Overview
Strategic Report
Governance
Highlights
Milestones
Who We Are
Where We Are
Executive Chairman’s Statement
Our Strategy
Business Model
Principal Risks
Business Review
Financial Review
Property and Stores Review
Corporate and Social Responsibility
The Board
Directors’ Report
Corporate Governance Report
Audit Committee Report
Directors’ Remuneration Report
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Consolidated Income Statement
Statement of Comprehensive Income
Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Company Balance Sheet
Company Statement of Changes in Equity
Notes to the Company Financial Statements
Financial Statements
Group Information
Financial Calendar
Shareholder Information
Five Year Record
Glossary
Contents
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Overview
Highlights
“Headline profit
before tax and
exceptional items
increasing by a
further 26% to
£307.4 million.”
Peter Cowgill
7
Overview
Highlights
Revenue
2018 / £3,161.4m
2017 / £2,378.7m
2016 / £1,821.7m
2015 / £1,522.3m
2014 / £1,216.4m
Profit before tax and exceptional items*
2018 / £307.4m
2017 / £244.8m
2016 / £157.1m
2015 / £100.0m
2014 / £82.0m
Profit before tax
2018 / £294.5m
2017 / £238.4m
2016 / £131.6m
2015 / £90.5m
2014 / £76.8m
Total dividend payable per ordinary share
2018 / 1.63p
2017 / 1.55p
2016 / 1.48p
2015 / 1.41p
2014 / 1.36p
8
Overview
Highlights
Basic earnings per ordinary share
2018 / 23.83p
2017 / 18.38p
2016 / 10.03p
2015 / 7.03p
2014 / 5.82p
Adjusted basic earnings per ordinary share*
2018 / 25.15p
2017 / 19.04p
2016 / 12.27p
2015 / 7.78p
2014 / 6.16p
Net assets
2018 / £834.3m
2017 / £578.8m
2016 / £400.8m
2015 / £310.0m
2014 / £272.8m
Net cash (a)
2018 / £309.7m
2017 / £213.6m
2016 / £209.4m
2015 / £84.2m
2014 / £45.3m
Throughout the Annual Report ‘*’ indicates first instance of a term defined and explained in the Glossary on page 190.
a) Net cash consists of cash and cash equivalents together with interest-bearing loans and borrowings
9
Overview
Highlights
30%
5%
65%
10
Group Revenue by Geographical Market
UK
65%
Europe
30%
Rest of World
5%
Overview
Highlights
80%
16%
4%
Group Revenue by Channel
Retail Stores
80%
Multichannel
16%
Wholesale
4%
11
Overview
April 2017
The Group opened its first
JD store in Australia, a flagship
store situated in Melbourne Central.
A further four stores opened
during the year under the
JD fascia.
May 2017
The Group’s acquisition
of Go Outdoors was given
unconditional approval
by the Competition and
Markets Authority.
September 2017
The Group announced
the acquisition of
an initial 15% of the
multibranded Hot-T
fascia in South Korea
which, after the period
end, has been increased
to 50%. Working with
our local partner,
Shoemarker Inc.,
we are engaged on a
programme of works
to convert these stores
to JD with the first
JD store very
recently opened in
Gangnam, Seoul.
12
Milestones
October 2017
Anthony Joshua, the
unified world heavyweight
champion, signed a new
multi-fight sponsorship
with JD. The deal will
see Anthony Joshua
collaborate with JD
on branded content
and will also feature in
JD’s boxing magazine
show, JD Undisputed.
Overview
Milestones
January 2018
The Group received unconditional
clearance from the European
Commission and formally completed
its acquisition of Sport Zone, one of
the largest sports retailers in Spain
and Portugal. This acquisition
will give the Group an enhanced
presence across Iberia.
December 2017
JD opened its
20,000 sq. ft.
flagship store in
Liverpool ONE.
November 2017
JD opened its 17,000 sq. ft.
flagship store in the Arndale
Centre, Manchester.
The Kingsway Distribution Centre
was awarded the British Safety
Council’s ‘Sword of Honour’ which
recognises that JD Sports Fashion
Plc is committed to excellent
health and safety standards
and continuous improvement.
March 2018
The Group announced it
had entered into a conditional
acquisition agreement to acquire
The Finish Line, Inc. (‘Finish
Line’). Finish Line is one of the
largest retailers of premium
multibranded athletic footwear,
apparel and accessories in
the United States.
13
Overview
Who We Are
We remain committed
to giving consumers
a digitally integrated
multibrand experience
where the product
offering retains a high
degree of exclusivity.
14
15
Overview
Who We Are
Established in 1981 with a
single store in the North West
of England, JD Sports Fashion
Plc is a leading international
multichannel retailer of
sports, fashion and
outdoor brands.
27
Overview
Who We Are
JD is a specialist multiple retailer of fashionable
branded and own brand sports and casual wear
combining globally recognised brands such as
Nike, adidas and The North Face with strong own
brand labels such as Pink Soda, Supply & Demand
and The Duffer of St George. JD continues to invest
in brand relationships with new ranges introduced
in the period from Sik Silk, Tommy Hilfiger and Calvin
Klein with further brand partnerships under constant
review. JD is an industry leading retail business with
the best of physical and digital retail combined to
give a compelling proposition which enables its
consumers to shop seamlessly across all channels.
The JD fascia continues to expand its store and
multichannel consumer reach and brand influence
globally. JD’s acknowledged strength in its core
UK and Republic of Ireland markets are increasingly
being complemented with significant international
progression, instore and online, in Europe and,
increasingly, in markets further afield including
Malaysia, Australia and, very recently, South Korea.
28
Established in 2000, Size? specialises in supplying the
finest products from the best brands in footwear, apparel
and accessories. Initially set up to trial edgier product
collections before introducing them to the mass market
through the JD fascia, the Size? offer has since grown to
include its own roster of highly sought-after worldwide
exclusive product releases. Outside of the UK and
Republic of Ireland, Size? now has stores in Denmark,
France, Germany, Italy, the Netherlands and Spain.
Footpatrol is London’s best-known destination sneaker
store, with a history in supplying the most exclusive
footwear. It has been at the heart of supplying the
sneaker fraternity with the most desirable footwear,
apparel and accessories. Specialising in new and classic
sneakers, limited editions, Japanese exclusives and rare
deadstock, Footpatrol is based in the heart of Soho on
Berwick Street.
Overview
Who We Are
Chausport operates throughout France retailing
through a network of 79 stores and a website, leading
international footwear brands such as adidas, Nike and
Timberland together with brands more specific to the
local market such as Le Coq Sportif.
Sprinter is one of the leading sports retailers in Spain
selling footwear, apparel, accessories and equipment
for a wide range of sports as well as lifestyle casual wear
and childrenswear. Their offer includes both international
sports brands and successful own brands.
Sport Zone is a well-established and leading
multibranded sports retailer in Portugal, with a
presence in mainland Spain and the Canary Islands.
With 138 stores in Iberia, Sport Zone offers a
multisport product range with a wide apparel,
footwear, accessories and equipment offering.
29
Overview
Who We Are
Next Athleisure operates in Australia under the Glue
and Superglue retail fascias and Trend Imports wholesale
fascia. Glue and Superglue stores offer cutting-edge
streetwear and youth fashion from aspirational brands
such as Nike, adidas, Stussy and Deus. Trend Imports
specialises in sales, production, distribution, retail and
marketing offering a diverse range of highly sought after
international and local brands including Kappa, Ivy Park,
Superga, Nude Lucy and Article No.1 to a vast network
of major department stores, multi-national and
independent retailers.
JD Gyms offers seriously stylish, seriously affordable,
award-winning gym membership across thirteen prime
locations. JD Gyms plays host to a bespoke mix of the
industry’s leading fitness equipment, alongside our
unique JD Burn areas, providing a wide range of exciting
fitness classes. Our friendly expert support and advice
will allow you to maximise your potential.
Sports Unlimited Retail operates in the Netherlands
under the Perry Sport and Aktiesport fascias. Aktiesport
is the largest sports retail business in the Netherlands
with a sharp focus on selling football and lifestyle goods
from various brands such as Nike, adidas, Under Armour
and FILA. Perry Sport is a sports and adventure retailer
with a focus on functional sports, sports lifestyle and
adventure simultaneously.
30
Overview
Who We Are
Scotts retails fashion and sport led brands with
authority to older, more affluent male consumers
largely beyond school age, stocking brands such as
Lacoste, Fred Perry, Pretty Green and Paul & Shark.
Tessuti’s vision is to become the first choice retailer for
branded premium menswear fashion in the UK. With 36
stores and a trading website, Tessuti offers customers a
strong mix of relevant fashion brands including Boss,
Polo Ralph Lauren, Canada Goose and Stone Island.
31
Overview
Who We Are
Mainline Menswear is an online niche retailer
of premium branded men’s apparel and
footwear, stocking brands such as Armani,
Hugo Boss and Ralph Lauren.
With three stores and a trading website, Kids
Cavern offers award winning childrenswear
featuring brands such as Armani, Moncler,
Gucci, Fendi and many more.
Established over 25 years ago, the Nicholas
Deakins business continues to combine
innovative yet practical designs with
quality manufacture to produce
aspirational collections of casual
and formal designer footwear.
32
Overview
Who We Are
Kukri Sports is an international sportswear
manufacturer supplying bespoke teamwear to
many leading schools, colleges and universities.
In addition, Kukri is sole kit supplier to a number
of high profile professional teams and was once
again the official kit supplier to Team England
for the 2018 Commonwealth Games.
Focus are involved in the design, sourcing and
distribution of footwear and apparel both for own
brand and licensed brands, such as Ellesse, Certified,
Henley’s, Peter Werth, and Starter, for both Group
and external customers.
Source Lab is a football license business in the
UK working with some of the biggest and best
known names in world football, designing, sourcing
and distributing mono branded apparel as well as
supplying club retail operations. Source Lab has an
impressive license portfolio which includes Chelsea,
Arsenal, Manchester City, Real Madrid and Barcelona.
Getthelabel.com is an online business which
offers customers significant savings on branded
fashion and footwear.
33
Overview
Who We Are
Trading from 100 stores, Millets supply a more
casual outdoor customer who seeks value for
money, providing for a wide range of recreational
activities with an emphasis on exclusive brands,
such as Peter Storm and Eurohike.
Blacks is a long established retailer of
specialist outdoor apparel, footwear and
equipment. Trading online and from 57 stores,
Blacks primarily stock more technical products
from premium brands such as Berghaus and
The North Face helping Outdoor participants,
from weekend family users to more avid
explorers, reach their goals, no matter
how high.
Tiso is Scotland’s leading adventure sports
retailer specialising in outdoor, mountain, skiing
and cycling. Their reputation for quality has been
established over 56 years. The Tiso group is based
in Scotland, but includes the iconic George Fisher
store in the English Lake District.
34
Overview
Who We Are
GO focuses on innovation and value, helping
people to step into the outdoors whether it’s
to go walking, camping, cycling or fishing.
From unique product areas to strong exclusive
brands such as Hi-Gear, North Ridge and
Freedom Trail, GO is constantly looking
for fresh ideas to keep things fun.
Ultimate Outdoors is the ultimate destination
for the outdoor consumer offering high quality
and technical product from the biggest names
in outdoors at the best prices.
35
Overview
Where We Are
The Group has almost 1,500
stores across a number of
retail fascias and is proud
of the fact that it always
provides its customers with
the latest products from
the very best brands.
The Group embraces the
latest online and instore
digital technology providing
it with a truly multichannel,
international platform for
future growth.
36
Overview
Where We Are
Europe
United Kingdom
Republic of Ireland
France
Germany
Netherlands
Spain
Portugal
Belgium
Italy
Sweden
Denmark
Finland
Asia Pacific
Malaysia
Australia
Where We Are
Rest of World
37
Sports Fashion Fascias – Number of Stores
Outdoor Fascias – Number of Stores
JD UK & ROI
2018: 385
2017: 369
Blacks
2018: 57
2017: 59
SQ FT (000)
2017 / 1,429 2018 / 1,525
SQ FT (000)
2017: 204 2018: 206
JD Europe
2018 / 213
2017 / 157
Millets
2018: 100
2017: 99
SQ FT (000)
2017 / 386 2018 / 541
SQ FT (000)
2017: 199 2018: 211
JD AsiaPac
2018 / 12
2017 / 3
Ultimate Outdoors
2018 / 7
2017 / 7
SQ FT (000)
2017 / 19 2018 / 56
SQ FT (000)
2017 / 163 2018 / 162
Tiso
2018: 13
2017: 15
SQ FT (000)
2017 / 94 2018 / 88
Go Outdoors
2018 / 60
2017 / 58
SQ FT (000)
2017 / 1,699 2018 / 1,794
Total Stores
2018 / 237
2017 / 238
Total SQ FT (000)
2017: 2,359 2018: 2,461
Size?
2018 / 38
2017 / 37
SQ FT (000)
2017 / 65 2018 / 60
Sub-total JD & Size?
2018 / 648
2017 / 566
SQ FT (000)
2017 / 1,899 2018 / 2,182
Fashion UK
2018 / 77
2017 / 74
SQ FT (000)
2017 / 165 2018 / 179
Other France (i)
2018 / 79
2017 / 75
SQ FT (000)
2017 / 83 2018 / 89
Other Iberia (ii)
2018 / 265
2017 / 119
SQ FT (000)
2017 / 1,069 2018 / 2,147
Other Netherlands (iii)
2018 / 101
2017 / 164
SQ FT (000)
2017 / 836 2018 / 717
Other Asia Pacific (iv)
2018 / 67
2017 / 52
SQ FT (000)
2017 / 210 2018 / 284
Total Stores
2018 / 1,237
2017 / 1,050
Total SQ FT (000)
2017 / 4,262 2018 / 5,598
(i) Chausport
(ii) Sprinter (Spain) and Sport Zone (Portugal, Spain and Canary Islands)
(iii) Perry Sport and Aktiesport
(iv) Glue (Australia), Stream Fascias (Malaysia) and Hot-T (South Korea)
Overview
Executive Chairman’s Statement
Introduction
I am delighted to report that this has been another period
of significant progress for the Group with headline profit
before tax and exceptional items increasing by a further
26% to £307.4 million (2017: £244.8 million). This is an
excellent result demonstrating our capacity for continuing
growth in both existing and new markets, and the strength
of our offer in store and online.
After delivering a headline profit of £100 million for the first
time in the year to January 2015, the headline profit has
increased by more than £200 million over the subsequent
three years, a rise in excess of 200%. This sustained growth
could not have been achieved without a relentless and
ongoing focus on a number of key principles which ensure
we remain the undisputed consumer destination of choice
for sport lifestyle footwear and apparel:
• Providing a best-in-class multibrand experience with
breadth, newness and exclusivity in our offer which
is consistent across all channels and in an expanding
network of international markets
• Satisfying a demanding digital-first consumer with
innovative technology which can be rapidly evolved
to react to dynamic consumer expectations
• Developing a multichannel infrastructure which provides
consumers in multiple territories with access to a
universal stock pool and enables them to shop with us in
the channel and at the time of their choice
• Delivering an enhanced brand proposition
• Being first to market with new styles
• Continually investing in sector-leading physical
retail environments
The focus on these principles and the investments we
have made over a number of years in developing our
multichannel proposition and driving improved buying,
merchandising and retail disciplines have ultimately led
to the creation of a world class sports fashion business
which combines the best of physical and digital retail
on an increasingly global scale. The JD fascia operates
with the same high standards in each of its markets
and we believe that this consistency of operation across
a
international retail footprint, complemented
by a comprehensive range of multi-currency and
local language transactional websites, is an attractive
proposition for premium third party brands. An evolving
brand offer ensures
that our carefully curated
proposition is always on trend.
large
Our core* UK and
Ireland Sports Fashion fascias
continue to provide the foundation for our success.
Whilst acknowledging the
increased distribution of
aspirational athletic inspired footwear and apparel in
these markets, we remain committed to giving consumers
a digitally integrated multibrand experience where the
product offering retains a high degree of exclusivity.
In recent years we have enhanced the differentiation in our
proposition and elevated the brand offer with the highest
standards of visual merchandising, retail theatre and
digital integration.
There has also been further significant progression
internationally for the JD fascia with a net increase of
65 stores, of which 56 were in Europe. We remain confident
in our ability to exploit the opportunities that exist for the
JD fascia in European markets and we would expect to
maintain significant expansionary momentum there in the
new financial year. Indeed, subsequent to the period end
we have extended our reach with the opening of our first
store in Finland at the Itis Centre in Helsinki which is one
of the largest shopping malls in the Nordic countries. This
has been complemented by the launch of a transactional
website. Further afield, we have opened four further new
JD stores in Malaysia during the period and we have also
successfully launched the JD fascia in Australia both online
and in stores, with five stores trading at the period end.
In September 2017 we announced the acquisition of
an initial 15% of the multibranded Hot-T fascia in South
Korea which, after the period end, has been increased to
50% at a cost of £8 million. Working with our local partner,
Shoemarker Inc, we are engaged on a programme of works
to convert these stores to JD with the first JD store very
recently opened in Gangnam, Seoul.
We are very encouraged by the progress that we
are making internationally and we continue to look for
further opportunities to bring our dynamic multichannel
proposition to new markets around the world with
the support of our key brands. One such market is the
United States which is the largest global market for sport
lifestyle footwear and apparel and where, very recently, we
announced the exchange of contracts for the acquisition
of The Finish Line business which, at the date of signing
the merger agreement, had 556 of its own stores across
44 states complemented by a transactional website and a
total of 563 concession stores, of which 375 are branded
as Finish Line, within Macy’s department stores. Ultimate
completion of this transaction will depend on approval
from the shareholders of both businesses, a process that
we do not expect to be completed until nearer the end
of the first half. The transaction will also be subject to an
antitrust review under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976. Based on an agreed price
of $13.50 per share, the consideration payable will be
approximately $558 million plus costs. We believe this
acquisition will be transformational for the business in
terms of its international relevance with both consumers
and the principal brands.
38
Overview
Executive Chairman’s Statement
Away from the core JD fascia, we continue to make
investments where they provide strategic
selected
benefits or strengthen our position in an existing market
or territory. In this regard, we have completed the
acquisition of the Sport Zone business in Iberia and
the Canary Islands which complements our existing
strong Sprinter business and gives us a significantly
enhanced sports performance presence across Iberia
with an estimated combined turnover in excess of €450
million and a footprint of more than 300 stores.
The acquisition of Go Outdoors in the prior year was
approved unconditionally in the first half of this year
by the Competition and Markets Authority. During
this review phase, our businesses had to operate
independently and whilst we continue to maintain separate
functional teams, there is increased communication and
co-ordination between the management teams on
strategy and purchasing decisions. Overall, we are very
pleased with the progress being made in the Outdoor
fascias with our businesses performing strongly through
the winter months.
We continue to make very significant investments in
logistics across the Group to support our ongoing
expansion. Works are now substantially complete on the
project to expand the internal use of the Group’s principal
Kingsway warehouse site. The base build of the new
352,000 square feet leased extension to this facility has also
now been completed with the site handed over for internal
fitting out. In total, the Group has invested a total of £24
million in the year on these expansionary developments at
Kingsway with an estimated £30 million of spend, including
further significant investment on automation equipment,
required to complete the project to extend the site, the
majority of which will be incurred in the new financial year.
Works are also ongoing on fitting out the new warehouse
in Alicante, Spain, which was acquired in the year at a total
cost of approximately €15.5 million. The fitting out of this
site, including the construction of a separate building for
a mini-load system, is expected to cost around €25 million
of which approximately €21 million has been incurred
to date. Elsewhere, a smaller scale project to expand our
logistics capabilities in Australia to facilitate anticipated
further growth, both in stores and online, of the JD fascia is
also ongoing.
Dividends and Earnings per Share
The Board proposes paying a final dividend of 1.37p
(2017: 1.30p) bringing the total dividend payable for
the year to 1.63p (2017: 1.55p) per ordinary share,
an increase of 5.2%. Subject to shareholder approval at
our AGM, the proposed final dividend will be paid on 6
August 2018 to all shareholders on the register at 29 June
2018. We continue to believe that it is in the longer term
interests of all shareholders to keep dividend growth
restrained so as to maximise the available funding for
our ongoing development opportunities, including our
potential major acquisition in the United States.
The adjusted earnings per ordinary share before
exceptional items have increased by 32% to 25.15p (2017:
19.04p).
The basic earnings per ordinary share have increased by
30% to 23.83p (2017: 18.38p).
Board Effectiveness
As Executive Chairman, I am responsible for the leadership
of the Board and ensuring its effectiveness in all aspects
of its role. The Board is then responsible for the Group’s
strategic development, review of performance against
the business objectives, overseeing risk and maintaining
effective corporate governance including health and
safety, environmental, social and ethical matters.
People
The commitment of our employees is crucial to our success
and I would like to thank everyone in our businesses for
their support in delivering another set of excellent results.
Their talent and energy is at the heart of our success and
we remain committed to giving all our colleagues a quality
work experience which is challenging yet rewarding. We
firmly believe that our ongoing international expansion
provides significant personal development opportunities,
both temporary and permanent, and is a major reason why
people are attracted to our business.
Given the growth opportunities available to the Group,
particularly with respect to our international development,
we will continue to look to strengthen our senior
management team where appropriate.
Current Trading and Outlook
Given the significant change in the timing of Easter relative
to last year, it is not relevant to issue any detailed update
at this time on trading to date in the new financial year.
However, at this early stage, we are satisfied with progress
and remain confident about the prospects for the current
financial year. Our next scheduled update will take place
upon the announcement of our Interim Results which is
scheduled for 11 September 2018.
The Board remains confident in the robustness and
international potential of the JD proposition and is excited
by the major developments ahead.
Peter Cowgill
Executive Chairman
16 April 2018
39
Overview
Executive Chairman’s Statement
“ An excellent result
demonstrating our
capacity for continuing
growth in both existing
and new markets,
and the strength of
our offer in store
and online.”
Peter Cowgill
40
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Strategic Report
Our Strategy
Introduction
Stores
The Group’s principal JD fascia has long been established
as a leading retailer of branded and own brand sports
fashion apparel and footwear in the UK and Ireland.
The JD fascia is also now firmly established in mainland
Europe and Asia Pacific with new stores being added
there as quickly as we can find the right locations
available. We are highly encouraged by the positive
progress that we have made internationally and we
expect to expand the number of countries in which the
JD fascia is physically present over the next twelve
months including making an entry to the USA through
our proposed acquisition of The Finish Line Inc. Building
the global reach of our JD fascia not only gives us
significant potential for growth but it also cements the
strong supplier relationships required to constantly
bring in new and exclusive products and to market
them collaboratively.
We will sustain the market position of the JD fascia
through ongoing investment in the retail store portfolio,
development and nurture of global branded supplier
relationships, and the opening of new branded supplier
accounts which we can develop and exploit to ensure our
overall product range remains uniquely appealing and our
stores remain unique highly differentiated destinations.
Our core business strength is branded retail and our
customers are either sports fashion or outdoor oriented.
Where we use own brands we will seek to present
them as complementary to third party brands giving us
additionality in ranging and price architecture. We seek to
build very strong market positions and we maintain and
defend them by constantly adding to our brand roster
and endeavouring to be the partner of choice to as many
brands as possible with as much exclusive product as
possible. The Board considers that continuing supply from
Nike and adidas, being the main suppliers of third party
branded sporting products, to the Group’s core sports
fashion retail operation is essential to the business of
the Group.
Any new business which we invest in will have relevance to
our core strength and all businesses in the Group need to
be capable of enhanced profitability in the medium term.
Our ultimate objective is to deliver long term sustainable
earnings growth to enhance total shareholder returns
(‘TSR’) through share price performance and dividends,
whilst retaining our financial capability to invest in the
growth and the sustainability of our propositions. Recent
TSR performance is shown in the graph within the
Remuneration Report on page 98.
In working towards our objectives we aim to act always
in a responsible and ethical manner with all our
stakeholders including suppliers, employees and, of course,
our customers.
We are engaged in omnichannel retail and we continue
to invest considerable time and financial resources in
expanding and refurbishing our retail property portfolio.
Increasingly, developments in the Sports Fashion fascias
are focused overseas so that the Group increases its store
and multichannel consumer reach and its brand influence
globally. We believe that the combination of a largely
exclusive product offering, presented in a well fitted store
with world class standards of retail theatre, are major
drivers of footfall to our stores.
The movements in store numbers and square footage at
the start and end of the period are documented in the
‘Where We Are’ section on page 36.
Multichannel
In the UK, we have again seen significant growth in online
sales, principally driven by our continued investment and
strengthening of our mobile and apps offer. Our digital
and social media channels continue to be important
destinations for our customers and there continues to be
growth in sales from our instore digital devices (kiosks,
web tills and iPads), both through increased adoption
of existing devices by customers and through the roll
out of additional options. These enable customers to
order products from the website but pay in cash, access
extended ranges not available in the store and access our
full warehouse inventory.
The continuing international growth in physical store
space is complemented by ongoing investment in our
international multichannel capability with a significantly
expanded multicurrency website estate. We believe we
are creating an industry leading retail business with the
best of physical and digital retail combined to give a
compelling proposition and enabling our consumers
to shop seamlessly across all channels. We believe this
multichannel capability is a key differentiator for us.
Overseas, JD now has a local language and local currency
multichannel offer in Australia, Belgium, Denmark, Finland,
France, Germany, Ireland, Italy, Malaysia, the Netherlands,
Spain and Sweden.
In 2018 we will continue our focus on optimising our digital
channels profitably, improving the customer experience,
enhancing our multichannel proposition, exploiting
group synergies and rolling out our multichannel
offer internationally.
Multichannel sales represented 16% (2017: 13%) of total
fascia sales in the core JD fascia across the core markets
of the UK and Republic of Ireland, excluding kiosk sales.
43
Strategic Report
Brexit
Our Strategy
The UK is due to leave the EU in March 2019. It is expected that there will be a subsequent transitional period until 31
December 2020. Beyond that date, the risk and impact of Brexit along with the mitigating activities that are being
considered by the Group are detailed further in the Principal Risks section on page 50.
Infrastructure and Resources
Our most important resources are our people. We are a large equal opportunities employer and we are particularly
proud of our training resources. We provide direct employment and career development to thousands of people,
including large numbers of recent school leavers and graduates. We believe retention of our best staff is crucial to the
success of our business as it preserves the DNA of each business.
Details of the significant investments we continue to make in logistics are included in the Executive Chairman’s Statement
on page 39 and the Working Capital and Cash section of the Financial Review on page 54.
Number of items processed by Kingsway Distribution Centre
53 week
period ended
3 February 2018
52 week
period ended
28 January 2017
79.62m
66.40m
We recognise the importance of protecting our environment and are committed to carrying out all our activities with
due consideration for their environmental impact, particularly with regard to ensuring efficient use of energy and
other resources and materials, minimising waste by recycling wherever possible and ensuring compliance with relevant
legislation and codes of best practice. See also our Corporate Responsibility Report on pages 62 to 76.
The risks faced by the Group and our mitigation plans are reported separately on pages 46 to 52.
Financial Key Performance Indicators
Revenue
Gross profit %
Operating profit
Operating profit (before exceptional items)*
Profit before tax and exceptional items
Profit before tax
Basic earnings per ordinary share
Adjusted earnings per ordinary share
Total dividend payable per ordinary share
Net cash at end of period (a)
a) Net cash consists of cash and cash equivalents together with interest-bearing loans and borrowings.
Note
2018
£m
2017
£m
%
Change
3.161.4
2,378.7
33%
48.4%
295.9
48.9%
239.8
308.8
246.2
307.4
294.5
244.8
238.4
23.83p
18.38p
23%
25%
26%
24%
10
25.15p
19.04p
1.63p
28
309.7
1.55p
213.6
On behalf of the Board
Peter Cowgill
Executive Chairman
16 April 2018
44
Strategic Report
Business Model
1. Retail
16
Countries
1,474
Stores
30,292
Colleagues
3. Key Inputs
International
Brands
Own Brands
Supply Chain
Technology and
IT Infrastructure
Third Party
Logistics
2. Key Commercial Activities
Retail
Buying
Merchandising
Marketing
Multichannel
Property
Distribution
• Providing customers with
exclusive ranges from
the best brands in sports
fashion and outdoor
• Market leading online
and in-store technology
• World class standards
4. Revenue Channels
Stores
Instore Devices
Store Collection
or Home Delivery
Desktop, Tablet and
Mobile Optimised
Websites
Apps
45
Strategic Report
Principal Risks
Assessment of Principal Risks and Uncertainties
The Directors confirm that they have carried out a robust assessment of the principal risks and uncertainties facing the Group,
including those that would threaten its business model, future performance, solvency or liquidity. The principal risk areas
remain the same as reported last year and are described below along with explanations of how they are managed / mitigated:
Supply Chain Risks
As with other retailers and distributors into retail businesses, the Group’s core retail business is highly seasonal and the
most important trading period in terms of sales, profitability and cash flow in its Sports Fashion fascias has been the
Christmas season. Lower than expected performance in this period may have an adverse impact on results for the full year,
which may cause excess inventories that are difficult to liquidate. The Group seeks to manage this risk by monitoring the
stock levels and managing the peaks in demand constantly with regular sales re-forecasting. As the Group continues to
grow and expand, the risk to store replenishment and multichannel fulfilment from both equipment and system failure,
together with the inherent risk of having all the stock in one location increases.
The supply chain risks and uncertainties that are specific to the Group and the markets in which its businesses operate
are as follows:
Risk and Impact
Key Suppliers and Brands
The retail fascias offer a proposition that contains a mixture of
third party and own brand product. The Group maintains and is
dependent on long term supplier relationships whose loss could
adversely impact results.
The retail fascias are heavily dependent on the products and the
brands themselves being desirable to the customer if the revenue
streams are to grow. Therefore, the Group needs all of its third
party and own brands, including brands licensed exclusively to
it, to maintain their design and marketing prominence to sustain
that desirability.
The Group is also subject to the distribution policies operated
by some third party brands both in terms of the fascias which
can sell the ranges and, more specifically, the individual towns
or retail centres.
Reliance on Non-UK Manufacturers
The majority of both third party branded product and the
Group’s own branded product is sourced outside of the UK.
The Group is therefore exposed to the risks associated with
international trade and transport as well as different legal
systems and operating standards. Whilst the Group can manage
the risk in the supply chain on its own and licensed products,
it has little control over the supply chain within the third party
brands. As such, the Group is exposed to events which may not
be under its control.
Intellectual Property
The Group’s trademarks and other intellectual property rights
are critical in maintaining the value of the Group’s own brands.
Ensuring that the Group’s businesses can use these brands
exclusively is critical in providing a point of differentiation to our
customers and without this exclusivity we believe that footfall
into the stores, visits to our websites and ultimately conversion
of these visits into revenues would all be reduced.
Warehouse Operations
Stock is held in the Group’s warehouse in Rochdale. Having the
stock in one location with increased automation in the picking
process has brought significant benefits in terms of capacity,
product availability, quicker deliveries to our European stores
and reduced transport costs. However, there is an increased risk
to store replenishment and multichannel fulfilment from both
equipment and system failure, together with the inherent risk of
having all the stock in one location.
46
Change in Risk
Exposure 2017
/ 2018 before
Mitigating
Activities
Mitigating Activities
The Group seeks to ensure it is not too reliant on a small number
of athletic brands by constantly adding new brands to its offer
and by offering a stable of evolving own brands.
Where possible, the Group’s retail fascias also work in partnership
with the third party brands in their business on the design of
bespoke product which is then exclusive to the Group’s fascias.
Furthermore, the Group continues to actively seek additional
brands which it can either own or license exclusively.
The Group works with its suppliers to ensure that the products
being sourced satisfy increasingly stringent laws and regulations
governing issues of health and safety, packaging and labelling and
other social and environmental factors. Furthermore, adequate
levels of stock are maintained to cover short periods of
supply delay.
Compliance is monitored by the Group’s Head of Quality and
Ethics who has extensive experience in this area. The Group has
established a cross functional approach to compliance ensuring
that the sourcing and design teams work collaboratively to ensure
compliance is built into the design process.
The Group works with third party organisations to ensure that the
Group’s intellectual property is registered in all relevant territories.
The Group also has a well-established Profit Protection team
which actively works to prevent counterfeit product being passed
off as legitimate.
The Group has worked with its insurers on a conceptual Business
Continuity Plan which came into effect when the warehouse
became operational.
In addition, there is a full support contract with our automation
equipment providers which includes a 24/7 presence from a
qualified engineer thereby enabling immediate attention to any
equipment issues.
The construction of an extension to the facility at Kingsway is
ongoing. Whilst it is an extension rather than a separate building,
there will be a two hour fire resistance wall between the two
operations. The Group’s insurers have also been involved at every
stage of the project.
Strategic Report
Property Risks
Risk and Impact
Retail Property Factors
The retail landscape has seen significant changes in recent years
with a number of new developments opened and a high volume
of retail units becoming vacant.
The Group can be exposed where it has committed itself to
a long lease in a location which, as a result of a more recent
retail development, is no longer as attractive to the customer
leading to reduced footfall and potentially lower sales volumes.
Additionally there could be a further shift of sales from bricks
and mortar stores to ecommerce.
Principal Risks
Change in Risk
Exposure 2017
/ 2018 before
Mitigating
Activities
Mitigating Activities
Wherever possible, the Group will seek a number of protections
when agreeing to new property leases:
• New leases taken out for a maximum period of 10 years.
• Break option part way through the lease.
• Capped rent reviews.
• Rents which flex with turnover in the store.
When the Group determines that the current store performance
is unsatisfactory then an assessment is made on whether the
Group wants to continue trading in that location. If it does then the
landlord is approached to see whether we can reach an agreement
on a reduction in the rent or a change to a turnover based rent.
If it is considered that the best solution is to exit the store
completely then the landlord is approached with a view to a
complete surrender of the lease. If this is not possible then the
Group would alternatively seek to assign the lease or sublet it to
another retailer. The Group is mindful of general economic factors
and the already wide availability of retail units consequent to the
bankruptcy of other retail businesses.
Assigning the lease or finding a sub-tenant is not without risk
because if the incoming retailer fails then the liability to pay the
rent usually reverts to the head lessee. The Group monitors the
financial condition of the assignees closely for evidence that the
possibility of a store returning is more than remote and makes
a provision for the return of stores if this risk looks probable.
The Board reviews the list of assigned leases regularly and is
comfortable that appropriate provisions have been made where
there is a probable risk of the store returning to the Group under
privity of contract and, other than as disclosed in note 21, they
are not aware of any other stores where there is a possible risk
of these stores returning.
Technological Risks
The Group continues to enhance its multichannel proposition and the threat of cyber crime is constantly evolving
resulting in an increased risk exposure before mitigating activities.
Risk and Impact
IT Systems
The Group relies on its IT systems and networks and those of
the banks and the credit card companies to service its retail
customers all year round.
The principal enterprise system continues to be ideally suited to
the operations of the business but it has historically been reliant
on a limited number of key development staff.
Cyber Security
Cyber crime is becoming more sophisticated and is a risk in
all of our markets. A cyber attack or a breach of information
security may result in the short term loss of revenue and diverted
resources and there is the risk of a longer term negative impact
on customer confidence and the Group’s reputation.
Change in Risk
Exposure 2017
/ 2018 before
Mitigating
Activities
Mitigating Activities
The IT team continues to be strengthened. Further, a bespoke
training scheme is in place to train already highly skilled IT
operatives in the operating system behind the core ERP system.
Any long term interruption in the availability of the core enterprise
system would have a significant impact on the retail businesses.
The Group manages this risk by housing the principal IT servers in
a third party location which has a mirror back up available should
the primary servers or links fail.
The Group continues to invest in protecting our sites and customer
data from exposure to cyber attacks. There have also been
improvements made in how we handle data across the group with
focus on training and awareness for staff and improved policies,
procedures and strategies in place to monitor our systems. There
has been focus on encryption, network security, access controls,
perimeter defence, data protection and a review of information
handling by all parties.
49
Strategic Report
Personnel Risks
Risk and Impact
Personnel
The success of the Group is dependent upon the continued
service of its key management personnel and upon its ability
to attract, motivate and retain suitably qualified employees.
Principal Risks
Change in Risk
Exposure 2017
/ 2018 before
Mitigating
Activities
Mitigating Activities
To help achieve this continued service, the Group has
competitive reward packages for all staff.
More specifically for the retail businesses, the Group also has a
long established and substantial training function which seeks
to develop training for all levels of retail employees and thereby
increase morale and improve staff retention. This then ensures
that knowledge of the Group’s differentiated product offering
is not lost, thereby enhancing customer service.
The Board regularly considers the actions required to ensure
there is succession planning for all key roles.
Economic & Financial Risks
As with other retailers and distributors into retail businesses, the demand for the Group’s products is influenced
by a number of economic factors, notably interest rates, the availability of consumer credit, employment levels
and ultimately, disposable incomes. The Group seeks to manage this risk by offering a highly desirable and competitively
priced product range, which is highly differentiated from that of the Group’s competitors.
As the Group continues to expand in Europe and further afield into newer territories, the risk of exposure to
fluctuations in foreign exchange rates increases. The economic and financial risks and uncertainties that are
specific to the Group and the markets in which its businesses operate are as follows:
Risk and Impact
Brexit
The UK is due to leave the EU in March 2019. It is expected
that there will be a subsequent transitional period until
31 December 2020.
The majority of the Group’s retail stores across Europe are
supplied with stock by the Group’s principal warehouse at
Kingsway, Rochdale. Consequently, the current business model
requires access to these European markets and various free trade
agreements to be maintained at no worse than current levels.
Further, Brexit has had a negative impact on the rate at which
the Group can source goods which are priced or sourced in US
Dollars and Euros.
Treasury and Financial
The Group is exposed to fluctuations in foreign exchange rates.
Branded product for the JD fascia throughout Europe is
purchased by JD Sports Fashion Plc which is the main UK trading
business. This business then sells to the international businesses
in their local currencies. Given the current geographical location
of the Group’s stores this results in an increasingly significant
Sterling / Euro exposure in the UK trading business for the Euros
which are remitted back for stock purchases.
There is also exposure in relation to Sterling / US Dollar
consequent to the sourcing of own brand merchandise, where
suppliers are located principally in the Far East or Indian Sub-
Continent. Strengthening of the US Dollar relative to Sterling
makes product sourced in this currency more expensive thus
reducing profitability.
50
Change in Risk
Exposure 2017
/ 2018 before
Mitigating
Activities
Mitigating Activities
There are options to mitigate Brexit risks but they could
come at a price with additional significant fixed costs,
a potential requirement for suppliers to take action and
likely operational inefficiencies.
Having reviewed the options at a high level, the Board considers
that the Group’s best long term solution to mitigate these risks
is through a European Hub. This will be investigated in the year
to January 2019 with urgency as we will be ordering goods for
retailing in 2021 through most of 2020.
As per page 59, the Group aims to protect the anticipated US
Dollar requirement at rates at, or above, the buying rate through
appropriate foreign exchange instruments.
Consequently, Brexit and its associated risks will remain high on
the Board’s agenda as the changes currently being negotiated
become clearer.
The Group encourages its own brand suppliers to quote in Euros
where possible thus creating a natural hedge against the Euros
remitted from the international businesses. The surplus Euros
are also used to fund the international store developments thus
alleviating the need for local third party financing. Any surplus
Euros are converted back to sterling with hedging now put in
place for approximately 83% of the anticipated surplus for the year
to 2 February 2019. This leaves some Euros available should the
Group need to move quickly to take advantage of an acquisition
or other investment opportunity. Discussions continue with senior
management at the major international brands on how the risk on
Sterling / Euro volatility from the centralisation of product buying
can be shared fairly between the parties.
The Group sets a buying rate for the purchase of own brand goods
in US dollars at the start of the buying season (typically six to
nine months before the product actually starts to appear in the
stores) and then enters into a number of local currency / US dollar
contracts, using a variety of instruments, whereby the minimum
exchange rate on the purchase of dollars is guaranteed. Hedging
has now been put in place for approximately 96% of the anticipated
requirement for the year to 2 February 2019.
Strategic Report
Regulatory Risks
Risk and Impact
Health and Safety
The health and safety of our customers and employees is of the
utmost importance. Policies are implemented in conjunction with
training programmes to protect our employees and customers.
Personal injuries, distress and fatalities could result from a failure
to establish and maintain safe environments.
Regulatory and Compliance
The Group operates in an environment regulated by legislation,
codes and standards including, but not limited to, listing rules,
trading standards, advertising, product quality, carbon emission
reporting, bribery, corruption and data protection rules.
The introduction of regulations such as the General Data
Protection Regulation (GDPR), The Modern Slavery Act and
Supplier Payment Reporting has increased the risk exposure of
non-compliance. The Group recognises that failure to comply
with these may result in financial or reputational damage to
the business.
Principal Risks
Change in Risk
Exposure 2017
/ 2018 before
Mitigating
Activities
Mitigating Activities
There is a comprehensive induction and training programme
for all staff covering Health and Safety issues.
The Group Health and Safety Committee meets on a quarterly
basis, is chaired by the Group Health and Safety Manager and
includes as its attendees the Group Company Secretary and
Group Property Director. The Group Health and Safety Manager
appraises the Board of material issues and incidents on
a periodic basis. Targets are set by the Board to enable
measurement of performance.
Performance against targets, incidents, and legal claims that
arise are reported to the Board.
The Group also works closely with its principal insurers who
undertake regular risk reviews both in the store portfolio and
in the main central warehouse. The Kingsway distribution centre
underwent an annual independent Health & Safety audit with
the British Safety Council and in 2017 achieved five star status.
The Group actively monitors adherence to its existing regulatory
requirements and has a number of internal policies and standards
to ensure compliance where appropriate.
The Group provides training where required and operates a
confidential whistleblowing hotline for colleagues to raise
concerns in confidence.
The Group expects all suppliers to comply with its Conditions of
Supply which clearly sets out its expectations of its suppliers and
includes a Code of Conduct which all suppliers must adhere to.
51
Strategic Report
Principal Risks
Assessment of the Group’s Prospects
Viability Statement
Based on the results of the analysis, the Board has a
reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall
due over the three year period of the assessment.
Going Concern
After making enquiries and completing the assessment
outlined in the Viability Reporting (including the proposed
acquisition of The Finish Line), the Directors have a
reasonable expectation that the Company, and the Group as
a whole, has adequate resources to continue in operational
existence for the foreseeable future.
