Frasers Group Plc · LSE:FRAS
Frasers — Sports Direct International — FY2017 Earnings Presentation
30 slides from Frasers's earnings presentation, Jul 20, 2017
Slide 1: FY17 Preliminary Results Pack
FORWARD TOGETHER Sports Direct International plc FY17 Preliminary Results Pack For the 53 weeks ended 30 April 2017 20 July 2017
Slide 2: Forward Looking Information
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 m
Slide 3: Contents
CONTENTS • Group Highlights • Financial Review • Strategic update • Outlook 3
Slide 4: Group Highlights
GROUP HIGHLIGHTS
Slide 5: FY17: Group Highlights
FY17: GROUP HIGHLIGHTS • FY17 has been a transitional year for the Company and FY17 ∆ FY161 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 53r
Slide 6: Financial Review
FINANCIAL REVIEW
Slide 7: FY17: Group Revenue Bridge
FY17: GROUP REVENUE BRIDGE 11.6% 4.1% +11.7% +38.0% +6.9% 1 • Heatons acquisition benefitted both UK and International Sports Retail • Excluding acquisitions and the 53rd week, Group revenue increased by 3.2% on a currency neutral basis 7
Slide 8: FY17: Sports Retail Overview
FY17: SPORTS RETAIL OVERVIEW REVENUE RETAIL GROSS MARGIN1 +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 53rd week: in GBP/USD, and increase in inventory and other • UK Sports Retail reta
Slide 9: UK Sports Retail – Operating Costs & Underlying EBITDA
FY17: UK SPORTS RETAIL – OPERATING COSTS & UNDERLYING EBITDA £m FY17 FY16 Change (%) Store Wages 164.5 154.0 6.8% Premises Costs 206.1 172.4 19.5% Other Retail Costs 243.5 214.7 13.4% UK Sports Retail – Operating Costs 614.1 541.1 13.5% UK Sports Retail – Underlying EBITDA, pre Associates 265.3 353.
Slide 10: International Sports Retail – Operating Costs & Underlying EBITDA
FY17: INTERNATIONAL SPORTS RETAIL – OPERATING COSTS & UNDERLYING EBITDA £m FY17 FY16 Change (%) Store Wages 117.1 117.1 -% Premises Costs 116.6 49.2 137.0% Other Retail Costs 73.1 57.0 28.2% International Sports Retail – Operating Costs 306.8 223.3 37.4% International Sports Retail – Underlying EBIT
Slide 11: FY17: Premium Lifestyle Overview
FY17: PREMIUM LIFESTYLE OVERVIEW REVENUE & GROSS MARGIN OPERATING COSTS & UNDERLYING EBITDA Change £m FY17 FY16 (%) Store Wages 15.4 18.3 (15.8%) Premises Costs 21.1 33.7 (37.4%) Other Costs 39.9 28.3 41.0% Total Operating Costs 76.4 80.3 (4.9%) Underlying EBITDA (0.3) (5.1) 94.1% • Operating costs
Slide 12: FY17: Brands Overview
FY17: BRANDS OVERVIEW REVENUE OPERATING COSTS & UNDERLYING EBITDA 4.1% Change £241.1m £m FY17 FY16 (%) £231.5m 14.1% Wages 19.7 21.5 (8.4%) Advertising & Promotion 12.4 11.4 8.8% Other Costs 29.3 27.1 8.1% 2.4% Total Operating Costs 61.4 60.0 2.3% Underlying EBITDA 26.4 37.5 (29.6%) • Brands operati
Slide 13: FY17: Underlying EBITDA Bridge
FY17: UNDERLYING EBITDA BRIDGE (28.5%) 13
Slide 14: Summary Underlying PBT / PAT / EPS
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.
