Dave Forsey Chief Executive 19 July 2012 - Sports Direct International

Ebitda and profit before tax
EBITDA
(£’m)
Operating profit - 53 weeks 158.8
Depreciation 58.1
Impairment 2.5
Amortisation 4.7
Exceptional items (5.6)
Share of profit of associated undertakings (0.7)
PBT
(£’m)
Reported 217.8 151.5
Bonus Share Scheme 20.7
Realised FX profit 2.0 2.0
IAS 39 FX fair value adjustment on forward
currency contracts
- (3.6)
Other investment income - 7.1
Impairment - 2.5
Exceptional items - (5.6)
Fair value adjustment within associates - (1.3)
Underlying - 53 weeks 240.5 152.6
Less pro forma 53 rd week (4.8) (3.5)
Underlying - 52 weeks 235.7 149.1
Premium Lifestyle 7.8 9.5
Underlying Excluding Premium
Lifestyle - 52 weeks
243.5 158.6
Underlying EBITDA is the preferred measure of operational
performance for the Group. This measure excludes the Bonus
Share Schemes, FX, depreciation and exceptional items. Underlying
EBITDA grew by 11.7% due to the growth in UK Sports Retail.
Underlying profit before tax excludes exceptional items and
impairments, which increased profit by £3.1m, realised exchange
profit / loss and IFRS revaluation of foreign currency contracts,
which decreased 2012 profits by £2.0m and increased profit by
£3.6m respectively and a £1.3m gain on fair value adjustments
within associated undertakings.
Selling, distribution and
administration costs
Selling, distribution and administration costs for the Group
decreased as a percentage of revenue. This was as a result of cost
and efficiency savings offsetting inflation.
Foreign exchange
The Group manages the impact of currency movements through
the use of forward fixed-rate currency purchase and sales
contracts. The Company’s policy has been to hold or hedge up to
four years (with generally a minimum of six months) of anticipated
purchases in foreign currency.
The exchange loss of £2.0m (2011: £0.3m gain) included in
administration costs have arisen from:
a) accepting Dollars and Euros at the contracted rate; and
b) the translation of Dollars and Euro denominated assets and
liabilities at the period end rate or date of realisation.
The exchange gain of £3.6m (2011: £1.6m loss) included in finance
income substantially represents the reduction in the mark-to-market
provision made (under IFRS) for the unhedged forward contracts at
24 April 2011. A number of the forward contracts outstanding at 29
April 2012 qualify for hedge accounting and the fair value loss on
these contracts of £1.3m has been debited to equity through the
Consolidated Statement of Comprehensive Income. The Group has
sufficient US Dollar contracts to cover all purchases in UK Retail for
the 2013 financial year. These hedged contracts are at an average
rate of 1.620.
The Sterling exchange rate with the US dollar was $1.650 at 24
April 2011 and $1.626 at 29 April 2012.
Exceptional items
53 weeks
ended
29 April
2012
(£’m)
Pro forma
52 week
April 2012
(£’m)
52 weeks
ended
24 April
2011
(£’m)
Profit on sale of
intangible assets
1.6 1.6 0.9
Release of provisions for
Regulatory costs
2.3 2.3 -
Lease surrender incentive 0.7 0.7 -
Profit on disposal of property 1.0 1.0 -
Provision for the cost of legal
disputes
- - (3.1)
5.6 5.6 (2.2)
39
As we have previously stated, the Office of Fair Trading and the
Serious Fraud Office have concluded their investigation and
absolved the Company and any individuals from any wrongdoing.
The legal fees incurred by the Group in relation to these matters has
accumulated to £4.7m.