PROUD OF OUR PEOPLE Sports Direct International plc FY17 H1 Interim - - PowerPoint PPT Presentation

PROUD OF OUR PEOPLE

Sports Direct International plc FY17 H1 Interim Results Presentation For the 26 weeks ended 23 October 2016 8 December 2016

FORWARD LOOKING INFORMATION AND PROTOCOL FOR QUOTES

This presentation will be presented and discussed by the Acting Chief Financial Officer, the Chief Executive and other non- executive directors of Sports Direct International plc (“Sports Direct” or the “Company”). 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

• bligations 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. So as to avoid the possibility of any comments made by the Company being misconstrued or taken out of context, the Company requests that attendees confirm with the Company’s Investor Relations team (investor.relations@sportsdirect.com) before quoting any answer given in response to a question at today’s Interim Results Briefing presentation and Q&A discussion, noting that all information that the Board has determined has had a substantial impact on Sports Direct’s

• perating and financial performance, or that the Board currently expects could potentially have a substantial impact on future
• perating and financial performance, has been included in the half year financial results statement lodged with the RNS.

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AGENDA

• Group Highlights
• Financial Review
• Strategic Update
• Outlook
• Q&A

3

GROUP HIGHLIGHTS

MATT PEARSON Acting Chief Financial Officer

FY17 H1: GROUP HIGHLIGHTS

• The last year has been very tough for our people and

trading conditions continue to be challenging

• Group revenue increased by 4.2% on a currency neutral

basis excluding the impact of the acquisition of Heatons

• Underlying EBITDA decreased by 33.5% largely due to

the devaluation of the GBP and an increase in operating expenses

• Underlying profit before tax decreased by 57% following

an increase in depreciation and amortisation

• Continue to generate strong cash flow, with underlying

free cash generation of £129.5m

• Capital expenditure of £287.0m, including £261.0m of

investment in freehold property as we elevate our sports retail proposition

• Net Debt decreased to £72.0m from £99.7m at 24 April

2016, positively assisted by net proceeds on disposal of investments of £160.5m

• Substantial financial resources and strong balance sheet

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FY17 H1 ∆ FY16 H1 Group revenue £1,638m 14.2% UK Sports Retail revenue £1,111m 7.4% International Sports Retail revenue £330m 66.1% Premium Lifestyle revenue £83m (4.9%) Brands revenue £113m 0.4% Group gross margin 40.4% (450 bps) UK Sports Retail 40.2% (610 bps) International Sports Retail 39.7% (570 bps) Underlying EBITDA £145.3m (33.5%) Underlying PBT £71.6m (57.0%) Reported PBT £140.2m (25.1%) Underlying EPS 8.5p (61.1%) Reported EPS 15.6p (36.3%)

FINANCIAL REVIEW

MATT PEARSON Acting Chief Financial Officer

FY17 H1: GROUP REVENUE BRIDGE

• Heatons acquisition benefitted both UK and International Sports Retail
• Excluding acquisitions, Group revenue increased by 4.2% on a currency neutral basis2, largely due to growth in UK Sports

Retail

1. Includes wholesale sales. 2. Excludes wholesale sales. Note: Growth figures within the chart reflect growth of the particular segment, not their proportional impact on underlying E BITDA. 7

+14.2% +7.4% +66.1% (4.9%) 0.4%

1

RETAIL REVENUE1 RETAIL GROSS MARGIN1

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• On a currency neutral basis and excluding acquisitions:
• UK Sports Retail retail revenue increased by 5.6%1
• International Sports Retail retail revenue

increased by 9.4%

• UK Sports Retail gross margin impacted by deterioration

in GBP/USD, clearance of inventory build-up, and increase in inventory provision

• International Sports Retail also impacted by EUR/USD

rates, and increase in inventory provision

FY17 H1: SPORTS RETAIL OVERVIEW

+66.1%

• 1. Excludes wholesale sales.

