582.5 1,314.0
-------------- --- ----------------
Total current assets 3,435.7 2,676.5
-------------- --- ----------------
Total assets 8,024.7 7,068.6
-------------- --- ----------------
Liabilities
Interest-bearing loans and borrowings (75.2) (72.6)
Lease liabilities (423.8) (379.0)
Trade and other payables (1,471.2) (1,279.5)
Liabilities directly associated
with assets held-for-sale (165.6) (142.6)
Provisions (9.7) (13.2)
Income tax liabilities (17.5) -
-------------- --- ----------------
Total current liabilities (2,163.0) (1,886.9)
-------------- --- ----------------
Interest-bearing loans and borrowings (38.0) (55.5)
Lease liabilities (1,915.4) (1,863.9)
Put and call option liabilities (1,061.2) (764.8)
Other payables (102.4) (10.6)
Provisions (21.1) (19.9)
Deferred tax liabilities (90.2) (127.4)
-------------- --- ----------------
Total non-current liabilities (3,228.3) (2,842.1)
-------------- --- ----------------
Total liabilities (5,391.3) (4,729.0)
-------------- --- ----------------
Total assets less total liabilities 2,633.4 2,339.6
-------------- --- ----------------
Consolidated Statement of Financial Position (continued)
As at 28 January 2023
As at As at
28 January 29 January
2023 2022
(unaudited)
GBPm GBPm
Capital and reserves
Issued ordinary share capital 2.5 2.5
Share premium 467.5 467.5
Retained earnings 2,011.4 1,910.6
Other reserves (361.9) (454.6)
Total equity attributable to equity holders
of the parent 2,119.5 1,926.0
Non-controlling interests 513.9 413.6
-------------- ------------
Total equity 2,633.4 2,339.6
-------------- ------------
Consolidated Statement of Changes in Equity
For the 52 weeks ended 28 January 2023
Share-based Foreign Total Equity
Payment Currency Attributable
Ordinary Share Retained Other Reserve Translation to Equity
Share Capital Premium Earnings Equity GBPm Reserve Holders
GBPm GBPm GBPm GBPm GBPm of The
Parent
GBPm
Balance at 30 January
2021 2.4 11.7 1,560.8 (308.4) - (27.8) 1,238.7
Profit for the period - - 369.7 - - - 369.7
Other comprehensive income:
Exchange differences
on translation of foreign
operations - - - - - (12.4) (12.4)
--------- ----------------
Total other comprehensive
income - - - - - (12.4) (12.4)
----- --------- ----------- ---------------------- ----- --------- ----------------
Total comprehensive income
for the period - - 369.7 - - (12.4) 357.3
Dividends to equity holders - - (14.9) - - - (14.9)
Put and call options
held with non-controlling
interests - - - (106.1) - - (106.1)
Share capital issued 0.1 455.8 - - - - 455.9
Acquisition of
non-controlling
interests - - 0.4 - - - 0.4
Divestment of non-controlling
interests - - (5.4) - - - (5.4)
Share-based payment charge - - - - 0.1 - 0.1
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 - - 142.5 - - - 142.5
Other comprehensive income:
Exchange differences
on translation of foreign
operations - - - - - 95.9 95.9
----- --------- ----------- ---------------------- ----- --------- ----------------
Total other comprehensive
income - - - - - 95.9 95.9
----- --------- ----------- ---------------------- ----- --------- ----------------
Total comprehensive income
for the period - - 142.5 - - 95.9 238.4
Dividends to equity holders - - (24.8) - - - (24.8)
Put and call options
held with non-controlling
interests - - - (19.1) - - (19.1)
Divestment of put options
held by non-controlling
interests - - - 4.5 - - 4.5
Lapsed put options held
by non-controlling interests - - - 11.2 - - 11.2
Acquisition of
non-controlling
interests - - (16.9) - - - (16.9)
Share-based payment charge - - - - 0.2 - 0.2
Balance at 28 January
2023 2.5 467.5 2,011.4 (417.9) 0.3 55.7 2,119.5
(unaudited)
----- --------- ----------- ---------------------- ----- --------- -------------------
Consolidated Statement of Changes in Equity (continued)
For the 52 weeks ended 28 January 2023
Total Equity Attributable
to Equity Holders Non-Controlling Total
of The Parent Interests Equity
GBPm GBPm GBPm
Balance at 30 January 2021 1,238.7 257.7 1,496.4
Profit for the period 369.7 89.9 459.6
Other comprehensive income:
Exchange differences on translation
of foreign operations (12.4) (22.5) (34.9)
------------------ --------- ---------
Total other comprehensive income (12.4) (22.5) (34.9)
------------------ --------- ---------
Total comprehensive income for the
period 357.3 67.4 424.7
Dividends to equity holders (14.9) (1.8) (16.7)
Put and call options held with non-controlling
interests (106.1) - (106.1)
Share capital issued 455.9 - 455.9
Acquisition of non-controlling interests 0.4 (0.5) (0.1)
Divestment of non-controlling interests (5.4) 48.0 42.6
Non-controlling interests arising
on acquisition - 42.8 42.8
Share-based payment charge 0.1 - 0.1
Balance at 29 January 2022 1,926.0 413.6 2,339.6
------------------ --------- ---------
Profit for the period 142.5 84.2 226.7
Other comprehensive income:
Exchange differences on translation
of foreign operations 95.9 34.0 129.9
------------------ --------- ---------
Total other comprehensive income 95.9 34.0 129.9
------------------ --------- ---------
Total comprehensive income for the
period 238.4 118.2 356.6
Dividends to equity holders (24.8) (2.8) (27.6)
Put and call options held with non-controlling
interests (19.1) - (19.1)
Divestment of put options held by
non-controlling interests 4.5 - 4.5
Lapsed put options held by non-controlling
interests 11.2 - 11.2
Acquisition of non-controlling interests (16.9) (16.4) (33.3)
Divestment of non-controlling interests - (0.3) (0.3)
Non-controlling interests arising
on acquisition - 1.6 1.6
Share-based payment charge 0.2 - 0.2
Balance at 28 January 2023 (unaudited) 2,119.5 513.9 2,633.4
------------------ --------- ---------
Consolidated Statement of Cash Flows
For the 52 weeks ended 28 January 2023
52 weeks 52 weeks
to to
28 January 29 January
2023 2022
(unaudited)
GBPm GBPm
Cash flows from operating activities
Profit for the period 226.7 459.6
Income tax expense 214.2 195.1
Financial expenses 77.3 67.9
Financial income (8.4) (1.4)
Depreciation and amortisation of non-current
assets 633.2 579.9
Forex losses / (gains) on monetary assets and
liabilities 2.5 (2.1)
Impairment of other intangibles and non-current
assets (non-adjusted items) 3.4 13.2
Loss on disposal of non-current assets 5.1 3.5
Other adjusted items 407.3 287.0
Impairment of goodwill and fascia names (adjusted 117.6 -
items)
Impairment of investments in associates and 19.6 -
joint ventures (adjusted items)
Impairment of non-current assets (adjusted
items) 6.0 5.5
Share of profit of equity-accounted investees,
net of tax (4.9) (3.2)
Increase in inventories (501.3) (31.8)
Increase in trade and other receivables (42.2) (69.3)
Increase in trade and other payables 177.1 69.8
Interest paid (8.4) (8.4)
Lease interest (68.9) (59.5)
Income taxes paid (174.4) (244.1)
-------------- -----------------
Net cash from operating activities 1,081.5 1,261.7
-------------- -----------------
Cash flows from investing activities
Interest received 8.4 1.4
Proceeds from sale of non-current assets 11.5 7.8
Investment in software (19.9) (14.9)
Acquisition of property, plant and equipment (326.6) (227.3)
Acquisition of non-current other assets (12.8) (5.7)
Drawdown of finance lease liabilities 7.5 5.4
Dividends received from equity-accounted
investees 3.4 6.9
Cash consideration of disposals (net of 59.6 -
cash disposed)
Deferred consideration paid (29.2) -
Investments in associates and joint ventures (2.8) (57.2)
Acquisition of subsidiaries, net of cash
acquired (20.0) (559.3)
Net cash used in investing activities (320.9) (842.9)
-------------- -----------------
Cash flows from financing activities
Repayment of interest-bearing loans and
borrowings (37.4) (513.3)
Drawdown of interest-bearing loans and
borrowings 15.5 303.7
Repayment of lease liabilities (400.5) (356.2)
Proceeds received from issue of shares - 455.9
Divestment of non-controlling interests 0.1 43.1
Acquisition of non-controlling interests (29.3) (0.1)
Consolidated Statement of Cash Flows
(continued)
For the 52 weeks ended 28 January 2023 52 weeks to 52 weeks
28 January to
2023 29 January
(unaudited) 2022
GBPm
GBPm
Equity dividends paid (24.8) (14.9)
Dividends paid to non-controlling interests
in subsidiaries (2.8) (1.8)
------------------ -------------
Net cash used in financing activities (479.2) (83.6)
------------------ -------------
Net increase in cash and cash equivalents 281.4 335.2
Cash and cash equivalents at the beginning
of the period 1,280.4 948.7
Foreign exchange losses on cash and cash
equivalents (12.9) (3.5)
------------------ -------------
Cash and cash equivalents at the end
of the period 1,548.9 1,280.4
------------------ -------------
Analysis of Net Debt
As at 28 January 2023
At 29 Non- At 28
January On acquisition Cash cash January
of subsidiaries
2022 (unaudited) flow movements 2023
GBPm (unaudited) (unaudited) (unaudited)
GBPm GBPm GBPm GBPm
Cash at bank and in hand 1,314.0 1.1 280.3 (12.9) 1,582.5
Overdrafts (33.6) - - - (33.6)
---------- ------------------ -------------- -------------- -------------------
Cash and cash equivalents 1,280.4 1.1 280.3 (12.9) 1,548.9
Interest-bearing loans
and borrowings:
Bank loans (94.5) (3.8) 21.9 (3.2) (79.6)
Net cash / (financial
debt) before lease
liabilities 1,185.9 (2.7) 302.2 (16.1) 1,469.3
Lease liabilities (2,242.9) (6.7) 393.0 (482.6) (2,339.2)
---------- ------------------ -------------- -------------- -------------------
Net cash / (debt) (1,057.0) (9.4) 695.2 (498.7) (869.9)
---------- ------------------ -------------- -------------- -------------------
1. Basis of Preparation
General Information
JD Sports Fashion Plc (the 'Company') is a company incorporated
and domiciled in the United Kingdom. The financial statements for
the 52 week period ended 28 January 2023 represent those of the
Company and its subsidiaries (together referred to as the
'Group').