Slide 15: Depreciation & Amortisation
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 b
Slide 16: FY17: Cash Flow
FY17: CASH FLOW £m FY17 FY16 Underlying EBITDA 272.7 381.4 Realised (loss)/profit on FX contracts (23.7) (2.3) Taxes paid (75.3) (69.9) Underlying free cash flow 173.7 309.2 Working capital Inventory 60.0 (155.4) Debtors/Creditors, other (38.4) (88.1) Acquisitions (including debt) (22.6) (33.1) Proc
Slide 17: Capital Expenditure – Sports Retail
FY17: CAPITAL EXPENDITURE – SPORTS RETAIL UK Sports Retail, £m FY17 FY16 Property asset acquisitions & related development costs* 308.0 111.0 Shirebrook campus 2.9 39.7 New stores (leasehold) 13.4 15.1 Refurbishment capex 28.0 13.3 Corporate plane 39.0 0.0 Other 8.1 9.1 UK Sports Retail Capital Expe
Slide 18: Capital Expenditure – Premium Lifestyle, Brands & Group
FY17: CAPITAL EXPENDITURE – PREMIUM LIFESTYLE, BRANDS & GROUP £m FY17 FY16 UK Sports Retail 399.4 188.2 International Sports Retail 14.6 17.1 Premium Lifestyle 3.1 1.2 Brands 2.4 0.6 Gross Capital Expenditure 419.5 207.1 Proceeds on disposal of fixed assets (2.4) (44.0) Net Capital Expenditure 417.1
Slide 19: Net Debt Bridge
FY17: NET DEBT BRIDGE (300) (200) (£109.8m) £1639 (100) P| (£75.3m) || £1.6 - £417. 1m) 226m) _ (ETM) || (£99.6m) — (£182.1m) a 200 £41.6m 7 300 £109.5m 400 500 £160.5m FY16 Net Debt EBITDA &FX — Working Proceedson Proceedson Net capital Other Interest Tax Purchase of FY17 Net Debt capitaland dispos
Slide 20: Strategic Update
STRATEGIC UPDATE
Slide 21: FY17 – FY21+ Strategic Priorities
FY17 – FY21+ STRATEGIC PRIORITIES We aspire to be a leading sports and lifestyle retailer internationally MISSION and to deliver sustainable growth for our shareholders in the medium to long term Invest in our people and our key third party brand partners to deliver an STRATEGY enhanced multi-brand,
Slide 22: Strategic Priorities: Our People – The Sports Direct Family
STRATEGIC PRIORITIES: OUR PEOPLE – THE SPORTS DIRECT FAMILY • The value of Sports Direct is our people – the last 18+ months have been tough and have taken a toll on morale • At FY17 H1, we provided an update on our progress on improving our working practices. A number of existing practices have bee
Slide 23: Strategic Priorities: Elevation of Sports Retail
STRATEGIC PRIORITIES: ELEVATION OF SPORTS RETAIL • Remains our 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 profitabilit
Slide 24: Strategic Third Party Brand Partner Relationships
ELEVATION OF SPORTS RETAIL: STRATEGIC THIRD PARTY BRAND PARTNER RELATIONSHIPS • The current forward looking view is that the majority of our offer must be third party brands • Elevation of our sports retail proposition and the new generation concept is completely aligned with and helping to strength
Slide 25: Enhancing the Online Experience
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 compa
Slide 26: Third Party Brand Partner Marketing
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 offer-led campaigns • Key third party brand partners supporting this elevation with marketing assets in-store and online –
Slide 27: Group Brands Marketing
ELEVATION OF SPORTS RETAIL: GROUP BRANDS MARKETING • Consistent elevation in marketing of the Group’s Brands, and enhancing profiles with ambassadors: • No Fear announced a collaboration with grime artist Skepta, and will work together to develop a Motocross-inspired range over the next 12 months •
Slide 28: Outlook
OUTLOOK
Slide 29: Outlook
OUTLOOK We are pleased to confirm that early indications show that trading in our new generation flagship stores is exceeding our expectations. The table below shows two examples of these stores, which we have called Store X and Store Y. Store X is our highest-turnover new flagship, and Store Y is o
Slide 30: End
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Sports Direct International — FY2017 Earnings Presentation on 6ix