+9.2% +18.7% £1,423m £1,200m

FY17 H1: UK SPORTS RETAIL – OPERATING COSTS & UNDERLYING EBITDA

£m FY17 H1 FY16 H1 Change (%) Store Wages 90.4 82.0 10.2% Premises Costs 91.8 85.0 7.9% Other Retail Costs 131.7 100.6 30.9% UK Sports Retail – Operating Costs 313.9 267.7 17.3% UK Sports Retail – Underlying EBITDA, pre Associates 139.3 204.4 (31.8%) Associates

• (0.3)

(100.0%) UK Sports Retail – Underlying EBITDA 139.3 204.1 (31.7%)

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• Excluding acquisitions, UK Sports Retail operating costs increased by 13.7%, as a result of:
• Increase in provisions for the outcome of potential claims against the Group
• Planned wage increases
• Increase in operating costs relating to our Shirebook warehouse extension

FY17 H1: INTERNATIONAL SPORTS RETAIL – OPERATING COSTS & UNDERLYING EBITDA

£m FY17 H1 FY16 H1 Change (%) Store Wages 55.3 40.7 36.0% Premises Costs 54.0 25.5 111.8% Other Retail Costs 32.4 23.4 38.3% International Sports Retail – Operating Costs 141.7 89.6 58.1% International Sports Retail – Underlying EBITDA, pre Associates (10.7) 0.6

• Associates
• 1.8

(100.0%) International Sports Retail – Underlying EBITDA (10.7) 2.4

• 10
• Management appraised a number of the Group’s European stores and is working to implement a more tailored approach

to Europe over the medium term

• On a constant currency basis and excluding Heatons, International Sports Retail’s operating costs increased by 12.0%,

largely as a result of an increase in onerous lease provisions of £15.6m (included in Premises Costs), following the appraisal

• Heatons was included in Associates before being acquired in FY16 H2

REVENUE & GROSS MARGIN OPERATING COSTS & UNDERLYING EBITDA

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• Sales down by 4.9% due to the closure of loss-making

stores in the prior year

• Gross margin was also affected by an increase in

inventory provision

• Operating costs reduced as a result of the continued

rationalisation of the USC business

FY17 H1: PREMIUM LIFESTYLE OVERVIEW

£m FY17 H1 FY16 H1 Change (%) Store Wages 8.5 9.4 (9.6%) Premises Costs 13.1 18.4 (28.8%) Other Costs 12.3 13.5 (8.8%) Total Operating Costs 33.9 41.3 (17.9%) Underlying EBITDA (0.4) (5.1) (92.2%)

REVENUE OPERATING COSTS & UNDERLYING EBITDA

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• Wholesale revenues down due to reduction in activity in

third party licensed-in brands in the UK. Wholesale gross margin down 190 bps to 28.2%

• Licensing revenue growth driven by new licensing

agreements

• Brands operating costs decreased as a result of reduced

UK wholesale activity, and advertising and promotion costs

• Expect full year investment in key Group Brands to be

maintained at similar levels to previous years

FY17 H1: BRANDS OVERVIEW

0.4% £112.9m £112.5m £m FY17 H1 FY16 H1 Change (%) Wages 11.7 9.7 20.6% Advertising & Promotion 5.4 7.6 (28.9%) Other Costs 10.1 10.6 (4.7%) Total Operating Costs 27.2 27.9 (2.5%) Underlying EBITDA 17.1 17.1

• %

8.1% (0.9%)

FY17 H1: UNDERLYING EBITDA BRIDGE

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(33.5%)

FY17 H1: SUMMARY UNDERLYING PBT / PAT / EPS

£m FY17 H1 FY16 H1 Change (%) Underlying EBITDA 145.3 218.5 (33.5%) Share Scheme Charge (1.2) (11.0) (89.1%) Depreciation & Amortisation (68.8) (41.0) 67.8% Impairment