Accounts
The financial information set out above does not constitute the
Group's statutory accounts for the 52 weeks ended 28 January 2023
or 52 weeks ended 29 January 2022. The financial information for
the 52 weeks ended 29 January 2022 is derived from the statutory
accounts for the 52 weeks ended 29 January 2022 which have been
delivered to the registrar of companies. The auditor has reported
on the 52 weeks ended 29 January 2022 accounts; their report 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 (2) or (3) of the Companies Act 2006. The statutory
accounts for the 52 weeks ended 28 January 2023 will be finalised
on the basis of the financial information presented by the
directors in this preliminary announcement and will be delivered to
the registrar of companies in due course. Copies of full accounts
will be also be sent to shareholders by the end of May. Additional
copies will be available from JD Sports Fashion Plc, Hollinsbrook
Way, Pilsworth, Bury, Lancashire, BL9 8RR or online at
www.jdplc.com.
Basis of Preparation
The Group financial statements, from which these results have
been extracted, were prepared in accordance with UK-adopted
International Accounting Standards.
The financial statements are presented in Pounds Sterling,
rounded to the nearest tenth of a million. The financial statements
have been prepared under the historical cost convention, as
modified for financial assets and liabilities (including derivative
instruments) at fair value through the Consolidated Income
Statement and also put and call options held by the non-controlling
interests.
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods present in these
financial statements and have been applied consistently by all
Group entities. The Group has changed the presentation of certain
items for the financial period ended 28 January 2023 by
disaggregating elements of the Consolidated Income Statement and
Consolidated Statement of Financial Position. The primary aim of
this was to separate significant items and/or to facilitate the
cross-referencing to other disclosures within the financial
statements. This includes, but is not limited to, the share of
profit of equity-accounted investees in the Consolidated Income
Statement and the put and call option liabilities and investments
in associates and joint ventures in the Consolidated Statement of
Financial Position.
Going Concern
The Directors have prepared the Group financial statements on a
going concern basis for the following reasons:
At 28 January 2023, the Group had net cash balances of
GBP1,469.3 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 Group had net cash balances of GBP1,127.2 million and
GBPnil drawn down on the facilities as at 5 May 2023.
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 unaudited preliminary results, including specific
consideration of a range of impacts that could arise from
geopolitical tensions and the actual and potential impact on
inflationary cost pressures. These forecasts indicate that the
Group will be able to operate within the level of its agreed
facilities and covenant compliance. For the purposes of Going
Concern Reporting, 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 a significant business continuity event adversely
impacting one of the Group's main distribution centres and peak
trading. Further, the Directors have modelled the impact of a
significant cyber-attack resulting in a significant proportion of
the Group's stores being unable to trade for a period of one month,
impacting the peak trading period of December 2023.
A reverse stress test has also been performed, which
demonstrates that a reduction in revenue of 50% is required for the
Group to run out of cash and be fully drawn down on the available
facilities. This is not considered to be plausible.
1. Basis of Preparation (continued)
Going Concern (continued)
As part of this analysis, mitigating actions within the Group's
control, should these severe but plausible scenarios occur, have
also been considered, including reductions in capital expenditure,
discretionary spend and dividends. The Directors have also
considered the impact on the base case of the post balance sheet
event buy or sell notice re Iberian Sports Retail Group S.L. as
disclosed in Note 11. These forecast cash flows in the severe but
plausible downside scenario 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 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 unaudited
preliminary results. Accordingly, the financial statements have
been prepared on a going concern basis.
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 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
accounting for adjusted items. Adjusted 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 adjusted items, which are
presented as adjusted 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 adjusted is given in Note 3.
Further information can be found in the Alternative Performance
Measures section on page 19.
Adoption of New and Revised Standards
The following amendments to accounting standards and
interpretations, issued by the International Accounting Standards
Board ('IASB'), have been adopted for the first time by the Group
in the period with no significant impact on the consolidated
results or financial position:
- Amendments to IFRS 3 'Business Combinations'.
- Amendments to IAS 16 'Property, Plant and Equipment'.
- Amendments to IAS 37 'Provisions, Contingent Liabilities and
Contingent Assets'.
- Amendments to IFRS 9 'Financial Instruments'.
Other
The Group continues to monitor the potential impact of other new
standards and interpretations which 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.
Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with
adopted IFRSs 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. The estimates and
judgements disclosed below are those which have a significant risk
of causing a material adjustment to the carrying amount of assets
and liabilities. All other accounting estimates and judgements are
disclosed within the relevant accounting policy in the notes to the
financial statements.
1. Basis of Preparation (continued)
Change in Critical Accounting Estimate - Material Put and Call
Options (Genesis Topco Inc Put and Call Option GBP801.1 million,
ISRG Put Option GBP138.6 million and MIG Put and Call Option
GBP52.5million)
Put and call options are in place over all of the remaining
non-controlling interest shareholding in these subsidiaries and
these options are required to be measured at the present value of
the exercise price and this is reassessed at each period end.
Previous Accounting Estimate
In previous financial periods, the Group estimated the present
value of the exercise price of the put and call options using Board
approved forecasts multiplied by an earnings multiple. The option
formula and multiple are stated in the option agreements with the
exception of the ISRG option which does not have a multiple stated
in the agreement. In the absence of a specified formula or
multiple, the Group estimated this based on current evidence in the
Mergers & Acquisitions market and our past experience of
multiples paid for similar businesses. These forecast cash flows
were discounted using a discount rate reflecting the current market
assessment of the time value of money and any specific risk
premiums relevant to the individual businesses involved. These
discount rates were considered to be equivalent to the rates a
market participant would use.
Current Accounting Estimate
For the 52 week period ended 28 January 2023, a change in the
accounting estimation methodology was introduced using a
third-party valuation expert to independently determine the present
value of the exercise price of the material put and call options.
The revised approach uses a Monte-Carlo simulation model applying a
geometric Brownian motion to project the share price and arithmetic
Brownian motion for the projection of EBITDA. This was considered
to be a more suitable method of valuation given how material the
put and call options are in terms of value and the Directors
consider that this statistical based approach better accounts for
the variability in assumptions and risk. Previously, the Group used
a singular forecast model whereby the risk was dealt with via the
discount rate premia. The Monte-Carlo model is considered to be
more sophisticated in its simulation of historical and forecast
data and earnings volatility to assess potential impacts across a
wide range of future scenarios.
