40 YEARS
OF
STYLE
JD Sports Fashion Plc
Annual Report and Accounts 2022
OUR PURPOSE
The Group’s purpose is to be a leading
international multichannel retailer of
sports, fashion and outdoor brands with
core values of connecting with consumers
through continual investment in our
store portfolio, nurturing our global branded
supplier relationships and improving our
sustainability and financial performance.
OUR CULTURE AND VALUES
13 acquisitions completed
during the financial year
including DTLR in the US
Entrepreneurial – The Group has a strong track record
of revenue growth, profit optimisation and international
expansion. We maintain ultimate flexibility in our business
model which enables us to capitalise on the fast pace of
consumer trends.
Competitive – Our brand ethos is all about innovation,
creativity and competitiveness. We respect each member
of our team and everyone is encouraged to put forward their
ideas, regardless of how big or small, as dynamic thinking is
what drives the business to be competitive.
Committed – The Group is committed to protecting the
long-term interests of its shareholders, whilst balancing
and promoting the interests of its other key stakeholders,
including its colleagues and suppliers.
Team-oriented – Our people are integral to our success
and are the heartbeat of our business. They deliver on a daily
basis to enable the Group to meet and exceed expectations.
Problems are solved and opportunities seized by people
working together from all levels of the organisation.
Ethical – We believe in extending our entrepreneurial and
competitive spirit beyond financial performance to making the
world around us a better place. We always strive to do the right
thing for our colleagues, our customers and our communities.
OUR STRATEGY
The Group’s strategy is to continuously set the global standard
for retail experience through best-in-class operations, connected
consumer experiences and the unique delivery of the world’s most
authentic brands to the market. We seek to inspire the emerging
generation of globally minded consumers through a connection
to the universal culture of sport, music and fashion.
Further details of the Group’s short and long-term strategy are
set out on pages 14 and 15.
Strategic Report
Statement from the Board
Interim Non-Executive Chair’s Statement
Our Investment Proposition
Our Business Model and Strategy
Strategy in Action
Principal Risks
Business & Financial Review
Alternative Performance Measures
Property and Stores Review
Environmental – Overview and Governance
Environmental – TCFD
Environmental – Climate Change
Environmental – Sector Emissions Data
Environmental – Sustainability
Social – Ethical Sourcing
Social – Our People
Social – Health & Safety
Social – The JD Foundation
Social – Global Empowerment
Governance – Section 172 Statement
Governance – Stakeholder Engagement
Governance
Board of Directors
Directors’ Report
Corporate Governance Report
Nominations Committee Report
Audit & Risk Committee Report
Directors’ Remuneration Report
4
7
12
14
16
26
34
42
44
53
55
60
64
67
71
76
80
82
84
86
87
92
94
99
106
108
114
Financial Statements
131
Statement of Directors’ Responsibilities
132
Independent Auditor’s Report
Consolidated Income Statement
142
Consolidated Statement of Comprehensive Income 142
143
Consolidated Statement of Financial Position
144
Consolidated Statement of Changes in Equity
145
Consolidated Statement of Cash Flows
146
Notes to the Consolidated Financial Statements
219
Company Balance Sheet
220
Company Statement of Changes in Equity
221
Notes to the Company Financial Statements
Group Information
Financial Calendar
Shareholder Information
Five Year Record
235
235
236
HIGHLIGHTS
Revenue £m
£8,563.0m Total dividend payable
per ordinary share** p
8,563.0
0.33
0.34
0.29
0.35p
0.35
6,110.8
6,167.3
4,717.8
3,161.4
2018
2019
2020
2021
2022
2018
2019
0.06
2020
2021
2022
Profit before tax and
exceptional items £m
£947.2m Profit before tax £m
947.2
£654.7m
654.7
307.3
2018
355.2
438.8
421.3
294.5
339.9
348.5
324.0
2019
2020
2021
2022
2018
2019
2020
2021
2022
Basic earnings
per ordinary share** p
7.17p Adjusted earnings
per ordinary share*/** p
5.38
4.77
5.06
4.61
7.17
2018
2019
2020
2021
2022
5.03
2018
5.69
6.85
6.44
2019
2020
2021
2022
Net assets £m
£2,339.7m Net cash* £m
2,339.7
12.84p
12.84
£1,185.9m
1,185.9
795.4
1,289.2
1,496.4
1,076.8
834.3
2018
2019
2020
2021
2022
309.7
2018
125.2
2019
2020
2021
2022
429.9
Average number
of employees
Board gender diversity
(% of female Board members)
67,831
67,831
43%
43%
48,852
53,477
54,385
30,292
2018
2019
2020
2021
2022
29%
29%
17%
2018
17%
2019
2020
2021
2022
*
Throughout the Annual Report ‘*’ indicates the first instance of a term defined and explained in the Alternative Performance Measures
section on page 42 along with a reconciliation to statutory measures. Further detail setting out the background to the Alternative
Performance Measures is given in Note 1 to the financial statements.
** Basic and adjusted earnings per ordinary share and dividends per ordinary share have been adjusted to reflect the share sub-division
effective 30 November 2021, as if the event had occurred at the beginning of the earliest period presented.
1
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 3,402*
stores
67,831*
average number
of employees
THE GROUP
Building our position
as the showcase
of choice for the
global sports fashion
industry, providing
unrivalled access to
the finest brands.
* As at 29 January 2022.
CANADA
UK
THE REPUBLIC OF IRELAND
THE NETHERLANDS
FRANCE
BELGIUM
SPAIN AND THE CANARY ISLANDS
PORTUGAL
US
THE CZECH REPUBLIC
SWEDEN
FINLAND
DENMARK
ESTONIA
LATVIA
LITHUANIA
POLAND
AUSTRIA
SLOVAKIA
HUNGARY
ROMANIA
BULGARIA
GERMANY
ITALY
GREECE
CYPRUS
Geographical revenue %
Group revenue by channel %
Stores number split %
Rest of the World
North
America
3.8%
41.8%
Other
UK & ROI
Multichannel
3.2%
66.2%
Outdoor
Retail
Stores
7.3%
92.7%
Sports
Fashion
30.5%
30.6%
23.9%
Europe
2
SOUTH KOREA
THAILAND
MALAYSIA
SINGAPORE
AUSTRALIA
NEW ZEALAND
JD Sports Fashion Plc Annual Report and Accounts 2022 32*
territories across
the globe
SWEDEN
FINLAND
DENMARK
ESTONIA
LATVIA
LITHUANIA
POLAND
THE CZECH REPUBLIC
AUSTRIA
SLOVAKIA
HUNGARY
ROMANIA
BULGARIA
GERMANY
ITALY
GREECE
CYPRUS
OUR REVENUE CHANNELS
Sports Fashion brands
Stores
In-store devices
Apps
Online
Wholesale
SOUTH KOREA
THAILAND
MALAYSIA
SINGAPORE
AUSTRALIA
NEW ZEALAND
Outdoor brands
3
THE REPUBLIC OF IRELAND
THE NETHERLANDS
SPAIN AND THE CANARY ISLANDS
CANADA
UK
FRANCE
BELGIUM
PORTUGAL
US
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 S T A T E M E N T F R O M T H E B O A R D
Governance
Balancing the operational requirements of
running and growing a business through a
global pandemic with the obligations of
elevating governance standards has been
complex and not without challenge.
A number of regulatory issues have arisen
through this time which have highlighted the
need for both greater relevant experience on
the Board and more formalisation in governance
systems, risk management recording, the
documentation and appraisal of internal controls
and the mechanisms for reporting relevant matters
to the regulatory authorities where appropriate.
As a result, since the year end the Board has
engaged external advisors to carry out a number
of independent investigations into certain matters
including these regulatory issues. Alongside these
investigations, as announced in February 2022,
the Group has also been undertaking a review of
its Governance procedures and policies in light
of the process to divide the previous joint role of
the Executive Chair and Chief Executive Officer.
This process extended into a full review of the
Group’s Corporate Governance operating model
and assessment of its current compliance with
the UK Corporate Governance Code.
The Board has now completed the investigations
and the governance review and have ratified a
plan to rebase the governance, risk and control
environment. This will target compliance with
our various regulatory requirements whilst
also delivering a more formalised approach to
governance, risk management recording and
the documentation and appraisal of internal
controls. These actions are focused in four
principal workstreams:
– CMA regulatory compliance.
– FCA regulatory compliance re: limited permission
credit broking licence in certain UK businesses.
– Compliance with the UK corporate governance code.
– Risk management and internal control framework.
Each workstream consists of a three-month
intensive programme of works to address priority
issues complemented by the development of
longer term initiatives. It is anticipated that it
will take 18 months to deliver and embed these
workstreams in full to ensure that we balance
rigour in relation to governance and control with
maintaining the agility that has been key to our
success to date.
Search For a New Group Chief Executive Officer
and Non-Executive Chair
At its 2021 AGM on 1 July 2021, the Group
announced, with the support of Peter Cowgill,
that it intended to divide the role of Executive
Chair and Group Chief Executive Officer before
the 2022 Annual General Meeting. At that time,
it was intended that this would be achieved
through the appointment of a new Group Chief
Executive Officer with Peter Cowgill then moving
into the role of Chair with a progressive handover
of executive management responsibilities. In due
course, Peter Cowgill would then have been
replaced by a Non-Executive Chair.
Working with Spencer Stuart the Group commenced
a global search for a new Group Chief Executive
Officer. A number of excellent candidates were
attracted to this role but a recurring theme was
a wish for a much shorter handover period. This
search process also coincided with the governance
and assurance workstreams referred to above and
it is the Board’s view that the new Chief Executive
Officer should have the opportunity to shape
that process. Accordingly, the Board decided to
accelerate the separation of the roles of Chair
and Chief Executive Officer and Peter Cowgill left
the Group on 25 May 2022. Subsequently, Helen
Ashton accepted the role of Interim Non-Executive
Chair with Kath Smith, Senior Independent Director,
appointed as Interim Chief Executive Officer.
*
Throughout the Annual Report ‘*’ indicates the first instance of a term defined and explained in the Alternative Performance Measures
section on page 42.
4
JD Sports Fashion Plc Annual Report and Accounts 2022 The Board wish to thank Peter Cowgill for his
unwavering commitment, vision and inspirational
leadership since he re-joined the Group in 2004.
JD is a globally recognised iconic multichannel
retailer with a proven strategy, clear momentum
and a talented and resilient senior management
team who, through his guidance, are recognised
within the sports fashion industry as some of the
leading figures in their fields. The Board and Senior
Management team are united in their determination
to build on the historical successes with the same
laser focus on the consumer, commercial rigour,
attention to service excellence and analytical
intensity. We will continue to seek to inspire the
emerging generation of aspirationally minded
consumers through a connection to the universal
culture of sport, music and fashion with the highest
standards of consumer experience and execution,
both in stores and online. Building on our trusted
brand relationships, we will also continue to deliver
a product and brand mix which is emotionally
engaging, exclusive and continually evolving.
The process to recruit a Chief Executive Officer is
ongoing with a number of high calibre candidates
at different stages of consideration including some
who have only recently made their interest in the
role known. A process to recruit a new Non-Executive
Chair is also progressing at pace. Meanwhile, the
Board is happy with how the interim arrangements
are operating and will update the market on the
progress of these search processes as appropriate.
Board Composition
Prior to these recent developments, the Board had
made significant progress in its process to recruit
new Non-Executive Directors who can positively
contribute to the continued global development
and momentum of the Group. Helen Ashton initially
joined the Board on 15 November 2021 as Non-
Executive Director and Chair of the Audit & Risk
Committee. We were also delighted to welcome
during the year Bert Hoyt, who was formerly Head
of Europe for Nike; Mahbobeh Sabetnia, who has
been at the forefront of e-business expansions,
leading data-driven consumer insights to unlock
value and framing new business propositions in a
number of global organisations; and Andy Long,
who is an Executive Director at Pentland Group
Ltd and was formerly Chief Executive Officer at
Pentland Brands Ltd.
5
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 STATEMENT FROM THE BOARD CONTINUED
More recently, Suzi Williams joined the Board on
16 May 2022. Suzi brings a significant amount of
consumer marketing and management experience
to the Group and, in due course, it is intended
that she will take up the role of Remuneration
Committee Chair.
Prior to her appointment as Interim Chief Executive
Officer, Kath Smith was confirmed as the Senior
Independent Director and Chair of the Nominations
Committee and, whilst it is acknowledged that she
cannot currently act as Senior Independent Director,
it is the Board’s intention that she will revert back to
her former role upon the appointment of a permanent
Chief Executive Officer. Based on the current
progress in this search, the Board expects that Kath
Smith will resume her role as Senior Independent
Director before the end of the financial year. This
means that the Group would be compliant with
this aspect of the UK Corporate Governance Code
from the start of the next financial year. The Board
also considered whether she should continue as
Chair of the Nominations Committee but, to ensure
compliance with the UK Corporate Governance
Code, has concluded that this position should be
held by the Interim Chair.
Further, the Board has determined that, given both
the temporary nature of her position as Interim
Chair and the importance that it places on delivering
the plan to rebase the governance, risk and control
environment, Helen Ashton should also retain her
position as Chair of the Audit & Risk Committee.
Notwithstanding certain areas of non-compliance
with the UK Corporate Governance Code during
the year, the Group is pleased to advise that it
is fully compliant with the initiatives on Board
diversity proposed by the Hampton-Alexander
Review and the Parker Review.
Government Support
Throughout the COVID-19 pandemic, our priorities
have been to ensure the health and wellbeing of
our colleagues and customers, protect jobs,
preserve financial resources and limit the impact
on profitability. It is important to remember that
the stores were closed for a number of months
at the start of the year in some of our most
significant markets across Europe and whilst
stores progressively reopened through the
Spring, there was no certainty as to whether they
would stay open through the rest of the year and,
even if they did, whether footfall would be at a
level that would make the stores financially viable.
Accordingly, the Group accepted government
support where it was offered, including that
connected with property occupation, using it only
for the purposes intended. In particular, payments
from the Coronavirus Job Retention Scheme in the
UK helped provide the thousands of people that
we employed with short-term financial support
and reassurance regarding the sustainability of
their long-term employment prospects.
We are cognisant that the retention of sales in
the period when the stores were closed across
Europe in the early months of the year, combined
with the positive trading in the immediate period
after reopening, did help to offset the negative
financial impacts associated with the period of
temporary closures. Further, whilst there were
some subsequent periods of store closures,
particularly in Asia, later in the year, our most
significant markets all remained open through
the peak trading period and have traded positively.
Therefore, in line with our previous statements on
this matter and having considered all the relevant
facts, the Board decided that it would repay all of
the support that its businesses received from the
Coronavirus Job Retention Scheme in the UK
during the year. This repayment, which totalled
£24.4 million, has already been made.
6
JD Sports Fashion Plc Annual Report and Accounts 2022 I N T E R I M N O N - E X E C U T I V E C H A I R ’ S S T A T E M E N T
DELIVERING EXCELLENT
RESULTS
This result demonstrates our
capacity for growth in both
existing and new markets,
and the strength of our global
proposition and consumer
engagement in-store and online”
HELEN ASHTON
INTERIM NON-EXECUTIVE
CHAIR
22 June 2022
7
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 INTERIM NON-EXECUTIVE CHAIR’S STATEMENT CONTINUED
Group revenue
£8,563.0m
Group profit
before tax
£654.7m
Basic earnings
per ordinary share
7.17p
We are also particularly encouraged by the strong
performance from the Group’s banners in the
North America which have delivered a combined
profit before tax and exceptional items of
£343.0 million (2021: £171.9 million; 2020: £94.2 million).
This includes a full year contribution of £57.3 million
from Shoe Palace (2021: £13.9 million for Shoe
Palace in the six week period after acquisition)
and a part-year contribution of £50.6 million from
DTLR in respect of the period since the acquisition
was completed. This result was heavily influenced
by the fiscal stimulus which was made available by
the Federal Government in the United States in the
first half of the year with revenues between mid-March
and mid-July more than 40% ahead of pre-COVID
levels. Encouragingly, our businesses in the United
States also traded positively in the second half of
the year when there was no stimulus support, as
compared to pre-COVID levels.
It is increasingly evident that the Group’s progress
in North America, and the United States in particular,
is having a long-term positive impact both on the
Group’s overall performance and its relationships
with the international brands. We continue to be
encouraged by the progress that JD is making in
the United States with 87 stores trading as JD at
the end of the year and it is our intention to further
expand the JD fascia in this financial year through
both new stores and the conversion of existing
Finish Line stores. We also opened the first Group
fascia stores in Canada in the year with a first JD
store in both Toronto and Vancouver and a Size?
store, also in Toronto.
Whilst there is a global shortfall in the supply
of certain key footwear styles at this time, the
Group continues to have excellent availability
both in stores and online with the Group
benefitting both from its status as a premier
global strategic partner and the overall width
of its category offer. We would also expect
that the supply from the impacted brands
will improve progressively through the
remainder of the year.
b u s i n e s s
d e v e l o p m e n t s
Introduction
This was another period of outstanding progress
with the Group delivering a record headline profit
before tax and exceptional items of £947.2 million
(2021: £421.3 million), more than double the
previous record of £438.8 million set in the period
to 1 February 2020, which was the last completed
financial year prior to the COVID-19 pandemic.
It includes £125.6 million of profit from the
combination of acquisitions in the year and the
annualisation period of businesses bought in the
52 weeks to 30 January 2021. The profit before tax
for the period was £654.7 million (2021: £324.0 million).
This result was achieved in the face of a series of
unprecedented challenges including sustained
periods of temporary store closures in many
markets, constraints in the supply of certain
products due to factory closures within the
global supply chains of the international brands,
widespread turbulence in international logistics
and the ongoing administrative and cost
consequences resulting from the loss of tariff-
free, frictionless trade with the European Union.
This result demonstrates our capacity for growth
in both existing and new markets, and the strength
of our global proposition and consumer engagement
in-store and online. We are, as always, indebted to
our talented and committed colleagues across our
Group and send our thanks for the amazing work
they do every day. This is crucial in our increasingly
global development and I would like to thank
everyone in our businesses for their significant
contribution and dedication.
Whilst the Group does not have any facilities or
employees in either Russia or Ukraine, we are
aware that many of our colleagues have relatives
and friends in these countries. The Group is deeply
concerned by the continuing conflict in Ukraine
and has ceased all trading in Russia across both
its brand websites and wholesale channels.
We are very reassured by the positive performance
of the Group’s sports fashion retail fascias in
the UK and Republic of Ireland which delivered a
combined record profit before tax and exceptional
items of £471.2 million (2021: £262.7 million;
2020: £288.5 million). Given that the stores were
again closed for a number of weeks in the year,
this performance reflects very positively both
the enhanced agility of the Group’s operational
infrastructure in these countries and the depth
of the connection and trust that JD has built with
its consumers who are clearly very comfortable
engaging with JD through both physical and
digital channels.
8
JD Sports Fashion Plc Annual Report and Accounts 2022 Number of
acquisitions
in the year
13
Consideration paid
for acquisitions, net
of cash acquired
£616.5m
Marketing Investment Group S.A. (‘MIG’)
The acquisition of MIG completed on 30 April 2021
with a 60% holding acquired for total consideration
of 348.9 million Polish Zloty (‘PLN’) of which
12.7 million PLN has been deferred subject to
customary closing conditions and is expected to be
paid in 2022. At completion, MIG, which is based in
Krakow, Poland, had 410 stores trading principally
as either Sizeer, which is a premium multi-branded
fascia not too dissimilar to JD, or 50 Style, which is
a multi-branded volume retail concept with lower
price points. Whilst the majority of these stores are
located in Poland, the Company has also expanded
its reach beyond Poland in recent years with a
presence, at completion, in a total of nine countries
across Central and Eastern Europe.
More recently, the MIG team has acquired the
trade and assets of a further 22 stores which
traded as The Athlete’s Foot across Slovenia,
Croatia, Serbia and Bosnia & Herzegovina which
are all new territories for the MIG business. These
stores are currently being converted to Sizeer.
The MIG team has also been instrumental in the
opening of the first JD stores in Eastern Europe
with stores at Poznan, Poland, and Constanta,
Romania. Since the period end, the Group has
opened four further JD stores in Poland, one
additional store in Romania and a first store
in Hungary, at the Árkád Shopping Centre in
Budapest. We would anticipate further openings
for the JD fascia across Eastern Europe in the
new financial year although events in Ukraine
do drive some caution.
Deporvillage S.L. (‘Deporvillage’)
On 3 August 2021, Iberian Sports Retail Group SL
(‘ISRG’), the Group’s existing intermediate holding
company in Spain, completed the acquisition of
an initial 80% holding in Deporvillage which is
based in Manresa, Catalonia. Consideration of
€100.0 million was paid at completion with further
consideration up to a maximum of €40.4 million
deferred, to be paid contingent on achieving
certain performance criteria.
ISRG is a leading operator in the sporting goods
market across Iberia through its Sprinter and Sport
Zone fascias with the acquisition of Deporvillage
providing additional expertise in both the development
of an international digital infrastructure and insights of
the key performance-related categories of cycling,
running and outdoor.
9
s i g n i f i c a n t m & a
t r a n s a c t i o n s
The Group has completed a number of acquisitions
and other investments in the period, which look
to either expand the geographical reach of its
premium sports fashion operations or widen the
category offer to include other products which
are relevant to a style-conscious consumer.
DTLR Villa LLC (‘DTLR’)
The acquisition of 100% of DTLR completed
on 17 March 2021 for cash consideration of
$423.6 million with third party indebtedness
of $86.5 million also refinanced at this time.
At completion, DTLR, which is based in Baltimore,
Maryland, had 247 stores selling athletic footwear
and apparel streetwear across 19 states, principally
in neighbourhood urban areas across the North
and East of the United States. Subsequent to
completion, DTLR was transferred to the same
sub-group as Finish Line, JD US and Shoe Palace.
Five new stores have opened subsequently
although these have been offset by the closure
of eight smaller under-performing stores. We
would anticipate further evolution of the property
portfolio in the forthcoming year with DTLR having
the support of the international brands to expand
its network of stores in its markets.
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 INTERIM NON-EXECUTIVE CHAIR’S STATEMENT CONTINUED
Wheelbase Lakeland Limited (‘Wheelbase’) and
XLR8 Limited t/a Leisure Lakes (‘Leisure Lakes’)
The Group has enhanced its presence in the UK
premium cycling market in the year through the
acquisitions of Wheelbase and Leisure Lakes.
On 30 September 2021, the Group acquired
77.5% of Wheelbase for £22.2 million. Based near
Kendal, Cumbria, on acquisition Wheelbase had
three stores in cycling hotspots, including the
renowned store at Staveley which, at 16,000 sqft,
is one of the largest cycle stores in the UK. Wheelbase
is firmly established as one of the premier cycling
retailers in the UK selling key brands such as Cube,
Cannondale, Trek and Specialized. Working with
the Wheelbase team, the Group will open specialist
cycling concessions in selected Go Outdoors
stores with the first two concessions, in Coventry
and Stockton, now open.
On 19 November 2021, the Group also acquired
100% of Leisure Lakes for initial cash consideration
of £25.6 million with additional consideration up
to a maximum of £15.0 million payable if certain
performance criteria are achieved. Based near
Preston, Leisure Lakes had ten stores in urban
locations at completion and, like Wheelbase, is also
considered to be one of the leading omnichannel
retailers of bicycles and associated accessories in
the UK and is a key partner for most of the major
cycling brands.
Cosmos Sport S.A. (‘Cosmos’)
On 21 October 2021, the Group acquired 80%
of Cosmos for cash consideration of €73.0 million.
Based in Crete, Cosmos had 58 stores in Greece
at acquisition with a further three stores in Cyprus.
Cosmos mainly trades under two fascias, being
Cosmos Sport and Sneaker 10. Cosmos Sport is the
core fascia trading through an elevated sporting
goods and lifestyle proposition with Sneaker 10
focusing on trainers and premium releases and
is more similar to the Group’s Size? fascia.
Two new stores, one in Greece and one in Cyprus,
have opened since completion although these
have been offset by the closure of two of the
adidas monobrand stores. We would anticipate
further evolution of the property portfolio in the
forthcoming year with Cosmos having the support
of the international brands to expand its network
of stores in its markets. Further, this acquisition
also provides the Group with an infrastructure and
management team for the development of JD in
Greece and Cyprus, with the first store in Greece
currently expected to open in the second half of
this year.
GymNation Limited (‘GymNation’)
On 24 December 2021, the Group’s existing
subsidiary JD Sports Gyms Limited (‘JD Gyms’)
acquired 100% of GymNation Limited and
its 100% owned subsidiary GymNation LLC
(together ‘GymNation’) for cash consideration
of $42.2 million and contingent consideration
of $6.1 million. Contingent consideration is
cash-settled and is linked to GymNation’s future
performance. It is initially measured at fair value
and is subsequently remeasured to fair value
at each reporting date until the contingency is
settled. The fair value of contingent consideration
recognised at 29 January 2022 is $6.6 million.
The maximum amount of the future payment
is £75 million. GymNation had seven gyms at
acquisition with five in Dubai, one in Abu Dhabi
and one in Ras Al Khaimah. The GymNation
approach is very similar to JD Gyms with a focus
on providing well-equipped gyms to a style-
conscious participant with extensive use of social
media in a digitally-led marketing approach and
memberships that are both affordable and flexible.
u p d a t e o n
f o o t a s y l u m
l i m i t e d
( ‘ f o o t a s y l u m ’ )
The Competition and Markets Authority
(‘CMA’) announced in its Provisional Report on
2 September 2021 that it was again minded to
prohibit the Group’s acquisition of Footasylum.
This decision was confirmed in the CMA’s Final
Report dated 5 November 2021.
We were very disappointed by this decision
as we firmly believed that we had provided
overwhelming evidence to the CMA in its
re-examination of the transaction of how the
COVID-19 pandemic has materially changed the
market for the retailing of international sports
brands. In particular, the Group demonstrated
very clearly to the CMA how, by causing a
structural shift in favour of online shopping,
COVID-19 has empowered and accelerated the
Direct to Consumer strategies of the international
brands. The evidence of this is clear in the recent
public statements of not just the brands but
also some of their longest standing wholesale
customers. We continue to believe that JD, with
its recognised status as a premier global strategic
partner, would have positively influenced Footasylum’s
brand relationships and its access to product over
the longer term.
The Group has agreed Final Undertakings
with the CMA which require the divestment of
Footasylum to an ‘Approved Purchaser’. This
divestment process is ongoing with a number
of parties expressing interest in the business.
10
JD Sports Fashion Plc Annual Report and Accounts 2022 p e o p l e
We are, of course, indebted to all of our teams in
our different territories for their resolute attitude
in dealing with the challenges posed by COVID-19
during the year. Whilst the Group’s stores are
now trading without restrictions, we are conscious
that there is still a high prevalence of the virus in
many countries and that new variants could emerge
in the future and result in new challenges. However,
the Board reaffirms that the safety and wellbeing of
our colleagues and our consumers has been and
will always be our number one priority.
The Board is particularly aware of the need to
support our colleagues mental health needs with
wellbeing integrated into our culture. We have
launched our Wellbeing Network which provides
colleagues with a host of resources, including
access to health care professionals and specialist
support and we intend to enhance the size and
scope of this programme with additional resources
including podcasts and interactive group sessions.
k i c k s t a r t
The Group is working closely with the UK
Government and The Prince’s Trust as a national
partner on its Kickstart scheme which aims to
provide employment opportunities for young
people who were previously on Universal Credit
and who faced significant barriers to employment
as a result of the pandemic. Over 1,000 people
have progressed through the programme to date
with 90% of those young people subsequently
offered permanent roles within the Group.
The Group were pleased to welcome His Royal
Highness The Prince of Wales and the Chancellor
of the Exchequer, The Rt Hon Rishi Sunak MP, to
our store on Walworth Road in South London on
11 May 2022 where they met with a number of
Kickstart recruits to get an appreciation of their
experience of the Kickstart scheme. The Group
recognises the prevalence of social inequality in
the UK and feels passionately about reducing
barriers to entry to employment for young people
who are socially and economically disadvantaged.
JD is proud of its participation in the Kickstart
scheme which was delivered in partnership with
The Prince’s Trust.
e s g
As a FTSE 100 company, we recognise and
embrace that our scale enables us to make
positive, lasting changes. Our Environmental,
Social and Governance Committee (founded in
2020) governs our global, Group-wide approach
to sustainability, including such critical topics as
our people strategy, climate change, sustainable
sourcing and governance.
For further details about the responsibilities of the
Environmental, Social and Governance Committee
and the Group’s achievements in the year, please
see page 53.
c u r r e n t t r a d i n g
a n d o u t l o o k
The Group is reassured with the trading to date with
total sales in the Group’s like-for-like businesses
after four months 5% ahead of the same period in
the prior year. This performance is a further positive
reflection of both the strength and breadth of the
Group’s brand relationships and category offer.
It has also been achieved against a backdrop of
a global shortfall in the supply of certain key
footwear styles with this supply expected to
improve progressively through the remainder
of the year.
Whilst we are encouraged by the resilient nature of
the consumer demand in the current year to date,
we remain conscious of the headwinds that prevail
at this time including the general global macro-
economic and geopolitical situation. Against this
backdrop, the Board believes that the headline
profit before tax and exceptional items for the year
end 28 January 2023 will be in line with the record
performance for the year ended 29 January 2022.
Our next scheduled update will take place upon
the announcement of our Interim Results. We will
confirm a date for these results in due course.
Helen Ashton
Interim Non-Executive Chair
22 June 2022
11
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022
O U R I N V E S T M E N T P R O P O S I T I O N
REASONS TO INVEST
1
UNRIVALLED
BRAND ACCESS
JD is a premier global strategic
partner to the international brands,
uniquely delivering the world’s
most iconic and emerging
products to the market.
OMNICHANNEL
APPROACH
JD is the leading omnichannel retailer
of sports fashion and outdoor brands,
demonstrating strong retail execution
across all platforms with a flexible
and agile approach.
2 3
GLOBAL PRESENCE
The Group is globally recognised
with over 3,400 stores in 32
territories following a history of
international expansion and further
acquisitions capability in the future.
12
JD Sports Fashion Plc Annual Report and Accounts 2022 4
PROVEN TRACK
RECORD
JD operates from a stable financial
base with a history of strong revenue
and profit growth over a sustained
period (see page 236 for our five
year history).
Revenue £m
£8,563.0m
8,563.0
6,110.8
6,167.3
4,717.8
3,161.4
2018
2019
2020
2021
2022
5
FOCUSED ON ESG
As a FTSE 100 company, we recognise
and embrace that our scale enables
us to make positive, lasting changes
by extending our entrepreneurial and
competitive spirit beyond financial
performance to making the world
around us a better place. Read our
latest Environment, Social and
Governance Report on page 51.
OUR PEOPLE
At the heart of JD are highly-motivated,
loyal and experienced teams who have
a razor sharp focus on the consumer
and continuously set the global standard
for retail experience through best-in-
class operations.
6
13
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 O U R B U S I N E S S M O D E L A N D S T R A T E G Y
OUR BUSINESS MODEL AND STRATEGY
The Group’s principal JD banner is widely recognised
as the leading omnichannel retailer of branded and
private label Sports Fashion apparel and footwear
in the UK and Ireland. Increasingly, the fascia is
attracting a similar reputation internationally.
The other banners within the Group offer category
width, international reach, flexibility and ability to
broaden its appeal to a wider consumer base.
Our strategy is underpinned by the following pillars:
– Strong consumer connection
– Excellence in physical retail & the
international expansion of the JD brand
– Omnichannel capability & technology
– Environment, social & governance
– Brand & category width
o u r b u s i n e s s m o d e l
KEY INPUTS
International
brands
Supply
chain
Third-party
logistics
Private labels
Technology
and IT
infrastructure
CHANNELS
Wholesale
Stores
In-store
devices
s t r a t e g i c p r i o r i t y
w h at w e a c h i e v e d i n 2 0 2 1 / 2 2 f u t u r e va l u e g e n e r at i o n
STRONG CONSUMER CONNECTION
JD seeks to inspire the emerging generation of globally
minded consumers through a connection to the universal
culture of sport, music and fashion. JD has a detailed
understanding of its fashion focused consumer and
cultivates its product range to appeal to this audience.
EXCELLENCE IN PHYSICAL RETAIL
& INTERNATIONAL EXPANSION
The Group continuously sets the global standard
for retail experience through best-in-class operations,
connected consumer experiences and the unique
delivery of the world’s most authentic brands to the
market. The Group is committed to showcasing brands
in a premium environment and stores remain a core
part of our strategy.
OMNICHANNEL CAPABILITY & TECHNOLOGY
We utilise our digital platforms to maximise our reach
and impact on a local level, with consumers able to shop
seamlessly across all channels. We want our consumers
to be able to shop frictionlessly, however and whenever
they choose.
ENVIRONMENT, SOCIAL & GOVERNANCE (ESG)
Improving ESG performance is an integral part of our
Group strategy. As a FTSE 100 company, we recognise
and embrace that our scale enables us to make positive,
lasting changes.
Apps
Online
Desktop, tablet
and mobile
optimised
Store
collection or
home delivery
BRAND & CATEGORY WIDTH
Across the wider Group, there are multiple businesses
which expand our branded reach, support our ability to
develop and wholesale branded clothing or facilitate the
Group’s entry into fashion and sport-related categories.
This helps us to maintain ultimate flexibility in our
business model, widen our customer appeal and
capitalise on the fast pace of consumer trends.
Delivery
14
– Our product offering is underpinned by substantial
– We will continue to focus on our core
communication of the JD brand and its associations through
demographic whilst also targeting relevant
social media, influencers and outdoor marketing campaigns.
brand or product adjacencies.
– The Group successfully worked with a number of sport,
– We will continue to work with the most influential
music and fashion partners during the year, including
names in youth culture across all social media
ITV’s Love Island and Manchester’s Parklife festival.
channels and as appointed brand ambassadors.
– The Christmas campaign made JD the destination for
Christmas shopping as the number one TV advert on
YouTube with over 20 million views and in excess of
44 million TikTok views.
– Total number of stores across the Group increased by 766
– Further development of the Group’s presence in
to 3,402 stores at the year end.
the US, the largest sportswear market in the world.
– Expansion into new territories through a combination of
– We will continue with our major programme to
organic growth and selective acquisitions, with Group
enhance the logistics network across the UK and
fascias present in 32 territories worldwide at the financial
Western Europe.
year end.
– We will work with our acquisitions and joint
– Larger format stores opened in the UK, demonstrating our
venture partners to expand further into new
continued focus on visual merchandising, retail theatre and
territories in Central and Eastern Europe and
– 13 global acquisitions completed this year (see Note 11)
– For further details, see our Property and Stores
digital integration.
for details).
further afield.
review on page 44.
– The continuing global growth in physical store space is
– We are investing in additional warehousing
complemented by ongoing investment in our international
capacity that can be solely dedicated to the
online capability through a significant multicurrency and
fulfilment of online orders in the UK.
multilanguage website estate.
– Further investment in our website estate to
– High levels of sales retention in the periods of temporary
coordinate the growth in physical retail with
store closures due to COVID-19 restrictions. Consumers
our digital platforms.
have readily switched to online channels, reflecting the
benefits of the agile omnichannel approach that the
Group has developed over a number of years.
– We are proud of our achievements to date, from improving
– We understand that there is still so much more
conditions for workers in our supply chain to increasing our
that we can do. Our ESG Committee governs our
efforts (and those of our suppliers) to reduce the impact of
approach to sustainability, including such critical
climate change.
topics as Climate Change, Sustainable Sourcing,
– Examples of the Group’s achievements in the year include:
and the Circular Economy. Our ESG section on
Retaining the Group’s A- Climate Change grade from the
page 51 provides further details of our future
Carbon Disclosure Project, working with the UK
ESG strategy.
Government as a national partner and employing over 700
people through the Kickstart Scheme plus the Group has
increased the gender and ethnic diversity of its Board.
– Further details of all of the Group’s achievements in this
area are included in our ESG section on page 51.
– The Group completed several acquisitions in the year
– We will continue to make selective acquisitions
that expand our brand and category width both in the
where appropriate to expand our brand and
UK and internationally.
category width whilst still focusing on enhanced
– A number of strategic investments were made in the year
profitability in the medium term.
in associates and joint venture companies such as Applied
Nutrition and Gym King (see Note 15 for details).
– Further development of our Outdoor portfolio with the
inclusion of fishing and equestrian concessions within our
Go Outdoors stores.
JD Sports Fashion Plc Annual Report and Accounts 2022 s t r a t e g i c p r i o r i t y
w h at w e a c h i e v e d i n 2 0 2 1 / 2 2 f u t u r e va l u e g e n e r at i o n
STRONG CONSUMER CONNECTION
JD seeks to inspire the emerging generation of globally
minded consumers through a connection to the universal
culture of sport, music and fashion. JD has a detailed
understanding of its fashion focused consumer and
cultivates its product range to appeal to this audience.
EXCELLENCE IN PHYSICAL RETAIL
& INTERNATIONAL EXPANSION
The Group continuously sets the global standard
for retail experience through best-in-class operations,
connected consumer experiences and the unique
delivery of the world’s most authentic brands to the
market. The Group is committed to showcasing brands
in a premium environment and stores remain a core
part of our strategy.
OMNICHANNEL CAPABILITY & TECHNOLOGY
We utilise our digital platforms to maximise our reach
and impact on a local level, with consumers able to shop
seamlessly across all channels. We want our consumers
to be able to shop frictionlessly, however and whenever
they choose.
ENVIRONMENT, SOCIAL & GOVERNANCE (ESG)
Improving ESG performance is an integral part of our
Group strategy. As a FTSE 100 company, we recognise
and embrace that our scale enables us to make positive,
lasting changes.
BRAND & CATEGORY WIDTH
Across the wider Group, there are multiple businesses
which expand our branded reach, support our ability to
develop and wholesale branded clothing or facilitate the
Group’s entry into fashion and sport-related categories.
This helps us to maintain ultimate flexibility in our
business model, widen our customer appeal and
capitalise on the fast pace of consumer trends.
– Our product offering is underpinned by substantial
– We will continue to focus on our core
communication of the JD brand and its associations through
social media, influencers and outdoor marketing campaigns.
demographic whilst also targeting relevant
brand or product adjacencies.
– The Group successfully worked with a number of sport,
music and fashion partners during the year, including
ITV’s Love Island and Manchester’s Parklife festival.
– The Christmas campaign made JD the destination for
Christmas shopping as the number one TV advert on
YouTube with over 20 million views and in excess of
44 million TikTok views.
– We will continue to work with the most influential
names in youth culture across all social media
channels and as appointed brand ambassadors.
– Total number of stores across the Group increased by 766
– Further development of the Group’s presence in
to 3,402 stores at the year end.
– Expansion into new territories through a combination of
organic growth and selective acquisitions, with Group
fascias present in 32 territories worldwide at the financial
year end.
– Larger format stores opened in the UK, demonstrating our
continued focus on visual merchandising, retail theatre and
digital integration.
the US, the largest sportswear market in the world.
– We will continue with our major programme to
enhance the logistics network across the UK and
Western Europe.
– We will work with our acquisitions and joint
venture partners to expand further into new
territories in Central and Eastern Europe and
further afield.
– 13 global acquisitions completed this year (see Note 11)
– For further details, see our Property and Stores
for details).
review on page 44.
– The continuing global growth in physical store space is
– We are investing in additional warehousing
complemented by ongoing investment in our international
online capability through a significant multicurrency and
multilanguage website estate.
– High levels of sales retention in the periods of temporary
store closures due to COVID-19 restrictions. Consumers
have readily switched to online channels, reflecting the
benefits of the agile omnichannel approach that the
Group has developed over a number of years.
– We are proud of our achievements to date, from improving
conditions for workers in our supply chain to increasing our
efforts (and those of our suppliers) to reduce the impact of
climate change.
– Examples of the Group’s achievements in the year include:
Retaining the Group’s A- Climate Change grade from the
Carbon Disclosure Project, working with the UK
Government as a national partner and employing over 700
people through the Kickstart Scheme plus the Group has
increased the gender and ethnic diversity of its Board.
– Further details of all of the Group’s achievements in this
area are included in our ESG section on page 51.
– The Group completed several acquisitions in the year
that expand our brand and category width both in the
UK and internationally.
– A number of strategic investments were made in the year
in associates and joint venture companies such as Applied
Nutrition and Gym King (see Note 15 for details).
– Further development of our Outdoor portfolio with the
inclusion of fishing and equestrian concessions within our
Go Outdoors stores.
capacity that can be solely dedicated to the
fulfilment of online orders in the UK.
– Further investment in our website estate to
coordinate the growth in physical retail with
our digital platforms.
– We understand that there is still so much more
that we can do. Our ESG Committee governs our
approach to sustainability, including such critical
topics as Climate Change, Sustainable Sourcing,
and the Circular Economy. Our ESG section on
page 51 provides further details of our future
ESG strategy.
– We will continue to make selective acquisitions
where appropriate to expand our brand and
category width whilst still focusing on enhanced
profitability in the medium term.
15
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 S T R A T E G Y I N A C T I O N
40 YEARS OF
DEFiNiNG
AN iCON
In the beginning...
JD began its journey in 1981
with its first store in Bury, Greater
Manchester and has since grown
to become one of the leading
global omnichannel retailer of
sports, fashion and outdoor brands.
NYC flagship store
2020
2016
2016 also saw the opening of the
Group’s first gym through the
JD Gyms affordable yet stylish
gym concept. In 2021, the Group
completed the acquisition of
GymNation, a chain of gyms
based in the United Arab Emirates.
J + D John Wardle
and David Makin
1981
First store in Bury, Manchester
New Territories
The JD fascia expanded internationally
with its first store in France in 2010
and now has flagship-style stores
in many of the Group’s European
territories. Next stop was the
Asia Pacific region in 2016, with
the US following in 2018 after
the acquisition of Finish Line.
2020
Paris flagship store
New Markets
The Group expanded into the
Outdoor market via its acquisition
of Blacks and Millets in 2012, with
the acquisition of Go Outdoors
following in 2016.
16
2016
Acquisition of GO
JD Sports Fashion Plc Annual Report and Accounts 2022 DEFiNiNG
AN iCON
2015
Oxford Street, London
2021
Westfield, Stratford
New Zealand
2021
Where next?
The Group plans to continue its
expansion into new territories in
Central and Eastern Europe. We are
also working with our joint venture
partners further afield, with the
first JD store in Jakarta, Indonesia
opening in the first few weeks of
2022/23, followed more recently by
the opening of the two stores in Israel.
What’s next?
We plan to further develop our
Group fascias in both existing and
new territories and will continue to
make selective acquisitions where
appropriate to expand our brand
and category width.
For further details see Our Business
Model and Strategy on page 14.
1981
Started in Bury,
Greater Manchester
THE SHOWCASE
OF CHOICE
From the North West of England to the
West Coast of America, Australia and
beyond, the Group strives to provide
its customers with the latest exclusive
products from the very best brands.
t h e j d
d u f f l e
The Group’s iconic plastic
bag (the JD ‘duffle’) represents
a fantastic example of how a
design-led plastic product can
generate continued re-use from
customers. The JD flexi-loop
bags are now made with 70%
recycled content.
2021
GymNation, UAE
17
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 S T R A T E G Y I N A C T I O N
40 YEARS OF
BRiLLiANT
BRANDS
18
JD Sports Fashion Plc Annual Report and Accounts 2022 BRiLLiANT
BRANDS THE KING
OF TRAINERS
The Group is at the pinnacle of the
global sports fashion industry with
consumers instinctively knowing
that our retail propositions focus on
their fashion desires and aspirations
in both footwear and apparel.
e x c l u s i v e
p r o d u c t
We seek opportunities to work in
partnership with the third-party
brands on the design of bespoke
product which is then exclusive
to the Group’s fascias.
International brands
regularly call out JD
as a premier global
strategic partner.
19
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 S T R A T E G Y I N A C T I O N
40 YEARS OF
THE BEST
EMPLOYEES
20
JD Sports Fashion Plc Annual Report and Accounts 2022 THE BEST
EMPLOYEES
THE HEARTBEAT
OF OUR BUSINESS
employees in 2021/22
67,831
average number of
The talented individuals working across
the Group are integral to our continued
success, delivering exceptional results
year after year.
We want to attract, retain and develop
the very best talent at all levels throughout
the Group and believe that an engaged
workforce is an essential ingredient towards
our continued success.
k i c k s t a r t
We are proud to be working with the
UK Government as a national partner
on its Kickstart scheme which aims
to provide employment opportunities
for young people who were previously
on Universal Credit and who faced
significant barriers to employment
as a result of the pandemic. Further
details can be found on page 78.
The Group continues to strive
to create an environment where
people feel welcome and safe,
where they are treated with
dignity and respect and where
the talent and skills of all
colleagues are valued.
21
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 S T R A T E G Y I N A C T I O N
40 YEARS OF
GLOBAL
GROWTH
JD has a powerful
combination of
international reach,
a strong consumer
connection and a
consistently premium
proposition.
22
JD Sports Fashion Plc Annual Report and Accounts 2022 GLOBAL
GROWTH
32
territories
across
the globe
A MULTICHANNEL
PLATFORM FOR
FUTURE GROWTH
The Group has over 3,400 stores across
32 territories at the financial year end
and this continuing global growth in
physical store space is complemented by
a significant multicurrency, multilanguage
website estate.
t h e
b i g a p p l e
JD’s profile in the United States
was enhanced by the opening of our
16,000 sqft flagship store in Times
Square, New York in October 2020.
At the 2022 financial year end, there
were 87 stores trading as JD in the
United States.
23
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 S T R A T E G Y I N A C T I O N
40 YEARS OF
LEADiNG
RETAiL
d i g i t a l
f u t u r e
We utilise our digital platforms to
maximise our reach and impact on a
local level with consumers able to shop
seamlessly across all channels. We want
our consumers to be able to shop on the
channel and at the time of their choice.
24
JD Sports Fashion Plc Annual Report and Accounts 2022 LEADiNG
RETAiL
3,402
stores
CREATING
RETAIL THEATRE
JD is a world class retail fascia where a
constantly evolving sports and fashion
premium brand offer is presented in a
vibrant retail theatre with innovative
digital technology.
The Group continuously sets the global
standard for retail experience through
best-in-class operations, connected
consumer experiences and the unique
delivery of the world’s most authentic
brands to the market.
t h e
s t o r e s
The stores give a platform to showcase
product, allow consumers to physically
see and try the product immediately,
and provide the operational flexibility
and agility to offer an enhanced speed
of service for online orders.
We will continue to invest in
property with a focus on the
international expansion of
the JD fascia. For more details
see our Property and Stores
review on page 44.
25
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 P R I N C I P A L R I S K S
OUR FRAMEWORK AND PROCESS
r i s k m a n a g e m e n t
a n d i n t e r n a l
c o n t r o l s
The Board, in conjunction with the Audit
& Risk Committee, has full responsibility for
monitoring the effectiveness of the Group’s
system of risk management and the supporting
system of internal controls. Executive Directors
and Senior Management are tasked with managing
risk on a day-to-day basis and are supported
by functional risk management in areas of focus
such as Environmental, Social and Governance
(‘ESG’), Cyber and Health & Safety. Additionally,
the Board operates the following features of risk
management and internal controls:
– A well-defined organisational structure.
– Identification and monitoring of the business
risks facing the Group, with major risks identified
and reported to the Audit & Risk Committee and
the Board as necessary and an annual risk report
preparation and review process. As per page 108
of the Audit & Risk Committee report, the Group is
looking to enhance its framework in this area with
Phase 1 of designing an Enterprise Risk Management
process starting with immediate effect.
– Detailed appraisal and authorisation procedures
for capital investment, which are 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.
The Board continues to review opportunities to
develop, strengthen and optimise the effectiveness
of these systems, particularly in light of the recent
growth of the business following the material
acquisitions in the US and continued growth in
Europe and Asia Pacific. The Group has therefore
created an internal controls function with a
primary focus on implementing a Group-wide
controls framework (see page 110 for further
details). Further, the Board sees the value in a
connected and embedded process where risks
and opportunities are considered when making
decisions to meet strategic objectives. To further
this, the Board has established an internal working
group to build and execute a roadmap of risk
management improvements in 2022 and beyond.
The 2023 Annual Report will provide details on
new features of the risk management framework.
a s s e s s m e n t o f
p r i n c i p a l a n d
e m e r g i n g r i s k s
a n d u n c e r t a i n t i e s
The Directors confirm that, during the financial
year, there has been a continuous assessment of
the principal risks and uncertainties facing the
Group, including any emerging risks, and those
that would threaten its business model, future
performance, solvency or liquidity.
The principal risk areas remain largely the same as
reported last year and as a prelude to the principal
risks table, the Board has provided commentary
below on the areas of change and topical risks
impacting the Group.
Brexit
The terms of the UK’s trading agreement with
the European Union mean that we no longer
enjoy tariff-free frictionless trading with our
former European partners. As a consequence,
we are now incurring some duties on the transfer
of goods from the UK into EU countries plus a
significantly enhanced administrative burden.
Our detailed planning meant that we were well
prepared for Brexit. Our operational systems have
been configured to sort stocks as required by the
Customs Authorities and produce the necessary
documentation in the right format, although there
is still some disruption from Customs checks on
the transfer of goods from the UK into the EU.
Further, we have a clear plan to expand our
European supply chain operations, which will
mitigate against the disruption and duties on
transferring goods into the EU.
Now that the impact of Brexit has been integrated
into our day-to-day operations and strategy, we
have removed this from our principal risks table.
Further detail in respect of our European supply
chain strategy can be found on pages 15 and 50.
26
JD Sports Fashion Plc Annual Report and Accounts 2022 Finally, our approach to ESG risks will benefit from
the roadmap of risk management improvements
detailed on page 110.
Cost of Living Crisis
Many of the countries where the Group operates
have experienced a cost of living increase since
late 2021 with high inflation outstripping wage
increases for many consumers.
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
income. Therefore, the emerging risk associated
with the cost of living crisis will remain under
review by the Group.
COVID-19
Colleague safety and wellbeing has been,
and continues to be, our number one priority.
Social distancing and safety measures have
been implemented according to the government
guidelines in the countries in which we operate.
Further, COVID-19 has impacted our supply
chain strategy and expedited our requirement
for additional long-term warehousing capacity in
the UK that can be dedicated to the fulfilment of
online orders. Further detail on our supply chain
strategy can be found in our Property and Stores
Review on page 50.
Across all of our markets, COVID-19 remains a
pressing issue, with each country taking a different
approach to managing the situation. In the UK,
for example, some of our COVID-19 measures
have been adjusted to mirror the trend towards
‘living with COVID’. The personal, operational and
economic implications in all of our territories will
remain under constant review in 2022.
Topical Risks
ESG Risks
Improving the sustainability and environmental
performance of the Group has been an integral
facet of our business plan over recent years with
efforts intensifying due to both external pressures
and our increasing global footprint. The Group
continues to adhere to ESG best practice by
identifying and detailing climate-related and
social impact risks.
The Group uses globally recognised independent
benchmarks to assess our ESG performance
and to help identify ESG-related risks. Robust
governance, transparency and accountability
principles underpin our approach across all areas
of the business. Understanding and assessing ESG
risks supports our efforts to mitigate and manage
accordingly, benefitting both the Group, and the
local environments in which we operate.
The Group recognises the Task Force on
Climate-Related Financial Disclosures (‘TCFD’)
recommendation to quantify financial impact
of strategic climate-related risks. Considerable
time has been invested in our attempts to fulfil
this requirement. However, our research into
quantifying climate risks identified that (owing to
the current lack of standard calculation method)
there are large variances in the interpretations
and estimates from the leading brands that have
provided estimates. We anticipate that more
accurate, verifiable climate-related financial
planning risks can be provided within one to two
years. The Group continues to discuss climate-
related risks within our regular financial planning
activities, primarily via the Group ESG Committee,
chaired by our Chief Financial Officer.
27
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 PRINCIPAL RISKS CONTINUED
The following table outlines the Group’s principal risks, the change in risk exposure in 2021/22, the mitigation activities
and links to our strategy. The table only includes those risks that the Group has identified as principal risks.
k e y
Consumer
connection
Omnichannel
capability &
technology
Increased risk
exposure
Brand &
category width
No change in
risk exposure
Reduced risk
exposure
Physical retail &
international expansion
ESG
STRATEGIC RISK
Change in Risk Exposure 2021/22
before Mitigating Activities
Risk and Impact
Acquisition Risks
JD’s status as a premier global strategic partner with key international
brands is an important factor in the success of the Group. Acquisitions
and expansion into new territories should align with the Group’s overall
corporate strategy and further develop these brand relationships.
A core element of the Group’s growth and diversification strategy
is through selective acquisitions to expand the Group’s stable of
private labels.
Acquired businesses may fail to realise expected synergies, growth
targets and performance, impacting Group profitability and cash flows.
SUPPLY CHAIN
Change in Risk Exposure 2021/22
before Mitigating Activities
Risk and Impact
Link to Our Strategy
Mitigating Activities
The Group has detailed targeted appraisal procedures in place,
including appropriate due diligence and a dedicated Mergers &
Acquisitions function.
We have robust Board approval procedures to ensure the thorough
and detailed review of acquisition proposals.
Integration plans are finalised prior to acquisitions completing to ensure
newly acquired businesses are integrated efficiently and swiftly.
Link to Our Strategy
Mitigating Activities
Key Suppliers & Brands
The retail fascias are heavily dependent on third-party brands and these
brands themselves being desirable to the consumer if the
revenue streams are to grow.
The Group is also subject to the distribution policies operated by some
third-party brands. Further, supply chain issues or a reduction in the
allocation of stock from key suppliers could negatively impact the results
of the Group.
The Group regularly engages with its key suppliers with the aim
of continuing to receive the exclusive, differentiated footwear and
apparel which our consumer desires. We seek opportunities to work
in partnership with the third-party brands on the design of bespoke
product which is then exclusive to the Group’s fascias.
The Group aims to add new brands to its offer and provide a stable
of evolving private labels to expand the width of its brand and
category offer.
Excess Inventories
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 continues to be the Christmas season. Lower than expected
performance in this period may have an adverse impact on results for the
full year and may result in excess inventories that are difficult to liquidate.
Business Interruption
Significant amounts of stock are held in any one of the Group’s
warehouses. As a result there is an increased risk to store replenishment
and multichannel fulfilment from both equipment and system failure,
together with the inherent risk of holding large amounts of stock in
any one location.
The Group seeks to manage the risk of excess inventories by
monitoring the stock levels and managing the peaks in demand
constantly with regular sales re-forecasting.
A conceptual business continuity plan is in place for our
warehouse operations.
A full support contract with our automation equipment providers
is in place which includes a 24/7 presence from qualified engineers
thereby enabling immediate attention to any equipment issues.
The Group also pays for enhanced ‘hypercare’ support over the
seasonal peak period from Black Friday in November to Christmas.
28
JD Sports Fashion Plc Annual Report and Accounts 2022
INTELLECTUAL PROPERTY
Change in Risk Exposure 2021/22
before Mitigating Activities
Risk and Impact
Link to Our Strategy
Mitigating Activities
Intellectual Property
The Group’s trademarks and other intellectual property rights are critical
in maintaining the value of the Group’s private labels. 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.
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.
ENVIRONMENTAL
Change in Risk Exposure 2021/22
before Mitigating Activities
Risk and Impact
Climate Reporting
Failure to achieve climate-related targets, meet reporting requirements
and ‘green-washing’ in our supply chain and marketing processes could
result in public criticism and fines.
Link to Our Strategy
Mitigating Activities
The Group has adopted the TCFD framework in order to keep the
transitional risks, physical risks and opportunities under review.
The Group’s ESG Committee is responsible for determining ESG-related
strategy, corporate risk assessment and monitoring ESG performance
across the Group’s respective fascias and territories.
For further details of our ESG-related risks, our environment-related
investment plans and the communication of our ESG strategy to
colleagues, customers and investors see page 54 and our ESG report
at www.jdplc.com.
SOCIAL – HUMAN RIGHTS, LABOUR STANDARDS AND RESPONSIBILITY
Change in Risk Exposure 2021/22
before Mitigating Activities
Risk and Impact
Link to Our Strategy
Mitigating Activities
Human Rights & Labour Standards
Failure to uphold the rights of people working in our distribution
centres and warehouses, including those in the supply chain of our
private labels could result in criticism by the media and other bodies.
Adverse reports may influence consumer decision making.
Reliance on Non-UK Manufacturers
The majority of both third-party branded product and the Group’s
private label product is sourced outside of the UK. The Group is
therefore exposed to the risks of human rights violations from having
parts of its supply chain operating in regions with inadequate labour
laws and working practices.
The Group’s Supply Chain Ethics team has an ongoing programme
to audit our private label supply chain (including agents, factories,
mills, dye houses and print houses).
Suppliers within our private label supply chain are required to adhere
to the Group’s ‘Ethical Code of Practice’ which provides assurance
that workers producing our products are safe and in fair conditions.
Compliance in our private label supply chain 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.
For our largest third-party brand partners, the Group collates
disclosures and statements (such as supply chain risk and ESG-
related issues) on material matters including, but not limited to
modern slavery, codes of practice, carbon emissions and water
security. A consolidated view of risks and opportunities identified
is periodically provided to our ESG Committee for review and
appropriate action.
The Group uses third-party accredited auditors to continuously
audit the factories it uses for its private label business. The Group’s
factories are also screened and verified prior to being included
within our sourcing strategy.
29
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022
PRINCIPAL RISKS CONTINUED
HEALTH AND SAFETY
Change in Risk Exposure 2021/22
before Mitigating Activities
Risk and Impact
Health & Safety
Failure to establish and maintain safe environments could result in
personal injuries, distress and fatalities to our employees and customers.
Link to Our Strategy
Mitigating Activities
Health and safety incidents are recorded and profiled. Actions are
taken to address adverse trends.
The Group Health & Safety Committee meets on a quarterly basis.
The Committee is chaired by the Group Health & Safety Manager with
attendees including the Chief Financial Officer, Company Secretary
and Group Property Director.
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 by the Group Health & Safety Manager.
There is a comprehensive induction and training programme for all
staff covering health & safety issues.
COVID-19
Failure to follow government guidelines could result in significant
health and safety challenges to our employees and customers.
The Group has COVID-19 working practices that remain under
review and are adjusted to reflect the latest government and
scientific guidelines for the markets we operate in.
GOVERNANCE – ANTI-CORRUPTION, RISK MANAGEMENT, REGULATORY AND COMPLIANCE
Change in Risk Exposure 2021/22
before Mitigating Activities
Risk and Impact
Anti-corruption and Anti-bribery
The Group’s practices and colleague behaviours could result in
breaches in regulations and fines.
Tax Risk
Tax risk arises due to the global scale of the Group’s operations and the
governing tax legislation that is applicable in each associated jurisdiction.
Data Protection Compliance
With our increased reliance on our multichannel digital and marketing
activities, the Group could inadvertently process customer or employee
data in a manner deemed unethical or unlawful resulting in significant
financial penalties, remedial costs and reputational damage.
Regulatory & Compliance
The Group operates in a fast-paced retail environment which is
subject to various legislation, codes of practice, guidance and
standards including, but not limited to, the listing rules, consumer
protection and trading standards legislation, advertising regulations,
product safety and quality standards, carbon emission reporting,
bribery and corruption requirements, market abuse regulation, FCA
regulations in respect of the provision of consumer credit, competition
law and health & safety legislation.
The Group recognises that failure to comply with these legal frameworks
may result in financial or reputational damage to the business.
Further, as a result of Brexit, laws and regulations could diverge
between the UK and EU leading to increased operational complexity
and a greater risk of non-compliance.
CMA Action
The Competition and Markets Authority (‘CMA’) acts as the competition
regulator in the United Kingdom. The CMA has a wide-ranging remit
covering mergers and acquisitions, unfair trading practices and
anti-competitive behaviour. As the Group continues to grow and as
the Group’s activities continue to expand, the CMA will have increased
involvement in considering the Group’s activities and proposed mergers
and acquisitions. Failure to comply with competition regulators in the
UK and beyond can result in public criticism, significant financial
penalties, reputational damage and remediation costs.
30
Link to Our Strategy
Mitigating Activities
There is an Employee Handbook which outlines the standards
expected of employees and the Group has an anti-corruption and
bribery policy that is available to all staff. The Group Profit Protection
team monitors and investigates any convictions and issues.
The Group aims to ensure that it pays the right amount of tax in each
country in which it operates and does not engage in arrangements
which are artificial or contrived. The Group actively identifies,
evaluates, manages and monitors tax risks on an ongoing basis
using tax risk registers and strives to remain low-risk. Where there
is uncertainty or complexity in relation to how the tax legislation is
to be applied, advice is sought from external advisors and discussed
where appropriate with the relevant tax authority.
The Group has a Data Protection Officer who is supported by the
Group’s Legal team, Information Security team, HR and Profit Protection
team to advise the business and to provide training where applicable.
The Group expects all suppliers to comply with its Conditions of Supply
which clearly sets out its expectations of its suppliers and includes an
Ethical Code of Practice which all suppliers must adhere to.
The Group has a legal team which advises the business on day-to-
day legal matters and aims to ensure compliance with all applicable
legal and regulatory frameworks with the support of external
specialist advisors.
The legal team provide updates to the Executive Directors on
significant matters relating to legal and regulatory compliance.
In addition, the Board are engaged in a process to enhance the
Group’s overall regulatory compliance (for example, in recognition
of the Group’s Principle 11 obligations under the FCA framework).
The Group invests heavily in external specialist competition law
advice from well-respected competition law advisors. The Group
continues to invest in additional policies, procedures, and training
programmes to ensure that colleagues in the business are aware of
the rules in this area and can make appropriate decisions on a
day-to-day basis.
JD Sports Fashion Plc Annual Report and Accounts 2022 RETAIL PROPERTY FACTORS
Change in Risk Exposure 2021/22
before Mitigating Activities
Risk and Impact
Retail Property
The Group can be financially exposed where it has committed itself
to a long lease in a location which, as a result of external factors,
now has high vacancy rates. Higher vacancy rates make a location
less attractive to the customer resulting in further reductions in
footfall and potentially lower sales volumes in the future.
Additionally, there could be a further shift of revenue from bricks
and mortar stores to e-commerce as consumer preferences continue
to change over time.
Link to Our Strategy
Mitigating Activities
New property lease agreements are actively managed by Senior
Management, with caps on the length of leases, break options,
capped rent reviews and rents based on store revenue.
When the Group determines that the current store performance is
unsatisfactory then an assessment is made as to whether the Group
wants to continue trading in that location and engages accordingly
with the landlord.
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 sub-let to another retailer.
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. The Board
reviews the list of assigned leases regularly to assess the probable
risk of the store returning to the Group under privity of contract.
The Group continues to invest in store refurbishment, visual
merchandising, retail theatre, customer service and digital
integration to enhance the consumers’ in-store retail experience.
IT SYSTEMS
Change in Risk Exposure 2021/22
before Mitigating Activities
Risk and Impact
Link to Our Strategy
Mitigating Activities
IT Systems
The Group relies heavily on its IT systems and networks and those of its
partners to service its customers throughout the year across all channels.
Any long-term interruption in the availability of core enterprise systems
would have a significant impact on the retail businesses.
The Group manages this risk by combining the best available premise
solutions with active cloud provisioning to form a robust architecture.
The principal IT services are hosted in enterprise grade data centres with
high availability and reliability at the core of their design. In addition,
there are robust backup and disaster recovery capabilities in place
which are tested periodically throughout the year.
CYBER SECURITY
Change in Risk Exposure 2021/22
before Mitigating Activities
Risk and Impact
Link to Our Strategy
Mitigating Activities
Cyber Security
Cyber-crime is becoming more sophisticated with the risk increasing
across all markets. Any cyber-attack or breach of data may result in the
short-term loss of revenue and diverted resources, while there is also
the risk of a longer-term negative impact on customer confidence and
the Group’s reputation.
The continued growth of the Group via acquisition leads to a more
complex network of IT systems. The Group recognises the importance
of maintaining a robust set of cyber security policies, procedures and
technical controls across all business areas.
The Group continues to invest in protecting our sites, systems, and
customer data from exposure to cyber-attacks. There has also been
a strong focus on increasing the level of cyber security education
and awareness across all Group staff, with a particular focus on the
increased risk when working remotely.
The Group has developed strong processes to review and manage
the security risks within our IT systems in order to quickly detect
and respond to any threats that occur.
Regular independent assessments of the Group’s security posture are
undertaken to ensure that the correct people, processes and technology
are in place to mitigate against the ever-changing threat landscape.
31
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 PRINCIPAL RISKS CONTINUED
PERSONNEL
Change in Risk Exposure 2021/22
before Mitigating Activities
Risk and Impact
Key Management 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.
TREASURY AND FINANCIAL
Change in Risk Exposure 2021/22
before Mitigating Activities
Risk and Impact
Economic Factors
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
income. These economic factors are impacted by events outside
of the Group’s control, in particular the COVID-19 pandemic.
Foreign Exchange
As a result of the Group’s global footprint, we are increasingly exposed
to foreign exchange risk and profits may be adversely affected by
unforeseen fluctuations in foreign exchange rates.
Branded product for the JD fascia throughout Europe is purchased
mainly 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 a 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 private label 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.
Link to Our Strategy
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 ensures that knowledge of the
Group’s differentiated product offering is not lost, thereby
enhancing customer service.
The Nominations Committee is currently actively engaged in the
recruitment of a Group Chief Executive Officer and Independent
Non-Executive Chair. This process is being conducted with the
assistance of a market leading executive search company.
For further details please refer to the Nominations Committee
Report on page 106.
Link to Our Strategy
Mitigating Activities
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.
The Group operates a centralised treasury function which is responsible
for managing liquidity, interest rates and foreign currency risks.
It operates under a Board approved Treasury Policy.
Our European supply chain strategy has reduced the exposure in
2021/22 and will continue to reduce the Sterling/Euro exposure
going forward as the European Distribution Centres increasingly
source the goods in Euros and create a natural hedge.
Surplus Euros are also used to fund the international store
developments across Europe thus alleviating the need for local
third-party financing.
The resulting Euros that will continue to flow back to the UK are
converted back to Sterling with hedging now put in place for
approximately 75% of the anticipated surplus for the year to
28 January 2023. This leaves some Euros available should the
Group need to move quickly to take advantage of acquisitions
or other investment opportunities.
The Group sets a buying rate for the purchase of private label 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 75% of the anticipated requirement for
the year to 28 January 2023.
32
JD Sports Fashion Plc Annual Report and Accounts 2022
Assessment of the Group’s Prospects
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 26 to 33.
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 4 to 91.
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 1 February 2025.
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.
Whilst all of the risks identified in our Principal
Risks section could have an impact on the
Group’s performance, the specific risks that have
been focused on for the purposes of Viability
Reporting are those that pose the greatest risk
to the Group’s financial position, being a potential
reduction in sales volumes due to:
1)
2)
A material and unexpected reduction in
demand due to future events such as a
pandemic or economic downturn; or
Supply chain issues, a reduction in the
allocation of stock or business interruption
impacting the availability of stock from one
of our key Sports Fashion suppliers.
The Board has evaluated the impact of these risks
actually occurring based on severe but plausible
scenarios, for example by reducing sales across
the impacted Sports Fashion retail fascias by 10%
in 2022/23 and a further 10% in 2023/24 and
assuming any mitigating actions within the Group’s
control (such as reductions in operating and
capital expenditure) were not taken. The evaluation
included performing sensitivity analysis by flexing
the reduction in sales further, for example to 20%
of sales across the impacted Sports Fashion retail
fascias in 2022/23 and 2023/24.
Furthermore, the global COVID-19 pandemic has
presented a series of unprecedented challenges
which have severely tested all aspects of our
business including our multichannel capabilities,
the robustness of our operational infrastructure
and the resilience of our colleagues. Whilst COVID-19
has inevitably constrained our short-term progress,
we firmly believe that we have a robust premium
branded multichannel proposition with our loyal
consumers comfortable engaging with us in any
channel. For the purposes of both Viability and
Going Concern Reporting, the Directors have
prepared severe but plausible downside scenarios
which cover the same period as the base case,
including specific consideration of a range of
impacts that could arise from geopolitical tensions
and the actual and potential impact on supply
chains, inflationary cost pressures and business
interruption impacting the availability of stock from
the Group’s key Sports Fashion suppliers, as well
as the ongoing impact of the COVID-19 pandemic.
These scenarios included a two month store closure
in Winter 2023/24 and a 20% reduction in sales.
As part of this analysis, mitigating actions within the
Group’s control, should these severe but plausible
scenarios occur, have also been considered.
Viability Statement
All of the forecast scenarios indicate that there
remains sufficient headroom for the Group to
operate within the committed facilities and to
comply with all relevant banking covenants during
the forecast period. The Board therefore 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
The financial statements are prepared on a going
concern basis, which the Directors believe to be
appropriate for the following reasons:
At 29 January 2022, the Group had net cash
balances of £1,185.9 million (2021: £795.4 million)
including loans of £128.1 million (2021: £169.0 million)
with available committed UK borrowing facilities
of £700 million (2021: £700 million) of which £nil
(2021: £nil) has been drawn down (see Note 20) and
US facilities of approximately $300 million of which
$nil was drawn down (2021: $nil). These facilities are
subject to certain covenants (see Note 20). With a
UK facility of £700 million available up to 6 November
2026 and a US facility of approximately $300 million
available up until 24 September 2026, the Directors
believe that the Group is well placed to manage
its business risks successfully despite the current
uncertain economic outlook. The Group had net
cash balances of £946.1 million as at 30 May 2022.
The Directors have prepared cash flow forecasts
for the Group covering a period of at least 12 months
from the date of approval of the financial statements,
which indicate that the Group will be able to operate
within the level of its agreed facilities and covenant
compliance. The Directors have considered all of
the factors noted above, including the inherent
uncertainty in forecasting the impact of the current
geopolitical tensions and COVID-19 pandemic, and
are confident that the Group has adequate resources
to continue to meet all liabilities as and when they fall
due for a period of at least 12 months from the date
of approval of these financial statements.
Neil Greenhalgh
Chief Financial Officer
22 June 2022
33
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 B U S I N E S S & F I N A N C I A L R E V I E W
SPORTS FASHION
p r e m i u m s p o r t s
f a s h i o n
UK & Republic of Ireland
There was robust consumer demand in our
UK and Republic of Ireland market throughout
the period. During the Spring closure period
the business retained approximately 90% of
the comparative combined store and online
revenues from 2019, being the last time we
traded free from restrictions, through solely
digital channels. This represented an improvement
on the initial period of store closures in Spring
2020 when the sales retention relative to pre-
COVID-19 levels through the initial period of
store closures was approximately 70%. This is
a reflection of the enhanced flexibility that we
have built into our operational infrastructure
since the start of the pandemic.
There was some pent-up demand when the stores
reopened in April 2021 with exceptional growth in
revenues in like-for-like stores through April and
May, of around 30% when measured on a two year
basis against 2019. Growth in revenues in like-for-
like stores relative to 2019 through the rest of the
year then normalised at around 10%.
We continue to take opportunities to invest in
our retail estate where it will further enhance our
consumer proposition in key locations with a net
increase of 13 stores in the period. This included a
new flagship store at Westfield Stratford which is
the most technologically advanced store in our
portfolio with a number of new consumer focused
innovations including self-service checkout kiosks.
The growth in revenues in stores has been
complemented by significant progression online.
Since reopening, revenues through digital channels
have remained at elevated levels as compared to
the period prior to the pandemic with sales in the
trading websites now representing approximately
30% of total sales. Prior to the pandemic, sales
through digital channels represented approximately
22% of total sales and there is no reason to expect
that they will drop back to those historic levels.
Europe
The COVID-19 pandemic and the loss of tariff-
free, frictionless trade with the European Union
have combined to create a difficult operational
environment. The first half of the year was
particularly challenging, with all stores temporarily
closed for a number of weeks in France, Belgium,
Portugal, the Netherlands and Germany where
the stores did not fully reopen until June. Other
markets, including Spain and Italy, had a more
regionalised approach with some stores able to
remain open, albeit with restrictions on customer
capacity and trading hours. In those markets which
suffered full closures, the average retention of
sales, compared to pre-pandemic levels, solely
through digital channels in the closure period
was around 80% (2021: 60%).
The performance in stores after reopening was
mixed with some markets, including France and
Italy, having robust levels of footfall initially.
Combined with a higher level of conversion, this
resulted in a short period where revenues in the
like-for-like stores grew by around 20% compared
to pre-COVID levels. However, consumers in other
markets, particularly Germany and Portugal, were
initially a lot more cautious about returning to
stores and whilst conversion was significantly
higher, revenues in stores in these countries
remained below pre-pandemic levels.
34
*
Throughout the Annual Report ‘*’ indicates the first instance
of a term defined and explained in the Alternative Performance
Measures section on page 42.
JD Sports Fashion Plc Annual Report and Accounts 2022 Most markets remained open throughout the
second half although there were further short
closure periods in both the Netherlands and
Austria. Footfall normalised at around 80% of
pre-pandemic levels although Germany was
slightly lower, typically averaging around 70%.
However, there was significantly higher conversion
in all markets and so, across Europe overall, the
revenues in the like-for-like stores in the second
half were around 10% ahead of 2019.
Restrictions on construction in a number of
markets constrained store developments at
times although we did ultimately open a net
32 stores across the year. A further four stores
were relocated to better space including a
bigger store at the premium Maquinista Mall
in Barcelona. The openings in the year included
the first JD stores in Eastern Europe with a first
store in both Poland and Romania.
We believe that the operational challenges which
we have faced in Europe over the last two years
in particular are very much temporary in nature
and we retain our belief in the long-term
opportunity across the continent. Accordingly,
we remain committed to expanding our physical
retail presence in Europe at pace with a headline
target of opening one store per week on average.
Subsequent to the year end, JD opened its first
store in Hungary which means that JD now has
a presence in 14 markets across Europe
The JD team in Europe are also managing the joint
venture in Israel with two stores now trading and
further openings anticipated later in the year.
Online now represents approximately 20% of
total sales for JD across Europe which represents
a small increase from the 18% participation prior
to the pandemic. The Group is currently actively
engaged in a number of projects which will
improve its service proposition for online orders
in Europe in the short term ahead of fulfilment
from the Group’s 620,000 sqft facility in Heerlen,
South East Netherlands commencing in the first
half of 2024.
Asia Pacific
COVID-19 related trading restrictions have had
a significant impact in all of our markets in the
Asia Pacific region at some stage of the period
with lengthy periods of store closures in Australia
and Malaysia in particular. All stores traded
through the final quarter of the year, although
footfall was below pre-pandemic levels in all
markets. Australia was the market where footfall
was closest to normal levels and, combined, with
strong conversion resulted in an encouraging
growth in revenues in like-for-like stores in the
final quarter relative to 2019 of approximately
20%. Notwithstanding the short-term challenges
that we experienced in the year, we regard
Australia as a very important market with 40
stores trading at the end of the year (2021: 30).
Elsewhere, the Group opened two additional
new stores in Thailand and also opened its first
store in New Zealand at Sylvia Park in Auckland.
Subsequent to the year end, working with its joint
venture partner, PT Erajaya Swasembada Tb, the
Group opened its first two stores in Indonesia which
is JD’s sixth market in the Asia Pacific region.
North America
The stores in the United States have largely traded
free from any restrictions in the year with all of our
businesses benefitting significantly in the first half
of the year, in particular from a temporary boost
to trading which arose as a direct result of the
second round of stimulus introduced by the
Federal Government. The positive impact was
most felt in the period from mid-March to mid-
July with revenues in the like-for-like stores in
this period growing by more than 40% compared
to pre-COVID levels. As with the first round of
stimulus in the prior year, this economic support
was given directly to individuals, focusing on lower
earning members of the population.