• 0.3

n/m Interest (4.2) (1.7) 147.1% Investment Income 0.5 1.3 (61.5%) Underlying Profit Before Tax 71.6 166.4 (57.0%) Underlying Taxation (20.6) (34.9) (41.0%) Non-Controlling Interests (0.9) (2.1) (57.1%) Underlying Profit After Tax 50.1 129.4 (61.3%) Number of Shares (millions) 591.6 592.4 (0.1%) Underlying Basic Earnings per Share 8.5p 21.8p (61.0%) Underlying Diluted Earnings per Share 8.2p 20.5p (60.0%)

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FY17 H1: DEPRECIATION & AMORTISATION

£m FY17 H1 FY16 H1 Change (%) Sports Retail UK – Stores, Warehouse & Amortisation of Goodwill 27.5 26.3 4.6% UK – Changes in Estimated Useful Life and capitalisation threshold 8.8 2.3 282.6% UK – Revaluations, impairments and aligning of policies in acquired businesses 5.8

• International – Stores, Warehouse & Amortisation of Goodwill

11.8 8.0 47.5% International – Changes in Estimated Useful Life and capitalisation threshold 9.0

• Total Sports Retail

62.9 36.6 71.9% Premium Lifestyle 3.0 1.8 66.7% Brands 2.9 2.6 11.5% Total 68.8 41.0 67.8%

• We expect Group depreciation and amortisation to increase to c. £130m for FY17

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FY17 H1: TAXATION

£m FY17 H1 Reported FY17 H1 Underlying FY16 H1 Reported FY16 H1 Underlying Reported Profit Before Tax 140.2 71.6 187.3 166.4 Standard Rate of Corporation Tax (20%) 28.0 14.3 37.5 33.3 Non-qualifying depreciation 3.9 3.9 2.5 2.5 Other differences 14.8 2.4 (0.1) 0.8 Effective Tax 46.7 20.6 39.9 36.6 Effective Tax Rate 33.3% 28.8% 21.3% 22.0%

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• The underlying tax rate for FY17 is expected to be in the region of 29%
• The difference between the prevailing corporate tax rate of 20% and the effective rate reflects depreciation on non-

qualifying assets, unrelieved overseas losses and the derecognition of deferred tax assets following the appraisal of our International Sports Retail business

FY17 H1: CASH FLOW

£m FY17 H1 FY16 H1 Underlying EBITDA 145.3 218.5 Realised (loss)/profit on FX contracts 18.6 (9.7) Taxes paid (34.4) (33.7) Underlying free cash flow 129.5 175.1 Working capital Inventory (14.1) (116.0) Debtors/Creditors, other 55.2 17.7 Acquisitions (including debt)

• (9.2)

Proceeds on disposal of investments 160.5 19.4 Investment income 0.5 2.1 Purchase of properties (261.0) (39.7) Proceeds from sale of freehold properties (including warehouses)

• 44.0

Other capital expenditure (26.0) (52.6) Purchase of own shares (13.1)

• Finance costs and other financing activities

(3.9) (1.4) Decrease/(increase) in Net Debt 27.6 39.4

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FY17 H1: CAPITAL EXPENDITURE – SPORTS RETAIL

UK Sports Retail, £m FY17 H1 FY16 H1 Freehold acquisitions 250.5 32.6 Warehouse and Shirebrook store expansion 2.0 26.4 New stores (leasehold) 6.6 13.3 Refurbishment capex 1.1 2.6 Other 7.7 4.0 UK Sports Retail Capital Expenditure 267.9 78.9

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• Invested £250.5m in 15 freehold properties in the UK and invested £10.5m in one freehold property in International

International Sports Retail, £m FY17 H1 FY16 H1 Freehold acquisitions 10.5 7.1 New stores (leasehold) 3.7 2.2 Refurbishment capex 1.3 1.8 Other 0.8 0.5 International Sports Retail Capital Expenditure 16.3 11.6

FY17 H1: CAPITAL EXPENDITURE – PREMIUM LIFESTYLE, BRANDS & GROUP

£m FY17 H1 FY16 H1 Sports Retail 284.2 90.5 Premium Lifestyle 1.5 0.5 Brands 1.3 1.3 Gross Capital Expenditure 287.0 92.3 Proceeds on disposal of fixed assets

