FORWARD TOGETHER Sports Direct International plc FY17 Preliminary - PowerPoint PPT Presentation

FORWARD TOGETHER Sports Direct International plc FY17 Preliminary Results Pack For the 53 weeks ended 30 April 2017 20 July 2017

FORWARD LOOKING INFORMATION This presentation may contain forward-looking statements, beliefs or opinions, including statements with respect to management's current views and expectations of future events, and the Company’s future financial condition and results of operations. No representation is made that any of these statements, beliefs or opinions will come to pass. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these statements, beliefs or opinions. Forward-looking statements speak only as at the date of this presentation and the Company expressly disclaims any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this presentation. No statement in this presentation is intended to be a profit forecast. As a result, you are cautioned not to place any undue reliance on such forward-looking statements, beliefs or opinions. 2

CONTENTS Group Highlights • Financial Review • Strategic update • Outlook • 3

GROUP HIGHLIGHTS

FY17: GROUP HIGHLIGHTS FY17 ∆ FY16 1 FY17 has been a transitional year for the Company and • for our people £3,245.3 Group revenue 11.7% Group revenue increased by 3.2% on a currency neutral • £2,136.4 12.5% UK Sports Retail revenue basis excluding the impact of the acquisition of Heatons and the 53 rd week £665.6 38.0% International Sports Retail revenue Underlying EBITDA decreased by 28.5% largely due to • £203.2 11.6% Premium Lifestyle revenue the devaluation of the GBP and an increase in operating expenses £241.1 4.1% Brands revenue (323 bps) 41.0% Underlying profit before tax decreased by 58.7% Group gross margin • following an increase in depreciation and amortisation (430 bps) 40.4% UK Sports Retail Underlying free cash generation of £173.7m • 43.2% (159 bps) International Sports Retail Capital expenditure of £419.5m, including £317.0m of • £272.7 (28.5%) Underlying EBITDA 2 investment in property assets as we elevate our sports retail proposition £113.7 (58.7%) Underlying PBT Net Debt increased to £182.1m from £99.6m at 24 April • £281.6 (22.2%) Reported PBT 2016, positively assisted by net proceeds on disposal of investments of £165.9m 11.4p (67.8%) Underlying EPS 2 Substantial financial resources and strong balance sheet • 39.4p (15.8%) Reported EPS 2 1. FY17 is 53 weeks to 30 April 2017. FY16 is 52 weeks to 24 April 2016. 5 2. Underlying EBITDA, underlying profit before taxation and underlying EPS exclude realised foreign exchange gains/losses in selling and administration costs, exceptional costs, disposal of subsidiaries and the profit/loss on sale of strategic investments. Underlying EBITDA also excludes the Share Scheme charges.

FINANCIAL REVIEW

FY17: GROUP REVENUE BRIDGE +11.7% 11.6% 4.1% +38.0% +6.9% 1 Heatons acquisition benefitted both UK and International Sports Retail • Excluding acquisitions and the 53 rd week, Group revenue increased by 3.2% on a currency neutral basis • 7

FY17: SPORTS RETAIL OVERVIEW REVENUE RETAIL GROSS MARGIN 1 +12.5% £2,802m £2,492m +38.0% +6.3% On a currency neutral basis, and excluding acquisitions • UK Sports Retail gross margin impacted by deterioration • and the 53 rd week: in GBP/USD, and increase in inventory and other provisions UK Sports Retail retail revenue increased by 2.6% • International Sports Retail gross margin impacted by • International Sports Retail retail revenue • favourable EUR/USD rate in second half increased by 5.9% 8 1. Excludes wholesale sales.

FY17: UK SPORTS RETAIL – OPERATING COSTS & UNDERLYING EBITDA £m FY17 FY16 Change (%) 164.5 154.0 6.8% Store Wages 206.1 172.4 19.5% Premises Costs 243.5 214.7 13.4% Other Retail Costs 614.1 541.1 13.5% UK Sports Retail – Operating Costs UK Sports Retail – Underlying EBITDA, pre Associates 265.3 353.8 (25.0%) 0.4 0.1 300.0% Associates 265.7 353.9 (24.9%) UK Sports Retail – Underlying EBITDA 9

FY17: INTERNATIONAL SPORTS RETAIL – OPERATING COSTS & UNDERLYING EBITDA £m FY17 FY16 Change (%) 117.1 117.1 -% Store Wages 116.6 49.2 137.0% Premises Costs 73.1 57.0 28.2% Other Retail Costs 306.8 223.3 37.4% International Sports Retail – Operating Costs International Sports Retail – Underlying EBITDA, pre Associates (19.5) (7.3) - 0.4 2.4 (83.3%) Associates (19.1) (4.9) (289.8%) International Sports Retail – Underlying EBITDA 10