For this reason, the financial statements have been prepared
on a going concern basis.
Brian Small
Chief Financial Officer
16 April 2018
The Board regularly reviews the current financial position
and performance and assesses the future prospects of
the Group. As part of this assessment the Board reviews
the Group’s income and expenditure projections, cash
flows and other key financial ratios along with the potential
impact of, and challenges presented by, the principal risks
outlined on page 46 to 51.
The Group’s strategy along with the factors likely to
affect the development, performance and position of the
businesses are detailed throughout the Strategic Report
on pages 43 to 76.
Viability Reporting
In accordance with the requirements of the UK Corporate
Governance Code, the Board has assessed the viability of
the Group for a period of three years to 30 January 2021.
A period of three years has been selected as the Board
considered this to be an appropriate period to assess
performance and the potential impact of key risks in a
fast paced retail environment. The three year period also
strikes a balance between the time horizons across the
different aspects of the Group, such as short term detailed
financial budgets and forecasts, medium term financing
considerations and retail space planning.
For the purposes of Viability Reporting, the Board has
focused on the operational risks included in the supply
chain section of the principal risks outlined on page 46
to 51. The Board has evaluated the impact of these risks
actually occurring based on severe but plausible scenarios.
The evaluation included performing sensitivity analysis by
flexing the main assumptions in the scenarios.
As Brexit remains high on the agenda, the Board has also
considered the potential impact of the incremental fixed
costs as a result of applying the mitigating solutions to the
risks as outlined in the Principal Risks section on page 50.
Furthermore, with reference to the proposed acquisition of
The Finish Line, the Board has reviewed the working capital
requirements of the enlarged group. Sensitivity analysis
has been prepared on a reasonable worst case scenario
basis, applying sensitivities to sales, margin and the costs
required to support and grow the enlarged group.
52
Strategic Report
Sports Fashion
Sports Fashion has had another exceptional year with
operating profits (before exceptional items) increasing by
22% to £300.0 million (2017: £245.0 million). After double
digit like for like growth in our Sports Fashion stores in
each of the three preceding years and with a relative lack
of new footwear models from the principal brands in the
second half of the year, we are pleased with the further
like for like growth in stores in the year of 3% across our
combined fascias with a particularly strong performance
from the JD fascia in Europe.
This growth in stores was complemented by growth
online in excess of 30% on a pan-European basis. We
are particularly pleased with the development of our
international websites which are becoming increasingly
significant in scale and we would expect further significant
trading progress from these websites in the new financial
year as we leverage the benefits from previous investments
to create a consistent multichannel ecosystem with all
territories having access to a universal stock pool.
We have opened a net 56 stores in mainland Europe
during the year with new stores in most of our existing
European territories. We expect to maintain the current
momentum on store openings for JD in mainland Europe
through the new financial year with approximately one
new store opening per week on average. We have also
recently opened our first store in Finland and whilst we
continue to investigate options to open organically in
other territories, this will be subject to the stores meeting
our usual stringent financial criteria.
Our non JD fascias in Europe have delivered another
positive result although the result in the largest of these
businesses, Sprinter, has been negatively impacted by one
off charges of £4.1 million associated with the ongoing
relocation of the logistics operations to a new and more
appropriately sized warehouse in Alicante. This site has the
capacity to service 450 stores initially with land available for
further development if necessary. We are pleased to have
extended the reach of Sprinter in Spain with the acquisition
of the Sport Zone business in Iberia and the Canary Islands
which is very complementary to Sprinter although there
will be a drag on profitability in the short term until we
start to leverage the synergies of this combination. This
process has already started with the Sprinter management
team having taken on operational responsibility for the
Sport Zone stores in Spain. We are confident that there
will be further benefits over the longer term in sourcing
and other commercial operations. Our secondary fascia
in France, Chausport, which is typically located in smaller
retail space and is more biased to footwear than JD, had a
strong first half but a more difficult second half reflecting
the lack of new footwear styles available to it. Meanwhile,
in Sports Unlimited Retail in the Netherlands, the process
to reduce the Perry Sport and Aktiesport store portfolios
to a sustainable size and to trade through the excess and
disjointed stock from our acquisition in the previous year
has been completed. This process inevitably impacted on
the financial performance in the year but it has left the
business more appropriately positioned to deliver positive
results in the future.
Further afield, we are pleased with our continued progress
in Malaysia with seven JD stores trading in the country
at the end of the year and a further two stores opened
subsequently. At the year end, we also had five stores
trading as JD in Australia with two stores in each of the
Sydney Metropolitan area and Melbourne and one in Gold
Coast. Two further stores have opened subsequently with
a third store in the Sydney area at the Macquarie Shopping
Business Review
Centre and a third store in the Melbourne area from the
conversion of the Glue store at Doncaster. Our initial
performance in these markets is encouraging and it has
given us the confidence to investigate options in other
territories. Indeed, very recently, we have opened our
first store in South Korea by converting the Hot-T store in
Gangnam, Seoul. We would anticipate further progress in
these markets in the current financial year.
Our principal premium Fashion businesses, Scotts and
Tessuti, together with Mainline Menswear, are an important
part of our Group and we continue to invest in both
the stores and multichannel infrastructure to elevate
the customer and brand experience. Elsewhere, we are
looking to deliver consistency in our overall proposition in
this sector by consolidating the activities of some of our
smaller businesses.
We continue to be pleased with the development of
our gyms business which offers a cutting edge fitness
experience on an excellent value for money basis. We had
13 gyms open at the end of the year with a further five
opened subsequently. Our bespoke mix of the industry’s
leading fitness equipment and an exciting range of classes
has been well received by both customers and the wider
fitness industry.
Given the relative weakness of sterling after the Brexit
vote and the impact that this had on cost prices then we
are pleased to have maintained the overall gross margin
in Sports Fashion at a level similar to that in the previous
year. Keeping a high proportion of exclusivity in the
offer in the core JD fascia helps to maintain margins. We
would hope that sterling has now stabilised against other
currencies although we would not expect this to lead to
any significant margin improvement in the short term.
Outdoor
The Outdoor fascias have made encouraging progress in
the year with composite like for like growth of 3% in stores
and in excess of 30% online. Our teams have worked hard
to improve their propositions and deliver offers which are
appealing and relevant to their consumers all year round.
It is pleasing that this effort is having positive results.
The overall segment operating profit before exceptional
items was £8.8 million (2017: £1.2 million). This result is
stated after a non-trading amortisation charge of £3.7
million (2017: £nil) which represents the start of the
amortisation of the value of the intangible assets on the
fascia and various brand names which were created on the
consolidation of the acquisition of Go Outdoors last year.
We continue to plan for further integration of the enlarged
Outdoor business. We believe that the availability of
product in the Go Outdoors stores can be enhanced by
more regular deliveries of stock from central warehousing
leveraging off the existing JD logistics and transport
infrastructure. It is our current intention to transfer the Go
Outdoors stock into the Group’s principal warehouse at
Kingsway sometime during the next year.
Peter Cowgill
Executive Chairman
16 April 2018
53
Strategic Report
Financial Review
Revenue, Gross Margin and Overheads
Total revenue increased by 33% in the year to £3,161.4
million (2017: £2,378.7 million). Like for like store sales
for the 53 week period across all Group fascias, including
those in Europe, increased by a further 3%, which was a
pleasing performance given the double digit growth seen
in each of the three previous years. The overall like for like
growth including online was 7%.
Total gross margin in the year of 48.4% was slightly behind
the prior year (2017: 48.9%) with the inclusion of a full year
from Go Outdoors increasing the relative participation
of the lower margin Outdoor businesses in the overall
Group result.
Operating Profits and Results
Operating profit (before exceptional items) increased
substantially by £62.6 million to £308.8 million (2017:
£246.2 million) driven by another very strong performance
in Sports Fashion together with encouraging growth
in Outdoor including a full year contribution from Go
Outdoors for the first time. Operating profit (before
exceptional items) has now increased by more than 200%
over the last three financial years (2015: £102.2 million).
There were exceptional items in the year of £12.9 million
(2017: £6.4 million) primarily from the non-cash impairment
of certain intangible assets.
The exceptional items comprised:
Non-cash impairment of intangible assets (1)
Movement in fair value of put and call options (2)
Total exceptional charge
2018
£m
11.6
1.3
12.9
2017
£m
6.4
-
6.4
1. The charge in the period to 3 February 2018 relates to
the non-cash impairment of the fascia name balance
arising in prior years on the acquisition of Next
Athleisure Pty Limited and JD Sports Fashion SDN BHD
and the impairment of goodwill arising in prior years
on the acquisition of Tiso Group Limited. The charge
in the period to 28 January 2017 relates to the non-
cash impairment of the fascia name balance arising in
prior years on the acquisition of ActivInstinct Limited,
the fascia name arising in the year on the acquisition
of Aspecto Holdings Limited and Infinities Retail Group
Holdings Limited and the impairment of the goodwill
arising in the year on the acquisition of 2Squared
Agency Limited.
2. Movement in the fair value of put and call options
(See note 20).
Group profit before tax in the year ultimately increased
by 24% to £294.5 million (2017: £238.4 million).
Working Capital and Cash
Strong cash generation from the ongoing trading in our
core retail fascias has meant that we ended the year with
a net cash balance in excess of £300 million for the first
time. The positive cash position provides the Group with
a strong financial foundation for potential acquisitions,
54
investment in our infrastructure for future growth and
our ongoing retail developments, both in the UK and
internationally. The growth of 37% in net stocks to £478.0
million (2017: £348.0 million) is consistent with the growth
in sales and we maintain our robust approach to stock
management.
Acquisition and Other Investments
The net cash consideration on acquisitions in the year, net
of cash acquired, was £24.9 million (2017: £138.6 million).
Subject to approval from shareholders of both businesses,
we would anticipate completing the major acquisition of
The Finish Line business in the United States in the first
half of the current year and we will also continue to make
other selected acquisitions and investments where they
benefit our strategic development.
Capital Expenditure
Gross capital expenditure (excluding disposal costs) has
increased significantly to £186.6 million (2017: £88.0
million). A large proportion of this increase has come from
investments made to increase warehousing capacity and
to provide certainty on office accommodation in the UK
and Spain:
UK: We have spent a further £24.5 million (2017: £3.7
million) at the Kingsway site. Works to expand the internal
use of the initial warehouse are now substantially complete
with initial fitting out of the 352,000 sq. ft. extension
ongoing. We estimate that further expenditure of up to £30
million is required to complete the fitting out of the leased
extension, including automation equipment, the majority
of which will be incurred in the current year. We currently
expect to have the first areas in the extension available
for operational use before Christmas. In addition, we have
secured the land and buildings at the site of our existing
Group Head Office in Bury at a cost of £12.6 million. This
will remain our base for the foreseeable future.
Spain: A total of €39.5 million (2017: €nil) has been incurred
to date on the acquisition and subsequent fitting out of a
new warehouse and head office in Alicante for our Sprinter
business. We estimate that a further €4 million is required
to complete the fit out of this facility, including automation
equipment, with operational testing underway ahead of
the site being commissioned during the summer.
Elsewhere, the primary focus of our capital expenditure
remains our international retail expansion with the spend
in the year on property fit outs increasing by £15.7 million
to £79.7 million (2017: £64.0 million). This includes £38.6
million (2017: £35.7 million) of expenditure in retail stores
outside the JD fascia’s core UK and Ireland domain.
We have also spent a further £12.2 million (2017: £5.4
million) on our developing gyms business. There was
also an increase in the spend on key money and other
store related long term deposits to £10.9 million (2017:
£6.0 million) reflecting the increased scale of the Group’s
international operations.
We anticipate that expenditure in the current financial
year will be maintained at a similar level overall with a
reduction in expenditure on warehouse infrastructure
offset by additional investment in our retail fascias
reflecting our focus on international development and the
increased number of territories that the Group operates in.
55
Strategic Report
Taxation
Financial Review
We are committed to paying our fair share of tax to build
a successful and sustainable business. Our approach to
responsible tax management is to pay the correct amount
of tax in the right jurisdictions and on time. The tax we pay
reflects the underlying commercial transactions across our
business and given the focus of our activities in the UK, it is
only right that this is where the majority of our tax is paid.
The total amount paid in the UK across the various taxes
(including local authority business rates) in the year to
3 February 2018 was £211.4 million (2017: £198.6 million).
The effective rate of tax on profit from continuing
operations has decreased from 22.6% to 19.8% primarily
due to the continuing reduction in the UK tax rate and prior
year adjustments. Excluding both exceptional items and
prior year adjustments from the tax charge, the effective
core rate* from continuing activities has decreased from
21.8% to 19.4%. This core effective rate continues to
be above the standard rate due to depreciation of non-
current assets which do not qualify for tax relief and
overseas subsidiaries generally being subject to higher
rates of corporation tax than the UK.
Earnings per Share
The basic earnings per share has increased by 30% from
18.38p to 23.83p. However, the Directors consider the
adjusted earnings per share to be a more appropriate
measure of the Group’s underlying earnings performance
since it excludes the post-tax effect of exceptional items
(other than the loss on disposal of non-current assets).
The strong trading performance in the year is reflected in
the fact that the adjusted earnings per share has increased
by 32% from 19.04p to 25.15p.
Dividends
The Board reviews the level of distributable reserves
bi-annually, to align with the proposed interim and final
dividend payment dates. In determining the level of dividend
in any year the Board considers the following factors:
• The availability of cash resources and future cash
commitments;
• The strategic plan to ensure the retention of sufficient
financial facilities and resource to facilitate ongoing
developments which will drive success for the Group and
increased benefits to shareholders, over the longer term;
• The principal risks and uncertainties as identified on
pages 46 to 51 which could affect the future results of
the Group; and
• The level of retained distributable reserves of JD Sports
Fashion Plc, the Company. The Company has £760.6
million of distributable reserves at 3 February 2018 to
support the dividend policy.
A final cash dividend of 1.37p per share is proposed,
which if approved, would represent an increase of 5.4%
on the final dividend from the prior year. Added to the
interim dividend of 0.26p per share, this takes the full
year dividend to 1.63p, which is an increase of 5.2% on the
prior year. We believe that this level of dividend strikes
a fair balance for shareholders with appropriate capital
retained to facilitate ongoing developments, particularly
investment in the international Sports Fashion fascias,
which will drive success for the Group, and increased
benefits to shareholders, over the longer term.
Treasury Facilities
Interest rate hedging has not been put in place on the
current facility. The Directors continue to be mindful of the
potential for rises in UK base rates as the general economic
situation improves but, at present, given the highly seasonal
nature of the Group’s core cashflows, they do not believe
that a long term interest hedge is appropriate. This position
continues to be reviewed regularly.
Working capital remains well controlled with suppliers
continuing to be paid to agreed terms and settlement
discounts taken whenever due.
Foreign Exchange Exposures
The Group has two principal foreign exchange exposures:
1. The sourcing of own brand merchandise from either the
Far East or Indian Sub-Continent which usually has to be
paid for in US Dollars. A buying rate is set at the start of
the buying season (typically six to nine months before
product is delivered to stores). At this point, the Group
aims to protect the anticipated US Dollar requirement at
rates at, or above, the buying rate through appropriate
foreign exchange instruments. The Group’s forecast
requirement for US Dollars in the period to January
2019 is now $229.5 million. Cover is in place for $220.7
million meaning that the Group is currently exposed
on exchange rate movements for $8.8 million of the
current year’s estimated requirement.
2. The Group is also exposed to the movement in the rate
of the Euro from the sale of its UK sourced stocks to
its subsidiaries in Europe. However, the Group has an
element of a natural hedge on this exposure as the
Euros received for that stock are then reinvested back
in those European subsidiaries to fund the development
of both new stores and refurbishments. The anticipated
surplus over and above the planned investment levels
in the period to January 2019, pre any potential
acquisition activity to be funded in Euros, is €340.0
million. Hedging contracts are in place to sell €281.7
million meaning that the Group is currently exposed
on exchange rate movements for €58.3 million of the
current year’s estimated surplus.
Brian Small
Chief Financial Officer
16 April 2018
59
Strategic Report
Sports Fashion
JD
The retail property strategy for the core JD fascia is
consistent across all of our territories. JD is a world
class retail fascia and by continually investing in our
multichannel proposition we will ensure that the stores
retain their dynamic appeal and further elevate the
consumer experience.
International expansion of the JD fascia remains a clear
strategic focus:
• Europe: There have been new store openings in most of
our existing territories and during the period we also
converted the 12 stores in Portugal previously trading
as The Athletes Foot to JD. Very recently, we also
opened our first store in Finland at the Itis Centre in
Helsinki. We expect to maintain the current momentum
on store openings for JD in mainland Europe into the
new financial year with approximately one new store
opening per week on average.
• Asia & Australia: We have opened a further four stores
in Malaysia including our first stores outside of Kuala
Lumpur. We have also opened our first stores in
Australia with five stores trading at the period end. Very
recently, we opened our first store in Seoul, South Korea
following the conversion of one of the Hot-T stores
which were acquired in September 2017. We would
anticipate further new stores in all of these territories
in the new financial year together with our first stores
in Singapore.
We are confident that our increasing international reach
and the consistency of our premium proposition across
our territories is recognised by the major international
landlords and property agents.
The major property developments in each area were:
• UK & Republic of Ireland – 36 new stores were opened in
the period with 21 stores closed. The openings included
14 relocations in towns or malls in the UK to a more
appropriately spaced store or a position of greater
footfall. The openings also included two temporary
stores in Liverpool which we traded whilst our principal
store in the Liverpool One centre was extended with the
new store now having a retail footprint of approximately
20,000 sq. ft. Ensuring that we have sufficient space
to present our full offer in major markets remains a
key strategy. In addition to extending our principal
store in Liverpool, we have also consolidated our offer
in Manchester’s Arndale Centre into one new larger
store which has a retail footprint of approximately
17,000 sq. ft.
• Europe – JD continues to develop momentum in Europe
with a net increase of 56 stores. A total of 59 stores
were opened in the year of which 15 were in France,
15 in Spain and 14 in Italy. In addition, one store in
Spain also transferred from Sprinter. Four stores were
closed in the year of which three were relocations into
larger space.
• Asia – JD’s presence in Malaysia has been enhanced
through the opening of four further new stores including
Johor and Penang which are our first stores outside of
Kuala Lumpur. Very recently, we have started to fit out a
store in the Orchard Mall in Singapore which will be our
first store in the country when it opens later in the year.
60
Property and Stores Review
• Australia – We opened five JD stores in the year of
which two are in malls in the suburbs of Sydney and
two are in malls in Melbourne. The openings in the year
included one store in Parramatta which was transferred
from the Glue fascia. We anticipate further openings in
Australia in the year.
Size?
This has been a year of consolidation for the Size? fascia
with a net increase of one store. There was no change in
the number of international stores with two openings and
one closure in the UK portfolio.
Chausport
Five stores have opened in the year and one store closed
with Chausport’s focus continuing to be the smaller
regional towns and centres which will not conflict with JD’s
expansion. We would not expect a significant expansion in
the Chausport portfolio at this time.
Sprinter
There was a net increase of eight stores in the period with
nine new stores offset by one store transferring to JD. The
nine openings include four in Catalonia and one in Galicia
as Sprinter continues to expand beyond its traditional
heartlands. The average retail footprint of the stores
opened in the year was 6,400 sq. ft. which is consistent
with the openings in recent years and represents the most
effective trading space for the Sprinter core offer.
Sport Zone
Immediately prior to the period end, we significantly
enhanced our presence in Iberia with the acquisition of
138 stores trading as Sport Zone with 91 stores in Portugal,
26 in Spain and 21 in the Canary Islands. The operational
management for the 26 stores in Spain has now been
transferred to the Sprinter team and, although the stores
in Spain are currently still trading as Sport Zone, we intend
to undertake some trial conversions later in the year to
assess whether this drives a better performance. However,
there are no plans to re-fascia any of the stores in Portugal
and Canary Islands as the Sport Zone name has significant
resonance with consumers here. These stores will also stay
under the operational control of the Sonae team, who are
our partners across Iberia, for the foreseeable future.
Perry Sport and Aktiesport
Our focus has been to consolidate the Perry Sport and
Aktiesport store portfolios down to a sustainable size
and use those stores which were not part of our longer
term plans to trade through the excess and disjointed
stock from the acquisition in the prior year. This process
is substantially complete with 63 stores closed in the year.
The business is now more appropriately positioned for
future development and we will make limited investments
in the future where these are appropriate.
Glue and Superglue
The Glue store in Parramatta was converted to JD in
the period. We are pleased with the performance post
conversion and we would anticipate converting further
stores in the new financial year. We are also looking at
options on other underperforming Glue stores and would
anticipate some closures during the year.
Strategic Report
Property and Stores Review
Sports Fashion (continued)
Outdoor
Hot-T
In September, we acquired an initial 15% of the Hot-T
retail business from Shoemarker Inc. Subsequent to the
financial year end, this investment has increased to 50%.
At the time of our initial investment, Hot-T had 23 stores
in the major cities of South Korea with a further store, at
Incheon Square, opening subsequently. It is our current
intention to convert all of these stores to JD with our initial
focus being the stores in Seoul. The store at Gangnam
has already opened with conversion works at three other
stores ongoing.
Blacks, Millets and Ultimate Outdoors
Subsequent to our acquisition of the business in January
2012, we have actively sought to keep our approach
as flexible as possible both in terms of the lease
conditions that we operate under and the fascia which
we trade to ensure that we can react quickly if market
conditions change:
• Lease conditions: Where possible we continue to seek
flexible mutual break clauses with landlords.
Fashion Fascias
Scotts and Tessuti
During the period we merged the Scotts and Tessuti retail
businesses. We believe that these two fascias offer the full
range of Fashion brands between them and as there is
some commonality in the offer then the overall efficiency
of the stock management could be enhanced through a
merger of the operational management. Ten stores were
opened and ten stores closed in the period across the two
fascias which includes five stores which were relocated. We
will continue to support investment in our Fashion fascias
where it is justified and where there is certainty on the
availability of third party brands in a particular location.
Kids Cavern
Immediately prior to the period end, we enhanced our Junior
Fashion offering with the acquisition of three stores trading
as Kids Cavern in Liverpool.
Cloggs
We have recently announced the closure of our Cloggs
fashion footwear business. Whilst the business principally
traded online, it also had three small stores in York,
Newcastle and Shrewsbury which have now closed.
• Fascias: We continually
the
optimal fascia in any particular location taking into
consideration consumer demographics, category
performance and competitor activity.
review which
is
A policy of flexibility means that the store portfolio,
particularly with regards to Blacks and Millets, continues
to evolve:
• Blacks: Two new stores were opened in the period
with two stores also closed. A further two stores were
converted to the Millets fascia.
• Millets: The Millets store portfolio has seen further
considerable change during the year with five new
stores opened and seven stores closed in the year.
Three stores were also transferred to Millets in the year
including the two conversions of former Blacks stores.
• Ultimate Outdoors: There has been no change to the
Ultimate Outdoors store portfolio in the year. We intend
trialling the conversion of at least one Ultimate Outdoors
store to Go Outdoors in the year to assess if this drives an
enhanced performance.
Tiso
The underperforming stores in Innerleithen (Alpine Bikes)
and Stirling (Tiso) were closed in the year. Tiso will be
opening a new store in Aviemore later in the year.
Go Outdoors
Go Outdoors opened two new stores in the year at
Ipswich and Tonbridge which were committed prior to
our acquisition of the business in November 2016. Whilst
the Go Outdoors store portfolio continues to operate
under its separate management, the approach to decision
making on properties is now consistent with that of
other Group fascias including rigorous financial analysis
pre-commitment.
For a complete table of store numbers see page 37.
Peter Cowgill
Executive Chairman
16 April 2018
61
Strategic Report
Corporate and Social Responsibility
Our People
Developing Our People
The Group is very aware that, behind each and every
success, our talented people are the very heartbeat of our
business. They deliver on a daily basis to enable JD Sports
Fashion Plc to meet and exceed expectations.
The business is eager to empower its employees to be the
very best at what they do. Integral to this approach is a
Learning and Development structure providing for every
part of the business.
E-learning
E-learning is an invaluable asset to the Group, ensuring
that thousands of employees across the globe have
access to the tools required to excel at all levels within
the business. There are now over 200 e-learning modules
available for our employees to improve and refresh their
knowledge base.
Face-To-Face Training
JD Sports Fashion Plc recognises the value of face-to-
face training.
Over 5,000 hours of training of this nature have been
delivered across the Group in the last calendar year across
our Academies, leadership programmes, management
courses, supervisor development sessions and bespoke
workshops. We are committed to expanding the training
departments with additional training rooms to be
constructed in the extension to our principal warehouse at
Kingsway, Rochdale.
Academies
It is crucial to our future to ensure that talent is both
recognised and nurtured. Our established retail Academy
produced 78 graduates in 2017 (including 17 from our
international territories). In the same year, our Head
Office Management Development Programme was also
introduced, aiding an additional 40 individuals to obtain
the knowledge required to take their careers to the
next level.
Senior Leadership Programme
In addition to our Academies, the business works with
training provider partners to deliver a bespoke nine month
leadership programme to develop leadership skills for our
current and future leaders. The programme comprises
of taught, classroom-based workshops and one-to-one
coaching sessions.
Apprenticeships
The Apprenticeship Levy was introduced in April 2017,
providing employer control of apprenticeship training
funds. We currently have a number of apprentices across
the group studying towards accredited qualifications on
subjects ranging from Data Analysis to Engineering.
As at the end of the financial year there were 32,389
people in our business. Our aim is to attract, develop
and engage committed and talented people so that they
will openly choose to grow with the Group throughout
their careers.
Attracting Our People
Our people are a source of great pride, and there have
never been so many opportunities for those employed
by JD Sports Fashion Plc. Our strategy is to continue to
recruit the very best talent via all available channels and
then retain them with challenging but rewarding careers.
Careers Website and Applicant Tracking System
The business has recently launched a new Group careers
website and applicant tracking system. This system provides
us with cutting edge digital tools for recruitment across UK
and International Retail, Head Office and the Distribution
Centre. We will be developing our careers site further to
include branded and interactive sections for each area of
the business, including a bespoke area for Early Careers,
Apprenticeships and Placement Opportunities.
Internships
A range of paid internships and placement opportunities
are available for both under and post graduates. These
opportunities are across our Head Office and Distribution
areas and we currently partner with a number of local
universities to advertise these roles. During an internship
or placement our Early Careers Managers undertake
reviews on a regular basis with both the individual and
department to ensure a great experience for both student
and line manager.
Graduate Schemes
The launch of bespoke Graduate Schemes in IT and
Multichannel have been highly successful. These schemes
are advertised with our partnered universities and the
duration is between one to two years. Students working
with us on Graduate Schemes gain experience of different
business departments, receiving specialised internal and
external training in a range of areas with a view to finding
their vocation within the business at the end of the scheme.
We aim to increase the options for graduates within
the business in 2018 to complement the success of the
existing programmes.
Masters Degrees
Within our Multichannel department we currently offer a
Masters Degree in Multichannel Retailing via Manchester
Metropolitan University. The degree is a course which has
been adapted specifically for JD from courses currently
offered within the university. This is a two or three year
qualification with a dissertation linked to current JD
departmental aims. We have 20 team members currently
studying for this qualification.
62
Strategic Report
Corporate and Social Responsibility
Engaging Our People
Equality and Diversity
The Group champions colleague engagement. A key
aspect of this is to ensure that our teams feel listened
to, involved and supported. We aim to ensure that our
colleagues are engaged through a number of approaches
and initiatives.
The Group is committed to promoting policies which are
designed to ensure that employees and those who seek
to work for the Group are treated equally regardless
of gender, marital status, sexual orientation, age, race,
religion, ethnic or social origin or disability.
The Group gives full and fair consideration to applications
for employment by people who are disabled, to continue
whenever possible the development of staff who become
disabled and to provide equal opportunities for the career
development of disabled employees. It is also Group policy
to provide opportunities for the large number of people
seeking flexible or part time hours.
A breakdown by gender of the number of employees who
were Directors of the Company, Senior Managers and
other employees as at 3 February 2018, is set out below:
Male
Female
Total
% Male % Female
Plc Board
Senior Managers*
5
195
1
63
6
258
Other employees
16,839
15,286
32,125
83%
76%
52%
17%
24%
48%
The breakdown for the comparative period, as at 28 January
2017, is set out below:
Male
Female
Total
% Male % Female
Plc Board
Senior Managers*
5
160
1
49
6
209
Other employees
12,387
11,197
23,584
83%
77%
53%
17%
23%
47%
* Senior Managers are defined as -
1. persons responsible for planning, directing or controlling
the activities of the Company, or a strategically significant
part of the Company, other than Company Directors and;
2. any other Directors of subsidiary undertakings
Communications
It is important that our colleagues know what is going on
in the business and also feel able to provide feedback and
to contribute to our success.
To ensure that all of our employees have a broad awareness
of the Group’s activities our quarterly magazine, People
1st, is sent to all stores, Head Offices and the Distribution
Centre. This contains articles regarding new acquisitions;
and profiles of our departments, stores and territories;
and coverage of key business campaigns and updates on
people and their role in the success of the business.
There are also a number of activities across different areas
of the business to supplement this publication to ensure
that communication flows both ways. These activities
include open door sessions, employee forums and
working parties, weekly newsletters and updates to our
Intranet. We have also introduced Yammer and Facebook
Workplace within our online communication channels.
Reward and Recognition
Our longstanding Employee of the Month programme
provides regular rewards for team members across all
areas of the business with monthly winners across Retail,
Distribution and Head Office receiving a certificate and a
Gift Card in acknowledgement of their fantastic work and
the impact on the business. We have also implemented a
number of staff discount initiatives to recognise the hard
work and commitment shown by our people throughout
the year.
Health, Safety and Wellbeing
We are committed to ensuring the protection and
wellbeing of our people both inside and outside of their
working environment.
Occupational Health provision provides health surveillance
and support for employees and supports the business in
making recommendations to help us to promote healthier
lifestyles and full health checks.
The Retail Trust is also a key component of our wellbeing
strategy, providing a free, confidential support service that
aids the emotional and financial wellbeing of our people,
their families and direct dependants in times of need.
Identifying talent and investing in our peoples’ future will
continue to be a key area of focus in 2018. Our expanding
global retail network will provide further opportunities for
career progression.
63
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
4500
4000
3500
3000
2500
2000
1500
1000
500
0
6000
5000
4000
3000
2000
1000
0
£1.7m
50%
£1.3m
33%
£0.9m
Fixed elements of rumuneration
Variable element of rumuneration
£0.6m
46%
£0.5m
30%
£0.3m
100%
67%
50%
100%
70%
54%
0.8
0.6
0.4
0.2
0.0
Minimum
On Target
Maximum
Minimum
On Target
Maximum
P Cowgill Executive Chairman
B Small Chief Financial Officer
4174
3993
2015
2016
Year
1638
2017
3993
1322
2018
4174
1638
1322
2015
2016
2017
2018
Year
22%
1.1%
1.8%
1.4% 1.0%
2.4%
3.2%
15.4%
Strategic Report
78%
Corporate and Social Responsibility
55.2%
Health and Safety
We are fully committed to continuous health and safety
improvement across all areas of the Group and understand
that it is the way we work and behave that protects our
colleagues, customers and other stakeholders.
Our organisational structure defines individual safety
responsibilities and duties to ensure that we provide and
maintain safe and healthy working conditions, equipment
and systems of work for all our colleagues.
68%
We demonstrate this commitment through active
100%
leadership, promoting best practice and by setting specific
and measurable targets each year. Our performance
80%
against these targets is reviewed and reported upon
regularly and we will ensure that adequate resource is
60%
provided to enable their achievement and ensure the
effective management of risk within the Group.
40%
50%
The widely dispersed nature of the Group store base
increases the risk of breaches of health and safety standards
20%
and regulations and consequently we have increased
the resource in this area. If breaches do occur we take
0%
appropriate action and use the experience to ensure even
No Audit Required
greater focus on health and safety improvement for the
benefit of the public, our customers and our employees.
25%
13%
18.5%
During the year:
• We achieved the British Safety Council ‘Five Star’
accreditation and ‘Sword of Honour’ award for safety
management at our Kingsway Distribution Centre,
demonstrating our commitment to both excellent health
and safety standards and continuous improvement.
• There have been no Local Authority or Fire Authority
enforcement notices served on the Group.
87%
Last Year
This Year
The table below shows how the number of enforcement
notices served on the company per calendar year has
reduced over the 10 year period since 2007.
3rd Party Audit in Date
7%
0%
Audit Required
6
5
4
3
2
1
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
• There was one prosecution for breaches of fire safety regulations which occurred in 2015 at our JD and Scotts Merryhill
stores and we were fined £60,000 in the year as a result.
4500
4000
3500
3000
2500
2000
1500
1000
500
0
64
1/31/2009
1/31/2010
1/31/2011
1/31/2012
1/31/2013
1/31/2014
1/31/2015
1/31/2016
1/31/2017
1/31/2018
JD Sports Fashion PLC
FTSE All Share General Retailers Index
Strategic Report
Corporate and Social Responsibility
Health and Safety (continued)
Environment
Our commitment to continuous health and safety
improvement is demonstrated by:
• The further development across the Group of our
web based, online induction and training programme
ensuring every colleague has the competence,
understanding and awareness to work safely and at
minimum risk.
• Safety input into all our new and refitted stores from the
initial design through to opening. Our health and safety
team conducts its own audit programmes to ensure
the highest safety standards are maintained during the
construction phase of all our shop-fit projects.
• The policies and processes review process that is in
place, with the aim of implementing best practice in all
areas of our business. During the year we have reviewed
our Group Health and Safety Policy and our Group
Asbestos Management Policy and established a new
safety improvement plan for our distribution team.
• Our quarterly Group and monthly distribution centre
health and safety committee meetings, allow colleague
engagement with everyone having the opportunity to
raise safety concerns through their representatives.
• All UK companies with warehousing and distribution
activity receive bi-annual internal health and safety
audits to assess the level of compliance with Group
health and safety standards.
Our focus in the coming year will be:
• Maintaining the British Safety Council accreditation
‘five star’ rating for our Kingsway distribution centre.
• Managing safety in all our stores and ensuring no local
Authority or Fire Authority enforcement notices are
served on the Group.
• To further improve the level of compliance with Group
standards across all international operations.
The Group embraces its responsibility to manage the impact
that its businesses have on the environment and is committed
to carrying out its activities with due consideration for the
potential environmental impact, both now and in the future.
Whilst we continue to ensure compliance with the UK
Government’s Carbon Reduction Commitment legislation,
the Group has undertaken, or invested in, a number of
additional projects and actions to further reduce our
environmental footprint. The Group has an Environmental
Policy which sets out our commitment to reducing pollution
and advancing our environmental performance.
During the period we have undertaken a full review of
our environmental management processes (within our
core UK trading operations) to identify further areas of
improvement. The purpose of this review was to provide
a platform for the introduction of an Environmental
Management System (‘EMS’). Over the coming year we
plan to introduce the Environmental Management System
(‘EMS’), detailing our outlined targets and objectives in
the following areas:
• Ensuring efficient use of energy and other raw materials.
• Maximising the amount of our waste that is or can
be recycled.
• Ensuring compliance with relevant legislation and codes
of best practice.
Energy
Basic Principles
The Group’s core business is retail and our various store
fascias aim to give customers an enjoyable retail experience
with goods displayed attractively in an environment that is
both well-lit and sustains a pleasant ambient temperature.
However, the Group accepts that all our businesses
(regardless of territory) must be responsible with their
respective energy usage and associated carbon emissions.
65
Strategic Report
Corporate and Social Responsibility
Energy (continued)
Carbon Management Programme
The Group maintains a Carbon Management Programme (‘CMP’) which is sponsored by the Chief Financial Officer and
is reviewed regularly. The objectives of this programme are:
Objective
Action & Progress
1. Reduce energy usage in non-trading periods
2. Reduce energy usage through investment in lighting technology
In the period to 3 February 2018, the Group has invested in Building
Management Systems (BMS) in a further 279 of its highest energy
consuming stores in the UK. The project covers all fascias and is delivering
average energy savings of 20%. In the period, we have successfully trialled
the technology in the Go Outdoors estate with similarly positive results.
We will continue to install BMS in all new stores as standard, with further
retrofits scheduled for 2018.
Following the average improvement in power efficiency of 11% achieved
by improving the design of the 23 Watt LED lamps in previous periods, we
continue to work with our lighting suppliers and have, this year, improved
the specification of our batten lamps. These batten lamps are now standard
specification for all new shopfits, delivering an average of 30% improvement
in power efficiency compared to our previous design. Our standard retail
lighting scheme continues to use LED lamps with motion sensors in both
changing room and non-retail areas. Furthermore, we have successfully
retro-fitted in the Go Outdoors estate with positive results. The Group
has approved funding for a project to complete the LED project for the
balance of our estate.
3. Reduce energy usage through staff awareness and training
Retail colleagues have a key role to play in the execution of the CMP.
All new staff receive online training in energy management as part of
our induction programme.
4. Ensure all business activities are aware of their impact on
energy consumption
A multi-disciplined approach to the CMP is adopted with considerable focus
also given to reducing usage in the Group’s warehouses and offices.
5. Ensure that the CMP applies to all businesses in all territories
The CMP applies to all businesses in the Group. For stores added by the
Group through acquisitions, we work closely with local management teams
to identify gaps and implement group strategies.
6. Purchase energy competitively from sustainable sources wherever possible
The Group already sources 100% of its electricity requirement for its sites in
the UK and Ireland from renewable sources. This has now been extended
on a similar basis through a new contract in the Netherlands, Italy, Belgium,
Sweden and Denmark. Newly acquired businesses are migrated to the
Group’s sustainable supply contracts wherever possible.
Percentage of Worldwide Operations Supplied by Renewable Sourced Energy
Renewable Sourced Energy
Non Renewable
The percentage is calculated based on the revenue of the businesses
supplied by renewable sourced energy as a % of the total revenue of
the Group for the financial period ended 3 February 2018.
66
100%1.21.41.61.82.00.8Fixed elements of rumunerationVariable element of rumuneration0.60.40.20.01.00.80.60.40.20.067%50%100%70%54%MinimumOn Target33%50%£1.7m46%£0.6m30%£0.3m£0.5m£1.3m£0.9mP Cowgill Executive ChairmanMaximum41743993020152016Year20172018MinimumOn TargetB Small Chief Financial Officer Maximum350040004500300025002000150010005001638132241743993020152016Year201720186000500040003000200010001638132218.5%1.8%3.2%1.4%1.0%1.1%2.4%15.4%55.2%25%100%80%60%40%20%0%50%13%No Audit Required68%87%3rd Party Audit in Date 7%0%Audit Required Last YearThis Year 2007200820092010201120122013201420152016201765432100500100015002000250030003500400045001/31/20181/31/20171/31/20161/31/20151/31/20141/31/20131/31/20121/31/20111/31/20101/31/200978%22%JD Sports Fashion PLCFTSE All Share General Retailers Index
67
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Corporate and Social Responsibility
Energy (continued)
Objectives for 2018 / 2019
KPIs
The Group is committed to using and subsequently
reporting on KPIs for energy usage. Accordingly, the
Group can report the figures below, calculated based on
GHG Protocol Corporate Standard using emissions factors
from UK government conversion factor guidance for the
year reported. The emissions reported correspond with
our financial year and reflect emissions from the leased
and controlled assets for which the Group is responsible.
Emissions are predominantly from electricity use for
our UK operations, some of which act as supporting
infrastructure for our international businesses.
The Group is committed to investing in the necessary
resources to help achieve its targets on reducing carbon
emissions, with the following works planned for the year
to 2 February 2019:
• Undertake a packaging review within our core UK
distribution network to identify further opportunities to
reduce usage.
• Introduce an Environmental Management System (‘EMS’).
• Continue to expand the reach of the CMP by working
with the newly acquired businesses.
Global GHG emissions from:
2017 / 2018
Tonnes CO2
Equivalent
2016 / 2017
Tonnes CO2
Equivalent
• Continue with the retrofit LED lighting project in our Go
Outdoors estate.
Combustion of fossil fuels in Group facilities (i)
Purchased electricity, heat, stream & cooling
4,237
41,579
7,222
36,697
• Invest further in the use of building management
systems to allow remote monitoring and control of
building services.
Intensity measurement (ii)
Emissions reported above normalised
to per £m revenue
(i)
Excludes facility F-Gas emissions
0.15
0.19
• Ensure compliance with our Energy Savings Opportunity
Scheme (‘ESOS’) obligations for the 2019 deadline.
Interaction with Pentland Group Plc
Under the current rules of the statutory Carbon Reduction
Commitment Energy Efficiency scheme (‘CRC’), the
Group’s submission to the UK Environment Agency is
aggregated with that of Pentland Group Plc which is
the Group’s ultimate holding company (see note C22).
The Group continues to work closely with Pentland Group
Plc to ensure consistent, high quality reporting in relation
to the emissions trading scheme introduced in April 2010,
as part of the CRC.
(ii) Like for like businesses that have contributed full years in both years
Whilst it is not a mandatory disclosure, the Group remains
committed to presenting data appertaining to energy
usage and carbon footprint. This is on a ‘like for like’ basis
in respect of those locations in the Group’s core operations
in the UK and Republic of Ireland that have been present
for the full year in both years:
Energy Usage – Electricity (MWh)
Energy Usage – Natural Gas (MWh)
Total Energy Use (MWh)
Carbon Footprint (Tonnes CO2)
2018
57,789
1,411
59,200
20,576
2017
% Change
59,812
1,467
61,279
24,916
-3%
-17%
In circumstances where data is not available, for example
when businesses which have been recently acquired or
where their contribution is not material at this time, an
accepted method of estimation has been applied based
on the revenue of each business.
69
Strategic Report
Corporate and Social Responsibility
There are three other main elements to our recycling
strategy:
• Confidential paper waste is shredded on collection by a
recycling business. This business provides a ‘Certificate
of Environmental Accomplishment’ which states that
the shredded paper, which was collected in the year,
was the equivalent of 3,710 trees (2017: 3,954).
• Photocopier and printer toners (laser and ink) are
collected and recycled for charity by Environmental
Business Products Limited.
• Food waste is separated where possible and reused in
the production of compost or animal feed.