• (44.0)

Net Capital Expenditure 287.0 48.3

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FY17 H1: NET DEBT BRIDGE

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• Group’s policy to maintain a strong capital base to sustain the development of the business and to maintain investor,

creditor and market confidence

• Board regularly monitors the ratio of net debt to underlying EBITDA. No minimum or maximum ratios are set, but
• bjective is to keep net debt to underlying EBITDA below 2.5x – current ratio is 0.2x

STRATEGIC UPDATE

MATT PEARSON Acting Chief Financial Officer

FY17 – FY21+ STRATEGIC PRIORITIES

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ONE TEAM, ONE GOAL OUR PEOPLE ARE OUR FIRST PRIORITY

#SDFAMILY

ELEVATION OF SPORTS RETAIL

IMPROVING STAKEHOLDER ENGAGEMENT Investing in our people to deliver the broadest range of choice and quality to our customers, and managing the business efficiently for the long term benefit of all of our stakeholders

STRATEGY STRATEGIC PRIORITIES

PROTECTING OUR PEOPLE

MISSION

STRATEGIC PRIORITIES: OUR PEOPLE – THE SPORTS DIRECT FAMILY

• The value of Sports Direct is our people
• The last 12+ months have been tough and have taken a toll on our people and morale
• During the period, the Board commissioned the Working Practices Report (“Report”) to investigate, review and address

any shortcomings in our employee practices

• Since the completion of the Report on 6 September 2016, we have progressed a number of key initiatives:
• Working practices: Continue to invest in development of our people and assessed additional training and

development needs across our warehouse teams

• Grievance procedure: The so-called ‘six strikes’ policy operated by our employment agencies has been replaced

by a standard grievance procedure which creates a better balance

• ‘Zero Hours’ review: Initial indications are that demand to move from ‘zero hours’ contracts is low. The Group will

extend its consultation across the business and now include exploring arrangements that may prove more attractive

• Staff migration: We are pleased to report that an initial test group of agency staff have accepted permanent

employment contracts with the Group

• Board and management team continue to work on developing a new incentive scheme for the Group
• In addition, as a result of the continued volatility in the Company’s share price, the Company has committed to delivering

a minimum value for share awards made under the 2011 Share Scheme that are due to vest to participating eligible employees in September 2017 – the minimum value will be fixed at £3 for each share awarded and will be delivered via a flexible cash bonus arrangement where required

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STRATEGIC PRIORITIES: ELEVATION OF SPORTS RETAIL

• Key medium to long term strategic priority to elevate our

sports retail proposition to:

• Continue to strengthen our relationships with our

key third party brand partners

• Benefit our customers
• Drive the Group’s long term viability
• Elevation of proposition across:
• Product
• Stores and Online
• Marketing
• Remain committed to offering an unrivalled range,

availability and quality of product

• Critical to our strategic relationships with our key third

party brand partners: Nike, adidas, Under Armour, Puma, and other leading specialists

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Oxford Street Shirebrook

ELEVATION OF SPORTS RETAIL: ACTIVE MANAGEMENT OF RETAIL PROPERTY NEEDS

• Property Division actively manages the Group’s property

portfolio to execute strategic intentions

• The team sources opportunities and assesses each

asset’s viability, develops plans, and then executes (subject to internal approval), alongside the Retail, Finance and Buying teams

• T
• increase the Group’s ability to win strategic retail

locations that are commercially viable, the team:

• Implements a mixed use approach where

necessary

• Actively manages the store portfolio to meet

retail needs

• Flexibility to build a pipeline of leaseholds, freeholds and

development opportunities, to attain the right location/door

• As stated, expect to spend potentially in excess of c.