Change in Accounting Estimate
The change in accounting estimate has resulted in an increase to
the total put and call option liability for the three material put
and call options in relation to Genesis, MIG and ISRG of GBP170.6
million compared to the total put and call option liability
calculated using the previous accounting estimate of GBP890.6
million as at 28 January 2023. The Group considers that the change
in accounting estimate was a result of a modification in estimating
techniques, rather than a change in policy and therefore is
accounted for prospectively, in accordance with IAS 8.
Other Accounting Judgements
Groups of Cash-Generating Units ('Group CGUs')
The cash-generating units used to monitor goodwill and test it
for impairment are the store portfolios and individual businesses.
The cash-generating units are referred to throughout the Annual
Report as Group CGUs. Online sales channels are included at a Group
CGU level rather than allocating to individual stores as these
cashflows are not considered to be independent with no reasonable
basis of allocation. Corporate assets that contribute to the future
cash flows of more than one Group CGU are allocated to each Group
CGU on a pro-rata basis based on forecast turnover. This allocation
method has been applied consistently.
Other Accounting Estimates
Impairment of Goodwill and Other Intangible Assets
Goodwill is allocated to the 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. Other intangible
assets arising on acquisition, such as fascia names, brand names
and customer relationships are also allocated to the Group CGUs.
The recoverable amount, including the portion of the corporate
assets, is compared with the carrying amount of the Group CGU
including goodwill. The recoverable amount of an asset or Group CGU
is the greater of its value in use and its fair value less costs of
disposal. Value in use is based on the estimated future cash flows,
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset or Group CGU. See Note 3 for
further information regarding the impairment of goodwill recognised
during the period ended 28 January 2023.
Impairment of Brand Licences
At each reporting date, the Group reviews the carrying amounts
of its brand licences to determine whether there is any indication
of impairment. If any such indication exists, then the asset's
recoverable amount is estimated. Impairment losses are recognised
within administrative expenses in the Consolidated Income
Statement. The recoverable amount of brand licences is determined
based on value-in-use calculations. The use of this method requires
the estimation of future cash flows expected to arise from the
continuing operation of the relevant asset until the licence expiry
date and the choice of a suitable discount rate in order to
calculate the present value.
1. Basis of Preparation (continued)
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. In accordance with IAS 20 'Government
Grants', GBPnil furlough income was received by the Group's UK
subsidiaries during the 52 week period ended 28 January 2023 (52
week period ended 29 January 2022: GBP24.4 million) and GBPnil
income was received by the Group's international subsidiaries
(2022: GBP7.5 million). Income received in the previous period has
been shown as a deduction from employed staff costs. Further,
GBPnil rates relief was received by the Group's UK subsidiaries
during the period ended 28 January 2023 (2022: GBP31.0 million).
Rates relief received in the previous period has been shown as a
deduction from selling and distribution costs. During the period,
the Group's international subsidiaries received GBP3.9 million of
government support in relation to rent charges (2022: GBPnil) which
has been recognised within other operating income. During the
period ended 28 January 2023, the Group repaid the GBP24.4 million
of furlough income that it received from the UK Government in the
period ended 29 January 2022. The repayment was accrued for as at
29 January 2022 and was shown as an expense within employed staff
costs.
Share-Based Payments
The Executive Directors receive an element of remuneration in
the form of share-based payments. Share based payments are measured
at fair value at the grant date which is determined by the share
price on that date. The cost of share-based payments is recognised
as an expense, together with a corresponding increase in equity, on
a straight-line basis over the vesting period of the awards. The
amount recognised as an expense is adjusted to reflect the number
of awards for which the related service and non-market performance
conditions are expected to be met, such that the amount ultimately
recognised is based on the number of awards that meet the related
service and non-market performance conditions at the vesting
date.
An Employee Benefit Trust ('EBT') has been established to
facilitate the acquisition of ordinary shares to fund share awards
made to employees. The assets and liabilities of the EBT have been
included in the Group and Company accounts. The assets of the EBT
are held separately from those of the Company. The Group
consolidated statement of comprehensive income does not recognise
gains or losses on purchases or sales of own shares. The cost of
shares acquired by the EBT is recognised within equity. The Trustee
of the EBT has agreed to waive its rights to any and all dividends
paid.
Assets held for sale and disposals
Non-current assets, or disposal groups comprising assets and
liabilities, are classified as held-for-sale if it is highly
probable that they will be recovered primarily through sale rather
than through continuing use. Such assets, or disposal groups, are
generally measured at the lower of their carrying amount and fair
value less costs to sell. Any impairment loss on a disposal group
is allocated first to goodwill, and then to the remaining assets
and liabilities on a pro-rata basis, except that no loss is
allocated to inventories, financial assets, deferred tax assets or
investment property, which continue to be measured in accordance
with the Group's other accounting policies. Impairment losses on
initial classification as held-for-sale and subsequent gains and
losses on remeasurement are recognised in profit or loss. Once
classified as held-for-sale, intangible assets and property, plant
and equipment are no longer amortised or depreciated. On disposal
the balances are derecognised and the profit or loss on disposal is
recognised in the Consolidated Income Statement as an adjusted
item.
Provisions and Contingent Liabilities
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.
Climate Change
In preparing the financial statements, we have considered the
potential impact of climate change, primarily focusing on the
non-current assets within the Consolidated Statement of Financial
Position:
- The property, plant and equipment and right-of-use assets have
relatively short useful lives and those longer life assets such as
warehouses and head offices are in locations that we would not
expect to be physically impacted by climate change. Further, the
assets of the Group are geographically spread, reducing the risk
further.
- The Group assess the intangible assets for indicators of
impairment on an annual basis. As part of this assessment, the
forecast cash flows include capital expenditure budgets in relation
to climate-related investments such as solar or building management
systems.
- The Group's investments in joint ventures and associates
comprise our equity investments. These businesses operate in the
same sector as the Group and have a similar asset profile. There
are no indicators of a specific climate-related material risk in
relation to the investment in these businesses.
- The other non-current assets were also reviewed and no risk was identified.
In conclusion, there has been no material impact on the
financial statements, judgements or estimates as a result of
climate change.
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 Chief Executive Officer 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 are treated as unallocated,
reflecting the nature of the Group's syndicated borrowing
facilities.
The eliminations remove intercompany transactions and balances
between different segments which primarily relate to the net
drawdown 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 reportable operating segments
for the 52 weeks to 28 January 2023 is shown below:
Income statement (unaudited)
Sports
Fashion Outdoor Unallocated Total
GBPm GBPm GBPm GBPm
Gross revenue 9,560.9 564.1 - 10,125.0
Inter-segment revenue (0.3) 0.3 - -
----------- ---------- -------------- ----------
Revenue 9,560.6 564.4 - 10,125.0
----------- ---------- -------------- ----------
Gross profit % 48.1% 42.2% - 47.8%
Operating profit before adjusted
items 1,043.5 16.8 - 1,060.3
Adjusted items (510.7) (39.8) - (550.5)
----------- ---------- -------------- ----------
Operating profit / (loss) 532.8 (23.0) - 509.8
Financial income - - 8.4 8.4
Financial expenses (66.1) (2.8) (8.4) (77.3)
----------- ---------- -------------- ----------
Profit / (loss) before tax 466.7 (25.8) - 440.9
Income tax expense (214.2)
----------- ---------- -------------- ----------
Profit for the period 226.7
----------- ---------- -------------- ----------
Sports Fashion Outdoor Eliminations Total
GBPm GBPm GBPm GBPm
Total assets 7,756.2 462.1 (193.6) 8,024.7
Total liabilities (5,185.2) (399.7) 193.6 (5,391.3)
--------------- -------- ------------- ------------
Total segment net
assets
(unaudited) 2,571.0 62.4 - 2,633.4
--------------- -------- ------------- ------------
2 . Segmental analysis (continued)
Other segment information (unaudited)
Sports Fashion Outdoor Total
GBPm GBPm GBPm
Capital expenditure:
Software development 19.9 - 19.9
Brand licences 78.4 - 78.4
Property, plant and equipment 305.6 21.0 326.6
Right-of-use assets 372.8 35.6 408.4
Non-current other assets 12.8 - 12.8
--------------- -------- ------
Depreciation, amortisation and impairments:
Amortisation of intangible assets 71.6 4.4 76.0
Depreciation of property, plant and
equipment 154.1 7.9 162.0
Depreciation of right-of-use assets 372.2 23.0 395.2
Impairment of non-current assets (adjusted
items) 83.8 39.8 123.6
Impairment of investment in associates
and joint ventures (adjusted items) 19.6 - 19.6
Impairment of non-current assets (non-adjusted
items) 3.4 - 3.4
--------------- -------- ------
The comparative segmental results for the 52 weeks to 29 January
2022 are as follows:
Income statement
Sports
Fashion Outdoor Unallocated Total
GBPm GBPm GBPm GBPm
Gross revenue 8,049.7 513.3 - 8,563.0
Inter-segment revenue (0.1) 0.1 - -
--------- ---------- -------------- ----------
Revenue 8,049.6 513.4 - 8,563.0
--------- ---------- -------------- ----------
Gross profit % 49.5% 43.9% - 49.1%
Operating profit before
adjusted items 985.5 28.2 - 1,013.7
Adjusted items (292.5) - - (292.5)
--------- ---------- -------------- ----------
Operating profit 693.0 28.2 - 721.2
Financial income - - 1.4 1.4
Financial expenses (57.2) (2.3) (8.4) (67.9)
--------- ---------- -------------- ----------
Profit / (loss) before
tax 635.8 25.9 (7.0) 654.7
Income tax expense (195.1)
--------- ---------- -------------- ----------
Profit for the period 459.6
--------- ---------- -------------- ----------
2. Segmental analysis (continued)
Sports Fashion Outdoor Eliminations Total
(restated1) (restated1) GBPm GBPm
GBPm GBPm
Total assets 6,762.6 422.0 (116.0) 7,068.6
Total liabilities (4,517.8) (327.2) 116.0 (4,729.0)
--------------- ------------- ------------- ------------
Total segment net
assets 2,244.8 94.8 - 2,339.6
--------------- ------------- ------------- ------------
(1) Certain prior period amounts have been reclassified for
consistency with the current period presentation. These
reclassifications had no effect on the reported results of
operations. A presentational adjustment was made between
Unallocated, Sports Fashion and Outdoor, with amounts reported in
the 2022 financial statements previously designated as Unallocated
now designated to either Sports Fashion or Outdoor. These items
were a deferred tax asset of GBP81.7 million, a deferred tax
liability of GBP127.4 million and an income tax receivable of
GBP0.6 million.
