JD Sports Regulatory News (JD.)

15 April 2015

JD Sports Fashion Plc (the "Group"), the leading retailer of sports, fashion and outdoor brands, today announces its Preliminary Results for the 52 weeks ended 31 January 2015 (2014: 52 weeks ended 1 February 2014).

The results of Bank Fashion Limited, which was disposed of on 25 November 2014, are presented as a discontinued activity. The results for the 52 weeks to 1 February 2014 have been re-presented on the same basis.

a) The prior year has been restated to reflect the 4:1 share split which was approved by shareholders at the Annual General Meeting on 26 June 2014. The earnings per share are calculated based on the continuing operations only.

b) Net cash consists of cash and cash equivalents together with interest-bearing loans and borrowings

Group Highlights

· Record result with profit before tax and exceptional items in the continuing businesses of £100.0 million (2014: 82.0 million).

· Exceptional performance in Sports Fashion with like for like store sales growth across the combined European fascias of 13% and operating profits increased by 18% to £107.0 million (2014: £91.0 million).

· Encouraging progress in the development of the international Sports Fashion offering with new stores added in all existing territories.

· Comparable with the wider sector, Outdoor had a difficult second half following the very mild autumn and winter. Sector wide promotional activity continues as the resulting imbalance of stocks in the trade is addressed.

A revised segmental structure has been adopted following the disposal of Bank. Sales, gross margin and operating profit before exceptional items of these two revised business segments for the continuing businesses are tabulated below:

· Investment levels remain high in Sports Fashion with total capital expenditure of £70.2 million (2014: £48.2 million). This is expected to increase further in the new financial year as the overseas rollout of JD continues.

· Final dividend payable increased by 4.2% to 5.90p (2014: 5.6625p) bringing the total dividends payable for the year to 7.05p (2014: 6.7750p) per ordinary share, an increase of 4.1%.

Peter Cowgill, Executive Chairman, said:

"I am delighted to report that our continuing operations have delivered a record result for the year with a headline profit before tax and exceptional items in excess of £100 million for the first time. This result and its ingredients provide a robust platform for further profitable growth, at home and internationally.

"This result has been driven by an outstanding performance in our Sports Fashion fascias where JD's unique and often exclusive sports and fashion premium brand offer continues to enthuse and excite both customers and suppliers. This, combined with our market leading standards of visual merchandising and disciplines instore, provides the basis for international success.

"The Board continues to believe that the Group is well positioned to exploit successfully the opportunities that exist for continued profitable growth."

Enquiries:

JD Sports Fashion Plc Tel: 0161 767 1000

Peter Cowgill, Executive Chairman

Brian Small, Chief Financial Officer

MHP Communications Tel: 0203 128 8100

Andrew Jaques

Barnaby Fry

Jack Holden

Jennifer Iveson

Introduction

I am delighted to report that our continuing operations have delivered a record result for the year with a headline profit before tax and exceptional items in excess of £100 million for the first time. This result and its ingredients provide a robust platform for further profitable growth, at home and internationally.

This result has been driven by an outstanding performance in our Sports Fashion fascias where JD's unique and often exclusive sports and fashion premium brand offer continues to enthuse and excite both customers and suppliers. We believe that our collaborative approach to working with third party brands to create a unique, premium and often exclusive offer is a major contributor to our success. We have the utmost respect for the brands that we sell and believe in working in partnership with them to achieve their ambitions. This, combined with our market leading standards of visual merchandising and disciplines instore, provides the basis for international success.

We have continued to extend our store presence in Europe with 19 new stores for JD and Size?, taking us to 70 stores. Our continued development recognises that our offer has been well received to date in these markets. We are also encouraged by the performance of Sprinter in Spain and Chausport in France. In so far as this progress continues, we anticipate further growth in overseas markets.

The turnaround of our Outdoor fascias continues although the encouraging results in the first half were somewhat tempered in the second half as the milder and drier weather led to a general oversupply relative to demand for winter related product in the market throughout the season with consequent high levels of discounting. We continue to work with our branded partners and our own brand supply chain to improve our product proposition and market positioning to achieve a more focused consumer targeting for each part of our business. Property investment, both in terms of new stores and refitting existing stores, is also required but will be driven by the strength of the proposition and the property costs in each location. We are conscious that delivery of profitability has been delayed but remain determined to enhance our proposition and the efficiency of the operations so that profitability is achieved in 2016/17.