Approximately 48% of the bags issued by the Group’s
businesses are our iconic, high quality drawstring duffle
bags, the re-use of which is visually evident from the high
street to the high school. Whilst our duffle bags are heavily
re-used, the Group seeks to minimise the associated
environmental impact by ensuring that the duffle bags are
made from 33% recycled material.
The Group uses paper-based bags rather than plastic bags
in its stores in the Republic of Ireland and Germany, and
complies with recent legislation changes made in Belgium,
parts of Spain, and Malaysia. We continue to remain fully
compliant with the carrier bag charge schemes across the
United Kingdom.
100% of the proceeds from the carrier bag charges (net of
VAT) are passed to the JD Foundation for annual
distribution as follows:
• England: £0.5 million received in the period to 3
February 2018. 50% of the funds are passed to Mountain
Rescue in England and Wales with the remaining 50%
donated to other charitable causes in accordance with
the objects of the JD Foundation.
• Wales: £0.02 million received in the period to 3 February
2018. 50% of the funds are passed to Mountain Rescue in
England and Wales with the remaining 50% donated to
other charitable causes in accordance with the objects
of the JD Foundation.
• Scotland: £0.1 million received in the period to 3
February 2018. 50% of these funds are passed to
Scottish Mountain Rescue with the balance 50%
donated to other charitable causes in accordance with
the objects of the JD Foundation.
3,993
4,174
Plastic Bags
Recycling
Wherever possible, cardboard (the major packaging
constituent) is taken back to the Group’s distribution
centres. The cardboard is then baled and passed to
recycling businesses for reprocessing. During the year, the
amount of cardboard recycled increased to 4,174 tonnes
(2017: 3,993 tonnes). This has been driven by the move
to reusable ‘tote’ boxes within our distribution network,
resulting in the retention of inward delivery cardboard
boxes at Kingsway which are recycled at source.
Tonnes of Cardboard Recycled at Kingsway Distribution Centre
6,000
5,000
4,000
3,000
2,000
1,000
0
1,638
1,322
2015
2016
2017
2018
Year
The Group continues to expand its use of the Dry Mixed
Recycling (‘DMR’) schemes to all its stores and businesses
in the UK, Ireland, the Netherlands and Belgium to maximise
waste diversion from landfill. The scheme will be rolled out
to our remaining territories and acquired businesses in due
course, subject to sufficient DMR infrastructure existing
within the respective countries. In the period to 3 February
2018 we recycled 98% (2017: 95%) of our DMR waste,
with the remainder being used as an energy-from-waste
(EfW) material.
Our main distribution facility (Kingsway Distribution
Centre) continues to be a zero waste to landfill site
with further investment in the period in our recycling
infrastructure
including the purchase of two new
commercial baling machines capable of processing
20 tonnes of material an hour. We continue to look for
additional opportunities to reduce our environmental
footprint, with the Group taking ownership of the
waste generated on the project to expand our principal
warehouse at Kingsway from the main contractor to
ensure the maximum amount of material was recycled.
To date we have recycled over 90% waste on this project.
70
Strategic Report
Corporate and Social Responsibility
JD Group Code of Conduct
• Employment is freely chosen. There must be no forced labour, bonded or involuntary
• Freedom of Association and the right to collective bargaining must be respected
• Workers conditions are safe and hygienic
• Child labour shall not be used
• Living wages are paid in line with local laws and for a standard working week, overtime must be paid at
a premium rate
• Working hours must not be excessive and must be voluntary
• No discrimination
• Regular employment is provided
• No harsh or inhumane treatment is tolerated
• Health & safety of workers is paramount in all areas of our business, direct or otherwise
Ethical Sourcing
Establishing Relationships with Second Tier Suppliers
Over many years we have established links with the
factories, mills and dye houses we utilise across the globe.
This mapping has identified almost 100,000 workers
involved in our retail and manufacturing supply chain. This
strategy is on-going and will cascade down the supply
chain as we incorporate trim suppliers in the next phase.
This process has a dual function as it has enabled us to
identify and develop a risk based assessment in our
on-going REACH project. REACH (the Registration,
Evaluation and Authorisation of Chemicals) is a regulation
of the European Union, adopted to improve the protection
of human health and the environment from the risks that
can be posed by chemicals used in the manufacture of our
textile products.
The Group feel that this mapping process is critical to
our ongoing support of our partners and how we can
help affect the lives of their workers in a positive manner.
The Group will only work with those suppliers who are
committed to working to our standards and to improving
conditions for our shared workforce.
The Group continues to review its policies on ethical
sourcing on a regular basis and works with its suppliers
to improve conditions in their many factories around the
world. Our intention is that all businesses within the Group
are compliant with our Group policy and we will continue
to work towards this, with a focus each year on those
businesses that have been recently acquired.
We are working hard to establish full mapping of our
supply chain. This is a long term strategy as it is a
constantly changing environment, involving many countries
and regions.
The Group insists on full transparency of locations
involved in the supply chain. The Group regularly visits
its factories and promotes the importance of longer term
relationships. New suppliers are carefully evaluated on a
need / unique selling proposition basis prior to beginning
the compliance process and are required to adhere to
our established policies. Longer term relationships not
only assist in the management of the supply base but
also give those suppliers working with us the confidence
to invest in and develop their own businesses on a long
term basis. Subcontracting is expressly forbidden without
authorisation and verification.
The Group Code of Conduct
The JD Sports Fashion Plc code of conduct is contained
in our private label and supplier terms and conditions.
The standards defined at the top of this page are the
minimum standards required.
71
Strategic Report
Corporate and Social Responsibility
Transparency of Supply Base
• 147 Agents
• 293 Factories
• 17 Sourcing Countries
• 5 Stockholding Transit Warehouses
• 3 Transit Trunk Hubs
Our main sourcing regions are in Asia, India and Turkey. The graph below illustrates the sourcing value in sterling
by country for all entities which source private label products being; JD UK, Blacks Outdoor Retail Limited,
Focus International Limited, Go Outdoors Limited, Kukri Sports Limited (including subsidiary companies), Nicholas
Deakins Limited, Topgrade Sportswear Limited, Sports Unlimited Retail B.V, Sprinter Megacentros Del Deporte SLU,
2Squared Retail and 2Squared Agency.
Sourcing Value in Sterling by Country (£m)
China £134.0m (55.2%)
Vietnam £44.9m (18.5%)
Turkey £37.4m (15.4%)
India £7.8m (3.2%)
Bangladesh £4.4m (1.8%)
Pakistan £3.1m (1.4%)
United Kingdom £2.7m (1.1%)
Myanmar £2.5m (1.0%)
Other £5.6m (2.4%)
72
100%1.21.41.61.82.00.8Fixed elements of rumunerationVariable element of rumuneration0.60.40.20.01.00.80.60.40.20.067%50%100%70%54%MinimumOn Target33%50%£1.7m46%£0.6m30%£0.3m£0.5m£1.3m£0.9mP Cowgill Executive ChairmanMaximum41743993020152016Year20172018MinimumOn TargetB Small Chief Financial Officer Maximum350040004500300025002000150010005001638132241743993020152016Year201720186000500040003000200010001638132218.5%1.8%3.2%1.4%1.0%1.1%2.4%15.4%55.2%25%100%80%60%40%20%0%50%13%No Audit Required68%87%3rd Party Audit in Date 7%0%Audit Required Last YearThis Year 2007200820092010201120122013201420152016201765432100500100015002000250030003500400045001/31/20181/31/20171/31/20161/31/20151/31/20141/31/20131/31/20121/31/20111/31/20101/31/200978%22%JD Sports Fashion PLCFTSE All Share General Retailers Index 2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
4500
4000
3500
3000
2500
2000
1500
1000
500
0
6000
5000
4000
3000
2000
1000
0
£1.7m
50%
£1.3m
33%
£0.9m
Fixed elements of rumuneration
Variable element of rumuneration
£0.6m
46%
£0.5m
30%
£0.3m
100%
67%
50%
100%
70%
54%
0.8
0.6
0.4
0.2
0.0
Minimum
On Target
Maximum
Minimum
On Target
Maximum
P Cowgill Executive Chairman
B Small Chief Financial Officer
4174
3993
2015
2016
Year
1638
2017
3993
1322
2018
4174
1638
1322
2015
2016
2017
2018
Year
22%
1.1%
1.8%
1.4% 1.0%
2.4%
3.2%
15.4%
Strategic Report
78%
Corporate and Social Responsibility
55.2%
We consider the protection of those workers in our supply chain paramount and we will continue to have a zero tolerance
to critical issues identified either by Group personnel or third party auditors relating to a safe working environment.
Critical issues are defined as an issue that impacts workers causing hardship or harm.
18.5%
87% of the Group factories are audited by a third party which, as shown to the right, represents 100% of the
factories where an audit is required. The remaining 13% of factories did not require an audit due to the low level of spend
or 2017 / 2018 was the first year we have worked with these factories.
Audit Status Last Year vs This Year
100%
80%
60%
40%
20%
0%
68%
50%
25%
13%
87%
Last Year
This Year
7%
0%
No Audit Required
3rd Party Audit in Date
Audit Required
Modern Slavery
6
Human Rights
3
5
4
This year we will be working with our third party auditors
to widen the scope of our ethical audits to include Modern
Slavery indicators. Following the training of our Head
Office staff involved in overseas procurement, we have
developed an Asia specific training model which has
been uploaded onto our third party’s e-learning platform.
This gives training to over 170 auditors across Asia and
Turkey. We are confident this will promote awareness
and allow the inspection companies to identify potential
areas of concern and improve the lives of workers and the
understanding worldwide of the plight of modern slaves.
It is important that everyone involved is aware of these
issues, learn to identify them and work to resolve them.
2
1
0
The Group endorses the principles set out in the United
Nations Universal Declaration of Human Rights and
the International Labour Organisation’s Declaration on
Fundamental Principles and Rights at Work which seek
to ensure safe and fair working conditions on a global
scale. Our suppliers are selected upon and contractually
committed to the Group on the basis of their adherence
to these principles.
2007
2008
2009
2010
2011
As the world’s workforce becomes more transient we
recognise that ensuring our workers are recruited properly
and fairly is critical. We will be working to ensure that no
exploitation takes place in the procurement of workers
both at home and abroad.
4500
2012
2013
2014
2015
2016
2017
Brian Small
Chief Financial Officer
16 April 2018
4000
Improving Futures
3500
This year we are hoping to engage our partners in China
3000
in the promotion of the Social Insurance system which,
although still a complicated system, is now transferable
2500
between regions. The Social Insurance system covers
contributions to pensions, unemployment, medical
2000
provision, work related injury and maternity insurance.
It is a dual contribution system paid by the employer
and the employee. The Group will work with all its first
tier suppliers to promote the benefits with the aim of
1000
increasing uptake of the scheme.
1500
500
0
1/31/2009
1/31/2010
1/31/2011
1/31/2012
1/31/2013
1/31/2014
1/31/2015
1/31/2016
1/31/2017
1/31/2018
JD Sports Fashion PLC
FTSE All Share General Retailers Index
73
Strategic Report
Corporate and Social Responsibility
Overview
The JD Foundation was founded in October 2015. In
the period from October 2015 to January 2018, the JD
Foundation has raised £1.9 million with 93% (£1.8 million)
donated to charity. 100% of all monies raised by the JD
Foundation excluding bank charges and audit fees, are
distributed to charities, any remaining amount is reserved
for emergency funding.
The mission of the Foundation is to support charities
working with disadvantaged young people in the UK.
In 2017 we supported ten charities plus we were able
to donate £50,000 from our emergency funding to the
We Love Manchester Emergency Fund and the British
Red Cross.
We have just committed our support to 13 charities
across 2018 / 2019.
Environmental Charities
Our environmental charities are Scottish Mountain
Rescue and Mountain Rescue England and Wales, who
both receive 50% of the net proceeds from the sale
of carrier bags with no deductions made for the cost of
production of the carrier bags or other operating costs.
£265k raised for Scottish Mountain Rescue & Mountain
Rescue England & Wales from the carrier bag charge in
Scotland, England & Wales during the year.
Salford Foundation Aspire to Inspire mentoring programme
In February 2017, the new ‘Inspired to Aspire’ Mentoring
Programme was launched at an event co-ordinated by the
BBC and the Salford Foundation.
Young people currently in education are assisted to
develop knowledge and understanding of the world of
work. The programme also explores ways of providing
workplace exposure and skills for young people who are
not in education or employment.
JD has committed to support the mentoring programme
and people from the business volunteer to visit local schools
in the Trafford, Salford and Bury areas to mentor groups
of people from years 8 and 9. People from year 10 will be
mentored on a one-to-one basis. Our mentors are trained
by the Salford Foundation and receive support from the
JD Group. The mentor programme is now embedded in the
JD Sports Management Development Programme.
74
Strategic Report
Corporate and Social Responsibility
CRY – The Aaron James Dixon Memorial fund / Screening Days
With the donations from the JD Foundation, CRY
have been able to hold six screening days in 2017 and
we have also been able to book and confirm 12 screening
days across 2018 & 2019:
A Screening Day costs £5,000 and 100 young adults aged
between 14-35 are screened for undetected heart defects.
During the six screening days in 2017:
• 498 young people were screened.
• 15 referred for a full cardiac evaluation.
• 2 of these screening days were held at JD Sports Head
Office where 206 of our employees were screened with
seven referrals.
• 4 of these screening days were held at external sites
across the North West.
Smiling Families – Christmas Appeal
The JD Head Office supported Smiling Families for
a second year in their Christmas Gift Appeal. Smiling
in
Families are a small family run charity based
Birmingham, who deliver presents to terminally
ill
children over the Christmas period. Via the magic that
is “Father Christmas, his Elves and Frosty the Snowman”
they deliver the gifts donated by our JD colleagues, to
their nominated families who are too ill to travel to their
local grotto. With the help and generosity they were
able to reach even more families in Christmas 2017
than ever before, creating more amazing memories
for families who are going through a difficult time
battling illness.
“I can honestly say that without
The JD Foundation there would
be no Smiling Families, I had
really started to struggle for
support over the last two years,
being so small people tend to
overlook us. We do not get
monetary donations other than
the wonderful help JD Foundation
has given us.”
Kerry from Smiling Families
retailHUB – Wellbeing Strategy
The Retail Trust provide a free, confidential support
service that aids the emotional and financial wellbeing
of our colleagues, their families and direct dependants
in times of need.
As a key component in our Wellbeing Strategy, 200 of
our employees were helped directly by the Retail Trust
in 2017. We are absolutely committed to supporting
our colleagues.
JD Foundation Charities Event
Held across two days in March at Holcombe Moor Training
Centre. Mountain Rescue England & Wales organised
the two day outdoor activity event for a number of
children/young adults who are supported by a selection of
charities that the JD Foundation support.
75
Strategic Report
Corporate and Social Responsibility
Staff Sponsorship
Exceptional Fundraising / Mollie Hughes
Outside the remit of the JD Foundation, we also recognise
exceptional fundraising within our team…
Mollie Hughes works in the Tiso Head Office in Edinburgh
as a content blogger for Tiso’s website and social media
channels, and is also an Ambassador for Tiso. In 2017,
Mollie fulfilled a dream with her climbing partner and
guide, Jon Gupta of Mountain Expeditions and her
trusted Sherpa team of Lhakpa Wongchu Sherpa and
Lila Bahadur Tamang, and stood on the summit of
Mount Everest (8,848m) for the second time.
On this occasion, Mollie had reached the roof of the world
by ascending the notoriously windy and cold north side
of the mountain from Tibet.
In 2012, at the age of 21, Mollie ascended the mountain
from the south side. Now, aged 26 she holds the record
of being the youngest woman in the world to have
successfully ascended the world’s highest peak from both
north and south.
The JD Foundation applaud Mollie’s expedition as an
outstanding achievement. The trustees were delighted
to donate £8,848, being £1 for every metre that she
climbed, to her chosen charity in recognition of her
exceptional achievement.
76
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Governance
The Board
Executive Directors
Peter Cowgill
Executive Chairman and Chairman of the
Nomination Committee
– Aged 65
Peter was appointed Executive Chairman in March
2004. He was previously Finance Director of the
Group until his resignation in June 2001. He is the
Non-Executive Chairman of United Carpets Plc and
a Non-Executive Director of Better Bathrooms (UK)
Limited. Peter was appointed as the Non-Executive
Chairman of Quiz Plc in July 2017.
Brian Small
Chief Financial Officer
– Aged 61
Brian was appointed Chief Financial Officer
in January 2004. Immediately prior to his
appointment he was Operations Finance
Director at Intercare Group Plc and has also
been Finance Director of a number of other
companies. He qualified as an accountant
with Price Waterhouse in 1981.
Non-Executive Directors
Andrew Leslie
Martin Davies
Non-Executive Director, Chairman of the
Remuneration Committee and Member of the Audit
and Nomination Committees
– Aged 71
Non-Executive Director, Chairman of the Audit
Committee and Member of the Nomination and
Remuneration Committees
– Aged 58
Andrew was appointed to the Board in May 2010.
He has over 40 years of experience in the retail,
footwear and apparel sectors. He was an Executive
Board Director of Pentland Brands Plc, from which
he retired in 2008. Andrew also held a number
of senior positions with British Shoe Corporation,
The Burton Group Plc and Timpson Shoes Limited.
Martin was appointed to the Board in October
2012. Martin also holds the position of Chairman
of Sentric Music Limited. He was previously Group
Chief Executive of Holidaybreak Plc from 2010 until
its sale to Cox and Kings Limited in 2011. He joined
the Board of Holidaybreak Plc in 2007 when it
acquired PGL where he had been Chief Executive.
He left Holidaybreak Plc in 2012. Previously,
he has had roles at Allied Breweries,
Kingfisher and Woolworths.
Heather Jackson
Andy Rubin
Non-Executive Director, Member of the Audit,
Nomination and Remuneration Committees
– Aged 52
Non-Executive Director
– Aged 53
Heather was appointed to the Board in May
2015. Heather has extensive experience in IT
and change management. Heather is currently
Managing Director at Actinista 2016 Limited and
a Non-Executive Director of Ikano Bank AB. Her
former roles have included CIO and COO of HBOS
Plc and other director level roles with Capital One,
Boots the Chemist and George at Asda.
Andy was appointed to the Board in February
2016. Andy is Chairman of Pentland Brands,
a Director of Pentland Group Plc and the
European Vice-President of the World
Federation of the Sporting Goods Industry.
7979
Governance
Directors’ Report
Directors’ Report
Share Capital
The Directors’ Report is required to be produced by law.
Pages 80 to 82 inclusive (together with the sections of
the Annual Report incorporated into these pages by
reference) constitute a Directors’ Report that has been
drawn up and presented in accordance with applicable law.
The Directors’ Report also includes certain disclosures that
the Company is required to make by the Financial Conduct
Authority’s Disclosure Guidance and Transparency Rules
and Listing Rules.
Fair, Balanced and Understandable
The Board considers that the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders
to assess the Company’s position and performance,
business model and strategy. A summary of the Directors’
responsibilities in respect of the Annual Report and
Financial Statements is set out on page 107.
As at 3 February 2018, the Company’s issued share capital
was £2,433,083 comprising 973,233,160 ordinary shares
of 0.25p each.
Shareholder and Voting Rights
Save as provided in the Company’s Articles of Association,
all members who hold ordinary shares are entitled to
attend and vote at the Company’s Annual General Meeting.
On a show of hands at a general meeting, every member
present in person or by proxy shall have one vote and, on
a poll, every member present in person or by proxy shall
have one vote for every ordinary share they hold. Subject
to relevant statutory provisions and the Company’s
Articles of Association, holders of ordinary shares are
entitled to a dividend where declared or paid out of profits
available for such purposes. Details of the interim and final
dividends proposed are provided in the Dividends and
Earnings Per Share section of the Executive Chairman’s
Statement on page 39.
Principal Activity
The principal activity of the Group is the retail of
multibranded sports fashionwear and outdoor clothing
and equipment.
The restrictions on the transfer of shares in the Company
are as follows:
Restrictions on Transfer of Shares
In accordance with the Companies Act 2006, a review of
the business providing a comprehensive analysis of the
main trends and factors likely to affect the development,
performance and position of the business, including an
assessment of relevant environmental, employee, social,
community and human rights issues, together with the
Group’s Key Performance Indicators and a description of
the principal risks and uncertainties facing the business
is detailed in the Strategic Report on pages 43 to 76.
These elements, along with the Company’s commitment
to good corporate governance, as set out in the Corporate
Governance Report, are critical to the integrity of the
business and maintaining good relationships with all key
stakeholders of the Company.
The Corporate Governance Report (pages 85 to 89) is
incorporated by reference into, and is deemed to form
part of, this report. For the purposes of DTR 4.1.5R(2)
and DTR 4.1.8, this Directors’ Report and the Strategic
Report on pages 43 to 76 comprise the Company’s
management report.
Details of the Group’s use of financial instruments,
together with information on policies and exposure to
interest rate, foreign currency, credit and liquidity risks,
can be found in Note 19 to the financial statements. The
information included in Note 19 is incorporated into the
Directors’ Report and is deemed to form part of this
Directors’ Report.
•
The Board may, in its absolute discretion, refuse to
register any transfer of shares which are not fully paid
up (but not so as to prevent dealings in listed shares
from taking place), or which is in favour of more than
four persons jointly or which is in relation to more than
one class of share.
• Certain restrictions may, from time to time, be
imposed by laws and regulations (for example, insider
trading laws).
•
Restrictions apply pursuant to the Listing Rules
(LR) and the Market Abuse Regulation (MAR) of the
Financial Conduct Authority. The Company has in
place a share dealing policy which includes processes
which must be followed to ensure that any transfer of
shares activity is conducted in compliance with MAR
and the LR and that all Directors and certain Company
employees obtain prior approval before dealing in the
Company’s shares.
The Company is not aware of any arrangement between its
shareholders that may result in restrictions on the transfer
of shares and / or voting rights.
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Substantial Interests in Share Capital
Appointment and Replacement of Directors
As at 3 February 2018, the Company has been advised of
the following significant holdings of voting rights in its
ordinary share capital pursuant to the Disclosure Guidance
and Transparency Rules of the Financial Conduct Authority
(‘DTRs’):
Pentland Group Plc
Aberdeen Standard Investments
Fidelity Management and Research LLC
Number of
ordinary
shares/ voting
rights held
% of
ordinary
share
capital
559,274,440
57.47
64,414,948
43,267,531
6.62
4.45
The Company has not been notified of any significant
changes in interests pursuant to the DTRs between
3 February 2018 and the date of this report.
Relationship Agreement
In accordance with LR 9.2.2 AD R (1), the Company has
entered into a written and legally binding relationship
agreement with its controlling shareholder, Pentland Group
Plc. The Company has complied with the undertakings
in the relationship agreement during the
included
period under review. So far as the Company is aware, the
undertakings in the agreement have also been complied
with by both Pentland Group Plc and its associates during
the period under review.
Directors
Details of all persons who were Directors during the 53
week period including their roles and brief biographical
details are set out on page 79. The Directors are responsible
for the management of the business of the Company and,
subject to law and the Company’s Articles of Association
(‘Articles’), the Directors may exercise all of the powers of
the Company and may delegate their power and discretion
to committees.
There are no agreements between the Company and its
Directors or employees providing for compensation for
loss of office or employment (whether through resignation,
purported redundancy or otherwise) that occurs because
of a takeover bid.
Directors’ Interests
Details of Directors’ interests (and those of their connected
persons) in the share capital of the Company are set out
on page 97. This information is incorporated into this
Directors’ Report by reference and is deemed to form a
part of it.
The number of Directors at any one point in time shall not
be less than two.
The Company’s Articles of Association provide that the
Company may by ordinary resolution at general meeting
appoint any person to act as a Director, provided that
(where such person has not been recommended by the
Board) notice is given by a member entitled to attend
and vote at the meeting of the intention to appoint such
a person and that the Company receives, among other
information, confirmation of that person’s willingness to
act as Director. The Articles also empower the Board to
appoint as a Director any person who is willing to act as
such. The maximum possible number of Directors under
the Articles is 20.
In addition to the powers of removal conferred by statute,
the Company may by ordinary resolution remove any
Director before the expiration of his or her period of office.
The Articles also set out the circumstances in which a
Director shall vacate office.
The Articles broadly require that at each AGM one-third
of eligible Directors shall retire from office by rotation and
may stand for re-election and that any Director who was
appointed by the Board after the previous AGM must retire
from office and may stand for election by the shareholders.
Additionally, any other Director who has not been elected
or re-elected at one of the previous two AGMs must also
retire from office and may stand for re-election.
Notwithstanding the provisions of the Articles, the
Board has determined that all the Directors will stand
for re-election at the 2018 AGM in accordance with the
best practice recommendations of the UK Corporate
Governance Code.
Amendment of the Company’s Articles of Association
The Company’s Articles of Association may only be
amended by a special resolution at a general meeting
of shareholders.
Change of Control – Significant Agreements
In the event of a change of control of the Company,
the Company and the lenders of the £215 million bank
syndicated facility shall enter into an agreement to
determine how to continue the facility. If no agreement
is reached within 20 business days of the date of change
of control, the lenders may, by giving not less than 10
business days’ notice to the Company, cancel the facility
and declare all outstanding loans, together with accrued
interest and all other amounts accrued immediately due
and payable.
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Governance
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Employees
Auditor
The Group communicates with its employees through team
briefs and via the Company’s intranet and notice boards.
Views of employees are sought on matters of common
concern via one to one meetings with management, staff
forums and other employee committees. Priority is given to
ensuring that employees are aware of all significant matters
affecting the Group’s performance and of significant
organisational changes.
A key factor in the Group’s employee remuneration
strategy is encouraging the involvement of all employees
in the Company’s performance. Full details of the Group’s
remuneration strategy are set out in the Remuneration
Report on pages 92 to 103.
The Group is committed to promoting equal opportunities
in employment regardless of employees’ or potential
employees’ gender, marital status, sexual orientation,
age, race, religion, ethnic or social origin or disability.
Recruitment, promotion and the availability of training
at all areas within the Group are based on the suitability
and merit of any applicant for the job and full and fair
consideration is always given to disabled persons in
such circumstances.
Should an employee become disabled during his or
her employment by the Group, every effort is made to
continue the employment, development and training of
the employee in question within their existing capacity
wherever practicable, or failing that, in an alternative
suitable capacity.
As set out on page 91, the Audit Committee has
recommended that KPMG be re-appointed as auditor for
the financial year 2018 / 2019 KPMG LLP have indicated
their willingness to continue in office as auditor of the
Company. A resolution proposing their re-appointment
will be proposed to shareholders at the forthcoming AGM.
Disclosure of Information to the Auditor
Each person who is a Director at the date of approval of
this report confirms that:
• So far as they are aware, there is no relevant
audit information of which the Company’s auditor is
unaware; and
• Each Director has taken all the steps that they ought to
have taken as a Director to make themselves aware of
any relevant audit information and to establish that the
Company’s auditor is aware of that information.
Annual General Meeting
The Company’s AGM will be held at 1pm on 28 June
2018 at Edinburgh House, Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR. The notice of this year’s
AGM is included in a separate circular to shareholders
and will be sent out at least 20 working days before the
meeting. This notice will be available to view under the
‘Investor Relations’ section of the Company’s website,
www.jdplc.com/investor-relations.
Post Balance Sheet Events
Details of post balance sheet events are provided in Note
30 of the financial statements.
By order of the Board
Political Donations and Expenditure
Neither the Company nor any or its subsidiaries has made
any political donation or incurred any political expenditure
during the period under review.
Greenhouse Gas Emissions
Details of the Group’s greenhouse gas emissions are
shown in the Corporate and Social Responsibility Report
report on page 69. This information is incorporated into
this Directors’ Report by reference and is deemed to form
part of it.
Brian Small
Chief Financial Officer
16 April 2018
82
83
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Governance
Corporate Governance Report
Corporate Governance Report
It is the role of the Board to ensure that the Group is
managed for the long term benefit of the shareholders,
whilst also ensuring the interests of other key stakeholders
– including employees and suppliers – are protected. The
Board promotes the principles set out in the UK Corporate
Governance Code 2016 as issued by the Financial
Reporting Council (FRC) in April 2016 (the ‘Code’). This
report sets out how the Company has applied the main
principles set out in the Code and the extent to which the
Company has complied with the provisions of the Code.
This report includes relevant provisions of the Code,
where appropriate. The full Code can be found on the FRC
website (www.frc.org.uk).
Chairman of Pentland Brands and a Director of Pentland
Group Plc and is, therefore, not considered by the Board
to be an independent Non-Executive Director. The Board
believes that the Non-Executive Directors have provided
ample guidance to the Board and perform an effective role
in challenging and encouraging the effective leadership
of the Executive Directors, when and in a manner which
is appropriate.
From time to time, the Executive Chairman meets with
the Non-Executive Directors without the other Director
present to discuss Board performance and other matters
considered appropriate.
The Board
Board Composition and Succession
The Board comprises six Directors: the Executive
Chairman, the Chief Financial Officer and four Non-
Executive Directors. Martin Davies performs the role of
senior independent Non-Executive Director. The name,
position and a brief profile of each Director is set out on
page 79.
The membership and composition of the Board is under
continual review and, whilst there were no changes to
the composition of the Board during the financial year to
3 February 2018, any changes would be recommended as
may be deemed appropriate in the best interests of the
Group. The Board is focused on ensuring that succession
planning is a key theme of its review of Board composition
on an ongoing basis. This focus is also applied to the Board’s
review of the composition of the Group’s senior team.
It is noted that Andrew Leslie, Non-Executive Director
and Chairman of the Remuneration Committee, will have
been in office for nine years in 2019 and, therefore, his
position on the Board will be reviewed by the Nominations
Committee during the financial period currently underway.
In accordance with Code provision B.7.1., Andrew Leslie
will be subject to re-election at the AGM this year, as will
all other Directors (as explained further on page 81).
The Board is dedicated to ensuring that it maintains
entrepreneurial leadership within a framework of effective
control and risk management. It is also considered that
the Board’s mix of Executive and Non-Executive Directors
provides an appropriate combination of judgement, skills
and experience to satisfy the Group’s need for overall
effective and agile leadership.
The independence of the Non-Executive Directors is
considered by the Board on an annual basis. All Non-
Executive Directors, save for Andy Rubin, are considered to
be independent by the Board. Andrew Leslie was formerly
an Executive Director of Pentland Brands Plc, a subsidiary
of Pentland Group Plc (‘Pentland’), the Company’s largest
shareholder. Andrew Leslie does not represent the interests
of Pentland on the Board and retired from Pentland Brands
Plc in 2008, and therefore is in excess of the 3 year period
referred to in provision B1.1 of the Code. Andy Rubin is the
The Board considers that all the Directors are able to devote
sufficient time to their duties as Directors of the Company.
The brief biographical detail on page 79 includes details
of the Chairman’s other directorships of listed companies.
The Board is satisfied that these appointments do not
conflict with the Chairman’s ability to carry out his role
effectively for the Group.
A summary of the rules that the Company has in place
about the appointment and replacement of Directors is
set out on page 81. Notwithstanding the provisions of the
Company’s Articles regarding the retirement of Directors,
the Board determined that all Directors will retire at
the 2018 AGM and offer themselves for re-election in
accordance with the best practice recommendation of the
UK Corporate Governance Code.
Board Composition and Diversity
The Board welcomes Board diversity reviews such as
the Davies Review, the Hampton-Alexander Reviews
(of November 2016 and 2017), the McGregor-Smith Review
and the Parker Review.
The Board holds the view that better diversity creates a
more inclusive and accountable corporate culture. The
Board’s overriding and principal aim is to ensure that Board
membership is based on merit given that the relevant skills,
experience and judgement is fundamental to ensuring that
the Board retains entrepreneurial leadership and effective,
strategic management.
Any new appointments to the Board are measured against
purely objective criteria and are based on the merit of
each candidate. The Board is encouraged by the gender
balance within the Company’s senior management team.
Whilst the Board remains committed to ensuring
appointments at all levels of the business, including the
Board, are made on the basis of merit, it recognises the
essential need to ensure the use of a wide talent pool,
targeting a broad range of candidates from various
backgrounds, sectors and cultures.
The Board is committed to ensuring that all recruitment is
conducted on this basis going forward and to continually
monitor this.
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Governance
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Board Operation and Responsibilities
The Board is responsible for the direction, management and performance of the Company. The Directors act together
in the best interests of the Group via the Board and its Committees. The Board held nine scheduled Board meetings
during the year under review and ad hoc meetings were held between scheduled meetings, where required. Directors’
attendance at scheduled Board and Committee meetings is set out below.
Attendance at Board and Committee Meetings
Year to
3 February 2018
P Cowgill
B Small
A Leslie
M Davies
H Jackson
A Rubin
Total Number of Meetings
Total Number of Meetings Attended
Notes:
Board
Meetings
Remuneration
Committee
Audit
Committee
Nomination
Committee
9
9
9
9
9
9
9
9
9
9
9
8
2
2
2
2
2
2
2(1)
-
2
2
2
-
4
4
4
4
4
4
4(1)
4(1)
4
4
4
-
-
-
-
-
-
-
-
-
-
-
-
-
1. P Cowgill and B Small attended the meetings as annotated in the table above at the invitation of the members
of those Committees in order to provide additional detail on day to day matters arising at such meetings and to
assist the Committee members with the matters delegated to the Committee as deemed appropriate by such
Committee members.
Board Evaluation
Having carried out internal evaluations of the performance and effectiveness of the Board in recent years,
the Board deemed it appropriate to carry out an externally facilitated Board evaluation this year. The Board
was keen to obtain the expert advice, perspective and judgement of an external specialist in this area and,
as such, selected Independent Audit to carry out an evaluation exercise. The Group has no prior relationship
or connection with Independent Audit. Specifically, the Board, led by the Senior Independent Director and
facilitated by the Company Secretary, engaged Independent Audit’s online governance assessment service,
Thinking Board. The purpose of the review was to direct the Board’s attention to areas where there might be
opportunities to improve its performance.
The Board and the Company Secretary completed an online self-assessment on an anonymous basis in order to
encourage and promote an open and honest exchange of perspectives from Board members and the Company
Secretary. The key themes of the evaluation were: Making a Difference, Strategy, Information & Communication,
Managing Strategic Risks, How the Board Works and Operation & Effectiveness of the Committees.
Following the completion of such assessment, Independent Audit produced a report, which was then delivered to
the Executive Chairman and Company Secretary in the first instance. The Company Secretary then circulated the
report to the Board for further discussion and decision on the most appropriate actions to be implemented and
monitored throughout the forthcoming financial year.
Matters Reserved for the Board
The Board has a formal schedule of matters reserved specifically to it for decisions which include:
•
•
•
•
strategy setting and major strategic matters;
approval of the Group’s financial statements;
corporate acquisitions and disposals; and
significant capital projects.
The matters reserved for the Board are kept under continual review to ensure they remain appropriate in light
of the size of the Group and the nature of its activities.
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Main Activities of the Board During the Year
• Approved a number of key strategic corporate acquisitions (see Note 11 of the financial statements);
• Approved and participated in an externally facilitated Board evaluation process (as referred to on the
opposite page)
• Considered and approved key health & safety objectives for the forthcoming financial year;
• Considered and approved a significant investment into the expansion of the Group’s warehouse at Kingsway
(see Executive Chairman’s Statement for further details of the expansion); and
•
Reviewed the Group’s plans and objectives for improving the level of compliance with relevant data
protection legislation in light of key legislative changes in the upcoming financial year.
In order to assist the Board in its effective review and decision making regarding the Group’s activities, Board
papers are circulated to Directors prior to Board meetings which include up-to-date financial information, reports
from the Executive Directors and papers on major issues for consideration by the Board. The Board has a formal
procedure for Directors to obtain independent professional advice.
All Board members have full access to the Company Secretary who is a fully admitted solicitor and attends all Board
and Committee meetings. The Company Secretary is responsible for advising the Board on Corporate Governance
and legal matters.
All newly appointed Directors receive an appropriate induction when they join the Board. Relevant training is arranged
throughout the year as deemed appropriate including the attendance at Board meetings by external legal specialists
and/or the circulation of advice notes. In particular, the Board members were provided with a comprehensive written
corporate governance update by the Group’s external legal advisers to ensure that the Board maintains a good level
of understanding of key corporate governance changes and updates in the financial year.
Insurance Agreements
The Company, through its majority shareholder Pentland Group Plc, maintains Directors’ and Officers’ liability insurance,
which is reviewed at appropriate intervals to ensure it remains fit for purpose.
Conflicts of Interest
The Company’s Articles of Association permit the Board to consider and, if it sees fit, to authorise situations where a
Director has an interest that conflicts, or possibly could conflict, with the interests of the Company. The Board considers
that the procedures it has in place for reporting and considering conflicts of interest are effective.
Board Committees
The Board delegates certain powers to Board Committees. There are three principal Board Committees to which the
Board has delegated certain of its responsibilities. The terms of reference for all three Committees are reviewed by each
Committee regularly and are available for inspection on request and are available on the Company’s corporate website
www.jdplc.com.
Audit Committee
The Audit Committee currently comprises three independent Non-Executive Directors; Martin Davies, Andrew Leslie and
Heather Jackson. Martin Davies chairs the Audit Committee. The Board notes that the DTRs now require and the Code
now recommends that the Audit Committee as a whole shall have competence relevant to the sector in which the
company operates. While the Board consider that the composition of the Audit Committee provides the requisite skills and
experience, the Board and the Audit Committee considers it is prudent to conduct an additional review in the financial year
currently underway to satisfy itself as to its sectoral competence.
The Audit Committee met four times in the year with the external auditor attending part of each meeting. Details of
attendance at Audit Committee meetings are set out in the table on the opposite page.
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Key features of the Group’s system of internal control and
risk management are:
• Identification and monitoring of the business risks facing
the Group, with major risks identified and reported to
the Audit Committee and the Board including via brief
monthly updates, more in depth quarterly updates and
an annual risk report preparation and review process.
• Detailed appraisal and authorisation procedures for
capital investment, which is documented in the Matters
Reserved for the Board and the Group’s Contract
Authorisation Policy.
• Prompt preparation of comprehensive monthly
management accounts providing relevant, reliable and
up-to-date information. These allow for comparison
with budget and previous year’s results. Significant
variances from approved budgets are investigated
as appropriate.
• Preparation of comprehensive annual profit and cash
flow budgets allowing management to monitor business
activities and major risks and the progress towards
financial objectives in the short and medium term.
• Monitoring of store procedures and the reporting and
investigation of suspected fraudulent activities.
• Reconciliation and checking of all cash and stock
balances and investigation of any material differences.
In addition, the Audit Committee receives detailed reports
from the external auditor in relation to the financial
statements and the Group’s system of internal controls.
The Group has a formal whistleblowing policy in place
which provides details of how employees can raise
concerns in relation to the Group’s activities or the
actions of any employee of the Group on a confidential
basis. Information about whistleblowing channels is made
available to all store and head office employees and
these have been reviewed in detail during the financial
year in order to ensure that there is an acceptable and
appropriate channel to report concerns relating to modern
slavery, along with any other areas of concern held by any
employee of the Group.
It is the Group’s policy to conduct all of its business in an
ethical manner. The Group takes a zero tolerance approach
to bribery and corruption, amongst its employees, suppliers
and any associated parties acting on the Group’s behalf.
The Group has a detailed Anti-Bribery and Corruption
Policy and is committed to acting professionally, fairly and
with integrity in all its business dealings and relationships
and to implementing effective systems to counter bribery,
which involves conducting an appropriate audit process at
suitable intervals.
Remuneration Committee
The Remuneration Committee currently comprises three
independent Non-Executive Directors; Andrew Leslie,
Martin Davies and Heather Jackson. Andrew Leslie is the
chair of the Remuneration Committee.
The Committee’s principal duties are to determine:
•
•
•
•
overall Group remuneration policy;
remuneration packages for Executive Directors and
senior management;
the terms of Executive Director service contracts as
may be required from time to time; and
the terms of any performance-related and/or long
term incentive schemes operated by the Group and
awards thereunder.
The Committee met twice during the year. Details of
attendance at Remuneration Committee meetings are set
out in the table on page 86.
Further details about Directors’ remuneration are set out
in the Directors’ Remuneration Report on pages 92 to 103.
Nomination Committee
The Nomination Committee currently comprises Peter
Cowgill, the Executive Chairman, and three independent
Non-Executive Directors, Andrew Leslie, Martin Davies
and Heather Jackson. The Executive Chairman is the chair
of the Nominations Committee.
The Committee’s principal duties are to consider the
size, structure and composition of the Board, ensure
appropriate succession plans are in place for the Board and
senior management and, where necessary, consider new
appointments to the Board and senior management. The
Nominations Committee did not formally meet during the
financial year, however, the matters delegated to the remit
of the Nominations Committee (including Board structure,
succession planning and the performance of the Board
and the senior management) were considered informally
by the members of the Committee on an ad hoc basis at
appropriate times during the year. From time to time, the
full Board performs some of the duties of the Nomination
Committee, as was the case during the last financial year.
Internal Control
There is an ongoing process for identifying, evaluating and
managing the significant risks faced by the Group. This
process has been in place for the year under review.
The Board, in conjunction with the Audit Committee,
has full responsibility for the Group’s system of internal
controls and monitoring their effectiveness. However, such
a system is designed to manage rather than eliminate the
risk of failure to achieve business objectives. The Board
has established a well-defined organisational structure
with clear operating procedures, lines of responsibility,
delegated authority to executive management and a
comprehensive financial reporting process.
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Internal Control (continued)
Compliance with the Code
The Board has reviewed the effectiveness of the Group’s
system of internal controls and believes this to be
effective. In establishing the system of internal control the
Directors have regard to the materiality of relevant risks,
the likelihood of a loss being incurred and costs of control.
It follows, therefore, that the system of internal control can
only provide a reasonable, and not absolute, assurance
against the risk of material misstatement or loss.
The Directors consider that, during the year under review
and to the date of this report, the Company complied with
the Code except in relation to the following:
• Code provision E.2.3 – One of the Non-Executive
Directors was unavoidably unable to attend the
Group’s AGM held in the financial year and so not all
Directors were present.
The integration of recently acquired businesses into the
Group’s system of internal controls is achieved as quickly
as possible.
This report was approved by the Board and signed on its
behalf by:
Brian Small
Chief Financial Officer
16 April 2018
Shareholder Relations
The Executive Directors maintain an active dialogue
with the Company’s major shareholders to enhance
understanding of their respective objectives, holding
conference calls and attending meetings and investor
roadshows on a regular basis. The Executive Chairman
and the Chief Financial Officer each provide feedback to
the Board on issues raised by major shareholders.