Other segment information
Sports
Fashion Outdoor Total
GBPm GBPm GBPm
Capital expenditure:
Software development 14.9 - 14.9
Brand licences 5.2 - 5.2
Property, plant and equipment 221.8 5.5 227.3
Right-of-use assets 467.6 54.4 522.0
Non-current other assets 5.7 - 5.7
--------- ---------- ---------
Depreciation, amortisation and impairments:
Amortisation of intangible assets 59.4 4.0 63.4
Depreciation of property, plant and
equipment 149.3 8.9 158.2
Amortisation of non-current other
assets 0.1 - 0.1
Depreciation of right-of-use assets 341.6 16.6 358.2
Impairment of non-current assets (adjusted
items) 5.5 - 5.5
Impairment of non-current assets (non-adjusted
items) 12.0 1.2 13.2
--------- ---------- ---------
2. Segmental analysis (continued)
Geographical Information
The Group's operations are located in the UK, Andorra,
Australia, Austria, Belgium, Bosnia and Herzegovina, Bulgaria,
Canada, Croatia, Cyprus, Czech Republic, Denmark, 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, the UAE 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:
2023 2022
(unaudited)
GBPm GBPm
UK and ROI 3,826.7 3,578.5
Europe 2,659.9 2,046.7
North America 3,150.1 2,609.2
Rest of world 488.3 328.6
-------------- --- --------
10,125.0 8,563.0
-------------- --- --------
The revenue from any individual country, with the exception of
the UK & US, is not more than 10% of the Group's total
revenue.
The following table provides analysis of the Group's revenue by
channel:
2023 2022
(unaudited)
GBPm GBPm
Retail stores 7,345.6 5,668.5
Multichannel 2,460.8 2,623.1
Other (1) 318.6 271.4
10,125.0 8,563.0
-------------- --- --------
(1) Other relates to revenue from leisure club memberships and
wholesale revenue.
The following table provides analysis of the Group's revenue by
product type:
2023 2022
(unaudited)
GBPm GBPm
Footwear 5,471.4 4,590.4
Apparel 3,560.6 3,199.9
Accessories 629.6 540.6
Other (2) 463.4 232.1
10,125.0 8,563.0
-------------- --- --------
(2) Other relates to revenue from sales of outdoor living
equipment, delivery income and revenue from leisure club
memberships.
2 . Segmental analysis (continued)
Non-current assets analysis
The following is an analysis of the carrying amount of segmental
non-current assets by the geographical area in which the assets are
located.
2023 2022
(unaudited) (restated3)
GBPm GBPm
UK and ROI 1,222.2 1,239.8
Europe 1,449.5 1,348.1
North America 1,758.8 1,643.6
Rest of world 158.5 160.6
4,589.0 4,392.1
-------------- --- -------------
(3) Certain prior period amounts have been reclassified for
consistency with the current period presentation. These
reclassifications had no effect on the reported results of
operations. A presentational adjustment was made between
Unallocated and the geographical areas listed above with the
deferred tax asset of GBP81.7 million reported in the 2022
financial statements previously designated as Unallocated now
designated to the appropriate geographical area.
3. Adjusted items
52 weeks to 52 weeks to
28 January 29 January
2023 2022
(unaudited)
GBPm GBPm
Impairment of intangible assets and impairments 137.2 -
(1)
Items that are unusual in nature or outside
of the normal course of business:
Movement in present value of put and call
options (2) 296.2 292.7
Insurance settlement for DTLR (3) - (16.6)
Items as a result of acquisitions, divestments,
major business changes or restructuring:
Divestment and restructuring (4) 129.6 16.4
Deferred consideration release (5) (12.5) -
Administrative expenses - adjusted items 550.5 292.5
-------------- ------------
1. The impairment in the current period primarily relates to the
impairment of goodwill and fascia name arising on the acquisition
of Deporvillage (GBP24.7 million), Hairburst (GBP21.6 million),
Leisure Lakes (GBP21.1 million), Wheelbase (GBP18.7 million),
Bodytone (GBP12.4 million), Missy Empire (GBP10.2 million),
Livestock (GBP7.1 million), Wellgosh (GBP1.0 million), Oi Polloi
(GBP0.7 million) and Philip Browne (GBP0.1 million). In addition
there is an impairment charge for the investment in Gym King of
GBP19.6 million.
2. Movement in the present value of the liabilities in respect
of put and call options as re-measured at each reporting date
(GBP295.0 million), comprising Genesis Topco Inc charge of GBP280.8
million (2022: charge of GBP258.7 million), Iberian Sports Retail
Group charge of GBP19.6 million (2022: charge of GBP31.6 million),
Marketing Investment Group S.A: a charge of GBP0.5 million (2022:
charge of GBP1.7 million) and a credit of GBP5.9 million (2022:
charge of GBP0.7 million) in relation to the other put and call
options held by non-controlling interests. Also included is a
charge of GBP1.2 million relating to an element of put and call
option agreements that have been treated as a long-term employee
benefit under IAS 19.
3. Insurance settlement proceeds in the prior period 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 in Note 5.
3. Adjusted items (continued)
4. The divestment and restructuring charge relates to the
divestment of UK-based non-core fashion business assets (GBP106.7
million) and Footasylum (GBP14.8 million) plus the closure costs
associated with JD's announced withdrawal from the South Korean
market in the current period (GBP8.1 million) being business
restructuring costs of GBP2.1 million and a charge of GBP6.0
million in relation to the impairment of non-current assets. (2022:
The impact of 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 GBP10.9
million).
5. Acquisition related release of contingent consideration for
Leisure Lakes (GBP10.5 million) and Total Swimming Holdings Limited
(GBP2.0 million).
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 0.25
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 was adjusted in the comparative period
ended 29 January 2022 for the proportionate change, as if the event
had occurred at the beginning of the earliest period presented. On
20 December 2022, JD Sports Fashion Plc completed the placing of
new ordinary shares in the Capital of the Company. A total of
25,000,000 new ordinary shares were issued, increasing the total
ordinary shares in issue to 5,183,135,745.
The calculation of basic earnings per ordinary share at 28
January 2023 is based on the profit for the period attributable to
equity holders of the parent of GBP142.5 million (2022: GBP369.7
million) and a weighted average number of ordinary shares
outstanding during the 52 week period ended 28 January 2023 of
5,158,135,745 (2022: 5,158,135,745). Adjusted 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 adjusted items. The
Directors consider that this gives a more useful measure of the
trading performance and profitability of the Group.