We are encouraged that even after this period
of exceptional demand there was positive trading
through the second half of the year although
activity slowed after the peak Holiday season as
our businesses, which have a higher participation
of Nike and Jordan branded footwear in the overall
mix, began to see the anticipated shortfall in the
supply of certain key footwear styles. Supply
of these styles will remain limited through the
first half of this financial year but our expectation
is still that the overall supply position should
progressively improve through the year.
This strong demand through the year has also
resulted in sector-wide lower inventory levels
and, consequently, there was significantly less
promotional activity than previous years with
a notable increase in gross margins.
The Group now has a significant presence in
North America with more than 930 stand-alone
stores (excluding the Macy’s concessions) across
the United States and Canada. It is our current
intention to maintain JD/Finish Line, Shoe Palace
and DTLR as separate fascias as there is little
crossover in locations and they all have their
own unique DNA which comes from their retail
style and having a rich connection with the local
consumer base in the individual neighbourhoods
where they operate. However, we believe that
there are opportunities to enhance both our
collective operational effectiveness and the
consumer experience in the United States by
operating collaboratively in certain areas, such
as Logistics and IT with a number of projects
ongoing that are connected with this objective.
35
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 – JD/Size (Canada): During the year, the Group,
through its local management in the country,
opened its first Group fascia stores in Canada
with a first JD store in both Toronto and
Vancouver and a Size? store, also in Toronto.
These stores complement the existing four
premium Livestock stores in the country.
The momentum on new store openings has
continued into this year with the first JD store
also now open in Edmonton.
OTHER FASCIAS
UK & Republic of Ireland
As with the JD fascia, there was a high level of
sales retention in the period in the premium fashion
businesses whilst the stores were temporarily closed.
Measured against 2019, around 85% of sales were
retained in this period through digital channels,
which was approximately 20% higher than the first
closure period in Spring 2020.
Since reopening, the trends have been broadly
similar to those in JD with significant initial pent-up
demand helping to contribute to total revenue
growth in stores through April and May of more
than 15% compared to 2019. Similar to JD, footfall
has slowed subsequently although continued
higher conversion has helped ensure that the
Tessuti and Scotts stores have continued to trade
positively overall through the rest of the year.
We believe that these businesses are an important
part of our Group, further elevating our overall
proposition and we will continue to invest in our
store estate to enhance the experience for both
consumers and our brand partners. In this regard,
the Group are currently fitting out a new 20,000
sqft flagship Tessuti store in Liverpool with this
store scheduled to open later in the summer.
Digital development is also a critical component
for these premium fashion businesses with total
revenues in the highly regarded Mainline Menswear
business growing by more than 75% compared
to pre-pandemic levels. This complements the
performance in the Tessuti and Scotts multichannel
businesses where the growth in store revenues has
been accompanied by significant progression online
with sales in the trading websites now representing
approximately 45% of total sales compared to
approximately 30% pre-pandemic.
BUSINESS & FINANCIAL REVIEW CONTINUED
Elsewhere, the businesses also continue to
make significant progress on their individual
development opportunities:
– JD/Finish Line (US): There were 87 stores
trading as JD at the end of the period with 12
new stores complementing the conversion of
a further 26 former Finish Line stores. We are
encouraged by the sales uplift that we have
seen to date in these converted stores which
is a fair reflection of consumers positive reaction
to JD’s development in the United States and
we will look to maintain this momentum with
at least 50 new locations for JD, either as new
stores or conversions of existing Finish Line
stores, planned for the current financial year.
Further, we recognise the role that the flagship
store in Times Square has had in enhancing both
JD’s profile and reputation with consumers and
brand partners and it is our expectation that
we will open our second JD flagship store in
the United States in Chicago later this year.
We also remain confident in the potential for
JD to build a meaningful apparel business in
the United States with the run-rate on apparel
participation through the second half of the
year at 17% (H2 2021: 14%).
– Shoe Palace (US): Shoe Palace has the support
of the international brands to open additional
stores focusing on the Spanish speaking
communities on the West Coast and in the
Southern states. During the year, one new
store was open in its heartland state of California
with two smaller stores closing. Shoe Palace
continues to grow its apparel business which
now represents more than 10% of total revenues
(pre-acquisition: 6%). The business also
continues to make significant investments in
its operational infrastructure to ensure that it
has the right platform from which to develop in
the future with the fitting out of a new 511,000
sqft warehouse in Morgan Hill, California, which
has photovoltaic power generation capabilities,
now substantially complete. We believe that
these investments will assist in the longer-term
development of the online business which
currently only represents 4% of total revenues.
– DTLR (US): DTLR also has the support of the
international brands to open additional stores
in future years focusing on its core markets
in the neighbourhood districts of the major
cities in the North and East of the United States.
Five stores were opened after completion of
the acquisition with eight smaller stores closed.
DTLR has a higher mix of apparel in its revenues
than our pre-existing Finish Line and Shoe
Palace businesses in the United States, in the
current year representing more than 30% of
total sales (pre-acquisition: 25%). As with
Shoe Palace, we believe that there is also an
opportunity to develop a more meaningful
online business in DTLR with online sales
currently representing only 3% of total revenues.
36
JD Sports Fashion Plc Annual Report and Accounts 2022
GYMS
The lockdowns over the last two years have
brought into sharper focus the physical and
mental health benefits of regular exercise.
We are confident that our market-leading,
premium low-cost gyms proposition provides an
environment and motivating atmosphere in which
all participants can achieve their fitness goals.
After opening a further six gyms in the period, the
Group had 74 sites in the UK at the end of the year
with 63 sites trading as JD, including 28 which
formerly operated under the Xercise4less (‘X4L’)
banner. A further 11 sites were still bannered as X4L
at the period end. It is our expectation that the
majority of these sites will be converted to JD and
retained longer-term. The conversions from X4L,
which see significant investment in the fabric of
the gym and the installation of new equipment,
have received a very positive reaction with average
membership numbers across the 28 converted
sites to date increasing by more than 20%.
Consequent to the acquisition of GymNation
in December 2021, the Group also now has an
initial presence in the Middle East with seven
gyms in the United Arab Emirates. Working
with local management, we are targeting to
open approximately four additional gyms in
the new financial year.
Europe
Whilst there were some regionalised restrictions
with regards to trading hours or customer capacity
in the early weeks of the year, the Sprinter stores in
Spain largely remained open throughout the period.
The business delivered a robust performance with
like-for-like revenues increasing by approximately
20% relative to pre-pandemic levels, reflecting a
strong performance in key active sports categories
with COVID-19 proving to be a catalyst for many
consumers to increase their participation in sports
and fitness. Our business’s expertise in these
categories has been enhanced through the
acquisitions of Deporvillage and Bodytone.
The Sport Zone stores in Portugal were closed
throughout the first quarter and reopened in May.
Once the stores were able to reopen, there was a
robust performance through the rest of the year
with like-for-like revenues in Portugal also increasing
by approximately 20% relative to pre-pandemic levels.
The management team in Iberia has also now
taken over the operational responsibility for
the Aktiesport and Perry Sport fascias in the
Netherlands. A trial has now commenced in the
Netherlands with the conversion of a former Perry
Sport in Rotterdam to the Sprinter fascia with an
enhanced focus on key active sports categories
such as running and cycling. The initial results of
this trial have been encouraging and it is our
intention to extend this trial into other stores
in this financial year.
Elsewhere, the conversion of the Chausport
stores to JD in France is ongoing with one store
converted by 29 January 2022 and a further
17 stores converted to date in the first four
months of this financial year.
North America
Macy’s has now notified us of its intention to
extend the contract by five years to January 2028.
It is our intention to retain the Finish Line name
in these concession stores with a product offer
which is more focused on families. The revised
terms pertaining to the extension allow us to close
a number of concessions over the term, although
the improved performance of these concessions
and, consequently, our enhanced confidence in
this part of the business is reflected by the fact
that only one concession was actually closed
in the year.
37
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 BUSINESS & FINANCIAL REVIEW CONTINUED
OUTDOOR
Our Outdoor businesses had a much improved
year with an elevated demand for holidays in the
UK and a general recognition of the physical and
mental health benefits of spending time outdoors
combining to drive a strong demand for outdoor
living and cycling categories in particular.
Whilst we are encouraged by our performance in
the year, we recognise that international holidays
are once again more widely available as the UK
emerges out of the COVID-19 pandemic. However,
we are confident that people will look to maintain
a more active lifestyle and that the welcoming
and engaging atmosphere in all of our stores will
continue to inspire people to spend time outdoors.
Further, we recognise that our businesses did not
achieve their full potential in the year, with supply
chain delays negatively impacting the performance
of certain seasonal categories combined with
insufficient global production capacity to meet
current strong demand for bikes and cycling
related accessories.
We continue to invest in all of our fascias with one
new Go Outdoors store in Bangor in the year and
the relocation of the stores in Stoke and Colchester.
Furthermore, we are enhancing the consumer
experience by having dedicated concessions
delivering expertise in key categories such as
fishing, equestrian and cycling. To date, we
have opened 30 Fishing Republic concessions
and four Naylors equestrian concessions. More
recently, we also opened our first two Wheelbase
cycling concessions. The Go Outdoors stores in
Coventry and Stockton, which have been refurbished
in the new premium style, contain all three of these
concessions. Elsewhere, our commitment to cycling
in Scotland is reflected in the fact that we have
relocated our specialist Alpine Bikes store in
Edinburgh with a new store in Aberdeen also
scheduled to open later in the year.
38
FINANCIAL
PERFORMANCE
s p o r t s f a s h i o n
The fundamental strength of our businesses is
reflected in the fact that, despite the challenges
of further temporary store closures in many
markets, we are able to report a record result
in Sports Fashion for the year with a profit
before tax and exceptional items* of
£928.3 million (2021: £433.5 million).
This result was heavily influenced by very positive
performances from the retail fascias in both the
UK and Republic of Ireland and North America.
The UK and Republic of Ireland was the most
profitable territory with a record profit before tax
and exceptional items across the combined retail
fascias of £471.2 million (2021: £262.7 million).
The retail fascias in North America, which benefitted
very significantly from the strong demand in the
United States from the Federal fiscal stimulus, also
delivered a record result with a combined profit
before tax and exceptional items of £343.0 million
(2021: £171.9 million).
Overall gross margins increased within Sports
Fashion by 1.1% to 49.5% (2021: 48.4%). This is
largely due to a stronger margin in the United
States with the strong demand resulting in lower
levels of promotional activity in the overall market
compared to previous years.
After recognising exceptional items in the period
of £292.5 million (2021: £76.9 million) principally
relating to a net increase in the fair value of the
liabilities in respect of the Group’s various future
put options combined with costs associated with
a restructuring of the Chausport business in
France, the profit before tax in Sports Fashion
was £635.8 million (2021: £356.6 million).
o u t d o o r
The positive progress in the Outdoor businesses
is reflected in the fact that, even though the majority
of stores were closed through the first quarter, there
were record revenues in Outdoor in the year with
total sales of £513.4 million (2021: £359.3 million).
Further, our businesses are also now benefitting
from the previous work to enhance the operational
integration of the businesses through common
merchandising systems and shared commercial
resources with overall gross margins increasing
by 1.7% to 43.9% (2021: 42.2%).
The combination of revenue and margin
progression meant that Outdoor returned to
profitability in the period delivering a profit before
exceptional items of £25.9 million (2021: loss of
£6.1 million). There were no exceptional items in
the period (2021: charge of £20.4 million) which
means that the profit before tax in Outdoor was
also £25.9 million (2021: loss of £26.5 million).
JD Sports Fashion Plc Annual Report and Accounts 2022 r e v e n u e &
g r o s s m a r g i n
Whilst there were further periods of temporary
store closures in many markets, the financial impact
of COVID-19 was less severe than the prior year with
stores in some markets, including the United States,
largely trading free from restrictions throughout
the year. Ultimately, total revenue for the Group for
the year increased by 38.8% to £8,563.0 million
(2021: £6,167.3 million) with this increase significantly
influenced by the impact of the recent acquisitions:
– Shoe Palace (completed 14 December 2020):
Revenues of £389.8 million for the full
year (2021: £56.1 million for the six week period
post-acquisition).
– DTLR (completed 17 March 2021): Revenues of
£382.8 million for the 46 weeks post-acquisition.
– MIG (completed 30 April 2021): Revenues of
£175.0 million for the 39 weeks post-acquisition.
– Deporvillage (completed 3 August 2021):
Revenues of £67.8 million for the 26 weeks
post-acquisition.
– Cosmos (completed 21 October 2021): Revenues
of £26.0 million for the 14 weeks post-acquisition.
Elsewhere, the impact of the fiscal stimulus in the
United States is reflected in the fact that revenues
in the Group’s pre-existing Finish Line business
increased by £99.9 million to £1,804.2 million
(2021: £1,704.3 million). There was also a very
robust performance from the JD business in
the UK and Republic of Ireland where revenues
increased by £508.0 million to £2,318.1 million (2021:
£1,810.1 million). Given the temporary closure periods
in both this year and the prior year, it would not be
meaningful to present sales on a like-for-like basis.
Total gross margin for the year increased
strongly to 49.1% (2021: 48.0%) largely due
to a stronger margin in the United States where
gross margins increased significantly to 49.8%
(2021: 46.7%) with strong demand consequent
to the Federal fiscal stimulus driving lower levels
of promotional activity in the overall market
compared to previous years.
p r o f i t b e f o r e t a x
There was a record result for the year with profit
before tax and exceptional items increasing to
£947.2 million (2021: £421.3 million). The recent
acquisitions in North America made a significant
contribution to this result:
– Shoe Palace (completed 14 December 2020): Profit
before tax and exceptional items of £57.3 million for
the full year (2021: £13.9 million for the six week
period post-acquisition).
– DTLR (completed 17 March 2021): Profit before
tax and exceptional items of £50.6 million for
the 46 weeks post-acquisition.
Elsewhere in North America, Finish Line (including
the Macy’s concessions) increased its profit before
tax and exceptional items for the year by more than
51% to £236.0 million (2021: £156.6 million). Further,
the premium sports JD business in the UK and
Republic of Ireland delivered a record result for the
year with a profit before tax and exceptional items
of £437.3 million (2021: £249.6 million).
Total operating costs in the year before exceptional
items of £292.5 million (2021: £97.3 million) were
£3,221.5 million which represented 37.6% of net
revenues (2021: £2,507.6 million being 40.7% of
net revenues).
There were exceptional items in the period of
£292.5 million (2021: £97.3 million) principally from
the movement in the fair value of the liabilities in
respect of future put options:
Group profit before tax ultimately increased to
£654.7 million (2021: £324.0 million).
Movement in fair value of put options(1)
Insurance settlement for DTLR(2)
Restructuring of Spodis SA(3)
Impairment of goodwill and fascia names(4)
Restructuring of Go Outdoors(5)
Administrative expenses – exceptional
52 weeks to
29 January
2022
£m
292.7
(16.6)
16.4
–
–
292.5
52 weeks to
30 January
2021
£m
20.7
–
–
56.2
20.4
97.3
(1)
(2)
(3)
(4)
(5)
Movement in the fair value of the liabilities in respect of the put options as re-measured at each reporting date (see Note 22)
(Genesis Topco Inc: charge of £258.7 million, Iberian Sports Retail Group: charge of £31.6 million, Marketing Investment Group S.A:
charge of £1.7 million, Other: charge of £0.7 million). The increase in the fair value of the put options attributable to Genesis Topco
Inc. includes £71.0 million consequent to the transfer of DTLR into the Genesis sub-group. The movement in the fair value of the put
option liabilities is presented as exceptional as it is a significant item that is outside of the normal course of business.
Insurance settlement proceeds related to a pre-acquisition claim for business interruption by DTLR Villa LLC. As the claim was
a contingent asset at the date of acquisition, this was not recognised in the assets acquired in the fair value table in Note 11.
These insurance proceeds are presented as exceptional as they are unusual in nature and are outside of the normal course of business.
The impact consequent to the restructuring of Spodis SA in the period including a charge of £5.5 million in relation to the
impairment of tangible assets and business restructuring costs of £10.9 million. This item is presented as exceptional as it related
to a non-recurring restructuring project.
The impairment in the prior period primarily relates to the impairment of goodwill and fascia name arising in prior years on the
acquisition of Footasylum (£55.6 million). The impairment is presented as exceptional as it is a significant item that is outside of
the normal course of business.
The net impact consequent to the restructuring of Go Outdoors in the prior period including a charge of £33.3 million in relation to
the impairment of intangible assets, a charge of £4.9 million in relation to the impairment of leasehold improvements and a credit
of £17.8 million in relation to the extinguishment of lease commitments. This item is presented as exceptional as it related to a
non-recurring restructuring project.
39
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 f o r e i g n e x c h a n g e
The Group has two principal foreign
exchange exposures:
1. The sourcing of private label 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 2023 is now $320 million.
Cover is in place for $243.5 million meaning
that the Group is currently exposed on
exchange rate movements for $76.5 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.
Our European supply chain strategy has
reduced the exposure in 2021/22 and will
continue to reduce the Sterling/Euro exposure
going forward as the European Distribution
Centres increasingly source the goods in
Euros and create a natural hedge. Surplus
Euros are also used to fund the international
store developments across Europe thus
alleviating the need for local third-party
financing. The anticipated surplus over and
above the planned investment levels in the
period to January 2023, pre any potential
acquisition activity to be funded in Euros,
is €400 million. Hedging contracts are in
place to sell €331.0 million meaning that
the Group is currently exposed on exchange
rate movements for €69.0 million of the
current year’s estimated surplus.
BUSINESS & FINANCIAL REVIEW CONTINUED
b a l a n c e s h e e t
The net cash balance at the end of the period
was £1,185.9 million (2021: £795.4 million). This
net cash position reflects both the very strong
cash generation in the United States and the
UK consequent to the strong trading in these
countries through the first half and the net
proceeds, after costs, of £455.9 million from
the placing of 58,393,989 new ordinary shares
on 3 February 2021. These shares were issued
prior to the 5:1 split of the ordinary shares on
30 November 2021. The Group continues to use
its very strong cash resources to fund its development
opportunities with cash consideration paid on
completed acquisitions in the year (net of cash
acquired) of £616.5 million (2021: £206.3 million).
Net inventories at the end of the period were
£989.4 million (2021: £813.7 million) which includes
£206.9 million of inventories in businesses which
have been acquired since 30 January 2021.
Period end inventories in the combined Finish
Line and JD business in the United States of
$149.1 million were approximately 11% lower than
the previous year (2021: $167.7 million) reflecting
both the strong demand in the period and the
gradual tightening of supply consequent
to the well-publicised production issues that
some brands experienced at their factories
in Asia in the second half of the year.
Gross capital expenditure* (excluding
disposal costs) increased to £247.9 million
(2021: £128.2 million) with fewer restrictions
on construction activity, including the fitting
out of stores. The primary focus of our capital
expenditure remains our physical retail fascias
with a spend in the period of £124.0 million
(2021: £73.5 million) which includes £48.7 million
(2021: £21.0 million) across our combined retail
fascias in North America. Given the increased
global footprint of the Group and the relaxation
of COVID-19 related operating restrictions in
many countries, the Group expects to significantly
increase its investment in physical retail in the
new financial year. In addition, there will also
be significant spend on the new warehouses
at Derby and Heerlen and so, consequently,
we would currently anticipate that the capital
expenditure for the year to 28 January 2023 will
be in the range of £325 million to £375 million.
Intangible assets increased by £653.9 million to
£1,473.6 million (2021: £819.7 million) consequent
to the recognition of intangible assets arising from
the acquisitions made in the year (see Note 11).
40
JD Sports Fashion Plc Annual Report and Accounts 2022 d i v i d e n d s
a n d e a r n i n g s
p e r s h a r e
The Board is cognisant that the Group has delivered
an excellent result for the year and that the Group’s
international operations, particularly those in the
United States, have made a very significant
contribution to this profitability. Further, the Board
recognise that most countries where the Group
operates have eased their trading restrictions and
have also begun to reopen their borders to allow
international tourism to recommence. After careful
consideration, the Board has decided that it is
appropriate to pay a dividend and that, whilst the
payment should be modest with funding retained
for our ongoing development opportunities, it
should reflect the performance over the full year.
Accordingly, the Board proposes paying a final
dividend of 0.35p (2021: 0.29p restated) per
ordinary share. Subject to shareholder approval at
our AGM, the proposed final dividend will be paid
on 5 August 2022 to all shareholders on the register
at 8 July 2022.
The basic earnings per ordinary share increased
by 55.5% to 7.17p (2021: 4.61p restated).
Neil Greenhalgh
Chief Financial Officer
22 June 2022
t a x a t i o n
The Group takes a responsible approach
to the management of taxes and aims to
work transparently and collaboratively with
all stakeholders.
The Group is committed to paying the right
amount of tax, in the right place, at the right
time. It recognises the importance of respecting
the spirit and letter of the law including allocating
value by reference to where it is created, managing
it within the normal course of commercial activity and
paying the associated tax.
When structuring commercial activities, consideration
is given, along with other factors, to the prevailing
tax laws in the relevant jurisdiction.
Intra-group transactions are conducted on an arm’s
length basis and comply with the obligations of the
transfer pricing rules in the jurisdictions where it
operates and under global transfer pricing principles.
Where there is uncertainty or complexity
in relation to how the tax legislation is to be
applied, advice will be sought from external
advisors and discussed with the relevant tax
authority, where appropriate.
The tax the Group pays reflects the underlying
commercial transactions across its global business.
The UK mainstream corporation tax rate for the
financial year was 19%, however the effective rate
of tax on profit from continuing operations for the
Group is 29.8% which is higher than the previous
period (2021: 29.1%). The increase above the UK
mainstream rate is mainly due to a further non-
deductible put option charge in the current year
of 8.5% (2021: 1.2%) and the proportion of Group
profits that have arisen in jurisdictions that have a
higher rate of corporation tax than that of the UK,
in particular the US.
Excluding both exceptional items (being the put
options) and prior year adjustments, the adjusted
effective tax rate* from continuing activities in the
financial year has decreased from 28.2% to 23.1%.
This adjusted effective rate continues to be above
the UK mainstream rate primarily due to the impact
of higher overseas corporation tax rates (4.4%).
The increase in the UK mainstream corporation
tax rate to 25% in April 2023 is expected to have
a c.3% impact of the Group’s effective tax rate.
Due to the current status of the ‘Build Back Better
Act’, the US Federal rate of tax is expected to remain
at 21% and therefore will have no further impact
on the Group’s effective rate in the short term.
41
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 ALTERNATIVE PERFORMANCE MEASURES
ALTERNATIVE PERFORMANCE MEASURES
(terms listed in alphabetical order)
(terms listed in alphabetical order)
The Directors measure the performance of the Group based on a range of financial measures, including measures not recognised
by International Accounting Standards (‘IAS’) in conformity with the requirements of the Companies Act 2006 and in accordance
with UK-adopted International Accounting Standards. These alternative performance measures may not be directly comparable
with other companies’ alternative performance measures and the Directors do not intend these to be a substitute for, or superior
to, IFRS measures. The Directors believe that these alternative performance measures assist in providing additional useful
information on the trading performance of the Group.
Alternative performance measures are also used to enhance the comparability of information between reporting periods, by
adjusting for exceptional items. Exceptional items are disclosed separately when they are considered unusual in nature and
not reflective of the trading performance and profitability of the Group. The separate reporting of exceptional items, which
are presented as exceptional within the relevant category in the Consolidated Income Statement, helps provide an indication
of the Group’s trading performance. An explanation as to why items have been classified as exceptional is given in Note 4.
a d j u s t e d e a r n i n g s p e r o r d i n a r y s h a r e
b e f o r e e x c e p t i o n a l s
The calculation of basic earnings per share is detailed in Note 10. Adjusted basic earnings per ordinary share has been based on
the profit for the period attributable to equity holders of the parent for each financial period but excluding the post-tax effect
of certain exceptional items. A reconciliation between basic earnings per share and adjusted earnings per share is shown below:
Basic earnings per share
Exceptional items
Tax relating to exceptional items
Adjusted earnings per ordinary share
2022
7.17p
5.66p
0.01p
12.84p
2021
(restated)
4.61p
2.00p
(0.17p)
6.44p
a d j u s t e d e f f e c t i v e r a t e o f t a x a t i o n
As a UK-based Group with subsidiaries in 32 territories worldwide as at 29 January 2022, we have presented a reconciliation
between the UK main rate of corporation tax and the effective rate (excluding exceptional items and prior year adjustments).
This is to provide further clarity for the users as the information is not easily identifiable from the financial statements:
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
Adjusted effective rate of taxation
g r o s s c a p i t a l e x p e n d i t u r e
Gross capital expenditure is used to provide a total of all spend of a capital nature in the financial year.
Investment in software (Note 12)
Acquisition of property, plant and equipment (Note 13)
Acquisition of non-current other assets (Note 16)
Total gross capital expenditure
2022
%
19.0
0.5
1.6
0.6
(0.9)
2.3
23.1
2022
£m
14.9
227.3
5.7
247.9
2021
%
19.0
1.1
2.0
1.7
1.8
2.6
28.2
2021
£m
19.1
105.2
3.9
128.2
l f l ( l i k e - f o r - l i k e ) s a l e s
The percentage change in the year-on-year sales, removing the impact of new store openings and closures in the current
or previous financial year. This metric enables the performance of the retail stores to be measured on a consistent year-on-year
basis and is a common term used in the retail industry.
42
JD Sports Fashion Plc Annual Report and Accounts 2022 n e t c a s h / ( d e b t )
Net cash/(debt) consists of cash and cash equivalents together with interest-bearing loans and borrowings. This measure
is a good indication of the strength of the Group’s Balance Sheet position and is widely used by credit rating agencies.
A reconciliation of net cash / (debt) is provided in Note 30.
o p e r a t i n g p r o f i t b e f o r e e x c e p t i o n a l i t e m s
A reconciliation between operating profit and exceptional items can be found in the Consolidated Income Statement.
p r o f i t b e f o r e t a x a n d e x c e p t i o n a l i t e m s
Profit before tax and exceptional items is used as a measure of in-year performance associated with bonus financial metrics.
Further details are provided in the Directors’ Remuneration Report on pages 114 to 130. 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
2022
£m
654.7
292.5
947.2
2021
£m
324.0
97.3
421.3
p r o f o r m a i a s 1 7
Pre-IFRS 16 profit is consistent with the financial information used to inform business decisions and investment appraisals.
Certain management incentives are also linked to the results on this basis (see Directors Remuneration Report on page 122.
A reconciliation from the IFRS 16 headline profit before tax and exceptional items to the proforma IAS 17 headline profit
before tax and exceptional items is as follows:
Profit before tax and exceptional items (IFRS 16)
Add back:
Depreciation and impairment of the right-of-use asset under IFRS 16 (Note 14)
Lease interest expense (Note 14)
Deduct:
Lease costs expensed to the income statement under IAS 17
Headline profit before tax and exceptional items (Proforma IAS 17)
2022
£m
947.2
361.3
59.5
2021
£m
421.3
324.8
54.9
(410.1)
957.9
(340.9)
460.1
s e g m e n t a l p r o f i t b e f o r e t a x
a n d e x c e p t i o n a l i t e m s
A reconciliation between profit before tax and profit before tax and exceptional items for each segment is as follows:
Sports Fashion
Profit before tax
Exceptional items
Profit before tax and exceptional items – Sports Fashion
Outdoor
Profit/(loss) before tax
Exceptional items
Profit/(loss) before tax and exceptional items – Outdoor
2022
£m
635.8
292.5
928.3
2022
£m
25.9
–
25.9
2021
£m
356.6
76.9
433.5
2021
£m
(26.5)
20.4
(6.1)
43
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 P R O P E R T Y A N D S T O R E S R E V I E W
OVERVIEW
SPORTS FASHION
JD UK and ROI
The retail landscape has seen significant changes
in recent years with a high volume of retail units
becoming vacant consequent to a number of
insolvencies. Additionally, there could be a further
shift of revenue from bricks and mortar stores to
e-commerce as consumer preferences change over time.
The COVID-19 pandemic may have accelerated this shift
in consumer preferences. Whilst the stores have been
closed during periods of lockdown, consumers have readily
switched to online channels reflecting the benefits of the
agile omnichannel approach that the Group has developed
over a number of years. Whilst it is inevitable that some
consumers have permanently changed their behaviour and
shopping preferences as a result of COVID-19, we do not
believe that bricks and mortar stores have lost their relevance
to the majority of customers who like the flexibility that
comes from operating stores in tandem with a strong online
offer. Stores give a platform to showcase product, allow
consumers to physically see and try the product immediately,
and provide the operational flexibility and agility to offer an
enhanced speed of service for online orders. It should also
be recognised that stores provide people with an opportunity
to interact socially with friends and families in a way that
has not been possible for large parts of the last two years.
We will continue to invest in property with a focus on the
international expansion of the JD fascia. We are confident
that the powerful combination of increasing international
reach, consistency of premium proposition across our
territories and strengths in consumer connection remain
attractive to the major international landlords and
property agents.
k e y h i g h l i g h t s
d u r i n g t h e
f i n a n c i a l y e a r :
– Number of stores increased to 3,402 at the financial
year end (2021: 2,636 stores) across 32 territories
(2021: 20 territories).
– Increased presence in the US, the largest sportswear
market in the world, through both the continued
development of the JD fascia and via the acquisition
of DTLR, which enhances the Group’s exposure to
key consumer demographics in the highly important
East Coast market in the United States.
– JD expansion into four new territories (Canada, Poland,
Romania and New Zealand).
– Commenced a major programme to enhance the
logistics network across the UK and Western Europe.
44
OUTDOOR
Blacks
Stores:
55
Millets
000 Sq Ft:
-2 198
000 Sq Ft:
Stores:
– 195
93
Ultimate Outdoors
-6
–
+104
+170
Stores:
414
JD Europe
000 Sq Ft:
+14 1,773
000 Sq Ft:
Stores:
369
JD Asia Pacific
+34 1,117
Stores:
79
JD US
000 Sq Ft:
+10 316
+25
Stores:
3
Tiso
000 Sq Ft:
-2 33
-80
Stores:
13
Go Outdoors
000 Sq Ft:
– 100
+7
000 Sq Ft:
-1 1,812
-68
Stores:
65
Go Fishing
Stores:
3
Naylors
000 Sq Ft:
– 23
000 Sq Ft:
Stores:
3
Leisure Lakes
– 25
000 Sq Ft:
Stores:
10
Wheelbase
+10 45
000 Sq Ft:
Stores:
+3 14
3
Total – Outdoors
Stores:
248
+8
000 Sq Ft:
2,445
-80
8
–
+45
+14
Stores:
87
JD Canada
000 Sq Ft:
+38 354
Stores:
2
Size?
Stores:
31
000 Sq Ft:
+2 7
000 Sq Ft:
-2 46
Sub total – JD and Size?
000 Sq Ft:
3,613
+454
Stores:
982
+96
Other UK
000 Sq Ft:
Stores:
151
Other Europe (i)
-3 503
000 Sq Ft:
Stores:
889
Finish Line (own)
+458 3,648
000 Sq Ft:
Stores:
427
Finish Line (Macy’s)
-37 1,394
Stores:
289
Livestock
000 Sq Ft:
-1 273
000 Sq Ft:
Stores:
– 8
4
Shoe Palace (ii)
Stores:
166
DTLR Villa
000 Sq Ft:
-1 489
+150
+7
-2
-1
+787
-170
-8
–
-2
000 Sq Ft:
Stores:
244 +244 904
Other Asia Pacific
+904
000 Sq Ft:
Stores:
2
Total – Sports Fashion
+2 1
Stores:
3,154
+758
000 Sq Ft:
10,833
+1,965
(i)
+1
(ii)
(iii)
Chausport (France), Sprinter
(Spain & the Canary Islands),
Sport Zone (Portugal),
Perry Sport/Aktiesport
(the Netherlands), MIG
(Central & Eastern Europe) and
Cosmos (Greece & Cyprus).
Includes four stores trading
as Nice Kicks.
The +/- figures show
the movement in the financial
year ended 29 January 2022.
JD Sports Fashion Plc Annual Report and Accounts 2022 International expansion – new territories
Our recent acquisitions and joint venture
partnerships have provided the platform to
develop the JD fascia and expand into four
new territories during the financial year with
our first stores opening in Canada, Poland,
Romania and New Zealand. We will continue
to leverage the expertise and experience of the
existing management teams and infrastructure
to facilitate the future global expansion of JD.
In 2022/23, we plan to open additional stores
in these four territories and expand further into
new territories in Central and Eastern Europe.
We are also working with our joint venture
partners further afield, with the first JD store in
Jakarta, Indonesia opening in the first few weeks
of 2022/23. This was followed more recently by
the opening of the first stores in Israel at Ben
Gurion Airport and Rishon LeZion.
o t h e r s p o r t s
f a s h i o n f a s c i a s
UK & ROI
Our other Sports Fashion fascias further elevate
our overall offer with the principal fascias being:
– Tessuti, Scotts, Choice and Giulio.
These businesses work together to deliver
a consistent proposition in the premium
apparel and footwear sector.
– Base Childrenswear and Kids Cavern
targeting the premium childrenswear market.
– HIP Store, Oi Polloi and Wellgosh continue to
bring together an eclectic mix of domestic and
international labels including emerging talent
and globally-established brands.
Across these fascias operating in the UK and ROI
(excluding Footasylum), there were 86 stores
in total at the end of the year (2021: 86 stores).
The overall footprint of these stores marginally
increased from 260,000 sqft to 262,000 sqft as
we continued to exit smaller stores in secondary
markets and focus our activity on larger space
stores in premium centres where we can showcase
the full range of the premium fashion offer.
t e s s u t i
Tessuti is a leading retailer of premium,
branded fashion for men, women and
juniors, combining an elevated in-store
concept and a seamless online experience.
Tessuti has established itself as a unique
consumer destination with ever-growing
appeal across the UK.
SPORTS FASHION
j d
JD is a world-class retail fascia with an elevated
multichannel proposition. A unique and constantly
evolving sports and fashion premium brand offer is
presented in a vibrant retail theatre with innovative
digital technology.
UK & ROI
During the year, there was a net increase of 14
JD stores across the UK and ROI. Ensuring that
we remain in positions with the highest footfall
and have sufficient space to present our full
footwear and apparel offer in major markets
remains a key strategy.
Several larger format stores opened during
the financial year including Westfield (Stratford)
and Castle Place (Belfast) with these stores
setting new standards in visual merchandising,
retail theatre and digital integration to enhance
the consumers’ in-store retail experience.
International expansion – existing territories
We have continued to focus on the international
growth of the JD fascia with a net 84 stores
opening in our existing international territories
during the financial year. The pace at which we
have opened new stores has been slower than
in previous years due to the impact of ongoing
restrictions on construction and fit out works
in certain markets as a result of the COVID-19
pandemic. The key highlights to note are:
– 40 new JD stores opened across existing
territories in Western Europe.
– 12 new JD stores in the Asia Pacific region
with two new stores in Thailand and 10 new
stores in Australia as we strengthen our
presence in the key cities of Sydney,
Melbourne, Adelaide, Brisbane and Perth.
– 87 stores now trading as JD in the United States.
The United States is becoming an increasingly
important territory for the Group with progression
and evolution in this country having a major impact
both on the Group’s overall performance and,
importantly, its standing with the international
brands. We are encouraged by the sales and
margin uplift that we have seen to date on the
conversions from Finish Line to JD and we
currently plan to convert approximately 50
further stores in 2022/23.
40
new JD stores
opened across
existing territories
in Western Europe
12
new JD stores in
the Asia Pacific
region
87
stores now
trading as JD in
the United States
45
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 PROPERTY AND STORES REVIEW CONTINUED
PROPERTY AND STORES REVIEW CONTINUED
PROPERTY AND STORES REVIEW CONTINUED
INTERNATIONAL
EXPANSION
ACQUISITIONS
The Group has continued to expand
its property and fascia portfolio
during the financial year with several
significant international acquisitions:
MIG
c e n t r a l a n d
e a s t e r n e u r o p e
Based in Krakow, Poland, MIG had 410 stores at
acquisition trading principally as either Sizeer, which
is a premium multi-branded fascia not too dissimilar
to JD, or 50 Style, which is a multi-branded volume
retail concept with lower price points. Whilst the
majority of the stores are located in Poland, the
Company has also been expanding its reach beyond
Poland in recent years and, at acquisition, had stores
in a total of nine countries across Central and Eastern
Europe. Since completion, Sizeer has further expanded
its store base with additional new stores in Bulgaria
and Romania.
46
410
stores at
acquisition
JD Sports Fashion Plc Annual Report and Accounts 2022 COSMOS
g r e e c e / c y p r u s
Operating from 58 stores in Greece and three in
Cyprus at acquisition, Cosmos trades under a
variety of retail banners and associated trading
websites with the principal ones being Cosmos
which is the core fascia of the business and
has an elevated sporting goods/lifestyle
proposition and Sneaker 10 which has a
more premium footwear offer.
61
stores
u s
e x p a n s i o n
The Group has increased its presence in
the US further in 2021/22 through both
the continued development of the JD
fascia and via the acquisition of DTLR.
247
stores at
acquisition
47
DTLR
u s
Based in Baltimore, DTLR is our third acquisition
in the United States. At acquisition, the business
had 247 stores trading primarily as DTLR across
19 states. DTLR, which retails both premium
athletic footwear and apparel, is principally
located in urban areas across the North and
East of the United States.
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 PROPERTY AND STORES REVIEW CONTINUED
PROPERTY AND STORES REVIEW CONTINUED
i n t e r n a t i o n a l –
m a t u r e f a s c i a s
Size?
Size? has a global reputation for supplying the
finest products from the best brands in footwear,
apparel and accessories with stores and dedicated
local websites in 10 countries. Size? is a truly
multichannel business with a focus on developing
flagship stores in key cities to showcase the full
offer and provide the full digital experience to
both consumers and our third party brand
partners. These stores also then generate an
excitement and hype with consumers beyond
their physical walls with the websites contributing
more than 50% of overall revenues.
Elsewhere, the focus on developing larger stores
in key locations is reflected in the closure of three
small stores across the UK and Europe.
Sprinter and Sport Zone
The Group’s subsidiary, Iberian Sports Retail
Group (‘ISRG’), is a leading operator in the
sporting goods market across Iberia through its
Sprinter and Sport Zone fascias. During the year,
13 stores opened under the Sprinter fascia which
included an elevated flagship store at Parquesur,
Madrid. The average size of the new stores in the
year was 6,400 sqft which is considered to be the
most effective trading space for the core offer
focusing on active sport participation. We will
continue to invest in the physical and online
channels to ensure a robust platform for future
growth across Iberia.
In November 2021, ISRG opened its first Sprinter
store in the Netherlands by rebranding an existing
Group store from the Perry Sport portfolio in
Amsterdam. The initial results have been encouraging
and it is our intention to extend this trial into other
stores in 2022/23. The trial will provide us with
significant learnings for the potential future
development of the Sprinter format not only in
the Netherlands but also, potentially, in other
European territories.
Perry Sport and Aktiesport
Aktiesport is the largest sports retail business in
the Netherlands with a focus on selling football
and lifestyle goods from major international
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. The Group
remains committed to maintaining a sizeable
business in the Netherlands which, depending on
the performance of the trial store in Amsterdam,
48
s i z e ?
During the period, the Group has
focused on developing our Size?
fascia in Canada with a new store
on Queen Street West in Toronto,
complemented by the launch of the
Size? trading website in the country.
The Group is planning to open its
second Canadian store in Vancouver
in 2022/23.
may involve the conversion of additional stores to
the Sprinter format. However, we will also continue
to take action where it is necessary to ‘right-size’
the store portfolio, closing 12 stores in the year and
transferring two stores to existing Group fascias.
Chausport
Chausport operates throughout France retailing
leading international footwear brands such as
adidas, Nike and Timberland to a more family
focused customer. The Group has concluded
that its performance in France will be improved
by focusing solely on the development of JD.
The Group has reviewed the Chausport portfolio
and has determined that approximately 30 stores
are appropriate in location and size to trade as JD.
These stores will be converted to JD progressively
over the next two years. The remaining stores
will close as the leases expire with 16 smaller
underperforming stores closed in the year.
JD Sports Fashion Plc Annual Report and Accounts 2022 g y m s
JD Gyms offers “seriously stylish, seriously
affordable, award winning facilities” across 63
prime locations and plays host to a bespoke mix of
industry leading fitness equipment and an exciting
range of fitness classes. The 63 sites include 28
sites which previously operated as Xercise4Less
(a business the Group acquired out of administration
in 2020). A further 11 gyms were still branded as
Xercise4Less at the year-end as we continue to
review the long-term viability of these sites. We are
optimistic that we will return to previous levels
of activity in the new financial year with at least
10 further JD clubs opening in the UK in 2022/23.
In December 2021, JD Gyms made its first
move outside of the UK with the acquisition
of GymNation (see Note 11) which is a chain of
seven gyms in the United Arab Emirates (‘UAE’).
GymNation, which operates from large facilities
with an average footprint of 30,000 sqft, has an
ethos which is very much aligned with JD Gyms
with a premium look and feel and a digital-first
approach. Given the high consumer regard for the
GymNation proposition, there are no plans, at this
stage, to rebrand the acquired gyms to JD Gyms.
74
UK Gyms
10+
new JD Gyms
planned for
2022/23
7
Gyms acquired in
the UAE in 2021/22
g y m n a t i o n
GymNation is the Group’s first acquisition
of gyms outside of the UK, currently
operating seven sites in the UAE.
u s f a s c i a s
(Finish Line, Shoe Palace & Nice Kicks and DTLR)
DTLR is our third acquisition in the United States
following the acquisitions of Finish Line in 2018
and Shoe Palace in 2020 bringing the total number
of stores and concessions operating under these
banners in the US to 1,126 at the financial year end
(2021: 921). It is our current intention to maintain
both Shoe Palace and DTLR as independent
fascias as they both have their own unique DNA
which comes from their retail style and the rich
connection with their consumer base. There has
been minimal movement on the DTLR and Shoe
Palace store portfolios in the period since
acquisition although both businesses have the
support of the international brands to open
additional stores, with DTLR focusing on its
core markets of the North and East of the
United States and Shoe Palace targeting the
West Coast and the Southern border states.
We remain encouraged by the positive reaction
by consumers and the international brands to the
development of JD in the United States. During the
year, we opened 12 new JD stores and converted
a further 26 stores which formerly traded as Finish
Line. It is our intention to continue the programme
of converting Finish Line stores to JD in appropriate
locations with approximately 50 further conversions
planned for the new financial year. Elsewhere, 11
Finish Line stores were closed in the year although
this included four malls where JD simultaneously
opened a new store in a more appropriate location.
Longer term, the Finish Line fascia will increasingly
become focused in the Macy’s concessions mainly
targeting female and family-oriented consumers.
The performance of these concessions has
improved significantly since our original acquisition
of Finish Line in June 2018 and, consequently, only
one concession was closed in the year.
Our teams in the United States have now
commenced a wide-ranging project to enhance
our collective operational effectiveness and further
enhance the consumer experience in the United
States by operating collaboratively in certain areas.
49
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 PROPERTY AND STORES REVIEW CONTINUED
PROPERTY AND STORES REVIEW CONTINUED
l o g i s t i c s
d e v e l o p m e n t s
There is significant ongoing investment to broaden
the international network to service a complex
international multichannel business with multiple
fascias. The Group is also investing in technically
advanced automation equipment and robotics
to strengthen the operational foundations of our
businesses and ensure that the Group remains
a leader in multichannel developments.
UK and Republic of Ireland
Construction works on the new 515,000 sqft facility
in Derby which will be used exclusively to fulfil online
orders for JD in the UK are now complete, with initial
fit out of the site ongoing. This will allow limited
fulfilment from the site to commence ahead of the
peak period later this year although it will be mid-2023
before the site is fully operational. Approximately
£10 million was incurred on this project in the year
with approximately £80 million to be incurred over
the next 18 months to bring the site into full
operational use.
To bridge the capacity gap ahead of Derby opening,
the Group engaged Clipper Logistics Plc in the year
to provide a range of logistics operations, including
warehousing and e-fulfilment, on a temporary
basis from their site at Sherburn, Leeds. More than
1.8 million units were shipped from this site in the
five weeks leading up to Christmas.
Elsewhere, our new 65,000 sqft warehouse near
Dublin is also now fully operational, supplying both
product to stores and fulfilling online orders in the
Republic of Ireland.
Western Europe
Work has also now commenced on the construction
of the 620,000 sqft facility in Heerlen, South-East
Netherlands. This site is scheduled to be handed
over later this year for initial fitting out although the
current long lead times on the supply of warehouse
automation equipment mean that it will likely be
mid-2024 before the site is fully operational.
Approximately €2 million was incurred on this
project in the year with the total cost to bring the
site into full operational use estimated at €95 million.
In the meantime, the Group continues to operate
out of a number of smaller facilities in Southern
Belgium and Northern France. To date these
facilities have focused on the fulfilment of a
large proportion of the core ranges and fastest
moving lines required for stores in Mainland
Europe although we have now started to fulfil
some online orders locally also.
Neil Greenhalgh
Chief Financial Officer
22 June 2022
c o n c e s s i o n s
A number of Go Outdoors stores
also now benefit from specialist
sections for fishing and equestrian
leveraging the specialist knowledge
and reputation at Fishing Republic
and Naylors respectively.
o u t d o o r
The Group’s Outdoor mission is to inspire and
equip everyone for life outdoors. Whether you’re
an Outdoor specialist in rock climbing, cycling,
trail or horse-riding or a casual Outdoor enthusiast
who likes to walk their dog, go on family treks and
camping trips, JD Outdoor aims to supply your
every need to facilitate a life spent being active in
nature, all year round. Across the breadth of our
Outdoor banners, Go Outdoors, Blacks, Millets,
Naylors, Wheelbase, Leisure Lakes and Tiso, we
expect to service all our customers’ Outdoor needs.
Across the Outdoor portfolio, our approach
continues to be to keep leases flexible with
break clauses wherever possible so we can react
quickly if market conditions change. During the
year there has been little change to our existing
Blacks, Millets and Tiso store portfolios and,
following the restructure of Go Outdoors in 2020,
the Group has now completed or substantially
agreed new leases with terms that were more
appropriately structured on 59 stores.
Our programme of works to enhance the profile of
certain categories such as fishing and equestrian
has gained momentum with the opening of 10
additional Fishing Republic concessions in key
locations combined with the opening of the first
Naylors concession in Kidderminster. We currently
plan to open a further 25 Fishing Republic and
10 Naylors concessions in 2022/23.
Further, we have made two acquisitions in the
second half of the year of cycling retailers,
Wheelbase and Leisure Lakes. Wheelbase has three
stores in the North of England whereas Leisure Lakes
has a more national presence with 10 stores in urban
locations. Both of these cycling retailers are renowned
for their industry expertise and have strong relationships
with key brands which will enhance the cycling offer
within the Group. It is the Group’s intention to
incorporate Wheelbase concessions in appropriate
larger spaced Go Outdoors stores with the first two
concessions in Coventry and Stockton now open.
248
Outdoor stores
10
10 Fishing Republic
concessions
opened in 2021/22
35+
concessions
planned for GO
stores in 2022/23
50
JD Sports Fashion Plc Annual Report and Accounts 2022 E S G
FOCUSED ON
THE FUTURE
ESG Highlights
Grade A
The Group received an ‘A’ grade
as a ‘Supplier Engagement
Leader’ from the Carbon
Disclosure Project (CDP)
700+
Young people joined the Group
through the UK Government’s
Kickstart programme
43%female Board members
at 29 January 2022
I am very proud to present our
ESG disclosures in a reporting
period that has seen the Group
achieve many notable and
sector-leading milestones.”
NEIL GREENHALGH
CHAIR OF THE ESG
COMMITTEE
22 June 2022
51
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 ESG CONTINUED
INTRODUCTION FROM NEIL GREENHALGH,
CHIEF FINANCIAL OFFICER AND ESG
COMMITTEE CHAIR
From planning for climate-related risks (now
formally supported by Task Force on Climate-
Related Financial Disclosures (‘TCFD’)), to
protecting both our colleagues and those
within our supply chain, fulfilment of our
environmental, social and governance
obligations has never been more critical.
Territorial expansion and sales growth necessitate
greater organisational transparency with regards
to our environmental impact and strategy. The
reporting period also included COP26 in Glasgow
which saw attending political leaders, non-
governmental organisations (NGO’s), businesses
(including JD) and private citizens collectively
working to engineer action in support of the
climate crisis.
Accordingly, I am very proud to present our
ESG disclosures in a reporting period that
has seen the Group achieve many notable
and sector-leading milestones.
ESG INDEX
Section
Overview and governance
Environmental
TCFD
Climate Change
Sector Emission Data
Sustainability in Private Label Manufacturing
Social
Ethical Sourcing
Our People
Health & Safety
The JD Foundation
Global Empowerment
Governance
S172 Statement – Stakeholder Engagement
52
Environmental – Key Facts
– The Group retained its ‘A-‘Climate Change grade from the Carbon
Disclosure Project (CDP), surpassing our sector average by two grades.
– Our private label team surpassed previously documented targets by
reaching 98% of our cotton sourced via the ‘Better Cotton’ initiative.
– The Group became one of the founding signatories to the Waste and
Resource Action Plan (‘WRAP’) Textiles 2030 initiative with our private
labels aiming to cut carbon by 50% and water by 30%.
Social – Key Facts
– We are proud to be working with the UK Government as a national partner
on its Kickstart Scheme with over 700 people employed through the scheme
in the financial year.
– The Group successfully trialled the roll-out of the ‘Together We Can’ project
to raise funds through micro-donations at the till point. The project is being
implemented across all of our JD and Outdoor stores in the UK in 2022 and
we plan to extend overseas in 2023. See page 84 for more details about
‘Together We Can’ and the other global empowerment initiatives undertaken
by the Group.
Governance – Key Facts
– This year the Group increased the gender and ethnic diversity of the Board.
As a result, the Board now consists of more female Board members than in
any other year.
– On 25 May 2022, the Group announced that it had decided to accelerate the
separation of the roles of Chair and Chief Executive Officer. Peter Cowgill
stood down as Executive Chairman and Chief Executive Officer with
immediate effect. Helen Ashton was appointed as Interim Non-Executive
Chair and Kath Smith was appointed as Interim Chief Executive Officer.
For further details, please see the Statement from the Board on page 4.
Pages
53
55
60
64
67
71
76
80
82
84
86
JD Sports Fashion Plc Annual Report and Accounts 2022 OVERVIEW AND GOVERNANCE
Overview and Governance – ESG Committee
As a FTSE 100 company, we recognise and embrace
that our scale enables us to make positive, lasting changes.
Our ESG Committee (founded in 2020) governs our global,
Group-wide approach to sustainability, including the critical
topics; people strategy, climate change, sustainable
sourcing and governance.
Further information on our ESG committee and
credentials can be found on our corporate website at
www.jdplc.com/esg/governance/esg-committee
Responsibilities of the ESG Committee include:
– The United Nations Sustainable Development Goals
(SDG’s) remain part of our ESG framework and
operations. Case study evidence is available via our
corporate website www.jdplc.com/esg/our-esg-stories.
– Determining our strategy, corporate risk-assessment
and monitoring of ESG performance across the Group’s
respective fascias and territories, including submission
of our TCFD statement.
– Reviewing investment plans from an ESG perspective –
from proposed capital expenditure projects to assessment
of risks and opportunities for potential acquisitions.
– Engaging (via our Committee Chair) with the Board on
ESG-strategy impacting activities on a periodic basis.
– Clear communication of our strategy to investors,
verifying our credentials via accreditation and data,
so as to support investors with EU Sustainable Finance
Disclosure Regulations (SFDR).
– Ensuring that our colleagues and suppliers are
supported and trained across a broad cross-section
of personal and environmental welfare topics.
– Supporting our customers by improving the frequency
and accuracy of environmental and sustainability
claims made relating to products manufactured by
both branded suppliers and our private labels.
Colleague
welfare,
support
and
training
People
services
(HR)
Group
finance
Financial
planning
and analysis
Supply
chain
Quality brand
sourcing and
quality assurance
ESG
Committee
Legal
team
GROUP
BOARD
Corporate
governance
and
compliance
Investor
relations
Regulatory/
shareholder
engagement
Group procurement
and environment
Group wide retail
and support operations
53
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 E S G – E N V I R O N M E N T
ESG RISK IDENTIFICATION AND MANAGEMENT
e s g r i s k i d e n t i f i c a t i o n –
s o u r c e s :
f o r m a l
– International NGOs (e.g. United Nations)
– Global inter-governmental organisations
– National government notifications
– Financial Conduct Authority updates
– Independent benchmarks
(e.g. Carbon Disclosure Project)
– Global, issue-based initiatives
(e.g. RE100 – renewable energy targets
– Audit recommendations
i n f o r m a l
– Media coverage
– Customer feedback
– Industry forum feedback
(e.g. British Retail Consortium)
– Supplier engagement
– Independent market reports
Risk identified
Embed compliance
model (own
operations)
Review supply chain
compliance
Identify
potential future
developments
Assess supply
chain (external)
exposure
Feedback from ESG
Committee
Risk included in
the Annual Report
Engage suppliers
and independent
topic experts
Verification of
financial risk
Risk presented to
ESG Committee
– Short-term
– Medium-term
– Long-term
Impact and
mitigation
strategy agreed
Background ESG Context – Third-party
brand and Private Label Products
As a multichannel retailer of branded sports
fashion and casual wear, the majority (presently
in excess of 90%) of our sales are from globally
recognised third-party brands including Nike,
adidas, Puma, Under Armour and The North Face
(owned by VF Corporation). The balance of our
products sales is from our quality private label
brands, including Pink Soda and Supply & Demand.
The global reach and recognition of our major
third-party brands is integral to our overall
sustainable sourcing commitments and objectives.
The visibility of our largest third-party brands
necessitates them meeting, and exceeding,
consumer expectations for product quality
and sustainability alike.
Representatives from our ESG Committee
undertake regular engagement sessions with
our largest third-party brands to monitor their
continued global leadership with regards to
sustainable product innovation, commitments
to reduce the impact of climate change and
supply chain transparency.
90%+
of our sales are
from globally
recognised
third-party
brands including
Nike and adidas.
A summary of the performance of our largest third-party brands (across multiple environmental and social metrics)
is included below.
Brand
Nike
adidas
Puma
The North Face
(VF Corporation)
54
UN Fashion
Charter
ZDHC
equivalent
CDP Climate
CDP Water
Animal
Welfare Policy
Conflict
Minerals policy
N/A
N/A
JD Sports Fashion Plc Annual Report and Accounts 2022 TCFD
Disclosures and Standards – TCFD
Within our 2020/21 Annual Report, the Group provided a summary
incorporating the key principles and requirements of TCFD,
demonstrating our commitment to TCFD disclosure adoption.
In addition to using independent sector benchmark performance
assessments such as CDP, we provide validated performance
reporting against targets and objectives consistent with
previous Annual Report disclosures.
In accordance with the Listing Rule 9.8.6R and consistent
with TCFD Recommendations and Recommended Disclosures,
we have provided a full, framework-template response to
support the disclosure of Group climate-related risks and
opportunities within this Annual Report. Due to the volume of
information and disclosures and to provide further verification
of our statements, where we have not included the information
in this Annual Report, we have included clear references and
links to additional TCFD-related documentation available on
our corporate website.
Our TCFD statement is supported by our 2021 Carbon
Disclosure Project (CDP) Climate Change response.
The CDP system is recognised by TCFD as supporting
TCFD recommendations via 25 TCFD-aligned climate-
related questions on topics including governance, risks
and opportunities, strategy, targets and emissions.
The Group recognises the TCFD recommendation to quantify
the financial impact of strategic climate-related risks. Considerable
time has been invested in our attempts to fulfil this requirement.
However, our research into quantifying climate risks identified
that (owing to the current lack of standard calculation method)
there are large variances in the interpretations and estimates
from the leading brands that have provided estimates. We
anticipate that more accurate, verifiable climate-related
financial planning risks can be provided in one to two years.
The Group continues to discuss climate-related risks within
our regular financial planning activities, primarily via the
Group ESG committee, chaired by our Chief Financial Officer.
Finally, our approach to ESG risks will benefit from the roadmap
of risk management improvements detailed on page 110.
e TCFD recommended disclosure
c
n
a
n
r
a) Describe the board’s oversight of climate-related risks and opportunities.
Pre-TCFD developments
The Board’s oversight of climate-related issues performance is provided by scheduled, two-way strategic engagement with our Chief
Financial Officer (as Chair of the ESG Committee) on ESG-related risk identification, strategy and performance vs policy and metrics,
including targets published within our Annual Report.
e
v
o
g
The ESG Committee Chair is appraised of climate-related issues both informally and formally on a regular basis. The ESG Committee
Chair will then provide updates as required during regular Board meetings. The Board is informed of climate-related issues, updates
and metrics via formal Board reports which are circulated on a monthly basis. Ad hoc sessions are also held where the ESG
Committee will present updates regarding specific issues, achievements and metrics to the Non-Executive Directors.
Engagement with the Board (the majority of whom hold multiple Non-Executive Director positions with other organisations) grants
our Chief Financial Officer and ESG Committee access to feedback and comparative assessment on climate-related risks and
opportunities.
In-year progress
The ESG Committee was expanded to include representation
from our Outdoor businesses.
Approval of final stage (Scope 3) submission of our Science
Based Targets.
2022/23 Plans
The Board, in conjunction with the Audit & Risk Committee, has
established an Enterprise Risk Management (‘ERM’) working
group, with ESG identified as one of the core topics for provision
of additional communication with the Board on risk management
identification, mitigation and policy.
Approval provided on Waste and Resources Action Plan
(‘WRAP’) Textiles 2030 targets including emission reductions,
sustainable sourcing and circular economy targets and metrics.
Our Group Chief Financial Officer and ESG Chair remains our
signatory and the conduit from the Board to our colleagues and
customers for carbon, sourcing, and people-based disclosures.
55
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 ESG CONTINUED
TCFD CONTINUED
e TCFD recommended disclosure
c
n
a
n
r
b) Describe management’s role in assessing and managing climate-related risks and opportunities.
Pre-TCFD developments
Profiles of our ESG Committee members can be found at www.jdplc.com/esg/governance/esg-committee. All positions have
a global remit for their respective responsibilities, ensuring provision of consistent ESG sourcing, reporting and training.
Our Chief Financial Officer and ESG Chair initiated the introduction of a monthly ESG summary (key climate and environment risks,
issues and opportunities), and this is reviewed by the Board and used for key investor updates. This allows incorporation of ESG
opportunities and climate-related risks within our scheduled financial planning activities.
In-year progress
Completion of SBTi Scope 3 emission reduction targets,
with data validation from third-party sources.
ESG Committee members joined the Textiles 2030 steering
committee and Department for Environment, Food and Rural
Affairs (‘DEFRA’) consultations for Extended Producer Responsibility,
expanding climate-risk and opportunity assessments.
Management increased engagement with key suppliers, with
particular focus on carbon emission reduction targets and
sustainable sourcing.
2022/23 Plans
2022/23 will see in-year objectives including agreement on
Circular Economy strategy and identification of global roles
and responsibilities with regards to climate change education
and carbon reduction.
e
v
o
g
y TCFD recommended disclosure
g
e
medium, and long-term.
a) Describe the climate-related risks and opportunities the organisation has identified over the short,
t
a
r
t
s
Pre-TCFD developments
The Group has documented short, medium and long-term climate-related risks within our annual Carbon Disclosure Project (CDP)
submission as short-term (0-3 years), medium-term (3-5 years) and long-term (5-10 years). Please see Additional Information –
TCFD on our corporate website at www.jdplc.com/esg/governance/our-policies. The Group notes that owing to the requirement
for immediate actions on climate, the time horizons are shorter than risk considerations covered elsewhere within this report.
CDP has the largest TCFD-aligned environmental database in the world. Accordingly, our climate-related risks have been verified in
accordance with TCFD principles, with the Group achieving an ‘A-’ grade in December 2021. For more information, see the ‘Climate
Change’ section of our corporate website. Our CDP submission and Science Based Targets (SBTi) are based upon the 1.5°c scenario
documented within the Paris Agreement. Additional climate risks identified included extreme weather-related events and biodiversity
changes.
In-year progress
Our climate-related risks were scored within the 2021 CDP report,
with the Group achieving an A- grade for Climate Change, and an
‘A’ grade for Climate Change Supply Chain Engagement.
2022/23 Plans
Despite the February 2022 announcement delaying the EPR
regulations, the Group continues preparations in accordance
with the original timescales.
Our work with Textiles 2030 has ensured that the Group is well
placed to mitigate risks (and maximise opportunities) relating
to Extended Producer Responsibility (‘EPR’) regulations.
We engaged our private label supply chain to identify additional
climate change mitigation measures at sourcing territory level,
including suppliers ability to access renewable energy within
the medium-term.
We have targeted the retention of our 2022 ‘A’ grade for climate
change supplier engagement. We aim to increase documented
measures (improved climate audit and data disclosure) with both
private label and key indirect suppliers.
56
JD Sports Fashion Plc Annual Report and Accounts 2022 y TCFD recommended disclosure
g
e
b) Describe the impact of climate-related risks and opportunities on the organisation’s businesses,
strategy, and financial planning risks and opportunities.
t
a
r
t
s
Pre-TCFD developments
The Group provided an assessment of the risks mentioned within our A- rated CDP Climate Change disclosure. This included
low-carbon economy transition, identifying potential supply chain disruptions, from raw material supplies and costs to labour
availability, production and distribution of goods.
Our Group supplies products from world-leading brands. Prior to TCFD becoming established reporting practice, the Group
observed that there was no common methodology to quantify the financial risk across our sector. Our CDP submission acknowledges
risks associated with leading brands providing large variances on interpretations and impacts of differing climate risk scenarios.
In-year progress
Our knowledge of climate-related risks enabled our most
detailed ESG-assessments of potential acquisitions to date.
The Group Mergers and Acquisition (‘M&A’) team has established
regular engagement with the ESG Committee to improve
climate-related financial risk assessment of potential investments.
The preparatory work for our (approved) SBTs enabled the
Group to ‘normalise’ sector data on climate-related risks,
improving our ability to identify risks and mitigating actions.
TCFD recommended disclosure
2022/23 Plans
Within 2022/23, high-risk ESG categories (e.g. carbon emissions
and labour conditions) will form part of the due diligence on
large-scale M&A activities. The Group will provide a year-end
summary of ESG due-diligence undertaken on acquisitions (in
accordance with Sustainable Finance Disclosure Regulations
(‘SFDR’) requirements).
c) Describe the resilience of the organisation’s strategy, taking into consideration different
climate-related scenarios, including a 2°C or lower scenario.
Pre-TCFD developments
The Group commenced resilience planning based upon the 1.5°C scenario, on the basis that we believed the 2.0°C or lower scenario
would be revised. In 2020 the Group submitted (and received verification of) Scope 1 and 2 emission targets based on the 1.5°C
scenario. Further information can be found on our corporate website at www.jdplc.com/esg/governance/our-policies.
In-year progress
Organisational resilience verified via achievement of an ‘A-’
CDP Climate Change rating for the second successive year and an
‘A’ grade for Supplier Engagement on Climate Change.
2022/23 Plans
Continue advocacy for the CDP project, with the target of JD
scoring at least one grade higher than our retail peer group
within the December 2022 climate change assessment.
The Group CDP responses (Climate Change, Water Stewardship
and Forestry) incorporate significant detail on climate-related
scenario planning, and our scores are ahead of sector averages.
Retain our ‘A’ grade for Supplier Engagement by providing case
study evidence of private label and indirect supplier climate
change mitigation and renewable energy progression.
t TCFD recommended disclosure
n
e
m
e
g
a
n
a
m
a) Describe the organisation’s processes for identifying and assessing climate-related risks.
Pre-TCFD developments
Within our 2021 Annual Report, we identified ESG-related risks and impacts, assessing each risk and categorising each as ‘short’,
‘medium’ and ‘long-term’. We have defined short-term as 0-3 years, medium-term as 3-5 years and long-term as 5-10 years.
We expanded our assessment scope in 2021 to include ESG risk identification and management from both formal and informal
sources. Examples of formal sources include the United Nations Sustainable Development Goals, international NGOs and Financial
Conduct Authority updates. Informal sources include media coverage, customer feedback and independent market reports.
The diagram on page 54 explains our risk identification and management process and the Topical Risks section on page 27 provides
further detail. Further information can be found on our corporate website at www.jdplc.com/esg/governance/our-policies.
k
s
i
r
In-year progress
Climate-related risks updated after the Group’s COP26
attendance and subsequent impact assessment, including
climate-related engagement of private label supply chain.
Our CDP submissions for Climate Change, Water Stewardship
and Forestry contain extensive detail on climate-related risk
identification and assessment. Our progress is validated and
evidenced via our ‘A-’ grade for CDP Climate Change and ‘B’
for Water Stewardship.
2022/23 Plans
The new ERM Working Group will document improvements to our
ESG risk management framework design. This includes climate-
related risks relating to our operations, private label supply chain
and the activities of our largest suppliers.
57
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022
ESG CONTINUED
TCFD CONTINUED
t TCFD recommended disclosure
n
e
m
e
g
a
n
a
m
b) Describe the organisation’s processes for managing climate-related risks.
Pre-TCFD developments
Since 2019, climate-related risks have been reviewed by our ESG Committee and incorporated into business planning processes
where appropriate. By using CDP for assessment of climate-related risks, investors and disclosers are provided with access to
independent data on our comparative performance. CDP has the largest TCFD-aligned environmental database in the world.
We are proud of our grade progression, as documented on our corporate website.
The Topical Risks section on page 27 includes a summary of our process for managing climate-related risks with further information
provided in our Additional Information – TCFD document on our corporate website at www.jdplc.com/esg/governance/our-policies.
In-year progress
ESG reporting included in our monthly Board reports has been
expanded to include sustainable sourcing (private label), quality
assurance, audit and ‘Circular Economy’ updates.
Climate-related (financial) risks re-assessed, with additional capital
expenditure investment to support emission reduction across our
retail estate. Our independent climate disclosures (CDP Climate
Change and Water) continue to achieve leading scores.
TCFD recommended disclosure
k
s
i
r
2022/23 Plans
Consistent use of independent, TCFD-aligned climate risk
disclosures. Our 2022/23 target is to achieve independent
verification that our performance remains ahead of our sector peers.
Improvements identified within the ERM framework will be
incorporated into our approach to managing climate-related risks.
c) Describe how processes for identifying, assessing, and managing climate-related risks are
integrated into the organisation’s overall risk management.
Pre-TCFD developments
Any risk measured as being greater than a 2% loss on our direct operating profit (against plan) is defined as a substantive risk.
This includes climate-related risks. Substantive impact risks have been addressed within our scheduled budgeting and reforecasting
processes. Any subsequent risks identified (and their respective impact) are assessed from the perspective context of legal
compliance, financial impact and reputational risk.
The diagram on page 54 explains our risk identification and management process and the Topical Risks section on page 27 provides
further detail. Further information can be found on our corporate website at www.jdplc.com/esg/governance/our-policies.
In-year progress
The ESG Committee increased engagement with the Group’s
Mergers and Acquisition team.
Our risk measurement approach incorporates assessment
of our strategy by CDP and enhanced transparency via our
corporate website.
Our private label team surveyed our key suppliers to assess
progress in adopting renewable energy and climate change
adaptation preparation.
2022/23 Plans
Extension of our (externally recognised) highly-rated ESG
risk management strategy to acquired businesses. This shall
enable the Group to report our updated, collective international
approach to climate risk within our December 2022 CDP
disclosure. Our Science Based Target and Road to Zero
progress shall also be updated and disclosed.
s TCFD recommended disclosure
t
a) Disclose the metrics used by the organisation to assess climate-related risks and opportunities
e
g
r
a
t
in line with its strategy and risk management process.
Pre-TCFD developments
Since 2017, the Group benchmarked ESG performance (including risk identification) via globally recognised, independent
ESG assessments aligned to TCFD. Assessments such as the Carbon Disclosure Project (CDP) encompass climate-related
risk assessments and opportunities, including financial impacts. Our CDP Climate Change score progressed from ‘D’ in 2017
to ‘A-’ by 2020, outperforming our sector benchmark by three grades. Our Water Security score reached ‘B’ grade by 2020,
again outperforming the discretionary retail sector.
Further information can be found in our Additional Information – TCFD document at www.jdplc.com/esg/governance/our-policies.
In-year progress
The Group’s proactive approach to climate-related risk was
recognised by retention of our CDP ‘A-’ rating for Climate
Change – two grades above our sector average, private label
brand progress enabled retention of our ‘B’ score for Water
Stewardship, outperforming the majority of our global brands.
Science Based Target validation was received for Scope 1
and 2 emissions. Scope 3 targets were submitted to SBTi
within the period.
2022/23 Plans
Continuation of disclosures via CDP, with a 2022/23 target
to achieve verification that Group performance (including
evidence, via metrics) remains ahead of our sector peers.
Achieve verification of Scope 3 emission reduction targets
(from SBTi committee) prior to evidencing our ‘climate change
outreach’ progress with key suppliers.
d
n
a
s
c
i
r
t
e
m
58
JD Sports Fashion Plc Annual Report and Accounts 2022
d
n
a
s
c
i
r
t
e
m
s TCFD recommended disclosure
t
b) Disclose Scope 1, Scope 2, and if appropriate, Scope 3 Greenhouse Gas (‘GHG’) emissions, and the
e
g
r
a
t
related risks.
Pre-TCFD developments
See data on page 63. The Group has disclosed GHG emissions data since 2014, Scope 3 disclosures have been provided since 2020,
and remains Streamlined Energy and Carbon Reporting (SECR) compliant as per regulatory requirements.
In-year progress
Continued disclosure of GHG emissions through our CDP
responses. Third-party verification of our Scope 1 and 2
emissions, incorporating calculation of data and compliant
reporting to regulatory standards.
2022/23 Plans
Expand Scope 1 and 2 reporting to acquisitions where we have
direct operational control over energy sourcing.
Develop Scope 3 reporting through our strategic suppliers and
utilise industry tools for our private label Scope 3 emissions.
TCFD recommended disclosure
c) Describe the targets used by the organisation to manage climate-related risks and opportunities
and performance against targets.
Pre-TCFD developments
Climate Change: In 2019 the Group identified the necessity of our climate-related targets receiving independent, science-based
verification. Our Science Based Target initiatives (SBTi) for Scope 1 and Scope 2 emissions received verification (by the SBTi board)
in 2021.
The Group is a member of RE100 (aligned to CDP and TCFD) with the world’s largest organisations committed to using 100%
renewable energy. Our renewable energy target for Western Europe is 100% by 2022, with a global target of 2025.
Sustainable Sourcing: Our private label brands committed to join the ‘Better Cotton’ (formerly BCI, or ‘Better Cotton Initiative’)
during 2019. As part of our commitment to increase sustainable manufacturing, we set targets for Better Cotton usage for private
label products. Targets were also established for the conversion of manufacturing components to more sustainable materials, with
our progress documented via our Product Component Table on page 69.
Recycling and the Circular Economy: The Group targeted, and achieved third-party verified ‘Zero Waste to Landfill’ accreditation in
2020 as part of our landfill diversion metrics.
In-year progress
Use of renewable energy increased to 91% for Western Europe
during the period. The Group remains on course to achieve
our ‘100% by end of 2022’ metric.
Private label use of Better Cotton reached a new milestone
of 98% use for garments sourced within our most recent
buying periods.
In 2021 the Group retained ‘Zero waste to landfill’ accreditation
for our largest directly operated site (Kingsway Distribution
Centre, Rochdale).
The Group successfully launched #IAMSUSTAINABLE training
modules. Accessible to over 20,000 colleagues, training topics
range from Climate Change to Circular Design. Completing the
#IAMSUSTAINABLE courses improves environmental engagement
and awareness, whilst providing colleagues with additional
learning credentials as part of their professional development.
2022/23 Plans
Achieve our 100% renewable target for operationally
feasible controlled sites by the end of 2022 in Western
Europe. Provide updates, progress reports and any risks
relating to our global 100% renewable energy target (2025).
Expand the ‘Better Cotton’ approach and learnings to
acquired businesses. This will support the advancement of
‘private label’ climate change awareness and management
across our expanded global operations.
Retain ‘Zero waste to landfill’ accreditation at our largest
operated facility, and achieve equivalent status for our
largest central office.
Expansion of our ‘#IAMSUSTAINABLE’ training programme
to a minimum of 10 new territories.
59
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022
ESG CONTINUED
ENVIRONMENT CONTINUED
91%
of energy used in
our Western
European sites is
renewable energy
Climate Change – Headline Achievements
– Achievement of ‘Leadership’ grade of A- within
the 2021 CDP ‘Climate Change’ assessment.
Climate Change – Reporting and Compliance
The Group’s management of carbon emissions
is delineated into two categories:
– Awarded ‘A’ rating for Climate Change ‘Supplier
Engagement’ by CDP in January 2022.
– As per our advocacy of the RE100 (the world’s
most influential companies, committed to 100%
renewable power), we reached 91% of Western
European site renewable energy use.
– Our Scope 1 and Scope 2 Science Based
Targets were approved by the Science
Based Targets Initiative (SBTi) board.
– Our Scope 3 targets were submitted during
the period. All JD targets are set against the
more ambitious 1.5-degree Celsius scenario.
– Amidst increased scoring thresholds, our
CDP ‘Water Stewardship’ submission retained
a ‘B’ grade score, demonstrating continued
progress by our private label brands.
– The Group was awarded a second-successive
‘Zero to landfill’ accreditation for our largest
directly operated site in Rochdale, UK.
– The Group used SBTi criteria and third-party
verified data to identify our forecast Net Zero
year as 2043 using 2019/20 as the base year.
For carbon-emission reductions targets,
including Net-Zero, the baseline year used is
2019-20. This matches our Science Based Target
initiative (SBTi) and Carbon Disclosure Project
(CDP) submissions.
1) Scope 1 and Scope 2 – Group ‘directly controlled’
operations within our infrastructure (e.g. our
warehouse and in-store energy usage). GHG
emissions are as defined by the GHG Protocol.
Scope 1 emissions are direct emissions from
owned or controlled sources. Scope 2 emissions
are indirect emissions from the generation of
purchased energy.
2) Scope 3 – operations and activities of our supply
chain, including manufacture of products and
our non-merchandise suppliers:
– Purchased goods and services (92.3%) are our
largest Scope 3 contributor.
– The Group continues to monitor and encourage
emission reduction progress from our strategic
suppliers. The highest level of emission
reductions need to be achieved at the raw
material and manufacturing stages for
branded products.
– Emissions data is constantly adjusting due to
both changes in Group activity and changes
to calculation methodologies.
Within these categories, the Group remains
compliant with:
– The updated UK SECR system.
– The Energy Savings Opportunity Scheme
obligations within the UK and Energy.
Efficiency Directive obligations for Europe.
Purchased
goods and services
92.3%
ENVIRONMENTAL
c l i m a t e
c h a n g e
r e p o r t i n g
– s c o p e 3
b r e a k d o w n
60
Employee commuting
0.5%
Waste generated in operations
0.2%
Fuel- and energy-
related activities
0.3%
Capital goods
2.1%
End-of-life treatment
of sold products
1.4%
Downstream transportation
and distribution
0.6%
Business travel
0.2%
Upstream transportation
and distribution
2.4%
JD Sports Fashion Plc Annual Report and Accounts 2022 Climate Change – Science Based Target initiative (SBTi)
During the period, our team worked with independent
consultants to identify the sources and values of our
Scope 1, Scope 2, and Scope 3 emissions prior to
submission of our targets to the SBTi board.
Group membership of WRAP Textiles 2030 enabled
the Group to commence further detailed evaluation of
our private label Scope 3 emissions, utilising tools such
as the ‘WRAP Carbon calculator’.
Please note that the targets below may be adjusted
due to any feedback received as part of the official
SBTi board verification process.