Sports Fashion

Sports Fashion consists of the businesses previously reported both within the former Sports segment and within the former Fashion segment which ceased to be a substantial separate segment following the disposal of Bank prior to the key Christmas trading period. In reality the Group's core retail operations have always largely presented and sold the major international sports brands alongside fashion brands as fashion and lifestyle attire thereby creating a natural and strengthening blend between sports and fashion brand participation in the overall success of the Group. Indeed, the natural strengthening flow across the Group has been well illustrated this year by the successful introduction of The North Face into JD last Autumn from our Outdoor brand roster. In addition, given the ActivInstinct online business is not a fashion led business and its key trading categories are Outdoor and Sports Performance, we now include this within Outdoor rather than Sports Fashion.

Sports Fashion has had an excellent year with operating profits (before exceptional items) in the continuing businesses increased to £107.0 million (2014: £91.0 million) with positive momentum in all of the territories in which we operate driven by a buoyant market for branded athletic footwear across Western Europe and an excellent buying and merchandising performance.

JD's approach to retail theatre and our commitment to working with our supplier partners on the presentation of their premium branded footwear and apparel is unique. We remain committed to the advancement of this proposition and during the year we refurbished our flagship Trafford Centre store in a new concept which moves forward our already excellent standards in visual merchandising and embraces the latest instore technology. This concept will continue to evolve and we are confident that our new store in Oxford Street, which we will open later in the year, will generate an equally positive reaction.

Outdoor

The operating loss (before exceptional items) in Outdoor has reduced by £3.1m to £4.9m (2014: £8.0m).

In the first half of the year, the performance of our Blacks and Millets businesses saw some encouraging improvement as we implemented a number of critical operational changes and introduced more seasonally relevant product. However, the second half of the year saw weaker than hoped for sellthrough of autumn and winter ranges during a particularly mild and dry season. Heavy discounting has inevitably followed across the whole sector to deal with the resulting imbalance between supply and demand, a process which has continued into the new financial year.

Tiso (incorporating George Fisher), in its first full year in the Group, has enabled us to enhance our relationship with several key brands and has given us significantly better geographical coverage in Scotland. The business, which continues to trade with independent management and systems, has suffered the same trading issues in the second half as Blacks and Millets although we remain confident about its longer term prospects.

Financial Summary - Continuing Businesses

Revenue, gross margin and overheads

Total revenue increased by 25% in the year to £1,522.3 million (2014: £1,216.4 million). Like for like sales for the 52 week period across all continuing Group fascias, including those in Europe, increased by 12% which was an exceptional performance.

Total gross margin in the year of 48.6% was broadly consistent with the prior year with a small increase in the margin in Sports Fashion to 49.5% (2014: 49.1%) offset by a reduction in the margin in Outdoor to 41.3% (2014: 44.8%), reflecting the inclusion of a full year of the lower margin Tiso and ActivInstinct businesses and the impact from heavier discounting in the final quarter of the year.

Operating profits and results

Operating profit (before exceptional items) increased substantially by £19.2 million to £102.2 million (2014: £83.0 million) with an exceptional performance in Sports Fashion and a reduction in the losses in Outdoor. A requirement to clear excess Autumn and Winter inventories means that whilst we anticipate that Outdoor will move towards profitability in the new financial year, it may be 2016/17 before this objective is achieved.

There were net exceptional items in the year of £9.5 million (2014: £5.2 million) which include a charge of £5.1m for the impairment of intangible assets previously recognised on the acquisitions of Blacks Outdoor Retail Limited, Kukri Sports Limited and Ark Fashion Limited.

The exceptional items comprised:

(1) Charge of £2.7 million in the prior year from the restructuring of the head office and warehouse operations of the Blacks, Champion and Kooga businesses.

(2) Charge arising from the impairment of the goodwill arising in prior years on the acquisition of Blacks Outdoor Retail Limited, the goodwill arising on the acquisition of Kukri Sports Limited, the Kukri brand name and the Ark fascia name.

Group profit before tax in the year ultimately increased by £13.7 million to £90.5 million (2014: £76.8 million).