FY17: PREMIUM LIFESTYLE OVERVIEW REVENUE & GROSS MARGIN OPERATING COSTS & UNDERLYING EBITDA Change £m FY17 FY16 (%) 15.4 18.3 (15.8%) Store Wages 21.1 33.7 (37.4%) Premises Costs 39.9 28.3 41.0% Other Costs Total Operating Costs 76.4 80.3 (4.9%) (0.3) (5.1) 94.1% Underlying EBITDA Operating costs reduced as a result of the previous • rationalisation undertaken 11

FY17: BRANDS OVERVIEW REVENUE OPERATING COSTS & UNDERLYING EBITDA 4.1% Change £241.1m £m FY17 FY16 (%) £231.5m 19.7 21.5 (8.4%) Wages 14.1% Advertising & Promotion 12.4 11.4 8.8% 29.3 27.1 8.1% Other Costs Total Operating Costs 61.4 60.0 2.3% 2.4% Underlying EBITDA 26.4 37.5 (29.6%) Brands operating costs increased primarily due to bad • debt provisions Divested the Dunlop brand in line with Sports Direct's • stated aspiration to become the "Selfridges" of sports retail, including its renewed focus on its core UK and International business and the development of its relationships with third party brands 12

FY17: UNDERLYING EBITDA BRIDGE (28.5%) 13

FY17: SUMMARY UNDERLYING PBT / PAT / EPS £m FY17 FY16 Change (%) Underlying EBITDA 272.7 381.4 (28.5%) Share Scheme Charge (2.8) (7.1) (60.6%) Depreciation and amortisation (148.0) (95.5) 55.0% Interest (8.7) (5.2) 67.3% Investment Income 0.5 1.6 (68.7%) Underlying Profit Before Tax 113.7 275.2 (58.7%) Underlying Taxation (45.4) (62.9) (27.8%) Non-Controlling Interests (1.8) (1.6) 12.5% Underlying Profit After Tax 66.5 210.7 (68.4%) Number of Shares (millions) 583.5 592.6 (1.5%) Underlying Basic Earnings per Share (67.9%) 11.4p 35.5p Underlying Diluted Earnings per Share (67.9%) 11.1p 34.5p 14

FY17: DEPRECIATION & AMORTISATION £m FY17 FY16 Change (%) Sports Retail UK – Stores, Warehouse & Amortisation of Goodwill (47.4) (53.3) (11.1%) UK – Changes in Estimated Useful Life and capitalisation threshold (14.5) (2.8) 417.9% UK – Revaluations, impairments and aligning of policies in acquired businesses (34.0) (10.0) 240.0% (95.9) (66.1) 45.1% Total UK Sports Retail International – Stores, Warehouse & Amortisation of Goodwill (12.1) (19.6) (38.3%) International – Changes in Estimated Useful Life and capitalisation threshold (30.3) - - Total International Sports Retail (42.4) (19.6) 116.3% (3.7) (4.7) (21.3%) Premium Lifestyle (6.0) (5.2) 15.4% Brands (148.0) (95.6) 54.8% Total Depreciation and amortisation charge increased due to increased investment in our store portfolio and revisions to • accounting estimates of useful economic lives of assets 15

FY17: CASH FLOW £m FY17 FY16 272.7 381.4 Underlying EBITDA (23.7) (2.3) Realised (loss)/profit on FX contracts (75.3) (69.9) Taxes paid 173.7 309.2 Underlying free cash flow Working capital 60.0 (155.4) Inventory (38.4) (88.1) Debtors/Creditors, other (22.6) (33.1) Acquisitions (including debt) 163.9 92.1 Proceeds on disposal of investments Proceeds on disposal of subsidiary 109.5 - 0.5 - Investment income (417.1) (150.7) Purchase of properties - 44.0 Proceeds from sale of freehold properties - (56.4) Other capital expenditure (109.8) - Purchase of own shares (2.1) (1.5) Finance costs and other financing activities (82.4) (39.9) Decrease/(increase) in Net Debt 16

FY17: CAPITAL EXPENDITURE – SPORTS RETAIL UK Sports Retail, £m FY17 FY16 308.0 111.0 Property asset acquisitions & related development costs* 2.9 39.7 Shirebrook campus 13.4 15.1 New stores (leasehold) 28.0 13.3 Refurbishment capex 39.0 0.0 Corporate plane 8.1 9.1 Other 399.4 188.2 UK Sports Retail Capital Expenditure International Sports Retail, £m FY17 FY16 9.0 1.7 Property asset acquisitions & related development costs* 0.0 11.2 New stores (leasehold) 5.6 4.2 Refurbishment capex Other 0.0 0.0 14.6 17.1 International Sports Retail Capital Expenditure *Total spend on new properties - £317m 17

FY17: CAPITAL EXPENDITURE – PREMIUM LIFESTYLE, BRANDS & GROUP £m FY17 FY16 399.4 188.2 UK Sports Retail 14.6 17.1 International Sports Retail 3.1 1.2 Premium Lifestyle 2.4 0.6 Brands 419.5 207.1 Gross Capital Expenditure (2.4) (44.0) Proceeds on disposal of fixed assets 417.1 163.1 Net Capital Expenditure 18

FY17: NET DEBT BRIDGE 19

STRATEGIC UPDATE