Independent Non-Executive Director
The Senior
is
available to shareholders if they have concerns which have
not been resolved through dialogue with the Executive
Directors, or for which such contact is inappropriate. Major
shareholders may meet with the Non-Executive Directors
upon request.
External brokers’ reports on the Group are circulated to the
Board for consideration. In addition, the Non-Executive
Directors attend results presentations and analyst and
institutional investor meetings whenever possible.
Shareholders are invited to attend the Group’s AGM and to
ask questions during the meeting and to meet with those
Directors in attendance after the formal proceedings have
ended, should they desire.
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Audit Committee Report
Principal Duties
The principal duties of the Audit Committee (‘the Committee’) are to review draft annual and interim financial
statements prior to being submitted to the Board, reviewing the effectiveness of the Group’s system of internal
control, risk management and the performance and cost effectiveness of the external auditor.
Main Activities of the Audit Committee During the Year
The Committee’s activities included:
• Reviewing the Group’s draft financial statements and interim results statement prior to Board approval and
reviewing the external auditor’s detailed reports thereon including internal controls.
• Reviewing regularly the potential impact on the Group’s financial statements of certain matters such as
impairments of fixed asset values and proposed International Accounting Standards.
• Reviewing the external auditor’s plan for the audit of the Group’s financial statements, key risks of misstatement
in the financial statements, confirmations of auditor independence, audit fee and terms of engagement of
the auditor.
• Reviewing the independence and effectiveness of the Group’s external auditor and the appropriateness and
timing of any tender process in respect of the Group’s external auditor.
• Reviewing the whistleblowing arrangements in place for employees to be able to raise matters of possible
impropriety in confidence to ensure they remain appropriate.
• Reviewing the Company’s risk register and internal controls.
• Consideration of whether an internal audit function should be established.
Financial Statements and Significant Accounting Matters
The Committee is responsible for reviewing the Group’s draft financial statements and interim results statement prior
to Board approval. As part of such review, the Committee considers whether suitable accounting policies have been
adopted and whether appropriate judgements have been made by management. The Committee also reviews reports
by the external auditor on the full year and half year results.
The following are material areas in which significant judgements have been applied and have been considered by the
Committee during the year:
Recoverability of Goodwill and Fascia Names
The Committee considered the assumptions underlying the calculation of the value in use of the cash generating units
being tested for impairment, primarily the achievement of the short term business plan, the assumptions on discount
rates and long term growth rates. The Committee reviewed the budgets and business plans that support the impairment
reviews and challenged the key assumptions used and are comfortable that they represent management’s best estimate
at the time.
The external auditor provides to the Committee detailed explanations of the results of their review of the estimate of the
value in use, including their challenge of management’s underlying cash flow projections, the key growth assumptions and
discount rates. The Committee has also reviewed the disclosures in the financial statements.
Valuation of Inventories
The Audit Committee considered the risk that inventory may need to be impaired and tested the principles and integrity
of the obsolescence provision calculation used across the Group. This risk review is particularly important to the Group
given the extremely seasonal nature of its retail businesses and the changing desirability of branded products over
time. The Audit Committee also reviewed the assessment carried out by the auditors of the overall consistency of the
assumptions used by comparing to those used in prior periods. The Committee reviews the provision models and
challenges management on the key judgements made over aged stock and the level of proceeds for aged stock.
The external auditor reports to the Committee on the work they have completed and how their audit work is
concentrated on this area.
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Valuation of Intangible Assets Recognised as Part of the Acquisition of Sport Zone
The Committee has reviewed the acquisition accounting in relation to the purchase of Sport Zone and has considered the
assumptions used in the intangibles valuation models; primarily the budgets and forecasts, discount rates and royalty
rates used. The external auditor provides to the Committee detailed explanations of the results of their review of the
acquisition accounting, including their challenge of management’s key assumptions and discount rates. The Committee
has also reviewed the disclosures in the financial statements.
External Auditor
A breakdown of the audit and non-audit related fees are set out in Note 3 to the Consolidated Financial Statements
on page 126.
During the financial year, the Committee has reviewed in detail the FRC rules on auditor independence and the
provision of non-audit services by the auditor and in particular its revised policy on the provision of non-audit services
by the external auditor. The new policy’s objective being to ensure auditor independence and appropriate levels of
approval for non-audit work being undertaken by the external auditor. Under the policy, any non-audit services to be
undertaken by the auditor which are not prohibited or potentially prohibited under the audit reforms require advance
authorisation in accordance with the following:
• For individual pieces of work below £20,000 – Chief Financial Officer approval required.
• Work in excess of £20,000 – Committee approval required.
If it is proposed that any potentially prohibited non-audit work is carried out by the auditor, this will require
Committee approval.
KPMG have acted as auditor to the Company since its flotation in 1996 and no tender exercise has been conducted to
date. The lead partner is subject to rotation every five years to safeguard independence, with a new lead partner having
been appointed to lead the audit during the 2014 / 2015 financial year.
The Audit Committee recommends that KPMG be reappointed as the Company’s statutory auditor for the 2018 / 2019
financial year. The Audit Committee, after careful consideration including of the auditor’s performance during their
period in office, is satisfied with the level of independence and impartiality of the external auditor and is happy with the
audit process and the way it operates remains effective.
Whilst the Audit Committee’s current recommendation is to re-appoint KPMG as auditor for the forthcoming financial
year, the Audit Committee regularly considers whether such a tender programme would be in the best interests of
the Company’s shareholders and, accordingly, this process will be completed at the appropriate time and in any event,
in advance of the deadline for completing a mandatory competitive tender process in order that a new auditor
is appointed for the financial year commencing February 2024.
The Audit Committee confirms that the Company otherwise complied throughout the financial year under review
with The Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender
Processes and Audit Committee Responsibilities) Order 2014.
Internal Audit
Whilst the Company does not have an internal audit function, the Audit Committee regularly considers and analyses
the benefits of an internal audit function and the nature of the same. In particular, the Audit Committee reviews the
advantages of an internal auditor being recruited as an employee of the business and also of an ‘outsourced’ internal
audit function, tasked with focusing on key projects. During the financial year, the Audit Committee determined that
such an appointment is not immediately necessary, and, due to the fact that the Group’s operations are still largely
centralised within its head office, many of the Group’s existing departments perform activities which would otherwise
be carried out by a specific internal audit function, such as its experienced Profit Protection team who are focused
on limiting shrinkage, theft and fraud as well as carrying out stock and cash audits. The Profit Protection Director
reports to the Board on a quarterly basis and the Audit Committee considers that this function plays an effective role
currently. The potential benefits of a dedicated internal audit function remains a key topic of consideration for the
Audit Committee during the forthcoming financial year.
Martin Davies
Chairman of the Audit Committee
16 April 2018
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Annual Report
I am pleased to report that the 2017 / 2018 year
demonstrated first class growth
in terms of sales
and earnings.
Key Highlights
• JD UK continues to grow in terms of both overall and
LFL sales;
• A number of market leading flagship stores have been
opened in major cities gaining fantastic reactions from
consumer and industry experts alike;
• In Europe there has been major growth in store numbers
and very strong LFL growth has continued;
• Initial activity for JD outside Europe is encouraging; and
• The Outdoor division is moving forward well with
improving profit performance.
This performance is driven by the Executive Chairman and
strongly supported by the Chief Financial Officer. Their
leadership, energy and huge contribution are recognised
by the Board. The significant increase in earnings further
demonstrates the success of these efforts.
The executive team directly below the Board continues
to grow both individually and collectively. The quality
and performance of these executive leaders and the
departments they lead and manage is exceptional and
sector leading. This gives the Board significant confidence
in the ability of the business to continue to perform at this
outstanding level into the future.
JD is now one of the major global players in our market
and growth is expected to continue. However, with
significant challenges and competition both in the UK and
internationally, it is essential that our Executive Directors
and the members of the executive team are rewarded and
remunerated appropriately.
I am confident that the level of the annual bonus awards
for the Executive Directors for the 2017 / 2018 financial
year are fully justified and reflect the outstanding and
continuing growth and exceeding of targets in all areas.
The members of the executive team have also been
rewarded appropriately for outstanding performance and
extremely strong results.
The annual bonuses for the Executive Directors are
based on a mix of financial targets (66.7%) and Strategic
Objectives (33.3%).
The Remuneration Committee has focused on ensuring
that our remuneration packages for both the Executive
Directors and the members of the executive team
reflect the excellent current performance, our medium/
long terms plans and the increasingly competitive UK
and international retail sector. At the same time the
remuneration packages ensure that we retain and motivate
these essential executive team members.
We consider that the Directors’ Remuneration policy and
our actions are appropriate in rewarding, retaining and
motivating our key leaders.
This Directors’ Remuneration Report (‘Report’) is based
on the activities of the Committee for the period to 3
February 2018. It sets out a summary of the remuneration
policy and remuneration details for the Executive and
Non-Executive Directors of the Company. There are
three sections:
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Directors’ Remuneration Report
• This Annual Statement;
• The Policy Report setting out a summary of the
Directors’ Remuneration Policy (as approved by
shareholders at our AGM on 29 June 2017); and
• The Annual Report on Remuneration providing details
on the remuneration earned in the year to 3 February
2018 and how the Directors’ Remuneration Policy will
be operated during the 2018 / 2019 financial year.
This Annual Report on Remuneration together with
the Annual Statement will be subject to an advisory
shareholder vote at the 2018 AGM.
This report has been prepared in accordance with
Schedule 8 of The Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008
(as amended) (‘Regulations’) and the requirements of
the Listing Rules. The Companies Act 2006 requires the
auditor to report to the shareholders on certain parts of the
Report and to state whether, in their opinion; those parts
of the report have been properly prepared in accordance
with the Regulations. The parts of the Annual Report on
Remuneration that are subject to audit are indicated in
that report.
Summary of Activity
• Agreeing annual bonus awards for the Executive
Directors and annual bonus and long term incentive
awards and plans for members of the executive team in
relation to the period 2017 / 2018.
• Reviewing the basic salary of the Executive Chairman
and the Chief Financial Officer to ensure these are
appropriate for the market in which we operate. With
effect from 1 April 2018, the Committee has agreed that
the basic salary reviews detailed on page 99 will be
implemented. This is a 10.5% increase for the Executive
Chairman, which the Committee believes is appropriate
following a review of external comparatives. The
Chief Financial Officer will receive an increase of 1.5%
which is in line with the general increase for Head
Office employees.
• Setting appropriate targets for the 2018 / 2019 financial
year. We are focused on ensuring that our Executive
Directors align shareholder interests with their strategic
commercial objectives which are set with the aim of
benefitting the Group as a whole. As such, the targets
for the Executive Directors’ annual bonus are based
on an appropriate combination of financial and non-
financial Key Performance Indicators (‘KPIs’) with this
purpose in mind.
• Discussions regarding a succession plan and an
appropriate future structure for the Board and
executive team.
Andrew Leslie
Chairman of the Remuneration Committee
16 April 2018
Governance
Directors’ Remuneration Report
Directors’ Remuneration Policy (Unaudited)
This Directors’ Remuneration Policy for the financial year
ended 3 February 2018 was approved by shareholders at
the AGM held on 29 June 2017 and will remain in force for
a period of three years.
Remuneration payments and payments for loss of office
can only be made to Directors if they are consistent with
the approved Directors’ Remuneration Policy. However,
commitments made before the Directors’ Remuneration
Policy came into effect and commitments made before
an individual became a Director will be honoured even if
they are inconsistent with the policy prevailing when the
commitment is fulfilled.
Policy Overview
• The Group operates in a highly competitive retail
environment and the Committee seeks to ensure that
the level and form of remuneration is appropriate to
attract, retain and motivate Executive Directors of the
right calibre to ensure the success of the Company into
the future.
• Remuneration should be aligned with the key
corporate metrics that drive earnings growth and
increased shareholder value with significant emphasis
on performance related pay measured over the
longer term.
• Incentive arrangements
for Executive Directors
should provide an appropriate balance between fixed
and performance related elements and be capable
of providing exceptional levels of total payment if
outstanding performance is achieved.
The full Remuneration Policy Table can be found on pages
87 to 89 of the 2017 Annual Report. This should be read
along with the explanatory letter which was posted to
shareholders on 12 June 2017. The 2017 Annual Report
and the explanatory letter are available to download at
www.jdplc.com.
Share Ownership Guidelines
The Company does not set a shareholder target or
minimum shareholding requirement for its Executive
Directors. The Committee believes that this is a sensible
and pragmatic approach given the relatively narrow
shareholder base.
Consideration of Shareholder Views
The Committee engages directly with major shareholders
on key aspects of the remuneration policy and will take
into consideration feedback received in relation to the
AGM (or otherwise) when next reviewing the policy.
Consideration of Employee Conditions Elsewhere in the Group
Remuneration arrangements are determined throughout
the Group based on the same principle that reward
should be achieved for delivery of our business strategy
and should be sufficient to attract and retain high
calibre talent, without paying more than is necessary.
Senior Managers below Board level with a significant
ability to influence company results may participate in an
annual bonus plan and deferred bonus plan which reward
both performance and loyalty and are designed to retain
and motivate.
Service Contracts
Details of the contracts currently in place for Executive
Directors are as follows:
Date of Contract
Notice Period
(Months)
Unexpired
Term
P Cowgill
B Small
16 March 2004
10 March 2004
12
12
Rolling
12 months
Rolling
12 months
It is the Company’s policy that notice periods for Executive
Directors’ service contracts are no more than 12 months.
In the event of early termination, the Company may make
a termination payment not exceeding one year’s salary
and benefits. Incidental expenses may also be payable
where appropriate. It is in the discretion of the Committee
as to whether departing Directors would be paid a
bonus. In exercising its discretion on determining the
amount payable to an Executive Director on termination
of employment, the Board would consider each instance
on an individual basis and take into account contractual
terms, circumstances of the termination and the
commercial interests of the Company. When determining
whether a bonus or any other payment should be made
to a departing Director, the Committee will ensure that
no ‘reward for failure’ is made. The Committee may make
a payment to a departing Director for agreeing to enter
into enhanced restrictive covenants following termination
where it considers that it is in the best interests of the
Company to do so.
In the event of gross misconduct, the Company may
terminate the service contract of an Executive Director
immediately and with no liability to make further payments
other than in respect of amounts accrued at the date
of termination.
The current Executive Directors’ service contracts permit
the Company to put an Executive Director on garden leave
for a maximum period of three months. The Company may
adjust such period as deemed appropriate for any new
Executive Directors.
The Executive Directors’ service contracts contain a
change of control provision whereby if 50% or more
of the shares in the Company come under the direct or
indirect control of a person or persons acting in concert,
an Executive Director may serve notice on the Company, at
any time within the 12 month period following a change of
control, terminating his employment. Upon termination in
these circumstances, an Executive Director will be entitled
to a sum equal to 112% of his basic salary (less deductions
required by law) and such Executive Director waives any
claim for wrongful or unfair dismissal. The Company does
not envisage such a provision being contained in any
service contracts for any new Executive Directors.
The service contracts and letters of appointment are
available for inspection by shareholders at the forthcoming
AGM and during normal business hours at the Company’s
registered office address.
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Governance
Directors’ Remuneration Report
Non-Executive Directors
The Non-Executive Directors have entered into letters of appointment with the Company which are terminable by the
Non-Executive Director or the Company on not less than three months’ notice.
Non-Executive Directorships
The Board recognises that Executive Directors may be invited to become Non-Executive Directors of other businesses
and that the knowledge and experience which they gain in those appointments could be of benefit to the Company. Prior
approval of the Board is required before acceptance of any new appointments.
During the year to 3 February 2018, only Peter Cowgill held other Non-Executive Directorships. Peter Cowgill is the Non-
Executive Chairman of United Carpets Group Plc, the Non-Executive Chairman of Quiz Plc and a Non-Executive Director
of Better Bathrooms (UK) Limited. His aggregate retained earnings were £134,250 (2017: £46,042) in respect of these
Non-Executive Directorships.
Illustrations of Application of Remuneration Policy
The chart below illustrates the level of remuneration that would be received by the Executive Directors in accordance
with the Directors’ remuneration policy in the year to 2 February 2019.
Each bar gives an indication of the minimum amount of remuneration payable at target performance and remuneration
payable at maximum performance to each Director under the policy. Each of the bars is broken down to show how the
total under each scenario is made up of fixed elements of remuneration and variable remuneration.
The scenarios in the graphs are defined as follows:
Minimum
On target
Performance
Maximum
Performance
Fixed Elements of Remuneration
• The base salary is the salary as at 1 April 2018
• The benefits are taken as those in the single figure table on page 97
• The pension contribution for Brian Small
Annual Bonus (1)
0%
50%
100%
1. The maximum annual bonus has been based on the usual maximum award of 100% of salary. The Committee has the
discretion to award bonuses of up to 200% of salary for exceptional performance.
96
100%1.21.41.61.82.00.8Fixed elements of rumunerationVariable element of rumuneration0.60.40.20.01.00.80.60.40.20.067%50%100%70%54%MinimumOn Target33%50%£1.7m46%£0.6m30%£0.3m£0.5m£1.3m£0.9mP Cowgill Executive ChairmanMaximum41743993020152016Year20172018MinimumOn TargetB Small Chief Financial Officer Maximum350040004500300025002000150010005001638132241743993020152016Year201720186000500040003000200010001638132218.5%1.8%3.2%1.4%1.0%1.1%2.4%15.4%55.2%25%100%80%60%40%20%0%50%13%No Audit Required68%87%3rd Party Audit in Date 7%0%Audit Required Last YearThis Year 2007200820092010201120122013201420152016201765432100500100015002000250030003500400045001/31/20181/31/20171/31/20161/31/20151/31/20141/31/20131/31/20121/31/20111/31/20101/31/200978%22%JD Sports Fashion PLCFTSE All Share General Retailers Index
Governance
Directors’ Remuneration Report
Annual Report on Remuneration
Single Total Figure Table (Audited)
Peter Cowgill
2018
2017
Brian Small (2)
2018
2017
Andrew Leslie
2018
2017
Martin Davies
2018
2017
Heather Jackson
2018
2017
Andy Rubin (3)
2018
2017
Salary (1)
£000
Benefits
£000
Pension
£000
Bonus
£000
LTIP (4)
£000
Total
£000
767
756
267
264
51
49
51
49
51
49
-
-
2
2
19
21
-
-
-
-
-
-
-
-
-
-
32
32
-
-
-
-
-
-
-
-
1,534
1,516
401
396
-
-
-
-
-
-
-
-
-
488
-
128
-
-
-
-
-
-
-
-
2,303
2,762
719
841
51
49
51
49
51
49
-
-
1. Salary reviews effective 1 April annually
2. In accordance with the remuneration policy £32,000 (2017: £32,000) of the pension contribution shown above for
Brian Small has been paid as a cash amount
3. Andy Rubin was appointed as a Non-Executive Director on 12 February 2016 but does not receive a fee from JD Sports
Fashion Plc for this role
4. The LTIP award was paid on 30 October 2017
The taxable benefit received by Peter Cowgill is healthcare insurance and the taxable benefits received by Brian Small
are car benefits and healthcare insurance.
Pension contributions are:
• Peter Cowgill – 0% of salary
• Brian Small – 12% of salary
There are no disclosures in respect of scheme interests awarded, payments to past directors or loss of office payments
as there were no transactions of this type during the financial year ended 3 February 2018.
LTIP (Audited)
Future long term incentive arrangements remain a key point of discussion for the Committee. Any new incentive plan will
be put to shareholders at the appropriate time.
Statement of Directors’ Shareholding (Audited)
The interests of the Directors who held office at 3 February 2018 and persons closely associated with them in the
Company’s ordinary shares are shown below:
P Cowgill
B Small
Ordinary Shares of 0.25p each
3 February 2018
28 January 2017
8,410,260
8,380,260
514,000
504,000
8,924,260
8,884,260
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Governance
Directors’ Remuneration Report
Annual Report on Remuneration (continued)
There has been no change in the interests of the Directors or persons closely associated with them between 3 February
2018 and the date of this report. The holdings stated on the previous page are held directly by the Directors and
persons closely associated with them and are not subject to any performance targets. The Directors have no other
interests in Company shares. As stated in the Directors’ Remuneration Policy, the Company does not have a minimum
share ownership requirement for Directors. Given our narrow shareholder base, the Committee considers it impractical
to set realistic shareholding targets.
Total Shareholder Return (Unaudited)
The following graph shows the Total Shareholder Return (‘TSR’) of the Group in comparison to the FTSE All Share General
Retailers Index over the past nine years. The Committee consider the FTSE All Share General Retailers Index a relevant
index for total shareholder return comparison disclosure required under the Regulations as the index represents the
broad range of UK quoted retailers.
TSR is calculated for each financial year end relative to the base date of 31 January 2009 by taking the percentage
change of the market price over the relevant period, re-investing any dividends at the ex-dividend rate.
%
4500
4000
3500
3000
2500
2000
1500
1000
500
0
31/1/2009
31/1/2010
31/1/2011
31/1/2012
31/1/2013
31/1/2014
31/1/2015
31/1/2016
31/1/2017
31/1/2018
JD Sports Fashion PLC
FTSE All Share General Retailers Index
Executive Chairman’s Remuneration Over Past 5 years (Unaudited)
The total remuneration figures for the Executive Chairman during each of the last 5 financial years are shown in the
table below. The total remuneration figure includes the annual bonus based on that year’s performance and LTIP awards
based on three year performance periods ending in the relevant financial year. The annual bonus payout and LTIP
vesting level as a percentage of the maximum opportunity are also shown for each of these years.
Year
Ended
Total remuneration £000
Annual bonus %
LTIP vesting %
January
2014
3,137
100
n/a
January
2015
1,951
100
n/a*
January
2016
2,728
200
n/a*
January
2017
2,762
200
100*
January
2018
2,303
200
n/a
* The LTIP performance criteria has been achieved over the full three year period to 28 January 2017 and the award was paid on 30 October 2017.
98
Governance
Directors’ Remuneration Report
Percentage Change in Executive Chairman’s Remuneration (Unaudited)
The table below shows the percentage change in the Executive Chairman’s salary, benefits and annual bonus between
financial years 28 January 2017 and 3 February 2018 compared to UK Head Office employees in the JD and Size?
businesses, being deemed by the Board as the most appropriate comparator group.
Salary
Executive Chairman
UK Head Office Employee average*
Benefits
Executive Chairman
UK Head Office Employee average*
Annual Bonus
Executive Chairman
UK Head Office Employee average*
% Change
10.5%
4.4%
-
-
-
6.4%
*Comparator group as defined above. There are circa 1,523 employees within this group.
Relative Importance of Spend on Pay (Unaudited)
The following table shows the Group’s actual spend on pay (for all employees) relative to dividends, tax and
retained profits:
Staff costs
Dividends
Tax
Retained profits
2018 (£m)
2017 (£m)
% Change
447.1
15.2
58.1
236.4
335.8
14.5
53.9
184.6
33.1%
4.8%
7.8%
28.1%
Implementation of Directors’ Remuneration Policy in 2017 / 2018 (Unaudited)
Salaries
Following this year’s review, the Committee has determined that salaries for the current year will be revised as follows
with effect from 1 April 2018:
P Cowgill
B Small
Annual Bonus Performance Targets
Financial Targets 2017 / 2018
Previous Salary
£000
New Salary
£000
Percentage
Increase
769
268
850
272
10.5%
1.5%
Two thirds of the annual bonus is linked to financial targets. The targets in respect of the annual bonus for the financial
year to 3 February 2018 were £265 million threshold earnings with a maximum payment being achieved where earnings
are £290 million.
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Governance
Directors’ Remuneration Report
Strategic Objectives 2017 / 2018
These targets focused on the following key strategic areas:
• Strategic development and growth of JD in the UK
• International development of the JD brand
• The strategic future plan and profitability for the Outdoor businesses
• People development, recruitment and succession planning across the JD Group
Annual Bonus 2017 / 2018
The Committee believes that the financial performance for the year ended 3 February 2018 was exceptional. The Committee
also agrees that there has been outstanding performance against the strategic objectives, in particular:
• The strategic growth and development of JD in the UK demonstrated by the market leading flagship stores taking
the brand to a new level.
• International development of the JD brand demonstrated by the expansion into 15 countries worldwide with new
stores opening in every market.
Based on the above exceptional performance the Committee has deemed it appropriate to award an exceptional annual
bonus to each of its Executive Directors.
Financial Targets and Strategic Objectives 2018 / 2019
The split between financial targets and strategic objectives will remain two thirds and one third respectively. The Board
considers that both the financial targets and the strategic objectives for the financial year to 2 February 2019 are commercially
sensitive and so will be disclosed in the 2019 Annual Report.
Consideration by Directors of Matters Relating to Directors’ Remuneration (Unaudited)
The Committee comprises three independent Non-Executive Directors, being Andrew Leslie, Martin Davies and Heather
Jackson. Andrew Leslie was appointed as the Chairman of the Committee on 1 October 2013.
The Committee assists the Board in determining the Group’s policy on Executive Directors’ remuneration and determines
the specific remuneration packages for Senior Executives, including the Executive Directors, on behalf of the Board.
Peter Cowgill, the Executive Chairman and Brian Small, the Chief Financial Officer, have assisted the Committee when
requested with regards to matters concerning key Executives below Board level.
The Committee can obtain independent advice at the Company’s expense where they consider it appropriate and in
order to perform their duties. No such advice was obtained during 2017 / 2018.
The Committee is formally constituted with written Terms of Reference, which are available on the Company’s corporate
website www.jdplc.com. The Committee engages with the major shareholders or other representative groups where
appropriate concerning remuneration matters.
The Committee is mindful of the Company’s social, ethical and environmental responsibilities and is satisfied that the
current remuneration arrangements and policies do not encourage irresponsible behaviour.
The Committee has met twice during the year under review with each member attending all the meetings. Details of
attendance at the Committee meetings are set out on page 86.
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Directors’ Remuneration Report
Statement of Voting at General Meeting (Unaudited)
At the 2017 AGM, the Directors’ Remuneration Report received the following votes from shareholders:
Votes cast for
Votes cast against
Total votes cast
Votes withheld
2017 AGM
676,596,015
194,156,552
870,752,567
3,118,983
At the 2017 AGM, the Directors’ Remuneration Policy received the following votes from shareholders:
Votes cast for
Votes cast against
Total votes cast
Votes withheld
2017 AGM
676,571,159
196,297,592
872,868,751
1,002,800
%
77.7%
22.3%
%
77.5%
22.5%
Upon receiving the results of the 2017 AGM, the Board undertook to take all appropriate measures in order to understand
and address any concerns regarding the votes against the remuneration report and policy.
Therefore the Board undertook a review of the disclosures in the Remuneration Report with its advisers in light of recent
shareholder voting guidelines and feedback. The Board has ensured that the level of disclosure in relation to some of
the areas raised in shareholder voting guidelines has been enhanced in this year’s Report.
This report has been prepared on behalf of the Board
Andrew Leslie
Chairman of the Remuneration Committee
16 April 2018
103
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t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
Financial Statements
Statement of Directors’ Responsibilities
Statement of Directors’ Responsibilities in Respect of the Annual Report and the Financial Statements
The directors are responsible for preparing the Annual Report and the Group and parent Company financial statements
in accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent Company financial statements for each financial year.
Under that law they are required to prepare the Group financial statements in accordance with International Financial
Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and applicable law and have
elected to prepare the parent Company financial statements in accordance with UK accounting standards, including FRS
101 Reduced Disclosure Framework.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and parent Company and of their profit or loss for that period. In
preparing each of the Group and parent Company financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant and reliable;
• for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by
the EU;
• for the parent Company financial statements, state whether applicable UK accounting standards have been followed,
subject to any material departures disclosed and explained in the parent company financial statements;
• assess the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or
to cease operations, or have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent Company
and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible
for such internal control as they determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report, Directors’
Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with that law and those
regulations.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on
the company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Responsibility Statement of the Directors in Respect of the Annual Financial Report
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the
consolidation taken as a whole; and
• the directors’ report includes a fair review of the development and performance of the business and the position of
the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face.
We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the group’s position and performance, business model and strategy.
Brian Small
Chief Financial Officer
16 April 2018
107
Financial Statements
Independent Auditor’s Report
1. Our Opinion is Unmodified
We have audited the financial statements of JD Sports Fashion Plc (“the Company”) for the 53 week period ended
3 February 2018 which comprise the Consolidated Income Statement, the Statement of Comprehensive Income, the
Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash
Flows, the Company Balance Sheet, the Company Statement of Changes in Equity, and the related notes.
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at
3 February 2018 and of the Group’s profit for the period then ended;
• the Group financial statements have been properly prepared in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs as adopted by the EU);
• the parent Company financial statements have been properly prepared in accordance with UK accounting standards,
including FRS 101 Reduced Disclosure Framework; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and,
as regards the Group financial statements, Article 4 of the IAS Regulation.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable
law. Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and
appropriate basis for our opinion. Our audit opinion is consistent with our report to the audit committee.
We were appointed as auditor by the shareholders in March 1996. The period of total uninterrupted engagement is
for the 22 financial periods ended 3 February 2018. We have fulfilled our ethical responsibilities under, and we remain
independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to
listed public interest entities. No non-audit services prohibited by that standard were provided.
Overview
Materiality:
group financial statements as a whole
£13.0m (2017: £10.0m)
4.4% (2017: 4.2%) of profit before tax
Coverage
87.9% (2017: 86.0%) of group profit before tax
Risks of material misstatement
Recurring risks
Event driven risk
Group:
Recoverability of goodwill and fascia names
Group and parent company:
Valuation of inventories
Group:
Valuation of the separately identifiable
intangible assets recognised as part of
the acquisition of Sport Zone
vs 2017
108
Financial Statements
Independent Auditor’s Report
2. Key Audit Matters: Our Assessment of Risks of Material Misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the
financial statements and include the most significant assessed risks of material misstatement (whether or not due to
fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit matters,
in decreasing order of audit significance, in arriving at our audit opinion left, together with our key audit procedures
to address those matters and, as required for public interest entities, our results from those procedures. These matters
were addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of,
our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to
that opinion, and we do not provide a separate opinion on these matters.
Recoverability of Goodwill and Fascia Names
(£193.2 million; 2017: £190.9million)
Refer to page 90 (Audit Committee Report), pages 140 to 141 (accounting policy) and pages 137 to 143 (financial disclosures).
The Risk
Forecast based valuation:
Goodwill and fascia names are significant and at risk of recoverability due to challenging trading conditions in certain of
the high street retail sectors and locations that the Group operates in. The estimated recoverable amounts are subjective
due to the inherent uncertainty involved in forecasting and discounting future cash flows therefore this is one of the key
areas that our audit concentrated on.
Our Response
Our procedures included:
• Historical comparisons: assessing the reasonableness of the budgets by considering the historical accuracy of
previous forecasts;
• Our sector experience: assessing whether assumptions used, in particular those relating to short term forecast
revenue growth, profit margins and the long term growth rate, reflect our knowledge of the business and industry,
including known or probable changes in the business environment;
• Benchmarking assumptions: using our own valuation specialists, challenging the key inputs used in the Group’s
calculation of the discount rates by comparing them to externally derived data, including available sources for
comparable companies;
• Sensitivity analysis: performing sensitivity analysis on the key assumptions noted above;
• Assessing transparency: assessing whether the Group’s disclosures about the impairment tests and resulting impairment
loss appropriately reflected the risks inherent in the valuation of goodwill and fascia names;
Our Results
• We found the resulting estimate of the recoverable amount of goodwill and fascia names to be acceptable.
(2017 result: acceptable).
109
Financial Statements
Independent Auditor’s Report
2. Key Audit Matters: Our Assessment of Risks of Material Misstatement (continued)
Valuation of inventories
(Group: £478.0 million; 2017: £348.0 million)
(Company: £144.0 million; 2017: £116.6 million)
Refer to page 90 (Audit Committee Report), page 147 (accounting policy) and page 147 (financial disclosures).
The Risk
Subjective estimate:
Inventories is one of the most significant items on the Group’s and parent company’s balance sheets and is stated at the
lower of cost and net realisable value. As the Group operates in the retail business where branded products are subject
to frequent changes in desirability, the assessment of net realisable value involves significant judgements around the
determination of stock that may not be in demand in the future and sales proceeds expected from such stock. Due to the
level of judgement, we consider the valuation of inventories to be a significant audit risk.
Our Response
Our procedures included:
• Our sector experience: assessing the directors’ methodology and key assumptions behind the provision, including
the expected level of stock that will not be in demand and respective sales prices, against our knowledge of the
business and industry and historical track record of the Group;
• Expectation vs outcome: forming our own expectation of the inventory provision using our own view of the
key assumptions above and comparing our expectation to the actual provision amount. This included analysing
inventory balances by season and criteria such as stock not bought in the last 6 months and slower moving stock;
• Test of detail: examining recent selling prices of a sample of inventory lines to assess whether lines already being
discounted below cost are included in the provision;
• Assessing transparency: assessing the adequacy of the financial statement disclosures about the degree of
estimation in arriving at the net realisable value.
Our Results
• We consider the valuation of inventories to be acceptable (2017 result: acceptable).
Valuation of the Separately Identifiable Intangible Assets Recognised as part of the Acquisition of Sport Zone Portugal
(£13.1 million; 2017: n/a)
Refer to page 91 (Audit Committee Report), page 130 (accounting policy) and page 131 to 132 (financial disclosures).
The Risk
Subjective valuation:
On 31 January 2018 the Group acquired a controlling interest in Sport Zone Portugal. Included within the fair value of
net identifiable assets recognised on acquisition are separately identifiable intangible assets of £13.1m, the valuation of
which involves significant judgements over certain assumptions such as future revenue growth, royalty relief rates and
discount rates. This is considered to be a significant audit risk as it may affect the balance between non-amortisable and
amortisable intangible assets.
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Financial Statements
Independent Auditor’s Report
2. Key Audit Matters: Our Assessment of Risks of Material Misstatement (continued)
Our Response
Our procedures included:
• Methodology choice: with the assistance of our valuation specialists, assessing the results of the valuation by checking
that the valuation was in accordance with relevant accounting standards and acceptable valuation practice.
• Benchmarking assumptions: with the assistance of our valuation specialists, challenging the key inputs used in
the valuation, in particular, discount rates and royalty rates by comparing them to externally derived data and
comparable transactions.
• Our sector experience: assessing whether the key assumptions used, in particular revenue growth rate, reflect our
knowledge of the business and industry, including assessing the forecast growth against historic actual growth for
the acquired business.
• Assessing transparency: assessing the appropriateness of the Group’s disclosures in respect of the valuation of
intangible assets recognised on acquisition.
Our Results
• We found the valuation of the separately identifiable intangible assets to be acceptable.
3. Our Application of Materiality and an Overview of the Scope of Our Audit
The materiality of the Group financial statements as a whole was set at £13.0 million (2017: £10.0 million), determined
with reference to a benchmark of Group profit before tax, of which it represents 4.4% (2017: 4.2%).
The materiality of the Parent Company financial statements as a whole was set at £9.5 million (2017: £7.2 million),
determined with reference to a benchmark of Parent Company profit before tax, of which it represents 3.8% (2017: 3.5%).
We report to the Audit Committee any corrected and uncorrected misstatements exceeding £0.65 million (2017: £0.5 million),
in addition to other identified misstatements that warranted reporting on qualitative grounds.
Of the group’s 55 (2017: 40) reporting components, we subjected 6 (2017: 5) to audits for group reporting purposes and
1 (2017: 1) component was subject to specified risk-focused audit procedures covering the specific risk areas including
those identified in this report. The component was not individually financially significant enough to require a full scope
audit for group purposes, but did present specific individual risks that needed to be addressed.
The remaining 21% (2017: 20%) of total group revenue, 12% (2017: 14%) of group profit and losses before tax and 23%
(2017: 13%) of total group assets is represented by 48 reporting components (2017: 34), none of which individually
represented more than 5% of any total group revenue, group profit before tax or total group assets. For these remaining
components, we performed analysis at an aggregated group level to re-examine our assessment that there were no
significant risks of material misstatement within these.
The Group team instructed component auditors as to the significant areas to be covered, including relevant risks detailed
above and the information to be reported back. The Group team approved the component materialities, which ranged
from £0.9m to £9.5m (2017: £1.0m to £7.2m), having regard to the mix of size and risk profile of the Group across the
components. The work on 3 out of the 7 components (2017: 3 of the 6 components) was performed by component
auditors and the rest by the Group team. The parent company audit was performed by the Group audit team.
The Group team visited 3 (2017: 3) component locations in Spain, France, and the Netherlands, which included assessing
the audit risk and strategy. Video and telephone conference meetings were also held with these component auditors.
At these meetings, the findings reported to the Group team were discussed in more detail, and any further work required
by the Group team was then performed by the component auditor. The Group team also reviewed specific areas of the
component auditor’s files.
111
Financial Statements
Independent Auditor’s Report
Profit Before Tax
£294.5m (2017: £238.4m)
Group Materiality
$13m (2017: £10.0m)
£13.0m
Whole financial
statements materiality
(2017: £10.0m)
£9.5m
Range of materiality at 7
components (£0.9m to £9.5m)
(2017: £1.0m to £7.2m)
Profit before tax
Group materiality
£0.65m
Misstatements reported to the
audit committee (2017: £0.5m)
Group Revenue
Group Profit Before Tax
Group Total Assets
Full scope for group audit purposes 2018
Specified risk-focused audit procedures 2018
Full scope for group audit purposes 2017
Specified risk-focused audit procedures 2017
Residual components
112
79%(2017:80%)7776Group Revenue3388%(2017:86%)8387Group Profit Before Tax1377%(2017:87%)8675Group Total Assets21Group RevenueGroup Profit Before Tax3379%(2017:80%)88%(2017:86%)7776838713 Financial Statements
Independent Auditor’s Report
4. We Have Nothing to Report on Going Concern
We are required to report to you if:
• we have anything material to add or draw attention to in relation to the directors’ statement in Note 1 to the financial
statements on the use of the going concern basis of accounting with no material uncertainties that may cast significant
doubt over the Group and Company’s use of that basis for a period of at least twelve months from the date of approval
of the financial statements; or
• the related statement under the Listing Rules set out on page 52 is materially inconsistent with our audit knowledge.
We have nothing to report in these respects.
5. We Have Nothing to Report on the Other Information in the Annual Report
The directors are responsible for the other information presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not
express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements
audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit
knowledge. Based solely on that work we have not identified material misstatements in the other information.
Strategic Report and Directors’ Report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic report and the directors’ report;
•
in our opinion the information given in those reports for the financial year is consistent with the financial statements; and
•
in our opinion those reports have been prepared in accordance with the Companies Act 2006.
Directors’ Remuneration Report
In our opinion the parts of the Directors’ Remuneration Report to be audited have been properly prepared in accordance
with the Companies Act 2006.
Disclosures of Principal Risks and Longer-Term Viability
Based on the knowledge we acquired during our financial statements audit, we have nothing material to add or draw
attention to in relation to:
• the directors’ confirmation within the viability statement on page 46 that they have carried out a robust assessment
of the principal risks facing the Group, including those that would threaten its business model, future performance,
solvency and liquidity;
• the Principal Risks disclosures describing these risks and explaining how they are being managed and mitigated; and
• the directors’ explanation in the viability statement of how they have assessed the prospects of the Group, over what
period they have done so and why they considered that period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as
they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.
Under the Listing Rules we are required to review the viability statement. We have nothing to report in this respect.
113
Financial Statements
Independent Auditor’s Report
5. We Have Nothing to Report on the Other Information in the Annual Report (continued)
Corporate Governance Disclosures
We are required to report to you if:
• we have identified material inconsistencies between the knowledge we acquired during our financial statements audit
and the directors’ statement that they consider that the annual report and financial statements taken as a whole is fair,
balanced and understandable and provides the information necessary for shareholders to assess the Group’s position
and performance, business model and strategy; or
• the section of the annual report describing the work of the Audit Committee does not appropriately address matters
communicated by us to the Audit Committee.
We are required to report to you:
•
if the Corporate Governance Statement does not properly disclose a departure from the eleven provisions of the UK
Corporate Governance Code specified by the Listing Rules for our review.
We have nothing to report in these respects.
6. We Have Nothing to Report on the Other Matters on Which we are Required to Report by Exception
Under the Companies Act 2006, we are required to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
7. Respective Responsibilities
Directors’ Responsibilities
As explained more fully in their statement set out on page 107, the directors are responsible for: the preparation of the
financial statements including being satisfied that they give a true and fair view; such internal control as they determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error; assessing the Group and parent Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend
to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud, other irregularities, or error, and to issue our opinion in an auditor’s report.
Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud, other
irregularities or error and are considered material if, individually or in aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of the financial statements. The risk of not detecting a
material misstatement resulting from fraud or other irregularities is higher than for one resulting from error, as they may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control and may involve
any area of law and regulation not just those directly affecting the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
114
Financial Statements
Independent Auditor’s Report
7. Respective Responsibilities (continued)
Irregularities – Ability to Detect
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial
statements from our sector experience and through discussion with the directors and other management (as required
by auditing standards).
We had regard to laws and regulations in areas that directly affect the financial statements including financial reporting
(including related company legislation) and taxation legislation. We considered the extent of compliance with those
laws and regulations as part of our procedures on the related financial statement items.
In addition we considered the impact of laws and regulations in the specific areas of health and safety, anti-bribery,
employment law, and certain aspects of company legislation recognising the nature of the group’s activities and its
legal form. With the exception of any known or possible non-compliance, and as required by auditing standards, our
work in respect of these was limited to enquiry of the directors and other management and inspection of regulatory and
legal correspondence. We considered the effect of any known or possible non-compliance in these areas as part of our
procedures on the related financial statement items.
We communicated identified laws and regulations throughout our team and remained alert to any indications of
non-compliance throughout the audit. This included communication from the group to component audit teams
of relevant laws and regulations identified at group level, with a request to report on any indications of potential
existence of non-compliance with relevant laws and regulations (irregularities) in these areas, or other areas directly
identified by the component team.
As with any audit, there remained a higher risk of non-detection of non-compliance with relevant laws and regulations
(irregularities), as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal controls.