£300m per annum over the next 2 – 4 years, if the right

• pportunities are available
• In FY17 H1 we have acquired 16 freeholds for £261.0m

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Southport Southampton

ELEVATION OF SPORTS RETAIL: NEW GENERATION CONCEPT

• New Generation is our customer destination concept,

bringing together the breadth of the Group:

• Sports Retail
• Lifestyle
• Premium
• Fitness
• Typical New Generation store retail attributes include:
• Exceptional visual merchandising and branded

category areas, leading with third party branded performance areas

• Extensive sport category offering
• Complemented by lifestyle and/or premium

store/s, and branded fitness gym

• Multi-channel approach: key elevation initiatives being

mirrored across online and marketing

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Southport Oxford Street

ELEVATION OF SPORTS RETAIL: STRATEGIC THIRD PARTY BRAND PARTNER RELATIONSHIPS

• The current forward looking view is that the majority of
• ur offer must be third party brands
• Elevation of our sports retail proposition and the New

Generation concept helping to strengthen how we work with key third party brands partners

• Key initiatives to date:
• New brand showrooms and offices at our

Shirebrook campus

• Greater collaboration on new store brand layout

planning, seasonal marketing calendars, visual merchandising and staff training

• Embarking on new joint UK-wide marketing

initiatives – for example, an exclusive style of the Nike CR7 Boot, and an adidas campaign launching in December 2016

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Reebok Showroom / office adidas Showroom / office

ELEVATION OF SPORTS RETAIL: NEW GENERATION STORE FOOTPRINT TO DATE

Current New Generation stores include:

• Aintree
• Gateshead
• Glasgow
• Leeds
• Oxford St
• Plymouth
• Active pipeline of target locations and openings
• Expect to open c. 5 New Generation stores in FY17 H2
• Expect ongoing additional costs due to store

rationalisation programme

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• Shirebrook
• Southampton
• Southport
• St Helens

SPORTS RETAIL: UK PROPERTY PORTFOLIO

• Total square footage increased but remains c. 5.0m1
• Four new stores opened in the period:
• Leasehold: 2
• Freehold: 2 (Southampton and Southport)
• Freehold openings in the period have been relocations

into our New Generation type stores – larger and better configured space

• During the period, 15 Freeholds acquired in the UK for

£250.5m

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FY17 H1 FY16 H1 UK Stores 454 455 Openings 4 28 Closures 8 13 Sportsdirect.com fascia 437 437 Retail Area (sq. ft.)1

• c. 5.0m
• c. 5.0m

Heatons: Northern Ireland Stores Combination – Sports Direct / Heatons 7 Standalone Sports stores 8 Total 15

• 1. Due to differing methodologies, this implies a range between 4.75m sq. ft. – 5.25m sq. ft..

SPORTS RETAIL: INTERNATIONAL PROPERTY PORTFOLIO

• Total square footage increased to c. 3.5m sq.ft. (FY16 H1:
• c. 3.0m sq.ft.)1
• In FY17 H1 we opened 11 new stores in 7 countries, and

closed 6 stores across 4 countries

• Continued investment in specialist Football, Running,

Womens and Outdoor performance areas

• During the period, 1 Freehold acquired in Ireland for

£10.5m Existing European sports stores FY17 H1 FY16 H1 Belgium 41 42 Austria 39 44 Estonia 26 25 Lithuania 16 14 Latvia 15 14 Portugal 17 17 Poland 16 11 Slovenia 15 15 Hungary 13 11 Czech Republic 9 6 France 7 7 Cyprus 6 6 Holland 6 6 Slovakia 6 4 Germany 3 3 Luxembourg 2 2 Spain 2 1 Switzerland 1 Sub-total 239 229 Iceland (Associate) 1 1 Total 240 230

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Heatons: Republic of Ireland2 Stores Combination – Sports Direct / Heatons 29 Standalone Heatons 14 Total 43 Rest of world2 FY17 H1 FY16 H1 Malaysia 23 16

• 1. Due to differing methodologies, this implies a range between 3.0m sq. ft. – 4.0m sq. ft.. Now includes all stores in the Baltics.
• 2. Note: not included in the square footage total.