52 weeks 52 weeks to
to 29 January
28 January 2022
2023
(unaudited) millions
millions
Issued ordinary shares at beginning
of period 5,158.1 4,866.2
Ordinary shares issued on 3 February
2021 - 291.9
Ordinary shares issued on 20 December 25.0 -
2022
-------------- --------------
Issued ordinary shares at end
of period 5,183.1 5,158.1
-------------- --------------
52 weeks 52 weeks
to to
28 January 29 January
2023 2022
Note (unaudited)
GBPm GBPm
Profit for the period attributable to
equity holders of the parent 142.5 369.7
Adjusted items 3 550.5 292.5
Tax relating to adjusted items (2.4) 0.3
Profit for the period attributable to
equity holders of the parent excluding
adjusted items 690.6 662.5
-------------------- --- --------------
Adjusted earnings per ordinary share 13.39p 12.84p
-------------------- --- --------------
Basic earnings per ordinary share 2.76p 7.17p
------ ------
4. Earnings per ordinary share (continued)
52 weeks 52 weeks to
to 29 January
28 January 2022
2023
(unaudited) millions
millions
Weighted average number of ordinary
shares at beginning of period 5,158.1 4,866.2
Effect of ordinary shares issued on
3 February 2021 - 291.9
Effect of ordinary shares issued on 2.8 -
20 December 2022
Effect of ordinary shares held by (2.4) -
the JD Sports Employee Benefit Trust
as treasury shares[1]
Weighted average number of ordinary
shares at end of period (basic) 5,158.5 5,158.1
-------------- --------------
Diluted Earnings Per Ordinary Share
Diluted earnings per ordinary share is 2.76p (2022: 7.17p).
Diluted adjusted earnings per share is 13.39p (2022: 12.84p).
The calculation of diluted earnings per ordinary share at 28
January 2023 is based on the profit for the period attributable
to equity holders of the parent of GBP142.5 million (2022:
GBP369.7 million) and a weighted average number of ordinary
shares
outstanding during the period after adjusted for the effects of
all dilutive potential ordinary shares calculated as follows:
52 weeks 52 weeks to
to 29 January
28 January 2022
2023
(unaudited) millions
millions
Weighted average number of ordinary
shares at beginning of period (diluted) 5,158.2 4,866.2
Effect of ordinary shares issued on
3 February 2021 - 291.9
Effect of shares granted on 20 October
2021 under the LTIP 2021 - 0.1
Effect of ordinary shares issued on 2.8 -
20 December 2022
Effect of ordinary shares held by (2.4) -
the JD Sports Employee Benefit Trust
as treasury shares1
Weighted average number of ordinary
shares at end of period (diluted) 5,158.6 5,158.2
-------------- ----------------
5. Acquisitions
Current Period - Non-Significant Acquisitions
Fair values
acquired
(unaudited)
GBPm
Acquiree's net assets at acquisition date:
Intangible assets 6.6
Property, plant and equipment 19.3
Right-of-use assets 9.2
Inventories 0.4
Cash and cash equivalents 1.1
Trade and other receivables 3.3
Trade and other payables (11.6)
Bank loans and overdrafts (3.8)
Deferred tax liability (3.7)
Lease liabilities (6.7)
Provisions (0.5)
Net identifiable assets 13.6
-------------
Non-controlling interests (various) (1.6)
Goodwill on acquisition 12.6
21.1
3.5
-------------
Consideration - satisfied in cash
Consideration - deferred
Total consideration 24.6
-------------
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 was payable if certain targets and performance criteria are
achieved. The fair value of the contingent consideration as at the
acquisition date was determined to be GBP3.5 million. During the
financial period ended 28 January 2023, one of the performance
criteria for receiving the deferred consideration was not met.
Since this was as a result of a post-acquisition event, the release
of GBP2.0 million of contingent consideration was taken through the
Consolidated Income Statement (Note 3). The fair value of the
remaining contingent consideration as at 28 January 2023 was
determined to be GBP1.4 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 and
call option liability has been performed using an earnings
multiple, a suitable discount rate and Board approved forecasts,
and the initial liability of GBP9.2 million has been recognised
with the corresponding entry to Other Equity in accordance with the
present value method of accounting. The present value of these
options is required to be estimated at each accounting period
date.
5. Acquisitions (continued)
Included within the 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. 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 28 January 2023 is revenue
of GBP15.4 million and a profit before tax of GBP0.1 million in
respect of Total Swimming Holdings.
Other Acquisitions
During the period, the Group made two other acquisitions which
were not material. The acquiree's net assets at acquisition related
to these acquisitions are also included in the fair value table
above.
Full Period Impact of Acquisitions
Had the acquisitions of the entities acquired been affected at
30 January 2022, the revenue and profit before tax of the Group for
the 52 week period to 28 January 2023 would have been GBP10.1
billion and GBP227.1 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 period, within administrative
expenses in the Consolidated Income Statement.
Acquisition of Non-Controlling Interests
JD Sports Fashion Korea Inc
On 6 September 2022, JD Sports Fashion Plc acquired the
remaining 50% of the issued share capital in its existing
subsidiary JD Sports Fashion Korea Inc for a cash consideration of
26.1 billion KRW (GBP16.4 million). The Group now owns 100% of the
issued share capital of JD Sports Fashion Korea Inc. In accordance
with IFRS 10, the Group had previously assessed and concluded that
it controlled the subsidiary. As the acquisition on 6 September
2022 does not result in a change of control, this has been
accounted for as an equity transaction.
During the period ended 28 January 2023, the Group announced
that JD would be withdrawing from the South Korean market (see Note
3 for details of the provision for closure costs).
Deporvillage S.L.
On 14 October 2022, Iberian Sports Retail Group S.L. ('ISRG'),
the Group's existing intermediate holding company in Spain,
acquired a further 18% of the issued share capital in its existing
subsidiary Deporvillage S.L. for a cash consideration of EUR14.8
million (GBP12.9 million) and deferred consideration of EUR5.0
million (GBP4.3 million) subject to the non-controlling interests
abiding by certain non-compete obligations. 50% of the deferred
consideration is due within one year of the completion date of 14
October 2022 with the remaining 50% due on the second anniversary
of the completion date. ISRG now owns 98% of the issued share
capital and the Group now owns an effective shareholding of 49% of
the issued share capital of Deporvillage S.L. In accordance with
IFRS 10, the Group had previously assessed and concluded that it
controlled the subsidiary. As the acquisition on 14 October 2022
does not result in a change of control, this has been accounted for
as an equity transaction.
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, enhances 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 from the date of
acquisition. In the prior period, a valuation of these put and call
options was 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.
The present value of these options is required to be estimated 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)
Measurement Fair value
Book value adjustments at
GBPm GBPm 17 March 2021
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets 43.7 62.9 106.6
Property, plant and 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 has been paid in February 2023.
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 JD stores in Eastern Europe with JD
stores now in Poland, Romania, Lithuania and Hungary.
Put and call options to enable future exit opportunities for the
40% shareholders have also been agreed and become exercisable after
the period ending January 2025. In the prior period, a valuation of
these put and call options was 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. The present value of these options is
required to be estimated 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 and 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 (paid February 2.4
2023)
----------- -------------- ---------------
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 period-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 were also agreed and became exercisable from 2024
onwards. In the prior period, a valuation of these put and call
options was 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. The present value of these options was required to be
estimated at each accounting period date. During the period ended
28 January 2023, these put and call options lapsed as a result of a
further acquisition of 18% of the issued share capital of
Deporvillage by ISRG. Revised put and call options over the
remaining 2% are now held by the non-controlling interest
shareholders.
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. An
impairment charge of GBP24.7 million has been recognised during the
period ended 28 January 2023 against the intangibles recorded on
acquisition The goodwill calculation is summarised below:
Measurement Fair value
Book value adjustments at 3 August
GBPm GBPm 2021
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets 0.9 48.4 49.3
Property, plant and 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. In the prior period, a valuation of these put and
call options was 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. The present value of these options is required to be
estimated 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. 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:
Fair value
Measurement at
Book value adjustments 21 October
GBPm GBPm 2021
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets - 13.3 13.3
Property, plant and equipment 14.0 - 14.0
Non-current other 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 and 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 interests (various) (11.6)
Goodwill on acquisition 126.7
--------------
Total consideration (including GBP18.7
million deferred) 193.0
--------------
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 was an intangible asset of GBP0.9 million representing
the Missy Empire fascia name. At the date of acquisition, 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. 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. An impairment charge
of GBP10.2 million has been recognised during the period ended 28
January 2023 against the intangibles recorded on acquisition.