Category
Target
Status
Scope 1 and 2
emissions
The Group commits to reduce absolute Scope 1 & 2 GHG emissions by
67.2% by 2035-36 from a 2019-20 base year.
Submitted
and approved
Scope 3
The Group commits to reduce absolute Scope 3 GHG emissions by 67.2%
from textiles and footwear within the purchased goods and services
category by 2035-36 from a 2019-20 base year.
Submitted
Climate Change – Reducing carbon emissions – progress and objectives
Environmental
objective
Climate Change
– carbon
and water
reductions
Temperature
2021/22 progress
2022/23 objective
– LED investments made in 31 stores and gyms
achieving 40% energy reduction (486t CO2).
– Completion of partial-LED retro-fit at Kingsway
Distribution Centre saving 45t CO2.
– Completion of our first solar installation at
Stockton GO Outdoors, saving 14t CO2.
– Over 400 Building Management Systems
(BMS) installed, enabling 2021 Winter/Spring
set-point temperature adjustments to deliver
estimated carbon savings of 198t CO2.
– JD Gyms reduced shower and tap water
consumption by over 60% for new sites.
Improved reporting data and faster corrective
action on high water-consuming sites has saved
7.5 million litres of water.
– Our fleet policy has been updated to encourage
the use of electric vehicles (EV) to align with
future legislation.
– Additional LED investment at our Kingsway
DC, and across additional UK retail stores.
– Additional investment in solar technology
(where feasible) for UK and European sites.
– BMS to be installed within new JD stores
as standard. Savings figures to be disclosed
at year-end.
– Proof of concept to be undertaken
on new carbon reduction technologies
(e.g. voltage optimisation).
– Electric vehicles: Complete installation
of vehicle charging point infrastructure
for our major occupancy sites.
– Conduct a trial of Electrical Vehicle use for
logistics transport within the London area,
and disclose results via ESG Committee.
Carbon
reduction
– procurement
– Renewed UK Green Energy contract, with 100%
– Achieve 100% renewable usage for Western
traceable renewable electricity.
Europe by the end of 2022.
– 100% renewable energy use within the
Republic of Ireland.
– 91% of renewable energy use in our Western
European stores (where we have direct operational
control over energy sourcing). We are on track for
100% by end of 2022 as per previously reported
target metrics.
– Continued progression towards 100% global
renewable energy use by 2025, with in-year
focus on those US stores where we have direct
operational control over energy sourcing.
61
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022
ESG CONTINUED
ENVIRONMENT CONTINUED
Environmental
objective
2021/22 progress
Sustainability
– education and
engagement
– ESG awareness and education increased via our
‘#IAMSUSTAINABLE’ online training courses,
available to over 20,000 colleagues.
– Environmental engagement and topical content
included in our colleague-wide, monthly ‘People
First’ magazine.
– ESG-related communication improvements via
both our corporate website, and product content
information available to customers.
2022/23 objective
– #IAMSUSTAINABLE’ training programme
to be accessible in 10 additional territories.
– Colleague updates on topics such as COP27.
– Provision of colleague support and advice to
embed sustainable behaviours at work and
home, with particular focus on mitigating the
impact of increased domestic energy costs.
– Evidence increased customer communication
on product-related circular economy and
sustainability topics. These will include ‘care
and repair’ and making more informed ‘end
of product life’ decisions.
Verification
and reporting
– Climate
Change
(carbon)
and Water
– The Group received Scope 1 and 2 emissions
– Achieve verification of our Scope 3
target approval by the SBTi committee. Scope 3
targets submitted during the period.
– The Group’s private label and licenced apparel
sourced 2,782 tonnes of cotton through the
‘Better Cotton’ initiative, saving over 1.3 billion
litres of water since joining in 2020.
emission targets from the SBTi committee.
– Continue improving Scope 3 emissions
reporting and reductions via:
i) Engagement with strategic suppliers.
ii) Utilising industry initiative tools and
standards to address our private label
Scope 3 emissions.
iii) In support of our work with WRAP Textiles
2030, evidence progress on our targets to cut
carbon by 50% and water by 30% for private
label brands.
Benchmarking
and
engagement
– The Group achieved an ‘A-‘ grade for the second
year running for Climate Change and a ‘B’ for
Water Stewardship. For the second successive
year the Group was certified as a ‘CDP Supplier
Engagement Leader’ with an ‘A’ rating.
– We are active contributors and supporters of
the UN ‘Race to Zero’ and attended COP26.
– We demonstrated the chronology of our
progression to climate change leadership
status as summarised on our corporate website.
– Continue outperforming our sector on
CDP scores (amidst vastly improved
submission standards).
– Achieving Net Zero before 2050.
Our present forecast year for Net Zero is
2043. This is based on detailed, externally
validated analysis of our emissions, including
our largest category (the manufacture of
the branded products that we sell).
Resource
management-
Circular
Economy
– For the second successive year we retained ‘Zero
– Retain ‘Zero waste to landfill’ accreditation
waste to landfill’ waste accreditation at our largest
operated facility.
– 5,638 tonnes of card recycled and over 40 tonnes
at our largest operated facility. Aim to
achieve equivalent status for our largest
UK/European office.
of plastic.
– Recycled 74 tonnes of broken totes, resulting
in the manufacture of 10,000 replacement
products from recyclate.
– The Group became one of the founding signatories
to the WRAP Textiles 2030. Our first module was
‘Circular Economy in Business’ giving focus to our
future business strategy.
– Review market solutions to implement
a ‘Recycling Recovery Unit’ facility to
expand take-back and recycling capability.
– Publish our Group-specific outputs from
WRAP 2030 workstream groups, including
retail ‘take-back trials’.
– Enhance customer environmental education
by providing additional guidance on recycling
and reuse.
62
JD Sports Fashion Plc Annual Report and Accounts 2022
Environmental – Greenhouse Gas (GHG) Emission Data
The Group uses and reports on Key Performance Indicators
for energy usage. During the last year:
– The Group has engaged the services of a leading third
party audit and certification body to audit and verify our
Greenhouse Gas (GHG) submissions (in accordance with
ISO 14064-3 standards).
– Accordingly, the Group can report the figures below,
calculated based on GHG Protocol Corporate Standard
using emissions factors from UK government conversion
factor guidance.
– The emissions reported correspond with our financial
year and reflect emissions from the leased and controlled
assets for which the Group is responsible.
Emissions Source:
Scope 1 (Purchased fuels)
Scope 2 (Electricity) Location based
Scope 2 (Electricity) Market based
Scope 3 (All emissions)
2021/22 Tonnes
CO2e Equivalent
7,461
70,403
36,547
4,458,224
2020/21 Tonnes
CO2e Equivalent
6,575
48,973
30,072
4,145,393
Additional information: Our UK volumes of Scope 1 emissions are 1,425 tonnes CO2e. Scope 2 Location-based emissions
19,055 tonnes CO2e and Scope 2 Market-based emissions 714 tonnes CO2e.
– Reporting boundaries for 2021/2022 (aggregated facilities
under operational control) include UK, Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany,
Ireland, Italy, the Netherlands, Malaysia, Portugal, Singapore,
South Korea, Spain, Sweden, Thailand & the US. We have
also included the acquisition of MIG which took place during
the year and includes the territories of Bulgaria, Czech
Republic, Estonia, Germany, Hungary, Latvia, Lithuania,
Poland, Romania and Slovakia.
– In line with the GHG protocol on dual reporting, we
have disclosed both market and location-based emissions
for purchased electricity in 2020/21 and 2021/22.
– Scope 3 emissions data is calculated via a screening
figure). This Scope 3 emissions category has not been
included in our Scope 3 boundary for our SBTi submission.
– Fugitive emissions are not included in the above as they are
a de-minimis category.
– The above figures for 2020/21 have been updated to reflect
our 2021 CDP submission verified by our third party auditor.
– Whilst not a mandatory disclosure, the Group remains
committed to presenting data appertaining to energy
usage and carbon footprint. After improving our reporting
mechanisms, the Group is now able to provide its full actual
UK and international energy usage (kWh measurement) and
carbon footprint.
– The easing of COVID-19 lockdown restrictions and
exercise using the Quantis financial input-output model and
excludes emissions from ‘use of sold product’ as this is an
optional category for GHG accounting (compared to the
data reported in 2021 when emissions for ‘use of sold
products’ has been included in the final Scope 3 reported
further acquisitions has caused an increase in our energy
consumption data and emissions versus the previous
financial year. Due to the impact of the restrictions, year-
on-year comparisons do not accurately reflect the Group’s
efforts to reduce energy use on a like-for-like basis.
Energy Usage – Electricity (kWh)
Energy Usage – Natural Gas (kWh)
Total Energy Use (kWh)
Carbon Emissions Location Based (Tonnes CO2e)
Carbon Emissions Market Based (Tonnes CO2e)
Intensity metric: Market based emissions (kgCO2e/m2)
2022
2022
(Int)
2022
(UK & ROI)
(Total)
97,988,977 144,440,342 242,429,319
22,276,701
41,475,393
63,752,094
185,915,735
120,265,678
306,181,413
55,602
22,262
77,864
39,568
4,440
44,008
49.8
5.6
27.6
Within the UK & Republic of Ireland, the equivalent for 2020/21 energy usage: Electricity (kWh) 71,254,598, Natural Gas (kWh)
14,184,165. Total energy use (kWh) 85,438,763.
– As required under UK SECR legislation, we now apply an intensity
factor to GHG emissions expressed in kilograms CO2e per metre
squared. To show our progress in decarbonising our operations
we are now using Market based emissions kgCO2e per sqm as our
intensity metric. The Location based approach does not allow us to
account for the emissions reductions due to renewable electricity
element. Our Market based comparative for 2020/21 emissions
kgCO2e per sqm was 9.4 (UK/ROI), 49.5 (Int) and 28.1 (Total).
– The above data also includes recent acquisitions of MIG in Europe
and Shoe Palace and DTLR in the US.
– The renewables split is calculated based on the total usage of
renewable energy supply as a % of the total electricity supply for
the region for our directly controlled operations. At this moment
we have excluded MIG from this European calculation as we don’t
have full operational control over their energy sourcing.
Europe
Worldwide
Renewable
sourced energy
Non renewable
91%
9%
Renewable
sourced energy
Non renewable
61%
39%
63
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 ESG CONTINUED
ENVIRONMENT CONTINUED
s e c t o r
e m i s s i o n d a t a
Industry data highlighted the need to accelerate
decarbonisation in line with the 2016 Paris Climate
Agreement and 2018 Intergovernmental Panel on
Climate Change (‘IPCC’) report. McKinsey & Company
and the Global Fashion Agenda described further targets
within the ‘Fashion on Climate’ report. The report identified
that the wider fashion industry needed to reduce annual
emissions by 1.1 billion tonnes (50%) within the next decade
to remain on course to achieve the 1.5°C global temperature
increase limit required to restrict global warming. The
largest carbon emission impact (identified in the chart
below) is the production, processing and garment
manufacturing stages of the supply chain cycle.
In 2020 we reviewed our own supply chain to identify how we
can encourage sustainable behaviour across our supply tiers
to further reduce carbon emissions, encourage increased
stewardship of water, whilst ensuring safe chemical practices.
In 2021 (post COP26) we developed a supplier survey relating
to carbon, water and waste. This survey incorporated responses
from the JD and Outdoor Group private label suppliers. This
will enable us to develop a sustainable road map across our
supply chain giving focus to emission-reduction opportunities.
Our supplier survey responses demonstrated partial
alignment to COP26 global targets, which highlights
territory-specific infrastructure constraints. By continuing
close engagement with established sourcing partners, we
aim to achieve emission reduction progress, whether via
energy source or process change.
Annual Greenhouse Gas Emissions of Apparel & Footwear
s
n
o
i
s
s
i
m
e
y
r
t
s
u
d
n
I
l
a
t
o
t
f
o
%
40%
30%
20%
10%
0%
Material
Production
Yarn
Preparation
Fabric
Preparation
Wet
Processes
Cut, Make,
Trim
Transport
Retail
Product
Use
End of
Life
Source: McKinsey & Co
TIER 4
TIER 3
Raw material
extraction
Raw material
processing
Cultivation and extraction
of raw materials from the
earth, plants or animals.
Processing of raw materials
into yarn and other
intermediate products.
TIER 2
Material
production
Production of
materials (e.g. fabric,
trims) that go directly
into finished product.
TIER 1
Finished
production
assembly
Assembly and
manufacturing
of final products.
TIER 0
Office, retail,
distribution
centres
Corporate real
estate not involved in
production process.
ILLUSTRATIVE ACTIVITIES FOR APPAREL AND FOOTWEAR
– Bottle recycling (for
– Yarn production
– Knitting and
– Cutting, sewing,
– Business travel and
recycled polyester)
– Conversion of oil/gas
(extrusion,
spinning, etc.)
weaving textiles
– Fabric bleaching,
into polymers
– Production of dyes,
dyeing, finishing,
– Cultivation of cotton,
inks, adhesives,
washing
stitching, embroidery
employee commuting
– Screen printing
– Stock fitting and
lasting for footwear
wood and natural
rubber products
resin, etc.)
– Production of footwear
– Product packaging
– Conversion of wood
mid and outer sole
– Cattle grazing
products into pulp
components (extrusion,
– Leather preparation
moulding, vulcanization)
(including tanning)
Source: Sciencebasedtargets.org
64
JD Sports Fashion Plc Annual Report and Accounts 2022
Environmental – Water Stewardship and Biodiversity
Background
The growth and extraction of raw materials (including
cotton) utilises high volumes of water. Accordingly, by
the Group adopting improved sustainable practices and
design principles, the environmental impact of our product
manufacture decreases. The Group can demonstrate
verifiable evidence of reduced water usage and removal
of pesticides from the supply chain. Both measures have
a direct, positive impact on farmers and local communities.
By using recycled polyester (versus virgin polyester),
additional sustainability benefits are delivered, including
reduced carbon emissions associated with the products.
Water Stewardship – Branded Suppliers
As outlined on page 54, the global scale and visibility of our
major third-party brands ensures high standards on all key
environmental categories. This includes water stewardship
and biodiversity, as evidenced by the CDP scores (on Water
Security) for our largest brands.
Water Stewardship – Private Label Manufacture
Within our private label supply chain, the highest volume
usage of water occurs during the manufacture of products.
The Group is proactively reducing water usage:
– Since joining ‘Better Cotton’ in 2020 (formerly known
as the ‘Better Cotton Initiative’) our sourcing of private
label products using ‘Better Cotton’ has delivered water
savings of over 1.3 billion litres.
– Our membership of WRAP Textiles 2030, and associated
30% water usage reduction targets.
– Our use of the WWF Water Risk Filter, allowing more
transparent and data-driven identification of water-
related risks.
Water Stewardship – Group Stores and Sites
The largest source of water usage within our site estate
is via our Gyms sites. Within the period, the use of new
tap and shower specifications delivered a water reduction
of over 60%.
Across all stores and sites, our proactive use of data and
trend analysis delivered water savings of over 7.5 million
litres versus the prior reporting period.
Biodiversity
For private label footwear and accessories brands we
provide and monitor a Supplier Manual incorporating
policies ranging from reducing environmental impact
to prevention of modern slavery.
The Supplier Manual includes mandatory standards
for compliance with REACH (Registration, Evaluation
& Authorisation of Chemicals). For manufactured goods
using leather, the Group requires our suppliers to have
signed, and adhere to the Leather Working Group
(‘LWG’) standards.
Key Metrics and Targets
In the most recent reporting period, the Group has
demonstrated progress via:
– Retaining our CDP ‘Water Stewardship’ ‘B’ grade,
delivering A-grade performance in four categories.
– Reduced usage of virgin polyester.
– Increased usage of ‘Better Cotton’ to over 98% in private
label product, supporting: 1) farmer training on water
reduction and economic irrigation and 2) receipt and
payment of fair wages to farm workers.
– Continuing our ‘Sustainability flag’ assessment process
for the Group’s private label manufactured garments
ensuring private label products (and suppliers) are
reviewed against environmental compliance criteria.
Further details can be found on our corporate website
www.jdplc.com.
BCI Better Cotton Initiative
We are proud members of Better Cotton. Better
Cotton trains farmers to use water efficiently, care
for soil health and natural habitats and reduce the
use of the most harmful pesticides.
We are committed to increasing the amount of Better
Cotton in our private label manufacturing. Over 98%
of our cotton in private label production is now sourced
through Better Cotton. Since joining Better Cotton
in 2020 and sourcing better cotton, our private
labels have contributed to:
1.1 million
garments
98.5%
€449,000
Additional
profit*
1 Billion
Litres of
water
2,724
Tonnes
675KG
of pesticides
of our cotton offering
Of our cotton
is now made using
offering is
Better Cotton
now made using
Time period from
better cotton
January 1st 2021 –
December 31st 2021
Thanks to
our sourcing
better cotton
Were saved thanks
to our sourcing
better cotton
of better cotton
has been sourced
since joining BCI
Were avoided
thanks to
our sourcing
better cotton
With the JD
private label have
been made using
recycled polyester
with a minimum
percentage of 30%
*
BCI Farmers experience profit increases for a variety of reasons,
most commonly due to increased yields and/or optimised use of
inputs (such as irrigation water, pesticides or synthetic fertiliser)
Time period from January 1st 2021 – December 31st 2021
65
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022
ESG CONTINUED
ENVIRONMENT CONTINUED
Environmental – Resource Management
There is ongoing public and media scrutiny and debate on plastic (and other packaging materials). Accordingly, the
Group has continued to improve its ‘resource management’ performance across several areas of our directly-controlled
operations as detailed below:
Resource Objective
2021/22 Progress
2022/23 Objective
Retail packaging
and materials
Increasing recycled
content within retail
packaging and
consumables.
We now have moved from 50% to 70% recycled content
within our JD flexi-loop bags.
We lobbied key packaging suppliers to move to
renewable energy tariffs, where possible.
Evidence transition of non-UK packaging suppliers
to 100% renewable energy usage, during product
manufacture (supporting the United Nations ‘Race
to Zero’ initiative).
Paper and till rolls are fully FSC certified and our store
bin liners are 100% recycled plastic.
GO Outdoors membership cards are now bio-degradable.
Demonstrate that new capital investment
projects have incorporated site level re-use
and recycling solutions.
Eliminate waste
to landfill
Our largest directly-controlled facility (Kingsway
Distribution Centre) achieved certified ‘Zero waste
to landfill’ accreditation in 2020/21 and 2021/22.
Achieve ‘Zero waste to landfill’ accreditation for
both our Kingsway Distribution Centre and Head
Office sites.
Recycle and re-use
Increase the re-use
and recycling of
more products and
develop circular
economy solutions.
To maximise waste diversion from landfill, we diverted
98.8% (2021: 98.8%) of our waste.
Maintain landfill diversion of at least 98.5% and target
99%+ (subject to regulation changes).
‘Circular economy’ development continued by increasing
recyclable waste streams within directly controlled
operations. We reprocessed and reused assets including
radios, mannequins, staff uniforms and container units.
Office furniture – over seven tonnes recycled and
diverted from landfill.
Demonstrate further circular economy infrastructure
within our own retail operations via investment in
recycling and recovery facilities at key locations.
Card recycling and
plastic recycling
To increase our
recycling volumes
specifically for
card and plastic.
The Group continues to remove card and plastic at
the earliest possible source (via Kingsway Distribution
Centre). During the year, the amount of cardboard
recycled increased by 9% to 5,643 tonnes. Less plastic
is used during site operations with 40 tonnes of
material recycled.
We completed a review of our warehouse boxes
specification which now has 100% recycled card content.
Expand from our existing card and plastic recycling
capability to incorporate more waste streams at
existing and new distribution centres.
Trial solutions to re-use waste streams within new
products, providing evidence of trial results.
We have a target for our new warehouse boxes to
reduce storage and transport by over 1,800 pallets.
By using recycled plastic material for our online item
packaging we achieved an equivalent embodied carbon
saving of 490t CO2e within the period. Our e-commerce
boxes are made from 100% recycled card.
New customer messaging on re-use has been introduced
across additional packaging for online sales.
Complete a packaging supply and specification
review for our new distribution sites, ensuring
compliance to 2022 UK plastic tax legislation.
Identify automated solutions to deliver a potential
15% reduction to site level packaging.
Almost nine tonnes of labelling removed for
e-commerce deliveries.
Achieved 100% FSC/recycled paper packaging
(including swing tags and tissue paper).
Our barcodes are now FSC accredited and APEO free.
Our goal is for all private label components to
be 100% sustainable by 2024 (see Production
Component table).
We plan to achieve 100% recycled plastic content
for our garment poly bags by Q4 2022.
E-Commerce
packaging
Increase recycled
content, improve
re-use messaging
and reduce
packaging
volume per sale.
Private label
packaging
Maximise sustainable
materials – ticketing
and packaging.
Support for United
Nations SDGs
66
JD Sports Fashion Plc Annual Report and Accounts 2022 Charitable Donation of Plastic Bag Levy Income
To encourage customer consideration of the necessity
of bag use, the Group voluntarily charges for the
use/sale of drawstring-bags. Where local authorities
permit the donation of bag-levy income, the Group
donates all proceeds from carrier bag charges in the
UK to the JD Foundation.
The Group does not offset any production or ‘administrative’
costs from its bag-levy income, and accordingly 100% of
proceeds (net of VAT) are received by the JD Foundation
for annual distribution as follows:
– England £0.525 million and Wales £0.02 million received
in the period to 29 January 2022. During the period, 12.5%
of the funds were passed to Mountain Rescue in England
and Wales with the remaining 87.5% donated to other
charitable causes in accordance with the objects of the
JD Foundation.
– Scotland £0.05 million received in the period to
29 January 2022. During the period, 12.5% of the funds
were passed to Scottish Mountain Rescue with the
remaining 87.5% donated to other charitable causes
in accordance with the objects of the JD Foundation.
For further details about how the JD Foundation uses
these donations see page 82.
s u s t a i n a b i l i t y
i n p r i v a t e l a b e l
m a n u f a c t u r i n g
Textiles 2030 – Support, Objectives and Deliverables
The Group is proud to have become a member of the
Textiles 2030 initiative. The Group has also joined the
advisory group for this initiative. Textiles 2030 is part
of a worldwide initiative, led by Waste and Resources
Action Programme (‘WRAP’).
The primary Textiles 2030 objective is to reduce the
environmental impact of clothing across the globe, with
particular focus on reducing carbon emissions (by 50%)
and water usage (30%).
The four Textiles 2030 modules supported by our
Sourcing and Development teams are:
– Circular business models/in-use & disposal.
– Raw materials & processing improvements.
– Citizen behaviour.
– Circular design.
Participation in Textiles 2030 has supported delivery of:
– Multi-fascia collaboration on circular business
models and customer awareness initiatives.
– Group awareness and compliance with
environmental standards.
– Organisational environmental awareness, further
supported by our #IAMSUSTAINABLE training.
Reports on these modules will be showcased on our
corporate website as they are completed throughout 2022.
Environmental Management Process and Auditing
Ethical sourcing and transparency (relating to supply
chain and processes) remains of paramount importance
to the Group.
Our private label supply chain information is disclosed
via our corporate site, including key sourcing territories,
audit status and gender split data.
In support of our Textiles 2030 commitments, collation
of environmental data and research has commenced
with scope to be extended to the lower tiers of our
private label supply chain, mills and dye houses.
This allowed us to develop a comprehensive Environmental
Management Process (‘EMP’) to increase transparency
of accreditations and practices within our supply chain,
whilst better understanding territory-specific challenges.
By using enhanced data and disclosures, we continue
to improve raw material processing so as to mitigate
risk, improve worker welfare, and reduce environmental
impacts (such as waste water impact).
Environmental audits have been completed by third party
specialists within the period. The results and ‘cause and
effect’ of these audits have aided development of the
in-house grading system we use as part of our EMP.
Our ambition is to ensure that our EMP reaches the
standards of external, specialist audits.
67
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 ESG CONTINUED
ENVIRONMENT CONTINUED
Environmental Management – Lower Tiers
The Group presently contracts fully-factored garments
and does not have direct relationships with the lower
tiers of our supply chain.
Product Manufacturing Process
Achieving genuinely ‘more sustainable’ products is not a cost
neutral process. Material supply, demand and global market
conditions must be assessed at the outset of the process.
Our ambition is to utilise our supply chain knowledge
and incorporate sustainable processes (including
finishes at dye house level) into private label product
development processes.
Such improvements include the reduction of
carbon emissions and water usage associated with
the manufacture of private label end garments.
The key factors impacting sustainable product manufacture
are: Availability, affordability, aesthetics and performance.
Our designers and product team constantly review materials
and fabrics with improved sustainability credentials. We utilise
innovative solutions such as recycled wadding and recycled
polyester (by %) to achieve more sustainable outcomes
without impacting product quality or performance wherever
possible although it is not always feasible for each private label
brand and every product to use verified sustainable fabrics.
In all products, we ensure that all packaging and point of
sale materials are made from recycled materials and are
subsequently recyclable.
SUSTAINABLE PRODUCT MAPPING
CO M P O N E N TS + CONSIDERATIONS
r
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Econyl
Fishing Nets
Sea Qual
Ocean Plastic
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RDS Down
Recycled Polyfill
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L
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B
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h
t
O
Pineapple Leather-pinetex
Apple Leather
Corylon
Orange Fibre
Tencel
Bio Wash
Lyocell
Naia-wood Pulp
Amni Soul – Biodegradable Nylon
K N I TS /WOV E N S
OT H E R
Faux Fur
F U R
FA B R I C S
B AC K N E C K
Recycled Plastic Aglets
Cords – Recycled Polyester
Remove Aglets +
Tie Drawcords
Recycled Polyester/Nylon
Recycled Rayon
Bamboo
Stitched Eyelets
Recycled
Plastic
D R AWCO R DS
/AG L E TS
TA P E S
E Y E L E TS
Paper Waste
P.E.T Waste
Plant Materials
Shell
Recycled
Polyester
Recycled
Plastic
Plastic/
Other
B U T TO N S
Tape
Z I P S
Plastic
P O P P E R S
/ R I V E TS
Remove
T R I M S
L A B E L S
C A R E L A B E L S
Water Base Prints
Recycled Polyester
Recycled Polyester
Care Labels
Natural
(Stone, Straw
And Bamboo)
FSC Recycled
Paper
BCI String
Recycled
Poly Ribbon
Water Based
Embossed
H A N GTAG
Paper
String
Prints
FAST E N I N G S
A P P L I C AT I O N S
E M B R O I D E RY
ST I TC H
CO N ST R U C T I O N
Recycled
Polyester
Thread
Mono Materials
G L I T T E R
DY E S
COAT I N G S
P R I N TS
100% Fabrics
Are Recyclable
All Components on
Garment Must Be
100% of the Same
Fibre Composition
PROPE RTY OF JD SPORTS FASHI ON PLC
Biodegradable
Glitter
Dry Dye
Waterless
Non Recyclable
Only To Be Used
For Longevity
Algae
Water Based
68
JD Sports Fashion Plc Annual Report and Accounts 2022
Product Governance – Zero Discharge of Hazardous
Chemicals (‘ZDHC’)
The Group is predominantly a supplier of third-party
brands. Over 88% of our product sales is from brand
partners formally recognised as ‘contributors’ to
the ZDHC initiative and corresponding standards.
The remaining balance of our suppliers comply with
alternative, high-standard measures to reduce the
use and impact of harmful substances in the apparel
and supply chain, such as the Apparel and Footwear
International RSL Management Group (‘AFIRM’).
Restricted Substances List (‘RSL’)
The Group operates a zero-tolerance policy on restricted
substances to ensure our products remain safe and do
not contain any hazardous or restricted substances. It is
mandated that our Tier 1 suppliers (producing finished
goods) follow a product testing matrix, with support from
our nominated, specialist support supplier. Our testing
matrix encompasses the most recent AFIRM RSL.
RSL audits are undertaken via seasonal due diligence
testing on items assessed as potentially containing
substances of high concern. Working with third party
experts, we incorporate legislation and scientific updates
to our approach to testing, ensuring that products do
not exceed the parts per measure limits specified within
the legislative and/or regulatory scope.
Product Safety Legislation Compliance
Our Product and Design Development teams are committed
to providing safe, compliant products that conform and
perform to high standards via:
– Training supported by third-party subject experts.
– Sourcing in compliance with all product safety updates,
including regular regional and global legislation changes.
– Identifying and removing product risks at design stage,
ensuring achievement of specific safety standards
relating to products for children.
– Using safe, functional and fit for purpose materials
and products, such as APEO-free adhesives.
Product Component Table
This table illustrates the conversion of the components
used in the manufacture of the product to sustainable
materials by percentage across the private label ranges.
Private Label Sustainable Volumes 2021/22
This diagram illustrates sustainable materials used
in a garment (at a minimum of 30%). Our progress
is tracked by overall garment order volumes.
Each layer of the pyramid shows the percentage achieved
of each component type. Our target metric is for all
components to be 100% sustainable by 2024.
Care labels
100%
Barcodes
100%
Swing tags
100%
Labels
100%
Thread
0%
Polyester
32%
Cotton
98.5%
Linings % waddings
83.5%
Fastenings
0%
Plastic packaging
In progress 2022
Men’s
Women’s
Junior and infant’s
75%
25%
83% 17%
79%
21%
Sustainable
Percentage of the total order values which has been sourced from
a sustainable source such as recycled Better Cotton etc.
Non-sustainable
Percentage of the total order values which are currently not from
a sustainable source. These areas are high priority to become
sustainable going forward.
Sustainable
Components in the production process which are sourced from
a sustainable source such as recycled BCI Cotton etc.
Non-sustainable
Components in the production process which are currently not
from a sustainable source. These areas are high priority to become
sustainable going forward.
69
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 ESG CONTINUED
ENVIRONMENT CONTINUED
Circular Economy – Keeping Products and Materials in Use
The Group has developed a supply chain to support the
environment by keeping products and materials in use
for as long as possible. We understand that this is not a
completely ‘circular’ design, but extending product life is a
key stage of the journey to circularity. Extending product
life contributes to the reduction of emissions via both reducing
manufacture of new products, and by encouraging re-use
and responsible end of product life decisions.
3. Carbon Resources (Camping Resources) Ltd
Supporting our Outdoor businesses, Carbon Resources
specialises in the refurbishment and repair of tents and
equipment, giving products an extended life. The quality
of repairs offered ensures ongoing durability for years
beyond the original repair, keeping products and materials
in use, and reducing the carbon footprint associated with
new manufacture.
Despite our design improvement progression, changing
customer tastes and requirements mean that it is not
possible to completely eliminate returned stock.
To enable circular economy improvements, it was
vital to identify market place outlets able to align to our
waste-elimination principles within their own businesses.
This ensures compliance throughout the supply chain,
benefits end customers and enables the suppliers to
make their own, direct contribution towards the United
Nations ‘Sustainable Development Goals’ (UN SDGs).
A summary of three of our suppliers supporting our goal
to ‘keep products and materials in use’ is provided below.
Through ongoing collaboration, we have achieved this goal,
whilst reducing waste, and supporting four of the UN SDGs.
1. Africa Shoes
Africa Shoes has been exporting branded second-hand and
safe basic-fault products to Africa and other outlets around
the world since 1990. This type of stock has historically
been ‘discarded’ by other retailers. Whilst Africa Shoes sells
product globally, the preferred destination for the majority
of our stock is markets within selected regions of Africa.
Small, local vendors are able to access re-saleable stock
at heavily discounted prices enabling them to make a profit
and contribute towards their local economy.
2. Sole Responsibility
Sole Responsibility specialises in the resale of clothing and
footwear diverted from landfill to consumers, thus giving
the ‘seconds’ a ‘second chance’ and keeping products and
materials in use.
The graph (below) demonstrates the recent volumes
of products given an ‘extended life’ via these outlets.
No of units
Sole
Responsibility
Carbon Resources
Africa Shoes
49,547
7,298
46,435
Retailers and brands need to make a proactive contribution
to reducing the impact of fashion on climate change.
Customer education and support also plays an integral
role to achieve improvements.
We believe that consumers have a stronger understanding
of the impact of their product choices (purchases and end
of life decisions) than ever before.
With this in mind, our online team has developed a
sustainability section on our consumer site to remind and
further educate our customers on ‘conscious choices’ .
Skip a wash
Care label
Pass it on
Re-use
Repair
Recycle
Skip a wash
Care label
On average a washing machine uses 105 litres of water per wash.
By reducing the amount you wash your products your products
you will reduce water usage and your clothes will last longer.
JD private label products have clear wash care
instructions which help to save energy and
maintain the quality of the garments.
70
JD Sports Fashion Plc Annual Report and Accounts 2022 ESG CONTINUED
ETHICAL SOURCING
The JD Ethical Code of Practice (‘Code’) establishes the procedure for protecting workers and
providing assurance that our private label products are manufactured within safe and fair conditions.
The Code forms part of the contract with us. The people working for our suppliers are to be treated
with respect, and their health and safety and basic human rights must be protected and promoted.
The Code follows the International Labour Organization minimum standards and the full form of the
Code can be found on our corporate website at www.jdplc.com.
j d c o d e o f p r a c t i c e :
m i n i m u m s t a n d a r d s
Employment is freely chosen – there must be no forced
labour, bonded or involuntary
The organisation shall not engage in or support the use
of forced or compulsory labour, including prison labour and
shall not retain original identification papers. No personnel
shall be required to pay deposits to the organisation at
any time during or prior to commencing employment.
Freedom of Association and the right to collective
bargaining must be respected
All personnel should have the right to form, join and
organise trade unions and to bargain collectively on
their behalf with the organisation. Where these rights
are restricted under local laws the organisation shall
allow workers to freely elect their own representatives.
Workers conditions are safe and hygienic
The organisation shall establish documented procedures
to detect, prevent, minimise and eliminate potential risks
to the health and safety of personnel. The organisation
shall maintain written records of all health and safety
incidents that occur in the workplace and in dormitories
provided by the organisation, whether it owns, leases
or contracts dormitories from a service provider.
The organisation shall provide, for use by all personnel, free
access to clean toilet facilities, potable water, suitable spaces
for meal breaks and, where applicable, sanitary facilities for
food storage.
Child labour shall not be used
The organisation shall establish, document, maintain
and effectively communicate to personnel and approved
subcontractors, written policies and procedures for
remediation of child labourers and shall provide adequate
financial and other support to enable such children to
attend and remain in school until no longer a child.
The organisation may employ young workers, but
where such young workers are subject to compulsory
education laws, they shall work only outside of school
hours. Under no circumstances shall any young worker’s
school, work and transportation time exceed a combined
total of 10 hours per day, and in no case shall young
workers work more than 8 hours a day. Young workers
may not work during night hours.
Living wages are paid in line with local laws
and for a standard working week, overtime
must be paid at premium rate
The organisation shall respect the right of personnel to a
living wage and ensure that wages for a normal work week,
not including overtime, shall always meet at least legal or
industry minimum standards, or collective bargaining
agreements (where applicable). Wages shall be sufficient
to meet the basic needs of personnel and to provide some
discretionary income. The organisation shall not make
deductions from wages for disciplinary purposes.
Working hours must not be excessive and must be voluntary
The organisation shall comply with applicable laws, collective
bargaining agreements (where applicable) and industry
standards on working hours, breaks and public holidays.
The normal work week, not including overtime, shall be
defined by law but shall not exceed 48 hours. Personnel
shall be provided with at least one day off following every
six consecutive days of working.
No discrimination
The organisation shall not engage in or support discrimination
in hiring, remuneration, access to training, promotion, termination
or retirement based on; race, national or territorial or social
origin, caste, birth, religion, disability, gender, sexual orientation,
family responsibilities, marital status, union membership,
political opinions, age or any other condition that could
give rise to discrimination. The organisation shall not allow
any behaviour that is threatening, abusive or exploitative,
including gestures, language and physical contact, in the
workplace and in all property provided by the organisation,
whether it owns, leases or contracts the residences or
property from a service provider.
Regular employment is provided
Obligations to employees under labour or social security
laws and regulations arising from the regular employment
relationship shall not be avoided through the use of labour-only
contracting, sub-contracting, or home-working arrangements,
or through apprenticeship schemes where there is no real intent
to impart skills or provide regular employment, nor shall any
such obligations be avoided through the excessive use of
fixed-term contracts of employment.
No harsh or inhumane treatment is tolerated
Physical abuse or discipline, the threat of physical abuse,
sexual or other harassment and verbal abuse or other forms
of intimidation shall be prohibited.
71
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 ESG CONTINUED
ETHICAL SOURCING CONTINUED
The health & safety of workers is paramount
in all areas of our business, direct or otherwise.
The Group continues to review its policies on
ethical sourcing on a regular basis. We continuously
assess factory ethical and quality management
and work with our suppliers to improve conditions
in the factories within our supply chain.
The Group recognises, especially in the wake of
the COVID-19 pandemic and subsequent rising
raw material costs, that brands and retailers need
to do more to address gross deficiencies in wage
and other forms of compensation for workers in
their supply chain. Further, paying a living wage
creates an economy that works for everyone and
leads to increased worker morale, worker health
and improved quality of service.
As a Group we define the living wage by using the
Global Living Wage Coalition. This definition seeks
to ensure that workers can afford decent housing,
meet the basic needs of themselves and their
families, and accumulate some savings, all without
working overtime.
We acknowledge that the change required cannot
be enacted in one phase. We started to evaluate
our suppliers by reviewing our factory workers
earnings in our own Tier 1 supply chain. We are
working to find ways to encourage reward for
workers for the increased private label business
that results from consolidation of the supply base
and to instil the principle that every worker has
the right to fair compensation.
An analysis of the factories included in our
JD and Outdoor supply chain showed that:
– 54% of our factories pay more than 5%
over the local national minimum wage
to their workers.
– Just under half of our factories pay their
workers more than 10% over the local
national minimum wage.
– 32% of our factories pay more than
20% over local national minimum wages.
– Almost 25% of our factories are paying
over the local living wage (91% of these
are based in China).
Top Five Countries Paying %
Above National Minimum Wage
The graph below shows the top five countries in
our supply chain paying above National Minimum
Wage (and the % above NMW that is paid).
29%
28%
The number of suppliers paying
% over National Minimum Wage
117
0-4%
20
5-9%
36
82
10-19%
20+%
19%
18%
The number of suppliers paying
% over local living wage
a
k
n
a
L
i
r
S
i
a
d
n
I
i
a
n
h
C
r
a
m
n
a
y
M
7%
i
a
d
o
b
m
a
C
19
14
13
12
0-4%
5-9%
10-19%
20+%
72
JD Sports Fashion Plc Annual Report and Accounts 2022
m o d e r n s l a v e r y
The Group recognises that human rights are
fundamental principles which allow an individual
to lead a dignified and independent life, free
from abuse and violations. We will not tolerate,
nor will we condone, abuse of human rights
within any part of our business or supply chain.
The Group is committed to complying with the
applicable laws and regulations in all of the
territories in which we operate. We will conduct
ourselves with professionalism, honesty and
integrity whilst working with our suppliers and
third-parties to ensure our high ethical standards
are maintained.
The target for the Group during 2020/21 and
2021/22 was to evaluate the living wage. As our
private label manufacturing is relatively small,
and can be difficult to influence, it was important
to build better partnerships with our supply
base to encourage participation in working
towards a living wage and other forms of
compensation for workers in their supply chain.
The graphs on page 72 show the results
of our initial evaluation of the factories within
our supply chain used by the JD and Outdoor
fascias against the local living wage and/or
the National Minimum Wage.
s u p p l y c h a i n
We have continued to map our supply chain
to 4th Tier this year. This exercise requires
continual engagement with our partners as the
manufacturing chains beyond 1st Tier will often
change due to demand and capacity. As a supplier
of fully factored garments, our partnership did
not extend to mills and dye houses historically
although we recognise the need to develop
these relationships further.
Our supply chain by tier:
1st Tier
2nd Tier
3rd Tier
4th Tier
= CMT Site (Factory)
= Mill
= Dye House
= Print House
Summary of partners in the calendar year
2021 vs 2020:
2021
191 Agents
536 factories
2020
176 Agents
496 factories
19 Sourcing countries
21 Sourcing countries
a u d i t s t a t u s
2 0 2 2 v s . 2 0 2 1
The protection of those workers in our supply
chain is paramount and we will continue to
have zero tolerance to critical issues identified
by Group personnel or third party auditors,
from physical working environment concerns
through to anything that impacts workers or
causes hardship or harm. The factories used by
the Group are audited by accredited third party,
specialist assessment and audit suppliers, as
shown in the graph below. Of the remaining 15.8%
of factories where an audit has not taken place,
3.2% did not require an audit due to the low level
of spend or where 2021/22 was the first year that
the Group has worked with these factories and
12.6% were delayed due to restrictions arising
from the COVID-19 pandemic.
Audit status last year vs this year
Audit Required
2022
2021
2021
12.6
16.8
3rd Party Audit in date
2022
2021
No Audit Required
2022 3.2
2021
6.2
84.2
77.0
73
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 Private Label Product Sourcing 2021/22 (£m)
Turkey
8.6
UK
1.8
Egypt
1.5
Other
2.0
Pakistan
24.6
Bangladesh
19.9
China
246.0
Sri Lanka
1.3
Portugal
2.7
Myanmar
3.4
Indonesia
2.6
Cambodia
2.1
India
19.8
ESG CONTINUED
ETHICAL SOURCING CONTINUED
s o u r c i n g
o f p r o d u c t
During 2020/21 we saw a decrease in our audit
percentage to 77.0% against previous years
where we typically maintained a threshold of at
least 85.0%. This was due to the inclusion of our
Iberian subsidiaries, Sprinter and Sports Zone,
in the Group audit strategy which involved
assessing their supply chain in its entirety and
evaluating the audit detail. In 2021/22, we achieved
an audit percentage of 84.2% against our target
of ensuring at least 85.0% of our third party audits
are in date which, given that our supply base
has increased by 7.4% year on year due to new
acquisitions and commercial private label growth,
shows greater commitment to third party ethical
audits by our partners.
Our main sourcing regions continue to be Asia,
India, Turkey and Pakistan. The chart on the right
illustrates the sourcing value in Sterling by country
for all entities which source private label products.
Subcontracting is expressly forbidden without
authorisation and verification. The Group regularly
visits the factories that we work with to check
production and standards. This is critical to promote
the importance of longer-term relationships which
we believe is the key to the protection of workers’
rights and working with the factories to achieve
higher standards for workers.
It is the aim of the Group to ensure that all entities
within the Group should comply with our policies.
We will continue to work towards ensuring that
all subsidiaries embed our policies into their
businesses, including those subsidiaries which
have been recently acquired.
74
JD Sports Fashion Plc Annual Report and Accounts 2022 t r a n s p a r e n c y
We recognise the need for transparency. We
are committed to working with our suppliers
in an open, constructive and transparent manner
and we request that our suppliers apply the same
approach to their own supply chain. There is a
greater need than ever to make these standards
and management systems part of our suppliers’
everyday business and for them to be able to
demonstrate they are meeting this objective.
Our commitment to transparency requires publicly
available information relating to the suppliers and
partners with whom we work, both in the UK and
overseas. This information is published on our
interactive supply chain map and partner list
which can be accessed on the corporate website
at www.jdplc.com.
Across the Group, 222 audits have been carried
out and evaluated during the 2021 calendar year.
The full report can be found on our corporate
website at www. jdplc.com. Non-compliances
have been categorised according to issue type,
root cause and severity level and action plans
have been proposed to the factories to resolve
and close the issues highlighted in the reports.
The closed non-compliances evidence the
commitment to improvements and solutions from
both the compliance team and the factories to
ensure that progress is made and workers have
a safe and prosperous environment. Where there
are still issues, the work continues to ensure that
remedies are implemented, working with the
factories and showing long-term commitment
through rewarding progress.
p r i v a t e l a b e l
g o v e r n a n c e
Reach Compliance
It is our priority to ensure that our product is safe
and does not contain any hazardous or restricted
substances. Suppliers are required to follow the
most recent Restricted Substances List issued by
the ‘AFIRM Group’ with further details available at
https://afirm-group.com.
Our private label team works closely with third-
party experts to ensure we are in line with the
most up to date legislation and scientific findings.
In order to verify the supplier’s compliance with
this policy we manage an ongoing stringent due
diligence programme that encompasses random
sampling Restricted Substances List (‘RSL’)
testing conducted by our third-party testing
house ‘Intertek’.
As the Group expands into new territories,
we regularly commission specialist training for
all our Product Development team in the local
legislation, for example Prop 65 in California.
Product Safety Legislation
We are committed to providing safe compliant
products that perform to a high standard.
Working with third-party experts, we undertake
regular training to ensure our Product Development
team is up to date on all aspects of product safety
and compliant with new legislation globally. With
a particular focus on children’s safety standards
we aim to design the risk out of the products at
the earliest stages to provide safe, functional and
fit for purpose products.
Product Testing
Our suppliers have online access, directly
through our supplier portal hosted by ‘Intertek’
to all our standards and manuals. They complete
their product testing via this portal to ensure we
can track and verify their compliance. In addition,
we have embraced the new methods available to
assess microfibre shedding, testing all our high-
volume fabrics (IHTM method) with very positive
results indicating very low shedding properties
in all our most popular fabrics. We will continue
to embrace all new developments and testing
advances in this area.
75
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 ESG CONTINUED
OUR PEOPLE
The talented individuals working across the
Group are integral to our continued success,
delivering exceptional results year after year.
Our people are without doubt our most valuable
resource, with over 70,000 colleagues worldwide
at the financial year end. We strive to create a
workplace in which everyone is safe, supported,
respected and has the opportunity to achieve
their full potential.
The strides we have made during the COVID-19
pandemic continued to demonstrate our colleagues’
unwavering commitment to their roles and each
other. In response, our People team has strengthened
and expanded to support employee experience,
focusing on engagement, culture, development
and talent. This is achieved through promoting
inclusivity, social mobility and mutual respect
across the Group.
w e l l b e i n g
Colleague welfare remains a matter of
paramount importance to us, and we want to
help our colleagues to be the best version of
themselves. The dedication and inspiring response
to COVID-19 led to the launch of our Welfare
campaign, concentrating on additional support and
resources available across the Group as follows:
– The number of Welfare Champions within the
Group continues to grow. Members of our
Wellbeing Network receive full training on
appropriate welfare topics developed and
delivered in house, with the opportunity to
attend an accredited Mental Health First Aid
course. Fantastic topics such as ‘Psychological
Safety’, ‘Modern Slavery’ and ‘Personal Happiness’
are also available through a variety of different
media formats.
– We were delighted to partner with Able Futures
in 2021. Able Futures provides colleagues with
a host of resources, including access to health
care professionals and specialist support.
We also announced a partnership with Salary
Finance to assist colleagues’ financial wellbeing.
This provides colleagues with access to financial
advice around improving their financial situation
and offers responsible financial products and
education resources.
– Colleague welfare is and will continue to be
a priority for 2022 and beyond. We intend to
enhance the size and scope of our Wellbeing
Network through additional and new resources,
including an exciting podcast series and
interactive group sessions.
– The link between mental and physical health
is well established and so, in addition to the
support mechanisms in place for colleagues’
mental and financial wellbeing, we continue
to promote physical fitness to our colleagues
76
throughout the Group. Heart screening days
were arranged in 2021 with our charity partners
‘Cardiac Risk in the Young’ to give colleagues
and their family and friends the chance to
check their heart health. Scheduled Online
Yoga sessions and access to subsidised Gym
membership is also available. We continue to
achieve excellence in the areas of Health &
Safety and the protection of our colleagues
in their working environment. As members
of the British Retail consortium, the Group
was instrumental in obtaining the signature
of the Home Secretary to the Shopworkers’
Protection Pledge, whereby signatories
pledge to support the legislation necessary
to protect retail workers from violence against
shopworkers nationwide.
JD Sports Fashion Plc Annual Report and Accounts 2022 GENDER ANALYSIS
2022
The breakdown of the Plc
Board and the Group as a
whole by gender as at the
end of the financial period
ended 29 January 2022 is
as follows:
2021
The breakdown for the
comparative period as
at 30 January 2021, is
set out below:
Note: Senior Managers are
defined as persons responsible
for planning, directing or
controlling the activities of a
Group company or companies,
a strategically significant part
of a Group company or Directors
of subsidiary undertakings.
Plc Board
Senior Managers*
Other employees
57%
Total
7
43%
Male 4
Female 3
69%
Total
844
31%
49%
Total
72,668
51%
Male 586
Female 258
Male 35,250
Female 37,418
Plc Board
Senior Managers*
Other employees
71%
Total
7
29%
73%
Total
559
27%
50%
Total
60,487
50%
Male 5
Female 2
Male 409
Female 150
Male 30,003
Female 30,484
d i v e r s i t y ,
e q u a l i t y
& i n c l u s i o n
We continue to educate colleagues on the
important topics surrounding Equality, Diversity,
and Inclusion.
The Group continues to strive to create an
environment where people feel welcome and safe,
where they are treated with dignity and respect
and where the talent and skills of all colleagues are
valued. As founder members of Diversity in Retail,
we encourage this approach both externally and
internally, ensuring where possible that our support of
all areas of society is reflected in our output on social
media as well as within our culture as a business.
Our campaigns on LGBTQ+ Pride, Black History
Month (in collaboration with Blueprint for All,
one of our JD Foundation charity partners)
and International Days for both women and
men are just a few examples of the messages
issued to promote inclusion and raise awareness
of fairness and equality. Our colleagues are
encouraged to challenge discrimination and bias
as a part of their personal and professional lives.
e n g a g e m e n t
As we invest in our colleagues, we want them to
continue to invest in us and become enthusiastic
ambassadors for the Group and its values. We
remain informed of their opinions and challenges
in order to ensure our resources are directed in
the most effective way to improve our overall
colleague experience.
The ‘Your Voice’ Colleague Engagement
Programme ensures all Colleagues are provided
with an opportunity to feed back on the internal
successes and identify areas for improvement.
This information is invaluable in shaping and
informing on new people initiatives. The programme
includes regular Colleague Feedback surveys which
provide us with an overall engagement score for
each sector of the business, measuring colleague
pride and advocacy of the Group as an employer.
In addition to these Feedback Surveys, further
initiatives took place throughout the year to generate
individual pieces of specific feedback from our
colleagues. In every area of the business, this provides
colleagues with a direct, anonymous line to our central
functions who can act upon suggestions received.
Our Diversity & Inclusivity champions throughout
the business also meet regularly to discuss Equality,
Diversity and Inclusion topics, offering insights and
lived experiences to contribute to how we can
continue to ensure the Group is an inclusive employer.
Engagement forums meet regularly with each other
to share observations from within the sectors in
which they operate. The forums also regularly meet
with the Board to discuss these matters and look
at ways to improve the journey of our colleagues.
Following colleague feedback around shaping
a more inclusive, accessible and flexible working
environment, we have introduced hybrid working
and core working hours where practical.
All of these initiatives have delivered various
additional benefits to colleagues and played a
key role in ensuring those ideas create and drive
change within the business and shape the future.
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 ESG CONTINUED
OUR PEOPLE CONTINUED
c o m m u n i c a t i o n
The delivery of key messages is crucial to ensuring
our values are received and understood by our
colleagues. Our communications platforms ensure
that all appropriate channels are utilised for the
dissemination of information throughout the Group.
k i c k s t a r t s c h e m e
Over 700 people have joined through the Kickstart
programme between April and September 2021
with 15% of these being young people with barriers
to employment, such as disabilities, homelessness
and those leaving the care system.
Our new and improved online interactive magazine
supports the visibility of activity across the Group
and our community networks, advocating a sense
of belonging.
t a l e n t &
d e v e l o p m e n t
Attracting and retaining talent remains a priority for
the Group and we continually review our brand and
our culture to attract and retain the best individuals.
Our dedicated Development team produce and
deliver material across the world to our colleagues
on a broad range of subjects, covering operational,
behavioural, leadership and technology.
We reviewed how candidates apply for roles within
the Group with the intention of removing barriers
to application and continuing our commitment and
agenda of fairness and inclusivity. Some of the
actions have included removing names, addresses
and educational levels from potential candidate
CVs. We have also trialled the removal of CVs for
the Kickstart scheme and some entry level roles
to encourage inexperienced candidates to apply.
In addition to our current one year Graduate
placement offering, we will also be introducing
a two-year Graduate Programme across several
different functional areas. We will also expand
our offerings on Traineeships and T-Levels
complementing the apprenticeship programme.
With thousands of courses available, including
our industry leading Management and Supervisor
Development programmes and our extensive early
career choices, we are proud to encourage and
provide different pathways for personal and
professional growth.
We currently have over 270 apprentices within
the Group and have successfully recruited 40 of
those externally. Our apprenticeship programmes
are extensive and cover many different functions
within our Retail, Distribution Centres and Head
Office. Our pipeline for apprentices continues
to grow and we have planned the conversion of
60% of all entry level roles into apprenticeship
programmes by 2023. In 2022 we will launch our
Women in Engineering apprenticeship programme
which is designed to drive diversity into this area
of the business. Furthermore, we will also launch
a bespoke digital apprenticeship programme
designed to get inexperienced talent into this area,
giving them the skills they need and developing
them from within the Group.
78
Upon completion of their placement, 90% of
the young people on the Kickstart scheme have
been offered permanent roles within the Group
and over 20% will progress onto an apprenticeship
programme. We will continue to see this figure rise
with the scheme now extended to March 2023.
We have now opened our scheme to include
Kickstart placements within JD Gyms and our
Size? fascia, further increasing the diversity of
opportunities we can offer to these young people.
After the Kickstart scheme completes, we look
forward to supporting and partnering with the
Department for Work & Pensions on further
initiatives including the new ‘Way into Work
Scheme’ that was launched in March 2022.
Way into Work is a campaign designed to help
people move back into the world of work and
also fill our vacant early careers roles across Retail,
Distribution Centres and Head Office by creating
a further pipeline for new talent into the Group.
We will co-design sector-based work academies
which the Department for Work & Pensions will
then fund and facilitate with groups of work-ready
people. These academies will cover skills they will
need in our roles and also give them employability
support pre-interview, so they are fully prepared,
ready and excited about a role with the Group.
This will also facilitate a swifter, more agile
recruitment process to get our roles seen and
marketed across large groups of people for either
permanent roles, work experience or apprenticeship
programmes. Ultimately, they will support us with our
commitment to engage with young people with
barriers to employment.
c o m m i t m e n t t o
o u r c o m m u n i t i e s
Across 2021, we worked with our JD Foundation
charity partners and in collaboration with the
Prince’s Trust to provide young people with real-
world careers advice and guidance. We created new
and engaging content and delivered employability
skills workshops, focusing on inspiring and
educating young people through our mentorship
programme. We look forward to continuing this
great work with our JD Foundation charity
partners. This includes our new affiliation with
the Diane Modahl Sports Foundation, which
works with young people from disadvantaged
areas, focusing on access to sport, education
and providing pathways into employment.
JD Sports Fashion Plc Annual Report and Accounts 2022 The Group aims to attract and retain the best
talent. The geographical reach of the Group
provides opportunities for global progression
within all international territories with career
pathways across all levels and specialisms.
PAUL CLARKE,
ASSOCIATE DIRECTOR, VM &
CENTRAL RETAIL OPERATIONS
“I joined JD in 1996 as a Part-Time Sales
Assistant. 26 years later, I’m proud to lead
the Central Retail Visual Merchandising
Team and the field Team across 23
Countries. I love what I do but it’s only
possible with the ‘best in class’ team
I have around me.”
GANESH SINVAGULA,
HEAD OF OPERATIONS,
JD HYDERABAD
“The culture in JD enables me to work
collaboratively with various teams and
individuals across different locations
whilst also feeling part of one global team.
I’m fortunate to have a great team and
the immense support of my colleagues
and management at Head Office.”
SAM DAVIES,
RETAIL OPERATIONS MANAGER, APAC
“I have been with the business for 15 years,
having joined as a Weekend Sales Assistant.
One of my favourite aspects about JD
is the opportunities that are available.
Working internationally is something that
I always wanted to do and JD has given
me that chance.”
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 ESG CONTINUED
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 Occupational Health provision offers health
checks and support, both physical and mental,
for employees and also enables the business to
promote healthier lifestyles. 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.
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.
We demonstrate this commitment through
active leadership, promoting best practice and by
setting specific and measurable targets each year.
Our performance against these targets is reviewed
at Board level and reported upon regularly. We
ensure that adequate resource is provided to
enable these targets to be achieved and to ensure
the effective management of risk within the Group.
As the Group’s physical store base becomes
more geographically dispersed, the risk of
breaches in health and safety standards and
regulations will naturally increase. To mitigate
against this risk, we constantly review the level
of resource dedicated to this important area to
ensure that our Health and Safety team has the
necessary personnel and other resources to
manage the risk effectively. Breaches of Health
and Safety regulations can happen though,
and where they do, we take appropriate action
and use any breach as a learning opportunity
to ensure an even greater focus on health
and safety improvement for the benefit of
the public, our customers and our employees.
o u r r e s u l t s
We can report the following for the year:
– For the third successive year, the Group has
received an award from The Royal Society for the
Prevention of Accidents in recognition of our UK
retail health and safety performance. The Group
was awarded a ‘Commended’ in the Wholesale
and Retail Industry sector, which is one level
higher than the Gold award previously achieved.
– Our Kingsway Distribution Centre remained a
British Safety Council, five star accredited site.
– There have been no Local Authority or Fire
Authority enforcement notices served in UK
and the Republic of Ireland during the year.
The table below shows the number of enforcement
notices served in the UK and the Republic of
Ireland over the 10-year period since 2012 on
a calendar year basis:
Enforcement notices served 2012 – 2021
2
3
1
1
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
0
0
0
0
0
0
In 2019 there were three Local Authority or
Fire Authority enforcement notices served.
In each case immediate action was taken to
comply with all requirements and as a result
the notices were withdrawn.
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JD Sports Fashion Plc Annual Report and Accounts 2022 c o v i d - 1 9
The COVID-19 pandemic presented significant
health and safety challenges. However, we
continue to develop and establish revised
working practices to ensure the safety of
our colleagues, customers and visitors.
The Health and Safety team assessed the risks
faced by our colleagues, customers and other
visitors as a result of COVID-19. The documented
risk assessments produced for our retail, office
and distribution environments set out the control
measures required to reduce the risk of potential
exposure to the COVID-19 virus. From the initial
risk assessment, the appropriate teams developed
operating procedures, visual messaging, procured
personal protective equipment and hygiene
products appropriate to their area of the business
but following a consistent Group approach.
As guidance has changed, the risk assessments and
control measures have been updated. This in turn
has informed changes in the procedures of the
teams, ensuring consistency across the Group.
The control measures in place for our retail stores
are published on our customer facing websites.
Those in place for colleagues working in distribution
and office based roles are communicated and
regularly updated through internal channels.
Local authorities have visited our distribution centres,
stores and gyms on multiple occasions to review the
control measures that we have implemented.
o u r c o m m i t m e n t
Our commitment to continuous health and safety
improvement is demonstrated by:
– The further development across our European
stores of our online induction and training
programme ensuring every colleague has the
competence, understanding and awareness
to work safely and at minimum risk.
– Continued health and safety input in 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.
– Continuous review of our policies and
processes to ensure best practice in all
areas of our business. During the year
we have reviewed and revised various risk
assessments across all areas of the business.
– Our quarterly Group and monthly Distribution
Centre health and safety committee meetings
allow colleague engagement in health and
safety, with all colleagues having the
opportunity to raise safety concerns
through their committee representatives.
– Bi-annual health and safety meetings held in all
other European countries in which we operate.
– All UK Group companies with warehousing and
distribution activities receive bi-annual internal
health and safety audits to ensure compliance
with Group health and safety standards.
o u r f o c u s
Our focus in the coming year will be:
– To retain the British Safety Council ‘five star’
accreditation for our Kingsway Distribution Centre.
– To retain the Royal Society for the Prevention
of Accidents Award for our retail health and
safety management.
– Continued safety management 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 in every territory.
– The further implementation of our health and
safety information, training and record keeping
software across all the European countries in
which we operate.
– The recruitment of an International Health
& Safety Manager who will work with the
International subsidiaries and joint venture
partners to review health and safety procedures
and ensure consistency with Group health and
safety standards.
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 Core Values
The Foundation’s aim is to ensure that disadvantaged children
and young adults can achieve lasting change in their lives. The
Foundation achieves this aim by staying true to its core values:
– Creating resilient charities. The Foundation works closely
with its charity partners by providing resource, in addition
to money, to enable them to build a brighter future for
themselves and the young people they support.
– Working together. Building strong partnerships with
its charity partners and providing opportunities for
networking and joint working wherever possible.
– Always compassionate. Listening to and empathising
with the needs of its charity partners to understand their
challenges and provide the relevant support.
– Making things happen. Ensuring its charity partners are
able to take action quickly when needed.
– Young people at heart. The Foundation will continue to
support the younger generation who are at the heart of the
charity and continually strive to create a better future for them.
How the JD Foundation Supports its Partners
The Foundation has delivered on its mission to support
organisations tackling disadvantage by offering them
funding and support, which has enabled them to provide
support in various ways, examples of which are:
– Providing a safe and inspiring place for thousands of
young people during the pandemic.
– The recruitment and training of volunteers to provide
specialist support for issues such as suicide, bullying,
modern slavery and child exploitation.
– Providing homeless young people with hot meals
and support to improve mental wellbeing and
community engagement.
– The development of an online service that provides
mentoring, work placement, internships and
employment opportunities for young people.
ESG CONTINUED
THE JD FOUNDATION
CHANGING LIVES,
SAVING LIVES
The JD Foundation (the ‘Foundation’)
is a registered charity in the UK founded
by the JD Group in October 2015. The mission
of the Foundation is to support disadvantaged
young people throughout the UK.
raised since
October 2015
£4.1m
19
charity partners
donated so far
£3.6m
265k+
hours of support given
The Foundation receives 100% of the net proceeds from
the sale of the Group’s carrier bags in England, Wales and
Scotland and this is further boosted by fundraising activities
that are undertaken by the Group’s employees.
In 2021, the JD Foundation supported 19 charity partners with
vital funding. On occasion, we are able to supply donations of
sportswear and equipment, as well as crucial ongoing business
support and guidance. All monies raised by the Foundation
(excluding fees) are distributed amongst our charity partners,
with a reserve left for emergency funding if required.
The COVID-19 pandemic has exacerbated the challenges
that our charity partners are facing; tackling poverty, youth
homelessness, unemployment and the loss of family members
are just a few of the life-changing issues that our charity
partners are dealing with.
The JD Foundation continuously strives to be more than a
funding body and aims to develop charities that leave a long
term life-changing impression on their beneficiaries. As we
join the post-pandemic road to recovery, we believe it is more
important than ever to help to change lives and save lives.
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JD Sports Fashion Plc Annual Report and Accounts 2022 CHARITY PARTNERS IN FOCUS
Here are some examples of the positive work that the
JD Foundation has undertaken with its charity partners.
Further information on the JD Foundation can be
found at www.jdplc.com/esg/social/jd-foundation
c a r d i a c r i s k i n
t h e y o u n g ( ‘ c r y ’ )
All money raised by CRY is used to fund heart screening
days for young people and adults aged 14-35.
These vital screening days have supported free heart
screening for 3,984 people, 740 of which have been
directly funded by the JD Foundation.
Every Week
12 fit and healthy
young people die of an
undiagnosed heart condition
The JD Foundation is a Patron of HideOut Youth Zone,
providing core funding to meet high operational costs
and overheads. HideOut Youth Zone is a safe and
inspiring place for thousands of young people aged
8 – 19, and up to 25 for those with additional needs,
to enjoy their leisure time.
Young people attending HideOut are welcomed by
a team of qualified staff and volunteers and take part
in fun and engaging activities including sports, arts,
music, media, dance, drama and much more. In addition,
employability workshops raise aspirations and encourage
participants to dream big and reach their full potential.
83
YoungMinds is a charity supporting the mental
health and emotional wellbeing of young people
up to 25 years old across the UK.
The grants from the JD Foundation have helped
YoungMinds to give essential support to over
18,000 families via its Parents Helpline Service.
“ We are incredibly grateful for
the JD Foundation’s continued
support which will make a
significant difference to our
work. The pandemic has had a
devastating impact on children
and young people’s mental
health and we must continue
to be there for them at this
truly crucial time. The grants
from the JD Foundation will
help us to do this and to achieve
our mission of stopping young
people reaching crisis point.”
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 ESG CONTINUED
GLOBAL EMPOWERMENT
In addition to supporting charities and communities in the
UK via the JD Foundation, we are committed to supporting
local communities in the Group’s international territories
and beyond. We want to share our values, help the socially
disadvantaged and promote diversity and inclusion,
empowering the urban youth of today.
The series has evolved over the past year to bring to light
the challenges impacting other marginalised communities
in the US, so that we can expand our allyship and education
process. On many occasions, we have also been able to
contribute monetary support to charitable organisations
of our guest’s choice.
Everyone should be safe, supported and respected, treated
fairly and taken care of, listened to, and motivated to achieve
their full potential. These values are promoted to our local
communities worldwide, empowering urban youths around
the world. Examples of our global initiatives are as follows:
UK
The ‘Together We Can’ project is to raise funds in conjunction
with ‘Pennies’, a national charity, through micro-donations
at the till points. Following a successful trial roll-out of the
project in December 2021 in our selected stores, the project
is being implemented across JD and Outdoor stores throughout
2022. In 2023, the project will be extended overseas and will
give the Group a platform to provide education to those
working in our factories, enhancing career opportunities
and providing financial support in the form of universal
food baskets which will indirectly help to bring the
minimum wages closer to the living wage.
This is an ambitious project but will help change the lives
of women and girls not only in the UK but around the world.
Europe
In addition to the outstanding projects undertaken in the
UK by the JD Foundation to empower the youth of today,
our EU-based businesses continue to promote our values
with activities and initiatives to promote equality and
opportunities for all.
We are proud that our subsidiary Sprinter, based in
Alicante in Spain, has recently been presented with the
Award for Employability from the University of Alicante for
its commitment to youth employment and the promotion
of business practices and training.
United States
Our businesses in the US continue to arrange initiatives
that engage local communities and promote our values.
We are committed to playing an active role in ending
discrimination within the workplace and in our communities.
JD Finish Line made the commitment to support our
customers, employees and the communities we live in,
with programmes and initiatives to create a more diverse
workforce and progress the careers and education of
many of our employees, including in our stores and our
Distribution and Customer Care Centres. JD Finish Line
started a weekly interview series called Community
Voices as part of our commitment to becoming better
allies and educating ourselves, our customers and our
employees on issues faced by the Black community.
Shoe Palace collaborated with Nike on a programme
where community leaders from all facets of Los Angeles
came together to work with a community organisation
‘Runway 4 Peace’. They took a group of underserved girls
from Inglewood California through a nine month journey to
help them learn what sport and community mean to them,
how to break barriers within their world and help change.
This was achieved through a series of talk panels, workshops,
and experiences. This ongoing series for young girls in our
communities inspires them to lead mentally healthy,
community based, fulfilled lives.
DTLR has partnered with the Jalen Rose Leadership
Academy, an open-enrolment, tuition-free public charter
school in Detroit to alleviate the weight on parents of
purchasing uniforms by providing them to the 130 incoming
freshmen. Each scholar was gifted with two uniforms, free of
charge, and their third will also be free, on behalf of DTLR.
In conjunction with this newfound partnership, DTLR is also
launching a scholarship, where one scholar from the Classes
of 2025, 2026 and 2027 will be awarded with funds to attend
a post-secondary institution. This partnership of uniforms
and scholar Dollars is a three year agreement, after which
DTLR hopes to extend the partnership and create outreach
volunteerism opportunities for the scholars to participate in
for years to come.
Asia Pacific
Each year in Australia, over 25 million pairs of shoes end up
in landfill sites. JD Australia helped launch a global first in
Australia in which we were part of an industry-wide footwear
recycling programme. The pilot programme ran within the JD
Victoria store and was so successful that it received federal
government funding and is now available in every JD store in
Australia. This footwear recycling initiative has diverted over
100,000 pairs of shoes from landfill sites to date and the
recycled by-product has been used, amongst many things,
to create gym mats, sporting surfaces and retail flooring.
In addition to our Group-wide environmental commitments,
we have consistently partnered with brands on campaigns in
these areas to promote diversity and equality whilst helping
those who need it most. We have participated in a number
of local campaigns in the Asia Pacific area, where the impact
on communities is of most immediate concern. For example,
JD sponsored 10 female students under the ‘Better Me’
programme at Pratthanadee Foundation, a local organisation
that empowers under-privileged women in Thailand. The
‘Better Me’ programme is a nine month course comprising
weekly three hour classes aiming to raise the employability
of the participants.
84
JD Sports Fashion Plc Annual Report and Accounts 2022
GLOBAL INITIATIVES
c o m m u n i t y
v o i c e s
Our commitment to amplify and
fund under-represented voices
with 90+ episodes.
Further information and episodes are
available at https://blog.finishline.
com/category/community-voices/
j d
t h a i l a n d
JD sponsored 10 female students under the ‘Better Me’
programme at Pratthanadee Foundation, a local
organisation that empowers under-privileged women
in Thailand. The ‘Better Me’ programme is a nine month
course comprising weekly three hour classes aiming to
raise the employability of the participants.
s h o e p a l a c e
x n i k e ‘ f o r h e r ’
‘For Her’ is a monthly programme from Shoe Palace and
Nike, where community leaders from all facets of Los
Angeles come together to break down what sport and
community mean to them, and how they are breaking
barriers within their industries to help change the world.
d t l r x j a l e n
r o s e a c a d e m y
DTLR x Jalen Rose Leadership Academy, a partnership
of uniforms and scholar dollars is a three-year agreement,
after which DTLR hopes to extend the partnership and
create outreach volunteer-ism opportunities for the
scholars to participate in for years to come.
j d a u s t r a l i a
Over 100,000 pairs of shoes have been diverted from
landfill to date.
85
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 S E C T I O N 1 7 2 S T A T E M E N T
Pages
14
26
33
102
76-79
77
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100
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55
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95
This statement sets out how the Directors have
approached and met their responsibilities under
Section 172 of the Companies Act 2006 and in
particular how the Directors have satisfied
themselves that they have acted in a way which is
most likely to promote the success of the Group
for the benefit of its members as a whole and, in
doing so, have regard for stakeholders’ interests.
Further information on how s172 has been applied by the Directors
can be found throughout the Annual Report:
s172 duties
Consequences of
decisions in the
long term
Read more
Our Business Model & Strategy
Principal Risks and Uncertainties
Viability Statement and Going Concern
This statement should be read in conjunction
with the Stakeholder Engagement section on
pages 87 to 91.
Interests of
employees
Fostering business
relationships with
suppliers, customers
and others
Impact of operations
on the community
and the environment
Board Activities
Our People
Diversity, Equality and Inclusion
Employee Engagement
Culture
Business & Financial Review
TCFD Disclosures
Sustainability
The Strategic Report on pages 4 to 91
is approved by the Board of Directors.
By order of the Board
Neil Greenhalgh
Chief Financial Officer
22 June 2022
Maintaining high
standards of
business conduct
Culture
Whistleblowing
Acting fairly
between members
Anti-bribery and Corruption
Modern Slavery
Shareholder Relations
Shareholder and Voting Rights
HOW THE BOARD FULFILS ITS S172 DUTIES
Each of the Directors is aware of their Director’s duties in respect of the s172 statement.
Board Awareness
Board Engagement
Our Board directly and indirectly engages with
our stakeholders. See pages 87 to 91 for further details.
Board Strategic Discussion
The Board considers the impact of its
decisions on our stakeholders.
Board Decisions
Outcomes of Board decisions are assessed
and further engagement with stakeholders
is undertaken where appropriate.
86
JD Sports Fashion Plc Annual Report and Accounts 2022 S T A K E H O L D E R E N G A G E M E N T
CUSTOMERS
Key issues
The COVID-19 pandemic increased the uptake and enduring
use of online retail by customers who now have elevated
demands and expectations of delivery of product and
associated service levels.
Diversification of the digital and social landscape
along with the challenge to stay relevant with our
target customer audience.
Customers’ expectations for retailers to offer a
seamless experience.
How we have engaged
We have embarked on a major programme to enhance
the logistics network across the UK and Western Europe.
This expansion allows for an increase in output capacity and,
combined with the latest automated stock pick and carrier
management technology, allows orders to be fulfilled
globally in the most efficient way.
We have worked with Chloe Burrows as JD’s first ever
dedicated female ambassador and recently announced our
new key influencer CHUNKZ to focus on YouTube community
engagement. Our 2021 Christmas advert was created to
engage and connect in a meaningful way to drive traffic
both online and offline.
For every JD UK in-store transaction, customers are
prompted to provide feedback in two ways. First at the point
of sale via a card machine, which contains a rating system for
their shopping experience that day. General questions are
provided in relation to the shopping/product/staff/transaction
experience and additionally store specific questions can be
tailored. The second method is via QR code on the customer
receipt which brings the customer to an online customer
satisfaction survey.
Online customer sentiment is measured via Trustpilot surveys
and monitoring of customers engagement with our customer
services teams. When a customer finalises their engagement
with our customer service team, they are prompted to
How the Board took account of the engagement
The progress of the build, operation, capacity output
and measurement of service level expectations at our
Distribution Centres is regularly provided to the Board.
The Board is regularly updated on the progress and
achievements of the Group’s digital engagement.
The Head of Customer Care reports into the Chief Financial
Officer, Neil Greenhalgh. A weekly report is provided to
the Executive Directors and relevant stakeholders, which
includes information and statistics on customer feedback
via the above-mentioned measurement sources. In addition
complete a short survey on their experience. Our online
teams monitor all JD Group social media channels for any
negative customer feedback or sentiment which may have
been provided, for example by increased comments and/or
sharing on social media platforms.
Impact of engagement
This has resulted in an increase in meeting delivery service
levels across our business, better service updates to our
customers and enhancing our customers’ post-purchase
customer experience.
Our social engagement via high profile ambassadors has
resulted in increased audience engagement. For example,
our Christmas TV ad campaign was our most successful
ever as the number one Christmas advert on YouTube with
over 20 million views and was viewed more than 44 million
times on TikTok. This helped make the JD Sports App the
number one UK shopping app on both IOS & Android during
the peak Christmas shopping period.
During the 2021/22 financial year, the point of sale feedback
system has asked 11.6 million questions and the QR code
customer satisfaction survey received feedback from over
3,000 customers. These two methods provide insights into
our customers enthusiasm for the JD offering and how we
can improve the customer experience.
During the 2021/22 financial year, there were over 100,000
responses to the Trustpilot surveys. There has been a
significant improvement over the last financial year in
both Trustpilot and customer service survey satisfaction.
the report monitors any increase in contacts with the JD
Customer care team which may illustrate increased customer
issues. This report is presented to the Executive Directors
by the Head of Customer Care in a weekly trade meeting
and relevant actions are agreed on and reviewed and
analysed at subsequent trade meetings to assess their
effectiveness. Periodically, the Board considers matters
relating to supplier, shareholders, customer and employees.
The Board continues to assess its engagement mechanisms
to ensure they remain effective.
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022
STAKEHOLDER ENGAGEMENT CONTINUED
COLLEAGUES
Key issues
As the Group continues to expand, the business must
ensure that constructive, relevant feedback is received
from colleagues across the Group to ensure our employee
policies remain attractive to a changing and increasingly
diverse workforce.
How we have engaged
We continuously listen to our colleagues and remain
dedicated to providing our teams with opportunities to
contribute towards the success of the business. Our ‘Your
Voice’ Colleague Engagement programme encourages
feedback and suggestions from across the Group, which
then informs our employee strategy going forward.
Impact of engagement
Some key highlights of the programme’s impact include
the introduction of our hybrid working policy, an improved
internal communications strategy and a focus on how
colleagues can get more involved in supporting the
JD Foundation. This then led to the introduction of our
Mentoring Network, which provides colleagues with an
opportunity to work with young people with barriers
to employment and deliver bespoke sessions, such as
employability skills or ‘World of work’ – which offers
insight into different careers.
