Dave Forsey Chief Executive 19 July 2012 - Sports Direct International

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16 / THE BUSINESS REVIEW Chief Executive’s Report Overview of financial performance I am pleased to be able to report another year of strong underlying profit growth for Sports Direct, in a consumer environment that remains tough. The resilience and flexibility of our business model continues to add significant value to our operations by providing customers with an unrivalled depth and breadth of product choice at the best available prices, across all categories and in all stores and online. We constantly review and improve our stores to provide a fresh and exciting retail environment for our customers. With new stores opened during the year in the UK and Europe, we are proud of our reputation for quality. We have continued to strengthen our position as the clear market leader in the UK sports retail sector, and we are very pleased to report that we increased our UK 52 week like-for-like gross contribution by 0.7% over the 12 month period, in spite of the challenging environment and tough comparatives. We have established a strong online presence, delivering rapid growth in the Year. Critically, our online sales benefit from our UK market-leading position on the high street and from our established systems and processes, while our retail stores continue to perform strongly. Furthermore, we have broadened our consumer offering with the creation of our Premium Lifestyle division, which includes our acquisitions of the USC, Cruise and Van Mildert retail fascias. Deontay Wilder Everlast Brand Ambassador We also announced, post the period end, the acquisition of Flannels Group Limited, which will join the Premium Lifestyle division. We have high expectations that this exclusive offering will benefit from our strong supply chain and provide a high-quality customer experience. Due to the success of our 2009 Bonus Share Scheme, in 2011 the Company launched a new four-year scheme covering the full years 2012 to 2015 with challenging underlying EBITDA targets of £215m, £250m, £260m and £300m. We are pleased to confirm that the first of these targets has been achieved and thank our colleagues for all their efforts this year. Both of these schemes have helped introduce and maintain a substantially lower level of employee turnover than before the scheme. This August will see the first part of the 2009 Bonus Share Scheme vest and we look forward to seeing our dedicated colleagues well rewarded for their hard work.
Our Business Model The Group’s financial strategy is to continue to deliver sustainable long-term growth. The focus remains strongly on growing the core UK Retail business by continuing to drive efficiencies and delivering the unrivalled value for money which our growing customer base has come to expect, while developing our offering in specialist sports categories. We are constantly refurbishing and upgrading our stores to improve our customer experience. Outside the UK, our Brands business will focus on licensing opportunities and will continue to restructure the wholesale businesses. We will continue to invest in our brands through sponsorship, advertising and promotion. We believe that acquisitions and strategic investments in other related businesses are beneficial to the Group and we will continue to evaluate opportunities as they arise. Sports Direct is the UK’s number 1 sports retailer. By focusing on the key principles within the business model, it enables the Group to implement an effective growth strategy to maintain and develop the success achieved so far. The Group’s Key principles are: The Group is constantly expanding its product range and offering to customers, developing brand awareness and investing in advertising and technology. Investment is being made to increase the store portfolio, and our international presence is growing constantly. Identify - Brand acquisitions and property enhancement Invest - Store portfolio and employees Develop - Website and mCommerce, enhanced product ranges Promote - Group-owned brands Achieve - Targets and Group success 17
Page 1 and 2: Dave Forsey Chief Executive 19 July
Page 3 and 4: Sports Direct is the UK’s leading
Page 5 and 6: financial highlights The Financial
Page 7 and 8: Further expansion of the Internatio
Page 9 and 10: fascias As at 29 April 2012 the Gro
Page 11 and 12: Online revenue (£’m) FY09 15.1 F
Page 13 and 14: Firetrap The Group made acquisition
Page 15: onus share scheme key performance i
Page 19 and 20: Key performance Indicators The Grou
Page 21 and 22: Review by business segment Retail R
Page 23 and 24: uk store portfolio 29 April 2012 24
Page 25 and 26: international store portfolio 29 Ap
Page 27 and 28: tennis cricket outdoor winter sport
Page 29 and 30: During the year we combined fashion
Page 31 and 32: 31 Eoin Morgan Slazenger Brand Amba
Page 33 and 34: Area Risk Mitigation Market Forces
Page 35 and 36: 35 Fernando Verdasco Dunlop Brand A
Page 37 and 38: 37 Lee Westwood and Darren Clarke D
Page 39 and 40: Ebitda and profit before tax EBITDA
Page 41 and 42: The items adjusted for arriving at
Page 43 and 44: Cash flow and net debt Net debt dec
Page 45 and 46: Simon Bentley (aged 57) Senior Inde
Page 47 and 48: Shareholders No shareholder enjoys
Page 49 and 50: Going concern The Group’s busines
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Page 57 and 58: Executive Bonus Share Scheme The Ex
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Page 63 and 64: Environment The Group is aware that
Page 65 and 66: official T-Shirt retailer for Sport
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Independent auditor’s report to t
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consolidated statement of comprehen
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consolidated cash flow statement Fo
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notes to the Financial Statements F
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Government grants and similar incom
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Employee Benefit Trust The cost of
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At each balance sheet date, there w
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Other segment items included in the
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8. Employee costs The average month
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13. Earnings per share from total a
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15. Intangible assets Cost Goodwill
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Associates The business activity of
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The administrator of KSF appealed t
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Contingent share awards The Executi
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24. Retirement benefit obligations
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The movements in the present value
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Loans and payables (£’000) Liabi
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Interest rate sensitivity analysis
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30. Cash inflow from operating acti
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35. principal subsidiary undertakin
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company balance sheet Fixed assets
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2. Investments Shares in Group unde
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consolidated five year record Unaud
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Dave Forsey Chief Executive 19 July 2012 - Sports Direct International

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