Put and call options over 9% of the remaining 49% shareholding
were also agreed and became exercisable after the period ending
January 2025. In the prior period, a valuation of these put and
call options was performed using an earnings multiple, a suitable
discount rate and approved forecasts, and the initial liability of
GBP1.4 million was recognised with the corresponding entry to Other
Equity in accordance with the present value method of accounting.
The present value of these options was required to be estimated at
each accounting period date. On 16 December 2022, the Group
announced its plan to simplify its fashion branded offer and as a
result disposed of Uggbugg Fashion Limited including its subsidiary
Missy Empire Limited (see Note 6). As a result of the disposal,
these put and call options lapsed and are no longer
exercisable.
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. At the date of acquisition, the Board believed that
the excess of consideration paid over net assets on acquisition of
GBP10.6 million was 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.
On 16 December 2022, the Group announced its plan to simplify
its fashion branded offer and as a result disposed of The Watch
Shop Holdings Limited including its subsidiary Watch Shop Logistics
Limited (see Note 6).
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 was 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. This was
subsequently paid in November 2022.
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 was best considered as goodwill on acquisition representing
future operating
5. Acquisitions (continued)
Bodytone International Sport S.L. (continued)
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. An impairment charge of GBP12.4 million has been
recognised during the period ended 28 January 2023 against the
intangibles recorded on acquisition.
Put and call options over the remaining 49.9% shareholding were
also agreed and become exercisable in tranches from 2024 onwards.
In the prior period, a valuation of these put and call options was
performed using an earnings multiple, a suitable discount rate and
approved forecasts, and the initial liability of GBP11.3 million
was recognised with the corresponding entry to Other Equity in
accordance with the present value method of accounting. The present
value of these options is required to be estimated 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.
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. 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. An impairment charge
GBP21.6 million has been recognised during the period ended 28
January 2023 against the intangibles recorded on acquisition.
Put and call options over the remaining 25% shareholding have
also been agreed and become exercisable in tranches from 2025
onwards. In the prior period, a valuation of these put and call
options was performed using an earnings multiple, a suitable
discount rate and approved forecasts, and the initial liability of
GBP8.4 million was recognised with the corresponding entry to Other
Equity in accordance with the present value method of accounting.
The present value of these options is required to be estimated 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 was an intangible asset
of GBP1.4 million representing the Wheelbase fascia name. The Board
believed that the excess of consideration paid over net assets on
acquisition of GBP18.7 million was 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. An impairment charge
of GBP18.7 million has been recognised during the period ended 28
January 2023 against the intangibles recorded on acquisition.
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 and call options was performed
using an earnings multiple, a suitable discount rate and approved
forecasts, and the initial liability of GBP4.0 million was
recognised with the corresponding entry to Other Equity in
accordance with the present value method of accounting. The present
value of these options is required to be estimated 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.
5. Acquisitions (continued)
Prior period acquisitions - Other Acquisitions (continued)
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. During the 52
week period ended 28 January 2023, GBP0.7 million of the contingent
consideration was paid. The fair value of the contingent
consideration as at 28 January 2023 was determined to be GBPnil and
the remaining contingent consideration of GBP10.5 million was
released to the Consolidated Income Statement.
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 was an intangible asset of
GBP2.5 million representing the Leisure Lakes fascia name. The
Board believed that the excess of consideration paid over net
assets on acquisition of GBP25.9 million was 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. An
impairment charge of GBP21.1 million has been recognised during the
period ended 28 January 2023 against the intangibles recorded on
acquisition.
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.
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 (GBP31.4 million) and deferred
consideration of $6.1 million (GBP4.5 million). The deferred
consideration was initially measured at fair value and subsequently
remeasured to fair value at each reporting date until settled. The
fair value of deferred consideration recognised at 29 January 2022
was $6.6 million (GBP4.9 million). The maximum amount of the future
payment was 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. The proceeds of the sale of the business by
GymNation Limited were transferred back to the Group and GymNation
Limited is in the process of being wound down. As a result, the
deferred 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 and call 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 and call option
liability has been performed using an earnings multiple, a suitable
discount rate and approved forecasts, and the initial liability of
GBP8.9 million has been recognised with the corresponding entry to
Other Equity in accordance with the present value method of
accounting. The present value of these options is required to be
estimated at each accounting period date.
At acquisition, GymNation was a chain of seven gyms in the UAE
(six in Dubai and one Abu Dhabi). Included within the fair value of
the net identifiable assets on acquisition was 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. 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 GBP1.3 million and a profit before tax of GBP0.2 million in
respect of GymNation.
Other Prior Period Acquisitions
During the period, the Group made one other small acquisition.
This transaction was not material.
Full Period Impact of Prior Period 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.
Prior Period Acquisition Costs
Acquisition-related costs amounting to GBP7.9 million have been
excluded from the consideration transferred and were recognised as
an expense in the prior period, within administrative expenses in
the Consolidated Income Statement.
6. Divestments
Footasylum
On 5 August 2022, the Group disposed of its 100% equity interest
in Footasylum and its associated subsidiaries to Aurelius Group for
a cash consideration of GBP37.5 million. The subsidiary was
classified as held for sale in the 2022 consolidated financial
statements (see Note 7). The consideration was received fully in
cash in 2022. At the date of disposal, the carrying amounts of
Footasylum's net assets were as follows:
As at
5 August 2022
(unaudited)
GBPm
Intangible assets 6.7
Property, plant and equipment 27.0
Right-of-use assets 79.1
Deferred tax assets 0.2
Total non-current assets 113.0
----------------
Inventories 36.4
Trade and other receivables 24.9
Cash and cash equivalents 6.0
----------------
Total current assets 67.3
----------------
Trade and other payables (24.7)
Other tax and social security (3.7)
Accruals and deferred income (19.1)
Borrowings (3.5)
Lease liabilities (15.6)
Income tax liabilities (1.0)
----------------
Total current liabilities (67.6)
Accruals and deferred income (5.6)
Lease liabilities (59.8)
Total non-current liabilities (65.4)
----------------
Total assets less total liabilities 47.3
----------------
Total consideration received in
cash 37.5
Net assets disposed of (47.3)
Costs to sell (5.0)
----------------
Loss on disposal (14.8)
----------------
Total consideration received in
cash 37.5
Cash and cash equivalents disposed
of (6.0)
----------------
Net cash received 31.5
----------------
In the 26 weeks to 30 July 2022, an impairment of GBP8.5 million
was 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. A further GBP6.3 million
loss has been recognised following the reversal of GBP8.3 million
of right-of-use assets depreciation in order to cease depreciating
these assets at the point of classification as held-for-sale in
accordance with IFRS 5 and the release of a GBP2.0 million
provision for costs to sell that is no longer required. This
resulted in a higher loss on disposal of the assets of GBP14.8
million when compared to the impairment of GBP8.5 million
recognised in the 26 week period ended 30 July 2022.
6. Divestments (continued)
Other non-core fashion businesses
On 16 December 2022, the Group announced its plan to
significantly simplify its fashion branded offer through the
divestment
of 15 UK-based non-core fashion businesses ('Divested
Businesses') to Frasers Group Plc ('Frasers'), for cash
consideration of GBP44.5 million, in order to focus more fully on
the opportunities across the rest of the Group, in particular the
international and digital expansion of the Group's core premium
Sports Fashion fascias. Completion on the acquisition of shares in
eight of the Divested Businesses, and on the acquisition of all of
the debt owing to JD by the Divested Businesses, took place
immediately on exchange. The initial eight divested businesses
were:
- Base Childrenswear Limited (80% equity interest);
- Dantra Limited (75% equity interest);
- PG2019 Limited (100% equity interest);
- Prevu Studio Limited (100% equity interest);
- Nicholas Deakins Limited (100% equity interest);
- Uggbugg Fashion Limited - including its subsidiary Missy
Empire Limited (51% equity interest);
- Clothingsites Holdings Limited - including its subsidiaries
Clothingsites.co.uk Limited and Old Brown Bag Clothing Limited
(100% equity interest); and
- WHCO Limited - including its subsidiaries The Watch Shop
Holdings Limited and Watch Shop Logistics Limited (100% equity
interest).
The consideration was received fully in cash during the period.
At the date of disposal, the carrying amounts of the initial eight
divested businesses net assets were as follows:
As at
16 December
2022
(unaudited)
GBPm
Intangible assets 22.6
Property, plant and equipment 3.9
Right-of-use assets 6.5
Total non-current assets 33.0
--------------
Inventories 29.8
Trade and other receivables 8.5
Cash and cash equivalents 16.4
--------------
Total current assets 54.7
--------------
Trade and other payables (19.7)
Provisions (0.1)
Borrowings (11.6)
Lease liabilities (7.4)
Income tax liabilities (0.3)
--------------
Total current liabilities (39.1)
--------------
Other payables and accrued expenses (1.5)
Total non-current liabilities (1.5)
--------------
Total assets less total liabilities 47.1
--------------
Total consideration received in
cash 44.5
Intercompany debt (86.0)
Net assets disposed of (47.1)
Costs to sell (0.6)
Impairment of assets held-for-sale
(Note 7) (17.5)
--------------
Loss on disposal (106.7)
--------------
6. Divestments (continued)
Other non-core fashion businesses
(continued)
Total consideration received in
cash 44.5
Cash and cash equivalents disposed
of (16.4)
-------
Net cash received 28.1
-------
The assets and liabilities of the remaining seven businesses
were classified as held-for-sale at 28 January 2023 (see Note 7).
Subsequent to the period end, on 7 February 2023, the Group
completed the disposal of five of these businesses.
- Tessuti Group Limited (100% equity interest) - including its
subsidiaries Tessuti Limited (87.5% equity interest), Tessuti
(Ireland) Limited (87.5% equity interest), Tessuti Retail Limited
(100% equity interest), Prima Designer Limited (100% equity
interest);
- Choice Limited (87.5% equity interest) - including its
subsidiary Choice 33 Limited (87.5% equity interest);
- Giulio Limited (87.5% equity interest) - including its
subsidiaries Giulio Fashion Limited (87.5% equity interest), Giulio
Woman Limited (87.5% equity interest);
- R.D. Scott Limited (100% equity interest); and
- Catchbest Limited (80% equity interest).
Rascal Clothing Limited ('Rascal') was withdrawn from the
transaction with Frasers as one of the founders exercised a
pre-emption right agreed as part of the Group's acquisition of
Rascal on 5 February 2019. The divestment of 75% equity interest in
Rascal completed on 6 February 2023.
On 2 March 2023, the Group completed the disposal of 80% equity
interest in Topgrade Sportwear Holdings Limited (including Topgrade
Sportswear Limited and GetTheLabel.com Limited) the final entity
outstanding as part of the Frasers transaction.
Impairment review of Divested Businesses
As at 29 January 2022, the Divested Businesses were still a key
part of the Group's strategy and, as part of our annual impairment
review procedures, the Group concluded that the assets of these
businesses were not impaired. The step change in the Group's
strategy occurred in the second half of 2022/23 following a
strategic review by the incoming Chief Executive Officer. The
Directors have therefore concluded that the assessment completed
for the period ended 29 January 2022 remains appropriate.
Divestment of other non-controlling interests
During the period ended 28 February 2023, JD Sports Fashion Plc
divested 5% of Kukri Sports Limited and 10% of JD Canary Islands
Sports SL as a result of options exercised by non-controlling
interests in the subsidiaries. In accordance with IFRS 10, the
Group had previously assessed and concluded that it controlled the
subsidiaries. As the divestment does not result in a change of
control, this has been accounted for as an equity transaction.
7. Held-for-sale
Footasylum
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 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 have 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 critical accounting judgement in
the accounting policies.
Held-for-sale
On 4 November 2021, the final ruling from the CMA was to
prohibit 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. Footasylum was
classified as held-for-sale as at 29 January 2022 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 had been initiated;
- Footasylum was being actively marketed at a price that was
reasonable in relation to its fair value; and
- there was an expectation that the sale process would be
completed within 12 months of the classification as
held-for-sale.
7. Held-for-sale (continued)
Footasylum (continued)
Assets and Liabilities of Footasylum held-for-sale
As at 29 January 2022 and prior to disposal, 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 29 January 2022 of GBP27.2
million were presented within the Group's cash and cash
equivalents.
As at 28 As at 29
January 2023 January 2022
(unaudited) GBPm
GBPm
Intangible assets - 4.7
Property, plant and equipment - 25.2
Deferred tax assets - 0.2
Right-of-use assets - 78.5
Inventories - 27.0
Trade and other receivables - 21.5
Assets held-for-sale - 157.1
----------------------- ---------------
As at 28 As at 29
January January 2022
2023
(unaudited) GBPm
GBPm
Trade and other payables - (57.5)
Lease liabilities - (82.0)
Income tax liability - (2.9)
Deferred tax liability - (0.2)
----------------------- ---------------
Liabilities held-for-sale - (142.6)
----------------------- ---------------
On 29 July 2022, JD Sports Fashion Plc exchanged contracts to
sell Footasylum and its associated subsidiaries to Aurelius Group
for cash consideration of GBP 37.5 million. The transaction
subsequently completed on 5 August 2022.
Non-core Fashion Businesses
On 16 December 2022, the Group announced its plan to
significantly simplify its fashion branded offer through the
divestment of 15 UK-based non-core fashion businesses to Frasers
Group Plc in order to focus more fully on the opportunities across
the rest of the Group, in particular the international and digital
expansion of the Group's core premium Sports Fashion fascias.
At 28 January 2023, the sale of seven of the 15 businesses had
not completed and therefore were held-for-sale at the period end.
In addition, the Group agreed to the sale of Source Lab to its
non-controlling interest pre period end and this completed on 28
February 2023. Therefore this business was also held-for-sale as at
28 January 2023.
The businesses have been classified as held-for-sale as at 28
January 2023 as:
- the carrying amount of the non-core fashion businesses will be
recovered through the sale transaction;
- the Group has committed to sell the businesses and this sale plan has been initiated; and
- there is an expectation that the sale process would be
completed within 12 months of the classification as
held-for-sale.
7. Held-for-sale (continued)
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; and
- 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.
The businesses disposed of during the period are subject to
individual plans and can be distinguished operationally and for
financial reporting purposes. However, the Group has other
subsidiaries and operations within the Sports Fashion segment in
the UK, and therefore these disposals do not represent a separate
major line of business or geographic area for the Group. The
disposal of these entities should not be classified as discontinued
operations but the Group is required to disclose the impact of the
disposal.
Assets and Liabilities of Non-Core Fashion Businesses
Held-for-Sale
As at 28 January 2023, the non-core fashion businesses and
Source Lab were held at the lower of carrying value or fair value
less costs to sell (excluding cash and cash equivalents). A
reconciliation is provided in the table below. Cash and cash
equivalents as at 28 January 2023 of GBP74.5 million have been
presented within the Group's cash and cash equivalents in
accordance with IFRS 5.
Non-core As at 28
fashion businesses January
2023
Source (unaudited)
Lab
GBPm GBPm
GBPm
Intangible assets 9.2 - 9.2
Property, plant and equipment 17.1 0.1 17.2
Inventories 51.9 0.8 52.7
Trade and other receivables 11.9 1.2 13.1
Right-of-use assets 30.8 - 30.8
Assets held-for-sale 120.9 2.1 123.0
---------------------------- ----------------------- --------------------
Non-core fashion As at 28
businesses January
2023
(unaudited) Source (unaudited)
Lab
GBPm (unaudited) GBPm
GBPm
Trade and other payables (131.7) (1.4) (133.1)
Provisions (0.4) - (0.4)
Lease liabilities (32.1) - (32.1)
Liabilities held-for-sale (164.2) (1.4) (165.6)
---------------------------- ----------------------- --------------------
Non-core As at
fashion businesses 28 January
2023
Reconciliation to lower of fair value (unaudited) Source (unaudited)
less costs to sell or carrying value Lab
GBPm (unaudited) GBPm
GBPm
Net (liabilities) / assets held-for-sale (43.3) 0.7 (42.6)
Cash and cash equivalents 72.2 2.3 74.5
Intercompany liabilities currently
eliminating on consolidation (8.4) (1.5) (9.9)
Impairment to lower of fair value
less costs to sell (17.5) - (17.5)
Cash consideration due to be received
on completion 3.0 1.5 4.5
---------------------------- ----------------------- --------------------
8. 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 the property provision, 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 maintains all properties to a
high standard and carry out repairs whenever necessary during the
Group's tenure. Therefore, if there is no risk of closure, any
provision would be minimal and management does not consider it
necessary to hold dilapidation provisions for these properties.
Other Provisions
Other provisions comprises 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 contract 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 seven year period ending 30
September 2030 .
Property Other provisions Onerous
provision contract Total
GBPm provision (unaudited)
GBPm GBPm GBPm
Balance at 30 January 2021 - - 5.8 5.8
Provisions reclassified from accruals 11.2 14.2 - 25.4
Provisions released during the
period (2.0) (6.7) (0.7) (9.4)
Provisions created during the period 9.4 5.0 - 14.4
Provisions utilised during the
period (0.4) (2.7) - (3.1)
------------ ------------------- ------------ --------------
Balance at 29 January 2022 18.2 9.8 5.1 33.1
Provisions reclassified from accruals 0.9 - - 0.9
Provisions acquired in the period 0.5 - - 0.5
Provisions transferred to held-for-sale
(Note 7) (0.4) - - (0.4)
Provisions divested in the period
(Note 6) (0.1) - - (0.1)
Provisions released during the
period (1.5) (6.5) (0.8) (8.8)
Provisions created during the period 4.5 1.8 - 6.3
Provisions utilised during the
period (0.7) - - (0.7)
------------
Balance at 28 January 2023 21.4 5.1 4.3 30.8
------------ ------------------- ------------ --------------
Provisions have been analysed between current and non-current as
follows:
2023 2022
(unaudited) GBPm
GBPm
Current 9.7 13.2
Non-current (within 10 years) 21.1 19.9
Total provisions 30.8 33.1
--------------- -------
9. Contingent Liabilities
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 Competition and Markets Authority
(CMA) launched an investigation under section 25 of the Competition
Act 1998 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 issued a statement of objections or 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. The CMA has
indicated that it will publish a further update in June 2023.
ICO Investigation
On 30 January 2023, the Group announced that it had been the
target of a cyber incident which resulted in the unauthorised
access to a system that contained customer data relating to some
online orders placed between November 2018 and October 2020. Whilst
the affected data was limited, the Group took the necessary
immediate steps to investigate and respond to the incident,
including working with leading cyber security experts. The Group
also engaged with the relevant authorities, including the UK's
Information Commissioner's Office (ICO), as appropriate.
The ICO have now formally advised that they will not be taking
any enforcement action in respect of this incident although they
have highlighted several areas where they believe JD needs to
demonstrate improvement. The Group is committed to addressing these
recommendations at pace. At this stage, no other regulatory body
has indicated that it intends to take any enforcement action
although the Group is aware that not all of the relevant regulators
have concluded their investigations. The Group will continue to
co-operate fully with the relevant global regulatory bodies,
including the ICO, on all appropriate matters.
10. Post Balance Sheet Events
Acquisitions and Divestments
Proposed acquisition of Group Courir
On 8 May 2023, the Group entered into exclusive negotiations
with the owners of Groupe Courir S.A.S ('Courir') with regards to
the potential future acquisition of 100% of the issued share
capital of Courir for an enterprise value of EUR520 million
('Transaction'). In accordance with French law, Courir management
will now commence consultation processes with its relevant employee
representative bodies prior to being able to enter into a binding
sale and purchase agreement for the Transaction. The Transaction
will need to be notified to the European Commission in accordance
with European Union Law. Completion of the acquisition is therefore
conditional on receipt of merger control approval. Given the
potential timings associated with the consultation and competition
assessment processes, completion of the Transaction would not be
expected before the second half of 2023. After deducting net debt
of EUR195 million, the amount payable at completion, subject to
certain adjustments, would be EUR325 million which would be funded
through available cash resources. The net debt of EUR195 million in
Courir principally constitutes existing funding lines of
approximately EUR210 million which would be refinanced at
completion.
Based in France, Courir is a leading player in the European
sports footwear and apparel sector with 313 stores bannered as
Courir across six countries in Europe. In addition, there are a
further 36 stores which trade under franchise agreements as Courir
in North West Africa, Middle East and French overseas territories.
Further, there are two stores which trade as Naked in Denmark which
is an elevated female sneaker business. At the Group's recent
Capital Markets Event, we emphasised the importance of
'Complementary Concepts' to leverage our existing premium concepts,
including JD. This proposed acquisition is in line with that growth
strategy as Courir operates stores with a primary focus on a female
consumer. The senior management team and operational infrastructure
of Courir would be retained and it is the intention that Courir
would maintain its identity and would run autonomously from JD's
French operations. Leveraging Courir's extensive knowledge in
managing female oriented stores would significantly broaden the
capabilities and global opportunities across the Group.
For the 52 week period ended 31 December 2022, Courir had
consolidated revenues of EUR609.8 million which included EUR100.3
million from the combination of the sale of product on a commission
basis to the affiliates and other commission income from
franchisees, a profit before interest and tax of EUR47.4 million
and gross assets of EUR678.4 million.
10. Post Balance Sheet Events (continued)
Buy or Sell Notice re Iberian Sports Retail Group, S.L.
('ISRG')
Following the receipt of a formal buy / sell notice from Balaiko
Firaja Invest, S.L. and Sonae Holdings, S.A. (together the
'Minority Parties'), who collectively hold 49.98% of Iberian Sports
Retail Group, S.L. ('ISRG'), the Group is now engaged in formal
discussions with the Minority Parties with regards to the future
ownership structure of ISRG, including the JD shareholding held by
ISRG. There are three possible outcomes from this process although
it is expected to be later in the summer before there is clarity as
to which outcome will be progressed by the parties:
-- The Group acquires the 49.98% holding in ISRG currently held by the Minority Parties.
-- The Minority parties acquire the Group's 50.02% holding in
ISRG and the Group simultaneously acquires the Minority parties
interest in JD across Iberia. This would result in the divestment
of the Sprinter, Sport Zone, Deporvillage and Bodytone businesses
in Iberia together with the Sprinter, Aktiesport and Perry Sport
businesses in the Netherlands. Based on the indicative values for
this outcome, there are no indicators of impairment in respect of
either the Group's investment in ISRG or its subsidiaries, or the
net assets included on consolidation in the financial statements of
the Group as at 28 January 2023.
-- No change to existing shareholdings.
Divestment of non-core fashion businesses
Subsequent to the financial period end, the Group completed the
sale of eight non-core fashion businesses as follows:
-- On 6 February 2023, the Group completed the sale of Rascal
Clothing Limited following the exercise of a pre-emption right by
one of the founders.
-- On 7 February 2023, the Group formally completed the
divestment of Tessuti (including Xile), Scotts, Choice, Giulio and
Cricket to Frasers Group Plc as per the terms of the transaction
agreed on 16 December 2022.
-- On 28 February 2023, the Group completed the divestment of
Source Lab Limited to its non-controlling shareholder.
-- On 2 March 2023, the Group formally completed the divestment
of Topgrade to Frasers Group Plc as per the terms of the
transaction agreed on 16 December 2022.
Details of the sale of the seven businesses to Frasers Group Plc
which exchanged on 16 December 2022 are provided in Note 6
Divestments. The assets and liabilities of these entities were
classified as held-for-sale as at the financial period end along
with Source Lab Limited which was sold to its non-controller
shareholder after the financial period end (see Note 7).
Other acquisitions and divestments
Further, the Group has also completed the following, subsequent
to the financial period end:
-- On 9 March 2023, the Group completed the divestment of
Woodlandslove Limited to Frasers Group Plc as a result of a
separate agreement to the sale of the businesses agreed on 16
December 2022.
-- The Group has completed the acquisition of the remaining 40%
shareholding of Tiso Group Limited and its subsidiaries and the
remaining 20% shareholding of JD Sports Fashion Germany GmbH. The
Group now owns 100% of these entities. Further, the Group has also
completed the acquisition of an additional 1% of the share capital
of JD Sports Gyms Limited. The Group now owns 95% of JD Sports Gyms
Limited. These transactions were not material.
Appointment of Non-Executive Directors
On 9 March 2023, the Group appointed Ian Dyson as a
Non-Executive Director. Ian will join the Audit & Risk
Committee and the Remuneration Committee. In addition, Angela
Luger, formerly CEO of N Brown Group Plc and Darren Shapland,
currently Chair of Topps Tiles Plc will join the Board as of 1 June
2023. Angela will join the Remuneration Committee and Darren will
join the Audit & Risk Committee, with effect from the date of
their appointment.
[1] On 20 December 2022, a total of 25,000,000 ordinary shares
of 0.05 pence each were issued at par. The shares were delivered to
the JD Sports Employee Benefit Trust ('Trust') and were issued, in
part to satisfy a buyout award due to Régis Schultz, the Group's
Chief Executive Officer with an effective date of 5 September 2022.
The remainder of the new shares shall be held by the Trust in
connection with the Long-Term Incentive Plan 2022.
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END
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(END) Dow Jones Newswires
May 17, 2023 02:00 ET (06:00 GMT)
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