How the Board took account of the engagement
To enhance the two-way dialogue between colleagues
and the Board, our People Experience team introduced
a series of recorded sessions, where colleagues who are
not forum members are provided with an opportunity
to ask a question of their own choosing directly to our
Executive Directors. The videos are then shared with
the global business via People First, our online interactive
magazine which enables colleagues to remain informed
regarding the Group’s progress and strategy across
all territories.
88
JD Sports Fashion Plc Annual Report and Accounts 2022 SHAREHOLDERS
Key issues
The key issues in the financial year were:
– Achieving a stable financial performance and
growth profile despite ongoing adverse impacts
of COVID-19, particularly in view of temporary store
closures in many markets and supply chain issues
for the international brands.
– Ensuring shareholders have greater transparency on our
financial performance and improvements in Environment,
Social and Governance (ESG) issues.
– Address shareholder concerns around the combined CEO
and Executive Chair role and Board diversity. Ensuring
that shareholders have reassurance on succession
planning particularly in respect of plans to divide the
Executive Chair and Chief Executive Officer role.
– Responding to shareholder feedback and implementing
a revised remuneration structure with share-based
incentives to ensure better alignment between Executive
pay and long-term shareholder value.
How we have engaged
We have engaged with stakeholders as follows:
– Maintained robust commercial, merchandising
and financial disciplines and strong consumer
connection, globally.
– Participated in numerous road shows, fireside chats
and one-to-ones with shareholders to communicate
Group strategy and performance.
– Delivered an improved investor and corporate website
with increased disclosure on key topics such as financial
results, ESG performance and our policies.
– The Group held its second Capital Markets Day Event
demonstrating to shareholders the strength and expertise
across the Senior Leadership Team.
– Engaged with Governance and Stewardship teams across
various institutions to discuss feedback on ESG issues.
Impact of engagement
The impact of the engagement was:
– The Group delivered its best profit performance to date,
more than doubling its headline profit before tax from the
year ended January 2021.
– Positive feedback was received from investors who
attended the Capital Markets Day which was held in
October 2021. Investors were reassured by the strength
and depth of expertise in the Senior Leadership Team.
– The Board has made significant progress in its process
to recruit new Non-Executive Directors who can positively
contribute to the continued global development and
momentum of the Group.
– It is also fully compliant with the initiatives on Board
diversity proposed by the Hampton-Alexander Review
and the Parker Review.
– The Board agreed to separate the roles of Chair and Chief
Executive Officer to be in line with the recommendations
of the Corporate Governance Code 2018.
– The Remuneration Committee introduced a new
Remuneration Policy with a share-based LTIP.
How the Board took account of the engagement
– This is a relatively new Board with a number of new Non-
Executive Directors. However, its engagement on these
key issues has begun and is ongoing with the Board
appointing new Chairs for the Remuneration Committee,
Nominations Committee and Audit & Risk Committee.
– The Board receives appropriately detailed Board papers
prior to considering major strategic decisions and tests
each decision against its overall objective to deliver
long-term sustainable earnings growth and enhance
total shareholder returns.
– The Board has also appointed a new Senior
– The Board ensures that acquisitions align with the
Independent Director.
overall corporate strategy.
– The Executive Directors personally liaised with
various investors and stewardship teams to collate
feedback first hand to ensure shareholder interests
are aligned with the Group.
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 STAKEHOLDER ENGAGEMENT CONTINUED
SUPPLIERS
Key issues
– JD’s status as a premier global strategic partner with key
international brands is an important factor in the success
of the Group.
– A robust framework is in place for the protection of
people working for our suppliers. From our Ethical Code
of Practice to transparency on factory location and audit
status, our team has engaged in continuous improvement
with regard to private label suppliers. Our Ethical Code of
Practice ensures that fundamental health & safety measures
are in place, along with promoting and safeguarding the
basic human rights of supply chain workers.
– Our ESG Committee provides strategic guidance and
management of supplier engagement, as outlined within
the Environment and Social sections of the report.
How we have engaged
– We carry out regular audits of our factories and
engage in extensive due diligence to ensure we
understand where the components of the products
that we manufacture are made and what the working
conditions are like in those environments.
– We regularly engage with our largest suppliers of
branded products on ESG-related risks, including
our approach to climate change initiatives.
– Members of the Senior Leadership team meet with the
senior stakeholders at key suppliers (such as Nike, adidas,
The North Face, Under Armour, VF Corp, New Balance) on
a regular basis throughout the year to discuss relationships
and to obtain supplier feedback. The wider JD business,
including some members of the Senior Leadership team,
are also in regular and frequent discussions with all
such suppliers on day-to-day matters (such as product
purchases, marketing campaigns and ongoing projects),
during which ongoing and real-time feedback from
suppliers is obtained.
Impact of engagement
– The second and third tiers of the Group’s manufacturing
supply chain have been successfully mapped (including
mills and dye houses). This data is documented within our
latest transparency map available at www.jdplc.com/esg/
modern-slavery/our-supply-chain.
– Nike and adidas are committed to carbon reduction
(including Net Zero) targets which align with those
of the Group.
– The engagement with suppliers ensures the Group
continues to be a key strategic brand partner of
the international brands. By nurturing these key
relationships, the Group aims to continue receiving
the exclusive, differentiated footwear and apparel
which our consumer desires.
90
How the Board took account of the engagement
– The JD Ethical Code of Practice was reviewed by our
ESG Committee and is shared with all suppliers.
The Code follows the International Labour Organization
minimum standards. As per the Social and Environment
sections of this report, the continued international
expansion of the Group ensures a wider network of
people who operate in accordance with our Company
values and standards.
– The Board fosters and nurtures long-term relationships
with the Group’s suppliers via this regular engagement,
at both a Senior Leadership team and wider business
level. Feedback to the Board allows the Group to share
the key suppliers vision of an elevated consumer
experience, while still considering the needs and support
required by those key suppliers.
JD Sports Fashion Plc Annual Report and Accounts 2022 COMMUNITY
How the Board took account of the engagement
Regular updates on this matter are fed into the
ESG Committee and reported to the Board.
Key issues
Our business is highly regulated and we seek to engage
constructively and build cohesive relationships with all
governmental and regulatory bodies that regulate our
business activities.
Compliance with the Task Force on Climate-Related
Financial Disclosures (‘TCFD’), which was created by
the Financial Stability Board to improve the accuracy
and consistency of climate-related risks.
How we have engaged
This is the first year that a mandatory submission to
the TCFD is required (we submitted voluntarily in 2021).
We used our Carbon Disclosure Project gradings to make
our TCFD submission.
Impact of engagement
We have been rated as A- for Climate Change and ‘B’
for water by the Carbon Disclosure Project, which is
a global voluntary disclosure system, and is scored
independently. The Carbon Disclosure Project is closely
aligned with TCFD principles and we would anticipate our
assessment by the TCFD to achieve the same excellent
results as our Carbon Disclosure Project assessment.
91
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 B O A R D O F D I R E C T O R S
AN EXPERIENCED TEAM DELIVERING OUR
STRATEGiC
ViSiON
KATH SMITH
Interim Chief Executive
Officer (effective
25 May 2022)
Aged 65
HELEN ASHTON
Interim Non-Executive Chair
(effective 25 May 2022)
Non-Executive Director
Aged 49
NEIL GREENHALGH
Chief Financial Officer
Aged 51
ANDY LONG
Non-Executive Director
Aged 51
Committee Memberships**
A R
Committee Memberships**
A N R
Committee Memberships
Committee Memberships
Skills and Experience
Kath was appointed to the Board
as a Non-Executive Director in
May 2019. She has 40 years of
executive experience building
world-leading brands including
Mars and Guinness. She is widely
recognised as a leading figure in
the sports, lifestyle and outdoor
sectors with almost 20 years of
experience as Managing Director
of both the adidas and Reebok
brands. Previously she was the
General Manager and Vice
President EMEA of The North
Face, transforming the business
and delivering unprecedented
results. During the last three
years, Kath has been developing
her Non-Executive career.
Skills and Experience
Helen was appointed to the
Board in November 2021.
She has 30 years of experience
of working in public and private
equity backed businesses
and is a qualified chartered
management accountant. As the
former CFO of ASOS Plc, Helen
has a deep knowledge of high
growth, digital fashion in an
international arena. She has
also held Executive level roles
at ASDA, Barclays and Lloyds
Banking Group and CEO
positions in high growth private
equity backed businesses.
Skills and Experience
Neil joined the Group in
June 2004 and was appointed
Chief Financial Officer in
November 2018 having been
promoted from his previous
role as Group Finance Director.
Neil previously held a number
of senior positions within
the Woolworths Group and
qualified as a chartered
accountant with KPMG in 1996.
Skills and Experience
Andy was appointed to the
Board in May 2021. He is
currently the Executive
Director at Pentland Group
and was the CEO of Pentland
Brands, the Pentland Group’s
portfolio of sports and fashion
brands, until the end of 2020,
having previously held the
roles of CFO and COO. Prior
to joining Pentland, Andy
held senior finance roles
at Boots and Procter and
Gamble and is a chartered
management accountant.
Key External Appointments
None
Key External Appointments
None
Key External Appointments
None
Key External Appointments
Executive Director at Pentland
Group and a Board member at
Sport England
92
JD Sports Fashion Plc Annual Report and Accounts 2022
AN EXPERIENCED TEAM DELIVERING OUR
STRATEGiC
ViSiON
BERT HOYT
Non-Executive Director
Aged 66
MAHBOBEH SABETNIA
Non-Executive Director
Aged 40
PETER COWGILL
Executive Chairman
(departed 25 May 2022)
Aged 69
Committee Memberships
R A N
Skills and Experience
Bert was appointed to the
Board in September 2021.
Bert is recognised as one of
the most eminent leaders in the
sporting goods and sportswear
industry in recent years and has
significant experience of global
markets. Prior to his retirement
in January 2021, he held the
position of Vice President
and General Manager of Nike
EMEA. He is acknowledged for
transforming Nike’s business in
Western Europe and EMEA over
the last nine years, achieving
substantial growth in revenues
and profitability. Prior to his
engagement at Nike, Bert spent
10 years at Puma, of which six
were spent as General Manager
for Puma International.
Committee Memberships
Committee Memberships*
Skills and Experience
Peter was appointed Executive
Chairman in March 2004 until he
stepped down from his role with
immediate effect on 25 May 2022.
Peter was previously Finance
Director of the Group until
June 2001. Peter is a chartered
accountant and founder of North
West based chartered accountancy
firm, Cowgill Holloway. In 2019,
Peter was awarded an honouree
doctorate (Doctor of Business
Administration) from the University
of Bolton for his outstanding
contribution to business.
Skills and Experience
Mahbobeh was appointed to
the Board in November 2021
and is a strategic and results
driven executive with significant
digital transformation experience
across various sectors. She
has been at the forefront of
e-business expansions, leading
data-driven consumer insights
to unlock value and framing
new business propositions.
Mahbobeh has an extensive
track record delivering digital
growth in global organisations,
has held executive roles within
Amazon.com Inc, McDonald’s
Corporation, HSBC and Mars Inc.
and is currently Chief Product
Officer for GSK Consumer
Healthcare.
Key External Appointments
None
Key External Appointments
None
Key External Appointments
Non-Executive Chairman of
Roxor Group Limited
Key
N
A
R
Nominations Committee
Audit & Risk Committee
Remuneration Committee
Committee Chair
*
During the 2021/22 financial year
and until he stepped down from
his role on 25 May 2022, Peter
Cowgill was a member of the
Nominations Committee.
** Kath Smith was appointed as Chair
of the Nominations Committee
with effect from 25 February 2022.
Following Kath Smith’s
appointment as Interim Chief
Executive Officer on 25 May 2022,
the Board considered whether
she should continue as Chair of
the Nominations Committee but,
to ensure compliance with the
UK Corporate Governance Code,
has concluded that this position
should be held by the Interim Chair.
This change was effective from
7 June 2022.
93
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022
D I R E C T O R S ’ R E P O R T
NEIL GREENHALGH
CHIEF FINANCIAL OFFICER
Pages 94 to 98 (inclusive) of the Annual Report,
together with the relevant sections of the Annual
Report, which are incorporated into these pages
by reference, constitute a Directors’ Report,
which is required to be produced by law and
is prepared 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
Listing Rules and Disclosure Guidance and
Transparency Rules (‘DTR’s’).
– An assessment of the Group and Parent
Company’s ability to continue as a going
concern, disclosing, as applicable, matters
related to going concern.
The Group is committed to establishing and
maintaining good corporate governance practices
(as set out in the Corporate Governance Report),
which the Board believes is appropriate for the
business of the Group and is fundamental for
retaining effective and long term, sustainable
relationships with its key stakeholders.
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 Group’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 131.
Principal Activity
The principal activity of the Group is the retail
of multibranded, sports fashion and outdoor
clothing, footwear, accessories and equipment.
In accordance with the Companies Act 2006,
the Strategic Report on pages 4 to 91 contains:
– A fair review of the business.
– A description of the principal risks and
uncertainties facing the Group.
– Balanced, comprehensive and understandable
analysis of the development and performance
of the Group’s business during the financial
year, including an assessment of relevant
environmental, employee, social, community
and human rights issues, together with the
Group’s key performance metrics; in a manner
which is consistent with the size and complexity
of the business.
94
The Corporate Governance Report (pages 99
to 105) 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,
which has been approved by the Board and
is set out on pages 4 to 91, comprise the
Group’s management report.
Details of the Group’s use of financial instruments,
together with information on policies and exposure
to interest rates, foreign currency, credit and
liquidity risks can be found in Note 21 to the
financial statements. The information included
in Note 21 is incorporated into the Directors’
Report and is deemed to form part of this
Directors’ Report.
Share Capital
As at 30 January 2021, the Company’s issued
share capital was £2,433,083 comprising
973,233,160 ordinary shares of 0.25p each.
On 3 February 2021, the Company completed the
placing of new ordinary shares in the capital of
the Company. A total of 58,393,989 new ordinary
shares were issued, increasing the total ordinary
shares in issue to 1,031,627,149.
JD Sports Fashion Plc Annual Report and Accounts 2022
An Ordinary Resolution was passed at the Annual
General Meeting, effective 30 November 2021,
resulting in a share split whereby five ordinary
shares were issued for each ordinary share.
The share split increased the total number of
ordinary shares in issue to 5,158,135,745. As at
29 January 2022, the Company’s issued share
capital was £2,579,068 comprising 5,158,135,745
shares of 0.05p each.
Share Allotment Authority
The Directors were granted authority at the
2021 AGM to allot shares in the Company and
to grant rights to subscribe for or convert any
securities into shares in the Company up to a
maximum aggregate nominal amount of £44,845
(which represented approximately 1.74% of the
Company’s issued ordinary share capital as at
1 July 2021). This authority is scheduled to lapse
at the 2022 AGM. At the 2022 AGM, shareholders
will be asked to grant a new allotment authority.
At the 2021 AGM, a resolution was also passed to
permit the Board to allot ordinary shares for cash
on a non-pre-emptive basis both in connection
with a rights issue or similar pre-emptive issue and,
otherwise than in connection with any such issue,
up to a maximum nominal amount of £44,845
(which represented approximately 1.74% of the
Company’s issued ordinary share capital). A new
special resolution will be proposed at the 2022
AGM to renew the Directors’ power in this regard.
Shareholder and Voting Rights
All members who hold ordinary shares are
entitled to attend and vote at the Company’s
Annual General Meeting, save as set out in the
Company’s Articles of Association. 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 final dividend proposed is provided in the
Dividends and Earnings per Share section on
page 41.
Restrictions on Transfer of Shares
The restrictions on the transfer of shares in the
Company are as follows:
– The Board may, in its absolute discretion,
refuse to register any transfer of shares which
are not fully paid up (but not in a manner which
prevents 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.
Substantial Interests in Share Capital
As at 29 January 2022, the Company has been
notified 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:
Number of
ordinary
shares/voting
rights held
% of ordinary
share capital
Pentland Group Plc
2,676,391,195
Fidelity Management
and Research Co
303,131,027
Black Rock Inc
236,903,884
51.9
5.9
4.6
After the financial year end, Fidelity Management
and Research Co’s shareholding reduced to 4.9%
and Black Rock Inc’s shareholding increased to
4.8%. As at the latest date prior to the publication
of this report, the Company has not received
any further notifications in regard to substantial
shareholdings under the Disclosure Guidance
and Transparency Rules.
95
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 DIRECTORS’ REPORT CONTINUED
Relationship Agreement
In accordance with LR 9.2.2 AD R (1), the Company
has in place a legally binding relationship agreement
with its controlling shareholder, Pentland Group
Limited. The Company has complied with the
undertakings included in the relationship agreement
during the period under review. So far as the
Company is aware, the undertakings in the
agreement have also been complied with by
both Pentland Group Limited and its associates
during the period under review.
Directors
Details of all persons who were Directors at
the financial period end including their roles and
brief biographical details are set out on page 92.
The following appointments and resignations
occurred during the financial year:
– Andy Rubin, resigned 6 May 2021.
– Andy Long, appointed 6 May 2021.
– Andrew Leslie, resigned 1 July 2021.
– Martin Davies, resigned 9 July 2021.
– Bert Hoyt, appointed 8 September 2021.
– Helen Ashton, appointed 15 November 2021.
– Heather Jackson, resigned 29 November 2021.
– Mahbobeh Sabetnia, appointed
29 November 2021.
After the financial year end, Suzi Williams was
appointed on 16 May 2022 as Non-Executive
Director. On 25 May 2022, Peter Cowgill stood
down as Executive Chair and Chief Executive
Officer with immediate effect. Helen Ashton was
appointed as Interim Non-Executive Chair and
Kath Smith was appointed as Interim Chief
Executive Officer.
The Directors are responsible for the management
of the business of the Company and, subject to
relevant legislation, regulatory requirements 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, as they see fit.
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.
96
Directors’ Interests
Details of Directors’ interests and those of their
connected persons in the share capital of the
Company are set out on page 125. This information
is incorporated into this Directors’ Report by
reference and is deemed to form a part of it.
Appointment and Replacement
of Directors
The Company’s Articles of Association provide
that the Company may by ordinary resolution
at a 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 2022 AGM
in accordance with the best practice
recommendations of the UK Corporate
Governance Code.
The number of Directors at any one point in time
shall not be less than two.
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.
JD Sports Fashion Plc Annual Report and Accounts 2022 Change of Control –
Significant Agreements
In the event of a change of control of the
Company, the Company and the lenders of the
£700 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.
Employees
The Our People section on pages 76 to 79 provides
information on the Group’s approach to people
and how the Group attracts, retains and develops
its employees. The Strategic Report also sets
out a summary of the measures recently adopted
by the Group to improve the way it engages with
its employees.
As required under the UK Corporate Governance
Code 2018, the Group has made further progress
regarding its stakeholder engagement programme.
The focus of this remains ensuring that the Group’s
employees are well informed about any material
organisational changes in the Group and all
significant matters which may affect the Group’s
financial performance.
Our engagement initiatives continue to go from
strength to strength, further connecting our
people to ensure meaningful two-way dialogue
continues between the business and its colleagues
via our established communication channels.
The Group’s employee forums are well established and
now engage with and comprise of representatives of
every area of the Group’s business. On a regular
basis, the employee forum met with the Group’s
former Executive Chair. It is the Directors’ view
that this regular meeting provided an opportunity
for a transparent and meaningful conversation
between a sample of employees at varying levels
of the Group and the former Executive Chair and
was, therefore, the most effective method of
workforce engagement. The Executive Chair then
provided feedback on these sessions to the rest of
the Group’s Board of Directors. Any appropriate
follow up actions or items to address would be
progressed, as appropriate, by the HR Director and
the HR Department. The Directors considered a
number of other forms of engagement, including
those suggested by the UK Corporate Governance
Code, however, it holds the view that its current
chosen method has prompted positive interaction
between the workforce and the Directors and has
allowed the Directors to incorporate the feedback
provided into its decision making processes.
In addition, a key factor in the Group’s employee
remuneration strategy is encouraging the involvement
of all employees in the Group’s performance so
that every employee feels they have an important
contribution to make in this regard. Full details of
the Group’s remuneration strategy are set out in
the Remuneration Report on pages 114 to 130.
Further details on how employee engagement is
taken into account in the principal decision making
process is set out in the Stakeholder Engagement
section on page 88.
Levels of support for colleagues have also
increased with a number of resources employed
to assist those in need in areas including, but not
limited to, wellbeing at work, first aid and financial
wellbeing. Our membership of the British Retail
Consortium resulted in a pledge from the Home
Secretary to protect retail workers from violence
nationwide, meaning this support is not limited to
our internal activities.
The Group is committed to promoting equal
opportunities in employment regardless of age,
disability, gender reassignment, marriage and
civil partnership, pregnancy and maternity, race
(which includes colour, nationality and ethnic or
national origins), religion or belief, sex or sexual
orientation. Recruitment, promotion and the
availability of training and development 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 their
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.
Further information regarding the Group’s
approach to equality and diversity is set out
in the Strategic Report on page 77.
Suppliers, Customers and Others
Details of how the Directors have had regard to the
need to foster the Group’s business relationships
with suppliers, customers and others, and the
effect of that regard, including on principal
decisions taken during the financial year, can be
found in the Stakeholder Engagement section on
pages 87 to 91.
Post Balance Sheet Events
Details of post balance sheet events are provided
in Note 34 of the financial statements.
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 DIRECTORS’ REPORT CONTINUED
Future Developments
Future developments are discussed throughout
the Strategic Report on pages 4 to 91.
Disclosure of Information to the Auditor
Each person who is a Director at the date
of approval of this report confirms that:
Political Donations and Expenditure
Neither the Company nor any of its subsidiaries
has made any political donation or incurred
any political expenditure during the period
under review.
Research & Development
During the financial period ended 29 January 2022,
the Group engaged in Research & Development
activity in relation to technological advances in
the Group’s multichannel solution.
Energy consumption and emissions
Information about greenhouse gas emissions,
energy consumption and energy efficiency action
are shown in the Corporate and Social Responsibility
report on page 63. This information is incorporated
into this Directors’ Report by reference and is
deemed to form part of it. Details of the energy
efficiency action taken by the Group in 2020/21
can be found on page 118 of last year’s annual
report at www.jdplc.com.
Auditor
As set out on page 113, the Audit & Risk
Committee has recommended that KPMG LLP
be re-appointed as auditors for the financial
year 2022/23. 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. For further details
regarding the audit tender process that was
undertaken during the 2021/22 financial year,
please refer to page 113 of the Audit & Risk
Committee report.
– 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 on Friday 22 July
2022 at the offices of Addleshaw Goddard LLP, 1
St. Peter’s Square, Manchester, M2 3DE. The notice
of this year’s AGM is included in a separate circular
to shareholders. This notice will be available to
view under the ‘Investor Relations’ section of the
Company’s website (www.jdplc.com/investor-
relations). If, however, restrictions upon public
gatherings are in place at the time of the AGM,
the Board will consider the need to hold the
AGM as a closed meeting or subject to other
restrictions on attendance.
By order of the Board
Neil Greenhalgh
Chief Financial Officer
22 June 2022
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JD Sports Fashion Plc Annual Report and Accounts 2022 C O R P O R A T E G O V E R N A N C E R E P O R T
“ The Board’s role is to ensure
that the Group is led in a
manner which protects the
long-term interests of its
shareholders whilst also
balancing and promoting
the interests of its other key
stakeholders, including its
employees and suppliers.”
NEIL GREENHALGH
CHIEF FINANCIAL OFFICER
The Board promotes the principles set out in the
UK Corporate Governance Code 2018 as issued
by the Financial Reporting Council (‘FRC’) (the
‘Code’). This report sets out how the Company
has applied the main principles set out in the Code.
The statement of the Company’s compliance with
the relevant provisions of the Code is set out on
page 105. This report includes relevant provisions
of the Code, where appropriate. The full Code can
be found on the FRC website (www.frc.org.uk).
Matters Reserved for the Board
The Board has a formal schedule of matters
reserved specifically to it for decisions
which include:
– Strategic decision making and shaping of
future strategy.
– Approval of the Group’s financial statements.
– Corporate acquisitions and disposals.
– Significant capital projects.
Board Composition
At the financial year end, the Board comprised
seven Directors: the former Executive Chair, the
Chief Financial Officer and five Non-Executive
Directors. The name, position and a brief profile
of each Director is set out on page 92. Kath
Smith was appointed as Senior Independent
Non-Executive Director on 25 February 2022.
The previous Senior Independent Director was
Martin Davies who left the Board on 9 July 2021.
There was no designated Senior Independent
Non-Executive Director in between these dates.
Peter Cowgill had been in his role for more than
nine years. At its 2021 AGM on 1 July 2021, the
Group announced, with the support of Peter
Cowgill, that it intended to divide the role of
Executive Chair and Chief Executive Officer
before the 2022 AGM. On 25 May 2022, the
Group announced that it had decided to
accelerate the separation of the roles of Chair
and Chief Executive Officer. Peter Cowgill stood
down as Executive Chair and Chief Executive
Officer with immediate effect. Helen Ashton
was appointed as Interim Non-Executive Chair
and Kath Smith was appointed as Interim Chief
Executive Officer. For further details, please
see the Statement from the Board on page 4.
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.
Board Leadership
The Board’s role is to ensure that the Group is led
in a manner which protects the long term interests
of its shareholders, whilst balancing and promoting
the interests of its other key stakeholders, including
its employees and suppliers.
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 11 scheduled Board meetings
during the year under review and ad hoc meetings
were held in between scheduled meetings, where
required. Director attendance at scheduled Board
and Committee meetings is set out in the table on
page 101.
Group Purpose
The Group’s purpose is to be a leading international
multichannel retailer of sports, fashion and outdoor
brands with core values of connecting with
consumers through continual investment in our
store portfolio, nurturing our global branded
supplier relationships and improving our
sustainability and financial performance.
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 CORPORATE GOVERNANCE REPORT CONTINUED
How the Board contributes to the delivery
of the Group’s strategy and purpose:
– The Board receives appropriately detailed
Board papers prior to considering major
strategic decisions and tests each decision
against the Group’s strategic objectives.
– The Group’s status as a premier strategic
partner with international brands is an important
factor in the strategy and success of the Group
and the Group’s relationship with these key
brands is discussed at regular Board meetings.
There are robust Board approval procedures in
place to ensure that acquisitions and expansion
into new territories align with the overall
corporate strategy and further develop
these brand relationships.
– The Chief Financial Officer, as ESG Committee
Chair, is appraised of climate-related issues
both informally and formally on a regular basis.
The Chief Financial Officer will then provide
updates as required during the regular Board
meetings. Furthermore, the Board is informed
of climate-related issues, updates and metrics
via formal Board reports which are circulated
on a monthly basis. Ad hoc sessions are also
held where the ESG Committee will present
updates regarding specific issues, achievements
and metrics to the Non-Executive Directors.
– Representatives from our ESG Committee
undertake regular engagement sessions with
our largest third-party brands to monitor their
continued global leadership with regards to
sustainable product innovation, commitments
to reduce the impact of climate change and
supply chain transparency.
– It is the Board’s strong belief that if colleagues
feel supported, respected and empowered to
achieve their ambitions regardless of background,
this will ultimately promote the long-term success
of the Group. The culture section provides
further details regarding the Board’s two-way
dialogue with our colleagues and the Our People
section on page 76 explains how we continue to
promote wellbeing, diversity, inclusion and
equality across the Group.
How the Group generates long-term
sustainable value:
The Board considers that the following align with
the Group’s strategic objectives and generate
long-term sustainable value:
– The Group operates from a stable financial base
with a history of strong revenue and profit growth
over a sustained period. The Group has delivered
total shareholder returns (‘TSR’) with reference to
the graph on page 126 which compares the
Group’s TSR with the FTSE All Share General
Retailers Index over the past 10 years.
of key risks in the fast-paced retail environment in
which the Group operates. This involves applying
severe but plausible scenarios and assessing the
impact on the financial position and performance
of the Group. For further details see our Viability
Reporting on page 33.
– The Group supports the economies in the
territories in which it operates by providing
employment both in the UK and internationally.
At the financial year end, the Group
employed 73,519 people (2021: 61,053).
– The Group takes a responsible approach
to the management of taxes and aims to
work transparently and collaboratively with
all stakeholders. The Group is committed to
paying the right amount of tax, in the right
place, at the right time. It recognises the
importance of respecting the spirit and
letter of the law, including allocating value
by reference to where it is created, managing
it within the normal course of commercial
activity and paying the associated tax.
– The Group’s global empowerment section
on page 84 explains how we promote
our values through our global initiatives,
supporting communities in the Group’s
international territories and beyond.
Culture
The Board strives to build a diverse and inclusive
team who promote the values of the Group. We
strive to create a workplace in which everyone is
safe, supported and respected, treated fairly and
taken care of, listened to and motivated to achieve
their full potential. This is achieved by educating,
informing and responding to our colleagues.
We assess and monitor culture in the following ways:
– Through the creation of a new Experience team
within our People team. The focus of this team is
to engage with all colleagues to ensure that all
experiences, values and voices across the Group
are provided with appropriate platforms to engage
in meaningful two-way dialogue with the Board.
– Engagement and attendance at forums by
Executive Directors to listen to the issues that are
important to our colleagues. Issues are relayed
back to the Board at the regular Board meetings
supported by the Group’s People Director.
– Inclusion of relevant information within the
reporting packs that are circulated to the
Board on a monthly basis.
– Annually reviewing the whistleblowing policy.
The mechanisms for employees to access
whistleblowing channels has been recently
reviewed to ensure that they are effective.
During the year:
– On an annual basis, the future viability of the
Group is internally assessed over a three-year
period by considering the potential future impact
– We continued to promote the values that
underpin the Group’s culture through our
global initiatives. Further details of some
100
JD Sports Fashion Plc Annual Report and Accounts 2022 of the initiatives undertaken in the year can
be found on page 84 or on our corporate
website at www.jdplc.com/esg/social/global-
empowerment.
– The Group continued to achieve excellence in
the areas of Health & Safety and the protection
of our colleagues in their working environment.
For the third successive year, the Group has
received an award from the Royal Society for
the Prevention of Accidents in recognition of
our UK retail health and safety performance.
– As members of the British Retail Consortium,
the Group was instrumental in obtaining the
signature of the Home Secretary to support the
legislation necessary to protect retail workers
from violence against shopworkers nationwide.
As a result of the recent Non-Executive Director
resignations and appointments, the Board is
relatively new. Engagement will continue in the
short term to embed the Group’s culture and
values with the aim of marrying the Group’s
entrepreneurial culture and competitive spirit
with the planned improvements to ensure that
an enhanced governance, risk and internal
controls framework is in place. For further details
on these planned improvements, please see the
Audit & Risk Committee report on pages 108 to 113.
Succession Planning
The main focus of the Board’s objectives this year
has been succession planning in three key areas:
– the role of Chair/Chief Executive Officer;
– the composition of the Board; and
– the strength and development of the Senior
Leadership Team.
Each succession programme has unique methods
and objectives but ultimately is centred around
securing the future long-term success of the
Group’s business. An overview of the Board’s
composition and succession activities, during the
course of this year, is set out on pages 106 and 107
of the Nominations Committee report.
The independence of the Non-Executives is carefully
considered by the Board on a continual basis:
– Bert Hoyt was formerly appointed as Head
of Europe for Nike, the Group’s largest supplier.
The Nominations Committee considered Bert’s
independence and was satisfied with this position
given the gap of one year in between Bert leaving
Nike and subsequently joining the Group as a
Non-Executive Director.
– It is acknowledged that Kath Smith cannot
currently act as Senior Independent Director
following her appointment as Interim Chief
Executive Officer on 25 May 2022. It is the
Board’s intention that she will revert back to
her former role upon the appointment of a
permanent Chief Executive Officer. Based on
the current progress in this search, the Board
expects that Kath Smith will resume her role as
Senior Independent Director before the end of
the financial year, meaning that the Group is
compliant with this aspect of the UK Corporate
Governance Code for the start of the next
financial year.
– All other Non-Executives, save for Andy Long,
are considered to be independent by the Board.
Andy Long is an Executive Director at Pentland
Group and is therefore not considered by the Board
to be an independent Non-Executive Director.
The Board considers that all Directors are able to
devote sufficient time to their duties as Directors
of the Company. The brief biographical detail on
pages 92 to 93 includes details of the former
Executive Chair’s other key external appointment.
The Board was satisfied that the limited time
commitment required for the former Executive
Chair to perform his other appointments and roles
did not conflict with his ability to carry out his role
effectively for the Group.
Attendance at Board and Committee Meetings
Year to 29 January 2022
Total number of meetings
P Cowgill
N Greenhalgh
A Leslie
M Davies
H Jackson
A Rubin
K Smith
A Long
B Hoyt
H Ashton
M Sabetnia
Board Meetings
Remuneration
Committee
Audit & Risk
Committee
Nominations
Committee
11
11
11
7
7
9
4
11
7
3
2
1
2
–
–
–
–
1
–
2
1**
1
1
1**
4
1*
4*
1
1
3
1
4
–
1
1
–
4
4
–
1
1
3
–
4
–
1
1
–
*
P Cowgill and N Greenhalgh 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.
** These Non-Executive Directors were present during the meeting but as observers only.
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A summary of the rules that the Company has in
place about the appointment and replacement of
Directors is set out on page 96. Notwithstanding
the provisions of the Company’s Articles regarding
the retirement of Directors, the Board determined
that all Directors will retire at the 2022 AGM and
offer themselves for re-election in accordance
with the best practice recommendation of the
UK Corporate Governance Code.
Board Diversity
An overview of the Board’s composition with
regards to diversity is set out on page 107 of the
Nominations Committee report.
Activities of the Board During the Year
The Board has undertaken a number of activities
during the year including:
– Approved a number of key strategic
corporate acquisitions to further develop
the international growth of the Group
(see Note 11 of the financial statements).
– Appointing BDO LLP to undertake a review of
the Group’s compliance with the UK Corporate
Governance Code. This review was led by a
sub-committee of the Board including Senior
Independent Director, Kath Smith and Helen
Ashton, Chair of the Audit & Risk Committee.
The sub-committee was chaired by Kath Smith.
Further detail is provided in the Audit & Risk
Committee report on page 109.
– Assessing the key regulatory risks posed
to the Group and the various measures
being implemented to counter this risk
on an ongoing basis including in relation to
regulatory frameworks such as competition law.
Since the year end, the Board has engaged
external advisors to carry out a number of
independent investigations into certain matters
including regulatory issues. For further details,
please see page 108.
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, a summary of key
risk and compliance issues and papers on major
issues for consideration by the Board. The Board
has a formal procedure for Directors to obtain
independent professional advice.
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.
From time to time, the Non-Executive Directors met
with the former Executive Chair without the other
Director present to discuss Board performance and
other matters considered appropriate.
Board Evaluation
As an externally facilitated Board evaluation was
carried out during 2020/21, the Board deemed
it appropriate to carry out an internal evaluation
of its performance during 2021/22.
The evaluation exercise required the Board
members to score themselves individually
and the Board as a whole on topics such as:
– The Board’s contribution to the shaping of
the Group’s strategy.
– An assessment of the effectiveness of the
Group’s risk management approach.
– The process of sharing information with the Board
to allow appropriate and effective interaction
between the Board and the rest of the Group.
– The Board’s expertise and skills in the context
of the Group.
– The effectiveness of the Committee and
the relevant expertise and experience of
Committee members.
– The decision making process adopted by
the Board and the Senior Leadership Team.
All evaluation responses were collated and will be
discussed at a future Board meeting.
Insurance Arrangements
The Company, through its majority shareholder
Pentland Group, 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.
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 all Corporate Governance and legal
matters. In the event that the Company Secretary
is not available, there are a number of other fully
admitted solicitors in the wider legal team.
Board Committees
The Board delegates certain powers to Board
Committees. There are three principal Board
Committees to which the Board has delegated
certain responsibilities. The terms of reference
for all three Committees are reviewed by each
Committee regularly and are available
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JD Sports Fashion Plc Annual Report and Accounts 2022 for inspection on request or on the Group’s
corporate website www.jdplc.com.
Audit & Risk Committee
At the start of the financial year, the Audit & Risk
Committee comprised three independent Non-
Executive Directors; Martin Davies, Andrew Leslie
and Heather Jackson. Martin Davies was the Chair
of the Audit & Risk Committee until his resignation
on 9 July 2021. Martin was replaced by Heather
Jackson as Interim Chair until Helen Ashton’s
appointment on 15 November 2021. Following
the Non-Executive Director resignations and
appointments during the year, the Audit & Risk
Committee currently comprises; Helen Ashton, Bert
Hoyt and Kath Smith with Helen Ashton as the Chair.
The Board notes that it is a requirement of
the DTRs and a recommendation of the Code
that the Audit & Risk Committee as a whole shall
have competence relevant to the sector in which
the Company operates. This is something which
was explored during the Board Evaluation process.
The Board confirms that it considers the composition
of the Audit & Risk Committee provides the requisite
skills and experience. However, the Board and the
Audit & Risk Committee considers it is prudent to
keep this under continual review in order to ensure
that it remains satisfied that the expertise of the
membership of the Audit & Risk Committee remains
appropriate. The brief biographical detail on page 92
and the skills table included in the Nominations
Committee report on page 107 includes details of
the experience and expertise of the Board.
The Audit & Risk Committee met four times during
the year with the external auditor attending part
of each meeting. Details of attendance at Audit &
Risk Committee meetings are set out in the table on
page 101. The Audit & Risk Committee has held four
meetings to date in the current financial year.
Remuneration Committee
At the start of the financial year, the Remuneration
Committee comprised four independent Non-
Executive Directors; Andrew Leslie, Martin Davies,
Heather Jackson and Kath Smith. Andrew Leslie was
the Chair of the Remuneration Committee until his
resignation on 1 July 2021. Kath Smith served as
Interim Chair until Bert Hoyt was appointed as
Interim Chair of the Remuneration Committee in
February 2022. Following the Non-Executive
Director resignations and appointments during
the year, the Remuneration Committee currently
comprises; Helen Ashton, Bert Hoyt and Kath Smith.
Suzi Williams was appointed on 16 May 2022 as
Non-Executive Director and will replace Bert Hoyt as
Chair of the Remuneration Committee in due course.
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.
– The terms of any performance-related and/or
long term incentive schemes operated by the
Group and awards thereunder.
The Remuneration Committee met twice during
the year. Details of attendance at Remuneration
Committee meetings are set out in the table on
page 101. Further details about Directors’
remuneration are set out in the Directors’
Remuneration Report on pages 114 to 130.
Nominations Committee
At the start of the financial year, the Nominations
Committee comprised; Peter Cowgill as Chair,
Andrew Leslie, Martin Davies, Heather Jackson
and Kath Smith. Following the Non-Executive
Director resignations and appointments during
the year, the Nominations Committee comprised
Peter Cowgill (until his departure on 25 May 2022),
Kath Smith, Bert Hoyt and Helen Ashton. Kath Smith
was appointed as the Chair of the Nominations
Committee with effect from 25 February 2022.
Following Kath Smith’s appointment as Interim
Chief Executive Officer on 25 May 2022, the Board
considered whether she should continue as Chair
of the Nominations Committee but, to ensure
compliance with the UK Corporate Governance
Code, has concluded that this position should be
held by the Interim Chair. This change was effective
from 7 June 2022.
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 matters delegated to the remit of
the Nominations Committee include Board structure,
succession planning and the performance of the
Board and the Senior Management.
The Nominations Committee met four times during the
year. Details of attendance at Nominations Committee
meetings are set out in the table on page 101.
The gender balance of the Board, Senior Management
team and the wider employee group is set out in the
Our People section of the Corporate Social
Responsibility Report on page 77.
Further details about the Nominations Committee
and its activities are set out in the Nominations
Committee Report on pages 106 to 107.
Audit, Risk & Internal Control
For further information on the Company’s
compliance with the Code provision relating to the
Audit & Risk Committee and auditors, please refer
to the Audit & Risk Committee Report on page 108.
The Group’s approach to internal audit, internal
controls and risk is also detailed on page 110
of the Audit & Risk Committee Report.
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 CORPORATE GOVERNANCE REPORT CONTINUED
During the 2021/22 financial year, the FRC
made a request for further information regarding
the disclosures in the Group’s 2021 Annual Report
and Accounts as part of its regular review and
assessment of the quality of corporate reporting
in the UK. The letter focused on non-controlling
interests, intangible assets, lease accounting, net
debt to equity ratio, operating segments and
corporate governance reporting. The Group
provided various undertakings to the FRC to
enhance the disclosures in these areas and the
FRC subsequently closed their enquiries.
The FRC has requested that we make clear the
limitations of its review. The FRC’s review was
based on the 2021 Annual Report and Accounts
and, whilst it was conducted by staff who have
an understanding of the relevant legal and
regulatory framework, the FRC does not have
detailed knowledge of the business or an
understanding of the underlying transactions
entered into. Communications from the FRC
provide no assurance that the Group’s 2021 Annual
Report and Accounts are correct in all material
aspects and are made on the basis that the FRC
accepts no liability for reliance on them by the
Company or any third-party, including but not
limited to, investors and shareholders. The FRC’s
role is not to verify information provided but to
consider compliance with reporting requirements.
AGM Resolutions
At the Company’s AGM, all resolutions, save for the
independent shareholder vote on resolution 6, were
duly passed on a poll with the requisite majority.
However, the Board acknowledges that in respect
of the resolutions set out as follows, a more than
20% vote against was received:
– Approval of the Directors’ Remuneration Report
(Ordinary resolution).
– Approval of the Directors’ Remuneration Policy
(Ordinary resolution).
– Re-election of Andrew Leslie (Ordinary resolution)
Throughout the course of the year, the Company
has been in regular dialogue with a wide range of
investors and its other key stakeholders in order to
understand their concerns regarding the remuneration
related resolutions. During its ongoing engagement
with shareholders, the Board has received very
positive feedback from shareholders in respect of
the changes made to its new remuneration policy,
the material change being the addition of a share-
based long-term incentive plan to ensure better
alignment between Executive pay and long-term
shareholder value. The Board has confirmed to its
shareholders that there will be additional amendments
to its remuneration structures, within the terms of
the new remuneration policy, in the future which will
further align Executive pay with the long-term interests
of its shareholders. Page 120 of the Directors’
Remuneration Report provides further details in
the Consideration of Shareholder Views section.
104
It is acknowledged that, at the AGM in 2021,
Andrew Leslie did not receive the requisite number
of votes from the independent shareholders and
was, therefore, not re-elected to the Board.
Shareholder Relations
Reflecting the importance of its shareholders, the
Company’s ongoing engagement with shareholders
is led by a senior leadership team consisting of
the Executive Directors, the Senior Independent
Director, the Investor Relations Manager and the
Company Secretary, who have engaged directly with
shareholders over the course of the last financial year.
During this period, the senior leadership team
have been in regular contact with many of the
Company’s shareholders and conducted multiple
virtual meetings (including conference calls
and investor road shows), particularly to seek
shareholder views on matters such as corporate
governance, Company business strategy and
financial performance. The Executive Directors aim
to provide the Company’s shareholders with up to
date and reliable information on these shareholder
priority areas in a transparent and collaborative
way, and encourages shareholders to contact
them should they have any concerns they wish to
discuss. The Investor Relations Manager supports
the Executive Directors by being a key source of
regular updates on analyst/broker market reaction,
shareholder feedback and managing continuous
engagement between the Company’s shareholders
and the Executive Directors.
In October 2021, the Group held its second Capital
Markets Day event. This was done physically in
London with a video link that enabled international
investors to join. The purpose of this event was to
demonstrate to shareholders the strength and
depth of expertise across senior positions within
the Group (including other territory trading
divisions and Outdoor) and created direct
engagement with these individuals.
Responding to shareholder feedback during the
2021/22 financial year, the Group has sought
to address some of the key concerns raised, such as:
– Creating an improved Group investor website
(www.jdplc.com) which provides increased
information on Group financial performance
and Environment, Social and Governance (ESG)
issues in a more accessible way.
– Made significant progress regarding Board
diversity by recruiting additional Non-Executive
Directors, which has resulted in the Company
being compliant with the initiatives on board
diversity proposed by the Hampton-Alexander
Review and the Parker Review.
– Following the resignations of Andrew Leslie,
Martin Davies and Heather Jackson, the Group
has recruited four new Independent Non-
Executive Directors and has consequently
appointed new Chairs for the Remuneration,
Nominations and Audit & Risk Committees
and a new Senior Independent Director.
JD Sports Fashion Plc Annual Report and Accounts 2022 – Commenced the process to split the current
combined Chief Executive Officer and Executive
Chair role in line with the recommendations of
the UK Corporate Governance Code 2018.
Compliance with the code
The Directors consider that during the year under
review and to the date of this report, the Company
complied with the Code except as follows:
– Code Provision 5: In relation to engagement with
the workforce, the Group does not have a designated
Director appointed to the Board from the workforce
who is responsible for this engagement, nor does
it have a formal workforce advisory panel or a
designated Non-Executive Director responsible for
this engagement. The former Executive Chair and
the Chief Financial Officer had regular interactions
and meetings with the Group People Director who
updated them regularly about the views of the
workforce. The former Executive Chair and the
Chief Financial Officer subsequently reported these
views back to the Board. The Board also receive
updates about the workforce in an information pack
circulated to all Board members prior to most
Board meetings. The Group therefore considers
that it has effective arrangements in place in this
regard but plans to review this position before the
end of the current financial year.
– Code Provision 9: The role of Chief Executive
Officer and Executive Chair was undertaken
by one person, Peter Cowgill, which has been
the case for almost the last eight years.
During this period, the Board believed that there
was sufficient separation of responsibilities of
the roles usually undertaken by the Chair and
the Chief Executive Officer as decisions on
certain key matters were specifically reserved
for the Board and the former Executive Chair
was subject to challenge from the Chief Financial
Officer, the Non-Executive Directors and the
Company’s highly experienced Senior
Management team. Notwithstanding this, during
the year the Company commenced a process to
split the role of the Chair and the Chief Executive
Officer. Following the departure of the former
Executive Chair on 25 May 2022, Helen Ashton
was appointed as Interim Chair with Kath Smith
appointed as Interim Chief Executive Officer.
The Nominations Committee is in the process of
recruiting a Group Chief Executive Officer and
Independent Non-Executive Chair. The Nominations
Committee Report on page 107 provides more
information in relation to the work undertaken
by the Company to date.
– Code Provision 12: There was no Senior
Independent Non-Executive Director between
9 July 2021 and 25 February 2022. There were
a number of new appointments made to the
Board in this period and the Board wanted
time to assess the skills and qualities of the
new members to ensure it made the correct
long-term appointment. As of 25 May 2022, the
Company no longer has a Senior Independent
Non-Executive Director, following the
appointment of Kath Smith as Interim Chief
Executive Officer. The Company is currently
considering the correct long-term appointment
and considers this position to be justifiable
on a temporary basis given the exceptional
circumstances. It is intended that the current
Interim Chief Executive Officer will revert back
to the role of Senior Independent Non-Executive
Director following the appointment of a Group
Chief Executive Officer.
– Code Provision 19: Peter Cowgill had been in his
role for more than nine years. Peter received
strong shareholder support and was subject to
annual re-election. On 25 May 2022, the Group
announced that it had decided to accelerate
the separation of the roles of Chair and Chief
Executive Officer. Peter Cowgill stood down as
Executive Chair and Chief Executive Officer with
immediate effect.
– Code Provision 24: There were less than three
members on the Audit & Risk Committee
between July and October 2021 and during this
period at least one member did not have recent
and relevant financial experience until Helen
Ashton was appointed in November 2021.
Andrew Leslie did not receive sufficient votes
to be re-elected to the Board in July resulting
in him stepping down from his position on the
Audit & Risk Committee. The Board required
time to consider carefully which of the new
upcoming members of the Board held the
requisite skills and qualities to become a
long-term member of the Committee. Helen
Ashton was appointed as Chair of the Audit &
Risk Committee on 15 November 2021 and, as
detailed in her biography on page 92, has recent
and relevant financial experience. Further, Bert
Hoyt has now been appointed to join the Audit &
Risk Committee, alongside Helen and Kath. As of
25 May 2022, following Helen Ashton’s appointment
as Interim Chair of the Board, Helen Ashton serves
as both Chair of the Board and Chair of the Audit
& Risk Committee. The Company is currently
considering the correct long-term appointment
and considers this position to be justifiable on a
temporary basis given the exceptional circumstances.
– Code Provision 32: Bert Hoyt was appointed
as Interim Chair of the Remuneration Committee
in February 2022. Bert has not previously served
on a remuneration committee for at least 12 months.
It is intended that Suzi Williams will replace
Bert as Chair of the Remuneration Committee
in due course and has previously served on a
Remuneration Committee for at least 12 months.
This report was approved by the Board and signed
on its behalf by:
Neil Greenhalgh
Chief Financial Officer
22 June 2022
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“ We are highly committed to Board
excellence and leadership. Ensuring
that the Board has the appropriate
balance and depth of skills, knowledge,
experience, market expertise, consumer
insight, diversity and independence
is of the utmost importance to the
Committee. We are very pleased to
have met the requirements for both
the Parker Review and the FTSE
Women Leaders: Improving gender
balance in FTSE leadership.”
HELEN ASHTON
CHAIR OF THE NOMINATIONS
COMMITTEE
Committee Role and Membership
Current Members
– Helen Ashton (Chair of the Committee)
– Bert Hoyt
The Committee was previously chaired by
the former Executive Chair but had been chaired
by Kath Smith since 25 February 2022. On 25 May
2022, following the departure of Peter Cowgill,
Kath Smith was appointed Interim Chief Executive
Officer. The Board also considered whether she
should continue as Chair of the Nominations
Committee but, to ensure compliance with the UK
Corporate Governance Code, has concluded that
this position should be held by the Interim Chair.
This change was effective from 7 June 2022.
In accordance with Provision 19 of the UK
Corporate Governance Code, the majority of
the members of the Nominations Committee
are independent Non-Executive Directors.
Committee Role
The Nominations Committee’s role and
responsibilities are covered in its terms of
reference which are available on our corporate
website. Individual meeting attendance and
changes to membership are referenced on
pages 101 and 103 and more detailed information
on the skills and experience of all Committee
members can be found on pages 92 and 93.
The Committee’s performance was reviewed as
part of the 2021/22 internally facilitated Board
Evaluation, which is covered on page 102.
Committee Activities 2021/22
Non-Executive Director Appointments
– Kath Smith was appointed as Interim Chair
of the Remuneration Committee in July 2021
(a role that was subsequently taken over by
Bert Hoyt in February 2022 when Kath became
Senior Independent Non-Executive Director
and Chair of the Nominations Committee).
– In 2021, Andy Rubin, Andrew Leslie, Martin
Davies and Heather Jackson stepped down
from the Board and the Board gave thanks
for their service.
– The Board agreed that it was necessary to
replace all of the Non-Executive Directors
who had resigned and also to expand and
diversify the Board.
– The Committee identified the need to appoint
Non-Executive Directors with industry experience,
audit and risk and remuneration experience as well
as digital, data and technological expertise. The
Board was advised of the availability of Bert Hoyt,
Board split by gender as at 29 January 2022
Board tenure as at 29 January 2022
Male 4
Female 3
0-1 years 4
1-5 years 3
5 years+ 1
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JD Sports Fashion Plc Annual Report and Accounts 2022 myself, Mahbobeh Sabetnia and more recently
Suzi Williams and concluded that each of these
individuals would enhance and bring important
and, in some instances, new skills to the Board.
– Bert Hoyt brings considerable veteran industry
experience. Bert’s sector experience of multiple
economic cycles, combined with Kath Smith’s,
can ensure that past lessons can inform the
challenges of the future.
– I am a qualified chartered management
accountant and, as the former CFO of ASOS Plc,
have deep knowledge and experience of high-
growth digital fashion. I have also been appointed
to Chair the Audit & Risk Committee.
– Mahbobeh Sabetnia has an extensive track
record delivering digital growth in global
organisations. Mahbobeh’s expertise enables the
Board to better evaluate the opportunities
and risks of digital, data and technology.
– Suzi Williams, our most recent addition to the
Board, has significant consumer marketing and
management experience and is a seasoned FTSE
250 Non-Executive Director and Remuneration
Chair. It is expected that Suzi will take up the role
of Remuneration Committee Chair in due course.
– All of the Board members appointed during
the financial period ended 29 January 2022
have completed their full, formal and tailored
induction programmes.
Succession Planning
Below is a skills matrix which sets out the core skills,
experience, knowledge and diversity represented
by our current Board members. We hope to expand
the Board in due course and will use this matrix to
help us in preparing role specifications and
evaluation of potential new Board candidates.
External search consultants have been engaged
to assist with the process for appointing Non-
Executive Directors during the year. These external
search consultants have no connection to the
Group or any individual Directors.
Skills and experience
Number of Directors
Operational/Commercial
7
Listed Market
experience and
governance
CEO experience
Brand Marketing
Cyber Risk & Digital
Finance/Accounting
Property
1
4
3
3
3
3
Search for a New Group CEO and Chair
At its 2021 AGM on 1 July 2021, the Group
announced, with the support of the former
Executive Chair, that it intended to divide the
role of Executive Chair and Chief Executive
Officer before the 2022 Annual General Meeting.
Subsequently, working with Spencer Stuart, it
commenced a global search for a new Group
Chief Executive Officer. The Group is also
working with Spencer Stuart on the recruitment
of a Chair to guide the business through its next
phase of growth and evolution. These processes
are ongoing and are being led by the Interim
Chief Executive Officer, Interim Chair and one
other independent Non-Executive Director who
are all members of the Nominations Committee.
The departure of the former Executive Chair on
25 May 2022 has not changed the approach to
these searches and the Board will announce
further details in due course.
Equality, Diversity and Inclusion
Our Equality, Diversity and Inclusion Policy is
embedded in our approach to recruitment at
all levels, including the Board. That policy is
that all employees are treated fairly and equally
regardless of age, disability, gender reassignment,
marriage and civil partnership, pregnancy and
maternity, race (which includes colour, nationality
and ethnic or national origins), religion or belief,
sex or sexual orientation.
We are proud to have met the requirements of
the Parker Review and the FTSE Women Leaders:
Improving gender balance in FTSE leadership but
we are not complacent. In July 2021, the Board
comprised two female and five male Board
members. As at the date of this report, there
are four female and three male Board members
following the appointment of Suzi Williams on
16 May 2022 and the departure of Peter Cowgill
on 25 May 2022. We acknowledge the benefits
of diversity in all its forms and we will continue
to strive to make our Board and senior leadership
teams more representative of our diverse workforce.
Future Aims
To ensure all of our new Board members
become fundamentally engaged with the
business and remain orientated to the
future and work in a spirit of openness
and transparency with the Executive team.
Helen Ashton
Chair of the Nominations Committee
22 June 2022
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“ The changes to the internal
controls framework that we
plan to implement in 2022
and 2023 will stand the
Group in good stead for the
reforms proposed by BEIS
in their 2021 consultation.”
HELEN ASHTON
CHAIR OF THE AUDIT & RISK COMMITTEE
Composition
The composition of the Audit & Risk Committee
(‘Committee’) is detailed on page 103 and full
details of the skills, experience and qualifications
(including recent and relevant financial experience)
can be found in the biographies on pages 92 and
93 and the skills table on page 107. The Committee
member meeting attendance table is shown
on page 101.
workstreams with a three-month intensive
programme of works to correct priority issues
complemented by the development of longer
term initiatives which will deliver the necessary
compliance framework and embed this into
operational practices. The Board are also
committed to making the necessary resource
available, internal and external, to ensure that
these commitments are delivered.
Overview
This has been a time of significant transition
for the Committee, the Board and the wider Group.
The Group has performed extraordinarily well in
managing both the supply chain disruption and
frequent consumer channel shift through the
COVID-19 pandemic. However, balancing the
operational requirements of running and growing
a business through a global pandemic with the
obligations of elevating governance standards
to those expected of a FTSE 100 listed business
has been complex and not without challenge.
A number of regulatory issues have arisen through
this time which have highlighted the need for both
greater relevant experience on the Board and
more formalisation in governance systems, risk
management recording, the documentation and
appraisal of internal controls and the mechanisms
for reporting relevant matters to the regulatory
authorities where appropriate.
Since the year end, the Board has engaged
external advisors to carry out a number of
independent investigations into certain matters
including these regulatory issues. Alongside these
investigations, the Board has completed a review
of the Group’s Corporate Governance operating
model and assessed its current compliance with
the UK Corporate Governance Code. The Board
is committed to making the necessary changes
highlighted through these reviews and has formally
agreed a rectification programme plan which
aims to rebase the control, risk and compliance
environment. This programme has four principal
108
CMA Regulatory Compliance
Issue: In December 2020, the Competition and
Markets Authority (‘CMA’) opened an investigation
into suspected anti-competitive behaviour,
involving JD Sports and certain other parties, in
relation to the price at which Rangers-branded
replica football kit was sold in the United Kingdom
between September 2017 and August 2020.
The CMA subsequently also opened a formal
investigation into conduct relating to Leicester
City branded products in September 2021.
Remedy: Working with external advisors, the
Group has already undertaken multiple training
sessions for key business teams, including the
senior leadership team. Further, having identified
the core “building blocks” for a comprehensive
compliance programme, the Group has a project
plan which is part way through implementation:
– Short-term: Immediate actions include training
sessions for Directors, senior management
and subsidiary businesses together with
the finalisation and roll out of a competition
compliance policy.
– Long-term: Longer term initiatives include
competition compliance built into the induction
process, annual refresher training and scheduled
regular independent monitoring of compliance
including spot checks of higher risk areas via
audit interviews/key word searches.
On 7 June 2022, the CMA announced that it had
issued a Statement of Objections with regards to
the sale of Rangers-branded replica football kit.
JD Sports Fashion Plc Annual Report and Accounts 2022 The CMA’s findings are, at this stage, only
provisional with the Group having the opportunity
to respond to them. The CMA will then consider
any representations that are made before issuing
its final findings as to whether there has been a
breach in competition law. Whilst the process to
reach that final decision may take several months,
the Board has reviewed the information available
to it at this stage, including advice from third-party
experts, and believes that it is appropriate to
recognise a provision of £2.0 million.
Issue: In February 2022 the CMA imposed a
penalty of £4.3 million on the Company for its
failure to comply with certain provisions of the
interim order issued by the CMA in May 2021
under section 81 of the Enterprise Act 2002 in
connection with its acquisition of Footasylum
Limited (‘Footasylum’). Further, the CMA also
imposed a penalty on Footasylum of £0.4 million.
Remedy: The Group took immediate action to
implement additional measures to strengthen
its processes surrounding its compliance with
the interim order which went well beyond what
was legally required by the CMA. This included a
prohibition on all contact between the Management
Teams other than that which was either undertaken
by named individuals in the Group who had been
designated as part of a ‘clean team’ or was a meeting
attended by legal advisors on both sides with a
formal agenda. These measures will remain in place
until the divestment of Footasylum is complete.
FCA Regulatory Compliance
Issue: A number of companies in the UK have a
limited permission credit broking licence from the
Financial Conduct Authority (‘FCA’). Principle 11 of
the FCA regulations requires a firm to deal with its
regulators in an open and cooperative way and to
disclose to the FCA appropriately anything relating
to the firm of which the FCA would reasonably
expect notice. The Board has identified that there
are certain historical facts and events which, with
hindsight, should have been disclosed to the FCA
under this obligation.
Remedy: The Group made the necessary
retrospective disclosure on 17 June 2022 with a
response expected from the FCA in due course.
The Group is now working with specialist third-
party advisors to deliver the necessary long-term
compliance frameworks.
– Short-term: The immediate priority is to develop
the relevant policies, procedures and training
which will facilitate regulatory activities going
forward. Further, the Group has also now
commenced an application for a new named
person who will have the designated Senior
Management Functions with the FCA.
– Long-term: The Group has already commenced a
process to recruit dedicated internal resource who
will review compliance in the registered entities
and provide training and guidance to these
businesses as appropriate.
UK Corporate Governance Code
Issue: The Board engaged BDO LLP to undertake
a review of the Group’s Corporate Governance
operating model and to assess current compliance
with the UK Corporate Governance Code (‘Code’).
The outcome of the review is a number of
improvements that will be underpinned by having
strategic direction, purpose and values that are
clearly articulated and commonly understood by
Board members and Senior Management. In turn,
these will need to be supported by strong governance
structures and processes, and a culture that positively
influences behaviours. It is the Board’s expectation
that these improvements will be delivered over a
period of 18 months.
Remedy: The Board are committed to enhancing
the Governance Framework and have already
made a number of changes including:
– Since the departure of the former Executive Chair,
that role has been split with the appointment of
an Interim Chair and an Interim Chief Executive
Officer. The process to fill both of these roles on
a permanent basis is progressing positively.
– The appointment of Kath Smith as Senior
Independent Director in February 2022.
Whilst it is acknowledged that Kath Smith
cannot currently act as Senior Independent
Director following her appointment as Interim
Chief Executive Officer, it is the Board’s intention
that she will revert back to her former role upon
the appointment of a permanent Chief Executive
Officer. Based on the current progress in this
search, the Board expects that Kath Smith will
be able to revert to her former role as Senior
Independent Director before the end of the
current financial year, meaning that the Group
is compliant with this aspect of the Corporate
Governance Code for the start of the next
financial year.
– The appointment of Kath Smith as Chair of the
Nominations Committee. This appointment was
made whilst Kath Smith was a Non-Executive
Director. The Board has considered whether she
should continue as Chair of the Nominations
Committee but, to ensure compliance with the
UK Corporate Governance Code, has concluded
that I should hold this position. This change was
effective from 7 June 2022.
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The Group have also begun assessing the resource
requirements necessary to support the delivery of
these governance enhancements, which could
involve appointing external service providers to
support delivery.
– Short-term: The Group has already begun
recruiting additional members for its General
Counsel team who will focus on compliance.
Further, the Board has engaged BDO LLP to
conduct a Control, Risk and Compliance Target
Operating Model (‘TOM’) review. The output
from this will be a detailed plan and resource
requirements assessment for an 18 month
programme of works which will move the
Group towards its target of fuller compliance
with the Code.
– Long-term: The Board will regularly assess Code
compliance and formally agree any areas of
non-compliance with the aim of ensuring that
the Group has the governance structures and
processes which are appropriate to both its size
and international complexity.
Risk Management and Internal Controls
Issue: The Group’s recent growth has added
volume and complexity to our domestic and
international operations, systems and
technologies. Accordingly, the Board has
determined that an internal controls function
should be established to ensure that the
Group’s system of internal controls continue
to provide reasonable assurance against the
risk of material misstatement or loss.
Remedy: In November 2021, the Group appointed
a Head of Internal Controls who reports into the
Chair of the Committee and the Chief Financial
Officer. As a priority, this function is developing
a roadmap to embed an Internal Control over
Financial Reporting (‘ICFR’) framework across the
Group in 2022 and 2023. Following a risk-based
scoping exercise and a preliminary maturity
assessment in key locations, the Group now has
a deeper understanding of its ICFR maturity and
the workstreams that are required to embed a
risk-based framework in an internationally complex
Group that has grown rapidly in recent times.
– Short-term: Phase 1 of designing an Enterprise
Risk Management (‘ERM’) process will commence
with immediate effect. An external partner has
been selected to support this work which will
determine the detailed action plans which will
deliver a Risk Framework, policies, risk registers
and the necessary resources to support JD
Sports Risk Management capability for the future.
– Long-term: Embedding an ICFR and ERM
framework across the Group presents a
significant change programme and the Board
is committed to resourcing it accordingly.
The Group is therefore increasing the size of
the Internal Controls team with Internal Controls
110
leads based in locations commensurate with
material subsidiaries in the Group. These roles,
supported by local management, will drive the
changes required to the ICFR environments.
The Group has also appointed an ICFR partner
with a global presence necessary to bolster the
Internal Controls team. The need for additional
resource will remain under constant review
throughout the programme. The Board is also
committed to ensuring that there is effective
testing of the Internal Control environment with
the creation of a formal Internal Audit function
at the appropriate time on this journey.
A Board Governance Committee (‘Governance
Committee’) has been established to manage
and monitor the key actions arising from the
workstreams above. Membership of this
Governance Committee includes the Chair of the
Audit & Risk Committee, Chief Financial Officer,
General Counsel, Head of Internal Controls and
Programme Director. The Governance Committee
will meet at least monthly and report on progress
through to the regular Audit & Risk Committee
meetings, at which the auditor will be in attendance.
In addition to these specific workstreams, the
Governance Committee will also manage a wider
process to review, and enhance where necessary,
the policies and controls which ensure compliance
with other regulators including the Information
Commissioner’s Office, the Advertising Standards
Association and the Market Abuse Regulations of
the FCA.
Further, the Board have accepted a recommendation
from its external advisors that it should create
a separate Disclosure Committee which would
review matters and events in the Group and
determine whether they are disclosable to the
various regulatory bodies. Membership of this
Governance Committee will include the Chair
of the Audit & Risk Committee, Chief Financial
Officer and General Counsel.
Other Principal Duties
The other principal duties of 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 & Risk
Committee During the Year
The Committee’s activities during the year 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.
JD Sports Fashion Plc Annual Report and Accounts 2022 – Reviewing Board papers prepared by
management to document the significant
accounting matters and key judgements in
order to determine whether there is a clear
basis for the conclusions reached.
– Regularly reviewing the potential impact on the
Group’s financial statements of certain matters
such as the valuation of intangible assets 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.
– Completing the tender process in respect
of the Group’s external auditor.
– Reviewing the whistleblowing arrangements
in place for employees to be able to raise
concerns in confidence. Subsequently, the
Committee has agreed to appoint an
independent third-party to run the
whistleblowing service to give employees
additional confidence that concerns may be
raised without fear of retribution.
– Consideration of the Company’s risk register
and internal controls.
– Assessment of the need for an internal audit
function and the effectiveness of the Group’s
existing system of internal controls. This will be
considered further in the forthcoming TOM
review being undertaken by BDO LLP.
In addition, following the identification of the
regulatory issues, a separate sub-committee of
Non-Executive Directors was formed consisting of
the Chair of the Audit & Risk Committee and the
Senior Independent Director. This sub-committee
was tasked with managing both the independent
investigations into the regulatory issues and the
assessment of the Group’s compliance with the UK
Corporate Governance Code. Whilst the Senior
Independent Director was appointed as the Interim
Chief Executive Officer prior to these investigations
being completed, the Board believed that completion
of these investigations was best served by
continuity of membership in this sub-committee.
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 considers whether appropriate disclosure
of significant estimates and judgements has
been made. 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:
Valuation of Intangible Assets Recognised
as Part of the Acquisition of DTLR Villa LLC
(‘DTLR’)
The Committee approved the appointment
of Kroll Advisory Ltd (previously known as
Duff & Phelps Ltd) as the Group’s formal
advisor in respect of the estimation of the
fair value and remaining useful life of certain
tangible and intangible assets of DTLR.
The Committee has reviewed the acquisition
accounting in relation to the purchase of DTLR
and has considered the assumptions used in
the intangible valuation model; primarily the
budgets and forecasts, discount rates and
royalty rates used. The external auditor provides
to the Committee detailed explanations of their
review of the acquisition accounting, including
their assessment of the royalty rate utilised in
the valuation of the DTLR Villa tradename and
their challenge of management’s key assumptions
and discount rates. The Committee has also
reviewed the disclosures in the financial statements
including sensitivity analyses.
Valuation of the Genesis Topco Inc Put Option
The Committee has reviewed the valuation
of the Genesis Topco Inc put option and
has considered the assumptions used in the
valuation model; primarily the EBITDA multiple,
the approved forecasts and the discount rate
used. The external auditor provides to the
Committee detailed explanations of their review
of the valuation, including their challenge of
management’s key assumptions and discount
rates. The Committee has also reviewed the
disclosures in the financial statements including
the sensitivity analysis performed.
Accruals
Given the recent strong performance of the
Group there may be an incentive of management
to manipulate the results and accruals has been
identified as an area more susceptible to
management bias. The Committee has reviewed
a Board paper detailing the key judgements in
respect of certain accruals and is comfortable
that there is a clear basis for the conclusions
reached supporting the existence, accuracy
and presentation of accruals. The external
auditor has provided to the Committee detailed
explanations of their audit work in this area and
the Committee has also reviewed the disclosures
in the financial statements.
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Provisions
Given the breadth of regulatory responsibilities
imposed on the Company, there is a risk in respect
of non-compliance with such laws and regulations
which could ultimately lead to financial penalties
imposed on the Company. Consequently, there
is also an inherent risk present in terms of the
completeness and presentation of provisions
and contingent liabilities. In particular, due to
the element of estimation uncertainty applied,
there is a risk that liabilities may be more akin
to a provision rather than an accrual, the former
having more extensive disclosure requirements
in the financial statements. The Committee has
reviewed the reports prepared by the external
advisors in relation to the investigations referred
to above and is comfortable that there is a clear
basis for the conclusions reached. Further, the
Committee have also made enquiries of:
– Material subsidiaries.
– Senior members of the General Counsel team.
– The Senior Leadership team.
In addition, the external auditor has provided to the
Committee detailed explanations of their audit work
in this area and the Committee has also reviewed
the disclosures in the financial statements.
Internal Audit and Internal Controls
The Board, in conjunction with the Committee, has
full responsibility for the Group’s system of internal
controls and monitoring their effectiveness. However,
such a system is designed to monitor and manage
the risk of failure to achieve business objectives
and cannot eliminate such risk entirely. The Board
seeks to manage this risk by having established
a well-defined organisational structure, clear
operating procedures, embedded lines of
responsibility, delegated authority to executive
management and a comprehensive financial
reporting process.
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 Committee and the Board
with in-depth quarterly updates and reviews
as appropriate.
– 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
112
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.
The Chair of the Committee has regular interaction
with the Head of Internal Controls and senior
members of the Group finance department in
order to monitor and assess the effectiveness
of the Group’s system of internal controls.
The Board has a responsibility to review the
effectiveness of the Group’s system of internal
controls. 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 reasonable, and not
absolute, assurance against the risk of material
misstatement or loss.
There has been significant change in the
composition of the Audit & Risk Committee and
wider Board through the year. However, through
the regular Board Meetings, there has still been
a continuous assessment of the emerging and
principal risks through the year. Further, the Board
is satisfied that the internal controls have operated
effectively through the year although they accept
that there can be greater formality in these areas and
so, as noted above, have determined that an internal
controls function should be established to ensure
that the Group’s system of internal controls continue
to provide reasonable assurance against the risk of
material misstatement or loss as the Group continues
to grow and expand. An 18-month implementation
plan is being developed, with clear milestones and
a governance structure to monitor progress and
ultimately provide the Audit & Risk Committee
with the visibility it requires for effective oversight.
An update on this programme will be provided in
next year’s Annual Report and Accounts.
The non-ICFR activities of the Internal Controls
function will be driven by the Group’s risk
management framework (see page 110).
The Committee will oversee all activities of the
internal controls function and will receive regular
updates on the progress of agreed activities.
In previous financial years, the Committee has
determined that an internal audit function was not
necessary given the work performed by existing
business functions. However, as the roadmaps for
risk management and internal controls begin to
deliver their intended benefits, it is important that
they are supported by a culture of continuous
review and improvement. Therefore, it is expected
JD Sports Fashion Plc Annual Report and Accounts 2022 that, in due course the responsibilities of the
internal controls function will evolve to include
internal audit. Finally, the Committee believes that
the changes we are implementing in 2022 and
2023 will stand the Group in good stead for the
reforms proposed by the Department for Business,
Energy and Industrial Strategy (‘BEIS’) in their
2021 consultation on ‘Restoring trust in audit
and corporate governance’.
Whistleblowing Policy
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. The Group is
evolving the reporting mechanism with the
support of an independent third-party provider
with regular review of reporting via the Audit &
Risk Committee who are also responsible for
reviewing the policy on an annual basis.
Anti-Bribery & Corruption Policy
The Group strives to conduct itself in all areas
and at all levels 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
and this is very clearly documented in the way that
it contracts with any such third-parties. 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.
The Group has appropriate processes in place
through its Profit Protection team to audit compliance
with its Anti-Bribery and Corruption Policy and its
Gifts and Hospitality Policy, periodically.
External Auditor Fees
A breakdown of the audit and non-audit related
fees are set out in Note 3 to the Consolidated
Financial Statements on page 154.
The Committee has regard to the FRC rules
on auditor independence and the provision of
non-audit services by the auditor and in particular
the policy on the provision of non-audit services
by the external auditor. The Committee recognises
that the policy’s objective is 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 under the audit reforms
require advance authorisation in accordance
with the following:
– For individual pieces of work between
£25,000 and £50,000: Approval by the
Chair of the Audit & Risk Committee.
– Work in excess of £50,000: Approval
by the full Audit & Risk Committee.
External Audit Tender Process
KPMG have acted as auditor to the Company
since its flotation in 1996. The Committee is
satisfied that this is in compliance with the
FRC’s rules on mandatory firm rotation.
The Committee acknowledges that the lead
audit partner is subject to rotation every five
years to safeguard independence, with a new
lead audit partner having been appointed during
the 2020/21 financial year. The Committee is
confident that this has brought an additional
level of independence to the audit process.
During the 2021/22 financial year, the Committee
concluded its tender process on the appointment
of a new external auditor to replace KPMG LLP
with Deloitte LLP providing the most compelling
global proposal.
Subject to approval by shareholders at the 2022
Annual General Meeting, KPMG will report on the
results to 28 January 2023. Thereafter, it is the
Board’s intention to recommend the appointment
of Deloitte to shareholders at the 2023 Annual
General Meeting with Deloitte’s first report to
members being on the results to 3 February 2024.
The 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.
External Auditor Reappointment
The Audit & Risk Committee recommends that
KPMG be reappointed as the Company’s statutory
auditor for the 2022/23 financial year. The
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
satisfied with the audit process and that the
way it operates remains effective.
Helen Ashton
Chair of the Audit & Risk Committee
– For individual pieces of work below £25,000:
22 June 2022
Approval by the Chief Financial Officer.
113
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T
“ The Remuneration Committee
continues to monitor the
overall remuneration policy
to ensure it remains fit
for purpose in our high
performing business.”
This Annual Report on Remuneration, together
with the Annual Statement, will be subject to an
advisory shareholder vote at the 2022 AGM.
The following paragraphs summarise key
highlights from the business performance
during the 2021/22 financial year which
informed the Committee activities:
– Record result for the year with profit before tax
and exceptional items of £947.2 million, more
than double the previous record set in the year
to 1 February 2020 (2021: £421.3 million;
2020: £438.8 million) demonstrates management’s
capabilities in relation to managing both supply
chain disruption and frequent consumer channel
shift through the COVID-19 pandemic. This result
includes £125.6 million of profit from the combination
of acquisitions in the year and the annualisation
period of businesses bought in the 52 weeks to
30 January 2021.
– Significant acquisitions in the period have further
extended the Group’s geographical reach.
– International development of JD in other
markets continues to gain momentum.
– A major programme of work is being progressed
to enhance the logistics network and fulfilment
capabilities across the UK and Western Europe.
This financial year being the second year of the
COVID-19 pandemic has been a year of recovery
and unprecedented growth. During this period of
recovery and growth, the Committee has focused
on ensuring that its Executive Director and Senior
Management remuneration continues to be aligned
with the Group’s short, medium and long-term
strategic aims. Alongside the Committee, the
Group have been focusing on a number of key
areas including, but not limited to:
– the continuation of being well-equipped to
deal with the different COVID-19 variants
which may cause local and national lockdowns;
– Executive and Senior Manager remuneration; and
BERT HOYT
INTERIM CHAIR OF THE
REMUNERATION COMMITTEE
Annual Statement of the Chair
of the Remuneration Committee
Dear Shareholder
As Interim Chair of the Remuneration Committee
(the ‘Committee’), I am pleased to present the
Company’s Remuneration Report for the 2021/22
financial year, my first since I took over as the
Chair of the Remuneration Committee on
25 February 2022.
This Directors’ Remuneration Report (‘Report’)
summarises the activities of the Committee
during the 2021/22 financial year. It sets out
the remuneration details for the Executive and
Non-Executive Directors of the Company during
the year, as well as a summary of the shareholder-
approved Directors’ Remuneration Policy (the
‘Policy’). 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.