8. The Purpose of our Audit Work and to Whom We Owe Our Responsibilities
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the Company and the Company’s members, as a body, for our
audit work, for this report, or for the opinions we have formed.
Mick Davies (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
1 St. Peter’s Square, Manchester, M2 3AE
16 April 2018
115
Financial Statements
Consolidated Income Statement
For the 53 weeks ended 3 February 2018
Revenue
Cost of sales
Gross profit
Selling and distribution expenses
Administrative expenses – normal
Administrative expenses – exceptional
Administrative expenses
Other operating income
Operating profit
Before exceptional items
Exceptional items
Operating profit
Financial income
Financial expenses
Profit before tax
Income tax expense
Profit for the period
Attributable to equity holders of the parent
Attributable to non-controlling interest
Basic earnings per ordinary share
Diluted earnings per ordinary share
Statement of Comprehensive Income
For the 53 weeks ended 3 February 2018
53 weeks to
3 February 2018
£m
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
52 weeks to
28 January 2017
£m
Note
3,161.4
(1,629.8)
1,531.6
(1,080.5)
(144.7)
(12.9)
(106.2)
(6.4)
(157.6)
2.4
295.9
308.8
(12.9)
295.9
0.6
(2.0)
294.5
(58.1)
236.4
231.9
4.5
23.83p
23.83p
2,378.7
(1,215.1)
1,163.6
(813.0)
(112.6)
1.8
239.8
246.2
(6.4)
239.8
0.8
(2.2)
238.4
(53.8)
184.6
178.9
5.7
18.38p
18.38p
4
4
7
8
3
9
10
10
Profit for the period
Other comprehensive income:
Items that may be classified subsequently to the Consolidated Income Statement:
Exchange differences on translation of foreign operations
Total other comprehensive income for the period
Total comprehensive income and expense for the period (net of income tax)
Attributable to equity holders of the parent
Attributable to non-controlling interest
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
236.4
184.6
6.4
6.4
242.8
237.1
5.7
22.6
22.6
207.2
197.7
9.5
116
Financial Statements
Statement of Financial Position
As at 3 February 2018
Assets
Intangible assets
Property, plant and equipment
Other assets
Total non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Interest-bearing loans and borrowings
Trade and other payables
Provisions
Income tax liabilities
Total current liabilities
Interest-bearing loans and borrowings
Other payables
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Total assets less total liabilities
Capital and reserves
Issued ordinary share capital
Share premium
Retained earnings
Other reserves
Total equity attributable to equity holders of the parent
Non-controlling interest
Total equity
As at
3 February 2018
£m
As at
28 January 2017
£m
Note
12
13
14
15
16
17
18
20
21
18
20
21
22
23
24
211.0
376.9
66.5
654.4
478.0
146.3
347.5
971.8
190.9
235.8
38.1
464.8
348.0
118.5
247.6
714.1
1,626.2
1,178.9
(26.8)
(623.2)
(2.1)
(30.2)
(682.3)
(11.0)
(91.5)
(1.8)
(5.3)
(109.6)
(791.9)
834.3
2.4
11.7
773.6
(17.3)
770.4
63.9
834.3
(31.5)
(469.1)
(1.0)
(33.6)
(535.2)
(2.5)
(53.2)
(1.0)
(8.2)
(64.9)
(600.1)
578.8
2.4
11.7
543.3
(5.2)
552.2
26.6
578.8
These financial statements were approved by the Board of Directors on 16 April 2018 and were signed on its behalf by:
B Small
Director
Registered number: 1888425
117
Financial Statements
Consolidated Statement of Changes in Equity
For the 53 weeks ended 3 February 2018
Ordinary
share
Share
capital
£m
premium
£m
Retained
earnings
£m
Treasury
reserve
£m
Other
equity
£m
Foreign
currency
translation
reserve
£m
Total equity
attributable
to equity
holders of
the parent
£m
Non-
controlling
interest
£m
Total
equity
£m
Balance at 30 January 2016
2.4
11.7
Profit for the period
Other comprehensive income:
Exchange differences on translation of foreign
operations
Total other comprehensive income
Total comprehensive income for the period
Repurchase of share capital held as Treasury Shares
Dividends to equity holders
Put options held by non-controlling interests
Acquisition of non-controlling interest
Divestment of non-controlling interest
Non-controlling interest arising on acquisition
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 28 January 2017
2.4
11.7
Profit for the period
Other comprehensive income:
Exchange differences on translation
of foreign operations
Total other comprehensive income
Total comprehensive income for the period
Dividends to equity holders
Put options held by non-controlling interests
Acquisition of non-controlling interest
Divestment of non-controlling interest
Non-controlling interest arising on acquisition
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
378.9
178.9
-
-
178.9
-
-
-
-
-
-
(15.9)
(14.5)
(2.2)
2.1
0.1
-
543.3
231.9
-
-
231.9
(15.2)
-
(0.3)
13.9
-
-
-
-
-
-
-
-
-
-
-
-
-
15.9
-
-
(3.1)
-
-
-
-
-
-
2.5
-
-
-
-
-
-
-
-
(33.2)
-
-
-
(15.9)
(0.6)
(7.5)
-
382.4
178.9
18.4
5.7
400.8
184.6
18.8
18.8
3.8
22.6
18.8
18.8
-
-
-
-
-
-
11.3
-
5.2
5.2
5.2
-
-
-
-
-
18.8
197.7
(15.9)
(14.5)
0.3
2.1
0.1
-
552.2
231.9
5.2
5.2
237.1
(15.2)
(33.2)
(0.3)
29.8
-
3.8
9.5
-
(0.7)
-
(2.1)
(0.1)
1.6
26.6
4.5
1.2
1.2
5.7
(8.8)
-
(0.9)
25.7
15.6
63.9
22.6
207.2
(15.9)
(15.2)
0.3
-
-
1.6
578.8
236.4
6.4
6.4
242.8
(24.0)
(33.2)
(1.2)
55.5
15.6
834.3
(33.8)
16.5
770.4
Balance at 3 February 2018
2.4
11.7
773.6
118
Financial Statements
Consolidated Statement of Cash Flows
For the 53 weeks ended 3 February 2018
Cash flows from operating activities
Profit for the period
Income tax expense
Financial expenses
Financial income
Depreciation and amortisation of non-current assets
Forex losses/(gains) on monetary assets and liabilities
Impairment of non-current assets
Loss on disposal of non-current assets
Other exceptional items
Impairment of intangible fixed assets
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
Interest paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Interest received
Proceeds from sale of non-current assets
Investment in bespoke software development
Acquisition of property, plant and equipment
Acquisition of non-current other assets
Acquisition of subsidiaries, net of cash acquired
Net cash used in investing activities
Cash flows from financing activities
Repayment of interest-bearing loans and borrowings
Repayment of finance lease liabilities
Draw down of finance lease liabilities
Subsidiary shares repurchased and held as Treasury Shares
Equity dividends paid
Dividends paid to non-controlling interest in subsidiaries
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Foreign exchange (losses) / gains on cash and cash equivalents
Cash and cash equivalents at the end of the period
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
Note
9
8
7
3
12
13
14
25
28
28
28
28
236.4
58.1
2.0
(0.6)
71.3
2.2
5.1
1.6
1.3
11.6
(79.0)
(22.1)
110.7
(2.0)
(57.8)
338.8
0.6
6.7
(4.5)
(169.3)
(12.8)
(24.9)
(204.2)
(11.4)
(0.5)
3.3
-
(15.2)
(8.8)
(32.6)
102.0
234.4
(1.8)
334.6
184.6
53.8
2.2
(0.8)
62.4
(5.4)
-
0.3
-
6.4
(21.2)
(4.6)
43.9
(2.2)
(40.1)
279.3
0.8
2.5
(3.8)
(77.3)
(6.9)
(138.6)
(223.3)
(3.2)
(0.1)
-
(14.8)
(14.5)
(0.7)
(33.3)
22.7
209.9
1.8
234.4
119
Financial Statements
Notes to the Consolidated Financial Statements
1. Basis of Preparation
General Information
JD Sports Fashion Plc (the ‘Company’) is a company incorporated and domiciled in the United Kingdom. The financial
statements for the 53 week period ended 3 February 2018 represent those of the Company and its subsidiaries (together
referred to as the ‘Group’).
The financial statements were authorised for issue by the Board of Directors on 16 April 2018.
Basis of Preparation
European Union law (‘EU LAW’) (IAS Regulation EC 1606 / 2002) requires that the financial statements of the Group
are prepared and approved in accordance with International Financial Reporting Standards as adopted by the EU
(‘adopted IFRSs’). The financial statements have been prepared on the basis of the requirements of adopted IFRSs that
are endorsed by the EU and effective at 3 February 2018.
The financial statements are presented in pounds sterling, rounded to the nearest tenth of a million.
The financial statements have been prepared under the historical cost convention, as modified for financial assets and
liabilities (including derivative instruments) at fair value through the Consolidated Income Statement and also put and
call options held by the non-controlling interests.
The accounting policies set out below have unless otherwise stated been applied consistently to all periods present in
these financial statements and have been applied consistently by all Group entities.
The Group’s business activities, together with the factors likely to affect its future development, performance and
position are set out in the Executive Chairman’s Statement and Financial and Risk Review on pages 38 to 39 and 46 to
59 respectively. In addition, details of financial instruments and exposures to interest rate, foreign currency, credit and
liquidity risks are outlined in note 19.
At 3 February 2018, the Group had net cash balances of £309.7 million (2017: £213.6 million) with available committed
borrowing facilities of £215 million (2017: £215 million) of which £nil (2017: £nil) has been drawn down (see note 18).
With a facility of £215 million available, the Directors believe that the Group is well placed to manage its business risks
successfully despite the current uncertain economic outlook.
After making enquiries and completing the assessment outlined in the Viability Reporting on page 52 (including the
proposed acquisition of The Finish Line), the Directors have a reasonable expectation that the Company, and the Group
as a whole, has adequate resources to continue in operational existence for the foreseeable future.
Alternative Performance Measures
The Directors measure the performance of the Group based on a range of financial measures, including measures not
recognised by EU-adopted IFRS. 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 underlying performance of the Group. Alternative performance measures are also used to enhance
the comparability of information between reporting periods, by adjusting for exceptional items, which could distort the
understanding of the performance for the year.
Further information can be found in the Glossary on page 190 to 191.
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
its consolidated results or financial position:
• Amendments to IAS 12 ‘Recognition of Deferred Tax Assets for Unrealised Losses’
• Amendments to IAS 7 ‘Disclosure Initiative’
IFRS 9 ‘Financial Instruments’ will be applicable to the Group for the financial year ending 2 February 2019. The Group
has completed an assessment of IFRS 9 and it is expected that the adoption will not have a material impact on the results
or financial position of the Group.
IFRS 15 ‘Revenue from Contracts with Customers’ will be applicable to the Group for the financial year ending 2 February
2019. The Group has completed an assessment of IFRS 15 and it is expected that the adoption will not have a material
impact on the results or financial position of the Group.
120
Financial Statements
Notes to the Consolidated Financial Statements
1. Basis of Preparation (continued)
IFRS 16 Leases will be applicable to the Group for the financial year ending 1 February 2020 and will significantly affect
the presentation of the Group financial statements with the Group recognising a right-of-use asset and a lease liability
for all leases currently accounted for as operating leases, with the exception of leases for short periods (less than 12
months) and those for items of low value. IFRS 16 is also expected to have a material impact on key components within the
Consolidated Income Statement as operating lease rental charges will be replaced with depreciation and finance costs.
The impact on the financial statements on transition to IFRS 16 will depend on the approach taken by the Group. The new
standard allows for two different transition approaches, fully retrospective and modified retrospective. Both approaches
will impact the income statement, balance sheet and disclosure when adopted including the opening balance sheet,
although the amounts will differ depending on the approach taken. The Group is currently in the process of assessing
the impact of the new standard, deciding on the transition approach and identifying process, systems and information
required when adopted. The Group has not yet concluded on a transition approach and as such it is not possible to fully
quantify the impact of IFRS 16 at this stage.
The Group continues to monitor the potential impact of other new standards and interpretations which may be
endorsed and require adoption by the Group in future reporting periods. The Group does not consider that any other
standards, amendments or interpretations issued by the IASB, but not yet applicable, will have a significant impact on
the financial statements.
Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with adopted IFRSs requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates.
The judgements and estimates 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 estimates in the prior year was the valuation of the intangibles assets recognised
as part of the acquisition of Go Outdoors Topco Limited (due to the inherent uncertainty involved in forecasting and
discounting future cash flows). As the measurement period for this acquisition has now closed, this has been removed
from the critical accounting estimates as the risk is now categorised as impairment of goodwill and other intangible
assets which is discussed further below.
Included within critical accounting policies in the current year is the valuation of the intangible assets recognised as part
of the acquisition of Sport Zone (see note 11). 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.
Intangible assets with indefinite lives
During the financial period ended 3 February 2018, the Board reassessed the useful life of each fascia name held by the
Group and determined that fascia names should have a finite life rather than an infinite life as previously estimated. The
change in estimate is as a result of identifying that, based on historical experience, the estimated useful life of a fascia is
finite taking into account factors such as group synergies and a homogenised offer.
The factors that the Board took into consideration when determining the useful life of each fascia name were:
• The strength of the respective fascia names in the relevant sector and geographic region where the fascia is located
• The history of the fascia names and that of similar assets in the relevant retail sectors
• The commitment of the Group to continue to operate these stores separately for the foreseeable future, including the
ongoing investment in new stores and refurbishments
The change in the useful life assessment from indefinite to finite has been accounted for as a change in the accounting
estimate in accordance with IAS 8. Quantification of the impact of this change in accounting estimate is provided in
Note 12.
121
Financial Statements
Notes to the Consolidated Financial Statements
1. Basis of Preparation (continued)
Critical Accounting Estimates
Impairment of Goodwill
Goodwill arising on acquisition is allocated to groups of cash-generating units that are expected to benefit from the
synergies of the business combination from which goodwill arose. Goodwill is allocated to groups of cash-generating
units, 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 amount is the higher of the value in use
and the fair value less the costs to sell. The recoverable amounts of these cash-generating units 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 cash-generating unit and the choice of a suitable discount rate in order to calculate the
present value. See Note 12 for further disclosure on impairment of goodwill and review of the key assumptions used.
Impairment of Other Intangible Assets with Definite Lives
The Group is required to test whether 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.
Alternatively the carrying value of the brand names has been allocated to a cash-generating unit, along with the
relevant goodwill and fascia names, and tested in the value-in-use calculation performed for that cash-generating unit.
The recoverable amount of brand licences is determined based on value-in-use calculations. The use of this method
requires the estimation of future cash flows expected to arise from the continuing operation of the cash-generating
unit until the licence expiry date and the choice of a suitable discount rate in order to calculate the present value. Note
12 provides further disclosure on impairment of other intangible assets with definite lives, including review of the key
assumptions used.
Provisions to Write Inventories Down to Net Realisable Value
The Group makes provisions for obsolescence, mark downs and shrinkage based on historical experiences, the quality of
the current season buy, market trends and management estimates of future events. The provision requires estimates for
shrinkage, the expected future selling price of items and identification of aged and obsolete items.
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
Chairman 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 therefore as follows:
• Sports Fashion – includes the results of JD Sports Fashion Plc, John David Sports Fashion (Ireland) Limited, Spodis
SA, Champion Sports Ireland, Iberian Sports Retail Group SL (including subsidiary companies), JD Sports Fashion BV,
Sports Unlimited Retail BV, JD Sports Fashion Germany GmbH, JD Sports Fashion SRL, JD Sports Fashion Belgium
BVBA, JD Sports Fashion Sweden AB, JD Sports Fashion Denmark ApS, JD Sports Fashion SDN BHD, JD Sports Fashion
Korea Inc, JD Sports Fashion India LLP, JD Sports Fashion Holdings Aus Pty (including subsidiary companies), Size
GmbH, JD Gyms Limited, Duffer of St George Limited, Topgrade Sportswear Limited, Kooga Rugby Limited, Focus
Brands Limited (including subsidiary companies), Kukri Sports Limited (including global subsidiary companies),
Source Lab Limited, R.D. Scott Limited, Tessuti Group Limited (including subsidiary companies), Nicholas Deakins
Limited, Cloggs Online Limited, Clothingsites.co.uk Limited, 2Squared Agency Limited, 2Squared Retail Limited,
Mainline Menswear Limited, Hip Store Limited, Simon & Simon Fashion Limited and Dantra Limited.
• Outdoor – includes the results of Blacks Outdoor Retail Limited, Tiso Group Limited (including subsidiary companies)
and Go Outdoors Topco Limited (including subsidiary companies).
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 core ‘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 products and 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. Disclosure of revenue from major product
groups is not provided at this time due to the cost involved to develop a reliable product split on a same category basis
across all companies in the Group.
Intersegment transactions are undertaken in the ordinary course of business on arm’s length terms.
122
Financial Statements
Notes to the Consolidated Financial Statements
2. Segmental Analysis (continued)
The Board consider that certain items are cross divisional in nature and cannot be allocated between the segments
on a meaningful basis. 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 liability of £5.3 million (2017: £8.2 million) and an
income tax liability of £30.2 million (2017: £33.6 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 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.
Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable
for goods and services provided in the normal course of business, net of price discounts and sales related taxes.
Goods Sold Through Retail Stores and Trading Websites
In the case of goods sold through the retail stores and trading websites, revenue is recognised when goods are
sold and the title has passed, less provision for returns. Accumulated experience is used to estimate and provide
for such returns at the time of the sale and this provision is included within accruals. Retail sales are usually in cash,
by debit card or by credit card.
• For online sales and click and collect orders, where the customer pays online but collects in store, title is deemed
to have passed when the goods are dispatched from the warehouse.
• For reserve and collect, where the customer reserves online but pays at the point of collection from the store,
the title is deemed to have passed when the goods are collected by the customer.
Wholesale Revenue
Wholesale revenue is recognised when goods are dispatched and the title and the risks and rewards of ownership
have passed to the customer. In some instances, goods are sold with a right of return. Where wholesale goods are
sold with a right of return, a provision is made to estimate the expected level of returns based on accumulated
experience and historical rates. The provision for returns is included within accruals. Wholesale sales are either
settled by cash received in advance of the goods being dispatched or made on agreed credit terms.
Gym Membership Revenue
Revenue from the sale of fitness club memberships is recognised in the period the membership relates to. JD Gyms
offers gym memberships with no contract therefore income related to joining fees are recognised immediately on the
basis that the related service has been performed. For new club openings, memberships are sold and joining fees are
collected in the period before the new club is opened. Membership income received in advance of the club opening
is deferred until the club is open and then recognised on an accruals basis over the related membership period.
Discount Card Revenue
Income from the sale of annual discount cards is accounted for on a systematic basis over the 12 month life of the
card which best matches the profile of the spend on these cards.
Gift Cards
The initial sale of a gift card is treated as an exchange of tender with the revenue recognised when the cards are
redeemed by the customer. Revenue from gift card breakage is recognised when the likelihood of the customer
utilising the gift card becomes remote.
123
Financial Statements
Notes to the Consolidated Financial Statements
2. Segmental Analysis (continued)
Business Segments
Information regarding the Group’s reportable operating segments for the 53 weeks to 3 February 2018 is shown below:
Income statement
Revenue
Operating profit before exeptional items
Exceptional items
Operating profit
Financial income
Financial expenses
Profit before tax
Income tax expense
Profit for the period
Total assets and liabilities
Total assets
Total liabilities
Total segment net assets / (liabilities)
Other segment information
Capital expenditure:
Software development
Property, plant and equipment
Non-current other assets
Depreciation, amortisation and impairments:
Depreciation and amortisation of non-current assets
Impairment of intangible assets (Exceptional Items)
Impairment of non-current assets (Non exceptional Items)
Sports Fashion
£m
Outdoor
£m
2,745.0
300.0
(9.6)
290.4
416.4
8.8
(3.3)
5.5
Sports Fashion
£m
Outdoor
£m
1,446.4
(667.6)
778.8
257.3
(166.3)
91.0
Unallocated
£m
-
(35.5)
(35.5)
Eliminations
£m
(77.5)
77.5
-
Sports Fashion
£m
Outdoor
£m
4.5
157.4
12.8
58.7
8.3
3.5
-
11.9
-
12.6
3.3
1.6
Total
£m
3,161.4
308.8
(12.9)
295.9
0.6
(2.0)
294.5
(58.1)
236.4
Total
£m
1,626.2
(791.9)
834.3
Total
£m
4.5
169.3
12.8
71.3
11.6
5.1
124
Financial Statements
Notes to the Consolidated Financial Statements
2. Segmental Analysis (continued)
The comparative segmental results for the 52 weeks to 28 January 2017 are as follows:
Income statement
Revenue
Operating profit before exceptional items
Exceptional items
Operating profit
Financial income
Financial expenses
Profit before tax
Income tax expense
Profit for the period
Total assets and liabilities
Total assets
Total liabilities
Total segment net assets / (liabilities)
Other segment information
Capital expenditure:
Software development
Property, plant and equipment
Non-current other assets
Depreciation, amortisation and impairments:
Depreciation and amortisation of non-current assets
Impairment of intangible assets (Exceptional Items)
Impairment of non-current assets (Non exceptional Items)
Geographical Information
Sports Fashion
£m
Outdoor
£m
Total
£m
2,180.6
198.1
2,378.7
245.0
(6.4)
238.6
1.2
-
1.2
Sports Fashion
£m
Outdoor
£m
994.5
(463.4)
531.1
256.0
(166.5)
89.5
Unallocated
£m
-
(41.8)
(41.8)
Eliminations
£m
(71.6)
71.6
-
246.2
(6.4)
239.8
0.8
(2.2)
238.4
(53.8)
184.6
Total
£m
1,178.9
(600.1)
578.8
Sports Fashion
£m
Outdoor
£m
Total
£m
3.8
72.8
6.9
57.4
6.4
(0.8)
-
4.5
-
5.0
-
0.8
3.8
77.3
6.9
62.4
6.4
-
The Group’s operations are located in the UK, Republic of Ireland, France, Spain, Germany, the Netherlands, Italy,
Portugal, Sweden, Denmark, Belgium, Malaysia, South Korea, India, Australia, New Zealand, Canada, Dubai, Singapore
and Hong Kong.
The following table provides analysis of the Group’s revenue by geographical market, irrespective of the origin of the
goods / services:
Revenue
UK
Europe
Rest of world
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
2,058.7
939.9
162.8
3,161.4
1,655.5
656.9
66.3
2,378.7
The revenue from any individual country, with the exception of the UK, is not more than 10% of the Group’s total revenue.
125
Financial Statements
Notes to the Consolidated Financial Statements
2. Segmental Analysis (continued)
The following is an analysis of the carrying amount of segmental non-current assets by the geographical area in which
the assets are located:
Non-current assets
UK
Europe
Rest of world
3. Profit Before Tax
Profit before tax is stated after charging:
Auditor’s remuneration:
Audit of these financial statements (KPMG LLP)
Amounts receivable by the Company’s auditor (KPMG LLP) and its associates in respect of:
Audit of financial statements of subsidiaries of the Company
Other tax advisory services
Depreciation and amortisation of non-current assets:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Amortisation of non-current other assets – owned
Impairments of non-current assets:
Property, plant and equipment
Intangible assets
Other non-current assets
Loss on disposal of non-current assets
Rentals payable under non-cancellable operating leases for:
Land and buildings – non-contingent rentals payable
Land and buildings – contingent rentals payable
Other – plant and equipment
Movement in the fair value of forward contracts
Profit before tax is stated after crediting:
Rents receivable and other income from property
Sundry income
Reversal of impairments of other non current assets
Reverse premia
Foreign exchange gain recognised
2018
£m
362.1
260.8
31.5
654.4
2017
£m
284.7
163.3
16.8
464.8
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
0.2
0.7
-
57.6
10.9
2.8
4.6
11.6
0.5
1.6
192.6
19.7
4.1
21.5
0.8
1.6
-
2.1
25.9
0.1
0.6
0.1
51.2
8.0
3.2
0.4
6.4
-
0.3
149.3
14.4
3.2
0.1
0.6
1.2
0.4
2.1
3.5
In addition, fees of £0.1 million (2017: £0.1 million) were incurred and paid by Pentland Group Plc (see Company note C22)
in relation to the non-coterminous audit of the Group for the purpose of inclusion in their consolidated financial statements.
Non-current other assets comprise key money, store deposits, legal fees and lease premia associated with the acquisition
of leasehold interests (see Note 14).
126
Financial Statements
Notes to the Consolidated Financial Statements
4. Exceptional Items
Items that are, in aggregate, material in size and / or unusual or infrequent in nature, are included within operating
profit and disclosed separately as exceptional items in the Consolidated Income Statement.
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 underlying business performance. The
principal items where significant or non-recurring which may be included as exceptional items are:
Impairment of non-current other assets
• Profit / (loss) on the disposal of non-current assets
• Provision for rentals on onerous property leases
• Impairment of property, plant and equipment
•
• Impairment of goodwill, brand names and fascia names
• Impairment of investment property
• Profit / (loss) on disposal of subsidiary undertakings
• Negative goodwill
• Business restructuring and business closure related costs
• (Gains) / losses arising on changes in ownership interest where control has been obtained
• Fair value adjustments to put option liabilities
Impairment of goodwill and fascia names (1)
Movement in fair value of put and call options (2)
Administrative expenses – exceptional
Note
12
20
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
11.6
1.3
12.9
6.4
-
6.4
1. The charge in the period to 3 February 2018 relates to the non-cash impairment of the fascia name balance arising in
prior years on the acquisition of Next Athleisure Pty Limited and JD Sports Fashion SDN BHD and the impairment of
goodwill arising in prior years on the acquisition of Tiso Group Limited. The charge in the period to 28 January 2017
relates to the non-cash impairment of the fascia name balance arising in prior years on the acquisition of ActivInstinct
Limited, the fascia name arising in the year on the acquisition of Aspecto Holdings Limited and Infinities Retail Group
Holdings Limited and the impairment of the goodwill arising in the year on the acquisition of 2Squared Agency Limited.
2. Movement in the fair value of put and call options (See note 20).
These administrative expenses are exceptional items as they are, in aggregate, material in size and / or unusual or
infrequent in nature.
5. Remuneration of Directors
The remuneration of the Executive Directors includes provision for future LTIP payments of £nil (2017: £0.6 million).
Further information on Directors’ emoluments is shown in the Directors’ Remuneration Report on page 92.
In the opinion of the Board, the key management as defined under revised IAS 24 ‘Related Party Disclosures’ are the six
Executive and Non-Executive Directors (2017: six). During the year there was one (2017: one) director within the defined
contribution pension scheme. Full disclosure of the Directors’ remuneration is given in the Directors’ Remuneration
Report on page 97.
Directors’ emoluments:
As Non-Executive Directors
As Executive Directors
Pension contributions
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
0.2
3.0
-
3.2
0.1
3.6
-
3.7
127
Financial Statements
Notes to the Consolidated Financial Statements
6. Staff Numbers and Costs
The average number of persons employed by the Group (including Directors) during the period, analysed by category,
was as follows:
Sales and distribution
Administration
Full time equivalents
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Other pension costs (see note 27)
7. Financial Income
2018
2017
29,240
1,052
30,292
19,212
24,850
976
25,826
16,218
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
398.8
41.0
7.3
447.1
301.1
29.9
4.8
335.8
Financial income comprises interest receivable on funds invested. Financial income is recognised in the Consolidated
Income Statement on an effective interest method.
Bank interest
Other interest
Financial income
8. Financial Expenses
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
0.6
-
0.6
0.7
0.1
0.8
Financial expenses comprise interest payable on interest-bearing loans and borrowings. Financial expenses are
recognised in the Consolidated Income Statement on an effective interest method.
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
1.9
0.1
2.0
1.9
0.3
2.2
On bank loans and overdrafts
Amortisation of facility fees
Financial expenses
128
Financial Statements
Notes to the Consolidated Financial Statements
9. Income Tax Expense
Tax on the profit or loss for the year comprises current and deferred tax.
Current Income Tax
Current income tax expense is calculated using the tax rates which have been enacted or substantively enacted by
the reporting date, adjusted for any tax paid in respect of prior years.
Deferred Tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences
are not provided for:
• Goodwill not deductible for tax purposes
• The initial recognition of assets or liabilities that affect neither accounting nor taxable profit
• Differences relating to investments in subsidiaries to the extent that they will probably not
reverse in the foreseeable future
The amount of deferred tax provided is based on the expected realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable
that the related tax benefit will be realised.
Current tax
UK corporation tax at 19.2% (2017: 20%)
Adjustment relating to prior periods
Total current tax charge
Deferred tax
Deferred tax (origination and reversal of temporary differences)
Adjustment relating to prior periods
Total deferred tax credit
Income tax expense
Profit before tax multiplied by the standard rate of corporation tax 19.2% (2017: 20%)
Effects of:
Expenses not deductible
Depreciation and impairment of non-qualifying non-current assets (including brand names arising on consolidation)
Non taxable income
Loss on disposal of non-qualifying non-current assets
Effect of tax rates in foreign jurisdictions
Research and development tax credits and other allowances
Recognition of previously unrecognised tax losses
Reduction in tax rate
Change in unrecognised temporary differences
Under provided in prior periods
Chargeable gains
Income tax expense
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
64.3
(1.0)
63.3
(4.0)
(1.2)
(5.2)
58.1
57.9
(0.1)
57.8
(4.8)
0.8
(4.0)
53.8
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
56.5
1.4
1.7
(0.4)
0.1
1.5
-
(0.7)
(0.1)
0.3
(2.2)
-
58.1
47.7
1.1
2.9
(0.4)
0.2
0.7
(0.1)
(0.2)
0.7
0.7
0.7
(0.2)
53.8
129
Financial Statements
Notes to the Consolidated Financial Statements
10. Earnings Per Ordinary Share
Basic and Diluted Earnings Per Ordinary Share
The calculation of basic and diluted earnings per ordinary share at 3 February 2018 is based on the profit for the period
attributable to equity holders of the parent of £231.9 million (2017: £178.9 million) and a weighted average number of
ordinary shares outstanding during the 53 week period ended 3 February 2018 of 973,233,160 (2017: 973,233,160).
An Ordinary Resolution was passed at the Annual General Meeting, effective 24 November 2016, resulting in a share
split 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.
53 weeks to
3 February 2018
Number
52 weeks to
28 January 2017
Number
Issued ordinary shares at beginning and end of period
973,233,160
973,233,160
Adjusted Basic and Diluted Earnings Per Ordinary Share
Adjusted basic and diluted 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 meaningful measure of the underlying performance of the Group.
Profit for the period attributable to equity holders of the parent
Exceptional items excluding loss on disposal of non-current assets
4
Tax relating to exceptional items
Profit for the period attributable to equity holders of the parent excluding exceptional items
Adjusted basic and diluted earnings per ordinary share
231.9
12.9
-
244.8
25.15p
178.9
6.4
-
185.3
19.04p
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
Note
11. Acquisitions
Business Combinations
The Group accounts for business combinations using the acquisition method when control is transferred to the
Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect the returns through its power over the entity.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the
Group incurs in connection with a business combination are expensed as incurred.
The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net
assets acquired. Any goodwill that arises is tested annually for impairment. The consideration transferred does not
include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in
the Consolidated Income Statement.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent
consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and
the settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent
consideration are recognised in the Consolidated Income Statement.
The valuation techniques used for measuring the fair value of material assets acquired are as follows:
• Property, plant and equipment – Depreciated replacement cost reflecting adjustments for physical deterioration
as well as functional and economic obsolescence.
• Intangible assets – The relief from royalty method considers the discounted estimated royalty payments that are
expected to be avoided as a result of the intangible assets being owned.
•
Inventories – The fair value is determined based on the estimated selling price in the ordinary course of
business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort
required to sell the inventories.
130
Financial Statements
Notes to the Consolidated Financial Statements
11. Acquisitions (continued)
Current Period Acquisitions
JD Sports Fashion South Korea
On 14 September 2017, the Group acquired an initial 15% of the issued ordinary share capital of J&S Partners Inc. for cash
consideration of 8.1 billion South Korean Won (KRW). As part of the joint venture agreement, the Group has a call
option, exercisable at Group’s discretion, to acquire a further 35% of the share capital. This was subsequently exercised on
13 April 2018.
J&S Partners Inc. subsequently changed its company name to JD Sports Fashion South Korea Inc. and currently trades as
the multibranded Hot-T fascia operating 23 stores and a trading website in South Korea. It is the Group’s current intention
to re-fascia the Hot-T stores as JD.
The period in which the call option could be exercised commenced in October 2017. The Group has concluded, in accordance
with IFRS 10, that the Group has ‘deemed control’ and therefore has the ability to control the entity from the point at which
the Group had the right to exercise the option, being October 2017. The Group has therefore included the results of the
entity in the consolidated financial statements of the Group.
The Board believes that the excess of cash consideration paid over the net identifiable assets on acquisition of £2.9 million
is best considered as goodwill on acquisition representing anticipated future operating synergies. The provisional goodwill
calculation is summarised below:
Acquiree’s net assets at acquisition date:
Property, plant and equipment
Other non-current assets
Inventories
Trade and other receivables
Trade and other payables
Interest bearing loans and borrowings
Net identifiable assets
Non-controlling interest
Goodwill on acquisition
Consideration paid – satisfied in cash
Book value
£m
Measurement
adjustments
£m
Provisional fair
value at
3 February 2018
£m
4.8
13.9
9.2
0.5
(3.5)
(5.8)
19.1
(16.3)
(1.9)
-
(0.4)
-
-
-
(2.3)
2.0
2.9
13.9
8.8
0.5
(3.5)
(5.8)
16.8
(14.3)
2.9
5.4
Included in the 53 period ended 3 February 2018 is revenue of £15.7 million and profit before tax of £0.4 million in respect
of JD Sports Fashion South Korea.
SDSR – Sports Division SR, S.A. (‘Sport Zone Portugal’)
On 31 January 2018, JD Sports Fashion Plc completed the acquisition of Sport Zone Portugal resulting in the combination
of its existing interests across Iberia with those of Sport Zone in Portugal, Spain and the Canary Islands.
The Group acquired, via its 50% subsidiary Iberian Sports Retail Group SL, 100% of the issued share capital of SDSR –
Sports Division SR, S.A. (‘Sport Zone Portugal’) for net cash consideration of £1.6 million and 30% of the issued share
capital in Iberian Sports Retail Group SL with a fair value of £61.1 million. Included within the 30% of the issued share capital
was the 24.95% of shares of Iberian Sports Retail Group SL that were held in the Treasury Reserve.
Sport Zone Portugal owns 100% of the issued share capital of Sport Zone Espana, Comercio de Articulos de Deporte S.A
(‘Sport Zone Spain’) and 60% of the issued share capital of Sport Zone Canarias (SL) (‘Sport Zone Canaries’). Sport Zone is
a well-established and leading multibranded sports retailer in Portugal, with a presence in mainland Spain and the Canary
Islands. With 138 stores in Iberia, Sport Zone offers a multisport product range with a wide apparel, footwear, accessories
and equipment offering.
Included within the fair value of the net identifiable assets on acquisition are intangible assets of £13.1 million; £9.2 million
representing the ‘Sport Zone’ fascia name and £3.9 million of Sport Zone exclusive brands.
131
Financial Statements
Notes to the Consolidated Financial Statements
11. Acquisitions (continued)
SDSR – Sports Division SR, S.A. (‘Sport Zone Portugal’) (continued)
The Board believes that the excess of consideration paid over the net assets on acquisition of £14.7 million is best considered
as goodwill on acquisition representing anticipated future operating synergies. The provisional goodwill calculation is
summarised below:
Acquiree’s net assets at acquisition date:
Intangible assets
Property, plant and equipment
Other non-current assets
Inventories
Cash and cash equivalents
Trade and other receivables
Income tax assets
Deferred tax assets / (liabilities)
Trade and other payables – current
Trade and other payables – non current
Interest bearing loans and borrowings
Net identifiable assets
Non-controlling interest (40% of Sport Zone Canarias (SL))
Goodwill on acquisition
Consideration paid – satisfied in cash
Consideration paid – fair value of shares in Iberian Sports Retail Group
Total consideration
Book value
£m
Measurement
adjustments
£m
Provisional fair
value at
3 February 2018
£m
-
39.7
1.2
43.0
4.8
5.0
0.2
5.3
(38.1)
(0.9)
(6.9)
53.3
(0.9)
13.1
(6.2)
-
(2.0)
-
-
-
(7.5)
(1.9)
-
-
(4.5)
0.1
13.1
33.5
1.2
41.0
4.8
5.0
0.2
(2.2)
(40.0)
(0.9)
(6.9)
48.8
(0.8)
14.7
1.6
61.1
62.7
Given the proximity of the acquisition to the financial year ended 3 February 2018, the results between acquisition and
the financial year ended 3 February 2018 were not included in the results of the Group for the 53 week period ended
3 February 2018.
Ben Dunne Gyms (UK) Limited
On 28 December 2017, the Group acquired, via its 87.5% owned subsidiary JD Sports Gyms Limited, 100% of the issued
ordinary share capital of Ben Dunne Gyms (UK) Limited for cash consideration of £1 assuming £2.0 million of net debt
as part of the transaction. Following the acquisition, the company name was changed to JD Sports Gyms Acquisitions
Limited. The Board believes that the excess of cash consideration paid over the net identifiable assets on acquisition of
£1.0 million is best considered as goodwill representing future operating synergies.
Included in the 53 period ended 3 February 2018 is revenue of £0.1 million and a break even result before tax in respect
of JD Sports Gyms Acquisitions Limited.
Dantra Limited (‘Kids Cavern’)
On 1 February 2018, the Group acquired 75% of the issued ordinary share capital of Dantra Limited for cash consideration
of £6.3 million. Dantra Limited trades under the fascia name Kids Cavern from three stores and a trading website. The Board
believes that the excess of cash consideration paid over the net identifiable assets on acquisition of £4.2 million is best
considered as goodwill representing future operating synergies.
Given the proximity of the acquisition to the financial year ended 3 February 2018, the results between acquisition and
the financial year ended 3 February 2018 were not included in the results of the Group for the 53 week period ended
3 February 2018.
132
Financial Statements
Notes to the Consolidated Financial Statements
11. Acquisitions (continued)
Other Acquisitions
During the period, the Group has made several small acquisitions, including increasing its shareholding to 100% in two
subsidiaries which were previously non-wholly owned. These transactions were not material.
Full Year Impact of Acquisitions
Had the acquisitions listed on page 131 to 132 been effected at 29 January 2017, the revenue and profit before tax of the
Group for the 53 week period to 3 February 2018 would have been £3,362.8 million and £278.3 million respectively.
Acquisition Costs
Acquisition related costs amounting to £0.7 million (JD Sports Fashion South Korea £0.2 million, Sport Zone Group
£0.4 million, other acquisitions £0.1 million (Ben Dunne Gyms Limited and Dantra Limited)) 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.
Prior Period Acquisitions
Sports Unlimited Retail BV
On 20 March 2016, the Group acquired, via its newly incorporated subsidiary Sports Unlimited Retail BV, the trading assets
and trade of the Aktiesport and Perry Sport fascias from the Trustee of Unlimited Sports Group BV which was declared
bankrupt by the court of Amsterdam on 23 February 2016. On acquisition there were 187 stores and two trading websites.
The period in which measurement adjustments could be made has now closed on this acquisition and the final goodwill
calculation is summarised below:
Acquiree’s net assets at acquisition date:
Property, plant and equipment
Inventories
Cash and cash equivalents
Trade and other payables
Provisions
Net identifiable assets
Goodwill on acquisition
Consideration paid – satisfied in cash
Book value
£m
Measurement
adjustments
£m
Fair value at
3 February 2018
£m
3.9
23.4
0.1
(8.4)
-
19.0
-
5.2
-
(2.1)
(3.1)
-
3.9
28.6
0.1
(10.5)
(3.1)
19.0
-
19.0
The Board believes that the cash consideration of €26.5 million represents the best estimates of the fair value of the
net assets acquired. No measurement adjustments have been made to the fair values during the 53 week period ended
3 February 2018.
133
Financial Statements
Notes to the Consolidated Financial Statements
11. Acquisitions (continued)
JD Sports Fashion SDN BHD
On 28 April 2016, the Group acquired via its 50% subsidiary in Malaysia, JD Sports Fashion SDN BHD, 20 multi-brand Sports
Fashion stores and a trading website which trade as Sports Empire, Revolution and The Marathon Shop from Runners
World SDN BHD. JD Sports Fashion SDN BHD is an entity controlled by the Group and therefore the results and financial
position of the entity are consolidated into the financial statements of the Group. The cash consideration payable on this
transaction was MYR 20.7 million.
The period in which measurement adjustments could be made has now closed on this acquisition and the final goodwill
calculation is summarised below:
Acquiree’s net assets at acquisition date:
Intangible assets
Property, plant and equipment
Other non-current assets
Inventories
Deferred tax liabilities
Net identifiable assets
Goodwill on acquisition
Consideration paid – satisfied in cash
Book value
£m
Measurement
adjustments
£m
Fair value at
3 February 2018
£m
0.8
0.4
0.2
2.0
-
3.4
0.3
-
-
-
(0.3)
-
1.1
0.4
0.2
2.0
(0.3)
3.4
-
3.4
The Board believes that the cash consideration of MYR 20.7 million represents the best estimates of the fair value of the
net assets acquired. No measurement adjustments have been made to the fair values during the 53 week period ended 3
February 2018.
SportIberica Sociedade de Artigos de Desporto, S.A.
On 1 July 2016, the Group acquired, both directly and via its 50.1% owned subsidiary Iberian Sports Retail Group SL, an
aggregate of 80% of the issued share capital of Sportiberica Sociedade de Artigos de Desporto S.A (“Sportiberica”) for
cash consideration of €4.2 million with additional consideration of up to €0.5 million payable if certain criteria were met. At
acquisition, management believed that the criteria would be met for the maximum consideration to be payable and the fair
value of the total consideration at that time of €4.7 million was recognised. The actual amount of additional consideration
paid in the period ended 3 February 2018 was €0.3 million reducing the total consideration paid to €4.5 million. This has
been reflected in the table below.
