Frasers Group PLC · LSE:FRAS
Frasers — Sports Direct International — FY2015 Earnings Presentation
31 slides from Frasers's earnings presentation, Jul 16, 2015
Slide 1: Preliminary Results Presentation
SPORTS DIRECT INTERNATIONAL PLC Preliminary Results Presentation For the 52 weeks ended 26 April 2015 Thursday 16 July 2015
Slide 2: Dave Forsey, Chief Executive
SPORTS _COM Dave Forsey CHIEF EXECUTIVE « _-
Slide 3: FY15: Group highlights of a record year
FY15: Group highlights of a record year…. • Sports Retail gross margin increased by 170 bps to 44.6% • Group underlying EBITDA increased by 15.7% to £383.2m • Underlying profit before tax up 20.5% to £300.3m • Underlying free cash generation of £301.8m • Sports Retail like-for-like stores gross cont
Slide 4: Financial Review
SPORTSDIRECT.com EXCEPTIONAL QUALITY * UNBEATABLE VALUE
Slide 5: Group Revenue Bridge
FY15: Group Revenue Bridge +14.4% -3.0% +4.1% £2,833m +3.9% Revenue (£m) £2,706m • Sports Retail revenue growth of 5.5% • Group revenue growth of 4.7% SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 16th July 2015 5
Slide 6: Sports Retail Overview
FY15: Sports Retail Overview Sports Retail Revenue Sports Retail Gross Margin 45.0 44.6 44.5 44.5 44.0 Online Stores and other 43.5 2,600 42.9 Gross Margin (%) 43.0 43.2 £2,399m 42.5 2,400 42.0 £2,274m 41.5 2,200 £384m 41.0 40.3 40.3 £335m 40.5 40.9 40.0 2,000 FY'12 H1'13 FY'13 H1'14 FY'14 H1'15 FY'
Slide 7: Sports Retail Operating Costs
FY15: Sports Retail Operating Costs FY15 FY14 Change (£m) (£m) (%) Store Wages 239 211 13.1 Premises Costs 211 193 9.5 Other Retail costs 281 246 14.2 Currency impact* (16) 6 - Sports Retail Operating Costs 715 656 9.0 Sports Retail Underlying EBITDA pre associates 354 319 10.9 Associates (Heatons &
Slide 8: Premium Lifestyle
FY15: Premium Lifestyle 250 £214.1m FY14 £207.6m • May 2013: acquired remaining 20% of Cruise Van Mildert Van Mildert • July 2013: acquired 51% of Pulp, a six store retail fashion chain 200 FY15 Premium • Continued rationalisation of USC/Republic business Premium • Consolidation of key head office f
Slide 9: Brands Division
FY15: Brands Division 250 £217.5m £226.4m 33.1 200 32.3 Revenue (£m) 150 Licensing 185.2 193.3 100 Wholesale 50 0 FY14 FY15 • Revenue: up 4.1% – Licensing: up 2.5% – Wholesale: up 4.4% • Wholesale margin: 30.1% – Down 310 bps • Licensing: – FY15: 58 deals completed / contractual minimum royalties of
Slide 10: Brands Operating Costs
FY15: Brands Operating Costs FY15 FY14 Change (£m) (£m) (%) Wages 21.2 22.9 (7.4) Advertising & promotion 12.7 15.0 (15.3) Other Brands Costs 23.1 25.2 (8.3) Total Brands Operating Costs 57.0 63.1 (9.7) Brands Underlying EBITDA 34.1 30.2 12.9 SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Pre
Slide 11: Underlying EBITDA Bridge
FY15: Underlying EBITDA Bridge +62.3% -15.1% +12.9% -£10.1 380 +11.1% (£10.1m) UNDERLYING EBITDA (£M) £12.7m £3.8m 360 £35.6m 340 £383.2m £373.1m 320 £331.1m 300 280 FY14 pre Share Sports Retail Premium Lifestyle Brands FY15 pre Share Share Schemes' FY15 Schemes' non-cash Schemes' non-cash non-cash
Slide 12: PBT / PAT / EPS
FY15: PBT / PAT / EPS FY15 FY14 Change (£m) (£m) (% ) Underlying EBITDA (pre share scheme) 383.2 331.1 15.7 Share scheme charge (10.1) (11.9) (15.1) Depreciation (excl. impairment) (67.8) (63.7) 6.4 Interest (6.5) (7.8) (16.7) Investment Income 1.5 1.6 (6.2) Underlying PBT 300.3 249.3 20.5 Underlyin
Slide 13: Depreciation & Amortisation
FY15: Depreciation & Amortisation FY15 FY14 Change (£m) (£m) (% ) Sports Retail - Stores, warehouse and amortisation of goodwill 50.5 49.7 1.6 Sports Retail - Change in estimated useful life – fixtures & fittings 3.6 2.2 63.6 Sports Retail - Change in estimated useful life – warehouse 4.3 - - Total
Slide 14: Taxation
FY15: Taxation FY15 FY14 (£m) (£m) Reported PBT 313.4 239.5 Standard rate of corporation tax (1) 65.8 55.1 Non-qualifying depreciation 3.5 4.9 Other differences 2.8 (0.2) Effective tax 72.1 59.8 Actual effective tax rate 23.0% 25.0% The effective rate for FY16 is expected to be in the region of 22%.