Key Highlights
There are three sections:
– This Annual Statement.
– The Policy Report which sets out a summary of
the Company’s remuneration policy for Directors
which was approved by shareholders at the 2021
AGM on 1 July 2021.
– The Annual Report on Remuneration providing
details on the Directors’ remuneration in the
2021/22 financial year and how the Policy will
be operated during the 2022/23 financial year.
114
JD Sports Fashion Plc Annual Report and Accounts 2022 – colleague welfare, diversity, inclusion and
social mobility.
These areas are covered in greater detail within
the report but are summarised below.
COVID-19 Recovery & Growth
Key measures were taken in the previous financial
year to protect the Group and its position during
such challenging times which included:
– voluntary reductions in salary for several
members of the Board and Senior Management
team ranging from 20-30% of salary;
– voluntary reduction of 75% of salary for the
former Executive Chair;
– a freeze to all pay rises outside of statutory
required increases;
– deferment of all incentive payments including
bonuses and LTIP’s; and
– recruitment freezes outside of business-
critical roles.
This demonstrated the commitment to
the Group at the senior levels to recovery,
whilst securing jobs and retaining colleagues.
The safeguarding of employment for as many
of our colleagues as possible during the
pandemic, I believe, has directly contributed
to the Group’s ability to provide a strong
financial performance throughout.
Reflecting the continuous success of the Group
as a business, the Board has repaid £24.4 million of
support that it has received from the Coronavirus
Job Retention Scheme in the UK during the year.
We believe that this demonstrates the strength
of the Group’s success and commitment to
the retention of jobs as well as growth for the
business as whole.
Executive and Senior
Management Remuneration
As with previous years, the Committee is
dedicated to ensuring that the remuneration
packages seek to retain and motivate the
Executive Directors and Senior Management
team members (consisting of the Group’s core
management team, excluding the Board of
Directors) who are a fundamental part of the
Group’s success and the Board’s succession
and future growth plans. Throughout the period,
the Group strived to ensure best market practice
as well as to ensure that the remuneration remains
competitive within the Remuneration Policy.
To continue the progress made in the previous
years, the Group have undertaken numerous
activities as detailed below.
Benchmarking
An annual market review of the basic salary and
total earnings of the Chief Financial Officer has
been undertaken. This is to ensure that remuneration
remains appropriate for the market in which the
Group operates. As per previous exercises, this was
based on publicly available information from FTSE
100 companies as well as companies within the
retail industry who may fall outside of the FTSE 100
listing but have made annual report disclosures.
This includes the following businesses:
– Next
– ASOS
– M&S
– ABF
– John Lewis
– BT Group
– Tesco
– Unilever
– Diageo
– Burberry Group
In addition, for this year’s review, the Group have also
engaged with external remuneration consultants for
a more in-depth benchmarking exercise across the
industry for the Executive Directors and intend to
extend such professional review to the Senior
Management team in the future years.
The results of both activities illustrated that
we continue to pay at low-mid quartile levels
despite the exponential year-on-year growth in
profit and shareholder returns. In this context,
the Committee agreed a salary increase for the
Chief Financial Officer to £450,000 (currently
£350,000). Although the increase for the Chief
Financial Officer is at a materially higher rate than
those given to the wider workforce, the Committee
believes that it is pivotal that he continues to remain
motivated to deliver superior performance for the
Group by a fair remuneration package based on
the size and complexity of the role.
The Committee also agreed a standard increase
of 5.0% for the former Executive Chair in line with
the wider workforce percentage increases (an
additional £43,000 from £863,000 to £906,000).
2021/22 Annual Bonus Outcome
The Group has demonstrated exceptional business
performance during the financial year despite
extremely challenging commercial and financial
factors globally. As a result the formulaic commercial
and strategic outcome was 100% of maximum.
However, corporate governance issues, as noted in
the governance section on page 108, were brought
to the attention of the Committee and the Committee
exercised discretion to reduce the annual bonus
payout as noted on page 124. Bonus payments
remain subject to the ongoing Remuneration Policy.
115
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 Over the course of the coming financial year the
Group is also reviewing the current pay strategy,
including discussing with colleagues at the
Engagement Forums alternative remuneration
approaches that could be beneficial for them.
The Group has also focused significantly on
creating a wide-ranging number of roles and
pathways available to new colleagues across
the Group, particularly in the areas of diversity
of employability and early careers. As a result,
we now offer employment and apprenticeship
opportunities to an even wider variety of people.
Bert Hoyt
Interim Chair of the Remuneration Committee
22 June 2022
DIRECTORS’ REMUNERATION REPORT CONTINUED
Share-based Remuneration
We have successfully implemented the new
share-based long-term incentive plan (the ‘LTIP’) as
approved by shareholders at the 2021 AGM with the
grant of the first awards during the 2021/22 financial
year. The terms of the LTIP awards were reviewed by
external advisors as well as internal finance and tax
teams to ensure they were market competitive and
compliant with relevant regulations.
In line with investor feedback, from the 2022/23
financial year, the proportion of the share-based
element of the Chief Financial Officer’s annual
LTIP award will increase from 33% to 50% of the
maximum opportunity.
Succession Planning
As disclosed on 25 May 2022, the Group has
accelerated the separation of the roles of Chair
and Chief Executive Officer as a consequence of
an ongoing review of its internal governance and
controls. As a result, the Group are in the process
of recruiting a permanent Chief Executive Officer
and Non-Executive Chair.
In this context, the Committee continues to review
the appropriateness and alignment of the current
Policy to ensure that it remains fit for purpose
and facilitates the recruitment and retention of
these roles.
Further details regarding Board composition are
provided on page 92.
Welfare, Diversity, Inclusion
and Social Mobility
The Group has taken steps to move forward
in the areas of welfare, diversity, inclusion and
social mobility as detailed in Our People section
on page 76.
The Group continues to review and monitor the
remuneration of the wider workforce as part of
our annual pay review. Our pay review considers
the remuneration strategy for the wider workforce
including statutory increases and bonus payments
linked to the Group and individual performance as
well the cost of living increase.
116
JD Sports Fashion Plc Annual Report and Accounts 2022 DIRECTORS’ REMUNERATION POLICY (UNAUDITED)
The Policy was approved by shareholders on 1 July 2021. The Policy will apply for a maximum of three years until the 2024 AGM.
A summary of the Policy is set out below. The full Policy is set out in the 2021 Directors’ Remuneration Report as part of our
2021 Annual Report which can be found on our website www.jdplc.com/reports-presentations.
Changes to the Existing Directors’ Remuneration Policy
The Committee believes that the overall structure of the Policy remains fit for purpose and is not proposing to make any
change to the Policy as part of this report. This may be reviewed as part of the succession planning in the future.
Operation
Maximum opportunity
Performance targets
How the element
supports our short
and long-term
strategic objectives
Base salary
Provides a
competitive fixed
level of remuneration
to attract and retain
Executive Directors
of the necessary
calibre to execute
the Group’s strategy
and deliver
shareholder value.
Base salaries for the Executive
Directors are normally reviewed
annually by the Committee.
The following factors are taken
into account when determining
base salary levels:
– Remuneration levels at
comparable quoted UK
retail companies.
– The need for salaries
to be competitive.
– The performance of the
individual Executive Director.
– Experience and responsibilities of
the individual Executive Director.
– Pay for other employees in
the Group.
– The total remuneration available
to the Executive Directors and
the components thereof and the
cost to the Group.
Benefits
Ensures the
overall package
is competitive
for Executive
Directors.
The current benefit provision
is detailed on page 121.
Other benefits may be provided
where appropriate, including
health insurance, life insurance/
death in service, travel and
relocation expenses.
Pensions
Provides market
competitive post-
retirement benefits for
Executive Directors.
Payments are made into a defined
contribution pension scheme with
company contributions set as a
percentage of base salary.
The Committee has the discretion
to pay a cash amount in lieu of
a pension contribution. Any
such payment would not form
part of the salary for the purposes
of determining the extent of
participation in the Group’s
incentive arrangements.
None
None
Base salaries will
normally be reviewed
annually, but
the Committee reserves
the right to review fees
on a discretionary basis
if it believes an
adjustment is required
to reflect market
rates or performance.
There is no prescribed
maximum annual
increase.
The Committee is
guided by the general
increase for the broader
employee population
but on occasion may
need to recognise, for
example, an increase
in the scale, scope
or responsibility of
the role, as well as
market rates.
The Committee
determines
the appropriate level
taking into account
market practice
and individual
circumstances.
There is no prescribed
maximum.
The maximum pension
provision is 8% of salary.
None
117
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 Operation
Maximum opportunity
Performance targets
The maximum bonus
opportunity may be
up to 200% of salary.
The targets are set by the Committee each year
and are based on a combination of financial and
strategic KPIs, with target and maximum levels.
Two thirds of the annual bonus will be linked
to financial targets.
The Committee retains the discretion to adjust
the performance targets in the event of
significant corporate activity during the year.
The Committee will review the Group’s
overall performance before determining
final bonus levels.
The Committee may, in exceptional circumstances
amend the bonus pay-out should this not, in the
view of the Committee, reflect the overall business
performance or individual contribution.
The Committee is of the opinion that, given the
commercial sensitivity arising in relation to the
detailed targets used for the annual bonus,
disclosing precise targets for the bonus plan
in advance would not be in shareholder interests.
Actual targets, performance achieved and
awards made will be published in the following
year’s Annual Report so that shareholders can
fully assess the basis for any pay-outs under
the annual bonus.
Base award on grant
equal to 100% of salary.
Pay-out is capped at
250% of salary.
This applies to the
total value of both
cash and share-based
elements combined.
Subject to performance criteria being met,
the value of the base award will trigger from
the agreed financial performance metrics.
The final value of the award is linked to the
change in profits and/or share price, subject
to the overall cap.
Targets will be disclosed in the Annual Report
for the year following a performance period.
DIRECTORS’ REMUNERATION REPORT CONTINUED
How the element
supports our short
and long-term
strategic objectives
Annual Bonus
Provides Executive
Directors with the
opportunity to earn
performance-related
bonuses based on
the achievement
of financial targets
and key performance
indicators which
incentivise the
achievement of the
business strategy.
The bonus is paid annually in
cash and is non-pensionable.
Clawback and malus provisions
apply to the bonus.
The Committee can use its
discretion to reduce, cancel or
impose further conditions on the
awards where it considers such
action is appropriate. This includes
where there has been a material
misstatement of the Group’s
audited financial results, a serious
failure of risk management or
serious reputational damage.
On change of control, the
Committee may pay bonuses
on a pro-rata basis measured
on performance up to the date
of change of control.
Long Term Incentive
Plan (LTIP)
Provides the
Executive
Directors with the
opportunity to earn
competitive rewards.
Aligns the Executive
Directors’ interests
more closely with
those of shareholders.
Focuses the Executive
Directors on
sustaining and
improving the
long-term financial
performance of the
Group and rewards
them appropriately
for doing so.
Both the cash and share award
will be subject to a three-year
performance period. If met,
the cash element will vest
after three years. Any
share-based elements
will vest after five years.
Malus and clawback provisions
apply to unvested awards.
The Committee can use its
discretion to reduce, cancel or
impose further conditions on the
awards where it considers such
action is appropriate. This includes
where there has been a material
misstatement of the Group’s
audited financial results, a serious
failure of risk management or
serious reputational damage.
LTIP awards track the Group’s
share price and/or a measure
of Group profit.
118
JD Sports Fashion Plc Annual Report and Accounts 2022 How the element
supports our short
and long-term
strategic objectives
Non-Executive
Director fees
Provides a level of
fees to reflect the
time commitment
and contributions
that are expected
from the Non-
Executive Directors.
Operation
Maximum opportunity
Performance targets
None
The Board as a whole is responsible
for setting the remuneration of
the Non-Executive Directors,
other than the Chair whose
remuneration is considered
by the Committee and
recommended to the Board.
Non-Executive Directors
are paid a base fee in cash.
Additional fees may be paid for
additional responsibilities such
as acting as Senior Independent
Director or the Chair of a
Committee of the Board.
Fee levels are reviewed annually.
The Non-Executive Directors do
not participate in the Group’s
incentive arrangements and no
pension contributions are made
in respect of them. Reasonable
travel and subsistence expenses
may be paid or reimbursed by
the Group.
The fees paid to
Non-Executive Directors
normally will be
reviewed annually, but
the Committee reserves
the right to review fees
on a discretionary
basis if it believes an
adjustment is required
to reflect market rates,
scope of responsibilities
or performance.
There is no prescribed
maximum increase, but
in general the level of
fee increase for the
Non-Executive Directors
will be set taking
account of any change
in responsibility and
the general rise in
salaries across the
UK workforce.
Service Contracts
Details of the contracts currently in place for Executive Directors are as follows:
Name
Peter Cowgill
Neil Greenhalgh
Date of contract
16 March 2004
1 November 2018
Notice
period
(months)
Unexpired Term
12
12
Rolling 12 months
Rolling 12 months
It is the Group’s policy that notice periods for Executive Director service contracts are no more than 12 months.
The service contracts and letters of appointment are available for inspection by shareholders at the forthcoming AGM
and during normal business hours at the Group’s registered office address.
Non-Executive Directors
The Non-Executive Directors have entered into Letters of Appointment with the Group which are terminable by the
Non-Executive Director or the Group on not less than three months’ notice.
In 2021/22 we have appointed four new Non-Executive Directors. These appointments will positively contribute to the global
development and momentum of the Group as well as increasing the gender, ethnic and cultural diversity of the Board.
Payments for Loss of Office
In the event of early termination, the Group may make a termination payment not exceeding one year’s salary and benefits.
Incidental expenses may also be payable where appropriate. It is at 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 Group. 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 Group to do so.
In the event of gross misconduct, the Group 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 Director service contracts permit the Group to put an Executive Director on garden leave for the
duration of the notice period.
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 DIRECTORS’ REMUNERATION REPORT CONTINUED
Where cessation of employment is due to ill-health, injury, disability or the sale of the employing entity out of the Group, the
unvested LTIP award will continue. It will continue to vest in accordance with the original vesting date unless the Committee
determines that it should vest as soon as reasonably practicable following the date of cessation. In these cases, the award
may be subject to a proration and the incremental value changes may be capped.
Where cessation of employment is due to death, the LTIP award will, unless the Committee determine otherwise, vest as soon
as reasonably practicable following death. Where the Executive Director is dismissed lawfully without notice, the LTIP award
will lapse on the date of cessation. In these cases, the award may be subject to a proration and the incremental value changes
may be capped.
In all other circumstances the Committee will determine if the award will lapse, in which case it will determine the extent to
which the unvested LTIP award shall vest taking into account the extent to which the performance target is satisfied at the
end of the performance period or, as appropriate, on the date on which employment ceases. The period of time that has
elapsed since the start of the performance period to the date of cessation of employment will also be taken into account
unless the Committee determines otherwise.
Change of Control
The Executive Director service contracts contain a change of control provision whereby if 50% or more of the shares in the
Group come under the direct or indirect control of a person or persons acting in concert, an Executive Director may serve
notice on the Group, at any time within the 12 month period following a change of control, terminating their employment.
In the event of a change of control, LTIP awards will vest at the date of change of control (other than in respect of an internal
reorganisation) unless the Committee determines otherwise.
Statement 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 the Group’s business strategy and should be competitive within the market to attract and retain
high-calibre talent, without paying more than is necessary.
Senior Managers below Board level with a significant ability to influence Group results may participate in an annual bonus plan
and LTIP which reward both performance and loyalty and are designed to retain and motivate. The current share-based LTIP
for the Executive Chair and the Chief Financial Officer will be rolled out to the Senior Management team in the coming years.
The Committee considers pay and employment conditions across the Group when reviewing the remuneration of the Executive
Directors and other senior employees. In particular, the Committee considers the range of base pay increases across the Group
when determining the increases to award to the Executive Directors.
The Committee has obtained the views of the workforce on issues such as remuneration via the various workforce forums led by
the Group’s People business partners and attended by Senior Management, including the former Executive Chair. Such views have
been communicated, as appropriate, to the Committee and the Board via the monthly Board reporting process. The workforce
committee has provided further insights into the Group’s engagement practices which have been fully considered by the
Committee and the Board. Changes which have been implemented as a result of these are:
– The introduction of an employee welfare committee.
– Global campaign for diversity and inclusion.
– Employee engagement forums.
– Apprentice and Kickstart scheme initiatives.
Consideration of Shareholder Views
The Committee engaged with several major shareholders to obtain their views on key aspects of the Policy implementation.
In previous years, shareholders were concerned that the LTIP scheme implemented did not go far enough to align remuneration
with shareholder interests. As such, the Committee implemented a significant change to the LTIP scheme from 2021/22 for
Executive Directors by granting share-based LTIP awards. Currently this has been rolled out to the Executive Directors but
more members of the Senior Management team will become eligible for participation. For 2022/23, awards will be granted as
a hybrid of cash and share-based awards for the Chief Financial Officer, with a greater emphasis on the share-based element
than in 2021/22.
There were concerns raised previously in relation to the loss of simplicity of the arrangement. Whilst there are added complexities
with the new LTIP given that, for the Chief Financial Officer only, it is a hybrid scheme involving cash and shares, the intention of
the Committee is that this will move towards an all share-based scheme at the appropriate time in the future, which should also
have the effect of simplifying the scheme.
120
JD Sports Fashion Plc Annual Report and Accounts 2022 Annual Report on Remuneration
Single Total Figure of Remuneration (Audited)
The table below sets out the single total figure of remuneration and breakdown for each Executive and Non-Executive
Director in respect of the 2021/22 financial year. Comparative figures for the 2020/21 financial year have also been provided.
Figures provided have been calculated in accordance with the UK disclosure requirements: Schedule 8 of The Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended) and the requirements of
the Listing Rules.
Name
Salary / Fee
(£’000)
Benefits
(£’000)
Bonus
(£’000)
LTIP
(£’000)
Pension
(£’000)
Others
(£’000)
Total Fixed
Remuneration
(£’000)
Total Variable
Remuneration
(£’000)
2021/
22
2020/
21
2021/
22
2020/
21
2021/
22
2020/
21
2021/
22
2020/
21
2021/
22
2020/
21
2021/
22
2020/
21
2021/
22
2020/
21
2021/
22
2020/
21
Peter Cowgill
863
Neil Greenhalgh
333
Andrew Leslie
Martin Davies
Heather
Jackson
Kath Smith
Andy Rubin
Andy Long
Bert Hoyt
Helen Ashton
Mahbobeh
Sabetnia
31
35
46
58
–
–
25
17
10
701
278
52
58
45
45
–
–
–
–
–
3
12
–
–
–
–
–
–
–
3 1,553 1,295
–
–
12
367
300
600
259
–
23
–
22
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 3,000
866
704 1,553 4,295
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
368
312
967
559
31
35
46
58
–
–
25
17
10
52
58
45
45
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Notes:
(1)
(2)
(3)
(4)
(5)
(6)
Both the former Executive Chair and the Chief Financial Officer are in the lower quartile of total remuneration (when compared to publicly available information of
other FTSE 100 businesses). As a result, an increase to the salary of the Chief Financial Officer was given after the salary reduction during the 2020/21 financial year
due to COVID-19 and the former Executive Chair’s salary level was restored to its 2019/20 level. Salary reviews are effective annually from 1 April 2021.
With effect from April 2021, Neil Greenhalgh’s annual salary was increased by £50,000.
The 2021/2022 fee figure for Bert Hoyt (commenced 8 September 2021), Helen Ashton (commenced 15 November 2021) and Mahbobeh Sabetnia (commenced
29 November 2021) represents a part-year figure based on when they commenced their role. Andy Long joined the Board on 6 May 2021 but does not receive
any remuneration in connection with his directorship.
The 2021/22 salary figure for Andrew Leslie (resigned 1 July 2021), Martin Davies (resigned 9 July 2021) and Heather Jackson (resigned 29 November 2021) are
also part-year, based on their leave date. Andy Rubin left the Board on 6 May 2021 and did not receive any remuneration in connection with his directorship.
The basis of calculation has been updated to ensure all figures are based on year to date values.
Neil Greenhalgh’s pension value is provided by means of a pension allowance salary supplement and an Employers Pension Scheme contribution. The values for
2021/22 have been updated to reflect what was paid during the financial year 2021/22. Peter Cowgill did not receive a pension contribution.
The benefit received by Peter Cowgill and Neil Greenhalgh is healthcare insurance. A car allowance is also payable to Neil Greenhalgh.
Pension contributions were:
– Peter Cowgill – 0% of salary; and
– Neil Greenhalgh – 8% of salary.
121
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 DIRECTORS’ REMUNERATION REPORT CONTINUED
Additional Information Regarding the Single Figure Table (Audited)
2021/22 Annual Bonus Awards
Under the Directors’ Remuneration Policy, the maximum bonus awards for Executive Directors are up to 200% of salary. Based
on an assessment of the relative roles and responsibilities, the Committee determined that the maximum bonus opportunities
for 2021/22 would be 200% of salary for the former Executive Chair and 120% of salary for the Chief Financial Officer.
The annual bonuses for the Executive Directors were based on a mix of financial targets (66.7%) and strategic/non-financial
performance objectives (33.3%). The Committee maintains the view that this is an appropriate method of incentivising the
Executive Directors to focus their efforts on the fundamental drivers for growth and exceptional performance during the
course of the financial year. The apportioning and determination of the award values for the 2021/22 annual bonus values
were measured against the following criteria:
Weighting Criteria
Target Outcome
Actual performance
67%
£460.1 million
£483 million
£957.9 million
Profit Before Tax
and Exceptional
Items (proforma
IAS 17 basis)
People
6.7%
Promote and expand
the succession planning
and development
of people within
the Group.
Identify a succession
plan for the senior
leadership team.
Ensure that the targets
are met in line with the
Hampton-Alexander
Davies review and
the Parker review.
Provide an
infrastructure that
supports development
and mobility.
All senior leadership team members have a
succession plan to develop the appropriate
skills and leadership to step into business-
critical roles and have highlighted pathway
planning strategies for the forthcoming
financial year.
Changes to infrastructures have been put in
place to allow for growth of apprenticeships,
skills training, qualifications and engagement
in government initiatives whilst focusing
on diversity, equality and inclusion and social
mobility.
% vesting
100%
100%
Environmental
6.7%
Maintain ‘leading’
sector-level
performance on critical
environmental issues
including climate
change and water
stewardship.
Independent, verifiable
reports demonstrating
that the Group remains
a sector-level ‘leader’
for environmental/
climate change
performance.
Deliver climate change
training and education
across our directly-
controlled supply
chain, with a primary
focus on private label
manufacturing.
Delivery of a TCFD-
compliant 2021/22
Annual Report.
Demonstrate sector-
level of ESG
performance with
regards to:
i) advocacy to
reduce the impact
of climate change;
ii) support for major
climate change
initiatives; and
iii) TCFD compliance
and improved
transparency of
environmental data.
In December 2021, the Group achieved its
second successive ‘A-’ grade for the Carbon
Disclosure Project (‘CDP’), two grades higher
than the average for the retail sector.
100%
The Group also retained a strong ‘B’ grade
within the CDP ‘Water Stewardship’, reflecting
the continued progress of our private label
team and site operational efficiencies.
CDP scoring metrics intensified from the prior
period ‘A- grade’ achievement requiring
significant year-on-year improvements, such
as verification of Scope 1 and 2 Science Based
Target initiatives, which we have achieved
against the 1.5c scenario.
The Group is a participating member and
advocate of the RE100, United Nations ‘Road to
Zero’, Better Cotton and Textile 2030 initiatives,
each of which underlines our ESG credentials
during this first TCFD reporting year.
122
JD Sports Fashion Plc Annual Report and Accounts 2022 % vesting
100%
Weighting Criteria
Target Outcome
Actual performance
Sustainability
6.7%
Provide an over-
arching, risk and
outcome assessment
demonstrating Group
prioritisation of
sustainability/
and environmental
based activities.
Provide internal
colleagues and
external stakeholders
(suppliers, investors
and customers) with
a transparent view
of (independently-
assessed) Group
climate-related risks
and opportunities via
both our TCFD
disclosure and
re-launched corporate
website.
Increase engagement
with strategic private
label suppliers and the
Group’s largest brand
suppliers on ESG-
related engagements.
Our Corporate website re-launch further
improved our ESG-related disclosures
and communication.
We undertook our largest ever consumer ESG
survey, attracting almost 10,000 responses to
further inform our future strategy.
Our TCFD disclosure is included within the ESG
section of this report. During the period, the
Group received an (independently assessed)
A- score for our CDP Climate Change survey.
Our Group Science Based Targets for Scope 1-3
have been validated by the Science Based Target
Initiative Board. Accordingly, documented Group
climate risks and opportunities have been
reviewed and approved by the ESG Committee
Chair prior to publication. During the period,
detailed climate-related content has been added
to the ESG section of our corporate website,
providing further confidence for customers,
colleagues and investors alike.
During the period, the Group increased
the frequency of ESG engagement with adidas,
Nike, Puma and Under Armour, whilst also
engaging private label suppliers on the topic
of climate change and renewable energy use.
The Group launched its ‘IAMSustainable’ training
programme within the year, accessible to over
20,000 colleagues. Our training materials were
shared with, and advised upon, by strategic
brand partners. The Group #IAMSUSTAINABLE
project has been submitted to the Chartered
Institute of Procurement and Supply (CIPS)
‘Excellence in Procurement’ awards for ‘Best
Sustainability Project of the Year’.
Governance (of
climate change)
6.7%
Active participation
and leadership within
sector/industry
initiatives to promote
‘circular economy’
principles, to reduce
the impact of the
fashion industry on
the environment.
Recognising the
importance of climate
change, the governance
of the activities to
reduce the impact of
climate change were
selected for this metric.
This reflects the
importance of
protecting workers
within the supply chain
through education,
communication and
disclosures.
The Group is a member of Textiles 2030 –
WRAP’s expert-led initiative to accelerate the
fashion/textiles industry move towards
circularity and system change. The Group has
also joined the advisory group for this initiative.
100%
123
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 DIRECTORS’ REMUNERATION REPORT CONTINUED
% vesting
100%
Weighting Criteria
Target Outcome
Actual performance
Digital
Innovation
6.7%
Ensure that the
business continues to
innovate and embrace
technology to maximise
online consumer
adoption and defend
market position.
Increased customer
adoption driven via
digital innovations.
The capability of the digital/online platforms
were leveraged to enable scaling of the B2C
supply chain.
Flexibility provided in
the online driven B2C
supply chain to increase
capacity, throughput
and consumer choice.
This provided additional consumer choice and
increased online sales against the previous
inflated COVID-19 year when much store
demand had switched online.
Introduction of allocation and routing
technology enabled multiple distribution
centres to be provisioned and competitive
customer service level agreements to
be maintained throughout the peak
trading period.
The online consumer proposition was further
expanded via the addition of new territories
and online businesses.
As a result of this performance, the Committee determined that the following bonuses were appropriate:
The formulaic outcome under the annual bonus leads to a 100% of maximum pay out for both the former Executive Chair and the
Chief Financial Officer. The outcome takes into account the exceptional financial performance (108.2% increase in profit before
tax and exceptional items on a pro-forma IAS 17 basis), strong shareholder returns (18% TSR) and the repayment of furlough
monies during the year.
Nevertheless, recognising events within the year that resulted in a CMA fine, the Committee determined that discretion should
be applied to reduce the formulaic bonus outcomes by 10%. The Group will continue to further strengthen corporate governance
and intends to specifically measure an element of the 2022/23 annual bonus on corporate governance related issues. As a result,
the final annual bonus outcome is equivalent to 90% of maximum; equivalent to 180% of salary for the former Executive Chair
and 108% of salary for the Chief Financial Officer.
LTIP Awards with Performance Periods Ended During 2021/22
The LTIP payments that Neil Greenhalgh became entitled to during the year were granted under the Executive Director LTIP in
April 2019 in respect of performance during the three financial years from 3 February 2019 to 29 January 2022. Full details of
this LTIP can be found within the final year of 2014 AGM notice at www.jdplc.com.
Neil Greenhalgh’s awards were subject to the following performance targets relating to the Group’s Profit Before Tax and
Exceptionals on a pro-forma IAS 17 basis.
Pro-forma IAS 17 Profit Before Tax and Exceptionals
for each Relevant Year in the Performance Period
Percentage of the relevant proportion
of the Award which Vests
Less than Threshold
Threshold Target
Maximum Target
0%
25%
100%
Between Threshold and Maximum
Pro-rata on a straight-line basis
Relevant Year
2019/20
2020/21
2021/22
Threshold
£355 million
£370 million
£385 million
Maximum
£370 million
£385 million
£400 million
Actual IAS 17 Profit
Before Tax & Exceptionals
£465.6 million
£460.1 million
£957.9 million
As the actual Profit Before Tax and Exceptionals on a pro-forma IAS 17 basis exceeded the maximum levels in each year of the
performance period, 100% of Neil Greenhalgh’s April 2019 LTIP award vested in April 2022.
124
JD Sports Fashion Plc Annual Report and Accounts 2022 Long Term Incentives Granted During 2021/22
The Executive Directors were granted the following awards under the LTIP:
Form of award
(% of total award value)
Name
Grant Date
% of salary
Cash-based
Share-based
(nil-cost
options)(2)
Peter Cowgill
20 October 2021
100%
Neil Greenhalgh 20 October 2021
100%(3)
–
67%
100%
33%
Number of
shares
underlying the
share-based
award(1)
81,855(1)
10,645(1)
Vesting Date
20 October 2026
20 October 2026 (share-based)
20 October 2024 (cash-based)
(1)
(2)
(3)
Based on the share price of £10.54, being the middle-market quotation on the dealing day prior to the grant date. Subsequent to the grant of these shares,
the Company completed a sub-division of the Company’s issued share capital on a 5:1 basis. As a result, the number of shares granted to Peter Cowgill was
409,275 and for Neil Greenhalgh this is 53,225.
Malus and clawback provisions apply to all share-based awards. The Committee can use its discretion to reduce, cancel or impose further conditions on the
awards where it considers such action is appropriate. This includes where there has been a material misstatement of the Company’s audited financial results,
a serious failure of risk management or serious reputational damage.
The total value of the awards which can be paid to the Chief Financial Officer at vesting is capped at 250% of base salary calculated as at the grant
date. The amount of the cash-based award will be reduced to the extent the total exceeds the cap, and if/when the share-based award vests, the sum
of the cash-based award already vested and the market value of the shares that vest exceeds the cap, then the vesting of the share-based award will
be reduced accordingly.
Awards will generally only vest or become exercisable subject to the satisfaction of a performance condition measured
over a three-year performance period. Awards will vest dependent on the satisfaction of performance conditions over the
performance period, with the targets determined by the Committee prior to the date of grant. The performance conditions
must contain objective conditions, which must be related to the underlying financial performance of the Company.
The vesting level of the awards granted to the Executive Directors on 20 October 2021 will be based on the extent to which
the Group PBT at the end of the three-year performance period commencing on 1 February 2021 exceeds the minimum PBT
target set by the Committee prior to the date of grant. Details of the specific PBT targets are considered commercially sensitive
and will be disclosed in the Directors Remuneration Report following the end of the performance period.
Following the departure of Peter Cowgill, as announced on 25 May 2022, this LTIP award will lapse on cessation in accordance
with the Policy.
The Committee will have the flexibility to make appropriate adjustments to the performance conditions in exceptional
circumstances such as large acquisitions, disposals or pandemics, to ensure that the Award achieves its original purpose.
Any vesting is also subject to the Committee being satisfied that the Company’s performance on these measures is consistent
with underlying business performance.
Statement of Directors’ Shareholdings and Share Interests (Audited)
The interests of the Directors who held office at 29 January 2022 and persons closely associated with them in the Company’s
ordinary shares are shown below:
Director
Peter Cowgill
Neil Greenhalgh
Unvested and subject
to performance
conditions
Unvested and subject
to continued
employment(2)
Vested but not
yet exercised
29 January 2022
30 January 2021
(restated)(4)
81,855(3)
10,645(3)
–
–
–
–
9,714,670
19,464,670
10,000
10,000
(1) No options were exercised by the Directors during the year to 29 January 2022.
(2) Refers to any unvested options under the LTIP for which the three-year performance period has expired.
(3)
Following the 5 for 1 share split that took effect on 30 November 2021, the number of shares underlying the award granted to Peter Cowgill was adjusted to
409,275 and the award granted to Neil Greenhalgh was adjusted to 53,225.
(4) The comparative figures have been restated for the 5:1 share split that was effective from 30 November 2021.
Following the departure of Peter Cowgill, as announced on 25 May 2022, the LTIP award granted during the year will lapse
on cessation in accordance with the Policy and therefore Peter Cowgill has no share interests that are unvested and subject
to performance conditions. There have been no other changes in the interests of the Directors or persons closely associated
with them between 29 January 2022 and the latest practicable date prior to the publication of this report. The holdings stated
above are held directly by the Directors and persons closely associated with them are not subject to any performance targets.
The Directors have no other interests in Company shares.
Stock Ownership Guidelines
There are currently no minimum share ownership guidelines applicable to the Executive Directors. As the share-based
element of the LTIP is a new basis of remuneration for the Group, the intention is to allow the LTIP to mature prior to setting
minimum share ownership guidelines for the Executive Directors. Over time, the Group will be working towards Executive
Directors holding a minimum percentage of base salary in the shares of the Company.
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 DIRECTORS’ REMUNERATION REPORT CONTINUED
At the discretion of the Committee this may also include post-employment termination periods. It is not intended that this
will be reviewed during the duration of the current Policy, although this may be subject to review or change at the direction
of the Committee.
Details of Scheme Interests
See page 125 for details of LTIP awards granted during 2021/22. The Directors hold no other outstanding scheme interests in shares.
Payments to Past Directors (Audited)
No such payments were made.
Payments for Loss of Office (Audited)
No such payments were made.
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 ten 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 2012 by taking
the percentage change of the market price over the relevant period, reinvesting any dividends at the ex-dividend rate.
%
3,500
3,000
2,500
2,000
1,500
1,000
500
0
31/1/12
31/1/13
31/1/14
31/1/15
31/1/16
31/1/17
31/1/18
31/1/19
31/1/20
31/1/21
31/1/22
JD Sports Fashion plc
FTSE All Share General Retailers Index
Former Executive Chair’s Remuneration Over Past Ten years (Unaudited)
The total remuneration figures for the former Executive Chair during each of the last ten financial years are shown in the table
below. The total remuneration figure includes the annual bonus based on that year’s performance and the LTIP award based
on three-year performance periods ending in the relevant financial year. The annual bonus pay-out and LTIP vesting level as
a percentage of the maximum opportunity are also shown for each of these years.
Salary
Total remuneration £m
Annual bonus %
LTIP vesting %
Year ended
Jan
2013
Jan
2014
Jan
2015
Jan
2016
Jan
2017
Jan
2018
Jan
2019
Jan
2020
Jan
2021
Jan
2022
2.0
37
100
3.1
100
n/a
2.0
100
2.7
2.8
2.3
2.6
5.6
200
200
200
200
200
n/a*
n/a*
100*
n/a
n/a
n/a
5.0
150
n/a
2.4
180
n/a
*
The LTIP performance criteria was achieved over the full three-year period to 28 January 2017 and the award was paid on 30 October 2017.
LTIP vesting is n/a for certain years as the former Executive Chair was not awarded an LTIP and therefore no LTIP vested.
Percentage Change in Executive and Non-Executive Directors’ Remuneration (Unaudited)
The table below shows the percentage change in the Executive and Non-Executive Directors’ salary and annual bonus between
financial years ended on 29 January 2022 and 30 January 2021 compared to UK Head Office employees in the JD and Size?
businesses, being deemed by the Board as the most appropriate comparator group based on the Group as they are remunerated
in the most comparable way within the Group. For this table we use the Head office employees average data as including the
retail data would skew the results.
126
JD Sports Fashion Plc Annual Report and Accounts 2022 Salary
Former Executive Chair
Chief Financial Officer
Non-Executive Director – Martin Davies
Non-Executive Director – Andrew Leslie
Non-Executive Director – Heather Jackson
Non-Executive Director – Kath Smith
UK Head Office employee average
Benefits
Former Executive Chair
Chief Financial Officer
Non-Executive Director – Martin Davies
Non-Executive Director – Andrew Leslie
Non-Executive Director – Heather Jackson
Non-Executive Director – Kath Smith
UK Head Office employee average
Annual bonus
Former Executive Chair
Chief Financial Officer
Non-Executive Director- Martin Davies
Non-Executive Director- Andrew Leslie
Non-Executive Director- Heather Jackson
Non-Executive Director- Kath Smith
UK Head Office employee average
% change
from 2019/20
to 2020/21
% change
from 2020/21
to 2021/22
(18.77%)
(3.47%)
23.11%
19.78%
(18.31%)
(39.66%)
(17.46%)
(40.38%)
(19.64%)
12.50%
1.28%
3.05%
0%
0%
0%
0%
0%
2.22%
28.89%
16.80%
3.99%
0.00%
0.00%
0.00%
0.00%
0.00%
(18.86%)
(0.69%)
(24.97%)
0%
0%
0%
0%
0%
4.53%
19.92%
22.33%
0.00%
0.00%
0.00%
0.00%
37.21%
Benefit comparisons are undertaken on information held at the point in time of calculation this includes year to date figures for
the Executive Directors, and last submitted P11D benefit values for all other employees.
The variation in salary and bonus for the former Executive Chair represents a restoration of salary to a pre-COVID-19 level and
the bonus paid remains below that of the 2019/20 year.
The Non-Executive Director changes reflect changes to roles, remits and changes in members during the financial year.
CEO Pay Ratio (Unaudited)
Set out below are ratios which compare the total remuneration of the former Executive Chair (as included in the single figure
table on page 121 to the remuneration of the 25th, 50th and 75th percentile of our UK employees.
Financial year end
2019/20
Base Salary
Total Remuneration
Financial year end
2020/21
Method
used
25th
Percentile
Ratio
50th
Percentile
Ratio
75th
Percentile
Ratio
B
348:1
310:1
304:1
25th
Percentile
Remuneration
50th
Percentile
Remuneration
75th
Percentile
Remuneration
£16,067
£16,067
£17,877
£17,981
£18,299
£18,366
Method used
25th
Percentile
Ratio
50th
Percentile
Ratio
75th
Percentile
Ratio
B
251:1
183:1
140:1
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 DIRECTORS’ REMUNERATION REPORT CONTINUED
Base Salary
Financial year end
2021/22
Base Salary
Total Remuneration
25th
Percentile
Remuneration
50th
Percentile
Remuneration
75th
Percentile
Remuneration
£15,624
£15,624
£21,174
£21,511
£27,929
£28,139
Total Remuneration
Method used
25th Percentile
Ratio
50th
Percentile
Ratio
75th Percentile
Ratio
B
351:1
191:1
110:1
25th Percentile
Remuneration
50th
Percentile
Remuneration
75th Percentile
Remuneration
£10,373
£19,064
£32,531
£10,405
£19,064
£33,232
We have used Option B in the legislation to identify the 25th, 50th and 75th percentile UK employees. This has utilised the
most recent data from our UK gender pay gap reporting for April 2021.
The Group has elected to utilise this approach for this year as to prepare individual employee calculations across a vast
employee base would be overly complicated. In line with published guidelines, any employee receiving a furlough payment
in the period was excluded as they are not considered a full pay relevant employee.
By utilising the gender pay gap data we have identified the employees at the three percentiles. To then calculate total
remuneration for these individuals, we have used the same methodology applied in the single figure calculation.
The largest population of employees within the Group are store colleagues and warehouse operatives and the individuals
represented at the 25th, 50th and 75th percentile were identified by the use of the gender pay data. It is important to note
that when completing the Gender Pay Gap data, we removed any individuals in receipt of furlough as this would mean that
they are not full pay employees and therefore do not meet the requirement to be included in the report. As stores opened in
April 2021 we still had an element of Flexible Furlough for that month which was also our snapshot date for the report per
the guidelines. Although the Gender Pay Gap Analysis was undertaken on a smaller sample, we believe these ratios, and the
individuals, are representative and appropriate given the guidelines that we have been required to apply.
All comparator employees were full-time for this year’s calculation, as such we have now converted any hourly rate of pay
into the equivalent 40-hour week.
As the former Executive Chair was in receipt of variable pay that is linked to the Group’s performance, the level of remuneration
will vary vastly from year-to-year and this, combined with the factors above, contribute to the level of the ratios.
Relative Importance of the 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
2022
(£m)
1,142.0
14.9
195.1
459.6
2021
(£m)
785.9
–
94.8
229.2
%
change
45.3%
–
105.8%
100.5%
Implementation of Remuneration Policy in Financial Year 2022/23 (Unaudited)
The Committee proposes to implement the policy for 2022/23 as set out below:
Salaries and Benefits
Salaries for the Executive Directors, effective 1 April 2022, are set out below:
Former Executive Chair
Chief Financial Officer
April 2022
April 2021
% increase
£906,000
£862,750
£450,000
£340,000
5.0%
32.4%
Senior Management teams and the wider workforce may receive an increase in line with Policy.
128
JD Sports Fashion Plc Annual Report and Accounts 2022
As part of the annual pay review and in line with the pay increases for the wider workforce, we increased the former Executive
Chair’s salary by 5.0%.
Whilst the increase for the Chief Financial Officer is at a materially higher percentage than those given to the wider workforce,
the Committee believes that this increase delivers a fair remuneration package for a Chief Financial Officer (with additional
operational responsibilities) operating in a business of this size and complexity.
Benefits and pension will be provided in line with the Directors’ Remuneration Policy.
The following salary/fees will be paid to the Chief Financial Officer effective from 25 May 2022:
Chief Financial Officer: A responsibility allowance will be paid of £250,000 per annum (pro-rated monthly for as long as
required) to reflect the enhanced responsibilities and duties of the role during the period of transition following the separation
of the Chair and Chief Executive Officer roles and prior to the appointment of permanent roles.
Non-Executive Director Fees (Unaudited)
As detailed in the Audit & Risk Committee report which commences on page 108, it was determined that extensive work should
be undertaken to fully review and improve the Group’s corporate governance, risk and controls processes. It was agreed that
two of the Non-Executive Directors (being Kath Smith and Helen Ashton) form a Governance Committee with specific Terms of
Reference to lead the governance review, supported by various advisors. In recognition of the complexity of such additional
responsibilities and the additional time commitment, which extend beyond the normal responsibilities of Non-Executive Directors,
during the period of 30 January 2022 to 24 May 2022, additional remuneration was considered. It was agreed by the former
Executive Chair (acting in the capacity of Chair and Chief Executive Officer) that the Non-Executive Directors would receive
fees at £3,500 per additional day worked. In total as at 24 May 2022, they had received gross fees of £80,755 for Kath Smith
and £89,795 for Helen Ashton, in addition to their normal Non-Executive Director fees. These amounts will also be reported in
the Single Total Figure for 2022/23 as part of the Group’s next Annual Report and Accounts.
In addition, following the announcement on the 25 May 2022 regarding the appointment of Helen Ashton as Interim Chair and
Kath Smith as Interim Chief Executive Officer, the following fees have been agreed:
– The Interim Chief Executive Officer will receive an annual fee of £1.2 million on a pro rata basis. Kath Smith will serve the role
on a full-time basis whilst a permanent appointment is sought. No variable pay or benefits will be paid.
– The Interim Non-Executive Chair will receive a basic annual fee of £425,000 on a pro-rata basis for her duties in that role.
Helen Ashton is expected to devote two days per week for her role as Interim Chair, and will receive additional fees for any
further days worked. No variable pay or benefits will be paid.
As noted, the current intention is that they would both step back into their permanent Non-Executive Director roles as soon as
practicable following the commencement of permanent replacements.
LTIP
The Committee intends to grant awards under the LTIP for the 2022/23 financial year to the Chief Financial Officer, consistent
with the approach taken in 2021/22 financial year as set out in page 125, in accordance with the Remuneration Policy.
The face value of the awards will be 100% of salary for the Chief Financial Officer. The exact number of share-based awards
to be granted is to be determined with reference to the prevailing mid-market share price the day before the date of grant.
The Chief Financial Officer’s grant will consist of 50% cash-based and 50% share-based awards.
The award will be subject to performance linked to Profit Before Tax over a three-year period. Specific targets will be disclosed in
the annual report on remuneration following the end of the relevant performance period. Cash-based awards will vest three years
after grant, and share-based awards will vest five years after grant. The awards will be subject to malus and clawback provisions.
2022/23 Annual Bonus Awards
The annual bonus maximum, as a percentage of base salary, is as follows:
Chief Financial Officer
200%
Financial Targets and Strategic Objectives for the Annual Bonus Awards in 2022/23
The split between financial targets and strategic objectives will remain two thirds and one third respectively. The financial
targets will include a minimum threshold below which no bonus will be payable.
The strategic objectives will be set against criteria in the following categories:
1. People – focused on succession planning and development of people within the Group.
2. Environmental – focused on maintaining performance on issues such as climate change and water stewardship
3. Sustainability – focused on providing an overarching risk and outcome assessment demonstrating Group prioritisation of sustainability.
4. Governance – focused on the strengthening and delivery of corporate governance controls and processes.
5. Digital Innovation – innovation and embracing technology to maximise online consumer adoption.
The Board considers that both the financial targets and the strategic objectives for the financial year to 28 January 2023
are commercially sensitive and so will be disclosed in the next Annual Report.
129
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 DIRECTORS’ REMUNERATION REPORT CONTINUED
Statement of Voting at Annual General Meeting (Unaudited)
At the 2021 AGM, the Directors’ Remuneration Report received the following votes from shareholders:
For
609,424,422
68.49%
Against
280,316,172
31.51%
At the 2021 AGM, the Directors’ Remuneration Policy received the following votes from shareholders:
For
712,912,592
79.99%
Against
178,373,866
20.01%
Withheld
6,184,469
Withheld
4,638,605
Composition of the Committee and Advisors (Unaudited)
The current composition of the Remuneration Committee and details of the changes to the composition during the financial
year are detailed on page 103. The Committee has met twice during the year under review and details of attendance at the
Committee meetings is set out on page 101.
In addition to the meetings noted above, the Committee met several times on an informal basis following the financial year end,
including two further formal Committee meetings for which the Remuneration Committee attended to discuss remuneration in
the context of the new leadership roles and structure.
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 former Executive Chair and Neil Greenhalgh, 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 and objective advice at the Company’s expense where they consider it appropriate
and in order to perform their duties. PwC have provided advice in relation to the Policy application and reporting and the
Company also engaged with Freshfields LLP and Addleshaw Goddard LLP in relation to the above. The Committee is satisfied
that the advice received from the external consultants was independent and objective. The Company incurred fees of
approximately £45,000 excluding VAT during 2021/22 for such advice taken from these external advisors.
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.
Members of senior management, including the Group People Director and the independent advisor to the Committee are
invited to attend meetings where appropriate. The Group Company Secretary and General Counsel is the secretary to the
Committee. Attendees are not involved in any decisions and are not present in any discussions involving their own remuneration.
Following the AGM, we propose the appointment of a permanent Remuneration Committee Chair. Together with our advisors it
has been agreed that they will continue to monitor changes within corporate governance developments relevant to the Group
and best practice to determine any revisions to the remuneration policy to ensure it is fit for purpose going forward. We are
always keen to listen to shareholder feedback and very much look forward to engaging with shareholders in the future.
Bert Hoyt
Interim Chair of the Remuneration Committee
22 June 2022
130
JD Sports Fashion Plc Annual Report and Accounts 2022 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 UK-adopted international
accounting standards and applicable law and have elected to prepare the Parent Company financial statements in accordance
with UK accounting standards and applicable law, including FRS 101 Reduced Disclosure Framework. In addition the Group
financial statements are required under the UK Disclosure Guidance and Transparency Rules to be prepared in accordance
with International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union (“IFRSs as adopted by the EU”).
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 the Group’s 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.
– State whether they have been prepared in accordance with international accounting standards in conformity with
the requirements of the Companies Act 2006 and, as regards the Group financial statements, International Financial
Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the UK-adopted international
accounting standards.
– Assess the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern.
– 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.
– The Strategic Report and 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. This responsibility
statement was approved by the Board of Directors on 22 June 2022 and is signed on its behalf by:
Neil Greenhalgh
Chief Financial Officer
22 June 2022
131
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022
INDEPENDENT AUDITOR’S REPORT
to the members of JD Sports Fashion plc
1. Our Opinion is Unmodified
We have audited the financial statements of JD Sports Fashion Plc (‘the Group’) for the year ended 29 January 2022 which
comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated
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, including the accounting
policies in Note 1 to the consolidated financial statements and Note C1 to the company financial statements.
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
29 January 2022 and of the Group’s profit for the year then ended;
– the Group financial statements have been properly prepared in accordance with UK- adopted international accounting
standards in conformity with the requirements of the Companies Act 2006;
– 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.
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 & Risk Committee.
We were first appointed as auditor by the shareholders in March 1996. The period of total uninterrupted engagement is for the
26 financial years ended 29 January 2022. 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
Coverage
Key audit matters
New risks
£30m (2021: £16.5m)
3.2% (2021: 4.1%) of normalised profit before tax
88.6% (2021: 84.8%) of Group absolute profit before tax
Group: Management override of controls
Group: Valuation of the separately identifiable tradename intangible recognised as part of
the DTLR Villa acquisition
–
Group and Parent: Existence, accuracy and presentation of accruals
Group and Parent: Completeness and presentation of provisions and contingent liabilities
vs 2021
2. Key Audit Matters: Our Assessment of Risks of Material Misstatement
Key audit matters are those matters that, in our professional judgement, 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 above, 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.
132
JD Sports Fashion Plc Annual Report and Accounts 2022 The risk
Our response
Management
override of
controls
Refer to page
108 (Audit &
Risk Committee
Report)
We assessed an increased risk of potential
management override of controls due to
fraud given the dominance of a small number
of Executive Directors in a unique position to
manipulate accounting records, together with
certain matters arising during the year and up
to the date of our audit report, relating to
the culture of, and actions taken by, those
individuals, including:
– Anticompetitive behaviour in relation to the
sale of football club replica kit and the resulting
CMA investigations as discussed in Note 23.
– Breach of the CMA’s hold separate order in
respect of the Footasylum acquisition by the
Group, (see Note 3 and Note 32).
– Lack of required declaration to the FCA under
Principle 11 of the FCA Handbook.
– Completeness of related party transactions
disclosed during the course of the audit, (see
Note 31).
In addition, in the course of our current year
audit we noted that the Directors had failed
to make us aware of certain facts related to
anticompetitive behaviour that were known
to the Directors at the date of our audit report
on the prior year financial statements. There is
a risk that the prior year financial statements
are materially misstated as a result.
Since the year end, the Board has engaged
advisors to carry out a number of investigations
into actions taken by senior management,
including those noted above. Alongside these
investigations, the Board has completed a review
of the Group’s Corporate Governance operating
model and assessed its current compliance with
the UK Corporate Governance Code. Additional
background to this review and the matters noted
can be found in the Audit & Risk Committee
report on page 108.
In addition to our response set out here, our
separate KAMs on accruals, provisions and
contingent liabilities describe further procedures
in response to these matters and our work in
respect of laws and regulations is described in
Section 6 of our audit report.
Our response included increasing the number of components
in scope for Group audit purposes, reducing materiality as a
percentage of the benchmark for the Group financial statements
as a whole and revisiting our risk assessment. We also undertook
a series of additional audit procedures, which included:
Extended scope: for all in scope components carried out additional,
focused journal testing to look for journals that we considered had
characteristics of being indicative of management override of
control. These characteristics included key word searches;
Enquiry of personnel: for all in scope components made inquiries
of individuals involved in the financial reporting process about
inappropriate or unusual activity relating to the processing of
journal entries and other judgements;
Enquiry of management: for all in scope components expanded
our enquires of senior management in respect of compliance
matters, including a walkthrough of procedures in place to
identify non-compliance with laws and regulations and
associated accounting analysis;
Extended scope: undertook additional testing in respect of
key supplier arrangements, including obtaining third party
confirmations of certain rebates recognised in the year;
Accounting analysis: assessed accounting estimates for bias
and evaluated whether the circumstances producing the bias,
if any, represent a risk of material misstatement due to fraud.
Use of specialists: with the assistance of our forensic specialists
we challenged the scope of review carried out by the advisors
appointed by the Board to investigate certain actions taken by
senior management;
Third party confirmations: completed a circularisation of the
related party that had not been disclosed to us and that sits
outside the Group to confirm transactions undertaken during
the current and prior year;
Accounting analysis: considered management’s approach to
deciding which audit differences were recorded and considered
if this presented any management bias;
Board representations: assessed the enhancement in the Board’s
approach to approving the Group’s representations following
our challenge given as part of the audit finalisation process and
considered whether this would prevent or detect if an incomplete
representation was given;
Accounting analysis: assessed whether any material prior period
error existed in respect of information that was known or could
reasonably have been known to the Directors at the date of
authorisation of the financial statements for the prior period
ended 30 January 2021; and
Assessing transparency: assessed the disclosures made in the Audit
& Risk Committee Report in relation to the investigations undertaken
by the Board in respect of actions taken by senior management and
the related regulatory matters for consistency with our knowledge
and understanding acquired during the audit.
Our results
Following these additional procedures and corrected audit
adjustments we determined that the financial statements are
not materially misstated as a result of management override.
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 INDEPENDENT AUDITOR’S REPORT CONTINUED
The risk
Our response
Subjective estimate
On 17 March 2021, the Group acquired the entire
issued shareholding of DTLR Villa LLC, a US company.
Due to the nature of the balance, we would expect to obtain audit
evidence primarily through the detailed procedures described,
rather than seeking to rely on any of the Group’s controls.
The purchase price allocation valuation is subject
to estimation uncertainty.
The fair value of the DTLR Villa tradename
has been identified as the significant estimate
in the purchase price allocation, and specifically
the royalty rate used in deriving this value.
The effect of these matters is that, as part of our
risk assessment, we determined that the royalty
rate used has a high degree of estimation
uncertainty, with a potential range of outcomes
greater than our materiality for the financial
statements as a whole. The financial statements
(Note 1) disclose the sensitivity estimated by
the Group.
Our procedures included:
Methodology choice: with the assistance of our valuation specialists
both at a group and component level, we assessed 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, we challenged the key assumptions used in the valuation,
in particular the royalty rate used by comparing them to externally
derived data and comparable transactions;
Sensitivity analysis: we performed sensitivity analysis on the key
assumptions noted above;
Our sector experience: assessing whether the key assumptions used,
in particular the royalty rate, reflect our knowledge of the business
and industry; and
Assessing transparency: assessing the appropriateness of the Group’s
disclosures in respect of the valuation of separately identifiable
intangible assets recognised on acquisition of DTLR Villa.
Our results
We found the valuation of the DTLR Villa tradename to be acceptable.
The risk
Our response
Accounting treatment
The recent strong performance of the Group
and Company may provide management
an incentive to manipulate the Group and
Company’s results. As a result, accruals may be
an area more susceptible to management bias.
Given the nature of the balance, we would expect to obtain audit
evidence primarily through the detailed procedures described below,
rather than seeking to rely on any of the Group’s or Company’s
controls. As a result of the increased risk identified, our substantive
work described below was expanded, for example by increasing
the items tested.
As described above, we also assessed there to be
an increased potential management override risk.
As noted within our provisions KAM, there is
increased risk over the presentation of accruals
versus provisions given historically there have
been a number of balances recognised as accruals
which should have been classified as provisions.
Our procedures included:
Test of details: we discussed with management the rationale
for a sample of accruals and agreed to supporting invoices,
calculations and/or third party correspondence as appropriate.
We also performed analytical procedures on other balances
where appropriate expectations could be set;
Accounting analysis: we retained a particular focus on the
classification between accruals and provisions and challenged
management to provide rationale where a reclassification appears
to be required; and
Assessing transparency: we assessed the adequacy of the Group
and Company’s classification in respect of accruals.
Our results
We consider the existence, accuracy and presentation of accruals
to be acceptable.
Valuation of
the separately
identifiable
tradename
intangible
recognised
as part of the
DTLR Villa
acquisition
Group
(£101.6 million;
2021: N/A)
Refer to page 111
(Audit & Risk
Committee
Report), page 160
(accounting policy)
and page 161
(financial
disclosures).
Existence,
accuracy and
presentation
of accruals
Group: £502.8m
(FY21: £350.3m)
Parent Company:
£206.4m
(FY21: £229.7m)
Refer to page 111
(Audit & Risk
Committee
Report) and page
195 (financial
disclosures).
134
JD Sports Fashion Plc Annual Report and Accounts 2022 The risk
Our response
Completeness
and presentation
of provisions
and contingent
liabilities
Group: £33.1m
(FY21: £5.8m)
Parent Company:
£19.8m (FY21: £Nil).
Refer to page 112
(Audit & Risk
Committee Report),
page 199 (accounting
policy) and page 199
(financial disclosures).
Accounting treatment
Given the breadth of regulatory
responsibilities imposed on the Group
and Company, there is a risk in respect
of non-compliance with such laws and
regulations which could ultimately lead to
financial penalties imposed on the Group
and Company along with a risk of wider
reputational consequence.
Completeness of the disclosed and identified
breaches in laws and regulations by the Group
and Company impacts the completeness of
any provisions and/or contingent liabilities.
Determining the likelihood and magnitude of
an unfavourable outcome in these matters
involves significant management judgement.
As described above, we also assessed there
to be an increased potential management
override risk.
Completeness of provisions and their
presentation is also an increased risk given
historically there have been a number of
balances recognised as accruals which
have been reclassified as provisions in
the current year.
Given the nature of the balance, we would expect to obtain audit
evidence primarily through the detailed procedures detailed below
rather than seeking to rely on any of the Group and Company’s
controls. As a result of the increased risk identified, our substantive
work described below was expanded, for example by increasing
the items tested.
Our procedures included:
Personnel enquiries: on all significant matters subject to litigation/
adversarial proceedings, including regulatory matters, we discussed
the status of those matters with internal counsel and external legal
advisors and considered the documentation available to support
the assessment as to whether the matter should be provided for
as a provision or disclosed as a contingent liability;
Legal inquiries: we reviewed the legal expense account to identify
any costs incurred with legal firms. We sought direct confirmations
from management’s legal experts regarding the nature of any advice
being provided to ensure completeness of the audit team’s understanding
of potential provisions or contingent liabilities required;
Evaluating Directors’ intent: we reviewed board minutes for
discussion of any legal or regulatory matters that may have been
discussed by the Board but not already disclosed to us;
Extended scope: where provisions have been made for ongoing legal
cases or regulatory matters and associated costs, we considered
whether the provision is consistent with information received as part
of inquiries with management’s experts and those inquiries held were
also carried out independently from management;
Use of specialists: we involved our forensic specialists to shadow
ongoing investigations in respect of certain regulatory matters
relevant to the Group and Company;
Assessing transparency: we assessed the adequacy of the Group
and Company’s classification and related disclosures in respect of
provisions and contingent liabilities.
Our results
We consider the completeness and presentation of provisions and
contingent liabilities to be acceptable.
Changes to key audit matters
Going concern
In the prior year, we reported a key audit matter in respect of going concern given the uncertainty that surrounded the retail
industry due to COVID-19 and the possibility of future lockdowns. However, due to the country’s recovery from the pandemic
we have not deemed this to be a key audit matter but it still remains an other focus area in the audit.
Inventory Valuation
The valuation of Group and Parent Company inventory was a significant risk and key audit matter in the prior period. However,
following the COVID-19 pandemic the Group and Parent Company have experienced strong performance, including conversions
to online sales, which has reduced the risk of obsolete inventory. Therefore this is not separately identified in our audit report this
but still remains an other focus area in the audit.
Impairment of Intangibles
The valuation of the recoverable amount of the Go Outdoors and Footasylum CGUs was a significant risk in the prior period.
However, due to the impairment charges booked by management with respect to these CGUs in the prior year we have not
assessed this as one of our most significant risks in our current year audit and, therefore, it is not separately identified in our
report this year.
Valuation of the Separately Identifiable Intangible Assets recognised as part of the Shoe Palace acquisition
The valuation of separately identifiable intangible assets recognised in the Shoe Palace acquisition is not a significant risk or a
KAM in the current year. The risk in how its valued is an issue on recognition and after the initial year it is no longer a significant risk.
135
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 INDEPENDENT AUDITOR’S REPORT CONTINUED
3. Our Application of Materiality and an Overview of the Scope of our Audit
Materiality for the Group financial statements as a whole was set at £30m (2021: £16.5m), determined with reference to a
benchmark of Group normalised profit before tax, normalised to exclude this year’s DTLR insurance settlement receivable of
£16.6m and the movement in fair value of Genesis and ISRG put options of £290.3m as disclosed in Note 4 (2021: Normalised
to exclude impairment of Go Outdoors of £33.3m, Footasylum impairment of £55.6m and movement in fair value of Sport Zone
put options of £18.6m and by averaging over the last three years), of which it represents 3.2% (2021: 4.1%) in response to the
matters set out in the Management override of controls KAM in section 2.
Materiality for the Parent Company financial statements as a whole was set at £11.5m (2021: £11.1m), determined with reference
to a benchmark of Company’s PBT (2021: normalised by averaging over the last three years), of which it represents 3.5%
(2021: 4.2%), in response to the matters set out in the Management override of controls KAM in Section 2.
In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in
individual account balances add up to a material amount across the financial statements as a whole.
Performance materiality was set at 50% (2021: 65%) of materiality for the Group financial statements as a whole, which equates
to £15m (2021: £10.7m) and £5.8m (2021: £7.2m) for the Parent Company financial statements. We applied this percentage in
our determination of performance materiality based on the level of identified misstatements and control deficiencies during
the prior period. We have reduced this threshold to 50% from prior year to account for the increased risk in the wider control
environment and Corporate Governance matters noted during the year.
We agreed to report to the Audit & Risk Committee any corrected or uncorrected identified misstatements exceeding £0.9m
(2021: £0.8m), in addition to other identified misstatements that warranted reporting on qualitative grounds.
Of the Group’s 87 (2021: 79) reporting components, we subjected 9 (2021: 10) to full scope audits for group purposes and,
3 (2021: 1) components to specified risk-focused audit procedures. We subjected 2 (2021: 1) components to specific risk-focused
procedures over revenue, cash and journals (Focus and MIG (2021: Focus) and 1 (2021: 0) component to specific risk-focused
procedures over revenue, cash, journals and inventory (France).
Normalised group profit before tax
£928.4m (2021: £403.0m)
Group materiality
£30m (2021: £16.5m)
£30m
Whole financial statements materiality (2021: £16.5m)
£15m
Whole financial statements performance materiality (2021: £10.7m)
£20m
Range of materiality at 12 components (£20m to £1m)
(2021: £13.2m to £2m)
£0.9m
Misstatements reported to the Audit & Risk Committee (2021: £0.8m)
Group revenue
Group absolute profit before tax
Group total assets
1.6%
7.1%
82.4%
(2021 84.3%)
88.6%
(2021 84.8%)
78.8%
(2021 89.3%)
82.7%
75.3%
84.8%
88.6%
89.3%
78.8%
Normalised PBT
Group materiality
Full scope for group
audit purposes 2022
Specified risk-focused
audit procedures 2022
Full scope for group
audit purposes 2021
Specified risk-focused
audit purposes 2021
Residual components
The components within the scope of our work accounted for the percentages illustrated above. The group team performed
procedures on the items excluded from normalised Group profit before tax.
136
JD Sports Fashion Plc Annual Report and Accounts 2022
3. Our Application of Materiality and an Overview of the Scope of our Audit (continued)
The remaining 17.6% (2021: 15.7%) of total Group revenue, 11.4% (2021: 13.4%) of the total profits and losses that made up Group
profit before tax and 21.2% (2021: 9.7%) of total Group assets is represented by 75 (2021: 68) of reporting components, none of
which individually represented more than 3% (2021: 3%) of any of total Group revenue, Group profit before tax or total Group
assets. For these 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 the relevant risks detailed
above and the information to be reported back. The group team approved the component materialities, which ranged from
£20.0m to £1.0m (2021: £13.2m to £2.0m), having regard to the mix of size and risk profile of the Group across the components.
The work on 6 of the 12 components (2021: 7 of the 11 components) was performed by component auditors and the rest,
including the audit of the Parent Company, was performed by the group team.
The scope of the audit work performed was predominately substantive as we did not rely upon the Group’s internal control
over financial reporting.
The group team visited 1 (2021: 0) component location in the United States to assess the audit risk and strategy. Further, the
group team attended video and telephone conference meetings with 6 (2021: 6) component teams from Spain, Portugal, USA,
France, Australia and Footasylum to assess the audit risk and strategy. At this visit and 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.
4. The Impact of Climate Change on our Audit
In planning our audit, we have considered the potential impact of risks arising from climate change on the Group’s business and
its financial statements.
Further information on the Group’s commitments is provided in the Group’s Task Force for Climate-Related Financial Disclosures
(‘TCFD’) recommended disclosures on page 55.
As part of our audit we have performed a risk assessment, including making enquiries of management, reading board meeting
minutes and applying our knowledge of the Group and sector in which it operates to understand the extent of the potential
impact of climate change risk on the Group’s financial statements. Taking into account the nature of the business and the extent
of the headroom in impairment testing, we have not assessed climate related risk to be significant to our audit this year.
There was no impact on our key audit matters.
We have read the Group’s TCFD in the front half of the Annual Report and considered consistency with the financial statements
and our audit knowledge.
We have not been engaged to provide assurance over the accuracy of the climate risk disclosures set out on pages 55 to 59 in
the Annual Report.
5. Going Concern
The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group
or the Company or to cease their operations, and as they have concluded that the Group’s and the Company’s financial position
means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant
doubt over their ability to continue as a going concern for at least a year from the date of approval of the financial statements
(‘the going concern period’).
We used our knowledge of the Group, its industry, and the general economic environment to identify the inherent risks to its
business model and analysed how those risks might affect the Group’s and the Parent Company’s financial resources or ability
to continue operations over the going concern period. The risks that we considered most likely to adversely affect the Group’s
and the Parent Company’s available financial resources and metrics relevant to debt covenants over this period were:
– A material and unexpected reduction in demand due to future events such as a pandemic or economic downturn.
– Supply chain issues, a reduction in the allocation of stock or business interruption impacting the availability of stock from one
of the Group’s key Sports Fashion suppliers.
We considered whether these risks could plausibly affect the liquidity or covenant compliance in the going concern period by
assessing the Director’s sensitivities over the level of available financial resources and covenant thresholds indicated by the
Group’s financial forecasts taking account of severe, but plausible adverse effects that could arise from these risks individually
and collectively.
137
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 INDEPENDENT AUDITOR’S REPORT CONTINUED
Our procedures included:
– Critically assessing assumptions in the base case and downside scenarios relevant to liquidity and covenant metrics, in particular
by comparing to economic forecasts, approved budgets and our knowledge of the Group and the sector in which it operates;
– Assessing whether downside scenarios applied mutually consistent and severe assumptions in aggregate, using our
assessment of the possible range of each key assumption and our knowledge of inter-dependencies;
– We also compared past budgets to actual results to assess the Directors’ track record of budgeting accurately.
We also assessed the completeness of the going concern disclosure. Our conclusions based on this work are:
– we consider that the Directors’ use of the going concern basis of accounting in the preparation of the Financial Statements
is appropriate;
– we have not identified, and concur with the Directors’ assessment that there is not, a material uncertainty related to events
or conditions that, individually or collectively, may cast significant doubt on the Group’s or the Parent Company’s ability to
continue as a going concern for the going concern period;
– we have nothing 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 the Parent Company’s use of that basis for the going concern period, and we found the going
concern disclosure in Note 1 to be acceptable; and
– the related statement under the Listing Rules set out on page 33 is materially consistent with the Financial Statements
and our audit knowledge.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee
that the Group or the Parent Company will continue in operation.
6. Fraud and Breaches of Laws and Regulations – Ability to Detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (‘fraud risks’) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
– Enquiring of Directors, the Audit & Risk Committee and inspection of policy documentation as to the Group’s high-level
policies and procedures to prevent and detect fraud including the Group’s channel for “whistleblowing”, as well as whether
they have knowledge of any actual, suspected or alleged fraud.
– Reading Board and Audit & Risk Committee meeting minutes.
– Considering remuneration incentive schemes and performance targets for management and Directors including the profit
target for management remuneration.
– Using analytical procedures to identify any unusual or unexpected relationships.
– Involving our forensic specialists in our risk assessment and assisting us in identifying key fraud risks. This included attending
the Risk Assessment and Planning Discussion, holding a discussion with the engagement partner and engagement quality
control reviewer, and assisting with designing relevant audit procedures to respond to the identified fraud risks. They also
attended meetings with both Executive and Non-Executive Directors and external advisors and assisted with certain
procedures including shadowing investigations ongoing during the course of our audit.
We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout
the audit. This included communication from the group to full scope component audit teams of relevant fraud risks identified
at the Group level and request to full scope component audit teams to report to the Group audit team any instances of fraud
that could give rise to a material misstatement at the Group level.
As required by auditing standards, and taking into account the dominance of a small number of Executive Directors and
the potential for management bias given the strong performance in the year, we performed procedures to address the risk
of management override of controls and the risk of fraudulent revenue recognition, in particular the risk that Group and
component management may be in a position to make inappropriate accounting entries.
We identified “Management override of controls” as a separate KAM this year (see section 2) as a result of the matters
described in that KAM.
Further to this, we have identified additional fraud risks in relation to the existence, accuracy and presentation of accruals
and the completeness and presentation of provisions and contingent liabilities. Further detail in respect of these areas is set
out in the key audit matter disclosures in section 2 of this report.
In determining the audit procedures we took into account the results of our evaluation and testing of the operating effectiveness
of the Group-wide fraud risk management controls, together with the matters described in the KAM regarding Management
override of controls.
138
JD Sports Fashion Plc Annual Report and Accounts 2022 Our work in respect of these matters is described in section 2.
We discussed with the Audit & Risk Committee other matters related to actual or suspected fraud, for which disclosure is not
necessary, and considered any implications for our audit.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements
from our general commercial and sector experience and through discussion with the Directors and other management (as required
by auditing standards), and from inspection of the Group’s regulatory and legal correspondence, and discussed with the Directors
and other management the policies and procedures regarding compliance with laws and regulations.
As the Group is regulated, our assessment of risks involved gaining an understanding of the control environment including
the entity’s procedures for complying with regulatory requirements.
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 full- scope component audit teams of relevant laws and
regulations identified at the Group level, and a request for full scope component auditors to report to the group team any
instances of non-compliance with laws and regulations that could give rise to a material misstatement at group.
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial reporting
legislation (including related companies legislation), distributable profits legislation and taxation legislation, and we assessed
the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have a
material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation
or the loss of the Group’s license to operate. We identified the following areas as those most likely to have such an effect: laws
and regulations of various bodies that regulate the Group’s activities including the Competition and Market Authority (CMA),
the Financial Conduct Authority (‘FCA’) (in respect of the provision of consumer credit) and the Information Commissioners
Office (‘ICO’). Further we identified the following areas of laws and regulations: health and safety laws, data protection laws,
competition law, market abuse regulation, bribery and corruption requirements, advertising standards, employment law and
certain aspects of company legislation recognising the regulated nature of the Group’s activities. Auditing standards limit the
required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Directors and other
management, and inspection of regulatory and legal correspondence, if any. Therefore if a breach of operational regulations
is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.
Further detail in respect of our audit work over completeness and presentation of accruals and completeness and presentation
of provisions and contingent liabilities is set out in the key audit matter disclosures in section 2 of this report.
For the matters described in the Audit & Risk Committee Report on page 108 to 110 and in Note 23 and 33, we assessed these
disclosures against our understanding from legal correspondence and enquiry of the Group’s legal advisors on the matter and
enquiry of the Directors.
We discussed with the Audit & Risk Committee the following matters related to actual or suspected breaches of laws or regulations
and considered any implications for our audit. Our work in respect of these matters is described in section 2, together with
inspection of correspondence with regulatory bodies and discussion with management’s advisors to each key matter:
1.
Known anticompetitive behaviour in relation to football club replica kit and the resulting CMA investigation as discussed
in Note 23.
2. Breach of the CMA’s hold separate order in respect of the Footasylum acquisition by the Group (see Note 3 and Note 32).
3.
Lack of required declaration to the FCA under Principle 11 of the FCA Handbook (see Audit & Risk Committee Report page 109).
We also discussed with the Audit & Risk Committee other matters related to actual or suspected breaches of laws or
regulations, for which disclosure is not necessary, and considered any implications for our audit.
139
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 INDEPENDENT AUDITOR’S REPORT CONTINUED
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have properly planned and performed our audit in accordance
with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing
standards would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
7. 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 part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with
the Companies Act 2006.
Disclosures of emerging and principal risks and longer-term viability
We are required to perform procedures to identify whether there is a material inconsistency between the Directors’ disclosures
in respect of emerging and principal risks and the viability statement, and the financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw attention to in relation to:
– the Directors’ confirmation within the Viability statement that they have carried out a robust assessment of the emerging and
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 how emerging risks are identified, and explaining how they are
being managed and mitigated;
– 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.
We are also required to review the Viability Statement, set out on page 33 under the Listing Rules. Based on the above procedures,
we have concluded that the above disclosures are materially consistent with the financial statements and our audit knowledge.
Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements
audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were made, the absence of anything to report on these statements is
not a guarantee as to the Group’s and Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material inconsistency between the Directors’ corporate
governance disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is materially consistent with the financial statements
and our audit knowledge:
– 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;
– the section of the annual report describing the work of the Audit & Risk Committee, including the significant issues that
the Audit & Risk Committee considered in relation to the financial statements, and how these issues were addressed; and
140
JD Sports Fashion Plc Annual Report and Accounts 2022 – the section of the annual report that describes the review of the effectiveness of the Group’s risk management and internal
control systems,
We are required to review the part of the Corporate Governance Statement relating to the Group’s compliance with the
provisions of the UK Corporate Governance Code specified by the Listing Rules for our review.
We have nothing to report in this respect.
8. 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.
9. Respective Responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 131, 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 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 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.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements in an annual financial report prepared using the single electronic
reporting format specifies in the TD ESEF Regulation. This auditor’s report provides no assurance over whether the annual
financial report has been prepared in accordance with that format.
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.
Frances Simpson (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
1 St Peter’s Square, Manchester M2 3AE
22 June 2022
141
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 CONSOLIDATED INCOME STATEMENT
For the 52 weeks ended 29 January 2022
Revenue
Cost of sales
Gross profit
Selling and distribution expenses
Administrative expenses – normal
Administrative expenses – exceptional
Administrative expenses – total
Sales commission
Other operating income
Operating profit before financing
Before exceptional items
Exceptional items
Financial income
Financial expenses
Net financial expense
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*
Note
52 weeks to
29 January
2022
£m
8,563.0
52 weeks to
30 January
2021
£m
6,167.3
(4,355.0)
(3,205.7)
4,208.0
(2,808.1)
(413.4)
(292.5)
(705.9)
10.6
16.6
721.2
1,013.7
(292.5)
1.4
(67.9)
(66.5)
654.7
(195.1)
459.6
369.7
89.9
7.17p
7.17p
2,961.6
(2,126.4)
(381.2)
(97.3)
(478.5)
15.2
13.1
385.0
482.3
(97.3)
1.5
(62.5)
(61.0)
324.0
(94.8)
229.2
224.3
4.9
4.61p
4.61p
4
4
7
8
3
9
26
10
10
* Basic and diluted earnings per ordinary share have been restated for year ended 30 January 2021 following a share sub-division in the year
ended 29 January 2022. Further details can be found in Note 25.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 52 weeks ended 29 January 2022
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
The accompanying notes form part of these financial statements.