The period in which measurement adjustments could be made has now closed on this acquisition and the final goodwill
calculation is summarised below:
Acquiree’s net assets at acquisition date:
Property, plant and equipment
Inventories
Cash
Trade and other receivables
Income tax assets
Trade and other payables
Interest bearing loans and borrowings
Net identifiable assets
Non-controlling interest
Goodwill on acquisition
Consideration paid – satisfied in cash
Book value
£m
Measurement
adjustments
£m
Fair value at
3 February 2018
£m
0.2
2.8
0.7
0.9
-
(1.5)
(0.7)
2.4
(0.5)
0.1
0.4
-
(0.8)
0.1
(0.2)
-
(0.4)
0.1
0.3
3.2
0.7
0.1
0.1
(1.7)
(0.7)
2.0
(0.4)
1.6
3.2
The Board believes that the excess of cash consideration paid over net identifiable assets on acquisition of £1.6 million
is best considered as goodwill on acquisition representing anticipated future operating synergies. The measurement
adjustments reflected in the table above were made to the fair values during the period ended 3 February 2018.
134
Financial Statements
Notes to the Consolidated Financial Statements
11. Acquisitions (continued)
Next Athleisure Pty Limited
On 26 August 2016, the Group acquired, via its newly incorporated subsidiary JD Sports Fashion Holdings Australia Pty,
80% of the issued ordinary share capital of Next Athleisure Pty Limited for consideration of $6.6 million AUD and has also
advanced $2.4 million AUD to allow it to settle an element of its indebtedness.
The period in which measurement adjustments could be made has now closed on this acquisition and the final goodwill
calculation is summarised below:
Acquiree’s net assets at acquisition date:
Intangible assets
Property, plant and equipment
Inventories
Cash
Trade and other receivables
Income tax assets
Deferred tax assets / (liabilities)
Trade and other payables
Interest bearing loans and borrowings
Net identifiable assets
Non-controlling interest
Goodwill on acquisition
Consideration paid – satisfied in cash
Consideration as loan owed to NCI
Total consideration
Book value
£m
Measurement
adjustments
£m
Fair value at
3 February 2018
£m
4.8
5.2
9.4
0.5
2.7
0.2
1.5
(11.9)
(8.0)
4.4
(0.9)
2.8
0.6
0.9
0.1
0.1
-
(2.1)
(1.1)
(0.8)
0.5
(0.1)
7.6
5.8
10.3
0.6
2.8
0.2
(0.6)
(13.0)
(8.8)
4.9
(1.0)
-
3.5
0.4
3.9
The Board believes that the cash consideration of $6.6 million represents the best estimates of the fair value of the
net assets acquired. No measurement adjustments have been made to the fair values during the 53 week period ended
3 February 2018.
Go Outdoors Topco Limited
On 27 November 2016, the Group acquired 100% of the issued ordinary share capital of Go Outdoors Topco Limited (‘Go
Outdoors’) for consideration of £112.3 million with the Group assuming net debt of £11.4 million as part of the transaction.
Go Outdoors is a nationwide omnichannel retailer catering for the outdoor enthusiast and specialist alike with 58 stores
across the UK at acquisition, the majority of which are situated in out of town retail parks.
Included within the fair value of net identifiable assets on acquisition are intangible assets of £66.7 million; £59.1 million
representing the ‘GO Outdoors’ fascia name and £7.6 million of brands. The period in which measurement adjustments
could be made has now closed on this acquisition and the final goodwill calculation is summarised below:
Acquiree’s net assets at acquisition date:
Intangible assets
Property, plant and equipment
Inventories
Cash
Trade and other receivables
Trade and other payables
Income tax liabilities
Deferred tax liabilities
Interest bearing loans and borrowings
Net identifiable assets
Goodwill on acquisition
Consideration paid – satisfied in cash
Book value
£m
Measurement
adjustments
£m
Fair value at
3 February 2018
£m
0.3
28.5
40.4
8.8
7.3
(48.2)
(1.0)
-
(20.2)
15.9
66.4
(2.5)
-
-
-
(0.6)
-
(11.3)
-
52.0
66.7
26.0
40.4
8.8
7.3
(48.8)
(1.0)
(11.3)
(20.2)
67.9
44.4
112.3
The Board believes that the excess of cash consideration paid over net identifiable assets on acquisition of £44.4 million
is best considered as goodwill on acquisition representing the strategic benefit of a larger Outdoor operation in the
Group. No measurement adjustments have been made to the fair values in the 53 week period ended 3 February 2018.
135
Financial Statements
Notes to the Consolidated Financial Statements
11. Acquisitions (continued)
Aspecto Holdings Limited
On 18 July 2016, the Group, via its new 100% subsidiary Napco 104 Limited acquired 100% of the entire issued share capital
of Aspecto Holdings Limited for cash consideration of £1. The period in which measurement adjustments could be made
has now closed on this acquisition and no measurement adjustments were made to the fair values during the period ended
3 February 2018. The Board believes that the cash consideration of £1 represents the current best estimates of the fair value
of the net assets acquired.
On 21 August 2016, the trade and assets (with the exception of certain assets and liabilities) were hived up into Tessuti
Limited, a 100% owned subsidiary of JD Sports Fashion Plc.
Infinities Retail Group Limited
On 12 September 2016, the Group, via its new 100% subsidiary Ensco 1157 Limited acquired 100% of the entire issued share
capital of Infinities Retail Group Limited for cash consideration of £1. The period in which measurement adjustments could
be made has now closed on this acquisition and no measurement adjustments were made to the fair values during the
period ended 3 February 2018. The Board believes that the cash consideration of £1 represents the current best estimates
of the fair value of the net assets acquired.
On 31 October 2016, the trade and assets (with the exception of certain assets and liabilities) were hived up into Tessuti
Limited, a 100% owned subsidiary of JD Sports Fashion Plc.
Clothingsites.co.uk Limited
On 26 September 2016, the Group, via its new 100% subsidiary Ensco 1173 Limited acquired 100% of the entire issued share
capital of Clothingsites.co.uk Limited for an initial cash consideration of £1. Clothingsites.co.uk Limited currently operates
two trading websites, Woodhouse Clothing and Brown Bag Clothing. The period in which measurement adjustments could
be made has now closed on this acquisition and no measurement adjustments were made to the fair values during the
period ended 3 February 2018. The Board believes that the cash consideration of £1 represents the current best estimates
of the fair value of the net assets acquired.
2Squared Agency Limited & 2Squared Retail Limited (‘2Squared’)
On 30 November 2016, the Group acquired 69% of the issued share capital of 2Squared Agency Limited and 51% of the
issued share capital of 2Squared Retail Limited for cash consideration of £0.5 million. The Board believed that the excess
of cash consideration paid over the net identifiable assets on acquisition of £1.0 million was best considered as goodwill
representing future operating synergies. The goodwill was subsequently impaired during the financial period ended 28
January 2017. The period in which measurement adjustments could be made has now closed on this acquisition and no
measurement adjustments were made to the fair values during the period ended 3 February 2018.
Other Acquisitions
During the prior period, the Group has made several small acquisitions, including increasing its shareholding to 100% in
three subsidiaries which were previously non-wholly owned. These transactions were not material.
136
Financial Statements
Notes to the Consolidated Financial Statements
12. Intangible Assets
Cost or valuation
At 30 January 2016
Additions
Acquisitions
Disposals
Exchange differences
At 28 January 2017
Additions
Acquisitions
Exchange differences
At 3 February 2018
Amortisation and impairment
At 30 January 2016
Charge for the period
Impairments
Disposals
At 28 January 2017
Charge for the period
Impairments
At 3 February 2018
Net book value
At 3 February 2018
At 28 January 2017
At 30 January 2016
Goodwill
£m
Brand licences
£m
Brand names
£m
Fascia names
£m
Software
development
£m
83.9
-
46.9
-
(0.2)
130.6
0.2
22.8
1.7
155.3
36.5
-
0.9
-
37.4
-
3.3
40.7
114.6
93.2
47.4
11.8
-
-
-
-
11.8
-
-
-
11.8
8.1
0.8
-
-
8.9
0.8
-
9.7
2.1
2.9
3.7
15.3
-
7.7
(2.4)
-
20.6
-
3.9
-
24.5
11.8
1.7
-
(2.4)
11.1
1.5
-
12.6
11.9
9.5
3.5
24.4
-
73.4
-
0.2
98.0
-
9.2
0.3
107.5
7.2
2.2
5.5
-
14.9
5.7
8.3
28.9
78.6
83.1
17.2
6.9
3.8
-
-
-
10.7
4.5
-
-
15.2
5.2
3.3
-
-
8.5
2.9
-
11.4
3.8
2.2
1.7
Total
£m
142.3
3.8
128.0
(2.4)
-
271.7
4.7
35.9
2.0
314.3
68.8
8.0
6.4
(2.4)
80.8
10.9
11.6
103.3
211.0
190.9
73.5
Acquisitions
The acquisitions of Intangibles Assets in the current year principally relate to the acquisition of Sport Zone and JD Sport
Fashion South Korea. The acquisitions in the prior year principally relate to the acquisition of Go Outdoors Limited,
Sports Unlimited Retail BV, Next Athleisure, JD Sports Fashion SDN. BHD and Sportiberica. Further details, including the
provisional fair value of the assets acquired, are provided in Note 11.
Impairment
The impairment in the current period relates to the impairment of the fascia name arising in prior years on the acquisition
of Next Athleisure Pty Limited and JD Sports Fashion SDN. BHD and the goodwill arising in prior years on the acquisition
of Tiso Group Limited.
The impairment in the previous period related to the impairment of the ActivInstinct, Aspecto and Infinities fascia names
and the impairment of the goodwill arising on the acquisition of 2Squared.
Intangibles Assets with Definite Lives
Brand Licences
Brand licences are stated at cost less accumulated amortisation and impairment losses. Amortisation of brand
licences is charged to the Consolidated Income Statement within cost of sales over the term to the licence expiry on
a straight line basis.
Brand licences are tested annually for impairment by comparing the recoverable amount to their carrying value.
Impairment losses are recognised in the Consolidated Income Statement.
The recoverable amount of brand licences is determined based on value-in-use calculations. The use of this method
requires the estimation of future cash flows expected to arise from the continuing operation of the relevant cash-
generating unit until the licence expiry date and the choice of a suitable discount rate in order to calculate the
present value.
137
Financial Statements
Notes to the Consolidated Financial Statements
12. Intangible Assets (continued)
The Group’s brand licences and the key assumptions used in the value-in-use calculations, is as follows:
Basic information
Impairment model assumptions used
Segment
Terms
Fila
Sports
Fashion
10 year licence from
January 2011 for
exclusive use of the
brand in the UK and
Republic of Ireland
Net
Book
Value
2018
£m
Net
Book
Value
2017
£m
Short
term
growth
rate (1)
%
Long
term
growth
rate (2)
%
Cost
£m
Margin rate
7.5
2.1
2.9
2.0%
2.0%
Gross margins over the remaining
licence period are assumed to be
consistent with approved budget
levels for the period ending
January 19
Sergio
Sports
Fashion
Sub-licence to use
the brand in the UK
4.3
-
-
N/A
N/A The licence was fully written down
in the period ended January 2015
Pre Tax
Discount
rate (3)
2018
%
Pre Tax
Discount
rate (3)
2017
%
10.6%
11.3%
N/A – fully
written
down
N/A – fully
written
down
11.8
2.1
2.9
1. The short term growth rate is the Board approved compound annual growth rate in sales for the first two year period
following the January 2019 financial year currently underway
2. The long term growth rate is the rate used thereafter until the end of the licence period
3. The discount rate applied is pre-tax and reflects current market assessments of the time value of money and risks
specific to the assets, for which future cash flow estimates have not been adjusted. This discount rate is considered
to be equivalent to the rate a market participant would use
Brand Names
Brand names acquired as part of a business combination are stated at fair value as at the acquisition date less
accumulated amortisation and impairment losses. Brand names separately acquired are stated at cost less
accumulated amortisation and impairment losses. The useful economic life of each purchased brand name is
considered to be finite. In determining the useful economic life of each brand name, the Board considers the market
position of the brands acquired, the nature of the market that the brands operate in, typical product life cycles of
brands and the useful economic lives of similar assets that are used in comparable ways.
The brand names above are amortised over a period of 10 years and the amortisation charge is included within
administrative expenses in the Consolidated Income Statement. Brand names are tested annually for impairment by
comparing the recoverable amount to their carrying value.
The recoverable amount of brand names is determined based on a ‘royalty relief’ method of valuation. This 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. This method involves calculating a net present
value for each brand by discounting the projected future royalties expected over the remaining useful life of each
brand. The future royalties are estimated by applying a suitable royalty rate to the sales forecast. Alternatively
the carrying value of the brand names has been allocated to a cash-generating unit, along with the relevant
goodwill and fascia names, and tested in the value-in-use calculation performed for that cash-generating unit.
Impairment losses are recognised in the Consolidated Income Statement.
138
Financial Statements
Notes to the Consolidated Financial Statements
12. Intangible Assets (continued)
The Group’s brand names and the key assumptions used in ‘royalty relief’ method of valuation, are as follows:
Segment
Date of acquisition
Royalty relief model used to
test the following brands:
Duffer of St George
Sports Fashion
24 November 2009
Hi-Gear
North Ridge
Freedom Trail
Doone
Outdoor
Outdoor
Outdoor
27 November 2016
27 November 2016
27 November 2016
Sports Fashion
31 January 2018
Brands included within the
intangible asset models:
Nanny State
Peter Storm
Eurohike
Brands with nil net book
value at period end:
Kooga
Sonneti
Chilli Pepper
Kukri
Fenchurch
Peter Werth
Henleys
Sports Fashion
Outdoor
Outdoor
Sports Fashion
Sports Fashion
Sports Fashion
Sports Fashion
Sports Fashion
Sports Fashion
Sports Fashion
4 August 2010
9 January 2012
9 January 2012
3 July 2009
26 April 2010
18 June 2010
7 February 2011
17 March 2011
26 May 2011
4 May 2012
One True Saxon
Sports Fashion
13 September 2012
Fly 53
Sports Fashion
2 February 2013
Basic information
Impairment model assumptions used
Net
Book
Value
2018
£m
Net
Book
Value
2017
£m
Short
term
growth
rate (1)
%
Long
term
growth
rate (2)
%
Pre Tax
Discount
rate (3)
2018
%
Pre Tax
Discount
rate (3)
2017
%
Cost
£m
2.0%
3.0%
3.0%
3.0%
2.0%
3.0%
3.0%
3.0%
-
15.7%
15.7%
15.7%
11.3%
16.4%
16.4%
16.4%
2.1
6.0
0.8
0.8
3.9
0.3
2.2
0.8
0.5
1.5
0.2
0.7
1.1
0.4
2.6
0.1
0.5
-
5.3
0.7
0.7
3.9
-
1.0
0.3
-
-
-
-
-
-
-
-
-
0.5
5.9
0.8
0.8
-
-
1.1
0.4
-
-
-
-
-
-
-
-
-
24.5
11.9
9.5
1. The short term growth rate is the Board approved annual growth rate in sales for the first two year period following
the January 2019 financial year currently underway
2. The long term growth rate is the rate used thereafter until the end of the useful life remaining
3. The discount rate applied is pre-tax and reflects current market assessments of the time value of money and risks
specific to the assets, for which future cash flow estimates have not been adjusted. This discount rate is considered
to be equivalent to the rate a market participant would use
Software Development
Software development costs (including website development costs) are capitalised as Intangible Assets if the
technical and commercial feasibility of the project has been demonstrated, the future economic benefits are
probable, the Group has an intention and ability to complete and use or sell the software and the costs can be
measured reliably. Costs that do not meet these criteria are expensed as incurred. Software development costs
are stated at historic cost, less accumulated amortisation.
Software development costs are all amortised over a period of two to seven years and the amortisation charge
is included within administrative expenses in the Consolidated Income Statement.
139
Financial Statements
Notes to the Consolidated Financial Statements
12. Intangible Assets (continued)
Fascia Name
Separately identifiable fascia names acquired are stated at fair value as at the acquisition date less accumulated
amortisation and impairment losses. The initial fair value is determined by using a ‘royalty relief’ method of valuation.
This 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. This method involves calculating a
net present value for each fascia name by discounting the projected future royalties expected using an indefinite
useful economic life for each fascia. The future royalties are estimated by applying a suitable royalty rate to the sales
forecast.
Store and online fascia names are considered to have a finite useful economic life. The useful economic life of an
online fascia name is lower than that of a store fascia name due to increased competition in the marketplace as a
result of reduced barriers to entry. The estimated useful economic lives are as follows:
• Online fascia names
3 to 5 years
• Store fascia names
10 to 20 years
All fascia names are subject to an impairment review on an annual basis or more frequently if there is an indicator
that the fascia name is impaired. The recoverable amount of these assets is determined based on value-in-use
calculations. The use of this method requires the estimation of future cash flows expected to arise from the continuing
operation of the cash-generating unit and the choice of a suitable discount rate in order to calculate the present
value. Impairment losses are recognised in the Consolidated Income Statement.
During the financial period ended 3 February 2018, the Board reassessed the useful life of each fascia name held by the
Group and determined that fascia names should have a finite life rather than an infinite life as previously estimated. The
change in estimate is as a result of identifying that, based on historical experience, the estimated useful life of a fascia is
finite taking into account factors such as group synergies and a homogenised offer.
The factors that the Board took into consideration when determining the useful life of each fascia name were:
• The strength of the respective fascia names in the relevant sector and geographic region where the fascia is located
• The history of the fascia names and that of similar assets in the relevant retail sectors
• The commitment of the Group to continue to operate these stores separately for the foreseeable future, including the
ongoing investment in new stores and refurbishments
The change in the useful life assessment from indefinite to finite has been accounted for as a change in the accounting
estimate in accordance with IAS 8. The change in accounting estimate has resulted in a £5.7 million amortisation charge
for the period ended 3 February 2018. Based on the carrying value of the fascia names held as at 3 February 2018 and
the current estimate of the useful life for each of these assets, the amortisation charge for the financial period ended 2
February 2019 is expected to be at a similar level.
140
Financial Statements
Notes to the Consolidated Financial Statements
12. Intangible Assets (continued)
Intangibles Assets with Indefinite Lives
Goodwill
Goodwill represents amounts arising on acquisition of subsidiaries.
Method 1: For acquisitions on or after 31 January 2010, the Group measures goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the acquiree; plus
•
if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less
• the net recognised amount of the identifiable assets acquired and liabilities assumed.
When the excess is negative, negative goodwill is recognised immediately in the Consolidated Income Statement.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit / loss
on disposal.
Method 2: In respect of business acquisitions that occurred from 1 February 2004 to 30 January 2010, goodwill
represents the difference between the cost of the acquisition and the net fair value of the identifiable assets,
liabilities and contingent liabilities of the acquiree. When the excess was negative (negative goodwill), it was
recognised immediately in the Consolidated Income Statement as an exceptional item. Transaction costs, other than
those associated with the issue of debt or equity securities, that the Group incurred in connection with business
combinations were capitalised as part of the cost of the acquisition.
Method 3: In respect of acquisitions prior to 1 February 2004, goodwill is included on the basis of its deemed
cost, which represents the amount recorded under previous GAAP. The classification and accounting treatment of
business combinations that occurred prior to 1 February 2004 has not been reconsidered in preparing the Group’s
opening adopted IFRS balance sheet at 1 February 2004.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to groups of cash-generating
units and is tested annually for impairment and whenever there is an indication that the goodwill may be impaired.
The cash-generating units used are individual stores and the groups of cash-generating units are either the store
portfolios or individual businesses acquired. The recoverable amount is compared to the carrying amount of the
cash-generating units including goodwill.
The recoverable amount of a cash-generating unit is determined based on value-in-use calculations. The carrying amount
of goodwill and fascia name by cash-generating units, along with the key assumptions used in the value-in-use calculation
is set out on the following pages:
141
Financial Statements
Notes to the Consolidated Financial Statements
12. Intangible Assets (continued)
Basic financial information
Impairment model assumptions used
Goodwill
2018
£m
Fascia
name
2018
£m
Total
intangible
2018
£m
Goodwill
2017
£m
Fascia
name
2017
£m
Total
intangible
2017
£m
Short term
growth
rate (1)
%
Long term
growth
rate (2)
%
Margin rate
15.0
-
15.0
15.0
-
15.0
1.0%
1.0%
Gross margins are assumed
to be broadly consistent
with recent historic and
approved budget levels
Pre Tax
Discount
rate (3)
2018
%
Pre Tax
Discount
rate (3)
2017
%
8.0%
7.7%
11.2
-
11.2
10.2
-
10.2
2.0%
2.0% Gross margins are assumed
8.0%
8.9%
to be broadly consistent
with recent historic and
approved budget levels
6.2
3.8
10.0
5.7
3.8
9.5
2.0%
2.0% Gross margins are assumed
11.1%
12.2%
Segment
Sports
Fashion
First Sport
store
portfolio
Champion
store
portfolio
Sports
Fashion
Sprinter
store
portfolio
Sports
Fashion
Blacks/
Millets
store
portfolio
(4)
Tiso store
portfolio
Outdoor
-
4.5
4.5
-
5.0
5.0
3.0%
Outdoor
-
2.4
2.4
3.3
2.7
6.0
3.0%
Mainline
Menswear
Limited
Sports
Fashion
7.4
0.7
8.1
7.4
0.8
8.2
1.0%
to be broadly consistent
with recent historic and
approved budget levels
1.0% Gross margins are assumed
to improve by 2.0% in
the short term to reflect
increase proportion of own
brand sales budget and
better purchasing
3.0% Gross margins are assumed
to improve by 2.0% in
the short term to reflect
focused strategy regarding
stock and merchandising
1.0% Gross margins are assumed
to improve by 1.5% in
the short term to reflect
implementation of
enhanced group terms and
focused strategy regarding
stock and merchandising
1.0% The fascia name has been
fully impaired during the
financial period ended
3 February 2018
12.8%
13.2%
14.7%
13.4%
9.9%
10.8%
-
11.7%
Sports
Fashion
-
-
-
-
7.6
7.6
2.0%
Next-
Athleisure
Pty
Limited
Go
Outdoors
Outdoor
44.4
56.1
100.5
44.4
59.1
103.5
2.0%
2.5% Gross margins are assumed
15.2%
15.2%
to be broadly consistent
with recent historic and
approved budget levels
14.7
9.2
23.9
-
-
-
3.0%
3.0% Acquired during the
17.3%
-
financial period ended
3 February 2018
15.7
1.9
17.6
7.2
4.1
11.3 1.0% - 3.0% 1.0% - 2.0% A range of gross margin
7.9% - 11.8% 7.7% - 12.6%
assumptions, from
broadly consistent with
approved budget levels
to improvements of up
to 4% in the short term to
reflect implementation of
enhanced group terms and
focused strategy regarding
stock and merchandising
114.6
78.6
193.2
93.2
83.1
176.3
Sport
Zone
Other
Sports
Fashion
Sports
Fashion
142
Financial Statements
Notes to the Consolidated Financial Statements
12. Intangible Assets (continued)
1. The short term growth rate is the Board approved compound annual growth rate for the four year period following
the January 2019 financial year currently underway
2. The long term growth rate is the rate used thereafter, which is an estimate of the growth based on past experience
within the Group taking account of economic growth forecast for the relevant industries
3. The discount rate applied is pre-tax and reflects the current market assessments of the time value of money and any
specific risk premiums relevant to the individual cash-generating unit. These discount rates are considered to be
equivalent to the rates a market participant would use
4. The impairment model prepared for Blacks and Millets, in addition to covering the fascia names, has also been used
to support the net book value of the Peter Storm and Eurohike brand names, which are exclusively sold through the
Blacks and Millets store portfolio
The cash flow projections used in the value-in-use calculations are all based on actual operating results, together with
financial forecasts and strategy plans approved by the Board covering a five year period. These forecasts and plans are
based on both past performance and expectations for future market development.
Sensitivity Analysis
A sensitivity analysis has been performed on the base case assumptions of margin growth used for assessing the
goodwill and other intangibles.
With regards to the assessment of value-in-use of all cash-generating units, with the exceptions of those listed below,
the Board believe that there are no reasonably possible changes in any of the key assumptions, which would cause the
carrying value of the unit to exceed its recoverable amount.
For the Go Outdoors cash-generating unit, significant changes in key assumptions could cause the carrying value of the
unit to exceed its recoverable amount. The following sensitivities were performed:
• Reduce the assumed short term store and online gross margin rate % growth of 2% to 1%, assuming the business
would be unable to reduce selling and distribution and administrative costs. Assuming all other assumptions remain
unchanged, this would not lead to an impairment.
• Increasing the pre-tax discount rate by 1% would lead to an impairment of £10.2 million. All other assumptions remain
unchanged.
• Reducing the long term growth rate by 1% would lead to an impairment of £4.7 million. All other assumptions remain
unchanged.
The Board has considered the possibility of each of these businesses achieving less revenue and gross profit % than
forecast. Whilst any reduction in revenue would be partially offset by a reduction in revenue related costs, the Board
would also take actions to mitigate the loss of gross profit by reducing other costs.
143
Financial Statements
Notes to the Consolidated Financial Statements
13. Property, Plant and Equipment
Owned Assets
Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Where parts of an item of property, plant and equipment have different useful economic lives, they are accounted
for as separate items.
Legal fees and other costs associated with the acquisition of a leasehold interest are capitalised within non-current
other assets (see note 14). These costs are amortised over the life of the lease.
Rental income from operating leases where the Group is the lessor is recognised on a straight-line basis over the
term of the relevant lease.
Depreciation
Depreciation is charged to the Consolidated Income Statement over the estimated useful life of each part of an item
of property, plant and equipment. The estimated useful economic lives are as follows:
• Freehold land
• Warehouse
• Long leasehold and freehold properties
• Improvements to short leasehold properties
• Computer equipment
• Fixtures and fittings
• Motor vehicles
not depreciated
15 years on a straight line basis
2% per annum on a straight line basis
life of lease on a straight line basis
3 - 4 years on a straight line basis
5 - 7 years, or length of lease if shorter, on a straight line basis
25% per annum on a reducing balance basis
Impairment of Property, Plant and Equipment and Non-current Other Assets
Property, plant and equipment and non-current other assets are reviewed for impairment if events or changes in
circumstances indicate that the carrying amount of an asset or a cash-generating unit is not recoverable. A cash-
generating unit is an individual store. The recoverable amount is the greater of the fair value less costs to sell and
value-in-use. Impairment losses recognised in prior periods are assessed at each reporting period date for any
indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change
in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that
the assets carrying amount does not exceed the carrying amount that would be held (net of depreciation) if no
impairment had been realised.
Leased Assets
Assets funded through finance leases and similar hire purchase contracts are capitalised as property, plant and
equipment where the Group assumes substantially all of the risks and rewards of ownership. Upon initial recognition,
the leased asset is measured at the lower of its fair value and the present value of the minimum lease payments. Future
instalments under such leases, net of financing costs, are included within interest-bearing loans and borrowings.
Rental payments are apportioned between the finance element, which is included in finance costs, and the capital
element which reduces the outstanding obligation for future instalments so as to give a constant charge on the
outstanding obligation.
All other leases are accounted for as operating leases and the rental costs, are charged to the Consolidated Income
Statement on a straight line basis over the life of the lease. Contingent rentals payable based on store revenues are
accrued in line with the related sales and are charged as expenses in the period to which they relate. The value of any
lease incentives is recognised as deferred income and credited to the Consolidated Income Statement against rentals
payable on a straight line basis over the life of the lease.
144
Financial Statements
Notes to the Consolidated Financial Statements
13. Property, Plant and Equipment (continued)
Cost
At 30 January 2016
Additions
Disposals
Reclassifications
Acquisitions
Exchange differences
At 28 January 2017
Additions
Disposals
Reclassifications
Acquisitions
Exchange differences
At 3 February 2018
Depreciation and impairment
At 30 January 2016
Charge for the period
Disposals
Impairments
Exchange differences
At 28 January 2017
Charge for the period
Disposals
Reclassifications
Impairments
Exchange differences
At 3 February 2018
Net book value
At 3 February 2018
At 28 January 2017
At 30 January 2016
Freehold land,
long leasehold
& freehold
properties
Improvements
to short
leasehold
properties
Computer
equipment
Fixtures
and fittings
Assets under
construction
£m
17.2
-
-
-
-
-
17.2
23.8
(4.5)
-
-
-
36.5
0.7
0.2
-
-
-
0.9
0.4
-
-
-
-
1.3
35.2
16.3
16.5
£m
£m
£m
£m
22.8
5.2
(1.8)
-
17.8
0.2
44.2
12.4
(1.5)
(2.0)
3.6
0.4
57.1
11.6
4.6
(0.8)
0.1
-
15.5
5.5
(1.2)
(0.5)
0.3
0.1
19.7
37.4
28.7
11.2
39.9
7.2
(1.6)
-
4.0
0.2
49.7
8.5
(1.4)
1.0
2.6
0.6
61.0
30.2
10.0
(1.5)
0.2
0.1
39.0
7.3
(1.2)
0.8
0.2
0.3
46.4
14.6
10.7
9.7
261.0
64.8
(15.0)
(0.3)
15.5
3.9
329.9
106.1
(17.3)
0.1
30.6
10.3
459.7
125.2
36.3
(13.2)
0.1
1.6
150.0
44.3
(15.3)
1.3
4.1
4.8
189.2
270.5
179.9
135.8
-
-
-
-
-
-
-
18.4
-
-
0.6
-
19.0
-
-
-
-
-
-
-
-
-
-
-
-
19.0
-
-
Motor
vehicles
£m
Total
£m
0.2
0.1
(0.1)
-
0.1
-
0.3
0.1
(0.1)
-
-
-
0.3
0.1
0.1
(0.1)
-
-
0.1
0.1
(0.1)
-
-
-
0.1
0.2
0.2
0.1
341.1
77.3
(18.5)
(0.3)
37.4
4.3
441.3
169.3
(24.8)
(0.9)
37.4
11.3
633.6
167.8
51.2
(15.6)
0.4
1.7
205.5
57.6
(17.8)
1.6
4.6
5.2
256.7
376.9
235.8
173.3
Impairment charges of £4.9 million (2017: £0.4 million) relate to all classes of property, plant and equipment in cash-
generating units which are loss making and where it is considered that the position cannot be recovered as a result of
a continuing deterioration in the performance in the particular store. The cash-generating units represent individual
stores with the loss based on the specific revenue streams and costs attributable to those cash-generating units. Assets
in impaired stores are written down to their recoverable amount which is calculated as the greater of the fair value less
costs to sell and value-in-use.
Included within the depreciation charge for the period ended 3 February 2018 is accelerated depreciation of £3.3 million
(2017: £9.4 million) following a review of the useful economic life of certain items of property, plant and equipment and
assets capitalised.
The carrying amount of the Group’s property, plant and equipment includes an amount of £3.9 million (2017: £1.1 million)
in respect of assets held under finance leases. The depreciation charge on those assets for the current period was £0.5
million (2017: £0.6 million).
145
Financial Statements
Notes to the Consolidated Financial Statements
14. Non-Current Other Assets
Key Money
Monies paid in certain countries to give access to retail locations are capitalised within non-current assets. Key money
is stated at historic cost less impairment losses. These assets are not depreciated as past experience has shown that
the key money is recoverable on disposal of a retail location and is deemed to have an indefinite useful economic life
but will be impaired if evidence exists that the market value is less than the historic cost. Gains / losses on key money
from the subsequent disposal of these retail locations are recognised in the Consolidated Income Statement.
Deposits
Money paid in certain countries as deposits to store landlords as protection against non-payment of rent, is capitalised
within non-current assets. A provision for the impairment of these deposits is established when there is objective
evidence that the landlord will not repay the deposit in full.
Legal Fees
Legal fees and other costs associated with the acquisition of a leasehold interest are capitalised within non-current
other assets and amortised over the life of the lease.
Lease Premia
Money paid in certain countries specifically to landlords or tenants as an incentive to exit an existing lease commonly
referred to as compensation for early termination, to enable acquisition of that lease. These payments are capitalised
within other non-current assets and amortised over the life of the lease.
146
Financial Statements
Notes to the Consolidated Financial Statements
14. Non-Current Other Assets (continued)
Key Money
£m
Deposits
£m
Cost
At 30 January 2016
Additions
Disposals
Acquisitions
Reclassifications
Exchange Differences
At 28 January 2017
Additions
Disposals
Acquisitions
Reclassifications
Exchange Differences
At 3 February 2018
Depreciation and impairment
At 30 January 2016
Charge for period
Disposals
Impairments
Exchange differences
At 28 January 2017
Charge for period
Disposals
Reclassifications
Impairments
Exchange differences
At 3 February 2018
Net book value
At 3 February 2018
At 28 January 2017
At 30 January 2016
15. Inventories
13.3
1.6
(0.1)
-
0.2
0.7
15.7
2.0
-
-
2.2
1.2
21.1
0.7
-
-
(0.4)
0.2
0.5
-
-
-
0.5
-
1.0
20.1
15.2
12.6
6.8
3.4
(0.2)
0.2
-
0.3
10.5
4.4
(0.3)
15.2
-
0.8
30.6
0.1
-
-
-
-
0.1
-
-
-
-
-
0.1
30.5
10.4
6.7
Legal Fees
Lease Premia
£m
13.5
1.7
(0.5)
-
-
-
14.7
3.3
(1.0)
-
0.8
0.1
17.9
6.5
2.3
(0.4)
-
-
8.4
1.6
(0.5)
0.5
-
0.1
10.1
7.8
6.3
7.0
£m
8.0
0.2
-
-
-
0.1
8.3
3.1
(0.8)
0.4
-
0.3
11.3
1.2
0.9
-
-
-
2.1
1.2
(0.2)
-
-
0.1
3.2
8.1
6.2
6.8
Total
£m
41.6
6.9
(0.8)
0.2
0.2
1.1
49.2
12.8
(2.1)
15.6
3.0
2.4
80.9
8.5
3.2
(0.4)
(0.4)
0.2
11.1
2.8
(0.7)
0.5
0.5
0.2
14.4
66.5
38.1
33.1
Inventories are stated at the lower of cost and net realisable value. Cost is based on the weighted average principle.
Provisions are made for obsolescence, mark downs and shrinkage.
Finished goods and goods for resale
2018
£m
478.0
2017
£m
348.0
The cost of inventories recognised as expenses and included in cost of sales for the 53 weeks ended 3 February 2018
was £1,629.8 million (2017: £1,215.1 million).
The Group has £43.7 million (2017: £25.6 million) of stock provisions at the end of the period.
Cost of inventories includes a net charge of £13.2 million (2017: £4.5 million) in relation to net provisions recognised
against inventories.
147
Financial Statements
Notes to the Consolidated Financial Statements
16. Trade and Other Receivables
Trade receivables are recognised at amortised cost less impairment losses. A provision for the impairment of trade
receivables is established when there is objective evidence that the Group will not be able to collect all amounts due
according to the original terms. Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation and default or delinquency in payments are considered indicators that the
trade receivable is impaired. The movement in the provision is recognised in the Consolidated Income Statement.
Current assets
Trade receivables
Other receivables
Prepayments and accrued income
The ageing of trade receivables is detailed below:
Not past due
Past due 0 - 30 days
Past due 30 - 60 days
Past 60 days
2018
Gross
£m
Provision
£m
2017
Net
£m
Gross
£m
Provision
£m
22.0
3.6
1.4
1.8
28.8
-
(0.1)
(0.3)
(0.7)
(1.1)
22.0
3.6
1.1
1.1
27.7
15.7
4.9
2.1
1.1
23.8
-
(0.3)
(0.2)
(0.6)
(1.1)
Analysis of gross trade receivables is shown below:
Not past due or impaired
Past due but not impaired
Impaired
2018
£m
27.7
59.9
58.7
146.3
2018
£m
21.9
5.8
1.1
28.8
2017
£m
22.7
50.3
45.5
118.5
Net
£m
15.7
4.6
1.9
0.5
22.7
2017
£m
15.7
7.0
1.1
23.8
The Board consider that the carrying amount of trade and other receivables approximate their fair value. Concentrations
of credit risk with respect to trade receivables are limited due to the majority of the Group’s customer base being wide
and unrelated. Therefore, no further credit risk provision is required in excess of the normal provision for impairment
losses, which has been calculated following individual assessments of credit quality based on historic default rates and
knowledge of debtor insolvency or other credit risk.
Movement on this provision is shown below:
At 30 January 2016
Created
At 28 January 2017
Created
Released
Acquired
At 3 February 2018
The other classes within trade and other receivables do not contain impaired assets.
148
£m
0.9
0.2
1.1
0.1
(0.4)
0.3
1.1
Financial Statements
Notes to the Consolidated Financial Statements
17. Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or
less. Bank overdrafts are included as a component of cash and cash equivalents for the purpose of the Consolidated
Statement of Cash Flows, as these are used as an integral part of the Group’s cash management.
Cash at bank and in hand
18. Interest-Bearing Loans and Borrowings
2018
£m
347.5
2017
£m
247.6
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Following the
initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and
redemption value being recognised in the Consolidated Income Statement over the period of the borrowings on an
effective interest basis.
Current liabilities
Finance lease liabilities
Bank loans and overdrafts
Other loans
Non-current liabilities
Finance lease liabilities
Bank loans
Other loans
2018
£m
1.2
25.3
0.3
26.8
2.6
8.4
-
11.0
2017
£m
0.5
30.6
0.4
31.5
0.5
1.7
0.3
2.5
The following provides information about the contractual terms of the Group’s interest-bearing loans and borrowings.
For more information about the Group’s exposure to interest rate risk, see note 19.
Bank Facilities
As at 3 February 2018, the Group has a syndicated committed £215 million bank facility which expires on 11 October 2019.
Under this facility, a maximum of 10 drawdowns can be outstanding at any time with drawdowns made for a period of
one, two, three or six months with interest currently payable at a rate of LIBOR plus a margin of 1.10% (2017: 1.10%). The
arrangement fee payable on the amended facility is 0.5% on £60 million of the commitment and 0.25% on £155 million
of the commitment. The commitment fee on the undrawn element of the facility is 35% of the applicable margin rate.
This facility encompasses cross guarantees between the Company, RD Scott Limited, Topgrade Sportswear Limited,
Blacks Outdoor Retail Limited, Tessuti Limited, Focus International Limited and Go Outdoors Limited.
At 3 February 2018, £nil was drawn down on this facility (2017: £nil).
149
Financial Statements
Notes to the Consolidated Financial Statements
18. Interest-Bearing Loans and Borrowings (continued)
Bank Loans and Overdrafts
The following Group companies have overdraft facilities which are repayable on demand:
• ActivInstinct Limited £nil (2017: £0.3 million)
• Cloggs Online Limited £0.5 million (2017: £0.5 million)
• Go Outdoors Limited £nil (2017: £5.0 million)
• Kukri Sports Limited and Kukri GB Limited £1.0 million (2017: £1.0 million)
• Next Athleisure Pty Limited AUS$12.0 million (2017: AUS$12.0 million)
• Source Lab Limited £0.4 million (2017: £0.4 million)
• Spodis SA €5.0 million (2017: €5.0 million)
• Sportibérica Sociedade de Artigos de Desporto, S.A. €0.5 million (2017: €2.2 million)
• Sprinter Megacentros Del Deporte SLU €19.5 million (2017: €7.1 million)
• Tiso Group £5.0 million (2017: £5.0 million)
The maturity of the bank loans and overdrafts is as follows:
Within one year
Between one and five years
2018
£m
25.3
8.4
33.7
2017
£m
30.6
1.7
32.3
Other Loans
The acquisition of Go Outdoors Topco Limited included term loans with balances remaining of £0.7 million at the time
of acquisition. The term loans are repayable over 36 months and attract interest at 4.9% - 6.2%. As at 3 February 2018,
1 to 9 months are remaining.
The maturity of the other loans is as follows:
Within one year
Between one and five years
2018
£m
0.3
-
0.3
2017
£m
0.4
0.3
0.7
Finance Leases
As at 3 February 2018, the Group’s liabilities under finance leases are analysed as follows:
Amounts payable under finance leases:
Within one year
Later than one year and not later than five years
Minimum lease payments
Present value of minimum lease payments
2018
£m
2017
£m
2018
£m
2017
£m
1.3
2.6
3.9
0.5
0.5
1.0
1.2
2.6
3.8
0.5
0.5
1.0
The fair value of the Group’s lease obligations approximate to their present value. The Group’s obligations under finance
leases are secured by the lessors’ rights over the leased assets.
150
Financial Statements
Notes to the Consolidated Financial Statements
19. Financial Instruments
Financial assets and financial liabilities are recognised in the Group’s Statement of Financial Position when the
Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when
the contractual rights to the cash flows from the financial assets expire or are transferred. Financial liabilities are
derecognised when the obligation specified in the contract is discharged, cancelled or expires.
Financial Assets
The Group’s financial assets are all categorised as loans and receivables with the exception of derivative assets.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. The Group’s loans and receivables comprise ‘Trade and other receivables’ and ‘Cash and cash
equivalents’ in the Consolidated Statement of Financial Position.
Cash and cash equivalents comprise short-term cash deposits with major clearing banks earning floating rates of
interest based upon bank base rates or rates linked to LIBOR and EURIBOR.
The currency profile of cash and cash equivalents is shown below:
Cash and cash equivalents
Sterling
Euros
US Dollars
Australian Dollars
New Zealand Dollars
Swedish Krona
Danish Krone
Other
2018
£m
347.5
218.7
97.4
12.5
9.2
0.3
0.6
3.7
5.1
2017
£m
247.6
159.1
75.6
5.1
4.2
0.2
0.3
1.3
1.8
347.5
247.6
Financial Liabilities
The Group’s financial liabilities are all categorised as other financial liabilities. Other financial liabilities, with the exception
of foreign exchange forward contracts and put option liabilities are measured at amortised cost. The Group’s other financial
liabilities comprise ‘Interest-bearing loans and borrowings’ and ‘Trade and other payables’.
The currency profile of interest-bearing loans and borrowings is shown below:
Interest-bearing loans and borrowings
Sterling
Euros
Australian Dollars
South Korean Won
Other
2018
£m
37.8
7.7
13.0
7.9
7.0
2.2
37.8
2017
£m
34.0
25.7
0.7
7.1
-
0.5
34.0
Risk Management
The Group’s operations expose it to a variety of financial risks that include the effects of changes in exchange rates,
interest rates, credit risk and its liquidity position. The Group manages these risks through the use of derivative
instruments, which are reviewed on a regular basis. Derivative instruments are not entered into for speculative purposes.