Working Capital and Cash

Our core retail fascias continue to provide a source of strong cash generation which provides the Group with the financial framework for ongoing acquisition activity and continuing substantial investments in both retail property and operational infrastructure. Ultimately, net cash balances improved by £38.9m in the year to £84.2m (2014: £45.3 million) although this was assisted by £16.5m of lease incentives received in the last two months connected with the acquisition of five former Kiddicare stores.

Gross capital expenditure (excluding disposal costs) increased by £22.0 million to £70.2 million (2014: £48.2 million). Our commitment both to delivering the best possible experience to our customers and to overseas expansion means that investment in our retail fascias, both in terms of taking new stores where appropriate and refurbishing existing space, remains substantial. A total of £37.2 million was invested in our retail fascias during the year (2014: £27.9 million). Elsewhere, investment in Project Emperor, the replacement of our core systems with Oracle and new JD proprietary software, was £5.9 million in the year (2014: £5.1 million). We have also invested £11.5m (2014: £2.2 million) on the first phase of a project to increase the operational capacity and flexibility of our Kingsway warehouse.

Our increased confidence in international success means that investment in JD's international fascias will be a key focus for the Group in the new year. International development opportunities combined with ongoing investment in Project Emperor and further works at Kingsway means that there is likely to be a further substantial increase in the overall capital expenditure in the new financial year.

Disposal of Bank Fashion Limited

Prior to its disposal to Hilco on 25 November 2014, Bank was having another difficult year with operating losses at similar levels to the prior year leading the Board to conclude, shortly before that date, that there was no realistic prospect of a material improvement in performance in the short term. Consequently we reluctantly determined that the sale of Bank was in the best interests of the Group and its shareholders with future investment being prioritised for our successful core fascias. However, we remain absolutely committed to supporting the broadest possible range of fashion brands within the Group and all our other fascias will continue to be supported with necessary investment and working capital this year.

Following the disposal of Bank, repayments of £18.15m against JD's intercompany loan have been made which represents a substantial recovery of the intergroup indebtedness at disposal. The pre-tax exceptional loss arising on the disposal of Bank was £6.3 million. The results of Bank for the period of the Group's ownership together with the exceptional loss arising on the disposal of the business have been presented as a discontinued activity.

Store Portfolio

During the period, store numbers (excluding trading websites) have moved as follows:

Sports Fashion Fascias

1. Includes Champion stores which are serviced and managed by the UK team

In addition, there were two JD branded Gyms at the period end in Hull and Liverpool. This venture remains a trial with no major rollout planned at this stage.

Outdoor Fascias

Dividends and Earnings per Share

The Board proposes paying a final dividend of 5.90p (2014: 5.6625p) bringing the total dividend payable for the year to 7.05p (2014: 6.775p) per ordinary share, an increase of 4%. The proposed final dividend will be paid on 3 August 2015 to all shareholders on the register at 26 June 2015. Given the increasing success that we are seeing from the international developments of the JD fascia and the capital investment that this requires, we intend to keep dividend growth restrained at this time.

The adjusted earnings per ordinary share before exceptional items have increased by 26% to 38.89p (2014: 30.82p).

The basic earnings per ordinary share have increased by 21% to 35.17p (2014: 29.08p).

People

We are fortunate, as a Group, to have talented people in every aspect of our business. Our success would not be continuing were it not for the skills, drive and passion of the teams that work in our businesses day to day. As Executive Chairman, it is particularly pleasing to see the commitment that the team show to achieve success internationally. I thank everybody involved in delivering these excellent results.

Current Trading and Outlook

Given the significant change in the timing of Easter relative to last year, we do not believe that it is appropriate to issue any detailed update at this time on trading to date in the new financial year. That said, we are encouraged by continued positive trading across our core fascias. Our next scheduled update will take place upon the announcement of our Interim Results which is scheduled for 16 September 2015.

The Board continues to believe that the Group is well positioned to exploit successfully the opportunities that exist for continued profitable growth.