142
52 weeks to
29 January
2022
£m
459.6
52 weeks to
30 January
2021
£m
229.2
(34.9)
(34.9)
424.7
357.3
67.4
(20.0)
(20.0)
209.2
200.7
8.5
JD Sports Fashion Plc Annual Report and Accounts 2022 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 29 January 2022
Assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments in associates and joint ventures
Other assets
Forward contract asset
Deferred tax assets
Total non-current assets
Inventories
Right of return assets
Trade and other receivables
Income tax receivables
Assets held-for-sale
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Interest-bearing loans and borrowings
Lease liabilities
Trade and other payables
Liabilities directly associated with assets held-for-sale
Provisions
Income tax liabilities
Total current liabilities
Interest-bearing loans and borrowings
Lease liabilities
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
The accompanying notes form part of these financial statements.
As at
29 January
2022
£m
As at
30 January
2021
£m
Note
12
13
14
15
16
24
17
18
32
19
20
14
22
32
23
20
14
22
23
24
25
26
1,473.6
688.5
2,032.6
56.2
57.0
2.5
81.7
4,392.1
989.4
12.5
202.9
0.6
157.1
1,314.0
2,676.5
7,068.6
(72.6)
(379.0)
(1,279.5)
(142.6)
(13.2)
–
(1,886.9)
(55.5)
(1,863.9)
(775.4)
(19.9)
(127.4)
(2,842.1)
(4,729.0)
2,339.6
2.5
467.5
1,910.6
(454.6)
1,926.0
413.6
2,339.6
819.7
564.0
1,752.4
2.7
63.2
–
40.6
3,242.6
813.7
–
141.2
–
–
964.4
1,919.3
5,161.9
(120.9)
(301.8)
(1,102.0)
–
(0.7)
(29.5)
(1,554.9)
(48.1)
(1,628.0)
(374.4)
(5.1)
(55.0)
(2,110.6)
(3,665.5)
1,496.4
2.4
11.7
1,560.8
(336.2)
1,238.7
257.7
1,496.4
These financial statements were approved by the Board of Directors on 22 June 2022 and were signed on its behalf by:
N Greenhalgh
Director
Registered number: 1888425
143
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 52 weeks ended 29 January 2022
Ordinary
share
capital
£m
Share
premium
£m
Retained
earnings
£m
Other
equity
£m
Share-
based
payment
reserve
£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 1 February 2020
2.4
11.7
1,245.7
(36.4)
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
Non-controlling interest
share capital issued
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
224.3
–
–
224.3
–
–
(3.7)
94.5
–
–
–
–
–
–
–
(272.0)
–
–
–
–
Balance at 30 January 2021
2.4
11.7
1,560.8
(308.4)
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
–
–
–
–
–
–
–
–
–
–
–
–
Share capital issued
0.1
455.8
Acquisition of
non-controlling interest
Divestment of
non-controlling interest
Non-controlling interest
arising on acquisition
Share-based payment charge
–
–
–
–
–
–
–
–
369.7
–
–
369.7
(14.9)
–
–
0.4
(5.4)
–
–
–
–
–
–
–
(106.1)
–
–
–
–
–
Balance at 29 January 2022
2.5
467.5
1,910.6
(414.5)
The accompanying notes form part of these financial statements.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.1
0.1
144
(4.2)
1,219.2
70.0
1,289.2
–
224.3
4.9
229.2
(23.6)
(23.6)
3.6
(20.0)
(23.6)
(23.6)
3.6
(20.0)
(23.6)
200.7
8.5
(1.2)
209.2
(1.2)
–
–
–
–
–
–
–
(272.0)
–
(272.0)
(3.7)
(1.7)
(5.4)
94.5
181.4
275.9
–
–
0.4
0.3
0.4
0.3
(27.8)
1,238.7
257.7
1,496.4
–
369.7
89.9
459.6
(12.4)
(12.4)
(22.5)
(34.9)
(12.4)
(12.4)
(22.5)
(34.9)
(12.4)
–
–
–
–
–
–
–
357.3
(14.9)
67.4
(1.8)
424.7
(16.7)
(106.1)
455.9
–
–
(106.1)
455.9
0.4
(0.5)
(0.1)
(5.4)
48.0
42.6
–
0.1
42.8
–
42.8
0.1
(40.2)
1,926.0
413.6
2,339.6
JD Sports Fashion Plc Annual Report and Accounts 2022 CONSOLIDATED STATEMENT OF CASH FLOWS
For the 52 weeks ended 29 January 2022
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 other intangibles and non-current assets (non-exceptional)
Loss on disposal of non-current assets
Other exceptional items
Impairment of goodwill and fascia names (exceptional)
Impairment of non-current assets (exceptional)
Share of profit of equity-accounted investees, net of tax
(Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Interest paid
Lease interest
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Interest received
Proceeds from sale of non-current assets
Investment in software
Acquisition of property, plant and equipment
Acquisition of other non-current other assets
Acquisition of other intangibles
Draw down of finance lease liabilities
Dividends received from equity-accounted investees
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
Draw down of interest-bearing loans and borrowings
Repayment of finance lease liabilities
Repayment of lease liabilities
Subsidiary shares issued in the period
Proceeds received from issue of shares
Divestment of non-controlling interests
Acquisition of non-controlling interests
Equity dividends paid
Dividends paid to non-controlling interests 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
The accompanying notes form part of these financial statements.
52 weeks to
29 January
2022
£m
52 weeks to
30 January
2021
£m
Note
9
8
7
3
3
3
3, 4
3, 4
15
8
8, 14
8
12
13
16
12
30
30
14, 30
27
30
30
30
30
459.6
195.1
67.9
(1.4)
579.9
(2.1)
13.2
3.5
287.0
–
5.5
(3.2)
(31.8)
(69.3)
75.0
(8.4)
(59.5)
(244.1)
1,266.9
1.4
7.8
(14.9)
(227.3)
(5.7)
(5.2)
5.4
6.9
(616.5)
(848.1)
(513.3)
303.7
(6.1)
(350.1)
–
455.9
43.0
–
(14.9)
(1.8)
(83.6)
335.2
948.7
(3.5)
1,280.4
229.2
94.8
62.5
(1.5)
499.2
3.6
8.7
1.2
2.9
89.5
4.9
–
63.5
46.2
149.5
(7.6)
(54.9)
(130.4)
1,061.3
1.5
2.1
(19.1)
(105.2)
(3.9)
(3.8)
4.7
–
(206.3)
(330.0)
(391.5)
443.1
(3.4)
(285.2)
0.3
–
–
(5.2)
–
(1.2)
(243.1)
488.2
460.3
0.2
948.7
145
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 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 52 week period ended 29 January 2022 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 22 June 2022.
Basis of Preparation
These Group financial statements were prepared in accordance with International Accounting Standards (‘IAS’) in conformity
with the requirements of the Companies Act 2006 and in accordance with UK-adopted International Accounting Standards.
The financial statements are presented in Pounds Sterling, rounded to the nearest tenth of a million.
The financial statements have been prepared under the historical cost convention, as modified for financial assets and
liabilities (including derivative instruments) at fair value through the Consolidated Income Statement and also put 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 Interim Non-Executive Chair’s Statement and Business & Financial Review on pages 7 to 11 and 34 to 41
respectively. In addition, details of financial instruments and exposures to interest rate, foreign currency, credit and liquidity
risks are outlined in Note 21.
Going Concern
The global COVID-19 pandemic has presented a series of unprecedented challenges which have severely tested all aspects
of our business including our multichannel capabilities, the robustness of our operational infrastructure and the resilience
of our colleagues. Whilst COVID-19 has inevitably constrained our short-term progress, we firmly believe that we have a
robust premium branded multichannel proposition with our loyal consumers comfortable engaging with us in any channel.
The financial statements are prepared on a going concern basis, which the Directors believe to be appropriate for the
following reasons.
At 29 January 2022, the Group had net cash balances of £1,185.9 million (2021: £795.4 million) including loans of £128.1 million
(2021: £169.0 million) with available committed UK borrowing facilities of £700 million (2021: £700 million) of which £nil
(2021: £nil) has been drawn down (see Note 20) and US facilities of approximately $300 million of which $nil was drawn down
(2021: $nil). These facilities are subject to certain covenants (see Note 20). With a UK facility of £700 million available up to
6 November 2026 and a US facility of approximately $300 million available up until 24 September 2026, the Directors believe
that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.
The Group had net cash of £946.1 million as at 30 May 2022.
The Directors have prepared cash flow forecasts for the Group covering a period of at least 12 months from the date of approval
of these financial statements, which indicate that the Group will be able to operate within the level of its agreed facilities and
covenant compliance. For the purposes of both Viability and Going Concern Reporting, the Directors have prepared severe
but plausible downside scenarios which cover the same period as the base case, including specific consideration of a range
of impacts that could arise from geopolitical tensions and the actual and potential impact on supply chains, inflationary cost
pressures and business interruption impacting the availability of stock from the Group’s key Sports Fashion suppliers, as well as
the ongoing impact of the COVID-19 pandemic. These scenarios included a two month store closure in Winter 2023/24 and a
20% reduction in sales. As part of this analysis, mitigating actions within the Group’s control, should these severe but plausible
scenarios occur, have also been considered. These forecast cash flows indicate that there remains sufficient headroom for the
Group to operate within the committed facilities and to comply with all relevant banking covenants during the forecast period.
The Directors have considered all of the factors noted above, including the inherent uncertainty in forecasting the impact
of the current geopolitical tensions and COVID-19 pandemic, and are confident that the Group has adequate resources to
continue to meet all liabilities as and when they fall due for a period of at least 12 months from the date of approval of these
financial statements. Accordingly, the financial statements have been prepared on a going concern basis.
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.
146
JD Sports Fashion Plc Annual Report and Accounts 2022 1. Basis of Preparation (continued)
Basis of Consolidation (continued)
I. Subsidiaries (continued)
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. Associates and Joint Ventures
The Group’s interests in equity-accounted investees comprise interests in associates and interests in joint ventures.
Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial
and operating policies. A joint venture is an arrangement in which the Group has joint control over the financial and operating
policies based on a contractual arrangement.
Interests in associates and joint ventures are accounted for using the equity method and are initially recognised at cost.
Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and
other comprehensive income of equity-accounted investees, until the date on which significant influence or joint control ceases.
III. Transactions Eliminated on Consolidation
Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in
preparing the consolidated financial statements.
Changes in Ownership Interest Without a Loss of Control
In accordance with IFRS 10 ‘Consolidated Financial Statements’, 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.
Alternative Performance Measures
The Directors measure the performance of the Group based on a range of financial measures, including measures not
recognised by International Accounting Standards (‘IAS’) in conformity with the requirements of the Companies Act 2006
and in accordance with UK-adopted International Accounting Standards. These alternative performance measures may not
be directly comparable with other companies’ alternative performance measures and the Directors do not intend these to
be a substitute for, or superior to, IFRS measures. The Directors believe that these alternative performance measures assist
in providing additional useful information on the trading performance of the Group.
Alternative Performance Measures are also used to enhance the comparability of information between reporting periods, by
adjusting for exceptional items. Exceptional items are disclosed separately when they are considered unusual in nature and
not reflective of the trading performance and profitability of the Group. The separate reporting of exceptional items, which
are presented as exceptional within the relevant category in the Consolidated Income Statement, helps provide an indication
of the Group’s trading performance. An explanation as to why items have been classified as Exceptional is given in Note 4.
Further information can be found in the Alternative Performance Measures section on page 42.
Adoption of New and Revised Standards
The following amendments to accounting standards and interpretations, issued by the International Accounting Standards
Board (‘IASB’), have been adopted for the first time by the Group in the period with no significant impact on the consolidated
results or financial position:
– Amendments to IFRS 3 ‘Business Combinations’.
– Amendments to IAS 16 ‘Property, Plant and Equipment’.
– Amendments to IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’.
– Amendments to IAS 38 ‘Intangible Assets’ – Configuration of Customisation Costs in a Cloud Computing Arrangement.
– Interest Rate Benchmark Reform – Phase 2 – amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16.
– Annual Improvements – Cycle 2018–2020.
Other
The Group continues to monitor the potential impact of other new standards and interpretations which may be endorsed and
require adoption by the Group in future reporting periods. The Group does not consider that any other standards, amendments
or interpretations issued by the IASB, but not yet applicable, will have a significant impact on the financial statements.
147
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
1. Basis of Preparation (continued)
Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with adopted IFRSs requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates. The estimates and judgements disclosed below are those which have a significant risk of causing
a material adjustment to the carrying amount of assets and liabilities. All other accounting estimates and judgements
are disclosed within the relevant accounting policy in the notes to the financial statements.
Changes to Critical Accounting Estimates
Determination of the Fair Value of Assets and Liabilities on Acquisition
Included within critical accounting policies in the current year is the valuation of the intangible assets recognised as part
of the acquisition of DTLR Villa LLC (‘DTLR’) (see Note 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. The key assumption used by management in the valuation of the fascia name was the royalty rate. The
royalty rate assumption used in the valuation was estimated based on published comparable licence fees in the sports
fashion market and a calculation of the expected return on assets of the DTLR business. If the royalty rate used in the
valuation was 1% higher or lower, this would lead to a change in the fascia name valuation of plus or minus £25.4 million.
1% was determined to be a reasonable royalty rate sensitivity by comparing the royalty rate used with publicly disclosed
licensing transactions related to the retail of sportswear and footwear.
Changes to Critical Accounting Judgements
Provisions and Contingent Liabilities
The activities of the Group are overseen by a number of regulators around the world and, whilst the Group strives to ensure
full compliance with all its regulatory obligations, periodic reviews are inevitable which may result in a financial penalty. If
the risk of a financial penalty arising from one of these reviews is more than remote but not probable or cannot be measured
reliably then the Group will disclose this matter as a contingent liability. If the risk of a financial penalty is considered probable
and can be measured reliably then the Group would make a provision for this matter.
Critical Accounting Estimates
Put Options (Genesis Topco Inc put option £520.3 million)
Put options are in place over all or part of the remaining non-controlling interest shareholding in various subsidiaries and
these options are required to be fair valued at each accounting period date. Put options held by non-controlling interests
are accounted for using the present access method. The present value of the non-controlling interests’ put options is
estimated using Board approved forecasts multiplied by an earnings multiple. The option formula and multiple are usually
stated in the put option agreement; however, in the absence of a specified formula or multiple, we would estimate this based
on current evidence in the Mergers & Acquisitions market and our past experience of multiples paid for similar businesses.
These forecast cash flows are discounted using a discount rate reflecting the current market assessment of the time value
of money and any specific risk premiums relevant to the individual businesses involved. These discount rates are considered
to be equivalent to the rates a market participant would use. Sensitivity analysis has been performed over the key variable
inputs to the valuation of the significant put options, being the discount rate and the approved forecasts, and this has been
disclosed in Note 22 on page 196.
Other Accounting Judgements
Footasylum Disposal
This judgement has been revised due to changes during the financial period. On 4 November 2021, the final ruling from
the CMA was that it had again prohibited the Group’s acquisition of Footasylum. The final CMA undertakings were issued
on 14 January 2022, which was effectively the start date for the Footasylum sale process. Footasylum has been presented
as held-for-sale at 29 January 2022 and full details are provided in Note 32.
Other Accounting Estimates
Impairment of Goodwill (carrying value of the Shoe Palace CGU £546.7 million)
Goodwill arising on acquisition is allocated to groups of cash-generating units (‘Group CGUs’), that are expected to benefit
from the synergies of the business combination from which goodwill arose, being portfolios of stores or individual businesses.
The cash-generating units used to monitor goodwill and test it for impairment are therefore the store portfolios and individual
businesses rather than individual stores, as the cash flows of individual stores are not considered to be independent. These
cash-generating units are referred to throughout the Annual Report as Group CGUs. The recoverable amounts of these Group
CGUs are determined based on value-in-use calculations.
148
JD Sports Fashion Plc Annual Report and Accounts 2022 1. Basis of Preparation (continued)
Other Accounting Estimates (continued)
Impairment of Goodwill (carrying value of the Shoe Palace CGU £546.7 million) (continued)
The use of this method requires the estimation of future cash flows expected to arise from the continuing operation of the
Group CGU and the choice of a suitable discount rate in order to calculate the present value. 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 (carrying value of the Go Outdoors CGU £77.0 million and the
Shoe Palace CGU £546.7 million)
The Group is required to assess whether there is an indication that other intangible assets with a definite useful economic
life have suffered any impairment. The recoverable amount of brand names is based on an estimation of future sales and
the choice of a suitable royalty and discount rate in order to calculate the present value, when this method is deemed the
most appropriate. The use of this method requires the estimation of future cash flows expected to arise from the continuing
operation of the asset over its useful economic life and the choice of a suitable discount rate in order to calculate the present
value. Impairment losses are recognised in the Consolidated Income Statement. Note 12 provides further disclosure on
impairment of other intangible assets with definite lives, including a review of the key assumptions used.
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. A separate right of return asset is recognised on the face of the Statement of
Financial Position which represents the right to recover product from the customer. Accumulated experience is used to
estimate and provide for such returns at the time of the sale. The refund liability due to customers on return of their goods
was recognised within accruals in the prior year and has been reclassified to a separate refund liability category in the current
year. Retail sales are usually in cash, by debit card or by credit card.
– For online sales, title is deemed to have passed when the goods are delivered to the customer.
– 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 collected by the customer.
– 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 control over a product 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. A separate right of return asset is recognised on the face of the Statement of Financial Position which represents
the right to recover product from the customer. The provision for returns was included within accruals in the prior year
and has been reclassified to a separate refund liability category in the current year. 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. Where there are
specific obligations attached to joining fees, the income related to this is recognised in the period in which membership
commences since the performance obligation attached to that income is satisfied in that period. Where there are no specific
performance obligations attached to joining fees, these are recognised over time, on a straight-line basis over the expected
duration of the membership. 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.
149
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
1. Basis of Preparation (continued)
Other Accounting Policies
Sales Commission
Sales commission is presented separately in the Consolidated Income Statement and is received in relation to products
advertised on Group trading websites where the goods are delivered to the customer directly by the third-party supplier.
Provisions to Write Inventories Down to Net Realisable Value
The Group makes provisions for obsolescence, mark downs and shrinkage based on historical experience, 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.
Government Support
Government support is recognised in the Consolidated Financial Statements when it can be reliably measured, which the
Group considers to be on receipt. In accordance with IAS 20 ‘Government Grants’, furlough income received by the Group’s
UK subsidiaries of £24.4 million (2021: £61.6 million) and £7.5 million received by the Group’s international subsidiaries
(2021: £24.5 million) has been shown as a deduction from employed staff costs. Further, £31.0 million (2021: £58.8 million)
of rates relief received by the Group’s UK subsidiaries has been shown as a deduction from selling and distribution costs.
After the financial period end, the Group repaid the £24.4 million of furlough income that it received from the UK Government
in the year ended 29 January 2022. The repayment was accrued for as at 29 January 2022 and is shown as an expense within
employed staff costs.
Valuation of Rolling Leases
In initially applying IFRS 16 ‘Leases’, the Group has applied judgement to determine the lease term for certain lease contracts
in which the Group is a lessee that either have no specified end date, or where the Group continues to occupy the property
despite the contractual lease end date having passed. In determining the lease term, the Group takes into consideration its
commercial strategy on a store by store basis and the future intentions of the Group regarding the duration of continuing
occupation of the property. For lease contracts falling into these parameters, the associated lease liability is calculated at
the present value of the minimum lease payments over the estimated lease term, discounted at the Group’s incremental
cost of borrowing. A corresponding right-of-use asset is also recognised.
Share-Based Payments
The Executive Directors receive an element of remuneration in the form of share-based payments. Share-based payments
are measured at fair value at the grant date which is determined by the share price on that date. The cost of share-based
payments is recognised as an expense, together with a corresponding increase in equity, on a straight-line basis over the
vesting period of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the
related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised
is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.
Further information is available in the Directors’ Remuneration Report on page 125 and Note 5.
Supplier Rebates
Supplier rebates such as volume-related rebates, promotional cost contributions and defective allowances are recognised
in the Consolidated Financial Statements when they are contractually agreed with the supplier and can be reliably measured,
which the Group considers to be on receipt. Contributions towards store fixtures are recognised by way of a reduction in the
related capital expenditure. All significant rebates are agreed with suppliers retrospectively and after the end of the relevant
supplier’s financial year. An element of volume-related supplier rebates is deferred and recognised within inventory and
released on a straight-line basis over the six-month period following the financial year end as the related inventory is sold.
2. Segmental Analysis
IFRS 8 ‘Operating Segments’ requires the Group’s segments to be identified on the basis of internal reports about
components of the Group that are regularly reviewed by the Chief Operating Decision Maker to allocate resources to
the segments and to assess their performance. The Chief Operating Decision Maker is considered to be the Executive Chair
of JD Sports Fashion Plc.
Information reported to the Chief Operating Decision Maker is focused on the nature of the businesses within the Group.
The Group’s operating and reportable segments under IFRS 8 are Sports Fashion and Outdoor. In accordance with IFRS 8.12,
we have aggregated several operating segments with similar economic characteristics into a larger Sports Fashion operating
segment and concluded that, in doing so, the aggregation is still consistent with the core principles of IFRS 8.
When aggregating the operating segments into the larger Sports Fashion operating segment, we have primarily taken
into consideration:
– IFRS 8.12.a the nature of products or services;
– IFRS 8.12.c type or class of customer; and
– IFRS 8.12.d the methods used to distribute their products.
150
JD Sports Fashion Plc Annual Report and Accounts 2022 2. Segmental Analysis (continued)
The entities included in the Sports Fashion operating segment have similar characteristics as well-established, leading
retailers or wholesalers of footwear, apparel and accessories from a mix of international sports fashion brands and
private labels. When determining what to include within the Sports Fashion segment, we have considered that the
fascias all target a similar demographic in terms of both age range and an aspiration to achieve a certain style, whether
the product is to be used for lifestyle wear or active sports participation. The entities typically have similar economic
characteristics in terms of sales metrics, long-term average gross margins, levels of capital investment and operating cash
flows. The Outdoor segment differs from the Sports Fashion segment in that Outdoor is focused on retailing specialist
apparel, footwear and technical products for outdoor pursuits. Further, the Outdoor segment typically appeals to an older
and/or family-oriented demographic as compared with the younger and more style-focused demographic targeted by
the Sports Fashion businesses.
The Chief Operating Decision Maker receives and reviews segmental operating profit. Certain central administrative costs
including Group Directors’ salaries are included within the Group’s Sports Fashion result. This is consistent with the results
as reported to the Chief Operating Decision Maker.
IFRS 8 requires disclosure of information regarding revenue from major customers. The majority of the Group’s revenue is
derived from the retail of a wide range of apparel, footwear and accessories to the general public. As such, the disclosure
of revenues from major customers is not appropriate.
The Board considers that certain items are cross-divisional in nature and cannot be allocated between the segments on
a meaningful basis. Certain net funding costs and taxation are treated as unallocated, reflecting the nature of the Group’s
syndicated borrowing facilities and its tax group. A deferred tax asset of £81.7 million (2021: £40.6 million), a deferred tax
liability of £127.4 million (2021: £55.0 million) and an income tax receivable of £0.6 million (2021: liability of £29.5 million)
are included within the unallocated segment.
Each segment is shown net of intercompany transactions and balances within that segment. The eliminations remove
intercompany transactions and balances between different segments which primarily relate to the net draw down of
long-term loans and short-term working capital funding provided by JD Sports Fashion Plc (within Sports Fashion)
to other companies in the Group, and intercompany trading between companies in different segments. Inter-segment
transactions are undertaken in the ordinary course of business on arm’s length terms.
Information regarding the Group’s reportable operating segments for the 52 weeks to 29 January 2022 is shown below:
Income statement
Gross revenue
Inter-segment revenue
Revenue
Gross profit %
Operating profit before exceptional items
Exceptional items
Operating profit
Financial income
Financial expenses
Profit/(loss) before tax
Income tax expense
Profit for the period
Total assets and liabilities
Total assets
Total liabilities
Total segment net assets/(liabilities)
Sports Fashion
£m
Outdoor
£m
Unallocated
£m
8,049.7
(0.1)
8,049.6
49.5%
985.5
(292.5)
693.0
–
(57.2)
635.8
513.3
0.1
513.4
43.9%
28.2
–
28.2
–
(2.3)
25.9
–
–
–
–
–
–
–
1.4
(8.4)
(7.0)
Sports Fashion
£m
Outdoor
£m
Unallocated
£m
Eliminations
£m
Total
£m
8,563.0
–
8,563.0
49.1%
1,013.7
(292.5)
721.2
1.4
(67.9)
654.7
(195.1)
459.6
Total
£m
6,681.4
(4,390.4)
2,291.0
420.9
(327.2)
93.7
82.3
(127.4)
(45.1)
(116.0)
116.0
7,068.6
(4,729.0)
–
2,339.6
151
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 The comparative segmental results for the 52 weeks to 30 January 2021 are shown below:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2. Segmental Analysis (continued)
Other segment information
Capital expenditure:
Software development
Brand licences
Property, plant and equipment
Right-of-use assets
Non-current other assets
Depreciation, amortisation and impairments:
Amortisation of intangible assets
Depreciation of property, plant and equipment
Amortisation of non-current other assets
Depreciation of right-of-use assets
Impairment of non-current assets (exceptional items)
Impairment of non-current assets (non-exceptional items)
Income statement
Gross revenue
Inter-segment revenue
Revenue
Gross profit %
Operating profit/(loss) before exceptional items
Exceptional items
Operating profit/(loss)
Financial income
Financial expenses
Profit/(loss) 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
Right-of-use assets
Non-current other assets
Depreciation, amortisation and impairments:
Amortisation of intangible assets
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Impairment of goodwill and fascia names (exceptional items)
Impairment of non-current assets (exceptional items)
Impairment of non-current assets (non-exceptional items)
152
Sports Fashion
£m
Outdoor
£m
Total
£m
14.9
5.2
221.8
467.6
5.7
59.4
149.3
0.1
341.6
5.5
12.0
–
–
5.5
54.4
–
4.0
8.9
–
16.6
–
1.2
14.9
5.2
227.3
522.0
5.7
63.4
158.2
0.1
358.2
5.5
13.2
Total
£m
6,167.3
–
6,167.3
48.0%
482.3
(97.3)
385.0
1.5
(62.5)
324.0
(94.8)
229.2
Sports Fashion
£m
Outdoor
£m
Unallocated
£m
5,808.2
(0.2)
5,808.0
48.4%
484.7
(76.9)
407.8
–
(51.2)
356.6
359.1
0.2
359.3
42.2%
(2.4)
(20.4)
(22.8)
–
(3.7)
(26.5)
–
–
–
–
–
–
–
1.5
(7.6)
(6.1)
Sports Fashion
£m
Outdoor
£m
Unallocated
£m
Eliminations
£m
4,940.2
(3,420.3)
1,519.9
293.2
(272.8)
20.4
40.6
(84.5)
(43.9)
(112.1)
112.1
–
Total
£m
5,161.9
(3,665.5)
1,496.4
Sports Fashion
£m
Outdoor
£m
Total
£m
19.1
102.1
168.3
7.7
36.4
125.4
301.5
56.2
–
7.3
–
3.1
46.6
–
4.6
11.4
19.9
33.3
4.9
1.4
19.1
105.2
214.9
7.7
41.0
136.8
321.4
89.5
4.9
8.7
JD Sports Fashion Plc Annual Report and Accounts 2022 2. Segmental Analysis (continued)
Geographical Information
The Group’s operations are located in the UK, Australia, Austria, Belgium, Bulgaria, Canada, Cyprus, Czech Republic,
Denmark, Dubai, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Israel, Italy, Latvia,
Lithuania, Malaysia, the Netherlands, New Zealand, Poland, Portugal, Republic of Ireland (‘ROI’), Romania, Singapore,
Slovakia, South Korea, Spain and the Canary Islands, Sweden, Thailand and the US.
The following table provides analysis of the Group’s revenue by geographical market, irrespective of the origin of the
goods/services:
Revenue
UK & ROI
Europe
North America
Rest of world
52 weeks to
29 January
2022
£m
3,578.5
2,046.7
2,609.2
328.6
8,563.0
52 weeks to
30 January
2021
£m
2,527.0
1,579.4
1,780.5
280.4
6,167.3
The revenue from any individual country, with the exception of the UK and US, is not more than 10% of the Group’s total revenue.
Revenue by channel
Revenue
Retail stores
Multichannel
Other
Revenue by product type
Revenue
Footwear
Apparel
Accessories
Other
52 weeks to
29 January
2022
£m
5,668.5
2,623.1
271.4
8,563.0
52 weeks to
29 January
2022
£m
4,590.4
3,199.9
540.6
232.1
8,563.0
52 weeks to
30 January
2021
£m
3,524.9
2,465.2
177.2
6,167.3
52 weeks to
30 January
2021
£m
3,499.8
2,200.5
326.0
141.0
6,167.3
The following is an analysis of the carrying amount of segmental non-current assets by the geographical area in which the
assets are located. Taxation is treated as unallocated, reflecting the nature of the Group’s tax group.
Non-current assets
UK & ROI
Europe
North America
Rest of world
Unallocated
52 weeks to
29 January
2022
£m
1,217.4
1,329.7
1,607.8
155.5
81.7
52 weeks to
30 January
2021
£m
1,011.0
1,003.4
1,078.6
109.0
40.6
4,392.1
3,242.6
153
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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
Interim review
Depreciation and amortisation of non-current assets:
Depreciation of property, plant and equipment
Depreciation of right-of-use asset
Amortisation of intangible assets
Amortisation of non-current other assets – owned
Impairments of non-current assets:
Property, plant and equipment (exceptional)
Property, plant and equipment (non-exceptional)
Right-of-use asset (non-exceptional)
Goodwill and fascia names (exceptional)
Goodwill and fascia names (non-exceptional)
Other intangible assets (non-exceptional)
Other non-current assets (exceptional)
Loss on disposal of non-current assets
Rentals payable under non-cancellable operating leases for:
Land and buildings – variable lease payments
Land and buildings – short-term and low-value leases
Plant and equipment – short-term and low-value leases
Movement in the fair value of forward contracts
Provision related to ongoing CMA investigation into the sale of the Rangers FC branded replica
football shirts (see Note 23)
The penalty decision issued by the CMA in relation to a breach of the Interim Order imposed as
part of the CMA’s review of the Group’s acquisition of Footasylum Ltd
Profit before tax is stated after crediting:
Sales commission received
Other operating income
Movement in the fair value of forward contracts
Foreign exchange gain recognised
52 weeks to
29 January
2022
£m
52 weeks to
30 January
2021
£m
2.2
2.1
0.1
158.2
358.2
63.4
0.1
2.5
4.8
3.1
–
2.4
2.9
3.0
3.5
86.6
5.2
4.3
–
2.0
4.7
10.6
16.6
37.0
11.6
0.4
1.5
0.1
136.8
321.4
41.0
–
4.9
5.2
3.4
89.5
–
0.1
–
1.2
37.9
3.4
0.5
31.5
–
–
15.2
13.1
–
18.5
The auditor’s remuneration in respect of the 2021/22 financial statements includes £1.6 million for the additional work
performed in relation to the matters outlined in the Audit & Risk Committee report commencing on page 108. Fees of
£0.1 million (2021: £0.1 million) were incurred and paid to KPMG LLP by Pentland Group Limited in relation to the non-
coterminous audit of the Group for the purpose of inclusion in its consolidated financial statements for the 12 month
period to December 2021. In addition, fees of £10,000 were incurred and paid to KPMG LLP for non-audit services in
relation to certification of turnover for the Group’s Australian subsidiary, JD Sports Fashion Aus Pty.
Other non-current assets comprise key money and store deposits associated with the acquisition of leasehold interests
(see Note 16).
Since transition to IFRS 16 on 2 February 2019, only lease rentals in relation to variable lease payments, low value assets or
short-term leases have been charged to the Income Statement. The variable lease payments shown above relate to turnover
rents which are impacted by changes in sales at certain stores where the lease includes an element of turnover rent.
154
JD Sports Fashion Plc Annual Report and Accounts 2022 4. Exceptional Items
The Group exercises judgement in assessing whether items should be classified as exceptional. This assessment covers the
nature of the item, cause of occurrence and scale of impact of that item on the reported performance. In determining whether
an item should be presented as exceptional, the Group considers items which are significant because of either their size or
their nature, and which are non-recurring. In order for an item to be presented as exceptional, it should typically meet at least
one of the following criteria:
– It is a significant item, which may cross more than one accounting period.
– It has been directly incurred as a result of either an acquisition or a divestment, or arises from a major business change
or restructuring programme.
– It is unusual in nature or outside the normal course of business.
The separate reporting of items, which are presented as exceptional within the relevant category in the Consolidated Income
Statement, helps provide an indication of the Group’s trading performance in the normal course of business.
Movement in fair value of put options(1)
Insurance settlement for DTLR(2)
Restructuring of Spodis SA(3)
Impairment of goodwill and fascia names(4)
Restructuring of Go Outdoors(5)
Administrative expenses – exceptional
52 weeks to
29 January
2022
£m
292.7
(16.6)
16.4
–
–
292.5
52 weeks to
30 January
2021
£m
20.7
–
–
56.2
20.4
97.3
(1) Movement in the fair value of the liabilities in respect of the put options as re-measured at each reporting date (see Note 22) (Genesis Topco
Inc: charge of £258.7 million, Iberian Sports Retail Group: charge of £31.6 million, Marketing Investment Group S.A: charge of £1.7 million, Other:
charge of £0.7 million). The increase in the fair value of the put options attributable to Genesis Topco Inc. includes £71.0 million consequent to
the transfer of DTLR into the Genesis sub-group. The movement in the fair value of the put option liabilities is presented as exceptional as it is a
significant item that is outside of the normal course of business.
(2) Insurance settlement proceeds related to a pre-acquisition claim for business interruption by DTLR Villa LLC. As the claim was a contingent
asset at the date of acquisition, this was not recognised in the assets acquired in the fair value table in Note 11. These insurance proceeds are
presented as exceptional as they are unusual in nature and are outside of the normal course of business.
(3) The impact consequent to the restructuring of Spodis SA in the period, including a charge of £5.5 million in relation to the impairment of
tangible assets and business restructuring costs of £10.9 million. This item is presented as exceptional as it related to a non-recurring
restructuring project.
(4) The impairment in the prior period primarily relates to the impairment of goodwill and fascia name arising in prior years on the acquisition of
Footasylum (£55.6 million). The impairment is presented as exceptional as it is a significant item that is outside of the normal course of business.
(5) The net impact consequent to the restructuring of Go Outdoors in the prior period, including a charge of £33.3 million in relation to the
impairment of intangible assets, a charge of £4.9 million in relation to the impairment of leasehold improvements and a credit of £17.8 million in
relation to the extinguishment of lease commitments. This item is presented as exceptional as it related to a non-recurring restructuring project.
5. Remuneration of Directors
The Executive Directors’ Remuneration Policy, approved at the Annual General Meeting on 1 July 2021, states that the Long-
term Incentive Plan (‘LTIP’) awards will be a hybrid of cash and share awards. On 20 October 2021, the Executive Directors
were granted awards under the JD Sports Fashion Plc LTIP 2021 as follows:
Executive Director
Peter Cowgill
Neil Greenhalgh
No of shares
granted
Share price at
the grant date
(p)
409,275
53,225
210.8
210.8
These options will vest on the fifth anniversary of the grant date. The total expense recognised in the period arising from
equity-settled share-based payment transactions was £0.1 million.
On 20 October 2021, Peter Cowgill was granted 81,855 shares and Neil Greenhalgh was granted 10,645 shares. The number
of shares disclosed in the table above have been restated to reflect the 5:1 share sub-division effective 30 November 2021.
Following his departure, as announced on 25 May 2022, the LTIP award for Peter Cowgill lapsed on cessation in accordance
with the Directors’ Remuneration Policy.
155
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
5. Remuneration of Directors (continued)
The remuneration of the Executive Directors also includes provision for future LTIP cash payments of £0.6 million
(2021: £0.3 million).
Further information on Directors’ emoluments is shown in the Directors’ Remuneration Report on pages 114 to 130.
In the opinion of the Board, the key management as defined under revised IAS 24 ‘Related Party Disclosures’ are the Executive
and Non-Executive Directors. Page 96 of the Directors’ Report provides the details of the Directors who served during the
financial year. During the year there was one (2021: one) Director within the defined contribution pension scheme. Full disclosure
of the Directors’ remuneration is given in the Directors’ Remuneration Report on page 114 to 130.
Directors' emoluments:
As Non-Executive Directors
As Executive Directors
Pension contributions
6. Staff Numbers and Costs
52 weeks to
29 January
2022
£m
0.2
3.8
–
4.0
52 weeks to
30 January
2021
£m
0.2
5.9
–
6.1
The average number of persons employed by the Group (including Directors) during the period, analysed by category,
was as follows:
Sales and distribution
Administration
Total average staff employed
Full-time equivalents
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Pension costs
Other employed staff costs
2022
65,127
2,704
67,831
2021
52,234
2,151
54,385
44,488
37,297
52 weeks to
29 January
2022
£m
1,007.8
107.6
16.8
9.8
1,142.0
52 weeks to
30 January
2021
£m
682.8
79.8
14.7
8.6
785.9
156
JD Sports Fashion Plc Annual Report and Accounts 2022 7. Financial Income
Financial income comprises interest receivable on funds invested. Financial income is recognised in the Consolidated Income
Statement on an effective interest method.
Financial income
Bank interest
8. Financial Expenses
52 weeks to
29 January
2022
£m
1.4
52 weeks to
30 January
2021
£m
1.5
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.
On bank loans and overdrafts
Amortisation of facility fees
Lease interest
Other interest
Financial expenses
9. Income Tax Expense
52 weeks to
29 January
2022
£m
5.6
1.4
59.5
1.4
67.9
52 weeks to
30 January
2021
£m
5.7
1.5
54.9
0.4
62.5
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.
157
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
9. Income Tax Expense (continued)
Current tax
UK corporation tax at 19.0% (2021: 19.0%)
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 19.0% (2021: 19.0%)
Effects of:
Expenses not deductible
Put option movement not deductible(1)
Depreciation and impairment of non-qualifying non-current assets
(including brand names arising on consolidation)
Non-taxable income
Effect of tax rates in foreign jurisdictions(2)
Research and development tax credits and other allowances
Recognition of previously unrecognised tax losses
Change in tax rate(3)
Non-qualifying impairment of goodwill on consolidation
Change in unrecognised temporary differences
Over-provided in prior periods(4)
Other taxes due(5)
Income tax expense
52 weeks to
29 January
2022
£m
220.0
(7.3)
212.7
(12.9)
(4.7)
(17.6)
195.1
52 weeks to
29 January
2022
£m
124.4
5.3
55.7
2.9
(1.1)
10.5
(3.2)
(7.1)
(4.4)
0.4
5.9
(12.0)
17.8
195.1
52 weeks to
30 January
2021
£m
129.8
(3.6)
126.2
(28.0)
(3.4)
(31.4)
94.8
52 weeks to
30 January
2021
£m
61.6
7.0
3.9
8.6
(0.5)
6.8
(0.3)
–
0.5
–
5.6
(7.0)
8.6
94.8
(1) The movement in the put options per Note 22 is non-deductible for corporate tax.
(2) The growing proportion of overseas profits, predominantly in the US, arise in jurisdictions with a higher tax rate than the UK mainstream
corporation rate of 19%, thereby driving an adjusting item.
(3) The movement reflects the change in the UK deferred tax rate from an opening rate of 19% to a closing rate of 25%.
(4) Prior year adjustments represent UK R&D claims (0.3%), trading loss claims (0.3%) and other movements arising on the finalisation of the
corporation tax returns (0.4%) in conjunction with changes to the US opening deferred tax position (0.4%).
(5) Other taxes due are primarily in respect of US state taxes but also include other taxes payable in overseas jurisdictions.
158
JD Sports Fashion Plc Annual Report and Accounts 2022 10. Earnings Per Ordinary Share
Basic and Adjusted Earnings Per Ordinary Share
On 3 February 2021, JD Sports Fashion Plc completed the placing of new ordinary shares in the capital of the Company.
A total of 58,393,989 new ordinary shares were issued, increasing the total ordinary shares in issue to 1,031,627,149.
The shares were placed at an issue price of 795 pence per share with a par value of 25 pence leading to share capital
of £0.1 million and share premium of £455.8 million being recognised on issue (this is net of £8.3 million of costs incurred).
Following an ordinary resolution on 30 November 2021, a share split occurred whereby five ordinary shares were issued
for each ordinary share. In accordance with IAS 33, the number of shares outstanding before the event has been adjusted
for the proportionate change as if the event had occurred at the beginning of the earliest period presented.
The calculation of basic earnings per ordinary share at 29 January 2022 is based on the profit for the period attributable
to equity holders of the parent of £369.7 million (2021: £224.3 million) and a weighted average number of ordinary shares
outstanding during the 52 week period ended 29 January 2022 of 5,158,135,745 (2021: restated 4,866,165,800).
Adjusted earnings per ordinary share have been based on the profit for the period attributable to equity holders of the parent
for each financial period but excluding the post-tax effect of certain exceptional items. The Directors consider that this gives
a more useful measure of the trading performance and profitability of the Group.
Issued ordinary shares at beginning of period (restated)
Ordinary shares issued on 3 February 2021 (restated)
Issued ordinary shares at end of period
Profit for the period attributable to equity holders of the parent
Exceptional items
Tax relating to exceptional items
Profit for the period attributable to equity holders of the parent excluding
exceptional items
Adjusted earnings per ordinary share
Basic earnings per ordinary share
52 weeks to
29 January
2022
millions
4,866.2
291.9
5,158.1
52 weeks to
29 January
2022
£m
369.7
292.5
0.3
662.5
12.84p
7.17p
52 weeks to
30 January
2021
millions
4,866.2
–
4,866.2
52 weeks to
30 January
2021
restated
£m
224.3
97.3
(8.3)
313.3
6.44p
4.61p
Note
4
Diluted Earnings Per Ordinary Share
Diluted earnings per ordinary share is 7.17p (2021: 4.61p restated). Diluted adjusted earnings per share is 12.84p
(2021: 6.44p restated).
The calculation of diluted earnings per ordinary share at 29 January 2022 is based on the profit for the period attributable
to equity holders of the parent of £369.7 million (2021: £224.3 million) and a weighted average number of ordinary shares
outstanding during the period after adjusting for the effects of all dilutive potential ordinary shares calculated as follows:
Issued ordinary shares at end of period
Shares granted on 20 October 2021 under the JD Sports Fashion Plc LTIP 2021 (see Note 5)
Issued ordinary shares at end of period
52 weeks to
29 January
2022
millions
5,158.1
0.1
5,158.2
52 weeks to
30 January
2021
millions
4,866.2
–
4,866.2
159
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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; however, any resulting impairment will not be tax deductible. 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:
– Assembled workforce – In accordance with IAS 38, the assembled workforce is not recognised as a separate intangible
asset but is subsumed within goodwill. The assembled workforce is valued using the cost savings method which estimates
the costs saved by the acquirer from purchasing the asset vs. building or developing the asset internally.
– Intangible assets (computer software) – The cost approach is used which reflects the amount that would be required to
currently replace the service capacity of an asset (often referred to as current replacement cost).
– Intangible assets (fascia names and brand names) – 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.
– Leases – A right-of-use asset and lease liability are recognised, measured as if the acquired lease were a new lease at
the date of acquisition. The fair value of the acquired leases is estimated by comparing the annual rent to a normalised
rent level based on a market-oriented occupancy rate. The difference is calculated over the remaining lease term and
discounted at the estimated pre-tax discount rate, adjusting the value of the right-of-use asset recognised under IFRS 16
‘Leases’. The lease liability recognised is measured at the present value of the remaining lease payments, using a discount
rate determined in accordance with IFRS 16 at the date of acquisition.
– Owned property – The cost approach considers the cost to replace the existing improvements, less accrued depreciation,
plus the fair value of the land. The value of the properties is derived by adding the estimated value of the land to the cost
of constructing a reproduction or replacement for the improvements and then subtracting the amount of depreciation.
– Property, plant and equipment – The depreciated replacement cost new valuation approach is utilised, reflecting
adjustments for physical deterioration as well as functional and economic obsolescence.
– Customer relationships – The excess earnings method is used to value these intangible assets on acquisition. This method
considers the use of other assets in the generation of the projected cash flows of a specific asset to isolate the economic
benefit generated by the subject intangible asset. The contribution of other assets, such as fixed assets, working capital,
workforce, and other intangible assets, to overall cash flows is estimated through contributory asset ‘capital charges’.
The latter adjustment is made to separate the value of the particular intangible asset from the portion of the purchase
price that has already been allocated to the net tangible assets and other intangible assets employed. Therefore, the
value of the intangible asset is the present value of the after-tax cash flows potentially attributable to it, net of the
return on fair value attributable to tangible and other intangible assets.
160
JD Sports Fashion Plc Annual Report and Accounts 2022 11. Acquisitions (continued)
Current Period – Significant Acquisitions
Acquisitions are presented as significant when they are considered significant in terms of total consideration, the size of the
store base and/or geographical reach.
DTLR Villa LLC
Initial acquisition
On 17 March 2021, JD Sports Fashion Plc (‘JD’) acquired 100% of the issued share capital of DTLR Villa LLC, via a wholly
owned intermediate holding company in the US. Total cash consideration was £305.2 million, split between £117.9 million
debt funding and £187.3 million equity funding.
DTLR is based in Baltimore, Maryland and is a hyperlocal athletic footwear and apparel streetwear retailer operating from
247 stores across 19 states on acquisition. The acquisition of DTLR, with its differentiated consumer proposition, will enhance
the Group’s neighbourhood presence in the North and East of the US.
The existing DTLR management team has also reinvested a portion of its proceeds back into DTLR in exchange for a new
minority stake of 1.5%. Put and call options, to enable future exit opportunities for the management team, have also been
agreed and become exercisable after a minimum period of three years. A valuation of these put options has been performed
using an earnings multiple, a suitable discount rate and approved forecasts, and the initial liability of £4.2 million has been
recognised with the corresponding entry to Other Equity in accordance with the present value method of accounting.
These options are required to be fair valued at each accounting period date.
Included within the fair value of the net identifiable assets on acquisition is an intangible asset of £101.6 million representing
the DTLR fascia name and an intangible asset of £3.8 million representing the customer relationships arising from the loyalty
scheme in place. The Board believes that the excess of consideration paid over net assets on acquisition of £212.0 million is
best considered as goodwill on acquisition representing future operating synergies. The goodwill calculation is summarised
on the next page. As at the date of this report, the period in which measurement adjustments could be made has now closed
on this acquisition and no further fair value measurement adjustments have been made.
Subsequent intra-group transfer
On 2 July 2021, JD completed the transfer of the intermediate Parent Company and DTLR to Genesis Topco Inc (‘Genesis’),
which is an existing 80.0% subsidiary based in the US and Parent Company of the sub-group which contains Finish Line Inc.
and the Shoe Palace Corporation. It was always the intention for DTLR to be part of the Genesis sub-group, but the requirement
for speed and certainty of execution on the original transaction meant that it was more appropriate for the Group to initially
acquire DTLR directly. This transfer to Genesis now brings all of the Group’s businesses in the US into one sub-group, which
will enhance the future operational collaboration between them. However, as the parent to Genesis, JD will continue to make
strategic decisions regarding the Company’s future. The consideration payable by Genesis to JD in relation to the transfer
was the same as the total consideration paid by JD on the original acquisition.
By virtue of the fact that JD only owns 80% of Genesis, JD effectively disposed of a proportion of its investment in DTLR to
the four Mersho Brothers (‘the Mershos’) who, with their 20% aggregate shareholding in Genesis, are jointly a related party
of JD. In order to maintain their shareholding in Genesis at the current level, the Mershos invested their pro-rata element of
the equity consideration of $52.0 million into Genesis. This transfer has taken place on an arm’s length basis and reflects the
net assets acquired as at the original acquisition date of 17 March 2021.
161
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
11. Acquisitions (continued)
Current Period – Significant Acquisitions (continued)
DTLR Villa LLC (continued)
Acquiree’s net assets at acquisition date:
Intangible assets
Property, plant and equipment
Other non-current assets
Right-of-use assets
Inventories
Cash and cash equivalents
Trade and other receivables
Income tax asset
Trade and other payables
Bank loans and overdrafts
Deferred tax liability
Lease liabilities
Net identifiable assets
Goodwill on acquisition
Total consideration
Book value
£m
Measurement
adjustments
£m
Fair value at
17 March 2021
£m
43.7
53.7
0.5
–
40.3
95.2
7.6
0.4
(37.6)
(140.2)
(3.3)
(11.8)
48.5
62.9
(4.4)
(0.2)
139.9
–
–
(3.3)
–
(0.9)
–
(21.2)
(128.1)
44.7
106.6
49.3
0.3
139.9
40.3
95.2
4.3
0.4
(38.5)
(140.2)
(24.5)
(139.9)
93.2
212.0
305.2
Included in the 52 week period ended 29 January 2022 is revenue of £382.8 million and a profit before tax of £63.9 million in
respect of DTLR.
Marketing Investment Group S.A.
On 30 April 2021, JD Sports Fashion Plc acquired 60% of the issued share capital of Marketing Investment Group S.A.
(‘MIG’) for total consideration of £66.0 million. Total consideration comprises cash consideration of £63.6 million and
£2.4 million of deferred consideration that is subject to customary closing conditions and expected to be paid in 2022.
MIG operated 410 stores on acquisition along with the associated trading websites in nine countries in Central and Eastern
Europe. The acquisition of MIG provided the platform to develop the JD fascia in Central and Eastern Europe. The MIG team
has been instrumental in the opening of the first JD stores in Eastern Europe with stores at Poznan, Poland, and Constanta,
Romania. Since the period end, the Group has opened four further JD stores in Poland, one additional store in Romania and
a first store in Hungary, at the Árkád Shopping Centre in Budapest. We would anticipate further openings for the JD fascia
across Eastern Europe in the new financial year although events in Ukraine do drive some caution.
Put and call options to enable future exit opportunities for the 40% shareholders have also been agreed and become
exercisable after the year ending January 2025. A valuation of these put options has been performed using an earnings
multiple, a suitable discount rate and approved forecasts, and the initial liability of £50.2 million has been recognised with
the corresponding entry to Other Equity in accordance with the present value method of accounting. These options are
required to be fair valued at each accounting period date.
Included within the fair value of the net identifiable assets on acquisition is an intangible asset of £25.1 million representing
the Sizeer fascia name and an intangible asset of £4.1 million representing the 50 Style fascia name. The Board believes that
the excess of consideration paid over net assets on acquisition of £41.4 million is best considered as goodwill on acquisition
representing future operating synergies. As at the date of this report, the period in which measurement adjustments could be
made has now closed on this acquisition and no further fair value measurement adjustments have been made. The goodwill
calculation is summarised on the next page.
162
JD Sports Fashion Plc Annual Report and Accounts 2022 11. Acquisitions (continued)
Current Period – Significant Acquisitions (continued)
Marketing Investment Group S.A. (continued)
Acquiree’s net assets at acquisition date:
Intangible assets
Property, plant and equipment
Other non-current assets
Right-of-use assets
Inventories
Cash and cash equivalents
Trade and other receivables
Income tax asset
Trade and other payables
Bank loans and overdrafts
Deferred tax asset/(liability)
Lease liabilities
Net identifiable assets
Non-controlling interest (40%)
Goodwill on acquisition
Consideration – satisfied in cash
Consideration – deferred
Total consideration
Book value
£m
Measurement
adjustments
£m
Fair value at
30 April 2021
£m
2.6
16.6
1.1
–
69.1
6.5
4.9
0.1
(58.6)
(27.0)
1.0
–
16.3
(6.5)
29.2
–
–
66.2
(1.9)
–
1.1
–
1.7
–
(5.5)
(66.2)
24.6
(9.8)
31.8
16.6
1.1
66.2
67.2
6.5
6.0
0.1
(56.9)
(27.0)
(4.5)
(66.2)
40.9
(16.3)
41.4
63.6
2.4
66.0
Included in the 52 week period ended 29 January 2022 is revenue of £175.0 million and a profit before tax of £6.0 million in
respect of MIG.
Deporvillage S.L.
On 25 June 2021, Iberian Sports Retail Group S.L. (‘ISRG’), the Group’s existing intermediate holding company in Spain,
exchanged contracts on the conditional acquisition of Deporvillage S.L. (‘Deporvillage’), which is based in Manresa, Catalonia.
ISRG is a leading operator in the sporting goods market across Iberia through its Sprinter and Sport Zone fascias with the
acquisition of Deporvillage, an online retailer of specialist sports equipment with country specific websites in six European
countries, giving additional depth and expertise in the key categories of cycling, running and outdoor. The transaction was
subject to certain conditions, principally relating to anti-trust clearance, with formal completion taking place on 3 August
2021. Total maximum cash consideration for the acquisition of an initial 80% holding is £119.6 million of which a maximum
of £34.5 million has been deferred and will be paid contingent on achieving certain future performance criteria. As at the
date of the acquisition and the January 2022 year-end, the fair value of the contingent consideration was determined to
be £19.0 million.
Put and call options to enable future exit opportunities for the 20% shareholders have also been agreed and become
exercisable from 2024 onwards. A valuation of these put options has been performed using an earnings multiple, a suitable
discount rate and approved forecasts, and the initial liability of £11.2 million has been recognised with the corresponding entry
to Other Equity in accordance with the present value method of accounting. These options are required to be fair valued at
each accounting period date.
Included within the fair value of the net identifiable assets on acquisition is an intangible asset of £38.8 million representing
the Deporvillage online fascia name and an intangible asset of £2.9 million representing the fair value of the customer base.
The Board believes that the excess of consideration paid over net assets on acquisition of £70.4 million is best considered
as goodwill on acquisition representing future operating synergies. The provisional goodwill calculation is summarised on the
next page.
Included in the 52 week period ended 29 January 2022 is revenue of £67.8 million and a profit before tax of £2.5 million in
respect of Deporvillage.
163
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
11. Acquisitions (continued)
Current Period – Significant Acquisitions (continued)
Deporvillage S.L. (continued)
Acquiree’s net assets at acquisition date:
Intangible assets
Property, plant and equipment
Right-of-use assets
Inventories
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Bank loans and overdrafts
Income tax liability
Deferred tax asset/(liability)
Lease liabilities
Net identifiable assets
Non-controlling interest (20%)
Goodwill on acquisition
Consideration – satisfied in cash
Consideration – deferred
Total consideration
Book value
£m
Measurement
adjustments
£m
Provisional fair
value at
3 August 2021
£m
0.9
0.3
–
28.6
2.4
4.7
(29.3)
(1.3)
(1.0)
0.6
–
5.9
(1.2)
48.4
–
1.1
–
–
–
–
–
–
(12.1)
(1.1)
36.3
(7.3)
49.3
0.3
1.1
28.6
2.4
4.7
(29.3)
(1.3)
(1.0)
(11.5)
(1.1)
42.2
(8.5)
70.4
85.1
19.0
104.1
Cosmos Sport S.A.
On 21 October 2021, the Group acquired 80% of the issued share capital of Cosmos Sport S.A. (‘Cosmos’) for cash
consideration of £65.0 million. At acquisition Cosmos operated 58 stores in Greece and three in Cyprus under a variety
of retail banners and associated trading websites. The two main fascias are Cosmos, which is the core fascia of the business
and has an elevated sporting goods and lifestyle proposition, and Sneaker 10, which has a more premium footwear offer.
Put and call options to enable future exit opportunities for the 20% shareholders have also been agreed and become
exercisable from 2025 onwards. A valuation of these put options has been performed using an earnings multiple, a suitable
discount rate and approved forecasts, and the initial liability of £10.0 million has been recognised with the corresponding
entry to Other Equity in accordance with the present value method of accounting. These options are required to be fair
valued at each accounting period date.
Included within the fair value of the net identifiable assets on acquisition is an intangible asset of £9.1 million representing the
Cosmos fascia name and an intangible asset of £4.2 million representing the Sneaker 10 fascia name. The Board believes that
the excess of consideration paid over net assets on acquisition of £39.5 million is best considered as goodwill on acquisition
representing future operating synergies. The provisional goodwill calculation is summarised on the next page.
Included in the 52 week period ended 29 January 2022 is revenue of £26.0 million and a profit before tax of £0.9 million in
respect of Cosmos.
164
JD Sports Fashion Plc Annual Report and Accounts 2022 11. Acquisitions (continued)
Current Period – Significant Acquisitions (continued)
Cosmos Sport S.A. (continued)
Acquiree’s net assets at acquisition date:
Intangible assets
Property, plant and equipment
Other non-current assets
Right-of-use assets
Inventories
Cash and cash equivalents
Trade and other receivables
Income tax asset
Trade and other payables
Bank loans and overdrafts
Deferred tax liability
Lease liabilities
Net identifiable assets
Non-controlling interest (20%)
Goodwill on acquisition
Total consideration
Book value
£m
Measurement
adjustments
£m
Provisional fair
value at
21 October 2021
£m
–
14.0
1.0
–
24.3
13.2
5.7
0.3
(27.9)
(8.5)
(0.3)
–
21.8
(4.4)
13.3
–
–
38.2
–
–
–
–
–
–
(3.2)
(38.2)
10.1
(2.0)
13.3
14.0
1.0
38.2
24.3
13.2
5.7
0.3
(27.9)
(8.5)
(3.5)
(38.2)
31.9
(6.4)
39.5
65.0
Current Period – Other Acquisitions
The aggregate impact of the other acquisitions in the current period is as follows with further details provided in the narrative
on pages 166 to 168:
Acquiree’s net assets at acquisition date:
Intangible assets
Property, plant and equipment
Right-of-use assets
Other non-current assets
Inventories
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Bank loans and overdrafts
Income tax liabilities
Deferred tax liabilities
Lease liabilities
Net identifiable assets
Non-controlling interest (various)
Goodwill on acquisition
Consideration – satisfied in cash
Consideration – deferred
Total consideration
Fair values
acquired
£m
34.4
8.5
26.3
0.2
31.6
35.3
9.6
(24.5)
(6.2)
(4.4)
(6.6)
(26.3)
77.9
(11.6)
126.7
174.3
18.7
193.0
165
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
11. Acquisitions (continued)
Current Period – Other Acquisitions (continued)
80s Casual Classics Limited
On 2 March 2021, JD Sports Fashion Plc acquired 70% of the issued share capital of 80s Casual Classics Limited (‘80s CC’) for
cash consideration of £15.4 million. 80s CC is predominantly an online retailer of retro and original clothing from brands such
as adidas and Sergio Tacchini, inspired by the British subculture of the ‘70s, ‘80s and ‘90s. The acquisition included put and
call options over the remaining 30% of shares, exercisable in annual tranches after a minimum period of three years.
Included within the fair value of the net identifiable assets on acquisition is an intangible asset of £1.0 million representing the
80s CC fascia name. The Board believes that the excess of consideration paid over net assets on acquisition of £9.0 million
is best considered as goodwill representing future operating synergies. As at the date of this report, the period in which
measurement adjustments could be made has now closed on this acquisition and no further fair value measurement
adjustments have been made.
Included in the 52 week period ended 29 January 2022 is revenue of £13.0 million and a profit before tax of £3.9 million in
respect of 80s Casual Classics.
Uggbugg Fashion Limited
On 18 June 2021, JD Sports Fashion Plc acquired 51% of the issued share capital of Uggbugg Fashion Limited, including
a wholly owned subsidiary, Missy Empire Limited (together ‘Missy Empire’), for initial cash consideration of £11.7 million.
Additional consideration of up to £2.2 million is payable if certain performance criteria are achieved. The fair value of the
contingent consideration as at the acquisition date and as at 29 January 2022 was determined to be £nil.
Included within the fair value of the net identifiable assets on acquisition is an intangible asset of £0.9 million representing
the Missy Empire fascia name. The Board believes that the excess of consideration paid over net assets on acquisition of
£9.6 million is best considered as goodwill on acquisition representing future operating synergies.
Put and call options over 9% of the remaining 49% shareholding have also been agreed and become exercisable after
the year ending January 2025. A valuation of these put options has been performed using an earnings multiple, a suitable
discount rate and approved forecasts, and the initial liability of £1.4 million has been recognised with the corresponding
entry to Other Equity in accordance with the present value method of accounting. These options are required to be fair
valued at each accounting period date.
Included in the 52 week period ended 29 January 2022 is revenue of £6.2 million and a break even result in respect of Missy Empire.
The Watch Shop Holdings Limited and Watch Shop Logistics Ltd
On 18 June 2021, JD Sports Fashion Plc acquired 100% of the issued share capital of The Watch Shop Holdings Limited
and Watch Shop Logistics Ltd (together ‘WatchShop’) via a wholly owned intermediate holding company. Total cash
consideration paid was £26.2 million. Contingent consideration is payable subject to certain criteria being met. The fair
value of the contingent consideration as at the acquisition date and as at 29 January 2022 was determined to be £nil.
WatchShop is an online retailer of designer fashion watches from brands such as Armani, Michael Kors and Hugo Boss.
Included within the fair value of the net identifiable assets on acquisition is an intangible asset of £2.5 million representing
the WatchShop fascia name. The Board believes that the excess of consideration paid over net assets on acquisition of
£10.6 million is best considered as goodwill on acquisition representing future operating synergies.
Included in the 52 week period ended 29 January 2022 is revenue of £19.2 million and a loss before tax of £0.7 million in
respect of WatchShop.
Bodytone International Sport S.L.
On 3 August 2021, ISRG, the Group’s existing intermediate holding company in Spain, acquired 50.1% of the issued share
capital of Bodytone International Sport S.L. (‘Bodytone’) for initial cash consideration of £8.9 million. Additional consideration
of up to £3.1 million is payable if certain performance criteria are achieved and the fair value of this contingent consideration
as at the acquisition date and as at 29 January 2022 was determined to be £2.9 million.
Based in Murcia in Spain, Bodytone manufactures and distributes professional fitness equipment with a presence in over
40 countries worldwide. ISRG believes that the acquisition of Bodytone will enhance its product categories and improve its
specialised sporting goods offer. Included within the fair value of the net identifiable assets on acquisition is an intangible
asset of £4.9 million representing the Bodytone name. The Board believes that the excess of consideration paid over net
assets on acquisition of £8.8 million is best considered as goodwill on acquisition representing future operating synergies.
166
JD Sports Fashion Plc Annual Report and Accounts 2022 11. Acquisitions (continued)
Current Period – Other Acquisitions (continued)
Put and call options over the remaining 49.9% shareholding have also been agreed and become exercisable in tranches from
2024 onwards. A valuation of these put options has been performed using an earnings multiple, a suitable discount rate and
approved forecasts, and the initial liability of £11.3 million has been recognised with the corresponding entry to Other Equity
in accordance with the present value method of accounting. These options are required to be fair valued at each accounting
period date.
Included in the 52 week period ended 29 January 2022 is revenue of £7.5 million and a profit before tax of £1.0 million in
respect of Bodytone.
Hairburst Holding Group Limited
On 17 September 2021, JD Sports Fashion Plc acquired 75% of the issued share capital of Hairburst Holding Group Limited,
including three wholly owned subsidiaries (together ‘Hairburst’) for cash consideration of £26.2 million.
Hairburst retails own label haircare products and vitamins via a direct to consumer website and as a wholesaler both in
the UK and internationally. Included within the fair value of the net identifiable assets on acquisition is an intangible asset
of £6.6 million representing the Hairburst name. The Board believes that the excess of consideration paid over net assets
on acquisition of £18.1 million is best considered as goodwill on acquisition representing future operating synergies.
Put and call options over the remaining 25% shareholding have also been agreed and become exercisable in tranches from
2025 onwards. A valuation of these put options has been performed using an earnings multiple, a suitable discount rate and
approved forecasts, and the initial liability of £8.4 million has been recognised with the corresponding entry to Other Equity
in accordance with the present value method of accounting. These options are required to be fair valued at each accounting
period date.
Included in the 52 week period ended 29 January 2022 is revenue of £6.3 million and a profit before tax of £0.1 million in
respect of Hairburst.
Wheelbase Lakeland Limited
On 3 June 2021, JD Sports Fashion Plc exchanged contracts on the conditional acquisition of 77.5% of the issued share
capital of Wheelbase Lakeland Limited (‘Wheelbase’). Completion of the acquisition was subject to obtaining consent
for the change in control from the Financial Conduct Authority. This was obtained, the acquisition subsequently completed
on 30 September 2021 and the cash consideration paid was £22.2 million.
Operating from three stores on acquisition and a trading website, Wheelbase is firmly established as one of the premier
cycling retailers in the UK, and the product offering centres on premium cycles and accessories from key brands such
as Cube, Cannondale, Trek and Specialized. Included within the fair value of the net identifiable assets on acquisition
is an intangible asset of £1.4 million representing the Wheelbase fascia name. The Board believes that the excess
of consideration paid over net assets on acquisition of £18.7 million is best considered as goodwill on acquisition
representing future operating synergies.
Put and call options over the remaining 22.5% shareholding have also been agreed and become exercisable in tranches from
2025 onwards. A valuation of these put options has been performed using an earnings multiple, a suitable discount rate and
approved forecasts, and the initial liability of £4.0 million has been recognised with the corresponding entry to Other Equity
in accordance with the present value method of accounting. These options are required to be fair valued at each accounting
period date.
Included in the 52 week period ended 29 January 2022 is revenue of £4.0 million and a profit before tax of £0.2 million in
respect of Wheelbase.
XLR8 Sports Limited
On 19 November 2021, JD Sports Fashion Plc acquired 100% of XLR8 Sports Limited trading as Leisure Lakes Bikes (‘Leisure
Lakes’) for initial cash consideration of £25.6 million plus additional consideration up to a maximum of £15.0 million if certain
performance criteria are achieved. The fair value of this contingent consideration as at the acquisition date and as at
29 January 2022 was determined to be £11.2 million.
Operating from 10 stores and a trading website, Leisure Lakes is considered to be one of the leading omnichannel retailers
of bicycles and bicycle parts, equipment, clothing and accessories, and is a key partner for most of the major brands including
Trek, Cube and Specialized. Included within the fair value of the net identifiable assets on acquisition is an intangible asset
of £2.5 million representing the Leisure Lakes fascia name. The Board believes that the excess of consideration paid over net
assets on acquisition of £25.9 million is best considered as goodwill on acquisition representing future operating synergies.
Included in the 52 week period ended 29 January 2022 is revenue of £4.4 million and a loss before tax of £0.3 million in
respect of Leisure Lakes.
167
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
11. Acquisitions (continued)
Current Period – Other Acquisitions
GymNation
On 24 December 2021, the Group’s existing subsidiary JD Sports Gyms Limited (‘JD Gyms’) acquired 100% of GymNation
Limited and its 100% owned subsidiary GymNation LLC (together ‘GymNation’) for cash consideration of $42.2 million and
contingent consideration of $6.1 million. We assessed the substance of the contingent payment taking into account the
management leaver terms of the shareholder agreement and concluded that an element of the contingent payment is a future
payment to employees and the remainder is contingent consideration. Contingent consideration is cash-settled and is linked
to GymNation’s future performance. It is initially measured at fair value and is subsequently remeasured to fair value at each
reporting date until the contingency is settled. The fair value of contingent consideration recognised at 29 January 2022 is
$6.6 million (£4.9 million). The maximum amount of the future payment is £75 million.
GymNation is a chain of seven gyms in the UAE (six in Dubai and one Abu Dhabi). Included within the fair value of the net
identifiable assets on acquisition is an intangible asset of £7.9 million representing the GymNation fascia name. The Board
believes that the excess of consideration paid over net assets on acquisition of £21.8 million is best considered as goodwill
on acquisition representing future operating synergies. Included in the 52 week period ended 29 January 2022 is revenue
of £1.3 million and a profit before tax of £0.2 million in respect of GymNation.
Other Acquisitions
During the period, the Group made one other small acquisitions. This transaction was not material.
Full Year Impact of Acquisitions
Had the acquisitions of the entities listed above been effected at 31 January 2021, the revenue and profit before tax of the
Group for the 52 week period to 29 January 2022 would have been £8.9 billion and £666.1 million respectively.
Acquisition Costs
Acquisition-related costs amounting to £7.9 million have been excluded from the consideration transferred and have been
recognised as an expense in the year, within administrative expenses in the Consolidated Income Statement.
Prior Period Acquisitions
Onepointfive Ventures Limited trading as Livestock
On 10 February 2020, the Group acquired 100% of the issued share capital of Onepointfive Ventures Limited DBA Livestock
(‘Livestock’) through a newly established Canadian holding company (JDSF Holdings (Canada) Inc.) (‘Holdco’). Based in
Vancouver, this business and its management will provide the platform to develop JD Group fascias in Canada.
Consideration comprised £7.0 million in cash, of which £0.6 million was deferred as at the date of acquisition, plus 20% of the
equity in Holdco. The fair value of the 20% equity in Holdco was £1.8 million. The deferred consideration of £0.6 million was
subsequently paid in June 2021.
Included within the fair value of the net identifiable assets on acquisition is an intangible asset of £1.2 million, representing the
‘Livestock’ fascia name. The Board believes that the excess of consideration paid over net assets on acquisition of £8.4 million
is best considered as goodwill on acquisition representing future operating synergies. No measurement adjustments have
been made during the 52 week period ended 29 January 2022 and the period in which measurement adjustments could be
made has now closed on this acquisition. The goodwill calculation is summarised below:
Acquiree’s net assets at acquisition date:
Intangible assets
Property, plant and equipment
Right-of-use assets
Inventories
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Deferred tax liability
Lease liabilities
Income tax liability
Net identifiable (liabilities)/assets
Goodwill on acquisition
Consideration – satisfied in cash
Consideration – fair value of shares issued
Consideration – deferred (paid June 2021)
Total consideration
168
Book value
£m
Measurement
adjustments
£m
Fair value at
10 February
2020
£m
–
0.5
0.5
0.5
(0.8)
0.1
(0.5)
–
(0.5)
(0.3)
(0.5)
1.2
–
–
–
–
–
–
(0.3)
–
–
0.9
1.2
0.5
0.5
0.5
(0.8)
0.1
(0.5)
(0.3)
(0.5)
(0.3)
0.4
8.4
6.4
1.8
0.6
8.8
JD Sports Fashion Plc Annual Report and Accounts 2022 11. Acquisitions (continued)
Prior Period Acquisitions (continued)
Included in the 52 week period ended 30 January 2021 was revenue of £10.1 million and a profit before tax of £1.4 million in
respect of Livestock.
X4L Gyms Limited
On 22 July 2020, X4L Gyms Limited, a 100% owned subsidiary of JD Gyms Limited, acquired certain assets of Wright Leisure
Limited trading as Xercise4less following the Group being placed into administration on the same date.
Xercise4less is a UK-based value-gym chain with 50 operational clubs at the date of administration. The Company offered
high-quality, low-cost contract and non-contract memberships to its members from large operational facilities nationwide.
The Board believes that Xercise4less further strengthens the Group’s presence in the growing UK fitness market with the
acquisition providing immediate reach to a wider membership base as well as facilitating the Group’s presence as a key player
in the market. Xercise4less is a well-established business with a wealth of knowledge in the UK fitness market which the Board
believes will be complementary to JD Gyms. The Board also believes that there will be significant operational and strategic
benefits from a combination of the two businesses.
The Board believes the excess of cash consideration paid over the net identifiable assets on acquisition of £14.2 million is
best considered as goodwill representing future operating synergies.
No measurement adjustments have been made during the 52 week period ended 29 January 2022 and the period in which
measurement adjustments could be made has now closed on this acquisition. The goodwill calculation is summarised below:
Acquiree’s net assets at acquisition date:
Intangible assets
Property, plant and equipment
Trade and other receivables
Trade and other payables
Deferred tax liability
Net identifiable assets/(liabilities)
Goodwill on acquisition
Consideration – satisfied in cash
Book value
£m
Measurement
adjustments
£m
Fair value at
22 July 2020
£m
16.3
7.8
0.1
–
–
24.2
–
(16.1)
4.4
(0.1)
(1.5)
(0.9)
(14.2)
–
0.2
12.2
–
(1.5)
(0.9)
10.0
14.2
24.2
Included in the 52 week period ended 30 January 2021 was revenue of £8.1 million and a loss before tax of £3.3 million
in respect of X4L Gyms Limited.
Of the initial 50 X4L Gyms Limited sites initially acquired, 11 have been subsequently handed back to the landlord, 28 have
been re-branded as JD Gyms and 11 continue to operate as X4L Gyms Limited as we continue to review the long-term viability
of these sites.
Shoe Palace Corporation and Nice Kicks LLC
On 14 December 2020, JD Sports Fashion Plc’s wholly owned intermediate holding company in the US, Genesis Holdings,
acquired 100% of the issued shares in Shoe Palace Corporation and the members’ interests in Nice Kicks LLC (together
‘Shoe Palace’). Shoe Palace has an established retail presence in California, Texas, Nevada, Arizona, Florida, Colorado, New
Mexico and Hawaii with 163 stores trading under the Shoe Palace fascia and four stores trading as Nice Kicks at acquisition.
Total consideration for the acquisition was £517.6 million, comprising £243.5 million of cash consideration (of which
£73.1 million was deferred as at the date of acquisition) and £274.1 million, being the initial fair value of this equity
in the enlarged Group in the US calculated using an EBITDA multiple and approved forecasts. Post acquisition, the
£73.1 million of deferred consideration has been settled.
Additionally, put and call options, to enable future exit opportunities for the minority interest, have also been agreed, which
commence after the end of the financial year to 1 February 2025. A valuation of these put options has been performed using
an EBITDA multiple, a suitable discount rate and approved forecasts, and the initial liability of £261.6 million was recognised
with the corresponding entry to Other Equity in accordance with the present access method of accounting. These options are
required to be fair valued at each accounting period date.
169
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
11. Acquisitions (continued)
Prior Period Acquisitions (continued)
Shoe Palace Corporation and Nice Kicks LLC (continued)
Included within the fair value of the net identifiable assets on acquisition is an intangible asset of £105.8 million, representing
the ‘Shoe Palace’ fascia name and an intangible asset of £1.2 million, representing the ‘Nice Kicks’ fascia name. The Board
believes that the excess of consideration paid over net assets on acquisition of £411.0 million is best considered as goodwill
on acquisition representing future operating synergies. Due to the proximity of the date of the acquisition to the financial year
ended 30 January 2021, information was received during the financial year ended 29 January 2022 which resulted in changes
to the measurement adjustments. The changes made were not significant in nature or value, with the final values presented
in the table below. The period in which measurement adjustments could be made has now closed on this acquisition.
Book value
£m
Measurement
adjustments
£m
Fair value at
14 December 2020
£m
Acquiree’s net assets at acquisition date:
Intangible assets
Property, plant and equipment
Right-of-use assets
Other non-current assets
Inventories
Cash and cash equivalents
Bank loans and overdrafts
Trade and other receivables
Trade and other payables – current
Trade and other payables – non-current
Deferred tax liability
Lease liabilities
Net identifiable assets
Goodwill on acquisition
Consideration – satisfied in cash
Consideration – fair value of shares issued
Consideration – deferred
Total consideration
0.2
22.7
139.8
0.6
49.7
3.1
(1.7)
10.7
(64.2)
(9.5)
–
(139.8)
11.6
107.0
1.3
–
–
6.7
–
–
(2.1)
6.4
9.5
(33.8)
–
95.0
107.2
24.0
139.8
0.6
56.4
3.1
(1.7)
8.6
(57.8)
–
(33.8)
(139.8)
106.6
411.0
170.4
274.1
73.1
517.6
Included in the 52 week period ended 30 January 2021 was revenue of £56.1 million and a profit before tax of £13.9 million in
respect of Shoe Palace.
A Number of Names Limited
On 23 December 2020, the Group acquired 100% of the issued share capital of A Number of Names Limited (‘ANON’).
ANON is primarily a wholesale business with the licence to the Billionaire Boys Club (‘BBC’) brand in the UK, Europe, the
Middle East, Africa, Australia, Canada and certain other territories.
The total fair value of consideration recognised at 23 December 2020 was £5.5 million comprising £3.7 million of cash
consideration and £1.8 million of deferred consideration that is contingent upon ANON meeting certain performance
criteria. £1.8 million was deemed to be the fair value of the deferred consideration based on management’s judgement
and best estimates as at 23 December 2020. Due to the proximity of the date of the acquisition to the financial year ended
30 January 2021, information was received during the financial year ended 29 January 2022 which resulted in changes to the
measurement adjustments. The changes made were not significant in nature or value and the period in which measurement
adjustments could be made has now closed on this acquisition.
The Board believes the excess of consideration over the net assets acquired of £2.7 million is best considered as goodwill
on acquisition representing future operating synergies.
Included in the 52 week period ended 30 January 2021 was revenue of £0.2 million and a break even result before tax
in respect of ANON.
170
JD Sports Fashion Plc Annual Report and Accounts 2022 11. Acquisitions (continued)
Other Acquisitions
During the period, the Group made several small acquisitions. These transactions were not material.
Full Year Impact of Acquisitions
Had the acquisitions of the entities listed above been effected at 2 February 2020, the revenue and profit before tax
of the Group for the 52 week period to 30 January 2021 would have been £6.5 billion and £334.9 million respectively.
Acquisition Costs
Acquisition-related costs amounting to £4.0 million have been excluded from the consideration transferred and have
been recognised as an expense in the prior year, within administrative expenses in the Consolidated Income Statement.
12. Intangible Assets
Acquisitions
The acquisitions of intangible assets in the current year principally relate to the acquisition of DTLR Villa LLC, Marketing
Investment Group S.A., Deporvillage S.L. and Cosmos Sport S.A. The acquisitions in the prior year principally relate to the
acquisition of Onepointfive Ventures Limited, X4L Gyms Limited and Shoe Palace Corporation (including Nice Kicks LLC).
Further details, including the fair value of the assets acquired, are provided in Note 11.
Amortisation
Included within the amortisation charge for the period ended 29 January 2022 is accelerated amortisation of £0.4 million
(2021: £4.0 million) following a review of the useful economic life of certain items of software development capitalised.
Impairment
The impairment in the current period relates to the goodwill arising on the acquisition of Rascal Clothing Limited and Bernard
Esher Limited. An impairment charge of £2.2 million has been recognised against the goodwill included in the carrying value
of the Rascal Clothing Limited Group CGU of £5.6 million (recoverable amount £2.4 million) and an impairment charge of
£0.2 million against the goodwill included in the carrying value of the Bernard Esher Limited Group CGU of £0.4 million
(recoverable amount £nil).
The impairment in the prior period primarily relates to the impairment of the goodwill and fascia names arising in prior years
on the acquisition of Footasylum (£55.6 million) and Go Outdoors Topco Limited (£33.3 million).
Intangible Assets with Finite 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.
At each reporting date, the Group reviews the carrying amounts of its brand licences to determine whether there is any
indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Impairment losses
are recognised within administrative expenses in the Consolidated Income Statement.
The recoverable amount of brand licences is determined based on value-in-use calculations. The use of this method requires
the estimation of future cash flows expected to arise from the continuing operation of the relevant asset until the licence
expiry date and the choice of a suitable discount rate in order to calculate the present value.
Customer Relationships
Customer relationships acquired as part of a business combination are stated at fair value as at the acquisition date less
accumulated amortisation and impairment losses. Amortisation of customer relationships is charged to the Consolidated
Income Statement within administrative expenses over the estimated useful life of five years on a straight-line basis. At
each reporting date, the Group reviews the carrying amounts of its customer relationships to determine whether there is
any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Impairment
losses are recognised within administrative expenses in the Consolidated Income Statement.
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 and is typically
between five and ten years. 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. Brand names are amortised
on a straight-line basis over their useful economic lives and the amortisation charge is included within administrative
expenses in the Consolidated Income Statement.
171
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
12. Intangible Assets (continued)
Intangible Assets with Finite Lives (continued)
Brand Names (continued)
At each reporting date, the Group reviews the carrying amounts of its brand names and licences to determine whether there
is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
The recoverable amount of brand names is determined based on a ‘royalty relief’ method of valuation. The recoverable amount of
brand names is based on an estimation of future sales and the choice of a suitable royalty and discount rate in order to calculate
the present value, when this method is deemed the most appropriate. The use of this method requires the estimation of future cash
flows expected to arise from the continuing operation of the asset and the choice of a suitable discount rate in order to calculate
the present value. Impairment losses are recognised within administrative expenses in the Consolidated Income Statement.
Software Development
Software developments 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. Capitalised software costs are related to software under the control of the Group.
Software development costs are all amortised over a period of two to seven years on a straight-line basis and the amortisation
charge is included within administrative expenses in the Consolidated Income Statement. Software development includes £nil
(2021: £nil) of internally generated software development.
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 a finite 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 estimated useful economic lives are as follows:
– Online fascia names
– Store fascia names
3 to 10 years
10 years
The factors that are considered when determining the useful life of each fascia name are as follows:
– 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 impact of increased competition in the marketplace as a result of reduced barriers to entry and its impact on the
useful life of online fascia names.
The remaining useful economic lives of fascia names as at 29 January 2022 range over a period of 4 to 10 years.
Fascia names are all amortised over the useful economic life on a straight-line basis and the amortisation charge is
included within administrative expenses in the Consolidated Income Statement.
At each reporting date, the Group reviews the carrying amounts of its fascia names to determine whether there is any
indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. 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 Group CGU and the choice of a suitable discount
rate in order to calculate the present value. Impairment losses are recognised in the Consolidated Income Statement.
Intangible Assets with Indefinite Lives
Goodwill
Goodwill represents amounts arising on acquisition of subsidiaries. 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, the 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.
172
JD Sports Fashion Plc Annual Report and Accounts 2022
12. Intangible Assets (continued)
Intangible Assets with Indefinite Lives (continued)
Goodwill (continued)
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to Group CGUs and is tested annually
for impairment and whenever there is an indication that the goodwill may be impaired. The Group CGUs are either the store
portfolios or individual businesses acquired and the recoverable amount is determined based on value-in-use calculations.
The recoverable amount is compared with the carrying amount of the Group CGU including goodwill.
Goodwill
£m
Brand licences
£m
Brand names
£m
Fascia names
£m
Customer
relationships
£m
Software
development
£m
Cost or valuation
At 1 February 2020
Additions
Acquisitions
Reclassifications
Disposals
Exchange differences
At 30 January 2021
Additions
Acquisitions
Reclassifications
Disposals
Transfer to assets held-for-sale
(Note 32)
Exchange differences
At 29 January 2022
Amortisation
and impairment
At 1 February 2020
Charge for the period
Impairments
Reclassifications
Disposals
Exchange differences
At 30 January 2021
Charge for the period
Impairments
Reclassifications
Disposals
Transfer to assets held-for-sale
(Note 32)
299.8
–
434.8
–
–
(36.1)
698.5
–
490.0
–
–
–
(2.6)
1,185.9
90.4
–
29.8
–
–
–
120.2
–
2.4
–
–
–
11.8
3.8
–
–
–
–
15.6
5.2
1.3
–
–
–
–
22.1
11.1
2.2
–
–
–
–
13.3
1.1
–
–
–
–
At 29 January 2022
122.6
14.4
Net book value
At 29 January 2022
At 30 January 2021
At 1 February 2020
1,063.3
578.3
209.4
7.7
2.3
0.7
25.9
–
–
–
–
–
25.9
–
–
–
–
(3.0)
–
22.9
13.3
1.7
–
–
–
–
15.0
1.8
0.1
–
–
(0.8)
16.1
6.8
10.9
12.6
214.0
–
108.9
–
–
5.2
328.1
–
212.5
–
–
–
(15.6)
525.0
55.0
16.2
59.7
–
–
1.0
131.9
39.5
–
–
–
–
171.4
353.6
196.2
159.0
–
–
–
–
–
–
–
–
12.6
–
–
–
(0.9)
11.7
–
–
–
–
–
–
–
1.5
–
–
–
–
1.5
10.2
–
–
77.5
19.1
0.2
1.8
(0.7)
2.2
100.1
14.9
9.0
0.7
(3.6)
(7.5)
0.1
113.7
45.5
20.9
0.1
0.9
(0.4)
1.1
68.1
19.5
2.8
(1.1)
(2.6)
(5.0)
81.7
32.0
32.0
32.0
Total
£m
629.0
22.9
543.9
1.8
(0.7)
(28.7)
1,168.2
20.1
725.4
0.7
(3.6)
(10.5)
(19.0)
1,881.3
215.3
41.0
89.6
0.9
(0.4)
2.1
348.5
63.4
5.3
(1.1)
(2.6)
(5.8)
407.7
1,473.6
819.7
413.7
173
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
12. Intangible Assets (continued)
Intangible Assets with Indefinite Lives (continued)
Goodwill (continued)
The carrying amount of goodwill and fascia name by Group CGU, along with the key assumptions used in the value-in-use
calculation, is as follows:
Basic financial information
Bodytone
Cosmos
Deporvillage
DTLR
Finish Line
First Sport store portfolio
Go Outdoors
GymNation
Hairburst
JD Gyms
Leisure Lakes
MIG
Missy Empire
Shoe Palace
Sport Zone
WatchShop
Wheelbase
Other
Segment
Sports
Fashion
Sports
Fashion
Sports
Fashion
Sports
Fashion
Sports
Fashion
Sports
Fashion
Outdoor
Sports
Fashion
Sports
Fashion
Sports
Fashion
Outdoor
Sports
Fashion
Sports
Fashion
Sports
Fashion
Sports
Fashion
Sports
Fashion
Outdoor
Sports
Fashion &
Outdoor
Goodwill
2022
£m
Fascia name
2022
£m
Total
intangible
2022
£m
8.1
4.3
12.4
36.6
12.0
48.6
65.2
34.0
99.2
205.5
89.2
294.7
99.6
45.5
145.1
15.0
–
20.4
18.1
14.1
25.9
37.5
9.6
–
14.3
7.2
15.0
14.3
27.6
6.4
24.5
–
2.4
25.7
0.7
14.1
28.3
63.2
10.3
Goodwill
2021
£m
Fascia name
2021
£m
Total
intangible
2021
£m
–
–
–
–
97.2
15.0
–
–
–
14.1
–
–
–
–
–
–
–
–
–
–
–
51.3
148.5
–
16.1
–
–
–
–
–
–
15.0
16.1
–
–
14.1
–
–
–
398.3
92.1
490.4
386.3
101.1
487.4
16.1
10.6
18.7
64.0
5.9
2.2
1.4
10.3
22.0
12.8
20.1
74.3
17.2
7.3
24.5
–
–
–
–
–
–
48.5
20.4
68.9
The total intangible assets include a decrease of £55.1 million (Shoe Palace £17.5 million, Deporvillage £8.1 million, MIG
£6.8 million, DTLR £6.6 million, Finish Line £5.6 million, Cosmos £3.6 million, Other £6.9 million) in relation to exchange
rate fluctuations (2021: £36.1 million).
1,063.3
353.6
1,416.9
578.3
196.2
774.5
174
JD Sports Fashion Plc Annual Report and Accounts 2022 12. Intangible Assets (continued)
Intangible Assets with Indefinite Lives (continued)
Goodwill (continued)
Impairment model assumptions used
Short-
term
growth
Short-
term
growth
Long-
term
growth
Long-
term
growth
rate(1)
2022
rate(1)
2021
rate(2)
2022
rate(2)
2021
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Pre-Tax
Discount
Pre-Tax
Discount
rate(3)
2022
rate(3)
2021
Margin rate
–
–
–
–
–
–
–
–
–
–
–
–
1.4%
2.0%
1.0%
1.0% Gross margins are assumed to be broadly consistent
with recent historic and approved budget levels
14.2%
13.7%
Bodytone(4)
Cosmos(4)
Deporvillage(4)
DTLR(4)
Finish Line
Segment
Sports
Fashion
Sports
Fashion
Sports
Fashion
Sports
Fashion
Sports
Fashion
First Sport
store portfolio
Sports
Fashion
1.0%
1.0%
1.0%
1.0% Gross margins are assumed to be broadly consistent
with recent historic and approved budget levels
9.0%
8.5%
Go Outdoors Outdoor
4.1%
2.0%
2.0%
2.0% Gross margins are assumed to be broadly consistent
with recent historic and approved budget levels
20.4%
16.0%
GymNation(4)
Hairburst(4)
JD Gyms
Leisure
Lakes(4)
MIG(4)
Missy
Empire(4)
Shoe Palace
Sport Zone
WatchShop(4)
Sports
Fashion
Sports
Fashion
Sports
Fashion
Outdoor
Sports
Fashion
Sports
Fashion
Sports
Fashion
Sports
Fashion
Sports
Fashion
Wheelbase(4) Outdoor
Other
Sports
Fashion &
Outdoor
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3.0%
3.0%
3.0%
1.0% Gross margins are assumed to be broadly consistent
with recent historic and approved budget levels
10.2%
9.7%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4.0%
4.0%
3.0%
1.5% Gross margins are assumed to be broadly consistent
with recent historic and approved budget levels
15.1%
15.6%
4.8%
2.0%
2.0%
2.0% Gross margins are assumed to be broadly consistent
with recent historic and approved budget levels
12.5%
12.3%
–
–
–
–
–
–
–
–
1.0%
–3.0%
1.0%
–3.0%
1.0%
–3.0%
1.0%
–3.0%
–
–
–
–
–
–
A range of gross margin assumptions, from
broadly consistent with approved budget levels
to improvements of up to 2% in the short term to
reflect implementation of enhanced Group terms and
focused strategy regarding stock and merchandising
8.9%
–18.1%
7.0%
–13.1%
(1) The short-term revenue growth rate is the Board approved average annual growth rate for the four year period following the January 2023
financial year currently underway.
(2) The long-term revenue 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 a pre-tax measure based on the historical industry average weighted average cost of capital, with a possible
debt leverage of 15% at a market interest rate of 5%. The discount rate applied reflects any specific risk premiums relevant to the Group CGU.
The impact of the right-of-use asset funding under IFRS 16 has been taken into consideration and factored into the calculation of the discount
rate. These discount rates are considered to be equivalent to the rates a market participant would use.
(4) No impairment models have been completed for these assets given they were newly acquired during the financial year and there were no
indicators of impairment noted at the year-end.
175
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
12. Intangible Assets (continued)
Intangible Assets with Indefinite Lives (continued)
Goodwill (continued)
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 used for assessing the goodwill and other intangibles.
The Board has considered the possibility of each business 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. With regard to the assessment of value-in-use of all Group CGUs,
with the exception of Go Outdoors and Shoe Palace (see separate disclosure below), the Board believes 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 and the amount of headroom would cover large negative growth rates.
The table below shows the amount of headroom for each Group CGU, as well as the current assumption used and the revised
assumption which would be required to eliminate the headroom.
Short-term growth rate
Long-term growth rate
Pre-tax discount rate
Company
Headroom
£m
First Sport store portfolio
235.0
Finish Line
1,050.9
Go Outdoors
JD Gyms
Shoe Palace
Sport Zone
13.9
23.8
39.9
247.3
% Used
Revised %
% Used
Revised %
% Used
Revised %
1.0
1.4
4.1
3.0
4.0
4.8
-17.1
-5.0
2.9
-44.5
1.6
-29.1
1.0
1.0
2.0
3.0
3.0
2.0
more than
-1,000
more than
-1,000
-18.2
-32.3
2.1
-146.1
9.0
14.2
20.4
10.2
15.1
12.5
104.2
58.9
24.9
58.2
16.0
38.1
Go Outdoors
As shown in the table above, marginal changes to the assumptions could eliminate the headroom and cause the carrying
value of the Group CGU to exceed its recoverable amount. The following further sensitivities were performed:
– If the pre-tax discount rate increased by 1% with all other assumptions remaining unchanged, this would not result in an
impairment but would reduce the headroom to £10.1 million (representing 13.1% of the carrying value of the Group CGU).
– Reducing the long-term growth rate by 1% with all other assumptions remaining unchanged would not result in an
impairment but would reduce the headroom to £1.1 million (representing 1.4% of the carrying value of the Group CGU).
– Reducing the forecast gross profit margin rate by 1% with all other assumptions remaining unchanged would not result in
an impairment but would reduce the headroom to £4.7 million (representing 6.1% of the carrying value of the Group CGU).
+/-1% was considered a reasonably possible change in the key assumptions listed above. Given the sensitivity analysis
indicates that reasonable changes in the assumptions could result in a reduction to marginal headroom in the impairment
model, it was not considered appropriate to reverse the impairments recognised in respect of Go Outdoors in previous years.
Shoe Palace
As shown in the table above, marginal changes to the assumptions could eliminate the headroom and cause the carrying
value of the Group CGU to exceed its recoverable amount. The following further sensitivities were performed:
– If the pre-tax discount rate increased by 1% with all other assumptions remaining unchanged, this would result in an
impairment of £19.2 million (representing 3.5% of the carrying value of the Group CGU).
– Reducing the short-term and long-term growth rate by 1% with all other assumptions remaining unchanged would result
in an impairment of £18.1 million (representing 3.3% of the carrying value of the Group CGU).
– Reducing the forecast gross profit margin rate by 1% with all other assumptions remaining unchanged would not result in
an impairment but would reduce the headroom to £8.1 million (representing 1.5% of the carrying value of the Group CGU).
176
JD Sports Fashion Plc Annual Report and Accounts 2022 12. Intangible Assets (continued)
Intangible Assets with Indefinite Lives (continued)
Shoe Palace (continued)
+/-1% was considered a reasonably possible change in the key assumptions listed above. Whilst the potential impairments as
a result of the sensitivity analysis are material in value, they are not significant as a % of the £546.7 million carrying value of
the Shoe Palace Group CGU. Whilst the model is sensitive to the assumptions used, there are no indicators of impairment in
relation to the Shoe Palace intangibles since acquisition in December 2021 and Shoe Palace (along with our other businesses
in the US) has performed well against expectations over the last financial year. We will, however, keep this under close review
during 2022/23.
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.
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
– not depreciated
– 15–25 years on a straight-line basis
– Long leasehold and freehold properties
– 2% per annum on a straight-line basis
– Improvements to short leasehold properties
– life of lease on a straight-line basis
– Computer equipment
– Fixtures and fittings
– Motor vehicles
– 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 in these
circumstances is an individual store (‘Store CGU’). 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.
The discount rate applied in the value-in-use calculations is a pre-tax measure based on the historical industry average
weighted average cost of capital, with a possible debt leverage of 15% at a market interest rate of 5%. The discount rate
applied reflects any specific risk premiums relevant to the Store CGU. These discount rates are considered to be equivalent
to the rates a market participant would use.
Impairment charges of £7.3 million (2021: £10.1 million) relate to all classes of property, plant and equipment in Store
CGUs 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 of the particular store. The loss is based on the specific revenue streams and costs
attributable to the Store CGU. Assets in impaired Store CGUs 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 29 January 2022 is accelerated depreciation of £9.7 million
(2021: £16.5 million) following a review of the useful economic life of certain items of property, plant and equipment and
assets capitalised.
177
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
13. Property, Plant and Equipment (continued)
Freehold
land, long
leasehold
and freehold
properties
£m
Improvements
to short
leasehold
properties
£m
Assets under
construction
£m
Fixtures
and fittings
£m
Computer
equipment
£m
Motor
vehicles
£m
120.4
16.6
(1.7)
11.2
0.2
–
711.6
68.9
(7.4)
(22.7)
(7.5)
(23.6)
Total
£m
988.5
105.2
(10.4)
(69.1)
39.6
10.0
1,063.8
227.3
(29.5)
33.7
88.7
(10.1)
(39.1)
89.5
14.6
(1.2)
(14.5)
1.5
1.2
91.1
21.6
(2.5)
1.4
3.0
0.4
1.3
0.8
(0.1)
(0.8)
0.2
0.1
1.5
1.1
(0.3)
1.0
1.3
–
(5.6)
(0.7)
10.2
3.1
762.8
132.0
(20.5)
37.8
34.7
(10.6)
(30.6)
905.6
109.4
3.9
1,334.8
311.9
98.4
(4.6)
(25.9)
2.9
2.1
384.8
105.4
(16.9)
18.9
6.1
1.7
(10.9)
489.1
416.5
378.0
399.7
62.4
13.8
(1.2)
(15.7)
0.2
0.6
60.1
15.7
0.8
0.7
(0.1)
(0.4)
–
–
1.0
0.8
422.5
136.8
(6.9)
(66.6)
10.1
3.9
499.8
158.2
(2.4)
(0.2)
(24.0)
1.3
0.6
0.2
(2.5)
73.0
36.4
31.0
27.1
0.1
–
–
16.9
7.3
2.0
(0.3)
1.4
(13.9)
646.3
2.5
0.5
0.5
688.5
564.0
566.0
26.6
3.8
143.0
43.0
(5.8)
3.4
45.6
0.1
(0.3)
229.0
42.8
18.8
(1.0)
(24.7)
7.0
1.1
44.0
34.6
(4.5)
(4.6)
0.3
0.1
(0.2)
69.7
159.3
99.0
77.6
0.7
0.6
5.2
19.8
–
(10.7)
4.0
–
(1.9)
16.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
16.4
5.2
11.2
Cost
At 1 February 2020
Additions
Disposals
Reclassifications
Acquisitions
Exchange differences
At 30 January 2021
Additions
Disposals
Reclassifications
Acquisitions
Exchange differences
Transfer to assets held-for-sale (Note 32)
At 29 January 2022
Depreciation and impairment
At 1 February 2020
Charge for the period
Disposals
Reclassifications
Impairments
Exchange differences
At 30 January 2021
Charge for the period
Disposals
Reclassifications
Impairments
Exchange differences
Transfer to assets held-for-sale (Note 32)
At 29 January 2022
Net book value
At 29 January 2022
At 30 January 2021
At 1 February 2020
54.5
4.1
–
–
0.4
1.2
60.2
9.8
(0.4)
0.8
0.1
–
–
70.5
4.6
5.1
–
0.1
–
0.1
9.9
1.7
–
1.2
0.3
–
–
13.1
57.4
50.3
49.9
178
JD Sports Fashion Plc Annual Report and Accounts 2022 14. Leases
The Group adopted IFRS 16 ‘Leases’ from 3 February 2019. IFRS 16 introduced a single, on-Balance Sheet accounting
model for lessees. As a result, the Group, as a lessee, recognised right-of-use assets representing its rights to use the
underlying assets and lease liabilities representing its obligation to make lease payments. The Group applied IFRS 16
using the modified retrospective approach, under which any cumulative effect of initial application was recognised in
retained earnings at 3 February 2019.
Accounting Policy
The Group leases assets which consist of properties, vehicles and equipment. The most significant leases in size for the
Group are its retail stores, offices and warehouses. Some leases include an option to renew the lease for an additional
number of years after the end of the non-cancellable period. Some leases provide for additional rent payments that are
based on changes in local price indices.
The Group assesses whether a contract is or contains a lease. Under IFRS 16, a contract is, or contains, a lease if the contract
conveys a right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether
a contract conveys the right to control the use of an identified asset, the Group assesses whether the following criteria apply:
– The contract involves the use of an identified asset – this may be specified explicitly or implicitly and should be physically
distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive
substitution right, then the asset is not identified.
– The Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period
of use.
– The Group has the right to direct the use of the asset. The Group has this right when it has the decision-making rights that
are most relevant to changing how and for what purpose the asset is used. In rare cases, the decision about how and for
what purpose the asset is used is predetermined; the Group has the right to direct the use of the asset if either:
– the Group has the right to operate the asset; or
– the Group designed the asset in a way that predetermines how and for what purpose it will be used.
This policy is applied to contracts entered into, or changed, on or after 3 February 2019.
At inception, or on reassessment of a contract that contains a lease component, the Group allocates the consideration in
the contract to each lease component on the basis of its relative stand-alone price. However, for the leases of land and
buildings in which it is a lessee, the Group has elected not to separate non-lease components and accounts for the lease
and non-lease components as a single lease component.
On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which
transactions are leases. It applied IFRS 16 only to contracts that were previously identified as leases. Therefore, the
definition of a lease under IFRS 16 has been applied only to contracts entered into or changed on or after 3 February 2019.
As a Lessee
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. Lease liabilities are measured
at the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate for the relevant
subsidiary in which the lease represents a contractual commitment. Right-of-use assets are measured at an amount equal to
the lease liability, adjusted by the amount of any prepaid or accrued lease payments plus any initial direct costs incurred less
any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier
of the end of the useful life of the right-of-use asset or the end of the lease term. A right-of-use asset’s useful economic life is
determined on the same basis as for land and buildings recognised in property, plant and equipment. In addition, the right-of-
use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted at the rate implicit in the lease. If the rate implicit in the lease is not readily available, then payments are discounted
using the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise the following:
– fixed payments, including in-substance fixed payments;
– variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date; and
– lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option and
penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.
179
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
14. Leases (continued)
Accounting Policy (continued)
As a Lessee (continued)
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a
change in future lease payments arising from a change in index or rate, a change in the estimate of the amount expected
to be payable under a residual value guarantee, or as appropriate in the assessment of whether a purchase or extension
option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.
Where revised lease terms involve a change in the scope of a lease, or the consideration for a lease, that was not part of
the original terms and conditions of the lease, then these changes are accounted for as a lease modification. Any revised
consideration and/or revised lease length are taken into account in a remeasurement calculation that includes a revised
discount rate at the effective date of the modification of terms. The revised discount rate is determined as the lessee’s
incremental borrowing rate at the effective date of the modification.
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include
renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term,
which significantly affects the amount of lease liabilities and right-of-use assets recognised.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-
use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group has also applied judgement to determine the lease term for some lease contracts in which it is a lessee that either
have no specified end date, or where the Group continues to occupy the property despite the contractual lease end date
having passed. In determining the lease term, the Group takes into consideration its commercial strategy on a store by store
basis and the future intentions of the Group regarding the duration of continuing occupation of the property.
The Group presents right-of-use assets that do not meet the definition of investment property separately on the face of the
Consolidated Statement of Financial Position. The Group presents lease liabilities separately within the statement of financial
position.
Short-term Leases and Leases of Low-value Assets
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of
12 months or less and leases of low-value assets, including IT equipment. The Group recognises the lease payments associated
with these leases as an expense on a straight-line basis over the lease term.
As a Lessor
The Group sub-leases a small number of properties. When the Group acts as a lessor, it determines at lease inception whether
each lease is a finance lease or an operating lease.
To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks
and rewards incidental to ownership of the underlying asset. If this is the case, the lease is a finance lease; if not, then it is
an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the
major part of the economic life of the asset.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately.
It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not
with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption
described above, then it classifies the sub-lease as an operating lease.
The Group recognises lease payments received under operating leases as income on a straight-line basis over the lease term
as part of ‘other income’.
When the Group is an intermediate lessor, the sub-leases are classified with reference to the right-of-use asset arising from
the head lease, not with reference to the underlying asset.
The Group as a Lessee
The Group leases many assets, including land and buildings, vehicles, machinery and IT equipment. Information about leases
for which the Group is a lessee is presented below.
The carrying amount of the right-of-use asset is as follows:
Right-of-use assets
180
2022
£m
2021
£m
2,032.6
1,752.4
JD Sports Fashion Plc Annual Report and Accounts 2022 14. Leases (continued)
Right-of-use assets
Cost
At 1 February 2020
Additions
Additions – on acquisition
Disposals
Remeasurement adjustments
Foreign exchange retranslation
At 30 January 2021
Additions
Additions – on acquisition
Transfer to assets held-for-sale (Note 32)
Disposals
Remeasurement adjustments
Reclassifications
Foreign exchange retranslation
At 29 January 2022
Depreciation and impairment
At 1 February 2020
Depreciation charge for the period
Depreciation on disposals
Impairment of right-of-use assets
At 30 January 2021
Depreciation charge for the period
Transfer to assets held-for-sale (Note 32)
Depreciation on disposals
Impairment of right-of-use assets
Foreign exchange retranslation
At 29 January 2022
Net book value
At 29 January 2022
At 30 January 2021
At 1 February 2020
Property
£m
Vehicles
£m
Total
£m
2,158.9
211.6
143.2
(203.8)
8.2
22.3
2,340.4
520.2
271.6
(125.0)
(42.8)
2.0
(1.7)
(55.1)
2,909.6
309.2
317.2
(32.2)
3.4
597.6
355.5
(47.2)
(14.3)
3.1
(14.2)
880.5
2,029.1
1,742.8
1,849.7
6.3
3.3
–
2,165.2
214.9
143.2
(0.2)
(204.0)
6.2
0.1
15.7
1.8
0.1
(1.5)
(6.0)
16.1
(16.0)
–
10.2
1.9
4.2
–
–
6.1
2.7
(0.8)
(1.3)
–
–
6.7
3.5
9.6
4.4
14.4
22.4
2,356.1
522.0
271.7
(126.5)
(48.8)
18.1
(17.7)
(55.1)
2,919.8
311.1
321.4
(32.2)
3.4
603.7
358.2
(48.0)
(15.6)
3.1
(14.2)
887.2
2,032.6
1,752.4
1,854.1
Lease modifications have been accounted for by remeasuring the right-of-use asset and corresponding lease liability for
any change in lease length and total consideration, recalculating using a revised discount rate of the lessee’s incremental
borrowing rate at the effective date of the modification. Other remeasurement adjustments to the right-of-use asset
predominantly relate to deferred income and rolling leases. Valuation of the Group’s rolling leases as at 29 January 2022
is £37.1 million (2021: £31.4 million).
Impairment of Right-of-use Assets
For impairment testing purposes, the Group has determined that each store is a separate Store CGU. Each Store CGU is
tested for impairment at the balance sheet date if any indicators of impairment have been identified.
Right-of-use assets have been tested for impairment by comparing the carrying amount of each Store CGU with its
recoverable amount determined from value-in-use calculations.
181
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
14. Leases (continued)
Right-of-use assets (continued)
Impairment of Right-of-use Assets (continued)
The value-in-use of each Store CGU has been calculated using discounted cash flows derived from the Group’s latest Board
approved budget, taking into account the projected impact of future sales growth, and reflects historic performance and
knowledge of the current market, together with the Group’s views on the future achievable growth. Cash flows beyond the
budget period are extrapolated using growth rates appropriate to each store’s location. Cash flows have been included for
the remaining lease life for the specific store.
The key assumptions on which the forecast cash flows of the Store CGUs are based include revenue and the pre-tax discount
rate. Other assumptions in the model relate to gross margin, cost inflation and longer-term growth rates.
The pre-tax discount rates are derived from the Group’s weighted average cost of capital, which has been calculated using the
capital asset pricing model, the inputs of which include the risk-free rate, equity risk premium, Group size premium and a risk
adjustment (beta).
Where the value-in-use was less than the carrying value of the Store CGU, an impairment of property, plant and equipment
and right-of-use assets was recorded. The Group has recognised an impairment charge of £3.1m to right-of-use assets as a
result of impairment testing.
Lease Liabilities
The Group presents lease liabilities separately within the Statement of Financial Position. The carrying amount of the lease
liability as at 29 January 2022 is below, along with a maturity analysis of contractual undiscounted cash flows to which the
Group is committed. As at 29 January 2022, the weighted average discount rate applied to the lease portfolio of the Group
is 2.8% (2021: 3.1%).
Maturity analysis – contractual undiscounted cash flows
Within one year
Later than one year and not later than two years
Later than two years and not later than three years
Later than three years and not later than four years
Later than four years and not later than five years
After five years
Total undiscounted lease liabilities
Current
Non-current
Lease liabilities included in the Statement of Financial Position
2022
£m
2021
£m
409.6
385.4
332.4
284.3
241.1
823.7
355.3
326.9
303.5
257.3
216.5
713.5
2,476.5
2,173.0
2022
£m
379.0
1,863.9
2,242.9
2021
£m
301.8
1,628.0
1,929.8
Lease liabilities held at 29 January 2022 are stated after reclassifying £82.0 million of lease liabilities to liabilities held-for-sale
– see Note 32.
Amounts recognised in the Statement of Cash Flows and their categorisation are below:
Repayments of principal portion of lease liability
(Cash flows from financing activities)
Interest on lease liabilities
(Cash flows from operating activities)
Expenses relating to short-term leases and low-value leases
Variable lease payments
Total cash outflow for leases
(Net operating costs)
(Net operating costs)
182
52 weeks to
29 January
2022
£m
350.1
59.5
9.5
86.6
505.7
52 weeks to
30 January
2021
£m
285.2
54.9
3.9
37.9
381.9
JD Sports Fashion Plc Annual Report and Accounts 2022 14. Leases (continued)
Amounts recognised in profit or loss:
Interest on lease liabilities
Variable lease payments not included in the measurement of lease liabilities
Income from sub-leasing right-of-use assets
Expenses relating to short-term leases and low-value leases
52 weeks to
29 January
2022
£m
59.5
86.6
0.5
9.5
52 weeks to
30 January
2021
£m
54.9
37.9
0.8
3.9
Property Leases
The Group leases buildings for its office space, retail stores and warehouses. These leases typically run for a period of 10
years. Some leases include an option to renew the lease for an additional number of years after the end of the non-cancellable
period. Some require the Group to make payments that relate to the property taxes levied on the lessor and insurance
payments made by the lessor.
Some properties leased by the Group provide for additional rent payments that are based on changes in local price indices
or sales that the Group makes at the leased store in the period. In respect of contracts linked to store sales, initial recognition
of the lease liability is measured at the present value of the minimum lease payments specified in the contract excluding the
element linked to sales, since the variable element of these payments is not based on an index or rate. Where the variable
element of the payments is based on an index or rate, initial and subsequent measurement of the lease liability includes
these index linked payments.
The Group sub-leases some of its properties under operating leases.
Other Leases
The Group leases vehicles and equipment (including IT equipment) with lease terms of three to five years. Leases of equipment
are of low-value items, therefore the Group has elected not to recognise right-of-use assets and lease liabilities for these leases.
The Group as a Lessor
The Group leases out residential and office properties. The Group has classified these leases as operating leases, because
they do not transfer substantially all the risk and rewards incidental to the ownership of the assets. Lease income from lease
contracts in which the Group acts as a lessor amounted to £0.5 million (2021: £0.8 million).
15. Investments in Associates and Joint Ventures
Interest in associates
Interest in joint venture
2022
£m
28.2
28.0
56.2
2021
£m
2.7
–
2.7
Accounting Policy
The Group’s interests in equity-accounted investees comprise interests in associates and interests in joint ventures. Associates
are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating
policies. A joint venture is an arrangement in which the Group has joint control over the financial and operating policies.
Interests in associates and joint ventures are accounted for using the equity method and are initially recognised at cost.
Subsequent to initial recognition, the Consolidated Financial Statements include the Group’s share of the profit or loss
and other comprehensive income of equity-accounted investees, until the date on which significant influence or joint
control ceases.
Associates
The Group has an equity interest in a number of associates including a material interest in Applied Nutrition Limited
(‘Applied Nutrition’). On 7 May 2021, the Group acquired a 32% ownership interest in, and has significant influence over,
Applied Nutrition, an online sports nutrition brand.
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15. Investments in Associates and Joint Ventures (continued)
Associates (continued)
The following table summarises the financial information of Applied Nutrition and reconciles the summarised financial
information to the carrying amount of the Group’s interest in Applied Nutrition.
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets (100%)
Group's share of net assets (32%)
Elimination of unrealised profit on downstream sales
Goodwill and other intangibles
Carrying amount of interest in associate
Revenue for the period from acquisition to 29 January 2022
Profit and total comprehensive income from acquisition to 29 January 2022 (100%)
Group's share of total comprehensive income (32%)
Dividends received by the Group
2022
£m
0.7
15.7
(6.3)
(0.7)
9.4
3.0
–
21.9
24.9
21.7
4.3
1.4
6.0
2021
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
Joint Ventures
The Group has an equity interest in a number of joint ventures, including an interest in Gym King (Holdings) Limited and its
subsidiaries (together ‘Gym King’). On 10 May 2021, the Group acquired a 40% ownership in and has joint control over Gym
King, an athleisure brand and one of the Group’s suppliers. The Group determined there was joint control following a review of
the shareholders’ agreement which requires consent from all shareholders when directing the relevant activities of Gym King.
The following table summarises the financial information of Gym King and reconciles the summarised financial information
to the carrying amount of the Group’s interest in Gym King.
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets (100%)
Group’s share of net assets (40%)
Elimination of unrealised profit on downstream sales
Goodwill and other intangibles
Carrying amount of interest in joint venture
Revenue
Profit and total comprehensive income (100%)
Group's share of total comprehensive income (40%)
Dividends received by the Group
2022
£m
0.2
13.6
(4.6)
–
9.2
3.7
–
19.5
23.2
21.4
1.2
0.5
–
2021
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
The Group also has interests in a number of immaterial associates and joint ventures. The following table analyses, in
aggregate, the carrying amount and share of profit and other comprehensive income of these associates and joint ventures.
Carrying amount of interests in these associates and joint ventures
Share of profit and other comprehensive income
Dividends received by the Group
184
2022
£m
8.1
1.3
0.9
2021
£m
2.7
–
–
JD Sports Fashion Plc Annual Report and Accounts 2022 16. 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. Deposits are assessed for recoverability on leased stores on a practical basis and 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.
Cost
At 1 February 2020
Additions
Disposals
Acquisitions
Reclassifications
Exchange differences
At 30 January 2021
Additions
Disposals
Acquisitions
Reclassifications
Exchange differences
At 29 January 2022
Depreciation and impairment
At 1 February 2020
Exchange differences
At 30 January 2021
Charge for period
Disposals
Reclassifications
Impairments
At 29 January 2022
Net book value
At 29 January 2022
At 30 January 2021
At 1 February 2020
Key Money
£m
Deposits
£m
23.0
0.4
(0.1)
–
–
0.2
23.5
0.3
(0.2)
0.1
(0.8)
–
22.9
1.5
(0.2)
1.3
0.1
(0.2)
(0.2)
3.0
4.0
18.9
22.2
21.5
26.5
3.5
(2.1)
0.6
0.2
12.4
41.1
5.4
(6.6)
2.6
(0.4)
(3.9)
38.2
0.1
–
0.1
–
–
–
–
0.1
38.1
41.0
26.4
Total
£m
49.5
3.9
(2.2)
0.6
0.2
12.6
64.6
5.7
(6.8)
2.7
(1.2)
(3.9)
61.1
1.6
(0.2)
1.4
0.1
(0.2)
(0.2)
3.0
4.1
57.0
63.2
47.9
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
17. Inventories
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. An element of supplier rebates is deferred into inventory and released
on a straight-line basis over the six-month period following the financial year-end as the related inventory is sold.
Finished goods and goods for resale
2022
£m
989.4
2021
£m
813.7
The cost of inventories recognised as expenses and included in cost of sales for the 52 weeks ended 29 January 2022 was
£4,355.0 million (2021: £3,205.7 million).
The Group had £91.5 million (2021: £89.0 million) of stock provisions at the end of the period. Cost of inventories includes
a net charge of £16.7 million (2021: £21.7 million) in relation to net provisions recognised against inventories. £23.3 million
of the inventory provision was utilised during the period against the write down of inventory (2021: £16.7 million).
There were no reversals of inventory write downs in either the current or prior period.
Included within inventories is £2.4 million of deferred supplier rebates (2021: £1.6 million).
At the period end, net inventories of £27.0 million (2021: £nil) were transferred to assets held-for-sale. Further information
is provided in Note 32.
18. Trade and Other Receivables
Credit Risk
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However,
management also considers the factors that may influence the credit risk of its customer base, including the default risk
associated with the industry and country in which customers operate.
The trade receivables balances are typically held by the wholesale businesses within the Group. Each subsidiary establishes
a credit policy under which each new customer is analysed individually for creditworthiness before the payment and delivery
terms and conditions are offered. The Group review includes financial statements, credit agency information and industry
information. Each subsidiary limits its credit exposure by setting payment periods and, in certain circumstances, these are
approved by Group management.
Customers are monitored by taking into account their credit characteristics; whether they are a wholesale or retail customer,
their geographic location, industry, trading history with the Group and existence of previous financial difficulties.
Expected Credit Loss Assessment
Each subsidiary within the Group allocates each exposure to a credit risk grade based on the data that is determined to be
predictive of the risk of loss (including but not limited to external ratings, audited financial statements, management accounts
and available press information about customers) and by applying experienced credit judgement.
An allowance matrix is used to measure the expected credit losses (‘ECLs’) of trade receivables from smaller customers, which
comprise a very large number of small balances. Loss rates are based on actual credit loss experience over the past five years,
factoring in other information such as current conditions, age of the customer relationship and the view of the economic
conditions over the expected lives of the receivables.
The Group recognises loss allowances for ECLs on financial assets measured at amortised cost and measures the loss
allowances at an amount equal to the lifetime ECLs for trade receivables.
186
JD Sports Fashion Plc Annual Report and Accounts 2022 18. Trade and Other Receivables (continued)
Current assets
Trade receivables
Other receivables
Prepayments and accrued income
A summary of the Group’s exposure to credit risk for trade receivables is as follows:
Not past due
Past due 0–30 days
Past due 30–60 days
Past due 60 days +
Gross
£m
44.0
6.3
2.5
5.9
58.7
2022
Provision
£m
(0.2)
(0.1)
(0.1)
(1.7)
(2.1)
Net
£m
43.8
6.2
2.4
4.2
56.6
Gross
£m
21.7
10.0
7.6
8.2
47.5
2022
£m
56.6
33.7
112.6
202.9
2021
Provision
£m
(0.2)
–
(0.1)
(1.0)
(1.3)
At 29 January 2022, the exposure to credit risk for trade receivables by geographic region was as follows:
UK
Europe
US
Rest of world
Total
As at
29 January
2022
Total
£m
22.4
24.7
5.5
6.1
58.7
At 29 January 2022, the exposure to credit risk for trade receivables by type of counter-party was as follows:
Wholesale customers
Retail customers
End user customers
Other
Total
As at
29 January
2022
Total
£m
30.3
9.3
7.0
12.1
58.7
2021
£m
46.2
26.0
69.0
141.2
Net
£m
21.5
10.0
7.5
7.2
46.2
As at
30 January
2021
Total
£m
20.8
19.6
4.0
3.1
47.5
As at
30 January
2021
Total
£m
22.6
7.3
8.5
9.1
47.5
At 29 January 2022, the carrying amount of the Group’s most significant customer was £5.6 million (2021: £5.0 million).
Included within the £12.1 million ‘Other’ are supplier rebates totalling £3.2 million (2021: £5.4 million).
187
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
18. Trade and Other Receivables (continued)
The following table provides information about the exposure to credit risk and expected credit losses for trade receivables as
at 29 January 2022:
As at 29 January 2022
Not past due
Past due 0–30 days
Past due 30–60 days
Past due 61–90 days
More than 90 days past due
Total
Movement on this provision is shown below:
At 1 February 2020
Created
Released
At 30 January 2021
Created
Released
At 29 January 2022
Weighted
average loss
rate
£m
Gross
carrying
amount
£m
Loss
allowance
£m
Credit
impaired
£m
0.5%
1.6%
4.0%
–
48.6%
3.6%
44.0
6.3
2.5
2.4
3.5
58.7
(0.2)
(0.1)
(0.1)
–
(1.7)
(2.1)
–
–
–
–
–
–
£m
1.3
0.1
(0.1)
1.3
1.3
(0.5)
2.1
The other classes within trade and other receivables do not contain impaired assets.
19. Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances, uncleared credit card receipts 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
20. Interest-bearing Loans and Borrowings
2022
£m
1,314.0
2021
£m
964.4
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
Bank loans and overdrafts
Other loans
Non-current liabilities
Bank loans
2022
£m
72.6
–
72.6
55.5
2021
£m
52.0
68.9
120.9
48.1
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 21.
188
JD Sports Fashion Plc Annual Report and Accounts 2022 20. Interest-bearing Loans and Borrowings (continued)
Bank Facilities
As at 29 January 2022, the Group had a syndicated committed £700 million bank facility expiring on 6 November 2026,
which was recently extended for a period of two years with no changes to existing terms (previous expiry 6 November 2024).
The Group is subject to covenants on Net Worth, Net Debt Leverage and a Fixed Charge Cover. Under this facility, a maximum
of 15 draw downs can be outstanding at any time, with draw downs made for a period of one, two, three or six months, with
interest currently payable at a rate of SONIA (Sterling Overnight Index Average) plus a margin of 0.9% (2021: LIBOR plus
a margin of 0.9%). The arrangement and underwriting fee payable on the facility is 1.0% and the commitment fee on the
undrawn element of the facility is 35% of the applicable margin rate.
Following the financial crisis, the reform and replacement of benchmark interest rates such as GBP LIBOR and other interbank
offered rates (‘IBORs’) became a priority for global regulators. LIBOR fixings relevant to the Group were no longer representative
after 31 December 2021, which created a requirement for the Group’s contracts which referenced LIBOR to use an alternative
benchmark rate. The Group’s most significant risk exposure affected by these LIBOR changes relates to its syndicated committed
bank facility. The reference rate for borrowings made under this facility was amended to SONIA from 22 December 2021.
As at 29 January 2022, this facility encompassed cross guarantees between the Company, Blacks Outdoor Retail Limited,
Tessuti Limited, Go Outdoors Retail Limited, The Finish Line Inc, The Finish Line USA Inc, Genesis Holdings Inc, Genesis
Topco Inc, Shoe Palace Corporation, Terminus Bidco Inc, DTLR Villa LLC, Genesis Finco Limited, Focus Brands Limited
and Focus International Limited.
At 29 January 2022, £nil was drawn down on this facility (2021: £nil).
The Group’s second principal bank facility is a syndicated Asset Based Lending Facility in the US, which has a maximum
revolving advance amount of approximately $300 million and expires on 24 September 2026 (2021: $300 million).
At 29 January 2022, $nil was drawn down on this facility (2021: $nil).
Bank Loans and Overdrafts
The bank loans and overdrafts attract interest rates at 0.4%–8.2%. The overdrafts are repayable on demand and the bank
loans are repayable over periods between two and 70 months. Included within bank loans and overdrafts are bank loans of
£94.5 million (2021: £84.4 million) and overdrafts of £33.6 million (2021: £15.7 million). The maturity of the bank loans and
overdrafts is as follows:
Within one year
Between one and five years
Due in more than five years
2022
£m
72.6
53.4
2.1
128.1
2021
£m
52.0
48.1
–
100.1
Other Loans
Other loans of less than one year which existed in the year ended 30 January 2021 is the deferred consideration payable in
relation to the acquisition of Shoe Palace Corporation (see Note 11). The deferred consideration was repaid during the year
ended 29 January 2022.
The maturity of the other loans is as follows:
Less than one year
2022
£m
–
2021
£m
68.9
Finance Leases
As at 29 January 2022 and 30 January 2021, the Group’s liabilities under finance leases are included in Leases (see Note 14).
189
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
21. Financial Instruments
Financial assets and financial liabilities are recognised in the Consolidated Statement of Financial Position when the Group
becomes a party to the contractual provisions of the instrument. Financial assets are de-recognised when the contractual
rights to the cash flows from the financial assets expire or are transferred. Financial liabilities are de-recognised when the
obligation specified in the contract is discharged, is cancelled or expires.
Financial Assets
The Group’s financial assets are non-derivative and derivative financial assets. The non-derivative assets have fixed or
determinable payments that are not quoted in an active market. The Group’s financial assets comprise ‘Trade 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 SONIA and EURIBOR.
The currency profile of cash and cash equivalents is shown below:
2022
£m
1,314.0
497.0
330.3
402.5
37.7
5.7
7.5
33.3
1,314.0
2022
£m
56.6
22.5
19.4
9.0
5.7
56.6
2021
£m
964.4
378.7
306.8
212.2
30.2
7.1
6.1
23.3
964.4
2021
£m
46.2
20.6
17.7
5.1
2.8
46.2
Cash and cash equivalents
Sterling
Euros
US Dollars
Australian Dollars
Danish Krone
Singapore Dollars
Other
Total
The currency profile of trade receivables is shown below:
Trade receivables
Sterling
Euros
US Dollars
Other
Total
190
JD Sports Fashion Plc Annual Report and Accounts 2022 21. Financial Instruments (continued)
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 payables’.
The currency profile of interest-bearing loans and borrowings is shown below:
Interest-bearing loans and borrowings
Sterling
Euros
Polish Zloty
US Dollars
Other
Total
The currency profile of trade payables is shown below:
Trade payables
Sterling
Euros
US Dollars
Australian Dollars
Polish Zloty
Canadian Dollars
Other
Total
2022
£m
128.1
5.8
100.3
20.2
–
1.8
128.1
2022
£m
526.6
206.4
136.3
130.4
14.5
25.6
3.3
10.1
2021
£m
169.0
15.9
78.5
–
68.9
5.7
169.0
2021
£m
514.2
241.6
114.5
142.1
11.9
–
1.2
2.9
526.6
514.2
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 29 January 2022.
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 £700 million committed bank facility, together with
overdraft facilities in subsidiary companies (see Note 20). At 29 January 2022, £nil was drawn down from the committed
bank facility (2021: £nil). When draw downs are made, the Group is exposed to cash flow interest risk with interest paid
at a rate of SONIA plus a margin of 0.9% (2021: LIBOR plus a margin of 0.9%).
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 £0.2 million (2021: £nil) and would change equity
by £0.2 million (2021: £nil). The calculation is based on any floating interest rate loans and borrowings drawn down at
the period end date. Calculations are performed on the same basis as the prior year and assume that all other variables
remain unchanged.
191
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
21. Financial Instruments (continued)
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 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.
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 counter-parties.
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 29 January 2022, options have been entered into to protect approximately 76% of the US Dollar trading requirement
for the period to January 2023. The balance of any US Dollar requirement for the period will be satisfied at spot rates.
As at 29 January 2022, the fair value of these instruments was a net asset of £16.3 million (2021: net liability of £20.7 million).
£15.7 million is due within one year and the remaining £0.6 million is due between one and two years (split as £2.5 million
non-current asset and £1.9 million non-current liabilities). A gain of £37.0 million (2021: loss of £31.5 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 counter-party’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
192
Profit before tax
Equity
2022
£m
2.8
17.9
0.7
0.7
22.1
2021
£m
4.5
6.6
0.5
0.8
12.4
2022
£m
32.7
126.5
2.8
3.2
165.2
2021
£m
23.6
67.5
2.1
2.8
96.0
JD Sports Fashion Plc Annual Report and Accounts 2022 21. Financial Instruments (continued)
Foreign Currency Risk (continued)
Hedging of Monetary Assets and Liabilities (continued)
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
2022
£m
3.5
21.9
0.9
0.8
27.1
2021
£m
5.4
8.1
0.7
1.0
15.2
2022
£m
40.0
154.6
3.5
3.9
202.0
2021
£m
29.2
82.5
2.5
3.4
117.6
Calculations are performed on the same basis as the prior year and the method assumes that all other variables remain unchanged.
Credit Risk
Credit risk arises from the possibility of customers and counter-parties 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 a provision is made for impairment where amounts are not thought to be recoverable
(see Note 18). 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 £90.3 million
(2021: £72.2 million) and cash and cash equivalents of £1,314.0 million (2021: £964.4 million).
Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. 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. Management aims to ensure there is headroom of at least £200 million in
relation to the £700 million syndicated committed facility and $75 million in relation to the $300 million Asset Based
Lending Facility in the US. The Board reviews 13 week and annual cash flow forecasts each month. See Note 20 for the
overdraft facilities available to the Group. The commitment fee on these facilities is 0.35% (2021: 0.35%).
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and
undiscounted and exclude the impact of netting agreements.
Non-derivative financial instruments
Bank loans and overdrafts
Trade and other payables
Lease liabilities
Derivative financial instruments
Put options
Forward contracts
2022
£m
0–3 months
£m
3–12 months
£m
1–2 years
£m
2–5 years
£m
> 5 years
£m
128.1
1,145.5
2,476.5
1,307.3
5.0
5,062.4
47.4
860.0
102.4
–
3.0
25.2
285.5
307.2
6.5
–
1,012.8
624.4
23.5
–
385.4
88.8
2.0
499.7
29.9
–
857.8
2.1
–
823.7
654.0
558.0
–
–
1,541.7
1,383.8
193
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
21. Financial Instruments (continued)
Fair Values
The fair values together with the carrying amounts shown in the Statement of Financial Position as at 29 January 2022 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
The comparatives at 30 January 2021 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
Note
18
19
20
20
Note
18
19
20
20
Carrying
amount
2022
£m
90.3
1,314.0
(72.6)
(55.5)
(1,147.1)
(773.5)
(644.4)
Carrying
amount
2021
£m
72.2
964.4
(120.9)
(48.1)
(976.6)
(374.4)
(483.4)
Fair value
2022
£m
90.3
1,314.0
(72.6)
(43.5)
(1,147.1)
(773.5)
(632.4)
12.0
Fair value
2021
£m
72.2
964.4
(120.9)
(41.2)
(976.6)
(374.4)
(476.5)
6.9
In the opinion of the Board, the fair value of the Group’s current financial assets and liabilities as at 29 January 2022 and
30 January 2021 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 29 January 2022 and
30 January 2021, the fair value has been calculated using a pre-tax discount rate of 8.4% (2021: 8.1%) 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 29 January 2022, the Group held the following financial instruments carried at fair value on the Consolidated Statement
of Financial Position:
– Foreign exchange forward contracts – non-hedged
– Put and call option
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.
194
JD Sports Fashion Plc Annual Report and Accounts 2022 21. Financial Instruments (continued)
Fair Value Hierarchy (continued)
At 29 January 2022
Loans and receivables
Deposits
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
Put options held by non-controlling interests
At 30 January 2021
Loans and receivables
Deposits
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
Put options held by non-controlling interests
Carrying
amount
£m
38.1
1,314.0
21.3
(5.0)
(72.6)
(55.5)
(764.7)
Carrying
amount
£m
41.0
964.4
(20.7)
(120.9)
(48.1)
(365.9)
Level 1
£m
Level 2
£m
Level 3
£m
–
–
–
–
–
–
–
38.1
1,314.0
21.3
(5.0)
(72.6)
(55.5)
–
–
–
–
–
–
–
(764.7)
Level 1
£m
Level 2
£m
Level 3
£m
–
–
–
–
–
–
41.0
964.4
(20.7)
(120.9)
(48.1)
–
–
–
–
–
–
(365.9)
22. Trade and Other Payables
Trade and other payables are non-interest-bearing and are stated at their cost.
Current liabilities
Trade payables
Other payables and accrued expenses
Refund liabilities
Other tax and social security costs
Non-current liabilities
Other payables and accrued expenses
2022
£m
2021
£m
526.6
594.8
27.2
130.9
1,279.5
514.2
463.0
–
124.8
1,102.0
775.4
374.4
195
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
22. Trade and Other Payables (continued)
Put and Call Options
Put and call options are in place relating to the remaining shares in partly-owned businesses within the Group. All call options
held by the Group are in conjunction with put options.
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 is estimated using Board approved forecasts multiplied by an earnings multiple. The option formula and multiple
are usually stated in the put option agreement; however, in the absence of a specified formula or multiple, we would estimate
this based on current evidence in the Mergers & Acquisitions market and our past experience of multiples paid for similar
businesses. The range of multiples used across the put options at 29 January 2022 is 4.0–10.0. These forecast cash flows are
discounted using a discount rate reflecting the current market assessment of the time value of money and any specific risk
premiums relevant to the individual businesses involved. These discount rates are considered to be equivalent to the rates
a market participant would use. 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 Exceptional Items in the Income
Statement. As the Group has recognised the liability for the put option, the related call options to acquire the same non-
controlling interest are valued at £Nil.
Sensitivity Analysis
Sensitivity analysis was performed over the key variable inputs to the valuation of the following put options. The key variable
inputs were determined to be the discount rate and approved forecasts. 1% was determined to be a reasonable variance to
demonstrate the sensitivity of the put option valuation to the key inputs used. With reference to the Iberian Sports Retail
Group put option, a multiple is not stated in the agreement and is therefore also a key variable input that is estimated.
Sensitivity analysis has also been performed over this estimate:
Iberian Sports Retail Group Put Option
A discount rate increase of 1% would result in a reduction in the put option liability of £1.4 million and an increase of 1% to
the forecast EBITDA % would result in an increase in the put option liability of £13.5 million. An increase of one in terms
of the estimated multiple used would result in an increase in the put option liability of £18.5 million.
Genesis Topco Put Option
A discount rate increase of 1% would result in a reduction in the put option liability of £23.5 million and an increase of 1%
to the forecast EBITDA % would result in an increase in the put option liability of £31.3 million.
Marketing Investment Group S.A. Put Option
A discount rate increase of 1% would result in a reduction in the put option liability of £3.0 million and an increase of 1%
to the forecast EBITDA % would result in an increase in the put option liability of £8.0 million.
Put Option Liability
At 30 January 2021
Acquisitions
Increase in the present value of
the existing option liability
At 29 January 2022
Iberian Sports
Retail Group
£m
Genesis Topco
Inc
£m
Marketing
Investment
Group S.A.
£m
Other
£m
Total Put
Options
£m
87.4
–
31.6
119.0
261.6
–
258.7
520.3
–
50.2
1.7
51.9
16.9
55.9
0.7
73.5
365.9
106.1
292.7
764.7
Other put option liabilities held at 29 January 2022 are in respect of the following subsidiary undertakings:
Options held since 30 January 2021 and prior, total £17.0 million: Source Lab Limited £0.1 million (2021: £0.1 million), JD
Germany GmbH £0.5 million (2021: £1.7 million), JD Sports Gyms Limited £5.2 million (2021: £2.8 million), Dantra Limited
£0.2 million (2021: £0.5 million), Base Childrenswear Limited £0.2 million (2021: £0.1 million), Tessuti Limited £3.9 million
(2021: £1.1 million), Catchbest Limited £1.1 million (2021: £1.1 million), Mainline Menswear Holdings Limited £5.6 million
(£6.0 million), JDSF Holdings (Canada) Inc. £0.1 million (2021: £3.4 million), Oi Polloi Limited £0.1 million (2021: £0.1 million).
Options relating to acquisitions in the year ended 29 January 2022, total £56.5 million: 80s Casual Classics Limited
£4.1 million, DTLR Villa LLC £5.1 million, Uggbugg Fashion Limited £1.5 million, Marshall Artist Holdings Limited £1.5 million,
Wheelbase Lakeland Limited £4.2 million, Bodytone International Sport S.L. £11.3 million, Deporvillage S.L. £11.7 million,
Hairburst Holding Group Limited £6.2 million, Cosmos Sport £10.9 million.
196
JD Sports Fashion Plc Annual Report and Accounts 2022 Recognised as a liability
Short-term
EBITDA
growth
assumptions
Discount
rate
applied
At 29
January
2022
£m
At 30
January
2021
£m
6%
10.3%
119.0
87.4
Maximum
price
The option
price
shall not
exceed
£332 million.
22. Trade and Other Payables (continued)
Put and Call Options (continued)
Company
Options in existence
Exercise periods
Methodology
Iberian
Sports
Retail
Group
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.
First put option
whereby JD Sports
Fashion Plc may be
required to acquire
70% of the option
holder’s 20% holding
of the issued share
capital of Iberian
Sports Retail Group.
Second put option
whereby JD Sports
Fashion Plc may be
required to acquire
30% of the option
holder’s 20% holding
of the issued share
capital of Iberian
Sports Retail Group
in three tranches
of 10%.
The first put option
is exercisable for a
period of 30 days
following the
approval of the
audited financial
statements of
Iberian Sports
Retail Group for
the year ended
29 January 2022.
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.
5%
12.5%
520.3
261.6
Genesis
Topco Inc
The option
price
shall not
exceed
£1.2 billion.
Put option whereby
JD Sports Fashion
Plc may be required
to acquire the
remaining 20%
of the issued share
capital of Genesis
Topco Inc in four
equal tranches
with the ability to
roll over a tranche
that has not
previously been
subject to the
exercise of a
put option.
The put options
are exercisable
within 30 calendar
days after the
determination
of the final put/call
value for the fiscal
year. The first
put period will
occur after the
determination of
the put/call value
for the fiscal year
ending on
1 February 2025.
The option price
is calculated
based on a
multiple of
earnings before
interest, tax,
depreciation and
amortisation for
the relevant
financial period,
less post-closing
cash and debt.
197
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
22. Trade and Other Payables (continued)
Put and Call Options (continued)
Company
Options in existence
Exercise periods
Methodology
Marketing
Investment
Group S.A.
Put option whereby
JD Sports Fashion
Plc may be required
to acquire the
remaining 40% of
the issued share
capital of Marketing
Investment Group
S.A. in two equal
tranches with the
ability to roll over
a tranche that
has not previously
been subject to
the exercise of
a put option.
The option price
is calculated
based on a
multiple of
earnings before
interest, tax,
depreciation
and amortisation
for the relevant
financial period,
less net debt
and any
working capital
adjustments.
The put options
are exercisable
one month after
the shareholders
meeting in any
given year after
the determination
of the put option
value for the
financial year.
The first put
period will occur
after the financial
statements for
the year ending
31 January 2025
are approved.
The second
put option is
exercisable after
the financial
statements for
the year ending
31 January 2026
are approved.
If an option is not
exercised, it may
be exercised in any
year within the 15
years following the
acquisition date
of 30 April 2021.
Only one tranche
may be exercised
in any one year.
Other put
option
liabilities
Total
liability
198
Recognised as a liability
Short-term
EBITDA
growth
assumptions
Discount
rate
applied
At 29
January
2022
£m
At 30
January
2021
£m
22%
13%
51.9
–
Maximum
price
The option
price
shall not
exceed
£309.8
million.
73.5
16.9
764.7
365.9
JD Sports Fashion Plc Annual Report and Accounts 2022 23. Provisions
A provision is recognised in the Consolidated Statement of Financial Position when the Group has a present legal or
constructive obligation as a result of a past event, it is more likely than not that an outflow of economic benefits will be
required to settle the obligation and the obligation can be estimated reliably.
Property Provision
Within property provisions, management has provided for expected dilapidations on stores and warehouses. This provision
covers expected dilapidation costs for any lease considered onerous, any related to stores recently closed, stores which
are planned to close or are at risk of closure and those under contract but not currently in use. Management maintain all
properties to a high standard and carry out repairs whenever necessary during their tenure. Therefore if there is no risk of
closure any provision would be minimal and management do not consider it necessary to hold dilapidation provisions for
these properties.
Other Provisions
Included in other provisions is £2.0 million in respect of the CMA’s ongoing investigation into the sale of the Rangers FC
branded replica football shirts. This provision represents management’s best estimate of the liability payable in respect of
this matter, including associated legal costs, based on the information available to it at the date of approving these financial
statements which includes consideration of the provisional Statement of Objections which the CMA issued on 7 June 2022.
The CMA’s findings are, at this stage, only provisional and the Group will review them with its advisors. The CMA will consider
any representations that are made before issuing its final findings and accordingly the amount to be settled could be materially
different to the amount provided. The CMA has not yet confirmed when it will release its final decision on this matter but the
Group currently expects this to occur within 12 months of the date of approval of these financial statements along with any
related outflows.
The remaining balance in other provisions is made up of various other trade provisions and legal costs. The provisions are
estimated based on accumulated experience, supplier communication and management approved forecasts.
Onerous Contracts Provision
Within the onerous contracts provision, management has provided against the minimum contractual cost for the remaining
term on a non-cancellable logistics services contract for the Azambuja warehouse in Portugal within the SportZone division.
The provision will be unwound over the remaining 8 year period ending 30 September 2030.
Balance at 1 February 2020
Provisions created during the year
Balance at 30 January 2021
Provisions reclassified from accruals
Provisions released during the year
Provisions created during the year
Provisions utilised during the year
Balance at 29 January 2022
Property
provision
£m
Other
provisions
£m
Onerous
contracts
£m
–
–
–
11.2
(2.0)
9.4
(0.4)
18.2
–
–
–
14.2
(6.7)
5.0
(2.7)
9.8
–
5.8
5.8
–
(0.7)
–
–
5.1
Total
£m
–
5.8
5.8
25.4
(9.4)
14.4
(3.1)
33.1
The £9.4 million of property provision created in the year relates to the provision for expected dilapidations for the UK
Distribution Centre and across a number of stores in the portfolio.
£4.8 million of the other provisions released in the year arises following settlement of an ongoing legal case during the year.
The £5.0 million of other provisions created in the year relates to various trade provisions and legal costs.
Provisions have been analysed between current and non-current as follows:
Current
Non-current (within 10 years)
2022
£m
13.2
19.9
33.1
2021
£m
0.7
5.1
5.8
199
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
24. 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 names
Other temporary differences
Tax losses
Tax assets/(liabilities)
Assets
2022
£m
19.6
–
55.6
6.5
81.7
Assets
2021
£m
14.7
–
24.2
1.7
40.6
Liabilities
2022
£m
Liabilities
2021
£m
(29.4)
(97.6)
(0.4)
–
(127.4)
(12.0)
(37.4)
(5.6)
–
(55.0)
Net
2022
£m
(9.8)
(97.6)
55.2
6.5
(45.7)
Net
2021
£m
2.7
(37.4)
18.6
1.7
(14.4)
Other temporary differences primarily relates to short-term timing differences across various territories including employee
benefits, specific trade provisions and equipment finance leases. These will unwind in accordance with the tax legislation in
each relevant jurisdiction.
The Financial Bill 2021, which was substantially enacted on 24 May 2021, included an increase in the rate of UK corporation tax
from 19% to 25% with effect from 1 April 2023. In accordance with IAS 12, UK deferred tax has been recognised at the enacted
25% at the balance sheet date.
The development of the Organisation for Economic Co-operation and Development’s Two Pillar Solution to Address the
Tax Challenges arising from the Digitalisation of the Economy is being closely monitored. It is expected to be enacted in
2022 with application from 1 January 2023. The accounting implications under IAS 12 will be ascertained once the relevant
legislation is available.
Deferred tax assets have not been recognised on losses of £88.1m (2021: £89.4m) as there is uncertainty over the timing of
their utilisation. These losses have arisen in the following Group subsidiaries:
2022
£m
–
20.8
3.9
5.6
6.2
3.5
8.1
11.8
3.9
12.2
0.1
2.9
4.5
2.7
1.9
88.1
2021
£m
21.7
6.7
4.0
5.3
4.1
2.7
13.6
–
3.0
12.9
–
–
4.5
4.7
6.2
89.4
SDSR – Sports Division SR, S.A
JD Sports Fashion Germany GmbH
JD Size GmbH
JD Sports Fashion AT GmbH
JD Sports Fashion Sweden AB
JD Sports Fashion Finland OY
Sports Unlimited Retail BV
JD Sports Fashion BV
JD Sports (Thailand) Limited
JD Sports Fashion Korea Inc
JDSF Holdings (Canada) Inc
JDSF Retail (Canada) Inc
Clothingsites.co.uk Limited
Tiso Group Limited and its subsidiaries
Other
200
JD Sports Fashion Plc Annual Report and Accounts 2022 24. Deferred Tax Assets and Liabilities (continued)
Movement in Deferred Tax During the Period
Balance at 1 February 2020
Recognised on acquisition
Recognised in income
Foreign exchange movements
Balance at 30 January 2021
Recognised on acquisition
Recognised in income
Reclassification
Foreign exchange movements
Balance at 29 January 2022
Property, plant
and equipment
£m
Fascia names
£m
Other
£m
Tax losses
£m
(6.4)
(1.7)
11.5
(0.7)
2.7
(0.5)
(6.7)
(5.3)
–
(9.8)
(20.3)
(28.2)
10.9
0.2
(37.4)
(50.2)
(0.8)
(12.2)
3.0
(97.6)
13.0
(3.8)
8.6
0.8
18.6
(1.5)
20.3
17.5
0.3
55.2
1.2
–
0.4
0.1
1.7
–
4.8
–
–
6.5
Total
£m
(12.5)
(33.7)
31.4
0.4
(14.4)
(52.2)
17.6
–
3.3
(45.7)
As at 29 January 2022, the Group had no recognised deferred income tax liability (2021: £nil) in respect of taxes that would
be payable on the unremitted earnings of certain overseas subsidiaries. At this date, the unrecognised gross temporary
differences in respect of overseas subsidiaries was £689.2 million (2021: £425.4 million). No deferred income tax liability
has been recognised in respect of this temporary difference due to the foreign profits exemption and the availability of
double tax relief.
There are no undisclosed tax liabilities or income tax consequences attached to the payment of dividends by the
Group’s subsidiaries.
25. Capital and Reserves
Issued Ordinary Share Capital
On 3 February 2021, JD Sports Fashion Plc completed the placing of new ordinary shares in the capital of the Company.
A total of 58,393,989 new ordinary shares were issued, increasing the total ordinary shares in issue to 1,031,627,149.
The shares were placed at an issue price of 795 pence per share with a par value of 25 pence leading to share capital
of £0.1 million and share premium of £455.8 million being recognised on issue (this is net of £8.3 million costs incurred).
An ordinary resolution was passed at the Annual General Meeting, effective 30 November 2021, 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 6,215 million (2021: restated 6,215 million) with a par value of 0.05 pence
per share (2021: restated 0.05 pence 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.
Full disclosure on the rights attached to shares is provided in the Directors’ Report on page 95.
At 30 January 2021 (restated)
Shares issued on 3 February 2021
At 29 January 2022
Number of
ordinary shares
millions
Ordinary share
capital
£m
Share premium
£m
4,866
292
5,158
2.4
0.1
2.5
11.7
455.8
467.5
201
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
25. Capital and Reserves (continued)
Net Debt to Capital Ratio
There were no changes to the Group’s approach to capital management during the period. The Board monitors capital using a
net debt to equity ratio calculated as follows:
Net debt (Note 30)
Capital:
Net debt (as above)
Equity (calculated as 5,158.1 million shares in issue multiplied by 188.3 pence per share
(2021: 4,866.2 million shares in issue multiplied by 149.4 pence per share))
Total capital
Net debt to capital ratio
2022
£m
2021
(restated)
£m
1,057.0
1,134.4
1,057.0
1,134.4
9,712.7
7,270.1
10,769.7
8,404.5
9.8%
13.5%
The Board note that the 2021 comparative was disclosed as 18.0% but should have been 13.5%. As a result, the Board have
decided to restate the 2021 comparative to ensure it is accurately reflected in this year’s Annual Report.
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.
Other Equity
Put option reserve
Put options held by non-controlling interests are accounted for using the present access method. Upon initial recognition of
the put or call option liability a corresponding entry is made to Other Equity, and for subsequent changes on remeasurement
of the liability the corresponding entry is made to Exceptional Items in the Income Statement.
Share-based payment reserve
As at 29 January 2022, 462,500 ordinary shares were granted under the JD Sports Fashion Plc Long-term Incentive Plan 2021.
The market value of these shares as at 29 January 2022 was 188.3 pence per share (see Note 5 Remuneration of Directors).
26. Non-controlling Interests
The following disclosure provides summarised financial information for investments that have non-controlling interests (‘NCI’).
NCI 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 NCI at 29 January 2022 and 30 January 2021:
Country of
incorporation
NCI at
29 January
2022
%
NCI at
30 January
2021
%
Net income/
(loss)
attributable
to NCI for
52 weeks
ending
29 January
2022
£m
Net income/
(loss)
attributable to
NCI for
52 weeks
ending
30 January
2021
£m
NCI at
29 January
2022
£m
NCI at
30 January
2021
£m
Name of subsidiary:
Genesis Topco Inc
US
Iberian Sports Retail
Group SL
Marketing Investment
Group S.A.
Spain/
Portugal/
Canaries
Poland
20.0%
49.99%
20.0%
49.99%
45.4
32.9
271.2
108.6
40%
–
3.6
18.4
Other
Various*
6%–50%
6%–50%
8.0
89.9
15.4
413.6
(1.2)
5.9
–
0.2
4.9
178.4
67.6
–
11.7
257.7
* Other includes subsidiaries incorporated in the UK, Canada, Cyprus, Germany, Greece, India and Malaysia (2021: UK, Canada, Germany, India
and Malaysia).
For newly acquired non-wholly owned subsidiaries, further details are provided in Note 11.
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JD Sports Fashion Plc Annual Report and Accounts 2022 26. Non-controlling Interests (continued)
The following table summarises the information relating to each of the Group’s subsidiaries that has material NCI.
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/(loss) for the period, net of tax
Summarised Statement of Cash Flows
Net cash provided by/(used in)
operating activities
Net cash used in investing activities
Net cash from/(used in) financing activities
Cash and cash equivalents:
At the beginning of the period presented
At the end of the period
Genesis Topco
Inc (sub-group)
2022
£m
Genesis Topco
Inc (sub-group)
2021
£m
Iberian Sports
Retail Group SL
2022
£m
Iberian Sports
Retail Group SL
2021
£m
437.6
1,610.8
2,048.4
(376.8)
(495.3)
1,176.3
319.0
1,091.3
1,410.3
(387.6)
(359.7)
663.0
284.2
626.4
910.6
(348.4)
(413.4)
148.8
269.0
456.3
725.3
(239.9)
(343.4)
142.0
Genesis Topco
Inc (sub-group)
52 weeks to
29 January
2022
£m
Genesis Topco
Inc (sub-group)
6 week period
to 30 January
2021
£m
Iberian Sports
Retail Group SL
52 weeks to
29 January
2022
£m
2,576.7
266.2
156.3
(8.7)
920.6
50.1
Genesis Topco
Inc (sub-group)
52 weeks to
29 January
2022
£m
Genesis Topco
Inc (sub-group)
6 week period
to 30 January
2021
£m
Iberian Sports
Retail Group SL
52 weeks to
29 January
2022
£m
343.8
(277.2)
–
124.8
191.4
(33.8)
(8.6)
(15.7)
182.9
124.8
87.8
(121.9)
6.0
159.1
131.0
Iberian Sports
Retail Group SL
52 weeks to
30 January
2021
£m
579.2
3.7
Iberian Sports
Retail Group SL
52 weeks to
30 January
2021
£m
35.7
(16.3)
57.2
82.5
159.1
Marketing
Investment
Group S.A.
2022
£m
63.3
75.1
138.4
(69.9)
(51.4)
17.1
Marketing
Investment
Group S.A.
39 week period
to 29 January
2022
£m
175.0
7.1
Marketing
Investment
Group S.A.
39 week period
to 29 January
2022
£m
1.0
(2.7)
(0.1)
6.8
5.0
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
27. 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 dividend was proposed by the Directors and will be payable to all shareholders on the
register at 8 July 2022. The dividends were not provided for at the reporting date.
0.35 pence per ordinary share (2021: restated 0.29 pence)
Dividends on Issued Ordinary Share Capital
52 weeks to
29 January
2022
£m
18.1
52 weeks to
30 January
2021
£m
14.9
52 weeks to
29 January
2022
£m
52 weeks to
30 January
2021
£m
Final dividend of 0.29 pence (2021: 0.00 pence) per qualifying ordinary share paid
in respect of prior period, but not recognised as a liability in that period
Interim dividend of 0.00 pence (2021: 0.00 pence) per qualifying ordinary share paid
in respect of current period
14.9
–
14.9
28. Commitments
As at 29 January 2022, the Group had entered into contracts to purchase property, plant and equipment as follows:
Contracted
2022
£m
30.2
–
–
–
2021
£m
12.8
In December 2021, JD Sports Fashion Plc signed a contract with ABG Reebok LLC to licence the Reebok brand in various
territories. The agreement is subject to terms and conditions and was not effective until after the 29 January 2022 financial
year-end. As a result, the Group has not recognised an intangible asset for the use of the brand in the Consolidated Statement
of Financial Position at 29 January 2022 or a liability for the discounted contractual minimum royalty payments under the
initial 10 year term of £73.1 million.