There are no concentrations of risk in the period to 3 February 2018.
151
Financial Statements
Notes to the Consolidated Financial Statements
19. Financial Instruments (continued)
Interest Rate Risk
The Group finances its operations by a mixture of retained profits and bank borrowings. The Group’s borrowings are at
floating rates, partially hedged by floating rate interest on deposits, reflecting the seasonality of its cash flow. Interest
rate risk therefore arises from bank borrowings. Interest rate hedging has not been put in place on the current facility.
The Directors continue to be mindful of the potential volatility in base rates, but at present do not consider a long term
interest rate hedge to be necessary given the inherent short term nature of both the revolving credit facility and working
capital facility. This position is reviewed regularly, along with the level of facility required.
The Group has potential bank floating rate financial liabilities on the £215 million committed bank facility, together with
overdraft facilities in subsidiary companies (see note 18). At 3 February 2018 £nil was drawn down from the committed
bank facility (2017: £nil). When drawdowns are made, the Group is exposed to cash flow interest risk with interest
paid at a rate of LIBOR plus a margin of 1.1% (2017: 1.1%).
As at 3 February 2018 the Group has liabilities of £3.8 million (2017: £1.0 million), in respect of finance lease or similar
hire purchase contracts.
A change of 1.0% in the average interest rates during the year, applied to the Group’s floating interest rate loans and
borrowings as at the reporting date, would change profit before tax by £0.1 million (2017: £0.1 million) and would change
equity by £0.1 million (2017: £0.1 million). The calculation is based on any floating interest rate loans and borrowings
drawn down at the period end date. This includes the Group’s committed bank facility, Tiso Group Limited’s overdraft,
Next Athleisure Pty Limited’s overdraft, Go Outdoors Limited’s bank loans and JD Sports Fashion South Korea bank loans.
Calculations are performed on the same basis as the prior year and assume that all other variables remain unchanged.
Foreign Currency Risk
Foreign Currency Translation
Transactions denominated in foreign currencies are translated into sterling at the exchange rate prevailing on
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into
sterling at the rate of exchange at the reporting date. Exchange differences in monetary items are recognised in the
Consolidated Income Statement.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction.
On consolidation, the assets and liabilities of the Group’s overseas operations are translated into sterling at the
rate of exchange at the reporting date. Income and expenses are translated at the average exchange rate for the
accounting period. Foreign currency differences are recognised in Other Comprehensive Income and are presented
in the foreign currency translation reserve.
Derivative Financial Instruments
The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks
arising from operational, financing and investment activities. In accordance with its treasury policy, the Group does
not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for
hedge accounting are accounted for as trading instruments.
Derivative financial instruments are recognised initially at fair value and remeasured at each period end. The gain
or loss on remeasurement to fair value is recognised immediately in the Consolidated Income Statement. However,
where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of
the item being hedged.
Interest rate swaps are recognised at fair value in the Consolidated Statement of Financial Position with movements
in fair value recognised in the Consolidated Income Statement for the period. The fair value of interest rate swaps is
the estimated amount that the Group would receive or pay to terminate the swap at the reporting date, taking into
account current interest rates and the respective risk profiles of the swap counterparties.
152
Financial Statements
Notes to the Consolidated Financial Statements
19. Financial Instruments (continued)
Hedging of Monetary Assets and Liabilities
Where a derivative financial instrument is used to hedge the foreign exchange exposure of a recognised monetary
asset or liability, no hedge accounting is applied and any gain or loss on the hedging instrument is recognised in the
Consolidated Income Statement.
The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than
pound sterling. The currencies giving rise to this risk are the Euro and US Dollar with sales made in Euros and purchases
made in both Euros and US Dollars (principal exposure). To protect its foreign currency position, the Group sets a buying
rate in each country for the purchase of goods in US Dollars at the start of the buying season (typically six to nine months
before the product actually starts to appear in the stores) and then enters into a number of local currency / US Dollar
contracts whereby the minimum exchange rate on the purchase of dollars is guaranteed.
As at 3 February 2018, options have been entered into to protect approximately 96% of the US Dollar trading requirement
for the period to January 2019. The balance of the US Dollar requirement for the period will be satisfied at spot rates.
As at 3 February 2018, the fair value of these instruments was a liability of £24.8 million (2017: liability of £3.3 million)
and these are all classified as due within one year. A loss of £21.5 million (2017: loss of £4.4 million) has been recognised
in cost of sales within the Consolidated Income Statement for the change in fair value of these instruments.
We have considered the credit risk of the Group’s and counterparty’s credit risk and this is not expected to have a material
effect on the valuation of these options.
A 10.0% strengthening of sterling relative to the following currencies as at the reporting date would have reduced profit
before tax and equity as follows:
Euros
US Dollars
Australian Dollars
Other
Profit before tax
Equity
2018
£m
2017
£m
2.9
0.9
0.7
0.5
5.0
4.9
0.4
0.3
0.1
5.7
2018
£m
14.6
0.9
1.1
1.8
18.4
2017
£m
13.1
0.4
0.7
-
14.2
A 10.0% weakening of sterling relative to the following currencies as at the reporting date would have increased profit
before tax and equity as follows:
Euros
US Dollars
Australian Dollars
Other
Profit before tax
Equity
2018
£m
2017
£m
3.6
1.1
0.9
0.5
6.1
5.9
0.5
0.3
0.2
6.9
2018
£m
18.7
1.1
1.4
2.2
23.4
2017
£m
16.3
0.5
0.9
-
17.7
Calculations are performed on the same basis as the prior year and the method assumes that all other variables
remain unchanged.
153
Financial Statements
Notes to the Consolidated Financial Statements
19. Financial Instruments (continued)
Credit Risk
Credit risk arises from the possibility of customers and counterparties failing to meet their obligations to the Group.
Investments of cash surpluses, borrowings and derivative instruments are made through major clearing banks, which must
meet minimum credit ratings as required by the Board.
All customers who wish to trade on credit terms are subject to credit verification procedures. Receivable balances are
monitored on an ongoing basis and provision is made for impairment where amounts are not thought to be recoverable
(see note 16). At the reporting date there were no significant concentrations of credit risk and receivables which are not
impaired are believed to be recoverable.
The Group considers its maximum exposure to credit risk to be equivalent to total trade and other receivables of £146.3
million (2017: £118.5 million) and cash and cash equivalents of £347.5 million (2017: £247.6 million).
Liquidity Risk
The Group manages its cash and borrowing requirement to minimise net interest expense, whilst ensuring that the Group
has sufficient liquid resources to meet the operating needs of the business. The forecast cash and borrowing profile of
the Group is monitored on an ongoing basis, to ensure that adequate headroom remains under committed borrowing
facilities. The Board review 13 week and annual cash flow forecasts each month.
Information about the maturity of the Group’s financial liabilities is disclosed in note 18.
Expiring in more than one year but no more than two years
Expiring in more than two years but no more than three years
2018
£m
215.0
-
215.0
2017
£m
-
215.0
215.0
The commitment fee on these facilities is 0.35% (2017: 0.35%).
Fair Values
The fair values together with the carrying amounts shown in the Statement of Financial Position as at 3 February 2018
are as follows:
Trade and other receivables
Cash and cash equivalents
Interest-bearing loans and borrowings – current
Interest-bearing loans and borrowings – non-current
Trade and other payables – current
Trade and other payables – non-current
Unrecognised gains
Carrying amount
2018
£m
Note
Fair value
2018
£m
16
17
18
18
87.6
347.5
(26.8)
(11.0)
(548.7)
(40.2)
(191.6)
87.6
347.5
(26.8)
(9.5)
(548.7)
(39.8)
(189.7)
1.9
154
Financial Statements
Notes to the Consolidated Financial Statements
19. Financial Instruments (continued)
The comparatives at 28 January 2017 are as follows:
Trade and other receivables
Cash and cash equivalents
Interest-bearing loans and borrowings – current
Interest-bearing loans and borrowings – non-current
Trade and other payables – current
Trade and other payables – non-current
Unrecognised gains
Carrying amount
2017
£m
Note
Fair value
2017
£m
16
17
18
18
73.0
247.6
(31.5)
(2.5)
(399.4)
(7.5)
(120.3)
73.0
247.6
(31.5)
(2.0)
(399.4)
(6.4)
(118.7)
1.6
In the opinion of the Board, the fair value of the Group’s current financial assets and liabilities as at 3 February 2018
and 28 January 2017 are not considered to be materially different to that of the book value. On this basis, the fair
value hierarchy reflects the carrying values. In respect of the Group’s non-current financial assets and liabilities as at
3 February 2018 and 28 January 2017, the fair value has been calculated using a pre-tax discount rate of 10.1% (2017:
10.7%) which reflects the current market assessments of the time value of money and the specific risks applicable to
the liability.
Estimation of Fair Values
For trade and other receivables / payables, the notional amount is deemed to reflect the fair value.
Fair Value Hierarchy
As at 3 February 2018, the Group held the following financial instruments carried at fair value on the Statement of
Financial Position:
• Foreign exchange forward contracts – non-hedged
• Put and call options
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation
technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable,
either directly or indirectly
Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on
observable market data
155
Financial Statements
Notes to the Consolidated Financial Statements
19. Financial Instruments (continued)
At 3 February 2018
Loans and receivables
Deposits
Trade and other receivables
Cash and cash equivalents
Financial liabilities at fair value through profit or loss
Foreign exchange forward contracts – non-hedged
Other financial liabilities
Interest-bearing loans and borrowings – current
Interest-bearing loans and borrowings – non-current
Trade and other payables – current
Trade and other payables – non-current
Put options held by non-controlling interests
The comparatives at 28 January 2017 are as follows:
At 28 January 2017
Loans and receivables
Deposits
Trade and other receivables
Cash and cash equivalents
Financial assets at fair value through profit or loss
Foreign exchange forward contracts – non-hedged
Financial liabilities at fair value through profit or loss
Foreign exchange forward contracts – non-hedged
Other financial liabilities
Interest-bearing loans and borrowings – current
Interest-bearing loans and borrowings – non-current
Trade and other payables – current
Trade and other payables – non-current
Put options held by non-controlling interests
20. Trade and Other Payables
Carrying amount
£m
Level 1
£m
Level 2
£m
Level 3
£m
30.5
87.6
347.5
(24.8)
(26.8)
(11.0)
(523.9)
(2.2)
(38.0)
-
-
-
-
-
-
-
-
-
30.5
87.6
347.5
(24.8)
(26.8)
(11.0)
(523.9)
(2.2)
(38.0)
-
-
-
-
-
-
-
-
-
Carrying amount
£m
Level 1
£m
Level 2
£m
Level 3
£m
10.4
71.1
247.6
1.9
(5.2)
(31.5)
(2.5)
(394.2)
(4.1)
(3.4)
-
-
-
-
-
-
-
-
-
-
10.4
71.1
247.6
1.9
(5.2)
(31.5)
(2.5)
(394.2)
(4.1)
(3.4)
-
-
-
-
-
-
-
-
-
-
Trade and other payables are non-interest-bearing and are stated at their cost. Volume related rebates or other
contributions from suppliers are recognised in the Consolidated Financial Statements when it is contractually agreed
with the supplier and can be reliably measured. All significant rebates and contributions are agreed with suppliers
retrospectively and after the end of the relevant supplier’s financial year.
Reverse Premia
Reverse premia represent monies received by the Group on assignment of property leases and are included within
other payables and accrued expenses. Reverse premia are amortised over the life of the remaining lease.
156
Financial Statements
Notes to the Consolidated Financial Statements
20. Trade and Other Payables (continued)
Current liabilities
Trade payables
Other payables and accrued expenses
Other tax and social security costs
Non-current liabilities
Other payables and accrued expenses
Put and Call Options
2018
£m
224.2
337.4
61.6
623.2
91.5
2017
£m
165.0
245.6
58.5
469.1
53.2
Put options held by non-controlling interests are accounted for using the present access method. The Group
recognises put options held by non-controlling interests in its subsidiary undertakings as a liability in the Consolidated
Statement of Financial Position at the present value of the estimated exercise price of the put option. The present
value of the non-controlling Interests’ put options are estimated based on expected earnings in Board approved
forecasts and the choice of a suitable discount rate. Upon initial recognition of put options a corresponding entry
is made to other equity, and for subsequent changes on remeasurement of the liability the corresponding entry is
made to the Income Statement.
Call options held by the Group are also accounted for using the present access method. The Group recognises call
options over non-controlling interests in its subsidiary undertakings as a liability in the Consolidated Statement of
Financial Position at the present value of the estimated exercise price of the put option. The present value of the
non-controlling Interests’ put options are estimated based on expected earnings in Board approved forecasts and
the choice of a suitable discount rate. Upon initial recognition and for subsequent changes on remeasurement of the
liability of call options a corresponding entry is made to the Income Statement.
The Group has a number of options to buy the remaining shares in partly-owned subsidiaries from the non-controlling
interest. The present value of these options has been estimated as at 3 February 2018 and is included within non-current
other payables and accrued expenses.
The present value of the estimated exercise price is calculated using the option price formula agreed on acquisition.
All existing option price formulas are based on a profit measure, which is estimated by applying an approved growth
assumption to the current budget profit for the January 2019 financial year, if appropriate for the individual business the
put or call option directly relates to. A discount rate is also applied to the option price which is pre-tax and reflects the
current market assessments 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.
Put Options
Call Option
Source Lab
Limited
£m
JD
Germany
GmbH
£m
Tiso Group
Limited
JD Gyms
Limited
£m
£m
Put and call options
At 28 January 2017
Acquisitions
Increase/ (decrease) in the present
value of the existing option liability
At 3 February 2018
0.2
-
(0.1)
0.1
1.3
-
0.2
1.5
0.6
-
-
0.6
-
1.6
-
1.6
Iberian
Sports
Retail
Group
£m
-
30.9
-
30.9
Dantra
Limited
£m
Total Put
Options
£m
Sportiberica
£m
Total Put
and Call
Options
£m
-
0.8
-
0.8
2.1
33.3
0.1
35.5
1.3
-
1.2
2.5
3.4
33.3
1.3
38.0
157
Financial Statements
Notes to the Consolidated Financial Statements
20. Trade and Other Payables (continued)
Recognised as a liability
At 3
February
2018
£m
At 28
January
2017
£m
0.1
0.2
Source Lab
Limited
JD Germany
GmbH
Tiso Group
Limited
Company
Options in existence
Exercise periods
Methodology
Maximum price
Put and call option,
whereby JD Sports
Fashion Plc may acquire
or be required to acquire
(in stages) the remaining
15% of the issued share
capital of Source
Lab Limited.
Exercisable by either party
after the third anniversary of
the completion of the initial
transaction, during the 30 day
period commencing on the date
on which the statutory accounts
of Source Lab Limited for the
relevant financial year have
been approved by the board
of directors.
The option price is
calculated based on a
multiple of the audited
profit before distributions,
interest, amortisation
and exceptional items
but after taxation for the
relevant financial year
prior to the exercise date.
The option price
shall not exceed
£12.5 million.
Put option whereby JD
Sports Fashion Plc may
be required to acquire all
or some of the remaining
15% of the issued share
capital of JD Germany
GmbH, including earn
out shares.
The put option is exercisable
after a period of five years from
the completion date during the
30 days following approval of
the shareholders meeting of
the audited annual accounts of
the Company for the relevant
financial year.
The option price is
calculated based on a
multiple of the average
earnings before tax
for the relevant two
financial years prior
to the exercise date.
Put and call option
whereby JD Sports
Fashion Plc may acquire
or be required to acquire
40% of the issued share
capital of Tiso Group
Limited.
The call option is exercisable
90 days beginning 30 days after
the consolidated accounts of
the Company for the financial
period ending 3 February 2018
are signed. The put option is
exercisable 60 days following the
end of the second call option.
The option price is
calculated based on a
multiple of the average
operating profit for the
financial year ending
3 February 2018 and
the prior year.
The put and call options are
exerciseable 30 days after the
approval by the Board of the
annual audited accounts of:
- The year ended 31 January 2019
- The year ended 31 January 2020
- The year ended 31 January 2021
- The year ended 31 January 2022
- The year ended 31 January 2023
The option price is
calculated based on a
multiple of profit before
tax for the relevant
financial year prior to
the exercise date.
The first put option is exerciseable
after 31 January 2021. The second
put option is exercisable after at
least one year has lapsed since
the first put option was exercised.
The 30% option, in three separate
tranches of 10%, need not be
exercised in consecutive years.
The option price is
calculated based on the
equity value plus the
outstanding loans or
financing provided by the
option holder with unpaid
interest accrued.
JD Sports
Gyms
Limited
Put and call option
whereby JD Sports
Fashion Plc may acquire
12.5% of the issued share
capital of JD Sports
Gyms Limited in five
tranches of 2.5%.
Iberian Sports
Retail Group
First put option whereby
JD Sports Fashion Plc may
acquire or be required to
acquire 70% of the option
holders 20% holding of
the issued share capital
of Iberian Sports Retail
Group. Second put option
whereby JD Sports
Fashion Plc may acquire
or be required to acquire
30% of the option holders
20% holding of the issued
share capital of Iberian
Sports Retail Group in
three tranches of 10%.
Dantra
Limited
First put and call option
whereby JD Sports Fash-
ion Plc may acquire 12.5%
of the issued share capital
of Dantra Limited.
Second put and call
option whereby JD Sports
Fashion Plc may acquire
12.5% of the issued share
capital of Dantra Limited.
The first put option is
exerciseable for a ten year
period beginning the day after
the accounts of Dantra Limited
are signed by the auditors for the
financial year ending 31 January
2022. The second put option is
exerciseable after at least one
year has lapsed since the first
put option was exercised.
The option price is
calculated based on a
multiple of the average
earnings before tax
for the relevant two
financial years prior
to the exercise date.
Sportibérica
Sociedade
de Artigos
de Desporto,
S.A
Call option whereby
JD Sports Fashion Plc
may acquire 20% of the
issued share capital
of Sportiberica
Sociedade de Artigos
de Desporto, S.A.
The call option is exercisable
3 months after the approval
by the Shareholders General
Meeting of the annual audited
accounts of the period ending
2 February 2019, 1 February
2020 or 30 January 2021.
The option price is
calculated based on
a multiple of earnings
before interest, tax,
depreciation and
amortisation for the
relevant financial
period plus a % of
post completion cash.
158
The put option price
shall not exceed
€20 million.
1.5
1.3
The option price shall
not exceed £8 million
or 25p per share.
0.6
0.6
The option price shall
not exceed £9 million.
1.6
-
The option price shall
not exceed £332 million.
30.9
-
Each put option
price shall not exceed
£7.8 million.
0.8
-
The minimum option
price is €6,000,000;
€6,100,000 and
€6,200,000 for the
financial period
ending 2 February
2019; 1 February 2020
and 30 January 2021
respectively.
The maximum option
price is €11,000,000;
€12,000,000 and
€13,000,000 for the
financial period ending
2 February 2019;
1 February 2020 and
30 January 2021
respectively.
2.5
1.3
38.0
3.4
Financial Statements
Notes to the Consolidated Financial Statements
21. 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.
Onerous Lease Provision
The Group makes a provision for onerous property leases on specific stores based on the anticipated future cash
outflows relating to the contractual lease cost less potential sublease income. The estimation of sublease income
is based on historical experience and knowledge of the retail property market in the area around each property.
Assumptions and judgements are used in making these estimates and changes in assumptions and future events
could cause the value of these provisions to change. This would include sublet premises becoming vacant, the
liquidation of an assignee resulting in a property reverting to the Group or closing an uneconomic store and
subletting at below contracted rent. Within the onerous lease provision, management have provided against the
minimum contractual lease cost less potential sublease income for vacant stores. For loss making trading stores and
for stores where there is a probable risk of the store returning to the Group under privity of contract, a provision is
made to the extent that the lease is deemed to be onerous.
Onerous Contracts Provision
Within the onerous contracts provision, management have provided against the minimum contractual cost for the
remaining term on non-cancellable sponsorship contracts. For contracts where there is probable risk that the costs
to fulfil the terms of the contract are higher than the income received, a provision is made to the extent that the
contract is deemed onerous.
The provisions are discounted where the effect is material. The pre-tax discount rate used is 10.1% (2017: 10.7%) which
reflects the current market assessments of the time value of money and the specific risks applicable to the liability.
Balance at 28 January 2017
Provisions created during the period
Provisions released during the period
Provisions utilised during the period
Balance at 3 February 2018
Provisions have been analysed between current and non-current as follows:
Current
Non-current (within five years)
Onerous
property leases
£m
Onerous
contracts
£m
1.7
2.7
(0.1)
(0.4)
3.9
0.3
-
-
(0.3)
-
2018
£m
2.1
1.8
3.9
Total
£m
2.0
2.7
(0.1)
(0.7)
3.9
2017
£m
1.0
1.0
2.0
159
Financial Statements
Notes to the Consolidated Financial Statements
22. Deferred Tax Assets and Liabilities
Recognised Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are attributable to the following:
Property, plant and equipment
Fascia name
Other short term timing differences
Tax losses
Tax assets / (liabilities)
Assets
2018
£m
Assets
2017
£m
Liabilities
2018
£m
Liabilities
2017
£m
1.8
-
4.9
2.7
9.4
2.3
-
3.5
1.9
7.7
-
-
(14.7)
(15.9)
-
-
-
-
(14.7)
15.9
Net
2018
£m
1.8
(14.7)
4.9
2.7
(5.3)
Net
2017
£m
2.3
(15.9)
3.5
1.9
(8.2)
Deferred tax assets on losses of £0.4 million (2017: £0.4 million) within Focus Brands Limited (and its subsidiaries);
£4.0 million (2017: £4.1 million) within Kooga Rugby Limited; £0.7 million (2017: £0.7 million) within Blacks Outdoor
Retail Limited; £3.3 million (2017: £3.3 million) within Champion Retail Limited; £nil (2017: £1.0 million) with Tessuti
Group Limited (and its subsidiaries); £2.1 million (2017: £2.3 million) with Ark Fashion Limited, £0.4 million (2017: £0.4
million) with Kukri Sports Limited (and its subsidiaries); £2.7 million (2017: £3.0 million) within Tiso Group Limited (and
its subsidiaries), £4.6 million (2017: £3.8 million) within Clothingsites.co.uk Limited and £0.5 million (2017: £nil) within
2Squared Agency Limited have not been recognised as there is uncertainty over the utilisation of these losses. None of
the losses are subject to expiration.
Movement in Deferred Tax during the Period
Balance at 30 January 2016
Recognised on acquisition
Recognised in income
Foreign exchange movements
Balance at 28 January 2017
Recognised on acquisition
Recognised in income
Foreign exchange movements
Balance at 3 February 2018
Property,
plant and
equipment
£m
Chargeable
gains
held over/
rolled over
£m
1.7
0.2
0.3
-
2.2
-
(0.4)
-
1.8
(0.2)
-
0.2
-
-
-
-
-
-
Fascia
name
£m
(2.5)
(14.3)
1.0
(0.1)
(15.9)
(2.1)
3.4
(0.1)
(14.7)
Other
£m
Tax losses
£m
1.1
1.5
1.0
-
3.6
-
1.3
-
4.9
0.4
-
1.5
-
1.9
-
0.7
0.1
2.7
Total
£m
0.5
(12.6)
4.0
(0.1)
(8.2)
(2.1)
5.0
-
(5.3)
As at 3 February 2018, the Group has no recognised deferred income tax liability (2017: £nil) in respect of taxes that
would be payable on the unremitted earnings of certain overseas subsidiaries. As at 3 February 2018, the unrecognised
gross temporary differences in respect of overseas subsidiaries is £48.5 million (2017: £51.7 million). No deferred income
tax liability has been recognised in respect of this temporary timing difference due to the foreign profits exemption, the
availability of double tax relief and the ability to control the remittance of earnings.
There are no income tax consequences attached to the payment of dividends by the Group to its shareholders.
The UK corporation tax rate had been 20% since 1 April 2015. The rate reduced to 19% with effect from 1 April 2017 and
will reduce to 17% with effect from 1 April 2020. This will reduce the group’s future current tax charge accordingly. The
deferred tax liability at 3 February 2018 has been calculated based on a rate of 17% as this is the prevailing rate at which
the group expects the deferred tax liability to reverse.
160
Financial Statements
Notes to the Consolidated Financial Statements
23. Capital and Reserves
Issued Ordinary Share Capital
An Ordinary Resolution was passed at the Annual General Meeting, effective 24 November 2016, resulting in a share
split 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 total number of authorised ordinary shares was 1,243,000,000 (2017: 1,243,000,000) with a par value of 0.25p per
share (2017: 0.25p per share). All issued shares are fully paid.
The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued
share capital, share premium and retained earnings.
It is the Board’s policy to maintain a strong capital base so as to maintain investor, creditor and market confidence
and to sustain future development of the business. The processes for managing the Group’s capital levels are that the
Board regularly monitors the net cash / debt in the business, the working capital requirements and forecast cash flows.
Based on this analysis, the Board determines the appropriate return to equity holders while ensuring sufficient capital is
retained in the business to meet its strategic objectives.
The Board consider the capital of the Group as the net cash / debt at the year end (see note 28) and the Board review
the gearing position of the Group which as at 3 February 2018 was less than zero (2017: less than zero). There were no
changes to the Group’s approach to capital management during the period.
Full disclosure on the rights attached to shares is provided in the Directors’ Report on page 80.
At 28 January 2017 and 3 February 2018
Number of
ordinary shares
thousands
Ordinary
share capital
£m
973,233
2.4
Treasury Reserve
The reserve for the Group’s treasury shares comprised the cost of the shares of a subsidiary, Iberian Sports Retail Group
SL, held by the Group. On 31 January 2018, the treasury shares were transferred to the minority interests as part of
the consideration for the acquisition of Sport Zone Portugal. At 3 February 2018, the Group held no Treasury shares in
relation to Iberian Sports Retail Group SL (2017: 24.95%).
Foreign Currency Translation Reserve
The foreign currency translation reserve comprises all foreign currency differences arising from the translation of the
financial statements of foreign operations.
161
Financial Statements
Notes to the Consolidated Financial Statements
24. Non-Controlling Interests
The following disclosure provides summarised financial information for investments that have non-controlling interests.
Non-controlling interest is initially measured at the proportionate interest in identifiable net assets of the acquiree.
The table below provides a list of the subsidiaries which include non-controlling interests at 3 February 2018 and
28 January 2017:
% of
non-controlling
interests and
non-controlling
voting rights at
3 February 2018
% of
non-controlling
interests and
non-controlling
voting rights at
28 January 2017
Net income/
(loss)
attributable to
non-controlling
interests for 53
weeks ending
Non-controlling
interests at
Net income/
(loss)
attributable to
non-controlling
interests for 52
weeks ending
3 February 2018
£m
3 February 2018
£m
28 January 2017
£m
Non-controlling
interests at
28 January 2017
£m
Name of subsidiary:
Iberian Sports Retail Group SL
Country of
incorporation
Spain/
Portugal/
Canaries
50.0%
33.2%
2.8
46.5
Mainline Menswear Holdings Limited
UK
JD Sports Fashion Germany GmbH
Germany
JD Sports Fashion Holdings Aus Pty
Australia
Tiso Group Limited
Other
UK
UK/ Malaysia/
South Korea/
India
20.0%
15.0%
20.0%
40.0%
20.0%
15.0%
20.0%
40.0%
15% - 50%
15% - 50%
0.6
0.2
(0.1)
-
1.0
4.5
0.9
0.6
0.8
(1.5)
16.6
63.9
4.6
0.5
0.1
-
(0.1)
0.6
5.7
24.3
0.9
0.4
0.9
(1.5)
1.7
26.6
During the period, the Group has increased its shareholding in three non-wholly owned subsidiaries. The consideration
paid was negligible.
For newly acquired non-wholly owned subsidiaries, further details are provided in note 11.
The table below provides summarised financial information for significant non-controlling interests at 3 February 2018 and
28 January 2017:
Summarised statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Net assets
Summarised results of operations
Revenue
Profit for the period, net of tax
Summarised statement of cash flows
Net cash provided by operating activities
Net cash used in investing activities
Net cash from financing activities
Cash and cash equivalents:
At the beginning of the period
At the end of the period
162
Sprinter 2018
£m
Sprinter 2017
£m
52.1
78.5
130.6
(89.5)
(8.6)
32.5
61.6
52.7
114.3
(64.0)
(3.2)
47.1
Sprinter
53 weeks to
3 February 2018
£m
Sprinter
52 weeks to
28 January 2017
£m
267.0
10.3
198.4
9.6
Sprinter
53 weeks to
3 February 2018
£m
Sprinter
52 weeks to
28 January 2017
£m
(9.6)
(12.6)
6.6
22.2
6.6
12.0
(12.0)
(0.1)
22.3
22.2
Financial Statements
Notes to the Consolidated Financial Statements
25. Dividends
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group and Company financial
statements in the period in which it is approved.
After the reporting date the following dividends were proposed by the Directors. The dividends were not provided for
at the reporting date.
1.37p per ordinary share (2017: 1.30p)
Dividends on Issued Ordinary Share Capital
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
13.3
12.7
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
Final dividend of 1.30p (2017: 1.24p) per qualifying ordinary share paid in respect of prior period,
but not recognised as a liability in that period
Interim dividend of 0.26p (2017: 0.25p) per qualifying ordinary share paid in respect of current period
12.7
2.5
15.2
26. Commitments
(i) Capital Commitments
As at 3 February 2018, the Group had entered into contracts to purchase property, plant and equipment as follows:
Contracted
2018
£m
18.9
12.1
2.4
14.5
2017
£m
39.8
(ii) Operating Lease Commitments
The Group leases various retail outlets, offices, warehouses, plant and equipment under non-cancellable operating lease
agreements. The leases have varying terms, escalation clauses and renewal rights.
Undiscounted total future minimum rentals payable under non-cancellable operating leases are as follows:
Within one year
Later than one year and not later than five years
After five years
Land and
buildings
2018
£m
208.4
594.0
432.8
1,235.2
Plant and
equipment
2018
£m
2.4
2.5
0.4
5.3
Land and
buildings
2017
£m
167.6
498.4
407.8
1,073.8
Plant and
equipment
2017
£m
2.1
2.0
-
4.1
The future minimum rentals payable on land and buildings represent the base rents that are due on each property over
the non-cancellable lease term, being usually the earliest date at which the lease can be exited. Certain properties have
rents which are partly dependent on turnover levels in the individual store concerned.
163
Financial Statements
Notes to the Consolidated Financial Statements
26. Commitments (continued)
(iii) Sublease Receipts
The Group subleases various retail outlets under non-cancellable operating lease agreements. The leases have varying
terms, escalation clauses and renewal rights. The total future minimum operating sublease receipts expected to be
received at 3 February 2018 are as follows:
Within one year
Later than one year and not later than five years
After five years
27. Pension Schemes
2018
£m
0.9
1.4
0.1
2.4
2017
£m
0.5
1.4
0.3
2.2
The Group operates defined contribution pension schemes, the assets of which are held separately from those of the
Group in independently administered funds. Obligations for contributions to the defined contribution schemes are
recognised as an expense in the Consolidated Income Statement when incurred.
The pension charge for the period represents contributions payable by the Group of £7.3 million (2017: £4.8 million)
in respect of employees. Disclosure of the pension contributions payable in respect of the Directors is included in the
Directors Remuneration Report. The amount owed to the schemes at the period end was £0.8 million (2017: £0.8 million).
28. Analysis of Net Cash
Net cash consists of cash and cash equivalents together with other borrowings from bank loans and overdrafts, other
loans, loan notes, finance leases and similar hire purchase contracts.
Cash at bank and in hand
Overdrafts
Cash and cash equivalents
Interest-bearing loans and borrowings:
Bank loans
Finance lease liabilities
Other loans
At 28 January 2017
On acquisition of
subsidiaries
Cash flow
£m
247.6
(13.2)
234.4
(19.1)
(1.0)
(0.7)
213.6
£m
7.3
-
7.3
(12.7)
-
-
(5.4)
£m
94.4
0.3
94.7
11.0
(2.8)
0.4
103.3
Non-cash
movements
£m
At 3 February 2018
£m
(1.8)
-
(1.8)
-
-
-
(1.8)
347.5
(12.9)
334.6
(20.8)
(3.8)
(0.3)
309.7
29. Related Party Transactions and Balances
Transactions and balances with each category of related parties during the period are shown in the tables to the right.
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 Plc
Pentland Group Plc owns 57.5% (2017: 57.5%) of the issued ordinary share capital of JD Sports Fashion Plc. The Group
made purchases of inventory from Pentland Group Plc in the period and the Group also sold inventory to Pentland Group
Plc. The Group also paid royalty costs to Pentland Group Plc for the use of a brand.
164
Financial Statements
Notes to the Consolidated Financial Statements
29. Related Party Transactions and Balances (continued)
During the period, the Group entered into the following transactions with Pentland Group Plc:
Sale of inventory
Purchase of inventory
Royalty costs
Marketing costs
Other income
Income from
related parties
2018
£m
Expenditure with
related parties
2018
£m
Income from
related parties
2017
£m
Expenditure with
related parties
2017
£m
0.4
-
-
-
0.1
-
(26.3)
(3.4)
(0.6)
-
0.3
-
-
-
-
-
(29.6)
(1.8)
-
-
At the end of the period, the following balances were outstanding with Pentland Group Plc:
Amounts owed by
related parties
2018
£m
Amounts owed to
related parties
2018
£m
Amounts owed by
related parties
2017
£m
Amounts owed to
related parties
2017
£m
Trade receivables / (payables)
-
-
-
(1.6)
Other than the remuneration of Directors as shown in note 5 and in the Directors’ Remuneration Report on page 97 there
have been no other transactions with Directors in the year (2017: nil).
30. Subsequent Events
The Finish Line, Inc.
On 25 March 2018 JD Sports Fashion Plc entered into a conditional acquisition agreement to acquire 100% of the issued
share capital of The Finish Line, Inc. (“Finish Line”) at a price of $13.50 per Finish Line share in cash, valuing Finish Line’s
total equity at approximately $558 million (approximately £396 million) (the “Acquisition”).
Finish Line is one of the largest retailers of premium multibranded athletic footwear, apparel and accessories in the
United States (“US”), the largest sportswear market in the world. Finish Line trades from 556 Finish Line branded retail
stores across 44 US states and Puerto Rico in addition to a well-established multichannel offering. Finish Line is also the
exclusive retailer of athletic shoes, both in-store and online for Macy’s, one of the US’ premier retailers, operating 375
branded and 188 unbranded concessions within Macy’s stores.
The Acquisition offers the Company the opportunity to expand its market leading elevated proposition into the most
significant global market. It immediately gains the benefit of a significant physical and online retail presence and
increases the importance of the Company to its major international brand partners. On completion of the Acquisition,
the Company will focus on bringing JD’s highly differentiated multichannel retail proposition to the US market.
The Acquisition agreement contains a number of conditions which must be satisfied by one or both of the parties prior
to the closing of the Acquisition, including:
• Approval by the Company’s shareholders
• The approval by the holders of a majority of the issued and outstanding Finish Line shares
• The expiration of the 30 days’ waiting period after the submission of anti-trust filings by both Finish Line and the
Company under the US federal anti-trust laws, which must be filed no later than 10 business days from the signing of
the Acquisition agreement, without any request for additional information being made by the US anti-trust authorities
during such 30 days’ period
• The absence of a company material adverse effect in the period between the signing of the Acquisition agreement
and the closing of the Acquisition
• The continuing accuracy of a number of representations and warranties which are customary in a transaction of this nature
165
Financial Statements
Notes to the Consolidated Financial Statements
31. Subsidiary Undertakings
The following companies were the subsidiary undertakings of JD Sports Fashion Plc at 3 February 2018.
*Indirect holding of the Company
Name of
subsidiary
Place of
registration
Registered
address
Nature of business
and operation
Ownership
interest
Voting rights
interest
Kukri Australia Pty Limited*
Australia
39 Charles Street, Norwood, SA 5067
Distributor of sports clothing and
accessories
83.0%
83.0%
JD Sports Fashion Holdings
Aus Pty
Australia
Level 3, 80 George Street, Sydney NSW 2000
Intermediate holding company
80.0%
80.0%
JD Sports Fashion Aus Pty* Australia
Level 3, 80 George Street, Sydney NSW 2000
Next Athleisure Pty Ltd*
Australia
Level 3, 80 George Street, Sydney NSW 2000
Trend Imports Pty Ltd*
Australia
Level 3, 80 George Street, Sydney NSW 2000
Retailer of sports inspired footwear and
apparel
80.0%
80.0%
Retailer of sports inspired footwear and
apparel
80.0%
80.0%
Distributor of sports inspired footwear
and apparel
80.0%
80.0%
Le Coq Sportif Oceania
Pty Ltd*
JD Sports Fashion Belgium
BVBA
Australia
Level 3, 80 George Street, Sydney NSW 2000
Retailer of sports inspired footwear and
apparel
56.0%
56.0%
Belgium
Wiegstraat 21, 2000 Antwerpen, Belgie
Retailer of sports inspired footwear and
apparel
100.0%
100.0%
Kukri Sports Canada Inc*
Canada
106-1533 Broadway St, Port Coquitlam,
British Columbia, V3c 6P3
Distributor of sports clothing and
accessories
75.0%
75.0%
Shanghai Go Outdoors
Limited*
China
Room A1412, 1 Building, No.5500 Yuanjiang
Road, Minhang, Shanghai, China
Sourcing of products and management
of supplier relationships
100.0%
100.0%
JD Sports Fashion Denmark
APS
Denmark
c/o Harbour House, Sundkrogsgade 21,
2100 Copenhagen,Denmark
Retailer of sports inspired footwear and
apparel
100.0%
100.0%
JD Sports Fashion Finland
OY
Finland
c/o Intertrust Finland Oy, Lautatarhankatu 6,
00580, Helsinki
Retailer of sports inspired footwear and
apparel
100.0%
100.0%
JD Sports Fashion (France)
SAS
France
96 R Du Pont Rompu, 59200 Tourcoing, France
Intermediate holding company
100.0%
100.0%
Spodis SA*
France
96 R Du Pont Rompu, 59200 Tourcoing, France Retailer of sports footwear and
100.0%
100.0%
accessories
JD Sports Fashion Germany
GmbH
Germany
Lap Street 107-108, 12163 Berlin, Germany
Retailer of sports inspired footwear and
apparel
85.0%
85.0%
JD Size GmbH
Germany
Schloßstraße 107-108, 12163 Berlin, Germany
Retailer of sports inspired footwear and
apparel
100.0%
100.0%
Kukri (Asia) Limited*
Hong Kong
Unit 4, 27th Floor, Global Trade Square,
21 Wong Chuk Hang Road, Hong Kong
Distributor of sports clothing and
accessories
100.0%
100.0%
Kukri (HK) Limited*
Hong Kong
Unit 4, 27th Floor, Global Trade Square,
21 Wong Chuk Hang Road, Hong Kong
Dormant company
100.0%
100.0%
JD Sports Fashion India LLP India
B-808 The Platina, Gachibawli, Hyderabad,
Telangana, India – 500032
Outsourced multichannel operations
100.0%
100.0%
John David Sports Fashion
(Ireland) Limited
Ireland
3 Burlington Road, Dublin 4, D04RD68,
Republic of Ireland
Retailer of sports inspired footwear and
apparel
100.0%
100.0%
J.D Sports Limited*
Ireland
3 Burlington Road, Dublin 4, D04RD68,
Republic of Ireland
Intermediate holding company
100.0%
100.0%
Kukri Sports Ireland Limited* Ireland
3 Burlington Road, Dublin 4, D04RD68,
Republic of Ireland
Distributor of sports clothing and
accessories
100.0%
100.0%
Champion Sports Group
Limited*
Ireland
3 Burlington Road, Dublin 4, D04RD68,
Republic of Ireland
Intermediate holding company
100.0%
100.0%
PCPONE*
Ireland
3 Burlington Road, Dublin 4, D04RD68,
Republic of Ireland
Intermediate holding company
100.0%
100.0%
Champion Retail Limited*
Ireland
3 Burlington Road, Dublin 4, D04RD68,
Republic of Ireland
Retailer of sports and leisure goods
100.0%
100.0%
Champion Sports Ireland*
Ireland
3 Burlington Road, Dublin 4, D04RD68,
Republic of Ireland
Retailer of sports and leisure goods
100.0%
100.0%
Champion Sports Newco
Limited*
Ireland
3 Burlington Road, Dublin 4, D04RD68,
Republic of Ireland
Dormant company
100.0%
100.0%
Marathon Sports Limited*
Ireland
3 Burlington Road, Dublin 4, D04RD68,
Republic of Ireland
Dormant company
100.0%
100.0%
166
Financial Statements
Notes to the Consolidated Financial Statements
31. Subsidiary Undertakings (continued)
Name of
subsidiary
Place of
registration
Registered
address
Nature of business
and operation
Ownership
interest
Voting rights
interest
Champion Sports (Holdings)
Unlimited*
Ireland
3 Burlington Road, Dublin 4, D04RD68,
Republic of Ireland
Dormant company
100.0%
100.0%
Capso Holdings Limited*
Isle of Man
33-37 Athol Street, Isle Of Man, IM1 1LB
Intermediate holding company
100.0%
100.0%
Focus Italy S.pa.*
Italy
Viale Majno Luigi 17/A, 20122 Milano Italy
JD Sports Fashion SRL
Italy
Via Montenapoleone n. 29 – 20121 Milan, Italy
Distributor of sports clothing and
footwear
100.0%
100.0%
Retailer of sports inspired footwear
and apparel
100.0%
100.0%
JD Sports Fashion Korea Inc Korea
6F Yoonik Bldg. 430 Eonju-ro, Gangnam-gu,
Seoul
Retailer of sports inspired footwear
and apparel
15.0%
15.0%
JD Sports Fashion SDN BHD Malaysia
Suite D23, 2ND Floor, Plaza Pekeliling, No. 2,
Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia
Retailer of sports inspired footwear
and apparel
50.0%
50.0%
Kukri Sports Middle East JLT* Middle East
Lakeview Tower, Jumeirah Lake Towers, Dubai,
United Arab Emirates
Distributor of sports clothing and
accessories
100.0%
100.0%
JD Sports Fashion BV
Netherlands Oosteinderweg 247 B 1432 AT Aalsmeer,
The Netherlands
Retailer of sports inspired footwear
and apparel
100.0%
100.0%
Sports Unlimited Retail BV Netherlands Oosteinderweg 247 B 1432 AT Aalsmeer,
The Netherlands
Retailer of sports inspired footwear
and apparel
100.0%
100.0%
Kukri NZ Limited*
New Zealand Unit 2, 45 The Boulevard, Te Rapa Park,
Hamilton
Distributor of sports clothing and
accessories
75.0%
75.0%
Trend Imports (NZ) Pty
Limited*
New Zealand Level 2, Fidelity House, 81 Carlton Gore Rd,
Newmarket, Auckland, New Zealand
Distributor of sports inspired footwear
and apparel
80.0%
80.0%
SDSR – Sports Division SR,
S.A*
Portugal
Rua Joao Mendoça, nº 505, Matosinhos
Freguesia, São Mamede de Infesta e Senhora
da Hora, 4464 503 Matosinhos, Portugal
Retailer of sports and leisure goods
50.0%
50.0%
Sportiberica – Sociedade de
Arigos de Desporto S.A.