ELEVATION OF SPORTS RETAIL: ENHANCING THE ONLINE EXPERIENCE

• Significantly re-styled and elevated our fascias’ and

brands’ online presence

• Developed an app to add to the Group’s suite of fully

responsive ecommerce and websites

• Driven by the Group’s centralised web platform and built

to be compatible with ios and Android. Skinned for:

• SportsDirect.com
• Plus:
• Lifestyle brand: Firetrap, and
• Premium fascia: Flannels.com
• Improving seamless customer feel and presence across

website and app

• Working closely with third party brand partners on
• nline marketing initiatives – first “take over” of website

and app by Nike to launch an exclusive style of the CR7 Boot

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ELEVATION OF SPORTS RETAIL: THIRD PARTY BRAND PARTNER MARKETING

• In Sports Retail, steadily moving to clean, brand- and

category-led campaigns, in contrast to previous focus on

• ffer-led campaigns
• Key third party brand partners supporting this elevation

with marketing assets in-store and online – first major new campaigns launched in November 2016

• Same principles adopted across Premium Lifestyle fascias

– closely working with third party brand partners to deliver brand-led campaigns

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ELEVATION OF SPORTS RETAIL: GROUP BRANDS MARKETING

• Consistent elevation in marketing of the Group’s Brands,

and enhancing profiles with ambassadors:

• Little Mix co-branded range launched in

November 2016

• Slazenger by Becky Adlington swimwear range

launched in November 2016

• Karrimor wins a total of six awards at the Men’s

and Women’s Running awards including gold for the Best High Visibility Product, Best Support Shoe and Best Newcomer Shoe

• Continue to enhance and broaden marketing assets

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SPORTS RETAIL: FITNESS DIVISION UPDATE

• Important aspect of the New Generation concept –

normally integrated within the overall development

• Revenue has grown in FY17 H1, driven by:
• Growth in memberships in existing gyms
• Opening of three new gyms, including an Everlast

gym in Southport

• Continue to invest in product development, new

equipment and re-modelling of the LA Fitness club layouts, which has contributed to growth in member numbers in the former LA Fitness sites

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Everlast fitness club Southport Everlast fitness club Southport

PREMIUM LIFESTYLE UPDATE

• Division benefiting from historic rationalisation
• Continue to enhance existing space and invest in new

flagship locations (such as Oxford St site)

• Working closely with third party brand partners to build

relationships and deliver ‘best in class’ visual merchandising

• Benefiting from ongoing investment by the Group in

ecommerce and marketing initiatives, including development of ecommerce app for Flannels.com

• Continue to enhance our fascias’ positions as the

premium retail destinations

• Demonstrates Group’s ability to execute a premium retail

proposition

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Flannels.com Sunderland Flannels.com Swindon

BRANDS UPDATE

Wholesale

• Overall revenue largely impacted by a reduction in

activity in third party licensed-in brands in the UK

• Continued growth in wholesale in the Everlast brand in

the US due to category expansion

• Expect FY17 A & P spend to be c. £10.7m

Licensing

• 407 active licensing agreements, across 282 licensees,

with minimums of US$265m over the remaining contract lifetime

• Everlast continues to be a key growth driver
• Licensing model remains key driver of Brands division’s

growth and profitability

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STRATEGIC PRIORITIES: OUR PEOPLE – BOARD & CORPORATE GOVERNANCE UPDATE

Corporate Governance Review

• The Board has continued a constructive dialogue with the Company's independent shareholders via The Investor Forum

and is in the process of selecting an independent Chairperson to undertake the review Board update

• At this year’s AGM, the Company’s Chairman, Dr Keith Hellawell QPM, did not receive the necessary support from a

majority of the Company’s independent shareholders who voted at the meeting

• Dr Hellawell will stand for re-election at a General Meeting set for 5 January 2017
• Today we have announced a new non-executive director, David Brayshaw, who has over 30 years’ experience in investment

and commercial banking in the UK

• Mr Brayshaw’s skill set will be complementary and of significant benefit to the Company