29. Pension Schemes
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 £16.8 million (2021: £14.7 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 £3.1 million (2021: £2.4 million).
204
JD Sports Fashion Plc Annual Report and Accounts 2022 30. 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
Other loans
Net cash/(financial debt) before lease liabilities
Lease liabilities
Net cash/(debt)
At 30 January
2021
£m
On acquisition
of subsidiaries
£m
Cash flow
£m
Non-cash
movements
£m
At 29 January
2022
£m
964.4
(15.7)
948.7
(84.4)
(68.9)
795.4
(1,929.8)
(1,134.4)
152.7
(23.2)
129.5
(156.2)
–
(26.7)
(271.7)
(298.4)
200.4
5.3
205.7
140.8
68.9
415.4
350.8
766.2
(3.5)
–
(3.5)
5.3
–
1.8
(392.2)
(390.4)
1,314.0
(33.6)
1,280.4
(94.5)
–
1,185.9
(2,242.9)
(1,057.0)
Other loans of £68.9 million was the deferred consideration payable at 30 January 2021 in respect of the acquisition of Shoe
Palace Corporation (see Note 11). The deferred consideration was fully paid during the financial year ended 29 January 2022.
31. Related Party Transactions and Balances
Transactions and balances with each category of related parties during the period are shown below. Transactions were
undertaken in the ordinary course of business on an arm’s length basis. Outstanding balances are unsecured (unless
otherwise stated) and will be settled in cash.
Transactions with Related Parties Who Are Not Members of the Group
Pentland Group Limited
During the financial year, Pentland Group Limited owned 51.9% (2021: 55%) of the issued ordinary share capital of JD Sports
Fashion Plc. The Group made purchases of inventory from Pentland Group Limited in the period and the Group also sold
inventory to Pentland Group Limited. The Group also paid royalty costs to Pentland Group Limited for the use of a brand.
During the period, the Group entered into the following transactions with Pentland Group Limited:
Sale of inventory
Purchase of inventory
Royalty costs
Marketing costs
Income from
related parties
2022
£m
Expenditure
with related
parties
2022
£m
Income from
related parties
2021
£m
Expenditure
with related
parties
2021
£m
1.3
–
–
–
–
(48.7)
(6.2)
(0.9)
1.4
–
–
–
–
(46.7)
(1.8)
(0.3)
At the end of the period, the following balances were outstanding with Pentland Group Limited:
Trade receivables/(payables)
0.2
(2.5)
0.9
(3.1)
Amounts owed
by related
parties
2022
£m
Amounts owed
to related
parties
2022
£m
Amounts owed
by related
parties
2021
£m
Amounts owed
to related
parties
2021
£m
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
31. Related Party Transactions and Balances (continued)
Transactions with Related Parties Who Are Not Members of the Group (continued)
Associates and Joint Ventures
During the period, the Group entered into the following transactions with its associates and joint ventures:
Purchase of inventory
Dividends and distributions received
Income from
related parties
2022
£m
Expenditure
with related
parties
2022
£m
Income from
related parties
2021
£m
Expenditure
with related
parties
2021
£m
–
6.9
(12.5)
–
–
–
–
–
At the end of the period, the Group had the following balances outstanding with its associates and joint ventures:
Other receivables
Trade payables
Amounts owed
by related
parties
2022
£m
Amounts owed
to related
parties
2022
£m
Amounts owed
by related
parties
2021
£m
Amounts owed
to related
parties
2021
£m
0.2
–
–
(0.3)
–
–
–
–
Other receivables from associates and joint ventures relate to costs incurred by the Group on behalf of these entities, which
have then been recharged.
Other than the remuneration of Directors as shown in Note 5 and in the Directors’ Remuneration Report on pages 114 to 130
there have been no other transactions with Directors in the year (2021: nil). £25,000 of invoices from Cowgill Holloway Business
Recovery LLP in respect of professional fees were accrued in the financial year ended 29 January 2022 and paid post year-end
(2021: £3,300). Peter Cowgill is indirectly a member of this Limited Liability Partnership through his membership of Cowgill
Holloway LLP who are then a member of Cowgill Holloway Business Recovery LLP. Peter Cowgill does not participate in any
profit share arrangement relating to either Cowgill Holloway LLP or Cowgill Holloway Business Recovery LLP. In addition, Cowgill
Holloway LLP (including member firms of Cowgill Holloway LLP) has acted on behalf of certain vendors where the Group has
ultimately completed an acquisition. Where this has occurred, there has been no monetary payments between the Group and
Cowgill Holloway LLP (including its member firms).
32. Held-for-sale (Footasylum Plc)
Transaction History
On 18 February 2019, JD Sports Fashion Plc acquired 19,579,964 Footasylum Plc shares at prices between 50 pence and
75 pence per share, representing 18.7% of the issued ordinary share capital.
On 18 March 2019, in conjunction with the Board of Footasylum Plc, JD Sports Fashion Plc announced the terms of an offer
to be made for the remaining 81.3% of the ordinary share capital of Footasylum at a price of 82.5 pence per ordinary share.
This offer was declared unconditional in all respects on 12 April 2019 with acceptances received for a total of 78,176,481 shares
representing a further 74.8% of the issued ordinary share capital. On 26 April 2019, the first bulk transfer was made to acquire
an additional 80.5 million shares (in addition to the 19.5 million already owned). The formal process to acquire the remaining
Footasylum shares (incl. the dissenting shareholders) was completed on 4 June 2019. Footasylum was delisted on 16 May 2019
and converted from an unlisted Plc to a private company on 19 September 2019.
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JD Sports Fashion Plc Annual Report and Accounts 2022
32. Held-for-sale (Footasylum Plc) (continued)
Hold Separate Order and Consolidation
On 17 May 2019, JD Sports Fashion Plc received a ‘hold separate’ enforcement order from the CMA regarding the
Footasylum acquisition.
In accordance with IFRS 10 ‘Consolidated Financial Statements’, an investor controls an investee when it is exposed, or
has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through
its power over the investee. Whilst this transaction was being reviewed by the CMA, the Directors of JD Sports Fashion Plc
have assessed whether the Group had control over Footasylum and could therefore consolidate the results of Footasylum.
In making their judgement, the Directors considered that there was a simultaneous exchange and completion on the
transaction and completion was not conditional on the outcome of the CMA review. The risks and rewards ultimately rested
with JD Sports Fashion Plc as legal owner and there would be no pass through to the former shareholders. This evidences
that the Group had exposure, or rights, to variable returns from its involvement with the investee. Further, the Group had the
power of veto over strategic decision making. After careful consideration, the Directors concluded that the consolidation of
Footasylum into the Group financial statements from the date of acquisition was appropriate and was disclosed as a critical
accounting judgement in the accounting policies.
Held-for-sale
On 4 November 2021, the final ruling from the CMA was that it had again prohibited the Group’s acquisition of Footasylum.
The final CMA undertakings were issued on 14 January 2022 which was effectively the start date for the Footasylum sale
process. Footasylum has been classified as held-for-sale as at 29 January 2022 as:
– the carrying amount of Footasylum will be recovered through the sale transaction;
– it is available for sale in its present condition;
– the Group has committed to sell Footasylum and this sale plan has been initiated;
– Footasylum was being actively marketed at a price that is reasonable in relation to its fair value; and
– there is an expectation that the sale process will be completed within six months of the classification as held-for-sale.
Assets and Liabilities of Footasylum held-for-sale
As at 29 January 2022, Footasylum was stated at carrying value (excluding cash and cash equivalents), being the lower of
carrying value or fair value less costs to sell. Cash and cash equivalents as at 29 January 2022 of £27.2 million have been
presented within the Group’s cash and cash equivalents (Note 30) in accordance with IFRS 5.
Intangible assets
Property, plant and equipment
Deferred tax assets
Inventories
Trade and other receivables
Right-of-use assets
Assets held-for-sale
2022
£m
4.7
25.2
0.2
27.0
21.5
78.5
157.1
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Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
32. Held-for-sale (Footasylum Plc) (continued)
Trade and other payables
Lease liabilities
Income tax liability
Deferred tax liability
Liabilities held-for-sale
2022
£m
(57.5)
(82.0)
(2.9)
(0.2)
(142.6)
Discontinued operations
The presentation of an operation as a discontinued operation is limited to a component of an entity that either has been
disposed of or is classified as held-for-sale, and:
– represents a separate major line of business or geographic area of operations;
– is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations,
or is a subsidiary acquired exclusively with a view to resale.
Whilst the disposal of Footasylum is significant for the Group, it is subject to a single plan and can be distinguished
operationally and for financial reporting purposes, the disposal of Footasylum should not be classified as a discontinued
operation. This is because the Group has other subsidiaries and operations within the Sports Fashion segment in the UK,
therefore Footasylum does not represent a separate major line of business or geographic area for the Group. However,
the Group is required to disclose the impact of the disposal.
33. Contingent Liabilities
The activities of the Group are overseen by a number of regulators around the world and, whilst the Group strives to ensure
full compliance with all its regulatory obligations, periodic reviews are inevitable which may result in a financial penalty. If the
risk of a financial penalty arising from one of these reviews is more than remote but not probable or cannot be measured
reliably then the Group will disclose this matter as a contingent liability. If the risk of a financial penalty is considered probable
and can be measured reliably then the Group would make a provision for this matter.
CMA Investigation
On 23 September 2021, the Competition and Markets Authority (CMA) launched an investigation under section 25 of the
Competition Act 1998 (‘CA98’) into suspected breaches of competition law by Leicester City Football Club Limited and
JD Sports Fashion Plc, together with their affiliates. The Group continues to co-operate fully with the CMA.
The CMA has not reached a view as to whether there is sufficient evidence of an infringement of competition law for it to issue
a statement of objections or, ultimately, an infringement decision, to any party under investigation. Therefore, at this stage, it
is not possible to determine with sufficient certainty that a liability will ultimately arise. Indeed, not all cases result in the CMA
issuing a statement of objections or an infringement decision. The CMA has indicated that it will publish a further update in
September 2022.
34. Post Balance Sheet Events
Directorate Change
On 25 May 2022, the Group announced that it had decided to accelerate the separation of the roles of Chair and Chief
Executive Officer. Peter Cowgill stood down as Chief Executive Officer and Executive Chairman with immediate effect.
Helen Ashton was appointed as Interim Non-Executive Chair and Kath Smith was appointed as Interim Chief Executive
Officer. For further details, please see the Statement from the Board on page 4.
Acquisition of Total Swimming Group
On 27 May 2022, JD Sports Fashion Plc completed, via its existing subsidiary JD Sports Gyms Limited, the acquisition of a
60% share in Total Swimming Group. Initial cash consideration paid was £11.1 million with a maximum of £4.0 million of deferred
consideration that is contingent upon future performance criteria and certain closing conditions. Total Swimming Group was
founded by former Olympic swimmers Steve Parry, Rebecca Adlington and Adrian Turner to make swimming more accessible
and includes Swim!, the first multi-site operator of dedicated children’s learn to swim centres in the UK. The acquisition provides
a broadening of the Group’s leisure interests, which now includes gyms and pools. In its 2021 financial year, Total Swimming
Group generated revenues of £8.6 million. Due to the proximity of the date of the acquisition and the date of this report, it is
not possible to present a provisional goodwill calculation or the provisional fair values of the assets and liabilities acquired.
The provisional goodwill calculation will be presented in the announcement of our Interim Results.
208
JD Sports Fashion Plc Annual Report and Accounts 2022 35. Subsidiary Undertakings
The following companies were the subsidiary undertakings of JD Sports Fashion Plc at 29 January 2022.
Place of
registration
Registered address
Name of subsidiary
2Squared Agency Limited
24Sevenbikes Ltd
UK
UK
80s Casual Classics Limited
UK
A Number of Names Limited
UK
ActivInstinct Holdings Limited
UK
ActivInstinct Limited*
Aghoco 1966 Limited
Allsports.co.uk Limited*
Alpine Bikes Limited*
UK
UK
UK
UK
Alpine Group (Scotland) Limited* UK
Applied Nutrition LimitedA
Ark Fashion Limited
Aspecto Holdings Limited
Aspecto Trading Limited*
Athleisure Limited
UK
UK
UK
UK
UK
Base Childrenswear Limited
UK
Bernard Esher Limited
UK
Blacks Outdoor Retail Limited
UK
Blue Retail Limited*
UK
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
41 Commercial Street, Leith,
Edinburgh, EH6 6JD
41 Commercial Street, Leith,
Edinburgh, EH6 6JD
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
2 Acornfield Road, Knowsley
Industrial Park, Liverpool, L33 7UG
Manufacture of
other food products
Bodytone International
Sport S.L.*
Spain
Calle Legón, 180 – 30500, Molina
de Segura, Murcia (Spain)
Brand Stable LtdJ
UK
Atlantic House, 65 Jeddo Road,
London, W12 9ED
Online own label women’s
fashion retailer
Capso Holdings Limited*
Isle of Man 33–37 Athol Street, Isle of Man,
Catchbest Limited
UK
Champion Retail Limited*
Ireland
IM1 1LB
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
3 Burlington Road, Dublin 4,
D04RD68, Republic of Ireland
Intermediate
holding company
Retail of clothing in
a specialised store
Retailer of sports
and leisure goods
Nature of business
and operation
Distributor of fashion
apparel and accessories
Dormant company
Retailer of fashion
apparel and footwear
Wholesale of clothing
and footwear
Intermediate
holding company
Dormant company
Dormant company
Dormant company
Dormant company
Intermediate
holding company
Dormant company
Dormant company
Dormant company
Intermediate
holding company
Retailer of children’s
fashion apparel
and footwear
Retailer of premium
women’s fashion
apparel and footwear
Retailer of outdoor
footwear, apparel
and equipment
Dormant company
Manufacture and
distribute professional
fitness equipment
Ownership
and voting
rights interest
100%
100%
70%
100%
100%
100%
100%
100%
60%
60%
32%
100%
100%
100%
100%
80%
80%
100%
100%
25%**
49%
100%
80%
100%
209
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
35. Subsidiary Undertakings (continued)
Name of subsidiary
Champion Sports
(Holdings) Unlimited*
Place of
registration
Ireland
Champion Sports Group Limited* Ireland
Champion Sports Ireland*
Ireland
Champion Sports
Newco Limited*
Choice 33 Limited*
Choice Limited*
Cloggs Online Limited
Ireland
UK
UK
UK
Clothingsites Holdings Limited
UK
Clothingsites.co.uk Limited*
UK
Registered address
3 Burlington Road, Dublin 4,
D04RD68, Republic of Ireland
3 Burlington Road, Dublin 4,
D04RD68, Republic of Ireland
3 Burlington Road, Dublin 4,
D04RD68, Republic of Ireland
3 Burlington Road, Dublin 4,
D04RD68, Republic of Ireland
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Nature of business
and operation
Dormant company
Intermediate
holding company
Retailer of sports
and leisure goods
Dormant company
Dormant company
Retailer of fashion
apparel and footwear
Dormant company
Intermediate
holding company
Retailer of fashion
apparel and footwear
Cosmos Sport Commercial, Hotel
and Tourism Société Anonyme
Greece
148, 62 Martiron Ave. 71303,
Kaminia, Heraklion, Crete, Greece
Retailer of sports inspired
footwear and apparel
Cosmossport Trading
(Cyprus) Limited*
Dallas D&K Corporation*
Dantra Limited
Cyprus
US
UK
11 Michail Paridi, 1095, Nicosia,
Cyprus
1300 Mercedes Drive Hanover
MD 21076
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Retailer of sports inspired
footwear and apparel
Athletic footwear and
apparel streetwear retailer
Retailer of children’s
fashion apparel
and footwear
Deporvillage S.L.
Spain
Plaça de la Ciencia 1 Local 4, Edifici
Impuls, Manresa, 08240, Barcelona
Retailer of sports
and leisure goods
Drome Limited*
DTLR Holding Inc*
DTLR Villa LLC*
DTLR, Inc*
UK
US
US
US
Duffer of St George Limited
UK
Exclusive Footwear Limited
UK
First Sport Limited*
Focus Brands Limited
Focus Equipment Limited*
UK
UK
UK
Focus Group Holdings Limited* UK
Focus International Limited*
UK
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
1300 Mercedes Drive
Hanover MD 21076
1300 Mercedes Drive Hanover
MD 21076
1300 Mercedes Drive Hanover
MD 21076
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Focus International NL B.V.*
Netherlands Danzigerkade 9 A, 1013AP
Amsterdam, the Netherlands
210
Dormant company
Intermediate
holding company
Athletic footwear and
apparel streetwear retailer
Athletic footwear and
apparel streetwear retailer
Licensor of a fashion brand
100%
Dormant company
Dormant company
Intermediate holding
company
Dormant company
Intermediate
holding company
Distributor of sports
apparel and footwear
Distributor of sports
apparel and footwear
90%
100%
100%
100%
100%
100%
100%
Ownership
and voting
rights interest
100%
100%
100%
100%
88%
88%
100%
100%
100%
80%
80%
79%
75%
40%**
100%
79%
79%
79%
JD Sports Fashion Plc Annual Report and Accounts 2022 Ownership
and voting
rights interest
Nature of business
and operation
Distributor of sports
apparel and footwear
Dormant company
Dormant company
Retailer of sports inspired
footwear and apparel
Retailer of sports inspired
footwear and apparel
Dormant company
Dormant company
Intermediate
holding company
35. Subsidiary Undertakings (continued)
Name of subsidiary
Focus Italy S.pa.*
Focus Sports & Leisure
International Limited*
Place of
registration
Italy
UK
Footasylum Brands Limited*
UK
Registered address
Viale Majno Luigi 17/A,
20122 Milano Italy
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Footasylum GmbH*
Germany Wittestr. 30K, 13509, Berlin, 13509,
Footasylum Limited
UK
Footpatrol London 2002 Limited UK
Frank Harrison Limited*
Genesis Finco Limited
Genesis Holdings Inc*
Genesis Topco Inc
UK
UK
US
US
George Fisher Holdings Limited* UK
George Fisher Limited*
UK
GetTheLabel.com Limited*
UK
Gio Goi Brands LimitedJ
Gio-Goi Trading Limited*J
Giulio Fashion Limited*
Giulio Limited*
Giulio Woman Limited*
UK
UK
UK
UK
UK
Go Outdoors Equestrian Limited* UK
Go Outdoors Fishing Limited*
UK
Go Outdoors Retail Limited
UK
Graham Tiso Limited*
UK
GymNation Limited*
GymNation LLC*
British
Virgin
Islands
UAE
Berlin
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
3308 N. Mitthoeffer Rd. Indianapolis,
IN 46235
Intermediate
holding company
3308 N. Mitthoeffer Rd. Indianapolis,
IN 46235
Intermediate
holding company
41 Commercial Street, Edinburgh,
EH6 6JD
Intermediate
holding company
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Spring Court, Spring Road, Hale,
Cheshire, England, WA14 2UQ
Spring Court, Spring Road, Hale,
Cheshire, England, WA14 2UQ
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
41 Commercial Street, Leith,
Edinburgh, EH6 6JD
Retailer of outdoor
footwear, apparel
and equipment
Dormant company
Retailer of fashion
apparel and footwear
Retailer of fashion
apparel and footwear
Intermediate
holding company
Retailer of premium fashion
apparel and footwear
Dormant company
Dormant company
Retailer of outdoor leisure
equipment and apparel
Retailer of outdoor leisure
equipment and apparel
Retailer of outdoor
footwear, apparel
and equipment
Craigmuir Chambers, Road Town,
Tortola VG1110, British Virgin Islands
Intermediate
holding company
100%
100%
100%
100%
100%
100%
72%
100%
80%
80%
60%
60%
80%
50%
50%
88%
88%
88%
100%
100%
100%
60%
94%
M Floor, ETA Star Building, Near
Time Square Centre, Al Quoz 1,
Sheikh Zayed Road, Dubai, UAE
Operator of fitness centres
94%
Hair Burst Limited*
UK
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Retailer of hair vitamins
and growth products
75%
211
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
35. Subsidiary Undertakings (continued)
Name of subsidiary
Place of
registration
Registered address
Hairburst Holding Group Limited UK
Helium Miracle 311 Limited*
UK
Henleys Clothing Limited
Hip (Birmingham) Limited
Hip Store Limited
I Am Athlete, LLC*
UK
UK
UK
US
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
6701 Center Drive W, Suite 700,
Los Angeles, CA 90045
Nature of business
and operation
Intermediate
holding company
Dormant company
Dormant company
Dormant company
Retailer of premium
men’s fashion apparel
and footwear
Retailer of sports and
leisure inspired goods
Iberian Sports Retail Group SL
Spain
Polígono Industrial de las Atalayas,
Avenida Euro, N2, Alicante 03114
Intermediate
holding company
Ownership
and voting
rights interest
75%
94%
100%
100%
100%
80%
50.01%
Tanzaro House, Ardwick Green N,
Manchester, M12 6HD
Retailer of fashion apparel
30%
Il Sarto Milano Limited*A
Infinities Retail Group
Holdings Limited
UK
UK
Infinities Retail Group Limited*
UK
IRG Altrincham Limited*
IRG Birkenhead Limited*
IRG Blackburn Limited*
IRG Bradford Limited*
IRG Bury Limited*
IRG Chesterfield Limited*
IRG Denton Limited*
IRG Derby Limited*
IRG Stockport Limited*
IRG Stoke Limited*
IRG Warrington Limited*
J D Sports Limited
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Intermediate
holding company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Jandernama SL
Spain
JD Canary Islands Sports SL*
Spain
JD Newco 2 Limited
UK
Polígono Industrial de las Atalayas,
Avenida Euro, N2, Alicante 03114
Intermediate
holding company
Polígono Industrial de las Atalayas,
Avenida Euro, N2, Alicante 03114
Retailer of sports inspired
footwear and apparel
Hollinsbrook Way, Pilsworth, Bury,
Lancashire, BL9 8RR
Dormant company
JD Size GmbH
Germany
Neusser Straße 93, 50670 Cologne Retailer of sports inspired
100%
footwear and apparel
212
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
65%
100%
JD Sports Fashion Plc Annual Report and Accounts 2022 35. Subsidiary Undertakings (continued)
Name of subsidiary
Place of
registration
Registered address
Nature of business
and operation
JD Spain Sports Fashion 2010 SL* Spain
JD Sports (Thailand) Limited*
Thailand
JD Sports Active Limited
UK
JD Sports Fashion (France) SAS France
JD Sports Fashion Acquisitions
2021 Limited
UK
JD Sports Fashion AT GmbH
Austria
JD Sports Fashion Aus Pty*
Australia
Polígono Industrial de las Atalayas,
Avenida Euro, N2, Alicante 03114
Retailer of sports inspired
footwear and apparel
Room No. TT04 No. 1106 Sukhumvit
Road, Phrakhanong Sub-district,
Klongtoey District, Bangkok
Retailer of sports inspired
footwear and apparel
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
96 R Du Pont Rompu, 59200
Tourcoing
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Dormant company
Intermediate
holding company
Intermediate
holding company
Wallnerstraße 1, 3. Stock, 1010
Vienna, Austria
Retailer of sports inspired
footwear and apparel
Level 12, 54 Park St, Sydney, NSW
2000
Retailer of sports inspired
footwear and apparel
JD Sports Fashion Belgium BV
Belgium
Wiegstraat 21, 2000 Antwerpen
JD Sports Fashion BV
Netherlands Oosteinderweg 247 B 1432 AT
Aalsmeer
Retailer of sports inspired
footwear and apparel
Retailer of sports inspired
footwear and apparel
JD Sports Fashion Denmark APS Denmark
JD Sports Fashion Finland OY
Finland
c/o Harbour House, Sundkrogsgade
21, 2100 Copenhagen
Retailer of sports inspired
footwear and apparel
c/o Intertrust Finland Oy,
Lautatarhankatu 6, 00580, Helsinki
Retailer of sports inspired
footwear and apparel
Ownership
and voting
rights interest
65%
80%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Germany
Neusser Strasse 93, 50670 Cologne Retailer of sports inspired
80%
JD Sports Fashion Germany
GmbH
JD Sports Fashion Holdings
Aus Pty
Australia
Level 12, 54 Park St, Sydney, NSW
2000
Intermediate
holding company
footwear and apparel
JD Sports Fashion India LLP
India
JD Sports Fashion Israel Ltd*J
Israel
JD Sports Fashion Israel (2021)
Limited Partnership*J
JD Sports Fashion Korea Inc
Israel
Korea
JD Sports Fashion NZ Pty
Limited*
New
Zealand
JD Sports Fashion PTE LTD*
Singapore
JD Sports Fashion SDN BHD
Malaysia
JD Sports Fashion SRL
Italy
JD Sports Fashion Sweden AB
Sweden
JD Sports Gyms Acquisitions
Limited*
JD Sports Gyms Limited
UK
UK
B-808 The Platina, Gachibawli,
Hyderabad, Telangana, India –
500032
Outsourced multichannel
operations
HaMelacha 8 Holon, Israel, Zip code:
5881504
Retailer of sports inspired
footwear and apparel
HaMelacha 8 Holon, Israel, Zip code:
5881504
Retailer of sports inspired
footwear and apparel
6F Yoonik Bldg. 430 Eonju-ro,
Gangnam-gu, Seoul
Anderson Lloyd, Level 10 Otago
House, Cnr Moray Place & Princes
Street, Dunedin, 9016, NZ
Retailer of sports inspired
footwear and apparel
Retailer of sports inspired
footwear and apparel
190 Middle Road, 14-05, Fortune
Centre, Singapore, 188979
Retailer of sports inspired
footwear and apparel
Suite D23, 2nd Floor, Plaza
Pekeliling, No. 2, Jalan Tun Razak,
50400 Kuala Lumpur, Malaysia
Retailer of sports inspired
footwear and apparel
Via Montenapoleone n. 29 – 20121
Milan, Italy
Retailer of sports inspired
footwear and apparel
C/o Intertrust CN (Sweden) AB,
PO Box 16285, 103 25 Stockholm,
Sweden
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Retailer of sports inspired
footwear and apparel
Dormant company
Operator of fitness centres
100%
100%
60%
60%
50%
100%
80%
80%
100%
100%
94%
94%
213
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
35. Subsidiary Undertakings (continued)
Name of subsidiary
Place of
registration
JDSF Holdings (Canada) Inc
Canada
JDSF Retail (Canada) Inc
Canada
Registered address
1200 Waterfront Centre,
200 Burrard Street,
Vancouver BC V6C 3L6
1200 Waterfront Centre,
200 Burrard Street,
Vancouver BC V6C 3L6
Nature of business
and operation
Intermediate
holding company
Retailer of sports inspired
footwear and apparel
JMH Cosmetics Limited*
UK
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Other business
support service
John David Sports Fashion
(Ireland) Limited
Ireland
3 Burlington Road, Dublin 4,
D04RD68, Republic of Ireland
Retailer of sports inspired
footwear and apparel
Kukri (Asia) Limited*
Hong Kong Unit 4, 27th Floor, Global Trade
Square, 21 Wong Chuk Hang Road,
Hong Kong
Distributor of sports
apparel and accessories
Kukri (HK) Limited*
Hong Kong Unit 4, 27th Floor, Global Trade
Dormant company
Kukri Australia Pty Limited*
Australia
Kukri Events Limited*
Kukri GB Limited*
UK
UK
Kukri NZ Limited*
Kukri PTE Limited*
New
Zealand
Singapore
Kukri Shanghai Limited*
Shanghai
Kukri Sports Canada Inc*
Canada
Kukri Sports Ireland Limited*
Ireland
Kukri Sports Limited
UK
Kukri Sports Middle East JLT*
UAE
Mainline Menswear Holdings
Limited
UK
Mainline Menswear Limited*
UK
Mallet. Footwear LimitedA
UK
Marathon Sports Limited*
Ireland
Square, 21 Wong Chuk Hang Road,
Hong Kong
Level 12, 338–340 Pitt Street,
Sydney NSW 2000
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Unit 2, 45 The Boulevard,
Te Rapa Park, Hamilton
Distributor of sports
apparel and accessories
Dormant company
Distributor and retailer
of sports apparel
and accessories
Distributor of sports
apparel and accessories
10 Anson Road, 19–15 International
Plaza, Singapore 079903
Distributor of sports
apparel and accessories
Room 221-225, No. 2 Building,
No.38 Debao Road, China
(Shanghai) Pilot Free Trade Zone,
Shanghai, 200131, China
106–1533 Broadway St, Port
Coquitlam, British Columbia,
V3C 6P3
Distributor of sports
apparel and accessories
Distributor of sports
apparel and accessories
3 Burlington Road, Dublin 4,
D04RD68, Republic of Ireland
Distributor of sports
apparel and accessories
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Intermediate
holding company
Lakeview Tower, Jumeirah Lake
Towers, Dubai, United Arab Emirates
Distributor of sports
apparel and accessories
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
M25 Business Centre, 121 Brooker
Road, Waltham Abbey, Essex,
England, EN9 1J
3 Burlington Road, Dublin 4,
D04RD68, Republic of Ireland
Intermediate
holding company
Retailer of premium
men’s fashion apparel
and footwear
Retailer of fashion
apparel and footwear
Dormant company
Marketing Investment Group
Bulgaria EOOD*
Bulgaria
53А Nikola Y. Vaptsarov Blvd., 1407
Promishlena zona Hladilnika, Sofia
Retailer of sports inspired
footwear and apparel
Marketing Investment Group
Czech s.r.o.*
Czech
Republic
Jakubská 647/2, Staré Město, 110 00,
Praha
Retailer of sports inspired
footwear and apparel
214
Ownership
and voting
rights interest
80%
88%
75%
100%
80%
80%
80%
80%
80%
60%
80%
80%
60%
80%
80%
80%
80%
80%
25%
100%
60%
60%
JD Sports Fashion Plc Annual Report and Accounts 2022 35. Subsidiary Undertakings (continued)
Name of subsidiary
Marketing Investment Group
Estonia OÜ*
Marketing Investment Group
Hungary Korlátolt Felelősségű
Társaság*
Place of
registration
Estonia
Hungary
Marketing Investment Group S.A. Poland
Marketing Investment Group
Slovakia s. r. o.*
Marshall Artist Holdings LimitedJ UK
Slovakia
Registered address
Nature of business
and operation
Ownership
and voting
rights interest
Harju maakond, Tallinn, Kesklinna
linnaosa, Narva mnt 5, 10117
Retailer of sports inspired
footwear and apparel
Horvát u. 14-24 4.em.2, Budapest,
1027
Retailer of sports inspired
footwear and apparel
ul. Prof. Michała Życzkowskiego 10,
31-864 Kraków
Retailer of sports inspired
footwear and apparel
Michalská 7, 811 03 Bratislava
Retailer of sports inspired
footwear and apparel
97 Alderley Road, Wilmslow,
England, SK9 1PT
Intermediate
holding company
MIG Marketing Investment Group
Austria GmbH*
MIG Marketing Investment Group
GmbH*
Austria
Mahlerstraße 13/1B, 1010 Vienna
Retailer of sports inspired
footwear and apparel
Germany
Dr. Hans-Lebach-Str. 2, 15537 Erkner Retailer of sports inspired
footwear and apparel
MIG Marketing Investment Group
RO SRL*
Romania
Calea Floreasca 169, Corp P1, Etaj 3,
Camera 10, Bucuresti 077190
Retailer of sports inspired
footwear and apparel
MIG Wholesale spółka z o.o.*
Poland
ul. Prof. Michała Życzkowskiego 10,
31-864
Wholesale of clothing
and footwear
Dormant company
100%
Millets Limited
Missy Empire Limited*
Modern Casuals Ltd
Mrblancteeth Limited*
UK
UK
UK
UK
myBox Spolka z.o.o*
Poland
Nanny State Limited
Naylor's Equestrian LLP*
NiceKicks Holdings LLC*
Nicholas Deakins Limited
Oi-Polloi Limited
UK
UK
US
UK
UK
Old Brown Bag Clothing Limited* UK
Onepointfive Ventures Limited*
Canada
OneTrueSaxon Limited
Open Fashion Limited
UK
UK
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
59a Knowsley Street,
Manchester, England, M8 8JF
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Logistyczna 9, 26-060
Chęciny, Poland
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
755 Jarvis Drive, Morgan Hill,
CA 95037
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
1200 Waterfront Centre,
200 Burrard Street, Vancouver
BC V6C 3L6
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Dormant company
Dormant company
Retailer of teeth
whitening products
Provide comprehensive
support for logistics
processes
Dormant company
Retailer of Equestrian
equipment
Retailer of athletic footwear
and streetwear apparel
Distributor of
fashion footwear
Retail sale of clothing
in specialised stores
Dormant company
Retailer of fashion
apparel and footwear
Dormant company
Dormant company
PCPONE*
Ireland
3 Burlington Road, Dublin 4,
D04RD68, Republic of Ireland
Intermediate
holding company
Pear Sports LLC*
US
20371 Irvine Ave, Suite 120,
Newport Beach, CA 92660
Retailer of sports and
leisure inspired goods
60%
60%
60%
60%
25%
60%
60%
60%
60%
51%
70%
75%
60%
100%
100%
80%
100%
80%
100%
80%
100%
100%
100%
80%
215
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
35. Subsidiary Undertakings (continued)
Place of
registration
Registered address
Ownership
and voting
rights interest
Name of subsidiary
Peter Werth Limited*
PG2019 Limited
Pink Soda Limited
Premium Fashion Limited
Prevu Studio Limited
Prima Designer Limited*
Projekts NYC Limited*
UK
UK
UK
UK
UK
UK
UK
PT JD Sports FashionJ
Indonesia
PT JD Sports Fashion
DistributionJ
Indonesia
R.D. Scott Limited
Rascal Clothing Ltd
UK
UK
SDSR – Sports Division SR, S.A* Portugal
SEA Sports Fashion SDN. BHD. Malaysia
Suite 20, 196 Rose Street,
Edinburgh, Midlothian, EH2 4AT
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Nature of business
and operation
Dormant company
Retailer of fashion
apparel and footwear
Intermediate
holding company
Dormant company
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, United Kingdom,
BL9 8RR
Retail sale of clothing
in specialised stores
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Erajaya Plaza, Jalan Bandengan
Selatan Number 19–20, Kel. Pekojan,
Kec. Tambora, Adm. City of West
Jakarta, DKI Jakarta Province, 11240
Erajaya Plaza, Jalan Bandengan
Selatan Number 19–20, Kel. Pekojan,
Kec. Tambora, Adm. City of West
Jakarta, DKI Jakarta Province, 11240
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Rua Joao Mendoça, nº 505,
Matosinhos Freguesia, São Mamede
de Infesta e Senhora da Hora, 4464
503 Matosinhos, Portugal
Level 19–01, Block B, Plaza Zurich,
No. 12, Jalan Gelenggang, Bukit
Damansara, 50490 Kuala Lumpur
Intermediate
holding company
Dormant company
Retailer of sports inspired
footwear and apparel
Retailer of sports inspired
footwear and apparel
Retailer of fashion
apparel and footwear
Retailer of fashion
apparel and footwear
Retailer of sports
and leisure goods
Retailer of sports inspired
footwear and apparel
Shoe Palace Corporation*
US
755 Jarvis Drive, Morgan Hill,
CA 95037
Retailer of athletic footwear
and streetwear apparel
SIA Marketing Investment
Group Latvia*
Size? Limited
Sneaker Villa Inc*
Sonneti Fashions Limited*
Source Lab Limited
South South East Limited
Spikes Holding LLC*
UK
US
UK
UK
UK
US
Latvia
Rīga, Lienes iela 1–3, LV-1009
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Retailer of sports inspired
footwear and apparel
Retailer of sports inspired
footwear and apparel
1300 Mercedes Drive Hanover MD
21076
Athletic footwear and
apparel streetwear retailer
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
3308 N. Mitthoeffer Rd.
Indianapolis, IN 46235
Dormant company
Design and distributor
of sportswear
Intermediate
holding company
Dormant company
Spodis SA*
France
96 R Du Pont Rompu, 59200
Tourcoing, France
Retailer of sports
and leisure goods
216
100%
100%
100%
100%
100%
100%
100%
51%
49%
100%
75%
50%**
60%
80%
60%
100%
79%
100%
85%
100%
80%
100%
JD Sports Fashion Plc Annual Report and Accounts 2022 35. Subsidiary Undertakings (continued)
Name of subsidiary
Place of
registration
Registered address
Sport Zone Canarias (SL)*
Spain
Avenida el Paso, 10, 1º, Edificio
Multiusos, Polígono Industrial Los
Majuelos, La Laguna 38201, Santa
Cruz de Tenerife, Spain
Nature of business
and operation
Retailer of sports
and leisure goods
Ownership
and voting
rights interest
30%**
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
Sports Unlimited Retail BV*
Netherlands Oosteinderweg 247 B 1432 AT
Sprinter Megacentros Del
Deporte SLU*
Spain
Squirrel Sports Limited*
Terminus Bidco, Inc.*
Tessuti Group Limited
Tessuti Limited*
Tessuti Retail Limited*
The Alpine Group Limited*
The Couture Club Ltd*A
UK
US
UK
UK
UK
UK
UK
The Finish Line Distribution, Inc* US
The Finish Line MA, Inc*
US
The Finish Line Puerto Rico, Inc* US
The Finish Line
Transportation, Inc*
The Finish Line USA, Inc*
The Finish Line, Inc*
The Gym King
(Holdings) LimitedJ
US
US
US
UK
The Gym King IE Limited*J
UK
The Gym King Limited*J
The Gym King
Wholesale Limited*J
UK
UK
Aalsmeer, The Netherlands
Polígono Industrial de las Atalayas,
Avenida Euro, N2, Alicante 03114,
Spain
Hollinsbrook Way, Pilsworth, Bury,
Lancashire, BL9 8RR
Retailer of sports
and leisure goods
Retailer of sports
and leisure goods
Dormant company
1300 Mercedes Drive Hanover MD
21076
Intermediate
holding company
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
41 Commercial Street, Leith,
Edinburgh, EH6 6JD
40–42 Matthews Street, Higher
Ardwick, Manchester, England,
M12 5BB
Intermediate
holding company
Retailer of fashion
apparel and footwear
Dormant company
Intermediate
holding company
Retailer of fashion apparel
3308 N. Mitthoeffer Rd. Indianapolis,
IN 46235
Retailer of sports and
leisure inspired goods
3308 N. Mitthoeffer Rd. Indianapolis,
IN 46235
Dormant company
3308 N. Mitthoeffer Rd. Indianapolis,
IN 46235
Retailer of sports and
leisure inspired goods
3308 N. Mitthoeffer Rd. Indianapolis,
IN 46235
Retailer of sports and
leisure inspired goods
3308 N. Mitthoeffer Rd. Indianapolis,
IN 46235
Retailer of sports and
leisure inspired goods
3308 N. Mitthoeffer Rd. Indianapolis,
IN 46235
Intermediate
holding company
Unit 6 Temple Point Bullerthorpe
Lane, Colton, Leeds, West Yorkshire,
LS15 9JL
Intermediate
holding company
Online retailer and
wholesaler of sports
inspired apparel
Dormant company
Unit 6 Temple Point Bullerthorpe
Lane, Colton, Leeds, West Yorkshire,
LS15 9JL
Unit 6 Temple Point Bullerthorpe
Lane, Colton, Leeds, West Yorkshire,
LS15 9JL
Online retailer and
wholesaler of sports
inspired apparel
Unit 6 Temple Point Bullerthorpe
Lane, Colton, Leeds, West Yorkshire,
LS15 9JL
Dormant company
The Gym King GmbH*J
Germany
Adlerstraße 34, 90403 Nürnberg
65%
50%
50%
80%
80%
100%
88%
100%
60%
40%
80%
80%
80%
80%
80%
80%
40%
40%
40%
40%
40%
217
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
35. Subsidiary Undertakings (continued)
Name of subsidiary
Place of
registration
Registered address
The John David Group Limited
UK
The Watch Shop
Holdings Limited*
Tiso Group Limited
Topgrade Sportswear
Holdings Limited
UK
UK
UK
Topgrade Sportswear Limited*
UK
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
41 Commercial Street, Leith,
Edinburgh, EH6 6JD
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
UAB Marketing Investment
Group Lietuva*
Lithuania
Gvazdikų g. 170, LT-10247 Vilnius
Uggbugg Fashion Limited
UK
Ultimate Outdoors Limited*
UK
Varsity Kit Limited*
Watch Shop Logistics Ltd*
Weaver’s Door Ltd
Wellgosh Limited
UK
UK
UK
UK
Wheelbase Lakeland Limited
UK
X4L Gyms Limited*
XLR8 Sports Limited
UK
UK
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Hollinsbrook Way, Pilsworth,
Bury, Lancashire, BL9 8RR
Nature of business
and operation
Dormant company
Retail sale of watches
and jewellery in
specialised stores
Intermediate
holding company
Dormant company
Retailer of sports inspired
footwear and apparel
Agency business for luxury
childrenswear brands
Retailer of fashion
apparel and footwear
Dormant company
Dormant company
Dormant company
Dormant company
Retailer of fashion
apparel and footwear
Retail sale of sports goods,
fishing gear, camping
goods, boats and bicycles
Ownership
and voting
rights interest
100%
100%
60%
80%
80%
60%
51%
100%
100%
100%
100%
100%
78%
Operator of fitness centres
94%
Retail sale of bicycles
100%
*
**
Indirect holding of the Company
Indirect holding of <50%. The following are entities owned by ISRG, and ISRG’s ownership and voting rights interest is presented in brackets:
Bodytone International Sport S.L., (50.1%), Deporvillage S.L. (80%), SDSR – Sports Division SR, S.A (100%), Sprinter Megacentros Del Deporte
SLU (94%), Sport Zone Canarias S.L. (60%). JD is deemed to control ISRG via its shareholding (50.01%) and Board of Director / Chairman
appointments, and subsequently deemed to control these subsidiaries via its control of ISRG.
A Associated undertaking.
J
Joint venture.
218
JD Sports Fashion Plc Annual Report and Accounts 2022 COMPANY BALANCE SHEET
As at 29 January 2022
Assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investment property
Investments in subsidiaries
Investments in associates and joint ventures
Trade and other receivables
Deferred tax assets
Total non-current assets
Stocks
Trade and other receivables
Right of return assets
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Creditors: amounts falling due within one year
Lease liabilities
Provisions
Income tax liabilities
Total current liabilities
Creditors: amounts falling due after more than one year
Provisions
Lease liabilities
Total non-current liabilities
Total liabilities
Total assets less total liabilities
Capital and reserves
Issued ordinary share capital
Share premium
Share-based payment reserve
Retained earnings
Total equity
As at
29 January
2022
£m
As at
30 January
2021
£m
Note
C5
C6
C7
C8
C9
C9
C11
C15
C10
C11
C12
C13
C7
C22
C14
C22
C7
C16
C16
C16
28.2
137.5
445.2
14.8
947.0
55.9
512.2
5.8
28.9
135.6
366.9
2.8
532.2
2.5
–
3.4
2,146.6
1,072.3
192.4
160.2
6.1
572.2
930.9
3,077.5
193.0
502.1
–
398.0
1,093.1
2,165.4
(465.3)
(436.0)
(73.3)
(8.9)
(0.9)
(61.9)
–
(8.9)
(548.4)
(506.8)
(6.5)
(10.9)
(428.1)
(445.5)
(993.9)
2,083.6
2.6
467.5
0.1
1,613.4
2,083.6
(8.0)
–
(371.2)
(379.2)
(886.0)
1,279.4
2.4
11.7
–
1,265.3
1,279.4
The profit for the year in the accounts of the Company is £363.0 million (2021: £130.1 million).
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 accompanying notes form part of these financial statements.
These financial statements were approved by the Board of Directors on 22 June 2022 and were signed on its behalf by:
N Greenhalgh
Director
Registered number: 1888425
219
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022
COMPANY STATEMENT OF CHANGES IN EQUITY
For the 52 weeks ended 29 January 2022
Balance at 1 February 2020
Profit for the period
Total comprehensive income for the period
Balance at 30 January 2021
Profit for the period
Total comprehensive income for the period
Dividends to equity holders
Share-based payment charge
Issue of share capital
Balance at 29 January 2022
Ordinary share
capital
£m
Share
premium
£m
Share-based
payments
reserve
£m
2.4
–
–
2.4
–
–
–
–
0.2
2.6
11.7
–
–
11.7
–
–
–
–
455.8
467.5
–
–
–
–
–
–
–
0.1
–
0.1
Retained
earnings
£m
1,135.2
130.1
130.1
1,265.3
363.0
363.0
(14.9)
–
–
1,613.4
Total
equity
£m
1,149.3
130.1
130.1
1,279.4
363.0
363.0
(14.9)
0.1
456.0
2,083.6
The accompanying notes form part of these financial statements.
220
JD Sports Fashion Plc Annual Report and Accounts 2022 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’).
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of
International Accounting Standards in conformity with the requirements of UK-adopted International Accounting Standards
(‘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 advantage of 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 15 ‘Revenue from Contracts with Customers’ in respect of disaggregation of revenue
and performance obligations;
– certain disclosures required by IFRS 16 ‘Leases’ in respect of the Company acting as a lessor;
– 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 accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in
these financial statements.
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 148 and 149 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.
221
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
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
Pension costs
Other employed staff costs
C5. Intangible Assets
2022
16,800
661
17,461
11,239
2021
15,510
619
16,129
10,388
52 weeks to
29 January
2022
£m
266.3
19.3
3.9
0.2
289.7
52 weeks to
30 January
2021
£m
188.4
13.7
3.6
–
205.7
Goodwill in the Company comprises the goodwill on acquisition of First Sport (£15.0 million) and Allsports (£0.9 million).
Brand licences in the Company comprise all brand licences Included in the Group table (Note 12) within the Sport Fashion
segment, with the exclusion of the Lotto and Umbro brand licences, which are held within Marketing Investment Group S.A.,
and the Missy Empire brand licence, which is included within Uggbugg Fashion Limited. Brand licences are stated at cost less
accumulated amortisation and impairment losses.
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 Duffer brand name, which is included within Duffer of St George Limited, and the
Doone brand name, which is included in the Sport Zone group.
Included within the amortisation charge for the period ended 29 January 2022 is accelerated amortisation of £0.4 million
(2021: £4.0 million) following a review of the useful economic life of certain items of software development capitalised.
Goodwill
£m
Brand
licences
£m
Brand
names
£m
Software
development
£m
19.9
–
19.9
4.0
–
4.0
15.9
15.9
15.5
5.2
20.7
13.2
0.8
14.0
6.7
2.3
7.4
–
7.4
7.4
–
7.4
–
–
43.9
2.6
46.5
33.2
7.7
40.9
5.6
10.7
Total
£m
86.7
7.8
94.5
57.8
8.5
66.3
28.2
28.9
Cost or valuation
At 30 January 2021
Additions
At 29 January 2022
Amortisation and impairment
At 30 January 2021
Charge for the period
At 29 January 2022
Net book value
At 29 January 2022
At 30 January 2021
222
JD Sports Fashion Plc Annual Report and Accounts 2022 C6. Property, Plant and Equipment
Included within the depreciation charge for the period ended 29 January 2022 is accelerated depreciation of £6.7 million
(2021: £16.5 million) following a review of the useful economic life of certain items of property, plant and equipment and
assets capitalised.
Cost
At 30 January 2021
Additions
Disposals
Reclassifications to other asset categories
At 29 January 2022
Depreciation and impairment
At 30 January 2021
Charge for period
Disposals
Reclassifications to other asset categories
At 29 January 2022
Net book value
At 29 January 2022
At 30 January 2021
Improvements
to short
leasehold
properties
£m
Land and
buildings
£m
Computer
equipment
£m
Fixtures and
fittings
£m
Motor
vehicles
£m
16.9
–
–
(3.9)
13.0
3.1
0.2
–
0.4
3.7
9.3
13.8
21.3
3.6
(0.5)
(2.4)
22.0
19.0
3.4
(0.4)
(4.6)
17.4
4.6
2.3
50.0
8.9
(0.1)
–
58.8
43.8
6.8
(0.1)
–
50.5
8.3
6.2
283.1
33.1
(3.3)
–
312.9
169.8
30.5
(2.7)
–
197.6
115.3
113.3
0.1
–
–
–
0.1
0.1
–
–
–
0.1
–
–
Total
£m
371.4
45.6
(3.9)
(6.3)
406.8
235.8
40.9
(3.2)
(4.2)
269.3
137.5
135.6
223
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
C7. Leases
The Company has adopted the same accounting policies as the Group in respect of IFRS 16 ‘Leases’ and adopted IFRS 16
on 3 February 2019. Details of the accounting policies applied from 3 February 2019 onwards can be found in Note 1 to the
Group financial statements on page 150 and Note 14 to the Group financial statements on page 179 and 180.
The Company leases assets including land and buildings, vehicles, machinery and IT equipment. Information about leases
for which the Company is a lessee is presented below.
Right-of-use assets
Cost
At 30 January 2021
Additions
Disposals
Remeasurement adjustments
At 29 January 2022
Depreciation and impairment
At 30 January 2021
Depreciation charge for the period
Disposals
At 29 January 2022
Net book value
At 29 January 2022
At 30 January 2021
Lease liabilities
Maturity analysis – contractual undiscounted cash flows
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities
Lease liabilities included in the Statement of Financial Position
Current
Non-current
Total
Property
£m
Vehicles and
equipment
£m
509.0
132.5
(8.7)
15.9
648.7
143.4
64.5
(3.7)
204.2
444.5
365.6
3.0
–
–
–
3.0
1.7
0.6
–
2.3
0.7
1.3
Total
£m
512.0
132.5
(8.7)
15.9
651.7
145.1
65.1
(3.7)
206.5
445.2
366.9
As at 2022
£m
As at 2021
£m
79.7
252.6
224.7
557.0
73.3
428.1
501.4
76.4
235.0
190.2
501.6
61.9
371.2
433.1
As at 29 January 2022, the weighted average discount rate applied to the lease portfolio of the Company is 2.7% (2021: 3.2%).
Amounts recognised in profit or loss
Interest on lease liabilities
Variable lease payments not included in the measurement of lease liabilities
Income from sub-leasing right-of-use assets
Expenses relating to short-term leases and low-value leases
Impairment of right-of-use assets
224
52 weeks to
29 January
2022
£m
12.6
8.7
0.1
0.3
–
52 weeks to
30 January
2021
£m
13.4
2.9
0.1
0.3
0.3
JD Sports Fashion Plc Annual Report and Accounts 2022 C8. Investment Property
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 below. 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
At 30 January 2021
Additions
Reclassifications from other asset categories
At 29 January 2022
Depreciation and impairment
At 30 January 2021
Charge for period
Reclassifications to other asset categories
At 29 January 2022
Net book value
At 29 January 2022
At 30 January 2021
£m
4.8
7.8
3.9
16.5
2.0
0.1
(0.4)
1.7
14.8
2.8
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 29 January 2022.
Based on an external valuation prepared as at 31 December 2021, the fair value of these investment properties as at that date
was £5.8 million.
During the year ended 29 January 2022, the Company purchased the freehold of two sites which trade as Go Outdoors Retail
Limited (cost of £7.8 million). A further site leased to Go Outdoors Retail Limited, previously recognised as land and buildings
within property, plant and equipment, has been reclassified into investment property (cost £3.9 million). The Directors
consider the cost of these properties to represent current fair value. Additionally, an amount of £0.4 million in accumulated
depreciation has been reclassified to property, plant and equipment.
The rental income from investment properties recognised in the Company accounts is £0.6 million (2021: £0.3 million).
The Directors do not consider the investment properties to be impaired as the future rental income supports the carrying value.
225
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
C9. Investments in Subsidiaries, Associates and Joint Ventures
In the Company’s accounts, all investments in subsidiary undertakings, associates and joint ventures are stated at cost less
provisions for impairment losses. A list of subsidiaries is disclosed in Note 35 of the Group financial statements.
Investments in subsidiaries
Cost
At 30 January 2021
Additions
Disposals (see note below)
At 29 January 2022
Impairment
At 30 January 2021
Impairments
At 29 January 2022
Net book value
At 29 January 2022
At 30 January 2021
The additions to investments in subsidiaries in the current year comprise the following. Unless otherwise stated, the
investment is 100% owned.
Genesis Topco Inc – 80%
Marketing Investment Group S.A. – 60%
Cosmos Sports Commercial, Hotel and Tourism Société Anonyme – 80%
XLR8 Sports Limited
Hairburst Holding Group Limited – 75%
Wheelbase Lakeland Limited – 77.5%
80s Casual Classics Limited – 70%
Uggbugg Fashion Limited – 51%
Iberian Sports Retail Group S.L. – 50.01% (see note below)
Other
Total additions
£m
621.4
429.6
(12.3)
1,038.7
89.2
2.5
91.7
947.0
532.2
£m
175.8
66.0
65.0
36.8
26.2
22.2
15.4
11.7
8.2
2.3
429.6
During the financial period ended 29 January 2022, the share capital of Sports Unlimited Retail B.V. (a 100% owned subsidiary)
was sold by JD Sports Fashion Plc to Iberian Sports Retail Group S.L. (a 50.01% owned subsidiary). The transfer was a common
control transaction and resulted in the disposal of JD Sports Fashion Plc’s investment in Sports Unlimited Retail B.V. of
£12.3 million and an additional investment by JD Sports Fashion Plc in Iberian Sports Retail Group S. L. of £8.2 million.
226
JD Sports Fashion Plc Annual Report and Accounts 2022 C9. Investments in Subsidiaries, Associates and Joint Ventures (continued)
Investments in associates and joint ventures
Cost and net book value
At 30 January 2021
Additions
Share of profit
Dividends
At 29 January 2022
Associates
£m
Joint ventures
£m
2.5
29.5
2.8
(6.9)
27.9
–
27.6
0.4
–
28.0
2022
£m
2.5
57.1
3.2
(6.9)
55.9
Details of the amounts included in the table above are disclosed in Note 15 of the Group financial statements. Investments in
associates and joint ventures in the Company comprise all those included in the Group table (Note 15), with the exclusion of
the investment in The Couture Club Limited (£0.3 million), which is held by 2Squared Agency Limited.
C10. Stocks
Finished goods and goods for resale
2022
£m
192.4
2021
£m
193.0
The Company has £22.5 million (2021: £19.7 million) of stock provisions at the end of the period. Cost of inventories includes
a net charge of £7.6 million (2021: £7.3 million) in relation to net provisions recognised against inventories. £9.2 million of
the inventory provision was utilised during the period against the write down of inventory (2021: £6.6 million). There were
no reversals of inventory write downs in either the current or prior period.
Included within inventories is £2.4 million of deferred supplier rebates (2021: £1.6 million).
C11. Trade and Other Receivables
Current assets
Trade receivables
Other receivables
Prepayments and accrued income
Amounts owed by other Group companies
Non-current assets
Amounts owed by other Group companies
Forward contract assets
2022
£m
5.9
21.8
30.9
101.6
160.2
2022
£m
509.7
2.5
512.2
2021
£m
5.1
1.0
24.5
471.5
502.1
2021
£m
–
–
–
The Directors have assessed and concluded at the reporting date that a portion of receivables due from other Group companies
is expected to be realised in more than 12 months from the date of the Statement of Financial Position. As such, the assets
have been categorised accordingly.
227
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
C11. Trade and Other Receivables (continued)
A summary of the Company’s exposure to credit risk for trade receivables is as follows:
Not past due
Past due 0–30 days
Past due 30–60 days
Past 60 days
2022
Gross
£m
Provision
£m
4.0
0.7
0.6
0.9
6.2
–
–
–
(0.3)
(0.3)
Net
£m
4.0
0.7
0.6
0.6
5.9
2021
Gross
£m
Provision
£m
0.7
1.3
0.6
2.8
5.4
–
–
–
(0.3)
(0.3)
Net
£m
0.7
1.3
0.6
2.5
5.1
At 29 January 2022, the exposure to credit risk for trade receivables by geographic region was as follows:
Trade receivables
UK
Europe
Rest of world
Total
As at
29 January
2022
Total
£m
4.2
1.2
0.8
6.2
As at
30 January
2021
Total
£m
4.3
0.8
0.3
5.4
At 29 January 2022, the exposure to credit risk for trade receivables by type of counter-party was as follows:
Trade receivables
Supplier rebates
Amounts owed by associates and joint ventures
Other
Total
As at
29 January
2022
Total
£m
3.2
0.2
2.8
6.2
As at
30 January
2021
Total
£m
5.4
–
–
5.4
At 29 January 2022, the carrying amount of the Company’s most significant customer was £0.4 million (2021: £1.7 million).
A summary of the Company’s exposure to credit risk for trade receivables is as follows:
Weighted
average loss
rate
%
Gross
carrying
amount
£m
Loss
allowance
£m
Credit
impaired
£m
–
–
–
–
100%
4.8%
4.0
0.7
0.6
0.6
0.3
6.2
–
–
–
–
(0.3)
(0.3)
–
–
–
–
–
–
As at 29 January 2022
Not past due
Past due 0–30 days
Past due 30–60 days
Past due 61–90 days
More than 90 days past due
Total
228
JD Sports Fashion Plc Annual Report and Accounts 2022 C11. Trade and Other Receivables (continued)
As at 30 January 2021
Not past due
Past due 0 – 30 days
Past due 30 – 60 days
Past due 61 – 90 days
More than 90 days past due
Total
Movement on this provision is shown below:
At 30 January 2021
Created
At 29 January 2022
Weighted
average loss
rate
%
Gross
carrying
amount
£m
Loss
allowance
£m
Credit
impaired
£m
–
–
–
–
12.0%
5.6%
0.7
1.3
0.6
0.3
2.5
5.4
–
–
–
–
(0.3)
(0.3)
–
–
–
–
–
–
£m
0.3
–
0.3
Amounts Owed by Other Group Companies
The amounts owed by other Group companies is after recognising a provision of £76.8 million (2021: £114.8 million) against
the balances outstanding at the end of the period.
A summary of the Company’s exposure to credit risk for receivables due from other Group companies is as follows:
As at 29 January 2022
Repayable on demand (current)
Repayable on demand (non-current)
Total
As at 30 January 2021
Repayable on demand (current)
Weighted
average loss
rate
%
–%
13.1%
11.2%
Weighted
average loss
rate
%
19.6%
Gross
carrying
amount
£m
101.6
586.5
688.1
Gross
carrying
amount
£m
586.3
Loss
allowance
£m
Credit
impaired
£m
–
(76.8)
(76.8)
–
–
–
Loss
allowance
£m
(114.8)
Credit
impaired
£m
–
The other classes within trade and other receivables do not contain impaired assets.
C12. Financial Instruments
Financial Assets
The currency profile of cash and cash equivalents is shown below:
Cash and cash equivalents
Sterling
Euros
US Dollars
Australian Dollars
Other
2022
£m
572.2
340.3
18.0
200.1
7.6
6.2
572.2
2021
£m
398.0
265.9
39.1
79.9
5.4
7.7
398.0
229
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
C12. Financial Instruments (continued)
Credit Risk
The Company has provided guarantees on working capital and other banking facilities entered into by Spodis SA (€1.6 million)
and Kukri Sports Limited and Kukri GB Limited (£1.0 million). In addition, the syndicated committed £700 million bank facility,
which was in place as at 29 January 2022, encompassed cross guarantees between the Company, Blacks Outdoor Retail
Limited, Tessuti Limited, Go Outdoors Retail Limited, The Finish Line Inc, The Finish Line USA Inc, Genesis Holdings Inc,
Genesis Topco Inc, Shoe Palace Corporation, Terminus Bidco Inc, DTLR Villa LLC, Genesis Finco Limited, Focus Brands Limited
and Focus International Limited, to the extent to which any of these companies were overdrawn. As at 29 January 2022, these
facilities were drawn down by £nil (2021: £nil).
Fair Values
The fair values together with the carrying amounts shown in the Balance Sheet as at 29 January 2022 are as follows:
Trade and other receivables
Cash and cash equivalents
Trade and other creditors – current
Trade and other creditors – non-current
Unrecognised gains
Note
C11
Carrying
amount
2022
£m
639.0
572.2
(397.8)
(6.5)
806.9
–
Fair
value
2022
£m
639.0
572.2
(397.8)
(6.5)
806.9
–
Fair Value Hierarchy
For information on Company balances which are categorised at the same level as for the Group, see Note 21. In addition,
investment property held in the Company of £14.8 million (2021: £2.8 million) is categorised as Level 3 within the fair
value hierarchy.
C13. Creditors: Amounts Falling Due Within One Year
Trade creditors
Other creditors and accrued expenses
Refund liabilities
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
C15. 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
Other
Tax assets/(liabilities)
Assets
2022
£m
1.8
4.0
5.8
Assets
2021
£m
Liabilities
2022
£m
Liabilities
2021
£m
1.1
2.3
3.4
–
–
–
–
–
–
230
2022
£m
163.0
234.4
11.8
22.4
33.7
465.3
2022
£m
6.5
Net
2022
£m
1.8
4.0
5.8
2021
£m
199.2
184.0
11.9
9.1
31.8
436.0
2021
£m
8.0
Net
2021
£m
1.1
2.3
3.4
JD Sports Fashion Plc Annual Report and Accounts 2022 C15. Deferred Tax Assets and Liabilities (continued)
Movement in Deferred Tax during the Period
Balance at 1 February 2020
Recognised in income
Balance at 30 January 2021
Recognised in income
Balance at 29 January 2022
Property, plant
and equipment
£m
(1.2)
2.3
1.1
0.7
1.8
Other
£m
2.2
0.1
2.3
1.7
4.0
Total
£m
1.0
2.4
3.4
2.4
5.8
The Finance Bill 2021 included an increase to the UK corporation tax rate to 25% from 19% from 1 April 2023 for certain
companies. This increase was substantially enacted on 24 May 2021. Under IAS 12, deferred tax is required to be calculated
using rates that have been substantively enacted at the Balance Sheet date. Consequently, the deferred tax asset and liability
have been calculated based on a rate of 25%.
We are closely monitoring the Organisation for Economic Co-operation and Development’s Two Pillar Solution to Address the
Tax Challenges arising from the Digitalisation of the Economy, which are expected to be enacted in 2022 with application from
1 January 2023. The accounting implications under IAS 12 will be determined when the relevant legislation is available.
C16. Capital
Issued ordinary share capital, share premium and the share-based payment reserve for both the Company and Group are
disclosed in Note 25 of the Group financial statements.
C17. Dividends
After the reporting date, the dividend proposed by both Company and Group Directors is disclosed in Note 27 of the Group
financial statements.
C18. Commitments
As at 29 January 2022, the Company had entered into contracts to purchase property, plant and equipment as follows:
Contracted
2022
£m
8.2
2021
£m
8.0
In December 2021, the Company signed a contract with ABG Reebok LLC to license the Reebok brand in various territories.
The agreement is subject to terms and conditions and was not effective until after the 29 January 2022 financial year-end.
As a result, the Company has not recognised an intangible asset for the use of the brand on the Balance Sheet at 29 January
2022 or a liability for the discounted contractual minimum royalty payments under the initial 10 year term of £73.1 million.
C19. Related Party Transactions and Balances
Transactions and balances with each category of related parties during the period are shown below. Transactions were
undertaken in the ordinary course of business on an arm’s length basis. Outstanding balances are unsecured (unless
otherwise stated) and will be settled in cash.
Transactions with Related Parties Who Are Not Members of the Group
Pentland Group Limited
During the period, the Company entered into the following transactions with Pentland Group Limited:
Purchase of inventory
Marketing costs
Other income
Income from
related parties
2022
£m
Expenditure
with related
parties
2022
£m
Income from
related parties
2021
£m
–
0.1
–
(18.1)
–
(0.1)
–
–
–
Expenditure
with related
parties
2021
£m
(26.0)
–
–
231
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
C19. Related Party Transactions and Balances (continued)
Transactions with Related Parties Who Are Not Members of the Group (continued)
At the end of the period, the Company had the following balances outstanding with Pentland Group Limited:
Amounts owed
by related
parties
2022
£m
Amounts owed
to related
parties
2022
£m
Amounts owed
by related
parties
2021
£m
Amounts owed
to related
parties
2021
£m
Trade receivables/(payables)
0.1
(0.3)
–
(0.1)
Associates and Joint Ventures
During the period, the Company entered into the following transactions with its associates and joint ventures:
Purchase of inventory
Dividends and distributions received
Income from
related parties
2022
£m
Expenditure
with related
parties
2022
£m
Income from
related parties
2021
£m
Expenditure
with related
parties
2021
£m
–
6.9
(5.1)
–
–
–
–
–
At the end of the period, the Company had the following balances outstanding with its associates and joint ventures:
Other receivables
Trade payables
Amounts owed
by related
parties
2022
£m
Amounts owed
to related
parties
2022
£m
Income from
related parties
2021
£m
Expenditure
with related
parties
2021
£m
0.2
–
–
(0.1)
–
–
–
–
Other receivables from associates and joint ventures relate to costs incurred by the Company on behalf of these entities,
which have then been recharged.
£25,000 of invoices from Cowgill Holloway Business Recovery LLP in respect of professional fees were accrued in the
financial year ended 29 January 2022 and paid post year-end (2021: £3,300). Peter Cowgill is indirectly a member of this
Limited Liability Partnership through his membership of Cowgill Holloway LLP who are then a member of Cowgill Holloway
Business Recovery LLP. Peter Cowgill does not participate in any profit share arrangement relating to either Cowgill Holloway
LLP or Cowgill Holloway Business Recovery LLP. In addition, Cowgill Holloway LLP (including member firms of Cowgill
Holloway LLP) has acted on behalf of certain vendors where the Group has ultimately completed an acquisition. Where this
has occurred, there has been no monetary payments between the Group and Cowgill Holloway LLP (including its member
firms).
Transactions with Related Parties Who Are Members of the Group
Subsidiaries
In the disclosure that follows, 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 relate to:
– the sale and purchase of stock between the Company and its subsidiaries on arm’s length terms;
– the charge for the use of the JD IP; and
– 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.
232
JD Sports Fashion Plc Annual Report and Accounts 2022 C19. Related Party Transactions and Balances (continued)
Transactions with Related Parties Who Are Members of the Group (continued)
During the period, the Company entered into the following transactions with subsidiaries not wholly owned:
Sale/(purchase) of inventory
Interest receivable
Dividend income received
Rental income
IP licence fee
Management charge receivable
Income from
related parties
2022
£m
96.0
3.8
9.0
0.1
38.3
3.5
Expenditure
with related
parties
2022
£m
(0.9)
–
–
–
–
–
Income from
related parties
2021
£m
150.5
4.0
3.8
0.1
28.9
2.3
Expenditure
with related
parties
2021
£m
(1.4)
–
–
–
–
–
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
Other intercompany balances
Income tax group relief
C20. Contingent Liabilities
Amounts owed
by related
parties
2022
£m
Amounts owed
to related
parties
2022
£m
Amounts owed
by related
parties
2021
£m
Amounts owed
to related
parties
2021
£m
85.9
142.4
26.4
0.1
8.0
–
–
–
(0.1)
–
50.2
111.5
22.5
–
0.6
–
–
–
(3.4)
–
The activities of the Company are overseen by a number of regulators and, whilst the Company strives to ensure full compliance
with all its regulatory obligations, periodic reviews are inevitable which may result in a financial penalty. If the risk of a financial
penalty arising from one of these reviews is more than remote but not probable or cannot be measured reliably then the
Company will disclose this matter as a contingent liability. If the risk of a financial penalty is considered probable and can be
measured reliably then the Company would make a provision for this matter.
CMA Investigation
On 23 September 2021, the Competition and Markets Authority (CMA) launched an investigation under section 25 of the
Competition Act 1998 (‘CA98’) into suspected breaches of competition law by Leicester City Football Club Limited and
JD Sports Fashion Plc, together with their affiliates. JD continues to co-operate fully with the CMA. The CMA has not reached
a view as to whether there is sufficient evidence of an infringement of competition law for it to issue a statement of objections
or, ultimately, an infringement decision, to any party under investigation. Therefore, at this stage, it is not possible to determine
with sufficient certainty that a liability will ultimately arise. Indeed, not all cases result in the CMA issuing a statement of
objections or an infringement decision. The CMA has indicated that it will publish a further update in September 2022.
Guarantees
Where the Company enters into 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 €1.6 million (2021: €6.6 million).
– Guarantee on the working capital facilities in Kukri Sports Limited and Kukri GB Limited of £1.0 million (2021: £1.0 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 29 January 2022 was £0.2 million (2021: £1.3 million).
– Guarantee on loan facility with HSBC in JD Australia of 1.1 million AUD (2021: 1.1 million AUD).
– Guarantee on rental commitments for JD Sports Fashion BV in relation to warehouse rental costs. The total value of the
remaining commitments at 29 January 2022 was £37.1 million (2021: £nil).
– Guarantee on overdraft facility with Lloyds for Tiso Limited of £5.7 million (2021: £5.7 million).
233
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022 NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
C21. Ultimate Parent Company
The immediate parent undertaking is Pentland Group (Trading) Limited, a company registered in England and Wales.
R S Rubin and his close family are considered the ultimate controlling party by virtue of their control of Pentland Group
Holdings Limited (a company registered in Jersey). Consolidated financial statements will be prepared by Pentland Group
Holdings Limited, which is the parent undertaking of the smallest and largest group of undertakings to consolidate these
financial statements for the year ended 31 December 2021. The consolidated financial statements of Pentland Group
Holdings Limited can be obtained from the company’s registered office at 26 New Street, St Helier, Jersey, JE2 3RA.
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.
C22. Provisions
A provision is recognised in the Consolidated Statement of Financial Position when the Company has a present legal or
constructive obligation as a result of a past event, it is more likely than not that an outflow of economic benefits will be
required to settle the obligation and the obligation can be estimated reliably.
Property Provision
Within property provisions, management has provided for expected dilapidations on stores and warehouses. This provision
covers expected dilapidation costs for any lease considered onerous, any related to stores recently closed, stores which are
planned to close or at risk of closure and those under contract but not currently in use. Management maintain all properties
to a high standard and carry out repairs whenever necessary during their tenure. Therefore, if there is no risk of closure, any
provision would be minimal and management do not consider it necessary to hold dilapidations for these properties.
Other Provision
Included in other provisions is £2.0 million in respect of the CMA’s ongoing investigation into the sale of the Rangers FC
branded replica football shirts. This provision represents management’s best estimate of the liability payable in respect of
this matter, including associated legal costs, based on the information available to it at the date of approving these financial
statements which includes consideration of the provisional Statement of Objections which the CMA issued on 7 June 2022.
The CMA’s findings are, at this stage, only provisional and the Company will review them with its advisors. The CMA will
consider any representations that are made before issuing its final findings and accordingly the amount to be settled
could be materially different to the amount provided. The CMA has not yet confirmed when it will release its final
decision on this matter but the Company currently expects to this to occur within 12 months of the date of approval
of these financial statements along with any related outflows.
The remaining balance in other provisions is made up of various other trade provisions and legal costs. The provisions are
estimated based on accumulated experience, supplier communication and management approved forecasts.
Balance at 1 February 2020 and 30 January 2021
Provisions reclassified from accruals
Provisions released during the year
Provisions created during the year
Provisions utilised during the year
Balance at 29 January 2022
Property
provision
£m
Other
provision
£m
–
6.5
(0.7)
5.3
(0.2)
10.9
–
13.8
(6.4)
4.3
(2.8)
8.9
Total
£m
–
20.3
(7.1)
9.6
(3.0)
19.8
The £5.3 million of property provision created in the year relates to the provision for expected dilapidations for the UK
Distribution Centre and across a number of stores in the portfolio.
£4.8 million of the other provisions released the year arises following settlement of an ongoing legal case during the year.
The £4.3 million of other provisions created in the year relates to various trade provisions and legal costs.
Provisions have been analysed between current and non-current as follows:
Current
Non-current
2022
£m
8.9
10.9
19.8
2021
£m
–
–
–
C23. Post Balance Sheet Events
Please refer to Note 34 in the Group accounts for disclosure of the post Balance Sheet events impacting JD Sports Fashion Plc.
234
JD Sports Fashion Plc Annual Report and Accounts 2022 FINANCIAL CALENDAR
Annual General Meeting
Period End (52 Weeks)
Friday, 22 July 2022
Saturday, 28 January 2023
SHAREHOLDER INFORMATION
Registered office
JD Sports Fashion Plc
Hollinsbrook Way
Pilsworth
Bury
Lancashire BL9 8RR
Financial advisors
and stockbrokers
Investec Bank plc
30 Gresham Street
London EC2V 7QP
Peel Hunt LLP
7th Floor
100 Liverpool Street
London EC2M 2AT
Principal bankers
Barclays Bank Plc
43 High Street
Sutton
Surrey SM1 1DR
Solicitors
Addleshaw Goddard LLP
1 St. Peter’s Square
Manchester M2 3DE
Linklaters LLP
One Silk Street
London EC2Y 8HQ
Company number
Registered in England
and Wales,
Number 1888425
Financial public relations
Finsbury Glover Hering
The Adelphi
1-11 John Adam Street
London WC2N 6HT
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Auditor
KPMG LLP
1 St. Peter’s Square
Manchester M2 3AE
235
Strategic ReportGovernanceFinancial StatementsGroup InformationJD Sports Fashion Plc Annual Report and Accounts 2022
FIVE YEAR RECORD (UNAUDITED)
Revenue
Cost of sales
Gross profit
53 weeks to
3 February
52 weeks to
2 February
52 weeks to
1 February
52 weeks to
30 January
52 weeks to
29 January
2018
£m
3,161.4
2019
£m
2020
£m(iv)
2021
£m
2022
£m
4,717.8
6,110.8
6,167.3
8,563.0
(1,629.8)
(2,474.5)
(3,236.0)
(3,205.7)
(4,355.0)
1,531.6
2,243.3
2,874.8
2,961.6
4,208.0
Selling and distribution expenses
(1,080.5)
(1,632.9)
(2,020.2)
(2,126.4)
(2,808.1)
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
Attributable to equity holders of the parent
Attributable to non-controlling interest
Basic earnings per ordinary share(i)
Adjusted basic earnings per ordinary share(i)(ii)
Dividends per ordinary share(i)(iii)
(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
4.77p
5.03p
0.33p
(253.6)
(15.3)
(268.9)
4.7
346.2
361.5
(15.3)
346.2
1.2
(7.5)
339.9
(75.7)
264.2
261.8
2.4
5.38p
5.69p
0.34p
(348.6)
(90.3)
(438.9)
10.9
426.6
516.9
(90.3)
426.6
1.7
(79.8)
348.5
(97.8)
250.7
246.1
4.6
5.06p
6.85p
0.06p
(381.2)
(97.3)
(478.5)
28.3
385.0
482.3
(97.3)
385.0
1.5
(62.5)
324.0
(94.8)
229.2
224.3
4.9
4.61p
6.44p
0.29p
(413.4)
(292.5)
(705.9)
27.2
721.2
1,013.7
(292.5)
721.2
1.4
(67.9)
654.7
(195.1)
459.6
369.7
89.9
7.17p
12.84p
0.35p
(i) Basic and adjusted earnings per ordinary share and dividends per ordinary share have been adjusted to reflect the share sub-division effective
30 November 2021, 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) 52 weeks to 1 February 2020 reflects the application of IFRS 16 ‘Leases’ for the first time, impacting operating profit and financial expenses.
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JD Sports Fashion Plc Annual Report and Accounts 2022 © JD Sports Fashion Plc 2022
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