Peter Cowgill

Executive Chairman

15 April 2015

Consolidated Income Statement

For the 52 weeks ended 31 January 2015

Consolidated Statement of Comprehensive Income

For the 52 weeks ended 31 January 2015

Consolidated Statement of Financial Position

As at 31 January 2015

Consolidated Statement of Changes in Equity

For the 52 weeks ended 31 January 2015

Consolidated Statement of Changes in Equity (continued)

For the 52 weeks ended 31 January 2015

Consolidated Statement of Cash Flows

For the 52 weeks ended 31 January 2015

Analysis of Net Cash

As at 31 January 2015

1. Prior period re-presentation

In accordance with IFRS 5 ('Non-current Assets Held for Sale and Discontinued Operations'), the results of Bank Fashion Limited ('Bank') are presented as a discontinued activity as Bank was a separate major line of business. The Consolidated Income Statement for the 52 weeks to 1 February 2014 has consequently been re-presented as if Bank had been discontinued from the start of the comparative year.

2. Segmental analysis

IFRS 8 'Operating Segments' requires the Group's segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker to allocate resources to the segments and to assess their performance. The Chief Operating Decision Maker is considered to be the Executive Chairman of JD Sports Fashion Plc.

Information reported to the Chief Operating Decision Maker is focused on the nature of the businesses within the Group. In the current period the reportable segments have been adjusted to better reflect the way that product is held out for sale in the Group's core retail businesses. These adjustments were:

· The creation of a new segment 'Sports Fashion' reflecting the fact that the Group's core retail operations present and sell the major international Sports Brands as Fashion thereby creating a natural continuum between Sports and Fashion. All businesses previously allocated to the individual Sports and Fashion segments, with the exception of ActivInstinct Limited (see below), have been incorporated in this new segment.

· ActivInstinct Limited is now included in the Outdoor segment reflecting the fact that its key trading categories in Outdoor and Running are more closely aligned with the Group's other Outdoor businesses than the businesses classified as Sports Fashion.

The Group's revised reportable segments under IFRS 8 are therefore as follows:

· Sports Fashion - includes the results of JD Sports Fashion Plc, John David Sports Fashion (Ireland) Limited, Spodis SA, Champion Sports Ireland, JD Sprinter Holdings 2010 SL (including subsidiary companies), JD Sports Fashion BV, JD Sports Fashion Germany GmbH, JD Sports Fashion SRL, Duffer of St George Limited, Topgrade Sportswear Limited, Kooga Rugby Limited, Focus Brands Limited (including subsidiary companies), Kukri Sports Limited (including global subsidiary companies), Source Lab Limited, R.D. Scott Limited, Tessuti Group Limited (including subsidiary companies), Nicholas Deakins Limited, Cloggs Online Limited, Ark Fashion Limited and Mainline Menswear Limited. Bank Fashion Limited was also included until the point of disposal (see note 6).

· Outdoor - includes the results of Blacks Outdoor Retail Limited, Tiso Group Limited (including subsidiary companies) and ActivInstinct Limited.

The Chief Operating Decision Maker receives and reviews segmental operating profit. Certain central administrative costs including Group Directors' salaries are included within the Group's core 'Sports Fashion' result. This is consistent with the results as reported to the Chief Operating Decision Maker.

IFRS 8 requires disclosure of information regarding revenue from major products and customers. The majority of the Group's revenue is derived from the retail of a wide range of apparel, footwear and accessories to the general public. As such, the disclosure of revenues from major customers is not appropriate. Disclosure of revenue from major product groups is not provided at this time due to the cost involved to develop a reliable product split on a same category basis across all companies in the Group.

Intersegment transactions are undertaken in the ordinary course of business on arm's length terms.

The Board consider that certain items are cross divisional in nature and cannot be allocated between the segments on a meaningful basis. Net funding costs and taxation are treated as unallocated reflecting the nature of the Group's syndicated borrowing facilities and its tax group. Drawdowns from the Group's syndicated borrowing facility of £31,000,000 (2014: £26,000,000), a deferred tax liability of £1,804,000 (2014: £4,283,000) and an income tax liability of £12,931,000 (2014: £11,596,000) are included within the unallocated segment.

Each segment is shown net of intercompany transactions and balances within that segment. The eliminations remove intercompany transactions and balances between different segments which primarily relate to the net down of long term loans and short term working capital funding provided by JD Sports Fashion Plc (within Sports Fashion) to other companies in the Group, and intercompany trading between companies in different segments.

Business Segments

Information regarding the Group's reportable operating segments for the 52 weeks to 31 January 2015 is shown below:

The comparative segmental results (re-presented) for the 52 weeks to 1 February 2014 are as follows: