TIDMJD.
RNS Number : 7107P
JD Sports Fashion Plc
22 June 2022
22 June 2022
JD SPORTS FASHION PLC
FINAL RESULTS
FOR THE 52 WEEKSED 29 JANUARY 2022
JD Sports Fashion Plc (the 'Group'), the leading retailer of
sports, fashion and outdoor brands, today announces its Final
Results for the 52 weeks ended 29 January 2022 (2021: 52 weeks
ended 30 January 2021).
IFRS 16 Proforma IAS 17*
2022 2021 2022 2021
GBPm GBPm GBPm GBPm
Revenue 8,563.0 6,167.3 8,563.0 6,167.3
Gross profit % 49.1% 48.0% 49.1% 48.0%
Operating profit 721.2 385.0 672.4 361.4
Net interest expense (66.5) (61.0) (7.0) (6.1)
------------- ----------- --------- ---------
Profit before tax 654.7 324.0 665.4 355.3
------------- ----------- --------- ---------
Basic earnings per ordinary
share (a) 7.17p 4.61p 7.37p 5.25p
Total dividend payable per
ordinary share (a) 0.35p 0.29p
Alternative Performance
Measures (b)
EBITDA before exceptional
items 1,606.8 990.2 1,196.7 649.3
Depreciation / amortisation (593.1) (507.9) (231.8) (183.1)
------------- ----------- --------- ---------
Operating profit (before
exceptional items) 1,013.7 482.3 964.9 466.2
Net interest expense (66.5) (61.0) (7.0) (6.1)
------------- ----------- --------- ---------
Profit before tax and exceptional
items 947.2 421.3 957.9 460.1
Exceptional items (see note
3) (292.5) (97.3) (292.5) (104.8)
------------- ----------- --------- ---------
Profit before tax 654.7 324.0 665.4 355.3
------------- ----------- --------- ---------
Adjusted earnings per ordinary
share (a) 12.84p 6.44p 13.05p 7.24p
Net cash at period end (c) 1,185.9 795.4
----------------------------------- ------------- ----------- --------- ---------
a) The prior year has been restated to reflect the 5:1 share
split which was approved by shareholders at a General Meeting on 26
November 2021
b) Further detail setting out the background to the alternative
performance measures and a reconciliation to statutory measures is
provided after the Interim Chair's Statement. In addition,
throughout this release '*' indicates the first instance of other
alternative performance measures which are also explained after the
Interim Chair's Statement and are reconciled to the statutory
measures
c) Net cash consists of cash and cash equivalents less interest-bearing loans and borrowings
Helen Ashton, Interim Chair, said:
"This was another period of outstanding progress with the Group
delivering a record headline profit before tax and exceptional
items of GBP947.2 million (2021: GBP421.3 million), more than
double the previous record of GBP438.8 million set in the period to
1 February 2020, which was the last completed financial year prior
to the COVID-19 pandemic. This result demonstrates our capacity for
growth in both existing and new markets, and the strength of our
global proposition and consumer engagement in store and online. We
are, as always, indebted to our talented and committed colleagues
across our Group and send our thanks for the amazing work they do
every day.
"We are particularly encouraged by the strong performance from
the Group's banners in North America. It is increasingly evident
that the Group's progress in North America, and the United States
in particular, is having a long-term positive impact both on the
Group's overall performance and its relationships with the
international brands.
"Balancing the operational requirements of running and growing a
business through a global pandemic with the obligations of
elevating governance standards has been complex and not without
challenge. A number of regulatory issues have arisen through this
time which, following a series of independent investigations
alongside the completion of the Group's Governance review, have
highlighted the need for both greater relevant experience on the
Board and more 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 where appropriate.
"The process to recruit a CEO is ongoing with a number of high
calibre candidates at different stages of consideration including
some who have only recently made their interest in the role known.
A process to recruit a new Non-Executive Chair is also progressing
at pace. Meanwhile, the Board is happy with how the interim
arrangements are operating and will update the market on the
progress of these search processes as appropriate.
"JD is a globally recognised iconic multichannel retailer with a
proven strategy, clear momentum and a talented and resilient senior
management team who are recognised within the sports fashion
industry as some of the leading figures in their fields. The Board
and senior management team are united in their determination to
build on the historical successes with the same laser focus on the
consumer, commercial rigour, attention to service excellence and
analytical intensity. We will continue to seek to inspire the
emerging generation of aspirationally minded consumers through a
connection to the universal culture of sport, music and fashion
with the highest standards of consumer experience and execution,
both in stores and online. Building on our status as a premier
global strategic partner, we will also continue to deliver a
product and brand mix which is emotionally engaging, exclusive and
continually evolving.
"Whilst we are encouraged by the resilient nature of the
consumer demand in the current year 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, the Board believes that the headline profit before tax
and exceptional items for the year end 28 January 2023 will be in
line with the record performance for the year ended 29 January
2022."
Financial Results Summary
-- Record result for the year with profit before tax and
exceptional items of GBP947.2 million, more than double the
previous record set in the year to 1 February 2020 (2021: GBP421.3
million; 2020: GBP438.8 million) demonstrates management's
capabilities in relation to managing both supply chain disruption
and frequent consumer channel shift through the COVID-19 pandemic.
This result includes GBP125.6 million of profit from the
combination of acquisitions in the year and the annualisation
period of businesses bought in the 52 weeks to 30 January 2021.
-- Strong performances from the Sports Fashion retail fascias in
the UK and Republic of Ireland and North America in particular:
o UK and Republic of Ireland: Profit before tax and exceptional
items increased to GBP471.2 million (2021: GBP262.7 million; 2020:
GBP288.5 million) with a strong retention of sales through digital
channels in the first quarter whilst the stores were temporarily
closed combined with strong demand after reopening
o North America: Profit before tax and exceptional items
increased to GBP343.0 million (2021: GBP171.9 million; 2020:
GBP94.2 million) which includes contributions of GBP57.3 million
(2021: GBP13.9 million in the six-week period after acquisition)
from Shoe Palace and GBP50.6 million from DTLR (46-week period post
acquisition). All of the Group's businesses successfully
capitalised on the favourable trading conditions provided by a
second round of fiscal stimulus from the US Federal Government
-- Outdoor returned to profitability with an elevated demand for
holidays in the UK and a general recognition of the physical and
mental health benefits of spending time outdoors with a profit
before tax and exceptional items of GBP25.9 million (2021: loss of
GBP6.1 million)
-- Net cash balance at the end of the period, being the peak of
the cash cycle, of GBP1,185.9 million (2021: GBP795.4 million)
reflects both the very strong cash generation in the UK and North
America and the net proceeds, after costs, of GBP455.9 million from
the placing of 58,393,989 new ordinary shares during the year
-- An enhanced final dividend of 0.35p (2021: 0.29p - restated)
per share is proposed which recognises the performance of the Group
over the full year
-- Key financial information of the two business segments is tabulated below:
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%
--------------- -------- ------------ --------
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
--------------- -------- ------------ --------
Alternative Performance Measures
Operating profit before exceptional
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 exceptional items 928.3 25.9 (7.0) 947.2
Exceptional items (292.5) - - (292.5)
--------------- -------- ------------ --------
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.
Period to 30 January 2021
Sports Fashion Outdoor Unallocated Total
GBPm GBPm GBPm GBPm
Revenue 5,808.0 359.3 - 6,167.3
--------------- -------- ------------ --------
Gross profit % 48.4% 42.2% - 48.0%
Operating profit 407.8 (22.8) - 385.0
Net interest expense (51.2) (3.7) (6.1) (61.0)
--------------- -------- ------------ --------
Profit / (loss) before tax 356.6 (26.5) (6.1) 324.0
Alternative Performance Measures
Operating profit / (loss) before
exceptional items 484.7 (2.4) - 482.3
Net interest expense(1) (51.2) (3.7) (6.1) (61.0)
--------------- -------- ------------ --------
Profit / (loss) before tax
and exceptional items 433.5 (6.1) (6.1) 421.3
Exceptional items (76.9) (20.4) - (97.3)
--------------- -------- ------------ --------
Profit / (loss) before tax 356.6 (26.5) (6.1) 324.0
--------------- -------- ------------ --------
Strategic and Operational Summary
-- Search for Global CEO progressing with process for
Non-Executive Chair also ongoing. Board and senior management
aligned in a desire to build on the recent success and global
momentum against our proven strategy
-- Review of regulatory compliance issues, Group's Corporate
Governance operating model and assessment of current compliance
with the UK Corporate Governance Code completed with Board fully
committed to making the necessary changes highlighted through these
reviews
-- Significant acquisitions in the period have further extended
the Group's geographical reach:
o DTLR enhances the Group's exposure to key consumer
demographics in the highly important East Coast market in the
United States
o Marketing Investment Group in Poland gives the Group a
presence in Central and Eastern Europe for the first time
o Cosmos in Greece and Cyprus gives the Group its first presence
in the east of the Mediterranean which has been complemented in the
current financial year by the commencement of a joint venture in
Israel
-- International development of JD in other markets continues to gain momentum:
o 87 stores trading as JD in the United States at the end of the
period with a further nine stores converted in the first four
months of the new financial year
o 32 net new JD stores opened across Europe including first
stores in Eastern Europe in Poland and Romania
o 10 net new JD stores in the Asia Pacific region
o First JD stores in Indonesia and Israel opened in the current financial year
-- A major programme of work is being progressed to enhance the
logistics network and fulfilment capabilities across the UK and
Western Europe:
o Derby (UK): Construction works on the new 515,000 sqft
facility in Derby which will be used exclusively to fulfil online
orders for JD in the UK are now complete, with initial fit out of
the site ongoing. Limited fulfilment from the site is due to
commence ahead of the peak period later this year with the site
expected to be fully operational by mid-2023
o Heerlen (the Netherlands): C onstruction of the 620,000 sqft
facility in Heerlen, South-East Netherlands which will fulfil
product for both stores and online orders in Western Europe is
underway. Initial fulfilment from this site is scheduled to
commence in the second half of 2023 with the site expected to be
fully operational by mid-2024
o Dublin (Republic of Ireland): 65,000 sqft warehouse near
Dublin now fully operational, supplying both product to stores and
fulfilling online orders in the Republic of Ireland
-- The Group has repaid, in full, the support which its UK
businesses received during the current year from the Coronavirus
Job Retention Scheme totaling GBP24.4 million
Enquiries:
JD Sports Fashion Plc Tel: 0161 767 1000
Helen Ashton, Interim Chair
Kath Smith, Interim CEO
Neil Greenhalgh, Chief Financial
Officer
Investec Bank Plc Tel: 0207 597 5075
David Flin
Peel Hunt LLP Tel: 0207 418 8869
Dan Webster
FGS Global Tel: 0207 251 3801
Rollo Head
Jenny Davey
James Thompson
Statement from the Board
Governance
Balancing the operational requirements of running and growing a
business through a global pandemic with the obligations of
elevating governance standards has been complex and not without
challenge. A number of regulatory issues have arisen through this
time which have highlighted the need for both greater relevant
experience on the Board and more 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 where appropriate.
As a result, since the year end the Board has engaged external
advisors to carry out a number of independent investigations into
certain matters including these regulatory issues. Alongside these
investigations, as announced in February 2022, the Group has also
been undertaking a review of its Governance procedures and policies
in light of the process to divide the previous joint role of
Executive Chair and Chief Executive Officer ('CEO'). This process
extended into a full review of the Group's Corporate Governance
operating model and assessment of its current compliance with the
UK Corporate Governance Code.
The Board has now completed the investigations and the
governance review and have ratified a plan to rebase the
governance, risk and control environment. This will target
compliance with our various regulatory requirements whilst also
delivering a more formalised approach to governance, risk
management and the documentation and appraisal of internal
controls. These actions are focused in four principal
workstreams:
-- CMA regulatory compliance
-- FCA regulatory compliance re: limited permission credit
broking licence in certain UK businesses
-- Compliance with the UK corporate governance code
-- Risk management and internal control framework
Each workstream consists of a three month intensive programme of
works to address priority issues complemented by the development of
longer term initiatives. It is anticipated that it will take 18
months to deliver and embed these workstreams in full to ensure
that we balance rigour in relation to governance and control with
maintaining the agility that has been key to our success to
date.
Search for new Group CEO and Non-Executive Chair
At its 2021 AGM on 1 July 2021, the Group announced, with the
support of Peter Cowgill, that it intended to divide the role of
Executive Chair and Group CEO before the 2022 Annual General
Meeting. At that time, it was intended that this would be achieved
through the appointment of a new Group CEO with Peter Cowgill then
moving into the role of Chair with a progressive handover of
executive management responsibilities. In due course, Peter Cowgill
would then have been replaced by a Non-Executive Chair.
Working with Spencer Stuart the Group commenced a global search
for a new Group CEO. A number of excellent candidates were
attracted to this role but a recurring theme was a wish for a much
shorter handover period. This search process also coincided with
the governance and assurance workstreams referred to above and it
is the Board's view that the new CEO should have the opportunity to
shape that process. Accordingly, the Board decided to accelerate
the separation of the roles of Chair and Chief Executive Officer
and Peter Cowgill left the Group on 25 May 2022. Subsequently,
Helen Ashton accepted the role of Interim Non-Executive Chair with
Kath Smith, Senior Independent Director, appointed as Interim
CEO.
The Board wish to thank Peter Cowgill for his unwavering
commitment, vision and inspirational leadership since he re-joined
the Group in 2004. JD is a globally recognised iconic multichannel
retailer with a proven strategy, clear momentum and a talented and
resilient senior management team who, through his guidance, are
recognised within the sports fashion industry as some of the
leading figures in their fields. The Board and senior management
team are united in their determination to build on the historical
successes with the same laser focus on the consumer, commercial
rigour, attention to service excellence and analytical intensity.
We will continue to seek to inspire the emerging generation of
aspirationally minded consumers through a connection to the
universal culture of sport, music and fashion with the highest
standards of consumer experience and execution, both in stores and
online. Building on our trusted brand relationships, we will also
continue to deliver a product and brand mix which is emotionally
engaging, exclusive and continually evolving.
The process to recruit a CEO is ongoing with a number of high
calibre candidates at different stages of consideration including
some who have only recently made their interest in the role known.
A process to recruit a new Non-Executive Chair is also progressing
at pace. Meanwhile, the Board is happy with how the interim
arrangements are operating and will update the market on the
progress of these search processes as appropriate.
Board Composition
Prior to these recent developments, the Board had made
significant progress in its process to recruit new Non-Executive
Directors who can positively contribute to the continued global
development and momentum of the Group. Helen Ashton initially
joined the Board on 15 November 2021 as Non-Executive Director and
Chair of the Audit and Risk Committee. We were also delighted to
welcome during the year Bert Hoyt, who was formerly Head of Europe
for Nike; Mahbobeh Sabetnia, who has been at the forefront of
e-business expansions, leading data-driven consumer insights to
unlock value and framing new business propositions in a number of
global organisations; and Andy Long, who is an Executive Director
at Pentland Group Ltd and was formerly CEO at Pentland Brands
Ltd.
More recently, Suzi Williams joined the Board on 16 May 2022.
Suzi brings a significant amount of consumer marketing and
management experience to the Group and, in due course, it is
intended that she will take up the role of Remuneration Committee
Chair.
Prior to her appointment as Interim CEO, Kath Smith was
confirmed as the Senior Independent Director and Chair of the
Nominations Committee and, whilst it is acknowledged that she
cannot currently act as Senior Independent Director, it is the
Board's intention that she will revert back to her former role upon
the appointment of a permanent CEO. Based on the current progress
in this search, the Board expects that Kath Smith will be able to
resume her role as Senior Independent Director before the end of
the financial year. This means that the Group would be compliant
with this aspect of the UK Corporate Governance Code from the start
of the next financial year. The Board also considered whether she
should continue as Chair of the Nominations Committee but, to
ensure compliance with the UK Corporate Governance Code, has
concluded that this position should be held by the Interim
Chair.
Further, the Board has determined that, given both the temporary
nature of her position as Interim Chair and the importance that it
places on delivering the plan to rebase the governance, risk and
control environment, Helen Ashton should also retain her position
as Chair of the Audit and Risk Committee.
Notwithstanding certain areas of non-compliance with the
Corporate Governance Code during the year, the Group is pleased to
advise that it is fully compliant with the initiatives on Board
diversity proposed by the Hampton-Alexander Review and the Parker
Review.
Government Support
Throughout the COVID-19 pandemic, our priorities have been to
ensure the health and wellbeing of our colleagues and customers,
protect jobs, preserve financial resources and limit the impact on
profitability. It is important to remember that the stores were
closed for a number of months at the start of the year in some of
our most significant markets across Europe and whilst stores
progressively reopened through the Spring, there was no certainty
as to whether they would stay open through the rest of the year
and, even if they did, whether footfall would be at a level that
would make the stores financially viable. Accordingly, the Group
accepted government support where it was offered, including that
connected with property occupation, using it only for the purposes
intended. In particular, payments from the Coronavirus Job
Retention Scheme in the UK helped provide the thousands of people
that we employed with short-term financial support and reassurance
regarding the sustainability of their long-term employment
prospects.
We are cognisant that the retention of sales in the period when
the stores were closed across Europe in the early months of the
year, combined with the positive trading in the immediate period
after reopening, did help to offset the negative financial impacts
associated with the period of temporary closures. Further, whilst
there were some subsequent periods of store closures, particularly
in Asia, later in the year, our most significant markets all
remained open through the peak trading period and have traded
positively.
Therefore, in line with our previous statements on this matter
and having considered all the relevant facts, the Board decided
that it would repay all of the support that its businesses received
from the Coronavirus Job Retention Scheme in the UK during the
year. This repayment, which totalled GBP24.4 million, has already
been made.
Interim Chair's Statement
Business Developments
Introduction
This was another period of outstanding progress with the Group
delivering a record headline profit before tax and exceptional
items of GBP947.2 million (2021: GBP421.3 million), more than
double the previous record of GBP438.8 million set in the period to
1 February 2020, which was the last completed financial year prior
to the COVID-19 pandemic. It includes GBP125.6 million of profit
from the combination of acquisitions in the year and the
annualisation period of businesses bought in the 52 weeks to 30
January 2021. The profit before tax for the period was GBP654.7
million (2021: GBP324.0 million).
This result was achieved in the face of a series of
unprecedented challenges including sustained periods of temporary
store closures in many markets, constraints in the supply of
certain products due to factory closures within the global supply
chains of the international brands, widespread turbulence in
international logistics and the ongoing administrative and cost
consequences resulting from the loss of tariff-free, frictionless
trade with the European Union.
This result demonstrates our capacity for growth in both
existing and new markets, and the strength of our global
proposition and consumer engagement in store and online. We are, as
always, indebted to our talented and committed colleagues across
our Group and send our thanks for the amazing work they do every
day. This is crucial in our increasingly global development and I
would like to thank everyone in our businesses for their
significant contribution and dedication.
Whilst the Group does not have any facilities or employees in
either Russia or Ukraine, we are aware that many of our colleagues
have relatives and friends in these countries. The Group is deeply
concerned by the continuing conflict in Ukraine and has ceased all
trading in Russia across both its brand websites and wholesale
channels.
We are very reassured by the positive performance of the Group's
sports fashion retail fascias in the UK and Republic of Ireland
which delivered a combined record profit before tax and exceptional
items of GBP471.2 million (2021: GBP262.7 million; 2020: GBP288.5
million). Given that the stores were again closed for a number of
weeks in the year, this performance reflects very positively both
the enhanced agility of the Group's operational infrastructure in
these countries and the depth of the connection and trust that JD
has built with its consumers who are clearly very comfortable
engaging with JD through both physical and digital channels.
We are also particularly encouraged by the strong performance
from the Group's banners in North America which have delivered a
combined profit before tax and exceptional items of GBP343.0
million (2021: GBP171.9 million; 2020: GBP94.2 million). This
includes a full-year contribution of GBP57.3 million from Shoe
Palace (2021: GBP13.9 million for Shoe Palace in the six-week
period after acquisition) and a part-year contribution of GBP50.6
million from DTLR in respect of the period since the acquisition
was completed. This result was heavily influenced by the fiscal
stimulus, which was made available by the Federal Government in the
United States in the first half of the year, with revenues between
mid-March and mid-July more than 40% ahead of pre-COVID levels.
Encouragingly, our businesses in the United States also traded
positively in the second half of the year when there was no
stimulus support, as compared to pre-COVID levels.
It is increasingly evident that the Group's progress in North
America, and the United States in particular, is having a long-term
positive impact both on the Group's overall performance and its
relationships with the international brands. We continue to be
encouraged by the progress that JD is making in the United States
with 87 stores trading as JD at the end of the year and it is our
intention to further expand the JD fascia in this financial year
through both new stores and the conversion of existing Finish Line
stores. We also opened the first Group fascia stores in Canada in
the year with a first JD store in both Toronto and Vancouver and a
Size? store, also in Toronto.
Whilst there is a global shortfall in the supply of certain key
footwear styles at this time, the Group continues to have excellent
availability both in stores and online with the Group benefitting
both from its status as a premier global strategic partner and the
overall width of its category offer. We would also expect that the
supply from the impacted brands will improve progressively through
the remainder of the year.
Significant M&A Transactions
The Group has completed a number of acquisitions and other
investments in the period, which look to either expand the
geographical reach of its premium sports fashion operations or
widen the category offer to include other products which are
relevant to a style-conscious consumer.
DTLR Villa LLC ('DTLR')
The acquisition of 100% of DTLR completed on 17 March 2021 for
cash consideration of $423.6 million with third party indebtedness
of $86.5 million also refinanced at this time. At completion, DTLR,
which is based in Baltimore, Maryland, had 247 stores selling
athletic footwear and apparel streetwear across 19 states,
principally in neighbourhood urban areas across the North and East
of the United States. Subsequent to completion, DTLR was
transferred to the same sub-group as Finish Line, JD US and Shoe
Palace.
Five new stores have opened subsequently, although these have
been offset by the closure of eight smaller underperforming stores.
We would anticipate further evolution of the property portfolio in
the forthcoming year with DTLR having the support of the
international brands to expand its network of stores in its
markets.
Marketing Investment Group S.A. ('MIG')
The acquisition of MIG completed on 30 April 2021 with a 60%
holding acquired for total consideration of 348.9 million Polish
Zloty ('PLN') of which 12.7 million PLN has been deferred subject
to customary closing conditions and is expected to be paid in 2022.
At completion, MIG, which is based in Krakow, Poland, had 410
stores trading principally as either Sizeer, which is a premium
multi-branded fascia not too dissimilar to JD, or 50 Style, which
is a multi-branded volume retail concept with lower price points.
Whilst the majority of these stores are located in Poland, the
Company has also expanded its reach beyond Poland in recent years
with a presence, at completion, in a total of nine countries across
Central and Eastern Europe.
More recently, the MIG team has acquired the trade and assets of
a further 22 stores which traded as The Athlete's Foot across
Slovenia, Croatia, Serbia and Bosnia & Herzegovina which are
all new territories for the MIG business. These stores are
currently being converted to Sizeer.
The MIG team has also been instrumental in the opening of the
first JD stores in Eastern Europe with stores at Poznan, Poland,
and Constanta, Romania. Since the period end, the Group has opened
four further JD stores in Poland, one additional store in Romania
and a first store in Hungary, at the Árkád Shopping Centre in
Budapest. We would anticipate further openings for the JD fascia
across Eastern Europe in the new financial year although events in
Ukraine do drive some caution.
Deporvillage SL ('Deporvillage')
On 3 August 2021, Iberian Sports Retail Group SL ('ISRG'), the
Group's existing intermediate holding company in Spain, completed
the acquisition of an initial 80% holding in Deporvillage which is
based in Manresa, Catalonia. Consideration of EUR100.0 million was
paid at completion with further consideration up to a maximum of
EUR40.4 million deferred, to be paid contingent on achieving
certain performance criteria.
ISRG is a leading operator in the sporting goods market across
Iberia through its Sprinter and Sport Zone fascias with the
acquisition of Deporvillage providing additional expertise in both
the development of an international digital infrastructure and
insights of the key performance-related categories of cycling,
running and outdoor.
Wheelbase Lakeland Limited ('Wheelbase') and XLR8 Limited t/a
Leisure Lakes ('Leisure Lakes')
The Group has enhanced its presence in the UK premium cycling
market in the year through the acquisitions of Wheelbase and
Leisure Lakes.
On 30 September 2021, the Group acquired 77.5% of Wheelbase for
GBP22.2 million. Based near Kendal, Cumbria, on acquisition
Wheelbase had three stores in cycling hotspots, including the
renowned store at Staveley which, at 16,000 sqft, is one of the
largest cycle stores in the UK. Wheelbase is firmly established as
one of the premier cycling retailers in the UK selling key brands
such as Cube, Cannondale, Trek and Specialized. Working with the
Wheelbase team, the Group will open specialist cycling concessions
in selected Go Outdoors stores with the first two concessions, in
Coventry and Stockton, now open.
On 19 November 2021, the Group also acquired 100% of Leisure
Lakes for initial cash consideration of GBP25.6 million with
additional consideration up to a maximum of GBP15.0 million payable
if certain performance criteria are achieved. Based near Preston,
Leisure Lakes had ten stores in urban locations at completion and,
like Wheelbase, is also considered to be one of the leading
omnichannel retailers of bicycles and associated accessories in the
UK and is a key partner for most of the major cycling brands.
Cosmos Sport S.A. ('Cosmos')
On 21 October 2021, the Group acquired 80% of Cosmos for cash
consideration of EUR73.0 million. Based in Crete, Cosmos had 58
stores in Greece at acquisition with a further three stores in
Cyprus. Cosmos mainly trades under two fascias being Cosmos Sport
and Sneaker 10. Cosmos Sport is the core fascia trading through an
elevated sporting goods and lifestyle proposition with Sneaker 10
focusing on trainers and premium releases and is more similar to
the Group's Size? fascia.
Two new stores, one in Greece and one in Cyprus, have opened
since completion although these have been offset by the closure of
two of the adidas monobrand stores. We would anticipate further
evolution of the property portfolio in the forthcoming year, with
Cosmos having the support of the international brands to expand its
network of stores in its markets. Further, this acquisition also
provides the Group with an infrastructure and management team for
the development of JD in Greece and Cyprus, with the first store in
Greece currently expected to open in the second half of this
year.
GymNation Limited ('GymNation')
On 24 December 2021, the Group's existing subsidiary JD Sports
Gyms Limited ('JD Gyms') acquired 100% of GymNation Limited and its
100% owned subsidiary GymNation LLC (together 'GymNation') for cash
consideration of
$42.2 million and contingent consideration of $6.1 million.
Contingent consideration is cash-settled and is linked to
GymNation's future performance. It is initially measured at fair
value and is subsequently remeasured to fair value at each
reporting date until the contingency is settled. The fair value of
contingent consideration recognised at 29 January 2022 is $6.6
million. The maximum amount of the future payment is GBP75 million.
GymNation had seven gyms at acquisition with five in Dubai, one in
Abu Dhabi and one in Ras Al Khaimah. The GymNation approach is very
similar to JD Gyms with a focus on providing well-equipped gyms to
a style-conscious participant with extensive use of social media in
a digitally-led marketing approach and memberships that are both
affordable and flexible.
Update on Footasylum Limited ('Footasylum')
The Competition and Markets Authority ('CMA') announced in its
Provisional Report on 2 September 2021 that it was again minded to
prohibit the Group's acquisition of Footasylum. This decision was
confirmed in the CMA's Final Report dated 5 November 2021.
We were very disappointed by this decision as we firmly believed
that we had provided overwhelming evidence to the CMA in its
re-examination of the transaction of how the COVID-19 pandemic has
materially changed the market for the retailing of international
sports brands. In particular, the Group demonstrated very clearly
to the CMA how, by causing a structural shift in favour of online
shopping, COVID-19 has empowered and accelerated the Direct to
Consumer strategies of the international brands. The evidence of
this is clear in the recent public statements of not just the
brands but also some of their longest standing wholesale customers.
We continue to believe that JD, with its recognised status as a
premier global strategic partner, would have positively influenced
Footasylum's brand relationships and its access to product over the
longer term.
The Group has agreed Final Undertakings with the CMA which
require the divestment of Footasylum to an 'Approved Purchaser'.
This divestment process is ongoing with a number of parties
expressing interest in the business.
Sports Fashion
Premium Sports
UK & Republic of Ireland
There was robust consumer demand in our UK and Republic of
Ireland market throughout the period. During the Spring closure
period the business retained approximately 90% of the comparative
combined store and online revenues from 2019, being the last time
we traded free from restrictions, through solely digital channels.
This represented an improvement on the initial period of store
closures in Spring 2020 when the sales retention relative to
pre-COVID-19 levels through the initial period of store closures
was approximately 70%. This is a reflection of the enhanced
flexibility that we have built into our operational infrastructure
since the start of the pandemic.
There was some pent-up demand when the stores reopened in April
2021 with an exceptional growth in revenues in like-for-like stores
through April and May of around 30% when measured on a two year
basis against 2019. Growth in revenues in like-for-like stores
relative to 2019 through the rest of the year then normalised at
around 10%.
We continue to take opportunities to invest in our retail estate
where it will further enhance our consumer proposition in key
locations with a net increase of 13 stores in the period. This
included a new flagship store at Westfield Stratford which is the
most technologically advanced store in our portfolio with a number
of new consumer focused innovations including self-service checkout
kiosks.
The growth in revenues in stores has been complemented by
significant progression online. Since reopening, revenues through
digital channels have remained at elevated levels as compared to
the period prior to the pandemic with sales in the trading websites
now representing approximately 30% of total sales. Prior to the
pandemic, sales through digital channels represented approximately
22% of total sales and there is no reason to expect that they will
drop back to those historic levels.
Europe
The COVID-19 pandemic and the loss of tariff-free, frictionless
trade with the European Union have combined to create a difficult
operational environment. The first half of the year was
particularly challenging, with all stores temporarily closed for a
number of weeks in France, Belgium, Portugal, the Netherlands and
Germany where the stores did not fully reopen until June. Other
markets, including Spain and Italy, had a more regionalised
approach with some stores able to remain open, albeit with
restrictions on customer capacity and trading hours. In those
markets which suffered full closures, the average retention of
sales, compared to pre-pandemic levels, solely through digital
channels in the closure period was around 80% (2021: 60%).
The performance in stores after reopening was mixed with some
markets, including France and Italy, having robust levels of
footfall initially. Combined with a higher level of conversion,
this resulted in a short period where revenues in the like-for-like
stores grew by around 20% compared to pre-COVID levels. However,
consumers in other markets, particularly Germany and Portugal, were
initially a lot more cautious about returning to stores and whilst
conversion was significantly higher, revenues in stores in these
countries remained below pre-pandemic levels.
Most markets remained open throughout the second half although
there were further short closure periods in both the Netherlands
and Austria. Footfall normalised at around 80% of pre-pandemic
levels although Germany was slightly lower, typically averaging
around 70%. However, there was significantly higher conversion in
all markets and so, across Europe overall, the revenues in the
like-for-like stores in the second half were around 10% ahead of
2019.
Restrictions on construction in a number of markets constrained
store developments at times although we did ultimately open a net
32 stores across the year. A further four stores were relocated to
better space including a bigger store at the premium Maquinista
Mall in Barcelona. The openings in the year included the first JD
stores in Eastern Europe with a first store in both Poland and
Romania.
We believe that the operational challenges which we have faced
in Europe over the last two years in particular are very much
temporary in nature and we retain our belief in the long-term
opportunity across the continent. Accordingly, we remain committed
to expanding our physical retail presence in Europe at pace with a
headline target of opening one store per week on average.
Subsequent to the year end, JD opened its first store in Hungary
which means that JD now has a presence in 14 markets across
Europe.
The JD team in Europe are also managing the joint venture in
Israel with two stores now trading and further openings anticipated
later in the year.
Online now represents approximately 20% of total sales for JD
across Europe which represents a small increase from the 18%
participation prior to the pandemic. The Group is currently
actively engaged in a number of projects which will improve its
service proposition for online orders in Europe in the short term
ahead of fulfilment from the Group's 620,000 sqft facility in
Heerlen, South East Netherlands commencing in the first half of
2024.
Asia Pacific
COVID-19 related trading restrictions have had a significant
impact in all of our markets in the Asia Pacific region at some
stage of the period, with lengthy periods of store closures in
Australia and Malaysia in particular. All stores traded through the
final quarter of the year, although footfall was below pre-pandemic
levels in all markets. Australia was the market where footfall was
closest to normal levels and, combined with strong conversion,
resulted in an encouraging growth in revenues in like-for-like
stores in the final quarter relative to 2019 of approximately 20%.
Notwithstanding the short-term challenges that we experienced in
the year, we regard Australia as a very important market with 40
stores trading at the end of the year (2021: 30).
Elsewhere, the Group opened two additional new stores in
Thailand and also opened its first store in New Zealand at Sylvia
Park in Auckland. Subsequent to the year end, working with its
joint venture partner, PT Erajaya Swasembada Tb, the Group opened
its first two stores in Indonesia which is JD's sixth market in the
Asia Pacific region.
North America
The stores in the United States have largely traded free from
any restrictions in the year with all of our businesses benefitting
significantly in the first half of the year, in particular from a
temporary boost to trading which arose as a direct result of the
second round of stimulus introduced by the Federal Government. The
positive impact was most felt in the period from mid-March to
mid-July with revenues in the like-for-like stores in this period
growing by more than 40% compared to pre-COVID levels. As with the
first round of stimulus in the prior year, this economic support
was given directly to individuals, focusing on lower earning
members of the population.
We are encouraged that even after this period of exceptional
demand there was positive trading through the second half of the
year although activity slowed after the peak Holiday season as our
businesses, which have a higher participation of Nike and Jordan
branded footwear in the overall mix, began to see the anticipated
shortfall in the supply of certain key footwear styles. Supply of
these styles will remain limited through the first half of this
financial year but our expectation is still that the overall supply
position should progressively improve through the year.
This strong demand through the year has also resulted in
sector-wide lower inventory levels and, consequently, there was
significantly less promotional activity than previous years with a
notable increase in gross margins.
The Group now has a significant presence in North America with
more than 930 stand-alone stores (excluding the Macy's concessions)
across the United States and Canada. It is our current intention to
maintain JD / Finish Line, Shoe Palace and DTLR as separate fascias
as there is little crossover in locations and they all have their
own unique DNA which comes from their retail style and having a
rich connection with the local consumer base in the individual
neighbourhoods where they operate. However, we believe that there
are opportunities to enhance both our collective operational
effectiveness and the consumer experience in the United States by
operating collaboratively in certain areas, such as Logistics and
IT, with a number of projects ongoing that are connected with this
objective.
Elsewhere, the businesses also continue to make significant
progress on their individual development opportunities:
-- JD / Finish Line (US): There were 87 stores trading as JD at
the end of the period with 12 new stores complementing the
conversion of a further 26 former Finish Line stores. We are
encouraged by the sales uplift that we have seen to date in these
converted stores which is a fair reflection of consumers positive
reaction to JD's development in the United States and we will look
to maintain this momentum with at least 50 new locations for JD,
either as new stores or conversions of existing Finish Line stores,
planned for the current financial year. Further, we recognise the
role that the flagship store in Times Square has had in enhancing
both JD's profile and reputation with consumers and brand partners
and it is our expectation that we will open our second JD flagship
store in the United States in Chicago later this year. We also
remain confident in the potential for JD to build a meaningful
apparel business in the United States with the run rate on apparel
participation through the second half of the year at 17% (H2 2021:
14%).
-- Shoe Palace (US): Shoe Palace has the support of the
international brands to open additional stores focusing on the
Spanish speaking communities on the West Coast and in the Southern
states. During the year, one new store was open in its heartland
state of California with two smaller stores closing. Shoe Palace
continues to grow its apparel business which now represents more
than 10% of total revenues (pre-acquisition: 6%). The business also
continues to make significant investments in its operational
infrastructure to ensure that it has the right platform from which
to develop in the future with the fitting out of a new 511,000 sqft
warehouse in Morgan Hill, California, which has photovoltaic power
generation capabilities, now substantially complete. We believe
that these investments will assist in the longer term development
of the online business which currently only represents 4% of total
revenues.
-- DTLR (US): DTLR also has the support of the international
brands to open additional stores in future years focusing on their
core markets in the neighbourhood districts of the major cities in
the North and East of the United States. Five stores were opened
after completion of the acquisition with eight smaller stores
closed. DTLR has a higher mix of apparel in its revenues than our
pre-existing Finish Line and Shoe Palace businesses in the United
States, in the current year representing more than 30% of total
sales (pre-acquisition: 25%). As with Shoe Palace, we believe that
there is also an opportunity to develop a more meaningful online
business in DTLR with online sales currently representing only 3%
of total revenues.
-- JD / Size (Canada): During the year, the Group, through its
local management in the country, opened its first Group fascia
stores in Canada with a first JD store in both Toronto and
Vancouver and a Size? store, also in Toronto. These stores
complement the existing four premium Livestock stores in the
country. The momentum on new store openings has continued into this
year with the first JD store also now open in Edmonton.
Other Fascias
UK & Republic of Ireland
As with the JD fascia, there was a high level of sales retention
in the period in the premium fashion businesses whilst the stores
were temporarily closed. Measured against 2019, around 85% of sales
were retained in this period through digital channels, which was
approximately 20% higher than the first closure period in Spring
2020.
Since reopening, the trends have been broadly similar to those
in JD with significant initial pent-up demand helping to contribute
to total revenue growth in stores through April and May of more
than 15% compared to 2019. Similar to JD, footfall has slowed
subsequently, although continued higher conversion has helped
ensure that the Tessuti and Scotts stores have continued to trade
positively overall through the rest of the year.
We believe that these businesses are an important part of our
Group, further elevating our overall proposition and we will
continue to invest in our store estate to enhance the experience
for both consumers and our brand partners. In this regard, the
Group are currently fitting out a new 20,000 sqft flagship Tessuti
store in Liverpool with this store scheduled to open later in the
summer.
Digital development is also a critical component for these
premium fashion businesses with total revenues in the highly
regarded Mainline Menswear business growing by more than 75%
compared to pre-pandemic levels. This complements the performance
in the Tessuti and Scotts multichannel businesses where the growth
in store revenues has been accompanied by significant progression
online with sales in the trading websites now representing
approximately 45% of total sales compared to approximately 30%
pre-pandemic.
Europe
Whilst there were some regionalised restrictions with regards to
trading hours or customer capacity in the early weeks of the year,
the Sprinter stores in Spain largely remained open throughout the
period. The business delivered a robust performance with
like-for-like revenues increasing by approximately 20% relative to
pre-pandemic levels, reflecting a strong performance in key active
sports categories with COVID-19 proving to be a catalyst for many
consumers to increase their participation in sports and fitness.
Our business's expertise in these categories has been enhanced
through the acquisitions of Deporvillage and Bodytone.
The Sport Zone stores in Portugal were closed throughout the
first quarter and reopened in May. Once the stores were able to
reopen, there was a robust performance through the rest of the year
with like-for-like revenues in Portugal also increasing by
approximately 20% relative to pre-pandemic levels.
The management team in Iberia has also now taken over the
operational responsibility for the Aktiesport and Perry Sport
fascias in the Netherlands. A trial has now commenced in the
Netherlands with the conversion of a former Perry Sport in
Rotterdam to the Sprinter fascia with an enhanced focus on key
active sports categories such as running and cycling. The initial
results of this trial have been encouraging and it is our intention
to extend this trial into other stores in this financial year.
Elsewhere, the conversion of the Chausport stores to JD in
France is ongoing with one store converted by 29 January 2022 and a
further 17 stores converted to date in the first four months of
this financial year.
North America
Macy's has now notified us of its intention to extend the
contract by five years to January 2028. It is our intention to
retain the Finish Line name in these concession stores with a
product offer which is more focused on families. The revised terms
pertaining to the extension allow us to close a number of
concessions over the term, although the improved performance of
these concessions and, consequently, our enhanced confidence in
this part of the business, is reflected by the fact that only one
concession was actually closed in the year.
Gyms
The lockdowns over the last two years have brought into sharper
focus the physical and mental health benefits of regular exercise.
We are confident that our market-leading, premium low-cost gyms
proposition provides an environment and motivating atmosphere in
which all participants can achieve their fitness goals.
After opening a further six gyms in the period, the Group had 74
sites in the UK at the end of the year with 63 sites trading as JD,
including 28 which formerly operated under the Xercise4less ('X4L')
banner. A further 11 sites were still bannered as X4L at the period
end. It is our expectation that the majority of these sites will be
converted to JD and retained longer term. The conversions from X4L,
which see significant investment in the fabric of the gym and the
installation of new equipment, have received a very positive
reaction with average membership numbers across the 28 converted
sites to date increasing by more than 20%.
Consequent to the acquisition of GymNation in December 2021, the
Group also now has an initial presence in the Middle East with
seven gyms in the United Arab Emirates. Working with local
management, we are targeting to open approximately four additional
gyms in the new financial year.
Financial Performance
The fundamental strength of our businesses is reflected in the
fact that, despite the challenges of further temporary store
closures in many markets, we are able to report a record result in
Sports Fashion for the year with a profit before tax and
exceptional items of GBP928.3 million (2021: GBP433.5 million).
This result was heavily influenced by very positive performances
from the retail fascias in both the UK and Republic of Ireland and
North America. The UK and Republic of Ireland was the most
profitable territory with a record profit before tax and
exceptional items across the combined retail fascias of GBP471.2
million (2021: GBP262.7 million). The retail fascias in North
America, which benefitted very significantly from the strong demand
in the United States from the Federal fiscal stimulus, also
delivered a record result with a combined profit before tax and
exceptional items of GBP343.0 million (2021: GBP171.9 million).
Overall gross margins increased within Sports Fashion by 1.1% to
49.5% (2021: 48.4%). This is largely due to a stronger margin in
the United States with the strong demand resulting in lower levels
of promotional activity in the overall market compared to previous
years.
After recognising exceptional items in the period of GBP292.5
million (2021: GBP76.9 million) principally relating to a net
increase in the fair value of the liabilities in respect of the
Group's various future put options combined with costs associated
with a restructuring of the Chausport business in France, the
profit before tax in Sports Fashion was GBP635.8 million (2021:
GBP356.6 million).
Outdoor
Our Outdoor businesses had a much improved year with an elevated
demand for holidays in the UK and a general recognition of the
physical and mental health benefits of spending time outdoors
combining to drive a strong demand for outdoor living and cycling
categories in particular. Whilst we are encouraged by our
performance in the year, we recognise that international holidays
are once again more widely available as the UK emerges out of the
COVID-19 pandemic. However, we are confident that people will look
to maintain a more active lifestyle and that the welcoming and
engaging atmosphere in all of our stores will continue to inspire
people to spend time outdoors. Further, we recognise that our
businesses did not achieve their full potential in the year, with
supply chain delays negatively impacting the performance of certain
seasonal categories combined with insufficient global production
capacity to meet current strong demand for bikes and cycling
related accessories.
We continue to invest in all of our fascias with one new Go
Outdoors store in Bangor in the year and the relocation of the
stores in Stoke and Colchester. Furthermore, we are enhancing the
consumer experience by having dedicated concessions delivering
expertise in key categories such as fishing, equestrian and
cycling. To date, we have opened 30 Fishing Republic concessions
and four Naylors equestrian concessions. More recently, we also
opened our first two Wheelbase cycling concessions. The Go Outdoors
stores in Coventry and Stockton, which have been refurbished in the
new premium style, contain all three of these concessions.
Elsewhere, our commitment to cycling in Scotland is reflected in
the fact that we have relocated our specialist Alpine Bikes store
in Edinburgh with a new store in Aberdeen also scheduled to open
later in the year.
Financial Performance
The positive progress in the Outdoor businesses is reflected in
the fact that, even though the majority of stores were closed
through the first quarter, there were record revenues in Outdoor in
the year with total sales of GBP513.4 million (2021: GBP359.3
million). Further, our businesses are also now benefitting from the
previous work to enhance the operational integration of the
businesses through common merchandising systems and shared
commercial resources with overall gross margins increasing by 1.7%
to 43.9% (2021: 42.2%).
The combination of revenue and margin progression meant that
Outdoor returned to profitability in the period, delivering a
profit before exceptional items of GBP25.9 million (2021: loss of
GBP6.1 million). There were no exceptional items in the period
(2021: charge of GBP20.4 million) which means that the profit
before tax in Outdoor was also GBP25.9 million (2021: loss of
GBP26.5 million).
Logistics Developments
There is significant ongoing investment to broaden the
international network to service a complex international
multichannel business with multiple fascias. The Group is also
investing in technically advanced automation equipment and robotics
to strengthen the operational foundations of our businesses and
ensure that the Group remains a leader in multichannel
developments.
UK and Republic of Ireland
Construction works on the new 515,000 sqft facility in Derby
which will be used exclusively to fulfil online orders for JD in
the UK are now complete, with initial fit out of the site ongoing.
This will allow limited fulfilment from the site to commence ahead
of the peak period later this year, although it will be mid-2023
before the site is fully operational. Approximately GBP10 million
was incurred on this project in the year, with approximately GBP80
million to be incurred over the next 18 months to bring the site
into full operational use.
To bridge the capacity gap ahead of Derby opening, the Group
engaged Clipper Logistics Plc in the year to provide a range of
logistics operations, including warehousing and e-fulfilment, on a
temporary basis from their site at Sherburn, Leeds. More than 1.8
million units were shipped from this site in the five weeks leading
up to Christmas.
Elsewhere, our new 65,000 sqft warehouse near Dublin is also now
fully operational, supplying both product to stores and fulfilling
online orders in the Republic of Ireland.
Western Europe
Work has also now commenced on the construction of the 620,000
sqft facility in Heerlen, South-East Netherlands. This site is
scheduled to be handed over later this year for initial fitting out
although the current long lead times on the supply of warehouse
automation equipment mean that it will likely be mid-2024 before
the site is fully operational. Approximately EUR2 million was
incurred on this project in the year with the total cost to bring
the site into full operational use estimated at EUR95 million.
In the meantime, the Group continues to operate out of a number
of smaller facilities in Southern Belgium and Northern France. To
date, these facilities have focused on the fulfilment of a large
proportion of the core ranges and fastest moving lines required for
stores in Mainland Europe although we have now started to fulfil
some online orders locally also.
Financial Summary
Revenue and Gross Margin
Whilst there were further periods of temporary store closures in
many markets, the financial impact of COVID-19 was less severe than
the prior year with stores in some markets, including the United
States, largely trading free from restrictions throughout the year.
Ultimately, total revenue for the Group for the year increased by
38.8% to GBP8,563.0 million (2021: GBP6,167.3 million) with this
increase significantly influenced by the impact of the recent
acquisitions:
-- Shoe Palace (completed 14 December 2020): Revenues of
GBP389.8 million for the full year (2021: GBP56.1 million for the
six week period post-acquisition)
-- DTLR (completed 17 March 2021): Revenues of GBP382.8 million
for the 46 weeks post-acquisition
-- MIG (completed 30 April 2021): Revenues of GBP175.0 million
for the 39 weeks post-acquisition
-- Deporvillage (completed 3 August 2021): Revenues of GBP67.8
million for the 26 weeks post-acquisition
-- Cosmos (completed 21 October 2021): Revenues of GBP26.0
million for the 14 weeks post-acquisition
Elsewhere, the impact of the fiscal stimulus in the United
States is reflected in the fact that revenues in the Group's
pre-existing Finish Line business increased by GBP99.9 million to
GBP1,804.2 million (2021: GBP1,704.3 million). There was also a
very robust performance from the JD business in the UK and Republic
of Ireland where revenues increased by GBP508.0 million to
GBP2,318.1 million (2021: GBP1,810.1 million). Given the temporary
closure periods in both this year and the prior year, it would not
be meaningful to present sales on a like-for-like basis.
Total gross margin for the year increased strongly to 49.1%
(2021: 48.0%) largely due to a stronger margin in the United States
where gross margins increased significantly to 49.8% (2021: 46.7%)
with strong demand consequent to the Federal fiscal stimulus
driving lower levels of promotional activity in the overall market
compared to previous years.
Profit Before Tax
There was a record result for the year with profit before tax
and exceptional items increasing to GBP947.2 million (2021:
GBP421.3 million). The recent acquisitions in North America made a
significant contribution to this result:
-- Shoe Palace (completed 14 December 2020): Profit before tax
and exceptional items of GBP57.3 million for the full year (2021:
GBP13.9 million for the six week period post-acquisition)
-- DTLR (completed 17 March 2021): Profit before tax and
exceptional items of GBP50.6 million for the 46 weeks
post-acquisition
Elsewhere in North America, Finish Line (including the Macy's
concessions) increased its profit before tax and exceptional items
for the year by more than 51% to GBP236.0 million (2021: GBP156.6
million). Further, the premium sports JD business in the UK and
Republic of Ireland also delivered a record result for the year
with a profit before tax and exceptional items of GBP437.3 million
(2021: GBP249.6 million).
Total operating costs in the year before exceptional items of
GBP292.5 million (2021: GBP97.3 million) were GBP3,221.5 million
which represented 37.6% of net revenues (2021: GBP2,507.6 million
being 40.7% of net revenues).
There were exceptional items in the period of GBP292.5 million
(2021: GBP97.3 million) principally from the movement in the fair
value of the liabilities in respect of future put options:
2022 2021
GBPm GBPm
Movement in fair value of put options
(1) 292.7 20.7
Insurance settlement for DTLR (2) (16.6) -
Restructuring of Spodis SA (3) 16.4 -
Impairment of goodwill and fascia
names (4) - 56.2
Restructuring of Go Outdoors (5) - 20.4
Total exceptional charge 292.5 97.3
======= ======
1. Movement in the fair value of the liabilities in respect of
the put options as re-measured at each reporting date (Genesis
Topco Inc: charge of GBP258.7 million, Iberian Sports Retail Group:
charge of GBP31.6 million, Marketing Investment Group S.A: charge
of GBP1.7 million, Other: charge of GBP0.7 million). The increase
in the fair value of the put options attributable to Genesis Topco
Inc. includes GBP71.0 million consequent to the transfer of DTLR
into the Genesis sub-group. The movement in the fair value of the
put option liabilities is presented as exceptional as it is a
significant item that is outside of the normal course of
business.
2. Insurance settlement proceeds related to a pre-acquisition
claim for business interruption by DTLR Villa LLC. As the claim was
a contingent asset at the date of acquisition, this was not
recognised in the assets acquired in the fair value table in Note
5. These insurance proceeds are presented as exceptional as they
are unusual in nature and are outside of the normal course of
business.
3. The impact consequent to the restructuring of Spodis SA in
the period including a charge of GBP5.5 million in relation to the
impairment of tangible assets and business restructuring costs of
GBP10.9 million. This item is presented as exceptional as it
related to a non-recurring restructuring project.
4. The impairment in the prior period primarily relates to the
impairment of goodwill and fascia name arising in prior years on
the acquisition of Footasylum (GBP55.6 million). The impairment is
presented as exceptional as it is a significant item that is
outside of the normal course of business.
5. The net impact consequent to the restructuring of Go Outdoors
in the prior year including a charge of GBP33.3 million in relation
to the impairment of intangible assets, a charge of GBP4.9 million
in relation to the impairment of leasehold improvements and a
credit of GBP17.8 million in relation to the extinguishment of
lease commitments. This item is presented as exceptional as it
related to a non-recurring restructuring project.
Group profit before tax ultimately increased to GBP654.7 million
(2021: GBP324.0 million).
Balance Sheet
The net cash balance at the end of the period was GBP1,185.9
million (2021: GBP795.4 million). This net cash position reflects
both the very strong cash generation in the United States and the
UK consequent to the strong trading in these countries through the
first half and the net proceeds, after costs, of GBP455.9 million
from the placing of 58,393,989 new ordinary shares on 3 February
2021. These shares were issued prior to the 5:1 split of the
ordinary shares on 30 November 2021. The Group continues to use its
very strong cash resources to fund its development opportunities
with cash consideration paid on completed acquisitions in the year
(net of cash acquired) of GBP616.5 million (2021: GBP206.3
million).
Net inventories at the end of the period were GBP989.4 million
(2021: GBP813.7 million) which includes GBP206.9 million of
inventories in businesses which have been acquired since 30 January
2021. Period-end inventories in the combined Finish Line and JD
business in the United States of $149.1 million were approximately
11% lower than the previous year (2021: $167.7 million) reflecting
both the strong demand in the period and the gradual tightening of
supply consequent to the well-publicised production issues that
some brands experienced at their factories in Asia in the second
half of the year.
Gross capital expenditure* (excluding disposal costs) increased
to GBP247.9 million (2021: GBP128.2 million) with fewer
restrictions on construction activity, including the fitting out of
stores. The primary focus of our capital expenditure remains our
physical retail fascias with a spend in the period of GBP124.0
million (2021: GBP73.5 million) which includes GBP48.7 million
(2021: GBP21.0 million) across our combined retail fascias in North
America. Given the increased global footprint of the Group and the
relaxation of COVID-19 related operating restrictions in many
countries, the Group expects to significantly increase its
investment in physical retail in the new financial year. In
addition, there will also be significant spend on the new
warehouses at Derby and Heerlen and so, consequently, we would
currently anticipate that the capital expenditure for the year to
28 January 2023 will be in the range of GBP325 million to GBP375
million.
Intangible assets increased by GBP653.9 million to GBP1,473.6
million (2021: GBP819.7 million) consequent to the recognition of
intangible assets arising from the acquisitions made in the year
(see Note 5).
Dividends and Earnings per Ordinary Share
The Board is cognisant that the Group has delivered an excellent
result for the year and that the Group's international operations,
particularly those in the United States, have made a very
significant contribution to this profitability. Further, the Board
recognise that most countries where the Group operates have eased
their trading restrictions and have also begun to reopen their
borders to allow international tourism to recommence. After careful
consideration, the Board has decided that it is appropriate to pay
a dividend and that, whilst the payment should be modest with
funding retained for our ongoing development opportunities, it
should reflect the performance over the full year. Accordingly, the
Board proposes paying a final dividend of 0.35p (2021: 0.29p
restated) per ordinary share. Subject to shareholder approval at
our AGM, the proposed final dividend will be paid on 5 August 2022
to all shareholders on the register at 8 July 2022.
The basic earnings per ordinary share increased by 55.5% to
7.17p (2021: 4.61p restated).
Store Portfolio
During the period, store numbers have moved as follows:
Sports Fashion
Period New Stores Transfers Acquired Closures Period
Start End
Premium Sports
UK & Republic of
Ireland 423 20 - - (7) 436
Europe 345 42 2 - (12) 377
Asia Pacific 69 13 - - (3) 79
North America 684 21 - 247 (21) 931
1,521 96 2 247 (43) 1,823
------- ----------- ---------- --------- --------- -------
Other Fascias
UK & Republic of
Ireland (i) 154 5 - 3 (11) 151
Europe 431 36 (2) 471 (47) 889
Asia Pacific - 2 - - - 2
North America 290 - - - (1) 289
875 43 (2) 474 (59) 1,331
------- ----------- ---------- --------- --------- -------
Total Sports Fashion 2,396 139 - 721 (102) 3,154
------- ----------- ---------- --------- --------- -------
Total Outdoor 240 4 - 13 (9) 248
Total Group 2,636 143 - 734 (111) 3,402
------- ----------- ---------- --------- --------- -------
(i) Includes 65 stores trading as Footasylum (2021: 68 stores)
People
We are, of course, indebted to all of our teams in our different
territories for their resolute attitude in dealing with the
challenges posed by COVID-19 during the year. Whilst the Group's
stores are now trading without restrictions, we are conscious that
there is still a high prevalence of the virus in many countries and
that new variants could emerge in the future and result in new
challenges. However, the Board reaffirms that the safety and
wellbeing of our colleagues and our consumers has been and will
always be our number one priority.
The Board is particularly aware of the need to support our
colleagues mental health needs with wellbeing integrated into our
culture. We have launched our Wellbeing Network which provides
colleagues with a host of resources, including access to health
care professionals and specialist support and we intend to enhance
the size and scope of this programme with additional resources
including podcasts and interactive group sessions.
Kickstart
The Group is working closely with the UK Government and The
Prince's Trust as a national partner on its Kickstart scheme which
aims to provide employment opportunities for young people who were
previously on Universal Credit and who faced significant barriers
to employment as a result of the pandemic. Over 1,000 people have
progressed through the programme to date with 90% of those young
people subsequently offered permanent roles within the Group. The
Group were pleased to welcome His Royal Highness The Prince of
Wales and the Chancellor of the Exchequer, The Rt Hon Rishi Sunak
MP, to our store on Walworth Road in South London on 11 May 2022
where they met with a number of Kickstart recruits to get an
appreciation of their experience of the Kickstart scheme. The Group
recognises the prevalence of social inequality in the UK and feels
passionately about reducing barriers to entry to employment for
young people who are socially and economically disadvantaged. JD is
proud of its participation in the Kickstart scheme which was
delivered in partnership with The Prince's Trust.
Environmental and Social Update
As a FTSE 100 company, we recognise and embrace that our scale
enables us to make positive, lasting changes. Our Environmental,
Social and Governance ('ESG') Committee (founded in 2020) governs
our global, Group-wide approach to sustainability, including such
critical topics as our people strategy, climate change, sustainable
sourcing and governance.
Responsibilities of the ESG Committee include:
-- Determining our strategy, corporate risk-assessment and
monitoring of ESG performance across the Group's respective fascias
and territories, including submission of our 'Task Force on
Climate-Related Financial Disclosures' statement.
-- Reviewing investment plans from an ESG perspective including
advising on proposed capital expenditure projects and assessment of
the risks and opportunities for potential acquisitions.
-- Clear communication of our strategy to investors, verifying
our credentials via accreditation and data.
-- Ensuring that our colleagues and suppliers are supported and
trained across a broad cross-section of personal and environmental
welfare topics.
-- Supporting our customers by improving the frequency and
accuracy of environmental and sustainability claims made relating
to products manufactured by both branded suppliers and our private
labels.
Our achievements in the year include:
-- Retained an 'A-' rating in the 2021 Carbon Disclosure Project Climate Change assessment.
-- Attained an 'A' grade for Climate Change Supply Chain Engagement.
-- Retained a 'B' rating for Water Stewardship in the 2021
Carbon Disclosure Project Climate Change assessment.
-- Approval of the Group's Scope 1 and Scope 2 Science Based
targets with the Group targeting a reduction in greenhouse gas
emissions of 67.2% by 2035-36 when measured against a 2019-20 base
year reflecting the more ambitious 1.5 degree Celsius scenario.
-- Submitted the Group's Scope 3 Science Based targets with the
Group committing to reduce absolute Scope 3 greenhouse gas
emissions from textiles and footwear within the purchased goods and
services category by 67.2% by 2035-36 from a 2019-20 base year
reflecting the more ambitious 1.5 degree Celsius scenario. These
have subsequently been approved.
-- Sourced 98% of cotton through the 'Better Cotton' initiative.
-- The Group became one of the founding signatories to the Waste
and Resource Action Plan ('WRAP') Textiles 2030 initiative with our
private labels aiming to cut carbon by 50% and water by 30%.
-- Successfully trialed the 'Together We Can' project which
raises funds through micro-donations at the till point and aims to
provide education opportunities to those working in our factories,
enhancing career opportunities and providing financial support.
Current Trading and Outlook
The Group is reassured with the trading to date with total sales
in the Group's like-for-like businesses after four months 5% ahead
of the same period in the prior year. This performance is a further
positive reflection of both the strength and breadth of the Group's
brand relationships and category offer. It has also been achieved
against a backdrop of a global shortfall in the supply of certain
key footwear styles with this supply expected to improve
progressively through the remainder of the year.
Whilst we are encouraged by the resilient nature of the consumer
demand in the current year 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,
the Board believes that the headline profit before tax and
exceptional items for the year end 28 January 2023 will be in line
with the record performance for the year ended 29 January 2022.
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.
Helen Ashton
Interim Chair
22 June 2022
Alternative Performance Measures (terms listed in alphabetical
order)
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 adjusting for exceptional items. Exceptional
items are disclosed separately when they are considered unusual in
nature and not reflective of the trading performance and
profitability of the Group. The separate reporting of exceptional
items, which are presented as exceptional within the relevant
category in the Consolidated Income Statement, helps provide an
indication of the Group's trading performance. An explanation as to
why items have been classified as Exceptional is given in Note
3.
Adjusted earnings per share
The calculation of basic earnings per share is detailed in Note
4. Adjusted basic earnings per ordinary share has been based on the
profit for the period attributable to equity holders of the parent
for each financial period but excluding the post-tax effect of
certain exceptional items. A reconciliation between basic earnings
per share and adjusted earnings per share is shown below:
2021
2022 (restated)
Basic earnings per share 7.17p 4.61p
Exceptional items 5.66p 2.00p
Tax relating to exceptional items 0.01p (0.17)p
------- ----------------------
Adjusted earnings per ordinary share 12.84p 6.44p
------- ----------------------
EBITDA before exceptional items
Earnings before interest, tax, depreciation and
amortisation.
2022 2021
GBPm GBPm
Profit for the period 459.6 229.2
Addback:
Financial expenses 67.9 62.5
Income tax expense 195.1 94.8
Depreciation, amortisation and impairment
of non-current assets 593.1 507.9
Exceptional items (see note 3) 292.5 97.3
Deduct:
Financial income (1.4) (1.5)
-------- ------
EBITDA before exceptional items 1,606.8 990.2
-------- ------
Gross capital expenditure
2022 2021
GBPm GBPm
Investment in software 14.9 19.1
Acquisition of property, plant and equipment 227.3 105.2
Acquisition of non-current other assets 5.7 3.9
------- -------
Total gross capital expenditure 247.9 128.2
------- -------
Alternative Performance Measures (continued)
LFL (Like-for-Like) sales
The percentage change in the year-on-year sales, removing the
impact of new store openings and closures in the current or
previous financial year . This metric enables the performance of
the retail stores to be measured on a consistent year-on-year basis
and is a common term used in the industry.
Net cash / (debt)
Net cash / (debt) consists of cash and cash equivalents together
with interest-bearing loans and borrowings. This measure is a good
indication of the strength of the Group's Balance Sheet position
and is widely used by credit rating agencies. A reconciliation of
net cash / (debt) is provided on page 29.
Operating profit before exceptional items
A reconciliation between operating profit and exceptional items
can be found in the Consolidated Income Statement.
Profit before tax and exceptional items
A reconciliation between profit before tax and profit before tax
and exceptional items is as follows:
2022 2021
GBPm GBPm
Profit before tax 654.7 324.0
Exceptional items 292.5 97.3
------ ------
Profit before tax and exceptional items 947.2 421.3
------ ------
Proforma IAS 17
The Group presents results on a proforma basis with rents
recognised under the provisions of IAS 17 'Leases' as opposed to
IFRS 16 'Leases' as this is consistent with the financial
information used to inform business decisions and investment
appraisals. Certain management incentives are also linked to the
results on this basis.
A reconciliation from the IFRS 16 headline profit before tax and
exceptional items to the proforma IAS 17 headline profit before tax
and exceptional items is as follows:
2022 2021
GBPm GBPm
Headline profit before tax and exceptional
items (IFRS 16) 947.2 421.3
Addback:
Depreciation and impairment of the Right of
Use asset under IFRS 16 361.3 324.8
Lease interest expense 59.5 54.9
Deduct:
Lease costs expensed to the income statement
under IAS 17 (410.1) (340.9)
-------- --------
Headline profit before tax and exceptional
items (Proforma IAS 17) 957.9 460.1
-------- --------
Consolidated Income Statement
For the 52 weeks ended 29 January 2022
52 weeks to 52 weeks to
29 January 30 January 2021
Note 2022 GBPm
GBPm
Revenue 8,563.0 6,167.3
Cost of sales (4,355.0) (3,205.7)
-------------- ------------------
Gross profit 4,208.0 2,961.6
Selling and distribution expenses (2,808.1) (2,126.4)
Administrative expenses - normal (413.4) (381.2)
Administrative expenses - exceptional (292.5) (97.3)
Other operating income 27.2 28.3
Operating profit 721.2 385.0
Before exceptional items 1,013.7 482.3
Exceptional items 3 (292.5) (97.3)
------------------
Operating profit 721.2 385.0
Financial income 1.4 1.5
Financial expenses (67.9) (62.5)
-------------- ------------------
Profit before tax 654.7 324.0
Income tax expense (195.1) (94.8)
Profit for the period 459.6 229.2
-------------- ------------------
Attributable to equity holders
of the parent 369.7 224.3
Attributable to non-controlling
interest 89.9 4.9
Basic earnings per ordinary share 4 7.17p 4.61p
-------------- ------------------
Diluted earnings per ordinary
share 4 7.17p 4.61p
-------------- ------------------
* Basic and diluted earnings per ordinary share have been
restated for year ended 30 January 2021 following a share
sub-division in the year ended 29 January 2022. Further details can
be found in Note 4.
Consolidated Statement of Comprehensive Income
For the 52 weeks ended 29 January 2022
52 weeks to
29 January 52 weeks to
2022 30 January 2021
GBPm GBPm
Profit for the period 459.6 229.2
Other comprehensive income:
Items that may be classified subsequently
to the Consolidated Income Statement:
Exchange differences on translation
of foreign operations (34.9) (20.0)
Total other comprehensive income for
the period (34.9) (20.0)
------------ -----------------
Total comprehensive income and expense
for the period
(net of income tax) 424.7 209.2
------------ -----------------
Attributable to equity holders of the
parent 357.3 200.7
Attributable to non-controlling interest 67.4 8.5
------------ -----------------
Consolidated Statement of Financial Position
As at 29 January 2022
As at As at
29 January 30 January
2022 2021
GBPm GBPm
Assets
Intangible assets 1,473.6 819.7
Property, plant and equipment 688.5 564.0
Right-of-use assets 2,032.6 1,752.4
Investments in associates and joint
ventures 56.2 2.7
Other assets 59.5 63.2
Deferred tax assets 81.7 40.6
Total non-current assets 4,392.1 3,242.6
------------ ------------
Inventories 989.4 813.7
Right of return assets 12.5 -
Trade and other receivables 202.9 141.2
Income tax receivables 0.6 -
Assets held-for-sale 157.1 -
Cash and cash equivalents 1,314.0 964.4
------------ ------------
Total current assets 2,676.5 1,919.3
------------ ------------
Total assets 7,068.6 5,161.9
------------ ------------
Liabilities
Interest-bearing loans and borrowings (72.6) (120.9)
Lease liabilities (379.0) (301.8)
Trade and other payables (1,279.5) (1,102.0)
Liabilities directly associated (142.6) -
with assets held-for-sale
Provisions (13.2) (0.7)
Income tax liabilities - (29.5)
------------ ------------
Total current liabilities (1,886.9) (1,554.9)
------------ ------------
Interest-bearing loans and borrowings (55.5) (48.1)
Lease liabilities (1,863.9) (1,628.0)
Other payables (775.4) (374.4)
Provisions (19.9) (5.1)
Deferred tax liabilities (127.4) (55.0)
------------ ------------
Total non-current liabilities (2,842.1) (2,110.6)
------------ ------------
Total liabilities (4,729.0) (3,665.5)
------------ ------------
Total assets less total liabilities 2,339.6 1,496.4
------------ ------------
Consolidated Statement of Financial Position (continued)
As at 29 January 2022
Capital and reserves
Issued ordinary share capital 2.5 2.4
Share premium 467.5 11.7
Retained earnings 1,910.6 1,560.8
Other reserves (454.6) (336.2)
Total equity attributable to equity holders
of the parent 1,926.0 1,238.7
Non-controlling interest 413.6 257.7
-------- --------
Total equity 2,339.6 1,496.4
-------- --------
Consolidated Statement of Changes in Equity
For the 52 weeks ended 29 January 2022
Total
Equity
Share-based Foreign Attributable
Ordinary payment Currency to Equity
Share Share Retained Other reserve Translation Holders
Capital Premium Earnings Equity GBPm Reserve of The
GBPm GBPm GBPm GBPm GBPm Parent
GBPm
Balance at
1 February
2020 2.4 11.7 1,245.7 (36.4) - (4.2) 1,219.2
Profit for
the period - - 224.3 - - - 224.3
Other comprehensive
income:
Exchange differences
on translation
of foreign
operations - - - - - (23.6) (23.6)
-------------- --------------
Total other
comprehensive
income - - - - - (23.6) (23.6)
----------- ---------- ----------- --------- -------------- -------------- --------------
Total comprehensive
income for
the period - - 224.3 - - (23.6) 200.7
Put options
held by
non-controlling
interest - - - (272.0) - - (272.0)
Acquisition
of non-controlling
interest - - (3.7) - - - (3.7)
Divestment
of non-controlling
interest - - 94.5 - - - 94.5
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 options
held by
non-controlling
interests - - - (106.1) - - (106.1)
Share capital
issued 0.1 455.8 - - - - 455.9
Acquisition
of non-controlling
interest - - 0.4 - - - 0.4
Divestment
of non-controlling
interest - - (5.4) - - - (5.4)
Non-controlling - - - - - - -
interest arising
on acquisition
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
----------- ---------- ----------- --------- -------------- -------------- --------------
Consolidated Statement of Changes in Equity (continued)
For the 52 weeks ended 29 January 2022
Total Equity
Attributable Non-Controlling
to Equity Interest Total
Holders GBPm Equity
of The Parent GBPm
GBPm
Balance at 1 February 2020 1,219.2 70.0 1,289.2
Profit for the period 224.3 4.9 229.2
Other comprehensive income:
Exchange differences on translation
of foreign operations (23.6) 3.6 (20.0)
--------------- ------------------ ---------
Total other comprehensive income (23.6) 3.6 (20.0)
--------------- ------------------ ---------
Total comprehensive income for
the period 200.7 8.5 209.2
Dividends to equity holders - (1.2) (1.2)
Put options held by non-controlling
interest (272.0) - (272.0)
Acquisition of non-controlling
interest (3.7) (1.7) (5.4)
Divestment of non-controlling
interest 94.5 181.4 275.9
Non-controlling interest arising
on acquisition - 0.4 0.4
Non-controlling interest share
capital issued - 0.3 0.3
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 options held by non-controlling
interests (106.1) - (106.1)
Share capital issued 455.9 - 455.9
Acquisition of non-controlling
interest 0.4 (0.5) (0.1)
Divestment of non-controlling
interest (5.4) 48.0 42.6
Non-controlling interest 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
--------------- ------------------ ---------
Consolidated Statement of Cash Flows
For the 52 weeks ended 29 January 2022
52 weeks to 52 weeks to
29 January 30 January
2022 2021
GBPm GBPm
Cash flows from operating activities
Profit for the period 459.6 229.2
Income tax expense 195.1 94.8
Financial expenses 67.9 62.5
Financial income (1.4) (1.5)
Depreciation and amortisation of non-current
assets 579.9 499.2
Forex (losses) / gains on monetary assets
and liabilities (2.1) 3.6
Impairment of other intangibles and non-current
assets (non-exceptional) 13.2 8.7
Loss on disposal of non-current assets 3.5 1.2
Other exceptional items 287.0 2.9
Impairment of goodwill and fascia names
(exceptional) - 89.5
Impairment of non-current assets (exceptional) 5.5 4.9
Share of profit of equity-accounted investees, (3.2) -
net of tax
(Increase) / decrease in inventories (31.8) 63.5
(Increase) / decrease in trade and other
receivables (69.3) 46.2
Increase in trade and other payables 75.0 149.5
Interest paid (8.4) (7.6)
Lease interest (59.5) (54.9)
Income taxes paid (244.1) (130.4)
------------ ------------
Net cash from operating activities 1,266.9 1,061.3
------------ ------------
Cash flows from investing activities
Interest received 1.4 1.5
Proceeds from sale of non-current assets 7.8 2.1
Investment in software (14.9) (19.1)
Acquisition of property, plant and equipment (227.3) (105.2)
Acquisition of non-current other assets (5.7) (3.9)
Acquisition of other intangible assets (5.2) (3.8)
Draw down of finance lease liabilities 5.4 4.7
Dividends received from equity-accounted 6.9 -
investees
Acquisition of subsidiaries, net of cash
acquired (616.5) (206.3)
Net cash used in investing activities (848.1) (330.0)
------------ ------------
Cash flows from financing activities
Repayment of interest-bearing loans and
borrowings (513.3) (391.5)
Draw down of interest-bearing loans and
borrowings 303.7 443.1
Repayment of finance lease liabilities (6.1) (3.4)
Repayment of lease liabilities (350.1) (285.2)
Subsidiary shares issued in the period - 0.3
Proceeds received from issue of shares 455.9 -
Divestment of non-controlling interests 43.0 -
Acquisition of non-controlling interests - (5.2)
Equity dividends paid (14.9) -
Dividends paid to non-controlling interests
in subsidiaries (1.8) (1.2)
------------ ------------
Net cash used in financing activities (83.6) (243.1)
------------ ------------
Consolidated Statement of Cash Flows (continued)
For the 52 weeks ended 29 January 2022
Net increase in cash and cash equivalents 335.2 488.2
Cash and cash equivalents at the beginning
of the period 948.7 460.3
Foreign exchange (losses) / gains on cash
and cash equivalents (3.5) 0.2
------------ ------------
Cash and cash equivalents at the end of
the period 1,280.4 948.7
------------ ------------
Analysis of Net Cash
As at 29 January 2022
At 30 Non- At 29
January On acquisition Cash cash January
2021 of subsidiaries flow movements 2022
GBPm GBPm GBPm GBPm GBPm
Cash at bank and in hand 964.4 152.7 200.4 (3.5) 1,314.0
Overdrafts (15.7) (23.2) 5.3 - (33.6)
---------- ------------------ ------- ------------ ----------
Cash and cash equivalents 948.7 129.5 205.7 (3.5) 1,280.4
Interest-bearing loans
and borrowings:
Bank loans (84.4) (156.2) 140.8 5.3 (94.5)
Other loans (68.9) - 68.9 - -
---------- ------------------ ------- ------------ ----------
Net cash / (financial
debt) before lease liabilities 795.4 (26.7) 415.4 1.8 1,185.9
Lease liabilities (1,929.8) (271.7) 350.8 (392.2) (2,242.9)
---------- ------------------ ------- ------------ ----------
Net cash / (debt) (1,134.4) (298.4) 766.2 (390.4) (1,057.0)
---------- ------------------ ------- ------------ ----------
1. Basis of Preparation
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 IAS 38 'Intangible Assets' - Configuration of
Customisation Costs in a Cloud Computing Arrangement.
-- Interest Rate Benchmark Reform - Phase 2 - amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16.
-- Annual Improvements - Cycle 2018-2020.
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.
Going Concern
The global COVID-19 pandemic has presented a series of
unprecedented challenges which have severely tested all aspects of
our business including our multichannel capabilities, the
robustness of our operational infrastructure and the resilience of
our colleagues. Whilst COVID-19 has inevitably constrained our
short-term progress, we firmly believe that we have a robust
premium branded multichannel proposition with our loyal consumers
comfortable engaging with us in any channel.
The financial statements are prepared on a going concern basis,
which the Directors believe to be appropriate for the following
reasons.
At 29 January 2022, the Group had net cash balances of
GBP1,185.9 million (2021: GBP795.4 million) including loans of
GBP128.1 million (2021: GBP169.0 million) with available committed
UK borrowing facilities of GBP700 million (2021: GBP700 million) of
which GBPnil (2021: GBPnil) has been drawn down and US facilities
of approximately $300 million of which $nil was drawn down (2021:
$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
GBP946.1 million as at 30 May 2022.
The Directors have prepared cash flow forecasts for the Group
covering a period of at least 12 months from the date of approval
of these financial statements, which indicate that the Group will
be able to operate within the level of its agreed facilities and
covenant compliance. For the purposes of both Viability and 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 geopolitical tensions and the actual and potential
impact on supply chains, inflationary cost pressures and business
interruption impacting the availability of stock from the Group's
key Sports Fashion suppliers, as well as the ongoing impact of the
COVID-19 pandemic. These scenarios included a two month store
closure in Winter 2023/24 and a 20% reduction in sales. As part of
this analysis, mitigating actions within the Group's control,
should these severe but plausible scenarios occur, have also been
considered. These forecast cash flows indicate that there remains
sufficient headroom for the Group to operate within the committed
facilities and to comply with all relevant banking covenants during
the forecast period.
The Directors have considered all of the factors noted above,
including the inherent uncertainty in forecasting the impact of the
current geopolitical tensions and COVID-19 pandemic, and are
confident that the Group has adequate resources to continue to meet
all liabilities as and when they fall due for a period of at least
12 months from the date of approval of these financial statements.
Accordingly, the financial statements have been prepared on a going
concern basis.
1. Basis of Preparation (continued)
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.
Changes to Critical Accounting Estimates
Determination of the Fair Value of Assets and Liabilities on
Acquisition
Included within critical accounting policies in the current year
is the valuation of the intangible assets recognised as part of the
acquisition of DTLR Villa LLC ('DTLR') (see Note 5). The estimates
used in the valuation of the intangible assets are considered to
have a significant risk of causing a material misstatement;
specifically, the estimation of future cash flows, the useful
economic life of the asset, the selection of suitable royalty
relief rates and the selection of a suitable discount rate. The key
assumption used by management in the valuation of the fascia name
was the royalty rate. The royalty rate assumption used in the
valuation was estimated based on published comparable licence fees
in the sports fashion market and a calculation of the expected
return on assets of the DTLR business. If the royalty rate used in
the valuation was 1% higher or lower, this would lead to a change
in the fascia name valuation of plus or minus GBP25.4 million. 1%
was determined to be a reasonable royalty rate sensitivity by
comparing the royalty rate used with publicly disclosed licensing
transactions related to the retail of sportswear and footwear.
Changes to Critical Accounting Judgements
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.
Critical Accounting Estimates
Put Options (Genesis Topco Inc put option GBP520.3 million)
Put options are in place over all or part of the remaining
non-controlling interest shareholding in various subsidiaries and
these options are required to be fair valued at each accounting
period date. Put options held by non-controlling interests are
accounted for using the present access method. The present value of
the non-controlling interests' put options is estimated using Board
approved forecasts multiplied by an earnings multiple. The option
formula and multiple are usually stated in the put option
agreement; however, in the absence of a specified formula or
multiple, we would estimate this based on current evidence in the
Mergers & Acquisitions market and our past experience of
multiples paid for similar businesses.
These forecast cash flows are 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 are considered to be
equivalent to the rates a market participant would use.
Sensitivity analysis was performed over the key variable inputs
to the valuation of the following put options. The key variable
inputs were determined to be the discount rate and approved
forecasts. 1% was determined to be a reasonable variance to
demonstrate the sensitivity of the put option valuation to the key
inputs used. A discount rate increase of 1% would result in a
reduction in the put option liability of GBP23.5 million and an
increase of 1% to the forecast EBITDA % would result in an increase
in the put option liability of GBP31.3 million.
1. Basis of Preparation (continued)
Other Accounting Estimates
Impairment of Goodwill (carrying value of the Shoe Palace CGU
GBP546.7 million)
Goodwill arising on acquisition is allocated to groups of
cash-generating units ('Group CGUs'), that are expected to benefit
from the synergies of the business combination from which goodwill
arose, being portfolios of stores or individual businesses. The
cash-generating units used to monitor goodwill and test it for
impairment are therefore the store portfolios and individual
businesses rather than individual stores, as the cash flows of
individual stores are not considered to be independent. The
recoverable amounts of these Group CGUs are 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 Group CGU and the choice of a suitable
discount rate in order to calculate the present value.
Impairment of Other Intangible Assets with Definite Lives
(carrying value of the Go Outdoors CGU GBP77.0 million and the Shoe
Palace CGU GBP546.7 million)
The Group is required to assess whether there is an indication
that other intangible assets with a definite useful economic life
have suffered any impairment. The recoverable amount of brand names
is based on an estimation of future sales and the choice of a
suitable royalty and discount rate in order to calculate the
present value when this method is deemed the most appropriate. The
use of this method requires the estimation of future cash flows
expected to arise from the continuing operation of the asset over
its useful life and the choice of a suitable discount rate in order
to calculate the present value. Impairment losses are recognised in
the Consolidated Income Statement.
Other Accounting Judgements
Footasylum Disposal
This judgement has been revised due to changes during the
financial period. On 4 November 2021, the final ruling from the CMA
was that it had again prohibited the Group's acquisition of
Footasylum. The final CMA undertakings were issued on 14 January
2022, which was effectively the start date for the Footasylum sale
process. Footasylum has been presented as held-for-sale at 29
January 2022 and full details are provided in Note 7.
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 Executive Chair of JD Sports Fashion Plc.
Information reported to the Chief Operating Decision Maker is
focused on the nature of the businesses within the Group. The
Group's operating and reportable segments under IFRS 8 are Sports
Fashion and Outdoor. In accordance with IFRS 8.12, we have
aggregated several operating segments with similar economic
characteristics into a larger Sports Fashion operating segment and
concluded that, in doing so, the aggregation is still consistent
with the core principles of IFRS 8.
When aggregating the operating segments into the larger Sports
Fashion operating segment, we have primarily taken into
consideration:
-- IFRS 8.12.a the nature of products or services;
-- IFRS 8.12.c type or class of customer; and
-- IFRS 8.12.d the methods used to distribute their products.
The entities included in the Sports Fashion operating segment
have similar characteristics as well-established, leading retailers
or wholesalers of footwear, apparel and accessories from a mix of
international sports fashion brands and private labels. When
determining what to include within the Sports Fashion segment, we
have considered that the fascias all target a similar demographic
in terms of both age range and an aspiration to achieve a certain
style, whether the product is to be used for lifestyle wear or
active sports participation. The entities typically have similar
economic characteristics in terms of sales metrics, long-term
average gross margins, levels of capital investment and operating
cash flows. The Outdoor segment differs from the Sports Fashion
segment in that Outdoor is focused on retailing specialist apparel,
footwear and technical products for outdoor pursuits. Further, the
Outdoor segment typically appeals to an older and/or
family-oriented demographic as compared with the younger and more
style-focused demographic targeted by the Sports Fashion
businesses.
The Chief Operating Decision Maker receives and reviews
segmental operating profit. Certain central administrative costs
including Group Directors' salaries are included within the Group's
Sports Fashion result. This is consistent with the results as
reported to the Chief Operating Decision Maker.
IFRS 8 requires disclosure of information regarding revenue from
major customers. The majority of the Group's revenue is derived
from the retail of a wide range of apparel, footwear and
accessories to the general public. As such, the disclosure of
revenues from major customers is not appropriate.
Inter-segment transactions are undertaken in the ordinary course
of business on arm's length terms.
The Board considers that certain items are cross-divisional in
nature and cannot be allocated between the segments on a meaningful
basis. Certain net funding costs and taxation are treated as
unallocated, reflecting the nature of the Group's syndicated
borrowing facilities and its tax group. A deferred tax asset of
GBP81.7 million (2021: GBP40.6 million), a deferred tax liability
of GBP127.4 million (2021: GBP55.0 million) and an income tax
receivable of GBP0.6 million (2021: liability of GBP29.5 million)
are included within the unallocated segment.
Each segment is shown net of intercompany transactions and
balances within that segment. The eliminations remove intercompany
transactions and balances between different segments which
primarily relate to the net draw down of long-term loans and
short-term working capital funding provided by JD Sports Fashion
Plc (within Sports Fashion) to other companies in the Group, and
intercompany trading between companies in different segments.
2. Segmental analysis (continued)
Business segments
Information regarding the Group's reportable operating segments
for the 52 weeks to 29 January 2022 is shown below:
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 exceptional
items 985.5 28.2 - 1,013.7
Exceptional 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
----------- ------------ ---------------- ------------
Total assets and liabilities
Sports Fashion Outdoor Unallocated Eliminations Total
GBPm GBPm GBPm GBPm GBPm
Total assets 6,681.4 420.9 82.3 (116.0) 7,068.6
Total liabilities (4,390.4) (327.2) (127.4) 116.0 (4,729.0)
--------------- -------- ------------ ------------- -------------
Total segment
net assets / (liabilities) 2,291.0 93.7 (45.1) - 2,339.6
--------------- -------- ------------ ------------- -------------
2 . Segmental analysis (continued)
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 (exceptional
items) 5.5 - 5.5
Impairment of non-current assets (non-exceptional
items) 12.0 1.2 13.2
--------------- -------- ------
The comparative segmental results for the 52 weeks to 30 January
2021 are as follows:
Income statement
Sports
Fashion Outdoor Unallocated Total
GBPm GBPm GBPm GBPm
Gross revenue 5,808.2 359.1 - 6,167.3
Inter-segment revenue (0.2) 0.2 - -
--------- ---------- -------------- ----------
Revenue 5,808.0 359.3 - 6,167.3
--------- ---------- -------------- ----------
Gross profit % 48.4% 42.2% - 48.0%
Operating profit / (loss)
before exceptional items 484.7 (2.4) - 482.3
Exceptional items (76.9) (20.4) - (97.3)
--------- ---------- -------------- ----------
Operating profit / (loss) 407.8 (22.8) - 385.0
Financial income - - 1.5 1.5
Financial expenses (51.2) (3.7) (7.6) (62.5)
--------- ---------- -------------- ----------
Profit / (loss) before
tax 356.6 (26.5) (6.1) 324.0
Income tax expense (94.8)
--------- ---------- -------------- ----------
Profit for the period 229.2
--------- ---------- -------------- ----------
2 . Segmental analysis (continued)
Total assets and liabilities
Sports Fashion Outdoor Unallocated Eliminations Total
GBPm GBPm GBPm GBPm GBPm
Total assets 4,940.2 293.2 40.6 (112.1) 5,161.9
Total liabilities (3,420.3) (272.8) (84.5) 112.1 (3,665.5)
--------------- ---------- ------------ ------------- --------------
Total segment
net assets / (liabilities) 1,519.9 20.4 (43.9) - 1,496.4
--------------- ---------- ------------ ------------- --------------
Other segment information
Sports Outdoor Total
Fashion GBPm GBPm
GBPm
Capital expenditure:
Software development 19.1 - 19.1
Brand licences 3.8 - 3.8
Property, plant and equipment 102.1 3.1 105.2
Right-of-use assets 168.3 46.6 214.9
Non-current other assets 3.9 - 3.9
--------- -------- --------
Depreciation, amortisation and impairments:
Amortisation of intangible assets 36.4 4.6 41.0
Depreciation of property, plant and
equipment 125.4 11.4 136.8
Depreciation of right-of-use assets 301.5 19.9 321.4
Impairment of goodwill and fascia
names (exceptional items) 56.2 33.3 89.5
Impairment of non-current assets (exceptional
items) - 4.9 4.9
Impairment of non-assets (non-exceptional
items) 7.3 1.4 8.7
--------- -------- --------
2 . Segmental analysis (continued)
Geographical Information
The Group's operations are located in the UK, Australia,
Austria, Belgium, Bulgaria, Canada, Cyprus, Czech Republic,
Denmark, Dubai, Estonia, Finland, France, Germany, Greece, Hong
Kong, Hungary, India, Indonesia, Israel, Italy, Latvia, Lithuania,
Malaysia, the Netherlands, New Zealand, Poland, Portugal, Republic
of Ireland, Romania, Singapore, Slovakia, South Korea, Spain and
the Canary Islands, Sweden, Thailand and the US.
Revenue analysis
The following table provides analysis of the Group's revenue by
geographical market, irrespective of the origin of the goods /
services:
2022 2021
GBPm GBPm
UK and ROI 3,578.5 2,527.0
Europe 2,046.7 1,579.4
United States 2,609.2 1,780.5
Rest of world 328.6 280.4
-------- --------
8,563.0 6,167.3
-------- --------
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:
2022 2021
GBPm GBPm
Retail stores 5,668.5 3,524.9
Multichannel 2,623.1 2,465.2
Other 271.4 177.2
8,563.0 6,167.3
-------- --------
The following table provides analysis of the Group's revenue by
product type:
2022 2021
GBPm GBPm
Footwear 4,590.4 3,499.8
Apparel 3,199.9 2,200.5
Accessories 540.6 326.0
Other 232.1 141.0
8,563.0 6,167.3
-------- --------
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. Taxation is treated as unallocated reflecting the nature
of the Group's tax group:
2022 2021
GBPm GBPm
UK and ROI 1,217.4 1,011.0
Europe 1,329.7 1,003.4
United States 1,607.8 1,078.6
Rest of world 155.5 109.0
Unallocated 81.7 40.6
4,392.1 3,242.6
-------- --------
3. Exceptional items
52 weeks to 52 weeks to
29 January 30 January
2022 2021
GBPm GBPm
Movement in fair value of put options
(1) 292.7 20.7
Insurance settlement for DTLR (2) (16.6) -
Restructuring of Spodis SA (3) 16.4 -
Impairment of goodwill and fascia names
(4) - 56.2
Restructuring of Go Outdoors (5) - 20.4
------------ ------------
Total exceptional items - administrative
expenses 292.5 97.3
------------ ------------
(1) Movement in the fair value of the liabilities in respect of
the put options as measured at each reporting date (Genesis Topco
Inc: charge of GBP258.7 million, Iberian Sports Retail Group:
charge of GBP31.6 million, Marketing Investment Group S.A: charge
of GBP1.7 million, Other: charge of GBP0.7 million). The increase
in the fair value of the put options attributable to Genesis Topco
Inc. includes GBP71.0 million consequent to the transfer of DTLR
into the Genesis sub-group. The movement in the fair value of the
put option liabilities is presented as exceptional as it is a
significant item that is outside of the normal course of
business.
(2) Insurance settlement proceeds related to a pre-acquisition
claim for business interruption by DTLR Villa LLC. As the claim was
a contingent asset at the date of acquisition, this was not
recognised in the assets acquired in the fair value table in Note
5. These insurance proceeds are presented as exceptional as they
are unusual in nature and are outside of the normal course of
business.
(3) The impact consequent to the restructuring of Spodis SA in
the period including a charge of GBP5.5 million in relation to the
impairment of tangible assets and business restructuring costs of
GBP10.9 million. This item is presented as exceptional as it
related to a non-recurring restructuring project.
(4) The impairment in the prior period primarily relates to the
impairment of goodwill and fascia name arising in prior years on
the acquisition of Footasylum (GBP55.6m). The impairment is
presented as exceptional as it is a significant item that is
outside of the normal course of business.
(5) The net impact consequent to the restructuring of Go
Outdoors in the prior year including a charge of GBP33.3 million in
relation to the impairment of intangible assets, a charge of GBP4.9
million in relation to the impairment of leasehold improvements and
a credit of GBP17.8 million in relation to the extinguishment of
lease commitments. This item is presented as exceptional as it
related to a non-recurring restructuring project.
4. Earnings per ordinary share
Basic and adjusted earnings per ordinary share
On 3 February 2021, JD Sports Fashion Plc completed the placing
of new ordinary shares in the capital of the Company. A total of
58,393,989 new ordinary shares were issued, increasing the total
ordinary shares in issue to 1,031,627,149. The shares were placed
at an issue price of 795 pence per share with a par value of 25
pence leading to share capital of GBP0.1 million and share premium
of GBP455.8 million being recognised on issue (this is net of
GBP8.3 million of costs incurred).
Following an ordinary resolution on 30 November 2021, a share
split occurred whereby five ordinary shares were issued for each
ordinary share. In accordance with IAS 33, the number of shares
outstanding before the event has been adjusted for the
proportionate change as if the event had occurred at the beginning
of the earliest period presented.
The calculation of basic earnings per ordinary share at 29
January 2022 is based on the profit for the period attributable to
equity holders of the parent of GBP369.7 million (2021: GBP224.3
million) and a weighted average number of ordinary shares
outstanding during the 52 week period ended 29 January 2022 of
5,158,135,745 (2021: restated 4,866,165,800). 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 exceptional
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 30 January
29 January 2021
2022 Number
Number millions
millions (restated)
Issued ordinary shares at beginning
of period 4,866.2 4,866.2
Ordinary shares issued on 3 February 291.9 -
2021 (restated)
------------- --------------
Issued ordinary shares at end
of period 5,158.1 4,866.2
------------- --------------
52 weeks 52 weeks
to to
29 January 30 January
Note 2022 2021
GBPm GBPm
(restated)
Profit for the period attributable to
equity holders of the parent 369.7 224.3
Exceptional items 3 292.5 97.3
Tax relating to exceptional items 0.3 (8.3)
Profit for the period attributable to
equity holders of the parent excluding
exceptional items 662.5 313.3
------------------ --------------
Adjusted earnings per ordinary share 12.84p 6.44p
------------------ --------------
Basic earnings per ordinary share 7.17p 4.61p
------------------ --------------
Diluted earnings and diluted adjusted earnings per ordinary
share
Diluted earnings per ordinary share is 7.17p (2021: 4.61p -
restated). Diluted adjusted earnings per share is 12.84p (2021:
6.44p - restated). The calculation of diluted earnings per ordinary
share at 29 January 2022 is based on the profit for the period
attributable to equity holders of the parent of GBP369.7 million
(2021: GBP224.3 million) and a weighted average number of ordinary
shares outstanding during the period of 5,158.2 million (2021:
4,866.2 million) after adjusting for the weighted average impact of
the shares granted on 20 October 2021 under the JD Sports Fashion
Plc LTIP scheme of 0.1 million (2021: Nil).
5. Acquisitions
Current Period - Significant Acquisitions
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 consideration was
GBP305.2 million, split between GBP117.9 million debt funding and
GBP187.3 million equity funding.
DTLR is based in Baltimore, Maryland and is a hyperlocal
athletic footwear and apparel streetwear retailer operating from
247 stores across 19 states on acquisition. The acquisition of
DTLR, with its differentiated consumer proposition, will enhance
the Group's neighbourhood presence in the North and East of the
US.
The existing DTLR management team has also reinvested a portion
of its proceeds back into DTLR in exchange for a new minority stake
of 1.5%. Put and call options, to enable future exit opportunities
for the management team, have also been agreed and become
exercisable after a minimum period of three years. A valuation of
these put options has been performed using an earnings multiple, a
suitable discount rate and approved forecasts, and the initial
liability of GBP4.2 million has been recognised with the
corresponding entry to Other Equity in accordance with the present
value method of accounting. These options are required to be fair
valued at each accounting period date.
Included within the 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
has taken 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)
Current Period - Significant Acquisitions (continued)
DTLR Villa LLC (continued)
Book value Measurement Fair value
GBPm adjustments at
GBPm 17 March 2021
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets 43.7 62.9 106.6
Property, plant & equipment 53.7 (4.4) 49.3
Other non-current assets 0.5 (0.2) 0.3
Right-of-use assets - 139.9 139.9
Inventories 40.3 - 40.3
Cash and cash equivalents 95.2 - 95.2
Trade and other receivables 7.6 (3.3) 4.3
Income tax asset 0.4 - 0.4
Trade and other payables (37.6) (0.9) (38.5)
Bank loans and overdrafts (140.2) - (140.2)
Deferred tax liability (3.3) (21.2) (24.5)
Lease liabilities (11.8) (128.1) (139.9)
Net identifiable assets 48.5 44.7 93.2
------------- -------------- ----------------
Goodwill on acquisition 212.0
------------- -------------- ----------------
Total consideration 305.2
------------- -------------- ----------------
Included in the 52 week period ended 29 January 2022 is revenue
of GBP382.8 million and a profit before tax of GBP63.9 million in
respect of DTLR.
5. Acquisitions (continued)
Current Period - Significant Acquisitions (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
comprises cash consideration of GBP63.6 million and GBP2.4 million
of deferred consideration that is subject to customary closing
conditions and expected to be paid in 2022.
MIG operated 410 stores on acquisition along with the associated
trading websites in nine countries in Central and Eastern Europe.
The acquisition of MIG provided the platform to develop the JD
fascia in Central and Eastern Europe. The MIG team has also been
instrumental in the opening of the first JD stores in Eastern
Europe with stores at Poznan, Poland, and Constanta, Romania. Since
the period end, the Group has opened four further JD stores in
Poland, one additional store in Romania and a first store in
Hungary, at the Árkád Shopping Centre in Budapest. We would
anticipate further openings for the JD fascia across Eastern Europe
in the new financial year although events in Ukraine do drive some
caution.
Put and call options to enable future exit opportunities for the
40% shareholders have also been agreed and become exercisable after
the year ending January 2025. A valuation of these put options has
been performed using an earnings multiple, a suitable discount rate
and approved forecasts, and the initial liability of GBP50.2
million has been recognised with the corresponding entry to Other
Equity in accordance with the present value method of accounting.
These options are required to be fair valued at each accounting
period date.
Included within the 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 on the next page:
5. Acquisitions (continued)
Current Period - Significant Acquisitions (continued)
Marketing Investment Group S.A. (continued)
Book value Measurement Fair value
GBPm adjustments at
GBPm 30 April 2021
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets 2.6 29.2 31.8
Property, plant & equipment 16.6 - 16.6
Other non-current assets 1.1 - 1.1
Right-of-use assets - 66.2 66.2
Inventories 69.1 (1.9) 67.2
Cash and cash equivalents 6.5 - 6.5
Trade and other receivables 4.9 1.1 6.0
Income tax asset 0.1 - 0.1
Trade and other payables (58.6) 1.7 (56.9)
Bank loans and overdrafts (27.0) - (27.0)
Deferred tax asset / (liability) 1.0 (5.5) (4.5)
Lease liabilities - (66.2) (66.2)
Net identifiable assets 16.3 24.6 40.9
------------- -------------- ----------------
Non-controlling interest (40%) (6.5) (9.8) (16.3)
Goodwill on acquisition 41.4
------------- -------------- ----------------
Consideration - satisfied in cash 63.6
Consideration - deferred 2.4
------------- -------------- ----------------
Total consideration 66.0
------------- -------------- ----------------
Included in the 52 week period ended 29 January 2022 is revenue
of GBP175.0 million and a profit before tax of GBP6.0 million in
respect of MIG.
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 is
GBP119.6 million of which a maximum of GBP34.5 million has been
deferred and will be paid contingent on achieving certain future
performance criteria. As at the date of the acquisition and the
January 2022 year-end, the fair value of the contingent
consideration was determined to be GBP19.0 million.
Put and call options to enable future exit opportunities for the
20% shareholders have also been agreed and become exercisable from
2024 onwards. A valuation of these put options has been performed
using an earnings multiple, a suitable discount rate and approved
forecasts, and the initial liability of GBP11.2 million has been
recognised with the corresponding entry to Other Equity in
accordance with the present value method of accounting. These
options are required to be fair valued at each accounting period
date.
Included within the 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
GBP2.9 million representing the fair value of the customer
base.
5. Acquisitions (continued)
Current Period - Significant Acquisitions (continued)
Deporvillage S.L. (continued)
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.
The goodwill calculation is summarised below:
Provisional
Book value Measurement fair value
GBPm adjustments at
GBPm 3 August 2021
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets 0.9 48.4 49.3
Property, plant & equipment 0.3 - 0.3
Right-of-use assets - 1.1 1.1
Inventories 28.6 - 28.6
Cash and cash equivalents 2.4 - 2.4
Trade and other receivables 4.7 - 4.7
Trade and other payables (29.3) - (29.3)
Bank loans and overdrafts (1.3) - (1.3)
Income tax liability (1.0) - (1.0)
Deferred tax asset / (liability) 0.6 (12.1) (11.5)
Lease liabilities - (1.1) (1.1)
Net identifiable assets 5.9 36.3 42.2
------------- -------------- ----------------
Non-controlling interest (20%) (1.2) (7.3) (8.5)
Goodwill on acquisition 70.4
------------- -------------- ----------------
Consideration - satisfied in cash 85.1
Consideration - deferred 19.0
------------- -------------- ----------------
Total consideration 104.1
------------- -------------- ----------------
Included in the 52 week period ended 29 January 2022 is revenue
of GBP67.8 million and a profit before tax of GBP2.5 million in
respect of Deporvillage.
5. Acquisitions (continued)
Current Period - Significant Acquisitions (continued)
Cosmos Sport S.A.
On 21 October 2021, the Group acquired 80% of the issued share
capital of Cosmos Sport S.A. ('Cosmos') for cash consideration of
GBP65.0 million. At acquisition Cosmos operated 58 stores in Greece
and three in Cyprus under a variety of retail banners and
associated trading websites. The two main fascias are Cosmos, which
is the core fascia of the business and has an elevated sporting
goods and lifestyle proposition, and Sneaker 10, which has a more
premium footwear offer.
Put and call options to enable future exit opportunities for the
20% shareholders have also been agreed and become exercisable from
2025 onwards. A valuation of these put options has been performed
using an earnings multiple, a suitable discount rate and approved
forecasts, and the initial liability of GBP10.0 million has been
recognised with the corresponding entry to Other Equity in
accordance with the present value method of accounting. These
options are required to be fair valued at each accounting period
date.
Included within the fair value of the net identifiable assets on
acquisition is an intangible asset of GBP9.1 million representing
the Cosmos fascia name and an intangible asset of GBP4.2 million
representing the Sneaker 10 fascia name. The Board believes that
the excess of consideration paid over net assets on acquisition of
GBP39.5 million is best considered as goodwill on acquisition
representing future operating synergies. The provisional goodwill
calculation is summarised below:
Provisional
Book value Measurement fair value
GBPm adjustments at
GBPm 21 October
2021
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets - 13.3 13.3
Property, plant & equipment 14.0 - 14.0
Other non-current assets 1.0 - 1.0
Right-of-use assets - 38.2 38.2
Inventories 24.3 - 24.3
Cash and cash equivalents 13.2 - 13.2
Trade and other receivables 5.7 - 5.7
Income tax asset 0.3 - 0.3
Trade and other payables (27.9) - (27.9)
Bank loans and overdrafts (8.5) - (8.5)
Deferred tax liability (0.3) (3.2) (3.5)
Lease liabilities - (38.2) (38.2)
Net identifiable assets 21.8 10.1 31.9
------------- -------------- --------------
Non-controlling interest (20%) (4.4) (2.0) (6.4)
Goodwill on acquisition 39.5
------------- -------------- --------------
Total consideration 65.0
------------- -------------- --------------
Included in the 52 week period ended 29 January 2022 is revenue
of GBP26.0 million and a profit before tax of GBP0.9 million in
respect of Cosmos.
5. Acquisitions (continued)
Current Period - Other Acquisitions
During the period, the Group made a number of other
acquisitions:
-- 2 March 2021, 70% of the issued share capital of 80s Casual Classics Limited.
-- 18 June 2021, 51% of the issued share capital of UggBugg Fashion Limited t/a Missy Empire.
-- 18 June 2021, 100% of the issued share capital of The Watch
Shop Holdings Limited and Watch Shop Logistics Ltd (together
'WatchShop').
-- 1 July 2021, acquisition of the trade and assets of Prevu
London Limited via a newly incorporated subsidiary, Prevu Studio
Limited.
-- 3 August 2021, 50.1% of the issued share capital of Bodytone International Sport S.L.
-- 17 September 2021, 75% of the issued share capital of Hairburst Holding Group Limited.
-- 30 September 2021, 77.5% of the issued share capital of Wheelbase Lakeland Limited.
-- 19 November 2021, 100% of XLR8 Sports Limited trading as Leisure Lakes Bikes.
-- 24 December 2021, 100% of GymNation Limited and its 100%
owned subsidiary GymNation LLC (together 'GymNation').
The aggregate impact of these acquisitions in the current period
is as follows:
Fair values
acquired
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets 34.4
Property, plant & equipment 8.5
Other non-current assets 0.2
Right-of-use assets 26.3
Inventories 31.6
Cash and cash equivalents 35.3
Trade and other receivables 9.6
Trade and other payables (24.5)
Bank loans and overdrafts (6.2)
Income tax liabilities (4.4)
Deferred tax liabilities (6.6)
Lease liabilities (26.3)
Net identifiable assets 77.9
--------------
Non-controlling interest (various) (11.6)
Goodwill on acquisition 126.7
--------------
Total consideration (including GBP18.7
million deferred) 193.0
--------------
Included in the 52 week period ended 29 January 2022 is revenue
of GBP61.9 million and a profit before tax of GBP4.4 million in
respect of these acquisitions.
Full Year Impact of Acquisitions
Had the acquisitions of the entities listed above been effected
at 31 January 2021, the revenue and profit before tax of the Group
for the 52 week period to 29 January 2022 would have been GBP8.9
billion and GBP666.1 million respectively.
Acquisition Costs
Acquisition-related costs amounting to GBP7.9 million have been
excluded from the consideration transferred and have been
recognised as an expense in the year, within administrative
expenses in the Consolidated Income Statement.
5. Acquisitions (continued)
Prior period acquisitions
Onepointfive Ventures Limited trading as Livestock
('Livestock')
On 10 February 2020, the Group acquired 100% of the issued share
capital of Onepointfive Ventures Limited DBA Livestock
('Livestock') through a newly established Canadian holding company
(JDSF Holdings (Canada) Inc.) ('Holdco'). Based in Vancouver, this
business and its management will provide the platform to develop JD
Group fascias in Canada.
Consideration was comprised of GBP7.0 million in cash, of which
GBP0.6m was deferred as at the date of acquisition, plus 20% of the
equity in Holdco. The fair value of the 20% equity in Holdco was
GBP1.8 million. The deferred consideration of GBP0.6 million was
subsequently paid in June 2021.
Included within the fair value of the net identifiable assets on
acquisition is an intangible asset of GBP1.2 million, representing
the 'Livestock' fascia name. The Board believes that the excess of
consideration paid over net assets on acquisition of GBP8.4 million
is best considered as goodwill on acquisition representing future
operating synergies. The goodwill calculation is summarised
below:
Book value Measurement Fair value
GBPm adjustments at
GBPm 10 February
2020
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets - 1.2 1.2
Property, plant & equipment 0.5 - 0.5
Right-of-use assets 0.5 - 0.5
Inventories 0.5 - 0.5
Cash and cash equivalents (0.8) - (0.8)
Trade and other receivables 0.1 - 0.1
Trade and other payables (0.5) - (0.5)
Deferred tax liability - (0.3) (0.3)
Lease liabilities (0.5) - (0.5)
Income tax liability (0.3) - (0.3)
Net identifiable (liabilities) /
assets (0.5) 0.9 0.4
------------- -------------- --------------
Goodwill on acquisition 8.4
------------- -------------- --------------
Consideration - satisfied in cash 6.4
Consideration - fair value of shares 1.8
issued
Consideration - deferred (paid June 0.6
2021)
------------- -------------- --------------
Total consideration 8.8
------------- -------------- --------------
Included in the 52 week period ended 30 January 2021 was revenue
of GBP10.1 million and a profit before tax of GBP1.4 million in
respect of Livestock.
5. Acquisitions (continued)
Prior period acquisitions (continued)
X4L Gyms Limited
On 22 July 2020, X4L Gyms Limited, a 100% owned subsidiary of JD
Gyms Limited acquired certain assets of Wright Leisure Limited
trading as Xercise4less following the Group being placed into
administration on the same date.
Xercise4less is a UK-based value-gym chain with 50 operational
clubs at the date of administration. The company offered
high-quality, low-cost contract and non-contract memberships to its
members from large operational facilities nationwide.
The Board believes that Xercise4less further strengthens the
Group's presence in the growing UK fitness market with the
acquisition providing immediate reach to a wider membership base as
well as facilitating the Group's presence as a key player in the
market. Xercise4less is a well-established business with a wealth
of knowledge in the UK fitness market which the board believes will
be complementary to JD. The Board also believes that there will be
significant operational and strategic benefits from a combination
of the two businesses.
The Board believes the excess of cash consideration paid over
the net identifiable assets on acquisition of GBP14.2 million is
best considered as goodwill representing future operating
synergies. The goodwill calculation is summarised below:
Measurement Fair value
Book value adjustments at
GBPm GBPm 22 July 2020
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets 16.3 (16.1) 0.2
Property, plant & equipment 7.8 4.4 12.2
Trade and other receivables 0.1 (0.1) -
Trade and other payables - (1.5) (1.5)
Deferred tax liability - (0.9) (0.9)
Net identifiable assets / (liabilities) 24.2 (14.2) 10.0
------------- -------------- ---------------
Goodwill on acquisition 14.2
------------- -------------- ---------------
Consideration paid - satisfied in
cash 24.2
------------- -------------- ---------------
Included in the 52 week period ended 30 January 2021 was revenue
of GBP8.1 million and a loss before tax of GBP3.3 million in
respect of X4L Gyms Limited.
Of the initial 50 X4L Gyms Limited sites initially acquired, 11
have been subsequently handed back to the landlord, 28 have been
re-branded as JD Gyms and 11 continue to operate as X4L Gyms
Limited as we continue to review the long-term viability of these
sites.
5. Acquisitions (continued)
Prior period acquisitions (continued)
Shoe Palace Corporation and Nice Kicks LLC
On 14 December 2020, JD Sports Fashion Plc's wholly owned
intermediate holding company in the US, Genesis Holdings, acquired
100% of the issued shares in Shoe Palace Corporation and the
members' interests in Nice Kicks LLC (together 'Shoe Palace'). Shoe
Palace has an established retail presence in California, Texas,
Nevada, Arizona, Florida, Colorado, New Mexico and Hawaii with 163
stores trading under the Shoe Palace fascia and four stores trading
as Nice Kicks at acquisition.
Total consideration for the acquisition was GBP517.6 million,
comprising GBP243.5 million of cash consideration (of which GBP73.1
million was deferred as at the date of acquisition) and GBP274.1
million, being the initial fair value of this equity in the
enlarged Group in the US calculated using an EBITDA multiple and
approved forecasts. Post-acquisition, the GBP73.1 million of
deferred consideration has been settled.
Additionally, put and call options, to enable future exit
opportunities for the minority interest, have also been agreed,
which commence after the end of the financial year to 1 February
2025. A valuation of these put options has been performed using an
EBITDA multiple, a suitable discount rate and approved forecasts,
and the initial liability of GBP261.6 million was recognised with
the corresponding entry to Other Equity in accordance with the
present access method of accounting. These options are required to
be fair valued at each accounting period date.
Included within the fair value of the net identifiable assets on
acquisition is an intangible asset of GBP105.8 million,
representing the 'Shoe Palace' fascia name and an intangible asset
of GBP1.2 million, representing the 'Nice Kicks' fascia name. The
Board believes that the excess of consideration paid over net
assets on acquisition of GBP411.0 million is best considered as
goodwill on acquisition representing future operating synergies.
Due to the proximity of the date of the acquisition to the
financial year ended 30 January 2021, information was received
during the financial year ended 29 January 2022 which resulted in
changes to the measurement adjustments. The changes made were not
significant in nature or value, with the final values presented in
the table on the next page. The period in which measurement
adjustments could be made has now closed on this acquisition.
5. Acquisitions (continued)
Prior period acquisitions (continued)
Shoe Palace Corporation and Nice Kicks LLC (continued)
Book value Measurement Fair value
GBPm adjustments at
GBPm 14 December
2020
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets 0.2 107.0 107.2
Property, plant & equipment 22.7 1.3 24.0
Right-of-use assets 139.8 - 139.8
Other non-current assets 0.6 - 0.6
Inventories 49.7 6.7 56.4
Cash and cash equivalents 3.1 - 3.1
Bank loans and overdrafts (1.7) - (1.7)
Trade and other receivables 10.7 (2.1) 8.6
Trade and other payables - current (64.2) 6.4 (57.8)
Trade and other payables - non-current (9.5) 9.5 -
Deferred tax liability - (33.8) (33.8)
Lease liabilities (139.8) - (139.8)
Net identifiable assets 11.6 95.0 106.6
------------- -------------- --------------
Goodwill on acquisition 411.0
------------- -------------- --------------
Consideration - satisfied in cash 170.4
Consideration - fair value of shares 274.1
issued
Consideration - deferred 73.1
------------- -------------- --------------
Total consideration 517.6
------------- -------------- --------------
Included in the 52 week period ended 30 January 2021 was revenue
of GBP56.1 million and a profit before tax of GBP13.9 million in
respect of Shoe Palace.
A Number of Names Limited
On 23 December 2020, the Group acquired 100% of the issued share
capital of A Number of Names Limited ('ANON'). ANON is primarily a
wholesale business with the licence to the Billionaire Boys Club
('BBC') brand in the UK, Europe, the Middle East, Africa,
Australia, Canada and certain other territories.
The total fair value of consideration recognised at 23 December
2020 was GBP5.5 million comprising GBP3.7 million of cash
consideration and GBP1.8 million of deferred consideration that is
contingent upon ANON meeting certain performance criteria. GBP1.8
million was deemed to be the fair value of the deferred
consideration based on management's judgement and best estimates as
at 23 December 2020. Due to the proximity of the date of the
acquisition to the financial year ended 30 January 2021,
information was received during the financial year ended 29 January
2022 which resulted in changes to the measurement adjustments. The
changes made were not significant in nature or value and the period
in which measurement adjustments could be made has now closed on
this acquisition. The Board believes the excess of consideration
over the net assets acquired of GBP2.7 million is best considered
as goodwill on acquisition representing future operating
synergies.
Included in the 52 week period ended 30 January 2021 was revenue
of GBP0.2 million and a break even result before tax in respect of
ANON.
5. Acquisitions (continued)
Prior period acquisitions (continued)
Other acquisitions
During the period, the Group made several small acquisitions.
These transactions were not material.
Full year impact of acquisitions
Had the acquisitions of the entities listed above been effected
at 2 February 2020, the revenue and profit before tax of the Group
for the 52 week period to 30 January 2021 would have been GBP6.5
billion and GBP334.9 million respectively.
Acquisition costs
Acquisition-related costs amounting to GBP4.0 million have been
excluded from the consideration transferred and have been
recognised as an expense in the prior year, within administrative
expenses in the Consolidated Income Statement.
6. Related Party Transactions and Balances
Transactions and balances with each category of related parties
during the period are shown below. Transactions were undertaken in
the ordinary course of business on an arm's length basis.
Outstanding balances are unsecured (unless otherwise stated) and
will be settled in cash.
Transactions with Related Parties Who Are Not Members of the
Group
Pentland Group Limited
During the financial year, Pentland Group Limited owned 51.9%
(2021: 55%) of the issued ordinary share capital of JD Sports
Fashion Plc. The Group made purchases of inventory from Pentland
Group Limited in the period and the Group also sold inventory to
Pentland Group Limited. The Group also paid royalty costs to
Pentland Group Limited for the use of a brand.
During the period, the Group entered into the following
transactions with Pentland Group Limited:
Income Expenditure Expenditure
from related with related Income from with related
parties parties related parties
2022 2022 parties 2021
GBPm GBPm 2021 GBPm
GBPm
Sale of inventory 1.3 - 1.4 -
Purchase of inventory - (48.7) - (46.7)
Royalty costs - (6.2) - (1.8)
Marketing costs - (0.9) - (0.3)
-------------- --------------- -------------- ---------------
At the end of the period, the following balances were
outstanding with Pentland Group Limited:
Amounts Amounts
owed by owed to Amounts Amounts
related related owed by owed to
parties parties related related
2022 2022 parties parties
GBPm GBPm 2021 2021
GBPm GBPm
Trade receivables / (payables) 0.2 (2.5) 0.9 (3.1)
--------- ---------- ---------- ----------
6. Related Party Transactions and Balances (continued)
Associates and Joint Ventures
During the period, the Group entered into the following
transactions with its associates and joint ventures:
Income Expenditure Expenditure
from related with related Income from with related
parties parties related parties
2022 2022 parties 2021
GBPm GBPm 2021 GBPm
GBPm
Purchase of inventory - (12.5) - -
Dividends and distributions 6.9 - - -
received
-------------- --------------- -------------- ---------------
During the period, the Group had the following balances
outstanding with its associates and joint ventures:
Amounts Amounts
owed by owed to Amounts Amounts
related related owed by owed to
parties parties related related
2022 2022 parties parties
GBPm GBPm 2021 2021
GBPm GBPm
Other receivables 0.2 - - -
Trade payables - (0.3) - -
--------- ---------- ---------- ----------
Other receivables from associates and joint ventures relate to
costs incurred by the Group on behalf of these entities, which have
then been recharged.
Other than the remuneration of Directors, there have been no
other transactions with Directors in the year (2021: nil).
GBP25,000 of invoices from Cowgill Holloway Business Recovery LLP
in respect of professional fees were accrued in the financial year
ended 29 January 2022 and paid post year-end (2021: GBP3,300).
Peter Cowgill is indirectly a member of this Limited Liability
Partnership through his membership of Cowgill Holloway LLP who are
then a member of Cowgill Holloway Business Recovery LLP. Peter
Cowgill does not participate in any profit share arrangement
relating to either Cowgill Holloway LLP or Cowgill Holloway
Business Recovery LLP. In addition, Cowgill Holloway LLP (including
member firms of Cowgill Holloway LLP) has acted on behalf of
certain vendors where the Group has ultimately completed an
acquisition. Where this has occurred, there has been no monetary
payments between the Group and Cowgill Holloway LLP (including its
member firms).
7. Held-for-sale
Transaction History
On 18 February 2019, JD Sports Fashion Plc acquired 19,579,964
Footasylum Plc shares at prices between 50 pence and 75 pence per
share, representing 18.7% of the issued ordinary share capital. On
18 March 2019, in conjunction with the Board of Footasylum Plc, JD
Sports Fashion Plc announced the terms of an offer to be made for
the remaining 81.3% of the ordinary share capital of Footasylum at
a price of 82.5 pence per ordinary share. This offer was declared
unconditional in all respects on 12 April 2019 with acceptances
received for a total of 78,176,481 shares representing a further
74.8% of the issued ordinary share capital. On 26 April 2019, the
first bulk transfer was made to acquire an additional 80.5 million
shares (in addition to the 19.5 million already owned). The formal
process to acquire the remaining Footasylum shares (incl. the
dissenting shareholders) was completed on 4 June 2019. Footasylum
was delisted on 16 May 2019 and converted from an unlisted Plc to a
private company on 19 September 2019.
7. Held-for-sale (continued)
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 that it
had again prohibited the Group's acquisition of Footasylum. The
final CMA undertakings were issued on 14 January 2022 which was
effectively the start date for the Footasylum sale process.
Footasylum has been classified as held-for-sale as at 29 January
2022 as:
-- the carrying amount of Footasylum will be recovered through the sale transaction;
-- it is available for sale in its present condition;
-- the Group has committed to sell Footasylum and this sale plan has been initiated;
-- Footasylum was being actively marketed at a price that is
reasonable in relation to its fair value; and
-- there is an expectation that the sale process will be
completed within six months of the classification as
held-for-sale.
2022
Assets and liabilities of Footasylum held-for-sale GBPm
Intangible assets 4.7
Property, plant and equipment 25.2
Deferred tax assets 0.2
Inventories 27.0
Trade and other receivables 21.5
Right-of-use assets 78.5
Assets held-for-sale 157.1
--------
2022
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)
Cash and cash equivalents as at 29 January 2022 of GBP27.2
million have been presented within the Group's cash and cash
equivalents in accordance with IFRS 5.
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;
-- is part of a coordinated single plan to dispose of a separate
major line of business or geographic area of operations; or is a
subsidiary acquired exclusively with a view to resale.
Whilst the disposal of Footasylum is significant for the Group,
it is subject to a single plan and can be distinguished
operationally and for financial reporting purposes, the disposal of
Footasylum should not be classified as a discontinued operation.
This is because the Group has other subsidiaries and operations
within the Sports Fashion segment in the UK, therefore Footasylum
does not represent a separate major line of business or geographic
area for the Group. However, the Group is required to disclose the
impact of the disposal.
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 property provisions, management has provided for expected
dilapidations on stores and warehouses. This provision covers
expected dilapidation costs for any lease considered onerous, any
related to stores recently closed, stores which are planned to
close or are at risk of closure and those under contract but not
currently in use. Management maintains all properties to a high
standard and carry out repairs whenever necessary during their
tenure. Therefore, if there is no risk of closure, any provision
would be minimal and management do not consider it necessary to
hold dilapidation provisions for these properties.
Other Provisions
Included within other provisions is GBP2.0m in respect of the
CMA's ongoing investigation into the sale of the Rangers FC branded
replica football shirts. This provision represents management's
best estimate of the liability payable in respect of this matter,
including associated legal costs, based on the information
available to it at the date of approving these financial statements
which includes consideration of the provisional Statement of
Objections which the CMA issued on 7 June 2022. The CMA's findings
are, at this stage, only provisional and the Group will review them
with its advisors. The CMA will consider any representations that
are made before issuing its final findings and accordingly the
amount to be settled could be materially different to the amount
provided. The CMA has not yet confirmed when it will release its
final decision on this matter but the Group currently expects this
to occur within 12 months of the date of approval of these
financial statements along with any related outflows.
The remaining balance in other provisions is made up of various
other trade provisions and legal costs. The provisions are
estimated based on accumulated experience, supplier communication
and management approved forecasts.
Onerous Contracts Provision
Within the onerous contracts provision, management has provided
against the minimum contractual cost for the remaining term on a
non-cancellable logistics services contract for the Azambuja
warehouse in Portugal within the SportZone division. The provision
will be unwound over the remaining 8 year period ending 30
September 2030.
8. Provisions (continued)
Property Other provisions Onerous
provision GBPm contracts Total
GBPm GBPm GBPm
Balance at 1 February 2020 - - - -
Provisions created during the year - - 5.8 5.8
------------ ------------------- ------------ --------
Balance at 30 January 2021 - - 5.8 5.8
Provisions reclassified from accruals 11.2 14.2 - 25.4
Provisions released during the
year (2.0) (6.7) (0.7) (9.4)
Provisions created during the year 9.4 5.0 - 14.4
Provisions utilised during the
year (0.4) (2.7) - (3.1)
------------
Balance at 29 January 2022 18.2 9.8 5.1 33.1
------------ ------------------- ------------ --------
The GBP9.4 million of property provision created in the year
relates to the provision for expected dilapidations for the UK
Distribution Centre and across a number of stores in the
portfolio.
GBP4.8 million of the other provisions released the year arises
following settlement of an ongoing legal case during the year. The
GBP5.0 million of other provisions created in the year relates to
various trade provisions and legal costs.
Provisions have been analysed between current and non-current as
follows:
2022 2021
GBPm GBPm
------- -------
Current 13.2 0.7
Non-current 19.9 5.1
Total provisions 33.1 5.8
------- -------
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 ('CA98') into suspected breaches of
competition law by Leicester City Football Club Limited and JD
Sports Fashion Plc, together with their affiliates. The Group
continues to co-operate fully with the CMA.
The CMA has not reached a view as to whether there is sufficient
evidence of an infringement of competition law for it to issue a
statement of objections or, ultimately, an infringement decision,
to any party under investigation. Therefore, at this stage, it is
not possible to determine with sufficient certainty that a
liability will ultimately arise. Indeed, not all cases result in
the CMA issuing a statement of objections or an infringement
decision. The CMA has indicated that it will publish a further
update in September 2022.
10. Subsequent Events
Directorate Change
On 25 May 2022, the Group announced that it had decided to
accelerate the separation of the roles of Chair and Chief Executive
Officer. Peter Cowgill stood down as Chief Executive Officer and
Executive Chairman with immediate effect. Helen Ashton was
appointed as Interim Non-Executive Chair and Kath Smith was
appointed as Interim Chief Executive Officer.
10. Subsequent Events (continued)
Acquisition of Total Swimming Group
On 27 May 2022, JD Sports Fashion Plc completed, via its
existing subsidiary JD Sports Gyms Limited, the acquisition of a
60% share in Total Swimming Group. Initial cash consideration paid
was GBP11.1 million with a maximum of GBP4.0 million of deferred
consideration that is contingent upon future performance criteria
and certain closing conditions. Total Swimming Group 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. In
its 2021 financial year, Total Swimming Group generated revenues of
GBP8.6 million. Due to the proximity of the date of the acquisition
and the date of this announcement, it is not possible to present a
provisional goodwill calculation or the provisional fair values of
the assets and liabilities acquired. The provisional goodwill
calculation will be presented in the announcement of our Interim
Results.
11. Accounts
The financial information set out above does not constitute the
Group's statutory accounts for the 52 weeks ended 29 January 2022
or 52 weeks ended 30 January 2021 but is derived from those
accounts. Statutory accounts for the 52 weeks ended 30 January 2021
have been delivered to the Registrar of Companies, and those for
the 52 weeks to 29 January 2022 will be delivered in due course.
The auditor has reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditors 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. Copies of full
accounts will be sent to shareholders in due course. Additional
copies will be available from JD Sports Fashion Plc, Hollinsbrook
Way, Pilsworth, Bury, Lancashire, BL9 8RR or online at
www.jdplc.com.
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