Slide 15: Cash Flow
FY15: Cash Flow FY15 FY14 (£m) (£m) EBITDA (pre scheme costs) 383.2 331.1 Realised (loss)/profit on fx contracts (3.7) 1.8 Taxes paid (77.7) (55.7) Underlying free cash flow 301.8 277.2 Working capital Inventory 57.0 (54.8) Debtors / Creditors, other (121.8) (55.3) Acquisitions (including debt) (1)
Slide 16: Capital Expenditure
FY15: Capital Expenditure FY15 FY14 (£m) (£m) Freehold acquisitions 5.3 13.4 Warehouse and Shirebrook store expansion 37.4 5.2 New stores (leasehold)* 25.1 16.1 Maintenance capex 15.2 11.9 Other 10.3 11.0 Sports Retail 93.6 57.6 Premium Lifestyle 2.3 7.0 Brands 4.4 4.5 100.3 69.1 Proceeds on disposa
Slide 17: Net Debt Bridge
FY15: Net Debt Bridge -200 379.5 -150 (100.3) -100 (68.6) 4.1 -50 21.2 NET DEBT (£M) (77.7) 0 (5.9) 59.7 50 100 212.0 150 200 250 Net Debt EBITDA & Working Income from Capital Sale of Interest Tax Net Debt FY14 FX capital & investments Expenditure freehold FY15 other property • Investment in working
Slide 18: Operational Review - Matt Pearson
Matt Pearson ACTING CHIEF FINANCIAL OFFICER FINANCIAL REVIEW OPERATIONAL REVIEW
Slide 19: Sports Retail: Property Portfolio UK
Sports Retail: Property Portfolio UK FY15 FY14 • Square footage increased to c. 4.75m sq. ft. (1) UK Stores (3) 440 417 • 39 new stores opened in the period (2) Openings 39 32 • 12 out of the 16 closures in FY15 have been relocations into Closures 16 10 larger and better configured space • Leasehold
Slide 20: Sports Retail: Mega Store Format
Glasgow city centre Sports Retail: Mega Store Format Glasgow city centre extension • New Glasgow city centre store opened in March 2015 • Net sales area increased from 22,000 sq. ft. over 2 floors to c.50,000 sq. ft. over 5 floors. • Enhanced in-store concepts. • Collaboration with key suppliers e.g
Slide 21: Sports Retail: Property Portfolio EU
Sports Retail: Property Portfolio EU Stores Stores Territory FY15 FY14 • Square footage remained at c. 3.0m sq. ft. Austria 46 52 Belgium 43 44 • 16 new stores opened in nine different countries in FY15 Estonia (1) 24 20 • 7 closures in two countries in FY15 Latvia (1) 13 13 Lithuania (1) 12 12 • Le
Slide 22: Sports Retail: Austria and Baltics Update
Sports Retail: Austria and Baltics Update Austria • Continued reconfiguration of Mega stores • Key Austrian Mega stores to be re-branded to Lillywhites fascia • Similar to UK city centre format • Wintersports/outdoor still key areas • Collaboration with key suppliers (e.g. Salomon) Lillywhites, Inns
Slide 23: Sports Retail: Fitness Division Created
Sports Retail: Fitness Division Created • Acquired 25 former LA Fitness sites • Opened an additional 2 gyms in Aintree and Keighley in FY15. • Aintree is a new build site with: • 40,000 sq. ft. retail space over 2 floors • A separate 20,000 sq. ft. dry gym • Additional gym openings planned for FY16.
Slide 24: Sports Retail: Marketing
Sports Retail: Marketing • February 2015 saw adidas launch its final version of the iconic F50 football boot, with Sports Direct channels chosen as key marketed distribution points • Executed in store through bespoke window executions and refreshed fixturing and supported online with product & ambas
Slide 25: Sports Retail: Marketing
Sports Retail: Marketing • In only its second period of audit circulation results our consumer magazine, Forever Sports, is now ranked as the bestselling sports magazine in the UK • Even within the highly competitive Men’s Lifestyle category, Forever Sports is now the 2nd best selling title, ahead o
Slide 26: Sports Retail: Online Overview
Sports Retail: Online Overview Overview Online Sports Sales • Successful UK launch of Click and Collect – now over 20% £450m of all UK orders delivered by Click and Collect £400m £384m o Exceptional considering the £4.99 charge • Resulting in accelerated online growth in FY15 H2 £350m £335m • Contin
Slide 27: Premium Lifestyle
Premium Lifestyle • Consolidation of key head office functions in Flannels.com, Cruise and Van Mildert, resulting in operating cost savings • Beginning to see the benefit of the re-structuring of Republic in the prior year and the closure of loss- making stores in FY15 • Successful launch of Click a
Slide 28: Brands: Wholesale
Brands: Wholesale • Overall wholesale revenue of £193.3m up 4.4% on prior year • Sales growth in a challenging UK wholesale market • US trading in line with expectations and remains c.40% of total wholesale sales • Sales in Europe down 3.8% due to the adverse trading conditions in Southern Europe in
Slide 29: Brands: Licensing
Brands: Licensing • Licensing revenues were up 2.5% to £33.1m. • 58 new license agreements, covering multiple brands and product categories, were signed during the year with minimum contracted values of $25.0m over the term of the agreements • Group has 401 license agreements worldwide across 264 li
Slide 30: FY16: Outlook Statement
FY16: Outlook Statement • Trading since the year end has been in line with management’s expectations, underpinning the revised FY16 target of £420m for the 2015 Bonus Share Scheme • Performance continues to be driven by • Investment in product range and availability • Optimisation of in-store and we
Slide 31: Questions?
SPORTSDIRECT.com EXCEPTIONAL QUALITY * UNBEATABLE VALUE
Sports Direct International — FY2015 Earnings Presentation on 6ix