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STRATEGIC PRIORITIES: STAKEHOLDER ENGAGEMENT

• We have recognised the need to improve communications with stakeholders
• T
• day we have stated a Group approach to engagement which outlines how the Company intends to engage with the

financial community and media – it can be found on the Company’s website

• Intend to consider the recommendations of the Company’s forthcoming Corporate Governance Review to develop a plan

in accordance with our principles of being very open, very prudent and very compliant in our external engagement and communications

• On completion of that review, expect that we will progressively assess our approach and identify how we can improve

where it remains in the best interests of all stakeholders

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OUTLOOK

MATT PEARSON Acting Chief Financial Officer

FY17 H1: OUTLOOK

• Existing strategic challenges and currency headwinds expected to continue to adversely impact financial performance over

the medium term Strategic property investment

• The Group intends to invest potentially in excess of c. £300m per annum on property asset acquisitions over the next 2 – 4
• years. The Group’s current bank facility has in excess of £500m capacity, and is available until September 2018
• We expect Group depreciation and amortisation to increase to c. £130m for FY17

Currency exposure

• 54 months of cover in place on GBP/EUR – a mix of forwards and options gives between €1.1bn and €2.3bn cover
• As stated above, the Group has hedged the remainder of FY17 GBP/USD requirements, but remains unhedged on FY18

and beyond Overall

• The Company expects FY17 Underlying EBITDA to be around the bottom of the range implied by the Company’s

announcement of 7 October 2016 (£265m - £285m), subject to no unforeseen events and continuation of current trading conditions

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Q&A

MIKE ASHLEY Chief Executive MATT PEARSON Acting Chief Financial Officer

APPENDIX

FX EXPOSURES

GBP/EUR Hedging Cover GBP/EUR:

• 54 months of cover in place on GBP/EUR
• Mix of forwards and options gives between €1.1bn and €2.3bn cover

GBP/USD:

• $210m bought at a rate of 1.19 and $250m bought at a rate of 1.26
• Now hedged for remainder of FY17 – annual usage c. $750m

EUR/USD:

• Hedged for remainder of FY17 at 1.46 (current rate c. 1.07) – annual usage c. $100m

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Period RATE MIN COVER MAX COVER FY17 H2 1.29 €60m €120m FY18 1.24 €180m €360m FY19 1.19 €240m €480m FY20 1.14 €300m €600m FY21 1.09 €360m €720m Total €1,140m €2,280m

CLEAR APPROACH TO ENGAGEMENT

As part of Sports Direct’s commitment to being open but at the same time remaining prudent and compliant, the Company has developed a set approach to engagement with investors, analysts and the press. During the year, consistent with our obligations, the Company will report its half year and annual financial results, release its Annual Report and Accounts, and hold its Annual General Meeting. The Company will undertake collective face-to-face briefings for analysts and investors on announcement of the half year and annual results. In addition to the briefings at these times, the Company will host a collective meeting for the Company’s major shareholders to provide shareholders with an extended opportunity to engage with

• management. Mindful of our obligations as a public company, particularly with respect to selective disclosure, the executives of the

Company will not be engaging in one-on-one meetings with investors and analysts at these times or throughout the year. If investors or analysts would like to engage with executives throughout the year, they are invited to do so in writing via the Company’s Investor Relations email address: investor.relations@sportsdirect.com. The Company will respond to your queries in writing in a timely manner. If shareholders would like to initiate engagement with Non-executive Directors of the Company, including the Chairman, they are invited to do so in writing by contacting the Company Secretary in the first instance, via the Company’s Investor Relations email address: investor.relations@sportsdirect.com. The Non-executive Directors of the Company will undertake meetings with individual shareholders as needed throughout the year. The Board will be available to engage with all of the Company’s shareholders at the Company’s Annual General Meeting each yea r. If members of the press would like to engage with the Company, they are invited to do so in writing by contacting the Company’s public relations adviser, KBA PR, via the Sports Direct team’s email address: sd@kbapr.com. The Company’s public relations adviser will respond to your queries as appropriate in a timely manner. Other than as may required in exceptional circumstances, during the Company’s closed periods it is the Company’s policy to not engage with investors, analysts and the press on any non-factual information.

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END