Portugal
Avenida das Indústrias, n.º 63,
Agualva do Cacém, Sintra, Portugal
Retailer of sports and leisure goods
52.0%
52.0%
JD Sports Fashion PTE LTD* Singapore
190 Middle Road, 14-05, Fortune Centre,
Singapore, 188979
Retailer of sports inspired footwear
and apparel
50.0%
50.0%
Kukri Pte Limited*
Singapore
10 Anson Road, 19-15 International Plaza,
Singapore 079903
Distributor of sports clothing and
accessories
100.0%
100.0%
Kukri Shanghai Limited*
Shanghai
Room 221-225, No. 2 Building, No.38 Debao
Road, China (Shanghai) Pilot Free Trade Zone,
Shanghai, 200131, China
Distributor of sports clothing and
accessories
100.0%
100.0%
Jandernama
Spain
Polígono Industrial de las Atalayas,
Avenida Euro, N2, Alicante 03114, Spain
Intermediate holding company
100.0%
100.0%
Iberian Sports Retail Group
SL (formerlyJD Sprinter
Holdings 2010 SL)
Spain
Ctra. de Dolores 1.8 km Pol. Industrial Vizcarra,
Nave 14 03290 Elche, Alicante, Spain
Intermediate holding company
50.0%
50.0%
JD Spain Sports Fashion
2010 SL*
Spain
Ctra. de Dolores 1.8 km Pol. Industrial Vizcarra,
Nave 14 03290 Elche, Alicante, Spain
Retailer of sports and leisure goods
65.0%
65.0%
Sprinter Megacentros Del
Deporte SLU*
Spain
Ctra. de Dolores 1.8 km Pol. Industrial Vizcarra,
Nave 14 03290 Elche, Alicante, Spain
Retailer of sports and leisure goods
50.0%
50.0%
Sport Zone Espana,
Comercio de Articulos de
Deporte S.A*
Spain
Sport Zone Canarias (SL)*
Spain
Polígono Industrial de las Atalayas,
Avenida Euro, N2, Alicante 03114, Spain
Retailer of sports and leisure goods
50.0%
50.0%
Avenida el Paso, 10, 1º, Edificio Multiusos,
Polígono Industrial Los Majuelos, La Laguna
38201, Santa Cruz de Tenerife, Spain
Retailer of sports and leisure goods
30.0%
30.0%
JD Sports Fashion Sweden
AB
Sweden
c/o Intertrust CN (Sweden) AB, PO Box 16285,
103 25 Stockholm, Sweden
Retailer of sports inspired footwear
and apparel
100.0%
100.0%
2Squared Agency Limited UK
St. Ann’s Square, Manchester, M2 7PW
2Squared Retail Limited
UK
St. Ann’s Square, Manchester, M2 7PW
Distributor of fashion clothing
and accessories
Distributor of fashion clothing
and accessories
80.0%
80.0%
76.0%
76.0%
ActivInstinct Holdings
Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Intermediate holding company
100.0%
100.0%
ActivInstinct Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Multichannel retailer of sports inspired
footwear and apparel
100.0%
100.0%
167
Financial Statements
Notes to the Consolidated Financial Statements
31. Subsidiary Undertakings (continued)
Name of
subsidiary
Place of
registration
Registered
address
Nature of business
and operation
Ownership
interest
Voting rights
interest
Allsports (Retail) Limited
UK
Allsports.co.uk Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Dormant company
100.0%
100.0%
Alpine Bikes Limited*
UK
41 Commercial Street, Leith, Edinburgh,
EH6 6JD
Retailer of outdoor footwear,
apparel and equipment
60.0%
60.0%
Alpine Group (Scotland)
Limited*
UK
41 Commercial Street, Leith, Edinburgh,
EH6 6JD
Intermediate holding company
60.0%
60.0%
Ark Fashion Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Aspecto (Holdings) Limited UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Aspecto Trading Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Athleisure Limited
Blacks Outdoor Retail
Limited
UK
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Intermediate holding company
100.0%
100.0%
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Retailer of outdoor footwear,
apparel and equipment
100.0%
100.0%
Blue Retail Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Retailer of sports inspired footwear
and apparel
100.0%
100.0%
C.C.C. (Camping & Caravan
Centre) Limited*
UK
C.C.C. (Wholesale Leisure)
Limited*
UK
CCC Outdoors Limited*
Cloggs Online Limited
Clothingsites Holdings
Limited
UK
UK
UK
Cuthbert House, Arley Street, Sheffield, S2 4QP Dormant company
100.0%
100.0%
Cuthbert House, Arley Street, Sheffield, S2 4QP Dormant company
100.0%
100.0%
Cuthbert House, Arley Street, Sheffield, S2 4QP Dormant company
100.0%
100.0%
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Multichannel retailer of fashion
footwear
100.0%
100.0%
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Intermediate holding company
100.0%
100.0%
Clothingsites.co.uk Limited* UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Retailer of fashion clothing
and footwear
100.0%
100.0%
Dantra Limited
Dapper (Scarborough)
Limited*
UK
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Retailer of childrens fashion clothing
and footwear
75.0%
75.0%
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Retailer of premium branded
Men's apparel and footwear
80.0%
80.0%
Duffer of St George Limited UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Licensor of a fashion brand
100.0%
100.0%
Ensco 1092 Limited*
UK
Cuthbert House, Arley Street, Sheffield, S2 4QP Dormant company
100.0%
100.0%
Exclusive Footwear Limited UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
90.0%
90.0%
First Sport Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Focus Brands Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Intermediate holding company
100.0%
100.0%
Focus Equipment Limited* UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Focus Group Holdings
Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Intermediate holding company
100.0%
100.0%
Focus International Limited* UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Distributor of sports clothing
and footwear
100.0%
100.0%
Focus Sports & Leisure
International Limited*
Footpatrol London 2002
Limited
UK
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Dormant company
100.0%
100.0%
168
Financial Statements
Notes to the Consolidated Financial Statements
31. Subsidiary Undertakings (continued)
Name of
subsidiary
Place of
registration
Registered
address
Nature of business
and operation
Ownership
interest
Voting rights
interest
Frank Harrison Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
90.0%
90.0%
George Fisher Holdings
Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Intermediate holding company
60.0%
60.0%
George Fisher Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Retailer of outdoor footwear,
apparel and equipment
60.0%
60.0%
GetTheLabel.com Limited* UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
80.0%
80.0%
Go Explore Consulting
Limited*
UK
Cuthbert House, Arley Street, Sheffield,
S2 4QP
Dormant company
100.0%
100.0%
Go Outdoors Limited*
UK
Cuthbert House, Arley Street, Sheffield,
S2 4QP
Retailer of outdoor footwear,
apparel and equipment
100.0%
100.0%
Go Outdoors Topco Limited* UK
Cuthbert House, Arley Street, Sheffield, S2 4QP
Intermediate holding company
100.0%
100.0%
Graham Tiso Limited*
UK
41 Commercial Street, Leith, Edinburgh,
EH6 6JD
Retailer of outdoor footwear,
apparel and equipment
60.0%
60.0%
Henleys Clothing Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Hip Store Limited
Infinities Retail Group
Holdings Limited
Infinities Retail Group
Limited*
UK
UK
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Retailer of fashion clothing
and footwear
100.0%
100.0%
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Intermediate holding company
100.0%
100.0%
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Retailer of fashion clothing
and footwear
100.0%
100.0%
IRG Altrincham Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
IRG Birkenhead Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
IRG Blackburn Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
IRG Bradford Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
IRG Bury Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
IRG Chesterfield Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
IRG Denton Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
IRG Derby Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
IRG Stockport Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
IRG Stoke Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
IRG Warrington Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
J D Sports Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
JD Sports Gyms Acquisitions
Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
87.5%
87.5%
JD Sports Active Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
JD Sports Gyms Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Operator of fitness centres
87.5%
87.5%
169
Financial Statements
Notes to the Consolidated Financial Statements
31. Subsidiary Undertakings (continued)
Name of
subsidiary
Place of
registration
Registered
address
Nature of business
and operation
Ownership
interest
Voting rights
interest
Kooga Rugby Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Distributor of rugby clothing
and accessories
100.0%
100.0%
Kukri Events Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Kukri GB Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Distributor and retailer of sports
clothing and accessories
100.0%
100.0%
Kukri Sports Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Intermediate holding company
100.0%
100.0%
Mainline Menswear Holdings
Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Intermediate holding company
80.0%
80.0%
Mainline Menswear Limited* UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Retailer of premium branded
Men's apparel and footwear
80.0%
80.0%
Millet Sports Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Millets Limited
Mitchell's Practical
Campers Limited*
UK
UK
Nanny State Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Cuthbert House, Arley Street, Sheffield, S2 4QP Dormant company
100.0%
100.0%
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Nicholas Deakins Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Distributor of fashion footwear
100.0%
100.0%
Old Brown Bag Clothing
Limited*
UK
The Old Dairy 76 Heyes Lane, Alderley Edge,
Cheshire, SK9 7LE
Dormant company
100.0%
100.0%
OneTrueSaxon Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Open Fashion Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Oswald Bailey Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Outdoorclearance
Company Limited*
UK
Cuthbert House, Arley Street, Sheffield, S2 4QP Dormant company
100.0%
100.0%
Peter Werth Limited*
UK
Millae & Bryce Limited, Bonnington Bond 2
Anderson Place, Edinburgh, EH6 5NP
Dormant company
100.0%
100.0%
Pink Soda Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Intermediate holding company
100.0%
100.0%
Premium Fashion Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Prima Designer Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Intermediate holding company
100.0%
100.0%
R.D. Scott Limited
Simon & Simon
Fashion Limited
Size? Limited
UK
UK
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Retailer of fashion clothing
and footwear
100.0%
100.0%
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Retailer of fashion clothing
100.0%
100.0%
Dormant company
100.0%
100.0%
Sonneti Fashions Limited* UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Source Lab Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Design and distributor of sportswear
85.0%
85.0%
Squirrel Sports Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Sundown Limited*
UK
41 Commercial Street, Leith, Edinburgh,
EH6 6JD
Dormant company
60.0%
60.0%
170
Financial Statements
Notes to the Consolidated Financial Statements
31. Subsidiary Undertakings (continued)
Name of
subsidiary
Place of
registration
Registered
address
Nature of business
and operation
Ownership
interest
Voting rights
interest
Tessuti Group Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Intermediate holding company
100.0%
100.0%
Tessuti Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Retailer of fashion clothing and
footwear
100.0%
100.0%
Tessuti Retail Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
The Alpine Group Limited* UK
41 Commercial Street, Leith, Edinburgh,
EH6 6JD
Intermediate holding company
60.0%
60.0%
The Alpine Store Limited*
UK
41 Commercial Street, Leith, Edinburgh,
EH6 6JD
Dormant company
60.0%
60.0%
The John David Group
Limited
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Tiso Group Limited
UK
41 Commercial Street, Leith, Edinburgh,
EH6 6JD
Intermediate holding company
60.0%
60.0%
Topgrade Sportswear
Holdings Limited
Topgrade Sportswear
Limited*
UK
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
80.0%
80.0%
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Distributor and multichannel retailer
of sports and fashion clothing and
footwear
80.0%
80.0%
Topgrade Trading Limited* UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
80.0%
80.0%
Touchwood Sports Limited UK
Cuthbert House, Arley Street, Sheffield, S2 4QP Dormant company
100.0%
100.0%
Ultimate Outdoors Limited* UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
Varsity Kit Limited*
UK
Hollinsbrook Way, Pilsworth, Bury, Lancashire,
BL9 8RR
Dormant company
100.0%
100.0%
171
Financial Statements
Company Balance Sheet
As at 3 February 2018
Fixed assets
Intangible assets
Property, plant and equipment
Investment property
Other assets
Investments
Deferred tax assets
Current assets
Stocks
Debtors
Cash and cash equivalents
Total assets
Creditors : amounts falling due within one year
Provisions
Income tax liabilities
Creditors: amounts falling due after more than one year
Provisions
Total liabilities
Net assets
Capital and reserves
Issued ordinary share capital
Share premium
Retained earnings
Total equity
As at 3 February
2018
£m
Note
C5
C6
C7
C8
C9
C16
C10
C11
C12
C13
C15
C14
C15
C17
21.8
125.1
3.4
8.9
213.1
2.2
374.5
144.0
374.1
260.9
779.0
1,153.5
(288.5)
(0.3)
(26.8)
(315.6)
(62.7)
(0.5)
(63.2)
(378.8)
774.7
2.4
11.7
760.6
774.7
As at 28 January
2017
£m
20.9
84.3
3.5
9.2
189.3
3.7
310.9
116.6
314.8
168.2
599.6
910.5
(263.3)
(0.4)
(29.4)
(293.1)
(24.4)
(0.7)
(25.1)
(318.2)
592.3
2.4
11.7
578.2
592.3
These financial statements were approved by the Board of Directors on 16 April 2018 and were signed on its behalf by:
B Small
Director
Registered number: 1888425
172
Financial Statements
Company Statement of Changes in Equity
For the 53 weeks ended 3 February 2018
Balance at 30 January 2016
Profit for the period
Total comprehensive income for the period
Dividends to equity holders
Balance at 28 January 2017
Profit for the period
Total comprehensive income for the period
Dividends to equity holders
Balance at 3 February 2018
Ordinary
share
capital
£m
Share
premium
£m
Retained
earnings
£m
2.4
-
-
-
2.4
-
-
-
2.4
11.7
-
-
-
11.7
-
-
-
11.7
430.0
162.7
162.7
(14.5)
578.2
197.6
197.6
(15.2)
760.6
Total
equity
£m
444.1
162.7
162.7
(14.5)
592.3
197.6
197.6
(15.2)
774.7
173
Financial Statements
Notes to the Company Financial Statements
C1. Basis of Preparation
The parent company financial statements of JD Sports Fashion Plc were prepared in accordance with Financial Reporting
Standard 101 Reduced Disclosure Framework (“FRS 101”). The amendments to FRS 101 (2014 / 2015 Cycle) issued in July
2015 and effective immediately have been applied.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements
of International Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”), but makes amendments where
necessary in order to comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure
exemptions has been taken.
In these financial statements, the company has applied the exemptions available under FRS 101 in respect of the following
disclosures:
• a Cash Flow Statement and related notes;
• Comparative period reconciliations for share capital, tangible fixed assets, intangible assets and investment properties;
• Disclosures in respect of transactions with wholly owned subsidiaries;
• Disclosures in respect of capital management;
• The effects of new but not yet effective IFRSs;
• Disclosures in respect of the compensation of Key Management Personnel; and
• Disclosures of transactions with a management entity that provides key management personnel services to the company.
As the consolidated financial statements of JD Sports Fashion Plc include the equivalent disclosures, the Company has
also taken the exemptions under FRS 101 available in respect of the following disclosures:
• Certain disclosures required by IAS 36 Impairment of assets in respect of the impairment of goodwill and indefinite
life intangible assets;
• Certain disclosures required by IFRS 3 Business Combinations in respect of business combinations undertaken by the
Company; and
• Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial
Instrument Disclosures.
The Company has taken advantage of the exemption in s408 of the Companies Act 2006 not to present its individual
income statement and related notes. The total recognised comprehensive income for the parent included in these
consolidated financial statements is £197.6 million (2017: £162.7 million).
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in
these financial statements and in preparing an opening FRS 101 IFRS balance sheet at 30 January 2016 for the purposes
of the transition to FRS 101 Adopted IFRSs.
The financial statements have been prepared on a going concern basis under the historical cost convention except as
disclosed in the accounting policies in Note 1 of the Group financial statements. The preparation of financial statements
in conformity with FRS 101 requires the use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements are the same for the Company as they are for the Group. For further details, see page 121 to 122 in the Group
financial statements.
C2. Directors’ Remuneration
The remuneration of Executive Directors for both the Company and Group are disclosed in Note 5 of the Group financial
statements.
C3. Auditor’s Remuneration
Fees payable to the Company’s auditor for the audit of the Company and Group financial statements are disclosed
in Note 3 of the Group financial statements.
174
Financial Statements
Notes to the Company Financial Statements
C4. Staff Numbers and Costs
The average number of persons employed by the Company (including Directors) during the period, analysed by category,
was as follows:
Sales and distribution
Administration
Full time equivalents
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Other pension costs
C5. Intangible Assets
2018
2017
13,541
427
13,968
8,619
11,751
375
12,126
7,568
53 weeks to
3 February 2018
£m
52 weeks to
28 January 2017
£m
180.0
11.7
1.8
193.5
160.5
10.8
1.6
172.9
Goodwill in the Company comprises the goodwill on acquisition of First Sport (£15.0 million) and Allsports (£0.9 million).
Brand names in the Company comprise all brand names included in the Group table (Note 12) within the Sport Fashion
segment with the exclusion of the Doone brand name which is included in Sport Zone Portugal.
Goodwill
Brand licences
Brand names
£m
£m
£m
Software
development
£m
Total
£m
Cost or valuation
At 28 January 2017
Additions
At 3 February 2018
Amortisation and impairment
At 28 January 2017
Charge for the period
At 3 February 2018
Net book value
At 3 February 2018
At 28 January 2017
19.9
-
19.9
4.0
-
4.0
15.9
15.9
11.7
-
11.7
8.8
0.7
9.5
2.2
2.8
7.4
-
7.4
7.4
-
7.4
-
-
10.7
4.5
15.2
8.6
2.9
11.5
3.7
2.1
49.7
4.5
54.2
28.8
3.6
32.4
21.8
20.9
175
Financial Statements
Notes to the Company Financial Statements
C6. Property, Plant and Equipment
Cost
At 28 January 2017
Additions
Disposals
At 3 February 2018
Depreciation and impairment
At 28 January 2017
Charge for period
Disposals
Impairments
At 3 February 2018
Net book value
At 3 February 2018
At 28 January 2017
C7. Investment Property
Improvements to
short leasehold
properties
Computer
equipment
Fixtures and
fittings
£m
£m
£m
Land
£m
Motor
vehicles
£m
Total
£m
5.5
12.0
(4.5)
13.0
-
-
-
-
-
13.0
5.5
16.1
2.7
(1.1)
17.7
12.1
3.1
(0.8)
(1.2)
13.2
4.5
4.0
32.5
4.0
(0.4)
36.1
30.4
2.6
(0.2)
-
32.8
3.3
2.1
175.8
48.1
(9.5)
214.4
103.2
15.5
(8.6)
-
110.1
104.3
72.6
0.1
-
-
0.1
-
0.1
-
-
0.1
-
0.1
230.0
66.8
(15.5)
281.3
145.7
21.3
(9.6)
(1.2)
156.2
125.1
84.3
Investment property, which is property held to earn rentals, is stated at cost less accumulated depreciation and
impairment losses. Investment property is depreciated over a period of 50 years on a straight line basis, with the
exception of freehold land, which is not depreciated. The Company has not elected to revalue investment property
annually but to disclose the fair value in the Consolidated Financial Statements. An external valuation to determine
the fair value is prepared every three years by persons having the appropriate professional experience. When an
external valuation is not prepared, an annual assessment is conducted using internal expertise.
Cost
28 January 2017 and 3 February 2018
Depreciation and impairment
At 28 January 2017
Charge for period
At 3 February 2018
Net book value
At 3 February 2018
At 28 January 2017
£m
4.8
1.3
0.1
1.4
3.4
3.5
The investment properties brought forward relate to properties leased to Focus Brands Limited (£4.2 million) and Kukri
Sports Limited (£0.6 million).
These properties remain Investment Properties from the Company perspective as at 3 February 2018.
Based on an external valuation prepared as at 30 January 2016, the fair value of the investment properties as at that date
was £4.0 million. An internal assessment was conducted for the current financial year and the fair value of £4.0 million
remains appropriate as at 3 February 2018.
Management do not consider either of the investment properties to be impaired as the future rental income supports
the carrying value.
176
Financial Statements
Notes to the Company Financial Statements
C8. Non-current Other Assets
Cost
At 28 January 2017
Additions
Disposals
At 3 February 2018
Depreciation and impairment
At 28 January 2017
Charge for period
Disposals
At 3 February 2018
Net book value
At 3 February 2018
At 28 January 2017
C9. Investments
Legal Fees
Lease Premia
£m
12.4
2.2
(1.0)
13.6
7.0
1.2
(0.5)
7.7
5.9
5.4
£m
5.0
-
-
5.0
1.2
0.8
-
2.0
3.0
3.8
Total
£m
17.4
2.2
(1.0)
18.6
8.2
2.0
(0.5)
9.7
8.9
9.2
In the Company’s accounts all investments in subsidiary undertakings and joint ventures are stated at cost less
provisions for impairment losses.
Basis of Consolidation
I. Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity.
The financial statements of subsidiaries are included in the consolidated financial statements from the date that
control commences until the date that control ceases. Non-controlling interests in the net assets of consolidated
subsidiaries are identified separately from the equity attributable to holders of the parent. Non-controlling interests
consist of the amount of those interests at the date that control commences and the attributable share of changes
in equity subsequent to that date.
II. Joint Ventures
Joint ventures are entities over which the Group has joint control based on a contractual arrangement. The results
and assets and liabilities of joint ventures are incorporated in the consolidated financial statements using the equity
method of accounting. Investments in joint ventures are carried in the Consolidated Statement of Financial Position
at cost and adjusted for post-acquisition changes in the Group’s share of the net assets. Losses of the joint venture
in excess of the Group’s interest in it are not recognised.
III. Transactions Eliminated on Consolidation
Intragroup balances, and any unrealised income and expenses arising from intragroup transactions, are eliminated
in preparing the consolidated financial statements.
Changes in Ownership Interest Without a Loss of Control
In accordance with IAS 27 ‘Consolidated and Separate Financial Statements’ (2008), upon a change in ownership
interest in a subsidiary without a loss of control, the carrying amounts of the controlling and non-controlling
interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the
amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is
recognised directly in equity and attributed to the owners of the parent. Acquisitions or disposals of non-controlling
interests are therefore accounted for as transactions with owners in their capacity as owners and no goodwill is
recognised as a result of such transactions. Associated transaction costs are accounted for within equity.
177
Financial Statements
Notes to the Company Financial Statements
C9. Investments (continued)
Cost
At 28 January 2017
Additions
At 3 February 2018
Impairment
At 28 January 2017 and 3 February 2018
Net book value
At 3 February 2018
At 28 January 2017
£m
194.8
23.8
218.6
5.5
213.1
189.3
The additions to investments in the current year comprise the following. Unless otherwise stated the investment is
100% owned.
2018
£m
10.5
6.3
5.4
1.0
0.2
0.2
0.1
0.1
23.8
2018
£m
2017
£m
144.0
116.6
2018
£m
2017
£m
5.3
19.4
349.4
374.1
5.9
15.9
293.0
314.8
Iberian Sports Retail Group SL (50% owned)
Dantra Limited (75% owned)
JD Sports Fashion South Korea (15% owned)
JD Sports Gyms Limited (87.5% owned)
JD Sports Fashion Sweden AB
Focus Brands Limited
Sportiberica Sociedade De Artigos De Desporto S.A. (80% owned)
2Squared Retail Limited & 2Squared Agency Limited (76% and 80% owned)
Total additions
A list of subsidiaries is shown in Group Note 31.
C10. Stocks
Finished goods and goods for resale
The Company has £17.1 million (2017: £13.6 million) of stock provisions at the end of the period.
C11. Debtors – Amounts Falling Due Within One Year
Current assets
Trade debtors
Prepayments and accrued income
Amounts owed by other Group companies
178
Financial Statements
Notes to the Company Financial Statements
C12. Financial Instruments
Financial Assets
The currency profile of cash and cash equivalents is shown below:
Bank balances and cash floats
Sterling
Euros
US Dollars
Australian Dollars
Danish Krone
Other
2018
£m
260.9
206.4
31.5
9.8
8.1
1.7
3.4
2017
£m
168.2
140.4
20.9
2.5
3.0
0.9
0.5
260.9
168.2
Financial Liabilities
The company does not have any interest bearing loans and borrowings balances as at 3 February 2018 (28 January 2017: £nil).
Credit Risk
The Company has provided guarantees on working capital and other banking facilities entered into by Spodis SA
(€6.6 million), Sprinter Megacentros Del Deporte SLU (€8.8 million), Next Athleisure Pty Limited (AUS$12.0 million),
Cloggs Online Limited (£0.5 million), Kukri Sports Limited and Kukri GB Limited (£1 million), and Kooga Rugby Limited
(£0.3 million). As at 3 February 2018, these facilities were drawn down by £7.1 million (2017: £7.1 million). In addition,
the syndicated committed £215 million bank facility, which was in place as at 3 February 2018, encompassed cross guarantees
between the Company, RD Scott Limited, Topgrade Sportswear Limited, Blacks Outdoor Retail Limited, Tessuti Limited,
Focus International Limited and Go Outdoors Limited to the extent to which any of these companies were overdrawn.
As at 3 February 2018, these facilities were drawn down by £nil (2017: £nil).
Fair Values
The fair values together with the carrying amounts shown in the Balance Sheet as at 3 February 2018 are as follows:
Trade and other debtors
Cash and cash equivalents
Trade and other creditors – current
Trade and other creditors – non-current
Unrecognised gains
Carrying amount
Fair value
Note
C11
C12
2018
£m
354.7
260.9
(268.1)
37.9
385.4
2018
£m
354.7
260.9
(268.1)
37.9
385.4
-
Fair Value Hierarchy
For information on Company balances which are categorised at the same level as for Group, see note 19. In addition,
investment property held in the Company of £3.4 million (2017: £3.5 million) is categorised as Level 3 within the fair
value hierarchy.
179
Financial Statements
Notes to the Company Financial Statements
C13. Creditors: Amounts Falling Due Within One Year
Trade creditors
Other creditors and accrued expenses
Other tax and social security costs
Amounts payable to other Group companies
C14. Creditors: Amounts Falling Due After More Than One Year
Other creditors and accrued expenses
2018
£m
98.5
173.9
8.8
7.3
288.5
2018
£m
62.7
2017
£m
92.2
146.7
17.1
7.3
263.3
2017
£m
24.4
Included with Other creditors and accrued expenses are put option liabilities of £38.0 million (2017: £3.4 million).
Further disclosure can be found in Note 20 of the Group accounts.
C15. Provisions
Balance at 28 January 2017
Provisions released during the period
Provisions utilised during the period
Balance at 3 February 2018
C16. Deferred Tax Assets and Liabilities
Recognised Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
2018
£m
Assets
2017
£m
Liabilities
2018
£m
Liabilities
2017
£m
Property, plant and equipment
Other
Tax assets / (liabilities)
0.2
2.1
2.3
1.3
2.4
3.7
-
-
-
-
-
-
Movement in Deferred Tax during the Period
Onerous
property leases
£m
1.1
(0.1)
(0.2)
0.8
Net
2017
£m
1.3
2.4
3.7
Net
2018
£m
0.2
2.0
2.2
Property, plant
and equipment
Chargeable gains
held over/
rolled over
£m
0.9
0.4
1.3
(1.1)
0.2
£m
(0.2)
0.2
-
-
-
Other
£m
Total
£m
1.4
1.0
2.4
(0.4)
2.0
2.1
1.6
3.7
(1.5)
2.2
Balance at 30 January 2016
Recognised in income
Balance at 28 January 2017
Recognised in income
Balance at 3 February 2018
180
Financial Statements
Notes to the Company Financial Statements
C17. Capital
Issued Ordinary Share Capital for both the Company and Group is disclosed in Note 23 of the Group financial statements.
C18. Dividends
After the reporting date the dividend proposed by both Company and Group directors is disclosed in Note 25 of the
Group financial statements.
C19. Commitments
(i) Capital Commitments
As at 3 February 2018, the Company had entered into contracts to purchase property, plant and equipment as follows:
Contracted
2018
£m
1.4
2017
£m
29.5
(ii) Operating Lease Commitments
The Company leases various retail outlets, offices, warehouses, plant and equipment under non-cancellable operating
lease agreements. The leases have varying terms, escalation clauses and renewal rights.
Undiscounted total future minimum rentals payable under non-cancellable operating leases are as follows:
Within one year
Later than one year and not later than five years
After five years
Land and
buildings
2018
£m
Plant and
equipment
2018
£m
Land and
buildings
2017
£m
Plant and
equipment
2017
£m
70.9
236.1
198.3
505.3
1.0
1.2
-
2.2
65.6
217.2
174.4
457.2
1.2
1.1
-
2.3
(iii) Sublease Receipts
The Company subleases various retail outlets under non-cancellable operating lease agreements. The leases have
varying terms, escalation clauses and renewal rights. The total future minimum operating sublease receipts expected to
be received at 3 February 2018 are as follows:
Within one year
Later than one year and not later than five years
After five years
2018
£m
0.3
1.2
-
1.5
2017
£m
0.4
1.2
0.3
1.9
181
Financial Statements
Notes to the Company Financial Statements
C20. Related Party Transactions and Balances
The Company made purchases of inventory from Pentland Group Plc in the period and the Company also sold inventory
to Pentland Group Plc in the period. During the period, the Company entered into the following transactions with
Pentland Group Plc:
Purchase of inventory
Sale of inventory
Income from
related parties
2018
£m
Expenditure with
related parties
2018
£m
Income from
related parties
2017
£m
Expenditure with
related parties
2017
£m
-
0.1
(20.7)
-
-
-
(15.0)
-
At the end of the period, the Company had the following balances outstanding with Pentland Group Plc:
Trade receivables / (payables)
-
(0.5)
Amounts
owed by
related parties
2018
£m
Amounts
owed to
related parties
2018
£m
Amounts
owed by
Amounts
owed to
related parties
related parties
2017
£m
-
2017
£m
(1.2)
Transactions with Related Parties Who Are Members of the Group
Subsidiaries
In the disclosure below the Company has applied the exemptions available under FRS 101 in respect of transactions with
wholly owned subsidiaries.
Loans represent historic intercompany balances and initial investment in subsidiary undertakings to enable them to
purchase other businesses. For subsidiaries with a non-controlling interest, these long term loans attract interest at the
UK base rate plus an applicable margin.
Other intercompany balances and trade receivables / payables relates to:
• The sale and purchase of stock between the Company and its subsidiaries on arm’s length terms
• Recharges for administrative overhead and distribution costs
Other intercompany balances are settled a month in arrears. These balances do not accrue interest. In certain circumstances
where the subsidiaries have not repaid these balances, they have been reclassified to long term loans, and therefore accrue
interest as applicable.
During the period, the Company entered into the following transactions with subsidiaries not wholly owned:
Income from
related parties
2018
£m
Expenditure with
related parties
2018
£m
Income from
related parties
2017
£m
Expenditure with
related parties
2017
£m
85.6
1.4
23.5
-
0.7
2.9
(0.5)
-
-
-
-
-
42.8
1.1
0.3
0.2
0.6
1.9
(12.9)
-
-
-
-
-
Sale / (purchase) of inventory
Interest receivable
Dividend income received
Rental income
Royalty income
Management charge receivable
182
Financial Statements
Notes to the Company Financial Statements
C20. Related Party Transactions and Balances (continued)
At the end of the period, the Company had the following balances outstanding with subsidiaries not wholly owned:
Non-trading loan receivable
Non-trading loan receivable (interest bearing)
Trade receivables / (payables)
Other intercompany balances
Income tax group relief
C21. Contingent Liabilities
Amounts
owed by
related parties
2018
£m
Amounts
owed to
related parties
2018
£m
10.0
54.4
19.3
8.9
0.6
-
-
-
(0.8)
(0.6)
Amounts
owed by
Amounts
owed to
related parties
related parties
2017
£m
12.6
42.0
12.8
5.1
-
2017
£m
-
-
(0.6)
(1.4)
(1.4)
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies
within its group, the Company treats the guarantee contract as a contingent liability until such time as it becomes
probable that the Company will be required to make a payment under the guarantee.
The Company has provided the following guarantees:
• Guarantee on the working capital facilities and bonds and guarantees in Spodis SA of €6.6 million (2017: €6.6 million)
• Guarantee on the working capital and other banking facilities in relation to the Sprinter Megacentros Del Deporte SLU
of €8.8 million (2017: €8.8 million)
• Guarantee on the working capital and other banking facilities in relation to the Next Athleisure Pty Limited of
AUS $15.3 million (2017: AUS $15.3 million)
• Guarantee on the working capital facilities in Cloggs Online Limited of £0.5 million (2017: £0.5 million)
• Guarantee on the working capital facilities in Kooga Rugby Limited of £0.3 million (2017: £0.3 million)
• Guarantee on the working capital facilities Kukri Sports Limited and Kukri GB Limited of £1 million (2017: £1 million)
• Guarantee to Kiddicare Properties Limited in relation to the rental commitments on four stores assigned to Blacks
Outdoor Retail Limited. The total value of the remaining rental commitments at 3 February 2018 was £7.7 million
(2017: £10.2 million)
C22. Ultimate Parent Company
The Company is a subsidiary undertaking of Pentland Group Plc which is also the ultimate parent company. Pentland
Group Plc is incorporated in England and Wales.
The largest group in which the results of the Company are consolidated is that headed by Pentland Group Plc. The results
of Pentland Group Plc may be obtained from Companies House, Crown Way, Cardiff, CF14 3UZ.
The Consolidated Financial Statements of JD Sports Fashion Plc are available to the public and may be obtained from
The Company Secretary, JD Sports Fashion Plc, Hollinsbrook Way, Pilsworth, Bury, BL9 8RR or online at www.jdplc.com.
183
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Group Information
Financial Calendar
Financial Calendar
Final Results Announced
Final Dividend Record Date
Financial Statements Published
Annual General Meeting
Final Dividend Payable
Interim Results Announced
Period End (52 Weeks)
Final Results Announced
17 April 2018
29 June 2018
18 May 2018
28 June 2018
6 August 2018
11 September 2018
02 February 2019
April 2019
187
Group Information
Shareholder Information
Shareholder Information
Registered Office
JD Sports Fashion Plc
Hollinsbrook Way
Pilsworth
Bury
Lancashire BL9 8RR
Company Number
Registered in England
and Wales,
Number 1888425
Financial Advisers
and Stockbrokers
Investec
2 Gresham Street
London EC2V 7QP
Peel Hunt LLP
Moor House
120 London Wall
London EC2Y 5ET
Financial Public Relations
MHP Communications
60 Great Portland Street
London W1W 7RT
Principal Bankers
Barclays Bank Plc
43 High Street
Sutton
Surrey SM1 1DR
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Solicitors
DLA Piper UK LLP
Princes Exchange
Princes Square
Leeds LS1 4BY
Addleshaw Goddard LLP
100 Barbirolli Square
Manchester M2 3AB
Auditor
KPMG LLP
1 St. Peter’s Square
Manchester M2 3AE
The Board wishes to express its thanks to the Marketing and Finance departments for the in-house production of this
Annual Report and Accounts.
188
Group Information
Five Year Record (unaudited)
Five Year Record (unaudited)
Revenue
Cost of sales
Gross profit
Selling and distribution expenses – normal
Selling and distribution expenses – exceptional
Selling and distribution expenses
Administrative expenses – normal
Administrative expenses – exceptional
Administrative expenses
Other operating income
Operating profit
Before exceptional items
Exceptional items
Operating profit before financing
Financial income
Financial expenses
Profit before tax
Income tax expense
Profit for the period
Discontinued operation
Loss from discontinued operation, net of tax
Attributable to equity holders of the parent
Attributable to non-controlling interest
Basic earnings per ordinary share from continuing operations (i)
Adjusted basic earnings per ordinary share from continuing
operations (i) (ii)
(iv)
52 weeks to
1 February 2014
(iv)
52 weeks to
31 January 2015
52 weeks to
30 January 2016
52 weeks to
28 January 2017
53 weeks to
3 February 2018
£m
£m
£m
£m
£m
1,216.4
(624.2)
592.2
(455.7)
(5.2)
(460.9)
(55.2)
-
(55.2)
1.7
77.8
83.0
(5.2)
77.8
0.6
(1.6)
76.8
(18.9)
57.9
(16.4)
40.2
1.3
5.82p
6.16p
1,522.3
(782.7)
739.6
(564.3)
(4.5)
(568.8)
(74.0)
(5.0)
(79.0)
0.9
92.7
102.2
(9.5)
92.7
0.6
(2.8)
90.5
(20.7)
69.8
(15.8)
52.7
1.3
7.03p
7.78p
1,821.7
(937.5)
884.2
(648.3)
-
(648.3)
(78.2)
(25.5)
(103.7)
1.2
133.4
158.9
(25.5)
133.4
0.4
(2.2)
131.6
(31.0)
100.6
-
97.6
3.0
10.03p
12.27p
2,378.7
(1,215.1)
1,163.6
(813.0)
-
(813.0)
(106.2)
(6.4)
(112.6)
1.8
239.8
246.2
(6.4)
239.8
0.8
(2.2)
238.4
(53.8)
184.6
-
178.9
5.7
18.38p
19.04p
3,161.4
(1,629.8)
1,531.6
(1,080.5)
-
(1,080.5)
(144.7)
(12.9)
(157.6)
2.4
295.9
308.8
(12.9)
295.9
0.6
(2.0)
294.5
(58.1)
236.4
-
231.9
4.5
23.83p
25.15p
Dividends per ordinary share (i) (iii)
1.36p
1.41p
1.48p
1.55p
1.63p
(i) Basic and adjusted earnings per ordinary share and dividends per ordinary share have been adjusted to reflect the
two share splits (see note 23), effective 30 June 2014 and 24 November 2016, as if the event had occurred at the
beginning of the earliest period presented.
(ii) Adjusted basic earnings per ordinary share is based on earnings excluding the post-tax effect of certain exceptional
items (see note 10).
(iii) Represents dividends declared for the year. Under IFRS dividends are only accrued when approved.
(iv) In accordance with IFRS 5, the results of Bank Fashion Limited (‘Bank’) are presented as a discontinued activity in
the 52 weeks to 31 January 2015 as Bank was a separate major line of business. The Consolidated Income Statement
for the 52 weeks to 1 February 2014 has consequently been re-presented as if Bank had been discontinued from the
start of the comparative year.
189
Group Information
Glossary
Glossary
The Directors measure the performance of the Group based on a range of financial measures, including measures not
recognised by EU-adopted IFRS. 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 underlying performance of the Group. Alternative Performance measures are also used to enhance
the comparability of information between reporting periods, by adjusting for exceptional items, which could distort the
understanding of the performance for the year. Terms are listed in alphabetical order.
Adjusted Earnings Per Share
The calculation of basic earnings per share is detailed in Note 10. Adjusted basic 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. A reconciliation between basic earnings per share and adjusted earnings
per share is shown below:
Basic earnings per share
Exceptional items excluding loss on disposal of non-current assets
Tax relating to exceptional items
Adjusted earnings per share
Core
2018
2017
23.83p
1.32p
-
25.15p
18.38p
0.66p
-
19.04p
The Group’s core Sports Fashion fascia is JD and the Group’s core market is the UK and Republic of Ireland.
EBITDA
Earnings before interest, tax, depreciation and amortisation.
Profit for the period
Addback:
Financial expenses
Income tax expense
Depreciation, amortisation and impairment of non-current assets
Exceptional items
Deduct:
Financial income
EBITDA
2018
£m
236.4
2.0
58.1
76.4
12.9
(0.6)
385.2
2017
£m
184.6
2.2
53.8
62.4
6.4
(0.8)
308.6
190
Group Information
Glossary (continued)
Effective Core Rate of Taxation
Glossary
A reconciliation between the UK main rate of corporation tax and the effective core rate from continuing activities
is as follows:
UK main rate of corporation tax
Depreciation and impairment of non-qualifying non-current assets
Effect of tax rates in foreign jurisdictions
Expenses not deductible and income not taxable
Recognition of previously unrecognised tax losses/movement in deferred tax assets
Other
Profit before tax and exceptional items
2018
%
19.2
(0.3)
0.5
0.2
(0.3)
0.1
19.4
2017
%
20.0
0.7
0.3
0.3
0.2
0.3
21.8
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.
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:
Profit before tax
Exceptional items
Profit before tax and exceptional items
2018
£m
294.5
12.9
307.4
2017
£m
238.4
6.4
244.8
191
JD UK & International
www.jdsports.co.uk
www.jdsports.fr
www.jdsports.nl
www.jdsports.ie
www.jdsports.de
www.jdsports.es
www.jdsports.be
www.jdsports.it
www.jdsports.se
www.jdsports.dk
www.jdsports.fi
www.jdsports.my
www.jd-sports.com.au
www.jdgyms.co.uk
www.size.co.uk
www.sizeofficial.de
www.footpatrol.co.uk
Other UK Fascias
www.scottsmenswear.com
www.tessuti.co.uk
www.mainlinemenswear.co.uk
www.thehipstore.co.uk
www.woodhouseclothing.com
www.bbclothing.co.uk
www.kidscavern.co.uk
www.topgradesportswear.com
www.getthelabel.com
www.kukrisports.com
www.nicholasdeakins.com
Other International Fascias
www.chausport.com
www.sprinter.es
www.sportzone.es
www.sportzone.pt
www.aktiesport.nl
www.perrysport.nl
www.gluestore.com.au
www.peterwerth.co.uk
www.blacks.co.uk
www.millets.co.uk
www.tiso.com
www.georgefisher.co.uk
www.ultimateoutdoors.com
www.milletsports.co.uk
www.brasher.co.uk
www.eurohike.co.uk
www.peterstorm.com
www.gooutdoors.co.uk
www.uksourcelab.com
www.kooga-rugby.com
www.fly53.com
Sports Fashion
Outdoor
Non Trading